Purchase and Sale Agreement (2000)Full Document 

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                           PURCHASE AND SALE AGREEMENT

         THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated as of the
29th day of June, 2000, by and between  Sunrise Bellevue Assisted Living
Limited Partnership, a Washington limited partnership ("Sunrise Bellevue"),
Sunrise Cohasset Assisted Living Limited Partnership, a Massachusetts limited
partnership ("Sunrise Cohasset"), Sunrise Decatur Assisted Living Limited
Partnership, a Georgia limited partnership ("Sunrise Decatur"), Sunrise Glen
Cove Assisted Living, L. P., New York limited partnership ("Sunrise Glen Cove"),
Sunrise Lafayette Hills Assisted Living, L. P., a Pennsylvania limited
partnership ("Sunrise Lafayette Hills"), Sunrise Paoli Assisted Living, L. P., a
Pennsylvania limited partnership ("Sunrise Paoli"), Sunrise Paramus Assisted
Living Limited Partnership, a New Jersey limited partnership ("Sunrise
Paramus"), and Sunrise Walnut Creek Assisted Living Limited Partnership, a
California limited partnership ("Sunrise Walnut Creek") (Sunrise Bellevue,
Sunrise Cohasset, Sunrise Decatur, Sunrise Glen Cove, Sunrise Lafayette Hills,
Sunrise Paoli, Sunrise Paramus, and Sunrise Walnut Creek are hereinafter
individually and collectively referred to as "Seller") and (ii) Metropolitan
Senior Housing, LLC, a Delaware limited liability company (hereinafter referred
to as "Buyer").

                                    RECITALS:

         1.     Prior to the "Closing Date" hereunder, Metropolitan/Bellevue
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Bellevue ("MSH Bellevue"), will own the assisted living facility located
in Bellevue, Washington known as Sunrise Assisted Living of Bellevue, as more
fully described on Exhibit A attached hereto and made a part hereof (the
"Bellevue Facility"), by reason of the contribution of the title to the Bellevue
Facility by Sunrise Bellevue to MSH Bellevue.

         2.     Prior to the "Closing Date" hereunder, Metropolitan/Cohasset
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Cohasset ("MSH Cohasset"), will own the assisted living facility located
in Cohasset, Massachusetts known as Sunrise Assisted Living of Cohasset, as more
fully described on Exhibit B attached hereto and made a part hereof (the
"Cohasset Facility"), by reason of the contribution of the title to the Cohasset
Facility by Sunrise Cohasset to MSH Cohasset.

         3.     Prior to the "Closing Date" hereunder, Metropolitan/Decatur
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Decatur ("MSH Decatur"), will own the assisted living facility located
in Decatur, Georgia known as Sunrise Assisted Living of Decatur, as more fully
described on Exhibit C attached hereto and made a part hereof (the "Decatur
Facility"), by reason of the contribution of the title to the Decatur Facility
by Sunrise Decatur to MSH Decatur.

         4.     Prior to the "Closing Date" hereunder, Metropolitan/Glen Cove
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Glen Cove ("MSH Glen Cove"), will own the assisted living facility
located in Glen Cove, New York known as Sunrise Assisted Living of Glen Cove, as
more fully described on Exhibit D attached hereto and made a part hereof (the
"Glen Cove Facility"),
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by reason of the contribution of the title to the Glen Cove Facility by Sunrise
Glen Cove to MSH Glen Cove.

         5.     Prior to the "Closing Date" hereunder, Metropolitan/Whitemarsh
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Lafayette Hills ("MSH Whitemarsh"), will own the assisted living
facility located in Lafayette Hill, Pennsylvania known as Sunrise Assisted
Living of Lafayette Hill, as more fully described on Exhibit E attached hereto
and made a part hereof (the "Lafayette Hill Facility"), by reason of the
contribution of the title to the Lafayette Hill Facility by Sunrise Lafayette
Hills to MSH Whitemarsh.

         6.     Prior to the "Closing Date" hereunder, Metropolitan/Malvern
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Paoli ("MSH Malvern"), will own the assisted living facility located in
Malvern, Pennsylvania known as Sunrise Assisted Living of Paoli, as more fully
described on Exhibit F attached hereto and made a part hereof (the "Paoli
Facility"), by reason of the contribution of the title to the Paoli Facility by
Sunrise Paoli to MSH Malvern.

         7.     Prior to the "Closing Date" hereunder, Metropolitan/Paramus
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Paramus ("MSH Paramus"), will own the assisted living facility located
in Paramus, New Jersey known as Sunrise Assisted Living of Paramus, as more
fully described on Exhibit G attached hereto and made a part hereof (the
"Paramus Facility"), by reason of the contribution of the title to the Paramus
Facility by Sunrise Paramus to MSH Paramus.

         8.     Prior to the "Closing Date" hereunder, Metropolitan/Walnut Creek
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Walnut Creek ("MSH Walnut Creek"), will own the assisted living facility
located in Walnut Creek, California known as Sunrise Assisted Living of Walnut
Creek, as more fully described on Exhibit H attached hereto and made a part
hereof (the "Walnut Creek Facility"), by reason of the contribution of the title
to the Walnut Creek Facility by Sunrise Walnut Creek to MSH Walnut Creek.

                MSH Bellevue, MSH Cohasset, MSH Decatur, MSH Glen Cove, MSH
Whitemarsh, MSH Malvern, MSH Paramus, and MSH Walnut Creek are individually
referred to herein as a "Facility Owner" and collectively referred to herein as
the "Facility Owners." The assisted living facilities described in recital
paragraphs 1 through 8 are individually referred to herein as a "Facility" and
are collectively referred to as the "Facilities."

         9.     Two or more of the Sellers are willing to contribute membership
interests in certain of the Facility Owners (the "Contributed Interests") in
exchange for an increase (the "Interest Increase") in the "Unreturned
Contributions" account (as defined in the Limited Liability Company Agreement of
Buyer) of Sunrise Assisted Living Investments, Inc. ("SALII"), the general
partner of Seller equal to twenty-five percent (25%) of the total agreed equity
value of the Facilities. For purposes hereof, the total agreed equity

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value of the Facilities is (i) the Net Operating Income (as defined in the
Limited Liability Company Agreement of Buyer) of the Facilities for the fiscal
quarter of Seller ending on March 31, 2000, (ii) divided by 10.75%;

         10.    The remaining Sellers are willing to convey to Buyer the
remaining membership interests in the Facility Owners (the "Conveyed Interests,"
and together with the Contributed Interests, the "Interests"); and Buyer desires
to acquire and accept such Interests, according to the terms and conditions set
forth below. The Contributed Interests and the Conveyed Interests shall
constitute 100% of the membership interests in the Facility Owners.

         11.    On the Closing Date, the Facility Owners will lease the
Facilities to separate single-purpose entities (individually and/or collectively
referred to herein as "Lessee") of which MSH Operating, LLC, a Delaware limited
liability company, an Affiliate of Buyer, is the sole owner.

         12.    The Facilities will be managed by Sunrise Assisted Living
Management, Inc., a Virginia corporation (the "Operator"), pursuant to separate
Facility Operating Agreements with each Lessee.

         Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:

                                    ARTICLE I
                                   TERMINOLOGY

         1.1    Defined Terms. As used herein, the following terms shall have
         the meanings indicated:

         Affiliate: With respect to any specified person or entity, another
         person or entity which, or a member of an immediate family which,
         directly or indirectly controls, is controlled by, or is under common
         control with, the specified person or entity.

         Code:  The Internal Revenue Code of 1986, as amended.

         Documents: This Agreement and all Exhibits hereto, and each other
         agreement, certificate or instrument delivered pursuant to this
         Agreement.

         Due Diligence Period: The period ending on the earlier of 30 days after
         execution of this Agreement or September 30, 2000, during which Buyer
         may investigate the financial, legal, operational, environmental and
         all other aspects of the Facilities as Buyer may desire in order to
         determine whether to consummate the transactions contemplated by this
         Agreement or terminate this Agreement in accordance with Section 3.2.

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         Facility Operating Agreements: The agreements by and between Lessee and
         Operator to be executed and delivered at Closing pertaining to the
         operation, direction, marketing, management and supervision of the
         Facilities, substantially in the form attached hereto as Exhibit J, and
         incorporated herein by reference.

         FF&E: The furniture, fixtures and equipment owned by Seller and located
         at the Facilities, which are used or maintained in connection with
         Seller's operation of the Facilities.

         Freddie Mac Loans: Those certain loans secured by first lien mortgages
         or deeds of trust encumbering the Facilities evidenced by promissory
         notes dated March 22, 2000 in the following original principal amounts:


                                               
                           Bellevue Facility         $  9,000,000
                           Cohasset Facility         $  9,370,000
                           Decatur Facility          $  9,000,000
                           Glen Cove Facility        $ 15,200,000
                           Lafayette Facility        $  7,908,000
                           Paoli Facility            $ 11,100,000
                           Paramus Facility          $  8,885,000
                           Walnut Creek Facility     $  8,445,000



         A complete list of the documents evidencing and securing the Freddie
         Mac Loans is attached hereto as Exhibit W.

         Health Department: Collectively, all the departments of health and/or
         any other governmental or regulatory authorities of all the states
         where the Facilities are located, which authorities have jurisdiction
         over the licensing, ownership and/or operation of the Facilities as
         assisted living/dementia facilities.

         Knowledge: As used in this Agreement, the term "knowledge" when used to
         refer to the knowledge of Seller or its Affiliates (a) shall mean and
         apply to the actual knowledge of the responsible officers of Seller or
         its Affiliates who are directly engaged in the management of the
         Facilities and not to any other persons or parties, and (b) shall mean
         the actual knowledge of such responsible officers, it being understood
         and acknowledged that such responsible officers are not charged with
         knowledge of all the acts and/or omissions of their predecessors or
         with acts or omissions of agents or employees of Seller. Neither Seller
         nor the "Responsible Parties" as hereinafter defined, shall be
         obligated to do or perform any independent investigation in connection
         with the making of any representations or warranties as set forth in
         this Agreement; provided, however, that the Responsible Parties shall
         make a good faith inquiry of the executive director of each of the
         Facilities in connection with such representations and warranties. The
         responsible

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         officer of Seller directly engaged in the management and operation of
         the Facilities is: Daniel B. Gorham (whether one or more, the
         "Responsible Parties").

         Lessee: Individually or collectively, those eight (8) certain
         single-purpose Delaware limited liability companies which will, at the
         Closing, enter into separate Lease and Security Agreements
         (individually, a "Facility Lease;" collectively, the "Facility Leases")
         whereby Lessee will lease the Facilities from Buyer.

         Licenses. All certificates, licenses, and permits issued by
         governmental authorities held by Seller, the Facility Owners or
         Seller's Affiliates in connection with the ownership, use, occupancy,
         operation, and maintenance of the Facilities. A list of Licenses for
         each of the Facilities is attached hereto and incorporated herein as
         Exhibit K.

         Lien: Any mortgage, deed of trust, pledge, hypothecation, title defect,
         right of first refusal, security or other adverse interest,
         encumbrance, claim, option, lien, lease or charge of any kind, whether
         voluntarily incurred or arising by operation of law or otherwise,
         affecting any assets or property, including any agreement to give or
         grant any of the foregoing, any conditional sale or other title
         retention agreement, and the filing of or agreement to give any
         financing statement with respect to any assets or property under the
         Uniform Commercial Code or comparable law of any jurisdiction.

         Loss: With respect to any person or entity, any and all costs,
         obligations, liabilities, demands, claims, settlement payments, awards,
         judgments, fines, penalties, damages and reasonable out-of-pocket
         expenses, including court costs and reasonable attorneys' fees, whether
         or not arising out of a third party claim.

         Material Adverse Effect: A material adverse effect on the assets,
         business, operations, financial condition or results of operations of
         the Facilities, or any one of them.

         Operator: Sunrise Assisted Living Management, Inc., a Virginia
         corporation, its successors or assigns, which shall be the operator of
         the Facilities under the Facility Operating Agreements.

         Permitted Lien: Any statutory lien which secures a payment not yet due
         that arises, and is customarily discharged, in the ordinary course of
         Seller's business.

         Resident Deposits: All refundable deposits or advances of any kind or
         nature from any resident of any Facility.

         Taxes: All federal, state, local and foreign taxes including, without
         limitation, income, gains, transfer, unemployment, withholding,
         payroll, social security, real property, personal property, excise,
         sales, use and franchise taxes, levies, assessments, imposts, duties,
         licenses and registration

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         fees and charges of any nature whatsoever, including interest,
         penalties and additions with respect thereto and any interest in
         respect of such additions or penalties.

         Tax Return: Any return, filing, report, declaration, questionnaire or
         other document required to be filed for any period with any taxing
         authority (whether domestic or foreign) in connection with any Taxes
         (whether or not payment is required to be made with respect to such
         document).

         1.2    Additional Defined Terms.  As used herein, the following terms
shall have the meanings defined in the recitals or section indicated below:


                                                         
                  Balance Sheet                               Section 4.4
                  Buyer                                       Recitals
                  Closing                                     Section 9.1
                  Closing Date                                Section 9.1
                  Excluded Assets                             Section 2.2
                  Facilities                                  Recitals
                  Facility Agreements                         Section 2.1(c)
                  Facility Lease                              Definitions: "Lessee"
                  Indemnified Party                           Section 10.4(a)
                  Indemnifying Party                          Section 10.4(a)
                  Intellectual Property                       Section 2.2(j)
                  Land                                        Section 2.1(a)

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