Exhibit 10.33

 

Execution Copy

 

AGREEMENT OF SALE

 

BETWEEN

 

CERTAIN LIFEHOUSE SELLERS

 

collectively, as Seller,

 

and

 

LifeHouse holdings, LLC

 

as Seller Representative,

 

AND

 

American Realty Capital Healthcare Trust Operating Partnership, L.P.,

as Purchaser

 

June 16, 2014

 

 

 

 

TABLE OF CONTENTS

 

    Page   Definitions 1       1. Purchase and Sale 7       2. Purchase Price 7
      3. Property 10       4. Due Diligence 11       5. [Reserved] 15       6.
Conditions to Closing 15       7. Certain Representations and Warranties by
Seller 17       8. Covenants of Seller 25       9. Certain Representations and
Warranties of Purchaser 26       10. Closing 28       11. Closing Documents 28  
    12. Prorations and Adjustments 30       13. Closing Costs 34       14.
Remedies for Pre-Closing Defaults 34       15. Remedies for Post-Closing
Defaults 35       16. Broker 40       17. Risk of Loss 40       18. Limited
Warranties; Disclaimer 42       19. General Provisions 43       20. Interest in
Bed of Streets 46       21. Diligence Materials 46       22. Waiver 47       23.
Non-compete 47

 

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24. Facsimile/Electronic Signatures 47       25. Severability 47       26.
Assumed Liabilities 48       27. Calculation of Time Periods 48       28. Seller
Representative 48       29. Exculpation 48       30. Joint and Several Liability
49       31. Illinois Bulk Sales Clearances 49       32. Purchaser Records
Rights 49       33. Exhibits and Schedules 50

 

EXHIBITS AND SCHEDULES

 

Exhibit A Description of Land Exhibit B Aggregate Purchase Price Allocation
Exhibit B-1 Purchase Price Allocation Exhibit B-2 Deposit Allocation Exhibit C-1
Form of Deed for Michigan Property Exhibit C-2 Form of Deed for Illinois
Property Exhibit D FIRPTA Affidavit Exhibit E Form of Assignment of Contracts
Exhibit F Form of Owner’s Affidavit Exhibit G Certain Purchase Designees Exhibit
H Form of Assignment of Residency Agreements Exhibit I Form of Bill of Sale and
General Assignment Exhibit J Form of Bridging Documents Exhibit K Form of
Post-Closing Escrow Agreement for Seller Escrow Exhibit L Form of Temporary
License Agreement Exhibit M [Reserved] Exhibit N Form of Membership Interest
Purchase Agreement Exhibit O Form of Guaranty of New Operator’s Obligations
Schedule 3(a) Domain Names Included in Intangibles Schedule 3(b)(iv) Excluded
Personal Property Schedule 3(b)(vi) Excluded Computer Software Schedule 7(a)
General Disclosures Schedule 7(a)(vi) Liens on Personal Property Schedule
7(a)(x) Litigation Schedule 7(a)(xi) Material Contracts Schedule 7(a)(xii) Rent
Roll Schedule 7(a)(xix) Environmental Reports Schedule 7(a)(xxvii) List of
Seller’s property and liability insurance and claims thereunder

 

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AGREEMENT OF SALE

 

This AGREEMENT OF SALE (“Agreement”) is made as of June 16, 2014 (the “Effective
Date”), by and among LEISURE LIVING PROPERTIES - HOLT, LLC, a Delaware limited
liability company, LEISURE LIVING PROPERTIES - DEWITT, LLC, a Delaware limited
liability company, LIFEHOUSE CRYSTAL MANOR PROPERTY, LLC, a Michigan limited
liability company, LIFEHOUSE WALDON WOODS PROPERTY, LLC, a Michigan limited
liability company, LIFEHOUSE - GOLDEN ACRES PROPERTIES, LLC, a Michigan limited
liability company, LIFEHOUSE – GOLDEN ACRES PROPERTIES II, LLC, a Michigan
limited liability company, LIFEHOUSE GRAND BLANC PROPERTIES, LLC, a Michigan
limited liability company, LIFEHOUSE CLARE PROPERTIES, LLC, a Michigan limited
liability company, LIFEHOUSE MT. PLEASANT PROPERTIES, LLC, a Michigan limited
liability company, LIFEHOUSE MT. PLEASANT PROPERTIES II, LLC, a Michigan limited
liability company, LIFEHOUSE - OAKRIDGE MANOR DIXON PROPERTIES, LLC, an Illinois
limited liability company, LIFEHOUSE - OAKRIDGE MANOR ROCKFORD PROPERTIES, LLC,
an Illinois limited liability company, LIFEHOUSE PRESTIGE COMMONS PROPERTIES,
LLC, a Michigan limited liability company, LEISURE LIVING PROPERTIES – BUCHANAN,
LLC, a Michigan limited liability company, LIFEHOUSE BUCHANAN PROPERTY-II, LLC,
a Michigan limited liability company, LEISURE LIVING PROPERTIES – GRAND RAPIDS,
LLC, a Michigan limited liability company, and LEISURE LIVING PROPERTIES –
HOLLAND, LLC, a Michigan limited liability company (collectively, “Sellers” and
individually, a “Seller”, as the context requires), LIFEHOUSE HOLDINGS, LLC, a
Delaware limited liability company (the “Seller Representative”) and American
Realty Capital Healthcare Trust Operating Partnership, L.P., a Delaware limited
partnership (“Purchaser”).”

 

WITNESSETH:

 

WHEREAS, each Seller wishes to sell the applicable Real Property owned by such
Seller to Purchaser and Purchaser wishes to purchase the Real Properties from
Sellers in accordance with and subject to the terms and conditions of this
Agreement;

 

WHEREAS, in connection with the purchase and sale of the Real Properties, Seller
wishes to cause the Operators who operate the Business at each of the Facilities
to transfer to Purchaser, and Purchaser wishes to acquire from the Operators,
certain personal property assets in connection with the operation of the
Business at the Facilities.

 

NOW, THEREFORE, in consideration of the terms and provisions of this Agreement
and for other good and valuable consideration, the parties hereto agree as
follows:

 

Definitions

 

“Accrued Employee Benefits” has the meaning set forth in Section 7(a)(xvi).

 

“Accrued Employee Benefits Payout Amount” has the meaning set forth in
Section 7(a)(xvi).

 

“Agreement” has the meaning set forth in the introductory paragraph.

 

 

 

  

“Affiliate” with respect to any person or entity: (A) all persons or entities
that, directly or indirectly, control, are controlled by, or under common
control with, such person or entity; or (B) all persons or entities that,
directly or indirectly, own, are owned by or under common ownership with, such
person or entity.

 

“Aggregate Purchase Price” has the meaning set forth in Section 2(a).

 

“Applicable Properties” has the meaning set forth in Section 6(b)(8).

 

“Appurtenances” has the meaning set forth in Section 3(a).

 

“Assumed Liabilities” means (i) all liabilities and obligations of a Seller
and/or Operator arising under any agreement or contract included in the
Properties, including, without limitation any Residency Agreements, and (ii) all
liabilities and obligations of any of the Operators with respect to the
operation of the Business and the Facilities arising on or after the Closing
Date.

 

“Bridging Documents” has the meaning set forth in Section 6(c).

 

“Broker” has the meaning set forth in Section 16.

 

“Business” means the operation of the respective Facilities as senior housing
facilities by the Operators, including one hundred eighty-one (181) independent
living units, and six hundred thirty (630) assisted living and memory care
units, and related personal property, fixtures, equipment, and machinery used to
operate such Facilities upon the Properties.

 

“Business Day” means any day other than (i) Saturday, (ii) Sunday, or (iii) any
other day when federally insured banks in New York, New York are required or
authorized to be closed.

 

“Casualty” has the meaning set forth in Section 17(b).

 

“Casualty Event” has the meaning set forth in Section 17(b).

 

“Claims” shall mean, collectively, damages, claims (including without
limitation, any claim for damage to property of others or injury to or death of
any persons), penalties, obligations, liabilities, fines, losses, causes of
action, fees, injuries, liens, encumbrance, proceedings, judgments, actions,
rights, demands, costs and expenses (including without limitation, reasonable
attorneys’ fees whether or not legal proceedings are instituted and court and
litigation costs).

 

“Closing” has the meaning set forth in Section 10.

 

“Closing Date” has the meaning set forth in Section 10.

 

“Closing Document(s)” shall mean the documents to be executed and delivered by
Seller and Purchaser at Closing pursuant to Section 11.

 

“Closing Statement” has the meaning set forth in Section 11(a).

 

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“Contracts” shall mean all service contracts, leases of furniture, fixtures and
equipment and any other agreements relating to the ownership of the Properties
and the operation of the Business at each Property.

 

“Deed” has the meaning set forth in Section 11(a)(i).

 

“Deposit” has the meaning set forth in Section 2(b)(i).

 

“Diligence Materials” has the meaning set forth in Section 21.

 

“Due Diligence Deadline” means 5:59 P.M. Eastern Time on the date that is 45
days after the Effective Date, unless such date is not a Business Day, in which
event the Due Diligence Deadline shall be 5:59 P.M. Eastern Time on the next
Business Day.

 

“Due Diligence Period” shall mean the period commencing on the Effective Date
and expiring on the Due Diligence Deadline.

 

“Effective Date” has the meaning set forth in the introductory paragraph.

 

“Employees” has the meaning set forth in Section 7(a)(xvi).

 

“Environmental Laws” means all past, present or future federal, state and local
statutes, regulations, directives, ordinances, rules, policies, guidelines,
court orders, decrees, arbitration awards and the common law, which pertain to
environmental matters, contamination of any type whatsoever or health and safety
matters, as such have been amended, modified or supplemented from time to time
(including all present and future amendments thereto and re-authorizations
thereof).

 

“Escrow Agent” shall mean Stewart Title Guaranty Company of Boston,
Massachusetts.

 

“Escrow Amount” has the meaning set forth in Section 15.

 

“Excluded Liabilities” shall mean all of the debts, obligations and liabilities
of the Sellers and the Operators, other than the Assumed Liabilities and any
other debts, obligations and liabilities expressly assumed by Purchaser pursuant
to this Agreement or expressly assumed by New Operator pursuant to the
Membership Interest Purchase Agreement and the Bridging Documents.
Notwithstanding anything herein to the contrary, Excluded Liabilities shall
include, without limitation, any liability, obligation, claim, action, suit, or
proceeding pending as of the Closing Date, or any subsequent claim, action,
suit, or proceeding arising out of or relating to any such other event occurring
prior to the Closing, with respect to the Seller’s ownership or and Operator’s
operation of its businesses prior to the Closing Date, including, without
limitation, any obligation of Sellers and/or Operators for compliance with
applicable federal, state, county, and local tax laws or regulations, including
the obligations under such laws for the payment of taxes and the filing of tax
returns, under Part 6 of Title I of ERISA and Section 4980B of the IRC, as
amended (commonly known as “COBRA”), the Seller Plans (as herein defined), the
Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the
Occupational Safety and Health Act, the Age Discrimination in Employment Act of
1967, the Americans With

 

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Disabilities Act, the Family and Medical Leave Act, or state worker’s
compensation and unemployment compensation laws, as now or hereafter amended.

 

“Excluded Personal Property” has the meaning set forth in Section 3(b).

 

“Existing Manager” shall mean LifeHouse Management Services, LLC, a Delaware
limited liability company.

 

“Existing Survey” has the meaning set forth in Section 4(a).

 

“Facility(ies)” shall mean, individually and collectively, the facilities
described on Exhibit B-1, which are located on the respective Real Properties.

 

“Financial Statements” shall mean the statements of income and expenses for
calendar years 2012 and 2013 and year-to-date monthly statements of income and
expenses for 2014, including any such subsequent statements issued prior to
Closing.

 

“GAAP” shall mean generally accepted accounting principles, consistently
applied.

 

“Gap Notice” has the meaning set forth in Section 4(a).

 

“Gap Objections” has the meaning set forth in Section 4(a).

 

“GE Prepayment Fees” has the meaning set forth in Section 12(a)(vii).

 

“Governmental Approvals” has the meaning set forth in Section 6(b)(7).

 

“Government Programs” shall mean Medicaid, Medicare or any other governmental
authority third party payor programs.

 

“Hazardous Materials” shall mean, without limitation, polychlorinated biphenyls,
urea formaldehyde, radon gas, lead paint, radioactive matter, medical waste,
asbestos, petroleum products, including crude oil or any fraction thereof,
natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable
for fuel (or mixtures of natural gas or such synthetic gas), and any substance,
material, waste, pollutant or contaminant listed or defined as hazardous,
infectious, or toxic under any applicable federal, state or local law.

 

“Healthcare Laws” shall mean all applicable laws relating to the operation of
seniors housing facilities (including, but not limited to, assisted living
services agencies, memory care facilities, managed residential communities,
residential health care facilities and independent living facilities), patient
healthcare, patient healthcare information, patient abuse, quality and adequacy
of medical care, rate setting, equipment, personnel, operating policies, and fee
splitting, including, without limitation, (a) all federal and state fraud and
abuse laws; (b) the Health Insurance Portability and Accountability Act of 1996,
including the Privacy Standards (45 C.F.R. Parts 160 and 164, the Electronic
Transaction Standards (45 C.F.R. Parts 160 and 162) and the Security Standards
(45 C.F.R. Parts 160, 162, and 164) promulgated under the Administrative
Simplifications subtitle of the Health Insurance Portability and Accountability
Act of 1996, as amended by the Health Information Technology for Economic and
Clinical

 

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Health Act, enacted as part of the American Recovery and Reinvestment Act of
2009 (“HIPAA”); (c) Medicaid; (d) the Patient Protection and Affordable Care Act
(P.L. 111-1468); (e) the Health Care and Education Reconciliation Act of 2010
(P.L. 111-152); (f) quality, safety and accreditation standards and requirements
of all applicable state laws or regulatory bodies; (g) all laws, policies
procedures, requirements and regulations pursuant to which Operating Permits are
issued; and (h) any and all other applicable health care laws, regulations,
manual provisions, policies and administrative guidance, each of (a) through (h)
as may be amended from time to time.

 

“Healthcare Permits” shall mean all licenses, permits, certifications, supplier
or provider numbers, supplier or provider agreements (including participation
agreements), authorizations, registrations or similar documents (a) issued or
required under Healthcare Laws applicable to the business of Seller or necessary
in the possession, ownership, use, operation, management or delivery of goods or
services under Healthcare Laws, and/or (b) issued or required under Healthcare
Laws applicable to the ownership, leasing and/or operation of the Property.

 

“HUD” has the meaning set forth in Section 12(a)(vi).

 

“HUD Lender” has the meaning set forth in Section 12(a)(vi).

 

“HUD Loans” has the meaning set forth in Section 12(a)(vi).

 

“HUD Prepayment Fees” has the meaning set forth in Section 12(a)(vi).

 

“Improvements” has the meaning set forth in Section 3(a).

 

“Intangibles” means all of Seller’s and Operator’s right, title and interest in
and to (i) the domain names set forth in Schedule 3(a) attached hereto, and (ii)
the goodwill associated with the operation of the Business and the Facilities.

 

“Land” has the meaning set forth in Section 3(a).         

 

“Lists” has the meaning set forth in Section 7(a)(xv).

 

“Material Contracts” has the meaning set forth in Section 7(a)(xi).

 

“Maximum Title Expense” has the meaning set forth in Section 4(c).

 

“Membership Interest Purchase Agreement” shall mean an agreement in the form
attached hereto as Exhibit N.

 

“New Operator” means an Affiliate of Meridian Senior Living or another entity
designated by Purchaser to enter into the Membership Interest Purchase Agreement
and operate one or more of the Facilities after a Closing.

 

“Non-Permitted Title Objections” has the meaning set forth in Section 4(c).

 

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“OFAC” has the meaning set forth in Section 7(a)(xv).

 

“Operating Lease” means, for each Property, the operating lease between the
applicable Seller, as owner, and Operator, as tenant, relating to the Property.

 

“Operating Permits” has the meaning set forth in Section 7(a)(xxi).

 

“Operator(s)” means each tenant under an applicable Operating Lease for each
respective Facility. The “Operator(s)” hereunder are the entities that are the
“Acquired Companies” under the Membership Interest Purchase Agreement.

 

“Order” and “Orders” have the meaning set forth in Section 7(a)(xv).

 

“Permitted Exceptions” has the meaning set forth in Section 4(b).

 

“Personal Property” has the meaning set forth in Section 3(a).

 

“Post-Closing Escrow Agreement” shall mean the Post-Closing Escrow Agreement in
the form of Exhibit K.

 

“Property(ies)” has the meaning set forth in Section 3(a).

 

“Property Purchase Price” has the meaning set forth in Section 2(a).

 

“Purchaser” has the meaning set forth in introductory paragraph.

 

“Purchaser Designee” means a special purpose entity that is an Affiliate of
Purchaser which has been formed to acquire fee title to any Property. The
parties agree that each of the Delaware limited liability companies listed on
Exhibit G hereof shall constitute Purchaser Designees for purposes of this
Agreement.

 

“Real Property(ies)” has the meaning set forth in Section 3(a).

 

“Rent Roll” has the meaning set forth in Section 7(a)(xii).

 

“Reserves” has the meaning set forth in Section 12(a)(vi).

 

“Residency Agreements” shall mean all leases, rental, use, occupancy and
reservation agreements, commitments, documents and instruments in favor of
individual residents relating to any Property and all related documents,
instruments, agreements, letters of credit, deposits and other items (including,
without limitation, guarantees), including, without limitation, all amendments,
modifications, supplements, renewals and extensions thereof, which relate to the
occupancy of portions of the Property by individuals for independent living,
assisted living and memory care purposes.

 

“Seller” has the meaning set forth in introductory paragraph.

 

“Seller Escrow” has the meaning set forth in Section 15.

 

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“Seller Knowledge Parties” has the meaning set forth in Section 7.

 

“Seller Party(ies)” means, collectively, the Sellers and the Seller
Representative.

 

“Seller Representative” has the meaning set forth in the preamble of this
Agreement.

 

“Substantial Portion” has the meaning set forth in Section 17(a).

 

“Survey” has the meaning set forth in Section 4(a).

 

“Taking” has the meaning set forth in Section 17(a).

 

“Tests” has the meaning set forth in Section 4(d).

 

“Title Commitment” has the meaning set forth in Section 4(a).

 

“Title Company” has the meaning set forth in Section 4(a).

 

“Title Insurance Policy” has the meaning set forth in Section 6(b).

 

“Title Objection Date” has the meaning set forth in Section 4(a).

 

“Transaction” means the transaction contemplated by this Agreement.

 

1.           Purchase and Sale. The Sellers agree to sell and assign, or to
cause Operators to sell and assign, as applicable, to Purchaser (or Purchaser
Designee), and Purchaser (or Purchaser Designee) agrees to purchase and assume,
as applicable, from the Sellers and Operators, as applicable, the Properties for
the Aggregate Purchase Price (defined below), subject to the terms and
conditions set forth in this Agreement.

 

2.           Purchase Price.

 

(a)          The aggregate purchase price (the “Aggregate Purchase Price”) for
the Properties shall be Ninety Million Two Hundred Thousand Dollars
($90,200,000), subject to prorations and the adjustments expressly set forth in
this Agreement. Prior to the expiration of the Due Diligence Period, Sellers and
Purchaser shall agree on (x) a reasonable allocation of the Aggregate Purchase
Price to each Property, which shall be attached to this Agreement as Exhibit B,
and, (y) with respect to each Property, a reasonable allocation as between
(i) the Land and the Improvements, and (ii) the Personal Property, which shall
be attached to this Agreement as Exhibit B-1. The portion of the Aggregate
Purchase Price allocated to each Property shall be deemed the “Property Purchase
Price” for such Property. In the event this Agreement is terminated with respect
to one or more Properties as a result of a Casualty or Taking pursuant to
Section 17, then the Aggregate Purchase Price shall be reduced by the applicable
Property Purchase Price allocated to the terminated Property.

 

(b)          The Aggregate Purchase Price shall be payable by Purchaser to the
Sellers as follows:

 

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(i)          On or before the third Business Day after the Effective Date, the
sum of Three Million Dollars ($3,000,000) (the “Deposit”) shall be paid by
electronic wire transfer of immediately available federal funds to an account
designated by Escrow Agent. Sellers and Purchaser agree that the Deposit shall
be allocated among the Properties on a pro rata basis, based on the allocation
of the Aggregate Purchase Price and shall be attached to this Agreement as
Exhibit B-2 prior to the expiration of the Due Diligence Period.

 

(ii)         In the event of a failure by Purchaser to make the Deposit as set
forth in 2(b)(i) above, Seller Representative, on behalf of the Sellers, at its
sole option, may cancel this Agreement and/or pursue any legal remedies Seller
Representative or any Seller may have against Purchaser at the sole expense of
Purchaser, such remedies being cumulative and not exclusive.

 

(iii)        On the Closing Date, the balance of the Aggregate Purchase Price,
subject to adjustment and proration as expressly set forth in this Agreement,
less the Deposit, shall be paid by electronic wire transfer of immediately
available federal funds pursuant to wiring instructions to be given by Escrow
Agent or as Escrow Agent may direct to Purchaser prior to the Closing and
Purchaser shall cause Escrow Agent to distribute such funds to Sellers in
accordance with this Agreement.

 

(c)          Escrow Agent shall hold and disburse the Deposit (or so much
thereof as Escrow Agent is then holding) as follows:

 

(i)          Upon the Closing, Escrow Agent is authorized and directed to pay
the Deposit to Sellers as Seller Representative may direct.

 

(ii)         If Seller Representative, on behalf of the Sellers, terminates this
Agreement as a result of a Purchaser default pursuant to Section 14(a) below,
Escrow Agent shall pay the Deposit to Seller Representative, who shall retain
the Deposit in accordance with Section 14(a) below.

 

(iii)        If this Agreement is terminated by reason other than Purchaser’s
default, Escrow Agent shall pay the Deposit to Purchaser.

 

(iv)        In the event this Agreement is terminated during the Due Diligence
Period pursuant to Section 4(d) below, or is terminated with respect to one or
more Properties as a result of a Casualty or Taking pursuant to Section 17, then
the Escrow Agent shall return to Purchaser the entire Deposit or, as applicable,
the portion of the Deposit allocated to the terminated Property if the entire
Agreement is not terminated.

 

(v)         Upon receipt from Purchaser of a completed W-9 form, Escrow Agent
shall invest and reinvest, in the name of Purchaser, the Deposit, and any
interest earned thereon, in United States Government Treasury Bills or
Certificate(s) of Deposit or bank money market account(s) as Purchaser and
Sellers mutually agree. Purchaser shall pay all income taxes owed in connection
therewith. Escrow Agent, by signing this Agreement at the end hereof where
indicated, signifies its agreement to hold the Deposit for the purposes as
provided in this Agreement. In the event of any dispute, Escrow Agent shall have
the right to deposit the Deposit with a court of competent jurisdiction to await
the resolution of such dispute. Escrow Agent

 

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shall not incur any liability by reason of any action or non-action taken by it
in good faith, or pursuant to the judgment or order of a court of competent
jurisdiction. Escrow Agent shall have the right to rely upon the genuineness of
all certificates, notices and instruments delivered to it pursuant hereto, and
all the signatures thereto or to any other writing received by Escrow Agent
purporting to be signed by any party hereto, and upon the truth of the contents
thereof.

 

(vi)        Except as otherwise provided in Section 2(c)(i) and in this
paragraph below, Escrow Agent shall not pay or deliver the Deposit to any party
unless written demand is made therefor and a copy of such written demand is
delivered to the other party pursuant to the notice provisions of this
Agreement. If Escrow Agent does not receive a written objection from the other
party to the proposed payment or delivery within five (5) Business Days after a
copy of such demand is so given to such party, Escrow Agent is hereby authorized
and directed to make such payment or delivery. If Escrow Agent does receive such
written objection within such five (5) Business Day period or if for any other
reason Escrow Agent in good faith shall elect not to make such payment or
delivery, Escrow Agent shall forward a copy of the objections, if any, to the
other party or parties, and continue to hold the Deposit unless otherwise
directed by written instructions from the parties to this Agreement or by a
judgment of a court of competent jurisdiction. In any event, Escrow Agent shall
have the right to refrain from taking any further action with respect to the
subject matter of the escrow until it is reasonably satisfied that such dispute
is resolved or action by Escrow Agent is required by an order or judgment of a
court of competent jurisdiction. Notwithstanding anything to the contrary
contained herein, if Purchaser makes a demand for the Deposit before the Due
Diligence Deadline, then the Deposit shall automatically and immediately be
returned to Purchaser, and Seller Parties shall have no right to object.

 

(vii)       Escrow Agent shall be entitled to consult with counsel in connection
with its duties hereunder. Seller and Purchaser, jointly and severally, agree to
reimburse Escrow Agent, upon demand, for the reasonable costs and expenses
including attorneys’ fees incurred by Escrow Agent in connection with its acting
in its capacity as Escrow Agent. In the event of litigation relating to the
subject matter of the escrow, whichever of Seller or Purchaser is not the
prevailing party shall reimburse the prevailing party for any costs and fees
paid by the prevailing party or paid from the escrowed funds to Escrow Agent.

 

(viii)      Except for any claim, action or proceeding resulting in a final
determination that Escrow Agent acted in bad faith, acted with gross negligence
or engaged in any type of willful misconduct, Escrow Agent shall not be
responsible for any loss or delay occasioned by the closure or insolvency of the
institution with which any funds are invested in accordance with this Agreement,
and shall have no liability for interest on such funds. Escrow Agent shall not
be liable for any loss or delay occasioned by the failure of said financial
institution to wire funds in a timely manner.

 

(ix)         Escrow Agent may receive other benefits from the financial
institution where the funds are deposited. Based upon the deposit of escrow
funds in demand deposit accounts and other relationships with the financial
institution, Escrow Agent is eligible to participate in a program whereby it may
(i) receive favorable loan terms and earn income from the investment of loan
proceeds and (ii) receive other benefits offered by the financial institution.

 

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3.           Property.

 

(a)          “Property(ies)” means, subject to the exclusions set forth in
Section 3(b) below, individually or collectively (as the context requires), all
of a Seller’s and/or Operator’s (as applicable) right, title and interest in and
to each of the Real Property(ies) and the corresponding Personal Property(ies)
associated with the Facility located at each Real Property. The “Real
Property(ies)” shall mean: (i) the respective real property owned by such Seller
as more fully described on Exhibit A attached hereto (the “Land”); (ii) all
easements and other related rights appurtenant to the Land including, without
limitation, all rights to make divisions thereof that are exempt from the
platting requirements of the Michigan Land Division Act (MCL 560.101 et seq.),
as it may be amended from time to time (collectively, “Appurtenances”); and
(iii) all of the buildings, structures, fixtures and other improvements
comprising real property and located on the Land and all property which might be
considered personal property (including each Facility) except for the fact that
it is inextricably related or attached to any such buildings, structures,
fixtures and/or other improvements (collectively, “Improvements”). The “Personal
Property(ies)” shall mean: (i) all Residency Agreements relating to each
respective Facility; (ii) except for the Excluded Personal Property, all
tangible personal property on hand at any Facility and owned by each respective
Seller and each respective Operator, including without limitation all inventory
and supplies on hand at each Facility on the Closing Date (including food,
beverages, office and kitchen supplies), equipment, furniture, signage and
vehicles owned by the respective Operators and used in connection with the
Business as of the Closing Date, and (iii) the Intangibles.

 

(b)          The Property shall not include, and no Seller (or Operator or
Affiliate of Seller) shall have any obligation to sell, transfer or convey to
Purchaser the following (collectively, the “Excluded Personal Property”):

 

(i)          Accounts receivable relating to any Facility with respect to the
period prior to Closing;

 

(ii)         All books and records relating to any Facility, any Seller and/or
the past and present residents at any Facility that are consolidated with books
or records relating to any other facility, seller or the past and present
residents of any other facility to the extent such books or records contain
confidential or proprietary information (e.g., attorney-client communications),
or to the extent that such books or records cannot be properly shared under
applicable law; provided, however, all records that are required by law to
remain at any Facility shall so remain.

 

(iii)        All cash on hand at any Facility with respect to the period prior
to Closing;

 

(iv)        The personal property listed on Schedule 3(b)(iv) attached hereto;

 

(v)         All trademarks, trade names, brand names, intellectual property,
websites, URLs and domain names (other than websites, URLs and domain names set
forth in Schedule 3(a) attached hereto), and all proprietary and marketing
materials and documents of any Seller, and any trade names and trademarks
related to the corporate or limited liability

 

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company name of any Seller, including, without limitation, any name containing
the word “LifeHouse” or “Westport,” the so-called “Shirley Jones” marketing
campaign, and the Montessori dementia program.

 

(vi)        The computer software and systems set forth on Schedule 3(b)(vi);

 

(vii)       Cash, accounts, deposits (including, without limitation, bank and
demand deposit accounts (but excluding any refundable resident or tenant
deposits), and insurance policies of Sellers and any Affiliates of Seller;

 

(viii)      Except as otherwise expressly set forth in this Agreement, rights to
payments, reimbursements or refunds from the United States of America, any
State, any insurer, municipality, public utility or other agency, individual or
entity, including, without limitation, real estate and personal property tax
refunds, payments, reimbursements and deposits with respect to any Facility
relating to any period that precedes the Closing Date;

 

(ix)         All permits, licenses, approvals and authorizations issued, granted
or given by or under the authority of any federal, state or local governmental
or quasi-governmental agency, authority, official or tribunal which are not
assignable, for which consent to assignment is not obtained, or for which an
assignment will cause a Seller to incur liability or costs; and

 

(x)          All actions, suits, claims, rights and choses in action of any
Seller and any promissory notes held by any Seller.

 

Notwithstanding the foregoing, Sellers shall cooperate (and shall cause the
respective Operators to cooperate) with Purchaser to effect the orderly transfer
of operation of the Properties (including, without limitation, transfer of
electronic files, account information, utilities, etc.). In addition, at a
Closing, Seller and Purchaser shall enter into a Temporary License Agreement in
the form attached hereto as Exhibit L (the “Temporary License Agreement”),
pursuant to which Seller shall grant a temporary license to Purchaser (or a
designee of Purchaser) to use certain trademarks and software, as more
particularly set forth in the Temporary License Agreement.

 

4.           Due Diligence.

 

(a)          Title. Purchaser shall have the right to cause to be issued and
delivered to Purchaser title commitments (the “Title Commitment(s)”) issued by
Stewart Title Guaranty Company (the “Title Company”) covering each of the
Properties, accompanied by a copy of all recorded documents affecting each of
the Properties listed as exceptions in Schedule B of the applicable Title
Commitments. Each Seller has delivered to Purchaser a copy of the most recent
lender’s title policy affecting the Property owned by such Seller and the
existing ALTA survey of such Property (the “Existing Survey(s)”). Purchaser
shall have the right to obtain updates of each Existing Survey, or new surveys
(any such updates, together with any such new surveys, the “Survey(s)”). On or
prior to five (5) Business Days prior to the Due Diligence Deadline, Purchaser
shall furnish Seller Representative with notice of any objections Purchaser has
to the Title Commitments or the Surveys (the “Title Objection Date”); provided,
however, that except

 

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as otherwise set forth in this Agreement, the Seller Parties shall have no
obligation to cure any such objections. Any matters contained in the Title
Commitments or matters that are or would be disclosed by an accurate survey
existing on the Effective Date to which Purchaser does not object, shall be
deemed Permitted Exceptions. The Seller Representative shall, within three (3)
Business Days following Purchaser’s delivery of notice of any objections of
Purchaser to the Title Commitments or the Surveys, deliver a notice to Purchaser
(a “Seller’s Response Notice”) indicating as to whether Seller will cause such
matters to which Purchaser has objected to be cured and removed of record. If
Seller Representative gives notice that the Seller will not cure or if Seller do
not provide any notice within said three (3) Business Day period, Purchaser
shall have the right, in its sole discretion, to terminate this Agreement within
three (3) Business Days following its receipt of Seller Representative’s notice
as aforesaid (or following the expiration of said three (3) Business Day period
if Seller Representative does not give such notice), in which case the Agreement
shall terminate and, the Deposit shall be returned to Purchaser and neither
party shall have any further obligations to the other party hereunder. All
defects, encumbrances, encroachments and other matters of title that exist on
the Effective Date and which Seller is not obligated to remove pursuant to this
Agreement and has not in this Agreement or in a separate writing expressly
agreed to remove, shall be deemed Permitted Exceptions. Purchaser may, prior to
Closing, notify Seller Representative in writing (a “Gap Notice”) of defects,
encumbrances or encroachments raised in any update to the Title Commitments,
Surveys or otherwise between the Due Diligence Deadline and the Closing Date
(“Gap Objections”); provided that Purchaser must notify Seller Representative of
such exceptions within ten (10) days after being made aware of the existence of
such exceptions. If Purchaser sends a Gap Notice to Seller Representative,
Seller and Purchaser shall have the same rights and obligations (as described in
Section 4 hereof) with respect to such Gap Objections as they do with respect to
objections to the initial drafts of the Title Commitments and Surveys. Any
defects, encumbrances, encroachments and other matters of title that are not
timely objected to in accordance with this Section 4(a) shall be deemed
Permitted Exceptions.

 

(b)          Status of Title. Sellers shall deliver, and Purchaser or its
designee shall accept, title to the applicable Property and consummate the
Transaction subject to (i) the title matters deemed Permitted Exceptions under
Section 4(a) above, and (ii) any items or exceptions to title set forth on the
Surveys deemed Permitted Exceptions under Section 4(a) above (the title
exceptions described in (i) and (ii) herein sometimes referred to collectively
as “Permitted Exceptions”). In addition, “Permitted Exceptions” shall include
all liens, encumbrances and matters of title arising out of the acts or
omissions of Purchaser, New Operator, and their respective employees, agents,
contractors and Affiliates.

 

(c)          Non-Permitted Title Objections.

 

(i)          If on the Closing Date any one or more Properties is affected by
any lien, encumbrance, defect, encroachment or objection which is not a
Permitted Exception (including any lien, encumbrance, defect, encroachment or
objection that Seller has agreed to remove or cure under the terms of Section
4(a)) (collectively, “Non-Permitted Title Objections”), then in such event,
Sellers, at Seller Representative’s election, shall have the privilege to remove
or satisfy the same, and shall, for that purpose, be entitled to one or more
adjournments of the Closing for a period not to exceed thirty (30) days in the
aggregate beyond the date scheduled for Closing.

 

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(ii)         No Seller Party shall be required to bring any action or proceeding
or to otherwise incur any expense to remove or discharge any Non-Permitted Title
Objection, except that the Sellers shall be obligated to remove or discharge any
Non-Permitted Title Objection(s) that can be removed or discharged by payment of
a liquidated sum of money only, and if both (1) such removal or discharge can
reasonably be expected to be accomplished within a period of thirty (30) days
beyond the date scheduled for the Closing, and (2) the sum of money required to
accomplish such removal or discharge as to any one Property does not exceed
Fifty Thousand Dollars ($50,000) as to any particular Property, and, as to all
of the Properties in the aggregate, does not exceed Two Hundred Fifty Thousand
Dollars ($250,000) (the “Maximum Title Expense”). In such event, Sellers agree
to adjourn the Closing as set forth in Section 4(c)(i), and to expend (or at
Seller Representative’s election, to obligate the applicable Seller to expend by
indemnity agreement, bond or any other manner) an amount not to exceed the
Maximum Title Expense to remove or discharge such Non-Permitted Title
Objections. If there shall be any Non-Permitted Title Objections that can be
removed or discharged by the payment of a sum of money only which exceeds the
Maximum Title Expense, or that can be removed by the payment of not more than
the Maximum Title Expense but not within thirty (30) days and Seller
Representative notifies Purchaser that Seller Parties elect not to, or cannot,
remove or discharge such Non-Permitted Title Objections, Purchaser may elect to
(i) terminate this Agreement by notice given within five (5) Business Days after
receipt of Seller Representative’s notice in which case Purchaser shall be
entitled to the return of the Deposit, or (ii) by notice given within five (5)
Business Days after receipt of Seller Representative’s notice, close with a
credit from Sellers equal to the lesser of the amount required to remove or
discharge such Non-Permitted Title Objection or the Maximum Title Expense. If
Purchaser fails to timely elect to close in accordance with clause (ii) as
provided in the preceding sentence, Purchaser shall be deemed to have elected to
terminate the Agreement as set forth in clause (i) above. Anything in this
Section to the contrary notwithstanding, an attempt by any Seller Party to
remove or discharge any Non-Permitted Title Objection shall not be deemed to be
or create an obligation of such Seller Party to remove or discharge the same.

 

(iii)        The foregoing provisions of this Section to the contrary
notwithstanding, each Seller agrees to remove or discharge (u) any lien,
encumbrance, defect, encroachment or objection that Sellers have agreed in a
Seller’s Response Notice to remove or cure under the terms of Section 4(a), (v)
any lien for delinquent taxes (except for liens applicable to taxes due and
payable after Closing), (w) any mechanics’ lien or materialmens’ lien filed by
any contractor, subcontractor or other party that was engaged by such Seller,
the Existing Manager of the applicable Property or their respective Affiliates,
(x) the existing loan encumbering the applicable Property (subject to
Purchaser’s obligations set forth in Section 4(d)(ii) below), (y) any judgment
lien applicable to any Property subject to the Maximum Title Expense, and (z)
any Non-Permitted Title Objections voluntarily created by such Seller, Operator,
Existing Manager, or their respective Affiliates or with such Seller’s consent,
such Operator’s or Existing Manager’s consent or their respective Affiliates’
consent after the date hereof. For purposes of clarification, any amounts which
a Seller is required to expend under this subparagraph (iii) shall not be
included in, or subject to, the Maximum Title Expense.

 

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(d)          Tests and Inspections; Loan Documents.

 

(i)          From the Effective Date and continuing until the Closing, Purchaser
and/or its representatives, including its officers, directors, employees,
Affiliates, agents, accountants, and advisors, and Purchaser’s lender, shall
have the right to enter, upon reasonable prior notice to Existing Manager (which
can be made by e-mail or verbally) and during normal business hours, the
Properties, while this Agreement remains in full force and effect, for the
purpose of conducting such inspections, measurements, surveys, studies,
investigations, analyses and other tests, relating to all aspects of the
Property, including, without limitation, a close review and analysis of the
Diligence Materials, as Purchaser or Purchaser’s lender (as applicable) deems
appropriate (collectively, the “Tests”). In addition, Purchaser and Purchaser’s
lender may investigate all other aspects of the Property.

 

(ii)         Purchaser’s access to the Properties shall be subject to the
following: (A) Sellers shall have the option to have an agent or employee
accompany Purchaser at all times during its investigation or inspection of such
Property; provided, however, Sellers’ exercise of this option shall not, in any
event, serve to unreasonably delay Purchaser’s ability to enter such Property in
accordance with the terms of subsection (i) above; (B) Purchaser shall conduct
the Tests in a manner that does not unreasonably interfere with the operations
of the Facilities and Purchaser shall coordinate all visits to the Facilities in
order to minimize the number of visits required; (C) Purchaser shall not conduct
any invasive testing without Seller Representative’s prior written consent,
which consent shall be granted or withheld in Seller Representative’s sole and
absolute discretion; (D) Purchaser shall indemnify and hold harmless Seller
Parties from and against all liabilities incurred by Seller Parties in
connection with or by reason of any damage, death, or injury to any person or
property occurring in connection with the Tests conducted by it prior to the
Closing Date (other than any liability incurred in connection with or by reason
of Purchaser’s discovery of any existing condition, including, without
limitation, any Hazardous Materials) except to the extent such liabilities are
caused by the gross negligence or intentional misconduct of one or more Seller
Parties; and (E) Purchaser delivering to Seller Representative evidence of
commercial general liability insurance in form and substance reasonably
acceptable to Seller Representative and naming the applicable Seller as an
additional insured thereunder. Without limiting the generality of the foregoing
indemnity, Purchaser shall (x) remove or bond over any mechanics’ or other lien
which may be recorded against the Property (or any part thereof) by any party
providing labor, materials or services at the request of Purchaser and (y) not
file or cause to be filed any application or make any request (other than
inquiries of the public records) with any governmental or quasi-governmental
agency prior to Closing which would or could lead to a hearing before any
governmental or quasi-governmental agency or which would or could lead to a
violation of applicable law or any change in zoning, parcelization, licenses,
permits or other entitlements or any investigation or restriction on the use of
the Properties, or any part thereof; provided, however, that Purchaser shall be
entitled, at any time following the Effective Date, to submit applications for
licensure to the extent required by law. The foregoing indemnity shall survive
the expiration or any earlier termination of this Agreement.

 

(iii)        Purchaser may elect to proceed with the transaction contemplated by
this Agreement in its sole and absolute discretion at any time by written notice
given to Seller Representative on or before Due Diligence Deadline (the “Due
Diligence Notice”) that

 

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Purchaser elects to consummate the purchase of the Properties in accordance with
the terms of this Agreement.  If the Due Diligence Notice is not timely given,
this Agreement shall be deemed terminated and the Title Company shall
immediately return the Deposit to Purchaser, and, except for the provisions
expressly stated to survive a termination of this Agreement, no party shall have
any further liability to any other party under this Agreement.  If this
Agreement is terminated pursuant to the provisions of this Section, then
Purchaser shall promptly thereafter (i.e., not more than ten (10) Business Days
after this Agreement is terminated) deliver to Seller Representative copies of
any Phase I and/or Phase II environmental report, zoning report, surveys, title
reports, appraisal and/or property condition report commissioned by or on behalf
of Purchaser relating to the Properties, without representation or warranty
whatsoever as to the completeness or accuracy thereof and without liability for
any amounts which Purchaser may owe in connection therewith.

 

5.           [Reserved] .

 

6.           Conditions to Closing.

 

(a)          No Seller Party shall be obligated to proceed with Closing unless
and until each of the following conditions have been fulfilled:

 

(1)         Sellers shall have received payment of the Aggregate Purchase Price
in accordance with Section 2 of this Agreement, subject to the adjustments and
prorations contemplated by this Agreement, and subject to reduction by the
applicable Property Purchase Price with respect to any Property that is not
included in the Closing pursuant to Section 17 below.

 

(2)         The continuing validity (in all material respects) of all of the
representations and warranties of Purchaser set forth in Section 8.

 

(3)         New Operator shall have entered into the Membership Interest
Purchase Agreement with certain Affiliates of Sellers that own the Operators of
the Properties being conveyed in the applicable Closing in the form attached
hereto as Exhibit N, and such Membership Interest Purchase Agreement shall be in
escrow subject only to the occurrence of the Closing.

 

(4)         A creditworthy entity reasonably acceptable to Seller Representative
shall have entered into a Guaranty of New Operator’s (or its designees’)
respective obligations under the Bridging Documents and the Membership Interest
Purchase Agreement in the form attached hereto as Exhibit O.

 

(b)           Purchaser shall not be obligated to proceed with Closing unless
and until each of the following conditions have been fulfilled with respect to
the Properties, other than Property that is not included in the Closing pursuant
to Section 17 below:

 

(1)         The Title Company shall have delivered to Purchaser Title
Commitments to issue at the prevailing promulgated rates, ALTA standard owner’s
policy of title insurance with extended coverage insuring title to each of the
Properties in the amount of the applicable Property Purchase Price, subject only
to the Permitted Exceptions and containing all

 

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of the endorsements reasonably required by Purchaser and/or its lender, which
are available in Michigan or Illinois, as applicable (the “Title Insurance
Policy(ies)”), and shall be unconditionally prepared, subject only to the
payment of the applicable premium, to issue to Purchaser the Title Insurance
Policies.

 

(2)         The continuing validity (in all material respects) of all of the
representations and warranties of each applicable Seller set forth in Section 7,
as applicable to each Property, except that the representations set forth in
Section 7(a)(xi) and Section 7(a)(xii) may be updated to reflect the actual
status of Contracts and the Rent Roll as of the Closing, so long as the status
of the Contracts is in compliance with Section 7 of this Agreement.

 

(3)         Any Operating Lease and any property management agreement affecting
each Property will have been terminated effective as of Closing.

 

(4)         No action, proceeding, or investigation shall have been instituted
or be threatened before or by any court or governmental authority that seeks to
restrain or prohibit, or to seek substantial damages in respect of, or which is
related to or arises out of, this Agreement or the consummation of the
Transaction with respect to the applicable Seller or Property.

 

(5)         On or before the Closing, Purchaser shall have received, at Sellers’
sole cost and expense, copies of certificates evidencing insurance tail policies
(collectively, a “Tail Policy”) covering each of the Properties that (A) cover
incurred but unreported claims that would be covered under the respective
Seller’s (or its Affiliates’) current commercial general liability insurance
policies and current medical professional liability insurance policies, (B)
cover the period from the Closing Date through the through date that is 545 days
following the Closing Date (the “Tail Period”), and (C) are consistent, both in
terms of coverage and limits, with the respective Seller’s’ (or its Affiliates’)
current general liability and medical professional liability insurance policies.
The Tail Policy shall name Purchaser, Purchaser’s Designee and New Operator as
additional insureds as their interests may appear. The foregoing condition may
be satisfied either through the extension of the respective Seller’s’ (or its
Affiliates’) existing insurance policies to cover the Tail Period or the
purchase of new policies to cover the Tail Period.

 

(6)         There shall be no existing uncured material breach of any of the
covenants of the applicable Seller set forth in this Agreement that has not been
waived by Purchaser or that would not be cured by the occurrence of the Closing.

 

(7)         Purchaser or, as applicable, New Operator shall have obtained verbal
or other confirmation from all applicable governmental, administrative or
quasi-governmental agencies or authorities issuing such approvals that the
parties may consummate the Transaction with respect to each Facility and, as
applicable, operate each Facility in substantially the same manner such Facility
was operated by the applicable Operator prior to Closing, but not including the
Assumption Approval (the “Governmental Approvals”). In the event any applicable
governmental, administrative or quasi-governmental agencies or authorities
issuing such Governmental Approvals requires improvements to any of the
Properties (other than minor repairs in the Seller’s ordinary course of
business) in order for Purchaser to obtain any

 

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Governmental Approvals, Sellers shall have no obligation to make such
improvements, or to provide any funds or credit at Closing in connection with
such improvements.

 

(8)         The aggregate resident census for all of the Properties, excluding
any Properties that are terminated from this Agreement as a result of a casualty
or condemnation in accordance with Section 17 (collectively, the “Applicable
Properties”) is at least equal to ninety percent (90%) of the aggregate resident
census for the Applicable Properties as of the Effective Date of this Agreement.

 

(9)         Certain Affiliates of Sellers that own the Operators of the
Properties being conveyed in the applicable Closing shall have entered into the
Membership Interest Purchase Agreement with the New Operator in the form
attached hereto as Exhibit N, and such Membership Interest Purchase Agreement
shall be in escrow subject only to the occurrence of the Closing.

 

(c)          Governmental Approvals/Bridging Documents. Notwithstanding anything
herein to the contrary (including, without limitation, Sections 5(b) and (c)
above), in the event a particular Property or Properties satisfy all of the
conditions to Closing other than the condition set forth in Section 6(b)(7) (the
“Affected Properties”), then the Purchaser shall have the option to proceed to
Closing with respect to the Properties that are not Affected Properties, and to
extend Closing with respect to the Affected Property or Properties by thirty
(30) days, which option may be exercised by giving notice to Seller and
depositing with Escrow Agent an additional One Million Dollars ($1,000,000) as
an additional deposit (“Additional Deposit”) on or before the originally
scheduled Closing Date. In the event Purchaser does not exercise such option to
extend the Closing with respect to such Affected Properties and/or any one or
more of the Affected Properties does not satisfy the condition set forth in
Section 6(b)(7) on or before the extended Closing Date, then provided that
during the Due Diligence Period, both Purchaser and Seller shall have completed
diligence reasonably acceptable to each indicating that use of the Bridging
Documents to close the transaction with respect to any Affected Properties is
not prohibited by any applicable regulatory body and shall not prejudice or
unreasonably delay the ultimate issuance of any Governmental Approvals (and in
the event neither party terminates this Agreement during the Due Diligence
Period pursuant to Section 4(d)(iii) or Section 33, then each party shall be
deemed to have satisfied itself as to such diligence except with respect to new
information that is revealed to the parties after the expiration of the Due
Diligence Period); (x) Purchaser shall be obligated to proceed to Closing
hereunder, (y)  Seller shall provide the proper notice and filing (as necessary)
of the Bridging Documents to the applicable governmental authority(ies); and
(z) at Closing, New Operator and the applicable Seller, affiliate of Seller, or
Existing Manager, as applicable, will enter into a temporary operations transfer
agreement, lease and/or management agreement, in form and substance attached
hereto as Exhibit J (the “Bridging Documents”), which allows Purchaser to
acquire the applicable Facility, and for the Facility to be operated under the
Operator’s license therefor pending Governmental Approvals in favor of the New
Operator(s).

 

7.           Certain Representations and Warranties by Seller.

 

(a)          Representations and Warranties. Except as otherwise set forth in
Schedule 7(a) or otherwise in any Schedule or Exhibit attached to this
Agreement, each Seller hereby

 

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represents and warrants to Purchaser, jointly and severally, that as of the
Effective Date (which representations shall be updated as of the Closing Date
pursuant to Section 7(c) below):

 

(i)          Due Formation. Each Seller is a limited liability company duly
formed, validly existing and in good standing under the laws of the state in
which it was organized.

 

(ii)         Due Authorization. This Agreement has been duly authorized,
executed and delivered by Seller and is the legal, valid and binding obligation
of Seller, enforceable against such Seller in accordance with its terms.

 

(iii)        Due Execution and Delivery. All of the documents to be delivered by
Seller at Closing will, at Closing, be duly authorized, executed and delivered
by such Seller (and/or, if applicable, its Affiliates), will be the legal, valid
and binding obligations of such Seller (and/or, if applicable, its Affiliates),
and be enforceable against such Seller (and/or, if applicable, its Affiliates)
in accordance with their respective terms (except as may be limited by
bankruptcy, insolvency, or other similar laws affecting the rights of creditors
generally or the general principles of equity), and the execution and delivery
thereof and the performance by such Seller of the terms thereof will not violate
any material provision of any agreement, instrument, writ, order or decree to
which such Seller (and/or, if applicable, its Affiliates) is a party, or to
which any portion of the applicable Property is subject.

 

(iv)        Consents. Except for the Governmental Approvals, neither Seller, the
applicable Operator nor Existing Manager requires the authorization, consent or
approval of any governmental agency or any other third party for Seller to enter
into this Agreement or consummate the Transaction. Seller may, however, need to
provide notice of the Transaction (which may or may not include the Bridging
Documents) to certain applicable governmental authorities.

 

(v)         Mechanic’s Liens. There are no unsatisfied mechanics’ or
materialmen’s lien rights encumbering the applicable Property or any portion
thereof.

 

(vi)        Personal Property. Except as set forth on Schedule 7(a)(vi), each
Operator owns and has, or will have at the time of Closing, good title to all
applicable Personal Property, free and clear of any liens and encumbrances, and
the execution and delivery to Purchaser of the Bill of Sale required by Section
11(a)(vii), along with the execution and delivery of certificates of title with
respect to the automobiles, shall vest good title to all of the applicable
Personal Property in Purchaser, free and clear of liens, encumbrances and
adverse claims. Except for the Excluded Personal Property, the Personal Property
comprises all material tangible personal property used by Operators in the
operation of the Business as currently conducted.

 

(vii)       Condemnation. Seller has not received any written notice of any
condemnation proceeding or other proceeding in the nature of eminent domain, or
any other action for adverse possession, in connection with the applicable
Property owned by such Seller or any portion or portions thereof or any
utilities, sewers, roadways or other public

 

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improvements serving the applicable Property (and which proceeding would have a
material adverse effect on the applicable Property).

 

(viii)      No Violations. Seller, the applicable Operator and Existing Manager
have not received any written notice of any violation within the twelve month
period prior to the Effective Date of [i] any penalty, sanction or other adverse
action relating to the applicable Property owned by such Seller, which has not
been cured in all material respects or waived, [ii] any laws, orders, rules or
regulations, ordinances or codes of any kind or nature whatsoever relating to
the applicable Property, the applicable Facility or the ownership or operation
thereof (including, without limitation, zoning, building, fire, Healthcare Laws,
occupational safety and health, zoning and land use, planning and environmental
laws, orders, rules and regulations), which has not been cured in all material
respects or waived; [iii] any covenants, conditions, restrictions or agreements
affecting or relating to the ownership, use or occupancy of the applicable
Property and/or the applicable Facility, which has not been cured in all
material respects or waived; or [iv] any order, writ, regulation or decree
relating to any matter referred to in [i], [ii] or [iii] above, which has not
been cured or waived. If any Seller, Operator or Existing Manager receives any
written notice of any violation between the Effective Date and the Closing Date,
Seller shall promptly provide a copy of such notice to Purchaser and Seller
shall be given a reasonable opportunity to cure the same (provided that Seller
shall not have the right to extend the Closing Date unless agreed to by
Purchaser).

 

(ix)         Tax Abatements and Assessments; Separate Tax Parcel. To Seller’s
knowledge, (i) there are no tax abatements, tax increment financings or
exemptions affecting the applicable Land, and (ii) Seller has not received
notice of any, and to Seller’s knowledge there is no, (x) proposed increase in
the assessed valuation of the applicable Land, (except as may result from the
transactions contemplated under this Agreement), (y) pending or threatened
special assessments affecting the applicable Land or (z) contemplated
improvements affecting the applicable Land that may result in special
assessments affecting the applicable Land.

 

(x)          Litigation. Except as may be set forth on Schedule 7(a)(x), there
is no suit, action, investigation, complaint or proceeding pending or, to the
knowledge of Seller, threatened against Seller, the applicable Operator or
Existing Manager or any portion of the applicable Property before or by any
court, administrative agency or other governmental or quasi-governmental
authority. Seller, the applicable Operator and/or Existing Manager have not
entered into any settlement agreement, corporate integrity agreement or consent
decree with any governmental authority concerning compliance with any applicable
law. To Seller’s knowledge, Seller has not received written notice of any
judgment, injunction, order, writ or decree of any court or other governmental
authority or agency relating specifically to Seller or to the ownership,
operation or management of the Property, any Facility and/or the operations of
the Business.

 

(xi)         Contracts. Set forth on Schedule 7(a)(xi) is a true, correct and
complete list of the Contracts relating to the applicable Property owned by
Seller (and/or any Affiliate of Seller, including the Existing Manager and/or
any Operator) that have a value, or involve payment by the applicable Seller or
an Affiliate of Seller of at least Twenty-Five Thousand and no/100ths Dollars
($25,000.00) during any twelve (12) month period (the

 

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“Material Contracts”). Such Seller does not guarantee or undertake that any of
such Contracts will be in effect as of the Closing. At Purchaser’s election
(which election shall be made prior to the expiration of the Due Diligence
Period), the Contracts designated by Purchaser will be assigned by Seller (or
the applicable Affiliate of Seller) to one or more operating designees or
Affiliates of Purchaser, and assumed by such operating Affiliate(s), as of the
Closing Date, in accordance with the assignment attached hereto as Exhibit E.
Seller, the applicable Operator and the Existing Manager have not received any
written notice of any default under any such Contract which has not been cured
or waived, and, to such Seller’s knowledge, all other parties to such Contracts
have performed their obligations thereunder in all material respects and no
other party is in default under any such Contract. Such Seller, such Operator
and the Existing Manager have performed, in all material respects, their
obligations under each such Contract to which it is a party, to its knowledge is
not in default under any such Contract and has not received notice of default
under any such Contract.

 

(xii)        Rent Roll. Set forth on Schedule 7(a)(xii) hereto is a rent roll
for the applicable Facility (the “Rent Roll”) dated as of the date(s) set forth
in such Schedule. Except as set forth on the applicable Rent Roll:

 

(1)         Other than the residents under the Residency Agreements, no party
has any right to possess all or any portion of the applicable Property.

 

(2)         Seller has delivered, true, correct and complete copies of the
Residency Agreements with respect to its applicable Property, including any and
all amendments, modifications, supplements, renewals, and extensions thereof and
guarantees in connection therewith.

 

(3)         All information set forth in the applicable Rent Roll is true and
correct in all material respects as of its date.

 

(4)         Except as set forth on Schedule 7(a)(xii), the Residency Agreements
are in full force and effect and neither Seller nor, to such Seller’s knowledge,
the applicable Operator, the Existing Manager, any resident or other tenant is
in default under any Residency Agreement in any material respect. Such Seller,
the applicable Operator and the Existing Manager have not received from any
resident under a Residency Agreement a notice of default in performing any of
their obligations under any Residency Agreement.

 

(5)         Each Operator owns and holds the entire landlord’s interest in each
of the Residency Agreements relating to the applicable Property leased by such
Operator. No Operator has assigned or pledged any Residency Agreement, or rents
or any interest therein, to any person or entity other than the lenders in
connection with existing mortgage loans encumbering the

 

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applicable Property which will be discharged at Closing in accordance with the
terms of this Agreement.

 

(6)         Except as set forth on Schedule 7(a)(xii), no brokerage or leasing
commission or other compensation is currently due or will be due or payable to
any person in connection with any of the Residency Agreements.

 

(7)         Except as set forth on Schedule 7(a)(xii), no resident or other
tenant has paid rent or fees more than one (1) month in advance.

 

(xiii)       [Reserved].

 

(xiv)      Bankruptcy. Seller has not made a general assignment for the benefit
of creditors, filed any voluntary petition in bankruptcy or suffered the filing
of an involuntary petition by its creditors, suffered the appointment of a
receiver to take possession of all or substantially all of its assets, suffered
the attachment or other judicial seizure of all or substantially all of its
assets, admitted its inability to pay its debts as they come due, or made an
offer of settlement, extension or composition to its creditors generally.

 

(xv)       OFAC. To the best of Seller’s knowledge, such Seller is in compliance
with the requirements of Executive Order No. 133224, 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”). Further, Seller
covenants and agrees to make its policies, procedures and practices regarding
compliance with the Orders, if any, available to Purchaser for its review and
inspection during normal business hours and upon reasonable prior notice. To the
best of Seller’s knowledge, neither such Seller nor any beneficial owner of such
Seller:

 

(1)         is listed on the Specially Designated Nationals and Blocked Persons
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”);

 

(2)         is a person or entity who has been determined by competent authority
to be subject to the prohibitions contained in the Orders; or

 

(3)         is owned or controlled by, or acts for or on behalf of, any person
or entity on the Lists or any other person or entity who has been determined by
competent authority to be subject to the prohibitions contained in the Orders.

 

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Each Seller hereby covenants and agrees that if such Seller obtains knowledge
that such Seller or any of its beneficial owners becomes listed on the Lists or
is indicted, arraigned, or custodially detained on charges involving money
laundering or predicate crimes to money laundering, such Seller shall promptly
notify Purchaser in writing, and in such event, Purchaser shall have the right
to terminate this Agreement without penalty or liability to such Seller
immediately upon delivery of written notice thereof to Purchaser.

 

(xvi)       The following provisions shall apply with respect to Employees:

 

(1)         All persons employed at the applicable Property in connection with
the operation or maintenance of the applicable Property (the “Employees”) are
employees of Existing Manager or Affiliates of Existing Manager (the “Employer
Affiliates”). Existing Manager and such Employer Affiliates shall be responsible
for all Employee related issues, except that at Closing, Seller will (i) fund
(or cause to be funded) directly to Existing Manager and such Employer
Affiliates an amount equal to the amount necessary to pay the applicable
Employees all severance and accrued vacation and other accrued paid time off and
benefits (“Accrued Employee Benefits”) to which such Employees are entitled
through the Closing Date (the “Accrued Employee Benefits Payout Amount”).
Purchaser will offer, or will cause one or more of its Affiliates, Purchaser
Designees or New Operators to offer, employment to a requisite number of
Employees following Closing, on such terms as may be required, so as not to
trigger the Worker Adjustment and Retraining Notification Act of 1988, 29 U.S.C.
§ 2101, et seq. (and any state equivalent statute) (collectively, the “WARN
Act”). The Accrued Employee Benefits Payout Amount paid by Existing Manager and
such Employer Affiliates will sufficient to provide the Employees with the
Accrued Employee Benefits actually earned by the Employees through the Closing
Date. For the purposes hereof, the term “Accrued Employee Benefits” shall be
deemed to include, without limitation, a prorated portion (based upon the number
of days in the applicable bonus period) of any bonus payable to any Employee to
the extent that such portion of the bonus is attributable to services rendered
by such Employee prior to the Closing Date, but payable after the Closing Date.
Neither Seller nor to Seller’s Knowledge, the Existing Manager or such Employer
Affiliates, is a party to any employment contract or other written agreement
with any Employee. Neither Seller nor Existing Manager nor any such Employer
Affiliates is a party to any collective bargaining agreement with respect to any
Employees.

 

(2)         Each “employee benefit plan” as that term is defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)
regardless of whether such plan is subject to ERISA, and each bonus, deferred,
or incentive compensation, stock purchase, stock option, severance, and
termination pay plan or program (the “Plans”), that is maintained or contributed
to by Seller, the Existing Manager or any Employer Affiliates for the benefit of
Employees or pursuant to which Seller, the Existing Manager or any Employer
Affiliates has any liability with respect to Employees (“Seller Plans”) has been
administered and operated in material compliance with its terms and the
applicable requirements of ERISA and the IRC, including the requirement to file
an annual report. No Seller Plan is intended to be qualified under Section 401
of the IRC as a “multiemployer plan” (within the meaning of Section 3(37)

 

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of ERISA) or as a “multiple employer” plan (within the meaning of Section 4063
or 4064 of ERISA). There are no pending or, to Seller’s knowledge, threatened
claims of any Employees (or former employees who provided services to the
Business) against or otherwise involving any of the Seller Plans (other than
routine claims for benefits). Neither Seller, the Existing Manager nor any
Employer Affiliates has at any time (x) maintained, contributed to, or been
required to contribute or had any liability (that has not been satisfied in
full) to any Seller Plan subject to Title IV of ERISA, (y) incurred or expected
to incur any liability to the Pension Benefit Guaranty Corporation or otherwise
under Title IV of ERISA, or (z) incurred or expected to incur liability in
connection with an “accumulated funding deficiency” within the meaning of
Section 412 of the IRC, whether or not waived.

 

(xvii)     Lack of Conflict. Neither the execution of this Agreement nor the
consummation of the Transaction will violate any restriction, court order,
judgment, law, regulation, charter, bylaw, instrument, or agreement to which
Seller or the applicable Property (or any portion thereof) are subject.

 

(xviii)    Non-Foreign Seller. Seller is not a foreign seller as defined in the
“Foreign Investment in Real Property Tax Act.”

 

(xix)       Environmental. Seller has delivered to Purchaser copies of all final
environmental reports or studies prepared for such Seller by third party
consultants in such Seller’s possession relating to the applicable Property,
which reports are listed on Schedule 7(a)(xix) attached hereto (the
“Environmental Reports”). To Seller’s knowledge, except as disclosed in the
Environmental Reports, such Seller is not aware that the applicable Property is
in violation of any Environmental Laws. To Seller’s knowledge, such Seller is
not aware of any current or former underground storage tanks at the applicable
Property. Except as disclosed in the Environmental Reports, Seller has not
received any written notice of any pending or, to such Seller’s knowledge,
threatened action or proceeding arising out of the environmental condition of
the applicable Property, Hazardous Materials located on the applicable Property,
or any alleged violation of Environmental Laws, which either (i) has not been
remediated or otherwise addressed in all material respects or (ii) would
reasonably be expected to materially and adversely affect the operation of the
applicable Facility.

 

(xx)        Financial Statements. The Financial Statements for the applicable
Property are the financial statements used in such Seller’s ordinary course of
business and, to such Seller’s knowledge, are in accordance with the books and
records of such Seller, have been prepared using consistently applied accounting
methods throughout the periods indicated, present fairly in all material
respects the results of operations and financial condition of the Business for
the respective periods indicated, and, to such Seller’s knowledge, do not
contain any material inaccuracy or any material omission. Any monthly financial
reports provided to Purchaser by Seller prior to Closing will based upon the
books and records of Seller consistent with Seller’s current reporting practice,
and will present fairly in all material respects the information purported to be
presented therein.

 

(xxi)       Operating Permits. To Seller’s knowledge, each of the operating
permits and Healthcare Permits which are necessary to operate the applicable
Facility

 

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(collectively, the “Operating Permits”) is valid, in good standing and in full
force and effect. Such Seller has not received any written notice of any action
or proceeding, pending or threatened, from any governmental authority which
would revoke, or cause to refuse to renew, suspend, limit, modify, or otherwise
alter any such Operating Permit.

 

(xxii)      Licensed Healthcare Professionals. To such Seller’s knowledge, all
licensed healthcare professionals currently providing services at the applicable
Facility have all required licenses and certifications necessary to provide
services at the applicable Property.

 

(xxiii)     Government Programs. Such Seller does not participate in any
Government Programs, except for the Medicaid Waiver Program in Michigan. There
are no pending or threatened (i) civil monetary penalties, terminations or
exclusions from participation in any Government Programs for any Facility, (ii)
material payment denials, or (iii) other sanctions of a governmental authority
against Seller or the Facilities.

 

(xxiv)    Tax Certiorari Proceedings. There are no pending or outstanding
assessment, real estate tax, ad valorem or similar tax appeals for any period
with respect to any of the Properties.

 

(xxv)     Taxes and Tax Returns. The Sellers and Operators of the Properties
have filed when due or will file when due in correct form all federal and state
income tax returns for all periods ending on or prior to the Closing Date which
are required to be filed by Operators on or prior to the Closing Date. Other
than extensions to file Sellers’ and Operators’ respective tax returns, there
are no agreements by any Operator for the extension of time for the assessment
of any tax. To Seller’s knowledge, all federal, state, county and local income
taxes due and payable by Sellers and/or Operators on or before the Effective
Date have been paid and any such taxes due and payable at any time between the
Effective Date through the Closing will be paid prior to Closing, and there are
no federal, state or local tax liens pending against Sellers, Operators or the
Properties. To Seller’s knowledge, there is no open audit of any Seller’s or
Operator’s federal, state, local income, sales use or property tax returns
pending, and Seller has received no written notice of the pendency of any such
audit or examination. To Seller’s knowledge, none of the Sellers or Operators
hold or has held a certificate or other authorization issued by any tax
collection body for the purpose of avoiding the payment by such Seller or
Operator of sales and use taxes upon such Seller’s or Operator’s purchases of
goods and services, nor has any Seller or Operator applied for such a
certificate or other authorization.

 

(xxvi)    Affordable Housing Units. To Seller’s knowledge, other than the
Medicaid Waiver Program, no bedroom or unit at any Facility is leased or
reserved for lease as an affordable housing unit or for low or moderate income
residents. To Seller’s knowledge, no Facility is required to lease or reserve
any unit or bedroom as an affordable housing unit or bedroom or for low or
moderate income residents pursuant to a presently existing agreement or
requirement of law.

 

(xxvii)   Insurance. Schedule 7(a)(xxvii) lists all of Seller’s policies of
property and casualty insurance and liability insurance currently in effect and
covering each Facility, the Business and/or the Property, copies of which have
been made available for review by Purchaser. Each such policy currently is in
full force and effect and, to Seller’s knowledge,

 

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Seller has not taken or failed to take any action which would limit or impair
any of Seller’s rights thereunder with respect to any matter for which Purchaser
could be held liable as a successor to Seller. Schedule 7(a)(xxvii) lists any
pending, unresolved claims under Seller’s policies of property and casualty or
liability insurance, as well as all claims made and resolved within the past
three (3) years. Seller has not received written, or to Seller’s knowledge,
oral, notice of any pending cancellation or nonrenewal of such policies.

 

(b)          Seller Knowledge Parties. The phrases “to such Seller’s knowledge,”
the “knowledge of such Seller and/or of its Affiliates,” and similar terms used
in this Agreement, shall mean in all cases only the actual current knowledge,
without independent investigation, of the following individuals (or any one of
them): Rowan Farber and Terri Fowler (the “Seller Knowledge Parties”) following
reasonable consultation with the Executive Director for each Facility. For
avoidance of doubt, the parties acknowledge and agree that in no event shall any
of the Seller Knowledge Parties have any personal liability. In no event shall
Purchaser be entitled to assert any cause of action against any of the Seller
Knowledge Parties with respect to this Agreement or any breach hereof, nor shall
any of the Seller Knowledge Parties have any personal liability whatsoever for
any matter under or related to this Agreement. All representations and
warranties made by Sellers in this Section 7 shall survive Closing for a period
of 545 days.

 

(c)          Representation Update. At the Closing, Seller shall deliver an
instrument (the “Representation Update”) confirming that the Seller’s
representations in Section 7(a) above are and continue to be true and correct as
of the Closing Date or, if applicable, advising Purchaser in what respects such
representations are inaccurate as of the Closing Date, provided that the
foregoing shall not modify or affect the condition to closing set forth in
Section 6(b)(2).

 

8.           Covenants of Seller.

 

(a)          Operation of the Facility. Subject to the terms of this Agreement,
each Seller, during the term of this Agreement, shall carry on the business and
operations of the applicable Facility in substantially the same manner as
heretofore carried on by it. Prior to the Closing Date, each Seller shall
maintain (or replace with policies of like amounts) all existing insurance
policies insuring the applicable Property and the operation of the applicable
Facility. Such Seller shall maintain the inventory consistent with such Seller’s
past practices and will replenish the same consistent with its past practices.
Such Seller may extend, amend, modify or terminate any of the applicable
Contracts as such Seller deems appropriate to operate, service and maintain the
applicable Property consistent with normal business practices, and may enter
into new Contracts; provided, however, that so long as this Agreement is in full
force and effect, (A) from the date of this Agreement to the Closing Date, such
Seller shall provide to Purchaser copies of new Contracts and any terminations,
amendments, extensions, or modifications of existing Contracts, which such
Seller has entered into, or intends to enter into, within two (2) business days
thereof, (B) such Seller shall not, without the written consent of Purchaser
(which consent shall not be unreasonably withheld, conditioned or delayed),
enter into (i) any leases of furniture, fixtures or equipment for the applicable
Facility, (ii) any new Contract with respect to any one Property other than (x)
automatic renewals of existing Contracts, and (y) Contracts that are consistent
with past practices and have a value, or involves payment by (or to) such Seller
or its Affiliate, of less than Twenty-Five Thousand Dollars ($25,000.00) during
any twelve (12)

 

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month period or that are terminable with not more than thirty (30) days’ notice
without penalty, (iii) any extension, amendment, modification, or termination of
a Contract other than an extension of an existing Contract on identical terms
(provided that Purchaser has not delivered to Seller Notice of its intent to
terminate such Contract), or (iv) any new Residency Agreements except to the
extent such Residency Agreements are on the standard form of resident lease and
at rental rates, with promotional allowances, concessions, length of term, and
on other terms and conditions consistent in all material respects with past
practices, (C) such Seller shall not sell or otherwise transfer or encumber any
part of the applicable Property, or any interest therein, or (D) without the
prior written approval of Purchaser (which approval shall not be unreasonably
withheld, conditioned or delayed), such Seller shall not make any material
alterations to the applicable Property, or remove or otherwise dispose of any
material portion of the Personal Property, except to the extent such Seller
replaces the same with like items that are of equal or better quality and
condition. In the event any regulatory authority or other entity requires
improvements to any of the Properties (other than normal repairs in the Seller’s
ordinary course of business) in order for Purchaser to obtain any Governmental
Approvals, Seller shall have no obligation to make such improvements, or to
provide any funds or credit at Closing in connection with such improvements.

 

(b)          Cooperation. Each Seller shall cooperate with Purchaser in all
commercially reasonable respects, including by (A) executing and/or delivering
necessary or desirable applications and other information and documents, to
facilitate receipt of the Governmental Approvals, transfers of any permits or
licenses required for the Properties and other authorizations in connection with
the operation of the Property and (B) promptly notifying Purchaser of any
communications to or from any governmental agency with respect to matters that
could reasonably be expected to have a material adverse effect upon the
applicable Facility.

 

(c)          Listings and Other Offers. No Seller will list the applicable
Property with any broker or otherwise solicit or make or accept any offers to
sell all or any part of such Property or any direct or indirect interest
therein, engage in any discussions or negotiations with any third party with
respect to the sale or other disposition of such Property or any direct or
indirect interest therein, or enter into any contracts or agreements (whether
binding or not) regarding any disposition of all or any part of such Property or
any direct or indirect interest therein.

 

9.           Certain Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to each Seller Party as follows:

 

(a)          This Agreement has been duly authorized, executed and delivered by
Purchaser and is the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms.

 

(b)          The execution and delivery of this Agreement by Purchaser does not
violate any provision of any agreement or judicial order to which Purchaser is a
party or to which Purchaser is subject.

 

(c)          All the documents to be delivered by Purchaser at Closing will, at
Closing, be duly authorized, executed and delivered by Purchaser (and/or, if
applicable, its Affiliates),

 

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will be the legal, valid and binding obligations of Purchaser (and/or, if
applicable, its Affiliates), and be enforceable against Purchaser (and/or, if
applicable, its Affiliates) in accordance with their respective terms, and the
execution and delivery thereof will not violate any provision of any agreement
or judicial order to which Purchaser (and/or, if applicable, its Affiliates) is
a party or, to the best of Purchaser’s knowledge, to which the Property is
subject.

 

(d)          Purchaser is not required to obtain the consent of any person or
entity to consummate the Transaction.

 

(e)          To the best of Purchaser’s knowledge, Purchaser is in compliance
with the requirements of the Order and other similar requirements contained in
the rules and regulations of OFAC and in any enabling legislation or other
Executive Orders or regulations in respect thereof. Further, Purchaser covenants
and agrees to make its policies, procedures and practices regarding compliance
with the Orders, if any, available to Seller Representative for its review and
inspection during normal business hours and upon reasonable prior notice. To the
best of Purchaser’s knowledge, neither Purchaser nor any beneficial owner of
Purchaser:

 

(i)          is listed on the Lists;

 

(ii)         is a person or entity who has been determined by competent
authority to be subject to the prohibitions contained in the Orders; or

 

(iii)        is owned or controlled by, or acts for or on behalf of, any person
or entity on the Lists or any other person or entity who has been determined by
competent authority to be subject to the prohibitions contained in the Orders.

 

The phrases “to the best of Purchaser’s knowledge,” the “knowledge of Purchaser
and/or of its Affiliates,” and similar terms used in this Agreement, shall mean
in all cases only the actual current knowledge, without independent
investigation, of the following individuals (or any one of them): Ross Sanders,
Todd Jensen, Robert Sweet and Dan Castleberry (the “Purchaser Knowledge
Parties”). For avoidance of doubt, the parties acknowledge and agree that in no
event shall any of the Purchaser Knowledge Parties have any personal liability.
In no event shall Purchaser be entitled to assert any cause of action against
any of the Purchaser Knowledge Parties with respect to this Agreement or any
breach hereof, nor shall any of the Purchaser Knowledge Parties have any
personal liability whatsoever for any matter under or related to this Agreement.

 

Purchaser hereby covenants and agrees that if Purchaser obtains knowledge that
Purchaser or any of its beneficial owners becomes listed on the Lists or is
indicted, arraigned, or custodially detained on charges involving money
laundering or predicate crimes to money laundering, Purchaser shall promptly
notify Seller Representative in writing, and in such event, Sellers shall have
the right to terminate this Agreement without penalty or liability to Sellers
immediately upon delivery of written notice thereof to Purchaser.

 

All representations and warranties made by Purchaser in this Section 9 shall be
true and correct in all material respects on the Effective Date and on the
Closing Date. All of the representations and warranties made by Purchaser in
this Section 9 shall survive Closing for a period of 545 days.

 

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10.         Closing. The closing of the sale of the Properties (“Closing”) shall
take place at the office of the Title Company or at another place mutually
agreed upon by the parties, on July 31, 2014, or such later date as to which the
parties have mutually agreed to extend such date of closing, or as such date may
be extended pursuant to the provisions of this Agreement. Notwithstanding
anything herein to the contrary, in no event shall the Closing occur prior to
the Due Diligence Deadline. The term “Closing Date” shall mean the date that the
Closing occurs. Notwithstanding the foregoing, the parties need not attend the
Closing in person and shall have the right to close the Transaction through
escrow with Escrow Agent pursuant to written closing escrow instructions, which
instructions shall be reasonably satisfactory to Seller Representative and
Purchaser, and shall be consistent with the terms hereof. The Closing shall
occur early enough in the day such that Seller shall be able to confirm receipt
of Seller’s proceeds by federal wire transfer on the same day.

 

11.         Closing Documents.

 

(a)          Seller Closing Documents. At Closing, Sellers shall execute and
deliver, or cause to be executed and delivered, to Purchaser the following
documents:

 

(i)          For each Property located in Michigan, a deed in the form of
Exhibit C-1 in favor of Purchaser, or at the written request of Purchaser, in
favor of one or more Purchaser Designees and for each Property located in
Illinois, a deed in the form of Exhibit C-2 in favor of Purchaser, or at the
written request of Purchaser, in favor of one or more Purchaser Designees
(individually, a “Deed” and collectively, the “Deeds”);

 

(ii)         For each Property, a certification of non-foreign status in the
form of Exhibit D;

 

(iii)        All documents necessary to transfer title to the vehicles and
equipment owned by each Operator, to one or more Purchaser Designees;

 

(iv)        For each Property, a certification of the applicable Seller in form
reasonably satisfactory to Purchaser, containing an updated Rent Roll for the
applicable Property, and certifying the extent to which all of the
representations and warranties of such Seller contained in this Agreement remain
true and correct as of the Closing Date;

 

(v)         For each Property, a Bill of Sale and General Assignment, executed
by the applicable Seller and Operator, in the form of Exhibit I attached hereto;

 

(vi)        For each Property, an assignment of Residency Agreements for the
Facility in favor of Purchaser, or at the request of Purchaser, in favor of one
or more Purchaser designees (which may include the New Operators), or one or
more of Purchaser’s Affiliates, executed by the applicable Operator, in the form
of Exhibit H attached hereto;

 

(vii)       For each Property, an Assignment of Contracts in favor of Purchaser,
or at the request of Purchaser, in favor of one or more Purchaser designees
(which may include the New Operators), or one or more of Purchaser’s Affiliates,
in the form of Exhibit E executed by the applicable Operator;

 

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(viii)      The Bridging Documents, if applicable, pursuant to Section 6(c).

 

(ix)         The Temporary License Agreement in the form of Exhibit L attached
hereto.

 

(x)          Owner’s Affidavits in the form of Exhibit F;

 

(xi)         Such transfer tax declarations as are required by the Title Company
and/or by Purchaser in order to reflect the payment of taxes as contemplated by
this Agreement;

 

(xii)        The Post Closing Escrow Agreement in the form of Exhibit K;

 

(xiii)       For each Property, evidence of termination of any Operating Lease
and any property management agreement for the applicable Property;

 

(xiv)      A closing statement prepared by Escrow Agent and reasonably approved
by Seller Representative and Purchaser setting forth, among other things, all
payments to and from escrow in connection with the purchase and sale of the
Properties (the “Closing Statement”);

 

(xv)       For each Property, a notice to residents informing them of the sale
of the applicable Property; and

 

(xvi)      Evidence of Seller’s authority to consummate the Transaction, and any
other documentation reasonably and customarily required by the Title Company to
consummate the Transaction.

 

(b)          Purchaser Closing Documents. At the Closing, Purchaser shall
execute and deliver, or cause to be executed and delivered, to Seller the
following documents:

 

(i)          Such transfer tax declarations as are required by the Title Company
and/or by Seller in order to reflect the payment of taxes as contemplated by
this Agreement.

 

(ii)         Closing Statement;

 

(iii)        For each Property, a Bill of Sale and General Assignment in the
form of Exhibit I attached hereto.

 

(iv)        For each Property, an assignment of Residency Agreements for the
Facility, in the form of Exhibit H attached hereto;

 

(v)         For each Property, an Assignment of Contracts in the form of
Exhibit E;

 

(vi)        The Post Closing Escrow Agreement in the form of Exhibit K;

 

(vii)       The Bridging Documents, if applicable, pursuant to Section 6(c);

 

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(viii)      The Temporary License Agreement in the form of Exhibit L attached
hereto; and

 

(ix)         Any other documentation reasonably required to consummate the
Transaction.

 

(c)          Amounts to be Paid at Closing. At the Closing, Purchaser shall pay
to Seller, by federally insured wire transfer, the total amount of the balance
of the Aggregate Purchase Price, subject to the prorations and adjustments set
forth in this Agreement.

 

(d)          Further Assurances. Seller and Purchaser shall, at the Closing, and
from time to time thereafter, upon request, execute such additional documents as
are reasonably necessary in order to convey, assign and transfer the Properties
pursuant to this Agreement and otherwise complete the Transaction, provided that
such documents are consistent with the terms of this Agreement, and do not
increase Seller’s or Purchaser’s obligations hereunder or subject Seller or
Purchaser to additional liability not otherwise contemplated by this Agreement.
Additionally, if this Agreement is terminated, either party may request from
time to time thereafter confirmation of such termination from the other party,
upon which request, the non-requesting party shall promptly confirm to the
requesting party in writing (by a recordable instrument if requested by the
requesting party) that this Agreement has been terminated.

 

12.         Prorations and Adjustments.

 

(a)          The following items shall be prorated and adjusted between Sellers
and Purchaser as of 11:59 p.m. of the day preceding the Closing, except as
otherwise specified:

 

(i)          all income and revenue from the Properties including, without
limitation, all resident payments (uncollected rents and other uncollected
revenue shall not be adjusted at Closing and shall be subject to the provisions
of Section 12(b) below);

 

(ii)         water, electricity, gas, sewer, telephone and other utility charges
and deposits with utility companies to the extent such deposits are assignable
and are assigned to Purchaser; provided, however, if there are meters on any of
the Properties measuring the consumption of water, gas or electric current, the
applicable Sellers shall, not more than one (1) Business Day prior to the
Closing Date, make good faith efforts to have such meters read and shall pay
promptly all utility bills for which Sellers are liable upon receipt of
statements therefor. Purchaser shall be liable for and shall pay all utility
bills for services rendered after such meter readings;

 

(iii)         Current general real estate taxes, personal property taxes, other
ad valorem taxes and installments of assessments affecting the Properties
located in Michigan shall be prorated as of the Closing Date on the basis of the
most recent ascertainable amounts of each such item, with adjustments made at
closing. For purposes of such prorations, “current” general real estate,
personal property taxes and other ad valorem taxes means any of such impositions
that were or will become first due and payable during the twelve (12) month
period immediately preceding the Closing (the “Current Tax Year”), and “current”
installments of assessments means assessment installments scheduled to be paid
during the Current Tax Year. Current general real estate, personal property
taxes, and other ad valorem taxes and assessment

 

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installments shall be prorated on a so-called due date basis, and shall be
deemed to have been paid in advance by Sellers. Sellers shall be solely
responsible for all general real estate taxes, personal property taxes, and
other ad valorem taxes affecting the Properties that become first due and
payable (and with respect to assessment installments, were scheduled to be paid)
prior to the Current Tax Year. Purchaser shall be solely responsible for all
general real estate taxes, personal property taxes, and other ad valorem taxes
affecting the Property that become first due and payable (and with respect to
assessment installments, are scheduled to be paid, regardless of when levied)
after the Closing. In no event will any Seller be charged with or be responsible
for any increase in the taxes or assessments on the Property resulting from the
sale of the Property or from any improvements made or leases entered into at any
time or for any reason. All net tax refunds and credits attributable to any
period prior to the Closing Date which Seller has paid or for which Seller has
given a credit to Buyer will belong to and be the property of Sellers. All net
tax refunds and credits attributable to any period on or subsequent to the
Closing Date will belong to and be the property of Purchaser. Notwithstanding
anything to the contrary contained in this Agreement, Sellers will have no
obligation to pay or discharge any assessments (special or general), or the
liens arising in connection therewith, except (I) those installments scheduled
to be paid prior to the Current Tax Year, and (II) with respect to current
installments of assessments, as prorated hereunder;

 

(iv)        Current general real estate taxes, personal property taxes, other ad
valorem taxes and installments of assessments affecting the Properties located
in Illinois shall be prorated as of the Closing Date on the basis of the most
recent ascertainable amounts of each such item, with adjustments made at
closing. Purchaser and Seller agree to prorate real estate taxes for the
Properties located in Illinois assessed during calendar year 2013, which are
payable in calendar year 2014, as of the Closing Date on a "cash basis". There
shall be no proration of real estate taxes assessed during calendar year 2014
which are payable in calendar year 2015, the payment of which shall be
Purchaser's responsibility. Seller shall be responsible for real estate taxes
assessed during calendar year 2012 which were payable in calendar year 2013 and
real estate taxes for all years prior thereto. Real estate taxes assessed for
calendar year 2013 (which are payable in calendar year 2014) shall be prorated
between Seller and Purchaser. Seller's allocable share of such real estate taxes
shall be determined by multiplying the amount of such real estate taxes by a
fraction, the numerator of which is the number of days in the calendar year for
the period commencing on January 1, 2014 and ending on the Closing Date, and the
denominator of which is 365. Purchaser responsible for the remainder of the 2013
real estate taxes and real estate taxes for all subsequent years. To the extent
that prior to Closing Seller has paid real estate taxes for calendar year 2013
for which Purchaser is responsible, Seller shall receive a credit at Closing. If
at Closing, the real estate tax rate assessments have not been set for calendar
year 2013, then the proration of such taxes shall be based upon the most recent
real estate tax bill, and such proration shall be adjusted between Seller and
Purchaser after Closing upon issuance of the final tax bill for calendar year
2013;

 

(v)         amounts payable under the Contracts and the equipment and automobile
leases to be assumed by Purchaser (if any);

 

(vi)        any other expenses normal to the operation and maintenance of the
Properties; all installments of special assessments payable prior to the Current
Tax Year shall be paid exclusively by Seller and all installments of special
assessments payable after the Closing

 

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shall be paid exclusively by Purchaser, with current installments prorated as
set forth in Section 12(a)(iii) above;

 

(vii)       Notwithstanding any provision of this Agreement to the contrary,
Purchaser shall pay the sum of (x) fifty percent (50%) of all actual prepayment
fees, penalties and premiums (collectively the “HUD Prepayment Fees”) due to the
U.S. Department of Housing and Urban Development (“HUD”) and the applicable
mortgagee (“HUD Lender”) in connection with the prepayment of the existing HUD
insured loans (the “HUD Loans”), encumbering the properties known as Golden
Orchards, Liberty Court, Crystal Springs, Lakeside Vista, Whispering Woods and
Prestige Way, plus (y) One Hundred Thousand Dollars ($100,000.00) toward the HUD
Prepayment Fees for the HUD Loans encumbering the Properties known as Lakeside
Vista, Whispering Woods and Prestige Way. Notwithstanding the foregoing, in no
event shall Purchaser’s obligation to pay a portion of the HUD Prepayment Fees
with respect to the Properties known as Golden Orchards, Liberty Court, and
Crystal Springs exceed the aggregate amount of Five Hundred Forty-Eight Thousand
Dollars ($548,000.00) and in no event shall Purchaser’s obligation to pay a
portion of the HUD Prepayment Fees with respect to the Properties known as
Lakeside Vista, Whispering Woods and Prestige Way exceed the aggregate amount of
Seven Hundred Fifty Thousand Dollars ($750,000.00). In connection with the
prepayment of the HUD Loans, Seller shall have the right to receive the balance
of any FF&E replacement reserves (the “Reserves”) held by the applicable HUD
Lender under the HUD Loans, whether such Reserves are applied to the prepayment
balance of the HUD Loans or remitted separately from the HUD Lender; and

 

(viii)      Notwithstanding any provision of this Agreement to the contrary,
Purchaser shall pay fifty percent (50%) of all actual prepayment fees, penalties
and premiums due to GE Capital in connection with the prepayment of the existing
GE Capital loan encumbering the Properties (collectively the “GE Prepayment
Fees”), provided, however, in no event shall Purchaser’s obligation to pay a
portion of the GE Prepayment Fees exceed the aggregate amount of Two Hundred Two
Thousand Dollars ($202,000.00).

 

(b)          On the date of the Closing, the amount of prorations and
adjustments as aforesaid shall be determined or estimated to the extent
practicable, and monetary adjustment shall be made between Sellers and Purchaser
(or, provided that the parties agree, some of the prorations and adjustments may
be made between Sellers and New Operator). If any prorations or adjustments are
based on estimates as of Closing, when the amount of such costs, expenses,
charges or amounts upon which such prorations or adjustments are finally known,
Sellers and Purchaser shall make a recalculation of the apportionment of the
same, and Sellers or Purchaser, as the case may be, shall make an appropriate
payment to the other based on such recalculation. Subject to the prorations to
be made pursuant to this Section 12(b), if any resident sends payments to a
Seller after the Closing, such Seller shall promptly deliver such payment to
Purchaser. As soon as reasonably practicable following the Closing Date, but not
more than ten (10) days following the Closing Date, Seller Representative shall
provide Purchaser a schedule of all unpaid accounts receivable relating to the
period prior to the Closing Date. Sellers shall have the right to pursue such
delinquent amounts following the Closing; provided that Sellers shall not have
the right to cause any eviction or to terminate any Residency Agreement
following the Closing on account of any delinquent amounts. Other than invoicing
such past due amounts, Purchaser shall have no obligation to pursue any such
delinquent amounts. To the extent such

 

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delinquent rents and other amounts are collected by Purchaser, Purchaser may
deduct from the amount owed to Sellers an amount equal to the attorneys’ fees
and other reasonable costs of collection and out of pocket costs actually
incurred by Purchaser in collecting such rents, as well as any other amounts due
to Purchaser. Subject to the foregoing sentence, any rent or other payment
collected after the Closing from any resident which owed a payment that was
delinquent as of the Closing Date shall be applied first to the applicable
party’s unpaid monetary obligations with respect to any periods from and after
the Closing Date through the end of the month in which such payment is made, in
such order as Purchaser may elect, until such monetary obligations have been
paid in full; any remaining amount of such payment shall be paid over to
Sellers, for application against such party’s delinquent monetary obligations
with respect to any periods before the Closing Date, in such order as Seller
Representative may elect, until such delinquent monetary obligations have been
paid in full, and any remaining amount of such payment shall be retained by
Purchaser for application against such party’s future obligations. In addition,
in calculating the prorations pursuant to this Section 12(b), Seller shall
receive a credit in the amount of any utility, municipality or other deposits
relating to the Properties made by Sellers and which are assigned to Purchaser
at the Closing. Sellers shall be entitled to a refund from the utility or the
municipality of any such deposits not assigned to Purchaser.

 

(c)          If any refund of real property taxes or personal property taxes
regarding any of the Properties is made after the date of the Closing for a
period prior to the Closing, after deducting Purchaser’s reasonable
out-of-pocket costs, if any, in obtaining such refund, the amount of such refund
that is on account of the period prior to Closing shall be paid to Sellers as
Seller Representative directs. The balance, if any, of such refund that is on
account of the period following Closing shall be paid to Purchaser. In addition,
to the extent any income relating to the period prior to the Closing Date is
paid to Purchaser, Purchaser shall promptly notify Seller Representative and
remit such amount as directed by Seller Representative, to the extent Sellers
are entitled to the same pursuant to the terms of this Agreement.

 

(d)          At Closing, Sellers shall transfer the following sums or give
Purchaser a credit against the Aggregate Purchase Price in the amount of all (i)
security deposits (together with any interest earned thereon or otherwise due to
the residents under the terms of any Residency Agreement or applicable law);
(ii) last months’ rents, and other prepaid rent or fees (together with any
interest earned thereon or otherwise due to the residents under the terms of any
Residency Agreements or applicable law); and (iii) any amounts held by Sellers
in trust for the residents of the Facilities.

 

(e)          Any party hereto shall be entitled to a post-Closing adjustment for
any incorrect proration or adjustment or if information was not available prior
to or on the Closing Date to finalize any proration, provided such adjustment is
claimed by such party within ninety (90) days after the Closing Date or, with
respect to real estate taxes, within sixty (60) days after the information
necessary to finalize the proration becomes available. The provisions of this
Section 12(e) shall survive Closing for the longer of (i) a period of
ninety (90) days after Closing or (ii) sixty (60) days after the information
necessary to finalize the proration with respect to real estate taxes becomes
available.

 

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13.         Closing Costs.

 

(a)          Sellers shall be responsible for the payment of (i) the fees and
costs of Sellers’ counsel and investment advisors, if any, representing it in
connection with the Transaction, and (ii) the Applicable Seller Transfer Taxes;
(iii) the costs for the owner’s title policy with standard and extended coverage
and any endorsements to cure any title defects that Seller is required to cure
hereunder; (iv) one-half (1/2) of the sales and use taxes relating to the
transfer of vehicles and other Personal Property; (v) the commission due to the
Broker; (vi) one-half (1/2) of all escrow fees of the Title Company; and
(vii) and all other fees, costs and expenses incurred by Sellers in connection
with the Transaction not specifically provided for herein. The “Applicable
Seller Transfer Taxes” shall mean, with respect to the Properties located in
Michigan, Seller shall pay all recording and transfer taxes, and with respect to
the Properties located in Illinois, Seller shall pay all state and county
recording and transfer taxes.

 

(b)          Purchaser shall be responsible for the payment of (i) the fees and
costs of Purchaser’s counsel and investment advisors representing it in
connection with the Transaction; (ii) survey costs, environmental inspection
costs and all due diligence costs and expenses; (iii) except for the costs paid
by Seller pursuant to Section 13(a) above, the costs for any owner’s title
policy endorsements requested by Purchaser or Purchaser’s lender and all title
insurance costs in connection with the lender’s title policy; (iv) all taxes on
any new mortgages to be placed upon the Properties by Purchaser’s lender;
(v) one-half (1/2) of all escrow and closing fees of the Title Company;
(vi) one-half (1/2) of the sales and use taxes relating to the transfer of
vehicles and other Personal Property; (vii) with respect to the Properties
located in Illinois, all local/municipal transfer and recording taxes; and
(viii) all other fees, costs and expenses incurred by Purchaser in connection
with the Transaction not specifically provided for herein.

 

14.         Remedies for Pre-Closing Defaults.

 

(a)          Purchaser Default. If Purchaser shall default under this Agreement
and Sellers are not then in default under this Agreement, then subject to the
rights of Purchaser set forth in Section 4(d)(iii) hereof, Seller Representative
may elect to cancel this Agreement by giving notice to Purchaser and Escrow
Agent. The parties hereto agree that the damages that Sellers will sustain as a
result of such default will be substantial but will be difficult to ascertain.
Accordingly, the parties agree that in the event that Seller Representative
shall elect to terminate this Agreement as a result of such default, and this
Agreement shall not have terminated or be deemed terminated pursuant to the
provisions of Section 4(d)(iii) hereof, Escrow Agent is hereby directed to pay
the Deposit to Seller Representative, who shall retain the Deposit as and for
its liquidated damages and sole remedy hereunder, in which event this Agreement
shall be null and void and of no further force or effect except for those
provisions expressly stated to survive the termination of this Agreement.

 

(b)          Seller Default. If, due to Sellers’ default, Sellers shall fail to
convey title subject to, and in accordance with, the terms of this Agreement,
Purchaser’s sole remedy for such Seller’s default shall be to elect either
(i) enforce specific performance of this Agreement, (ii) waive such default(s)
and proceed to Closing or (iii) terminate this Agreement and receive a return of
the Deposit, and in the event of such termination Sellers shall reimburse
Purchaser for all out-of-pocket costs and expenses incurred by Purchaser in
respect of this Agreement and the

 

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Transaction, including, without limitation, Purchaser’s legal fees and expenses,
due diligence costs and title examination and survey expenses, in an amount not
to exceed $25,000 per Property for each Property, and, thereafter, Seller
Parties and Purchaser shall be relieved of all obligations and liabilities under
this Agreement except under those provisions of this Agreement that are
expressly stated to survive the termination of this Agreement. Purchaser hereby
waives all other rights and remedies that it might have, including but not
limited to, the right to sue for damages.

 

(c)          Collection Costs. If any legal action, arbitration or other similar
proceeding is commenced to enforce or interpret any provision of this Agreement,
the prevailing party shall be entitled to an award of its attorneys’ fees and
expenses. The phrase “prevailing party” shall include a party who receives
substantially the relief desired whether by dismissal, summary judgment,
judgment or otherwise. If either party is entitled to an award of its attorneys’
fees and expenses pursuant to the terms of this Section 14(c), such award shall
be available notwithstanding the limitations on remedies set forth in Sections
14(a) and (b) above.

 

(d)          Survival.

 

(i)          Closing. None of the terms and conditions of this Agreement shall
survive the Closing, except for the following Sections: 4(d)(ii), 7 (subject to
the limitations set forth therein and in Section 15), 9 (subject to the
limitations set forth therein), 11(d), 12 (subject to the limitations set forth
in Section 12(e)), 14(c), 14(d), 15, 16, 18 (subject to the limitations set
forth in Section 15), 19 (solely for purposes of interpreting any provision of
this Agreement that is the subject of a dispute or to the extent applicable to
any other surviving provision of this Agreement), 23, 26, 28, 29, 30 and 32.

 

(ii)         Termination. None of the terms and conditions of this Agreement
shall survive the termination of this Agreement, except for the following
Sections: 2(c), 4(d)(ii), 4(d)(iii) (with respect to Purchaser’s obligations to
deliver to Sellers copies of reports), 14, 16, 19 (solely for purposes of
interpreting any provision of this Agreement that is the subject of a dispute or
to the extent applicable to any other surviving provision of this Agreement),
21, 28, 29, and 30.

 

15.         Remedies for Post-Closing Defaults.

 

(a)          At Closing, an amount equal to two and 25/100ths percent (2.25%) of
the Aggregate Purchase Price paid at such Closing (the “Escrow Amount”) will be
withheld from Sellers’ closing proceeds and placed into an account agreed to by
the parties and designated by Escrow Agent, and Escrow Agent shall hold the same
in escrow (the “Seller Escrow”) pursuant to an escrow agreement in form attached
hereto as Exhibit K (the “Post Closing Escrow Agreement”), as security for any
liability of Seller arising in connection with any Claims with respect to any of
Sellers’ representations and warranties, covenants and indemnities contained in
this Agreement or in any Closing Document. On the date that is 425 days
following the Closing Date, the remaining portion of the Escrow Amount less the
good-faith and reasonable estimate of the amount sufficient to pay any Claim
with respect to any of the representations and warranties, covenants and
indemnities contained in this Agreement or in any Closing Document that that has

 

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not yet been fully agreed or adjudicated but that has been made by Purchaser
prior to the date that is 425 days following the Closing Date shall be released
to Seller.

 

(b)          Indemnification by Seller. Following the Closing, each Seller shall
jointly and severally indemnify, hold harmless and defend Purchaser and the
Purchaser Indemnification Parties from and against any and all losses, damages,
costs, expenses, liabilities, obligations and claims of any kind (including,
without limitation, reasonable attorneys’ fees and other legal costs and
expenses) (collectively, “Losses”) which Purchaser and/or the Purchaser
Indemnification Parties may at any time suffer or incur, or become subject to,
as a result of or in connection with:

 

(1)         any breach or inaccuracy of any of the representations and
warranties made by Seller in Section 7 of this Agreement;

 

(2)         any failure by Seller to carry out, perform, satisfy and discharge
any of its express covenants, agreements, or obligations under this Agreement in
any material respect;

 

(3)         the Excluded Liabilities; or

 

(4)         any federal, state, or local income, payroll, sales and use, ad
valorem or other taxes payable by Seller or Operators or for which Seller or
Operators are liable in connection with any period prior to the Closing Date,
and any interest or penalties thereon.

 

(c)          Indemnification by Purchaser. Following the Closing, Purchaser and
all of the Purchaser Designees who take title to the Properties at Closing (all
of the foregoing, jointly and severally, being collectively referred to as the
“Purchaser Indemnification Parties”), shall indemnify and hold harmless each
Seller Party from and against, and reimburse each Seller Party for, any and all
Losses which any Seller Party may at any time suffer or incur, or become subject
to, as a result of or in connection with:

 

(1)         any breach or inaccuracy of any representations and warranties made
by Purchaser in or pursuant to Section 8 of this Agreement;

 

(2)         any failure by any Purchaser Indemnification Parties to carry out,
perform, satisfy and discharge any of its covenants, agreements, undertakings,
liabilities or obligations under this Agreement; or

 

(3)         the Assumed Liabilities.

 

(d)          Purchaser Indemnification Limits; Survival. The Purchaser
Indemnification Parties shall not be entitled to any indemnification from Seller
under Sections 15(b)(1) or 15(b)(2) unless and until the aggregate amount of
indemnifiable claims of the Purchaser Indemnification Parties under Sections
15(b)(1) or 15(b)(2) exceeds One Hundred Thousand and No/100 U.S. Dollars
($100,000) (the “Seller Threshold”), at which point Seller shall be liable for
all indemnifiable claims of the Purchaser Indemnification Parties under Section
15(b)(1) or 15(b)(2). Seller’s liability for indemnification under Section
15(b)(1) or

 

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15(b)(2) shall not in any case exceed Three Million Five Hundred Thousand and
No/100th Dollars ($3,500,000), inclusive of the Seller Escrow, for Claims for
which Purchaser gives notice to Seller during the period commencing with the
Closing Date and ending 425 days following the Closing Date, and shall not
exceed One Million Five Hundred Thousand and No/100th Dollars ($1,500,000) for
Claims for which Purchaser gives notice to Seller during the period commencing
on the date that is 426 days following the Closing Date through the date that is
545 days following the Closing Date (as applicable, the “Indemnification Cap”);
provided, however, that neither the Seller Threshold nor the Indemnification Cap
shall apply in the case of: (i) fraud on the part of Seller; (ii) any claims
arising under Section 15(b)(1) with respect to the representations and
warranties contained in Sections 7(a)(i), 7(a)(ii), 7(a)(iii), 7(a)(xiv) or 16;
or (iii) any claims arising under Sections 15(b)(3) or 15(b)(4). Sellers shall
not be obligated to indemnify the Purchaser Indemnification Parties pursuant to
Section 15(b) for any amounts of indemnifiable Losses in excess of the Aggregate
Purchase Price. All of Seller’s representations and warranties under this
Agreement shall survive for a period of 545 days following the Closing Date.
Purchaser waives and releases any and all Claims for breach of representation or
warranty or for indemnifiable Losses for which Purchaser did not give notice of
a Claim to Seller prior to 545 days following the Closing Date. 

 

(e)          Seller Indemnification Limits; Survival. Seller shall not be
entitled to any indemnification from the Purchaser Indemnification Parties under
Section 15(c) unless and until the aggregate amount of indemnifiable claims of
Seller under Section 15(c)(1) or 15(c)(2) exceeds One Hundred Thousand and
No/100 U.S. Dollars ($100,000) (the “Purchaser Threshold”), at which point the
Purchaser Indemnification Parties shall be liable for all indemnifiable claims
of Seller under Section 15(c)(1) or 15(c)(2). The liability of the Purchase
Indemnification Parties for indemnification under Section 15(c)(1) or 15(c)(2)
shall not in any case exceed Three Million Five Hundred Thousand and No/100th
Dollars ($3,500,000) for Claims for which Seller gives notice to Purchaser
during the period commencing with the Closing Date and ending with the date that
is 425 days following the Closing Date, and shall not exceed One Million Five
Hundred Thousand and No/100th Dollars ($1,500,000) for Claims for which Seller
gives notice to Purchaser during the period commencing on the date that 426 days
following the Closing Date through the following the date that is 545 days
following the Closing Date (as applicable, the “Purchaser Indemnification Cap”);
provided, however, that neither the Purchaser Threshold nor the Purchaser
Indemnification Cap shall apply in the case of: (i) fraud on the part of any of
the Purchaser Indemnification Parties; (ii) any claims arising under Section
15(c)(1) with respect to the representations and warranties contained in
Sections 9(a) and 9(b), or (iii) any claims under Section 15(c)(3). The
Purchaser Indemnification Parties shall not be obligated to indemnify Sellers
pursuant to Section 15(c) for any amounts of indemnifiable Losses in excess of
the Aggregate Purchase Price. All of Purchaser’s representations and warranties
under this Agreement shall survive for a period of 545 days following the
Closing Date. Seller waives and releases any and all Claims for breach of
representation or warranty or for indemnifiable Losses for which the Seller did
not give notice of a Claim to Purchaser prior to 545 days following the Closing
Date.

 

(f)          Determination of Losses. For purposes of determining the amount of
Losses that are subject to indemnification hereunder with respect to any events,
facts or circumstances, after determining whether or not such facts, events or
circumstances give rise to a breach of a representation or warranty (after
giving full effect to any qualifications as to

 

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materiality or similar standards, or of lack of “material adverse effect,”
contained in such representation and warranty), the determination of the amount
of Losses for such breach of representation and warranty, as it relates to such
facts, events or circumstances, shall be made without giving effect to any
qualifications as to materiality or similar standards, or the lack of “material
adverse effect” contained in such representation or warranty.

 

(g)          Tax Treatment. Any payments made pursuant to Section 15 of this
Agreement shall be treated as a purchase price adjustment for income tax
purposes.

 

(h)          Calculation of Aggregate Purchase Price. For purposes of Section 15
the total Aggregate Purchase Price shall be deemed to mean the Aggregate
Purchase Price, as adjusted in accordance with the terms of this Agreement, for
each Facility for which Closing has occurred hereunder.

 

(i)          Procedures Regarding Third Party Claims. The procedures to be
followed by Purchaser and Seller with respect to indemnification hereunder
regarding claims by third parties shall be as follows:

 

(i)          Promptly after receipt by Purchaser or Seller, as the case may be,
of notice of the commencement of any action or proceeding or the assertion of
any claim by a third person, which the party receiving such notice has reason to
believe may result in a claim by it for indemnity pursuant to this Agreement,
such person (the “Indemnified Party”) shall give notice of such action,
proceeding or claim to the party against whom indemnification is sought (the
“Indemnifying Party”), setting forth in reasonable detail the nature of such
action or claim, including copies of any written correspondence from such third
person to such Indemnified Party.

 

(ii)         The Indemnifying Party shall be entitled, at its own expense, to
assume and control such defense with counsel chosen by the Indemnifying Party
and approved by the Indemnified Party, which approval shall not be unreasonably
withheld or delayed. The Indemnified Party shall be entitled to participate in
such defense after such assumption at the Indemnified Party’s own expense. Upon
assuming such defense, the Indemnifying Party shall have full rights to enter
into any monetary compromise or settlement which is dispositive of the matters
involved; provided that such settlement is paid in full by the Indemnifying
Party and will not have any continuing material adverse effect upon the
Indemnified Party.

 

(iii)        With respect to any action, proceeding or claim as to which the
Indemnifying Party shall not have exercised its right to assume the defense, the
Indemnified Party may assume and control the defense of and contest such action,
proceeding or claim with counsel chosen by the Indemnified Party. The
Indemnifying Party shall be entitled to participate in defense at the
Indemnifying Party’s own expense. The Indemnifying Party shall be obligated to
pay the reasonable attorneys’ fees and expenses of the Indemnified Party to the
extent that such fees and expenses relate to claims as to which indemnification
is due under this Section 15. The Indemnified Party shall have full rights to
dispose of such action and enter into any monetary compromise or settlement
which is dispositive of the matters involved; provided, however, in the

 

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event that the Indemnified Party shall settle or compromise any claims involved
in the action insofar as they relate to, or arise out of, the same facts as gave
rise to any claim for which indemnification is due under this Section 15, it
shall act reasonably and in good faith in doing so and in consultation with the
Indemnifying Party.

 

(iv)        Both the Indemnifying Party and the Indemnified Party shall
cooperate fully with one another in connection with the defense, compromise or
settlement of any such claim, proceeding or action, including, without
limitation, by making available to the other all pertinent information and
witnesses within its control.

 

(j)          General Qualifications on Indemnification. Notwithstanding any
provision to the contrary, the indemnification rights set forth in this Section
15 shall be subject to the following: 

 

(i)          The liability of an Indemnifying Party with respect to any
indemnification claim shall be reduced by the amount of any tax benefit actually
realized or any insurance proceeds received by Indemnified Party as a result of
any damages, upon which such claim is based, and shall include any tax detriment
actually suffered by the Indemnified Party as a result of such damages. The
amount of such tax benefit or detriment shall be determined by taking into
account the effect, if any, and to the extent determinable, of timing
differences resulting from the acceleration or deferral of items of gain or loss
resulting from such damages.

 

(ii)         Damages shall include actual damages and shall not include any
special, punitive, multiplied, incidental, indirect or consequential damages, or
lost profits, except to the extent the same are included in a third-party
judgment against the Indemnified Party.

 

(iii)        Upon payment in full of any indemnification claim, the Indemnifying
Party shall be subrogated to the extent of such payment to the rights of the
Indemnified Party against any person or entity with respect to the subject
matter of such indemnification claim.

 

(iv)        Any amounts due to Purchaser from Seller pursuant to this Section 15
shall be paid first from the Escrow Amount in accordance with the Post Closing
Escrow Agreement, until the Escrow Amount has been exhausted or released.

 

(v)         If there is a failure of any condition precedent to Closing
hereunder, as set forth in Section 6 hereof, then, unless such failure is caused
by the default of a party of a covenant or other obligation under this
Agreement, such failure shall not constitute a default hereunder and the sole
and exclusive remedy of the applicable party whose condition to Closing was not
satisfied shall be to terminate this Agreement by giving written notice thereof
to the other party prior to or at the Closing, in which event the Deposit shall
be returned to Purchaser, and, after the return to Purchaser of the Deposit,
neither the Seller Parties nor Purchaser will have any further rights or
obligations under this Agreement, except for any obligations that expressly
survive termination.

 

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(vi)        Notwithstanding anything herein to the contrary, Purchaser hereby
expressly waives, relinquishes and releases any right or remedy available to
Purchaser at law, in equity or under this Agreement to make a claim against any
Seller Parties or Operators for Losses that Purchaser may incur, or to rescind
this Agreement and the transactions contemplated hereby, as the result of any of
Seller’s representations or warranties being untrue, inaccurate or incorrect if
Purchaser actually knew or is deemed to have known (as defined below) that such
representation or warranty was untrue, inaccurate or incorrect at the time of
the Closing and Purchaser nevertheless closes title hereunder. Purchaser shall
be “deemed to have known” at the time of Closing that a representation or
warranty was untrue, inaccurate or incorrect if the due diligence information
that is either (i) provided by Seller to Purchaser in written or electronic form
either in the Schedules hereto, or in the electronic data room used by the
parties for the Transaction, or (ii) is obtained by Purchaser as a result of the
Tests and investigations performed by Purchaser, is inconsistent with such
representation or warranty.

 

(k)          Effective Upon Closing. The provisions of this Section 15 shall
become effective upon completion of the Closing, and shall have no force and
effect prior to the Closing or if this Agreement is terminated prior to Closing.

 

(l)           Exclusive Remedy. From and after the Closing, the rights of the
parties to indemnification relating to this Agreement and the transactions
contemplated hereby shall be strictly limited to those contained in this Article
8, and such rights shall be the exclusive remedies of the parties subsequent to
the Closing, except that the foregoing shall not limit any claim under this
Agreement with respect to fraud or wilful misconduct or to specifically enforce
covenants under this Agreement or in the event of any party’s breach of any
covenants or obligations first accruing after Closing under any documents
executed and delivered at Closing with ongoing obligations after Closing, or
with respect to obligations under this Agreement that survive Closing and for
which a Claim first accrues after Closing.

 

16.         Broker. Seller Parties and Purchaser represent to each other that
neither party has dealt with any broker or real estate consultant in connection
with the Transaction contemplated by this Agreement. Notwithstanding the
foregoing, Seller Parties and Purchaser acknowledge that Seller Parties have
engaged Houlihan Lokey Real Estate Group, Inc. (“Broker”) as its investment
advisor and the Sellers shall pay the fees due to Broker in accordance with a
separate agreement between Seller Representative and Broker. Sellers and
Purchaser shall indemnify and hold the other free and harmless from and against
any liabilities, damages, costs or expenses (including, but not limited to,
reasonable attorneys’ fees and disbursements) suffered by the indemnified party
arising from a misrepresentation or a breach of any covenant made by the
indemnifying party pursuant to this Section 16. The provisions of this Section
16 shall survive the Closing or termination of this Agreement.

 

17.         Risk of Loss.

 

(a)          Condemnation.

 

(i)          If, at any time prior to the Closing Date, all or a Substantial
Portion of a Property shall be taken in the exercise of the power of
condemnation or eminent domain by any sovereign, municipality or other public or
private authority or shall be the subject of a duly

 

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noticed hearing held by any such authority relating to a pending taking in the
exercise of the power of condemnation or eminent domain (a “Taking”), then this
Agreement shall remain in full force and effect (provided that the occurrence of
such Taking shall not be deemed to cause a breach of any provisions of this
Agreement, and Sellers shall not be obligated to transfer to Purchaser the
Property (or Substantial Portion of the Property) subject to such condemnation
or taking by eminent domain) and on the Closing either (A) Purchaser shall be
entitled to any condemnation award to be granted with respect to the remaining
Properties and Sellers shall assign all of its right, title and interest to such
award to Purchaser, less such sums, if any, actually and reasonably expended by
Sellers to prosecute such claim and restore the Properties, or (B) Purchaser
shall have the right to not close on the applicable Property and the Aggregate
Purchase Price shall be reduced by the applicable Property Purchase Price, and
the portion of the Deposit attributable to such Property shall be returned to
Purchaser. Sellers agree to deliver promptly after receipt thereof any and all
written notices of a Taking received by Sellers after the date hereof. In
addition, Seller shall have the right to terminate this Agreement with respect
to all of the Properties if a sufficient number of Properties are terminated
from this Agreement as a result of a Taking and/or Material Casualty so that the
aggregate resident census for all of the Properties that were not terminated
from this Agreement as a result of a Taking and/or Material Casualty is ninety
percent (90%) or less than the aggregate resident census for the Properties as
of the Effective Date of this Agreement

 

(ii)         As used herein, a Taking of a “Substantial Portion of a Property”
shall mean a Taking which (a) results in an award reasonably estimated to exceed
$125,000 with respect to any Facility, (b) adversely affects access to, egress
from or operation of such Property, (c) reduces the number of residential beds
in such Property by 5% or more, (d) materially reduces the common areas or
amenity space at such Property or results in Purchaser not being able to operate
the Property as an integrated economically viable whole, or (e) results in such
Property being in violation of any applicable law or any Contract.

 

(b)          Destruction or Damage.

 

(i)          In the event that a Property, shall be damaged or destroyed by fire
or any other casualty (“Casualty”) that constitutes a Material Casualty prior to
the Closing Date, Seller Representative shall give Purchaser prompt written
notice of such event together with an estimate of the cost and time to restore
prepared by an independent insurance examiner or engineer selected by Seller
Representative and reasonably satisfactory to Purchaser. If the Casualty is a
Material Casualty, then this Agreement shall remain in full force and effect
(provided that the occurrence of such Material Casualty shall not be deemed to
cause a breach of any provisions of this Agreement) and on the Closing either,
(A) Purchaser shall be entitled to any insurance proceeds payable to such Seller
on account of such Casualty as well as the amount of any policy deductibles
applicable to such Seller’s insurance, less such sums, if any, as shall have
been actually and reasonably incurred by such Seller or expended by such Seller
in connection with the repair or restoration of such Casualty or the prosecution
of such claim, or (B) Purchaser shall have the right to not close on the
applicable Property and the Aggregate Purchase Price shall be reduced by the
applicable Property Purchase Price , and the portion of the Deposit attributable
to such Property shall be returned to Purchaser.

 

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(ii)         As used herein, a “Material Casualty” shall mean a Casualty which
(a) the cost of repairs and/or restoration are reasonably estimated to exceed
$125,000 per Facility, (b) adversely affects access to, egress from or operation
of such Property, (c) reduces the number of residential beds in such Property by
five percent (5%) or more, (d) materially reduces the common areas or amenity
space at such Property or results in Purchaser not being able to operate the
Property as an integrated economically viable whole, or (e) results in such
Property being in violation of any applicable law or any Contract.

 

18.         Limited Warranties; Disclaimer.

 

(a)          Limited Warranties. Notwithstanding anything to the contrary
contained in this Agreement, the purchase, sale and conveyance of the Properties
shall be made with the limited warranties from Sellers to Purchaser contained in
Section 7 of this Agreement and the documents to be delivered by Sellers at
Closing.

 

(b)          Disclaimer. Purchaser agrees that, except as and to the extent
provided in the representations and warranties contained in Section 7 of this
Agreement or in the documents to be delivered by Sellers at Closing, Purchaser
is purchasing the Properties in “AS IS”, “WHERE IS”, “WITH ALL FAULTS”
condition, and without any other warranties, representations or guarantees,
either express or implied, of any kind, nature, or type whatsoever from, or on
behalf of, Sellers.

 

(i)          Except as and to the extent provided in the representations and
warranties contained in Section 7 of this Agreement and in the documents to be
delivered by Sellers at Closing, each of the Seller Parties and their
Affiliates, and its and their officers, directors, employees and agents,
expressly disclaims, has not made, will not make, and does not make, any
warranties or representations, express or implied, with respect to the
Properties or any portion thereof, the physical condition or repair or disrepair
thereof (whether patent or latent), the value, profitability or marketability
thereof or the title thereto, or of any of the appurtenances, facilities or
equipment thereon;

 

(ii)         Except as and to the extent provided in the representations and
warranties contained in Section 7 of this Agreement and in the documents to be
delivered by Sellers at Closing, each of Seller Parties and their Affiliates,
and its and their officers, directors, employees and agents, expressly
disclaims, has not made, will not, and does not, make, any warranties, express
or implied, of merchantability, habitability or fitness for a particular use;

 

(iii)        Purchaser has not relied upon any statement or representation by or
on behalf of Sellers unless such statement or representation is specifically set
forth in Section 7 of this Agreement or in the documents to be delivered by
Seller Parties at Closing;

 

(iv)        As of the date hereof and through the end of the Due Diligence
Period, Purchaser has made and will make such legal, factual and other inquiries
and investigations as Purchaser has deemed necessary, desirable or appropriate
with respect to the Properties and the value and marketability thereof and of
the appurtenances, facilities and equipment thereof. Such inquiries and
investigations of Purchaser are hereby deemed to include, without limitation,
the physical components of all portions of the Improvements, the condition of

 

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repair of the Property or any portion thereof, such state of facts as a current
title report and/or an accurate survey, environmental examinations, and flood
plain examinations would show or disclose, and the present and future zoning,
ordinances, resolutions and regulations of the city, county and state where the
Improvements are located.

 

(c)          Except as specifically set forth in Section 7 of this Agreement or
in the documents to be executed and delivered by Seller Parties at Closing, each
of Seller Parties and their Affiliates, and its and their officers, directors,
members, managers, partners, principals, employees and agents, expressly
disclaims, has not made, will not make, and does not make, any warranties or
representations, express or implied, that relate to, arise out of or with
respect to (1) Purchaser’s ability, or inability, to obtain or maintain
temporary or final certificates of occupancy or other licenses for the use or
operation of the Improvements, and/or certificates of compliance for the
Improvements, (2) the actual or potential income, or profits, to be derived from
the Properties, (3) the real estate, or other, taxes or special assessments, now
or hereafter payable on account of, or with respect to, the Properties, (4)
Purchaser’s ability or inability to demolish the Improvements or otherwise
develop the Properties, (5) the environmental condition of the Properties, (6)
the fitness of the Properties for a particular purpose, or (7) any other matter
relating to the Properties.

 

(d)          Neither this Section 18 nor any other provision of this Agreement
shall be deemed to excuse or otherwise limit Purchaser’s recourse against Seller
in the event of any fraud by any Seller Party.

 

19.         General Provisions.

 

(a)          Entire Agreement. This Agreement and exhibits hereto constitute the
entire agreement of Seller Parties and Purchaser with respect to sale of the
Properties and supersedes all prior or contemporaneous written or oral
agreements, whether express or implied, related to the subject matter hereof.

 

(b)          Amendments. This Agreement may be amended only by a written
agreement executed and delivered by Seller Representative and Purchaser.

 

(c)          Waivers. No waiver of any provision or condition of, or default
under, this Agreement by any party shall be valid unless in writing signed by
such party. No such waiver shall be taken as a waiver of any other or similar
provision or of any future event, act, or default.

 

(d)          Time. Time is of the essence of this Agreement. In the computation
of any period of time provided for in this Agreement or by law, the day of the
act or event from which the period of time runs shall be excluded, and the last
day of such period shall be included, unless it is not a Business Day, in which
case it shall run to the next day which is a Business Day.

 

(e)          Assignment. This Agreement may not be assigned by Purchaser without
the consent of Seller Representative. A direct or indirect transfer, sale or
assignment of the majority stock interest in a corporate purchaser or the
majority membership interest in a limited liability company purchaser or the
majority or any general partnership interest of a partnership

 

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purchaser shall constitute an assignment of this Agreement, which assignment or
attempted assignment shall be void if made without the written consent of Seller
Representative. Notwithstanding the foregoing, (i) concurrently with Closing,
Purchaser may assign its rights under this Agreement, without the consent of
Seller Representative, to one or more Purchaser Designees, provided that such
Purchaser Designees assume in writing all of the obligations of Purchaser to be
performed under this Agreement in a form reasonably acceptable to Seller
Representative and an original of such fully executed assignment and assumption
agreement is delivered to Seller Representative at least five (5) Business Days
prior to the Closing; (ii) Purchaser may designate (without assigning this
Agreement) one or more Purchaser Designees to take title to one or more of the
Properties at Closing; and (iii) Purchaser may assign certain of its rights
under this Agreement relating to the Personal Property, without the consent of
Seller Representative, to New Operator. Purchaser shall not assign this
Agreement, in whole or in part, or name as a Purchaser Designee, to an entity or
individual which would make any of the statements, representations or warranties
set forth in Section 9 of this Agreement untrue or incorrect in any material
respect. No assignment of this Agreement, in whole or in part, or designation of
a Purchaser Designee, shall relieve Purchaser from any of its obligations set
forth herein arising prior to or after the effective date of the assignment. Any
assignment in violation of this Section shall be null and void and without force
and effect.

 

(f)          Notices. Any notices or other communications permitted or required
to be given hereunder shall be in writing, shall be delivered (i) personally, in
which case notice shall be deemed delivered upon receipt or refusal of delivery,
(ii) by reputable overnight delivery service, in which case notice shall be
deemed delivered on the date of deposit with such courier, or (iii) by fax, in
which case notice shall be deemed delivered upon the mechanical confirmation of
delivery, and shall be addressed to the respective party as set forth in this
subsection (f). Notices on behalf of the respective parties may be given by
their attorneys and such notices shall have the same effect as if in fact
subscribed by the party on whose behalf it is given.

 

To Seller Representative: c/o WCP Investment Manager LLC   40 Danbury Road  
Wilton, CT  06897-4406   Attn: Jordan S. Socaransky & Marc Porosoff, Esq.  
Facsimile: 203-429-8599     with a copy to: Rowan Farber   LifeHouse Health
Services   300 Corporate Pointe, Suite 550   Culver City, CA 90230   Facsimile:
310-388-3061     with a copy to: DLA Piper LLP (US)   500 8th Street, NW  
Washington, DC 20004   Attention: Rick Marks, Esquire   Facsimile: 202-799-5202

 

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With a copy to: Morris, Manning & Martin, LLP   1401 I Street, NW   Suite 600  
Washington, DC  20008   Attention:  Elizabeth A. Karmin  
Facsimile:  202-408-5146     To Purchaser: American Realty Capital Healthcare
Trust Operating Partnership, L.P.   405 Park Avenue   15th Floor   New York,
NY  10022   Attention:  Edward M Weil., Jr.   Facsimile:  212-415-6542

 

with a copy (which will not constitute notice) to:       Jesse Galloway  
American Realty Capital Healthcare Trust Operating Partnership,  L.P.   405 Park
Avenue, 15th Floor   New York, New York 10022   Facsimile:  212-415-6542    
with a copy (which will not constitute notice) to:       Foley & Lardner LLP  
111 North Orange Avenue   Suite 1800   Orlando, Florida  32801   Attention:
Michael A. Okaty   Facsimile: 407-648-1743

 

(g)          Governing Law and Waiver of Jury Trial. This Agreement shall be
governed in all respects by the internal laws of the State of Michigan without
regard to the laws regarding conflicts of laws. The parties hereto waive trial
by jury in any action, proceeding or counterclaim brought by any party against
any other party on any matter arising out of or in any way connected with this
Agreement. Notwithstanding the foregoing, solely to the extent a dispute or
matter involves real estate conveyancing law pertaining to the Properties
located in Illinois, then such matter or dispute shall be governed by the
internal laws of the State of Illinois without regard to the principles of
conflicts of laws.

 

(h)          Counterparts. This Agreement may be executed in any number of
identical counterparts, any or all of which may contain the signatures of less
than all of the parties, and all of which shall be construed together as a
single instrument.

 

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(i)          Construction. Seller Parties and Purchaser agree that each party
and its counsel have reviewed and approved this Agreement, and that any rules of
construction that provide that ambiguities be resolved against the drafting
party shall not be used in the interpretation of this Agreement or any
amendments or exhibits hereto. The words “include”, “including”, “includes” and
any other derivation of “include” means “including, but not limited to” unless
specifically set forth to the contrary. As used in this Agreement, the neuter
shall include the feminine and masculine, the singular shall include the plural,
and the plural shall include the singular, except where expressly provided to
the contrary. The words “herein”, “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
Section, subsection or other subdivision. Headings of sections herein are for
convenience of reference only, and shall not be construed as a part of this
Agreement. Except to the extent expressly provided otherwise in this Agreement,
references to “sections” or “subsections” in this Agreement shall refer to
sections and subsections of this Agreement, and references to “exhibits” in this
Agreement shall mean exhibits attached to this Agreement.

 

(j)           No Recording. Purchaser shall not, and shall not cause or permit
any other person to, record this Agreement or any memorandum or other evidence
thereof in any public records. If Purchaser violates the terms of this
subsection (j), then this Agreement shall be deemed ipso facto terminated.

 

(k)          Public Announcement. Seller Representative and Purchaser agree to
cooperate with each other to make joint and/or coordinated public announcements
disclosing this Agreement and the Transaction contemplated hereby.

 

20.         Interest in Bed of Streets. Title to the Properties shall be
conveyed together with all rights, title and interest, if any, of Sellers in and
to land lying in the bed of any streets, roads, avenues, alleys or passageways,
opened or proposed, bounding or abutting any Property, and all rights, title and
interest of Sellers, if any, in and to any award(s) made or to be made in lieu
thereof and in and to any unpaid award(s) for damage to any Property by reason
of change of grade of any street, and Sellers will execute and deliver to
Purchaser, at Closing, or thereafter, on demand, a quitclaim conveyance of such
titles and the assignment and collection of any such award(s), together with all
rights, title and interest, if any, of Sellers in and to any easements, rights
of way or passageways appurtenant to such Property.

 

21.         Diligence Materials. If Closing is not completed (as to any one or
more Properties) Purchaser shall return to Seller Representative or shall
destroy all applicable plans, maps, descriptions, permits, certifications,
licenses, approvals, environmental audits, and other diligence materials
respecting the applicable Properties (“Diligence Materials”) to the extent such
materials have been provided by or on behalf of Seller, except to the extent
that Purchaser is advised by legal counsel that complying with this provision
would be prohibited by law or regulatory authority. Notwithstanding the
foregoing, Purchaser may keep archived copies of the Diligence Materials (but
expressly excluding any records, including medical records, pertaining to
individual residents at the Properties) in the ordinary course of business in
accordance with Purchaser’s document retention policies. If Closing is not
completed (as to any one or more Properties) for any reason other than Seller’s
default under this Agreement, Purchaser shall deliver to Seller Representative
copies of any Phase I and/or Phase II environmental report, zoning reports,
title reports, surveys, appraisals and/or property condition reports
commissioned

 

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by or on behalf of Purchaser relating to such Properties, without representation
or warranty whatsoever as to the completeness or accuracy thereof, and without
liability for any amounts which Purchaser may owe in connection therewith.

 

22.         Waiver. By proceeding with the Closing, Seller Parties and Purchaser
shall be deemed to have waived, and so covenant to waive, any claims of defaults
or breaches by the other party existing on or as of the Closing Date whether
under this Agreement or any other document or instrument executed by the other
party in connection with the Transaction, of which the waiving party was made
aware by written notice given in accordance with Section 19(f) of this Agreement
from the defaulting or breaching party prior to the Closing Date for which the
other party shall have no liability.

 

23.         Non-compete. Sellers agree that, for a period of two (2) years
following the applicable Closing Date, Sellers shall not have any other direct
or indirect interest whatsoever in, any business enterprise that develops, owns,
operates or manages any facility that is used or intended for use, in whole or
in part, for occupancy as an assisted living facility and that is located within
eight (8) miles of the applicable Properties that were sold on the applicable
Closing Date (the “Restricted Area”); provided, however, that the foregoing
shall not restrict (A) passive investments in securities of a publicly-held
entity, (B) investments of not more than 20% of the equity interests in a
privately-held entity, (C) any new investments in a portfolio of assets where
not more than 25% of such acquired portfolio constitutes senior facilities that
compete with the Properties, (D) investments in debt securities that are secured
by or relate to assets, services, operations or other businesses that compete
with the Properties within the Restricted Area.

 

24.         Facsimile/Electronic Signatures.

 

(a)          The execution of this Agreement and all notices given hereunder and
all amendments hereto, may be effected by facsimile signatures, all of which
shall be treated as originals; provided, however, that the party receiving a
document with a facsimile signature may, by notice to the other, require the
prompt delivery of an original signature to evidence and confirm the delivery of
the facsimile signature. Purchaser and Seller Parties each intend to be bound by
its respective facsimile transmitted signature, and is aware that the other
party will rely thereon, and each party waives any defenses to the enforcement
of the Agreement, and documents, and any notices delivered by facsimile
transmission.

 

(b)          Furthermore, the execution of this Agreement and all amendments
hereto, may be effected by electronic signatures, all of which shall be treated
as originals. Purchaser and Seller Parties each intend to be bound by its
respective electronic transmitted signature, and is aware that the other party
will rely thereon, and each party waives any defenses to the enforcement of the
Agreement, and any amendments delivered by electronic transmission.

 

25.         Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be

 

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affected thereby, and each such term and provision of this Agreement shall be
valid and be enforced to the fullest extent permitted by law.

 

26.         Assumed Liabilities. Except as expressly set forth herein, Purchaser
shall not assume, in connection with the Transaction, any liability or
obligation of Sellers whatsoever, and, to this end, Sellers shall retain
responsibility for all liabilities and obligations accrued or incurred from its
operations prior to Closing and all liabilities and obligations arising from its
operations prior to Closing, whether or not accrued and whether or not
disclosed.

 

27.         Calculation of Time Periods. Unless otherwise specified, in
computing any period of time described herein, the day of the act or event on
which the designated period of time begins to run shall not be included and the
last day of the period so computed shall be included, unless such last day is
not a Business Day, in which event the period shall run until the next day which
is a Business Day.

 

28.         Seller Representative. Each Seller, by signing this Agreement,
designates Seller Representative as the representative of the Sellers for
purposes of this Agreement and all agreements contemplated hereby or delivered
in connection herewith. The Sellers shall be bound by any and all actions taken
by Seller Representative on their behalf. Purchaser shall be entitled to rely
upon any communication or writing given by or to, or executed by, Seller
Representative. All notices to be sent to any Seller pursuant to this Agreement
or any other agreement contemplated hereby or delivered in connection herewith
may be addressed to Seller Representative and any notice so sent shall be deemed
notice to each Seller hereunder. The Sellers hereby consent and agree that
Seller Representative is authorized to accept and deliver notice on behalf of
the Sellers pursuant hereto and pursuant to all other agreements contemplated
hereby or delivered in connection herewith and to deliver waivers and consents
on behalf of the Sellers pursuant hereto. Seller Representative is hereby
appointed and constituted the true and lawful attorney-in-fact of each Seller
with respect to all matters pertaining to this Agreement and the transactions
contemplated hereby, with full power in its name and on its behalf to act
according to the terms of this Agreement and all other agreements contemplated
hereby or delivered in connection herewith in the absolute discretion of Seller
Representative, and to do all things and to perform all acts contemplated by or
deemed advisable in connection with this Agreement and the distribution of the
Aggregate Purchase Price payable to the Sellers. This power of attorney and all
authority hereby conferred is granted in consideration of the mutual covenants
and agreements made herein, and shall be irrevocable and shall not be terminated
by any act of any one or more Sellers, or by operation of law. Each Seller
hereby irrevocably agrees that it shall be bound to the terms of any settlement
of any dispute under this Agreement entered into by Seller Representative.

 

29.         Exculpation. Notwithstanding anything appearing to the contrary in
this Agreement, no direct or indirect partner, member or shareholder of the
Sellers, Seller Representative or Purchaser (or any officer, director, agent,
member, manager, personal representative, trustee or employee of any such direct
or indirect partner, member or shareholder) shall be personally liable for the
performance of the obligations of, or in respect of any claims against, any
Sellers, Seller Representative or Purchaser arising under this Agreement. No
personal judgment shall be sought or obtained against any of the foregoing
(other than Sellers and Purchaser) in connection with this Agreement. In
furtherance of the foregoing, Seller

 

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Representative shall not have any liability or responsibility for any of the
respective Sellers’ obligations under this Agreement or any of the documents
executed and delivered by the Sellers at Closing.

 

30.         Joint and Several Liability. Each Seller shall be jointly and
severally liable for the obligations and liabilities of each and every Seller
under this Agreement.

 

31.         Illinois Bulk Sales Clearances. Seller shall promptly request after
the expiration of the Due Diligence Period, and on or before the Closing Date
Seller shall deliver to Purchaser, a release letter or certificate from the
Illinois Department of Revenue indicating that Purchaser has no obligation to
withhold any amounts from the Purchase Price for the Illinois Properties upon
transfer of such Properties pursuant to Section 902(d) of the Illinois Income
Tax Act, as amended or 35 ILCS 120/5j of the Illinois Compiled Statutes, as
amended, or specifying the holdback amount which will satisfy Purchaser’s
obligations under Section 9.02(d) and 35 ILCS 201/5j (collectively, the “Bulk
Sale Clearances”). If the Bulk Sale Clearances are so delivered and require that
funds be withheld pursuant to the terms thereof, then Purchaser may, at the
Closing, deduct and withhold from the proceeds that are due to Seller the amount
necessary to comply with the withholding requirements imposed by the Bulk Sale
Clearances so received and the related statutes. Purchaser shall deposit the
amounts withheld in escrow with the Escrow Agent, pursuant to an escrow
agreement with terms and conditions reasonably acceptable to Seller and
Purchaser, but in any event complying with the Bulk Sale Clearances so received
and the related statutes. Notwithstanding the foregoing provisions of this
Section 31, in the event the Bulk Sale Clearances are not available at Closing,
at Seller’s option, Seller may either (1) proceed with Closing and provide
Purchaser with an indemnity agreement, in form and substance reasonably
satisfactory to Purchaser, pursuant to which Seller indemnifies Purchaser with
respect to all liabilities which may be imposed upon Purchaser as a result of
not having received one or more Bulk Sale Clearances and the effects of any
statutes related to bulk sales and attendant obligations; provided, that when
the Bulk Sale Clearances are delivered indicating that no assessed but unpaid
tax or penalty is due, then the aforementioned indemnity agreement shall be null
and void or (2) adjourn the Closing for a period not greater than thirty (30)
days until the Bulk Sale Clearances have been received.

 

32.         Purchaser Records Rights. Upon Purchaser’s request, for a period of
one (1) year after Closing, Seller shall make the operating statements and any
and all books, records, correspondence, financial data, leases, delinquency
reports and all other documents and matters maintained by Seller or its agents
and relating to receipts and expenditures reasonably necessary to complete an
audit pertaining to each purchased Facility for the three (3) most recent full
calendar years and the interim period of the current calendar year
(collectively, the “Records”) available to Purchaser for inspection, copying and
audit by Purchaser’s designated accountants, and at Purchaser’s expense. Seller
shall provide Purchaser, but without expense to Seller, with copies of, or
access to, such factual and financial information as may be reasonably requested
by Purchaser or its designated accountants, and in the possession or control of
Seller, to enable Purchaser to file any filings required by the Securities and
Exchange Commission (the “SEC”) in connection with the purchase of each
purchased Facility. Seller understands and acknowledges that Purchaser is
required to file audited financial statements related to the Purchased Property
with the SEC within seventy-one (71) days of the Closing Date and agrees to
provide any records

 

-49-

 

  

on a timely basis to facilitate Purchaser’s timely submission of such audited
financial statements. The provisions of this section shall survive Closing.

 

33.         Exhibits and Schedules. The parties acknowledge that the Applicable
Exhibits and Applicable Schedules (each defined below) have not been attached to
this Agreement as of the Effective Date. The parties shall agree upon the
Applicable Exhibits prior to the Due Diligence Deadline. In addition, Seller
shall deliver to Purchaser the Applicable Schedules within ten (10) Business
Days after the Effective Date. In the event Seller fails to provide to Purchaser
all of the Applicable Schedules within such ten (10) Business Days, then the Due
Diligence Deadline shall be extended, on a day for day basis, for each day after
such ten (10) Business Day period until Seller provides all of the Applicable
Schedules to Purchaser. In addition, in the event the parties have not agreed
upon the Applicable Exhibits prior to the Due Diligence Deadline, which
agreement shall be evidenced by an executed amendment to this Agreement or by
copies of the Applicable Exhibits to be attached hereto initialed by both
Purchaser and Seller Representative, then either party shall have the right to
terminate this Agreement by notice to the other party given prior to the Due
Diligence Deadline. The parties agree to negotiate the Applicable Exhibits in
good faith.

 

The “Applicable Exhibits” are:   Exhibit B Aggregate Purchase Price Allocation
Exhibit B-1 Purchase Price Allocation Exhibit B-2 Deposit Allocation Exhibit G
Certain Purchaser Designees Exhibit J Form of Bridging Documents Exhibit L Form
of Temporary License Agreement Exhibit N Form of Membership Interest Purchase
Agreement Exhibit O Form of Guaranty of New Operator’s Obligations     The
“Applicable Schedules” are: Schedule 3(a) Domain Names included in Intangibles
Schedule 3(b)(iv) Excluded Personal Property Schedule 3(b)(vi) Excluded Computer
Software Schedule 7(a) General Disclosures Schedule 7(a)(vi) Liens on Personal
Property Schedule 7(a)(x) Litigation Schedule 7(a)(xi) Material Contracts
Schedule 7(a)(xii) Rent Roll Schedule 7(a)(xix) Environmental Reports Schedule
7(a)(xxvii) List of Seller’s property and liability insurance and claims
thereunder

 

[Signatures on following pages]

 

-50-

 

  

IN WITNESS WHEREOF, Purchaser has executed this Agreement on the date first
above written.

 

  PURCHASER:       AMERICAN REALTY CAPITAL HEALTHCARE TRUST OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership           By: American Realty
Capital     Healthcare Trust, Inc.,     a Maryland corporation,     its general
partner             By: /s/ Edward M. Weil, Jr.       Name: Edward M. Weil, Jr.
      Title: President

 

 

 

  

IN WITNESS WHEREOF, Seller Parties have executed this Agreement on the date
first above written.

 

  SELLER REPRESENTATIVE:       LIFEHOUSE Holdings, LLC,   a Delaware limited
liability company       By: LifeHouse Investors I, LLC,     a Delaware limited
liability company, its Sole Member       By: /s/ Marc Porosoff   Name:  Marc
Porosoff   Title:    Authorized Signatory       By: /s/ Jordan Socaransky  
Name:  Jordan Socaransky   Title:   Authorized Signatory       SELLERS:      
LEISURE LIVING PROPERTIES - HOLT, LLC,   a Delaware limited liability company  
          By: LifeHouse Holdings, LLC, a Delaware limited liability company, its
Sole Member               By: LifeHouse Investors I, LLC, a Delaware limited
liability company, its Sole Member                           By: /s/ Marc
Porosoff       Name: Marc Porosoff       Title:   Authorized Signatory          
      By: /s/ Jordan Socaransky       Name:  Jordan Socaransky      
Title:    Authorized Signatory

 

 

 

  

  LEISURE LIVING PROPERTIES - DEWITT, LLC,   a Delaware limited liability
company             By: LifeHouse Holdings, LLC, a Delaware limited liability
company, its Sole Member               By: LifeHouse Investors I, LLC, a
Delaware limited liability company, its Sole Member                 By: /s/ Marc
Porosoff       Name: Marc Porosoff         Title:   Authorized Signatory        
          By: /s/ Jordan Socaransky       Name:  Jordan Socaransky        
Title:   Authorized Signatory               LIFEHOUSE CRYSTAL MANOR PROPERTY,
LLC,     a Michigan limited liability company               By: LifeHouse
Holdings, LLC, a Delaware limited liability company, its Sole Member            
    By: LifeHouse Investors I, LLC, a Delaware limited liability company, its
Sole Member                   By: /s/ Marc Porosoff       Name: Marc Porosoff  
      Title:   Authorized Signatory                   By: /s/ Jordan Socaransky
      Name:  Jordan Socaransky         Title:   Authorized Signatory  

 

 

 

 

  LIFEHOUSE WALDON WOODS PROPERTY, LLC,   a Michigan limited liability company  
          By: LifeHouse Holdings, LLC, a Delaware limited liability company, its
Sole Member               By: LifeHouse Investors I, LLC, a Delaware limited
liability company, its Sole Member                 By: /s/ Marc Porosoff      
Name: Marc Porosoff       Title:   Authorized Signatory                 By: /s/
Jordan Socaransky       Name:  Jordan Socaransky       Title:    Authorized
Signatory             LIFEHOUSE - GOLDEN ACRES PROPERTIES, LLC,   a Michigan
limited liability company             By: LifeHouse Holdings, LLC, a Delaware
limited liability company, its Sole Member               By: LifeHouse Investors
I, LLC, a Delaware limited liability company, its Sole Member                
By: /s/ Marc Porosof       Name: Marc Porosoff       Title:   Authorized
Signatory                 By: /s/ Jordan Socaransky       Name:  Jordan
Socaransky       Title:    Authorized Signatory

 

 

 

  

  LIFEHOUSE – GOLDEN ACRES PROPERTIES II, LLC, a Michigan limited liability
company             By: LifeHouse Holdings, LLC, a Delaware limited liability
company, its Sole Member               By: LifeHouse Investors I, LLC, a
Delaware limited liability company, its Sole Member                 By: /s/ Marc
Porosoff       Name: Marc Porosoff       Title:   Authorized Signatory          
      By: /s/ Jordan Socaransky       Name:  Jordan Socaransky      
Title:    Authorized Signatory             LIFEHOUSE GRAND BLANC PROPERTIES,
LLC,   a Michigan limited liability company             By: LifeHouse Holdings,
LLC, a Delaware limited liability company, its Sole Member               By:
LifeHouse Investors I, LLC, a Delaware limited liability company, its Sole
Member                 By: /s/ Marc Porosoff       Name: Marc Porosoff      
Title:   Authorized Signatory                 By: /s/ Jordan Socaransky      
Name:  Jordan Socaransky       Title:    Authorized Signatory

 

 

 

 

  LIFEHOUSE CLARE PROPERTIES, LLC,   a Michigan limited liability company      
      By: LifeHouse Holdings, LLC, a Delaware limited liability company, its
Sole Member               By: LifeHouse Investors I, LLC, a Delaware limited
liability company, its Sole Member                 By: /s/ Marc Porosoff      
Name: Marc Porosoff       Title:   Authorized Signatory                 By: /s/
Jordan Socaransky       Name:  Jordan Socaransky       Title:    Authorized
Signatory             LIFEHOUSE MT. PLEASANT PROPERTIES, LLC,   a Michigan
limited liability company             By: LifeHouse Holdings, LLC, a Delaware
limited liability company, its Sole Member               By: LifeHouse Investors
I, LLC, a Delaware limited liability company, its Sole Member                
By: /s/ Marc Porosoff       Name: Marc Porosoff       Title:   Authorized
Signatory                 By: /s/ Jordan Socaransky       Name:  Jordan
Socaransky       Title:    Authorized Signatory

 

 

 

  

  LIFEHOUSE MT. PLEASANT PROPERTIES II, LLC,   a Michigan limited liability
company             By: LifeHouse Holdings, LLC, a Delaware limited liability
company, its Sole Member               By: LifeHouse Investors I, LLC, a
Delaware limited liability company, its Sole Member                 By: /s/ Marc
Porosoff       Name: Marc Porosoff       Title:   Authorized Signatory          
      By: /s/ Jordan Socaransky       Name:  Jordan Socaransky      
Title:    Authorized Signatory             LIFEHOUSE - OAKRIDGE MANOR DIXON
PROPERTIES, LLC,   an Illinois limited liability company             By:
LifeHouse Holdings, LLC, a Delaware limited liability company, its Sole Member  
            By: LifeHouse Investors I, LLC, a Delaware limited liability
company, its Sole Member                 By: /s/ Marc Porosoff       Name: Marc
Porosoff       Title:   Authorized Signatory                 By: /s/ Jordan
Socaransky       Name:  Jordan Socaransky       Title:    Authorized Signatory

 

 

 

  

  LIFEHOUSE - OAKRIDGE MANOR ROCKFORD PROPERTIES, LLC,   an Illinois limited
liability company             By: LifeHouse Holdings, LLC, a Delaware limited
liability company, its Sole Member               By: LifeHouse Investors I, LLC,
a Delaware limited liability company, its Sole Member                 By: /s/
Marc Porosoff       Name: Marc Porosoff       Title:   Authorized Signatory    
            By: /s/ Jordan Socaransky       Name:  Jordan Socaransky      
Title:    Authorized Signatory             LIFEHOUSE PRESTIGE COMMONS
PROPERTIES, LLC, a Michigan limited liability company             By: LifeHouse
Holdings, LLC, a Delaware limited liability company, its Sole Member            
  By: LifeHouse Investors I, LLC, a Delaware limited liability company, its Sole
Member                 By: /s/ Marc Porosoff       Name: Marc Porosoff      
Title:   Authorized Signatory                 By: /s/ Jordan Socaransky      
Name:  Jordan Socaransky       Title:    Authorized Signatory

 

 

 

  

  LEISURE LIVING PROPERTIES – BUCHANAN, LLC,   a Michigan limited liability
company             By: LifeHouse Holdings, LLC, a Delaware limited liability
company, its Sole Member               By: LifeHouse Investors I, LLC, a
Delaware limited liability company, its Sole Member                 By: /s/ Marc
Porosoff       Name: Marc Porosoff       Title:   Authorized Signatory          
      By: /s/ Jordan Socaransky       Name:  Jordan Socaransky      
Title:    Authorized Signatory             LIFEHOUSE BUCHANAN PROPERTY-II, LLC,
  a Michigan limited liability company             By: LifeHouse Holdings, LLC,
a Delaware limited liability company, its Sole Member               By:
LifeHouse Investors I, LLC, a Delaware limited liability company, its Sole
Member                 By: /s/ Marc Porosoff       Name: Marc Porosoff      
Title:   Authorized Signatory                 By: /s/ Jordan Socaransky      
Name:  Jordan Socaransky       Title:    Authorized Signatory

 

 

 

  

  LEISURE LIVING PROPERTIES – GRAND RAPIDS, LLC, a Michigan limited liability
company             By: LifeHouse Holdings, LLC, a Delaware limited liability
company, its Sole Member               By: LifeHouse Investors I, LLC, a
Delaware limited liability company, its Sole Member                 By: /s/ Marc
Porosoff       Name: Marc Porosoff       Title:   Authorized Signatory          
      By: /s/ Jordan Socaransky       Name:  Jordan Socaransky      
Title:    Authorized Signatory             LEISURE LIVING PROPERTIES – HOLLAND,
LLC, a Michigan limited liability company             By: LifeHouse Holdings,
LLC, a Delaware limited liability company, its Sole Member               By:
LifeHouse Investors I, LLC, a Delaware limited liability company, its Sole
Member                 By: /s/ Marc Porosoff       Name: Marc Porosoff      
Title:   Authorized Signatory                 By: /s/ Jordan Socaransky      
Name:  Jordan Socaransky       Title:    Authorized Signatory

 

 

 

  

ACCEPTANCE AND APPROVAL BY ESCROW AGENT

 

Escrow Agent hereby (i) acknowledges receipt of a fully executed copy or
counterpart copies of the foregoing Agreement on this 17th day of June, 2014,
and (ii) agrees to establish an escrow and act as the Escrow Agent in accordance
with the provisions of the Agreement. Escrow Agent further agrees to deliver
immediately to Purchaser and Seller Representative fully executed copies of the
Agreement.

 

  STEWART TITLE GUARANTY COMPANY         By: /s/ Annette M. Comer   Name:
Annette M. Comer   Title: Vice President

 

Escrow Agent and

Address for Notices:

 

Wire Transfer Information: Bank Name: Wells Fargo Bank, N.A.   Bank Address: 420
Montgomery Street     San Francisco, CA 94101-1205         ABA #: 121 000 248  
For credit to the     Account of: Stewart Title Guaranty Company     National
Title Service – Boston         Account No.: 412166 5830   ATTN: Amy Wright      
  Reference:  

 

 

 

  

Exhibits and Schedules to the Agreement

 

Exhibit A Description of Land Exhibit B Aggregate Purchase Price Allocation
Exhibit B-1 Purchase Price Allocation Exhibit B-2 Deposit Allocation Exhibit C-1
Form of Deed for Michigan Property Exhibit C-2 Form of Deed for Illinois
Property Exhibit D FIRPTA Affidavit Exhibit E Form of Assignment of Contracts
Exhibit F Form of Owner’s Affidavit Exhibit G Certain Purchaser Designees
Exhibit H Form of Assignment of Residency Agreements Exhibit I Form of Bill of
Sale and General Assignment Exhibit J Form of Bridging Documents Exhibit K Form
of Post-Closing Escrow Agreement for Seller Escrow Exhibit L Form of Temporary
License Agreement Exhibit M [Reserved] Exhibit N Form of Membership Interest
Purchase Agreement Exhibit O Form of Guaranty of New Operator’s Obligations    
Schedule 3(a) Domain Names included in Intangibles Schedule 3(b)(iv) Excluded
Personal Property Schedule 3(b)(vi) Excluded Computer Software Schedule 7(a)
General Disclosures Schedule 7(a)(vi) Liens on Personal Property Schedule
7(a)(x) Litigation Schedule 7(a)(xi) Material Contracts Schedule 7(a)(xii) Rent
Roll Schedule 7(a)(xix) Environmental Reports Schedule 7(a)(xxvii) List of
Seller’s property and liability insurance and claims thereunder

 

Exhibits and Schedules

 

  

EXHIBIT A

 

DESCRIPTION OF LAND

 

 

 

  

EXHIBIT "A-01"

 

LEISURE LIVING PROPERTIES - HOLT, LLC

 

That part of the Northwest 1/4 of Section 14, Town 3 North, Range 2 West, Delhi
Township, Ingham County, Michigan, described as: Commencing at the West 1/4
corner of Section 14; thence South 89 degrees 43 minutes 30 seconds East,
2015.58 feet along the East-West1/41ine of Section 14 to the point of beginning
of the following described parcel; thence North 00 degrees 20 minutes 30 seconds
East, 640.31 feet; thence South 89 degrees 43 minutes 30 seconds East, 140.70
feet parallel with the East-West 1/4 line of Section 14; thence North 00 degrees
29 minutes 05 seconds East, 175.00 feet; thence North 89 degrees 43 minutes 30
seconds West, 79.55 feet parallel with the East-West 1/4 line of Section 14;
thence North 00 degrees 56 minutes 24 seconds East, 499.52 feet parallel with
the West line of The Park, a subdivision recorded in Liber 35 of Plats, Pages 29
and 30, Ingham County Records, to the North line of the Southeast 1/4 of the
Northwest 1/4 of Section 14; thence South 89 degrees 32 minutes 06 seconds East,
136.00 feet along the North line of the Southeast 1/4 of the Northwest 1/4 of
Section 14 to the West line of The Park; thence South 00 degrees 56 minutes 24
seconds West, 529.68 feet along the West line of The Park, as monumented, to the
Southwest corner of The Park, also being the Northwest corner of NORTH PARK
SUBDIVISION NO.2, a subdivision recorded in Liber 32 of Plats, Pages 45 and 46,
Ingham County Records; thence South 00 degrees 13 minutes 06 seconds West,
784.70 feet along the West line of NORTH PARK SUBDIVISION NO.2, as monumented,
to the East-West 1/4 line of Section 14; thence North 89 degrees 43 minutes 30
seconds West, 198.88 feet along the East-West 1/4 line of Section 14 to the
point of beginning.

 

 

 

  

EXHIBIT "A-02"

 

LEISURE LIVING PROPERTIES - DEWITT, LLC

 

Beginning at the Northwest corner of the Northeast 1/4 of the Southeast 1/4 of
Section 21, Town 5 North, Range 2 West, DeWitt Township, Clinton County,
Michigan, running thence East 49.5 feet; thence South 198 feet; thence East 328
feet; thence South 460 feet; thence West, 377.5 feet to the West line of the
Northeast 1/4 of the Southeast 1/4 of Section 21; thence North 658 feet to the
Point of Beginning. EXCEPT the following: The North 90 feet of a parcel
described as: Beginning at a point 41.5 feet East from the Northwest corner of
the Northeast 1/4 of the Southeast 1/4 of Section 21, Town 5 North, Range 2
West, DeWitt Township, Clinton County, Michigan, at a point which is located on
the center line of Solon Road; thence South 198 feet; thence East 8 feet; thence
North 198 feet; thence West B feet to the point of beginning,

 

Together with the perpetual right of Ingress and egress over the following
parcels of land:

No.1: Beginning at a point 658 feet South of the northwest corner of the
Northeast 1/4 of the Southeast 1/4 of Section 21, Town 5 North, Range 2 West,
and running thence South SO feet; thence East to U.S. Highway 27; thence North
50 feet; thence West to the place of beginning.

No.2: Beginning at a point 198 feet South and 377.5 feet East of the Northwest
corner of the Northeast 1/4 of the Southeast 1/4 of said Section 21; thence
north of the center of Solon Road; thence West 50 feet; thence South 198 feet;
thence East 50 feet to the point of beginning.

 

 

 

  

EXHIBIT "A-03"

 

LIFEHOUSE CRYSTAL MANOR PROPERTY, LLC

 

That part of the Southwest 1/4, Section 5, Town 5 North, Range 11 West, Gaines
Township, Kent County, Michigan, described as: Beginning at a point on the South
line of said Southwest 1/4, which is South 89 degrees 02 minutes 13 seconds West
170.00 feet from the South 1/4 corner of said Section 5; thence South 89 degrees
02 minutes 13 seconds West 161.84 feet along said South line; thence North 00
degrees 32 minutes 51 seconds West 1670.00 feet along the West line of the East
1/8 of said Southwest 1/4; thence North 70 degrees 38 minutes 20 seconds East
348.56 feet; thence South 00 degrees 36 minutes 31 seconds East 1540.00 feet
along the East line of said Southwest 1/4; thence South 89 degrees 02 minutes 13
seconds West 170.00 feet; thence South 00 degrees 36 minutes 31 seconds East
240.00 feet to the place of beginning.

 

 

 

  

EXHIBIT "A-04"

 

LIFEHOUSE WALDON WOODS PROPERTY, LLC

 

Situated in the County of Kent, City of Wyoming, State of Michigan, is described
as follows:

 

PARCEL 1 - Kent County:

That part of the Southeast Quarter of Section 16. Town 6 North, Range 12 West,
City of Wyoming, Kent County, Michigan, described as: Commencing at the
Southeast corner of said Section; thence North 00 degrees 00 minutes East
1334.14 feet, along the East line of said Section; thence South 89 degrees 57
minutes West 962.07 feet, along the South line of the North Half of said
Southeast Quarter to the place of beginning of this description; thence North 19
degrees 00 minutes West 267.52 feet; thence Northerly 85.03 feet, along a 50
foot radius curve to the left, the chord of which bears North 22 degrees 17
minutes East 75.15 feet; thence Northerly 39.13 feet, along a 50 foot radius
curve to the right, the chord of which bears North 04 degrees 00 minutes 51
seconds West 38.14 feet; thence Easterly 370.27 feet, along a 160 foot radius
curve to the right, the chord of which bears North 84 degrees 42 minutes 10
seconds East 293.01 feet; thence Southeasterly 57,86 feet, along a 195.0 foot
radius curve to the left, the chord of which bears South 37 degrees 30 minutes
East 57.65 feet; thence South 44 degrees 00 minutes West 102.28 feet; thence
South 48 degrees 50 minutes East 30.15 feet; thence South 41 degrees10 minutes
West 330.0 feet to the place of beginning.

 

PARCEL 2 - Kent County:

Part of the Southwest Quarter of Section 16, Town 6 North, Range 12 West, City
of Wyoming, Kent County, Michigan. described as: Commencing at the Southeast
corner of said Section; thence North 00 degrees 00 minutes East 1334.14 feet.
along the East line of said Section; thence South 89 degrees 57 minutes West
593.93 feet. along the South line of the North Half of said Southeast Quarter to
the place of beginning of this description; thence South 89 degrees 57 minutes
West 368.14 feet, along said South line; thence North 41 degrees 10 minutes East
330.0 feet; thence North 48 degrees 50 minutes West 30.15 feet; thence North 44
degrees 00 minutes East 102.28 feet; thence Southeasterly 116.44 feet. along the
Southerly line of Waldon Woods Drive (60 feet wide), on a 195.0 foot radius
curve to the left, the chord of which bears South 63 degrees 06 minutes 22
seconds East 114.72 feet; thence South 00 degrees 03 minutes East 289.63 feet to
the place of beginning.

 

PARCEL 3:

That part of Southeast Quarter of Section 16, Town 6 North, Range 12 West, City
of Wyoming, Kent County, Michigan, described as: Commencing at the Southeast
corner of said Section; thence North 00 degrees 00 minutes East 1334.14 feet,
along the East line of said Section; thence South 89 degrees 57 minutes West
272.00 feet, along the South line of the North Half of said Southeast Quarter to
the place of beginning of this description; thence South 89 degrees 57 minutes
West 321.93 feet, along said South line; thence North 00 degrees 03 minutes 00
seconds West 289.63 feet; thence Easterly 86.06 feet, along Southerly line of
Waldon Woods Drive (60

 

 

 

  

feet wide), on a 195.0 food radius curve to the left, the chord of which bears
North 87 degrees 08 minutes 38 seconds East 85.27 feet; thence Easterly 120,38
feet, along said Southerly line on a 445.0 foot radius curve to the right, the
chord of which bears North 82 degrees 15 minutes 00 seconds East 120.02 feet;
thence South 90 degrees 00 minutes East 118.0 feet; thence South 00 degrees 00
minutes West 309.70 feet to the place of beginning.

 

OVERALL PARCEL - Kent County:

That part of the Southeast Quarter of Section 16. Town 6 North, Range 12 West,
City of Wyoming, Kent County, Michigan, described as: Commencing at the
Southeast corner of said Section; thence North 00 degrees 00 minutes East
1334.14 feet, along the East line of said Section; thence South 89 degrees 57
minutes West 272.0 feet, along the South line of the North Half of said
Southeast Quarter to the place of beginning of this description; thence South 89
degrees 57 minutes West 690.07 feet, along said South line; thence North 19
degrees 00 minutes West 267.52 feet; thence Northerly 85.03 feet, along a 50
feet radius curve to the left, the chord of which bears North 22 degrees 17
minutes East 75.15 feet; thence Northerly 39.13 feet, along a 50 foot radius
curve to the right, the chord of which bears North 04 degrees 00 minutes 51
seconds West 38.14 feet; thence Easterly 370.27 feet, along a 160 foot radius
curve to the right, the chord of which bears North 84 degrees 42 minutes 10
seconds East 293.01 feet; thence Easterly 260.36 feet, along a 195 foot radius
curve to the left. the chord of which bears South 67 degrees 15 minutes East
241.45 feet; thence Easterly 120.38 feet. along a 445 foot radius curve to the
right, the chord of which bears North 82 degrees 15 minutes East 120.02 feet;
thence North 90 degrees 00 minutes East 118.0 feet; thence South 00 degrees 00
minutes West 209.79 feet to the place of beginning.

 

 

 

  

EXHIBIT "A-05"

 

LIFEHOUSE - GOLDEN ACRES PROPERTIES, LLC

 

PARCEL 4:

 

The South 1/2 of the South 1/2 of the Northeast 1/4 of the Southwest 1/4 of
Section 33, Town 3 North, Range 15 West.

 

PARCEL 4 (AS SURVEYED)

The South 1/2 of the South 1/2 of the Northeast 1/4 of the Southwest 1/4 of
Section 33, Town 3 North, Range 15 West, Manlius Township, Allegan County,
Michigan, being more particularly described as follows; Commencing the South 1/4
Cotner of Section 33 thence N00°11 '17"E, 1319.96 feet along the North-South 1/4
Line of Section 33, to the Point of Beginning of the following described Parcel;
thence N89°48'38"W, 1326.41 feet along the North Line of "Apple View Estates
No.2" as recorded in Liber 12 of Plats, Pages 8-10, Allegan County Records, also
being the South line of the Northeast 1/4 of the Southwest 1/4, of Section 33;
thence N00°05136"E, 331.86 feet along the West line of the Northeast 1/4 of the
Southwest 1/4, of Section 33; thence S89°43'48"E, 1326.96 feet along the North
Line of the South 1/2 of the South 1/2 of the Northeast 1/4 of the Southwest 1/4
of Section 33; thence S00°1 1117"W, 329.99 feet along the North-South 1/4 line
of Section 33 to the Point of Beginning.

 

 

 

  

EXHIBIT "A-06"

 

LIFEHOUSE - GOLDEN ACRES PROPERTIES II, LLC

 

PARCEL 1

 

The north 1/2 of the northwest V4 of the southwest, Section 33 T3N, R15W, except
any portion thereof owned by the C&O Railroad and all lands lying northwesterly
of the C&O Railroad.

 

PARCEL 2

The south 1/2 of the north 1/2 of the northeast 1/4 of the southwest 1/4 of
Section 33, T3N, R15W.

PARCEL 3

 

That part of Section 33, T3N, R15W, described as beginning on the north and
south 1/4 at a point 330.33 feet north 01 degree 44 minutes 03 seconds east 'A
post of the southwest 1/4 ; thence north 88 degrees 10 minutes 57 seconds west
1327.04 feet to the north and south 1/4 line of the southwest 1/4; thence north
01 degree 37 minutes 23 seconds east on said 1/8 line 332.03 feet; thence south
87 degrees 57 minutes 19 seconds east 1327.69 feet to the north and south 1/4
line; thence south 01 degree 44 minutes 03 seconds west on said 1/4 line 330.03
feet to the point of beginning.

 

 

 

  

EXHIBIT "A-07"

 

LIFEHOUSE GRAND BLANC PROPERTIES, LLC

 

Part of the Southwest 1/4 of Section 22, Town 6 North, Range 7 East, Township of
Grand Blanc, Genesee County, Michigan, more particularly described as beginning
at a point on the South line of said Section that is South 88 degrees 33 minutes
30 seconds West, 968.30 feet from the South 1/4 corner of said Section; thence
continuing along said South line, South 88 degrees 33 minutes 30 seconds West,
414.11 feet; thence North 07 degrees 09 minutes 40 seconds East, 301.39 feet;
thence North 88 degrees 33 minutes 30 seconds East, 369.03feet; thence South 01
degrees 26 minutes 30 seconds East, 298.00 feet to the point of beginning.

 

Together with the perpetual right of ingress and egress as set forth in that
certain Easement Agreement for ingress and Egress and the terms conditions and
provisions as recorded In Deed Liber 2551, Page 599.

 

 

 

  

EXHIBIT "A-08"

 

LIFEHOUSE CLARE PROPERTIES, LLC

 

Part of the West 1/2 of the Northwest 1/4 of Section 34, Town 17 North, Range 4
West, City of Clare, County of Clare, State of Michigan, described as beginning
South 00 degrees 08'00" East along the West Section line 1054.30 feet and South
72 degrees 48'00" East, parallel to and 99 feet Northerly of the center line of
the Ann Arbor Railroad, 689.63 feet from the Northwest corner of said Section
34; thence continuing South 72 degrees 48'00" East, parallel to and 99 feet
Northerly of the center line of the Ann Arbor Railroad, 210.39 feet; thence
North 00 degrees 54'26" West, parallel to the West 1/8 line, 362.2.2 feet;
thence West 200.00 feet; thence South 00 degrees 54'26" East, parallel to the
West 1/8 line, 300.00 feet back to the place of beginning.

 

 

 

  

EXHIBIT "A-09"

 

LIFEHOUSE MT. PLEASANT PROPERTIES, LLC

 

PARCEL 1: Union Township, Isabella County, Michigan

 

Part ofthe South 1/2 of the NE 114 of Section 13, Town 14 North, Range 4 West,
described as: Beginning at a point on the East-West 1/4 line which is North 88
degrees 57 minutes 50 seconds West, 961 feet from the East 1/4 corner of said
Section 13; thence North 88 degrees 57 minutes 50 seconds West, 389.0 feet;
thence North 0 degrees 08 minutes East, 250.0 feet; thence South 88 degrees 57
minutes 50 seconds East, 386.69 feet; thence South 0 degrees 23 minutes 50
seconds East, 250.0 feet to the point of beginning.

 

 

 

  

EXHIBIT "A-I0"

 

LIFEHOUSE MT. PLEASANT PROPERTIES II, LLC

 

PARCEL 2: Union Township, Isabella County, Michigan

 

Part of the Northeast 1/4 of Section 13, Town 14 North, Range 4 West, described
as: Beginning at a point on the East-West 1/4 line of said Section 13 which is
North 88 degrees 57 minutes 50 seconds West, 695.00 feet from the East 1/4
corner of said Section 13; thence continuing along said 1/4 line, North 88
degrees 57 minutes 50 seconds West, 266.00 feet; thence North 00 degrees 24
minutes 25 seconds West, 250.00 feet; thence North 88 degrees 57 minutes 24
seconds West, 386.64 feet (previously North 88 degrees 57 minutes 50 seconds
West, 386.69 feet); thence North 00 degrees 08 minutes 06 seconds East, 205.00
feet; thence South 88 degrees 56 minutes 38 seconds Bast, 330.91 feet; thence
North 00 degrees 25 minutes 45 seconds West, 55.85 feet; thence South 88 degrees
56 minutes 38 seconds East, 319.90 feet; thence South 00 degrees 23 minutes 50
seconds East, 510.71 feet to the point of beginning.

 

 

 

  

EXHIBIT "A- 1 1"

 

LIFEHOUSE - OAKRIDGE MANOR DIXON PROPERTIES, LLC

 

Lots 20, 21 and 22 in Independence Courts Phase Two, a Subdivision located in
part of the Southeast X of Section 30, Township 22 North, Range 9 East of the
Fourth Principal Meridian, according to the Plat thereof recorded in the
Recorder's Office of Lee County, Illinois in Book "J" of Plats on Page 14, all
situated in the County of Lee and State of Illinois.

 

 

 

  

EXHIBIT "A-12"

 

LIFEHOUSE OAKRIDGE MANOR ROCKFORD PROPERTIES, LLC

 

PARCEL 1

 

LOT 21 AS DESIGNATED UPON PLAT NO. 4 OF PERRY CREEK CENTRE, BEING A SUBDIVISION
OF LOT 17, PLAT OF PERRY CREEK CENTRE AND A PART OF THE WEST 1/2 OF THE
SOUTHWEST 'A OF SECTION 11, TOWNSHIP 44 NORTH, RANGE 2 EAST OF THE THIRD
PRINCIPAL MERIDIAN, THE PLAT OF WHICH SUBDIVISION IS RECORDED IN BOOK 41 OF
PLATS ON PAGE 69A IN THE RECORDER'S OFFICE OF WINNEBAGO COUNTY, ILLINOIS;
SITUATED IN THE COUNTY OF WINNEBAGO AND STATE OF ILLINOIS.

 

 

 

  

EXHIBIT "A-13"

 

LIFEHOUSE - PRESTIGE COMMONS PROPERTIES, LLC

 

Part of the Southwest 1/4 of Section 14, Town 3 North, Range 14 East,
Chesterfield Township, Macomb County, Michigan, and being more particularly
described as follows: Commencing at a point 1237.98 feet North 89 degrees 48
minutes 40 seconds East from the Southwest corner of said Section 14 to the
point of beginning; thence extending North 00 degrees 20 minutes 40 seconds
East, 325.49 feet; thence North 80 degrees 59 minutes 20 seconds West, 85.92
feet; thence North 01 degrees 14 minutes 00 seconds East, 206,22 feet; thence
North 89 degrees 48 minutes 40 seconds East, 208.00 feet; thence along the Salt
River, South 47 degrees 35 minutes 59 seconds East, 407.03 feet and South 01
degrees 34 minutes 55 seconds East, 270,00 feet to the South Section line;
thence South 89 degrees 48 minutes 40 seconds West, 437.56 feet along said line
to the point of beginning.

 

 

 

  

EXHIBIT "A-14"

 

LEISURE LIVING PROPERTIES - BUCHANAN, LLC

 

PARCEL NO.1:

 

That part of the Northwest Quarter of Section 36, Town 7 South, Range 18 West,
described as follows: Commencing at the West Quarter corner of said Section 36,
thence North 89 degrees 44 minutes 49 seconds East along the East and West
Quarter line of said Section 36, a distance of 1923.87 feet to the Southeast
corner of the recorded plat of Parkridge No.1, according to the plat thereof,
recorded in Liber 14 of Plats, page 24, thence North 00 degrees 15 minutes 50
seconds East along the Easterly line of said Plat, 191.30 feet to the true point
of beginning of the land herein described, thence continuing North 00 degrees 15
minutes 50 seconds East along said Easterly plat line 315.60 feet, thence South
89 degrees 47 minutes 47 seconds East 214.00 feet, thence South 00 degrees 15
minutes 50 seconds West 313.88 feet, thence South 89 degrees 44 minutes 49
seconds West 214.01 feet to the point of beginning; TOGETHER WITH a 30 foot wide
easement for ingress and egress parallel, adjacent to and South of the South
line of the above described parcel of land;

ALSO TOGETHER WITH an easement for parking described as follows: Commencing at
the Southeast corner of the above described parcel of land, thence North 00
degrees 15 minutes 50 seconds East 30 feet to the point beginning of this
description, thence continuing North 00 degrees 15 minutes 50 seconds East 89.01
feet, thence North 89 degrees 44 minutes 49 seconds East 71.03 feet, thence
South 00 degrees 15 minutes 50 seconds West 89.01 feet, thence South 89 degrees
44 minutes 49 seconds West 71.03 feet to the point of beginning.

 

PARCEL NO.2:

 

That part of the Northwest Quarter of section 36, Town 7 South, Range 18 West,
described as follows: Commencing at the West Quarter corner of said Section 36,
thence North 89 degrees 44 minutes 49 seconds East along the East and West
Quarter line of said Section 36 a distance of 1923.87 feet to the Southeast
corner of the recorded plat of Parkridge No.1, according to the plat thereof,
recorded in Liber 14 of Plats, page 24, thence North 00 degrees 15 minutes 50
seconds East along the Easterly line of said Plat, 506.90 feet to the true point
of beginning of the land herein described, thence continuing North 00 degrees 15
minutes 50 seconds East along said Easterly plat line 151.94 feet, thence South
89 degrees 47 minutes 47 seconds East

 

 

 

  

213.08 feet, thence South 00 degrees 05 minutes 05 seconds East 151.94 feet,
thence North 89 degrees 47 minutes 47 seconds West 214.00 feet to the point of
beginning.

 

 

 

  

EXHIBIT "A-15"

 

LIFEHOUSE BUCHANAN PROPERTY-TI, LLC

 

PARCEL NO.3:

 

That part of the Northwest Quarter of Section 36, Town 7 South, Range 18 West,
described as follows: Commencing at the West Quarter corner of said Section 36,
thence North 89 degrees 44 minutes 49 seconds East along the East and West
Quarter line of said Section 36, a distance of 1923.87 feet to the Southeast
corner of the recorded plat of Parkridge No.1, according to the plat thereof,
recorded in Liber 14 of Plats, page 24, thence North 00 degrees 15 minutes 50
seconds East along the Easterly line of said Plat 191.30 feet, thence North 89
degrees 44 minutes 49 seconds East 214.01 feet to the true point of beginning of
the land herein described, thence North 00 degrees 15 minutes 50 seconds East
313.88 feet, thence South 89 degrees 47 minutes 47 seconds East 197.69 feet,
thence South 00 degrees 22 minutes 41 seconds West 312.31 feet, thence South 89
degrees 44 minutes 49 seconds West 197.01 feet to the point of beginning;
TOGETHER WITH 30 foot wide easement for ingress and egress parallel, adjacent to
and South of the South line of the above described parcel of land.

 

PARCEL NO.4:

 

That part of the Northwest Quarter of section 36, Town 7 South, Range 18 West,
described as follows: Commencing at the West Quarter corner of said Section 36,
thence North 89 degrees 44 minutes 49 seconds East along the East and West
Quarter line of said Section 36, a distance of 1923.87 feet to the Southeast
corner of the recorded plat of Parkridge No.1, according to the plat thereof,
recorded in Liber 14 of Plats, page 24, thence North 00 degrees 15 minutes 50
seconds East along the Easterly line of said Plat, 161.30 feet, thence North 89
degrees 44 minutes 49 seconds East 411.02 feet, thence North 00 degrees 22
minutes 41 seconds East 342.31 feet to the true point of beginning of the land
herein described, thence North 89 degrees 47 minutes 47 seconds West 197.69
feet, thence North 00 degrees 05 minutes 05 seconds West 151.94 feet, thence
North 75 degrees 20 minutes 11 seconds East 205.97 feet, thence South 00 degrees
22 minutes 41 seconds West 204.79 feet to the point of beginning.

 

 

 

  

EXHIBIT "A-16"

 

LEISURE LIVING PROPERTIES - GRAND RAPIDS, LLC

 

PARCEL 1: That part of the South 1/2 of the Northeast Y4 of Section 11, Town 6
North, Range 11 West, City of Grand Rapids, Kent County, Michigan, described as:
Commencing on the East Section line North 00 degrees 00 minutes East, 1113.23
feet from the East 1/4 corner of said Section 11, said place of commencing being
South 00 degrees 00 minutes West, 207.70 feet from the Northeast corner of said
South 1/2 of the Northeast 1/4; thence North 87 degrees 34 minutes West, 303.84
feet along the South line of the North 207.70 feet of said South 1/2 of the
Northeast 1/4; thence South 03 degrees 56 minutes West, 20.00 feet; thence South
17 degrees 14 minutes 58 seconds West, 23.02 feet to the point of beginning;
thence South 17 degrees 14 minutes 58 seconds West, 144.22 feet; thence South 00
degrees 00 minutes West, 238.17 feet; thence North 87 degrees 34 minutes West,
261.15 feet along the South line of the North 627.70 feet of said South 1/2 of
the Northeast 1/4; thence North 02 degrees 26 minutes East, 242.36 feet; thence
South 89 degrees 37 minutes 52 seconds West, 257.57 feet; thence Southwesterly
51.49 feet on a 59.0 foot radius curve to the left, the chord of which bears
South 64 degrees 37 minutes 52 seconds West, 49.89 feet; thence South 39 degrees
37 minutes 52 seconds West, 141.00 feet; thence Southwesterly 52.31 feet on an
88.00 foot radius curve to the right, the chord of which bears South 56 degrees
39 minutes 37 seconds West, 51.54 feet; thence Southwesterly 92.02 feet on a
50.0 foot radius curve to the right, the chord of which bears South 30 degrees
54 minutes 19 seconds West, 79.57 feet; thence North 06 degrees 22 minutes 08
seconds West, 60.00 feet; thence Southwesterly 84.36 feet on a 560.00 foot
radius curve to the left, the chord of which bears South 79 degrees 18 minutes
56 seconds West, 84.28 feet; thence North 02 degrees 26 minutes East, 360.00
feet; thence North 87 degrees 34 minutes West, 785.94 feet; thence North 26
degrees 04 minutes West, 93.65 feet along the Easterly line of Rowland Drive (a
60.0 foot wide public street); thence Northwesterly 74.61 feet along the
Easterly line of Rowland Drive on a 150.00 foot radius curve to the right, the
chord of which bears North 11 degrees 49 minutes 00 seconds West, 73.85 feet;
thence North 02 degrees 26 minutes East, 79.00 feet along the East line of
Rowland Drive; thence South 87 degrees 34 minutes East, 1706.25 feet along the
North line of said South 1/2 of the Northeast 1/4; thence South 03 degrees 56
minutes West, 227.58 feet; thence South 17 degrees 14 minutes 58 seconds West,
23.02 feet to the point of beginning.

 

PARCEL 2: Subject to and together with the non-exclusive easements contains in
the Easement and Maintenance Agreement dated March 9, 1995 and recorded March
23, 1995 in Liber 3622, Page 1039.

 

PARCEL 3: Also subject to and together with a non-exclusive easement for ingress
and egress described and contained in the Easement dated January 23, 1997 and
recorded January 27, 1997 in Liber 4001, Page 742.

 

 

 

  

PARCEL 4: Together with a non-exclusive easement for ingress and egress and
access to utilities as described and contained in the Easement Agreement dated
May 26, 1981 and recorded May 27, 1981 in Liber 2354, Page 854.

 

 

 

  

EXHIBIT "A-17"

 

LEISURE LIVING PROPERTIES - HOLLAND, LLC

 

The North 11.29 acres of the East 1/2 of the Northwest 1/4 of the Southeast 1/4
of Section 6, Town 4 North, Range 15 West, City of Holland, Allegan County,
Michigan.

 

ALSO DESCRIBED AS: The North 716.0 feet of the East 1/2 of the Northwest 1/4 of
the Southeast 1/4 of Section 6, Town 4 North, Range 15 West, Fillmore Township,
now City of Holland, Allegan County, Michigan. Subject to a right of way for
highway purposes over the North 33 feet thereof.

 

ALSO DESCRIBED AS: That part of the East 1/2 of the Northwest 1/4 of the
Southeast 1/4 of Section 6, Town 4 North, Range 15 West, Fillmore Township, City
of Holland, Allegan County, Michigan, described as: Beginning at the Northeast
corner of the Northwest 1/4 of the Southeast 1/4 of said Section 6; thence South
00 degrees 52 minutes 49 seconds East, 716.00 feet along the East line of said
Northwest 1/4 of the Southeast 1/4; thence North 89 degrees 46 minutes 35
seconds West, 660.83 feet along the South line of the North 716.00 feet of said
East 1/2 of the Northwest 1/4 of the Southeast 1/4; thence North 00 degrees 51
minutes 51 seconds West, 716.00 feet along the West line of said East 1/2 of the
Northwest 1/4 of the Southeast 1/4; thence South 89 degrees 45 minutes 35
seconds East, 660.63 feet along the North line of said Southeast 1/4 to the
point of beginning. Subject to a right of way for highway purposes over the
North 33 feet thereof.

 

 

 

  

EXHIBIT B

 

AGGREGATE PURCHASE PRICE ALLOCATION

 

Exhibit to be completed and attached during Due Diligence Period pursuant to
Section 33.

 

Buchanan Meadows $___________     Crystal Springs $___________     Golden
Orchards $___________     Lakeside Vista $___________     Liberty Court
$___________     Prestige Centre $___________     Prestige Commons $___________
    Prestige Pines $___________     Prestige Place $___________     Prestige
Pointe $___________     Prestige Way $___________     The Atrium $___________  
  Waldon Woods $___________     Whispering Woods $___________     TOTAL
$90,200,000

 

Exhibit B

 

  

EXHIBIT B-1

 

PURCHASE PRICE ALLOCATION

 

Exhibit to be completed and attached during Due Diligence Period pursuant to
Section 33.

 

Buchanan Meadows       Real Estate associated with the Facility:   $__________  
  Furniture Fixtures & Equipment: $__________     Intangible Personal Property:
$__________     Goodwill: $__________     Crystal Springs       Real Estate
associated with the Facility:   $__________     Furniture Fixtures & Equipment:
$__________     Intangible Personal Property: $__________     Goodwill:
$__________     Golden Orchards       Real Estate associated with the
Facility:   $__________     Furniture Fixtures & Equipment: $__________    
Intangible Personal Property: $__________     Goodwill: $__________     Lakeside
Vista       Real Estate associated with the Facility:   $__________    
Furniture Fixtures & Equipment: $__________     Intangible Personal Property:
$__________     Goodwill: $__________

 

Exhibit B-1 – Page 1

 

  

Liberty Court       Real Estate associated with the Facility:   $________    
Furniture Fixtures & Equipment: $________     Intangible Personal Property:
$________     Goodwill: $________     Prestige Centre       Real Estate
associated with the Facility:   $________     Furniture Fixtures & Equipment:
$________     Intangible Personal Property: $________     Goodwill: $________  
  Prestige Commons       Real Estate associated with the Facility:   $________  
  Furniture Fixtures & Equipment: $________     Intangible Personal Property:
$________     Goodwill: $________     Prestige Pines       Real Estate
associated with the Facility:   $________     Furniture Fixtures & Equipment:
$________     Intangible Personal Property: $________     Goodwill: $________  
  Prestige Place       Real Estate associated with the Facility:   $________    
Furniture Fixtures & Equipment: $________     Intangible Personal Property:
$________     Goodwill: $________

 

Exhibit B-1 – Page 2

 

  

Prestige Pointe       Real Estate associated with the Facility:   $________    
Furniture Fixtures & Equipment: $________     Intangible Personal Property:
$________     Goodwill: $________     Prestige Way       Real Estate associated
with the Facility:   $________     Furniture Fixtures & Equipment: $________    
Intangible Personal Property: $________     Goodwill: $________     The Atrium  
    Real Estate associated with the Facility:   $________     Furniture Fixtures
& Equipment: $________     Intangible Personal Property: $________     Goodwill:
$________     Waldon Woods       Real Estate associated with the Facility:  
$________     Furniture Fixtures & Equipment: $________     Intangible Personal
Property: $________     Goodwill: $________     Whispering Woods       Real
Estate associated with the Facility:   $________     Furniture Fixtures &
Equipment: $________     Intangible Personal Property: $________     Goodwill:
$________     TOTAL $90,200,000

 

Exhibit B-1 – Page 3

 

  

EXHIBIT B-2

 

DEPOSIT ALLOCATION

 

Exhibit to be completed and attached during Due Diligence Period pursuant to
Section 33.

 

Buchanan Meadows $________     Crystal Springs $________     Golden Orchards
$________     Lakeside Vista $________     Liberty Court $________     Prestige
Centre $________     Prestige Commons $________     Prestige Pines $________    
Prestige Place $________     Prestige Pointe $________     Prestige Way
$________     The Atrium $________     Waldon Woods $________     Whispering
Woods $________     TOTAL $3,000,000

  

Exhibit B-2 – Page 1

 

 

EXHIBIT C-1

 

FORM OF DEED FOR MICHIGAN PROPERTY

 

COVENANT DEED

 

KNOW ALL MEN BY THESE PRESENTS: This COVENANT DEED is made as of the ____ day of
______________, 20__, by ______________________, a _____________________
(“Grantor”), having an address at c/o ________________________________, in favor
of _______________________________, a __________________________ (“Grantee”),
having an address at c/o __________________________________________.

 

WITNESSETH:

 

That for the full consideration of the sum of ________________________ Dollars
($________________), Grantor does hereby grant, bargain, sell and convey, unto
said Grantee, that certain property located in _________________Michigan, as is
more particularly described in Exhibit A attached hereto and made a part hereof
for all purposes, together with all of Grantor’s right, title and interest in
and to all appurtenances thereof (collectively, the “Property”), subject to the
easements, conditions, encumbrances, restrictions and other matters set forth on
Exhibit B.

 

TO HAVE AND TO HOLD the Property, as aforesaid, unto Grantee, its successors and
assigns, forever; and Grantor covenants with Grantee that Grantor has not
heretofore done, committed or wittingly or willingly suffered to be done or
committed any act, matter, or thing whatsoever, whereby the Property, or any
part thereof, is, or shall or may be charged or encumbered in title, estate or
otherwise, except for the easements, conditions, encumbrances, restrictions and
other matters set forth on Exhibit B.

 

[include the following provisions for unplatted property:

 

This property may be located within the vicinity of farmland or a farm
operation. Generally accepted agricultural and management practices which may
generate noise, dust, odors and other associated conditions may be used and are
protected by the Michigan right to farm act.

 

Grantor grants to Grantee the right to make all divisions under Section 108 of
the Land Division Act, Act No. 288 of the Public Acts of 1967.]

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

Exhibit C-1 – Page 1

 

  

IN WITNESS WHEREOF, Grantor has hereunto set his hand this ______ day of
________________, 2014

 

  GRANTOR       __________, LLC, a ______________ limited liability company    
      By: LifeHOUSE Holdings, LLC, a Delaware     limited liability company, its
sole member           By:       Name:     Title:    Authorized Signatory

 

Exhibit C-1 – Page 2

 

  

STATE OF )   ) SS. COUNTY OF __________________ )

 

Before me, on ________________ 2014, personally appeared
___________________________, as an Authorized Signatory of ____________, LLC, a
________________ limited liability company, the sole member of____________, LLC,
a _____________ limited liability company, who acknowledged that he executed the
same on behalf of and as the act and deed of said company.

 

  _______________________________________________   Print Name:   Notary Public,
__________ County, __________________   Acting in the County of
____________________________   My commission expires:
____________________________

 

This Instrument prepared by:                   When recorded, return to:        
         

 

Exhibit C-1 – Page 3

 

  

EXHIBIT A

 

All that certain piece or parcel of land with the improvements situated thereon,
as shown on a survey entitled, “___________,” more particularly bounded and
described as follows:

 

Address:     Tax Parcel No.:    

 

Exhibit C-1 – Page 4

 

  

EXHIBIT B

 

Easements, Conditions, Encumbrances,

Restrictions and Other Matters

 

Exhibit C-1 – Page 5

 

  

EXHIBIT C-2

 

Prepared by:

______________________

______________________

______________________

 

After Recording Mail To:

_____________________

_____________________

_____________________

 

Mail Tax Bills To:

______________________

This space reserved for Recorder’s use only

______________________

______________________

 

  

SPECIAL WARRANTY DEED

 

This Indenture, made this ___ day of _______________, _____, between
________________________________, a(n) ____________________ created and existing
under and by virtue of the laws of the State of ______________and duly
authorized to transact business in the State of ______________, party of the
first part, and ____________________, a(n) _____________________________, having
an address of _______________________________________, party of the second part,
WITNESSETH, that the party of the first part, for and in consideration of the
sum of Ten and 00/100 Dollars ($10.00) and other good and valuable consideration
in hand paid, by the party of the second part, the receipt of which is hereby
acknowledged, and pursuant to authority of the ______________________, by these
presents does REMISE, RELEASE, ALIENATE AND CONVEY unto the party of the second
part, FOREVER, the real estate described on Exhibit A attached hereto, situated
in the County of ___________ and State of _____________.

 

Together with all and singular hereditaments and appurtenances belonging there,
or in anyway appertaining, and the reversion or reversions, remainder or
remainders, rents, issues and profits thereof, and all the estate, right, title,
interest, claim or demand whatsoever, of the party of the first part, either at
law or in equity of, in and to the above-described premises, with the
hereditaments and appurtenances:

 

TO HAVE AND TO HOLD the said premises as described above, with the
appurtenances, unto the party of the second part, forever.

 

And the party of the first part, for itself and its successors, does covenant,
promise and agree to and with the party of the second part and its successors
that it has not done or suffered to be done, anything whereby the said premises
hereby granted are, or may be, in any manner encumbered or charged, except as
herein recited; and that it WILL WARRANT AND DEFEND, said premises against all
persons lawfully claiming, or to claim the same, by, through or under it,
subject only to those matters described on Exhibit B attached hereto.

 

Exhibit C-2 – Page 1

 

  

IN WITNESS WHEREOF, said party of the first part has caused these presents to be
executed, the day and year first above written.

 

  [INSERT SIGNATURE BLOCK]

 

STATE OF ________ )   ) SS. COUNTY OF _______ )

 

 

I, the undersigned, a Notary Public in and for said County, in the State
aforesaid, CERTIFY THAT___________________________ as ________________________
of ____________________________, a(n) _________________________________,
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person, and acknowledged
that he/she signed, sealed and delivered the instrument pursuant to the
authority given to him/her by said limited liability company as his/her free and
voluntary act and voluntary act of said limited liability company, for the uses
and purposes therein set forth.

 

Given under my hand and notarial seal, this ____ day of ______________, _____.

 

      Notary Public

 

My commission expires on       _______________________  

 

Exhibit C-2 – Page 2

 

  

EXHIBIT A

Legal Description

 

Address: _____________________________________

 

PIN: _________________________________________

 

Exhibit C-2 – Page 3

 

  

EXHIBIT B

Permitted Exceptions

 

Exhibit C-2 – Page 4

 

  

EXHIBIT D

 

CERTIFICATION OF NON-FOREIGN STATUS

 

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S.
real property interest must withhold tax if the transferor is a foreign person.
To inform the transferee that withholding of tax is not required upon the
disposition of a U.S. real property interest by _____________________________,
LLC, a Delaware limited liability company (“Seller”), the undersigned hereby
certifies the following:

 

1.Seller is a “United States Person” and is not a “foreign person” in accordance
with and for the purpose of the provisions of Sections 7701 and 1445 (as may be
amended) of the Internal Revenue Code of 1986 (the “Code”), as amended, and any
regulations promulgated thereunder.

 

2.Seller’s U. S. Employer Identification Number is [________________ ].

 

3.Seller is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii)
of the Code.

 

4.Seller’s office address is [_________________ ].

 

The undersigned and Seller understand that this certification may be disclosed
to the Internal Revenue Service by transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.

 

[Remainder of Page Left Blank/

Signatures on next page]

 

Exhibit D – Page 1 of 2

 

  

Under penalties of perjury, the undersigned declares that it have examined this
certification and to the best of its knowledge and belief it is true, correct
and complete, and the undersigned further declare that it have authority to sign
this document.

 

Dated: ______________, 2014.

  

  ___________, LLC, a ___________ limited liability company         By:
LifeHOUSE Holdings, LLC, a Delaware limited     liability company, its sole
member

 

    By:   Name:   Name:   [Print Name of Witness]   Title: Authorized Signatory

 

Sworn to and subscribed before me this _____ day of ________, 2014, in the state
and county aforesaid.

 

      Notary Public       [Notarial Seal]

 

My Commission Expires:  

 

Exhibit D – Page 2 of 2

 

  

EXHIBIT E

 

FORM OF ASSIGNMENT OF CONTRACTS

 

KNOW ALL MEN that ______________________________ (“Assignor”), in consideration
of Ten and 00/100 ($10.00) Dollars and other good and valuable consideration,
received from _________________________________ (“Assignee”), does hereby
assign, transfer and deliver onto Assignee, all of its right, title and interest
in and to those certain service contracts , leases of furniture, fixtures and
equipment and other agreements relating to the ownership, operation or
maintenance of the premises known as “____________,” (together with all related
written warranties and guaranties, the “Contracts”).

 

TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns, forever,
from and after the date hereof, subject to the terms, covenants, conditions and
provisions contained in the Contracts and subject aforesaid.

 

AND Assignee does hereby acknowledge receipt of the Contracts so delivered, and
does hereby (a) accept the within assignment and (b) assume the performance of
all the terms, covenants and conditions of the Contracts on the Assignor’s part
to be performed thereunder accruing from and after the date hereof.

 

Without limiting the express terms of the Agreement of Sale by and between
Assignor and Assignee dated ________, 2014 this assignment is made without
warranty or representation by Assignor and without recourse to Assignor in any
manner whatsoever, express or implied.

 

Assignor agrees to indemnify, defend and hold Assignee harmless from and against
any and all losses, costs, claims, damages, liabilities and expenses, including,
without limitation, reasonable attorneys’ fees and expenses, accruing prior to
the date hereof with respect to the Contracts.

 

Assignee agrees to indemnify, defend and hold Assignor harmless from and against
any and all losses, costs, claims, damages, liabilities and expenses, including,
without limitation, reasonable attorneys’ fees and expenses, accruing on or
after the date hereof with respect to the Contracts.

 

This assignment and assumption agreement shall inure to the benefit of Assignee
and Assignor and their respective successors and assigns, and shall be governed
by the laws of the State of [Michigan]/[Illinois]. This assignment and
assumption agreement may not be modified, altered or amended, or its terms
waived, except by an instrument in writing signed by the parties hereto.

 

None of the provisions of this instrument are intended to be, nor shall they be
construed to be, for the benefit of any third party.

 

[SIGNATURES ON FOLLOWING PAGE]

 

Exhibit E – Page 1 of 3

 

  

IN WITNESS WHEREOF, Assignor and Assignee have executed this agreement this
_____ day of _______________.

 

  ASSIGNOR       ________, LLC, a ___________ limited liability company        
  By: LifeHOUSE Holdings, LLC, a Delaware limited     liability company, its
sole member             By:       Name:     Title: Authorized Signatory        
  ________, LLC, a __________ limited liability company           By: LifeHOUSE
Holdings, LLC, a Delaware limited     liability company, its sole member        
    By:       Name:     Title: Authorized Signatory

 

Exhibit E – Page 2 of 3

 

 

  ASSIGNEE:       [INSERT PARTY]       By:     Name:   Title:

 

Exhibit E – Page 3 of 3

 

  

EXHIBIT F

 

FORM OF OWNER’S AFFIDAVIT

 

[Subject to such modifications as may be required by title company]

 

The undersigned, a [STATE and FORM OF ENTITY], hereby certifies to
[______________], as agent for [______________] (the “Insurer”) the following:

 

1.          The undersigned is the owner (“Owner”) of certain property (the
“Property”) situated in [________________], described in title commitment No.
________ (the “Title Commitment”) issued by Insurer.

 

2.          The only tenants of the undersigned are tenants under the leases
(the “Leases”) set forth on the rent roll annexed hereto as Exhibit A.

 

3.          During the period of 120 days immediately preceding the date of this
certification no improvements or alterations have been made to the Property by
or on behalf of Owner that have not been paid for (or if unpaid will be paid in
the ordinary course of business) and that no claims against Owner of laborers or
materialmen remain unpaid (or if unpaid will be paid in the ordinary course of
business) for work performed by or on behalf of Owner and that no material
incorporated into the Property by Owner is subject to a security interest (other
than in connection with any mortgage described in the Title Commitment, which
mortgages shall be satisfied on the date of recording of the deed to the
Insured).

 

4.          No proceedings in bankruptcy or receivership have been instituted by
or against Owner which are now pending, nor has the Owner made any assignment
for the benefit of creditors which is in effect as to the Property.

 

5.          Owner agrees not to cause any lien or encumbrance to be filed
against the Property between the date hereof and the earlier of (a) the date the
documents creating the interest being insured pursuant to the Title Commitment
have been filed of record and (b) three (3) days following the date hereof.

 

6.          This certification is made for the purpose of inducing Insurer to
issue its title policy insuring the Property.

 

Dated this _____ day of _______, 2014.

 

[SIGNATURES ON FOLLOWING PAGE]

 

Exhibit F – Page 1 of 2

 

  

IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date
set forth above.

  

  ________, LLC, a _____________ limited liability company         By: LifeHOUSE
Holdings, LLC, a Delaware limited     liability company, its sole member        
    By:       Name:     Title: Authorized Signatory

 

  ________, LLC, a ________________ limited liability company         By:
LifeHOUSE Holdings, LLC, a Delaware limited     liability company, its sole
member             By:       Name:     Title: Authorized Signatory

 

Sworn to and Subscribed before me   on _____/_____/2014      
____________________________________   Notary Public  

 

Exhibit F – Page 2 of 2

 

  

EXHIBIT G

 

CERTAIN PURCHASER DESIGNEES

 

(See Attached)

 

Exhibit to be completed and attached during Due Diligence Period pursuant to
Section 33.

 

Exhibit G – Page 1 of 1

 

  

EXHIBIT H

 

FORM OF ASSIGNMENT OF RESIDENCY AGREEMENTS

 

THIS ASSIGNMENT AND ASSUMPTION OF RESIDENCY AGREEMENTS (this “Assignment
Agreement”) is made and entered into as of this _____ day of __________, 2014
(the “Transfer Date”), by and between ___________________________ (the
“Assignor”), and _____________________________, LLC, a Delaware limited
liability company (the “Assignee”). Each party hereto is referred to
individually as a “Party” and collectively as the “Parties.”

 

BACKGROUND:

WHEREAS, the Assignor and Assignee have entered into that Agreement of Sale
dated as ________, 2014 (the “Agreement of Sale”), providing for, among other
things, the transfer by the Assignor to the Assignee of the memory care facility
identified on Exhibit A hereto (the “Facility”), all upon the terms and
conditions contained in the Settlement Agreement; and

 

WHEREAS, pursuant to the terms of the Agreement of Sale, the Assignor shall
assign to Assignee all of its right, title and interest in and to all “Residency
Agreements” (as defined in the Agreement of Sale).

 

NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Parties hereto, the Parties hereto, intending to be bound,
hereby agree as follows:

 

1.          Assignment. Assignor hereby assigns, transfers and conveys all of
its right, title and interest in, to, and under the Residency Agreements to
Assignee.

 

2.          Assumption. Assignee hereby accepts all of the Assignor’s right,
title and interest in, to, and under the Residency Agreements and assumes all of
the Assignor’s obligations accruing thereunder from and after the Transfer Date.

 

3.          Miscellaneous. Capitalized terms used but not defined in this
Assignment Agreement have the meaning given to them in the Agreement of Sale.
Nothing contained herein is intended to amend, modify or affect the rights and
obligations of the Parties under the Agreement of Sale. This Assignment
Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which, taken together, shall be considered one and the same
instrument. This Assignment Agreement shall be governed by the laws of the State
of [Michigan][Illinois].

 

Exhibit H – Page 1

 

  

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have duly executed this Assignment Agreement on the date first above written.

 

  ASSIGNOR:       ________, LLC, a Delaware limited liability company        
By: LifeHOUSE Holdings, LLC, a Delaware limited     liability company, its sole
member           By:       Name:     Title: Authorized Signatory        
ASSIGNEE:               By:       Name:     Title:

 

Exhibit H – Page 2

 

  

EXHIBIT I

 

FORM OF BILL OF SALE AND GENERAL ASSIGNMENT

 

KNOW ALL MEN that __________________________ (“Assignor”), in consideration of
Ten ($10.00) Dollars and other good and valuable consideration, receipt whereof
is hereby acknowledged from __________________, a _______________ (“Assignee”),
does hereby assign, transfer and deliver unto Assignee, all of its right, title
and interest in and to any and all Personal Property and Intangibles (each as
defined in that certain Agreement of Sale by and between Assignor and Assignee
dated as of ______, 2014 (the “Agreement of Sale”), presently held by Assignor
affecting the premises commonly known as _________, located at
__________________ (the “Premises”).

 

TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns, forever,
from and after the date hereof.

 

Assignor warrants that, except as otherwise expressly provided in the Agreement
of Sale, it is the lawful owner of the Personal Property and Intangibles, that
Assignor has the good and lawful right to sell and convey the Personal Property
and Intangibles, that the Personal Property and Intangibles are free from
encumbrances or rightful claims of others (with the exception of any leased
Personal Property as to which obligations Assignee agrees to assume from and
after the date hereof), and that it will defend Assignee’s title to the Personal
Property and Intangibles against all persons whomsoever, subject as aforesaid.
EXCEPT AS AFORESAID, BUT WITHOUT LIMITING THE EXPRESS TERMS OF THE AGREEMENT OF
SALE, ALL OF THE PERSONAL PROPERTY AND INTANGIBLES ARE USED AND ARE CONVEYED AND
ACCEPTED “AS IS” WITHOUT ANY WARRANTIES OR REPRESENTATIONS OF WHATSOEVER KIND OR
NATURE, INCLUDING, WITHOUT LIMITATION, AS TO MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WHETHER EXPRESS OR IMPLIED, OR WHETHER WRITTEN OR ORAL
CONCERNING ANY AND ALL DEFECTS OF A PHYSICAL NATURE, WHETHER IN MATERIAL OR
WORKMANSHIP, WHETHER OR NOT ANY SUCH DEFECTS WOULD BE VISIBLE AND APPARENT UPON
OWNER’S FULL INSPECTION AND EXAMINATION THEREOF.

 

This assignment agreement shall inure to the benefit of Assignee and its
successors and assigns and shall be governed by the laws of the State of
[Michigan][Illinois]. This assignment agreement may not be modified, altered or
amended, or its terms waived, except by an instrument in writing signed by the
parties hereto.

 

None of the provisions of this instrument are intended to be, nor shall they be
construed to be, for the benefit of any third party.

 

[SIGNATURES ON FOLLOWING PAGE]

 

Exhibit I – Page 1

 

 

IN WITNESS WHEREOF, Assignor has executed this agreement this _____ day of
___________, 2014.

 

  ASSIGNOR [PROPCO]:       ________, LLC, a Delaware limited liability company  
        By: LifeHOUSE Holdings, LLC, a Delaware limited     liability company,
its sole member             By:       Name:     Title: Authorized Signatory    
      ASSIGNOR [OPCO]:       ________, LLC, a Delaware limited liability company
          By: LifeHOUSE Holdings, LLC, a Delaware limited     liability company,
its sole member             By:       Name:     Title: Authorized Signatory    
      ASSIGNEE:               By:       Name:     Title:      

 

Exhibit I – Page 2

 

  

EXHIBIT J

 

FORM OF BRIDGING DOCUMENTS

 

Exhibit to be completed and attached during Due Diligence Period pursuant to
Section 33.

 

Exhibit J – Page 1 of 1

 

  

EXHIBIT K

 

POST-CLOSING ESCROW AGREEMENT

 

THIS POST-CLOSING ESCROW AGREEMENT (this “Agreement”) is entered into as of
___________, 2014 by and among LIFEHOUSE HOLDINGS, LLC, a Delaware limited
liability company (“Seller Representative”), and _____________________, a
_____________________ (“Purchaser”), and Stewart Title Guaranty Company (the
“Escrow Agent”). Seller Representative and Purchaser may each be referred to as
a “Party” and collectively as “Parties” to this Agreement.

 

Recitals:

 

A.           Pursuant to the Agreement of Sale dated as of _______, 2014
(“Purchase Agreement”), by and between Seller Representative, the “Sellers”
party thereto and Purchaser, Sellers are conveying to Purchaser the certain land
and improvements as described on Exhibit A of the Purchase Agreement and by this
reference incorporated herein (the “Properties”). Capitalized terms used but not
defined in this Agreement shall have the meanings ascribed to them in the
Purchase Agreement.

 

B.           The Purchase Agreement requires Sellers to deposit the Escrow Funds
(as defined below) with Escrow Agent in order to ensure that Purchaser will have
a means to recover from Sellers amounts due with respect to successful Claims
under any of Sellers’ representations and warranties, covenants and indemnities
contained in the Purchase Agreement or in any closing document (collectively,
the “Seller Obligations”).

 

C.           Pursuant to Section 15 of the Purchase Agreement, to secure and
facilitate payment of the Seller Obligations, the Escrow Funds are being
deposited in escrow to be held by Escrow Agent as hereinafter provided.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises of the
Parties herein contained, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:

 

1.           Establishment of Escrow; Investment. Seller Representative, on
behalf of Sellers, has deposited with the Escrow Agent, and the Escrow Agent
acknowledges receipt of a portion of the Aggregate Purchase Price equal to
_______________ Dollars ($___,000,000). Such funds shall be held in an
interest-bearing escrow account (the “Escrow Account”) in the name of [Seller
Representative], upon receipt of completed W-9 forms, subject to the terms and
conditions set forth in this Agreement. All amounts held by Escrow Agent from
time to time in the Escrow Account are hereinafter referred to as the “Escrow
Funds.” Unless directed in writing by Seller Representative and Purchaser, and
subject to the following sentence, the Escrow Agent shall invest the Escrow
Funds held in the Escrow Account in one or more of the investments (each
individually, an “Investment,” and collectively, the “Investments”) that
satisfies the definition of “Permitted Investments” set forth on Exhibit B
attached hereto and incorporated herein by this reference. Unless otherwise
directed in writing by Seller Representative and Purchaser, in no event shall
the Escrow Agent invest all or any portion of the

 

Exhibit K – Page 1 of 11

 

  

Escrow Funds in any Investment if the maturity date of such Investment is a date
which is later than the date that is 425 days after the Closing Date under the
Purchase Agreement.

 

2.           Amounts Earned on Escrow Funds; Tax Matters. All amounts earned on
the Escrow Funds (interest, dividends or otherwise), shall become a part of the
Escrow Account and shall be held hereunder upon the same terms as the original
Escrow Funds. The Parties agree that to the extent permitted by applicable law,
including Section 468B(g) of the Internal Revenue Code of 1986, as amended,
Seller will include all amounts earned on the Escrow Funds in its gross income
for federal, state and local income tax purposes and pay any income tax
resulting therefrom.

 

3.           Disbursement of Escrow Funds. The Escrow Funds shall be held by the
Escrow Agent in the Escrow Account and not disbursed until one of the following
events has occurred, in which event the Escrow Agent is authorized and directed
to disburse the Escrow Funds, or a portion thereof, in the manner indicated:

 

(a)          As soon as practicable after receipt of a written direction signed
jointly by Seller Representative and Purchaser, the Escrow Agent is authorized
and directed to disburse such portion of the Escrow Funds as directed in such
joint direction.

 

(b)          As soon as practicable after receipt of a written direction or
order issued by a court of competent jurisdiction, the Escrow Agent is
authorized and directed to disburse the Escrow Funds as provided in such
direction or order.

 

(c)          In accordance with Section 4 of this Agreement.

 

4.           Time Release/ Set Aside Amounts.

 

(a)          Subject to Section 3(a) and 3(b) of this Agreement, on the date
that is 425 days after the Closing Date under the Purchase Agreement (the
“Holdback Survival Date”), Escrow Agent shall pay to Seller, in immediately
available federal funds, within five (5) business days after a request from
Seller an amount equal to the positive difference, if any, between (i)
__________________ Dollars ($__,000,000)[total amount of Holdback Escrow]; minus
(ii) the sum of (x) the aggregate value, as of such date, of all amounts
previously disbursed to Purchaser under Section 3 of this Agreement (the
“Previously Disbursed Amounts”) and (y) the aggregate value, as of such date, of
all Set Aside Amounts (as defined in paragraph (d) below). For Example: if, on
the Holdback Survival Date, the aggregate value of the Previously Disbursed
Amounts, as of such date, is $25,000 and the aggregate value of the Set Aside
Amounts, as of such date, is $100,000, then Escrow Agent shall pay Seller an
amount equal to $_____ (i.e. $_______ - $___________). Escrow Agent shall have
no responsibility to determine the amount of any Set Aside Amounts. If no
Pending Claim is outstanding as of the Holdback Survival Date, then Escrow Agent
shall pay to Seller Representative, in immediately available federal funds, an
amount equal to the entire Escrow Funds less any Previously Disbursed Amounts
within five (5) business days after request from Seller Representative.

 

(b)          At any time or times prior to the Holdback Survival Date, Purchaser
may submit a notice of a Claim with respect to a Property (a “Claim Notice”)
against the Escrow Funds for indemnification or payment pursuant to and in
accordance with the provisions of the

 

Exhibit K – Page 2 of 11

 

  

Purchase Agreement (any Claim that Purchaser may have against Sellers for a
breach of Sellers’ representations and warranties, covenants and indemnities
contained in the Purchase Agreement or in any closing document with respect to
which a Claim Notice has been delivered to Seller Representative prior to the
Holdback Survival Date shall hereinafter be referred to as a “Pending Claim”).
Purchaser shall provide a copy of any Claim Notice to Seller Representative and
the Escrow Agent prior to the Holdback Survival Date, including a
reasonably-detailed description of the nature of the Claim (based on information
then available) and Purchaser’s good-faith and reasonable estimate of the amount
sufficient to pay the Claim in full (together with reasonable expenses and
reserves relating thereto, to the extent such amounts constitute Seller
Obligations) (“Purchaser’s Pending Claim Estimate”). The description on the
Claim Notice shall include Purchaser’s method for calculating Purchaser’s
Pending Claim Estimate. If Seller Representative objects to the amount of
Purchaser’s Pending Claim Estimate, Seller Representative may deliver notice of
the objection to Purchaser and Escrow Agent within ten (10) business days. Such
notice shall include an alternate amount to be withheld for the Pending Claim
(“Seller’s Alternate Estimate”), but shall not be deemed to be an admission of
the validity of the Pending Claim or any obligations on the part of Seller
Representative. If Purchaser objects to the amount of Seller Representative’s
Alternate Estimate, Purchaser may deliver notice of the objection to Seller
Representative and Escrow Agent within five (5) business days. If Purchaser
fails to object to the amount of Seller Representative’s Alternate Estimate
within the required time period set forth above, Purchaser shall be deemed to
have approved Seller Representative’s Alternate Estimate. If Purchaser rejects
Seller Representative’s Alternate Estimate and Seller Representative and
Purchaser cannot agree upon an amount to withhold for the Pending Claim, either
party may submit the dispute to arbitration pursuant to Section 10 of this
Agreement. Whichever of Seller Representative’s Alternative Estimate,
Purchaser’s Pending Claim Estimate, the amount finally determined by arbitration
or such other amount agreed upon by Purchaser and Seller Representative is
approved in accordance with this subsection (b) shall hereinafter be referred to
as the “Claim Estimate”.

 

(d)          If any Pending Claim is outstanding as of the Holdback Survival
Date, an amount equal to the lesser of (i) the then-balance of the Escrow Funds
or (ii) the Claim Estimate (the “Set Aside Amount”) shall continue to be held by
Escrow Agent in accordance with the terms hereof; provided, however, if a
Pending Claim is outstanding as of the Holdback Survival Date for which a Claim
Estimate has not been determined, the then-balance of the Escrow Funds shall
continue to be held by Escrow Agent and shall constitute the “Set Aside Amount.”
In the event Purchaser notifies the Escrow Agent and Seller Representative in
writing that it has made out-of-pocket expenditures in connection with any
Claim, an amount equal to such out-of-pocket expenditures, to the extent such
amounts constitute Seller Obligations, shall be added to and become a part of
the Set Aside Amount. If Escrow Agent receives from Purchaser a written request
for distribution from the Escrow Funds pursuant to this Section 4 (a “Request
for Payment”), and if Purchaser has not already provided a copy of such written
request for distribution to Seller with evidence of such delivery to Escrow
Agent, Escrow Agent shall promptly forward such Request for Payment to Seller
Representative. Unless Escrow Agent receives a written objection from Seller
within ten (10) business days after delivery of such notice to Seller
Representative, Escrow Agent shall within five (5) business days after such ten
business day period release the amount specified in the Request for Payment to
Purchaser. In the event Escrow Agent receives a written objection from Seller
Representative within such ten (10) business day period, Escrow Agent shall hold
such Escrow Funds until (i) receipt by Escrow

 

Exhibit K – Page 3 of 11

 

  

Agent of joint written directions from Purchaser and Seller directing Escrow
Agent to disburse such Escrow Funds to Purchaser or Seller Representative, as
applicable, or (ii) receipt by Escrow Agent of a written direction or order
issued by a court of competent jurisdiction directing Escrow Agent to disburse
such Escrow Funds to Seller Representative or Purchaser, as applicable. The
parties shall have a period expiring sixty (60) days after the Second Survival
Date to resolve any Pending Claim, if the Pending Claim is not resolved during
such time period; the parties agree to promptly submit the dispute to binding
arbitration pursuant to Section 10 of this Agreement.

 

5.           Termination. This Agreement shall continue in effect until all
Escrow Funds have been disbursed in accordance with Section 3 of this Agreement.

 

6.           The Escrow Agent.

 

(a)          There shall be no fees due to Escrow Agent in connection with its
performance of this Agreement. However, if there are any unexpected charges or
expenses due to Escrow Agent in connection with its performance of this
Agreement, such charges or expenses shall be paid one-half (1/2) by Sellers and
one-half (1/2) by Purchaser. The Escrow Agent shall not be liable for any act or
omission to act under this Escrow Agreement, except for its own gross negligence
or willful misconduct. The Escrow Agent may act upon any instrument or signature
believed by it to be genuine and may assume that any person purporting to give
any notice or instruction hereunder, reasonably believed by it to be authorized,
has been duly authorized to do so. The Escrow Agent’s duties shall be determined
only with reference to this Escrow Agreement and applicable laws, and the Escrow
Agent is not charged with knowledge of or any duties or responsibilities in
connection with any other document or agreement.

 

(b)          The Escrow Agent shall have the right at any time to resign
hereunder by giving written notice of its resignation to the Parties hereto, at
least thirty (30) days prior to the date specified for such resignation to take
effect. If the Parties hereto do not designate a successor escrow agent within
said thirty (30) days, the Escrow Agent may appoint a nationally recognized bank
or trust company as successor escrow agent. Upon the effective date of such
resignation, and provided that the successor escrow agent agrees in writing to
be bound by the terms hereof, all cash and other payments and all other property
then held by the Escrow Agent hereunder shall be delivered by it to such
successor escrow agent or as otherwise shall be designated in writing by both
Seller Representative and Purchaser.

 

(c)          In the event that the Escrow Agent should at any time be confronted
with inconsistent or conflicting Claims or demands by the Parties hereto, the
Escrow Agent shall have the right to interplead said Parties in any court of
competent jurisdiction and request that such court determine such respective
rights of the Parties with respect to this Escrow Agreement, and upon doing so,
the Escrow Agent shall be released from any obligations or liability to either
party as a consequence of any Claims or demands.

 

7.           Governing Law. This Agreement shall be governed in all respects by
the internal laws of the State of New York without regard to the laws regarding
conflicts of laws.

 

8.           Notice. Any notice pursuant to this Agreement shall be given in
writing and given (a) by hand, (b) by overnight courier service guaranteeing
next business day delivery postage

 

Exhibit K – Page 4 of 11

 

  

prepaid or U.S. mail postage prepaid, registered or certified with return
receipt requested or (c) by telecopy or facsimile transmission. All notices
shall be delivered as follows:

 

To Seller Representative: c/o ___________ LLC   40 Danbury Road   Wilton,
CT  06897-4406   Attention: Jordan S. Socaransky and Marc Porosoff, Esq.  
Facsimile: 203-429-8599     with a copy to: Rowan Farber   [_______________]  
[_______________]   Facsimile:     with a copy to: DLA Piper LLP (US)   500 8th
Street, NW   Washington, DC 20004   Attention: Rick Marks, Esquire   Facsimile:
202-799-5202     with a copy to: Morris, Manning & Martin, LLP   1401 I Street,
NW   Suite 600   Washington, DC  20005   Attn:  Elizabeth A. Karmin     To
Purchaser: American Realty Capital Healthcare Trust Operating Partnership, L.P.
   Attn: Edward M Weil., Jr.    405 Park Avenue, 15th Floor    New York, New
York 10022     with a copy (which will not constitute notice) to:       Jesse
Galloway   American Realty Capital Healthcare Trust Operating Partnership, L.P.
  405 Park Avenue, 15th Floor   New York, New York 10022     with a copy (which
will not constitute notice) to:       Foley & Lardner LLP   111 North Orange
Avenue   Suite 1800   Orlando, Florida  32801

 

Exhibit K – Page 5 of 11

 

  

  Attention: Michael A. Okaty   Facsimile: 407-648-1743

 

To Escrow Agent:

 

with a copy delivered to Purchaser or to Seller Representative, as applicable.

 

Either party may designate by notice given to the other party a new address to
which notices hereunder shall thereafter be sent. All notices hereunder shall be
deemed to have been delivered (i) upon actual receipt or refusal by the party to
whom intended, or (ii) with respect to any telecopy or facsimile transmission,
when sent subject to receipt of written confirmation.

 

9.           Miscellaneous.

 

(a)          Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any persons or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.

 

(b)          Waiver of Jury Trial. Each party to this Agreement waives trial by
jury in any action, proceeding or counterclaim brought by any party to this
Agreement against any other party to this Agreement on any matter arising out of
or in any way connected with this Agreement.

 

(c)          Interpretation. Paragraph headings shall not be used in construing
this Agreement. Each party acknowledges that such party and its counsel, after
negotiation and consultation, have reviewed and revised this Agreement. As such,
the terms of this Agreement shall be fairly construed and the usual rule of
construction, to the effect that any ambiguities herein should be resolved
against the drafting party, shall not be employed in the interpretation of this
Agreement or any amendments, modifications or exhibits hereto or thereto.

 

(d)          Counterparts and Signatures. This Agreement may be executed and
delivered in any number of counterparts, each of which so executed and delivered
shall be deemed to be an original and all of which shall constitute one and the
same instrument. The Parties stipulate that facsimile signatures to this
Agreement or any amendment hereto shall be treated as originals for all
purposes.

 

10.         Arbitration.

 

(a)          Any dispute with respect to the matters described in Section 4(b)
of this Agreement for which arbitration is expressly provided shall be
determined by binding arbitration proceeding (the “Arbitration Proceeding”)
administered by the American Arbitration Association (“AAA”) under its
Commercial Arbitration Rules and Expedited Procedures, in effect at the time of
the demand for arbitration, provided, however, that to the extent any provision
of this Section modifies, adds to, or is inconsistent with any provisions of
those rules

 

Exhibit K – Page 6 of 11

 

  

and procedures, the provisions of this Section shall control. Arbitration will
be conducted before a single arbitrator in New York, New York (the “Venue”). The
choice of law provisions set forth in Section 7 shall apply in any such
Arbitration Proceeding. Any dispute, disagreement, or controversy arising out of
or relating to this Agreement for which arbitration is not expressly provided as
the means of resolution may be resolved by litigation or by other lawful means.

 

(b)          The party desiring arbitration shall provide written notice in
accordance with the requirements of Section 8 to the other party (the
“Arbitration Notice”) indicating (i) the matter in controversy and (ii) the
name, contact information and professional resume of the proposed arbitrator
meeting the requirements for a qualified and independent arbitrator set forth in
Section 10(c) (“Initial Arbitrator”) to arbitrate such matter in controversy. If
the party receiving the Arbitration Notice rejects the Initial Arbitrator set
forth in the Arbitration Notice it shall object by written notice in accordance
with the requirements of Section 8 (“Objection Notice”) delivered to the other
party within seven (7) business days of the receipt of the Arbitration Notice.
The Objection Notice shall contain the name, contact information and
professional resume of a different arbitrator meeting the requirements for a
qualified and independent arbitrator set forth in Section 10(c) (“Secondary
Arbitrator”) to arbitrate the matter in controversy set forth in the Arbitration
Notice. If the party receiving the Objection Notice rejects the Secondary
Arbitrator, it shall object in writing (“Secondary Objection Notice”) to the
other party within seven (7) business days after the receipt of the Objection
Notice. If neither the Initial Arbitrator nor the Secondary Arbitrator is
accepted by the parties, the party which delivered the Arbitration Notice shall
instruct the Initial Arbitrator and the Secondary Arbitrator to agree, within
five (5) business days after receipt of the Secondary Objection Notice, upon an
arbitrator (“Appointed Arbitrator”) meeting the requirements for a qualified and
independent arbitrator set forth in Section 10(c). If they agree upon an
Appointed Arbitrator who is prepared to act as the Appointed Arbitrator, the
Initial Arbitrator and Secondary Arbitrator shall deliver written notice of the
name, contact information and professional resume of the Appointed Arbitrator to
each party simultaneously. The appointment of the Appointed Arbitrator shall be
a final decision, which shall not be subject to objection by either party,
unless either party to this Agreement within five (5) business days after such
selection of an Appointed Arbitrator, gives written notice in accordance with
the requirements of Section 8 of this Agreement to the other party, in writing,
that such Appointed Arbitrator fails to meet the requirements for a qualified
and independent arbitrator set forth in Section 10(c) and provides specific
information in such written notice as to the reasons why such failure exists.

 

(c)          In the event the Initial Arbitrator and the Secondary Arbitrator
cannot agree on an Appointed Arbitrator or if such appointed Arbitrator is
unwilling to act as the Appointed Arbitrator or if either party objects to the
Appointed Arbitrator within five (5) business days after the selection of such
Appointed Arbitrator, as permitted in this Section 10, then either party may
petition the AAA (or any successor body of similar function) to appoint an
arbitrator within five (5) business days of such petition using the following
criteria: such arbitrator shall be (i) with respect to physical property
matters, a licensed professional engineer or registered architect having at
least ten (10) years’ experience in the design or construction of similar senior
housing facilities, (ii) with respect to financial matters, a partner in a “Big
Four Accounting Firm” with at least ten (10) years’ experience with the type of
matter in dispute, (iii) with respect to property management issues, an
individual who shall have had at least ten (10) years’ experience managing
similar senior housing facilities in the market place for the matter in

 

Exhibit K – Page 7 of 11

 

  

dispute and (iv) be neutral and shall have had no prior notice, information or
discussions concerning such controversy and shall not be employed by or
associated with either party or any Affiliate of either of them, or any of their
respective agents or Affiliates at such time or for the previous ten (10) years.
If the dispute involves more than one type of matter, then the Appointed
Arbitrator may be (v) an individual with expertise in any one of the types of
matters in dispute, or (vi) a retired judge.

 

(d)         The Arbitration Proceedings shall commence fifteen (15) business
days after the engagement or appointment of the appropriate arbitrator pursuant
to this Section 10. The arbitrator shall make a determination within ten (10)
business days after conclusion of the Arbitration Proceeding.

 

(e)          Seller Representative and Purchaser shall each be liable for fifty
percent (50%) of the costs and expenses of an Arbitration Proceeding including
administrative fees and costs, expert fees and the arbitrator’s fees and cost.
Seller Representative and Purchaser shall be responsible for the fees and costs
of its respective legal counsel.

 

(f)          Any arbitrator’s final decision and award shall be in writing,
shall be binding on the parties and shall be non-appealable, and counterpart
copies thereof shall be delivered to both parties. A judgment or order based
upon such award may be entered in any court of competent jurisdiction. All
actions necessary to implement the decision of the arbitrator shall be
undertaken as soon as possible, but in no event later than five (5) business
days after the rendering of such decision.

 

[The Remainder of this Page is Intentionally Left Blank]

 

Exhibit K – Page 8 of 11

 

  

IN WITNESS WHEREOF, the Parties have executed this Post-Closing Escrow Agreement
as of the date first above written.

 

  SELLER REPRESENTATIVE:       LIFEHOUSE HOLDINGS, LLC, a Delaware limited  
liability company             By:       Name:     Title: Authorized Signatory  
        PURCHASER:       American Realty Capital Healthcare Trust Operating
Partnership, L.P,   a Delaware limited partnership             By:       Name:  
  Title: Authorized Signatory           ESCROW AGENT:       [TITLE INSURANCE
COMPANY]           By:     Name:   Title:

 

Exhibit K – Page 9 of 11

 

  

EXHIBIT “A”

 

PROPERTY

 

Exhibit K – Page 10 of 11

 

 

Exhibit B

 

Definition of “Permitted Investments”

 

“Permitted Investments”: Any one or more of the following obligations or
securities payable on demand and having at all times the required ratings, if
any, provided for in this definition, unless each Rating Agency shall have
confirmed in writing to the Servicer that a lower rating would not, in and of
itself, have resulted in the withdrawal, downgrading or qualification of the
ratings initially assigned to the Certificates:

 

(i)          direct obligations of, or guaranteed as to full and timely payment
of principal and interest by, the United States or any agency or instrumentality
thereof provided that such obligations are backed by the full faith and credit
of the United States of America;

 

(ii)         demand and time deposits, or demand notes of; in or certificates of
deposit of, or bankers’ acceptances issued by, any bank or trust company,
savings and loan association or savings bank, provided that the commercial paper
or long-term unsecured debt obligations of such depository institution or trust
company (or in the case of the principal depository institution in a holding
company system, the commercial paper or long-term unsecured debt obligations of
such holding company) have, in the case of commercial paper, a rating of “AAA”;
or

 

(iii)        an interest-bearing Money Market Account at Citibank, N.A.

 

provided, however, that such instrument continues to qualify as a “cash flow
investment” pursuant to Code Section 860G(a)(6) earning a passive return in the
nature of interest and that no instrument or security shall be a Permitted
Investment if (i) such instrument or security evidences a right to receive only
interest payments or (ii) the right to receive principal and interest payments
derived from the underlying investment provides a yield to maturity in excess of
120% of the yield to maturity at par of such underlying investment. The term
“Rating Agency” as used herein means each of Standard & Poor’s Ratings Group, a
division of McGraw Hill, Inc., Moody’s Investors Service, Inc., and Fitch, Inc.

 

Exhibit K – Page 11 of 11

 

  

EXHIBIT L

 

FORM OF TEMPORARY LICENSE AGREEMENT

 

Exhibit to be completed and attached during Due Diligence Period pursuant to
Section 33.

 

Exhibit L – Page 1

 

  

EXHIBIT M

 

[RESERVED]

 

Exhibit M – Page 1

 

  

EXHIBIT N

 

FORM OF MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

Exhibit to be completed and attached during Due Diligence Period pursuant to
Section 33.

 

Exhibit N – Page 1

 

 

EXHIBIT O

 

FORM OF GUARANTY OF NEW OPERATOR’S OBLIGATIONS

 

Exhibit to be completed and attached during Due Diligence Period pursuant to
Section 33.

 

Exhibit N – Page 2

 

  

SCHEDULE 3(a)

 

DOMAIN NAMES INCLUDED

IN INTANGIBLES

 

Schedule to be provided by Seller pursuant to Section 33.

 

Schedule 3(a)

 

  

SCHEDULE 3(b)(iv)

 

EXCLUDED PERSONAL PROPERTY

 

Schedule to be provided by Seller pursuant to Section 33

 

Schedule 3(b)(iv)

 

  

SCHEDULE 3(b)(vi)

 

EXCLUDED COMPUTER SOFTWARE

 

Schedule to be provided by Seller pursuant to Section 33

 

Schedule 3(b)(vi)

 

  

SCHEDULE 7(a)

 

GENERAL DISCLOSURES

 

Schedule to be provided by Seller pursuant to Section 33.

 

Schedule 7(a)

 

  

SCHEDULE 7(a)(vi)

 

LIENS ON PERSONAL PROPERTY

 

Schedule to be provided by Seller pursuant to Section 33

 

Schedule 7(a)(vi)

 

  

SCHEDULE 7(a)(x)

 

LITIGATION

 

Schedule to be provided by Seller pursuant to Section 33

 

Schedule 7(a)(x)

 

  

SCHEDULE 7(a)(xi)

 

MATERIAL CONTRACTS

 

(See Attached)

 

Schedule to be provided by Seller pursuant to Section 33

 

Schedule 7(a)(xi)

 

  

SCHEDULE 7(a)(xii)

 

RENT ROLL

 

(See Attached)

 

Schedule to be provided by Seller pursuant to Section 33

 

Schedule 7(a)(xii)

 

  

SCHEDULE 7(a)(xix)

 

ENVIRONMENTAL REPORTS

 

Schedule to be provided by Seller pursuant to Section 33

 

Schedule 7(a)(xix)

 

  

SCHEDULE 7(a)(xxvii)

 

LIST OF SELLER’S PROPERTY AND LIABILITY INSURANCE
AND CLAIMS THEREUNDER

 

Schedule to be provided by Seller pursuant to Section 33

 

Schedule 7(a)(xxvii)