EXHIBIT 10.1

Execution Version

ASSET PURCHASE AGREEMENT

BETWEEN

GAHC3 PENNSYLVANIA SENIOR HOUSING PORTFOLIO, LLC (“Purchaser”)

ABEKING ASSOCIATES, L.P. (“Powder Mill Partnership”),

WESTRUM HANOVER LP (“Hanover Partnership”),
And

ONE BOYERTOWN PROPERTIES LP (“Chestnut Knoll Partnership”)

February 25, 2015

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TABLE OF CONTENTS
 
 
 
ARTICLE I.
PURCHASE AND SALE
4
 
 
 
1.1
Transfer of Assets at the Closing
4
 
 
 
1.2
Excluded Assets
4
 
 
 
1.3
Closing Mechanics
5
 
 
 
1.4
Purchase Price
5
 
 
 
1.5
Payment of Purchase Price
7
 
 
 
1.6
Assumed Liabilities and Excluded Liabilities
8
 
 
 
1.7
Allocation of Purchase Price
9
 
 
 
1.8
Diligence Period
9
 
 
 
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
11
 
 
 
2.1
Organization and Qualification
11
 
 
 
2.2
Authority; Binding Effect
11
 
 
 
2.3
Licenses
11
 
 
 
2.4
Governmental Authorities
12
 
 
 
2.5
Taxes
12
 
 
 
2.6
No Defaults or Consents
13
 
 
 
2.7
Contracts
13
 
 
 
2.8
Title to Property and Related Matters
15
 
 
 
2.9
Hazardous Substances
16
 
 
 
2.10
Patriot Act
18
 
 
 
2.11
Survey Reports, Etc
18
 
 
 
2.12
Capital Expenditures
19
 
 
 
2.13
Absence of Notices
19
 
 
 
2.14
Resident Records
19
 
 
 
2.15
Advance Payments and Resident Funds
19
 
 
 
2.16
Medicare and Third Party Payor Programs Non-Participation
19
 
 
 
2.17
Licensed Beds and Units
21
 
 
 
2.18
Intellectual Property
21
 
 
 
2.19
Financial Statements
22
 
 
 
2.20
No Litigation
22

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2.21
Absence of Certain Changes or Events
22
 
 
 
2.22
Condition of Assets
23
 
 
 
2.23
Employee and Labor Relations
23
 
 
 
2.24
Employee Benefit Plans
25
 
 
 
2.25
Intentionally Deleted
27
 
 
 
2.26
Insurance
27
 
 
 
2.27
Related-Party Transactions
27
 
 
 
2.28
Broker
27
 
 
 
2.29
Intentionally Deleted
27
 
 
 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
27
 
 
 
3.1
Organization
27
 
 
 
3.2
Authority, Binding Effect
27
 
 
 
3.3
No Violation
28
 
 
 
3.4
Broker
28
 
 
 
3.5
Limited Reliance
28
 
 
 
3.6
Limited Representation
28
 
 
 
ARTICLE IV.
ADDITIONAL COVENANTS OF SELLER
29
 
 
 
4.1
Interim Operations
29
 
 
 
4.2
Borrowing
30
 
 
 
4.3
Full Access and Disclosure
30
 
 
 
4.4
Consents and Satisfaction of Conditions
31
 
 
 
4.5
Compliance With Laws
32
 
 
 
4.6
Taxes
32
 
 
 
4.7
No Disposition of Assets
32
 
 
 
4.8
Further Documentation
32
 
 
 
4.9
Confidentiality
32
 
 
 
4.10
Title Insurance and Survey; Environmental Assessments
33
 
 
 
4.11
Financial Information
34
 
 
 
4.12
Certain Employment Matters
34
 
 
 
4.13
No Shop
34
 
 
 
4.14
Intentionally Deleted
35
 
 
 
 
 
 

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4.15
Employment Records; Resident Records
35
 
 
 
4.16
Intentionally Deleted
35
 
 
 
4.17
COBRA Compliance
36
 
 
 
4.18
Capital Expenditures
36
 
 
 
4.19
Changes in Representations and Warranties
36
 
 
 
4.2
Appointment of Sellers’ Agent
36
 
 
 
4.21
Inventory
37
 
 
 
ARTICLE V.
COVENANTS OF PURCHASER
37
 
 
 
5.1
Confidentiality
37
 
 
 
5.2
Compliance with Laws
38
 
 
 
5.3
Books and Records
38
 
 
 
5.4
Cooperation
38
 
 
 
5.5
Governmental Approvals
39
 
 
 
5.6
Further Documentation
40
 
 
 
5.7
Changes in Representations and Warranties
40
 
 
 
ARTICLE VI.
OTHER COVENANTS
40
 
 
 
6.1
Residents Rents; Accounts Receivable; Move-In Deposits and Move-In Fees
40
 
 
 
6.2
Intentionally Deleted
42
 
 
 
6.3
Intentionally Deleted
42
 
 
 
6.4
Pre-Closing Access
42
 
 
 
6.5
Workers’ Compensation
42
 
 
 
6.6
Seller’s Financial Books and Records
42
 
 
 
6.7
Approvals and Consents
42
 
 
 
6.8
Discharged Resident Records
43
 
 
 
6.9
Management Agreement
43
 
 
 
ARTICLE VII.
INDEMNIFICATION
43
 
 
 
7.1
Indemnification by Seller
43
 
 
 
7.2
Indemnification by Purchaser
44
 
 
 
7.3
Notification of Claims and Indemnification Procedures
45
 
 
 
7.4
Survival of Representations, Warranties and Covenants
46
 
 
 
7.5
Set-Off
47
 
 
 
 
 
 

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7.6
Net Damages
47
 
 
 
7.7
Liability Limitations
47
 
 
 
ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
48
 
 
 
8.1
Representations and Warranties; Performance
48
 
 
 
8.2
Consents
48
 
 
 
8.3
No Proceeding or Litigation
48
 
 
 
8.4
Title Insurance
48
 
 
 
8.5
Material Adverse Change
49
 
 
 
8.6
Intentionally Deleted
49
 
 
 
8.7
Other Agreements
49
 
 
 
ARTICLE IX.
CONDITIONS TO THE OBLIGATIONS OF SELLER
49
 
 
 
9.1
Representations and Warranties; Performance
49
 
 
 
9.2
Consents
49
 
 
 
9.3
No Proceeding or Litigation
49
 
 
 
9.4
Other Agreements
50
 
 
 
ARTICLE X.
CLOSING
50
 
 
 
10.1
Closing
50
 
 
 
10.2
Resident Funds
52
 
 
 
10.3
Closing Adjustments
52
 
 
 
10.4
Other Costs at the Closing
53
 
 
 
10.5
Post-Closing Purchase Price Reconciliation
53
 
 
 
ARTICLE XI.
CONDEMNATION; DAMAGE OR DESTRUCTION
54
 
 
 
11.1
Condemnation
54
 
 
 
11.2
Damage or Destruction
55
 
 
 
11.3
Current Encumbrances
57
 
 
 
ARTICLE XII.
TERMINATION; REMEDIES
57
 
 
 
12.1
Termination Events
57
 
 
 
12.2
Opportunity to Cure
57
 
 
 
12.3
Effect of Termination; Remedies
58
 
 
 
12.4
DAMAGES
59
 
 
 
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
59
 
 
 
 
 
 

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13.1
Amendment and Modification
59
 
 
 
13.2
Joint and Several Liability
60
 
 
 
13.3
Waiver of Compliance; Consent
60
 
 
 
13.4
Notices
60
 
 
 
13.5
Expenses
61
 
 
 
13.6
Attorneys’ Fees
61
 
 
 
13.7
Assignment
61
 
 
 
13.8
Governing Law
61
 
 
 
13.9
Business Day
61
 
 
 
13.1
Counterparts; Electronic/Facsimile Signature
62
 
 
 
13.11
Headings; Use of Terms; Section References
62
 
 
 
13.12
Entire Agreement
62
 
 
 
13.13
Warranty of Authority
62
 
 
 
13.14
Schedules
62
 
 
 
13.15
Time of the Essence
62
 
 
 
13.16
Representation by Counsel
62
 
 
 
13.17
Reserved
63
 
 
 
13.18
Reliance
63
 
 
 
13.19
Publicity
63
 
 
 
13.20
Jurisdiction; Waiver of Jury Trial
63
 
 
 
13.21
Knowledge
63
 
 
 
13.22
Cooperation with Audit
64

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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of this 24th day of
February, 2015 (the “Date of Execution”), is made and entered into by and among
GAHC3 Pennsylvania Senior Housing Portfolio, LLC, a Delaware limited liability
company (“Purchaser”), Abeking Associates, L.P., a limited partnership organized
under the laws of the Commonwealth of Pennsylvania (the “Powder Mill
Partnership”), Westrum Hanover LP, a limited partnership organized under the
laws of the state of Delaware (the “Hanover Partnership”), One Boyertown
Properties LP, a limited partnership organized under the laws of the
Commonwealth of Pennsylvania (the “Chestnut Knoll Partnership” and, together
with the Powder Mill Partnership and the Hanover Partnership, individually and
collectively, “Seller” or “Sellers”).
RECITALS:
A.    Powder Mill Partnership owns and operates the mixed independent living and
assisted living personal care facility located at 1775 Powder Mill Road, York PA
17403 (the “Powder Mill Facility”). Hanover Partnership owns and operates the
independent living facility located at 5300 Northgate Drive, Bethlehem, PA 18017
(the “Hanover Facility”). Chestnut Knoll Partnership owns and operates the
assisted living personal care facility located at 120 West 5th Street,
Boyerstown PA 19512 (the “Chestnut Knoll Facility”). The Powder Mill Facility,
the Hanover Facility and the Chestnut Knoll Facility individually are referred
to as a “Facility” and collectively as the “Facilities.” The Powder Mill
Facility and the Chestnut have, respectively, the number of licensed beds and/or
units set forth on Exhibit A.
B.    The parties desire to enter into this Agreement pursuant to which
Purchaser or entities formed by Purchaser for the purpose of acquiring the
Facilities (each, a “Real Estate Purchaser” and collectively, the “Real Estate
Purchasers”) will acquire the Facilities and will purchase, accept and assume
from the Sellers, respectively, and each Seller will sell, convey, transfer and
assign to such Real Estate Purchaser, the following assets (excluding therefrom,
however, the Excluded Assets) (collectively, the “Real Property Assets”):
(i) each Seller’s respective valid and insurable fee simple title and all other
rights, title and interest of such Seller in and to the parcels of real property
on which the Facilities are located, such real property being more particularly
described on Exhibit B, and any additional parcel(s) of real property owned by
the Sellers and more particularly described on Exhibit B (collectively, the
“Real Property”);
(ii) each Seller’s fee simple title in and to all buildings, structures,
facilities, amenities, driveways, walkways, parking lots and other improvements
located on the Real Property owned by such Seller and any construction in
progress, including without limitation, all fixtures, fittings and components
thereof (such as any and all elevators, partitions, ducts, motors, compressors,
and the heating, ventilating, air conditioning, plumbing, sprinkler, drainage,
lighting, gas, electrical and all other systems located therein) (collectively,
the “Improvements”);
(iii)     all right, title and interest of each Seller in and to any alleys,
strips or gores adjoining the Real Property, any easements, rights of way or
other interests in, on, under or to, any land, highway, street, road or right of
way, open or proposed, in, under, across, abutting or benefiting

1

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the Real Property owned by such Seller, and any pending or future action for
condemnation, eminent domain or similar proceeding, or for any damage to the
Real Property by reason of a change of grade thereof, and all other accessions,
appurtenant rights and privileges of each Seller in and to the Real Property and
the Improvements;
(iv)     Intentionally deleted.
(v)     all right, title and interest of each Seller in and to the items of
tangible personal property owned or used in connection with the Facility located
at the Real Property owned or leased by such Seller;
(vi)     to the extent in Seller’s or Seller’s Affiliates’ possession, all
right, title and interest of each of them in and to the books, records,
documents, surveys, reports, drawings, plans, specifications, diagrams,
environmental assessments and other architectural or engineering work product to
the extent related to the Real Property and Improvements owned or leased by such
Seller (the “Real Property Records”); and
C.    The parties desire to enter into this Agreement pursuant to which
Purchaser or entities formed by Purchaser as taxable REIT subsidiaries for the
purpose of operating the Facilities (each, a “TRS Entity” and collectively, the
“TRS Entity”; together with Purchaser and the Real Estate Purchasers, sometimes
referred to herein individually or collectively as “Purchaser”) will,
concurrently with the Real Estate Purchasers’ acquisition of the Real Property
Assets associated with such Facility, purchase, accept and assume from the
Sellers, respectively, and each Seller will sell, convey, transfer and assign to
such TRS Entity, the following assets (excluding therefrom, however, the
Excluded Assets) (collectively, the “Operating Assets”, and together with the
Real Property Assets, collectively, the “Assets”):
(i)    all right, title and interest of each of the Sellers in and to all
supplies, inventory, consumables, linens, pharmaceutical products and other
medical goods and supplies, perishable and nonperishable food products, and
other similar tangible property used in the operation of the Facilities
(collectively, the “Inventory”);
(ii)    all Assumed Contracts and all Assumed Residency Agreements;
(iii)    to the extent each Seller’s interest is assignable without violating
any and all laws, rules, regulations, statutes, manual provisions, ordinances or
requirements or any judgments, decrees, writs, injunctions or orders of any
Governmental Authority in effect as of the Date of Execution, or as enacted or
amended from time to time from the Date of Execution through the Effective Time)
(“Applicable Laws”), and only to the extent the TRS Entity in its sole
discretion elects to assume the same, all Licenses relating to or used in
connection with the Facilities or the operation thereof;
(iv)    all right, title and interest of each Seller (or their respective
Affiliates) in and to all Intellectual Property, including without limitation,
the following: any trademarks, trade names, service marks, trade dress and all
variations thereof used in connection with the operation of the Facilities,
specifically including the identified on Schedule 2.18; all telephone and
facsimile numbers relating to the Facilities (including all “800” numbers) and
all e-mail addresses and domain names associated with the Facilities; all post
office box addresses associated with the Facilities; and all

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software or other computer programs to the extent used in connection with the
operation of the Facilities;
(v)    to the extent in Seller’s or Seller’s Affiliates’ possession, all books,
data and records (including electronic versions thereof) to the extent related
to the Facilities, including emails, financial and accounting records, contacts,
calendars, customer lists, referral source lists, regulatory surveys and
reports, incident tracking reports, advertising and marketing materials and
competitive analyses, all policy and procedure manuals (including those used for
the operation of the Facilities), all records and reports (except for such
records and reports where transfer is prohibited by Applicable Laws) relating to
any or all residents and Residents residing at the Facilities from time to time
on or after the Date of Execution (collectively, “Residents”), but only to the
extent such Residents remain Residents on the Closing Date (collectively,
“Resident Records”), all Employee Records, but only to the extent such Employee
Records are for Employees who become Transitioned Employees, all leads regarding
prospective Facility residents and Residents and copies of Seller’s general
ledgers and trial balances, disbursement journals and records, accounts payable
journals and records, cash receipts journals and records, sales journals and
records, payroll journals and records, fixed asset records, financial
statements, and other financial books and records related to any of the
foregoing (collectively, “Books and Records”);
(vi)    all right, title and interest of each Seller (or their respective
Affiliates) in and to all furniture, furnishings, equipment, computers, office
equipment, systems and supplies located at the Facilities (collectively, the
“Sellers’ FF&E” or “FF&E”), excluding all automobiles, vans, buses or other
vehicles located at the respective Facilities owned or operated by it or used in
connection therewith; and
(vii)    all right, title and interest of each Seller (or their respective
Affiliates) in any and all other items of tangible and intangible personal
property used or useful in connection with the use, operation, management and
maintenance of the Facilities, and all goodwill of Seller associated with the
businesses operated at the Facilities (collectively, the “Business”).
D.    Upon the consummation of Purchaser’s acquisition of the Assets, Seller or
one of its Affiliates, as an eligible independent contractor (the “EIK
Manager”), shall enter into a management agreement with each TRS Entity, whereby
the EIK Manager shall operate the Facilities on a day-to-day basis for and on
behalf of the TRS Entity on the terms and subject to the conditions set forth
herein and in such management agreement (such actions and transactions, together
with the Purchaser’s acquisition of the Assets, collectively, the
“Transactions”).
E.    For ease of reference, Appendix A contains a list of the section numbers
in which capitalized terms used herein are defined.
NOW, THEREFORE, in consideration of the recitals, and of the mutual agreements,
representations, warranties, conditions and covenants herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

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ARTICLE I.

PURCHASE AND SALE
1.1    Transfer of Assets at the Closing. For and in consideration of the
foregoing and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and subject to the terms and conditions herein
provided, at the Closing and with respect to each Facility, Seller (and, to the
extent required, their respective Affiliates) shall respectively sell, convey,
transfer and assign the Real Property Assets and Operating Assets owned by them
to the Real Estate Purchasers and the TRS Entity designated by Purchaser, and
each such Real Estate Purchaser and TRS Entity shall purchase, accept and assume
the Real Property Assets and Operating Assets from Seller.
1.2    Excluded Assets. Notwithstanding anything to the contrary contained
herein, the Assets shall not include the following items (collectively, the
“Excluded Assets”):
(a)    All of Seller’s bank accounts, cash, cash equivalents and securities
except to the extent any portion thereof is subject to the prorations or
reconciliation procedures set forth herein;
(b)    All replacement and tax escrow reserves, utility deposits and workers
compensation trust assets of Seller;
(c)    All prepaid expenses of Seller, including insurance prepayments;
(d)    All automobiles, vans, buses or other vehicles and cell phones owned by
Sellers;
(e)    All accounts receivable of Seller including receivables from any
Affiliate of Seller, accounts receivable relating to Residents’ fees and rents
and/or services provided prior to the Effective Time, whether from any
Governmental Authority, Resident or other person or entity whatsoever;
(f)    Except as otherwise expressly provided in this Agreement (including with
respect to the Move-In Deposits), all refunds or reimbursements of whatever
nature or description which relate to or are attributable to the period prior to
the Effective Time and all deposits, escrowed funds and similar funds;
(g)    Except to the extent otherwise expressly provided in this Agreement, all
claims, disputes and litigation, and all amounts of any nature or description
relating thereto, to the extent such dispute, claim or litigation is related to
the period prior to the Effective Time;
(h)    All of Seller’s rights and benefits under this Agreement; and
(i)    Seller’s organizational documents, minute books and other books and
records except to the extent needed for the operation of the Facilities;
(j)    Those additional items set forth on Schedule 1.2(k).

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1.3    Closing Mechanics.
(a)    Unless this Agreement shall have been terminated pursuant to an express
right to terminate as herein provided, the closing hereunder related to the
purchase and sale of the Assets (the “Closing”) shall occur at 10:00 a.m.
Pacific Time on the thirtieth (30th) day following the expiration date that is
the later of (i) the Diligence Period, or (ii) the date on which Regulatory
Approvals have been obtained under Section 5.5(c), or (iii) the date on which
the approval of the Loan Assumption has been obtained under Section 1.4(c) or
such other date as may be mutually agreed to by the parties (the “Closing
Date”). Subject to the preceding sentence, the parties hereto acknowledge that
their respective intention is to have a Closing Date which is the last day of a
calendar month. For purposes of the foregoing, if said 30th day is not the last
day of a calendar month, the Closing Date shall be on the last day of the
current calendar month in which said 30th day occurs. The Closing will be
effective for accounting purposes as of 11:59:59 p.m. Pacific Time on the
Closing Date (the “Effective Time”) such that the Closing Date will be a day of
income and expense to Seller. The Closing shall take place through an exchange
of consideration and documents using overnight courier service, wire transfers,
electronic mail or facsimile.
(b)    On the Closing Date, all documents and other materials required from
Seller under Section 10.1(b) (collectively, the “Seller Documents”) and from
Real Estate Purchasers and the TRS Entity under Section 10.1(c) (collectively,
the “Purchaser Documents”) in order to effectuate the consummation of the
Closing shall be delivered to the offices of the Title Company, as escrow agent,
or at such other place as Purchaser may reasonably require. Notwithstanding the
foregoing, (i) Seller may deliver all of the Seller Documents required hereunder
to the Title Company or to Purchaser’s counsel on or before the Closing Date (to
hold in escrow in accordance with customary conveyancing practices subject to
the consummation of the Closing), and (ii) Real Estate Purchasers and the TRS
Entity may deliver all of the Purchaser Documents required hereunder to the
Title Company or to Seller’s counsel on or before the Closing Date (to hold in
escrow in accordance with customary conveyancing practices subject to the
consummation of the Closing).
1.4    Purchase Price.
(a)    The aggregate purchase price (the “Purchase Price”) for the Assets shall
be Eighty-Seven Million Five Hundred Thousand and No/100 Dollars
($87,500,000.00), subject to the prorations and further adjustments as provided
for in this Agreement of which the portion of the Purchase Price allocated to
the Westrum Hanover Facility shall be reduced by the outstanding Loan Balance
(defined below) of the FNMA multifamily mortgage loan effective as of December
22, 2009 granted to Red Mortgage Capital Inc. (the “Hanover Loan”) which loan is
secured by that certain mortgage recorded as instrument #2009045841 (the
“Hanover Mortgage”) to Lender.
(b)    Attached to this Agreement as Schedule 1.4 is a list of the loan
documents entered into by the Seller of the Hanover Facility and its affiliates
in connection with the Hanover Loan and delivered to the Lender (each a “Loan
Document” and collectively, the “Loan Documents”). Hanover Partnership hereby
represents and warrants that it has delivered to Purchaser a materially true,
correct and complete copy of each of the Loan Documents. As used in this
Agreement, the term “Loan Balance” shall mean the then-applicable outstanding
principal balance, escrows, deposits, reserves, and all accrued but unpaid
interest, charges and fees then

5

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outstanding with respect to the Hanover Loan. The Purchase Price shall be paid,
in part, by Purchaser’s assumption of, and Hanover Partnership and its
Affiliates and guarantors fully released with respect to the Hanover Loan and
all of their respective obligations under the Loan Documents, other than for any
liability pursuant to the Assumption Agreement, the Loan Document guaranty and
environmental indemnity for any liability that relates to the period prior to
the Closing Date, regardless of when such environmental liability is discovered,
but subject to the Lender’s customary terms of the Assumption Agreement (the
“Loan Assumption”, and with the Hanover Loan actually assumed by Purchaser being
referred to herein as the “Assumed Debt”).
(i)    Application. On or before the Effective Date, Hanover Partnership shall
deliver to Purchaser a list of the relevant contact information for the
mortgagee of the Hanover Mortgage and its servicer (“Lender”), and thereafter
Purchaser shall submit to Lender an application requesting approval of an
assignment of the Hanover Loan and the Loan Documents to Purchaser, the release
of the Hanover Partnership, the respective guarantors of the Hanover Loan and
their Affiliates from the same (subject to the limitations stated in this
Section 1.4), and the assumption by Purchaser of same (the “Loan Assumption
Request”). Hanover Partnership has been advised by Lender that it wishes
Purchaser to deal directly with Lender, and hereby provides Hanover
Partnership’s consent to such action. Purchaser shall promptly and expeditiously
supply Lender with all information and documents requested by Lender that are
necessary to submit and process the Loan Assumption Request in order to provide
the Lender and any other third parties (the “Third Parties”) with the
information and documents reasonably necessary to evaluate and process the
applicable Loan Assumption Request. Hanover Partnership shall promptly and
expeditiously deliver any information necessary relating to Hanover Partnership
to Lender and/or the Third Parties, and shall reasonably cooperate with
Purchaser and Lender in the processing of the Loan Assumption Request. Purchaser
and Hanover Partnership shall use diligent, commercially reasonable efforts to
obtain approvals required for the Loan Assumption.
(ii)    Loan Assumption Documents. The terms of the documents to be executed by
Hanover Partnership, Purchaser and their respective affiliates and all other
parties in connection with the consummation of the Loan Assumption (the “Loan
Assumption Documents”) shall have such other terms not inconsistent with the
terms hereof that are standard and customary for the assumption of commercial
loans secured by properties similar to the Property and which do not increase
the liability of the borrower under the Assumed Debt. Hanover Partnership shall
have the right to review and approve the Loan Assumption Documents to the extent
(and only to the extent) that such documents pertain to Hanover Partnership’s
and its Affiliates’ release from liability and obligations first accruing on or
after the Closing Date including, without limitation, with respect to liability
pursuant to an environmental indemnity and any guaranty first accruing on or
after the Closing Date, it being the intent of the parties that, as between
Purchaser and Seller, Purchaser, and not Seller, shall be responsible for
environmental claims first accruing on or after the Closing Date notwithstanding
provisions within the Loan Assumption Documents making both jointly and
severally liable for same. Purchaser shall have the right to review and approve
all of the terms and conditions of the Loan Assumption Documents. At Purchaser’s
sole cost and expense, Purchaser shall provide all commercially reasonable and
customary legal opinions relating to Purchaser’s authority and authorization as
reasonably required by Lender. At Seller’s sole cost and expense, Seller shall
prepare and deliver all commercially reasonable and customary legal opinions
relating to its authority and authorization, and shall execute and deliver to
the appropriate parties all commercially reasonable and customary documents and
instruments required of Hanover Partnership

6

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by Lenders in connection with the Loan Assumption (the “Seller Loan Assumption
Documents”), and the foregoing shall be included within the meaning of “Seller
Closing Documents” that Seller is required to deliver under this Agreement. At
Closing, Purchaser shall purchase the full amount of all deposit accounts funded
by Seller under the Loan Documents.
(c)    Loan Assumption Approval; No Purchaser Termination Right. If Lender has
not approved the Loan Assumption Request within one hundred eighty (180) days
after the Date of Execution, then Seller may elect to either terminate this
Agreement or pay the Loan Balance at Closing and the Hanover Facility shall be
conveyed to Purchaser free and clear of any mortgage debt incurred by Seller.
Lender’s failure to approve the Loan Assumption Request shall not entitle the
Purchaser to terminate this Agreement or to decline to close on the purchase,
provided that all mortgage debt as to such Property shall be paid and discharged
in full at Closing from the Purchase Price.
1.5    Payment of Purchase Price.
(a)    Within three (3) Business Days following the Date of Execution Purchaser
shall deposit in immediately available federal funds, with the Dallas, TX office
of Chicago Title Insurance Company, as escrow agent (“Escrow Agent”), an amount
equal to Three Million and No/100 Dollars ($3,000,000) (together with any
interest and earnings thereon, the “Deposit”), which amount shall be held
pursuant to the terms of the escrow agreement (the “Escrow Agreement”), and
promptly upon receipt, confirmed by Escrow Agent to Seller in writing.
(b)    At the Closing, One Million Dollars ($1,000,000) of the Purchase Price
for each Facility (which amount may be adjusted during the Diligence Period by
agreement of the parties), aggregating a total of Three Million Dollars
($3,000,000), will be paid into an escrow account of the Title Company for the
benefit of Seller; the use of such funds distribution shall be restricted for
the twelve (12) month period following the Closing Date as the exclusive source
of funds to satisfy any Purchaser Indemnified Losses made by any Purchaser
Indemnified Party (the “Indemnity Holdback”) on a separate and several basis
among the three Facilities and their Sellers. Upon the last day of the sixth
(6th) full calendar month following the Closing Date, the sum of $500,000 of the
Indemnity Holdback then remaining as to each Facility (i.e. an aggregate of One
Million Five Hundred Thousand Dollars ($1,500,000), less the amount of any
Purchaser Indemnified Losses with respect to each such Facility against the
respective Indemnity Holdback that are outstanding as of said date, will
thereupon be distributed to the respective Seller; and, upon the expiration of
the twelve (12) full calendar month period after the Closing Date, the remaining
balance of the Indemnity Holdback, if any, less the amount of any respective
Purchaser Indemnified Losses against the remaining balance of the respective
Indemnity Holdback that are outstanding as of said anniversary of the Closing,
will be thereupon distributed to the respective Seller. The conditions for the
distribution or forfeiture of the respective Indemnity Holdback are more
particularly set forth in that certain Indemnity Holdback Agreement, which shall
be executed and delivered by Purchaser and Seller at the Closing, in the form to
be agreed upon during the Diligence Period (the “Indemnity Holdback Agreement”)
(c)    At the Closing, Purchaser shall pay the Purchase Price, adjusted for any
prorations, credits and additions for the benefit of Purchaser, or Seller as
specified in this Agreement, such as escrows, deposits, and reserves supporting
the Hanover Mortgage, less the

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Deposit and the aggregate amount of all indebtedness of the Partnerships
outstanding under the Hanover Mortgage as of the Closing, by wire transfer of
immediately available federal funds to the Title Company, and the Title Company
shall disburse all funds it receives from the parties in connection with the
Closing pursuant to the Closing Statement. Seller shall be responsible for any
prepayment penalties or fees associated with the pay-off of any debt encumbering
the Real Property or any of the other Assets that does not, as permitted by the
terms of this Agreement, remain outstanding from and after the Closing.
(d)    At the Closing, Seller shall pay and discharge in full any and all
Monetary Encumbrances, other than the Hanover Mortgage, and Seller shall pay all
penalties, fees and charges in connection therewith.
(e)    Any provision herein that entitles Purchaser to a return of the Deposit
upon termination or cancellation of this Agreement shall be construed to provide
for a return of the entire portion of the Deposit and any interest earned or
accrued thereon held by Escrow Agent pursuant to the Escrow Agreement, if any.
(f)    At the Closing, Seller and Purchaser shall make the adjustments and
prorations specified in Sections 1.3(a), 1.5, 6.1, 10.2 and 10.3 and shall, as
applicable, make the payments set forth in the Closing Statement.
1.6    Assumed Liabilities and Excluded Liabilities.
(a)    At the Closing, neither Purchaser nor any of the Real Estate Purchasers
nor TRS Entity shall assume any liabilities or obligations of Seller whatsoever,
fixed or contingent, other than (i) the applicable Real Estate Purchaser shall
accept title to the applicable Real Property, subject however to obtaining any
Required Consents; and (ii) the applicable TRS Entity shall assume the Assumed
Contracts and Assumed Residency Agreements, only to the extent such obligations
and liabilities assumed by the TRS Entity under the Assumed Contracts and
Assumed Residency Agreements relate to periods after the Effective Time, subject
however to obtaining any Required Consents and any other applicable third party
consents (collectively, the foregoing (i) and (ii) are the “Assumed
Liabilities”). Each applicable Real Estate Purchaser shall exercise its
respective commercially reasonable efforts to assume or take title subject to
and all Required Consents in connection therewith.
(b)    Seller shall retain, promptly pay and discharge in the ordinary course
all liabilities and obligations of Seller other than the Assumed Liabilities.
SPECIFICALLY, THIS AGREEMENT EXCLUDES, AND REAL ESTATE PURCHASERS AND TRS
ENTITIES ARE NOT ASSUMING, ANY LIABILITIES OF SELLER OTHER THAN THE ASSUMED
LIABILITIES (COLLECTIVELY, THE “EXCLUDED LIABILITIES”). THE EXCLUDED LIABILITIES
INCLUDE, BUT ARE NOT LIMITED TO, ANY LIABILITIES OR OBLIGATIONS UNDER ANY LOAN
OR MORTGAGE NOT EXPRESSLY ASSUMED UNDER THIS AGREEMENT, SELLER'S ACCOUNTS
PAYABLE AND ALL OBLIGATIONS ARISING OUT OF OR RELATED TO THE OPERATION OF THE
BUSINESS AND THE FACILITIES PRIOR TO THE EFFECTIVE TIME, INCLUDING WITHOUT
LIMITATION COSTS, EXPENSES AND OTHER LIABILITIES AND OBLIGATIONS ARISING FROM
THE OPERATION OF THE BUSINESS AND THE FACILITIES (INCLUDING MEDICAL

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MALPRACTICE CLAIMS OR OTHER INJURY OR DEATH TO PERSONS, INCLUDING CURRENT OR
FORMER RESIDENTS); LIABILITY FOR OVERPAYMENT AND FRAUD UNDER MEDICARE, MEDICAID
OR ANY THIRD-PARTY PAYOR AGREEMENT OR OTHER RESIDENT-RELATED CONTRACTUAL
OBLIGATION; OBLIGATIONS UNDER ANY COLLECTIVE BARGAINING AGREEMENT, EMPLOYMENT
AGREEMENT, PENSION OR RETIREMENT PLAN, PROFIT-SHARING PLAN, STOCK PURCHASE OR
STOCK OPTION PLAN, MEDICAL OR OTHER BENEFITS OR INSURANCE PLAN, COMPENSATION
OBLIGATION OR AGREEMENT OR SEVERANCE PAY PLAN OR AGREEMENT AND ANY OTHER
EMPLOYEE BENEFIT PLAN; AND LIABILITY FOR ANY AND ALL TAXES (EXCEPT TAXES
PRORATED IN ACCORDANCE WITH SECTION 10.3(a)). FOR PURPOSES OF CLARIFICATION, ANY
AND ALL ACCOUNTS PAYABLE OR OTHER OBLIGATIONS ACCRUING TO AND EXISTING AS OF THE
EFFECTIVE TIME ARE AND SHALL REMAIN THE SOLE OBLIGATION AND RESPONSIBILITY OF
SELLER.
1.7    Allocation of Purchase Price. The allocation of the Purchase Price among
the Facilities, to be used solely for the purpose of determining Closing costs,
such as realty transfer tax, is as follows (each an “Allocated Value”):
(a)
Powder Mill Facility
$
33,750,000.00

 
 
 
(b)
Hanover Facility
$
24,750,000.00

 
 
 
(c)
Chestnut Knoll Facility
$
29,000,000.00

Seller and Purchaser agree that each party shall file federal, state and local
returns based on each party’s own determination of the proper allocations of the
Purchase Price, each bearing its own consequences of any discrepancies.
1.8    Diligence Period.
(a)    As used herein, the term “Diligence Period” shall mean the 45 day period
commencing on the Date of Execution. Seller shall deliver to Purchaser or make
available to Purchaser in a data room to which Purchaser has access, all of the
items listed on Schedule 1.8 attached hereto (the “Diligence Materials”). Seller
also shall deliver to Purchaser the Schedules not affixed to this Agreement at
execution as required by Section 13.14. Additionally, during the term of this
Agreement, Purchaser, its employees, contractors, agents and designees
(“Purchaser Representative”), shall have the right to enter each Facility for
the purposes of inspecting and testing the same, and the Books and Records and
making surveys, mechanical and structural engineering studies, inspecting
construction, and conducting any other interviews (subject to the other terms of
this Section relating to the notice required prior to such entry), including
interviews of the chief nursing officer, human resources director, director of
quality assurance and chief information officer, and conduct investigations and
inspections as Purchaser may reasonably require to assess the condition and
suitability of the Facility and the Assets; provided, however, that such
activities by or on behalf of Purchaser at the Facility shall not materially
interfere with the conduct of business at the Facility; and, provided further,
however, that Purchaser shall indemnify and hold Seller harmless from and
against any and all claims or damages to the extent directly resulting from the
activities of Purchaser at the Facility (but not claims or damages arising out
of the findings of such activities),

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and Purchaser shall repair any and all damage caused, in whole or in part, by
Purchaser and return the Facility to its condition prior to such damage, which
obligation shall survive Closing or any termination of this Agreement. Seller
shall reasonably cooperate with the efforts of Purchaser and the Purchaser’s
representatives to inspect the Facility and the Assets. Purchaser shall give
Seller reasonable notice before entering the Facility, and Seller may have a
representative present during any and all examinations, inspections and/or
studies at the Facility. Prior to entry upon the Facility, Purchaser shall
notify Seller (which notice may be in writing pursuant to the notice Section of
this Agreement, or telephonically to David Lovitz at (215) 837-3550 or Kevin
McCollum at (215) 499-5667, of the date, approximate time, and anticipated
general scope of activities of such entry and inspection which Purchaser desires
to perform and the parties shall coordinate and cooperate with one another
during the performance of such inspection. Purchaser shall not enter the
Facility to perform such inspection until Seller has confirmed (verbally or in
writing) that Seller has consented to such inspection. For the purposes of this
paragraph, a written notice may be given by confirmed facsimile or email. In
conducting all such activity, Purchaser shall at all times materially comply
with all material and applicable laws, ordinances, rules, regulations and orders
of the governmental entities with jurisdiction over the Facility relating to
such activity, and such other written rules which Seller has delivered to
Purchaser prior to the commencement of such activity with respect to the
Facilities (it being the understanding of the parties that no such other rules
are in effect as of the date of this Agreement). Prior to entering on the
Facility, or any part thereof, or any other part of Seller, Purchaser shall
either have unencumbered cash or cash equivalent reserves of at least $1,000,000
or have insurance of at least $1,000,000 for comprehensive general liability as
set forth below and, if Purchaser does not have such reserves, shall submit to
Seller evidence of such insurance of Purchaser, in form and substance reasonably
satisfactory to Seller. Purchaser shall have the unconditional right, for any
reason or no reason, to terminate this Agreement by giving written notice
thereof to Seller prior to the expiration of the Diligence Period, in which
event this Agreement shall become null and void, whereupon Escrow Agent shall
refund the Deposit to Purchaser (which obligation and right shall survive such
termination), and all rights, liabilities and obligations of the parties under
this Agreement shall expire, except as otherwise expressly set forth herein. If
Purchaser does not so terminate this Agreement prior to the expiration of the
Diligence Period, Purchaser conclusively shall be deemed to have waived its
right to terminate this Agreement pursuant to this Section. The obligations of
Purchaser under this Section 1.8 shall survive the termination of this Agreement
for a period of six (6) months.
(b)    Notwithstanding anything to the contrary contained in this Agreement: (a)
Seller, in its sole discretion may deny or restrict any access (i) involving
possible breaches of applicable confidentiality agreements with third parties,
invasive environmental reviews which exceed the customary scope of a Phase I
environmental study the written work plan for which had not been previously
approved by Seller in its sole discretion or possible waivers of any applicable
attorney-client privileges or (ii) in the event Purchaser is in breach of this
Agreement, (b) such investigations shall not under any circumstances materially
interfere with Seller’s operations, activities or employees, and (c) such
investigations shall not be of a nature which are reasonable likely to violate
applicable antitrust or similar laws. In the event this Agreement is terminated
pursuant to its terms: (x) Purchaser shall keep confidential any information
obtained from Seller (except as may be specifically (and only to the extent)
required to be disclosed by applicable law or administrative or legal process or
pursuant to any securities exchange rules), it being understood that Purchaser
will notify Seller in writing prior to any proposed disclosure of such
confidential information in order to enable Seller to seek an appropriate
protective order; and (y) Purchaser shall

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return to Seller all documents (and reproductions thereof) delivered to
Purchaser in connection with this transaction, but shall be entitled to retain a
copy as required by its business record retention policies and/or Applicable
Laws.
ARTICLE II.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
As an inducement to Purchaser to enter into this Agreement and to consummate the
transactions contemplated herein, Seller, not jointly but severally with respect
to each of the entities that comprise Seller, each as to itself, and the
Facilities and Businesses such Seller owns, represents, warrants and covenants
the following, each of which warranties, representations and covenants is
material to and is relied upon by Purchaser:
2.1    Organization and Qualification. Each Seller is duly organized and validly
existing and in good standing under the laws of the jurisdiction in which it is
organized, with full power and authority to carry on its business as it has been
and is currently being conducted and to own, lease and operate its assets as and
in the places they have been and now are owned, leased or operated. With respect
to each Seller, Schedule 2.1 sets forth each jurisdiction in which such Seller
is licensed or qualified to do business, and such Seller is duly licensed and
qualified to do business and is in good standing in each jurisdiction in which
the properties owned, leased or operated by it or the operation of its business
as currently conducted makes such licensing or qualification necessary. The
authorized representative, if any, of each Seller are set forth on Schedule 2.1.
2.2    Authority; Binding Effect.
(a)    Each Seller has, and at the Closing, as applicable, will have, the full
and unrestricted right, corporate or limited liability company power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions and perform all obligations contemplated hereby and in all
agreements, instruments and documents being or to be executed and delivered by
such Seller in connection with such transactions, including, without limitation,
the Seller Documents (collectively, “Seller Related Documents”).
(b)    This Agreement does and each Seller Related Document, upon due execution
and delivery by each Seller, will constitute the legal, valid and binding
obligation of each of the Sellers, enforceable in accordance with its respective
terms, subject to bankruptcy, insolvency, and other limitations on creditors’
rights generally and to equitable principles.
(c)    Each Seller has obtained all required corporate approvals required for
the execution and consummation of this Agreement, the Seller Related Documents
and all transactions contemplated hereby and thereby to which they are a party
or are otherwise bound.
2.3    Licenses. Schedule 2.3 sets forth all permits, licenses, and other
authorizations issued or required by Governmental Authorities in connection with
the use, operation, management and maintenance of the Business and the
Facilities, including, without limitation, such licenses, and ancillary permits,
as are required for (x) the operations of the Facilities as personal care
facilities or independent living facilities, as the case may be, (y) the
operation of any other businesses or services conducted or provided at the
Facilities such as, without limitation, salon, elevator or pharmacy

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services, or (z) any modifications, expansions or additions to the Facilities,
if any (collectively, the “Licenses”). Each License (i) has not (A) been
transferred to any location other than the applicable Facility or (B) pledged as
collateral security, except with respect to the Hanover Mortgage, (ii) is free
from restrictions or known conflicts that would materially impair the use or
operation of the applicable Facility as intended, and (iii) is not provisional,
probationary, or restricted in any way, except in instances where a Governmental
Authority has issued a provisional, probationary or restricted license, permit
or certification in the ordinary course pending issuance of a final license,
permit or certification as set forth on Schedule 2.3, and (iv) except as set
forth on Schedule 2.3, may be transferred to Purchaser as contemplated by this
Agreement without violating any Applicable Laws and without restriction or loss
of any benefits afforded thereby, without notice to, or receipt of any consent
or approval from, any Governmental Authority in connection therewith. Except as
set forth on Schedule 2.3, the Licenses are valid, in full force and effect, in
good standing, there are no pending nor, to the Knowledge of Seller, threatened
proceedings for the revocation, suspension, termination, probation, restriction,
limitation, or non-renewal of any License and Seller has not received notice and
has no Knowledge that Seller is in violation of, or being investigated for a
potential violation of, any restriction or other Applicable Laws in connection
with the Licenses, the Business or the Facilities or otherwise restricting or
otherwise affecting possession, operation and use thereof. Except as set forth
on Schedule 2.3, Seller has not taken any action to rescind, withdraw, revoke,
amend, modify, supplement or otherwise alter the nature, tenor or scope of any
License other than non-material alterations effected in the ordinary course of
the Business consistent with past practice. Seller is the sole holder of all the
Licenses and there is no other person or entity that operates, manages or leases
the Facilities. To the Knowledge of Seller, each Employee who is required by
Applicable Law to hold a License to deliver health care services to Residents
(including the performance of diagnostic services such as x-ray or lab services)
holds such License and is performing only those services which are permitted by
such License.
2.4    Governmental Authorities. Except as set forth on Schedule 2.4, Seller is
not required to submit any notice, report or other filing with any federal,
state, municipal, foreign or other governmental or regulatory authority,
including any Pennsylvania state healthcare licensure agency (a “Pennsylvania
Licensure Agency”) (the foregoing, individually, a “Governmental Authority” and
collectively, “Governmental Authorities”) in connection with the execution or
delivery of this Agreement or any of the Seller Related Documents or the
consummation of the transactions contemplated hereby and thereby, in each case
by Seller, and no consent, approval or authorization of any Governmental
Authority is required to be obtained by Seller in connection with the execution,
delivery and performance of this Agreement except as set forth on Schedule 2.4.
2.5    Taxes. Except as set forth in Schedule 2.5, (i) all real property taxes
and assessments in connection with the Real Property Assets and allocable to the
period prior to the Closing have been paid or, by the time of Closing, will be
paid by Seller, or such taxes will be prorated between the parties as
contemplated in Section 10.3(a) and (ii) all personal property taxes and
assessments in connection with the Operating Assets and allocable to the period
of Seller’s ownership of the Assets prior to the Closing have been paid or, by
the time of Closing, will be paid by Seller, or such taxes will be prorated
between the parties as contemplated in Section 10.3(a). In addition: (a) all
income, sales, use, bed and franchise taxes due and payable by Seller during the
period of Seller’s (or any Affiliate of Seller’s) ownership of the Assets, if
any, and all interest and penalties thereon, if any, have been paid or, by the
time of Closing, will be paid by Seller; (b) all tax returns required to be
filed by Seller, if any (including, without limitation, all sales, use, income,
franchise and payroll tax

12

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returns and reports), have been properly and timely filed, and correctly reflect
the tax position of Seller, and all taxes respectively due under such tax
returns have been paid thereby or will be paid in the ordinary course of
Seller’s business and in any event on or before the applicable due date, as the
same may be extended in compliance with law; (c) Seller is not subject to a
claim for deficiency or other action in connection with any taxes and is not
paying any taxes for any prior period under any installment agreement,
compromise or settlement agreement or any other arrangement with any
Governmental Authority; (d) no tax returns of Seller have been or are being
examined by the Internal Revenue Service (“IRS”) or any state or local
Governmental Authority; (e) all tax returns filed or required to be filed by or
on behalf of Seller after the Date of Execution, covering periods prior to and
including the Closing Date, will be properly and timely filed (giving
consideration for allowable extensions) and all taxes respectively due under
such tax returns will be timely paid; (f) Seller has complied with all
Applicable Laws relating to the payment and withholding of taxes in connection
with any amounts paid or owing to any Employee, independent contractor,
creditor, stockholder, or other third party, including, without limitation, all
information reporting, backup withholding, and maintenance of required records
with respect thereto; and (g) Seller has not received any notice of any
obligation to pay any employment taxes owed or allegedly owed with respect to
Employees.
2.6    No Defaults or Consents. Except as set forth on Schedule 2.6, the
execution, delivery and performance of this Agreement and any of the Seller
Related Documents by Seller does not and will not, to the extent the same would
result in a Material Adverse Change to Purchaser:
(a)    Conflict with or result in any breach of the provisions of, or constitute
a default under the articles of incorporation, bylaws, articles of organization,
operating agreement, partnership agreement or other governing organizational or
charter documents, as the case may be, of any Seller;
(b)    Violate any restriction to which Seller is subject or, with or without
the giving of notice, the passage of time, or both, violate (or give rise to any
right of termination, cancellation or acceleration under) any mortgage, deed of
trust, license, lease, indenture or other material agreement or instrument
(including any Material Contracts), whether oral or written, to which Seller is
a party, or by which it or the Assets are bound, or result in the termination of
any such instrument or termination of any provisions or rights in respect of any
of the Assets, or result in the creation or imposition of any lien, charge or
encumbrance upon the Assets;
(c)    Create any liens or other encumbrances on the Assets;
(d)    Constitute a violation of any Applicable Law of any Governmental
Authority;
(e)    Result in the breach or violation of any of the warranties and
representations herein set forth by Seller; or
(f)    Result in the loss of any rights, privileges, authorizations or benefits
afforded or intended by any of the Assets or the Licenses.
2.7    Contracts.
(a)    Schedule 2.7(a)(i) includes a true and correct list as of the Date of
Execution of all outstanding contracts, leases or other agreements, whether
written or oral, to which Seller is

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a party or relating to the Assets or the operation of the Facilities or the
Business, in each case setting forth the applicable termination dates therefor
and the services or goods provided thereunder (collectively, the “Contracts”),
excluding (i) the Residency Agreements, (ii) any contract, lease or other
agreement which is cancellable without penalty on thirty (30) days or less
notice, (iii) any contract, lease or other agreement which is entered into in
the ordinary course of business consistent with past practice, is not material
to the Business and does require the expenditure of more than Fifty Thousand
Dollars ($50,000.00) per year (either individually or together with any related
agreements), and (iv) any of the insurance policies listed in Schedule 2.26 (or
the renewal of any such policies) (such contracts and agreements, including any
management agreement, administrative services agreement, pharmacy services
agreement, cost-sharing agreement or real property lease between any Seller, on
the one hand, and any Affiliate(s) of Seller, on the other hand, covered by
Schedule 2.27(a)(i), but expressly excluding those described in clauses (i) –
(iv), collectively, the “Material Contracts”). Seller has provided Purchaser
true and complete copies of each such Material Contract. Seller has not received
notice of any default, and there is no default, existing or continuing by Seller
or, to Seller’s Knowledge, any other party under the terms of any Material
Contracts, and each Material Contract is in full force and effect and is valid
and enforceable by Seller in accordance with its terms. At least twenty-one (21)
days prior to the Closing Date, Seller shall deliver to Purchaser a certificate
in which Seller (A) restates as of such date the representations and warranties
contained in the preceding portions of this Section 2.7(a) (and an updated
Schedule 2.7(a)(i) to bring forward the list of any Contracts required to be set
forth in such representations and warranties to the date of such certificate to
the extent they are true at such time), and (B) identifies any consents required
in order that the assignments of any Contracts by Seller at Closing not result
in a violation of any restrictions, termination of any rights or the creation of
any liens, charges or encumbrances with respect to the Contracts, with or
without the giving of notice, the passage of time or both which would result in
a Material Adverse Change. At or prior to the Closing, Seller will cause those
Contracts (whether entered into before or after the Date of Execution)
identified by Purchaser in its sole discretion in writing at least thirty (30)
days prior to the Closing Date to be terminated effective as of immediately
prior to the Closing, all at no cost to Purchaser or any Affiliate thereof, and
all such other Contracts not so designated for termination shall be assigned to
the Real Estate Purchaser or the TRS Entity at the Closing, in Purchaser’s sole
discretion and at no cost to Purchaser or the TRS Entity (collectively, “Assumed
Contracts”). Notwithstanding the foregoing, for the avoidance of doubt, subject
to and in accordance with Section 1.6(a), the parties have agreed that (x) the
TRS Entity will assume the Residency Agreements as more particularly set forth
in Section 2.7(b), and (y) the applicable TRS Entity or Real Estate Purchaser
will assume those Assumed Contracts set forth on Schedule 2.7(a).
(b)    Included on Schedule 2.7(b)(i) are specimen residency agreements for the
Powder Mill and the Hanover Facilities, and on Schedule 2.7(b)(ii), a true,
correct and complete resident roll dated as of February 1, 2015 for each
Facility. Except as set forth on Schedule 2.7(b), all Residents (or their
authorized agents) of the Powder Mill and the Hanover Facilities have executed
residency agreements as of or before the Date of Execution (“Residency
Agreements”), no Residency Agreements vary in any material respect from the
terms of the specimen agreements attached hereto, all Residency Agreements were
entered into on an arms’ length basis, do not provide for payment of a single
sum in exchange for lifetime care or other prepaid services and do not contain
any provisions that prohibit or limit the right to raise monthly occupancy or
other fees or rents payable thereunder for more than six (6) months after the
initial occupancy date under such Residency Agreement. All Residency Agreements
are terminable by the Resident therein named

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upon no more than thirty (30) days’ notice and comply with all Applicable Laws,
including, without limitation, all required regulatory standards of any
Governmental Authorities with regulatory jurisdiction over the Business and the
Facilities. True, correct and complete copies of all Residency Agreements are
located at the Facilities to which they relate and access thereto have been or
will be provided to Purchaser as part of its due diligence review. For the
avoidance of doubt, the parties have agreed that the TRS Entity shall at Closing
assume from Seller all Residency Agreements (including those entered into after
the Date of Execution in accordance with Section 4.1(a)) in effect as of the
Closing Date with the Residents of the Facilities as of the Closing Date, and
the contractual obligation of Seller to refund Move-In Deposits, if any, to
former Residents, to the extent that Purchaser receives a credit for such
Move-In Deposits pursuant to Section 6.1(d) (collectively, the “Assumed
Residency Agreements”).
2.8    Title to Property and Related Matters.
(a)    Each of the Sellers is the holder of good and marketable fee simple title
in and to the Facility it owns, in each case free and clear of all Monetary
Encumbrances other than the Hanover Mortgage, and as set forth on Schedule
2.8(a), without exception to title other than for the Permitted Encumbrances and
as set forth on Schedule 2.8(a). Except as set forth on Schedule 2.8(a), the
Sellers are organized under the laws of Pennsylvania or Delaware, have each
continuously operated its Facility for a period of not less than five (5) years
and using no names other than (i) the legal names and/or trade names of the
Sellers and (ii) the names of the Facilities set forth on Exhibit A. To Seller’s
Knowledge, there are no violations of any covenants or restrictions encumbering
the Assets that would result in a Material Adverse Change. No unrecorded
agreements, documents or instruments entered into by any Seller or otherwise to
Seller’s Knowledge affect the title to any Real Property or Improvements other
than the Permitted Encumbrances and encumbrances arising solely under the
Hanover Mortgage and as related to items set forth on Schedule 2.8(a).
(b)    Except for items leased by one or more of the Sellers and listed on
Schedule 2.8(b), to Seller’s Knowledge, one or more of the Sellers owns good
title to all Assets that are personal property free and clear of all mortgages,
security interests, liens or other monetary encumbrances, other than the Hanover
Mortgage and any Monetary Encumbrance as Seller shall pay and discharge in full
prior to or at the Closing.
(c)    To Seller’s Knowledge, all Facilities are supplied with such utilities as
are necessary for the operation of such Facilities and the Business as currently
operated and for their intended purposes, and Seller has no Knowledge of any
future plans by any utility provider to curtail or eliminate any utilities
currently serving the Assets. All utility bills and deposits required by any
utility provider have been paid by Seller.
(d)    To Seller’s Knowledge, each of the Facilities abuts on and has direct
vehicular access to a public road, or has access to a public road via a
permanent irrevocable and insurable easement benefiting the Real Property upon
which such Facility is located, and Seller has no Knowledge of, and no Seller
has received any written notice that alleges any breach or default under any
instrument creating any such easement or attempting to terminate or revoke such
easement.
(e)    To Seller’s Knowledge there are no pending rezoning or other pending land
use actions affecting the Assets or any properties in the immediate vicinity of
the Assets. Seller has

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not received written notice of, and has no Knowledge of, any threatened or
contemplated rezoning or other land use actions affecting or which will affect
the Assets, including, without limitation, on properties in the immediate
vicinity of the Assets. To Seller’s Knowledge, the current use of each Facility
is lawfully permitted as a currently conforming use and there is no known
violation of any Applicable Laws relating to the zoning, land use, building,
fire, life safety codes or other similar requirements of Applicable Laws and
Governmental Authorities.
(f)    Seller has not received written notice of any non-disputed debt or sum
owed to any contractor, laborer, mechanic, materialman, architect or engineer
for work, labor or services performed or rendered, or for materials supplied or
furnished, in connection with the Assets for which any such person or entity
could lawfully assert a lien against the Assets. Seller shall pay or bond over
all said amounts as of Closing.
(g)    There are no condemnation or eminent domain proceedings pending or, to
the Knowledge of Seller, Seller has not received written notice of any
threatened or contemplated against the Assets or any part thereof, or access
thereto, and Seller has not received notice, oral or written, of the desire of
any Governmental Authority or other entity to take or use the Assets or any part
thereof.
(h)    There are no parties other than Seller in possession of the Assets, or
any portion thereof, pursuant to lease, management agreement or otherwise, other
than Residents pursuant to Residency Agreements.
(i)    Seller has not entered into, and to Seller’s Knowledge, there are no
outstanding, options or rights of first refusal to purchase the Assets or any
portion thereof or interest therein.
(j)    The Assets constitute all of the assets necessary and sufficient for
Seller to conduct its operation of the Facilities and the Business in the manner
that such operations have been conducted and as required by Applicable Laws. To
Seller’s knowledge, except for the Assets, there are no other assets owned by
Seller or any Affiliates or Related Parties thereof which are used in connection
with the conduct of the Business or the Facilities or any expansion of the
Business or the Facilities.
2.9    Hazardous Substances. For purposes of this Agreement, “Environmental
Laws” shall mean the Resource Conservation and Recovery Act (RCRA), 42 U.S.C.
Section 6901 et seq., the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), 42 U.S.C. Sections 9601 et seq., the Clean Water Act, 33
U.S.C. Section 1251 et seq., the Toxic Substances Control Act (15 U.S.C. §2601
et seq.), the Clean Air Act (42 U.S.C. §7401 et seq.), the Safe Water Drinking
Act (42 U.S.C. §300(f) et seq.), the Occupational Safety and Health Act, and all
other applicable state, county, municipal, administrative or other
environmental, hazardous waste or substance, health and safety laws, ordinances,
rules, regulations, judgments, orders and requirements of any Governmental
Authority relating or pertaining to (A) any aspect of the environment, (B) the
preservation or reclamation of natural resources, (C) the management, release
and threatened release of Hazardous Substances, (D) response actions and
corrective actions regarding Hazardous Substances, (E) the ownership, operation
or maintenance of personal and real property that manages or releases Hazardous
Substances or at which Hazardous Substances are managed, (F) common law

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torts, including so-called “toxic torts”, and (G) environmental or ecological
conditions on, under or about the Assets, all as in effect as of the Date of
Execution and on the Closing Date. For purposes of this Agreement, “Hazardous
Substance” shall mean any and all substances, wastes, materials, pollutants,
contaminants, compounds, chemicals or elements which are defined or classified
as a “hazardous substance”, “hazardous material”, “toxic substance”, “hazardous
waste”, “pollutant”, “contaminant” or words of similar import under any
Environmental Law, including, without limitation, all dibenzodioxins and
dibenzofurans, polychlorinated biphenyls (PCBs), petroleum hydrocarbon,
including crude oil or any derivative thereof, any radioactive material, raw
materials used or stored in any Facility, Improvement or building components
including, asbestos-containing materials in any form, radon gas and mold of a
type or in amounts that violate applicable Environmental Laws.
(a)    Except as set forth on Schedule 2.9(a), to Seller’s Knowledge, the Assets
do not contain any Hazardous Substance, except for Hazardous Substances
typically used in, and in quantities necessary for the day-to-day operation of,
the Facilities and the Business and which are commonly used in other similar
facilities, such as cleaning fluids, insecticides and medicines (the “Common
Products”), which Common Products have been used, transported, stored and
disposed of in compliance with all applicable Environmental Laws.
(b)    Except as set forth on Schedule 2.9(b), there is no pending or threatened
litigation or proceeding before any Governmental Authority in which any person
or entity alleges the presence, release or threat of release of any Hazardous
Substance or violation of Environmental Laws at any Facility.
(c)    Except as set forth on Schedule 2.9(c), Seller has not received any
written notice of, and Seller has no Knowledge that, any Governmental Authority
or employee or agent thereof has determined, or threatens to determine, or is
investigating, that there is a presence, release or threat of release or
placement on, in or from the Assets, or the generation, transportation, storage,
treatment or disposal at the Assets, of any Hazardous Substance. Seller shall
notify Purchaser promptly of any receipt of any such notice or Knowledge after
the Date of Execution.
(d)    Except as set forth on Schedule 2.9(d), (i) to Seller’s Knowledge, Seller
has owned and operated the Assets in compliance with all applicable
Environmental Laws, has obtained all necessary licenses, permits and other
authorizations under the Environmental Laws for the operation of the Assets, and
has not used any of the Assets for the generation, storage, manufacture, use,
transportation, disposal or treatment of Hazardous Substances, and (ii) the
Assets are currently in compliance with all applicable Environmental Laws.
(e)    Except as set forth on Schedule 2.9(e), to Seller’s Knowledge, there has
been no discharge of any Hazardous Substance on or from any of the Assets during
the time of Seller’s ownership or occupancy thereof.
(f)    Seller has delivered to Purchaser true and complete copies of all written
reports or tests in the possession of Seller with respect to (i) the compliance
of the Assets with Environmental Laws and (ii) the presence of Hazardous
Substances on, in or from the Facilities or the Real Property, each of which is
listed on Schedule 2.9(f).

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2.10    Patriot Act. Seller is in compliance with the requirements of Executive
Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the “Order”), and other
similar requirements contained in the rules and regulations of the Office of
Foreign Assets Control, Department of the Treasury (“OFAC”) and in any enabling
legislation or other Executive Orders or regulations in respect thereof (the
Order and such other rules, regulations, legislation or orders are collectively
called the “Orders”). Neither Seller nor any Affiliate thereof (a) is listed on
the Specially Designated Nationals and Blocked Person List maintained by OFAC
pursuant to the Order and/or on any other list of terrorists or terrorist
organizations maintained pursuant to any of the rules and regulations of OFAC or
pursuant to any other applicable Orders (such lists are collectively referred to
as the “Lists”), (b) is a Person (as defined in the Order) who has been
determined by any competent authority to be subject to the prohibitions
contained in the Orders; or (c) is owned or controlled by (including, without
limitation, by virtue of such Person being a director or owning voting shares or
interests), or acts for or on behalf of, any Person on the Lists or any other
Person who has been determined by any competent authority to be subject to the
prohibitions contained in the Orders.
2.11    Survey Reports, Etc.; Compliance with Law.
(a)    Seller has delivered to Purchaser true and complete copies of all written
survey and other Governmental Authority reports, statements of deficiencies,
plans of correction, audits and any other investigation notices, warnings,
waivers, related correspondence or reports filed, issued, sent, and received,
with respect to the Facilities or the Business (collectively, “Licensing
Surveys” or collectively, “Audits”) since January 1, 2009, and Seller shall also
promptly deliver to Purchaser any Licensing Surveys or Audits received, filed or
arising with respect to the Facilities or the Business between the Date of
Execution and the Effective Time. There are no material deficiencies or
violations noted in any Licensing Surveys or Audits except as set forth on
Schedule 2.11, and Seller has remedied, discharged and complied with all
applicable plans of correction or other requirements, such that there are no
current violations or deficiencies with respect to any of the Licenses.
(b)    Except as set forth on Schedule 2.11, Seller has not been granted any
waivers from compliance with Applicable Laws. Seller is currently conducting,
has at all times conducted, and between the Date of Execution and the Effective
Time will conduct its operation of the Facilities and the Business in material
compliance with all Applicable Laws. Without limiting the foregoing, to Seller’s
Knowledge, Seller (and the operation of each Facility participating in the
Medicare program) is in compliance with the applicable provisions of the
Applicable Laws of any Governmental Authority having jurisdiction over the
ownership, use, operation, management or maintenance of any Facility, including
(i) staffing requirements, (ii) health and fire safety codes including quality
and safety standards, (iii) Applicable Laws relating to the prevention of fraud
and abuse, (iv) insurance, reimbursement and cost reporting requirements,
government payment program requirements and disclosure of ownership and related
information requirements, (v) requirements of applicable Governmental
Authorities, including those relating to each Facility’s physical structure and
environment, licensing, quality and adequacy of nursing facility care,
distributions of pharmaceuticals, rate setting, equipment, personnel, and
operating policies, and (vi) any other Applicable Laws or agreements for
reimbursement for the type of care or services provided with respect to each
Facility. Each Facility and the use thereof complies in all material respects
with all applicable local, state and federal building codes, fire codes, life
safety codes and other similar regulatory requirements and no waivers of such
physical plant standards exist at any of the Facilities.

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(c)    During the period of Seller’s ownership of the Assets, and to Seller’s
Knowledge prior to said period, none of the Facilities has been cited for any
deficiency that would result in a denial of payment for new admissions, civil
monetary penalty, termination, final revocation or cancellation of any License
or termination or other restriction of a Provider Agreement, and Seller has not
received written notice, either formal or informal, and Seller has no Knowledge,
that any such actions will or may be taken or that Seller or any Facility is
under investigation or review with respect to the foregoing.
(d)    During the period of Seller’s ownership of the Assets, and to Seller’s
Knowledge prior to said period, neither Seller nor any Facility has received any
written notice or communication from any Governmental Authority alleging any
violation of accreditation, professional, trade, industry, ethical or other
applicable standards by Seller or any Facility.
2.12    Capital Expenditures. Except as set forth on Schedule 2.12, and other
than ordinary course repair or maintenance projects Seller may undertake with
respect to the Facilities, Seller does not have any outstanding contracts for
capital expenditures relating to the Facilities, nor does Seller have any
agreement, obligation or commitment for capital expenditures relating to the
Facilities, including, without limitation, additions to property, plant,
equipment or tangible capital assets.
2.13    Absence of Notices. Except as disclosed on Schedule 2.13, Seller has not
received any written notice, and Seller has no Knowledge, that (a) any vendor or
supplier of the Facilities or the Business intends to discontinue, substantially
alter prices or terms to, or significantly diminish its relationship with the
Facilities or the Business, either as a result of the transactions contemplated
hereby or otherwise that would result in a Material Adverse Change, or (b) any
federal, state, county, municipal or other Governmental Authority is alleging
any fire, health, safety, building, pollution, environmental, zoning or other
violation of Applicable Law, including, without limitation, applicable health
care licensure laws or violations under the Licenses, with respect to any
Facility or any part thereof, which has not been corrected.
2.14    Resident Records. Except as provided on Schedule 2.14, Seller has
received no written notice, and Seller has no Knowledge: (a) that Resident
Records used or developed in connection with the Business have not been
maintained in accordance with any Applicable Laws (including but not limited to
HIPAA) governing the preparation, maintenance of confidentiality, use or
disclosure, transfer or destruction of such records; and (b) of any material
deficiency in the Resident Records or any other Books and Records.
2.15    Advance Payments and Resident Funds. The accounting for Resident Funds
provided to Purchaser by Seller pursuant to the provisions of Section 10.2, if
any, will be complete and accurate in all material respects as of the Closing.
2.16    Medicare and Third Party Payor Programs Non-Participation. None of the
Facilities are eligible to receive payment under Title XVIII (“Medicare”) or
Title XIX (“Medicaid”) of the Social Security Act, nor have the Facilities
contracted with third party payors, nor entered into provider or reimbursement
agreements or arrangements or received any provider numbers with or from any of
Medicare, Medicare, private or public insurers, health maintenance
organizations, preferred provider organizations or programs, self-insured
employee assistance programs or any other federal, state or local governmental
reimbursement programs.

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(a)    To Seller’s Knowledge, there are no Contracts with Residents or residents
of any Facility or with any other persons or organizations that deviate from or
that conflict with any statutory or regulatory requirements.
(b)    There are no bed taxes, provider fees, indigent and charity care
commitments, or other similar fees due and owing to any Governmental
Authorities.
(c)    Seller has not received written notice of any violations of Applicable
Laws relating to life safety code which remain uncorrected as of the date
hereof, nor has any written waivers for any such life safety code violation be
granted at any of the Facilities.
(d)    Seller is not a participant in any federal, state or local program
whereby any Governmental Authority or any intermediary, agency, board or other
authority or entity may have the right to recover funds with respect to any
Facility by reason of the advance of federal, state or local funds, including
those authorized under the Hill-Burton Act (42 U.S.C. § 291, et seq.). Seller
has received no written notice, and Seller has no Knowledge, of any actual or
alleged violation of applicable antitrust laws by Seller.
(e)    Seller and its operations are in compliance with the Health Insurance
Portability and Accountability Act of 1996 (Public Law 104-91) and the
regulations issued in connection therewith, and as amended by the Health
Information Technology for Economic and Clinical Health Act provisions of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-005) and the
regulations issued in connection therewith (collectively, “HIPAA”), including,
without limitation, having business associate or confidentiality agreements in
effect as required by HIPAA with all of its Business Associates (as defined in
HIPAA) , and any applicable state or other federal laws regarding
confidentiality of Resident information. Further, when acting as a Business
Associate, Seller has in effect agreements with each of its Covered Entity (as
defined in 45 C.F.R. § 160.103) clients that satisfy the requirements of 45
C.F.R. § 164.504(e) and neither Seller nor to Seller’s Knowledge any other party
is in breach of any such agreements. Seller is currently submitting, receiving
and handling the transactions that have been standardized pursuant to HIPAA in
compliance with HIPAA. To Seller’s Knowledge, Seller has not received any
written complaints from any person or entity regarding any of Seller’s agents’,
employees’ or contractors’ uses or disclosures of, or privacy or security
practices regarding, individually identifiable health-related information. With
regard to individually identifiable health-related information, Seller has no
Knowledge of any misuse, improper disclosure, breach of a confidentiality
agreement or security incident (each as determined by reference to HIPAA, or
state law, as applicable) by Seller or Seller’s agents, employees or
contractors. As currently structured, the operations of Seller comply with
HIPAA.
(f)    Seller has provided to Purchaser a copy of the Business’s current
compliance program materials, including, without limitation, all program
descriptions, compliance officer and committee descriptions, ethics and risk
area policy materials, training and education materials, auditing and monitoring
protocols, reporting mechanisms, and disciplinary policies. Seller (i) is not a
party to a corporate integrity agreement with the Office of Inspector General of
the United States Department of Health and Human Services, or any other
corrective action plan or settlement with any Governmental Authority (ii) has no
reporting obligations pursuant to any settlement agreement entered into with any
Governmental Authority, (iii) is not currently and has not been the subject of

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any government payor program investigation conducted by any federal or state
enforcement agency, (iv) is not currently and has not been a defendant in any
unsealed qui tam/False Claims Act litigation, (v) has not been served with or
received any search warrant, subpoena, civil or criminal investigative demand,
contact letter or telephone or personal contact by or from any federal or state
enforcement agency, and (vi) Seller has not received any written complaints from
employees, independent contractors, vendors, physicians, Residents or any other
person or entity that would indicate that Seller has violated any Applicable
Laws. Seller is in compliance with the false claims education and other
requirements of the Deficit Reduction Act of 2005 and with the applicable
requirements of Pennsylvania laws.
2.17    Licensed Beds and Units. Each Facility is duly licensed as an assisted
living facility, personal care facility or independent living facility as
required under the Applicable Laws of the Governmental Authorities. The total
number of licensed beds/units (including a designation of the number of assisted
living beds/units) at each of the Facilities as of the Date of Execution is as
set forth on Exhibit A. Except as set forth on Schedule 2.17, Seller has not
applied to reduce the number of licensed beds of any Facility or to move or
transfer the right to any or all of the licensed beds or operations of any
Facility to any other location or to amend or otherwise materially change any
Facility and/or the number of beds approved by the state health department or
equivalent (or any subdivision) or other applicable Governmental Authority, and
except as set forth in Schedule 2.17, to Seller’s Knowledge, there are no
proceedings or actions pending or contemplated to reduce the number of licensed
beds of any Facility. Seller shall take no action between the Date of Execution
and the Closing Date which changes the number of beds, or the licensure or
category or categories maintained by each such Facility without obtaining the
prior written consent of Purchaser. At no time during Seller’s ownership or
operation of the Facilities and the Business has the number of Residents at any
Facility exceeded the licensed capacity for such Facility.
2.18    Intellectual Property. Schedule 2.18 lists all Intellectual Property
used by Seller in the operation of the Facilities and the Business. For these
purposes, “Intellectual Property” shall mean, collectively, all: (i) United
States or foreign patents, patent applications, patent disclosures and all
renewals, reissues, divisions, continuations, extensions or
continuations-in-part thereof; (ii) trademarks, service marks, trade dress,
trade names, fictitious names, corporate names and registrations and
applications for registration thereof; and (iii) copyrights (registered or
unregistered), registrations and applications for registration thereof,
including all renewals, derivative works, enhancements, modifications, updates,
new releases or other revisions thereof. Except as specified on Schedule 2.18,
Seller owns or licenses and/or has the sole right to use all of the Intellectual
Property. Upon the consummation of the transactions contemplated hereby and
compliance with Applicable Laws as to the assignment of such Intellectual
Property, Purchaser will have obtained all rights of Seller to own, license
and/or otherwise exclusively use the Intellectual Property. No claims have been
asserted and no claims are pending or, to Seller’s Knowledge, threatened by any
person or entity, as to the use of any such Intellectual Property or challenging
or questioning the validity or effectiveness of any state or federal
registration of the Intellectual Property and Seller has not received any notice
of such claim or knows of any valid basis for such claim. Seller’s use of the
Intellectual Property, and Purchaser’s continued use of the Intellectual
Property following the Closing in the same manner as heretofore used by Seller,
does not and will not infringe the rights of any person or entity.

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2.19    Financial Statements. Seller has previously delivered to Purchaser
copies of: (i) unaudited, consolidated income statements, balance sheets,
changes in partners’ equity and cash flow statements for Seller for the calendar
years ended 2011, 2012 and 2013 (collectively, the “Year-End Financial
Statements”); (ii) unaudited, consolidated income statements and balance sheets
as of and for the twelve (12) month period ended December 31, 2014 (the “Most
Recent Financial Statements”; collectively, with the Year-End Financial
Statements, the “Financial Statements”), copies of which are attached as
Schedule 2.19; and (iii) a schedule of capital improvements to the Facilities
that were completed in the fiscal years ended 2012, 2013 and 2014, and the
period covered by the Most Recent Financial Statements. Except as set forth on
Schedule 2.19, the Year-End Financial Statements (including the notes thereto)
have been prepared in accordance with generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the periods covered thereby
and present fairly the financial position of Seller as of such dates and the
results of operations of Seller for such periods. Except as set forth on
Schedule 2.19, the Most Recent Financial Statements have been prepared in
accordance with GAAP (except for normal year-end adjustments and footnote
disclosure) and present fairly the financial position of the Facilities as of
such dates and the results of operations of Seller for such periods.
2.20    No Litigation. Except as set forth on Schedule 2.20, Seller has not
received written notice of any, and to Seller’s Knowledge there are no, actions,
suits, claims, governmental investigations or other legal or administrative
proceedings, or any orders, decrees or judgments in progress, pending or in
effect, that have been served on any of Seller or its resident agent, or, to the
Knowledge of Seller, threatened against or relating to Seller, the Facilities,
the Business or any of the Assets or against or relating to the transactions
contemplated by this Agreement, and there are none pending in state courts, or
in any federal courts, or, to the Knowledge of Seller, pending in other
jurisdictions or threatened in writing, at law or in equity, by or before any
federal, state or municipal court or other Governmental Authority. If the
matters set forth on Schedule 2.20, if any, are decided adversely, it will not
result in a Material Adverse Change in the Assets, Seller or Seller’s operation
of the Facilities or the Business, or the transactions contemplated by this
Agreement.
2.21    Absence of Certain Changes or Events. Since September 30, 2014, through
the Date of Execution, and between the Date of Execution and the Effective Time,
neither the Facilities nor any of the Sellers have:
(a)    Suffered any Material Adverse Change;
(b)    Entered into any employment contracts, offered options to or granted any
increase in the compensation or benefits provided or to be provided to or
payable or to become payable by Seller or any Affiliates thereof to any of its
officers or employees and any employees providing services with respect to the
Facilities (collectively, “Employees”), except as set forth on Schedule 2.21 or
for compensation granted to new Employees who were hired in the ordinary course
of business on substantially similar terms to existing Employees with comparable
duties and experience;
(c)    Other than in the ordinary course of business, consistent with past
practices, sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of, any assets related to or connected with the
Facilities or the Business having a fair market value at the time of sale,
transfer or disposition of $10,000.00 or more in the aggregate, or cancelled, or
agreed to

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cancel, any debts or claims relating primarily to the Facilities or the Business
in the amount of $10,000.00 or more in the aggregate;
(d)    Made any change in any method of accounting or accounting practice
relating to the Facilities or the Business;
(e)    Imposed any encumbrance upon any of the Assets; or
(f)    Entered into any Contract to do any of the foregoing, or any taken action
or omission that would result in any of the foregoing.
2.22    Condition of Assets. As of the Date of Execution, except as set forth on
Schedule 2.22, all of the Assets are in the exclusive possession or control of
one or more of the Sellers and are located at or on the Facilities, and to
Seller’s Knowledge all of the tangible Assets are in compliance with Applicable
Laws.
2.23    Employee and Labor Relations.
(a)    To Seller’s Knowledge, Seller is and has been in compliance with all
federal, state or other Applicable Laws respecting employment and employment
practices at the Facilities (collectively, “Employment Laws”).
(b)    Seller has not received written notice that it is not, and to Seller’s
Knowledge it is, in full compliance with all Employment Laws and Contracts
relating to collective bargaining, wages, hours, overtime, employee
classification, immigration, working conditions, hiring, promotion, affirmative
action, equal employment opportunity, occupational health and safety (including
employee training), terms and conditions of employment, and the payment and
withholding of taxes and similar obligations. Seller has not received any
written notice of any violation of any Employment Laws or Contracts. To Seller’s
Knowledge, all Employees are properly classified under the Fair Labor Standards
Act and any applicable state law. Seller has withheld from the wages and
salaries of its Employees as required by Applicable Law and is not liable for
any arrears of wages or any tax or penalty in connection therewith.
(c)    No legal claim, cause of action, grievance, judgment, other adverse
charge or decision of any kind (including any in the nature of employment
discrimination of any type, breach of contract, wrongful discharge, retaliation,
health, safety, child labor violations, workplace violence, or non-payment of
wages, benefits or wage supplements), notice of complaint or internal complaint
or communication with respect to application for employment, employment, the
terms or conditions of employment, the handling of benefits or termination of
employment or any other alleged breach of any Employment Laws has been asserted
or threatened in writing against Seller or any Affiliate thereof in connection
with the operation of the Facilities or the Business, nor is the internal
investigation of any such matters currently pending.
(d)    Seller is not subject to any consent decree, injunction or other form of
court or administrative order relating to any practice relating to labor,
collective bargaining, employment, civil rights, discrimination, affirmative
action or wage and hour issues.

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(e)    No labor strike, picketing action, dispute, slowdown or stoppage or
unfair labor practices are actually pending or, to the Knowledge of Seller,
threatened against, or involving, Seller or any of the Facilities or the
Business.
(f)    There is no pending grievance or arbitration and no unsatisfied or
unremedied grievance or arbitration award against Seller or any agent,
representative or Employee thereof and there is no basis for any such grievance
or arbitration. There is no unfair labor practice charge, pending trial of
unfair labor practice charges, unremedied unfair labor practice finding or
adverse decision of the National Labor Relations Board or of any other
Governmental Authority (including, but not limited to the Pennsylvania
Department of Labor), or any hearing officer or administrative law judge
thereof, against Seller or any agent, representative or Employee thereof, and to
Seller’s Knowledge, there is no basis for any such unfair labor practice charge.
(g)    Seller is not a party to any collective bargaining agreement, and no
collective bargaining agreement is currently being negotiated by Seller. To
Seller’s Knowledge, no petitions for representation have been filed against
Seller, nor during the period of Seller’s ownership of the Assets, any of the
Facilities or the Business, nor have any demands been made for recognition and
there are no attempts underway to organize or represent Employees of Seller.
(h)    To Seller’s Knowledge, Seller does not owe to any Employee or former
employee of the Business overtime pay (other than overtime pay for the current
payroll period), wages or salary for any period other than the current payroll
period, vacation, holiday or other time off or pay in lieu thereof (other than
time off or pay in lieu thereof earned in respect of the current year), or any
amount arising from any violation of any law, rule, regulation, standard or
contract relating to the payment of wages, fringe benefits, wage supplements or
hours of work; all such amounts shall be the obligation of Seller.
(i)    Attached as Schedule 2.23(i) is a true, correct and complete description
of Seller’s employment policies and practices regarding PTO.
(j)    Except as set forth on Schedule 2.23(j), all current personnel engaged in
operating the Business and the Facilities are Employees of Seller and are
employees-at-will. There are no employment agreements, written or oral, in
effect with any of the Employees.
(k)    To Seller’s Knowledge, Seller has taken any and all actions required by
law necessary to comply with the Worker Adjustment and Retraining Notification
Act, or state statute of similar import (collectively, “WARN”), with respect to
any event or occurrence during the period of Seller’s ownership of the Assets,
affecting the Business or the Facilities since the effective date of WARN.
(l)    Attached as Schedule 2.23(l) is a true, correct and complete list
(“Employee Roster”) of all Employees as of February 1, 2015, which lists their
respective salaries or hourly pay rates, place of employment, accrued PTO,
accrued bonus, position and term of employment, part-time or full-time status,
and, for hourly Employees, the number of hours worked for calendar year 2014,
and year-to-date as of January 31, 2015. An updated Employee Roster, as of the
Closing Date, will be delivered by Seller at the Closing.

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2.24    Employee Benefit Plans.
(a)    Schedule 2.24(a) sets forth an accurate and complete list of each
“employee benefit plan” (as defined by Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and rules and regulations promulgated
thereunder (“ERISA”)), and any other bonus, profit sharing, pension, deferred
compensation, stock option, stock purchase, fringe benefit, severance,
post-retirement, scholarship, disability, sick leave, vacation, individual
employment, commission, bonus, retention, or other plan, agreement, policy,
trust fund or arrangement (each such plan, agreement, policy, trust fund or
arrangement is referred to herein as an “Employee Benefit Plan”, and
collectively, the “Employee Benefit Plans”) that is currently in effect, was
maintained since December 31, 2008 or that has been approved before the Date of
Execution but is not yet effective, for the benefit of:
(i)    Employees of Seller, or any other persons performing services for Seller
or the Business;
(ii)    Former employees of Seller working in the Business, or any other persons
formerly performing services for Seller or the Business; and/or
(iii)    beneficiaries of anyone described in (i) or (ii);
(collectively, “Covered Persons”) or with respect to which Seller or any ERISA
Affiliate has or has had any obligation on behalf of any Covered Person, and
specifies which Seller sponsors each of said Employee Benefit Plans. Except as
disclosed on Schedule 2.24(a), there are no other benefits to which any Covered
Person is entitled. “ERISA Affiliate” is hereby defined to include any trade or
business, whether or not incorporated, other than Seller, which has employees
who are or have been at any date of determination occurring within the preceding
six (6) years, treated pursuant to Section 4001(a)(14) of ERISA and/or Section
414 of the Internal Revenue Code of 1986, as amended (the “Code”) as employees
of a single employer that includes Seller.
(b)    Except as disclosed on Schedule 2.24(b), neither Seller nor any ERISA
Affiliate maintains or contributes, and has ever maintained or contributed to,
an Employee Benefit Plan that is subject to Title IV of ERISA, Section 412 of
the Code or Section 302 of ERISA.
(c)    Except as disclosed on Schedule 2.24(c), neither Seller nor any ERISA
Affiliate contributes or has ever been obligated to contribute to any
multi-employer plan within the meaning of ERISA Section 3(37).
(d)    Except as disclosed on Schedule 2.24(d), the consummation of the
transactions contemplated by this Agreement will not (i) entitle any Employee or
former employee of Seller to severance pay, unemployment compensation or any
other payment under an Employee Benefit Plan or otherwise, (ii) accelerate the
time of payment or vesting or increase the amount of compensation due to any
such Employee or former employee, or (iii) increase any benefits otherwise
payable under any Employee Benefit Plan.
(e)    Each Employee Benefit Plan has been operated and administered in all
respects in accordance with its terms and all Applicable Laws and the rules and
regulations thereunder, including, without limitation, ERISA and the Code,
including Section 4980B of the

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Code and Part 6 of Subtitle B of Title 1 of ERISA (“COBRA”). There is no pending
or, to Seller’s Knowledge, threatened litigation, action, suit, proceeding or
investigation against or involving any Employee Benefit Plan (other than a
routine claim for benefits). All Employee Benefit Plans that are “pension plans”
(as defined in Section 3(2) of ERISA) have received favorable determination
letters from the IRS (or opinion letters as the case may be) as to their
tax-qualified status and the tax-exempt status of any related trust under
Sections 401(a) and 501 of the Code, respectively, which determinations are
currently in effect.
(f)    Schedule 2.24(f) lists the name of each Covered Person who, as of the
Date of Execution, is on a leave of absence (whether or not pursuant to the
Family and Medical Leave Act of 1993, as amended (“FMLA”)) and who is receiving
or entitled to receive health coverage under an Employee Benefit Plan, whether
pursuant to FMLA, COBRA or otherwise. Schedule 2.24(f) also lists the name of
each Covered Person who is on a leave of absence (whether or not pursuant to
FMLA) and whose reemployment is governed by the Uniformed Services Employment
and Reemployment Rights Act of 1994. An updated Schedule 2.24(f), as of the
Closing Date, will be delivered by Seller at the Closing.
(g)    Each Employee Benefit Plan that is a nonqualified deferred compensation
plan, as defined by Section 409A of the Code, has been maintained in good faith
compliance between January 1, 2005 and December 31, 2008, and has been
maintained in compliance since January 1, 2009, with Section 409A of the Code,
the U.S. Treasury Department Regulations and IRS guidance issued thereunder.
(h)    Seller has not had any obligation to contribute to or provide benefits
pursuant to, or any other liability of any kind with respect to, (i) a “multiple
employer welfare arrangement” (within the meaning of Section 3(40) of ERISA),
(ii) a “plan maintained by more than one employer” (within the meaning of
Section 413(c) of the Code) or (iii) any common law theory of joint, dual or
multi-employer liability.
(i)    Purchaser shall not, as a result of the transactions contemplated by this
Agreement (or any employment by Purchaser of Covered Persons):
(ii)    become liable for any contribution, tax, lien, penalty, cost, interest,
claim, loss, action, suit, damage, cost assessment or other similar type of
liability or expense of Seller or of any ERISA Affiliate (including predecessors
thereof) with regard to any Employee Benefit Plan, or any Employee Benefit Plan
sponsored, maintained or contributed to by an ERISA Affiliate (including
predecessors thereof) (assuming a definition of “Employee Benefit Plan” such as
that provided in Section 2.24(a) hereof were applicable to ERISA Affiliates as
to those same types of agreements, policies, trusts, funds and arrangements
sponsored, maintained or contributed to by them) (each such Employee Benefit
Plan for an ERISA Affiliate being an “ERISA Affiliate Employee Benefit Plan”)
including, without limitation, withdrawal liability arising under Title IV,
Subtitle E, Part 1 of ERISA or liabilities under Section 412 of the Code or
Section 302(a)(2) of ERISA; or
(iii)    be or become a party to any Employee Benefit Plan or any ERISA
Affiliate Employee Benefit Plan.

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2.25    Intentionally Deleted.
2.26    Insurance. Seller maintains and has maintained property, fire, casualty,
workman’s compensation, general liability insurance and other forms of insurance
relating to the Assets, the Facilities and the operation of the Business against
risks of the kind customarily insured against. Attached as Schedule 2.26 is a
list of insurance policies carried and insurance coverages maintained by Seller
with respect to the Assets, the Facilities, and the Business, and upon request
by Purchaser, Seller shall make available copies of any such policies to
Purchaser. All commercial general liability and professional liability policies
maintained by or for the benefit of Seller have been “occurrence” policies and
not “claims made” policies or Seller shall have obtained “tail coverage”, as
described on Schedule 2.26. Seller shall maintain its insurance policies in
effect on a continuous basis through the Effective Time.
2.27    Related-Party Transactions. Except as set forth in Schedule 2.27
attached hereto, no Related Party: (i) has any contractual or other claim,
express or implied, or of any kind whatsoever against the Business, Seller or
any of the Assets; (ii) has any interest in the Business, Seller, or any of the
Assets; or (iii) is engaged in any other transaction with the Business, Seller,
or any of the Assets. As used herein, “Related Party” means any of the
shareholders, members or partners of Seller, any officers, managers or directors
of Seller, any immediate family member of any such shareholders, members,
partners, officers, managers or directors, or any Affiliate of the foregoing. As
used herein, “Affiliate” of a party means any party controlling, controlled by
or under common control with such party.
2.28    Broker. Except for Marcus & Millichap Real Estate Investment Services,
Inc., no agent, broker, person or firm acting for or on behalf of Seller or any
Affiliate thereof is, or shall be, entitled to any broker’s fees, finder’s fees
or other fees or commissions from any party in connection with this Agreement or
any of the transactions contemplated hereby, and Purchaser shall have no
obligation to pay any fees or commissions to any such persons or entities. On or
before the Closing, Seller shall have paid all of the fees and commissions to
which Marcus & Millichap Real Estate Investment Services, Inc., are entitled in
connection with this Agreement or any of the transactions contemplated hereby.
2.29    Intentionally Deleted.
ARTICLE III.

COVENANTS, REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to consummate the
transactions contemplated herein, Purchaser covenants, represents and warrants
the following, each of which covenants, warranties and representations is
material to and is relied upon by Seller:
3.1    Organization. Purchaser is duly organized and validly existing and in
good standing under the laws of its jurisdiction of organization, with full
power and authority to carry on its business as currently being conducted.
3.2    Authority, Binding Effect.

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(a)    Purchaser has, and at the Closing, as applicable, will have, the full and
unrestricted right, organizational power and authority to execute, deliver and
perform this Agreement and to consummate the transactions and perform all
obligations contemplated hereby and in all agreements, instruments and documents
being or to be executed and delivered by Purchaser in connection with such
transactions, including, without limitation, the Purchaser Documents
(collectively, “Purchaser Related Documents”).
(b)    This Agreement does and each Purchaser Related Document, upon due
execution and delivery by Purchaser, will constitute the legal, valid and
binding obligation of Purchaser, enforceable in accordance with its respective
terms.
(c)    Purchaser has obtained all required organizational approval required for
the execution and consummation of this Agreement, the Purchaser Related
Documents and all transactions contemplated hereby and thereby.
3.3    No Violation. Purchaser is not subject to or obligated under any articles
of incorporation, bylaw, laws, articles of organization, operating agreement,
partnership agreement or other similar governing or charter document, or rule or
regulation of any Governmental Authority, or any agreement or instrument, or any
license, franchise or permit, or subject to any order, writ, injunction or
decree which would be in any material respect breached or violated by the
execution, delivery or performance of this Agreement.
3.4    Broker. Except as set forth on Schedule 3.4, no agent, broker, person or
firm acting for or on behalf of Purchaser is, or shall be, entitled to any
broker’s fees, finder’s fees or other fees or commissions from the Purchaser in
connection with this Agreement or any of the transactions contemplated hereby,
and Seller shall have no obligation to pay any fees or commissions to any such
persons or entities.
3.5    Limited Reliance. Purchaser has relied on no representations or
warranties of Seller other than those expressly set forth in this Agreement.
3.6    Limited Representation. Purchaser acknowledges and agrees that, except as
(and solely to the extent) specifically set forth in this Agreement, Seller has
not made, does not make and specifically negates and disclaims any
representations, warranties, promises, covenants, agreements or guaranties of
any kind or character whatsoever, whether express or implied, oral or written,
past, present, or future, of, as to, concerning or with respect to (a) the
value, nature, quality or condition of the Facility, including, without
limitation, the water, soil and geology, (b) the income to be derived from the
Facility, (c) the suitability of the Facility for any and all activities and
uses which Purchaser may conduct thereon, (d) the compliance of or by the
Facility or its operation with any laws, rules, ordinances or regulations of any
applicable governmental authority or body, (e) the habitability,
merchantability, marketability, profitability or fitness for a particular
purpose of the Facility, (f) the manner or quality of the construction or
materials, if any, incorporated into the Facility, (g) the manner, quality,
state of repair or lack of repair of the Facility, or (h) any other matter with
respect to the physical condition of the Facility. Purchaser further
acknowledges and agrees that it has been given the opportunity to inspect and
analyze the Assets, and the Business, and that, except as (and solely to the
extent) set forth herein and in the information and documents Seller has
provided or made available to Purchaser, Purchaser is relying solely on its own
investigation of them. Purchaser

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further acknowledges and agrees that any information provided or to be provided
with respect to them (or which was made available to Purchaser for its review)
was obtained or derived from a variety of sources and that, except as (and
solely to the extent) set forth herein, Seller has not made any independent
investigation or verification of such information and (except as to information
or documents having been generated by Seller and given by Seller to Purchaser,
or as to the information or documents generated by Seller and given to any third
party preparing a report for Purchaser) makes no representations as to the
accuracy or completeness of such information; except that, to Seller’s
Knowledge, none of the information or documentation that Seller has provided or
made available to Purchaser, which Purchaser could not independently verify, is
incomplete in any material respect or contains information that is incorrect in
any material respect. Seller is not liable or bound in any manner by any verbal
statements, representations or information pertaining to the Assets and the
Business, or the operation thereof, furnished by any real estate broker, agent,
employee, servant or other person. Purchaser further acknowledges and agrees
that to the maximum extent permitted by law, and except as (and solely to the
extent) set forth in this Agreement, the sale of the Facility as provided for
herein is made on an “as is” condition and basis with all faults. The provisions
of this paragraph shall survive Closing. Nothing set forth in this paragraph
shall amend or extinguish any specific representation, warranty or indemnity
obligation of Seller set forth in this Agreement.
ARTICLE IV.

ADDITIONAL COVENANTS OF SELLER
Seller, each solely as to itself, covenants and agrees during the period after
the Date of Execution and through the Closing Date as follows:
4.1    Interim Operations. Between the Date of Execution and the Closing Date,
Seller shall retain full authority and control of the operation of the Business
and the Facilities. Except as Purchaser in its sole discretion otherwise
approves, in advance, in writing, or as otherwise expressly required hereunder,
Seller shall using commercially reasonable efforts : (i) operate the Business
and the Facilities in a manner consistent with all Applicable Laws and past
practices (both operational and financial); (ii) maintain the Assets in
substantially the same order and condition (normal wear and tear excepted)
consistent with past practices; (iii) comply with all Applicable Laws with
respect to the Assets and the operation thereof, including, without limitation,
all required regulatory standards of any Governmental Authorities with
regulatory jurisdiction over the Business and the Facilities which would
otherwise result in a Material Adverse Change; (iv) timely pay all uncontested
payments due on or before the Closing Date under, and otherwise maintain and
comply with, all Contracts and all Residency Agreements, each without change
except as expressly provided herein; (v) except as may be required by Applicable
Law or as otherwise consistent with past practices, not make any changes or
modifications to any Contracts or Residency Agreements or incur any further
obligations or surrender any rights thereunder, except that Seller may enter
into new residency agreements with new Residents and may renew existing
Residency Agreements on substantially the same terms and conditions as other
Residency Agreements in effect prior to the Date of Execution for the same
Facility and otherwise consistent with the specimen residency agreement attached
hereto on Schedule 2.7(b), provided in no event shall such new residency
agreements provide for any “move in” specials or free rent, fix rental amounts
for more than sixty (60) days, provide for a single payment for lifetime
services, or be at rates that are lower than the

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rates reflected in Schedule 4.1(a)(v); (vi) not enter into any contracts,
agreements or leases (or any amendment of any of them) which would have had to
be disclosed on any schedule hereto had such contracts, agreements or leases
been entered into prior to the Date of Execution, unless (A) Purchaser is
notified thereof and (B) such contract, agreement or lease (or amendment
thereof) is otherwise consistent with past practice, or, if not so consistent,
then has been approved in advance in writing by Purchaser, such approval not to
be unreasonably withheld, conditioned or delayed; (vii) keep in full force and
effect (and renew as applicable) present insurance policies and Licenses through
the Closing Date; (viii) maintain in good standing all Licenses and use
commercially reasonable efforts to maintain (and not terminate) all present
goodwill of Residents, parties to all Contracts and vendors; (ix) not allow the
number of Residents at any Facility to exceed the licensed capacity for such
Facility; (x) except for any bonuses which Seller may in its discretion propose
to pay at its sole cost and expense to certain management employees in
connection with the transaction contemplated by this Agreement, not cause or
permit any of the following with respect to any Employees: any new bonus,
percentage compensation, service award or other like benefit, or any increase in
the compensation payable or to become payable by Seller to any Employees; or
make any change for which Purchaser would be liable in the method of calculating
any presently existing bonus, percentage compensation, service award or other
like benefit, granted, made or accrued to or to the credit of any of the
Employees, or any increase in any Employee welfare, insurance, pension,
retirement or similar payment or arrangement made or agreed to pursuant to
existing welfare, pension and retirement Employee Benefit Plans and
arrangements, deferred compensation, or other Employee Benefit Plans; and (xi)
except as expressly permitted hereunder, not take any action that would cause
any of the changes, events or conditions described in Section 2.21, for which
Purchaser would be liable.
(a)    Except as contemplated or otherwise consented to by Purchaser (which
consent shall not be unreasonably withheld, conditioned or delayed), Seller
shall, and shall cause its Affiliates to, carry on the Business in the ordinary
course and substantially the same manner as heretofore carried on. Nothing in
this Agreement shall diminish Seller’s (and its Affiliates) sole title to the
Business or shall be construed to limit Seller’s discretion to operate, or cause
its Affiliates to use commercially reasonable efforts to seek to operate the
Business in the ordinary course, or shall give Purchaser any ownership rights to
the Assets before the Closing Date. Subject to the foregoing and Seller’s other
obligations under this Agreement, Purchaser acknowledges and agrees that the
Seller shall be entitled to declare and pay cash and other kinds of dividends or
distributions or other assignments and conveyances (other than of Assets) prior
to the Closing Date and that Seller shall have complete and absolute discretion
over the amounts of such dividends, distributions, assignments and conveyances.
4.2    Borrowing. Other than in the ordinary course of the Business, or
otherwise with the written consent of Purchaser, from and after the Date of
Execution, Seller shall not create, or permit to become effective, any
additional Monetary Encumbrance on the Business, the Facilities or the Assets.
For the avoidance of doubt, as a condition of Closing, all Monetary Encumbrances
other than the Hanover Mortgage shall be satisfied by Seller at Closing.
4.3    Full Access and Disclosure.
(a)    The term “Facility Management” means the following personnel (if any with
respect to any certain Facility): the Principals, all “home office” management
personnel of Seller (or

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other personnel with managerial oversight of the Business and the Facilities),
the executive director/administrator of each Facility, the directors of nursing,
social services and rehabilitation services at each Facility (if such positions
exist), the head reimbursement person at each Facility, the head sales person at
each Facility and the head maintenance person at each Facility. Seller shall,
prior to Closing, notify the Facility Management of the pending sale of the
Facilities to Purchaser and instructed the Facility Management to fully
cooperate with Purchaser and to treat the pending sale with confidentiality.
(b)    Intentionally Deleted.
(c)    Intentionally Deleted.
(d)    After the receipt of the Governmental Approvals, Seller and Purchaser
shall hold joint meetings at such times as Purchaser shall reasonably request
with the Residents and Employees, to announce that the Assets will be sold to
Purchaser.
(e)    Notwithstanding any other Sections, nothing in this Agreement shall
afford to Purchaser any access which shall unreasonably disrupt the operation of
the Business.
(f)    Purchaser’s due diligence review and any inspections pursuant hereto
shall not waive or release Seller from any of its representations, warranties or
covenants in this Agreement.
4.4    Consents and Satisfaction of Conditions.
(a)    Other than as set forth in Section 1.4, and the Governmental Approvals
which under Section 5.5 are the responsibility of Purchaser and the TRS Entity,
the Seller shall use commercially reasonable efforts to seek to obtain in
writing and in form and substance reasonably satisfactory to Purchaser, at
Seller’s cost and expense, on or prior to the Closing, all consents (including
without limitation, the Required Consents) necessary for Seller to fulfill
Seller’s obligations to consummate the transactions contemplated hereby at the
Closing and to fulfill all conditions precedent to Closing. Seller will
reasonably cooperate with Purchaser in the performance by Purchaser of its
obligations under this Agreement and in obtaining all Required Consents. Without
limiting the foregoing, Seller will assist Purchaser in responding to questions
raised by, attending meetings with, and assisting with the preparation of
documents required by Governmental Authorities with jurisdiction over Seller in
order to obtain all Required Consents.
(b)    Nothing in this Agreement shall be construed as an attempt by Seller to
assign to Purchaser pursuant to this Agreement any contract, agreement, permit,
franchise, claim or asset included in the Assets which is by its terms or by law
is non-assignable without the consent of any other party or parties, unless such
consent or approval shall have been given, or as to which all the remedies for
the enforcement thereof available to Seller would not by law pass to Purchaser
as an incident of the assignments provided for by this Agreement (a
“Non-Assignable Contract”). To the extent that any such consent or approval in
respect of, or a novation of, a Non-Assignable Contract shall not have been
obtained on or before the Closing Date, the parties hereto shall use reasonable
efforts and shall cooperate in any reasonable arrangement to assure them the
benefits and obligations of such Non-Assignable Contract shall inure to the
account of Purchaser to the extent permitted by law. To the extent lawful,
practicable and reasonable in the circumstances, including the obtaining of any
such necessary consent or approval after the Closing (provided that Seller shall
not be

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required to pay any money or other consideration or grant forbearances to any
third party to effect such consent or approval), Seller, on its own or at the
request and under the direction of Purchaser and, in each case, at Purchaser’s
expense, shall take all reasonable actions to assure that the rights and
obligations of Seller under the Non-Assignable Contracts shall be preserved for
the account of Purchaser to the extent not involving any undue hardships upon
Seller or its Affiliates or unreasonable time constraints in the request or
compliance with any such Purchaser instructions. Purchaser shall indemnify and
hold harmless Seller for taking any such actions and reimburse Seller and its
Affiliates for its reasonable costs and expenses related thereto, provided that
such costs and expenses are approved in writing and in advance by Purchaser. The
parties hereto agree that Seller shall not be deemed to be in breach of this
Agreement as a result of its failure to transfer to Purchaser any Non-Assignable
Contract at Closing and, accordingly, the Purchaser shall not be excused from
its obligation to affect the Closing. Purchaser shall be responsible for
obtaining any necessary governmental consent or approval for the transfer or
reassurance of any environmental Permit included in the Assets.
4.5    Compliance With Laws. Seller shall use commercially reasonable efforts to
seek to comply in all material respects with all Applicable Laws in connection
with the execution, delivery and performance of this Agreement, the transactions
contemplated hereby and the ownership, use, operation, management and
maintenance of the Assets, the Business and the Facilities prior to the Closing.
4.6    Taxes. Seller shall timely file all federal, state and local tax returns
and, to the extent applicable, estimates and reports, and pay all amounts for
all taxes for all periods through and including the Closing Date. Furthermore,
Seller shall give all required notices and make all required filings, on behalf
of Purchaser when required, of the transactions contemplated hereby, including
any notices and filings required to obtain tax good standing letters or tax
clearances or certificates with the tax authorities of the Commonwealth of
Pennsylvania and any other state or any local tax authority with which Seller is
required to file tax returns and/or pay taxes.
4.7    No Disposition of Assets. Except for Assets depleted and replaced in the
ordinary course, Seller shall not sell, lease or otherwise dispose of or
distribute any of the Assets or properties related thereto or necessary for the
operation of the Facilities and the Business and, to the extent depleted or
replaced in the ordinary course, Seller shall restock and replenish any portion
of the Assets consumed or used between the Date of Execution and the Closing
Date with Assets of comparable quality.
4.8    Further Documentation. Seller agrees that following the Closing Date,
upon request by Purchaser, Seller will do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, all such further acts,
deeds, assignments, transfers, conveyances and assurances as may be reasonably
required, in order to more fully assign, grant, transfer, convey, assure and
confirm to Purchaser, or for aiding and assisting in collecting and reducing to
possession, all of the Assets to be sold to Purchaser pursuant to this Agreement
or transitioning the operations of the Facilities to the TRS Entity, provided
none of such will increase Seller’s liabilities or decrease its rights, or
require material expenditure of funds by Seller.
4.9    Confidentiality. Seller will, and will cause its Affiliates to, keep
confidential all information relating to the terms of this Agreement and all
information relating to Purchaser (other

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than information that is a matter of public knowledge or that has heretofore
been or is hereafter published in any publication for public distribution or,
through no fault of Seller, filed as public information with any Governmental
Authority) and such information shall not at any time be used for the advantage
of Seller, its Affiliates or its or their respective representatives or
disclosed to third parties (including Employees) by Seller, its Affiliates or
its or their respective representatives, other than to the extent necessary to
consummate the transactions contemplated hereby. provided, however, that Seller
shall be permitted to make such disclosures as are (i) required pursuant to
Applicable Law, order, subpoena or demand of any Governmental Authority or (ii)
necessary to be disclosed to lessors, lenders, Governmental Authorities,
Seller’s Representatives and other third parties in order to consummate the
transactions contemplated hereby.
Seller agrees to refrain from expressing – orally, in writing, or otherwise –
any negative, defamatory or disparaging remarks about the Purchaser, its
Affiliates, principals, employees or any individual or entity related to or
affiliated therewith, including by way of statements made by any internet
posting or uses of social media. Nothing in this Section shall prevent any
individual from providing truthful testimony under oath at any deposition or
proceeding in court or before any government or administrative body. Seller
agrees that this Section is a material provision of this Agreement. Seller
acknowledges that a breach of the provisions of this Section will cause
irreparable harm to Purchaser, for which monetary damages may be inadequate and
cannot readily be calculated and therefore, that upon any such breach, Purchaser
shall be entitled to seek, in addition to any other relief available at law or
in equity, emergency, preliminary and permanent injunctive relief against
Seller. In the event of such breach, Seller does hereby waive any requirement
that Purchaser’s pursuit for injunctive relief requires Purchaser to post a bond
or other security to stop Seller’s disparagement. Seller agrees that Seller’s
undertakings in this Section shall survive termination of this Agreement
4.10    Title Insurance and Survey; Environmental Assessments.
(a)    Intentionally omitted.
(b)    Purchaser, at Purchaser’s option, shall use commercially reasonable
efforts to obtain: (i) updated real property surveys for each of the Facilities
(collectively, the “Surveys”), and (ii) title commitments for each of the
Facilities (collectively, the “Title Commitments”), issued by Escrow Agent (also
referred to herein as the “Title Company”), which Title Commitments shall
contain commitments by the Title Company to issue to Purchaser title insurance
policies on extended coverage ALTA Owner’s forms, in form and substance
reasonably acceptable to Purchaser (each a “Title Policy” and collectively the
“Title Policies”) insuring the good and marketable fee simple title to the
Facilities. Seller will provide the Title Company with affidavits for the
standard exceptions to be deleted from the Title Policies at the Closing; and
Seller will execute and deliver or otherwise obtain such reasonable and
customary documents and instruments at no material cost to Seller as the Title
Company shall reasonably require, including, without limitation, Seller’s
affidavits, gap indemnities and the like. Promptly following the execution of
this Agreement, Purchaser shall make application for such title insurance, and
provide Seller with a copy of the application. Not later than ten (10) days of
receipt thereof, Purchaser shall give written notice to Seller accepting or
objecting to the Title Commitments and Surveys, with any such notice of
objection specifying the exceptions or other matters to which Purchaser objects
and Seller shall have ten (10) days to agree to cure or refuse to cure such
exceptions by written notice to Purchaser; and if Seller fails to deliver such
notice to

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Purchaser, Seller shall be deemed to have refused to cure such objections. If
Seller has agreed to cure such objections, the cure thereof shall be a condition
to Purchaser’s obligation to close hereunder. The failure of Purchaser to object
to any matter reflected in any Title Commitment or Survey shall be deemed a
waiver by Purchaser of any right to object to any matter so shown; provided,
however, that notwithstanding anything to the contrary contained in this Section
4.10, Seller shall be unconditionally obligated to pay, for itself and on behalf
of the Partnerships, any outstanding indebtedness evidenced by, and cause the
release of any, lien, mortgage, deed of trust, deed to secure debt, security
agreement, judgment, tax lien or other encumbrance affecting the Assets and
capable of being released through or as a result of the payment of money
(collectively, “Monetary Encumbrances”), other than the Hanover Mortgage
irrespective of whether Purchaser objects to same unless and only to the extent
that such obligation is waived in writing by Purchaser.
(c)    Notwithstanding the foregoing, Purchaser shall not have the right to
object to any of the following, all of which shall be deemed to be “Permitted
Encumbrances” hereunder: (A) the Assumed Liabilities and (B) (i) itemized
matters shown on the Surveys to which Purchaser does not object pursuant to the
provisions hereof and (ii) taxes for the year in which the Closing occurs which
are not yet due and payable, ad valorem taxes for the year in which the Closing
occurs, not yet due and payable.
(d)    Seller will permit Purchaser and its agents to conduct new environmental
assessments for each Facility. Notwithstanding the foregoing, Purchaser shall
not perform any Phase II environmental assessments or other intrusive
environmental investigation without Seller’s prior consent.
4.11    Financial Information. From the Date of Execution and through the
Effective Time, Seller shall make available to Purchaser not later than the
thirtieth (30th) day of the next succeeding calendar month (i)
internally-prepared, unaudited monthly individual Facility financial statements
(including a balance sheet and detailed income statement) showing current month,
year-to-date, and budget comparison data and per diem amounts; (ii) accounts
receivable aging; (iii) [reserved]; (iv) [reserved]; (v) intentionally deleted;
(vi) intentionally deleted; (vii) month and year-to-date capital expenditures;
and (viii) management reports and updated resident rolls in the form attached as
Schedule 2.7(b). The financial statements delivered by Seller pursuant to this
Section shall be prepared on a basis consistent with the Financial Statements.
4.12    Certain Employment Matters. From and after the Closing, Seller shall
assume all liability for, and neither Purchaser nor any of its Affiliates shall
have any liability or obligation in respect of any pre-Closing obligations of
Seller in respect of any collective bargaining agreement, employment agreement,
pension or retirement plan, profit sharing plan, stock purchase or stock option
plan, medical or other benefits or insurance plan, compensation obligation or
agreement or severance pay plan or agreement and any other Employee Benefit
Plan, including any contribution, tax lien, penalty, cost, interest, claim, loss
action, suit damage, cost assessment or other similar type of liability expense
of Seller or any of its ERISA Affiliates with regard thereto.
4.13    No Shop. At no time between the Date of Execution and the Closing Date
shall any or all of Seller, the Principals or any of their respective officers,
directors, employees, agents or Affiliates (or any of their respective agents),
directly or indirectly, solicit, initiate, participate in any negotiation or
discussion, enter into any agreement in respect of any Facility or Seller, or
cooperate

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with any person or entity regarding any Acquisition Proposal. The term
“Acquisition Proposal” shall mean any proposal (other than a proposal by
Purchaser) for the acquisition of all or a substantial portion of the equity
interests or assets of any Facility, any Assets or Seller, or for a merger,
consolidation or other business combination pursuant to which any other person
or entity would acquire any Facility, any Assets or Seller, or any substantial
equity interest in any Facility, the Assets or Seller. Seller represents and
warrants that, prior to the Date of Execution, Seller has ceased and caused to
be terminated all discussions or negotiations with any parties other than
Purchaser with respect to any Acquisition Proposal, and has terminated access of
any such parties to any information with regard to the Assets, the Facilities
and the Business, and any such parties have returned any such information
previously made available by or on behalf of Seller.
4.14    Intentionally Deleted.
4.15    Employment Records; Resident Records.
(a)    For seven (7) years from and after the Closing, Purchaser, unless
prevented by Applicable Law, and anything in this Agreement to the contrary
notwithstanding, shall retain possession of all Resident Records, and shall
provide reasonable access thereto to Seller. Seller shall for seven (7) years
after the Effective Time retain and make available to Purchaser its Books and
Records relating to all Employees, including any and all records or written
documents relating to performance reviews, performance improvement plans,
statements of disciplinary actions taken, medical records and all other
information maintained in such Employees’ personnel files (collectively,
“Employee Records”). Immediately prior to the Closing, Seller shall, at
Purchaser’s option, remove and retain, but only to the extent permitted by
Applicable Law, all records in Seller’s possession relating to all prior
Residents of the Facilities who were not residing therein on the Closing Date
(“Discharged Resident Records”). In the event that Seller does not remove all
Discharged Resident Records as herein required that Purchaser has specified
should be removed, then Purchaser may, upon not less than fifteen (15) days’
prior written notice to Seller, destroy such Discharged Resident Records.
(b)    Seller’s Books and Records used or developed in connection with the
Business conducted at the Facilities have been maintained in all material
respects in accordance with all Applicable Laws governing the preparation,
maintenance of confidentiality, transfer and/or destruction of such records and
there is no material deficiency in Seller’s Books and Records.
(c)    At least two (2) weeks prior to the Closing Date, Seller shall make
available to Purchaser customer data consisting of the names of all Residents,
the names and addresses of the Residents’ responsible parties and such further
information as Purchaser may reasonably require in order for the TRS Entity to
be able to assume full operation of the Facilities and full accounting functions
on the Closing Date.
(d)    Upon request, subject to any restrictions under Applicable Laws, Seller
shall have reasonable access, at its expense, to any records transferred to or
held by Purchaser as relates to pre-Closing operations of the Facility.
4.16    Intentionally Deleted.

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4.17    COBRA Compliance. Seller shall be liable and responsible for, and
Purchaser shall incur no liability or responsibility with respect to, any
Continuation Coverage (as that term is defined by COBRA Section 4980B of the
Code and Section 601, et seq. of ERISA) for any Employee terminated at any time
prior to or at the Closing. Purchaser shall not assume, honor or accept any
employee benefit plan of Seller or its Affiliates, including, without
limitation, any “employee benefit plan” within the meaning of Section 3(3) of
ERISA and Seller shall be solely responsible for satisfying all obligations
(whether arising under federal, state or local law or pursuant to contract)
which may arise or which may have arisen prior to the Closing Date in connection
with the employment of any Employees or the creation, funding, operation or
termination of any of the employee benefit plans by or on behalf of Seller that
cover any of the Employees.
4.18    Capital Expenditures. Prior to the Closing Date, Seller shall diligently
undertake, continuously prosecute and complete all capital projects as needed on
an emergency basis or as otherwise performed or made in accordance with past
practices.
4.19    Changes in Representations and Warranties. Throughout the period from
the Date of Execution through and including the Closing Date, Seller shall give
Purchaser prompt written notice of (a) any representation and warranty made by
Seller in this Agreement which Seller during such period obtains Knowledge that
it was inaccurate or incorrect when originally made, (b) any event, change or
occurrence arising after the Date of Execution which would make any
representation or warranty of Seller inaccurate or incorrect as of the time of
such event, change or occurrence (Seller hereby acknowledging and agreeing that
all representations and warranties of Seller herein are hereby deemed re-made
and re-affirmed by Seller each and every day while this Agreement is in effect),
and (c) any event, change or occurrence arising after the Date of Execution
which will or reasonably may be anticipated to prevent Seller from making the
same representations and warranties as set forth herein on and as of the Closing
Date. Upon receipt of said notice, Purchaser may either (i) extend the Closing
Date for the period of time necessary to complete remediation of such Material
Adverse Change at Seller’s sole cost and expense for a period of no more than
ninety (90) days (“Outside Date”), or (ii) terminate this Agreement upon written
notice to Seller, in which event the Deposit and Transaction Costs shall be
refunded to Purchaser and neither party shall have any further right or
obligation hereunder other than those expressly stated to survive. Seller cannot
be liable for failure to disclose an immaterial misrepresentation. The giving of
any such notices shall not limit or modify any rights of Purchaser hereunder
arising in the case of a breach of a representation or warranty by Seller
discovered after Closing, and Purchaser shall have the right, subject to and in
accordance with Article XII, to terminate this Agreement and receive an
immediate refund of the Deposit and Transaction Costs at any time prior to the
Closing, following receipt by Purchaser of any such notice of any materially
inaccurate or incorrect representation or warranty under clauses (a) – (c) of
this Section. Any determination of materiality under this Section shall be made
by Purchaser in its reasonable discretion.
4.20    Appointment of Sellers’ Agent.
(a)    Sellers each hereby appoint David Lovitz, and in his absence Kevin
McCollum, (“Sellers’ Agent”), as their agent and attorney-in-fact, on their
behalf and on behalf of each of them in accordance with the terms of this
Section, and hereby authorize the Sellers’ Agent (i) to perform all acts which,
by the provisions of this Agreement are to be performed by Sellers’ Agent; (ii)
to waive on behalf of each of them any of the provisions of this Agreement and
to execute and

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deliver such amendments on behalf of each of them to this Agreement as the
Sellers’ Agent, in its sole judgment, shall deem necessary or advisable; (iii)
to execute and deliver documents pursuant to this Agreement as the Sellers’
Agent, in its sole judgment, shall deem necessary or advisable, including any
amendments to any such agreements; (iv) to execute and give all notices,
requests and other communications required, permitted or contemplated under this
Agreement as Sellers’ Agent, in its sole judgment, shall deem necessary or
advisable; (v) to consent, dispute, compromise, adjust, settle, litigate, appeal
or otherwise deal with any and all set-offs, claims breaches, obligations,
liabilities, assessments, suits, actions, proceedings, liens, charges,
encumbrances, orders, judgments and decrees with respect to this Agreement or to
refrain so to do as Sellers’ Agent shall, in its sole judgment, deem necessary
or advisable; (vi) to delegate all or any of its power or authority under this
Agreement to any person or entity, as Sellers’ Agent, in its sole judgment,
shall deem necessary or advisable; (vii) to expend such amounts in the exercise
of its rights and powers and in the performance of its duties hereunder as
Sellers’ Agent shall, in its sole judgment, deem necessary or advisable; and
(viii) generally to act for and on behalf of each of them in all matters
connected with this Agreement, with the same force and effect as though such an
act had been taken by any of them personally. Seller agrees with Purchaser that
the Sellers’ Agent shall be the sole and exclusive person with legal capacity
and standing to contest, dispute, compromise, adjust, settle, litigate, appeal
or otherwise deal with Purchaser with respect to the indemnification of the
Purchaser Indemnified Parties as set forth in Article VII of this Agreement.
This appointment and power-of-attorney shall be a special power-of-attorney
coupled with an interest, shall be irrevocable and shall survive the
dissolution, death, disability or incapacity of any of the Principals.
(b)    Seller agrees that Purchaser may deal solely with the Sellers’ Agent as
the exclusive representative of Seller with reference to the matters set forth
in this Agreement, that the actions of the Sellers’ Agent are binding on Seller,
its successors and assigns, and that Purchaser has no duty to ascertain if the
Sellers’ Agent is properly carrying out its obligations under this Agreement.
(c)    Notwithstanding anything to the contrary, no one Seller nor the EIK
Manager are Affiliates of each other and the appointment of Sellers’ Agent shall
not make each Seller and the EIK Manager the Affiliate of each other Seller.
4.21    Inventory. As of the Date of Execution and at the Closing, the Inventory
will be in sufficient quantity and condition for the normal operation of the
Business in compliance with Applicable Laws and all requirements of Governmental
Authorities and consistent with past practices and in any event in a quantity
sufficient for the operation of the Business by Seller for not less than
fourteen (14) days after the Closing Date.
ARTICLE V.

COVENANTS OF PURCHASER
Purchaser covenants and agrees during the period after the Date of Execution and
through the Closing Date as follows:
5.1    Confidentiality.

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(a)    Prior to the Closing, Purchaser will cause its Affiliates and permitted
assigns (together (“Purchaser Confidential Users”) to keep confidential all
information relating to the terms of this Agreement, all information relating to
Seller, all information gathered in connection with its due diligence review and
all information related to the transaction, the Business, the Seller, the Assets
and the Facilities (other than information that is a matter of public knowledge,
or that has heretofore been or is hereafter published in any publication for
public distribution or filed through no fault of Purchaser Confidential Users as
public information with any Governmental Authority) and such information shall
not at any time be used for the advantage of Purchaser Confidential Users,
except to the extent necessary for them to evaluate and consummate the
transactions contemplated by this Agreement; provided, however, that Purchaser
shall be permitted to make such disclosures as are (i) required pursuant to
Applicable Law, order, subpoena or demand of any Governmental Authority or (ii)
necessary to be disclosed to lessors, lenders, Governmental Authorities,
Purchaser’s Representatives and other third parties in order to consummate the
transactions contemplated hereby.
(b)    Purchaser agrees to refrain from expressing – orally, in writing, or
otherwise – any negative, defamatory or disparaging remarks about the Seller,
its Affiliates, Principals, Employees or any individual or entity related to or
affiliated therewith, including by way of statements made by any internet
posting or uses of social media. Nothing in this Section shall prevent any
individual from providing truthful testimony under oath at any deposition or
proceeding in court or before any government or administrative body. Purchaser
agrees that this Section is a material provision of this Agreement. Purchaser
acknowledges that a breach of the provisions of this Section will cause
irreparable harm to Seller, for which monetary damages may be inadequate and
cannot readily be calculated and therefore, that upon any such breach, Seller
shall be entitled to seek, in addition to any other relief available at law or
in equity, emergency, preliminary and permanent injunctive relief against
Purchaser. In the event of such breach, Purchaser does hereby waive any
requirement that Seller’s pursuit for injunctive relief requires Seller to post
a bond or other security to stop Purchaser’s disparagement. Purchaser agrees
that Purchaser’s undertakings in this Section shall survive termination of this
Agreement.
5.2    Compliance with Laws. Purchaser shall comply in all material respects
with all Applicable Laws in connection with Purchaser’s execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
5.3    Books and Records. Purchaser understands that all of the Books and
Records (other than those removed by Seller pursuant to the terms of Section
4.15(a)) are being transferred to the TRS Entity subject to the requirements of
Applicable Laws. Purchaser agrees to cause the TRS Entity to maintain all such
Books and Records the longer of at least seven (7) years, or for the requisite
period prescribed by Applicable Law. In addition, if and to the extent not
prohibited by Applicable Law, Purchaser agrees to cause the TRS Entity to allow
Seller, or Seller’s agents or representatives upon reasonable advance notice and
at Seller’s sole cost and expense, to examine from time to time such Books and
Records relating to the period of Seller’s operation of the Facilities and the
Business, to promptly cooperate with Seller, Seller’s agents or representatives
in their examination or review of such Books and Records, and to permit Seller
to obtain copies thereof, upon request.
5.4    Cooperation. Following Closing, Purchaser shall cooperate with Seller and
provide reasonable access to the Books and Records in Purchaser’s possession
which are requested by Seller

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and reasonably necessary to respond to any litigation, investigation, inquiry,
government audit and/or third-party payor audit, upon reasonable advance notice
unless prohibited by Applicable Law. Seller shall be responsible for the costs
and expenses of copying any records in Purchaser’s possession or any costs of
third parties unrelated to Purchaser (e.g. record management companies) in
making the records available to Seller.
5.5    Governmental Approvals.
(a)    Subject to performance by Seller of its obligation to cooperate and
provide information as contemplated by Sections 4.4 and 4.16, Purchaser shall
cause the TRS Entity to make, at its cost, all filings with Governmental
Authorities and use commercially reasonable efforts to seek to obtain, and
diligently pursue, all permits, approvals, authorizations and consents of all
Governmental Authorities required to permit the TRS Entity to operate the
Facilities, including, without limitation, filing applications to obtain all
necessary or appropriate approvals for all Licenses, agreements, certificates
and other consents from all Governmental Authorities, administrators and
agencies, and any municipality or other governmental agency or administrative
body that authorizes or regulates the operation of the Facilities and the
conduct of the Business as presently operated upon terms and conditions
acceptable to Purchaser in its sole discretion (individually and collectively,
“Governmental Approvals”). Attached to this Agreement as Schedule 5.5(a) is a
list that has been agreed upon by Purchaser and Seller of Licenses that
Purchaser requires to be issued in the name of the TRS Entity with an effective
date of the Closing Date, and which are required for the operation of the
Facilities by the TRS Entity from and after the Closing Date. Without limiting
the generality of the foregoing, as soon as is practical following the Date of
Execution, Purchaser shall cause the TRS Entity to file the requisite
applications with the Pennsylvania Licensure Agency, and Purchaser shall use
commercially reasonable efforts to cause the TRS Entity to obtain, and
diligently pursue obtaining, all approvals of such applications, and shall not
unreasonably request any extensions of any time periods by which Purchaser must
reply or provide information to the Pennsylvania Licensure Agency. Purchaser
shall from time to time update Seller on the status of such applications and
shall promptly upon receipt provide to Seller copies of all correspondence to
and from the Pennsylvania Licensure Agency in connection with such applications.
Each party shall furnish promptly to each other all information that is not
otherwise available to the other party and that such party may reasonably
request in connection with any such filing. Seller shall reasonably cooperate
with Purchaser in the performance by Purchaser of its obligations under this
Agreement in obtaining all Governmental Approvals. Without limiting the
foregoing, Seller will assist Purchaser and the TRS Entity in responding to
questions raised by, attending meetings with, and assisting with the preparation
of documents required by Governmental Authorities in order to obtain all
Governmental Approvals, provided the same does not increase the liabilities or
decrease the rights of Seller.
(b)    Intentionally Deleted.
(c)    It shall be an express condition precedent to the obligation of each of
parties hereto to consummate the transactions under this Agreement that the
Governmental Approvals are obtained. In the event that, on or before 5:00 pm on
the date that is one hundred twenty (120) days following the Date of Execution
(the “Governmental Approval Outside Date”) the TRS Entity has not obtained the
Governmental Approvals, then either Seller or Purchaser may terminate this
Agreement upon written notice to the other parties and Escrow Agent (the
“Regulatory Contingency

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Termination Notice”). In the event that either Seller or Purchaser delivers a
Regulatory Contingency Termination Notice pursuant to this Section 5.5, this
Agreement shall terminate as of the date of the delivery of the Regulatory
Contingency Termination Notice in accordance with Article XII below.
5.6    Further Documentation. Purchaser agrees that following the Closing Date,
upon request by Seller, Purchaser will do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, all such further acts,
documents and assurances as may be reasonably required, without enlarging or
extending any obligations or liability of Purchaser under this Agreement in any
manner and without (except to the extent required by this Agreement) requiring
the material expenditure of any funds by Purchaser which are not reimbursed by
Seller, to fully consummate the transactions contemplated by this Agreement.
5.7    Changes in Representations and Warranties. Throughout the period from the
Date of Execution through and including the Closing Date, Purchaser shall give
Seller prompt written notice of (a) any representation and warranty made by
Purchaser in this Agreement which Purchaser hereafter learns was inaccurate or
incorrect when originally made and (b) any event, change or occurrence which
will or reasonably may be anticipated to prevent Purchaser from making the same
representations and warranties as set forth herein on and as of the Closing
Date.
ARTICLE VI.

OTHER COVENANTS
6.1    Residents Rents; Accounts Receivable; Move-In Deposits and Move-In Fees.
(a)    Prior to the Closing, except as provided in this Section 6.1(a), Seller
shall bill the Residents in the ordinary course of business for amounts due
under Residency Agreements and the TRS Entity shall assume responsibility for
the billing of such amounts on and after the Effective Time. The parties
acknowledge that private-pay Residents are billed monthly by Seller in advance
on or about the last day of the preceding calendar month. Seller shall bill
private-pay Residents for the calendar month of the Closing, but not for the
calendar month after the Closing. The TRS Entity shall bill Residents for those
private pay items that are billed in arrears (including, if applicable, for
items such as haircuts, guest meals, therapy services and other similar items)
attributable to the calendar month of the Closing; provided, however Seller
shall bill residents for such items if the Closing occurs on the last day of a
calendar month. Regardless of which party bills the Residents, the portion of
all resident rents and service fees allocable to the time period before the
Effective Time shall be allocated to Seller and the portion thereof allocable to
the time period on and after the Effective Time shall be allocable to Purchaser
and will be accounted for as part of the reconciliation process set forth in
Section 10.5.
(b)    Delinquent rents and service fees for the period on or before the
Effective Time will remain the property of Seller. Seller shall retain all
rights in and title to all pre-closing accounts receivable except to the extent
any portion relates in part to dates on and after the Effective Time. With
respect to the collection of delinquent rents and service fees for the period
before the Closing Date, as to (i) former Residents who are not Residents on the
Closing Date, Seller may conduct whatever collection actions it deems
commercially necessary and reasonable to recover such past due amounts, and (ii)
Residents who are Residents on the Closing Date, Seller may not conduct

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any collection activity except with respect to delinquent accounts which remain
past due more than ninety (90) days following the Closing Date. Seller shall
notify Purchaser prior to engaging any third party to pursue collection
activities and, upon Purchaser’s request, shall cooperate in good faith with
Purchaser in pursuing such actions. For the period from the Date of Execution
until the Closing Date, Seller may continue its past practices, including
eviction practices, with respect to the collection of delinquent rents and
service fees of Residents. Anything to the contrary contained in this Agreement
notwithstanding, Seller shall retain all collections relating to pre-Closing
rents and services rendered.
(c)    All rents and service fees received by either party after the Effective
Time from any Resident which does not specify the service dates for which such
payment relates will be applied in the following order of priority: (i) first,
to amounts owed by that Resident for the calendar month of Closing prorated
accordingly between the parties as applicable; (ii) second, (A) to Seller for
the delinquent amounts owed by that Resident attributable to periods before the
Effective Time but only with respect to undesignated payments received during
the period expiring sixty (60) days after the Closing Date and (B) after the
sixtieth (60th) day following the Closing Date, to amounts owed by that Resident
due and payable to Purchaser; and (iii) third, (A) to amounts owed by that
Resident due and payable to Purchaser until the sixtieth (60th) day following
the Closing Date and (B) after the sixtieth (60th) day following the Closing
Date, to Seller for the delinquent amounts owed by that Resident attributable to
the periods before the Effective Time. All payments received by either Purchaser
or Seller from Residents which specify a date of service for such Residents
shall be credited to the party who rendered the services on the specified dates.
(d)    With respect to entrance fees, security deposits and move-in fees paid by
any Resident of the Facilities at any time prior to the Effective Time,
including, without limitation, Residents as of the Closing Date as well as prior
Residents of the Facilities (such deposits and fees, collectively “Move-In
Deposits”), Purchaser shall be entitled to a credit at the Closing for the
portion of such Move-In Deposits that are refundable to any such Resident as of
the Closing Date in accordance with the term of the applicable Residency
Agreement.
(e)    If the Closing occurs at calendar month end, then Purchaser shall receive
a credit at the Closing equal to 100% of the resident fees billed and collected
by Seller in advance for the calendar month after the Closing occurs, subject to
the reconciliation process set forth in Section 10.5.
(f)    If the Closing occurs other than at calendar month end, Purchaser shall
receive a credit at the Closing equal to the following, subject to the
reconciliation process set forth in Section 10.5:
(i)    For the calendar month in which the Closing occurs, a credit equal to
Purchaser’s pro rata share of the amount of the total fees billed and collected
by Seller in advance for such calendar month; and
(ii)    For the calendar month after the Closing occurs, to the extent that
Seller has billed and collected for that calendar month in advance under Section
6.1(a), a credit equal to 100% of the resident fees so billed and collected.

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(g)    Each party agrees that they will provide each other with any information
reasonably required to enable either party to complete its billing to Residents.
6.2    Intentionally Deleted.
6.3    Intentionally Deleted.
6.4    Pre-Closing Access. During the two (2) week period prior to the Closing
Date, Seller shall permit the employees and representatives of the TRS Entity to
be present at the Facilities at scheduled times, mutually agreed upon by
Purchaser and Seller, to, as applicable and reasonably desired by the TRS
Entity, commence installation of time clocks, computers, billing, accounting and
security systems, and do such other things as may be reasonably necessary to
effect an orderly transition of the Facilities. In the event the Agreement is
terminated without Closing, Purchaser shall remove all such installations at
Purchaser’s sole cost.
6.5    Workers’ Compensation. Seller shall be responsible for and pay any and
all workers’ compensation and other similar claims asserted by or with respect
to any Employees or former employees of Seller (or any of them) in respect of
any injury or other compensable event or occupational illness or disease that
occurred or is attributable to any event, state of facts or condition that
existed or occurred prior to or on the Closing Date. Purchaser is responsible
for and shall pay any and all workers’ compensation and other similar claims
asserted by or with respect to any Employees in respect of any injury or other
compensable event or occupational illness or disease that occurred or is
attributable to any event, state of facts or condition that first existed or
occurred following the Closing Date.
6.6    Seller’s Financial Books and Records. Seller agrees to maintain all of
Seller’s Financial Books and Records for the requisite period prescribed by
Applicable Law. If at that time Seller intends to destroy such Books and
Records, it shall give Purchaser written notice thereof and, to the extent
Purchaser demonstrates to Seller that Purchaser is so permitted by Applicable
Law, Purchaser may within thirty (30) days after receipt of notice from Seller
requests Seller to make the Books and Records available to Purchaser in its
possession, Seller shall transfer them to Purchaser at Purchaser’s sole cost and
on the condition of Purchaser’s continuing indemnification of Seller for any
claim arising against Seller due to Purchaser’s possession or use of them. In
addition, if and to the extent permitted by Applicable Law, Seller agrees to
allow Purchaser, or its agents or representatives, in connection with a valid
business purpose and upon reasonable advance notice and at Purchaser’s sole cost
and expense, to examine from time to time such Seller’s Financial Books and
Records, to promptly cooperate with Purchaser, its agents or representatives in
their examination or review of such Seller’s Financial Books and Records, and to
permit Purchaser to obtain copies thereof, upon request.
6.7    Approvals and Consents. Prior to the Closing Date, and without limiting
the other provisions of this Agreement, Seller and Purchaser will take all
corporate and other action and exercise their respective commercially reasonable
efforts to fulfill their respective obligations hereunder. In addition, subject
to the other terms of this Agreement, including without limitation Sections 1.4
and 4.4, Seller shall use its commercially reasonable best efforts to obtain in
writing, at its cost and expense and in form and substance reasonably
satisfactory to Purchaser as promptly as possible, all Required Consents (other
than the Governmental Approvals which under Section 5.5 are

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the responsibility of the TRS Entity) and Purchaser shall reasonably cooperate
with Seller’s efforts to obtain such consents.
6.8    Discharged Resident Records. For a period of ten (10) years or, if less,
the period that Seller is required to retain Discharged Resident Records (but
for no less than five (5) years), Seller agrees to allow Purchaser, or its
agents or representatives, in connection with a valid business purpose and upon
reasonable advance notice and at Purchaser’s sole cost and expense, to examine
from time to time the Discharged Resident Records, to promptly cooperate with
Purchaser, its agents or representatives in their examination or review of such
Discharged Resident Records, and to permit Purchaser to obtain copies thereof,
upon request.
6.9    Management Agreement. As a condition of Closing, Seller shall cause the
EIK Manager (“Manager”) and Purchaser shall cause the TRS Entity to enter into a
management agreement for the management of the Facilities and subject to
finalizing the Form Management Agreement (defined below) pursuant to the terms
of this Section 6.9. The management of each such Facility by the Manager shall
commence, and the management agreement for such Facility shall be executed and
become effective as of the Effective Time. The form of the management agreement
shall be substantially in the form attached hereto as Exhibit C.
ARTICLE VII.

INDEMNIFICATION
7.1    Indemnification by Seller.
(a)    Subject to the limitations set forth in this Article VII and the other
provisions of this Agreement, each Seller shall, severally only as to its own
Assets and Business, indemnify, protect, defend, exculpate and hold Purchaser,
Real Estate Purchasers, the TRS Entity, Purchaser’s Permitted Assignees and
their respective partners, shareholders, members, directors, managers, officers,
employees and agents (collectively, “Purchaser Indemnified Parties”) harmless
from and against, and agree promptly to defend Purchaser Indemnified Parties
from and reimburse Purchaser Indemnified Parties for, any and all Losses
(collectively, “Purchaser Indemnified Losses”) which Purchaser Indemnified
Parties may at any time suffer or incur, or become subject to, to the extent of
or in connection with the following, except to the extent directly resulting
from the acts or omissions of Purchaser:
(i)    Any and all obligations of Seller and Seller’s Affiliates,
representatives, employees and agents (together with Seller, collectively,
“Seller Agents”), or any of them, of any nature whatsoever, including, without
limitation, all liabilities and obligations with respect to claims (including,
without limitation, recoupment actions, audits or any enforcement by
Governmental Authorities, damages, or injuries, related to or arising out of the
ownership, use, leasing, management, maintenance or operation of the Facilities,
the Business or any of the Assets prior to the Effective Time, whether such
obligation accrues or is asserted before or after the Effective Time, except for
Assumed Liabilities;

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(ii)    Any and all liability or loss arising out of or relating to any failure
in connection with the transactions contemplated herein to comply with the
requirements of any Applicable Laws relating to bulk sales or transfers;
(iii)    Any violation of Environmental Laws by Seller or any discharge of any
Hazardous Substance on or from any of the Assets during the time of Seller’s
ownership or occupancy thereof; and/or
(iv)    Any Seller breach, inaccuracy, misrepresentation or omission in any of
the representations or warranties to the extent made by Seller in or pursuant to
(a) this Agreement or any Exhibit or Schedule hereto, or (b) any instrument,
certificate or affidavit delivered by Seller at the Closing; and not otherwise
disclosed pursuant to Section 4.19;
(v)    Any breach of any covenant, agreement or undertaking to the extent made
by any of Seller Agents under this Agreement or as set forth in any instrument,
certificate or affidavit delivered by or on behalf of Seller Agents at the
Closing; and not otherwise disclosed pursuant to Section 4.19;
(vi)    Any Excluded Liabilities.
(b)    As used herein, “Losses” means any and all damages, losses, taxes,
liabilities, claims, judgments, penalties, causes of action, investigations,
audits, demands, assessments, adjustment, settlement payments, deficiencies,
fines, diminutions in value, costs and expenses (including without limitation
reasonable attorneys fees and court costs) and interest (including interest
imposed from the date of any such Loss), but expressly excluding consequential
and speculative damages.
7.2    Indemnification by Purchaser. Subject to the limitations set forth in
this Article VII and the other provisions of this Agreement, Purchaser shall
indemnify, protect, defend, exculpate, and hold Seller and its shareholders,
members, managers, directors, officers, employees, and agents (collectively,
“Seller Indemnified Parties”) harmless from and against, and agree promptly to
defend Seller Indemnified Parties from and reimburse Seller Indemnified Parties
for, any and all Losses (collectively, “Seller Indemnified Losses”) which Seller
Indemnified Parties may at any time suffer or incur, or become subject to, as a
result of or in connection with:
(i)    Any breach or inaccuracy of any of the representations or warranties made
by Purchaser in or pursuant to this Agreement or in any instrument, certificate
or affidavit delivered by Purchaser to Seller at the Closing or in any Exhibit,
Schedule, certificate, or other executed document furnished or to be furnished
to Seller hereunder;
(ii)    Any failure by Purchaser to carry out, perform, satisfy and discharge in
any respect any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or in any instrument, certificate or affidavit
delivered by Purchaser to Seller at the Closing;
(iii)    Any and all claims, including any suit, action, or other proceeding
brought by applicable Governmental Authorities or quasi-Governmental Authorities
against Seller

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arising from the ownership and operation of the Facilities by Purchaser or a
Purchaser designee, or as to any overpayments made to Purchaser or a Purchaser
designee by third parties, if applicable;
(iv)    Any and all claims arising out of Purchaser’s post-Closing obligations
under the Assumed Liabilities; and
(v)    (a) all taxes that result from, relate to or accrue in connection with
the operation of the Facilities on and after the Closing Date; and (b)
liabilities and obligations arising out of personal injury claims accruing with
respect to or related to the services provided at the Facilities after the
Closing Date.
7.3    Notification of Claims and Indemnification Procedures.
(a)    A party entitled to be indemnified pursuant to Section 7.1 or Section 7.2
or any other provision of this Agreement (the “Indemnified Party”) shall notify
the party liable for such indemnification (the “Indemnifying Party”) in writing
of any third party claim which the Indemnified Party has determined gives rise
or will likely give rise to a right of indemnification under this Agreement, as
soon as possible after the Indemnified Party becomes aware of such claim and has
made such determination; provided, however, that the Indemnified Party’s failure
to give such notice to the Indemnifying Party in a timely fashion shall not
result in the loss of the Indemnified Party’s rights with respect thereto except
to the extent the Indemnified Party is prejudiced by the delay. Subject to the
Indemnifying Party’s right to defend in good faith third party claims as
hereinafter provided, the Indemnifying Party shall satisfy its obligations under
this Article VII within thirty (30) days after the receipt of written notice
thereof from the Indemnified Party, it being agreed that the Indemnifying Party
need not satisfy such obligations during any period in which the Indemnifying
Party is defending in good faith the applicable third party claim in the manner
described herein below.
(b)    If the Indemnified Party notifies the Indemnifying Party of any claim
pursuant to Section 7.3 (a), and if such claim relates to a claim asserted by a
third party against the Indemnified Party which the Indemnifying Party
acknowledges is a claim for which it must indemnify or hold harmless the
Indemnified Party under Section 7.1 or Section 7.2, the Indemnifying Party shall
have the right to either (i) pay such claim or (ii) employ counsel reasonably
acceptable to the Indemnified Party to defend any such claim asserted against
the Indemnified Party. The Indemnified Party shall have the right to participate
in the defense of any such claim. The Indemnifying Party shall notify the
Indemnified Party in writing, as promptly as possible (but in any case
reasonably in advance of the due date for the answer or response to a claim)
after the date of the notice of claim given by the Indemnified Party to the
Indemnifying Party under Section 7.3 (a) of its election to defend in good faith
any such third party claim. So long as the Indemnifying Party is defending in
good faith any such claim asserted by a third party against the Indemnified
Party and is able to demonstrate to the Indemnified Party its financial
wherewithal to fully perform its indemnification obligation in the event such
contested claim is resolved adversely to the Indemnified Party, the Indemnified
Party shall not settle or compromise such claim. The Indemnified Party shall
make available to such counsel all records and other materials in the
Indemnified Party’s possession reasonably required by it for its use in
contesting any third party claim. Whether or not the Indemnifying Party elects
to defend any such claim, the Indemnified Party shall have no obligations to do
so.

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(c)    The Indemnified Party shall have the right to participate in any matter
through counsel of its own choosing at its own expense (unless the Indemnified
Party determines in good faith that there is a conflict of interest that
prevents counsel for the Indemnifying Party from representing the Indemnified
Party, in which case the Indemnifying Party will have the right to choose and
fund other counsel to represent the Indemnified Party or to reimburse the
Indemnified Party for the expenses of its counsel). After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to defend or
settle any such third party claim, and for so long as the Indemnifying Party
diligently pursues such defense and is able to demonstrate to the Indemnified
Party its financial wherewithal to fully perform its indemnification obligation
in the event such contested claim is resolved adversely to the Indemnified
Party, the Indemnifying Party shall not be liable for any additional legal
expenses incurred by the Indemnified Party in connection with any defense or
settlement of such third party claim, except to the extent such participation is
requested by the Indemnifying Party, in which event the Indemnified Party shall
be reimbursed by the Indemnifying Party for reasonable legal expenses and
out-of-pocket expenses incurred in connection with such requested participation.
(d)    An Indemnifying Party may not, without the prior written consent of the
Indemnified Party, settle or compromise any claim against an Indemnified Party
or consent to the entry of any judgment with respect to which indemnification is
being sought hereunder unless such settlement, compromise or consent includes an
unconditional release of the Indemnified Party from all liability arising out of
such claim and does not contain any equitable order, judgment or term which in
any manner affects, restrains or interferes with the business of the Indemnified
Party or any of the Indemnified Party’s Affiliates.
(e)    If any amounts payable by an Indemnifying Party to an Indemnified Party
is not paid when due, such unpaid amount shall bear interest at an interest rate
equal to a margin of 2% plus the “Prime Rate” as published by the Wall Street
Journal (Eastern edition) under its Money Rates column and specified as the base
rate on corporate loans at large U.S. commercial banks or, if it no longer
publishes such, the rate of interest announced from time to time by Well Fargo
Bank as its prime rate, base rate or reference rate.
7.4    Survival of Representations, Warranties and Covenants. The
representations and warranties contained in this Agreement shall survive for a
period of twelve (12) months following the Closing Date, and shall thereafter
cease to be of any force and effect, except for (a) claims as to which notice
has been given prior to such date and which are pending on such date, (b) claims
based upon representations and warranties set forth in Sections 2.1, 2.2, 2.8,
2.28, 3.1, 3.2, 3.4 and 3.6, which shall survive without limitation and (c)
claims based upon representations and warranties set forth in Sections 2.5, 2.9
or 2.24, which shall survive until the expiration of the applicable statute of
limitations (each, a “Claims Period”). If any act, omission, disclosure or
failure to disclose shall form the basis for a claim for breach of more than one
representation or warranty, and such claims have different periods of survival
hereunder, then the termination of the survival period of one claim shall not
affect a party’s right to make a claim based on the breach of the representation
or warranty still surviving. All covenants of the parties contained in this
Agreement which have a definitive term associated with such covenant shall
survive the Closing Date for such term. All other covenants of the parties
contained in this Agreement shall survive the Closing until fully performed.

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7.5    Set-Off. The Purchaser Indemnified Parties may set-off against unpaid
amounts of the Indemnity Holdback, if any, any amounts otherwise payable by
Seller to any of the Purchaser Indemnified Parties for any Purchaser Indemnified
Losses, all in accordance with the Indemnity Holdback Agreement. The Indemnity
Holdback and the right of set-off, shall be exclusive of any other right or
remedy any of the Purchaser Indemnified Parties may have with respect to the
Purchaser Indemnified Losses, whether under this Agreement, at law or in equity.
To the extent required under Section 7.7, Seller hereby agree that to the extent
the Purchaser Indemnified Losses exceed the amount of the Indemnity Holdback
then in existence, each Seller severally will be liable for all such Purchaser
Indemnified Losses relating to such Seller.
7.6    Net Damages. Notwithstanding anything contained herein to the contrary,
the amount of any Losses incurred or suffered by an Indemnified Party shall be
calculated after giving effect to any commercially reasonable mitigation efforts
required by applicable law which the Indemnified Party undertook or could have
undertaken, and any proceeds or recoveries actually received by the Indemnified
Party from any other third party, including any proceeds from insurance policies
covering the event or claim giving rise to the indemnification obligation, net
of the reasonable costs incurred by Purchaser or any of its Affiliates in
obtaining any such proceeds or recoveries.
7.7    Liability Limitations.
(a)    The maximum aggregate liability of each Seller to the Purchaser
Indemnified Parties with respect to claims for Purchaser Indemnified Losses
under Section 7.1 will be limited to an amount equal to One Million Dollars
($1,000,000) for each facility (the “Cap”); provided, however, the Cap shall not
apply to any Purchaser Indemnified Losses incurred or suffered by any of them
and arising out of or resulting from (i) any breach by Seller of any Exempt
Representations and Warranties made by it or (ii) claims based upon misconduct
or gross negligence.
(b)    The maximum aggregate liability of the Purchaser to each Seller
Indemnified Parties with respect to claims under Section 7.2 will be limited to
the Cap; provided, however, the Cap shall not apply to any Seller Indemnified
Losses incurred or suffered by any of them and arising out of or resulting from
(i) any breach by Purchaser of any Exempt Representations and Warranties made by
it or (ii) claims based upon willful misconduct or gross negligence.
(c)    No Seller will have any liability to any Purchaser Indemnified Parties
under Section 7.1 until the Purchaser Indemnified Parties shall have incurred on
a cumulative basis Losses for the respective Facility of Seventy-Five Thousand
Dollars ($75,000) (the “Basket”), at which point Seller shall be liable for all
Losses incurred by the Purchaser Indemnified Parties, including the amount of
the Basket; provided, however, the Basket shall not apply to any Losses incurred
or suffered by any of them arising out of or resulting from (i) any breach of
any Exempt Representations and Warranties or (ii) claims based upon willful
misconduct or gross negligence.
(d)    Purchaser will not have any liability to the Seller Indemnified Parties
under Section 7.2(ii) until the Seller Indemnified Parties shall have incurred
on a cumulative basis Losses exceeding the Basket, at which point Purchaser
shall be liable for all Losses incurred by the Seller Indemnified Parties,
including the amount of the Basket; provided, however, the Basket shall not
apply to any Losses incurred or suffered by any of them arising out of or
resulting from claims based upon willful misconduct or gross negligence or event
known by Purchaser at Closing.

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(e)    The representations and warranties set forth in Sections 2.1 (Seller
Authority), 2.2 (Seller Organization), 2.5 (Seller Taxes), 2.8 (Title to
Assets), 2.9 (Hazardous Materials), 2.23 (Employee and Labor Relations), 2.28
(Broker), 3.1 (Purchaser Organization), 3.2 (Purchaser Authority), 3.4 (Broker),
3.5 (Limited Reliance) and 3.6 (Limited Representation) are hereinafter referred
to as the “Exempt Representations and Warranties.”
ARTICLE VIII.

CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligation of Purchaser to effect the transactions contemplated hereby to be
consummated at the Closing shall be subject to the satisfaction of each of the
following conditions, unless waived in writing by Purchaser to the extent known
by Purchaser.
8.1    Representations and Warranties; Performance.
(a)    The representations and warranties made by Seller herein and in the
Seller Related Documents shall be true and correct in all material respects as
of the Date of Execution and at and as of the Closing Date, with the same effect
as though made on such date.
(b)    Seller shall have performed and complied with each of its covenants
pursuant to this Agreement or any Seller Related Documents in all material
respects through the Closing Date (including without limitation, the timely
delivery to Purchaser of any materials required to be delivered pursuant to the
terms hereof).
8.2    Consents. Seller, Purchaser, Real Estate Purchasers and/or the TRS Entity
shall have received or obtained and the Governmental Approvals. Without limiting
the foregoing, Purchaser shall be satisfied, in its reasonable discretion, that
all material consents have been obtained and all required filings have been made
as a condition to the consummation of the transaction set forth in this
Agreement, including those set forth in Sections 2.3, 2.4, 2.6 and 2.7
(collectively, together with the Governmental Approvals, the “Required
Consents”).
8.3    No Proceeding or Litigation. No injunction, judgment, order, decree,
ruling or charge shall be in effect under any action, suit or proceeding before
any Governmental Authority, court or quasi-judicial or administrative agency of
any federal, state, local or foreign jurisdiction or before any arbitrator that
(a) prevents consummation of any of the transactions contemplated by this
Agreement or (b) would cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, provided that Purchaser has
not solicited any such action, suit or proceeding.
8.4    Title Insurance. Purchaser shall have received the Title Policies in the
forms described in Section 4.10 and Purchaser shall have received satisfactory
evidence, including, without limitation, results of Uniform Commercial Code
Financing Statement searches, that all Assets are free and clear of encumbrances
other than the Permitted Encumbrances, encumbrances arising solely under the
Hanover Mortgage, and any Monetary Encumbrances as Seller shall pay and
discharge in full prior to or on or at the Closing.

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8.5    Material Adverse Change. There has been no Material Adverse Change. For
purposes hereof, the term “Material Adverse Change” shall mean (a) any change or
event or effect that is or would likely be materially adverse to Seller, the
Business, or the operations, results of operations, assets, properties or
financial condition of any of the Facilities, individually, or all Facilities,
taken as a whole; (b) any change or event or effect that is or would likely be
materially adverse to the ability of Seller to perform its obligations under
this Agreement or any of the Seller Documents; (c) a material adverse effect on
the ability of Seller to consummate the transactions contemplated by this
Agreement, including without limitation any revocation of any License required
to operate any of the Facilities, the issuance of any moratorium on the
acceptance of residents to any of the Facilities, or the general denial of
payment by any Governmental Authority with respect to new admissions or the
existing residents at any of the Facilities; (d) any change or event or effect
that materially adversely affects validity or enforceability of this Agreement
or any of the Seller Documents; (e) receipt of notice from any Governmental
Authority of a termination, revocation, rescission, suspension or refusal to
renew any of the Licenses; or (f) receipt of notice from any Governmental
Authority of a so-called “fast-track” decertification or a survey finding of
serious and immediate jeopardy at any Facility; provided, however, it shall not
include any adverse changes which directly results from past, existing or
prospective economic or regulatory conditions or other conditions affecting at
any time the Business or the industry in which the Business competes, including
fluctuating conditions resulting from the cyclicality of the Business.
8.6    Intentionally Deleted.
8.7    Other Agreements. Seller shall have delivered into the Closing escrow its
countersigned copies of this Agreement and the Seller Related Documents.
ARTICLE IX.

CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligation of Seller to effect the transactions contemplated hereby to be
consummated at the Closing shall be subject to the satisfaction of each of the
following conditions, unless waived in writing by Seller.
9.1    Representations and Warranties; Performance.
(a)    The representations and warranties made by Purchaser herein and in the
Purchaser Related Documents shall be true and correct in all material respects
on and as of the Date of Execution and at and as of the Closing Date, with the
same effect as though made on such date.
(b)    Purchaser shall have performed and complied with each of its covenants
pursuant to this Agreement or any Purchaser Related Documents in all material
respects through the Closing Date.
9.2    Consents. Seller, Purchaser, Real Estate Purchasers and/or the TRS Entity
shall have received or obtained the Required Consents.
9.3    No Proceeding or Litigation. No injunction, judgment, order, decree,
ruling or charge shall be in effect under any action, suit or proceeding before
any Governmental Authority, court or

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quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator that (a) prevents consummation of any of
the transactions contemplated by this Agreement or (b) would cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, provided that Seller has not solicited or encouraged any such
action, suit or proceeding.
9.4    Other Agreements. Purchaser shall have delivered into the Closing escrow
its countersigned copies of this Agreement and the Purchaser Related Documents,
including, without limitation the EIK Management Agreement.
ARTICLE X.

CLOSING
10.1    Closing.
(a)    Possession. Possession of all Assets sold hereunder shall be delivered to
Real Estate Purchasers and the TRS Entity on the Closing Date.
(b)    Seller Closing Documents. Seller shall deliver or cause to be delivered
to Purchaser, on the Closing Date, the following Seller Documents:
(i)    duly executed Special Warranty Deeds for each Facility, in recordable
form and otherwise sufficient to convey such Facility to Real Estate Purchasers
pursuant to laws of the Commonwealth of Pennsylvania, as reasonably approved by
Real Estate Purchasers and the Title Company;
(ii)    such additional bills of sale, certificates of title and other
appropriate instruments of assignment and conveyance, in form mutually but
reasonably satisfactory to Purchaser and Seller, dated as of the Closing Date,
conveying title to the Assets, free and clear of all liens, liabilities,
security interests or encumbrances except for Permitted Encumbrances;
(iii)    Intentionally Deleted;
(iv)    a then current resident roll in the form attached as Schedule 2.7(b),
updated Schedules to this Agreement, and schedule of refundable Move-In Deposits
all as certified by Seller as of the Closing Date as true, complete and
accurate;
(v)    originals of all of the Assumed Contracts, Assumed Residency Agreements
and Licenses;
(vi)    evidence of the authority of Seller to execute and deliver this
Agreement and the Seller Related Documents in order to effectuate the Closing;
(vii)    duly executed affidavits and documents in form satisfactory to obtain
the Title Policies, without exception for mechanic’s, materialman’s or other
statutory liens;

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(viii)    a closing statement setting forth in reasonable detail the financial
transactions contemplated by this Agreement to be consummated at the Closing
(“Closing Statement”), duly executed by Seller;
(ix)    a duly executed certificate of Seller certifying that the conditions set
forth in Article VIII have been satisfied and met or waived as of the Closing
Date;
(x)    duly executed certificates and affidavits of non-foreign status in form
reasonably acceptable to Purchaser;
(xi)    duly executed originals of the Seller Loan Assumption Documents, in
quantity as to each as reasonably requested by Lender;
(xii)    an accounting of Resident Funds, including the warranty and all other
information required pursuant to Section 10.2;
(xiii)    duly executed instruments providing for the assignment of Other
Contract Rights, and the assignment and assumption of the Assumed Contracts in
form and substance reasonably acceptable to Purchaser and Seller (the
“Assignment and Assumption Agreement”);
(xiv)    such additional assignments in form reasonably acceptable to Purchaser
and Seller of all Assets that are intangible property, including, without
limitation, documents, chattel paper, instruments, contract rights, goodwill,
going concern value, general intangibles and Intellectual Property, but
excluding all Excluded Assets;
(xv)    the duly executed Indemnity Holdback Agreement;
(xvi)    the duly executed Management Agreement;
(xvii)    any other documents reasonably required by Purchaser or the Title
Company in accordance with the terms of this Agreement.
(c)    Purchaser Closing Documents. Purchaser shall deliver or cause to be
delivered to Seller, on the Closing Date, the following Purchaser Documents:
(i)    payment of the Purchase Price, as provided in Section 1.5;
(ii)    instructions executed by Purchaser authorizing the Deposit to be
released to Seller;
(iii)    evidence of the authority of Purchaser to execute and deliver this
Agreement and the Purchaser Related Documents in order to effectuate the
Closing;
(iv)    the Closing Statement, duly executed by Purchaser;
(v)    duly executed originals of the Loan Assumption Documents to be executed
by Purchaser, in quantity as to each as reasonably requested by the applicable
Lender;

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(vi)    the Assignment and Assumption Agreement, duly executed by the
appropriate Purchaser designees;
(vii)    a duly executed certificate of Purchaser certifying that the conditions
set forth in Article IX have been satisfied and met or, if applicable with
respect to Closing, waived as of the Closing Date;
(viii)    Purchaser’s counterpart to the Closing Statement;
(ix)    the duly executed Indemnity Holdback Agreement;
(x)    the duly executed Management Agreement; and
(xi)    any other documents reasonably required by Seller.
(d)    Intentionally Deleted.
10.2    Resident Funds. (a) At the Closing, Seller shall transfer all funds
belonging to Residents which are held by Seller in a custodial capacity other
than Move-In Deposits (collectively, “Resident Funds”), to a bank account
designated by Purchaser and Purchaser shall, in writing, acknowledge receipt of
and expressly assume all of Seller’s financial and custodial obligations with
respect thereto, it being the intent and purpose of this provision that, at the
Closing, Seller will be relieved of all fiduciary and custodial obligation with
respect to such Resident Funds and that Purchaser or its designee will assume
all such obligations and be directly accountable to the Residents with respect
to all Resident Funds actually received by Purchaser. At the Closing, Seller
shall provide Purchaser with an accounting of all Resident Funds as of the
Closing, subject to adjustment within fifteen (15) days following the Closing
Date. Such accounting will set forth the names of the Residents for whom such
Resident Funds are held and the amounts held on behalf of each Resident, and
will be organized by Facility. The accounting must include Seller’s warranty
that the accounting is true, correct and complete as of the Closing Date,
subject to adjustment during the fifteen (15) day period referenced above.
(b)    Seller represents and warrants to Purchaser that Seller holds all
Resident Funds in trust and hold Purchaser Indemnified Parties and Seller will
indemnify and harmless from all liabilities, claims and demands in the event the
amount of such Resident Funds, if any, refunded to an individual Resident does
not represent the full amount due to the individual Resident as of the date of
the Final Reconciliation.
10.3    Closing Adjustments.
(a)    Real Estate and Personal Property Taxes; Prorations. Real and personal
property taxes and assessments shall be prorated as of the Closing Date for the
Facility to which they relate. Said prorations shall be based on the tax year of
the municipality in which the Assets are located and shall be based on the most
recent available bill. Said prorations shall be made on an accrual basis with
reference to the most recent available tax information with a post-closing
re-proration being made within thirty (30) days after either party’s receipt of
the actual final tax bills for the applicable years. If such amounts are not
paid by Seller to Purchaser, or by Purchaser to Seller, as the case may be,
within thirty (30) days after the post-closing re-proration, then the amount
owed

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shall accrue interest thereafter at the rate of 1.5% per month; provided,
however, that in no event will interest be charged in excess of the amount
permitted by Applicable Law.
(b)    Prepaid Resident Fees. In accordance with Section 6.1, Purchaser shall
receive a credit for all prepaid resident fees and Move-In Deposits, which
amounts shall be subject to reconciliation pursuant to Section 10.5.
(c)    Other Prorations. Charges for water, fuel, gas, oil, heat, electricity
and other utilities, operating charges and other prepaid amounts shall be
prorated as of the Closing Date for the Facility to which they relate to the
extent such accounts are transferred at Closing; provided, that, accounts for
water, fuel, gas, oil, heat, electricity and other utilities to the greatest
extent practicable shall not be transferred at Closing and each party shall
cooperate with the other in order to facilitate a smooth transition through the
termination of prior accounts and opening of new accounts effective as of the
Effective Time. Any such prorated amounts will not be paid pursuant to the
Closing Statement, but will instead be part of the post-closing reconciliation
process described in Section 10.5. Purchaser shall be responsible for all fees
and costs charged by Lender (but, not Seller) associated with the Assumed Debt.
Each party shall pay the costs of any consultants that said party may engage to
assist such party with the completion and/or processing of the Loan Assumption
Documents.
(d)    Estimated Costs. All payables, including accounts payable for Inventory,
utilities, payroll, services, supplies and materials, which accrue prior to the
Effective Time shall be Seller’s responsibility and shall be subject to the
reconciliation process described in Section 10.5. All payables, including
accounts payable for Inventory, utilities, payroll, services, supplies and
materials, which accrue after Effective Time shall be paid by Purchaser.
(e)    Closing Statement Accounting. All calculations and prorations under this
Section 10.3 shall be made on the accrual basis of accounting.
10.4    Other Costs at the Closing.
(a)    At or before the Closing, Seller shall pay (i) 50% of any and all
recordation and transfer taxes (including real property transfer taxes); and
(ii) all sales tax payable with respect to the transfer of tangible personal
property included within the Assets. Each of Purchaser and Seller shall pay
fifty percent (50%) of any escrow or similar closing charges of the Title
Company.
(b)    At or before the Closing, the TRS Entity or Real Estate Purchaser shall
pay (i) the title exam fees and the basic premium for the Title Policies, (ii)
the cost of all title endorsements, (iii) the costs of preparing the Survey,
(iv) the costs of any UCC searches, (v) any mortgage tax, (vi) any recording
fees; (vii) any sales tax with respect to tangible personal property included
within the Assets, (viii) fifty percent (50%) of any escrow or similar closing
charges of the Title Company, and (ix) 50% of any and all recordation and
transfer taxes (including real property transfer taxes).
10.5    Post-Closing Purchase Price Reconciliation. Within sixty (60) days after
the Closing Date, representatives of Purchaser shall prepare and deliver to
Seller a proposed initial statement of reconciliation itemizing the following:
(a) all costs, charges and expenses paid by one party with respect to the
Facilities (for operating costs, utilities, payroll, property taxes and the like
which are for time periods occurring both before and after the Effective Time)
that are properly allocable to

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the other party; (b) all Resident rents and service fees actually collected by
either party with respect to the Facilities, and (c) all other allocated and
prorated amounts identified in Section 10.3 above (the “Initial Reconciliation”)
and to whom such amounts should be properly allocated. The Initial
Reconciliation shall include appropriate detail to identify the items being
adjusted. A final reconciliation of all such expenses, costs, charges, service
fees and rents shall be prepared by Purchaser and Seller within ninety (90) days
after the Closing Date (the “Final Reconciliation”). Throughout the period
leading up to the Initial Reconciliation and the Final Reconciliation, each
party shall provide to the other party any information it may receive regarding
the revenue and expense items described in clauses (a) and (b) of this Section
10.5 and all other allocated and prorated amounts identified in Section 10.3
above. The Final Reconciliation shall appropriately reflect the net amount owed
to Purchaser or to Seller as a result of such reconciliation, but without any
proration or adjustment made as a result of Inventory, supplies, or other
consumables on hand at the Closing (none of which shall be subject to proration
or adjustment). After approval of the Final Reconciliation by both parties, the
party determined to owe cash as a result of such Final Reconciliation shall
promptly pay such cash to the other party.
ARTICLE XI.

CONDEMNATION; DAMAGE OR DESTRUCTION
11.1    Condemnation.     
(a)    In the event that any proceedings for the condemnation of the Real
Property or any portion thereof are instituted by any Governmental Authority
prior to Closing, then promptly upon obtaining knowledge of the institution of
such proceedings, each party will notify the other party in writing (the
“Condemnation Notice”) of the pendency of such proceedings. As used in this
Section 11.1: (i) the terms “condemnation”, or “condemn” or “taking” means the
exercise of, or intent to exercise, the power of eminent domain, expressed in
writing, as well as the filing of any proceeding for such purpose, by a
Condemning Authority, and shall include a voluntary sale by Seller to any such
Condemning Authority, either under the threat of condemnation or while such
proceedings are pending; and (ii) the term “Condemning Authority” means a
Governmental Authority with the right or power of eminent domain. A condemnation
shall be deemed to occur in point of time upon the actual physical taking of
possession pursuant to the exercise of said power of eminent domain. For
avoidance of doubt, a condemnation proceeding shall be deemed to commence upon
receipt of written notice of the intent to condemn.
(b)    If proceedings for condemnation are instituted by any Condemning
Authority with respect to any Real Property or any portion thereof prior to
Closing (a “Condemned Property”), then at the election of Purchaser, which
election shall be set forth in a written notice from Purchaser to Seller (the
“Condemnation Election Notice”), either: (i) this Agreement shall terminate
pursuant to this Section 11 upon delivery of the Condemnation Election Notice to
Purchaser; (ii) the Condemned Property and all other Assets and Assumed
Liabilities that are related to such Condemned Property (collectively, the
“Condemned Property Elements”) shall be excluded from the transactions
contemplated by this Agreement pursuant to Section 11.1(c) and the Closing shall
proceed with respect to the balance of the Assets and Assumed Liabilities; or
(iii) this Agreement shall remain in full force and effect, Purchaser shall not
be entitled to an abatement of the Purchase Price by reason of such
condemnation, and the proceeds of any award or payment in respect of such

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condemnation shall be paid over to, or assigned to, Purchaser, as applicable, at
the Closing. The Condemnation Election Notice shall be delivered by Purchaser to
Seller within twenty (20) Business Days following the receipt by Purchaser of
the Condemnation Notice. If Purchaser fails to deliver the Condemnation Election
Notice within that twenty (20) Business Day period, Purchaser shall be deemed to
have elected to terminate this Agreement in its entirety. Any termination of
this Agreement pursuant to this Section 11.1(b) shall be in accordance with
Article XII below. Condemned Property shall also include any Facility to the
extent any change of grade or closing of any such street or highway abutting or
adjacent to such Facility would materially impair access to and from such
Facility or otherwise materially interfere with its occupancy and use as a
assisted living facility.
(c)    In the event that Purchaser makes the election under Section 11.1(b)
(ii): (i) all of the respective covenants, obligations, representations and
warranties of each of the parties in this Agreement with respect to the
Condemned Property Elements shall be void ab initio and of no force or effect;
(ii) the Purchase Price shall be reduced by the aggregate fair market values of
the Condemned Property Elements; (iii) Seller and Purchaser shall mutually
execute a written amendment to this Agreement, to be prepared by Purchaser and
subject to the approval of Seller, in its sole and absolute discretion, to
confirm and evidence the reduction in the Purchase Price and the application of
the provisions of this Section 11.1(c) with respect to the Condemned Property
Elements; and (iv) all proceeds from such condemnation shall belong to the
applicable Seller.
11.2    Damage or Destruction.
(a)    Subject to the provisions of Section 11.2(b): (x) all risk or loss
concerning the Assets that occurs on or prior to the Closing shall be borne by
Seller; and (y) all risk of loss concerning the Assets that occurs after the
Closing shall be borne by Purchaser.
(b)    In the event that, on or prior to the Closing Date, the Assets are
damaged in whole or in part by fire or other casualty, the following procedures
shall apply:
(i)    Seller shall notify Purchaser in writing of the damage within two (2)
Business Days following Seller becoming aware of such damage (the “Asset Damage
Notice”).
(ii)    If the estimated costs of repairing damage to any Real Property as to
each facility (the “Damaged Property”) and any Assets located on the Damaged
Property (collectively, the “Damaged Property Components”) is less than Five
Hundred Thousand and No/100 Dollars ($500,000.00) (the “Damage Threshold
Amount”), which estimated repair costs (the “Estimated Repair Costs”) shall be
determined in accordance with Section 11.2(b)(iii), then the provisions of
Section 11.2(c) of this Agreement shall exclusively apply. In the event that the
Estimated Repair Costs to repair damage to the Damaged Property Components for
any Damaged Property is equal to or greater than the Damage Threshold Amount,
then the provisions of Section 11.2(d) of this Agreement shall exclusively
apply.
(iii)    Within thirty (30) calendar days following the delivery of the Asset
Damage Notice, Seller shall deliver to Purchaser a written notice (the “Damage
Estimate Notice”) that sets forth Seller’s reasonable estimate of Estimated
Repair Costs to repair the damage to the Damage Property Components for the
Damaged Property. In the event that Purchaser reasonably

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challenges Seller’s estimate of the Estimated Repair Costs in the Damage
Estimate Notice, then Purchaser must deliver a written notice to Seller (the
“Estimate Dispute Notice”) within thirty (30) days following Purchaser’s receipt
of the Damage Estimate Notice that sets forth Purchaser’s estimate of the
Estimated Repair Costs. If Purchaser fails to deliver the Estimated Dispute
Notice to Seller within such thirty (30) day period, Purchaser shall be deemed
to have waived its right to challenge Seller’s estimate of the Estimated Repair
Costs in the Damage Estimate Notice and Seller’s estimate shall be binding on
the Parties. In the event that Purchaser delivers an Estimate Dispute Notice to
Seller, then Seller shall deliver a written notice to Purchaser (the “Estimate
Response Notice”), within three (3) Business Days following the delivery of the
Estimate Dispute Notice, electing to either: (i) utilize Purchaser’s estimate of
Estimated Repair Costs in the Estimate Dispute Notice, in which case Purchaser’s
estimate shall be final and binding on the parties, or (ii) have the Estimated
Repair Costs determined by a contractor licensed in the Commonwealth of
Pennsylvania reasonably acceptable to both Purchaser and Seller (the “Estimating
Contractor”). Failure by Seller to deliver the Estimate Response Notice to
Purchaser prior to the expiration of such three (3) Business Day period (the
“Estimate Election Deadline”) shall be deemed to be Seller’s election to have
the Estimated Repair Costs determined by an Estimating Contractor. In the event
that Seller elects or is deemed to have elected to have the Estimated Repair
Costs determined by an Estimating Contractor, the parties shall mutually attempt
to agree on an Estimating Contractor within five (5) Business Days following the
Estimating Election Deadline. If the parties are unable to mutually agree on an
Estimating Contractor, then prior to the expiration of the five (5) Business Day
period, Seller and Purchaser shall each designate in writing to the other party
a contractor licensed in the Commonwealth of Pennsylvania and those two
designated contractors shall select the Estimating Contractor. The determination
by the Estimating Contractor of the amount of the Estimated Repair Costs shall
be final and binding on the parties.
(c)    In the event that the Estimated Repair Costs to the Damaged Property
Components for any Damaged Property, as determined pursuant to Section
11.2(b)(iii), is less than the Damage Threshold Amount, then Seller shall
deliver a written notice to Purchaser (the “Minor Damage Election Notice”) in
which Seller elects either to: (i) have Seller that owns the Damaged Property
repair the damage to the Damaged Property Components prior to Closing (which
shall be extended for a reasonable period of time to permit performance of such
repairs) at no cost or expense to Purchaser; or (b) not repair such damage prior
to Closing, in which case Purchaser shall be entitled to a credit against the
Purchase Price in the amount of the Estimated Repair Costs. If Seller fails to
deliver the Minor Damage Election Notice to Purchaser within five (5) Business
Days following the determination of Estimated Repair Costs pursuant to Section
11.2(b)(iii), Seller shall be deemed to have elected to have the applicable Real
Estate Seller repair the Damaged Property Components.
(d)    In the event that the Estimated Repair Costs to the Damaged Property
Components for any Damaged Property, as determined pursuant to Section
11.2(b)(iii), is equal to or greater than the Damage Threshold Amount, at the
election of Purchaser, which election shall be set forth in a written notice
from Purchaser to Seller (the “Major Damage Election Notice”), this Agreement
may be terminated pursuant to this Section upon delivery of the Major Damage
Election Notice to Seller. The Major Damage Election Notice shall be delivered
by Purchaser to Seller within five (5) Business Days following the final
determination of the Estimated Repair Amount pursuant to Section 11.2(b)(iii).
If Purchaser fails to deliver the Major Damage Election Notice within that five
(5) Business Day period, Purchaser shall be deemed to have elected to terminate
this

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Agreement. If Purchaser elects to proceed with the Closing of the transactions
contemplated under and pursuant to the provisions of this Agreement, Seller
shall (i) assign to Purchaser the right to collect any and all insurance
proceeds in respect of such Damaged Property after the Closing less deductions
under the following subsection (ii), and (ii) provide Purchaser a credit against
the Purchase Price in an amount of equal to (a) any applicable deductible and
(b) any insurance proceeds received as of the Closing Date. Any termination of
this Agreement pursuant to this Section 11.2 shall be in accordance with Article
XII below.
11.3    Current Encumbrances. Notwithstanding anything to the contrary, the
terms of this Article XI are subject to the terms of the current encumbrances
upon the Facilities. In the event that a mortgagee of Seller requires the
application of condemnation or insurance proceeds in a manner inconsistent with
the terms of this Article XI, then Purchaser shall have the right to terminate
this Agreement with respect to the affected Property.
ARTICLE XII.

TERMINATION; REMEDIES
12.1    Termination Events. This Agreement may be terminated as follows:
(a)    By mutual consent of the parties (a “Consent Termination”);
(b)    By Purchaser if the conditions to Closing set forth in Article VIII or
Section 4.19 have not been satisfied by the Outside Date for reasons other than
a breach of this Agreement by Purchaser (a “Purchaser Condition Termination”);
(c)    By Seller if the conditions to Closing set forth in Article IX have not
been satisfied by the Outside Date for reasons other than a breach of this
Agreement by Seller (a “Seller Condition Termination”);
(d)    By Purchaser as provided in Section 1.8;
(e)    By Purchaser or Seller upon delivery of Regulatory Contingency
Termination Notice (a “Regulatory Contingency Termination”) pursuant to Section
5.5;
(f)    By Purchaser pursuant to Section 11.1 or 11.2 (a “Casualty/Condemnation
Termination”);
(g)    By Purchaser, in the event of a material breach of this Agreement by
Seller which breach is not cured after the notice and cure period provided for
in Section 12.2 (a “Seller Breach Termination”); or
(h)    By Seller, in the event of a material breach of this Agreement by
Purchaser which breach is not cured after the notice and cure period provided
for in Section 12.2 (a “Purchaser Breach Termination”).
12.2    Opportunity to Cure. No party to this Agreement may claim termination
pursuant to Section 12.1(g) or (h) or pursue any other remedy referred to in
this Section 12 on account of such

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breach by the other party, without first giving the other party written notice
of such breach and not less than thirty (30) days within which to cure such or
breach. The Closing Date shall be postponed if necessary to afford such
opportunity to cure. Seller may not claim termination pursuant to Section
12.1(d) or pursue any other remedy referred to in this Section 12 on account of
Purchaser’s failure to deliver the Deposit to Escrow Agent, without first giving
Purchaser written notice of such breach and not less than three (3) Business
Days within which to cure such failure.
12.3    Effect of Termination; Remedies.
(a)    In the event of a termination of this Agreement by Purchaser or Seller
under this Section 12, (i) written notice thereof shall forthwith be given to
the other parties and the Escrow Agent; (ii) this Agreement shall forthwith
become void and of no further force or effect, other than with respect to
Sections 1.8, 2.28, 3.4, 4.9, 5.1, 12.3 and Article XIII of this Agreement which
shall survive the termination of this Agreement and shall be enforceable by the
parties hereto, and there shall be no liability or obligation on the part of any
party hereto, except for breaches of the surviving provisions of this Agreement
set forth immediately above; (iii) Purchaser shall have no right, option, title
or interest to purchase the Assets, or any portion thereof; (iv) the Escrow
Agreement shall be terminated; (v) if the event of termination is a Refundable
Event, Escrow Agent shall return the Deposit to Purchaser, together with any
interest earned thereon, if any, as set forth in this Agreement; (vi) if the
event of termination is not a Refundable Event, Escrow Agent shall pay the
Deposit to Seller, together with any interest earned thereon; and (vii)
Purchaser shall withdraw its regulatory filings related to the transactions
contemplated by this Agreement or made for the operation of the Facilities and
the Business after the Closing. The parties will promptly execute any documents
and instructions reasonably requested by the other party or Escrow Agent
relating to the termination of this Agreement or the Escrow Agreement or the
delivery of the Deposit pursuant to this Agreement. “Refundable Events” are
expressly limited to the following events: (a) a Consent Termination, (b) a
Seller Breach Termination; (c) a Regulatory Contingency Termination; (d) a
Purchaser Condition Termination; (e) a Seller Condition Termination, or (f) a
Casualty / Condemnation Termination. If this Agreement is terminated for any of
the above reasons, then a Refundable Event shall have occurred and the Deposit
shall be promptly refunded to Purchaser.
(b)    If a Seller Breach Termination occurs, Purchaser shall be entitled to a
return of the Deposit and to receive a sum equal to Purchaser’s actual and
verified out-of-pocket costs and expenses, including attorneys’ fees and
expenses, from Seller, jointly and severally, as liquidated damages, up to a
maximum of $200,000 (“Transaction Costs”). If, after a default by any Seller
that is not cured within the applicable cure period, Purchaser, as its sole
remedy, may either (i) (A) seek and shall be entitled to specific performance of
Seller’s obligations to Close under this Agreement, and either (B) upon being
awarded specific performance, pursue a claim for all costs and expenses,
including reasonable attorney fees and expenses, in pursuing such claim; or (C)
upon being denied specific performance, may elect to terminate pursuant to the
immediate following clauses of Section 12.3(b)(ii), or (ii) if Purchaser so
elects, Purchaser in the alternative to such claim for specific performance and
related costs and expenses, may terminate this Agreement, and be reimbursed the
Deposit and Transaction Costs as set forth above in this Section 12.3(b). Upon
the receipt of liquidated damages as set forth in this Section 12.3(b), no party
shall have any further rights or obligations under this Agreement, except as
provided in Section 12.3(a). If the Closing does not occur, the remedies
provided for in this Section shall be the exclusive remedy of Purchaser for a
breach of this Agreement by Seller. Notwithstanding the foregoing, the
limitation of remedies

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provided for in this Section shall not apply to (y) any indemnity obligations of
Seller under this Agreement, and (z) any reasonable attorneys’ fees, costs and
interest awarded to Purchaser in any proceeding between Seller and Purchaser
pursuant to or arising from this Agreement in which Purchaser is the prevailing
party.
(c)    If a Purchaser Breach Termination occurs, Seller shall be entitled to
receive the Deposit as liquidated damages and no party shall have any further
rights or obligations under this Agreement, except as otherwise provided in
Section 12.3(a). If Closing does not occur, the remedies provided for in this
Section shall be the exclusive remedy of Seller for a breach of this Agreement
by Purchaser. Notwithstanding the foregoing, the limitation of remedies provided
for in this Section shall not apply to (i) any indemnity obligations of
Purchaser under this Agreement, and (ii) any reasonable attorneys’ fees, costs
and interest awarded to Seller in any proceeding between Seller and Purchaser
pursuant to or arising out of or relating to this Agreement in which Seller is
the prevailing party.
12.4    DAMAGES. THE PARTIES AGREE THAT SELLER WILL SUFFER DAMAGES IN THE EVENT
OF THE BREACH OF THIS AGREEMENT BY PURCHASER. SUCH DAMAGES WILL, HOWEVER, BE
EXTREMELY DIFFICULT TO ASCERTAIN FOR THE FOLLOWING REASONS: (1) THE DAMAGES TO
WHICH SELLER WOULD BE ENTITLED IN A COURT OF LAW MAY BE BASED IN PART ON THE
DIFFERENCE BETWEEN THE ACTUAL VALUE OF THE ASSETS AND THE ASSUMED LIABILITIES AS
OF THE CLOSING DATE AND THE PURCHASE PRICE FOR THE ASSETS AND THE ASSUMED
LIABILITIES AS SET FORTH IN THIS AGREEMENT; (2) PROOF OF THE AMOUNT OF SUCH
DAMAGES MAY BE BASED ON OPINIONS OF VALUE OF THE ASSETS AND THE ASSUMED
LIABILITIES, WHICH CAN VARY IN SIGNIFICANT AMOUNTS; AND (3) IT IS IMPOSSIBLE TO
PREDICT AS OF THE DATE OF EXECUTION WHETHER THE VALUE OF THE ASSETS AND THE
ASSUMED LIABILITIES WILL INCREASE OR DECREASE AS OF THE CLOSING DATE. PURCHASER
AND SELLER DESIRE TO LIMIT THE AMOUNT OF DAMAGES FOR WHICH PURCHASER MIGHT BE
LIABLE SHOULD PURCHASER FAIL TO CONSUMMATE THE ACQUISITION UNDER THIS AGREEMENT.
PURCHASER AND SELLER WISH TO AVOID THE COSTS AND LENGTHY DELAYS WHICH WOULD
RESULT IF SELLER FILED A LAWSUIT TO COLLECT ITS DAMAGES FOR SUCH A BREACH OF
THIS AGREEMENT. THEREFORE, IF THE CLOSING DOES NOT OCCUR ON THE REQUIRED CLOSING
DATE DUE TO A BREACH OF THIS AGREEMENT BY PURCHASER, THEN THE SUM EQUAL TO THE
FULL AMOUNT OF THE LIQUIDATED DAMAGES SPECIFIED IN SECTION 12.3(a) SHALL BE
DEEMED TO CONSTITUTE A REASONABLE ESTIMATE OF THE DAMAGES.
ARTICLE XIII.

MISCELLANEOUS PROVISIONS
13.1    Amendment and Modification. This Agreement may be amended, modified and
supplemented only by written agreement of the parties sought to be charged by
such amendment, modification or supplement.

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13.2    Joint and Several Liability. Each of the entities comprising Seller
shall and are hereby liable for only its own duties, obligations and liabilities
and not those of the other entities comprising Seller, arising under or by
virtue of this Agreement, including, without limitation, in connection with any
breach of such Seller’s representations, warranties or covenants.
13.3    Waiver of Compliance; Consent. Any failure of Seller on the one hand, or
Purchaser, on the other hand, to comply with any obligation, covenant, agreement
or condition may be waived in writing by the other party, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 13.3.
13.4    Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be personally
delivered, or sent by facsimile or electronic transmission (provided that, if
notice is given by electronic transmission, a copy of such notice shall be
thereafter promptly deposited with an overnight commercial delivery service as
hereinafter provided), or sent by overnight commercial delivery service
(provided a receipt is available with respect to such delivery), and shall be
effective when received (including receipt by facsimile or electronic
transmission):
(a)    If to Seller and, prior to the Closing, the Seller, to:
Heritage Senior Living
765 Skippack Pike
Blue Bell, PA 19422
Attention: David Lovitz
Fax No.: (215) 793-4446
E-mail: dlovitz@heritagesl.com

with a copy to:

Klehr Harrison
1835 Market Street
Philadelphia, PA 19103
Attention: Gregory Gosfield, Esq.
Fax No.: (215) 568-6603
E-mail: ggosfield@klehr.com

(b)    If to Purchaser, to:
Griffin-American Healthcare REIT III, Inc.
18191 Von Karman Avenue, Suite 300
Irvine, CA 92612
Attn.: Stefan Oh
Email: soh@ahinvestors.com

            

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with a copy to:

Arnall Golden Gregory LLP
171 17th Street, NW, Suite 2100
Atlanta, Georgia 30363
Attention: Steven A. Kaye, Esq.
Fax No.: (404) 873-8100
E-mail: steven.kaye@agg.com
E-mail: steven.kaye@agg.com

or to such other person or address as any party shall furnish to the other
parties in writing pursuant to this Section 13.4.
13.5    Expenses. Except as otherwise provided herein, each party hereto shall
bear its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
13.6    Attorneys’ Fees. In the event any proceeding or suit is brought to
enforce this Agreement, the prevailing party shall be entitled to all reasonable
costs and expenses (including reasonable attorneys’ fees) incurred by such party
in connection with any action, suit or proceeding to enforce the other’s
obligations under this Agreement.
13.7    Assignment. This Agreement and all the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective heirs,
successors and permitted assigns. Purchaser may without the prior written
consent of Seller (a) assign in whole or in part its rights under this Agreement
its right to take conveyance of any one or more Facilities (or any portion of
the Assets) to one or more Affiliates of Purchaser, including joint venture
entities in which Purchaser or its Affiliates share control with third parties,
(b) assign or collaterally assign its rights to indemnification to any lender,
assignee or Affiliate of Purchaser (each such assignee a “Purchaser’s Permitted
Assignee”). Notwithstanding the foregoing, any such assignment by Purchaser
pursuant to (a) or (b) shall not relieve Purchaser of any of its obligations
under this Agreement, including, without limitation, to exercise consent where
expressly required and to not unreasonably withhold, condition or delay consent
where expressly provided. Seller may not assign this Agreement without first
obtaining Purchaser’s prior written consent, which may be withheld in
Purchaser’s sole discretion. Upon an assignment by Purchaser of its rights under
the Agreement in accordance with this Section 13.7, Purchaser’s Permitted
Assignee(s) shall be deemed to be the Purchaser hereunder provided it also
assumes Purchaser’s liabilities under this Agreement (as it relates to the
conveyance of the Facilities and Assumed Liabilities) for the benefit of Seller
and shall be the beneficiary of all of Seller’s warranties, representations and
covenants in favor of Purchaser under this Agreement.
13.8    Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania as to, without limitation, matters of validity,
construction, effect and performance but exclusive of its conflicts of laws
provisions.
13.9    Business Day. If the date for the giving of notice or performance of any
duty or obligation hereunder falls on a day that is not a Business Day, such
date shall be automatically extended to the next Business Day. As used herein, a
“Business Day” means any day other than a

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Saturday, Sunday or any other day on which United States federally chartered
banks are authorized to be closed.
13.10    Counterparts; Electronic/Facsimile Signature. This Agreement may be
executed in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Executed counterparts of this Agreement or any amendment hereto may
be delivered by electronic or facsimile transmission.
13.11    Headings; Use of Terms; Section References. The Article and Section
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. The
singular shall include the plural and vice versa where the context shall so
require. All references herein to “including” shall mean “including without
limitation.” All references to Seller “delivery” to Purchaser and words of
similar import shall be deemed satisfied by Seller making the item that Seller
is required to deliver available to Purchaser in a data room. All Article,
Section, Exhibit and Schedule references herein are to Articles, Sections,
Exhibits and Schedules of this Agreement, unless otherwise specified.
13.12    Entire Agreement. This Agreement, which term as used throughout
includes the Exhibits and Schedules hereto, embodies the entire agreement and
understanding of the parties in respect of the subject matter contained herein.
There are no restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to such subject matters contained herein.
13.13    Warranty of Authority. Each of the parties warrants that the persons
signing on its behalf have the right and power to enter into this Agreement and
to bind them to the terms of this Agreement.
13.14    Schedules and Exhibits. Nothing in any Schedule or Exhibit shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the applicable Schedule identifies the exception and the specific
representation to which it relates with reasonable particularity and describes
the relevant facts in reasonable detail. The Schedules are arranged in sections
and subsections corresponding to the numbered and lettered sections and
subsections of the Agreement to which such Schedule relates. Any fact or item
disclosed on any Schedule or Exhibit hereto shall not be deemed by reason only
of such inclusion to be material and shall not be employed as a point of
reference in determining any standard of materiality under this Agreement. In
addition, disclosures on the Schedules and Exhibits are made on a Facility by
Facility basis and any such disclosure shall only relate to the Facility so
indicated. Several Schedules and Exhibits designated in this Agreement are not
attached to this Agreement as of the date of execution. Within ten (10) Business
Days following the execution of this Agreement, Seller shall deliver to Purchase
a complete set of all Schedules and Exhibits not so attached, together with
Seller’s written authorization for Purchaser to affix same to its executed copy
of this Agreement.
13.15    Time of the Essence. Time is of the essence of this Agreement.
13.16    Representation by Counsel. The parties acknowledge that they have been
represented by independent legal counsel of their choosing throughout all of the
negotiations that preceded the

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execution of this Agreement, and that each party has executed this Agreement
with the consent and on the advice of such independent legal counsel. This
Agreement is a negotiated document. As a result, any rule of construction
providing for any ambiguity in the terms of this Agreement to be construed
against the draftsperson of this Agreement shall be inapplicable to the
interpretation of this Agreement.
13.17    Reserved.
13.18    Reliance. Except as otherwise expressly provided in this Agreement, the
rights of Purchaser to indemnification or any other remedies under this
Agreement shall not be impacted or limited by any knowledge that Purchaser may
have acquired, or could have acquired, whether before or after the Closing Date,
by any investigation or diligence by Purchaser or otherwise.
13.19    Publicity. No party shall issue any press release or public
announcement relating to the subject matter of this Agreement without the prior
written approval of the other parties, which approval shall not be unreasonably
withheld or delayed; provided, however, that any party may make (without the
consent of the other party) (a) such public disclosure it believes in good faith
is required by Applicable Law (in which case, to the extent practicable, the
disclosing party shall advise the other parties and provide them with a copy of
the proposed disclosure prior to making the disclosure) and (b) disclosures in
connection with satisfying or obtaining any Required Consent or disclosures of
information already in the public domain.
13.20    Jurisdiction; Waiver of Jury Trial. Except as otherwise provided in
this Agreement, in the event any party to this Agreement commences any
litigation, proceeding or other legal action in connection with or relating to
this Agreement, any Seller Related Document or Purchaser Related Document or any
matters described or contemplated herein or therein, the parties to this
Agreement hereby (a) agree under all circumstances absolutely and irrevocably to
institute any litigation, proceeding or other legal action exclusively in a
court of competent jurisdiction located within the City of Philadelphia, PA,
whether a state or federal court; (b) agree that in the event of any such
litigation, proceeding or action, such parties will consent and submit to
personal jurisdiction in any such court described in clause (a) and to service
of process upon them in accordance with the rules and statutes governing service
of process (it being understood that nothing in this Section 13.20 shall be
deemed to prevent any party from seeking to remove any action to a federal court
in Philadelphia, PA); and (c) agree to waive to the fullest extent permitted by
law any objection that they may now or hereafter have to the venue of any such
litigation, proceeding or action in any such court or that any such litigation,
proceeding or action was brought in an inconvenient forum. EACH OF THE PARTIES
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION BROUGHT ON OR
WITH RESPECT TO THIS AGREEMENT, INCLUDING TO ENFORCE OR DEFEND ANY RIGHTS
HEREUNDER, AND AGREES THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
13.21    Knowledge. As used herein, “Seller Knowledge,” “Knowledge” or similar
capitalized terms means the knowledge of David Lovitz and Kevin McCollum (or
their successor in such position). For purposes of this definition, such parties
shall be deemed to have “knowledge” of a particular fact, circumstance or other
matter if any of such parties is or at any time was actually aware of such fact,
circumstance or other matter and (if applicable given the context of the term)
its

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effect, or if any of such parties, after conducting an investigation reasonable
under the circumstances, should have been aware of such fact, circumstance or
other matter and (if applicable given the context of the term) effect.
13.22    Cooperation with Audit. Seller acknowledges that Purchaser and its
intended assignee are or may be affiliated with a publicly registered company
(“Registered Company”) promoted by Purchaser or its affiliate. Seller
acknowledges that it has been advised that Purchaser or such assignee may be
required to make certain filings with the Securities and Exchange Commission
(the “SEC Filings”) that relate to the most recent pre-acquisition fiscal year
(the “Audited Year”) and the current fiscal year through the date of acquisition
(the “stub period”) for the Property. To assist the assignee in preparing the
SEC Filings, Seller covenants to provide said assignee with the following during
the Diligence Period and thereafter until the first anniversary of the Effective
Time: (i) access to bank statements for the Audited Year and stub period; (ii)
rent roll as of the end of the Audited Year and stub period; (iii) operating
statements for the Audited Year and stub period; (iv) access to the general
ledger for the Audited Year and stub period; (v) cash receipts schedule for each
month in the Audited Year and stub period; (vi) access to invoices for expenses
and capital improvements in the Audited Year and stub period; (vii) accounts
payable ledger and accrued expense reconciliations; (viii) check register for
the 3-months following the Audited Year and stub period; (ix) all leases and
5-year lease schedules; (x) copies of all insurance documentation for the
Audited Year and stub period; (xi) copies of accounts receivable aging as of the
end of the Audited Year and stub period along with an explanation for all
accounts over 30 days past due as of the end of the Audited Year and stub
period; (xii) signed representation letter in the form attached hereto as
Schedule “13.22-A” (“Representation Letter”), and (xiii) to the extent
necessary, a signed audit letter in the form attached hereto as Schedule
“13.22-B”(“Audit Letter”). Seller also agrees to deliver a signed Representation
Letter and signed Audit Letter to Purchaser within five (5) business days prior
to Closing, and such delivery shall be a condition to Closing. The provisions of
this Section shall survive Closing. Seller also agrees to reasonably cooperate
with Purchaser to obtain a comfort letter, as may be requested by Purchaser.
[SIGNATURE PAGES FOLLOW]

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CONFIDENTIAL; NOT FOR DISTRIBUTION FOR ANY PURPOSE

IN WITNESS WHEREOF, the parties hereto have executed or have caused their duly
authorized officers to execute this Agreement as of the date first written
above.

PURCHASER:

GAHC3 Pennsylvania Senior Housing Portfolio, LLC

By: Griffin-American Healthcare REIT III Holdings,
LP, its Sole Member                

By: Griffin-American Healthcare REIT III, Inc. its General
Partner                

By: /s/ Danny Prosky
Name: Danny Prosky
Title: President and Chief Operating Officer

SELLER:

ABEKING ASSOCIATES, L.P.

By: /s/ David Lovitz
Name:      David Lovitz
Title: Authorized Signatory

WESTRUM HANOVER LP

By: /s/ David Lovitz
Name:      David Lovitz
Title: Authorized Signatory

ONE BOYERTOWN PROPERTIES LP

By: /s/ David Lovitz            
Name:      David Lovitz            
Title:     One Boyertown Properties, Inc.
Managing General Partner of One Boyertown
Properties, LP, Authorized Signature

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CONFIDENTIAL; NOT FOR DISTRIBUTION FOR ANY PURPOSE

IN WITNESS WHEREOF, the parties hereto have executed or have caused their duly
authorized officers to execute this Agreement as of the date first written
above.

PURCHASER:

GAHC3 Pennsylvania Senior Housing Portfolio, LLC

By: Griffin-American Healthcare REIT III Holdings,
LP, its Sole Member                

By: Griffin-American Healthcare REIT III, Inc. its General
Partner                

By: /s/ Danny Prosky
Name: Danny Prosky
Title: President and Chief Operating Officer

SELLER:

ABEKING ASSOCIATES, L.P.

By: /s/ Matt Loffer
Name:      Matt Loffer
Title: Authorized Signatory

WESTRUM HANOVER LP
By: One Hanover Properties, LLC
Its: General Partner

By: /s/ Michael F. McCormick
Name:      Michael F. McCormick
Title: Authorized Signatory

ONE BOYERTOWN PROPERTIES LP

By: /s/ Stuart D. Mills            
Name:      Stuart D. Mills            
Title:     One Boyertown Properties, Inc.
Managing General Partner of One Boyertown
Properties, LP, Authorized Signature

ONE BOYERTOWN PROPERTIES LP

By: /s/ Garry R. Hoffarth        
Name:      Gary R. Hoffarths            
Title:     One Boyertown Properties, Inc.
Managing General Partner of One Boyertown
Properties, LP, Authorized Signature