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 ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AND
▇▇▇▇▇ ▇▇▇▇ (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.
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
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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
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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.
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IN WITNESS WHEREOF, the parties hereby
execute this Agreement as of the day and year
first set forth above.
SELLER: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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PURCHASER: EMERITUS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇.
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Its: President
PURCHASER: EMERITUS PROPERTIES
V, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇.
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Its: President
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