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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- -------------------------------------------------------------
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report: May 1, 1997
(Date of earliest event reported)
EMERITUS CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 1-14012 91-1605464
(State or other (Commission file (I.R.S Employer
jurisdiction of number) Identification No.)
incorporation or
organization)
3131 Elliott Avenue, Suite 500
Seattle, WA 98121
(Address of principal executive offices)
(206) 298-2909
(Registrant's telephone number, including area code)
ITEM 1. NOT APPLICABLE.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 1, 1997, Emeritus Corporation (the "Company")
completed the acquisition of three assisted-living
communities (the "La Casa Communities" ), located in
Florida, containing an aggregate of approximately 424
units for a purchase price of $33.0 million. The La Casa
Communities were acquired from Englewood Retirement
Center, Inc., Stanford Center, Inc. and NPR Retirement
Center, Inc.
The $33.0 million acquisition was financed through a first
mortgage and subordinated debt. Fleet National Bank
("Fleet") financed $26.0 million through a two year first
mortgage, interest at LIBOR plus 2.50%, payable interest
only during the first year. Hanseatic Corporation
("Hanseatic") financed $7.0 million through 18% three year
subordinate debt, 10% payable monthly and 8% accrued and
due at maturity. The subordinate debt is secured by
pledge of the stock in Emeritus Properties V, Inc., a
wholly owned subsidiary of the Company and is fully
subordinated to the Fleet mortgage.
The La Casa Communities are comprised of three
communities, La Casa Grande in New Port Richey, Florida,
Stanford Centre in Altamonte Spring, Florida and River
Oaks in Englewood, Florida, which operate residential-
style congregate care, assisted-living and Alzheimer care
communities for seniors. The Company intends to continue
operating the La Casa Communities in the same manner. The
Company's growth strategy has focused, and will continue
to focus, on the acquisition of existing long-term-care
facilities that either are currently operated as assisted-
living communities or can be efficiently repositioned by
the Company as assisted-living communities, and the
development of assisted-living facilities.
ITEMS 3-6. NOT APPLICABLE.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The La Casa Communities combined balance sheet as of
December 31, 1996, and the combined statements of
income, shareholders' equity and cash flows for the
year ended December 31, 1996, along with the notes
thereto and the report of KPMG Peat Marwick LLP dated
May 9,1997 relating to such financial statements.
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(b) PRO FORMA FINANCIAL INFORMATION.
(1) Emeritus Corporation Pro Forma Condensed Consolidated
Balance Sheet (unaudited) December 31, 1996.
(2) Emeritus Corporation Pro Forma Condensed Consolidated
Statement of Operations (unaudited) For the Year
Ended December 31, 1996.
(3) Notes to Pro Forma Condensed Consolidated Financial
Statements (unaudited).
It is impracticable to provide the Financial Statements of
Business Acquired and the Pro Forma financial information
required by this Item 7(a) and (b) at this time. Such
information will be filed by amendment on Form 8-K/A as
soon as practicable, but in any event, not later than July
15, 1997.
(c) EXHIBITS.
10.1 Stock Purchase Agreement dated September 30, 1996
between Wayne Voegele, Jerome Lang, Ronald Carlson,
Thomas Stanford, Frank McMillan, Lonnie Carlson, and
Carla Holweger ("Seller") and the registrant
("Purchaser") with respect to La Casa Grande.
10.2 First Amendment to Stock Purchase Agreement dated
January 31, 1997 between the Seller and the
registrant with respect to La Case Grande.
10.3 Stock Purchase Agreement dated September 30, 1996
between the Seller and the registrant with respect
to River Oaks.
10.4 First Amendment to Stock Purchase Agreement dated
January 31, 1997 between the Seller and the
registrant with respect to River Oaks.
10.5 Stock Purchase Agreement dated September 30, 1996
between the Seller and the registrant with respect
to Stanford Centre.
10.6 First Amendment to Stock Purchase Agreement dated
January 31, 1997 between the Seller and the
registrant with respect to Stanford Centre.
ITEM 8. NOT APPLICABLE.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Dated: May 15, 1997
EMERITUS CORPORATION
(Registrant)
/s/ Kelly J. Price
---------------------
Kelly J. Price, Chief Financial
Officer and Vice President, Finance
/s/ James S. Keller
---------------------
James S. Keller, Controller and
Director of Accounting (Principal
Accounting Officer)
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STOCK PURCHASE AGREEMENT
This Agreement is made and entered into this
30th day of September 1996, by and between WAYNE
VOEGELE, JEROME LANG, RONALD CARLSON, THOMAS
STANFORD, FRAND McMILLAN, LONNIE CARLSON AND CARLA
HOLWEGER (collectively "Seller"), and EMERITUS
CORPORATION, a Washington corporation
("Purchaser").
PURCHASE AND SALE
1. On the terms and conditions set forth herein,
Seller shall sell to Purchaser and Purchaser shall
purchase from Seller all of the issued and
outstanding stock (the "Stock") of NPR Retirement
Center, Inc. (the "Corporation") owned by Seller,
which represents all of the issued and outstanding
stock of the Corporation. The parties acknowledge
and agree that the transaction is a stock purchase
and not an asset purchase.
PURCHASE PRICE
2. The purchase price payable by Purchaser to
Seller for the Stock shall be Twelve Million Nine
Hundred Thousand -and no/100 Dollars ($12,900,000)
and shall be payable as follows:
a. Ninety Seven Thousand Seven Hundred
Twenty Five and no/100 Dollars ($97,725.00) on
execution of this Agreement (the "Earnest Money")
shall be delivered by Purchaser to Chicago Title
Insurance Company (the "Escrow Agent"). In the
event the purchase and sale contemplated by this
Agreement is consummated, then the Earnest Money
will be credited against the Purchase Price at
Closing. In the event the purchase and sale
contemplated by this Agreement fails to occur, the
Earnest Money shall be remitted to Seller or
Purchaser, as appropriate, in accordance with the
provisions of Paragraph I 7 hereof. The Escrow
Agent shall be authorized, at Purchaser's option,
to invest the Earnest Money in such manner as
Purchaser may direct with Seller's reasonable
written approval; provided, however, that the
Escrow Agent shall invest the Earnest Money only
in such manner as will allow Escrow Agent to
disperse the Earnest Money on two (2) days'
notice. All interest or other earnings on the
Earnest Money shall become part of the Earnest
Money and shall be dispersed to the party who
becomes entitled to the Earnest Money pursuant to
the provisions of this Agreement.
b. The balance, as reduced by the Earnest
Money and any accrued interest thereon and as
adjusted by the costs and prorations provided for
in Paragraph 5 and as adjusted in accordance with
the provisions of Paragraph 7(e)(vi), shall be due
and payable in cash at Closing (as defined below).
c. Notwithstanding the foregoing, the
purchase price shall be reduced by Two Hundred
Forty Seven Thousand Nine Hundred Ten and no/100
Dollars ($247,910.00) in the event Purchaser
elects to take title to the Stock with the first
mortgage (the "Existing Debt") in favor of Aid
Association for Lutherans ("Lender") in place, as
well as taking title to the stock of the entities
described in Exhibit P hereto with the first
mortgages in favor of Lender in place as to each
entity and provided Purchaser pays all fees and
costs required to be paid to the Lender pursuant
to the loan documents between the Corporation and
Lender.
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Except as specifically provided in this
Agreement, notwithstanding Purchaser's purchase of
the Stock, Purchaser does not hereby or in
connection herewith assume any liability of Seller
whatsoever in relation to the Corporation which
relates to the period prior to Closing.
CLOSING
3. The Closing of the purchase and sale under
this Agreement (the "Closing") shall take place on
or before January 2,1997 effective as of January
1,1997 (provided all of the conditions to closing
set forth in Paragraphs 13 and 14 have been
satisfied or waived) (the "Closing Date");
provided, however, that Purchaser shall have the
right on written notice to Seller delivered on or
prior to the Closing Date to extend the Closing
Date for a period of up to thirty (30) days.
Closing shall occur at the offices of Escrow Agent
in Orlando, Florida or at such other place as
Purchaser and Seller may mutually agree. Time is
of the essence hereto.
CONVEYANCE
4. Conveyance of the Stock to Purchaser shall be
effected by a duly executed Assignment Separate
from Certificate in form and substance
substantially the same as that attached hereto as
Exhibit A-1 (the "Stock Assignment") and delivery
to Purchaser of the certificate or certificates
evidencing the Stock (the "Certificates"). At the
time of the conveyance of the Stock to Purchaser,
the Corporation shall have fee simple insurable
title to the Real Property as hereinafter defined)
and indefeasible title to the Personal Property
(as hereinafter defined) Free and clear of all
liens, charges, easements and encumbrances of any
kind, other than the following:
a. Liens for rea1 estate taxes not yet due
and payable;
b. Such items of record as described in the
Title Report (as defined below) which are not
objected to by Purchaser in accordance with the
terms of Paragraph 11(a)(ii);
c. All laws, ordinances and governmental
regulations, including, but not limited to, all
applicable building, zoning, and use and
environmental ordinances and regulations;
provided, however, that the provisions of this
clause (c) shall be subject to Purchaser's right
to object thereto and Seller's agreement to take
corrective action in response to said objections
all as specified more fully in Paragraph 11
(a)(ii); and
d. The rights of the residents of the
Facility under written rental agreements.
COSTS PRORATION, AND ADJUSTMENTS
5. The costs of the transaction and the expenses
related to the ownership and operation of the
Stock and the Corporation's Assets (as hereinafter
defined) shall be allocated among Seller and
Purchaser as follows:
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a. Seller shall pay any transfer or
documentary stamp or excise tax or sales tax due
as a result of the sale and transfer of the Stock
to Purchaser.
b. Seller and Purchaser shall share on a 50-
50 basis the cost of the Title Report and title
insurance
policy issued pursuant thereto and the cost of any
title endorsements requested by Purchaser. Seller
shall pay the cost of the ALTA survey required to
deliver the title insurance policy.
c. Seller shall either pay for any update
to the environmental assessments of the
Corporation's Assets which it has delivered to
Purchaser prior to the execution of this Agreement
(the "Environmental Updates") or, if Purchaser
elects to secure new environmental assessments
rather than the Environmental Updates, Seller
shall reimburse Purchaser for that portion of the
cost thereof which is equal to the proposed cost
of securing the Environmental Updates as reflected
in a written proposal therefor provided by Seller
to Purchaser.
d. Notwithstanding Purchaser's acquisition
of the Stock, all revenues (including but not
limited to rent due from the residents of the
Facility) and expenses (including but not limited
to payroll and employee benefits) related to the
ownership or operation of the Corporation'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.
e. Notwithstanding Purchaser's acquisition
of the Stock, 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.
f. Notwithstanding Purchaser's acquisition
of the Stock, 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 a11 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.
g. Purchaser and Seller shall each pay
their own attorney's fees.
h. Purchaser and Seller shall share
recording fees related to the recording of the
Deed, any escrow fees and any HSR filing fees (as
defined below) on a 50-50 basis:
i. In the event Seller elects to cure any
objections Purchaser makes to the items described
in the Title Report or the UCC-1 search report,
then Seller shall pay the cost of obtaining and
recording any releases necessary to deliver title
to the Corporation's Assets in accordance with the
terms of this Agreement.
POSSESSION
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6. At Closing, Purchaser shall be entitled to
possession of the Stock and the Corporation's
Assets, subject only to the rights of the
residents of the Facility under the Facility
Leases (as defined below). At Closing, Seller
shall deliver to Purchaser all resident records
and other relevant records used or developed in
connection with the business conducted at the
Facility and the Corporation's corporate financial
records, stock
records and minute books. At Closing Seller shall
be entitled to retain all cash on hand (other than
resident deposits), accounts receivable for the
period prior to the Closing Date and prepaid
expenses and utility deposits paid by the
Corporation prior to the Closing Date.
REPRESENTATIONS AND WARRANTIES
7. Seller hereby warrants and represents to
Purchaser that:
a. STATUS OF SELLER AND THE CORPORATION.
Seller is comprised of those persons or entities
listed on the signature page of this document,
each of whom or which is a natural person or a
duly organized legal entity and in the case of a
legal entity is in good standing under the laws of
the State of its organization: The Corporation is
a corporation duly organized, validly existing and
in good standing under the laws of the State of
Florida, with the authorized and outstanding stock
described in Exhibit A-2. The Corporation is
engaged in no business activity other than the
operation of the Facility.
b. SELLER'S AUTHORITY. Seller has full
power, and authority to execute and to deliver
this Agreement and all related documents, and to
carr5E out the transaction contemplated herein.
This Agreement is valid, binding and enforceable
against Seller in accordance 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 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 Stock or the assets of Seller or the
Corporation may be bound or affected.
c. THE FACILITY. The facility is a
congregate care and assisted living and Alzheimer
care facility commonly known as La Casa Grande of
New Port Richey, located in New Port Richey,
Florida and duly licensed, with respect by the
State of Florida as an adult congregate care
living facility with a total of 242 Units (the
"Facility"). The Facility is not certified to
participate in Medicare or Medicaid. There is no
action pending or, to the best knowledge of
Seller, recommended by the appropriate state
agency having jurisdiction thereof, to terminate
the Facility's license or any action of any other
type which would have a material adverse effect on
the Facility, its operations or business.
d. THE CORPORATION'S ASSETS. The assets of
the Corporation as of the date hereof consist, and
as of the Closing Date will consist, of the
following (collectively, the "Corporation's
Assets"):
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i. The real properly situated in the state
of Florida, which is more particularly described
in Exhibit B attached hereto (the "Real Property")
and the improvements on the Real Property that
constitute the Facility.
ii. All equipment, furniture, fixtures,
inventory (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,
entitlements, telephone numbers, any right, title
or interest which the Corporation or Seller may
have in and to any service marks, trademarks or
trade names owned or employed by the Corporation
in conjunction with the operation of the Facility
specifically including the name "La Casa Grande of
New Port Richey" and any trade names and trade
marks related thereto and goodwill associated
therewith, and all motor vehicles owned or leased
by Seller or the Corporation and used in
conjunction with the operation of the business
conducted at the Facility, but specifically
excluding cash, cash equivalents and accounts
receivable for the period prior to the Closing
Date (as defined below) (the "Personal Property"),
which Personal Property is more particularly
described in Exhibit C.
iii. The food and other consumable
inventories located at, and usable in the
operation of, the Facility on the Closing Date
(the "Consumables").
e. THE CORPORATION'S LIABILITIES.
i. As of the date hereof the liabilities of
the Corporation (the "Corporation's Liabilities")
consist of those items described in the balance
sheet dated as of June 30,1996 set forth in
Exhibit D (the "June Balance Sheet") and as of the
Closing Date the liabilities of the Corporation
shall consist of only (i) those liabilities set
forth in the June Balance Sheet, excluding,
however, (i) all long term debt reelected therein
and (ii) such other liabilities as Purchaser may
require Seller to satisfy or to cause the
Corporation to satisfy by written notice delivered
within thirty (30) days after the date hereof and
(ii) those liabilities incurred by the Corporation
between the date hereof and the Closing Date in
the ordinary course of business and reflected on a
balance sheet dated as of December 1,1996 and
approved by Purchaser (the "Closing Balance
Sheet").
ii. The June Balance Sheet has been prepared
and the Closing Balance Sheet shall be prepared in
accordance with generally accepted accounting
principles, except as otherwise specifically
reflected therein or in the notes thereto, and
reflect or shall accurately reflect, in the case
of the Closing Balance Sheet, the Corporation's
Assets and the Corporation's Liabilities as of the
date thereof.
iii. As of the date of the June Balance
Sheet the Corporation did not have, nor has the
Corporation incurred since that date, any
liabilities, contracts, obligations or commitments
(whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any
nature attributable to the operations of the
Corporations that would-be required by generally
accepted accounting principles to be reflected on
a balance sheet of the Corporation (including the
notes thereto), except liabilities or obligations
(A) which were incurred in the ordinary course of
business consistent with past practice or (B)
which have not been, and could not be reasonably
expected to be,
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individually or in the aggregate, materially
adverse to the Corporation, the Corporation's
Assets or the Corporation's Liabilities.
iv. Since the date of the June Balance Sheet
there has not been any change, event or
development having, or that could be reasonably
expected to have, individually or in the
aggregate, a material adverse effect on the
Corporation or the Corporation's Assets or the
Corporation's Liabilities.
v. There are no, and at Closing there will
not be any, liabilities, debts or other
obligations of any nature, whether absolute,
accrued, contingent or otherwise, whether due or
to become due, including liabilities for taxes,
employee wages, employee benefits and unfunded
pension plans other than those described herein.
vi. The net sales and the total assets of
the Corporation are each less than $25 million.
f. THE STOCK. Seller has good and
marketable title to the Stock free and clear of
all liens, encumbrances and charges. The Stock
represents all of the issued and outstanding stock
of the Corporation, Seller is the sole owner
thereof and all of such Stock is validly issued,
fully paid and non-assessable. There are no
outstanding subscriptions, options, warrants,
rights (including "phantom" stock rights),
preemptive rights or other contracts, commitments,
understandings or arrangements, including any
right of conversion or exchange under any
outstanding security, instrument or agreement
(together, "Rights"), obligating the Corporation
to issue or sell any shares of its capital stock
or to grant, extend or enter into any Right with
respect thereto nor any voting trusts, proxies or
other commitments, understandings, restrictions or
arrangements in favor of any person other than
Seller with respect to the voting of or the right
to participate in dividends or other earnings on
any capital stock or other equity security of the
Corporation. The Stock has not been registered
under the Securities Act of 1933 as amended or
under the laws of any state in which it may have
been sold or offered for sale.
g. TITLE. The Corporation 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 indefeasible title
to the Personal Property free and clear of all
leases, liens and encumbrances. The Personal
Property is all of the furniture, fixtures and
equipment necessary to operate the Facility at
full capacity and all of such Personal Property
is, and at Closing will be, in good operating
condition and repair and accordingly in the same
or better condition and repair, as on the date of
Purchaser's inspection thereof pursuant to
Paragraph 11 (a)(iv).
h. THE REAL PROPERTY. The Facility is
located on the Real Property. The Facility and the
roof and all major mechanical systems at the
Facility, including, but not limited to, the Air
Conditioning, Electrical and Heating and
Ventilating Systems, are, and at Closing shall be,
in the good operating condition and repair and
accordingly in the same or better condition and
repair as on the date of Purchaser's inspection
thereof pursuant to Paragraph 11 (a)(iv) and
Seller has no reason to believe that the same will
not have a useful life with ordinary routine
maintenance of no less than five years after the
Closing Date.
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i. 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.
j. TAXES AND TAX RETURNS. All tax returns,
reports and filings of any kind or nature required
to be filed by Seller or the Corporation prior to
Closing with respect to its ownership and
operation of the Facility, Seller's ownership of
the Stock and the Corporation's ownership and
operation of the Real Properly, the Personal
Property
and the Facility have been properly completed and
timely filed in material compliance with all
applicable requirements and all taxes or other
obligations which are due and payable by Seller or
the Corporation have been timely paid. Nothing
herein shall be construed as a representation by
any of the persons or entities comprising Seller
with respect to the filing of its income tax
returns or the payment of any taxes due
thereunder.
k. LITIGATION. 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 Corporation or its
or their properties or business, which (A) is
material to the Stock, Corporation's Assets, the
Facility, the Real Property or the Personal
Property or to this Agreement, or (B) 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. For purposes hereof, litigation, an
investigation or other proceeding shall be deemed
to be pending if the same has been served on
Seller or Seller has otherwise been advised either
orally or in writing of the pendency thereof and
litigation shall be deemed to be material if the
amount of recovery which is claimed is $50,000 or
more or the litigation challenges Seller's title
to the Stock or the Corporation's title to the
Facility, the Real Properly or the Personal
Properly. Seller acknowledges and that
notwithstanding that Purchaser is acquiring the
Stock of the Corporation, Purchaser is not
assuming any liability of the Corporation or
Seller for any litigation which may be pending at
Closing or which may be asserted or filed after
Closing with respect to the ownership or operation
of the Corporation's Assets or the Stock prior to
Closing.
l. BOOKS AND RECORDS. All of the books and
records maintained by the Corporation with respect
to its ownership and/or operation of the
Corporation's Assets are true and correct in all
material respects. Attached hereto as Exhibit E is
a true and correct aging report which identifies
each account receivable of the Corporation as of
June 30,1996. Seller shall update the aging report
on a monthly basis between the date hereof and the
Closing Date.
m. THE FACILITY LEASES. Attached hereto as
Exhibit F is a true and correct copy of an
exemplar of the forms of rental or admission
agreement entered into by the Corporation with
each of the current residents of the Facility and
each of the rental or admission agreements entered
into by the Corporation is in substantially the
form as the exhibit attached hereto (the "Facility
Leases"). A true and correct copy of each of the
rental or admission agreements entered into by the
Corporation with each of the current residents of
the Facility has been provided by Seller to
Purchaser. Each of the rental agreements executed
by the Corporation with the residents of the
Facility (the "Leases") is in full force and
effect and none of the Leases has been modified or
amended except as set forth in Exhibit F. Seller
has no knowledge or notice that the Corporation is
in default
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of any of its obligations under the Facility
Leases 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 Facility Leases by any of the
residents who are parties thereto.
n. RENT ROLL. Attached hereto as Exhibit G
is a true and correct rent roll as of August
1,1996, which identifies each of the residents 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. Seller further
represents and warrants that the Corporation has
the right under the Facility Leases to increase
the rents and related fees and charges paid by the
residents of the Facility on no more than sixty
(60) days notice and that it has not orally or in
writing to provide room, board or other services
to any resident or prospective resident for a
reduced or nominal fee or without charge.
o. LIENS. There are no mechanics',
materialmen's or similar liens presently claimed
or, to the best of Seller's knowledge, which will
be claimed against the Corporation's 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.
p. 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
Corporation 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 Corporation's Assets, neither
Seller nor the Corporation has installed any
underground storage tanks on the Real Property and
neither Seller nor the Corporation has used the
Real Property as a dump for waste material. To the
best of Seller's knowledge, no hazardous
materials, substances or wastes are 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; no underground storage
tanks are located on the Real Property; the Real
Property has never been used as a dump for waste
material and the Real Property and the Facility
and the prior uses of the Real Property and the
Facility at all times complied with all
Environmental Laws.
q. EMPLOYEES: UNIONS. None of the employees
of the Facility are employed by the Corporation
but rather all such employees are employed by
Human Resources One and leased to the Corporation
under the terms of the Agreement attached hereto
as part of Exhibit K (the "Employee Leasing
Agreement"). The Corporation has the right on no
more than thirty (30) days notice to terminate the
Employee Leasing Agreement without any further
liability thereunder and effective upon such
termination to hire any or all of the employees
who were the subject thereof. Such employees are
not members of a labor union or subject to a
collective bargaining agreement with respect to
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their employment at the Facility. There are no
labor disputes or grievances pending with respect
to the operations at the Facility, except as
otherwise provided in Exhibit H. For purposes
hereof, a labor dispute or grievance shall be
deemed to be pending if the same has been served
on Seller or Seller has otherwise been advised
either orally or in writing of the pendency
thereof.
r. COMPLIANCE WITH LAW
i. The Corporation's 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
Corporation's Assets;
ii. There are no outstanding deficiencies or
work orders of any authority having jurisdiction
over the Corporation's Assets requiring conformity
to any applicable statute, regulation, ordinance
or by-law pertaining thereto;
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;
and
iv. Attached hereto as Exhibit I is a true
and correct copy of any room size or other waivers
issued to the Corporation by the Florida
Department of Health and Rehabilitative Services
with respect to the Facility.
s. OPERATING CONTRACTS. Set forth in
Exhibit J are true and correct copies of all
operating contracts to which the Corporation 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 J. Seller has no notice or
knowledge that the Corporation 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.
t. INVENTORY. All inventories of non-
perishable food, central supplies, linen,
housekeeping and other supplies located at the
Facility are in sufficient condition and quantity
to operate the Facility at normal capacity for two
weeks. All inventories of perishable food are at
the level normally maintained at the Facility.
u. MATERIAL AGREEMENTS. Set forth in
Exhibit K is a list of the following material
agreements to which the Corporation or the
Facility is a party (the "Material Agreements"),
true and correct copies of which have been
provided to Purchaser prior to the execution of
this Agreement:
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<PAGE>
i. Lease agreements (whether as lessor or
lessee) relating to real properly or personal
property or the employees of the Facility;
ii. License agreements, assignments or other
contracts (whether as licensor or licensee,
assignor or assignee) relating to trademarks,
trade names, patents, or copyrights (or
applications therefor);
iii. Employment or consulting agreements
not terminable without liability to the
Corporation upon notice to the employee or
consultant of less than 30 days, or employment or
consulting agreements which provide for
compensation at the rate of more than $25,000 per
year (including salary, benefits, bonuses and
commissions) to any employee or consultant;
iv. Agreements for the purchase or sale of
goods, materials, supplies, machinery, capital
assets or services in excess of $ 10,000
individually or in excess of $20,000 in the
aggregate;
v. Agreements with any labor union;
vi. The Corporation's Articles of
Incorporation and Bylaws, including any and all
amendments thereto;
vii. Employee pension, profit sharing,
retirement bonus or benefit plans;
viii. Joint venture or partnership
agreements with any other person;
ix. Agreements for the borrowing or lending
of money, or for guaranteeing the obligations or
liabilities of another, or for indemnifying, or
otherwise becoming liable for, the obligations or
liabilities of another;
x. Agreements with any bank, factor,
finance company or similar organization regarding
the financing of the Corporation's accounts
receivable or other extensions of credit to the
Corporation;
xi. Agreements granting any lien, security
interest or mortgage on any property or asset of
the Corporation;
xii. Agreements for the construction or
modification of the Facility or for the incurrence
of any other capital expenditure involving total
payments in excess of $ 10,000 individually or in
excess of $20,000 in the aggregate;
xiii. Advertising agreements;
xiv. Agreements which restrict the
Corporation's right to do business;
xv. Other agreements involving the payment
or receipt in any period of 12 consecutive months
of more than $10,000 individually or of more than
$20,000 in the aggregate, or having a term of more
than six (6) months;
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<PAGE>
xvi. Any agreements to defend, indemnify
and/or hold harmless any person; and
xvii. Any other agreements relevant to
the operations of the Facility, including, but not
limited to, ancillary services agreements.
Each of the Material Agreements is in full force
and effect as of the date hereof has not be
amended or modified except as set forth in Exhibit
K and neither the Corporation nor
any other party thereto is in default thereunder
as of the date hereof or will be in default
thereunder as of the Closing Date. Seller
acknowledges and agrees that notwithstanding the
purchase of the Stock by Purchaser, Purchaser is
not assuming any obligations under the Material
Agreements which relate to the period prior to the
Closing Date and that Purchaser shall have the
right within thirty (30) days after the date
hereof, to advise Seller which, if any, of the
Material Agreements it wants terminated by the
Corporation as of the Closing Date.
v. ERISA/WAGES/BENEFITS. The Corporation
has no ERISA, employee benefit plan, wage or
vacation, holiday, sick pay or severance pay
obligations it being understood and agreed that
the Corporation's only economic obligation with
respect to the employees of the Facility is to
make the payments due to Human Resources One under
the terms of the Employee Lease Agreement.
w. INSURANCE.
i. Exhibit L lists all of the liability,
property, workers' compensation, directors' and
officers' liability and other insurance policies
currently in effect that insure the business,
operations, properties, assets or employees of the
Corporation. The Corporation has made available,
or during Purchaser's Due Diligence Review will
make available, for inspection by Purchaser a
true, complete and correct copy of each such
policy of insurance.
ii. Each insurable material property of the
Corporation is insured by it for its benefit, in
amounts deemed adequate by its officers against
all material risks usually insured against by
prudent managers of similar businesses, and under
policies issued by insurers of recognized
responsibility and on which all premiums currently
due have been paid. The continuation, validity and
effectiveness of each such policy will in no
material way be affected by the consummation of
the transactions contemplated by this Agreement
except to the extent that the Corporation
voluntarily take action to affect the same, such
as canceling the insurance in favor of insurance
maintained by Purchaser.
iii. To the Corporation's knowledge,
there is no default or claimed or purported or
alleged default or state of facts that, with the
giving of notice or the lapse of time or both,
would constitute a default on the part of any
party under any policy of insurance in effect that
insures the business, operations, properties,
assets or employees of the Corporation.
x. NO SUBSIDIARIES. The Corporation does
not own an interest, directly or indirectly, in
any other corporation,. company, business trust,
partnership, limited partnership, joint venture,
or other entity or association.
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<PAGE>
y. KEY EMPLOYEES. Exhibit M is a list of
the names of all the Corporation's salaried
employees, together with a statement as to the
full amount paid (including salary, bonuses and
commissions), to each such person by the
Corporation for services rendered during calendar
year 1995 and to date during calendar year 1996.
z. BANK ACCOUNTS AND SAFE DEPOSIT
ARRANGEMENTS. Exhibit O sets forth a correct and
complete list of each bank account and safe
deposit box maintained by the Corporation.
aa. FINANCIAL STATEMENTS. The financial
statements prepared by the Corporation or at the
Corporation's direction and delivered to Purchaser
for the 12 month period ended December 31,1995 and
for the six month period ending June 30,1996 are
true and correct in all material respects, fairly
present the operating results of the Corporation
with respect to the Facility and do not materially
distort income or losses. All such financial
statements with respect to the Corporation have
been prepared in accordance with generally
accepted accounting principles ("GAAP"), it being
understood and agreed that the Facility financial
statements have not been prepared in accordance
with GAAP. The financial statements to be
delivered by Seller to Purchaser between the date
hereof and the Closing Date pursuant to Paragraph
10(a)(xxii), will when prepared, be true and
correct in all material respects, will, in the
case of the financial statements with respect to
the Corporation, be prepared in accordance with
GAAP, will fairly present the operating results of
the Facility and will not materially distort
income or issues.
bb. CONVERSION OF SIX-PLEX. The Corporation
has obtained any and all consents and approvals
for the lawful conversion of the 18 licensed ACLF
units located in the three six-plex units located
at the Facility to 30 licensed ACLF units and for
the related increase in the licensed capacity of
the Facility which will result therefrom. Seller
and the corporation further represent and warrant
that certificate of need approval is not required
under Florida law for the conversion of the six-
plex units and the related increase in the
licensed capacity of the Facility resulting
therefrom.
cc. DISCLOSURE. No representation or
warranty by Seller contained in this Agreement and
no statement contained in any certificate, list,
exhibit, or other instrument 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 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.
8. Purchaser hereby warrants and represents to
Seller that:
a. STATUS OF PURCHASER. Purchaser is a
corporation duly organized and validly existing
under the laws of the state of Washington and is
in good standing under the laws thereof and is
duly qualified to do business as a foreign
corporation in the State of Florida and is in good
standing under the laws thereof.
b. AUTHORITY. Subject to Purchaser
obtaining the approval of its Board of Directors
within the time period provided for in Paragraph
13(i), 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
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<PAGE>
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. There is no litigation,
investigation or other proceeding pending or, to
the best of Purchaser's knowledge, 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 know of any basis
for any such action. For purposes hereof,
litigation, an investigation or a proceeding shall
be deemed to be pending if the same has been
served on Purchaser or Purchaser has been advised
either orally or in writing of the pendency
thereof.
d. NECESSARY ACTION. Purchaser 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,
using its best efforts to obtain the consent of
its Board of Directors.
e. INVESTMENT REPRESENTATIONS.
i. Purchaser has, or prior to Closing will
have, availed itself of every reasonably available
opportunity to conduct its due diligence review of
the Corporation and the Facility. The sale and
purchase price of the Stock has been independently
negotiated between the parties hereto and all the
various terms and provisions of this Agreement,
and all exhibits attached hereto, have been agreed
to by Purchaser based upon its own deliberations,
judgment and business experience, independent of
any material statement, whether of fact or
opinion, by the Corporation, its officers,
directors or employees, other than those
statements contained in the June Balance Sheet and
the representations and warranties of Seller as
set forth herein.
ii. The Stock is being purchased for
investment purposes only and Purchaser does not
intend to resell the same. Seller has disclosed
that the Stock has not been registered under the
Securities Act of 1933, as amended or any state in
which they may be offered for sale.
iii. Purchaser is a sophisticated
investor
iv. Purchaser has, or prior to Closing will
have, been furnished with sufficient written
information about the Corporation, the
Corporation's Assets and the Corporation's
Liabilities to allow it to make an informed
investment decision prior to purchasing the Stock.
v. Purchaser has obtained such independent
financial advice as it deemed necessary with
respect to Purchaser's acquisition of the Stock.
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<PAGE>
vi. Purchaser will be actively involved in
the management and operation of the . Corporation
after Closing, and the Stock is not being
purchased for the purpose of speculating in
securities.
vii. Purchaser is not currently the
owner, directly or indirectly, of any of the Stock
of the Corporation, nor has it entered into any
contracts, agreements or understandings with
respect to the Stock.
f. 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
Each party hereby represents and warrants to
the other party that it has not contacted or
entered into any agreement with any real estate
broker, agent, finder, or any other party in
connection with this transaction and that it has
not taken any action which would result in any
real estate broker's, finder or other fees or
commissions being due and payable to any other
party with respect to the transaction contemplated
by this Agreement, other than W. H. Benson and
Company, which has been retained and shall be
compensated by Seller. Each party hereby
indemnifies and agrees to hold the other party
harmless from any loss, liability, damage, cost,
or expense (including reasonable attorney's fees)
resulting to the other party by reason of a breach
of the representation and warranty made by the
indemnifying party in this paragraph.
Notwithstanding anything to the contrary contained
in this Agreement, the indemnity set forth in this
paragraph and any sums due pursuant to such
indemnity shall constitute separate agreements in
causes of action in addition to any liquidated
damages provided for in this Agreement.
COVENANTS
10. SELLER AND THE CORPORATION
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, or will cause the Corporation to,
satisfy and discharge all claims, liens, security
interests, tenancies (other than the Facility
Leases and any Operating Contracts which Purchaser
elects to assume at Closing pursuant to the terms
hereof, and encumbrances on the Corporation's
Assets.
ii. Seller will, or will cause the
Corporation to, file all tax returns, reports and
filings of any kind or nature required to be filed
by Seller or the Corporation with respect to the
Stock, the Corporation's Assets or the
Corporation's Liabilities and will timely pay all
taxes or other obligations which are due and
payable with respect thereto; provided, however,
nothing herein shall be construed as imposing any
specific obligations under this Agreement on any
of the persons or entities comprising Seller with
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<PAGE>
respect to the filing of their income tax returns
of the payment of the taxes due thereunder;
iii. Seller will not, nor will it permit
the Corporation to, 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 cause the Corporation to continue
until the Closing to fulfill any obligations which
it may have under the Facility Leases or each of
the other Material Agreements to which the
Corporation or Seller may be a party;
iv. Seller will cause the Corporation to
operate the Facility only in the ordinary course
and with due regard to the proper maintenance and
repair of the Facility and the Personal Property;
v. Seller will cause the Corporation to
take all reasonable action to preserve the
goodwill of the residents of the Facility;
vi. Seller will not permit the Corporation
to make any material change in the operation of
the Facility nor to sell or agree to sell any of
the items which comprise the Personal Property nor
otherwise to enter into an agreement materially
affecting any of the Corporation's Assets or the
Corporation's Liabilities;
vii. Seller will cause the Corporation
to use its reasonable efforts to retain the
services and goodwill of the employees located at
or connected with the operation of the Facility;
viii. Seller will cause the Corporation
to maintain in force the existing hazard and
liability insurance policies, or comparable
coverage, for the Corporation's Assets as now in
effect;
ix. Seller will not permit the Corporation
to increase its financial obligations under the
Employee Lease Agreement;
x. Seller will not, and will not permit the
Corporation to, enter into any contract or
commitment affecting the Corporation's Assets
except in the ordinary course of business and
Seller will, or will cause the Corporation to,
advise Purchaser of any contracts or commitments
which it enters, whether in the ordinary course of
business or otherwise;
xi. During normal business hours, Seller
will provide Purchaser and its agents with access
(in the company of a representative of Seller) on
24 hours notice to the Real Property and the
Facility, provided Purchaser does not interfere
with the operation of the Facility and provided
Purchaser uses its best efforts not to disturb any
residents of the Facility during the course of
such inspections and at such times Seller shall
permit Purchaser to inspect the books and records
and the physical and structural condition of the
Facility, the Real Property and the Personal
Property;
xii. Seller will timely pay all
obligations which are due and payable with respect
to the Stock and will cause the Corporation to
timely pay all obligations which are due and
payable with respect to the Corporation's Assets
or the Corporation's Liabilities;
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<PAGE>
xiii. Seller will cause the Corporation
to operate the Facility in substantial compliance
with all applicable municipal, county, state and
federal laws, regulations, ordinances, standards
and orders as now in effect (including without
limitation, the building and zoning codes as
currently applied with respect thereto) and with
the Environmental Laws, 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 or on the Corporation's Assets or the
Corporation's Liabilities;
xiv. Seller will cause the Corporation
to take all reasonable action to achieve
substantial compliance with any laws, regulations,
ordinances, standards and orders applicable to the
Corporation's Assets which are enacted after
execution of this Agreement and prior to Closing;
xv. As soon as practicable after the date
hereof but in no event later than thirty (30) days
following full execution of this Agreement, Seller
will (a) deliver to Purchaser a UCC-1 search
report (herein so called), (b) shall cause Marvin
L. Beaman, Jr., as agent for Chicago Title
Insurance Company to furnish to Purchaser a
current title commitment (the "Title Report") for
the issuance to Purchaser of an extended coverage
Owner's title insurance policy with a value equal
to the purchase price (the "Title Policy"),
insuring the Corporation's interest after
Purchaser acquisition of the Stock in the Real
Property and the Facility, subject to no
exceptions other than those of the usual printed
exceptions, which are acceptable to Purchaser and
the Permitted Exceptions (hereafter defined) and
(c) arrange with a survey firm acceptable to
Purchaser for the preparation and delivery of an
ALTA Survey of the Real Property and the Facility
(the "Survey");
xvii. Seller will, or will cause the
Corporation to, provide Purchaser within thirty
(30) days after execution of this Agreement with
copies of any environmental reports, structural
report or geological reports which may be in
Seller's or the Corporation's possession with
respect to the Facility and the Real Property;
xviii. Seller will cooperate, at
Purchaser's sole cost and expense, with Purchaser
in any efforts which it may undertake to audit the
Corporation's financial statements for the periods
prior to the Closing if and to the extent such an
audit is required for Purchaser's compliance with
applicable securities laws;
xix. Seller will not permit the
Corporation to amend its Articles of Incorporation
or Bylaws;
xx. Seller will cause the Corporation to
maintain the inventories of perishable food, non-
perishable food, central supplies, linen,
housekeeping and other supplies at the Facility at
substantially the same condition and quantity as
presently being maintained;
xxi. Seller will provide Purchaser with
copies of any monthly financial statements
prepared in the ordinary course of the
Corporation's business between the date hereof and
the Closing Date and with the September 30,1996
financial statements as soon as the same are
available and all such financial statements shall
conform to Seller's representations and warranties
set forth herein;
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<PAGE>
xxii. Seller shall allow Purchaser to
verify with the Corporation's lenders the
principal balance then outstanding under any
outstanding debt and the balances in the
Corporation's bank accounts;
xxiii. Seller shall deliver to Purchaser
all plans and specifications and as-built surveys
for the Real Property and the Facility which are
in the possession of the Corporation or Seller;
and
xxiv. Seller shall cause the Corporation
to pay off as of the Closing Date any debt secured
by the Facility.
b. CLOSING. On the Closing Date, Seller
agrees that it will:
i. Execute and deliver to Purchaser the
Stock Assignment and the Certificates and such
endorsements, assignments and other instruments of
transfer and conveyance as shall be necessary to
transfer and assign the Stock to Purchaser as
herein provided;
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) subject to the
limitations set forth in Paragraph 26 and setting
forth the incumbency of the persons executing
documents on behalf of Seller, a copy of the
resolutions adopted by the Board of Directors and
Shareholders of the Corporation authorizing the
transaction provided for herein and the execution
of this Purchase Agreement and the other documents
contemplated herein;
iii. Deliver the tangible property
included in the Corporation's Assets to Purchaser
in the condition and repair required by the terms
of this Agreement subject to no liens or
encumbrances other than those permitted under the
terms hereof;
iv. Deliver to Purchaser the Closing Balance
Sheet, subject to Purchaser's right to review and
approve the same in accordance with the terms
hereof;
v. Pay its share of the Closing costs,
including, but not limited to, the Title Report,
Title Policy and Survey described in Paragraph
10(a)(xvi);
vi. Deliver to Purchaser the duly executed
resignations of the officers and directors of the
Corporation;
vii. Deliver to Purchaser the Resident
Deposits (as defined in Paragraph I 8);
viii. Deliver to Purchaser evidence of
the designation of a duly authorized
representative to act with full power and
authority on behalf of Seller with respect to any
post-closing obligations imposed on Seller
hereunder; and
ix. Deliver to Purchaser the original titles
to any motor vehicles owned by the Corporation as
of the Closing Date and included within the
Personal Property duly executed, if necessary, to
reflect the sale of the Stock to Purchaser.
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<PAGE>
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
Stock and the Seller's Assets and cooperate, at
Purchaser's sole cost and expense, with Purchaser
in any efforts which it may undertake to audit the
Corporation'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
Purchaser's compliance with applicable securities
laws.
11. PURCHASER
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. Within ten ( 10) days after its receipt
of the UCC-1 Search Report, the Title Report and
the Survey, Purchaser shall advise Seller in
writing of its objections, if any, to each of the
UCC-1 Search Report, the Title Report and the
Survey. In the event Purchaser fails to notify
Seller in writing of Purchaser's objections within
said ten (10) day period, Purchaser shall be
deemed to have waived its right to object. Within
five (5) days of Seller's receipt of Purchaser's
objections, Seller shall advise Purchaser whether
it intends to correct the defects to which
Purchaser has objected. Seller shall be obligated
to act in good faith in responding to Purchaser's
title objections. For purposes hereof, Seller
shall be deemed to have failed to act in good
faith if its refuses to correct any matter which
is the subject of such title objections where the
only costs to it in doing are normal filing or
recording fees or delivery charges and where the
objections relate to liens which appear of record
but relate to previously discharged debt or other
minor defects in record title. If Seller refuses
to correct some or all of such defects, Purchaser
shall have five (5) days to advise Seller of its
decision to close, notwithstanding the defects, or
to terminate this Agreement, in which case neither
party shall have any further rights or obligations
hereunder, other than Seller's obligation to
return or to direct the return of Purchaser's
Earnest Money. Any matter reflected in the UCC1
Search Report, the Title Report or the Survey not
objected to in accordance with the terms hereof
shall be deemed accepted by Purchaser and to be
"Permitted Exceptions" (herein so called).
Notwithstanding anything contained herein to the
contrary, in the event Seller requires additional
time to prepare either the Survey or the Title
Report, then Seller shall have such additional
time to deliver the same to Purchaser, however, in
no event shall such extension be longer than
fifteen ( 15) additional days;
iii. Purchaser will proceed with all due
diligence to obtain all consents and approvals
necessary to permit the consummation of the
transaction contemplated by this Agreement and/or
necessary to permit Purchaser to own and to
operate the Facility, including, but not limited
to, a license from the Florida Department of
Health and Rehabilitative Services;
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<PAGE>
iv. Purchaser will proceed with all due
diligence and at its sole cost and expense to
conduct such investigations and to complete the
same within ninety (90) days after the date of
this Agreement with respect to the Stock, the
Corporation's Assets and the Corporation's
Liabilities 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
and investigations of the Corporation's and the
Facility's books and records and operations,
including a review of the licensure files
maintained by the State of Florida with respect to
the Facility to the extent the same are publicly
available, 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, 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 warranties shall be separate
from and unaffected by Purchaser's Due Diligence
Review; and provided, further, that Purchaser
shall maintain the confidentiality of any
documents or information obtained by it during the
course of its Due Diligence Review and shall
return the same to Seller in the event the
transaction provided for herein fails close for
any reason whatsoever Purchaser shall indemnify,
defend and hold Seller and the Corporation
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 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. The foregoing indemnity shall expressly
survive the Closing or the earlier termination of
this Agreement; and
v. Within fifteen (15) days after the later
of the date hereof or the date of their delivery
to Purchaser, Purchaser will advise Seller in
writing which, if any of the Operating Contracts
it elects to assume by virtue of its acquisition
of the Stock as of the Closing Date and Seller
shall thereafter cause the Corporation to
terminate prior to the Closing Date any such
Operating Contracts which Purchaser does not elect
to assume.
b. CLOSING. On the Closing Date, Purchaser
agrees that it will:
i. Pay the balance of the Purchase Price
due at Closing;
ii. Pay its share of the Closing costs as
herein provided; and
iii. Deliver to Seller a certificate of
a responsible officer dated as of the Closing
Date, certifying in such detail as Seller may
reasonably specify the fulfillment of the
conditions set forth in Paragraph(s) 14(a) and (b)
subject to the limitations set forth in Paragraph
26 and setting forth the incumbency of the
officers executing documents on behalf of
Purchaser, a copy of the resolutions adopted by
Purchaser's Board of Directors authorizing the
transaction provided for herein and the execution
of this Purchase Agreement and the other documents
contemplated herein and attaching a certificate of
good standing issued by the Washington Secretary
of State within no more than thirty (30) days
prior to Closing.
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c. POST-CLOSING. After the Closing of this
Agreement, Purchaser agrees that it will:
i. 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,
including lenders and lessors or to accomplish the
transaction contemplated by this Agreement;
provided, however, nothing herein shall be
construed to require Purchaser in order to secure
such consents to sell or otherwise dispose of any
of its assets, or agree to any conditions not
acceptable to Purchaser in its sole discretion.
c. If applicable, to file with the
Antitrust Division of the United States Department
of Justice and the Federal Trade Commission a
Notification and Report Form in accordance with
the notification requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") and to use its and their best efforts
to achieve the prompt termination or expiration of
the waiting period or any extension thereof
provided for under the HSR Act as a prerequisite
to the consummation of the transactions provided
for herein (the "HSR Approval"); provided,
however, that Seller and Purchaser shall share any
filing fees due under the HSR Act on a 50-50
basis.
i. Nothing herein shall be construed as
requiring the Corporation to (i) sell or otherwise
dispose of any of its assets which either alone or
in the aggregate, with all such other sales or
dispositions, would constitute the sale or
disposition of a "significant subsidiary" (as
defined in Rule I -02 of Regulation S-X of the
rules and regulations of the Securities and
Exchange Commission), (ii) take any action, the
consummation of which cannot be conditioned on the
consummation of the transactions contemplated by
this Agreement, where such action would have a
material adverse effect on the Corporation or
(iii) take any action which either would have a
material adverse effect on the operations,
business or financial condition of the Corporation
or would materially impair the value of the
transaction contemplated by this Agreement to the
Seller or Purchaser.
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ii. Nothing herein shall be construed as
requiring Purchaser to (A) sell or otherwise
dispose of any of its assets which either alone or
in the aggregate, with all such other sales or
dispositions, would constitute the sale or
disposition of a "significant subsidiary," (B)
take any action, the consummation of which cannot
be conditioned on the consummation of the
transactions contemplated by this Agreement, where
such action would have a material adverse effect
on Purchaser or (C) take any action which either
would have a material adverse effect on the
operations, business or financial condition of
Purchaser or would materially impair the value of
the transaction contemplated by this Agreement to
the Seller or Purchaser.
CONDITIONS
13. All obligations of Purchaser under this
Agreement are subject to fulfillment, prior to or
at Closing, 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 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 and shall have caused the Corporation to
have performed all of its and their 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. NO DEFAULTS. The Corporation shall not
be in default, where said default cannot be cured
by Closing, under any mortgage, contract, lease or
other agreement to which it is a party or by which
it 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.
d. DUE DILIGENCE REVIEW. Purchaser shall be
satisfied with the results of its Due Diligence
Review, including, but not limited to the results
of an EPA Phase I Assessment of the Real Property
and the Facility within the period specified in
Paragraph 11(a) (iv); 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 warranties shall be separate
from and unaffected by Purchaser's Due Diligence
Review except as to any representations or
warranties which, during the course of Purchaser's
Due Diligence Review, Seller demonstrates
Purchaser obtained knowledge of falsity or
inaccuracy thereof. In the event Purchaser elects
to terminate this Agreement within the period
specified in Paragraph 11 (a)(iv) and this
Paragraph 13(d), the parties shall have no further
rights or obligations hereunder, other than
Purchaser's right to the return of its Earnest
Money and Seller's obligation to pay any title
cancellation and UCC search fees incurred as a
result of such termination.
e. TITLE. The Title Insurer shall issue to
Purchaser as of the date of Closing, an Owner's
extended coverage policy of title insurance for
the Real Property and the Facility in accordance
with the requirements of Paragraph 4.
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<PAGE>
f. SURVEY. Purchaser shall be satisfied as
to the results of the ALTA Survey in accordance
with the provisions of Paragraph 11 (a)(ii).
g. UCC SEARCH. Purchaser shall be satisfied
with the results of the UCC search conducted by
Seller pursuant to Paragraph 10(a)(xvi) in
accordance with the provisions of Paragraph 11
(a)(ii). .
i. APPROVALS. Purchaser or the
Corporation, as appropriate, shall have received
all consents, and approvals as may be necessary
for it to own and to operate the Facility,
including, but not limited to, the issuance by the
Florida Department of Health and Rehabilitative
Services to Purchaser of a license to operate the
Facility in the event the sale of the Stock is
deemed to be a change of ownership and to require
such review and approval and the issuance of a new
license to Purchaser or to the Corporation, and
the approval of Purchaser's Board of Directors;
provided, however, that in the event Purchaser has
not advised Seller on or before September 1,1996
that its Board of Directors has failed to approve
the transaction provided for herein and in the
related Purchase Agreements set forth in Exhibit
P, the requirement for Purchaser's receipt of said
Board approval as a condition to Purchaser's
obligation to close shall be deemed to have been
satisfied.
j. CONVERSION OF SIX-PLEX. Seller shall
have provided purchaser with evidence that it has
secured all consents and approvals necessary for
the lawful conversion of the 18 licensed ACLF
units located in the three six-plex units located
at the Facility to 30 licensed ACLF units and for
the related increase in the licensed capacity of
the Facility which will result therefrom and that
the plans and specifications with respect thereto
are for a facility which is licensable under
Florida law as an ACLF facility.
k. HART SCOTT RODINO. If applicable, the
filing and waiting period requirements under the
HSR Act shall have been complied with and shall
have expired or terminated.
l. MATERIAL CHANGES. Between the date
hereof and the Closing Date, there shall be no
material adverse change in the following:
i. The financial condition of the
Corporation, including, but not limited to, a
significant reduction in the working capital (or
cash balance) or a significant increase in the
short term or long-term debt reflected on the June
Balance Sheet and the financial statements of the
Corporation and the Facility delivered by Seller
pursuant to the terms hereof;
ii. The condition of the Facility's
operations, including, but not limited to, its
census levels and licensure and/or certification
status; and
iii. The Corporation's Assets as
reflected on the June Balance Sheet.
m. TENDER OF STOCK. All of the issued and
outstanding shares of the Stock shall have been
tendered to Purchaser free and clear of all liens
and encumbrances.
n. ZONING. Purchaser shall be satisfied in
its sole and absolute discretion that the current
zoning to which the Real Properly and the Facility
are subject will permit the operation thereon of
the Facility.
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<PAGE>
o. CLOSING OF ALL STOCK ACQUISITIONS. The
stock acquisitions made pursuant to the agreements
described in Exhibit P shall have closed
concurrently with the closing of the transaction
provided for herein.
p. INSURANCE. Seller shall have provided
Purchaser with evidence satisfactory to Purchaser
that the property and liability insurance coverage
in effect to the Closing Date for the Facility is
"occurrence based" rather than "claims made";
provided, however, that if the current coverage is
on a "claims made" basis then the Seller shall
provide evidence satisfactory to Purchaser of the
existence of a fully paid up "tail" coverage
policy in the name of the Corporation.
q. CLOSING BALANCE SHEET. Purchaser shall
have reviewed and approved the Closing Balance
Sheet.
r. FACILITY EMPLOYEES. Purchaser shall have
offered employment to the employees who are
currently subject to the Employee Lease Agreement
and a sufficient number of such employees shall
have accepted employment with Purchaser to enable
Purchaser to lawfully operate the Facility after
Closing and such offer and acceptance of
employment shall have been at no cost to Purchaser
or the Corporation under the terms of the Employee
Lease Agreement.
s. ASSUMPTION OF EXISTING DEBT. Any and all
documents necessary to evidence the assumption of
the Existing Debt shall have been executed by
Purchaser and the lender thereunder, if and to the
extent Purchaser elects pursuant to Paragraph 2 to
permit the same to be a liability of the
Corporation at Closing.
Subject to the limitations set forth in the
foregoing Paragraph 13, in the event any of the
foregoing conditions is not satisfied by Seller or
Purchaser, as appropriate, or waived by Purchaser
prior to Closing, Purchaser shall have the right
to terminate this Agreement in accordance with the
provisions of Paragraph 17.
14. CONDITIONS TO SELLER'S OBLIGATIONS
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 CLOSING. 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. HSR APPROVAL. If applicable, the filing
and waiting period requirements under the HSR Act
shall have been complied with and shall have
expired or terminated.
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<PAGE>
d. CLOSING OF ALL STOCK ACQUISITIONS. The
stock acquisitions made pursuant to the agreements
described in Exhibit P shall have closed
concurrently with the closing of the transaction
provided for herein.
INDEMMFICATION
15. Notwithstanding Purchaser's acquisition of
the Stock, Seller shall indemnify and hold
Purchaser harmless from and against:
a. Except as otherwise provided in this
Agreement, any and all obligations relating to the
ownership of the Corporation's Assets and the
operation of the Facility which exist at the
Closing Date, including, but not limited to (i)
any obligations
under the Facility Leases or the Operating
Contracts which Purchaser elects to assume at
Closing, (ii) any obligations with respect to the
Resident Deposits, (iii) any matters related to or
arising from any prior bankruptcy or foreclosure
proceedings related to the Corporation's Assets
and (iv) any of the Corporation's Liabilities
reflected on the Closing Balance Sheet;
b. Any and all damage, loss or liability
arising either before or after the Closing Date
under any of the Operating Contracts which
Purchaser does not elect to assume at Closing and
which Purchaser directs Seller to terminate or to
cause the Corporation to terminate on or prior to
the Closing Date;
c. Subject to the limitations set forth in
Paragraph 26, 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
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. .
16. Purchaser shall indemnify and hold Seller
harmless from and against:
a. Except as otherwise provided in this
Agreement, any and all obligations relating to the
ownership of the Corporation's Assets and the
Corporation's Liabilities 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 assume at
Closing in accordance with the terms hereof and
any obligations with respect to the Resident
Deposits;
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<PAGE>
b. Subject to the limitations set forth in
Paragraph 26, 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 damage, loss or liability
resulting from the conduct by or the negligence or
willful misconduct of Purchaser in performing its
Due Diligence Review; and
d. 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.
TERMINATION
17. 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 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. If the Closing has not occurred by
February 1,1997 or such later date as may be
agreed upon by the parties (the "Outside Closing
Date"), unless extended by mutual agreement of the
parties; provided, however, that in the event all
of the conditions to Closing provided for in
Paragraph 13 have been satisfied or waived by the
Outside Closing Date other than the Purchaser's
receipt of the License pursuant to Paragraph
13(i), provided Purchaser is diligently pursuing
the issuance of the License by the Florida
Department of Health and Rehabilitative Services,
the Outside Closing Date shall automatically be
extended for such additional period of time as may
be necessary to permit Purchaser to secure the
License; provided, further that in the event
Purchaser has not secured the License by January
31,1997, this Agreement shall thereafter terminate
in accordance with the terms hereof and the
parties shall have no further rights or
obligations hereunder other than Purchaser's right
to the return of its Earnest Money.
b. In the event that prior to the Closing
Date, a material portion of the Real Properly, 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
25
<PAGE>
or quasi-public authority under the power of
eminent domain, Purchaser shall have the right to
terminate this Agreement on written notice to
Seller which notice must be delivered within ten
(10) days after Purchaser receives notice of such
damage, destruction or condemnation. In the event
Purchaser fails to exercise its termination rights
hereunder, then it shall be conclusively deemed to
have waived said right and the Corporation's
Assets at Closing shall include all of Seller's or
the Corporation's 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 other than Purchaser's right
to the return of its Earnest Money.
c. Neither party to this Agreement may
claim termination or pursue any other remedy
referred to in Paragraph 17(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; provided,
however, in no event shall the Closing Date be
postponed beyond the Outside Closing Date.
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 to retain Purchaser's
Earnest Money as full and complete liquidated
damages, the parties acknowledging and agreeing
that the amount of damages which Seller may incur
as a result of such termination may be difficult
to ascertain and that the amount of the Earnest
Money is a reasonable and fair estimate thereof,
after which the parties shall have no further
rights or obligations hereunder.
e. In the event of the termination of this
Agreement by Purchaser under P paragraph
17(a)(iii) or (iv) or under Paragraph 17(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 as
Purchaser's sole and exclusive remedies either to
(i) terminate this Agreement and demand the return
of its Earnest Money after which neither party
shall have any further rights or obligations
hereunder or (ii) seek specific performance of
Seller's obligations hereunder.
RESIDENT SECURITY DEPOSITS
18. 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.
19. On the Closing Date, Seller shall transfer
the Resident Deposits to the bank account
designated by the Purchaser and Purchaser shall in
writing acknowledge to Seller receipt of and
expressly assume all the Corporation's financial
and custodial obligations with respect thereto.
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<PAGE>
20. 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 as provided in
Paragraph 19 did not represent the full amount of
such Resident Deposits then or thereafter shown to
have been delivered to the Corporation by the
current residents or prospective residents of the
Facility.
NOTICES
21. 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 NPR Retirement
Center, Inc.
2501 N. Orange Avenue, Suite
435N
Orlando, FL 32804
Attn: Mr. Wayne Voegele
Phone No.: (407) 896-3369
FAX No.: (407) 894-2985
with copy to: Marvin L. Beaman, Jr.
Esq.
605 North Wymore Road
Winter Park, FL 32789-2893
Phone No. : (407) 628-4200
FAX No. : (407) 740-8402
To Purchaser: Emeritus Corporation
3131 Western Avenue, Suite 500
Seattle, WA 98121
Attn: Keith James
Phone No.: (206) 298-2909
FAX No.: (206) 301-4500
with copy to: The Nathanson Group
1411 Fourth Avenue, Suite 905
Seattle, WA 98101
Attn: Randi S. Nathanson
Phone No.: (206) 623-6239
FAX No.: (206) 623-1738
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).
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<PAGE>
SOLE AGREEMENT
22. 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.
SUCCESSORS
23. 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 an
affiliate; provided no such assignment shall
relieve Purchaser of its obligations hereunder and
provided, further, that Purchaser shall provide
Seller with notice of any such assignment and such
assignee shall assume all of Purchaser's
obligations hereunder in writing. In addition,
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 Corporation's 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.
CAPTIONS
24. The captions of this Agreement are for
convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SURVIVAL/LIMITATION OF ACTIONS
25. All covenants, warranties and representations
of Purchaser and Seller herein other than Seller's
representation and warranty in Paragraph 7(o),
which shall survive for the applicable statute of
limitations period, shall survive for two years
after Closing after which they shall automatically
expire; provided, however, that in the event
notice of a claim is delivered by Seller or
Purchaser prior to expiration of said two year
period or applicable statute of limitation period
in the case of a claim brought under Paragraph
7(o), the representation, warranty or covenant
which is the subject of said claim shall survive
until the final, non-appealable resolution
thereof.
GOVERNING LAW
26. This Agreement shall be governed by and
construed in accordance with the laws of the State
of Florida.
SEVERABILITY
27. 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 hereof shall not in any way
be affected or impaired thereby.
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COUNTERPARTS
28. 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. This
Agreement may be executed (i) on an original, (ii)
a copy of an original, or (iii) by a facsimile
transmission copy of an original followed within
five (5) calendar days with execution of an
original.
THIRD PARTY BFNEFICIARY
29. The provisions of this Agreement are not
intended to confer any benefits upon any person or
entity not a party to this Agreement.
ACCOUNTS RECEIVABLE
30. 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.
31. From and after the Closing Date, Purchaser
shall assume responsibility for the billing for
and collection of payments on account of services
rendered, ancillary services provided or goods
sold by it on and after the Closing Date and,
notwithstanding the sale of the Stock to
Purchaser, Seller shall retain all right, title
and interest in and to and all responsibility for
the collection of the accounts receivable of the
Corporation for services rendered, ancillary
services provided or goods sold by the Corporation
prior to the Closing Date.
32. Except as otherwise provided herein, any
payments received by Purchaser after the Closing
Date from residents with balances due for services
rendered, ancillary services provided or goods
sold by the Corporation during the period prior to
and after the Closing Date, shall be applied by
Purchaser first to reduce any post-Closing Date
balances, with the excess, if any, remitted to
Seller to reduce any pre-Closing Date balances
due. Notwithstanding the foregoing, in the event
the payment specifically designates that it
relates to services rendered, ancillary services
provided or goods sold by the Corporation during
the period prior to the Closing Date it shall be
remitted by Purchaser to Seller or in the event
the payment directly correlates to an invoice
which includes billings for ancillary services
provided by the Corporation prior to the Closing
Date, that portion of the payment which directly
relates to the payment for said ancillary services
shall be remitted to Seller by Purchaser.
33. Seller shall have the right during normal
business hours and on reasonable notice to
Purchaser to inspect Purchaser'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.
SUBCHAPTER S ELECTION
34. Seller shall have the right effective as of
the Closing Date to terminate the Corporation's
Subchapter S election and shall have the
obligation to file any final tax returns due with
respect to the Corporation for the tax year ending
on December 31,1996.
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Any and all taxes and tax returns due and payable
for the tax years commencing on the Closing Date
shall be the responsibility of Purchaser and any
and all taxes and tax returns due and payable for
the tax years prior to the Closing Date shall be
the responsibility of Seller.
EXHIBITS
35. Seller and Purchaser acknowledge and agree
that they shall have a period of thirty (30) days
from the date of this Agreement to attach the
exhibits hereto and that either party shall have
the right to terminate this Agreement in the event
either (i) the exhibits are not attached within
said period or (ii) they are not acceptable to
either party and, in the event of such a
termination, Purchaser shall be entitled to the
return of the
Earnest Money and any accrued interest thereon,
after which neither party shall have any further
rights or obligations hereunder.
SIGNATURES ON FOLLOWING PAGE
30
<PAGE>
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
/s/ Frank McMillan
- --------------------------------------------------
- ---
FRANK McMILLAN
/s/ Lonnie Carlson
- --------------------------------------------------
- ---
LONNIE CARLSON
/s/ Karla Holweger
- --------------------------------------------------
- ---
CARLA HOLWEGER
PURCHASER: By: /s/ Raymond R.
Brandstrom
- --------------------------------------------------
- --
Its: President
31
<PAGE>
FIRST AMENDMENT TO STOCK PURCHASER AGREEMENT
This Agreement is made and entered into
effective as of the 31st day of January, 1997, by
and between WAYNE VOEGELE, JEROME LANG, RONALD
CARLSON, THOMAS STANFORD, FRANK McMILLAN, LONNIE
CARLSON, AND CARLA HOLWEGER (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 30,1996
(the "Purchase Agreement") with respect to the
acquisition by Purchaser of all of the issued and
outstanding stock of NPR Retirement Center, 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, I 997.
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
to reflect that by the execution of this
Agreement, Purchaser does hereby assign all of its
right, title and interest in 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
<PAGE>
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 an d 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$31,280 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 l,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 La Casa Grande of
New Port Richey, located in New Port Richey,
Florida and duly licensed, with respect by the
State of Florida as an adult congregate care
living facility with a total of 242 licensed beds
and 200 licensed units (the "Facility").
6. Paragraph 7(m) is hereby amended by
adding the following at the end: "Seller is not
holding any security deposits on behalf of any of
the residents of the Facility. Seller is, however,
holding certain personal funds for certain
residents of the Facility, a detailed listing of
which will be provided to Purchaser at Closing and
which funds will be transferred to Purchaser at
Closing."
7. Section 10(a) is hereby amended to
include the following as an additional pre-closing
covenant of Seller:
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 on the date specified by Purchaser;
but in no event earlier than thirty (30) days
after the date of We Rate Increase notice and
shall commence on the first day of the month;
provided, however, in no event shall Seller be
required to
2
<PAGE>
issue the Rate Increase notice with an effective
date prior to the Closing Date, unless Purchaser
has confired in writing to Seller prior to the
issuance of the Rate Increase notice that it has
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. 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 right granted to Seller under Section 11.3(t)
of that Stock Purchase Statement dated September
30,1996 as amended by First Amendment dated as of
January 3l, 1997 with respect to the Englewood
Retirement Center in Englewood, Florida (the
"Englewood Purchase Agreement"), in which case the
Outstanding Closing Date shall be June 1,1997.
9. Except as specifically set forth
heerein, the Purchase Agreement shall remain, in
full force and effect as originally executed.
IN WITNESS WHEREOF, the parties heereby
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
/s/ Frank McMillan
- --------------------------------------------------
- ---
FRANK McMILLAN
/s/ Lonnie Carlson
- --------------------------------------------------
- ---
LONNIE CARLSON
/s/ Karla Holweger
- --------------------------------------------------
- ---
CARLA HOLWEGER
3
<PAGE>
PURCHASER: EMERITUS CORPORATION
By: /s/ Raymond R.
Brandstrom
- --------------------------------------------------
- --
Its: President
PURCHASER: EMERITUS PROPERTIES
V, INC.
By: /s/ Raymond R.
Brandstrom
- --------------------------------------------------
- --
Its: President
4
<PAGE>
STOCK PURCHASE AGREEMENT
This Agreement is made and entered into this
30th day of September 1996, by and between WAYNE
VOEGELE, JEROME LANG, RONALD CARLSON, THOMAS
STANFORD, STANFORD VOEGELE AND KEVIN LANG
(collectively "Seller"), and EMERITUS CORPORATION,
a Washington corporation ("Purchaser").
PURCHASE AND SALE
1. On the terms and conditions set forth herein,
Seller shall sell to Purchaser and Purchaser shall
purchase from Seller all of the issued and
outstanding stock (the "Stock") of Englewood
Retirement Center, Inc. (the "Corporation") owned
by Seller, which represents all of the issued and
outstanding stock of the Corporation. The parties
acknowledge and agree that the transaction is a
stock purchase and not an asset purchase.
PURCHASE PRICE
2. The purchase price payable by Purchaser to
Seller for the Stock shall be Eleven Million Two
Hundred Thousand -and no/100 Dollars ($11,200,000)
and shall be payable as follows:
a. Eighty Four Thousand Eight Hundred
Fifty and no/100 Dollars ($84,850.00) on execution
of this Agreement (the "Earnest Money") shall be
delivered by Purchaser to Chicago Title Insurance
Company (the "Escrow Agent"). In the event the
purchase and sale contemplated by this Agreement
is consummated, then the Earnest Money will be
credited against the Purchase Price at Closing. In
the event the purchase and sale contemplated by
this Agreement fails to occur, the Earnest Money
shall be remitted to Seller or Purchaser, as
appropriate, in accordance with the provisions of
Paragraph I 7 hereof. The Escrow Agent shall be
authorized, at Purchaser's option, to invest the
Earnest Money in such manner as Purchaser may
direct with Seller's reasonable written approval;
provided, however, that the Escrow Agent shall
invest the Earnest Money only in such manner as
will allow Escrow Agent to disperse the Earnest
Money on two (2) days' notice. All interest or
other earnings on the Earnest Money shall become
part of the Earnest Money and shall be dispersed
to the party who becomes entitled to the Earnest
Money pursuant to the provisions of this
Agreement.
b. The balance, as reduced by the Earnest
Money and any accrued interest thereon and as
adjusted by the costs and prorations provided for
in Paragraph 5 and as adjusted in accordance with
the provisions of Paragraph 7(e)(vi), shall be due
and payable in cash at Closing (as defined below).
c. Notwithstanding the foregoing, the
purchase price shall be reduced by Two Hundred
Thirty Thousand Four Hundred Twenty Five and
no/100 Dollars ($230,425.00) in the event
Purchaser elects to take title to the Stock with
the first mortgage (the "Existing Debt") in favor
of Aid Association for Lutherans ("Lender") in
place, as well as taking title to the stock of the
entities described in Exhibit P hereto with the
first mortgages in favor of Lender in place as to
each entity and provided Purchaser pays all fees
and costs required to be paid to the Lender
pursuant to the loan documents between the
Corporation and Lender.
1
<PAGE>
Except as specifically provided in this
Agreement, notwithstanding Purchaser's purchase of
the Stock, Purchaser does not hereby or in
connection herewith assume any liability of Seller
whatsoever in relation to the Corporation which
relates to the period prior to Closing.
CLOSING
3. The Closing of the purchase and sale under
this Agreement (the "Closing") shall take place on
or before January 2,1997 effective as of January
1,1997 (provided all of the conditions to closing
set forth in Paragraphs 13 and 14 have been
satisfied or waived) (the "Closing Date");
provided, however, that Purchaser shall have the
right on written notice to Seller delivered on or
prior to the Closing Date to extend the Closing
Date for a period of up to thirty (30) days.
Closing shall occur at the offices of Escrow Agent
in Orlando, Florida or at such other place as
Purchaser and Seller may mutually agree. Time is
of the essence hereto.
CONVEYANCE
4. Conveyance of the Stock to Purchaser shall be
effected by a duly executed Assignment Separate
from Certificate in form and substance
substantially the same as that attached hereto as
Exhibit A-1 (the "Stock Assignment") and delivery
to Purchaser of the certificate or certificates
evidencing the Stock (the "Certificates"). At the
time of the conveyance of the Stock to Purchaser,
the Corporation shall have fee simple insurable
title to the Real Property as hereinafter defined)
and indefeasible title to the Personal Property
(as hereinafter defined) Free and clear of all
liens, charges, easements and encumbrances of any
kind, other than the following:
a. Liens for rea1 estate taxes not yet due
and payable;
b. Such items of record as described in the
Title Report (as defined below) which are not
objected to by Purchaser in accordance with the
terms of Paragraph 11(a)(ii);
c. All laws, ordinances and governmental
regulations, including, but not limited to, all
applicable building, zoning, and use and
environmental ordinances and regulations;
provided, however, that the provisions of this
clause (c) shall be subject to Purchaser's right
to object thereto and Seller's agreement to take
corrective action in response to said objections
all as specified more fully in Paragraph 11
(a)(ii); and
d. The rights of the residents of the
Facility under written rental agreements.
COSTS PRORATION, AND ADJUSTMENTS
5. The costs of the transaction and the expenses
related to the ownership and operation of the
Stock and the Corporation's Assets (as hereinafter
defined) shall be allocated among Seller and
Purchaser as follows:
2
<PAGE>
a. Seller shall pay any transfer or
documentary stamp or excise tax or sales tax due
as a result of the sale and transfer of the Stock
to Purchaser.
b. Seller and Purchaser shall share on a 50-
50 basis the cost of the Title Report and title
insurance
policy issued pursuant thereto and the cost of any
title endorsements requested by Purchaser. Seller
shall pay the cost of the ALTA survey required to
deliver the title insurance policy.
c. Seller shall either pay for any update
to the environmental assessments of the
Corporation's Assets which it has delivered to
Purchaser prior to the execution of this Agreement
(the "Environmental Updates") or, if Purchaser
elects to secure new environmental assessments
rather than the Environmental Updates, Seller
shall reimburse Purchaser for that portion of the
cost thereof which is equal to the proposed cost
of securing the Environmental Updates as reflected
in a written proposal therefor provided by Seller
to Purchaser.
d. Notwithstanding Purchaser's acquisition
of the Stock, all revenues (including but not
limited to rent due from the residents of the
Facility) and expenses (including but not limited
to payroll and employee benefits) related to the
ownership or operation of the Corporation'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.
e. Notwithstanding Purchaser's acquisition
of the Stock, 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.
f. Notwithstanding Purchaser's acquisition
of the Stock, 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 a11 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.
g. Purchaser and Seller shall each pay
their own attorney's fees.
h. Purchaser and Seller shall share
recording fees related to the recording of the
Deed, any escrow fees and any HSR filing fees (as
defined below) on a 50-50 basis:
i. In the event Seller elects to cure any
objections Purchaser makes to the items described
in the Title Report or the UCC-1 search report,
then Seller shall pay the cost of obtaining and
recording any releases necessary to deliver title
to the Corporation's Assets in accordance with the
terms of this Agreement.
POSSESSION
3
<PAGE>
6. At Closing, Purchaser shall be entitled to
possession of the Stock and the Corporation's
Assets, subject only to the rights of the
residents of the Facility under the Facility
Leases (as defined below). At Closing, Seller
shall deliver to Purchaser all resident records
and other relevant records used or developed in
connection with the business conducted at the
Facility and the Corporation's corporate financial
records, stock
records and minute books. At Closing Seller shall
be entitled to retain all cash on hand (other than
resident deposits), accounts receivable for the
period prior to the Closing Date and prepaid
expenses and utility deposits paid by the
Corporation prior to the Closing Date.
REPRESENTATIONS AND WARRANTIES
7. Seller hereby warrants and represents to
Purchaser that:
a. STATUS OF SELLER AND THE CORPORATION.
Seller is comprised of those persons or entities
listed on the signature page of this document,
each of whom or which is a natural person or a
duly organized legal entity and in the case of a
legal entity is in good standing under the laws of
the State of its organization: The Corporation is
a corporation duly organized, validly existing and
in good standing under the laws of the State of
Florida, with the authorized and outstanding stock
described in Exhibit A-2. The Corporation is
engaged in no business activity other than the
operation of the Facility.
b. SELLER'S AUTHORITY. Seller has full
power, and authority to execute and to deliver
this Agreement and all related documents, and to
carr5E out the transaction contemplated herein.
This Agreement is valid, binding and enforceable
against Seller in accordance 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 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 Stock or the assets of Seller or the
Corporation may be bound or affected.
c. THE FACILITY. The facility is a
congregate care and assisted living and Alzheimer
care facility commonly known as La Casa Grande of
Englewood, located in Englewood, Florida and duly
licensed, with respect by the State of Florida as
an adult congregate care living facility with a
total of 155 Units (the "Facility"). The Facility
is not certified to participate in Medicare or
Medicaid. There is no action pending or, to the
best knowledge of Seller, recommended by the
appropriate state agency having jurisdiction
thereof, to terminate the Facility's license or
any action of any other type which would have a
material adverse effect on the Facility, its
operations or business.
d. THE CORPORATION'S ASSETS. The assets of
the Corporation as of the date hereof consist, and
as of the Closing Date will consist, of the
following (collectively, the "Corporation's
Assets"):
i. The real properly situated in the state
of Florida, which is more particularly described
in Exhibit B attached hereto (the "Real Property")
and the improvements on the Real Property that
constitute the Facility.
4
<PAGE>
ii. All equipment, furniture, fixtures,
inventory (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,
entitlements, telephone numbers, any right, title
or interest which the Corporation or Seller may
have in and to any service marks, trademarks or
trade names owned or employed by the Corporation
in conjunction with the operation of the Facility
specifically including the name "La Casa Grande of
Englewood" and any trade names and trade marks
related thereto and goodwill associated therewith,
and all motor vehicles owned or leased by Seller
or the Corporation and used in conjunction with
the operation of the business conducted at the
Facility, but specifically excluding cash, cash
equivalents and accounts receivable for the period
prior to the Closing Date (as defined below) (the
"Personal Property"), which Personal Property is
more particularly described in Exhibit C.
iii. The food and other consumable
inventories located at, and usable in the
operation of, the Facility on the Closing Date
(the "Consumables").
e. THE CORPORATION'S LIABILITIES.
i. As of the date hereof the liabilities of
the Corporation (the "Corporation's Liabilities")
consist of those items described in the balance
sheet dated as of June 30,1996 set forth in
Exhibit D (the "June Balance Sheet") and as of the
Closing Date the liabilities of the Corporation
shall consist of only (i) those liabilities set
forth in the June Balance Sheet, excluding,
however, (i) all long term debt reelected therein
and (ii) such other liabilities as Purchaser may
require Seller to satisfy or to cause the
Corporation to satisfy by written notice delivered
within thirty (30) days after the date hereof and
(ii) those liabilities incurred by the Corporation
between the date hereof and the Closing Date in
the ordinary course of business and reflected on a
balance sheet dated as of December 1,1996 and
approved by Purchaser (the "Closing Balance
Sheet").
ii. The June Balance Sheet has been prepared
and the Closing Balance Sheet shall be prepared in
accordance with generally accepted accounting
principles, except as otherwise specifically
reflected therein or in the notes thereto, and
reflect or shall accurately reflect, in the case
of the Closing Balance Sheet, the Corporation's
Assets and the Corporation's Liabilities as of the
date thereof.
iii. As of the date of the June Balance
Sheet the Corporation did not have, nor has the
Corporation incurred since that date, any
liabilities, contracts, obligations or commitments
(whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any
nature attributable to the operations of the
Corporations that would-be required by generally
accepted accounting principles to be reflected on
a balance sheet of the Corporation (including the
notes thereto), except liabilities or obligations
(A) which were incurred in the ordinary course of
business consistent with past practice or (B)
which have not been, and could not be reasonably
expected to be, individually or in the aggregate,
materially adverse to the Corporation, the
Corporation's Assets or the Corporation's
Liabilities.
5
<PAGE>
iv. Since the date of the June Balance Sheet
there has not been any change, event or
development having, or that could be reasonably
expected to have, individually or in the
aggregate, a material adverse effect on the
Corporation or the Corporation's Assets or the
Corporation's Liabilities.
v. There are no, and at Closing there will
not be any, liabilities, debts or other
obligations of any nature, whether absolute,
accrued, contingent or otherwise, whether due or
to become due, including liabilities for taxes,
employee wages, employee benefits and unfunded
pension plans other than those described herein.
vi. The net sales and the total assets of
the Corporation are each less than $25 million.
f. THE STOCK. Seller has good and
marketable title to the Stock free and clear of
all liens, encumbrances and charges. The Stock
represents all of the issued and outstanding stock
of the Corporation, Seller is the sole owner
thereof and all of such Stock is validly issued,
fully paid and non-assessable. There are no
outstanding subscriptions, options, warrants,
rights (including "phantom" stock rights),
preemptive rights or other contracts, commitments,
understandings or arrangements, including any
right of conversion or exchange under any
outstanding security, instrument or agreement
(together, "Rights"), obligating the Corporation
to issue or sell any shares of its capital stock
or to grant, extend or enter into any Right with
respect thereto nor any voting trusts, proxies or
other commitments, understandings, restrictions or
arrangements in favor of any person other than
Seller with respect to the voting of or the right
to participate in dividends or other earnings on
any capital stock or other equity security of the
Corporation. The Stock has not been registered
under the Securities Act of 1933 as amended or
under the laws of any state in which it may have
been sold or offered for sale.
g. TITLE. The Corporation 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 indefeasible title
to the Personal Property free and clear of all
leases, liens and encumbrances. The Personal
Property is all of the furniture, fixtures and
equipment necessary to operate the Facility at
full capacity and all of such Personal Property
is, and at Closing will be, in good operating
condition and repair and accordingly in the same
or better condition and repair, as on the date of
Purchaser's inspection thereof pursuant to
Paragraph 11 (a)(iv).
h. THE REAL PROPERTY. The Facility is
located on the Real Property. The Facility and the
roof and all major mechanical systems at the
Facility, including, but not limited to, the Air
Conditioning, Electrical and Heating and
Ventilating Systems, are, and at Closing shall be,
in the good operating condition and repair and
accordingly in the same or better condition and
repair as on the date of Purchaser's inspection
thereof pursuant to Paragraph 11 (a)(iv) and
Seller has no reason to believe that the same will
not have a useful life with ordinary routine
maintenance of no less than five years after the
Closing Date.
i. 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.
6
<PAGE>
j. TAXES AND TAX RETURNS. All tax returns,
reports and filings of any kind or nature required
to be filed by Seller or the Corporation prior to
Closing with respect to its ownership and
operation of the Facility, Seller's ownership of
the Stock and the Corporation's ownership and
operation of the Real Properly, the Personal
Property
and the Facility have been properly completed and
timely filed in material compliance with all
applicable requirements and all taxes or other
obligations which are due and payable by Seller or
the Corporation have been timely paid. Nothing
herein shall be construed as a representation by
any of the persons or entities comprising Seller
with respect to the filing of its income tax
returns or the payment of any taxes due
thereunder.
k. LITIGATION. 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 Corporation or its
or their properties or business, which (A) is
material to the Stock, Corporation's Assets, the
Facility, the Real Property or the Personal
Property or to this Agreement, or (B) 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. For purposes hereof, litigation, an
investigation or other proceeding shall be deemed
to be pending if the same has been served on
Seller or Seller has otherwise been advised either
orally or in writing of the pendency thereof and
litigation shall be deemed to be material if the
amount of recovery which is claimed is $50,000 or
more or the litigation challenges Seller's title
to the Stock or the Corporation's title to the
Facility, the Real Properly or the Personal
Properly. Seller acknowledges and that
notwithstanding that Purchaser is acquiring the
Stock of the Corporation, Purchaser is not
assuming any liability of the Corporation or
Seller for any litigation which may be pending at
Closing or which may be asserted or filed after
Closing with respect to the ownership or operation
of the Corporation's Assets or the Stock prior to
Closing.
l. BOOKS AND RECORDS. All of the books and
records maintained by the Corporation with respect
to its ownership and/or operation of the
Corporation's Assets are true and correct in all
material respects. Attached hereto as Exhibit E is
a true and correct aging report which identifies
each account receivable of the Corporation as of
June 30,1996. Seller shall update the aging report
on a monthly basis between the date hereof and the
Closing Date.
m. THE FACILITY LEASES. Attached hereto as
Exhibit F is a true and correct copy of an
exemplar of the forms of rental or admission
agreement entered into by the Corporation with
each of the current residents of the Facility and
each of the rental or admission agreements entered
into by the Corporation is in substantially the
form as the exhibit attached hereto (the "Facility
Leases"). A true and correct copy of each of the
rental or admission agreements entered into by the
Corporation with each of the current residents of
the Facility has been provided by Seller to
Purchaser. Each of the rental agreements executed
by the Corporation with the residents of the
Facility (the "Leases") is in full force and
effect and none of the Leases has been modified or
amended except as set forth in Exhibit F. Seller
has no knowledge or notice that the Corporation is
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 or time or
the giving of notice or both would constitute a
default, under the Facility Leases by any of the
residents who are parties thereto.
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n. RENT ROLL. Attached hereto as Exhibit G
is a true and correct rent roll as of August
1,1996, which identifies each of the residents 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. Seller further
represents and warrants that the Corporation has
the right under the Facility Leases to increase
the rents and related fees and charges paid by the
residents of the Facility on no more than sixty
(60) days notice and that it has not orally or in
writing to provide room, board or other services
to any resident or prospective resident for a
reduced or nominal fee or without charge.
o. LIENS. There are no mechanics',
materialmen's or similar liens presently claimed
or, to the best of Seller's knowledge, which will
be claimed against the Corporation's 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.
p. 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
Corporation 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 Corporation's Assets, neither
Seller nor the Corporation has installed any
underground storage tanks on the Real Property and
neither Seller nor the Corporation has used the
Real Property as a dump for waste material. To the
best of Seller's knowledge, no hazardous
materials, substances or wastes are 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; no underground storage
tanks are located on the Real Property; the Real
Property has never been used as a dump for waste
material and the Real Property and the Facility
and the prior uses of the Real Property and the
Facility at all times complied with all
Environmental Laws.
q. EMPLOYEES: UNIONS. None of the employees
of the Facility are employed by the Corporation
but rather all such employees are employed by
Human Resources One and leased to the Corporation
under the terms of the Agreement attached hereto
as part of Exhibit K (the "Employee Leasing
Agreement"). The Corporation has the right on no
more than thirty (30) days notice to terminate the
Employee Leasing Agreement without any further
liability thereunder and effective upon such
termination to hire any or all of the employees
who were the subject thereof. Such employees are
not members of a labor union or subject to a
collective bargaining agreement with respect to
their employment at the Facility. There are no
labor disputes or grievances pending with respect
to the operations at the Facility, except as
otherwise provided in Exhibit H. For purposes
hereof, a labor dispute or grievance shall be
deemed to be pending if the same has been served
on Seller or Seller has otherwise been advised
either orally or in writing of the pendency
thereof.
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r. COMPLIANCE WITH LAW
i. The Corporation's 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
Corporation's Assets;
ii. There are no outstanding deficiencies or
work orders of any authority having jurisdiction
over the Corporation's Assets requiring conformity
to any applicable statute, regulation, ordinance
or by-law pertaining thereto;
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;
and
iv. Attached hereto as Exhibit I is a true
and correct copy of any room size or other waivers
issued to the Corporation by the Florida
Department of Health and Rehabilitative Services
with respect to the Facility.
s. OPERATING CONTRACTS. Set forth in
Exhibit J are true and correct copies of all
operating contracts to which the Corporation 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 J. Seller has no notice or
knowledge that the Corporation 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.
t. INVENTORY. All inventories of non-
perishable food, central supplies, linen,
housekeeping and other supplies located at the
Facility are in sufficient condition and quantity
to operate the Facility at normal capacity for two
weeks. All inventories of perishable food are at
the level normally maintained at the Facility.
u. MATERIAL AGREEMENTS. Set forth in
Exhibit K is a list of the following material
agreements to which the Corporation or the
Facility is a party (the "Material Agreements"),
true and correct copies of which have been
provided to Purchaser prior to the execution of
this Agreement:
i. Lease agreements (whether as lessor or
lessee) relating to real properly or personal
property or the employees of the Facility;
ii. License agreements, assignments or other
contracts (whether as licensor or licensee,
assignor or assignee) relating to trademarks,
trade names, patents, or copyrights (or
applications therefor);
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<PAGE>
iii. Employment or consulting agreements
not terminable without liability to the
Corporation upon notice to the employee or
consultant of less than 30 days, or employment or
consulting agreements which provide for
compensation at the rate of more than $25,000 per
year (including salary, benefits, bonuses and
commissions) to any employee or consultant;
iv. Agreements for the purchase or sale of
goods, materials, supplies, machinery, capital
assets or services in excess of $ 10,000
individually or in excess of $20,000 in the
aggregate;
v. Agreements with any labor union;
vi. The Corporation's Articles of
Incorporation and Bylaws, including any and all
amendments thereto;
vii. Employee pension, profit sharing,
retirement bonus or benefit plans;
viii. Joint venture or partnership
agreements with any other person;
ix. Agreements for the borrowing or lending
of money, or for guaranteeing the obligations or
liabilities of another, or for indemnifying, or
otherwise becoming liable for, the obligations or
liabilities of another;
x. Agreements with any bank, factor,
finance company or similar organization regarding
the financing of the Corporation's accounts
receivable or other extensions of credit to the
Corporation;
xi. Agreements granting any lien, security
interest or mortgage on any property or asset of
the Corporation;
xii. Agreements for the construction or
modification of the Facility or for the incurrence
of any other capital expenditure involving total
payments in excess of $ 10,000 individually or in
excess of $20,000 in the aggregate;
xiii. Advertising agreements;
xiv. Agreements which restrict the
Corporation's right to do business;
xv. Other agreements involving the payment
or receipt in any period of 12 consecutive months
of more than $10,000 individually or of more than
$20,000 in the aggregate, or having a term of more
than six (6) months;
xvi. Any agreements to defend, indemnify
and/or hold harmless any person; and
xvii. Any other agreements relevant to
the operations of the Facility, including, but not
limited to, ancillary services agreements.
Each of the Material Agreements is in full force
and effect as of the date hereof has not be
amended or modified except as set forth in Exhibit
K and neither the Corporation nor
10
<PAGE>
any other party thereto is in default thereunder
as of the date hereof or will be in default
thereunder as of the Closing Date. Seller
acknowledges and agrees that notwithstanding the
purchase of the Stock by Purchaser, Purchaser is
not assuming any obligations under the Material
Agreements which relate to the period prior to the
Closing Date and that Purchaser shall have the
right within thirty (30) days after the date
hereof, to advise Seller which, if any, of the
Material Agreements it wants terminated by the
Corporation as of the Closing Date.
v. ERISA/WAGES/BENEFITS. The Corporation
has no ERISA, employee benefit plan, wage or
vacation, holiday, sick pay or severance pay
obligations it being understood and agreed that
the Corporation's only economic obligation with
respect to the employees of the Facility is to
make the payments due to Human Resources One under
the terms of the Employee Lease Agreement.
w. INSURANCE.
i. Exhibit L lists all of the liability,
property, workers' compensation, directors' and
officers' liability and other insurance policies
currently in effect that insure the business,
operations, properties, assets or employees of the
Corporation. The Corporation has made available,
or during Purchaser's Due Diligence Review will
make available, for inspection by Purchaser a
true, complete and correct copy of each such
policy of insurance.
ii. Each insurable material property of the
Corporation is insured by it for its benefit, in
amounts deemed adequate by its officers against
all material risks usually insured against by
prudent managers of similar businesses, and under
policies issued by insurers of recognized
responsibility and on which all premiums currently
due have been paid. The continuation, validity and
effectiveness of each such policy will in no
material way be affected by the consummation of
the transactions contemplated by this Agreement
except to the extent that the Corporation
voluntarily take action to affect the same, such
as canceling the insurance in favor of insurance
maintained by Purchaser.
iii. To the Corporation's knowledge,
there is no default or claimed or purported or
alleged default or state of facts that, with the
giving of notice or the lapse of time or both,
would constitute a default on the part of any
party under any policy of insurance in effect that
insures the business, operations, properties,
assets or employees of the Corporation.
x. NO SUBSIDIARIES. The Corporation does
not own an interest, directly or indirectly, in
any other corporation,. company, business trust,
partnership, limited partnership, joint venture,
or other entity or association.
y. KEY EMPLOYEES. Exhibit M is a list of the
names of all the Corporation's salaried employees,
together with a statement as to the full amount
paid (including salary, bonuses and commissions),
to each such person by the Corporation for
services rendered during calendar year 1995 and to
date during calendar year 1996.
z. BANK ACCOUNTS AND SAFE DEPOSIT
ARRANGEMENTS. Exhibit O sets forth a correct and
complete list of each bank account and safe
deposit box maintained by the Corporation.
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<PAGE>
aa. FINANCIAL STATEMENTS. The financial
statements prepared by the Corporation or at the
Corporation's direction and delivered to Purchaser
for the 12 month period ended December 31,1995 and
for the six month period ending June 30,1996 are
true and correct in all material respects, fairly
present the operating results of the Corporation
with respect to the Facility and do not materially
distort income or losses. All such financial
statements with respect to the Corporation have
been prepared in accordance with generally
accepted accounting principles ("GAAP"), it being
understood and agreed that the Facility financial
statements have not been prepared in accordance
with GAAP. The financial statements to be
delivered by Seller to Purchaser between the date
hereof and the Closing Date pursuant to Paragraph
10(a)(xxii), will when prepared, be true and
correct in all material respects, will, in the
case of the financial statements with respect to
the Corporation, be prepared in accordance with
GAAP, will fairly present the operating results of
the Facility and will not materially distort
income or issues.
bb. DISCLOSURE. No representation or
warranty by Seller contained in this Agreement and
no statement contained in any certificate, list,
exhibit, or other instrument 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 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.
8. Purchaser hereby warrants and represents to
Seller that:
a. STATUS OF PURCHASER. Purchaser is a
corporation duly organized and validly existing
under the laws of the state of Washington and is
in good standing under the laws thereof and is
duly qualified to do business as a foreign
corporation in the State of Florida and is in good
standing under the laws thereof.
b. AUTHORITY. Subject to Purchaser
obtaining the approval of its Board of Directors
within the time period provided for in Paragraph
13(i), 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 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. There is no litigation,
investigation or other proceeding pending or, to
the best of Purchaser's knowledge, 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 know of any basis
for any such action. For purposes hereof,
litigation, an investigation or a proceeding shall
be deemed to be pending if the same has been
served on Purchaser or Purchaser has been advised
either orally or in writing of the pendency
thereof.
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<PAGE>
d. NECESSARY ACTION. Purchaser 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,
using its best efforts to obtain the consent of
its Board of Directors.
e. INVESTMENT REPRESENTATIONS.
i. Purchaser has, or prior to Closing will
have, availed itself of every reasonably available
opportunity to conduct its due diligence review of
the Corporation and the Facility. The sale and
purchase price of the Stock has been independently
negotiated between the parties hereto and all the
various terms and provisions of this Agreement,
and all exhibits attached hereto, have been agreed
to by Purchaser based upon its own deliberations,
judgment and business experience, independent of
any material statement, whether of fact or
opinion, by the Corporation, its officers,
directors or employees, other than those
statements contained in the June Balance Sheet and
the representations and warranties of Seller as
set forth herein.
ii. The Stock is being purchased for
investment purposes only and Purchaser does not
intend to resell the same. Seller has disclosed
that the Stock has not been registered under the
Securities Act of 1933, as amended or any state in
which they may be offered for sale.
iii. Purchaser is a sophisticated
investor
iv. Purchaser has, or prior to Closing will
have, been furnished with sufficient written
information about the Corporation, the
Corporation's Assets and the Corporation's
Liabilities to allow it to make an informed
investment decision prior to purchasing the Stock.
v. Purchaser has obtained such independent
financial advice as it deemed necessary with
respect to Purchaser's acquisition of the Stock.
vi. Purchaser will be actively involved in
the management and operation of the .
Corporation after Closing, and the Stock is not
being purchased for the purpose of speculating in
securities.
vii. Purchaser is not currently the
owner, directly or indirectly, of any of the Stock
of the Corporation, nor has it entered into any
contracts, agreements or understandings with
respect to the Stock.
f. 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.
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<PAGE>
9. BROKER
Each party hereby represents and warrants to
the other party that it has not contacted or
entered into any agreement with any real estate
broker, agent, finder, or any other party in
connection with this transaction and that it has
not taken any action which would result in any
real estate broker's, finder or other fees or
commissions being due and payable to any other
party with respect to the transaction contemplated
by this Agreement, other than W. H. Benson and
Company, which has been retained and shall be
compensated by Seller. Each party hereby
indemnifies and agrees to hold the other party
harmless from any loss, liability, damage, cost,
or expense (including reasonable attorney's fees)
resulting to the other party by reason of a breach
of the representation and warranty made by the
indemnifying party in this paragraph.
Notwithstanding anything to the contrary contained
in this Agreement, the indemnity set forth in this
paragraph and any sums due pursuant to such
indemnity shall constitute separate agreements in
causes of action in addition to any liquidated
damages provided for in this Agreement.
COVENANTS
10. SELLER AND THE CORPORATION
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, or will cause the Corporation to,
satisfy and discharge all claims, liens, security
interests, tenancies (other than the Facility
Leases and any Operating Contracts which Purchaser
elects to assume at Closing pursuant to the terms
hereof, and encumbrances on the Corporation's
Assets.
ii. Seller will, or will cause the
Corporation to, file all tax returns, reports and
filings of any kind or nature required to be filed
by Seller or the Corporation with respect to the
Stock, the Corporation's Assets or the
Corporation's Liabilities and will timely pay all
taxes or other obligations which are due and
payable with respect thereto; provided, however,
nothing herein shall be construed as imposing any
specific obligations under this Agreement on any
of the persons or entities comprising Seller with
respect to the filing of their income tax returns
of the payment of the taxes due thereunder;
iii. Seller will not, nor will it permit
the Corporation to, 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 cause the Corporation to continue
until the Closing to fulfill any obligations which
it may have under the Facility Leases or each of
the other Material Agreements to which the
Corporation or Seller may be a party;
iv. Seller will cause the Corporation to
operate the Facility only in the ordinary course
and with due regard to the proper maintenance and
repair of the Facility and the Personal Property;
v. Seller will cause the Corporation to
take all reasonable action to preserve the
goodwill of the residents of the Facility;
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<PAGE>
vi. Seller will not permit the Corporation
to make any material change in the operation of
the Facility nor to sell or agree to sell any of
the items which comprise the Personal Property nor
otherwise to enter into an agreement materially
affecting any of the Corporation's Assets or the
Corporation's Liabilities;
vii. Seller will cause the Corporation
to use its reasonable efforts to retain the
services and goodwill of the employees located at
or connected with the operation of the Facility;
viii. Seller will cause the Corporation
to maintain in force the existing hazard and
liability insurance policies, or comparable
coverage, for the Corporation's Assets as now in
effect;
ix. Seller will not permit the Corporation
to increase its financial obligations under the
Employee Lease Agreement;
x. Seller will not, and will not permit the
Corporation to, enter into any contract or
commitment affecting the Corporation's Assets
except in the ordinary course of business and
Seller will, or will cause the Corporation to,
advise Purchaser of any contracts or commitments
which it enters, whether in the ordinary course of
business or otherwise;
xi. During normal business hours, Seller
will provide Purchaser and its agents with access
(in the company of a representative of Seller) on
24 hours notice to the Real Property and the
Facility, provided Purchaser does not interfere
with the operation of the Facility and provided
Purchaser uses its best efforts not to disturb any
residents of the Facility during the course of
such inspections and at such times Seller shall
permit Purchaser to inspect the books and records
and the physical and structural condition of the
Facility, the Real Property and the Personal
Property;
xii. Seller will timely pay all
obligations which are due and payable with respect
to the Stock and will cause the Corporation to
timely pay all obligations which are due and
payable with respect to the Corporation's Assets
or the Corporation's Liabilities;
xiii. Seller will cause the Corporation
to operate the Facility in substantial compliance
with all applicable municipal, county, state and
federal laws, regulations, ordinances, standards
and orders as now in effect (including without
limitation, the building and zoning codes as
currently applied with respect thereto) and with
the Environmental Laws, 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 or on the Corporation's Assets or the
Corporation's Liabilities;
xiv. Seller will cause the Corporation
to take all reasonable action to achieve
substantial compliance with any laws, regulations,
ordinances, standards and orders applicable to the
Corporation's Assets which are enacted after
execution of this Agreement and prior to Closing;
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<PAGE>
xv. As soon as practicable after the date
hereof but in no event later than thirty (30) days
following full execution of this Agreement, Seller
will (a) deliver to Purchaser a UCC-1 search
report (herein so called), (b) shall cause Marvin
L. Beaman, Jr., as agent for Chicago Title
Insurance Company to furnish to Purchaser a
current title commitment (the "Title Report") for
the issuance to Purchaser of an extended coverage
Owner's title insurance policy with a value equal
to the purchase price (the "Title Policy"),
insuring the Corporation's interest after
Purchaser acquisition of the Stock in the Real
Property and the Facility, subject to no
exceptions other than those of the usual printed
exceptions, which are acceptable to Purchaser and
the Permitted Exceptions (hereafter defined) and
(c) arrange with a survey firm acceptable to
Purchaser for the preparation and delivery of an
ALTA Survey of the Real Property and the Facility
(the "Survey");
xvii. Seller will, or will cause the
Corporation to, provide Purchaser within thirty
(30) days after execution of this Agreement with
copies of any environmental reports, structural
report or geological reports which may be in
Seller's or the Corporation's possession with
respect to the Facility and the Real Property;
xviii. Seller will cooperate, at
Purchaser's sole cost and expense, with Purchaser
in any efforts which it may undertake to audit the
Corporation's financial statements for the periods
prior to the Closing if and to the extent such an
audit is required for Purchaser's compliance with
applicable securities laws;
xix. Seller will not permit the
Corporation to amend its Articles of Incorporation
or Bylaws;
xx. Seller will cause the Corporation to
maintain the inventories of perishable food, non-
perishable food, central supplies, linen,
housekeeping and other supplies at the Facility at
substantially the same condition and quantity as
presently being maintained;
xxi. Seller will provide Purchaser with
copies of any monthly financial statements
prepared in the ordinary course of the
Corporation's business between the date hereof and
the Closing Date and with the September 30,1996
financial statements as soon as the same are
available and all such financial statements shall
conform to Seller's representations and warranties
set forth herein;
xxii. Seller shall allow Purchaser to
verify with the Corporation's lenders the
principal balance then outstanding under any
outstanding debt and the balances in the
Corporation's bank accounts;
xxiii. Seller shall deliver to Purchaser
all plans and specifications and as-built surveys
for the Real Property and the Facility which are
in the possession of the Corporation or Seller;
and
xxiv. Seller shall cause the Corporation
to pay off as of the Closing Date any debt secured
by the Facility.
b. CLOSING. On the Closing Date, Seller
agrees that it will:
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<PAGE>
i. Execute and deliver to Purchaser the
Stock Assignment and the Certificates and such
endorsements, assignments and other instruments of
transfer and conveyance as shall be necessary to
transfer and assign the Stock to Purchaser as
herein provided;
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) subject to the
limitations set forth in Paragraph 26 and setting
forth the incumbency of the persons executing
documents on behalf of Seller, a copy of the
resolutions adopted by the Board of Directors and
Shareholders of the Corporation authorizing the
transaction provided for herein and the execution
of this Purchase Agreement and the other documents
contemplated herein;
iii. Deliver the tangible property
included in the Corporation's Assets to Purchaser
in the condition and repair required by the terms
of this Agreement subject to no liens or
encumbrances other than those permitted under the
terms hereof;
iv. Deliver to Purchaser the Closing Balance
Sheet, subject to Purchaser's right to review and
approve the same in accordance with the terms
hereof;
v. Pay its share of the Closing costs,
including, but not limited to, the Title Report,
Title Policy and Survey described in Paragraph
10(a)(xvi);
vi. Deliver to Purchaser the duly executed
resignations of the officers and directors of the
Corporation;
vii. Deliver to Purchaser the Resident
Deposits (as defined in Paragraph I 8);
viii. Deliver to Purchaser evidence of
the designation of a duly authorized
representative to act with full power and
authority on behalf of Seller with respect to any
post-closing obligations imposed on Seller
hereunder; and
ix. Deliver to Purchaser the original titles
to any motor vehicles owned by the Corporation as
of the Closing Date and included within the
Personal Property duly executed, if necessary, to
reflect the sale of the Stock to Purchaser.
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
Stock and the Seller's Assets and cooperate, at
Purchaser's sole cost and expense, with Purchaser
in any efforts which it may undertake to audit the
Corporation'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
Purchaser's compliance with applicable securities
laws.
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<PAGE>
11. PURCHASER
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. Within ten ( 10) days after its receipt
of the UCC-1 Search Report, the Title Report and
the Survey, Purchaser shall advise Seller in
writing of its objections, if any, to each of the
UCC-1 Search Report, the Title Report and the
Survey. In the event Purchaser fails to notify
Seller in writing of Purchaser's objections within
said ten (10) day period, Purchaser shall be
deemed to have waived its right to object. Within
five (5) days of Seller's receipt of Purchaser's
objections, Seller shall advise Purchaser whether
it intends to correct the defects to which
Purchaser has objected. Seller shall be obligated
to act in good faith in responding to Purchaser's
title objections. For purposes hereof, Seller
shall be deemed to have failed to act in good
faith if its refuses to correct any matter which
is the subject of such title objections where the
only costs to it in doing are normal filing or
recording fees or delivery charges and where the
objections relate to liens which appear of record
but relate to previously discharged debt or other
minor defects in record title. If Seller refuses
to correct some or all of such defects, Purchaser
shall have five (5) days to advise Seller of its
decision to close, notwithstanding the defects, or
to terminate this Agreement, in which case neither
party shall have any further rights or obligations
hereunder, other than Seller's obligation to
return or to direct the return of Purchaser's
Earnest Money. Any matter reflected in the UCC1
Search Report, the Title Report or the Survey not
objected to in accordance with the terms hereof
shall be deemed accepted by Purchaser and to be
"Permitted Exceptions" (herein so called).
Notwithstanding anything contained herein to the
contrary, in the event Seller requires additional
time to prepare either the Survey or the Title
Report, then Seller shall have such additional
time to deliver the same to Purchaser, however, in
no event shall such extension be longer than
fifteen ( 15) additional days;
iii. Purchaser will proceed with all due
diligence to obtain all consents and approvals
necessary to permit the consummation of the
transaction contemplated by this Agreement and/or
necessary to permit Purchaser to own and to
operate the Facility, including, but not limited
to, a license from the Florida Department of
Health and Rehabilitative Services;
iv. Purchaser will proceed with all due
diligence and at its sole cost and expense to
conduct such investigations and to complete the
same within ninety (90) days after the date of
this Agreement with respect to the Stock, the
Corporation's Assets and the Corporation's
Liabilities 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
and investigations of the Corporation's and the
Facility's books and records and operations,
including a review of the licensure files
maintained by the State of Florida with respect to
the Facility to the extent the same are publicly
available, 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
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<PAGE>
Diligence 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 warranties shall be separate
from and unaffected by Purchaser's Due Diligence
Review; and provided, further, that Purchaser
shall maintain the confidentiality of any
documents or information obtained by it during the
course of its Due Diligence Review and shall
return the same to Seller in the event the
transaction provided for herein fails close for
any reason whatsoever Purchaser shall indemnify,
defend and hold Seller and the Corporation
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 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. The foregoing indemnity shall expressly
survive the Closing or the earlier termination of
this Agreement; and
v. Within fifteen (15) days after the later
of the date hereof or the date of their delivery
to Purchaser, Purchaser will advise Seller in
writing which, if any of the Operating Contracts
it elects to assume by virtue of its acquisition
of the Stock as of the Closing Date and Seller
shall thereafter cause the Corporation to
terminate prior to the Closing Date any such
Operating Contracts which Purchaser does not elect
to assume.
b. CLOSING. On the Closing Date, Purchaser
agrees that it will:
i. Pay the balance of the Purchase Price
due at Closing;
ii. Pay its share of the Closing costs as
herein provided; and
iii. Deliver to Seller a certificate of
a responsible officer dated as of the Closing
Date, certifying in such detail as Seller may
reasonably specify the fulfillment of the
conditions set forth in Paragraph(s) 14(a) and (b)
subject to the limitations set forth in Paragraph
26 and setting forth the incumbency of the
officers executing documents on behalf of
Purchaser, a copy of the resolutions adopted by
Purchaser's Board of Directors authorizing the
transaction provided for herein and the execution
of this Purchase Agreement and the other documents
contemplated herein and attaching a certificate of
good standing issued by the Washington Secretary
of State within no more than thirty (30) days
prior to Closing.
c. POST-CLOSING. After the Closing of this
Agreement, Purchaser agrees that it will:
i. 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.
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<PAGE>
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,
including lenders and lessors or to accomplish the
transaction contemplated by this Agreement;
provided, however, nothing herein shall be
construed to require Purchaser in order to secure
such consents to sell or otherwise dispose of any
of its assets, or agree to any conditions not
acceptable to Purchaser in its sole discretion.
c. If applicable, to file with the
Antitrust Division of the United States Department
of Justice and the Federal Trade Commission a
Notification and Report Form in accordance with
the notification requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") and to use its and their best efforts
to achieve the prompt termination or expiration of
the waiting period or any extension thereof
provided for under the HSR Act as a prerequisite
to the consummation of the transactions provided
for herein (the "HSR Approval"); provided,
however, that Seller and Purchaser shall share any
filing fees due under the HSR Act on a 50-50
basis.
i. Nothing herein shall be construed as
requiring the Corporation to (i) sell or otherwise
dispose of any of its assets which either alone or
in the aggregate, with all such other sales or
dispositions, would constitute the sale or
disposition of a "significant subsidiary" (as
defined in Rule I -02 of Regulation S-X of the
rules and regulations of the Securities and
Exchange Commission), (ii) take any action, the
consummation of which cannot be conditioned on the
consummation of the transactions contemplated by
this Agreement, where such action would have a
material adverse effect on the Corporation or
(iii) take any action which either would have a
material adverse effect on the operations,
business or financial condition of the Corporation
or would materially impair the value of the
transaction contemplated by this Agreement to the
Seller or Purchaser.
ii. Nothing herein shall be construed as
requiring Purchaser to (A) sell or otherwise
dispose of any of its assets which either alone or
in the aggregate, with all such other sales or
dispositions, would constitute the sale or
disposition of a "significant subsidiary," (B)
take any action, the consummation of which cannot
be conditioned on the consummation of the
transactions contemplated by this Agreement, where
such action would have a material adverse effect
on Purchaser or (C) take any action which either
would have a material adverse effect on the
operations, business or financial condition of
Purchaser or would materially impair the value of
the transaction contemplated by this Agreement to
the Seller or Purchaser.
20
<PAGE>
CONDITIONS
13. All obligations of Purchaser under this
Agreement are subject to fulfillment, prior to or
at Closing, 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 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 and shall have caused the Corporation to
have performed all of its and their 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. NO DEFAULTS. The Corporation shall not
be in default, where said default cannot be cured
by Closing, under any mortgage, contract, lease or
other agreement to which it is a party or by which
it 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.
d. DUE DILIGENCE REVIEW. Purchaser shall be
satisfied with the results of its Due Diligence
Review, including, but not limited to the results
of an EPA Phase I Assessment of the Real Property
and the Facility within the period specified in
Paragraph 11(a) (iv); 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 warranties shall be separate
from and unaffected by Purchaser's Due Diligence
Review except as to any representations or
warranties which, during the course of Purchaser's
Due Diligence Review, Seller demonstrates
Purchaser obtained knowledge of falsity or
inaccuracy thereof. In the event Purchaser elects
to terminate this Agreement within the period
specified in Paragraph 11 (a)(iv) and this
Paragraph 13(d), the parties shall have no further
rights or obligations hereunder, other than
Purchaser's right to the return of its Earnest
Money and Seller's obligation to pay any title
cancellation and UCC search fees incurred as a
result of such termination.
e. TITLE. The Title Insurer shall issue to
Purchaser as of the date of Closing, an Owner's
extended coverage policy of title insurance for
the Real Property and the Facility in accordance
with the requirements of Paragraph 4.
f. SURVEY. Purchaser shall be satisfied as
to the results of the ALTA Survey in accordance
with the provisions of Paragraph 11 (a)(ii).
g. UCC SEARCH. Purchaser shall be satisfied
with the results of the UCC search conducted by
Seller pursuant to Paragraph 10(a)(xvi) in
accordance with the provisions of Paragraph 11
(a)(ii). .
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<PAGE>
i. APPROVALS. Purchaser or the
Corporation, as appropriate, shall have received
all consents, and approvals as may be necessary
for it to own and to operate the Facility,
including, but not limited to, the issuance by the
Florida Department of Health and Rehabilitative
Services to Purchaser of a license to operate the
Facility in the event the sale of the Stock is
deemed to be a change of ownership and to require
such review and approval and the issuance of a new
license to Purchaser or to the Corporation, and
the approval of Purchaser's Board of Directors;
provided, however, that in the event Purchaser has
not advised Seller on or before September 1,1996
that its Board of Directors has failed to approve
the transaction provided for herein and in the
related Purchase Agreements set forth in Exhibit
P, the requirement for Purchaser's receipt of said
Board approval as a condition to Purchaser's
obligation to close shall be deemed to have been
satisfied.
j. HART SCOTT RODINO. If applicable, the
filing and waiting period requirements under the
HSR Act shall have been complied with and shall
have expired or terminated.
k. MATERIAL CHANGES. Between the date
hereof and the Closing Date, there shall be no
material adverse change in the following:
i. The financial condition of the
Corporation, including, but not limited to, a
significant reduction in the working capital (or
cash balance) or a significant increase in the
short term or long-term debt reflected on the June
Balance Sheet and the financial statements of the
Corporation and the Facility delivered by Seller
pursuant to the terms hereof;
ii. The condition of the Facility's
operations, including, but not limited to, its
census levels and licensure and/or certification
status; and
iii. The Corporation's Assets as
reflected on the June Balance Sheet.
l. TENDER OF STOCK. All of the issued and
outstanding shares of the Stock shall have been
tendered to Purchaser free and clear of all liens
and encumbrances.
m. ZONING. Purchaser shall be satisfied in
its sole and absolute discretion that the current
zoning to which the Real Properly and the Facility
are subject will permit the operation thereon of
the Facility.
n. CLOSING OF ALL STOCK ACQUISITIONS. The
stock acquisitions made pursuant to the agreements
described in Exhibit P shall have closed
concurrently with the closing of the transaction
provided for herein.
o. INSURANCE. Seller shall have provided
Purchaser with evidence satisfactory to Purchaser
that the property and liability insurance coverage
in effect to the Closing Date for the Facility is
"occurrence based" rather than "claims made";
provided, however, that if the current coverage is
on a "claims made" basis then the Seller shall
provide evidence satisfactory to Purchaser of the
existence of a fully paid up "tail" coverage
policy in the name of the Corporation.
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<PAGE>
p. CLOSING BALANCE SHEET. Purchaser shall
have reviewed and approved the Closing Balance
Sheet.
q. FACILITY EMPLOYEES. Purchaser shall have
offered employment to the employees who are
currently subject to the Employee Lease Agreement
and a sufficient number of such employees shall
have accepted employment with Purchaser to enable
Purchaser to lawfully operate the Facility after
Closing and such offer and acceptance of
employment shall have been at no cost to Purchaser
or the Corporation under the terms of the Employee
Lease Agreement.
r. ASSUMPTION OF EXISTING DEBT. Any and all
documents necessary to evidence the assumption of
the Existing Debt shall have been executed by
Purchaser and the lender thereunder, if and to the
extent Purchaser elects pursuant to Paragraph 2 to
permit the same to be a liability of the
Corporation at Closing.
Subject to the limitations set forth in the
foregoing Paragraph 13, in the event any of the
foregoing conditions is not satisfied by Seller or
Purchaser, as appropriate, or waived by Purchaser
prior to Closing, Purchaser shall have the right
to terminate this Agreement in accordance with the
provisions of Paragraph 17.
14. CONDITIONS TO SELLER'S OBLIGATIONS
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 CLOSING. 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. HSR APPROVAL. If applicable, the filing
and waiting period requirements under the HSR Act
shall have been complied with and shall have
expired or terminated.
d. CLOSING OF ALL STOCK ACQUISITIONS. The
stock acquisitions made pursuant to the agreements
described in Exhibit P shall have closed
concurrently with the closing of the transaction
provided for herein.
INDEMMFICATION
15. Notwithstanding Purchaser's acquisition of
the Stock, Seller shall indemnify and hold
Purchaser harmless from and against:
a. Except as otherwise provided in this
Agreement, any and all obligations relating to the
ownership of the Corporation's Assets and the
operation of the Facility which exist at the
Closing Date, including, but not limited to (i)
any obligations
23
<PAGE>
under the Facility Leases or the Operating
Contracts which Purchaser elects to assume at
Closing, (ii) any obligations with respect to the
Resident Deposits, (iii) any matters related to or
arising from any prior bankruptcy or foreclosure
proceedings related to the Corporation's Assets
and (iv) any of the Corporation's Liabilities
reflected on the Closing Balance Sheet;
b. Any and all damage, loss or liability
arising either before or after the Closing Date
under any of the Operating Contracts which
Purchaser does not elect to assume at Closing and
which Purchaser directs Seller to terminate or to
cause the Corporation to terminate on or prior to
the Closing Date;
c. Subject to the limitations set forth in
Paragraph 26, 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
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. .
16. Purchaser shall indemnify and hold Seller
harmless from and against:
a. Except as otherwise provided in this
Agreement, any and all obligations relating to the
ownership of the Corporation's Assets and the
Corporation's Liabilities 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 assume at
Closing in accordance with the terms hereof and
any obligations with respect to the Resident
Deposits;
b. Subject to the limitations set forth in
Paragraph 26, 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 damage, loss or liability
resulting from the conduct by or the negligence or
willful misconduct of Purchaser in performing its
Due Diligence Review; and
d. 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.
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<PAGE>
TERMINATION
17. 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 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. If the Closing has not occurred by
February 1,1997 or such later date as may be
agreed upon by the parties (the "Outside Closing
Date"), unless extended by mutual agreement of the
parties; provided, however, that in the event all
of the conditions to Closing provided for in
Paragraph 13 have been satisfied or waived by the
Outside Closing Date other than the Purchaser's
receipt of the License pursuant to Paragraph
13(i), provided Purchaser is diligently pursuing
the issuance of the License by the Florida
Department of Health and Rehabilitative Services,
the Outside Closing Date shall automatically be
extended for such additional period of time as may
be necessary to permit Purchaser to secure the
License; provided, further that in the event
Purchaser has not secured the License by January
31,1997, this Agreement shall thereafter terminate
in accordance with the terms hereof and the
parties shall have no further rights or
obligations hereunder other than Purchaser's right
to the return of its Earnest Money.
b. In the event that prior to the Closing
Date, a material portion of the Real Properly, 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 which notice must be delivered within ten
(10) days after Purchaser receives notice of such
damage, destruction or condemnation. In the event
Purchaser fails to exercise its termination rights
hereunder, then it shall be conclusively deemed to
have waived said right and the Corporation's
Assets at Closing shall include all of Seller's or
the Corporation's 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 other than Purchaser's right
to the return of its Earnest Money.
c. Neither party to this Agreement may
claim termination or pursue any other remedy
referred to in Paragraph 17(a) on account of a
breach of a condition, covenant or warranty by the
other, without first giving such other party
written notice of
25
<PAGE>
such breach and not less than ten ( 10) days
within which to cure such breach; provided,
however, in no event shall the Closing Date be
postponed beyond the Outside Closing Date.
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 to retain Purchaser's
Earnest Money as full and complete liquidated
damages, the parties acknowledging and agreeing
that the amount of damages which Seller may incur
as a result of such termination may be difficult
to ascertain and that the amount of the Earnest
Money is a reasonable and fair estimate thereof,
after which the parties shall have no further
rights or obligations hereunder.
e. In the event of the termination of this
Agreement by Purchaser under P paragraph
17(a)(iii) or (iv) or under Paragraph 17(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 as
Purchaser's sole and exclusive remedies either to
(i) terminate this Agreement and demand the return
of its Earnest Money after which neither party
shall have any further rights or obligations
hereunder or (ii) seek specific performance of
Seller's obligations hereunder.
RESIDENT SECURITY DEPOSITS
18. 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.
19. On the Closing Date, Seller shall transfer
the Resident Deposits to the bank account
designated by the Purchaser and Purchaser shall in
writing acknowledge to Seller receipt of and
expressly assume all the Corporation's financial
and custodial obligations with respect thereto.
20. 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 as provided in
Paragraph 19 did not represent the full amount of
such Resident Deposits then or thereafter shown to
have been delivered to the Corporation by the
current residents or prospective residents of the
Facility.
NOTICES
21. 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:
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<PAGE>
To Seller: c/o Englewood Retirement
Center, Inc.
2501 N. Orange Avenue, Suite
435N
Orlando, FL 32804
Attn: Mr. Wayne Voegele
Phone No.: (407) 896-3369
FAX No.: (407) 894-2985
with copy to: Marvin L. Beaman, Jr.
Esq.
605 North Wymore Road
Winter Park, FL 32789-2893
Phone No. : (407) 628-4200
FAX No. : (407) 740-8402
To Purchaser: Emeritus Corporation
3131 Western Avenue, Suite 500
Seattle, WA 98121
Attn: Keith James
Phone No.: (206) 298-2909
FAX No.: (206) 301-4500
with copy to: The Nathanson Group
1411 Fourth Avenue, Suite 905
Seattle, WA 98101
Attn: Randi S. Nathanson
Phone No.: (206) 623-6239
FAX No.: (206) 623-1738
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).
SOLE AGREEMENT
22. 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.
SUCCESSORS
23. 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 an
affiliate; provided no such assignment shall
relieve Purchaser of its obligations hereunder and
provided, further, that Purchaser shall provide
Seller with notice of any such assignment and such
assignee shall assume all of Purchaser's
obligations hereunder in writing. In addition,
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,
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<PAGE>
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 Corporation's 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.
CAPTIONS
24. The captions of this Agreement are for
convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SURVIVAL/LIMITATION OF ACTIONS
25. All covenants, warranties and representations
of Purchaser and Seller herein other than Seller's
representation and warranty in Paragraph 7(o),
which shall survive for the applicable statute of
limitations period, shall survive for two years
after Closing after which they shall automatically
expire; provided, however, that in the event
notice of a claim is delivered by Seller or
Purchaser prior to expiration of said two year
period or applicable statute of limitation period
in the case of a claim brought under Paragraph
7(o), the representation, warranty or covenant
which is the subject of said claim shall survive
until the final, non-appealable resolution
thereof.
GOVERNING LAW
26. This Agreement shall be governed by and
construed in accordance with the laws of the State
of Florida.
SEVERABILITY
27. 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 hereof shall not in any way
be affected or impaired thereby.
COUNTERPARTS
28. 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. This
Agreement may be executed (i) on an original, (ii)
a copy of an original, or (iii) by a facsimile
transmission copy of an original followed within
five (5) calendar days with execution of an
original.
THIRD PARTY BFNEFICIARY
29. The provisions of this Agreement are not
intended to confer any benefits upon any person or
entity not a party to this Agreement.
28
<PAGE>
ACCOUNTS RECEIVABLE
30. 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.
31. From and after the Closing Date, Purchaser
shall assume responsibility for the billing for
and collection of payments on account of services
rendered, ancillary services provided or goods
sold by it on and after the Closing Date and,
notwithstanding the sale of the Stock to
Purchaser, Seller shall retain all right, title
and interest in and to and all responsibility for
the collection of the accounts receivable of the
Corporation for services rendered, ancillary
services provided or goods sold by the Corporation
prior to the Closing Date.
32. Except as otherwise provided herein, any
payments received by Purchaser after the Closing
Date from residents with balances due for services
rendered, ancillary services provided or goods
sold by the Corporation during the period prior to
and after the Closing Date, shall be applied by
Purchaser first to reduce any post-Closing Date
balances, with the excess, if any, remitted to
Seller to reduce any pre-Closing Date balances
due. Notwithstanding the foregoing, in the event
the payment specifically designates that it
relates to services rendered, ancillary services
provided or goods sold by the Corporation during
the period prior to the Closing Date it shall be
remitted by Purchaser to Seller or in the event
the payment directly correlates to an invoice
which includes billings for ancillary services
provided by the Corporation prior to the Closing
Date, that portion of the payment which directly
relates to the payment for said ancillary services
shall be remitted to Seller by Purchaser.
33. Seller shall have the right during normal
business hours and on reasonable notice to
Purchaser to inspect Purchaser'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.
SUBCHAPTER S ELECTION
34. Seller shall have the right effective as of
the Closing Date to terminate the Corporation's
Subchapter S election and shall have the
obligation to file any final tax returns due with
respect to the Corporation for the tax year ending
on December 31,1996. Any and all taxes and tax
returns due and payable for the tax years
commencing on the Closing Date shall be the
responsibility of Purchaser and any and all taxes
and tax returns due and payable for the tax years
prior to the Closing Date shall be the
responsibility of Seller.
29
<PAGE>
EXHIBITS
35. Seller and Purchaser acknowledge and agree
that they shall have a period of thirty (30) days
from the date of this Agreement to attach the
exhibits hereto and that either party shall have
the right to terminate this Agreement in the event
either (i) the exhibits are not attached within
said period or (ii) they are not acceptable to
either party and, in the event of such a
termination, Purchaser shall be entitled to the
return of the
Earnest Money and any accrued interest thereon,
after which neither party shall have any further
rights or obligations hereunder.
SIGNATURES ON FOLLOWING PAGE
30
<PAGE>
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
/s/ Stanford Voegele
- --------------------------------------------------
- ---
STANFORD VOEGELE
/s/ Kevin Lang
- --------------------------------------------------
- ---
KEVIN LANG
PURCHASER: By: /s/ Raymond R.
Brandstrom
- --------------------------------------------------
- --
Its: President
31
<PAGE>
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This Agreement is made and entered into
effective as of the 31st day of January, 1997 by
and between WAYNE VOEGELE, JEROME LANG, RONALD
CARLSON, THOMAS STANFORD, STANFORD VOEGELE AND
KEVIN LANG (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 30,1996
(the "Purchase Agreement") with respect to the
acquisition by Purchaser of all of the issued and
outstanding stock of Englewood Retirement Center,
Inc. (the "Corporation").
B. The Purchase Agreement provides for an
outside closing date of February l, 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 l,1997.
C. The Purchase Agreement provides that it
is a condition to the Purchaser's obligation to
close that it obtain a license to operate the
Facility, which Purchaser has been advised it will
not be able to secure as a result of outstanding
regulatory issues which must be addressed by
Englewood Retirement Center, Inc. (the "Englewood
Regulatory Issues").
D. 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, I 997.
E. 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.
F. 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:
AGREEMENT
1. The Purchase Agreement is hereby amended
to reflect that by the execution of this
Agreement, Purchaser does hereby assign all of its
right, title and interest in and to and
obligations under the Purchase Agreement to
Properties and Properties hereby assumes all the
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.
<PAGE>
2. Paragraph I 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 as
follows:
(a) Purchaser shall receive a credit against
the cash due at Closing pursuant to Paragraph 2(b)
in the amount of (i) $22,650 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 and (ii) $2,000 to cover any costs
which Purchaser may incur after Closing as a
result of the encroachment of a carport over an
easement granted by the Corporation in favor of
Florida Power and Light Company for the
installation of overhead and underground
electrical utilities.
(b) In the event that the Closing Date Census
(as defined below) is less than 165 the purchase
price shall be reduced by $7,500 for each resident
that the Closing Date Census is less than 165 but
equal to or greater than 155, such that the
maximum purchase price reduction shall be $75,000.
With respect to said purchase price adjustment,
the following provisions shall apply:
(i) For purposes hereof, the term "Closing
Date Census" shall be defined as the sum of the
following:
A. Each resident residing at the
Facility on the Closing Date;
B. Each resident who died within five
days prior to the Closing Date and was
residing at the Facility immediately prior to
his/her death;
C. Each resident for whom a deposit has
been accepted by the Facility on the Closing
Date and who moves into the Facility within
one month after the Closing Date; and
D. Each resident, whether or not a
deposit has been accepted by the Facility on
the Closing Date, who moves into the Facility
within two weeks after the Closing Date.
(ii) In calculating the Closing Date Census,
any resident who advises Seller in writing that
he/she is moving out prior to the Closing Date as
a result of the Rate Increase (as defined below)
shall be deemed to be residing at the Facility on
the Closing Date.
(iii) In order to effect the purchase price
adjustment provided for in this section (b), a
portion of the purchase price in an amount equal
to the difference between 165 and the "in house"
census on the Closing Date, multiplied by $7,500
shall remain in escrow at Closing. Within forty
(40) days after Closing, Purchaser shall calculate
the Closing Date Census and the amount due to each
of Purchaser and Seller from escrow and shall
provide a written copy of said calculation to
Seller. Seller shall have a period often (10) days
after its receipt of the Closing Date Census
calculation to advise Purchaser whether or not it
agrees with the same. In the event Seller advises
Purchaser that it agrees
2
<PAGE>
with the Closing Date Census calculation, then
Purchaser shall provide a copy of the Closing Date
Census calculation to the Escrow Agent and the
Escrow Agent shall release the funds being held by
it to Seller and/or to Purchaser in accordance
with the terms of the Closing Date Census
calculation. In the event Seller advises Purchaser
that it does not agree with the Closing Date
Census calculation, within five days thereafter
Seller and Purchaser shall submit the Closing Date
Census calculation to mutually agreeable
independent certified public accountants (the"
CPA's"), who shall have no business affiliations
with either Sellers or Purchaser, for review. The
CPA's shall be directed to complete their review
within a period of thirty (30) days after their
receipt of the Closing Date Census calculation and
to provide the results of their review in writing
to Purchaser and to Seller. Purchaser and Seller
agree to be bound by the results of the CPA's
review. Purchaser and Seller further agree that
the cost of said review shall be borne by Seller,
in the event the CPA's confirm Purchaser's Closing
Date Census calculation, and shall be borne by
Purchaser, in the event the CPA's make any
adjustments to Purchaser's Closing Date Census
calculation.
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
except with the consent of Seller which may be
granted or withheld in Seller's discretion.
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 La Casa Grande of
Englewood, located in Englewood, Florida and duly
licensed, with respect by the State of Florida as
an adult congregate care living facility with a
total of 216 licensed beds and 155 licensed units
(the "Facility").
6. Paragraph 7(m) is hereby amended by
adding the following at the end: "Seller is not
holding any security deposits on behalf of any of
the residents of the Facility. Seller is however,
holding certain personal funds for certain
residents of the Facility, a detailed listing of
which will be provided to Purchaser at Closing and
which funds will be transferred to Purchaser at
Closing."
7. Section 10(a) is hereby amended to
include the following as an additional pre-closing
covenant of Seller:
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 determined that the conditions to closing
set forth in Sections 13(s), (t), (u) and (v) have
been
3
<PAGE>
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 as additional conditions to Closing:
s. JANUARY SURVEY. The Purchaser shall be
satisfied that the deficiencies cited in the
survey conducted by the Florida Department of
Rehabilitative Services on January 22 and 23,1997
(the "January Survey") have been resolved to the
satisfaction of the State of Florida and
Purchaser, which resolution may include the
submission of a Plan of Correction deemed
acceptable to the State and to Purchaser and which
resolution shall include the discharge from the
Facility in a manner which complies with state law
of any and all residents deemed by the State
during the January Survey to be improperly placed
for care in the Facility.
t. CENSUS. The census at the Facility on
the Closing Date shall not be less than 150;
provided, however, that in calculating the census,
the Rate Increase Residents shall be counted as if
they still resided at the Facility on the Closing
Date; and provided, further, that in the event
Purchaser elects to terminate this Agreement as a
result of the failure of this condition to
Closing, Seller shall have the right on written
notice to Purchaser to extend the Closing for a
period of thirty (30) days in order to attempt to
satisfy this condition to Closing.
u. NOTICES. Seller shall have provided to
Purchaser evidence that it has provided written
notice to the Englewood Water District to the
effect that there are no adverse possession rights
arising from the use of the property to the south
of the fence which is located on the Real Property
as reflected on Exhibit Q hereto and that the
Englewood Water District shall be liable for any
costs, damages, liabilities and expenses,
including, but not limited to, attorneys fees,
which Purchaser may incur as a result of the
operation by the Englewood Water District or the
Holiday Ventures at Englewood Sewage Treatment
Plant (the "Plant") and the use by the Englewood
Water District of the Real Property to access
River Road from the Plant.
v. AFFORDABLE HOUSING. Purchaser shall be
satisfied that the affordable housing conditions
imposed on the Real Property and the Facility
under the terms of the zoning ordinance No. 93-
077 will not adversely affect its operations at or
the financial viability of the Facility.
9. Paragraph 17(a)(v) is hereby deleted in
its entirety and the following inserted instead:
v. If the Closing has not occured by May 1,199?
(the "Outside Closing Date") unless the Closing
has been extended by Seller pursuant to the rights
granted to Seller under Section 13(t) in which
case the Outside Closing Date shall be June
1,1997.
10. Except as specifically set forth herein,
the Purchase Ageement shall remain in full force
and effect as originally executed.
4
<PAGE>
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
/s/ Stanford Voegele
- --------------------------------------------------
- ---
STANFORD VOEGELE
/s/ Kevin Lang
- --------------------------------------------------
- ---
KEVIN LANG
PURCHASER: EMERITUS CORPORATION
By: /s/ Raymond R.
Brandstrom
- --------------------------------------------------
- --
Its: President
PURCHASER: EMERITUS PROPERTIES
V, INC.
By: /s/ Raymond R.
Brandstrom
- --------------------------------------------------
- --
Its: President
5
<PAGE>
STOCK PURCHASE AGREEMENT
This Agreement is made and entered into this
30th day of September 1996, by and between WAYNE
VOEGELE, JEROME LANG, RONALD CARLSON, AND THOMAS
STANFORD (collectively "Seller"), and EMERITUS
CORPORATION, a Washington corporation
("Purchaser").
PURCHASE AND SALE
1. On the terms and conditions set forth herein,
Seller shall sell to Purchaser and Purchaser shall
purchase from Seller all of the issued and
outstanding stock (the "Stock") of Stanford
Centre, Inc. (the "Corporation") owned by Seller,
which represents all of the issued and outstanding
stock of the Corporation. The parties acknowledge
and agree that the transaction is a stock purchase
and not an asset purchase.
PURCHASE PRICE
2. The purchase price payable by Purchaser to
Seller for the Stock shall be Eight Million Nine
Hundred Thousand -and no/100 Dollars ($8,900,000)
and shall be payable as follows:
a. Sixty Seven Thousand Four Hundred
Twenty Five and no/100 Dollars ($67,425.00) on
execution of this Agreement (the "Earnest Money")
shall be delivered by Purchaser to Chicago Title
Insurance Company (the "Escrow Agent"). In the
event the purchase and sale contemplated by this
Agreement is consummated, then the Earnest Money
will be credited against the Purchase Price at
Closing. In the event the purchase and sale
contemplated by this Agreement fails to occur, the
Earnest Money shall be remitted to Seller or
Purchaser, as appropriate, in accordance with the
provisions of Paragraph I 7 hereof. The Escrow
Agent shall be authorized, at Purchaser's option,
to invest the Earnest Money in such manner as
Purchaser may direct with Seller's reasonable
written approval; provided, however, that the
Escrow Agent shall invest the Earnest Money only
in such manner as will allow Escrow Agent to
disperse the Earnest Money on two (2) days'
notice. All interest or other earnings on the
Earnest Money shall become part of the Earnest
Money and shall be dispersed to the party who
becomes entitled to the Earnest Money pursuant to
the provisions of this Agreement.
b. The balance, as reduced by the Earnest
Money and any accrued interest thereon and as
adjusted by the costs and prorations provided for
in Paragraph 5 and as adjusted in accordance with
the provisions of Paragraph 7(e)(vi), shall be due
and payable in cash at Closing (as defined below).
c. Notwithstanding the foregoing, the
purchase price shall be reduced by One Hundred
Seventy One Thousand Six Hundred Sixty Five and
no/100 Dollars ($171,665.00) in the event
Purchaser elects to take title to the Stock with
the first mortgage (the "Existing Debt") in favor
of Aid Association for Lutherans ("Lender") in
place, as well as taking title to the stock of the
entities described in Exhibit P hereto with the
first mortgages in favor of Lender in place as to
each entity and provided Purchaser pays all fees
and costs required to be paid to the Lender
pursuant to the loan documents between the
Corporation and Lender.
1
<PAGE>
Except as specifically provided in this
Agreement, notwithstanding Purchaser's purchase of
the Stock, Purchaser does not hereby or in
connection herewith assume any liability of Seller
whatsoever in relation to the Corporation which
relates to the period prior to Closing.
CLOSING
3. The Closing of the purchase and sale under
this Agreement (the "Closing") shall take place on
or before January 2,1997 effective as of January
1,1997 (provided all of the conditions to closing
set forth in Paragraphs 13 and 14 have been
satisfied or waived) (the "Closing Date");
provided, however, that Purchaser shall have the
right on written notice to Seller delivered on or
prior to the Closing Date to extend the Closing
Date for a period of up to thirty (30) days.
Closing shall occur at the offices of Escrow Agent
in Orlando, Florida or at such other place as
Purchaser and Seller may mutually agree. Time is
of the essence hereto.
CONVEYANCE
4. Conveyance of the Stock to Purchaser shall be
effected by a duly executed Assignment Separate
from Certificate in form and substance
substantially the same as that attached hereto as
Exhibit A-1 (the "Stock Assignment") and delivery
to Purchaser of the certificate or certificates
evidencing the Stock (the "Certificates"). At the
time of the conveyance of the Stock to Purchaser,
the Corporation shall have fee simple insurable
title to the Real Property as hereinafter defined)
and indefeasible title to the Personal Property
(as hereinafter defined) Free and clear of all
liens, charges, easements and encumbrances of any
kind, other than the following:
a. Liens for rea1 estate taxes not yet due
and payable;
b. Such items of record as described in the
Title Report (as defined below) which are not
objected to by Purchaser in accordance with the
terms of Paragraph 11(a)(ii);
c. All laws, ordinances and governmental
regulations, including, but not limited to, all
applicable building, zoning, and use and
environmental ordinances and regulations;
provided, however, that the provisions of this
clause (c) shall be subject to Purchaser's right
to object thereto and Seller's agreement to take
corrective action in response to said objections
all as specified more fully in Paragraph 11
(a)(ii); and
d. The rights of the residents of the
Facility under written rental agreements.
COSTS PRORATION, AND ADJUSTMENTS
5. The costs of the transaction and the expenses
related to the ownership and operation of the
Stock and the Corporation's Assets (as hereinafter
defined) shall be allocated among Seller and
Purchaser as follows:
2
<PAGE>
a. Seller shall pay any transfer or
documentary stamp or excise tax or sales tax due
as a result of the sale and transfer of the Stock
to Purchaser.
b. Seller and Purchaser shall share on a 50-
50 basis the cost of the Title Report and title
insurance
policy issued pursuant thereto and the cost of any
title endorsements requested by Purchaser. Seller
shall pay the cost of the ALTA survey required to
deliver the title insurance policy.
c. Seller shall either pay for any update
to the environmental assessments of the
Corporation's Assets which it has delivered to
Purchaser prior to the execution of this Agreement
(the "Environmental Updates") or, if Purchaser
elects to secure new environmental assessments
rather than the Environmental Updates, Seller
shall reimburse Purchaser for that portion of the
cost thereof which is equal to the proposed cost
of securing the Environmental Updates as reflected
in a written proposal therefor provided by Seller
to Purchaser.
d. Notwithstanding Purchaser's acquisition
of the Stock, all revenues (including but not
limited to rent due from the residents of the
Facility) and expenses (including but not limited
to payroll and employee benefits) related to the
ownership or operation of the Corporation'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.
e. Notwithstanding Purchaser's acquisition
of the Stock, 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.
f. Notwithstanding Purchaser's acquisition
of the Stock, 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 a11 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.
g. Purchaser and Seller shall each pay
their own attorney's fees.
h. Purchaser and Seller shall share
recording fees related to the recording of the
Deed, any escrow fees and any HSR filing fees (as
defined below) on a 50-50 basis:
i. In the event Seller elects to cure any
objections Purchaser makes to the items described
in the Title Report or the UCC-1 search report,
then Seller shall pay the cost of obtaining and
recording any releases necessary to deliver title
to the Corporation's Assets in accordance with the
terms of this Agreement.
POSSESSION
3
<PAGE>
6. At Closing, Purchaser shall be entitled to
possession of the Stock and the Corporation's
Assets, subject only to the rights of the
residents of the Facility under the Facility
Leases (as defined below). At Closing, Seller
shall deliver to Purchaser all resident records
and other relevant records used or developed in
connection with the business conducted at the
Facility and the Corporation's corporate financial
records, stock
records and minute books. At Closing Seller shall
be entitled to retain all cash on hand (other than
resident deposits), accounts receivable for the
period prior to the Closing Date and prepaid
expenses and utility deposits paid by the
Corporation prior to the Closing Date.
REPRESENTATIONS AND WARRANTIES
7. Seller hereby warrants and represents to
Purchaser that:
a. STATUS OF SELLER AND THE CORPORATION.
Seller is comprised of those persons or entities
listed on the signature page of this document,
each of whom or which is a natural person or a
duly organized legal entity and in the case of a
legal entity is in good standing under the laws of
the State of its organization: The Corporation is
a corporation duly organized, validly existing and
in good standing under the laws of the State of
Florida, with the authorized and outstanding stock
described in Exhibit A-2. The Corporation is
engaged in no business activity other than the
operation of the Facility.
b. SELLER'S AUTHORITY. Seller has full
power, and authority to execute and to deliver
this Agreement and all related documents, and to
carr5E out the transaction contemplated herein.
This Agreement is valid, binding and enforceable
against Seller in accordance 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 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 Stock or the assets of Seller or the
Corporation may be bound or affected.
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 118 Units (the
"Facility"). The Facility is not certified to
participate in Medicare or Medicaid. There is no
action pending or, to the best knowledge of
Seller, recommended by the appropriate state
agency having jurisdiction thereof, to terminate
the Facility's license or any action of any other
type which would have a material adverse effect on
the Facility, its operations or business.
d. THE CORPORATION'S ASSETS. The assets of
the Corporation as of the date hereof consist, and
as of the Closing Date will consist, of the
following (collectively, the "Corporation's
Assets"):
i. The real properly situated in the state
of Florida, which is more particularly described
in Exhibit B attached hereto (the "Real Property")
and the improvements on the Real Property that
constitute the Facility.
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ii. All equipment, furniture, fixtures,
inventory (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,
entitlements, telephone numbers, any right, title
or interest which the Corporation or Seller may
have in and to any service marks, trademarks or
trade names owned or employed by the Corporation
in conjunction with the operation of the Facility
specifically including the name "Stanford Centre,
Inc." and any trade names and trade marks related
thereto and goodwill associated therewith, and all
motor vehicles owned or leased by Seller or the
Corporation and used in conjunction with the
operation of the business conducted at the
Facility, but specifically excluding cash, cash
equivalents and accounts receivable for the period
prior to the Closing Date (as defined below) (the
"Personal Property"), which Personal Property is
more particularly described in Exhibit C.
iii. The food and other consumable
inventories located at, and usable in the
operation of, the Facility on the Closing Date
(the "Consumables").
e. THE CORPORATION'S LIABILITIES.
i. As of the date hereof the liabilities of
the Corporation (the "Corporation's Liabilities")
consist of those items described in the balance
sheet dated as of June 30,1996 set forth in
Exhibit D (the "June Balance Sheet") and as of the
Closing Date the liabilities of the Corporation
shall consist of only (i) those liabilities set
forth in the June Balance Sheet, excluding,
however, (i) all long term debt reelected therein
and (ii) such other liabilities as Purchaser may
require Seller to satisfy or to cause the
Corporation to satisfy by written notice delivered
within thirty (30) days after the date hereof and
(ii) those liabilities incurred by the Corporation
between the date hereof and the Closing Date in
the ordinary course of business and reflected on a
balance sheet dated as of December 1,1996 and
approved by Purchaser (the "Closing Balance
Sheet").
ii. The June Balance Sheet has been prepared
and the Closing Balance Sheet shall be prepared in
accordance with generally accepted accounting
principles, except as otherwise specifically
reflected therein or in the notes thereto, and
reflect or shall accurately reflect, in the case
of the Closing Balance Sheet, the Corporation's
Assets and the Corporation's Liabilities as of the
date thereof.
iii. As of the date of the June Balance
Sheet the Corporation did not have, nor has the
Corporation incurred since that date, any
liabilities, contracts, obligations or commitments
(whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any
nature attributable to the operations of the
Corporations that would-be required by generally
accepted accounting principles to be reflected on
a balance sheet of the Corporation (including the
notes thereto), except liabilities or obligations
(A) which were incurred in the ordinary course of
business consistent with past practice or (B)
which have not been, and could not be reasonably
expected to be, individually or in the aggregate,
materially adverse to the Corporation, the
Corporation's Assets or the Corporation's
Liabilities.
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<PAGE>
iv. Since the date of the June Balance Sheet
there has not been any change, event or
development having, or that could be reasonably
expected to have, individually or in the
aggregate, a material adverse effect on the
Corporation or the Corporation's Assets or the
Corporation's Liabilities.
v. There are no, and at Closing there will
not be any, liabilities, debts or other
obligations of any nature, whether absolute,
accrued, contingent or otherwise, whether due or
to become due, including liabilities for taxes,
employee wages, employee benefits and unfunded
pension plans other than those described herein.
vi. The net sales and the total assets of
the Corporation are each less than $25 million.
f. THE STOCK. Seller has good and
marketable title to the Stock free and clear of
all liens, encumbrances and charges. The Stock
represents all of the issued and outstanding stock
of the Corporation, Seller is the sole owner
thereof and all of such Stock is validly issued,
fully paid and non-assessable. There are no
outstanding subscriptions, options, warrants,
rights (including "phantom" stock rights),
preemptive rights or other contracts, commitments,
understandings or arrangements, including any
right of conversion or exchange under any
outstanding security, instrument or agreement
(together, "Rights"), obligating the Corporation
to issue or sell any shares of its capital stock
or to grant, extend or enter into any Right with
respect thereto nor any voting trusts, proxies or
other commitments, understandings, restrictions or
arrangements in favor of any person other than
Seller with respect to the voting of or the right
to participate in dividends or other earnings on
any capital stock or other equity security of the
Corporation. The Stock has not been registered
under the Securities Act of 1933 as amended or
under the laws of any state in which it may have
been sold or offered for sale.
g. TITLE. The Corporation 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 indefeasible title
to the Personal Property free and clear of all
leases, liens and encumbrances. The Personal
Property is all of the furniture, fixtures and
equipment necessary to operate the Facility at
full capacity and all of such Personal Property
is, and at Closing will be, in good operating
condition and repair and accordingly in the same
or better condition and repair, as on the date of
Purchaser's inspection thereof pursuant to
Paragraph 11 (a)(iv).
h. THE REAL PROPERTY. The Facility is
located on the Real Property. The Facility and the
roof and all major mechanical systems at the
Facility, including, but not limited to, the Air
Conditioning, Electrical and Heating and
Ventilating Systems, are, and at Closing shall be,
in the good operating condition and repair and
accordingly in the same or better condition and
repair as on the date of Purchaser's inspection
thereof pursuant to Paragraph 11 (a)(iv) and
Seller has no reason to believe that the same will
not have a useful life with ordinary routine
maintenance of no less than five years after the
Closing Date.
i. 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.
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<PAGE>
j. TAXES AND TAX RETURNS. All tax returns,
reports and filings of any kind or nature required
to be filed by Seller or the Corporation prior to
Closing with respect to its ownership and
operation of the Facility, Seller's ownership of
the Stock and the Corporation's ownership and
operation of the Real Properly, the Personal
Property
and the Facility have been properly completed and
timely filed in material compliance with all
applicable requirements and all taxes or other
obligations which are due and payable by Seller or
the Corporation have been timely paid. Nothing
herein shall be construed as a representation by
any of the persons or entities comprising Seller
with respect to the filing of its income tax
returns or the payment of any taxes due
thereunder.
k. LITIGATION. 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 Corporation or its
or their properties or business, which (A) is
material to the Stock, Corporation's Assets, the
Facility, the Real Property or the Personal
Property or to this Agreement, or (B) 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. For purposes hereof, litigation, an
investigation or other proceeding shall be deemed
to be pending if the same has been served on
Seller or Seller has otherwise been advised either
orally or in writing of the pendency thereof and
litigation shall be deemed to be material if the
amount of recovery which is claimed is $50,000 or
more or the litigation challenges Seller's title
to the Stock or the Corporation's title to the
Facility, the Real Properly or the Personal
Properly. Seller acknowledges and that
notwithstanding that Purchaser is acquiring the
Stock of the Corporation, Purchaser is not
assuming any liability of the Corporation or
Seller for any litigation which may be pending at
Closing or which may be asserted or filed after
Closing with respect to the ownership or operation
of the Corporation's Assets or the Stock prior to
Closing.
l. BOOKS AND RECORDS. All of the books and
records maintained by the Corporation with respect
to its ownership and/or operation of the
Corporation's Assets are true and correct in all
material respects. Attached hereto as Exhibit E is
a true and correct aging report which identifies
each account receivable of the Corporation as of
June 30,1996. Seller shall update the aging report
on a monthly basis between the date hereof and the
Closing Date.
m. THE FACILITY LEASES. Attached hereto as
Exhibit F is a true and correct copy of an
exemplar of the forms of rental or admission
agreement entered into by the Corporation with
each of the current residents of the Facility and
each of the rental or admission agreements entered
into by the Corporation is in substantially the
form as the exhibit attached hereto (the "Facility
Leases"). A true and correct copy of each of the
rental or admission agreements entered into by the
Corporation with each of the current residents of
the Facility has been provided by Seller to
Purchaser. Each of the rental agreements executed
by the Corporation with the residents of the
Facility (the "Leases") is in full force and
effect and none of the Leases has been modified or
amended except as set forth in Exhibit F. Seller
has no knowledge or notice that the Corporation is
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 or time or
the giving of notice or both would constitute a
default, under the Facility Leases by any of the
residents who are parties thereto.
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<PAGE>
n. RENT ROLL. Attached hereto as Exhibit G
is a true and correct rent roll as of August
1,1996, which identifies each of the residents 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. Seller further
represents and warrants that the Corporation has
the right under the Facility Leases to increase
the rents and related fees and charges paid by the
residents of the Facility on no more than sixty
(60) days notice and that it has not orally or in
writing to provide room, board or other services
to any resident or prospective resident for a
reduced or nominal fee or without charge.
o. LIENS. There are no mechanics',
materialmen's or similar liens presently claimed
or, to the best of Seller's knowledge, which will
be claimed against the Corporation's 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.
p. 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
Corporation 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 Corporation's Assets, neither
Seller nor the Corporation has installed any
underground storage tanks on the Real Property and
neither Seller nor the Corporation has used the
Real Property as a dump for waste material. To the
best of Seller's knowledge, no hazardous
materials, substances or wastes are 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; no underground storage
tanks are located on the Real Property; the Real
Property has never been used as a dump for waste
material and the Real Property and the Facility
and the prior uses of the Real Property and the
Facility at all times complied with all
Environmental Laws.
q. EMPLOYEES: UNIONS. None of the employees
of the Facility are employed by the Corporation
but rather all such employees are employed by
Human Resources One and leased to the Corporation
under the terms of the Agreement attached hereto
as part of Exhibit K (the "Employee Leasing
Agreement"). The Corporation has the right on no
more than thirty (30) days notice to terminate the
Employee Leasing Agreement without any further
liability thereunder and effective upon such
termination to hire any or all of the employees
who were the subject thereof. Such employees are
not members of a labor union or subject to a
collective bargaining agreement with respect to
their employment at the Facility. There are no
labor disputes or grievances pending with respect
to the operations at the Facility, except as
otherwise provided in Exhibit H. For purposes
hereof, a labor dispute or grievance shall be
deemed to be pending if the same has been served
on Seller or Seller has otherwise been advised
either orally or in writing of the pendency
thereof.
8
<PAGE>
r. COMPLIANCE WITH LAW
i. The Corporation's 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
Corporation's Assets;
ii. There are no outstanding deficiencies or
work orders of any authority having jurisdiction
over the Corporation's Assets requiring conformity
to any applicable statute, regulation, ordinance
or by-law pertaining thereto;
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;
and
iv. Attached hereto as Exhibit I is a true
and correct copy of any room size or other waivers
issued to the Corporation by the Florida
Department of Health and Rehabilitative Services
with respect to the Facility.
s. OPERATING CONTRACTS. Set forth in
Exhibit J are true and correct copies of all
operating contracts to which the Corporation 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 J. Seller has no notice or
knowledge that the Corporation 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.
t. INVENTORY. All inventories of non-
perishable food, central supplies, linen,
housekeeping and other supplies located at the
Facility are in sufficient condition and quantity
to operate the Facility at normal capacity for two
weeks. All inventories of perishable food are at
the level normally maintained at the Facility.
u. MATERIAL AGREEMENTS. Set forth in
Exhibit K is a list of the following material
agreements to which the Corporation or the
Facility is a party (the "Material Agreements"),
true and correct copies of which have been
provided to Purchaser prior to the execution of
this Agreement:
i. Lease agreements (whether as lessor or
lessee) relating to real properly or personal
property or the employees of the Facility;
ii. License agreements, assignments or other
contracts (whether as licensor or licensee,
assignor or assignee) relating to trademarks,
trade names, patents, or copyrights (or
applications therefor);
9
<PAGE>
iii. Employment or consulting agreements
not terminable without liability to the
Corporation upon notice to the employee or
consultant of less than 30 days, or employment or
consulting agreements which provide for
compensation at the rate of more than $25,000 per
year (including salary, benefits, bonuses and
commissions) to any employee or consultant;
iv. Agreements for the purchase or sale of
goods, materials, supplies, machinery, capital
assets or services in excess of $ 10,000
individually or in excess of $20,000 in the
aggregate;
v. Agreements with any labor union;
vi. The Corporation's Articles of
Incorporation and Bylaws, including any and all
amendments thereto;
vii. Employee pension, profit sharing,
retirement bonus or benefit plans;
viii. Joint venture or partnership
agreements with any other person;
ix. Agreements for the borrowing or lending
of money, or for guaranteeing the obligations or
liabilities of another, or for indemnifying, or
otherwise becoming liable for, the obligations or
liabilities of another;
x. Agreements with any bank, factor,
finance company or similar organization regarding
the financing of the Corporation's accounts
receivable or other extensions of credit to the
Corporation;
xi. Agreements granting any lien, security
interest or mortgage on any property or asset of
the Corporation;
xii. Agreements for the construction or
modification of the Facility or for the incurrence
of any other capital expenditure involving total
payments in excess of $ 10,000 individually or in
excess of $20,000 in the aggregate;
xiii. Advertising agreements;
xiv. Agreements which restrict the
Corporation's right to do business;
xv. Other agreements involving the payment
or receipt in any period of 12 consecutive months
of more than $10,000 individually or of more than
$20,000 in the aggregate, or having a term of more
than six (6) months;
xvi. Any agreements to defend, indemnify
and/or hold harmless any person; and
xvii. Any other agreements relevant to
the operations of the Facility, including, but not
limited to, ancillary services agreements.
Each of the Material Agreements is in full force
and effect as of the date hereof has not be
amended or modified except as set forth in Exhibit
K and neither the Corporation nor
10
<PAGE>
any other party thereto is in default thereunder
as of the date hereof or will be in default
thereunder as of the Closing Date. Seller
acknowledges and agrees that notwithstanding the
purchase of the Stock by Purchaser, Purchaser is
not assuming any obligations under the Material
Agreements which relate to the period prior to the
Closing Date and that Purchaser shall have the
right within thirty (30) days after the date
hereof, to advise Seller which, if any, of the
Material Agreements it wants terminated by the
Corporation as of the Closing Date.
v. ERISA/WAGES/BENEFITS. The Corporation
has no ERISA, employee benefit plan, wage or
vacation, holiday, sick pay or severance pay
obligations it being understood and agreed that
the Corporation's only economic obligation with
respect to the employees of the Facility is to
make the payments due to Human Resources One under
the terms of the Employee Lease Agreement.
w. INSURANCE.
i. Exhibit L lists all of the liability,
property, workers' compensation, directors' and
officers' liability and other insurance policies
currently in effect that insure the business,
operations, properties, assets or employees of the
Corporation. The Corporation has made available,
or during Purchaser's Due Diligence Review will
make available, for inspection by Purchaser a
true, complete and correct copy of each such
policy of insurance.
ii. Each insurable material property of the
Corporation is insured by it for its benefit, in
amounts deemed adequate by its officers against
all material risks usually insured against by
prudent managers of similar businesses, and under
policies issued by insurers of recognized
responsibility and on which all premiums currently
due have been paid. The continuation, validity and
effectiveness of each such policy will in no
material way be affected by the consummation of
the transactions contemplated by this Agreement
except to the extent that the Corporation
voluntarily take action to affect the same, such
as canceling the insurance in favor of insurance
maintained by Purchaser.
iii. To the Corporation's knowledge,
there is no default or claimed or purported or
alleged default or state of facts that, with the
giving of notice or the lapse of time or both,
would constitute a default on the part of any
party under any policy of insurance in effect that
insures the business, operations, properties,
assets or employees of the Corporation.
x. NO SUBSIDIARIES. The Corporation does
not own an interest, directly or indirectly, in
any other corporation,. company, business trust,
partnership, limited partnership, joint venture,
or other entity or association.
y. KEY EMPLOYEES. Exhibit M is a list of the
names of all the Corporation's salaried employees,
together with a statement as to the full amount
paid (including salary, bonuses and commissions),
to each such person by the Corporation for
services rendered during calendar year 1995 and to
date during calendar year 1996.
z. BANK ACCOUNTS AND SAFE DEPOSIT
ARRANGEMENTS. Exhibit O sets forth a correct and
complete list of each bank account and safe
deposit box maintained by the Corporation.
11
<PAGE>
aa. FINANCIAL STATEMENTS. The financial
statements prepared by the Corporation or at the
Corporation's direction and delivered to Purchaser
for the 12 month period ended December 31,1995 and
for the six month period ending June 30,1996 are
true and correct in all material respects, fairly
present the operating results of the Corporation
with respect to the Facility and do not materially
distort income or losses. All such financial
statements with respect to the Corporation have
been prepared in accordance with generally
accepted accounting principles ("GAAP"), it being
understood and agreed that the Facility financial
statements have not been prepared in accordance
with GAAP. The financial statements to be
delivered by Seller to Purchaser between the date
hereof and the Closing Date pursuant to Paragraph
10(a)(xxii), will when prepared, be true and
correct in all material respects, will, in the
case of the financial statements with respect to
the Corporation, be prepared in accordance with
GAAP, will fairly present the operating results of
the Facility and will not materially distort
income or issues.
bb. DISCLOSURE. No representation or
warranty by Seller contained in this Agreement and
no statement contained in any certificate, list,
exhibit, or other instrument 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 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.
8. Purchaser hereby warrants and represents to
Seller that:
a. STATUS OF PURCHASER. Purchaser is a
corporation duly organized and validly existing
under the laws of the state of Washington and is
in good standing under the laws thereof and is
duly qualified to do business as a foreign
corporation in the State of Florida and is in good
standing under the laws thereof.
b. AUTHORITY. Subject to Purchaser
obtaining the approval of its Board of Directors
within the time period provided for in Paragraph
13(i), 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 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. There is no litigation,
investigation or other proceeding pending or, to
the best of Purchaser's knowledge, 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 know of any basis
for any such action. For purposes hereof,
litigation, an investigation or a proceeding shall
be deemed to be pending if the same has been
served on Purchaser or Purchaser has been advised
either orally or in writing of the pendency
thereof.
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<PAGE>
d. NECESSARY ACTION. Purchaser 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,
using its best efforts to obtain the consent of
its Board of Directors.
e. INVESTMENT REPRESENTATIONS.
i. Purchaser has, or prior to Closing will
have, availed itself of every reasonably available
opportunity to conduct its due diligence review of
the Corporation and the Facility. The sale and
purchase price of the Stock has been independently
negotiated between the parties hereto and all the
various terms and provisions of this Agreement,
and all exhibits attached hereto, have been agreed
to by Purchaser based upon its own deliberations,
judgment and business experience, independent of
any material statement, whether of fact or
opinion, by the Corporation, its officers,
directors or employees, other than those
statements contained in the June Balance Sheet and
the representations and warranties of Seller as
set forth herein.
ii. The Stock is being purchased for
investment purposes only and Purchaser does not
intend to resell the same. Seller has disclosed
that the Stock has not been registered under the
Securities Act of 1933, as amended or any state in
which they may be offered for sale.
iii. Purchaser is a sophisticated
investor
iv. Purchaser has, or prior to Closing will
have, been furnished with sufficient written
information about the Corporation, the
Corporation's Assets and the Corporation's
Liabilities to allow it to make an informed
investment decision prior to purchasing the Stock.
v. Purchaser has obtained such independent
financial advice as it deemed necessary with
respect to Purchaser's acquisition of the Stock.
vi. Purchaser will be actively involved in
the management and operation of the .
Corporation after Closing, and the Stock is not
being purchased for the purpose of speculating in
securities.
vii. Purchaser is not currently the
owner, directly or indirectly, of any of the Stock
of the Corporation, nor has it entered into any
contracts, agreements or understandings with
respect to the Stock.
f. 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.
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<PAGE>
9. BROKER
Each party hereby represents and warrants to
the other party that it has not contacted or
entered into any agreement with any real estate
broker, agent, finder, or any other party in
connection with this transaction and that it has
not taken any action which would result in any
real estate broker's, finder or other fees or
commissions being due and payable to any other
party with respect to the transaction contemplated
by this Agreement, other than W. H. Benson and
Company, which has been retained and shall be
compensated by Seller. Each party hereby
indemnifies and agrees to hold the other party
harmless from any loss, liability, damage, cost,
or expense (including reasonable attorney's fees)
resulting to the other party by reason of a breach
of the representation and warranty made by the
indemnifying party in this paragraph.
Notwithstanding anything to the contrary contained
in this Agreement, the indemnity set forth in this
paragraph and any sums due pursuant to such
indemnity shall constitute separate agreements in
causes of action in addition to any liquidated
damages provided for in this Agreement.
COVENANTS
10. SELLER AND THE CORPORATION
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, or will cause the Corporation to,
satisfy and discharge all claims, liens, security
interests, tenancies (other than the Facility
Leases and any Operating Contracts which Purchaser
elects to assume at Closing pursuant to the terms
hereof, and encumbrances on the Corporation's
Assets.
ii. Seller will, or will cause the
Corporation to, file all tax returns, reports and
filings of any kind or nature required to be filed
by Seller or the Corporation with respect to the
Stock, the Corporation's Assets or the
Corporation's Liabilities and will timely pay all
taxes or other obligations which are due and
payable with respect thereto; provided, however,
nothing herein shall be construed as imposing any
specific obligations under this Agreement on any
of the persons or entities comprising Seller with
respect to the filing of their income tax returns
of the payment of the taxes due thereunder;
iii. Seller will not, nor will it permit
the Corporation to, 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 cause the Corporation to continue
until the Closing to fulfill any obligations which
it may have under the Facility Leases or each of
the other Material Agreements to which the
Corporation or Seller may be a party;
iv. Seller will cause the Corporation to
operate the Facility only in the ordinary course
and with due regard to the proper maintenance and
repair of the Facility and the Personal Property;
v. Seller will cause the Corporation to
take all reasonable action to preserve the
goodwill of the residents of the Facility;
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<PAGE>
vi. Seller will not permit the Corporation
to make any material change in the operation of
the Facility nor to sell or agree to sell any of
the items which comprise the Personal Property nor
otherwise to enter into an agreement materially
affecting any of the Corporation's Assets or the
Corporation's Liabilities;
vii. Seller will cause the Corporation
to use its reasonable efforts to retain the
services and goodwill of the employees located at
or connected with the operation of the Facility;
viii. Seller will cause the Corporation
to maintain in force the existing hazard and
liability insurance policies, or comparable
coverage, for the Corporation's Assets as now in
effect;
ix. Seller will not permit the Corporation
to increase its financial obligations under the
Employee Lease Agreement;
x. Seller will not, and will not permit the
Corporation to, enter into any contract or
commitment affecting the Corporation's Assets
except in the ordinary course of business and
Seller will, or will cause the Corporation to,
advise Purchaser of any contracts or commitments
which it enters, whether in the ordinary course of
business or otherwise;
xi. During normal business hours, Seller
will provide Purchaser and its agents with access
(in the company of a representative of Seller) on
24 hours notice to the Real Property and the
Facility, provided Purchaser does not interfere
with the operation of the Facility and provided
Purchaser uses its best efforts not to disturb any
residents of the Facility during the course of
such inspections and at such times Seller shall
permit Purchaser to inspect the books and records
and the physical and structural condition of the
Facility, the Real Property and the Personal
Property;
xii. Seller will timely pay all
obligations which are due and payable with respect
to the Stock and will cause the Corporation to
timely pay all obligations which are due and
payable with respect to the Corporation's Assets
or the Corporation's Liabilities;
xiii. Seller will cause the Corporation
to operate the Facility in substantial compliance
with all applicable municipal, county, state and
federal laws, regulations, ordinances, standards
and orders as now in effect (including without
limitation, the building and zoning codes as
currently applied with respect thereto) and with
the Environmental Laws, 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 or on the Corporation's Assets or the
Corporation's Liabilities;
xiv. Seller will cause the Corporation
to take all reasonable action to achieve
substantial compliance with any laws, regulations,
ordinances, standards and orders applicable to the
Corporation's Assets which are enacted after
execution of this Agreement and prior to Closing;
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<PAGE>
xv. As soon as practicable after the date
hereof but in no event later than thirty (30) days
following full execution of this Agreement, Seller
will (a) deliver to Purchaser a UCC-1 search
report (herein so called), (b) shall cause Marvin
L. Beaman, Jr., as agent for Chicago Title
Insurance Company to furnish to Purchaser a
current title commitment (the "Title Report") for
the issuance to Purchaser of an extended coverage
Owner's title insurance policy with a value equal
to the purchase price (the "Title Policy"),
insuring the Corporation's interest after
Purchaser acquisition of the Stock in the Real
Property and the Facility, subject to no
exceptions other than those of the usual printed
exceptions, which are acceptable to Purchaser and
the Permitted Exceptions (hereafter defined) and
(c) arrange with a survey firm acceptable to
Purchaser for the preparation and delivery of an
ALTA Survey of the Real Property and the Facility
(the "Survey");
xvii. Seller will, or will cause the
Corporation to, provide Purchaser within thirty
(30) days after execution of this Agreement with
copies of any environmental reports, structural
report or geological reports which may be in
Seller's or the Corporation's possession with
respect to the Facility and the Real Property;
xviii. Seller will cooperate, at
Purchaser's sole cost and expense, with Purchaser
in any efforts which it may undertake to audit the
Corporation's financial statements for the periods
prior to the Closing if and to the extent such an
audit is required for Purchaser's compliance with
applicable securities laws;
xix. Seller will not permit the
Corporation to amend its Articles of Incorporation
or Bylaws;
xx. Seller will cause the Corporation to
maintain the inventories of perishable food, non-
perishable food, central supplies, linen,
housekeeping and other supplies at the Facility at
substantially the same condition and quantity as
presently being maintained;
xxi. Seller will provide Purchaser with
copies of any monthly financial statements
prepared in the ordinary course of the
Corporation's business between the date hereof and
the Closing Date and with the September 30,1996
financial statements as soon as the same are
available and all such financial statements shall
conform to Seller's representations and warranties
set forth herein;
xxii. Seller shall allow Purchaser to
verify with the Corporation's lenders the
principal balance then outstanding under any
outstanding debt and the balances in the
Corporation's bank accounts;
xxiii. Seller shall deliver to Purchaser
all plans and specifications and as-built surveys
for the Real Property and the Facility which are
in the possession of the Corporation or Seller;
and
xxiv. Seller shall cause the Corporation
to pay off as of the Closing Date any debt secured
by the Facility.
b. CLOSING. On the Closing Date, Seller
agrees that it will:
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<PAGE>
i. Execute and deliver to Purchaser the
Stock Assignment and the Certificates and such
endorsements, assignments and other instruments of
transfer and conveyance as shall be necessary to
transfer and assign the Stock to Purchaser as
herein provided;
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) subject to the
limitations set forth in Paragraph 26 and setting
forth the incumbency of the persons executing
documents on behalf of Seller, a copy of the
resolutions adopted by the Board of Directors and
Shareholders of the Corporation authorizing the
transaction provided for herein and the execution
of this Purchase Agreement and the other documents
contemplated herein;
iii. Deliver the tangible property
included in the Corporation's Assets to Purchaser
in the condition and repair required by the terms
of this Agreement subject to no liens or
encumbrances other than those permitted under the
terms hereof;
iv. Deliver to Purchaser the Closing Balance
Sheet, subject to Purchaser's right to review and
approve the same in accordance with the terms
hereof;
v. Pay its share of the Closing costs,
including, but not limited to, the Title Report,
Title Policy and Survey described in Paragraph
10(a)(xvi);
vi. Deliver to Purchaser the duly executed
resignations of the officers and directors of the
Corporation;
vii. Deliver to Purchaser the Resident
Deposits (as defined in Paragraph I 8);
viii. Deliver to Purchaser evidence of
the designation of a duly authorized
representative to act with full power and
authority on behalf of Seller with respect to any
post-closing obligations imposed on Seller
hereunder; and
ix. Deliver to Purchaser the original titles
to any motor vehicles owned by the Corporation as
of the Closing Date and included within the
Personal Property duly executed, if necessary, to
reflect the sale of the Stock to Purchaser.
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
Stock and the Seller's Assets and cooperate, at
Purchaser's sole cost and expense, with Purchaser
in any efforts which it may undertake to audit the
Corporation'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
Purchaser's compliance with applicable securities
laws.
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<PAGE>
11. PURCHASER
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. Within ten ( 10) days after its receipt
of the UCC-1 Search Report, the Title Report and
the Survey, Purchaser shall advise Seller in
writing of its objections, if any, to each of the
UCC-1 Search Report, the Title Report and the
Survey. In the event Purchaser fails to notify
Seller in writing of Purchaser's objections within
said ten (10) day period, Purchaser shall be
deemed to have waived its right to object. Within
five (5) days of Seller's receipt of Purchaser's
objections, Seller shall advise Purchaser whether
it intends to correct the defects to which
Purchaser has objected. Seller shall be obligated
to act in good faith in responding to Purchaser's
title objections. For purposes hereof, Seller
shall be deemed to have failed to act in good
faith if its refuses to correct any matter which
is the subject of such title objections where the
only costs to it in doing are normal filing or
recording fees or delivery charges and where the
objections relate to liens which appear of record
but relate to previously discharged debt or other
minor defects in record title. If Seller refuses
to correct some or all of such defects, Purchaser
shall have five (5) days to advise Seller of its
decision to close, notwithstanding the defects, or
to terminate this Agreement, in which case neither
party shall have any further rights or obligations
hereunder, other than Seller's obligation to
return or to direct the return of Purchaser's
Earnest Money. Any matter reflected in the UCC1
Search Report, the Title Report or the Survey not
objected to in accordance with the terms hereof
shall be deemed accepted by Purchaser and to be
"Permitted Exceptions" (herein so called).
Notwithstanding anything contained herein to the
contrary, in the event Seller requires additional
time to prepare either the Survey or the Title
Report, then Seller shall have such additional
time to deliver the same to Purchaser, however, in
no event shall such extension be longer than
fifteen ( 15) additional days;
iii. Purchaser will proceed with all due
diligence to obtain all consents and approvals
necessary to permit the consummation of the
transaction contemplated by this Agreement and/or
necessary to permit Purchaser to own and to
operate the Facility, including, but not limited
to, a license from the Florida Department of
Health and Rehabilitative Services;
iv. Purchaser will proceed with all due
diligence and at its sole cost and expense to
conduct such investigations and to complete the
same within ninety (90) days after the date of
this Agreement with respect to the Stock, the
Corporation's Assets and the Corporation's
Liabilities 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
and investigations of the Corporation's and the
Facility's books and records and operations,
including a review of the licensure files
maintained by the State of Florida with respect to
the Facility to the extent the same are publicly
available, 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
18
<PAGE>
Diligence 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 warranties shall be separate
from and unaffected by Purchaser's Due Diligence
Review; and provided, further, that Purchaser
shall maintain the confidentiality of any
documents or information obtained by it during the
course of its Due Diligence Review and shall
return the same to Seller in the event the
transaction provided for herein fails close for
any reason whatsoever Purchaser shall indemnify,
defend and hold Seller and the Corporation
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 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. The foregoing indemnity shall expressly
survive the Closing or the earlier termination of
this Agreement; and
v. Within fifteen (15) days after the later
of the date hereof or the date of their delivery
to Purchaser, Purchaser will advise Seller in
writing which, if any of the Operating Contracts
it elects to assume by virtue of its acquisition
of the Stock as of the Closing Date and Seller
shall thereafter cause the Corporation to
terminate prior to the Closing Date any such
Operating Contracts which Purchaser does not elect
to assume.
b. CLOSING. On the Closing Date, Purchaser
agrees that it will:
i. Pay the balance of the Purchase Price
due at Closing;
ii. Pay its share of the Closing costs as
herein provided; and
iii. Deliver to Seller a certificate of
a responsible officer dated as of the Closing
Date, certifying in such detail as Seller may
reasonably specify the fulfillment of the
conditions set forth in Paragraph(s) 14(a) and (b)
subject to the limitations set forth in Paragraph
26 and setting forth the incumbency of the
officers executing documents on behalf of
Purchaser, a copy of the resolutions adopted by
Purchaser's Board of Directors authorizing the
transaction provided for herein and the execution
of this Purchase Agreement and the other documents
contemplated herein and attaching a certificate of
good standing issued by the Washington Secretary
of State within no more than thirty (30) days
prior to Closing.
c. POST-CLOSING. After the Closing of this
Agreement, Purchaser agrees that it will:
i. 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.
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<PAGE>
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,
including lenders and lessors or to accomplish the
transaction contemplated by this Agreement;
provided, however, nothing herein shall be
construed to require Purchaser in order to secure
such consents to sell or otherwise dispose of any
of its assets, or agree to any conditions not
acceptable to Purchaser in its sole discretion.
c. If applicable, to file with the
Antitrust Division of the United States Department
of Justice and the Federal Trade Commission a
Notification and Report Form in accordance with
the notification requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") and to use its and their best efforts
to achieve the prompt termination or expiration of
the waiting period or any extension thereof
provided for under the HSR Act as a prerequisite
to the consummation of the transactions provided
for herein (the "HSR Approval"); provided,
however, that Seller and Purchaser shall share any
filing fees due under the HSR Act on a 50-50
basis.
i. Nothing herein shall be construed as
requiring the Corporation to (i) sell or otherwise
dispose of any of its assets which either alone or
in the aggregate, with all such other sales or
dispositions, would constitute the sale or
disposition of a "significant subsidiary" (as
defined in Rule I -02 of Regulation S-X of the
rules and regulations of the Securities and
Exchange Commission), (ii) take any action, the
consummation of which cannot be conditioned on the
consummation of the transactions contemplated by
this Agreement, where such action would have a
material adverse effect on the Corporation or
(iii) take any action which either would have a
material adverse effect on the operations,
business or financial condition of the Corporation
or would materially impair the value of the
transaction contemplated by this Agreement to the
Seller or Purchaser.
ii. Nothing herein shall be construed as
requiring Purchaser to (A) sell or otherwise
dispose of any of its assets which either alone or
in the aggregate, with all such other sales or
dispositions, would constitute the sale or
disposition of a "significant subsidiary," (B)
take any action, the consummation of which cannot
be conditioned on the consummation of the
transactions contemplated by this Agreement, where
such action would have a material adverse effect
on Purchaser or (C) take any action which either
would have a material adverse effect on the
operations, business or financial condition of
Purchaser or would materially impair the value of
the transaction contemplated by this Agreement to
the Seller or Purchaser.
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<PAGE>
CONDITIONS
13. All obligations of Purchaser under this
Agreement are subject to fulfillment, prior to or
at Closing, 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 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 and shall have caused the Corporation to
have performed all of its and their 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. NO DEFAULTS. The Corporation shall not
be in default, where said default cannot be cured
by Closing, under any mortgage, contract, lease or
other agreement to which it is a party or by which
it 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.
d. DUE DILIGENCE REVIEW. Purchaser shall be
satisfied with the results of its Due Diligence
Review, including, but not limited to the results
of an EPA Phase I Assessment of the Real Property
and the Facility within the period specified in
Paragraph 11(a) (iv); 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 warranties shall be separate
from and unaffected by Purchaser's Due Diligence
Review except as to any representations or
warranties which, during the course of Purchaser's
Due Diligence Review, Seller demonstrates
Purchaser obtained knowledge of falsity or
inaccuracy thereof. In the event Purchaser elects
to terminate this Agreement within the period
specified in Paragraph 11 (a)(iv) and this
Paragraph 13(d), the parties shall have no further
rights or obligations hereunder, other than
Purchaser's right to the return of its Earnest
Money and Seller's obligation to pay any title
cancellation and UCC search fees incurred as a
result of such termination.
e. TITLE. The Title Insurer shall issue to
Purchaser as of the date of Closing, an Owner's
extended coverage policy of title insurance for
the Real Property and the Facility in accordance
with the requirements of Paragraph 4.
f. SURVEY. Purchaser shall be satisfied as
to the results of the ALTA Survey in accordance
with the provisions of Paragraph 11 (a)(ii).
g. UCC SEARCH. Purchaser shall be satisfied
with the results of the UCC search conducted by
Seller pursuant to Paragraph 10(a)(xvi) in
accordance with the provisions of Paragraph 11
(a)(ii). .
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<PAGE>
i. APPROVALS. Purchaser or the
Corporation, as appropriate, shall have received
all consents, and approvals as may be necessary
for it to own and to operate the Facility,
including, but not limited to, the issuance by the
Florida Department of Health and Rehabilitative
Services to Purchaser of a license to operate the
Facility in the event the sale of the Stock is
deemed to be a change of ownership and to require
such review and approval and the issuance of a new
license to Purchaser or to the Corporation, and
the approval of Purchaser's Board of Directors;
provided, however, that in the event Purchaser has
not advised Seller on or before September 1,1996
that its Board of Directors has failed to approve
the transaction provided for herein and in the
related Purchase Agreements set forth in Exhibit
P, the requirement for Purchaser's receipt of said
Board approval as a condition to Purchaser's
obligation to close shall be deemed to have been
satisfied.
j. HART SCOTT RODINO. If applicable, the
filing and waiting period requirements under the
HSR Act shall have been complied with and shall
have expired or terminated.
k. MATERIAL CHANGES. Between the date
hereof and the Closing Date, there shall be no
material adverse change in the following:
i. The financial condition of the
Corporation, including, but not limited to, a
significant reduction in the working capital (or
cash balance) or a significant increase in the
short term or long-term debt reflected on the June
Balance Sheet and the financial statements of the
Corporation and the Facility delivered by Seller
pursuant to the terms hereof;
ii. The condition of the Facility's
operations, including, but not limited to, its
census levels and licensure and/or certification
status; and
iii. The Corporation's Assets as
reflected on the June Balance Sheet.
l. TENDER OF STOCK. All of the issued and
outstanding shares of the Stock shall have been
tendered to Purchaser free and clear of all liens
and encumbrances.
m. ZONING. Purchaser shall be satisfied in
its sole and absolute discretion that the current
zoning to which the Real Properly and the Facility
are subject will permit the operation thereon of
the Facility.
n. CLOSING OF ALL STOCK ACQUISITIONS. The
stock acquisitions made pursuant to the agreements
described in Exhibit P shall have closed
concurrently with the closing of the transaction
provided for herein.
o. INSURANCE. Seller shall have provided
Purchaser with evidence satisfactory to Purchaser
that the property and liability insurance coverage
in effect to the Closing Date for the Facility is
"occurrence based" rather than "claims made";
provided, however, that if the current coverage is
on a "claims made" basis then the Seller shall
provide evidence satisfactory to Purchaser of the
existence of a fully paid up "tail" coverage
policy in the name of the Corporation.
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<PAGE>
p. CLOSING BALANCE SHEET. Purchaser shall
have reviewed and approved the Closing Balance
Sheet.
q. FACILITY EMPLOYEES. Purchaser shall have
offered employment to the employees who are
currently subject to the Employee Lease Agreement
and a sufficient number of such employees shall
have accepted employment with Purchaser to enable
Purchaser to lawfully operate the Facility after
Closing and such offer and acceptance of
employment shall have been at no cost to Purchaser
or the Corporation under the terms of the Employee
Lease Agreement.
r. ASSUMPTION OF EXISTING DEBT. Any and all
documents necessary to evidence the assumption of
the Existing Debt shall have been executed by
Purchaser and the lender thereunder, if and to the
extent Purchaser elects pursuant to Paragraph 2 to
permit the same to be a liability of the
Corporation at Closing.
Subject to the limitations set forth in the
foregoing Paragraph 13, in the event any of the
foregoing conditions is not satisfied by Seller or
Purchaser, as appropriate, or waived by Purchaser
prior to Closing, Purchaser shall have the right
to terminate this Agreement in accordance with the
provisions of Paragraph 17.
14. CONDITIONS TO SELLER'S OBLIGATIONS
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 CLOSING. 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. HSR APPROVAL. If applicable, the filing
and waiting period requirements under the HSR Act
shall have been complied with and shall have
expired or terminated.
d. CLOSING OF ALL STOCK ACQUISITIONS. The
stock acquisitions made pursuant to the agreements
described in Exhibit P shall have closed
concurrently with the closing of the transaction
provided for herein.
INDEMMFICATION
15. Notwithstanding Purchaser's acquisition of
the Stock, Seller shall indemnify and hold
Purchaser harmless from and against:
a. Except as otherwise provided in this
Agreement, any and all obligations relating to the
ownership of the Corporation's Assets and the
operation of the Facility which exist at the
Closing Date, including, but not limited to (i)
any obligations
23
<PAGE>
under the Facility Leases or the Operating
Contracts which Purchaser elects to assume at
Closing, (ii) any obligations with respect to the
Resident Deposits, (iii) any matters related to or
arising from any prior bankruptcy or foreclosure
proceedings related to the Corporation's Assets
and (iv) any of the Corporation's Liabilities
reflected on the Closing Balance Sheet;
b. Any and all damage, loss or liability
arising either before or after the Closing Date
under any of the Operating Contracts which
Purchaser does not elect to assume at Closing and
which Purchaser directs Seller to terminate or to
cause the Corporation to terminate on or prior to
the Closing Date;
c. Subject to the limitations set forth in
Paragraph 26, 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
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. .
16. Purchaser shall indemnify and hold Seller
harmless from and against:
a. Except as otherwise provided in this
Agreement, any and all obligations relating to the
ownership of the Corporation's Assets and the
Corporation's Liabilities 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 assume at
Closing in accordance with the terms hereof and
any obligations with respect to the Resident
Deposits;
b. Subject to the limitations set forth in
Paragraph 26, 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 damage, loss or liability
resulting from the conduct by or the negligence or
willful misconduct of Purchaser in performing its
Due Diligence Review; and
d. 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.
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TERMINATION
17. 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 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. If the Closing has not occurred by
February 1,1997 or such later date as may be
agreed upon by the parties (the "Outside Closing
Date"), unless extended by mutual agreement of the
parties; provided, however, that in the event all
of the conditions to Closing provided for in
Paragraph 13 have been satisfied or waived by the
Outside Closing Date other than the Purchaser's
receipt of the License pursuant to Paragraph
13(i), provided Purchaser is diligently pursuing
the issuance of the License by the Florida
Department of Health and Rehabilitative Services,
the Outside Closing Date shall automatically be
extended for such additional period of time as may
be necessary to permit Purchaser to secure the
License; provided, further that in the event
Purchaser has not secured the License by January
31,1997, this Agreement shall thereafter terminate
in accordance with the terms hereof and the
parties shall have no further rights or
obligations hereunder other than Purchaser's right
to the return of its Earnest Money.
b. In the event that prior to the Closing
Date, a material portion of the Real Properly, 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 which notice must be delivered within ten
(10) days after Purchaser receives notice of such
damage, destruction or condemnation. In the event
Purchaser fails to exercise its termination rights
hereunder, then it shall be conclusively deemed to
have waived said right and the Corporation's
Assets at Closing shall include all of Seller's or
the Corporation's 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 other than Purchaser's right
to the return of its Earnest Money.
c. Neither party to this Agreement may
claim termination or pursue any other remedy
referred to in Paragraph 17(a) on account of a
breach of a condition, covenant or warranty by the
other, without first giving such other party
written notice of
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<PAGE>
such breach and not less than ten ( 10) days
within which to cure such breach; provided,
however, in no event shall the Closing Date be
postponed beyond the Outside Closing Date.
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 to retain Purchaser's
Earnest Money as full and complete liquidated
damages, the parties acknowledging and agreeing
that the amount of damages which Seller may incur
as a result of such termination may be difficult
to ascertain and that the amount of the Earnest
Money is a reasonable and fair estimate thereof,
after which the parties shall have no further
rights or obligations hereunder.
e. In the event of the termination of this
Agreement by Purchaser under P paragraph
17(a)(iii) or (iv) or under Paragraph 17(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 as
Purchaser's sole and exclusive remedies either to
(i) terminate this Agreement and demand the return
of its Earnest Money after which neither party
shall have any further rights or obligations
hereunder or (ii) seek specific performance of
Seller's obligations hereunder.
RESIDENT SECURITY DEPOSITS
18. 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.
19. On the Closing Date, Seller shall transfer
the Resident Deposits to the bank account
designated by the Purchaser and Purchaser shall in
writing acknowledge to Seller receipt of and
expressly assume all the Corporation's financial
and custodial obligations with respect thereto.
20. 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 as provided in
Paragraph 19 did not represent the full amount of
such Resident Deposits then or thereafter shown to
have been delivered to the Corporation by the
current residents or prospective residents of the
Facility.
NOTICES
21. 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:
26
<PAGE>
To Seller: c/o Stanford Centre, Inc.
2501 N. Orange Avenue, Suite
435N
Orlando, FL 32804
Attn: Mr. Wayne Voegele
Phone No.: (407) 896-3369
FAX No.: (407) 894-2985
with copy to: Marvin L. Beaman, Jr.
Esq.
605 North Wymore Road
Winter Park, FL 32789-2893
Phone No. : (407) 628-4200
FAX No. : (407) 740-8402
To Purchaser: Emeritus Corporation
3131 Western Avenue, Suite 500
Seattle, WA 98121
Attn: Keith James
Phone No.: (206) 298-2909
FAX No.: (206) 301-4500
with copy to: The Nathanson Group
1411 Fourth Avenue, Suite 905
Seattle, WA 98101
Attn: Randi S. Nathanson
Phone No.: (206) 623-6239
FAX No.: (206) 623-1738
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).
SOLE AGREEMENT
22. 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.
SUCCESSORS
23. 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 an
affiliate; provided no such assignment shall
relieve Purchaser of its obligations hereunder and
provided, further, that Purchaser shall provide
Seller with notice of any such assignment and such
assignee shall assume all of Purchaser's
obligations hereunder in writing. In addition,
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,
27
<PAGE>
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 Corporation's 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.
CAPTIONS
24. The captions of this Agreement are for
convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SURVIVAL/LIMITATION OF ACTIONS
25. All covenants, warranties and representations
of Purchaser and Seller herein other than Seller's
representation and warranty in Paragraph 7(o),
which shall survive for the applicable statute of
limitations period, shall survive for two years
after Closing after which they shall automatically
expire; provided, however, that in the event
notice of a claim is delivered by Seller or
Purchaser prior to expiration of said two year
period or applicable statute of limitation period
in the case of a claim brought under Paragraph
7(o), the representation, warranty or covenant
which is the subject of said claim shall survive
until the final, non-appealable resolution
thereof.
GOVERNING LAW
26. This Agreement shall be governed by and
construed in accordance with the laws of the State
of Florida.
SEVERABILITY
27. 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 hereof shall not in any way
be affected or impaired thereby.
COUNTERPARTS
28. 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. This
Agreement may be executed (i) on an original, (ii)
a copy of an original, or (iii) by a facsimile
transmission copy of an original followed within
five (5) calendar days with execution of an
original.
THIRD PARTY BFNEFICIARY
29. The provisions of this Agreement are not
intended to confer any benefits upon any person or
entity not a party to this Agreement.
28
<PAGE>
ACCOUNTS RECEIVABLE
30. 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.
31. From and after the Closing Date, Purchaser
shall assume responsibility for the billing for
and collection of payments on account of services
rendered, ancillary services provided or goods
sold by it on and after the Closing Date and,
notwithstanding the sale of the Stock to
Purchaser, Seller shall retain all right, title
and interest in and to and all responsibility for
the collection of the accounts receivable of the
Corporation for services rendered, ancillary
services provided or goods sold by the Corporation
prior to the Closing Date.
32. Except as otherwise provided herein, any
payments received by Purchaser after the Closing
Date from residents with balances due for services
rendered, ancillary services provided or goods
sold by the Corporation during the period prior to
and after the Closing Date, shall be applied by
Purchaser first to reduce any post-Closing Date
balances, with the excess, if any, remitted to
Seller to reduce any pre-Closing Date balances
due. Notwithstanding the foregoing, in the event
the payment specifically designates that it
relates to services rendered, ancillary services
provided or goods sold by the Corporation during
the period prior to the Closing Date it shall be
remitted by Purchaser to Seller or in the event
the payment directly correlates to an invoice
which includes billings for ancillary services
provided by the Corporation prior to the Closing
Date, that portion of the payment which directly
relates to the payment for said ancillary services
shall be remitted to Seller by Purchaser.
33. Seller shall have the right during normal
business hours and on reasonable notice to
Purchaser to inspect Purchaser'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.
SUBCHAPTER S ELECTION
34. Seller shall have the right effective as of
the Closing Date to terminate the Corporation's
Subchapter S election and shall have the
obligation to file any final tax returns due with
respect to the Corporation for the tax year ending
on December 31,1996. Any and all taxes and tax
returns due and payable for the tax years
commencing on the Closing Date shall be the
responsibility of Purchaser and any and all taxes
and tax returns due and payable for the tax years
prior to the Closing Date shall be the
responsibility of Seller.
29
<PAGE>
EXHIBITS
35. Seller and Purchaser acknowledge and agree
that they shall have a period of thirty (30) days
from the date of this Agreement to attach the
exhibits hereto and that either party shall have
the right to terminate this Agreement in the event
either (i) the exhibits are not attached within
said period or (ii) they are not acceptable to
either party and, in the event of such a
termination, Purchaser shall be entitled to the
return of the
Earnest Money and any accrued interest thereon,
after which neither party shall have any further
rights or obligations hereunder.
SIGNATURES ON FOLLOWING PAGE
30
<PAGE>
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: By: /s/ Raymond R.
Brandstrom
- --------------------------------------------------
- --
Its: President
31
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
