Exhibit 10.1

EXECUTION COPY

PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
BY AND BETWEEN
THE PARTIES LISTED ON SCHEDULE 1 HERETO
COLLECTIVELY, AS “SELLER”
AND
FOUNTAINS PORTFOLIO OWNER LLC
AS “BUYER”
DATED AS OF FEBRUARY 18, 2015

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TABLE OF CONTENTS
 
 
 
Page

1.
 
Definitions
1

 
1.1
Defined Terms
1

 
1.2
Additional Defined Terms
10

2.
 
Purchase and Sale
12

3.
 
Purchase Price
15

 
3.1
Deposit
15

 
3.2
Closing Payment
16

 
3.3
Independent Contract Consideration
16

 
3.4
All or Nothing Basis
16

 
3.5
Tax Purchase Price Allocation
16

 
3.5
No Adjustment to Purchase Price
17

4.
 
Title to Property
17

 
4.1
Title Insurance
17

 
4.2
Procedure for Approval of Title
17

 
4.3
New Title Matter
19

5.
 
Due Diligence Items
20

6.
 
Inspections
20

7.
 
Escrow
21

 
7.1
Opening of Escrow
21

 
7.2
Closing Date
22

 
7.3
Duties of Escrow Holder
22

8.
 
AS-IS Sale and Purchase
23

 
8.1
Buyer’s Acknowledgment
23

 
8.2
AS-IS
23

 
8.3
No Representations
23

 
8.4
No Implied Warranties
23

 
8.5
Information Supplied by Sellers
24

 
8.6
Assumption/Release
24

 
8.7
Survival
25

9.
 
Sellers’ Representations and Warranties
25

 
9.1
Representations and Warranties
25

 
9.2
Subsequent Changes; Updates to Schedules
32

10.
 
Buyer Representations and Warranties
33

 
10.1
Organization and Authorization
33

 
10.2
No Conflicting Agreements
33

 
10.3
Patriot Act Compliance
33

 
10.4
Funding
33

11.
 
Covenants of Sellers and Buyer
34

 
11.1
Covenants of Sellers
34

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11.2
Covenants of Buyer
38

 
11.3
Licenses and Permits
39

 
11.4
Employees
40

 
11.5
Tax Contests
41

 
11.6
Notices and Filings
42

 
11.7
Access to Information
42

 
11.8
Privacy Laws
43

 
11.9
Further Assurances
43

12.
 
Conditions Precedent to Closing
44

 
12.1
Mutual Conditions Precedent
44

 
12.2
Buyer Closing Conditions
45

 
12.3
Seller Closing Conditions
46

 
12.4
Frustration of Closing Conditions
47

13.
 
Closing
47

 
13.1
Seller Closing Deliveries
47

 
13.2
Buyer’s Closing Deliveries
48

 
13.3
Post-Closing Deliverables
49

14.
 
Costs and Expenses
49

 
14.1
Seller Costs
49

 
14.2
Buyer’s Costs
50

15.
 
Prorations and Adjustments
51

 
15.1
Items to Be Prorated
51

 
15.2
Closing Statement
54

 
15.3
Post-Closing Adjustments
55

 
15.4
Items Not Prorated
55

 
15.5
Survival
55

16.
 
Survival, Indemnification and Release
56

 
16.1
Seller Retained Liabilities
56

 
16.2
Buyer Assumed Liabilities
57

17.
 
Damage or Destruction
60

18.
 
Notices
61

19.
 
Remedies
63

 
19.1
Seller Default
63

 
19.3
Buyer Default
64

 
19.4
LIQUIDATED DAMAGES
64

20.
 
Assignment
65

21.
 
Interpretation and Applicable Law
65

22.
 
Amendment
65

23.
 
Attorneys’ Fees
65

24.
 
Entire Agreement; Survival
66

25.
 
Counterparts
66

26.
 
Time Is of the Essence; Calculation of Time Periods
66

27.
 
Real Estate Commission
66

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28.
 
Severability
67

29.
 
Intentionally Omitted.
67

30.
 
No Option; Binding Effect
67

31.
 
Public Announcements
67

32.
 
No Recording
67

33.
 
Joint and Several Liability of Sellers
67

 
 
 
 
EXHIBITS
 
 
 
Exhibit A
 
Legal Description
 
Exhibit B
 
Form of Deed
 
Exhibit C
 
Form of Bill of Sale
 
Exhibit D
 
Assignment and Assumption Agreement
 
Exhibit E
 
Closing Certificate
 
Exhibit F
 
Intentionally Omitted
 
Exhibit G
 
Intentionally Omitted
 
Exhibit H
 
Escrow Agreement
 
Exhibit I
 
Form of Confirmation Statement
 
Exhibit J
 
Audit Inquiry Letter
 
Exhibit K
 
Signed Representation Letter
 
 
 
 
 
SCHEDULES
 
 
 
Schedule 1
 
Sellers; Communities
 
Schedule 2
 
Management Agreements
 
Schedule 3
 
Excluded Property
 
Schedule 4
 
Required Governmental Approvals
 
Schedule 5
 
Existing Operating Licenses
 
Schedule 6
 
Provider Agreements
 
Schedule 7
 
Home Health Care Agreements
 
Schedule 8
 
Due Diligence Materials in Data Room
 
Schedule 9
 
Entrance Fees
 
Schedule 2.4
 
Personal Property
 
Schedule 2.5
 
Residency Agreements
 
Schedule 2.6
 
Tenant Leases
 
Schedule 2.9
 
Equipment Leases
 
Schedule 3.5
 
Tax Purchase Price Allocations
 
Schedule 4.2
 
Prior Surveys and Commitments
 
Schedule 6.3
 
Required Assumed Contracts
 
Schedule 9.1
 
Disclosure Schedule
 
Schedule 9.1.4
 
Material Contracts
 
Schedule 9.1.9
 
Licenses and Permits
 
Schedule 9.1.18
 
Financial Statements
 
Schedule 11.1.4
 
Form Residency Agreements
 
Schedule 15.1.5
 
Medicare/Medicaid Receivables Payment Schedule
 

iii

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Schedule 15.1.14
 
Accounts Receivable Payment Schedule
 

iv

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PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this
“Agreement”) is made and entered into as of February 18, 2015 (the “Effective
Date”), by and among the parties listed on Schedule 1 attached hereto and made a
part hereof (each individually, a “Seller” and collectively, “Sellers”) and
FOUNTAINS PORTFOLIO OWNER LLC, a Delaware limited liability company (“Buyer”).
Sellers and Buyer are sometimes each individually referred to as a “Party” and
collectively as the “Parties.”
RECITALS:
A.     Each Seller is the respective owner of fee or leasehold title in and to
its respective Property (as hereinafter defined) on each of which is operated
certain senior housing communities (each, individually, a “Community”, and
collectively, the “Communities”) situated on the respective parcels of real
property located at the respective addresses, all as more particularly described
on Schedule 1 attached hereto.
B.    Each of the Communities located at the Properties (as hereinafter defined)
are managed by Watermark Retirement Communities, Inc. (“Manager”) pursuant to
the management agreements described on Schedule 2 attached hereto (individually,
a “Management Agreement” and collectively, the “Management Agreements”).
C.    Subject to the terms and conditions of this Agreement, Buyer agrees to
purchase all of the Properties in their “AS-IS-WHERE-IS AND WITH ALL FAULTS”
condition and further acknowledges that, except as expressly set forth herein,
Sellers have made no representations or warranties to Buyer regarding any of the
Properties or the operation thereof.
D.    Sellers and Buyer now desire to enter into an agreement whereby, subject
to the terms and conditions contained herein, each Seller shall sell its
respective Property to Buyer and Buyer shall purchase all such Property from
Sellers.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and agreements
contained in this Agreement, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Parties hereby agree
as follows:
1.Definitions.
1.1    Defined Terms. In addition to the terms defined above in the introduction
and recitals to this Agreement, the following terms when used in this Agreement
shall have the meanings set forth in this Section 1.1:
“Access and Exclusivity Agreement” means that certain Access and Exclusivity
Agreement dated as of January 22, 2015, as amended, executed by Fountains
Portfolio Owner LLC and Fountains Senior Living Holdings, LLC with respect to
the Property.

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“Additional Deposit” means an amount equal to Ten Million and 00/100 Dollars
($10,000,000.00).
“Affiliate” means, with respect to the Person in question, any other Person
that, directly or indirectly, (i) owns or controls fifty percent (50%) or more
of the outstanding voting and/or equity interests of such Person, or (ii)
controls, is controlled by or is under common control with, the Person in
question. For the purposes of this definition, the term “control” and its
derivations means having the power, directly or indirectly, to direct the
management, policies or general conduct of business of the Person in question,
whether by the ownership of voting securities, contract or otherwise.
“Alternative Transaction Proposal” means, prior to Closing, any proposal or
offer (whether or not in writing) from any person or “group” of persons (within
the meaning of Section 13(d) of the Securities Exchange of 1934), other than
Buyer, regarding any of the following: (a) the acquisition by a third party of
beneficial ownership (as defined in Rule 13d-3 as promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of (or an
interest that currently or with the passage of time or other event is
convertible into or exchangeable or exercisable for) any of the outstanding
voting securities of Sellers, in any one transaction or series of related
transactions, (b) a merger, consolidation, business combination, reorganization,
share exchange, recapitalization or similar transaction or series of related
transactions involving Sellers, (c) a liquidation or dissolution of Sellers or
any of its subsidiaries, or (d) any sale, lease, exchange, transfer, license or
other disposition of the Communities.
“Applicable Law” means (i) all statutes, laws, common law, rules, regulations,
ordinances, codes, resolutions and regulations of any Governmental Authority,
and (ii) any judgment, injunction, order or other similar requirement of any
court or other adjudicatory authority, in effect at the time in question and in
each case to the extent the Person or Property in question is subject to the
same.
“Brokers” means, collectively, Houlihan Lokey Capital, Inc. and Vant·Age Pointe
Capital Management & Advisory, Inc.
“Business” means, with respect to each Community, the senior housing business
and all activities related thereto conducted at such Community, including (i)
the rental or sale (by payment of Entrance Fee) of rooms to Residents, (ii) the
provision of services to Residents, (iii) the rental of any commercial or retail
space to Tenants at the Community, (iv) the maintenance and repair of the Real
Property and tangible Personal Property related to the Community, (v) the
employment of the Community Employees, and (vi) the payment of Taxes.
“Business Day” means any day other than a Saturday, Sunday or federal legal
holiday.
“Buyer Representatives” means Doug Bath and John Ambrosius.

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“Buyer’s Knowledge”, “Buyer’s knowledge”, or any reference to the “knowledge” of
Buyer, or words of similar effect, means the actual present knowledge of any
Buyer Representative after due inquiry of the core Northstar diligence team, and
without any personal liability with respect to any representation, warranty or
other statement made in connection with this Agreement or the transactions
contemplated hereby.
“Closing” means the closing of the transactions contemplated by this Agreement.
“Closing Date” means June 1, 2015; as the same may be extended pursuant to the
terms of this Agreement; provided, however, that if such date (as the same may
be extended pursuant to the terms of this Agreement) falls on or after the
fifteenth (15th) day of any calendar month, then either Party may elect, upon
written notice given to the other, to extend the Closing Date to the first (1st)
Business Day of the immediately following calendar month.
“Compensation” means, with respect to any Employee, all salary and wages which
such Employee is entitled to receive at the time in question, together with all
employment Taxes with respect thereto, including any withholding and employer
contributions required under Applicable Law, but expressly excluding (i) bonus
or incentive compensation; (ii) accrued paid time off; (iii) severance payments,
(iv) health, welfare and other benefits provided to such Employee, and employer
contributions to, and amounts paid or accrued under any such employee benefit
arrangements for the benefit of such Employee; and (v) all other compensation
accrued or payable to such Employee.
“Contracts” means, with respect to each Community, the Equipment Leases, the
Provider Agreements, the Home Health Care Agreements, and Operating Agreements
in effect for such Community, collectively.
“Current Entrance Fee Liabilities” means those Entrance Fee Liabilities as to
which a Trigger Event has occurred as of the date of measurement.
“Cutoff Time” means 11:59 p.m. (local time) on the calendar day immediately
preceding the Closing Date.
“Data Room” means the Project Mavericks data room website hosted by Intralinks.
“Deed” means a special or limited warranty deed (or its equivalent in the
applicable jurisdiction) or assignment of lease, as applicable, substantially in
the form of Exhibit B, (with such modifications as are required in the
applicable jurisdiction) conveying such Seller’s fee title or leasehold title,
as applicable, to the Real Property to Buyer, subject only to the Permitted
Exceptions.

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“Deferred Entrance Fee Liabilities” means those Entrance Fee Liabilities as to
which a Trigger Event has not occurred as of the date of measurement.
“Deposit” means collectively the Initial Deposit and the Additional Deposit and
any additional amounts held by Escrow Holder in connection therewith; provided,
however, that (a) in all circumstances under this Agreement where Seller is
entitled to the Deposit, Seller shall only be entitled to the Initial Deposit
and the Additional Deposit (and not any such additional amounts), and (b) at
Closing only the Initial Deposit and the Additional Deposit (and no such
additional amounts) shall be credited against the Purchase Price.
“Due Diligence Period” means a period commencing on January 22, 2015 and
terminating at 5:00 p.m. (New York time) on March 25, 2015.
“Due Inquiry” solely for purposes of determining “Seller’s Knowledge” as of any
date shall mean that Michael Casey has:
(i)
delivered a copy of the representations and warranties set forth in Section 9
and all related Schedules to David Barnes and David Freshwater;

(ii)
instructed each of Mr. Barnes and Mr. Freshwater to (A) review such
representations and warranties and (B) execute no more than ten (10) Business
Days prior to such date a written statement in the form attached hereto as
Exhibit I (the “Confirmation Statement”), modified as necessary to reflect such
person’s knowledge, (1) confirming that each of the representations and
warranties (as the same may be qualified by the Schedules) is true and correct
as of the date thereof, or (2) identifying those representations and warranties
that, to such person’s knowledge, are not true and correct as of the date of the
Confirmation Statement, and describing in reasonable detail the matter(s) that
cause such representation and warranty to not be true and correct; and

(iii)
promptly (but in any event on or prior to such date) delivered to Buyer copies
of each Confirmation Statement received by Mr. Casey.

“Entrance Fees” means the “entrance fees” paid or payable by a Resident pursuant
to a Residency Agreement, as set forth on Schedule 9 attached hereto (redacted
to the extent necessary to comply with applicable privacy laws and regulations).
“Entrance Fee Liabilities” means all Liabilities of any Seller Entity to refund
the Entrance Fees pursuant to the Residency Agreements, whether arising before
or after the Closing, comprised

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as of Closing of both Current Entrance Fee Liabilities and Deferred Entrance Fee
Liabilities, each of which are identified as such on Schedule 9 hereto.
“Environmental Laws” means all applicable federal, state and local laws,
ordinances, rules and regulations relating to protection of the environment,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. § 9601, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. § 6901, et seq., the Clean Air Act, 42 U.S.C. § 7401, et seq.,
and the Clean Water Act, 33 U.S.C. § 1251, et seq.
“Escrow Holder” means First American Title Insurance Company.
“Excluded Property” means collectively the following tangible and intangible
property, all of which shall not be transferred, assigned or conveyed to Buyer,
and are excluded from each Seller’s Property: (a) the Seller/Manager Proprietary
Marks (except to the extent constituting Intangible Property), (b) signs and
other fixtures and personal property at the Communities that bear any of the
Seller Proprietary Marks, (c) any Seller Entity internal management,
operational, employee and similar manuals, handbooks and publications, (d) the
property described on Schedule 3 (if any), which Sellers shall have the right to
remove from the Properties at or prior to Closing at Seller’s sole cost and
expense, (e) the Licenses and Permits set forth on Schedule 3, as well as the
Licenses and Permits and Residents records, if any, that any Seller is
prohibited by Applicable Law from transferring, (f) personnel records for
Employees who are not Hired Employees and, to the extent the transfer of such
records to Buyer or its Affiliates is prohibited by Applicable Law, for Hired
Employees, (g) Licenses and Permits relating to the sale or provision of
alcoholic beverages at any of the Communities, it being acknowledged and agreed
by Buyer that such Licenses and Permits do not belong to Seller and are not
being transferred to Buyer as part of the Property, (h) funds on deposit in any
bank accounts (including operating or reserve accounts) maintained by or for the
benefit of Sellers, and (i) any fixtures, personal property or intellectual
property owned by (i) the lessor under any Equipment Leases, (ii) the supplier,
vendor, licensor or other party under any Contracts, (iii) the Tenant under any
Tenant Leases, (iv) any Employees, (v) Manager, or (vi) any Residents, guests,
licensees or invitees of the Communities.
“Existing Operating Licenses” means those operating licenses currently in effect
for each of the Communities, as more particularly described on Schedule 5
attached hereto.
“F&B” means all food and non-alcoholic beverages which are located at a Property
(whether opened or unopened), or ordered for future use at such Property as of
Closing, in the Ordinary Course of Business;
“FF&E” means all fixtures (other than those which constitute Improvements),
furniture, furnishings, equipment, machinery, tools, vehicles, appliances, art
work and other items of tangible

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personal property which are located at a Property, or ordered for future use at
such Property as of Closing in the Ordinary Course of Business.
“Governmental Authority” means any federal, state or local government or other
political subdivision thereof, including any Person exercising executive,
legislative, judicial, regulatory or administrative governmental powers or
functions, in each case to the extent the same has jurisdiction over the Person
or Property in question.
“Hazardous Substances” means any toxic or hazardous substance, waste or material
or pollutant or contaminant regulated by any Environmental Law, including
asbestos, petroleum and petroleum-based products, polychlorinated biphenyls,
urea formaldehyde, and radioactive materials.
“Health Care Law” means (i) any and all Applicable Laws relating to health care
or insurance fraud and abuse, including, as applicable, the federal
Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b) and 41 U.S.C. §§ 51-58), the
civil False Claims Act (31 U.S.C. § 3729 et seq.), the Exclusion Laws (42
U.S.C.§§ 1320a-7 and 1320a-7a), the Program Fraud Civil Remedies Act (31 U.S.C.
§§ 3801-3812), the Civil Monetary Penalties Law (42 U.S.C. §§ 1320a and
1320a-7b, and the regulations promulgated pursuant to such statutes; (ii) the
federal Food, Drug & Cosmetic Act (21 U.S.C. §§ 301 et seq.), the Federal Health
Care Fraud Law (18 U.S.C. § 1347) and all federal and state laws, as applicable,
related to pharmacology and dispensing medicines or controlled substances, and
the regulations promulgated thereunder; (iii) any and all Applicable Laws
concerning privacy and data security for patient information, including the
Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. §§
1320d-1329d-8), as amended, and all federal and state laws concerning medical
record retention, privacy, security, patient confidentiality and informed
consent, and the regulations promulgated thereunder; (iv) Medicare (Title XVIII
of the Social Security Act), as amended and the regulations promulgated
thereunder, including, specifically, conditions of participation for skilled
nursing facilities; (v) Medicaid (Title XIX of the Social Security Act) and the
regulations promulgated thereunder; (vi) the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173) and the
regulations promulgated thereunder; (vii) the Patient Protection and Affordable
Care Act (Pub. L. 111-148) as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152); (viii) quality, safety and
accreditation standards and requirements of all Applicable Laws or regulatory
bodies; (ix) Applicable Laws regulating the ownership, operation or licensure of
a health care facility or business, or assets used in connection therewith,
including such Applicable Laws relating to licenses, approvals, certificates,
certificates of need, permits, consents, authorizations and variances required
for the management or operation of skilled nursing facilities, assisted living
facilities, independent living facilities and memory care facilities; (x)
Applicable Laws relating to the provision of management or administrative
services in connection with the practice of a health care profession, employment
of professionals by non-professionals, professional fee splitting, patient
brokering,

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patient or program charges, claims submission, record retention, certificates of
need, certificates of operations and authority; (xi) Applicable Laws with
respect to financial relationships between referral sources and referral
recipients, including, but not limited to the federal Stark Law (42 U.S.C.
1395nn et. seq.) and the regulations promulgated thereunder; and (xii) life
safety codes.
“Home Health Care Agreements” means the agreements identified on Schedule 7
attached hereto.
“Initial Deposit” means an amount equal to Ten Million and 00/100 Dollars
($10,000,000.00).
“Liability” means any claims, suits, liability, obligation, loss, diminution in
value, settlement payments, awards, judgments, fines, penalties, damage,
demands, claims, assessments, deficiencies, cost, charge or expense (including
reasonable attorneys’ fees) of any kind or nature whatsoever, whether accrued or
unaccrued, actual or contingent, known or unknown, foreseen or unforeseen,
including reasonable attorneys’ fees and expenses and court costs. Except and
only to the extent provided in Section 16.3.3 below, in no event shall
“Liability” include any consequential, punitive, exemplary, special, treble or
other forms of multiple or other non-actual damages.
“Management Agreements” means the facility management agreements for each of the
Communities identified on Schedule 2 attached hereto.
“Manager” has the meaning given to it in Recital B above.
“Manager Termination” means an agreement to be executed and delivered by Manager
at Closing in form and substance mutually acceptable to Manager and Sellers (a)
terminating the Management Agreements with respect to Communities that are not
subject to an Interim Bridging Document effective as of the Closing Date, and
(b) releasing Seller Entities from all Liability accrued thereunder.
“Material Contract” means, for any Community, (a) any Contract requiring
aggregate annual payments in excess of Fifty Thousand and no/100 Dollars
($50,000.00) for such Community for any year during the term of such Contract
after Closing and which cannot be terminated upon 90 days’ notice or less, and
(b) the Home Health Care Agreements.
“Non-Disclosure Agreement” means the letter agreement dated September 23, 2014
between Fountains Senior Living Holdings, LLC and Northstar Asset Management
Group, Ltd., the terms of which are incorporated herein by reference and shall
remain in full force and effect notwithstanding any provision contained therein
providing for its termination upon the execution of this Agreement.

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“Ordinary Course of Business” means the ordinary course of business consistent
with each Seller’s and Manager’s past and current custom and practice for the
applicable Business, taking into account the facts and circumstances in
existence from time to time.
“Permitted Exceptions” means (a) any Title Matter approved or deemed approved by
Buyer during the Title Review Period, (b) any New Title Matter approved or
deemed approved by Buyer pursuant to Section 4.3 and (c) all liens and
encumbrances caused or created by Buyer or any person or entity acting on behalf
of Buyer.
“Person” means any natural person, corporation, general or limited partnership,
limited liability company, association, joint venture, trust, estate,
Governmental Authority or other legal entity, in each case whether in its own or
a representative capacity.
“Portfolio” means collectively all of the Properties and the Businesses located
thereon, taken as a whole.
“Provider Agreements” means the Medicare/Medicaid Provider Agreements identified
on Schedule 6 attached hereto.
“Real Property” means collectively the Land, the Improvements and the
Appurtenances.
“Required Governmental Approvals” means the regulatory approvals, consents and
authorizations of Governmental Authorities necessary for each Seller to sell,
and for Buyer to purchase the Communities and operate the Business located
therein from and after Closing in the same manner as is currently operated,
including those approvals, consents and authorizations set forth on Schedule 4
attached hereto.
“Residency Agreement” means each type of residency agreement entered into by and
between a Resident at a Community and the applicable Seller (or by Manager on
behalf of such Seller) pertaining to such Resident’s occupancy at such
Community.
“Resident(s)” means any and all persons occupying the Real Property or any part
thereof pursuant to a Residency Agreement.
“Resident Data” means all individually identifiable personal health, financial
and demographic information relating to individuals residing at the Communities
or receiving services from the Business located therein, including, but not
limited to, “protected health information,” as that term is defined in 45 C.F.R.
§160.103.
“Seller Entity(ies)” means individually or collectively, as the case may be,
Seller, any person or entity acting by or on behalf of Seller (including
Manager), any Affiliate of Seller, and each of

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their respective direct or indirect partners, officers, directors, members,
managers, employees, agents, attorneys, representatives, Affiliates, successors
or assigns of Seller.
“Seller/Manager Proprietary Marks” means the trademarks, trade names,
servicemarks, symbols, logos and other intellectual property rights held by
Manager or its Affiliates or any Seller Entity.
“Sellers’ Knowledge” means the actual present knowledge of Michael Casey, after
Due Inquiry, and without any personal liability with respect to any
representation, warranty or other statement made in connection with this
Agreement or the transactions contemplated hereby. For purposes hereof,
“knowledge” means, the conscious awareness of Mr. Casey at the time in question,
and expressly excludes any constructive, imputed or implied knowledge of Mr.
Casey.

“Sellers’ Possession” means in the possession or control of any officer or
employee of any Seller or Manager (or any of their respective Affiliates);
provided, however, that any reference in this Agreement to Sellers’ Possession
of any documents or materials expressly excludes the possession of any such
documents or materials that (i) are legally privileged or constitute attorney
work product, (ii) are subject to Applicable Law prohibiting their disclosure by
any Seller, or (iii) constitute confidential internal assessments, reports,
studies, memoranda, notes or other correspondence prepared by or on behalf of
any officer or employee of any Seller.
“Supplies” means all china, glassware and silverware, linens, uniforms,
engineering, maintenance, cleaning and housekeeping supplies, soap and other
toiletries, stationery, menus, directories and other printed materials, and all
other similar supplies and materials, which are located at a Property or ordered
for future use at such Property as of Closing in the Ordinary Course of
Business.
“Taxes” means any federal, state, local or foreign, real property, personal
property, sales, use, room, occupancy, ad valorem or similar taxes, assessments,
levies, charges or fees imposed by any Governmental Authority on any Seller with
respect to its Property or its Business, including any interest, penalty or fine
with respect thereto, but expressly excluding any federal, state, local or
foreign income, capital gain, gross receipts, capital stock, franchise, profits,
estate, gift or generation skipping tax, transfer, documentary stamp, recording
or similar tax, levy, charge or fee incurred with respect to the transaction
described in this Agreement.
“Tenants” means all persons or entities occupying any portion of a Property
pursuant to a Tenant Lease.

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“Title Company” means First American Title Insurance Company whose address is
666 Third Avenue, New York, New York 10017; Attention: Brett Habermann and David
Smedley.
“Trigger Event” means an event occurring prior to or during the term of this
Agreement that obligates a Seller to repay the Entrance Fee for any Resident
pursuant to the terms of the applicable Resident Agreement by the end of a fixed
period of time and without the occurrence of any other event.
“WARN Act” means the Workers Adjustment and Retraining Notification Act, 29
U.S.C. §2101, et seq., as well as the rules and regulations thereto, set forth
in 20 CFR 639, et seq., and any similar state and local laws, as amended from
time to time, and any regulations, rules and guidance issued pursuant thereto.
1.2    Additional Defined Terms. In addition to the terms defined in Section
1.1, each of the following terms is defined in the Section set forth opposite
such term:
Term
Section
 
 
“Agreement”
Preamble
“Approval Notice”
Section 6.2
“Appurtenances”
Section 2.2
“Assignment”
Section 20
“Assignment Agreement”
Section 13.1.4
“Assumed Contracts”
Section 6.3
“Assumed Liabilities”
Section 16.2
“Audited Year”
Section 11.1.8
“Books and Records”
Section 2.11
“Buyer”
Preamble
“Buyer Default”
Section 19.2
“Buyer Closing Conditions”
Section 12.2.1
“Buyer Closing Condition Failure”
Section 12.2.2
“Buyer Closing Deliveries”
Section 13.2
“Buyer New Title Matter Objection Notice”
Section 4.3
“Buyer New Title Matter Response Notice”
Section 4.3
“Buyer Representative”
Section 6.1
“Cap”
Section 16.1.2
 “Closing Payment”
Section 3.2
“Closing Statement”
Section 15.2
“Commitment”
Section 4.2
“Community(ies)”
Recital “A”
“Company”
Section 11.1.8
“Contracts Notice”
Section 6.3
“Contract Notice Date”
Section 6.3
“Deductible”
Section 16.1.2

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“Department of Revenue”
Section 11.1.7
“Disclosure Schedule”
Section 9.1
“Due Diligence Items”
Section 5
“Effective Date”
Preamble
“Employees”
Section 9.1.8
“Employer”
Section 9.1.8
“Equipment Leases”
Section 2.9
“Escrow”
Section 7.1
“Escrow Holdback Agreement”
Section 16.1.2
“Estoppel”
Section 11.1.1
“Extended Survival Period”
Section 16.1.2
“Financial Statement”
Section 9.1.18
“FIRPTA”
Section 13.1.5
“Government Sponsored Health Care Program”
Section 9.1.13(a)
“Hired Employees”
Section 11.4.1
“Improvements”
Section 2.3
“Indemnified Party”
Section 16.3.1
“Indemnifying Party”
Section 16.3.1
“Independent Contract Consideration”
Section 3.3
“Inspections”
Section 6.1
“Intangible Property”
Section 2.8
“Interim Bridging Document”
Section 11.3.3
“Internal Revenue Code”
Section 13.1.5
“Land”
Section 2.1
“Licenses and Permits”
Section 2.7
“Licensing Surveys”
Section 9.1.13(c)
“Management Agreement(s)”
Recital “B”
“Manager”
Recital “B”
“Material Casualty”
Section 17.1
“Material Condemnation”
Section 17.2
“Monetary Liens”
Section 4.2
“Mutual Closing Conditions”
Section 12.1.1
“New Contracts and Leases”
Section 11.1.1
“New Operating Licenses”
Section 11.3.1
“New Survey”
Section 4.2
“New Title Matter”
Section 4.3
“NSAM”
Section 20
“OFAC”
Section 9.1.11
“Operating Agreements”
Section 2.10
“Party” and “Parties”
Preamble
“Patriot Act”
Section 9.1.11
“Personal Property”
Section 2.4
“Post-Closing Claim”
Section 16.1.2
“Post-Closing Obligations”
Section 16.1.2
“Post-Closing Plans”
Section 11.4.3
“Post Due Diligence Disclosure”
Section 9.2

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“Prior Survey”
Section 4.2
“Projected CapEx”
Section 3.6
“Property(ies)”
Section 2
“Purchase Price”
Section 3
“REIT”
Section 11.1.9
“Rent Roll”
Section 9.1.12(a)
“Representatives”
Section 11.1.4
“SEC Filings”
Section 11.1.8
“Seller(s)”
Preamble
“Seller Closing Conditions”
Section 12.3.1
“Seller Closing Deliveries”
Section 13.1
“Seller Default”
Section 19.1
“Seller New Title Matter Election Notice”
Section 4.3
“Seller Retained Liabilities”
Section 16.1.1
“Seller’s Notice Period”
Section 4.2
“SNDA”
Section 11.1.1
“Stub Period”
Section 11.1.8
“Surveys”
Section 4.2
“Survival Period”
Section 16.1.2
“Tail Insurance Policy”
Section 12.2.1
“Tax Clearance Certificate”
Section 11.1.7
“Tax Purchase Price Allocation”
Section 3.5
“Tenant Leases”
Section 2.6
“Terminated Contracts”
Section 6.3
“Third Party Claim”
Section 16.3.1
“Third Party Payor”
Section 9.1.13(a)
“Title Documents”
Section 4.2
“Title Matter(s)”
Section 4.2
“Title Policy(ies)”
Section 4.1
“Title Review Period”
Section 4.2
“Trade Payables”
Section 15.1.13

2.    Purchase and Sale. Each Seller hereby agrees to sell and convey to Buyer,
and Buyer hereby agrees to purchase from Seller, subject to the terms and
conditions of this Agreement, all of such Seller’s right, title, and interest
(if any) in and to its respective property and assets set forth in this Section
2 but expressly excluding the Excluded Property (all of such property and assets
as hereinafter described is collectively referred to as, with respect to each
individual Community, individually a “Property” and collectively the “Property”,
or “Properties”, as applicable) consisting of the following:
2.1    Land. All of that certain real property underlying the Communities, as
such real property is more particularly described on Exhibit A attached hereto
(collectively, the “Land”). The Parties acknowledge and agree that it is the
intent of the Parties that the term “Land” shall include all real property
comprising the Communities or owned by any Seller in connection with

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any of the Communities, and that all of such Seller’s interest in such Land be
conveyed to Buyer pursuant to this Agreement. The Parties further acknowledge
and agree that to the extent the Parties discover that Exhibit A does not
reflect all such Land, the Parties will amend Exhibit A to so reflect all such
Land, and that upon such amendment any such additional Land shall become part of
the “Land” for all purposes hereof.
2.2    Appurtenances. All privileges, easements and other rights appurtenant to
the Land, including all minerals, oil, gas and other hydrocarbon substances in,
on and under the Land, all development rights, air rights, water rights and
water stock owned by such Seller relating to the Land, and all easements, rights
of way, roads, alleys, strips and gores within or bounding the Land, or other
appurtenances used in connection with the beneficial use and enjoyment of the
Land, and rights of ingress and egress thereto (collectively, the
“Appurtenances”).
2.3    Improvements. All improvements and fixtures located on the Land,
including the physical buildings consisting of independent, assisted living, and
skilled nursing living units, and memory care units, together with all other
structures, apparatus, equipment and appliances located on and used in
connection with the operation or occupancy of the Land (the foregoing,
collectively, the “Improvements”).
2.4    Personal Property. All tangible personal property located on or in,
stored for future use with, or used in connection with, the Real Property and
identified on Schedule 2.4 attached hereto, including the FF&E, the Supplies and
the F&B (the “Personal Property”).
2.5    Residency Agreements. All Residency Agreements, together with all
deposits held in connection with the Residency Agreements, and inclusive of any
Residency Agreements entered into after the date hereof in accordance with
Section 11.1.5 hereof, as set forth on the attached Schedule 2.5; provided,
however, that the information on Schedule 2.5 will be redacted to the extent
necessary to comply with applicable privacy laws and regulations.
2.6    Tenant Leases. All leases, subleases, licenses, concessions and similar
agreements, together with all amendments and renewals thereof and supplements
thereto, and inclusive of any such leases, subleases, licenses, concessions and
similar agreements entered into after the date hereof in accordance with Section
11.1.1 hereof, if applicable, as set forth on Schedule 2.6 (or as otherwise
permitted under this Agreement) granting to any other Person the right to use or
occupy any portion of such Seller’s Real Property, together with all security
deposits held by the Seller thereunder, to the extent the same and such deposits
are transferable or the Parties obtain any consent necessary to effectuate such
a transfer, and any guaranties or pledges related thereto, but specifically
excluding the Residency Agreements (the “Tenant Leases”).
2.7    Licenses and Permits. All licenses, permits, consents, authorizations,
approvals, registrations and certificates issued by any Governmental Authority
which are held by

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such Seller or by an Affiliate of such Seller or by Manager for the benefit of
such Seller with respect to such Seller’s Community (including, the Existing
Operating Licenses and the Provider Agreements), including use or occupancy of
such Community or the Business at such Community, together with any deposits
made by such Seller thereunder (the “Licenses and Permits”), in each case to the
extent transferrable.
2.8    Intangible Property. To the extent assignable, all other intangible
property used by such Seller in the ownership, use, operation, occupancy,
maintenance or development of the Real Property and Personal Property, including
all (a) warranties and guaranties received from manufacturers, contractors,
subcontractors, manufacturers, suppliers, installers or other Person in
connection with the construction or operation of the Communities; (b) telephone
numbers, e-mail addresses, logos, service marks, copyrights, trade or assumed
names, brand names, certification marks, collective marks, d/b/a’s, symbols,
trade dress, fictitious names, trademarks (including, but not limited to the
name “Fountains”), domain names and sub-domain names used in the operation of or
in connection with the Communities and other indicia or origin, all applications
and registrations for the foregoing, and all goodwill associated therewith and
symbolized thereby, including renewals of same; and (c) consents, licenses,
authorizations, approvals, certificates, entitlements, floor plans, CAD files,
software and software files, plans, specifications, surveys, architectural or
engineering renderings, blue prints, drawings, utility contracts, soils and
other geological reports and studies and all other similar reports, studies or
information relating to such Seller’s ownership and operation of the Real
Property and the Personal Property with respect to its Community (collectively,
the “Intangible Property”); provided that the Intangible Property shall not
include any Excluded Property.
2.9    Equipment Leases. All leases and purchase money security agreements,
together with all amendments thereof and supplements thereto set forth on
Schedule 2.9 (or as otherwise permitted under this Agreement), for any
equipment, machinery, vehicles, furniture or other personal property located at
such Seller’s Community, which are held by such Seller and used primarily in
such Seller’s Business, together with all deposits made by the Seller thereunder
(the “Equipment Leases”), to the extent the same and such deposits are
transferable or the Parties obtain any consent necessary to effectuate such a
transfer.
2.10    Operating Agreements. Subject to Section 6.3, all maintenance, service
and supply contracts, reservation agreements, credit card service agreements,
and all other similar agreements, together with all amendments thereof and
supplements thereto, for goods or services which are held by such Seller or by
an Affiliate of such Seller in connection with such Seller’s Business, other
than the Tenant Leases, Equipment Leases, Residency Agreements and Licenses and
Permits, together with all deposits made or held by such Seller thereunder, and
inclusive of any such contracts entered into after the date hereof in accordance
with Section 11.1.1 hereof, if applicable (the “Operating Agreements”), to the
extent the same and such deposits are transferable

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or the Parties obtain any consent necessary to effectuate such a transfer;
provided, however, that the Operating Agreements shall not include, or be deemed
to include the Management Agreements.
2.11    Books and Records. All books and records located at such Seller’s
Community or within Seller’s Possession, which relate exclusively to such
Community or the Business at such Community, but expressly excluding all
documents and other materials which:
(a) are legally privileged or constitute attorney work product;
(b) are subject to Applicable Law prohibiting their disclosure by any Seller;
(c) constitute confidential internal assessments, reports, studies, memoranda,
notes or other correspondence prepared by or on behalf of any officer or
employee of any Seller, including, all (i) internal financial analyses,
appraisals, Tax returns, financial statements, (ii) corporate or other entity
governance records, (iii) any Employee personnel files for employees not hired
by Buyer or its manager and for those hired by Buyer or its manager, those
portions of Employee personnel files which Seller is not legally entitled or
authorized to transfer or disclose, and (iv) any work papers, memoranda,
analysis, correspondence and similar documents and materials prepared by or for
any Seller Entity in connection with the transactions described in this
Agreement; provided, however, that the excluded property described in this
clause (c) shall not prevent Buyer from receiving copies (upon request of such
items from Sellers) of or using any of the afore-described items, rights, claims
or the like which are reasonably necessary for the following purposes: (1) to
evidence, support and/or substantiate historical leasing, operation and
maintenance of the applicable Communities and/or the expenses and revenues
thereof, (2) to support the continued leasing, operation and maintenance of the
applicable Community, and/or the determination and substantiation of future
billings, allocations and responsibilities on account of taxes and other charges
related to such Community and/or to (3) to defend or prosecute claims against
third parties; or
(d) are subject to a Management Agreement prohibiting their disclosure
(all of the foregoing other than the items described in (a) through (d) above,
the “Books and Records”).
3.    Purchase Price. The total Purchase Price for all of the Property shall be
Six Hundred Forty Million and No/100 Dollars ($640,000,000.00) (“Purchase
Price”), as adjusted by the prorations and adjustments provided elsewhere in
this Agreement. The Purchase Price shall be payable as follows:
3.1    Deposit. Within one (1) Business Day following the mutual execution and
exchange of this Agreement, Buyer shall deposit the Initial Deposit with Escrow
Holder, in the form

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of a wire transfer payable to Escrow Holder. If Buyer has delivered the Approval
Notice pursuant to the provisions hereof prior thereto, then within one (1)
Business Day after the expiration of the Due Diligence Period Buyer shall
deposit the Additional Deposit with Escrow Holder. Escrow Holder shall deposit
the Deposit in a non-commingled trust account and shall invest the Deposit in an
insured account or such other instruments as directed by Buyer and reasonably
acceptable to Seller. In the event of the consummation of the purchase and sale
of the Property as contemplated hereunder, the Deposit shall be paid to Seller
and credited against the Purchase Price on the Closing Date. If the sale of the
Property is not consummated because of the termination of this Agreement in
accordance with Section 4.2, 4.3, 6.2, 9.2, 12.1.2, 12.2.2, 17.1, 17.2 or 19.1,
the Deposit shall be paid over to Buyer. If the sale of the Property is not
consummated because of the termination of this Agreement in accordance with
Sections 12.3.2 or 19.2, the Deposit shall be paid to Seller.
3.2    Closing Payment. On or before the Closing Date, Buyer shall deposit with
the Escrow Holder the balance of the Purchase Price (the “Closing Payment”), as
adjusted by the prorations and adjustments provided for in this Agreement, in
immediately available funds by wire transfer made payable to Escrow Holder.
3.3    Independent Contract Consideration. Notwithstanding anything in this
Agreement to the contrary, One Hundred and No/100 Dollars ($100.00) of the
Deposit is delivered to the Escrow Holder for delivery to Seller as “Independent
Contract Consideration”, and the Deposit is reduced by the amount of the
Independent Contract Consideration so delivered to Seller, which amount has been
bargained for and agreed to as consideration for Seller’s execution and delivery
of this Agreement.
3.4    All or Nothing Basis. Subject to the terms and conditions of this
Agreement, Sellers agree to sell to Buyer, and Buyer agrees to purchase from
Sellers, all of the Properties at Closing in consideration for the Purchase
Price. Sellers and Buyer acknowledge and agree that, except as otherwise
provided in this Agreement, (i) the sale of the Properties shall be on an “all
or nothing” basis, (ii) Buyer shall have no right, and Sellers shall have no
obligation, to exclude any single Property or any portion thereof from the
transaction described in this Agreement, and (iii) any termination of this
Agreement shall constitute a termination of this Agreement as to all of the
Properties.
3.5    Tax Purchase Price Allocation. During the Due Diligence Period, the
Parties shall cooperate in good faith to agree upon an allocation of the
Purchase Price (and any liabilities properly included therein for Tax purposes)
among the Properties and, within each Property, among the assets that comprise
the Property (the “Tax Purchase Price Allocation”) for federal, state and local
tax purposes in accordance with Section 1060 of the Internal Revenue Code, and
once agreed upon, the Parties shall attach such Tax Purchase Price Allocation to
this Agreement as Schedule 3.5. Buyer and Seller shall (i) cooperate in the
filing of any forms (including Form 8594 under

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Section 1060 of the Code) with respect to such allocation, including any
amendments to such forms required pursuant to this Agreement with respect to any
adjustment to the Purchase Price, and (ii) shall file all federal, state and
local tax returns and related tax documents consistent with such allocation, as
the same may be adjusted pursuant to any provisions of this Agreement. For
greater certainty, this Section 3.5 shall survive Closing.
3.6    No Adjustment to Purchase Price. Buyer acknowledges and agrees that (a)
as part of the Due Diligence Items, and prior to the execution of this
Agreement, Buyer has received and reviewed a schedule of capital expenditures
setting forth the nature and projected cost of capital expenditures to be
performed at the Properties over the next five (5) years (“Projected CapEx”),
(b) the Purchase Price reflects the fact that the Projected CapEx will be
performed (if at all) by Buyer at Buyer’s sole cost and expense, and (c) the
Purchase Price is not subject to adjustment to account for any such Projected
CapEx, or any other costs of maintenance, deferred maintenance, repair and/or
replacement of all or any part of the Property arising from “ordinary wear and
tear” incurred in the operation of the Properties as the same have previously
been and are currently being operated and in the Ordinary Course of Business.
4.    Title to Property.
4.1    Title Insurance. At Closing, each Seller shall convey to Buyer, through
escrow, good and insurable fee simple title to the Real Property for each
Community, subject only to the Permitted Exceptions, by duly executing and
acknowledging a Deed for the same, and the Title Company shall issue (or shall
irrevocably commit to issue) to Buyer an ALTA Owner’s Policy of Title Insurance,
together with such endorsements as, prior to the expiration of the Due Diligence
Period, Buyer will have requested and Title Company will have agreed to issue;
provided that such agreement shall not be conditioned upon any act of Sellers
other than delivery of an owner’s affidavit customarily given to title companies
by sellers of similar properties (each a “Title Policy” and, collectively, the
“Title Policies”), insuring in Buyer fee simple title to the Real Property of
each Community with liability in the amount of the Tax Purchase Price Allocation
attributable to such Property, subject only to the Permitted Exceptions.
4.2    Procedure for Approval of Title. (a) Buyer acknowledges and agrees that
Seller has delivered to Buyer a title insurance commitment for the Real Property
of each Community (each, a “Commitment”) identified on Schedule 4.2, together
with legible copies of all items identified as exceptions therein, and as soon
as practicable after the date hereof, shall deliver a Commitment (together with
legible copies of all items identified as exceptions therein) for the Real
Property for any Community not identified on Schedule 4.2 (collectively, the
“Title Documents”); and (b) a copy of the most recent surveys of the Communities
identified on Schedule 4.2 (each, a “Prior Survey”). As soon as practicable
after the date hereof, Buyer shall obtain a current survey (each, a “New
Survey”, and collectively with the Prior Survey, the “Surveys”) of any or all of
the

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Land and the Improvements by a registered land surveyor. Buyer shall pay all
costs and expenses incurred in obtaining a New Survey. Buyer shall have until
the date which is ten (10) days prior to the expiration of the Due Diligence
Period to review and approve or object to, in writing, the condition of the
title to the Real Property of each Community as reflected on the Commitment and
the Surveys (“Title Review Period”); provided, however, that with respect to any
Commitment for Real Property not identified on Schedule 4.2 or any New Survey
that is not received by Buyer at least five (5) Business Days prior to the
expiration of the Title Review Period, the Title Review Period will be extended
solely with respect to such Commitment or New Survey, as applicable, to the date
that is five (5) Business Days after Buyer’s receipt of such Commitment or New
Survey, as applicable. If the Title Documents or the Surveys reflect or disclose
any defect, exception or other matter that is unacceptable to Buyer (each, a
“Title Matter”, and collectively, the “Title Matters”), then Buyer shall provide
Seller with written notice of Buyer’s objections no later than the conclusion of
the Title Review Period. Seller may, at its sole option, elect, by written
notice given to Buyer within five (5) days following the conclusion of the Title
Review Period (“Seller’s Notice Period”), to cure or remove, or agree to cure
and remove by Closing, any of the Title Matters, provided, however, that
notwithstanding anything to the contrary set forth herein, Seller shall be
obligated to remove (or bond over) any mortgages, deeds of trust, mechanics’
liens, security agreements, delinquent taxes or other similar liens or charges
capable of computation as a fixed sum which were created or expressly assumed by
a Seller (collectively, “Monetary Liens”). The failure of a Seller to deliver
written notice electing to cure any or all such objected to exceptions during
such Seller’s Notice Period shall be deemed an election by such Seller not to
cure such exceptions, other than Monetary Liens. In the event such Seller elects
(or is deemed to have elected) not to cure or remove any objection, or in any
event such Seller fails to cure or remove any objection which such Seller agrees
or is required to cure, then Buyer shall be entitled, as Buyer’s sole and
exclusive remedy, either to (i) terminate this Agreement on or before the
expiration of the Due Diligence Period and obtain a refund of the Deposit, or
(ii) waive any Title Matters that Seller has not elected to cure and close this
transaction as otherwise contemplated herein. The failure of Buyer to provide
written notice to such Seller of its election to terminate this Agreement
pursuant to clause (i) of the immediately preceding sentence within seven (7)
days after the expiration of the Seller’s Notice Period shall be deemed an
election by Buyer to waive its objections as to all Title Matters that such
Seller has not agreed to release or cure (other than Monetary Liens) and to
proceed to Closing hereunder. The foregoing provisions of this Section 4.2 shall
neither limit nor expand Buyer’s rights under Section 6.2, it being understood
and agreed by the parties that if Buyer does not terminate this Agreement prior
to the expiration of the Due Diligence Period, Buyer shall be conclusively
deemed to have approved the status of title subject only to (i) those Title
Matters as to which Buyer has timely objected and as to which such Seller has
removed or agreed to remove in accordance with the provisions of this Section
4.2, and (ii) any New Title Matter as to which Buyer has timely objected and as
to which such Seller has removed or agreed to remove in accordance with Section
4.3.

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4.3    New Title Matter. If at any time after the expiration of the Title Review
Period or the Due Diligence Period, as applicable, Buyer receives a new, updated
or supplemental Commitment or Survey with respect to one or more of the
Communities, and such new, updated or supplemental Commitment or Survey
discloses one or more Title Matters that are not Permitted Exceptions (in each
case, a “New Title Matter”), and (a) such New Title Matter was not within
Buyer’s Knowledge prior to the expiration of the Due Diligence Period, (b) such
New Title Matter either (i) was created by or at the direction of Seller, or
(ii) would have a material, adverse impact on the access to or the current use
or operations of a Property, or (iii) would be reasonably expected to result in
a new tax or assessment against the Property in excess of five percent (5%) of
the gross annual revenues for such Property for the immediately preceding twelve
(12) months (following the exhaustion of all appeals), and (c) such New Title
Matter was not caused by Buyer or any Person on behalf of Buyer, Buyer may
object to such New Title Matter by providing written notice to such Seller
within five (5) Business Days after receiving such new, updated or supplemental
Commitment or New Survey (the “Buyer New Title Matter Objection Notice”). If
Buyer timely delivers a Buyer New Title Matter Objection Notice to any such
Seller, such Seller may elect, by providing written notice (the “Seller New
Title Matter Election Notice”) to Buyer within five (5) Business Days after such
Seller’s receipt of such Buyer New Title Matter Objection Notice, (A) to remove
or cure such New Title Matter at or prior to Closing, or (B) not to remove or
cure such New Title Matter; provided, however, that if such New Title Matter is
a Monetary Lien, Seller shall be obligated to remove or bond over the same as of
Closing. If the New Title Matter is a new tax or assessment described in clause
(b)(iii) above and the amount of such new tax or assessment is quantifiable
(e.g., an assessment for one or more specified periods, as compared to one that
extends into perpetuity), then Seller may elect to cure such New Title Matter by
promptly notifying Buyer of Seller’s intention to contest such tax or
assessment, and providing Buyer with evidence reasonably satisfactory to Buyer
that Seller has reserved for or bonded over any potential liability associated
with such tax or assessment. If such contest is not resolved in Seller’s favor
prior to Closing, Escrow Holder shall retain an amount equal to 110% of the
contested amount until such time as the contest is finally determined, at which
time the funds so retained shall be either returned to Seller, to the extent
such contest is determined in favor of Seller, or to Buyer, to the extent such
contest is not determined in favor of Seller. If such Seller does not timely
provide a Seller New Title Matter Election Notice to Buyer within such time
period, then such Seller shall be deemed to have elected not to remove or cure
such New Title Matter pursuant to clause (B) of the preceding sentence. If such
Seller elects or is deemed to have elected not to remove or cure a New Title
Matter, then Buyer shall have the right to elect, by providing written notice
(the “Buyer New Title Matter Response Notice”) to such Seller within five (5)
Business Days after Buyer’s receipt of the Seller New Title Matter Election
Notice, to (1) terminate this Agreement, in which case the Deposit shall be
disbursed to Buyer, and the Parties shall have no further rights or obligations
under this Agreement, except those which expressly survive such termination, or
(2) proceed to Closing pursuant to this Agreement and accept title to the
applicable Real Property subject to such New Title Matter which thereafter shall
be deemed to

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constitute a Permitted Exception, without any credit against the Purchase Price
for such New Title Matter. If Buyer does not provide a Buyer New Title Matter
Response Notice to Sellers within such time period, Buyer shall conclusively be
deemed to have elected to proceed to Closing pursuant to clause (2) of the
preceding sentence. If applicable, Closing shall be adjourned to the extent
necessary to provide the Parties with the full benefit of the time periods
provided herein.
5.    Due Diligence Items. Buyer acknowledges receipt, as of the date hereof, of
the due diligence materials set forth in the Data Room and listed on Schedule 8
attached hereto. Within five (5) Business Days after Buyer’s request therefor,
Seller shall use commercially reasonable efforts to respond to Buyer’s
reasonable requests for additional due diligence materials by depositing such
information into the Data Room or otherwise delivering the same to Buyer (all
documents and materials so delivered into the Data Room or otherwise provided by
Sellers to Buyer pursuant to or in connection with this Agreement, together with
any copies or reproductions of such documents or materials, or any summaries,
abstracts, compilations or other analyses made by or for Buyer based on the
information in such documents or materials are collectively referred to herein
as the “Due Diligence Items”). Except as otherwise expressly set forth in this
Agreement, Seller makes no representation whatsoever regarding the Due Diligence
Items, including as to their completeness or accuracy.
6.    Inspections.
6.1    Procedure; Indemnity. Subject to and in accordance with the provisions of
the Access and Exclusivity Agreement and this Section 6, Buyer, at its sole
expense, shall have the right to conduct feasibility, environmental, engineering
and physical studies of the Real Property at any time during the period
beginning on the Effective Date and expiring at the Closing Date. Buyer and its
investors and lenders, and its and their respective duly authorized agents or
representatives or contractors shall be permitted to enter upon the Real
Property of each Community at all reasonable times during such period in order
to conduct engineering studies, soil tests or other non-invasive environmental
studies and any other inspections and/or tests that Buyer may deem necessary
(collectively, the “Inspections”) provided that such entry shall be in
accordance with the terms and conditions of the Access and Exclusivity
Agreement. At its election, such Seller may have a representative present during
any such inspection. Buyer agrees to promptly repair any damage to, and
discharge any liens that may be imposed against, the Property as a result of
Buyer’s Representative’s Inspections and to defend, indemnify and hold each
Seller Entity harmless from all Liability incurred by any Seller Entity as a
result of any Inspections performed by Buyer’s Representatives, each in
accordance with the provisions of the Access and Exclusivity Agreement. For
greater certainty, the foregoing indemnity and agreements shall survive Closing
or any termination of this Agreement.

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6.2    Approval of Due Diligence. Buyer shall have until the conclusion of the
Due Diligence Period to approve or disapprove of the Inspections, Due Diligence
Items, the state of title (subject to New Title Matters), and the economic
feasibility of the Property. If, on or before the expiration of the Due
Diligence Period, Buyer delivers written notice (the “Approval Notice”) to
Seller and Escrow Holder approving its due diligence and electing to proceed
with the transactions contemplated in this Agreement (which notice shall be
given or not given in Buyer’s sole and absolute discretion, and for any reason
or no reason whatsoever), then (a) subject to the terms and conditions of this
Agreement, Buyer shall be deemed to have approved all matters concerning the
Property, (b) the Deposit shall become non-refundable to Buyer other than as
provided in Section 3.1 hereof, (c) Buyer shall deliver the Additional Deposit
to Escrow Holder within one (1) Business Day after the expiration of the Due
Diligence Period, and (d) the Parties shall proceed to Closing in accordance
with and subject to the provisions of this Agreement. If Buyer does not timely
deliver the Approval Notice as provided herein, then Buyer shall be deemed to
have elected not to proceed with the transactions contemplated in this
Agreement, in which event this Agreement and Escrow shall be terminated, Buyer
shall not be entitled to purchase the Property, Sellers shall not be obligated
to sell the Property to Buyer, and the Parties shall be relieved of any further
obligation to each other with respect to the Property that does not by its terms
survive a termination of this Agreement. Upon such a termination, Escrow Holder
shall, without any further action required from any Party, return all documents
and funds, including the Deposit (less the Independent Contract Consideration),
to Buyer and no further duties shall be required of Escrow Holder.
6.3    Assumption of Contracts. On or before the expiration of the Due Diligence
Period (the “Contract Notice Date”), Buyer may deliver a written notice to
Seller (the “Contracts Notice”) identifying those Contracts that Seller shall
assign to Buyer and that Buyer shall assume as of the Closing Date (such
designated Contracts shall be collectively referred to herein as the “Assumed
Contracts”). Seller shall terminate all Contracts that are not Assumed Contracts
(the “Terminated Contracts”) on or before Closing. To the extent that any
Terminated Contracts require payment of a penalty or premium for cancellation,
Seller shall be solely responsible for the payment of any such cancellation fees
or penalties. If Buyer fails to deliver the Contracts Notice on or before the
expiration Contract Notice Date, all Contracts shall be Assumed Contracts.
Notwithstanding anything to the contrary contained in this Section 6.3, Buyer
shall have no right to terminate the following Contracts, all of which shall be
deemed to be Assumed Contracts: (a) the Equipment Leases; (b) the Residency
Agreements, (c) the Tenant Leases, (d) the Provider Agreements, (e) the Home
Health Care Agreements, (f) all Contracts that are not Material Contracts, and
(f) those Contracts identified on Schedule 6.3 attached hereto.
7.    Escrow; Closing.
7.1    Opening of Escrow. The sale of the Property shall be consummated through
an escrow (“Escrow”) to be opened with Escrow Holder within one (1) Business Day
after the

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execution and delivery of this Agreement by Seller and Buyer. This Agreement
shall constitute the joint escrow instructions between the Parties, with such
further consistent instructions as Escrow Holder shall require in order to
clarify its duties and responsibilities. If Escrow Holder shall require further
Escrow instructions, Escrow Holder may prepare such instructions on its usual
form. Such further instructions shall, so long as not inconsistent with the
terms of this Agreement, be promptly signed by Buyer and Seller and returned to
Escrow Holder within three (3) Business Days after receipt thereof. In the event
of any conflict between the terms and conditions of this Agreement and any
further Escrow instructions, the terms and conditions of this Agreement shall
control.
7.2    Closing Date. Closing shall occur on the Closing Date.
7.3    Duties of Escrow Holder. Escrow Holder shall undertake the following at
or promptly after Closing:
7.3.1    If necessary, Escrow Holder is authorized and instructed to insert the
Closing Date as the effective date of any documents conveying interests herein
or which are to become operative as of the Closing Date;
7.3.2    Cause each Deed and any other recordable instruments that the Parties
so direct to be recorded in the Official Records of the Recorder of the County
in which the applicable Property is located. If permitted by Applicable Law,
Escrow Holder is hereby instructed not to affix the amount of the documentary
transfer Tax on the face of any Deed, but to pay on the basis of a separate
affidavit of Seller not made a part of the public record;
7.3.3    Cause each non-recorded document to be delivered to the Party acquiring
rights thereunder, or for whose benefit such document was obtained, unless there
are sufficient fully executed counterparts so that each Party executing the same
can receive its own fully executed counterpart;
7.3.4    Deliver the Title Policies to Buyer as soon as practicable;
7.3.5    Deliver to Seller the Closing Payment, and such other funds, if any, as
may be due to Seller by reason of credits under this Agreement; and
7.3.6    Comply with all applicable federal, state and local reporting and
withholding requirements relating to the close of the transactions contemplated
herein. Without limiting the generality of the foregoing, to the extent the
transactions contemplated by this Agreement involve a real estate transaction
within the purview of Section 6045 of the Internal Revenue Code, Escrow Holder
shall have sole responsibility to comply with the requirements of Section 6045
of the Internal Revenue Code (and any similar requirements imposed by state or
local law). Escrow Holder shall defend, indemnify and hold Buyer, Seller and
their counsel free and

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harmless from and against any and all Liability arising or resulting from the
failure or refusal of Escrow Holder to comply with such reporting requirements.
8.    AS-IS Sale and Purchase. Buyer acknowledges, by its initials as set forth
below, that the provisions of this Section 8 have been required by Sellers as a
material inducement to enter into the contemplated transactions, and the intent
and effect of such provisions have been explained to Buyer by Buyer’s counsel
and have been understood and agreed to by Buyer.
8.1    Buyer’s Acknowledgment. As a material inducement to Sellers to enter into
this Agreement and to convey the Property to Buyer, Buyer hereby acknowledges
and agrees that:
8.2    AS-IS. Subject to Sellers’ representation and warranties expressly set
forth in this Agreement or in any documents executed by a Seller in connection
with Closing, Buyer is purchasing the Property in its existing condition,
“AS-IS, WHERE-IS, WITH ALL FAULTS,” and upon the expiration of the Due Diligence
Period has made or has waived all inspections and investigations of the Property
and its vicinity which Buyer believes are necessary to protect its own interest
in, and its contemplated use of, the Property.
___________RJL___________
Buyer’s Initials
8.3    No Representations. Other than the express representations and warranties
of Sellers contained in this Agreement or in any documents executed by a Seller
in connection with Closing, no Seller Entity has made any representation,
warranty, inducement, promise, agreement, assurance or statement, oral or
written, of any kind to Buyer upon which Buyer is relying, or in connection with
which Buyer has made or will make any decisions concerning the Property or its
vicinity including its use, condition, value, entitlements, condemnation actions
(current or prospective), compliance with Applicable Law, existence or absence
of any environmental hazards or conditions thereon (including the presence of
asbestos or other Hazardous Substances) or compliance with applicable
Environmental Laws, or the permissibility, feasibility, or convertibility of all
or any portion of the Property for any particular use or purpose, including its
present or future prospects for sale, lease, development, occupancy or
suitability as security for financing.
___________RJL___________
Buyer’s Initials
8.4    No Implied Warranties. Except for any express representations and
warranties of Sellers set forth in this Agreement or in any documents executed
by a Seller in connection with Closing, each Seller hereby specifically
disclaims: (a) all warranties implied by law arising out of or with respect to
the execution of this Agreement, any aspect or element of the Property, or the
performance of Sellers’ obligations hereunder including all implied warranties
of merchantability, habitability and/or fitness for a particular purpose; and
(b) any warranty, guaranty

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or representation, oral or written, past, present or future, of, as to, or
concerning (i) the nature and condition of the Property or other items conveyed
hereunder, including the water, soil, and geology, the suitability thereof and
of the Property or other items conveyed hereunder for any and all activities and
uses which Buyer may elect to conduct thereon, the existence or absence of any
environmental hazards or conditions thereon (including to the presence of
asbestos or other Hazardous Substances) or compliance with applicable
Environmental Laws; (ii) the nature and extent of any right-of-way, lease,
possession, lien, encumbrance, license, reservation, current or potential
eminent domain proceedings, condition or otherwise; and (iii) the compliance of
the Property or other items conveyed hereunder or its operation with any
Governmental Regulations.
___________RJL___________
Buyer’s Initials
8.5    Information Supplied by Sellers. Buyer specifically acknowledges and
agrees that (i) no Seller has made any representation or warranty of any nature
concerning the accuracy or completeness of any documents delivered or made
available for inspection by any Seller to Buyer, including the Due Diligence
Items (other than any representations and warranties of Sellers set forth in
this Agreement or in any documents executed by a Seller in connection with
Closing which relate to such documents or the Due Diligence Items), (ii) Buyer
has undertaken or will undertake such inspections of the Property as Buyer deems
necessary and appropriate, and (iii) Buyer is relying solely upon such
investigations and not on any of the Due Diligence Items or any other
information provided to Buyer by or on behalf of any Seller. As to the Due
Diligence Items, Buyer specifically acknowledges that they have been prepared by
third parties with whom Buyer has no privity and Buyer acknowledges and agrees
that no warranty or representation, express or implied, has been made, except
for any representations or warranties set forth in this Agreement or in the
documents executed and delivered by Sellers at Closing, nor shall any be deemed
to have been made, to Buyer with respect to any and all Due Diligence Items,
either by any Seller Entity or by any third parties that prepared the same.
__________RJL____________
Buyer’s Initials
8.6    Assumption/Release. As of Closing, Buyer hereby (i) assumes the risk of
adverse matters, including adverse physical conditions, defects, construction
defects, environmental, health, safety and welfare matters or conditions which
may or may not have been revealed by Buyer’s investigation and evaluation of the
Property, and (ii) fully and irrevocably releases each and every Seller Entity
from any and all claims that Buyer may have or thereafter acquire against any
Seller Entity for any Liability arising from or related to any matter of any
nature relating to, and condition of, the Property or the purchase of the
Property by Buyer from Sellers pursuant to this Agreement and the documents to
be exchanged at Closing, including any Liability arising in connection with any
latent or patent construction defects, errors or omissions, compliance

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with Applicable Law, the existence or absence of any environmental hazards or
conditions thereon (including to the presence of asbestos or other Hazardous
Substances) and other environmental matters within, under or upon, or in the
vicinity of the Property, any statutory or common law right Buyer may have to
receive disclosures from Sellers, including any disclosures as to the location
of the Property within areas designated as subject to flooding, fire, seismic or
earthquake risks by any federal, state or local entity, the need to obtain flood
insurance, the certification of water heater bracing and/or the advisability of
obtaining title insurance, or any other condition or circumstance affecting the
Property, its financial viability, use or operation, or any portion thereof.
This release includes Liability for which Buyer is presently unaware or which
Buyer does not presently suspect to exist in its favor which, if known by Buyer,
would materially affect Buyer’s release of any Seller Entity. Notwithstanding
anything to the contrary set forth in this Section 8.6, the foregoing release is
not intended to and does not cover (i) any Liability incurred by Buyer arising
from a breach of Sellers’ representations or warranties expressly set forth in
this Agreement or in any documents executed by a Seller in connection with
Closing, (ii) any other breach or default by a Seller under this Agreement which
by its terms survives Closing or arising out of fraud or willful misconduct of a
Seller Entity, (iii) any matter subject to proration pursuant to Section 15
below, or (iv) any Seller Retained Liabilities.
__________RJL____________
Buyer’s Initials
8.7    Survival. For greater certainty, the provisions of this Section 8 shall
survive Closing.
9.    Sellers’ Representations and Warranties.
9.1    Representations and Warranties. Subject at all times to the matters
disclosed on Schedule 9.1 (the “Disclosure Schedule”), each Seller makes the
following representations and warranties with respect to, and only with respect
to, itself and its Property as of the Effective Date and, subject to the
provisions of Section 12.2.1(b), as of the Closing Date:
9.1.1    Formation; Authority. Seller is duly formed, validly existing, and in
good standing under laws of the state of its formation. Seller has full power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by Seller has been duly and validly authorized by all necessary action on the
part of Seller and all required corporate or entity consents and approvals have
been duly obtained or will have been obtained as of Closing. All requisite
action has been taken by Seller in connection with the entering into of this
Agreement and the instruments referenced herein and the consummation of the
transactions contemplated hereby. The individual(s) executing this Agreement and
the instruments referenced herein on behalf of Seller have the legal power,
right and actual authority to bind Seller to the terms and conditions hereof and
thereof.

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9.1.2    Foreign Person. Seller is not a “foreign person” as defined in Section
1445 of the Internal Revenue Code.
9.1.3    Tenant Leases. Schedule 2.6 sets forth a true, correct and complete
list of the Tenant Leases, and Sellers have made available to Buyer a true,
correct and complete copy of the Tenant Leases. Except as set forth in the
Disclosure Schedule, (i) each Tenant Lease is valid and enforceable in
accordance with its terms and is in full force and effect, (ii) Seller has not
either given or received any written notice of any breach or default under any
of the Tenant Leases relating to its Property which has not been cured, (iii) to
Seller’s Knowledge, no event has occurred or circumstance exists which, with
notice or the passage of time, would result in a material breach or default by
such Seller or the other party thereunder, (iv) no rent, additional rent, fees
or any other charges, after being billed therefor, payable under any of the
Tenant Leases is more than thirty (30) days in arrears of the date that the same
is required to be paid under the terms of such Tenant Lease, (v) Seller has not
received written notice that any Tenant has claimed or asserted, or has the
right to, any defenses, counterclaims, set-offs, offsets or abatements of or
against the rent, additional rent, fees or any other charges payable under any
of the Tenant Leases; (vi) Seller has not received any written notice from any
Tenant nor delivered to any Tenant a notice terminating such Tenant Lease, (vii)
all of the renewal and extension options with respect to each of the Tenant
Leases are as set forth in the relevant Tenant Lease, and there are no brokerage
fees due or payable in connection with any such renewal and extension (other
than those which have been paid in full as of the date hereof), (viii) no Tenant
has paid any rent for more than one (1) month in advance, (ix) except as may be
set forth in the applicable Tenant Lease, no Tenant has any right of first
refusal, option or other preferential right to purchase the applicable Property
or any portion thereof or any interest therein, and (x) to Seller’s Knowledge,
with the exception of subleases or licenses for de minimis spaces used for
ancillary services which may be provided at any Property, there are no
subtenants of any Tenant.
9.1.4    Material Contracts. Schedule 9.1.4 sets forth a true, correct and
complete list of the Material Contracts, and Sellers have made available to
Buyer a true, correct and complete copy of the Material Contracts. Except as set
forth in the Disclosure Schedule, (i) each Material Contract is valid and
enforceable in accordance with its terms and is in full force and effect, (ii)
no Seller has either given or received any written notice of any breach or
default under any of the Material Contracts relating to its Property which has
not been cured, and (iii) to such Seller’s Knowledge, no event has occurred or
circumstance exists which, with notice or the passage of time, would result in a
material breach or material default by such Seller or Manager or the other party
thereunder.
9.1.5    Management Agreements. No Seller is a party to any management agreement
with respect to its Property other than the Management Agreements and the Home
Health Care Agreements.

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9.1.6    Code and Health Care Law Compliance. Except as set forth on the
Disclosure Schedule, to Seller’s Knowledge, the Property and the present use and
condition of the same do not violate in any material respect any applicable deed
restrictions or other covenants, restrictions or agreements, site plan
approvals, zoning or subdivision regulations, urban redevelopment plans, or any
Applicable Law governing or regulating the use and operation, or otherwise
applicable to, such Property (including the establishment, construction,
ownership, use or occupancy of such Property or any part thereof as a skilled
nursing facility, assisted living facility, independent living facility, memory
care facility or other healthcare facility), as modified by any duly issued
variances within Seller’s Possession and control disclosed to Buyer in writing.
To Seller’s Knowledge, Seller is in compliance in all material respects with all
applicable Health Care Laws. Neither Seller nor, to Seller’s Knowledge, Manager,
has received written notice from any Governmental Authority alleging any
material violation of any applicable Health Care Law that has not been cured.
Seller has not received written notice of any legal, administrative, arbitral or
other claim, proceeding, suit, action or investigation by any Governmental
Authority pending and to Seller’s Knowledge, no such claim, proceeding, suit,
action or investigation has been threatened in writing against or affecting the
Property or the Business, alleging any material failure to comply with Health
Care Laws. Seller has not received written notice that any Person has filed or
has threatened in writing to file against Seller or, to Seller’s Knowledge,
Manager any claim under any federal or state whistleblower statute, including
the Federal False Claims Act (31 U.S.C. §§3729 et seq.) with respect to the
Property or the Business. Neither Seller nor, to Seller’s Knowledge, Manager,
has entered into any agreements with any Governmental Authority with respect to
the Property in connection with compliance with Health Care Laws.
9.1.7    Litigation. Except as may be set forth in the Disclosure Schedule,
Seller has not received written notice of any (i) pending litigation, action,
suit, hearing or administrative proceeding with respect to the Property or the
Business in which such Seller or its Manager is named a party which has not been
resolved, settled or dismissed, or (ii) any claim, charge or complaint from any
Governmental Authority or other Person pursuant to any administrative,
arbitration or similar adjudicatory proceeding with respect to its Property or
its Business which has not been resolved, settled or dismissed, in each case
other than those litigations, actions, suits, hearings, administrative
proceedings, claims, charges or complaints that, individually or in the
aggregate, would reasonably be expected to result in Liability (in excess of
third party insurance proceeds) of at least $12,800,000 if adversely determined.
9.1.8    Employees. Sellers have no employees at the Communities or relating to
the operation of the Business, and all employees relating to or located at the
Communities (collectively, the “Employees”) are employees of Watermark Services
IV, LLC (“Employer”). None of the Employees are subject to a collective
bargaining agreement with any union, work council or other collective bargaining
unit. Except as may be set forth in the Disclosure Schedule, to Seller’s
Knowledge, all Employees are employees at-will and to Seller’s Knowledge there
are no written

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employment agreement (including executive compensation, severance or retention
agreements) that would be binding on Buyer after Closing.
9.1.9    Licenses and Permits. Schedule 9.1.9 sets forth a true, correct and
complete list of all Licenses and Permits that are required to operate and
manage the Property as currently operated, and Seller has instructed Manager to
make available to Buyer true, correct and complete copies of all Licenses and
Permits with respect to its Property. Except as set forth in the Disclosure
Schedule, Seller has not received, and to Seller’s Knowledge, Manager has not
received, any written notice from any Governmental Authority or other Person of
(i) any violation, suspension, revocation or non-renewal of any Licenses and
Permits with respect to its Property or its Business that has not been cured or
dismissed, or (ii) any failure by such Seller or Manager to obtain any material
Licenses and Permits.
9.1.10    Compliance with Laws and Environmental Conditions. Except as set forth
in the Disclosure Schedule, (a) Seller has not received any written notice of
any violation of any Environmental Laws which has not been resolved, settled or
dismissed, and (b) Seller has not received any written notice of any pending or
threatened requests for information or inquiries from any Governmental Authority
or any investigations, action, suits, claims or proceeding relating to the
existence, generation, release, production, disposal, treatment, emission,
migration, transportation or storage of any Hazardous Materials in or on any of
the Properties, nor to Seller’s Knowledge has Seller released any Hazardous
Materials on, from or under the Real Property.
9.1.11    Patriot Act Compliance. To the extent applicable to Seller, Seller has
complied in all material respects with the International Money Laundering
Abatement and Anti-Terrorist Financing Act of 2001, which comprises Title III of
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) and the
regulations promulgated thereunder, and the rules and regulations administered
by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), to
the extent such Laws are applicable to Seller. Seller is not included on the
List of Specially Designated Nationals and Blocked Persons maintained by the
OFAC, or is a resident in, or organized or chartered under the laws of, (A) a
jurisdiction that has been designated by the U.S. Secretary of the Treasury
under Section 311 or 312 of the Patriot Act as warranting special measures due
to money laundering concerns or (B) any foreign country that has been designated
as non-cooperative with international anti-money laundering principles or
procedures by an intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering, of which the United States is a member
and with which designation the United States representative to the group or
organization continues to concur. Seller has not received written notice that it
(i) is under investigation by any Governmental Authority for, or has been
charged with, or convicted of, money laundering, drug trafficking, terrorist
related activities, any crimes which in the United States would be predicate
crimes to money laundering, or any violation of any anti-money laundering laws,
(ii)

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has been assessed civil or criminal penalties under any anti-money laundering
laws; or (C) has had any of its funds seized or forfeited in any action under
any anti-money laundering laws, or otherwise been in violation of any anti-money
laundering laws.
9.1.12    Residency Agreements.
(a)    Schedule 2.5 includes a true, correct and complete (in all material
respects) list of all Residency Agreements (redacted to the extent required to
comply with applicable privacy laws and regulations) in effect as of the date
indicated therein (the “Rent Roll”), and true, correct and complete copies of
Residency Agreements, and all guaranties and other documents relating thereto
have been made available to Buyer.
(b)    Except for any parties in possession pursuant to, and any rights of
possession granted under, the Residency Agreements shown on the Rent Roll (as of
the date indicated therein) or the updated Rent Roll to be delivered at Closing
(as of the date indicated therein), and Tenant Leases, and except for subleases
or licenses for de minimis spaces used for ancillary services which may be
provided at any Property and which are terminable upon no more than thirty (30)
days’ notice and without penalty, Seller has not granted any leases, occupancies
or tenancies or rights of possession of any part of the Real Property. Except
for any Permitted Exceptions, as of Closing, no interest of Seller in the
Residency Agreements, the Tenant Leases or in any of the rentals due or to
become due thereunder will be subject to any lien created by Seller, or to
Seller’s Knowledge, any other Person.
(c)    Each of the Residency Agreements is in full force and effect in
accordance with its terms. Except as set forth in the Rent Roll or as may be
disclosed on the updated Rent Roll to be delivered at Closing, no party
(including Seller) to any Residency Agreement is in monetary default in any
material respect under any of its obligations under such Residency Agreement.
(d)    Schedule 9 sets forth a true, correct and complete list (in all material
respects) of the Entrance Fees (if any) paid or payable by any of the Residents.
(e)    Except as set forth on the Rent Roll: (i) no Resident has paid any rent
for more than one (1) month in advance; (ii) no Resident has any right of first
refusal, option or other preferential right to purchase the applicable Property
or any portion thereof or any interest therein; and (iii) Seller has not
received written notice that there are any subtenants of any Resident under any
Residency Agreement.
9.1.13    Health Regulatory Compliance.

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(a)    To Seller’s Knowledge, Manager, and each Property, as applicable, is
certified for participation and reimbursement under and has current provider
numbers and provider agreements for each material Third Party Payor program
under which it is presently receiving payments. To Seller’s Knowledge, there is
no threatened in writing, existing or pending revocation, suspension,
termination, probation, restriction, limitation, or nonrenewal proceeding by any
Third Party Payor, to which Seller may presently be subject with respect to any
Property and which if adversely determined to Seller would have a material
adverse effect on the use or operation of the Property. The term “Third Party
Payor” shall mean any Government Sponsored Health Care Program, insurer, health
benefit plan, health maintenance organization, preferred provider organization,
employer-sponsored health plan, multi-employer welfare trust, or any other
managed care program or third party payor, including any fiscal intermediary or
contractor of any of the foregoing, to beneficiaries of which any Property
provides goods or services. The term “Government Sponsored Health Care Program”
shall mean any plan or program providing health care benefits, whether directly
through insurance or otherwise, that is funded directly, in whole or part, by a
Governmental Authority, whether pursuant to one or more contracts with the
applicable Governmental Authority or otherwise, including Medicare, state
Medicaid programs, the TRICARE program, Medicare Advantage and managed Medicaid.
(b)    To Seller’s Knowledge, with respect to each Property, except for the
matters set forth on the Disclosure Schedule, there are no threatened in writing
or pending proceedings by any Governmental Authority or written notices thereof
received by Seller that are reasonably likely (i) to have a material adverse
impact on Seller or Manager’s ability to accept and/or retain Residents or
operate such Property for its current use or result in the imposition of a lower
rate certification or a lower reimbursement rate for services rendered to
eligible patients or residents, (ii) to materially modify, limit or result in
the transfer, suspension, revocation or imposition of probationary use of any of
the material Permits and Licenses, or (iii) to adversely and materially affect,
as applicable Seller’s or Manager’s continued participation in any material
Third Party Payor programs.
(c)    True, correct and complete copies (redacted to the extent required to
comply with applicable privacy laws and regulations) of all Licensing Surveys
for the last three (3) years which are currently in Seller’s Possession or
control have been delivered or made available to Buyer. The term”Licensing
Surveys” shall mean all survey reports, waivers of deficiencies, plans of
correction, and any other investigation reports issued by the applicable
Governmental Authority with respect to the Real Property in respect of any
Licenses and Permits.
(d)    To Seller’s Knowledge, Seller or Manager has timely filed or caused to be
filed all material reports and billings required to be filed by it prior to the
date hereof with respect to Third Party Payors and all such reports and billings
are complete and accurate in all material respects and have been prepared in
material compliance with all applicable Health Care

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Laws governing reimbursement and payment of claims. To Seller’s Knowledge, true
and complete copies of such reports and billings have previously been made
available to Buyer. To Seller’s Knowledge, except as disclosed on the Disclosure
Schedule, each Seller or Manager has paid or caused to be paid all known and
undisputed material refunds, overpayments, discounts or adjustments which have
become due pursuant to such reports and billings, has not claimed or received
reimbursements from Third Party Payors in excess of amounts permitted by Law,
and has no material liability under any material Third Party Payor program for
any refund, overpayment, discount or adjustment
(e)    Each Property is being operated as a skilled nursing facility, assisted
living facility, independent living facility or memory care facility, having the
number of beds or Residents as set forth on the Rent Roll.
9.1.14    Condemnation. Except for the matters set forth on the Disclosure
Schedule, Seller has not received written notice of any pending or threatened
condemnation or eminent domain proceedings against any of the Properties or
Seller.
9.1.15    Property Taxes. Except as set forth on the Disclosure Schedule, no
Seller is currently protesting or challenging the assessed value of its Property
for real estate tax purposes. To Seller’s Knowledge, there are no impositions of
new special assessments with respect to its Property.
9.1.16    Transfer. Seller has not granted any options, rights of first refusal
or similar rights to purchase its Property or any portion thereof or interest
therein which remain exercisable after the Effective Date.
9.1.17    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 Seller’s creditors, suffered the appointment of a
receiver to take possession of all, or substantially all, of Seller’s assets,
suffered the attachment or other judicial seizure of all, or substantially all,
of Seller’s assets, admitted in writing its inability to pay its debts as they
come due or made an offer of settlement, extension or composition to creditors
generally.
9.1.18    Financial Statements. Each of the Financial Statements delivered to
Buyer (a)  was prepared in accordance with standard accounting practices
consistently applied, and (b) fairly presents in all material respects all
assets and liabilities, revenues, expenses and operations of the Purchased
Assets as a separate standalone business unit.  As used herein, “Financial
Statement” means the financial statements described on Schedule 9.1.18 attached
hereto.

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9.1.19    Insurance. Seller has delivered to Buyer true, correct and complete
copies of all insurance certificates in such Seller’s possession or control
evidencing the current insurance coverage in effect for the Property.
9.2    Subsequent Changes; Updates to Schedules. Notwithstanding anything to the
contrary in this Agreement, but without limiting any of Buyer’s rights or
remedies under this Agreement, Sellers shall have the right to amend and
supplement any schedule to this Agreement (other than Schedule 1, Schedule 3 and
Schedule 3.5) from time to time without Buyer’s consent to the extent that such
schedule needs to be amended or supplemented to maintain the truth or accuracy
of the applicable representation or warranty or the information disclosed
therein, by promptly (but in any event prior to Closing) providing a written
copy of such amendment or supplement to Buyer prior to Closing. If, after the
expiration of the Due Diligence Period and prior to Closing, either (i) any
Seller makes any amendment or supplement to the schedules (other than amendments
or supplements intended to reflect the operation of the Communities in the
Ordinary Course of Business or otherwise in accordance with this Agreement), or
(ii) Buyer has Knowledge of any fact that would constitute a breach of a
representation or warranty by any Seller (each, a “Post-Due Diligence
Disclosure”) and the matter of such Post-Due Diligence Disclosure, if not added
to the schedules would result in the failure of the condition set forth in
Section 12.2.1(b) to be satisfied at Closing, then Buyer, as its sole remedy,
shall have the option of either (i) waiving the breach of representation or
warranty, and proceeding with Closing, or (ii) terminating this Agreement in
accordance with this Section 9.2. Any such election shall be made by Buyer not
later than seven (7) calendar days after Buyer becomes actually aware (whether
by notice from Seller or otherwise) of such fact, provided that any election by
Buyer to terminate this Agreement shall not be effective unless Seller fails to
cure such breach within thirty (30) days following the delivery of Buyer’s
termination notice. If Seller elects to cure any such breach following Buyer’s
timely delivery of such termination notice, and the end of such 30-day cure
period extends beyond the Closing Date, then the Closing Date shall be extended
to the date two (2) Business Days following the end of such 30-day cure period.
If Buyer does not timely elect to terminate this Agreement pursuant to this
Section 9.2 with respect to any particular Post-Due Diligence Disclosure, and
Buyer nevertheless proceeds to Closing, then Buyer shall be conclusively deemed
to have elected to waive its right to terminate this Agreement pursuant to this
Section 9.2 by reason of such Post-Due Diligence Disclosure, and elected to
acquire the Property on the terms set forth in this Agreement without adjustment
to the Purchase Price, and waived all post-closing remedies under this
Agreement, at law or in equity with respect to such Post-Due Diligence
Disclosure. In no event shall Seller be liable to Buyer for, or be deemed to be
in default hereunder by reason of, any breach of any of Seller’s representations
or warranties that results from any change that (A) occurs between the Effective
Date and the Closing Date and (B) (1) results from actions of any Seller which
are expressly permitted under the terms of this Agreement, (2) is beyond the
reasonable control of Sellers, or (3) results from any act or omission of Buyer;
provided that the foregoing shall not limit

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Buyer’s right to terminate this Agreement pursuant to Section 12.2 as a result
of the failure of the condition set forth in Section 12.2.1(b) to be satisfied
at Closing. If applicable, Closing shall be adjourned to the extent necessary to
provide the Parties with the full benefit of the time periods provided herein.
10.    Buyer Representations and Warranties. Buyer hereby represents and
warrants to Sellers as of the Effective Date and as of the Closing Date that:
10.1    Organization and Authorization. Buyer is duly incorporated or formed (as
the case may be), and validly existing under the laws of the State of Delaware.
Buyer has full power and authority to enter into this Agreement, to perform this
Agreement and to consummate the transactions contemplated hereby. This Agreement
is a legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
affecting the rights of creditors generally.
10.2    No Conflicting Agreements. The execution, delivery and performance of
this Agreement and all documents contemplated hereby by Buyer have been duly and
validly authorized by all necessary action on the part of Buyer and all required
consents and approvals have been duly obtained and will not result in a breach
of any of the terms or provisions of, or constitute a default under, any
indenture, agreement or instrument to which Buyer is a Party or otherwise bound.
10.3    Patriot Act Compliance. To the extent applicable to Buyer, Buyer has
complied in all material respects with the Patriot Act and the regulations
promulgated thereunder, and the rules and regulations administered by OFAC, to
the extent such Laws are applicable to Buyer. Buyer is not included on the List
of Specially Designated Nationals and Blocked Persons maintained by the OFAC, or
is a resident in, or organized or chartered under the laws of (A) a jurisdiction
that has been designated by the U.S. Secretary of the Treasury under Section 311
or 312 of the Patriot Act as warranting special measures due to money laundering
concerns, or (B) any foreign country that has been designated as non-cooperative
with international anti-money laundering principles or procedures by an
intergovernmental group or organization, such as the Financial Action Task Force
on Money Laundering, of which the United States is a member and with which
designation the United States representative to the group or organization
continues to concur.
10.4    Funding. At Closing, Buyer will have all funds required to consummate
the transactions contemplated by this Agreement in accordance with the terms
hereof.

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11.    Covenants of Sellers and Buyer.
11.1    Covenants of Sellers. Each Seller hereby covenants with Buyer, as
follows:
11.1.1    Contracts; Tenant Leases. Between the Effective Date and the date
which is three (3) Business Days prior to the expiration of the Due Diligence
Period, (i) Sellers will instruct Manager to keep Buyer informed of any new
Contracts or Tenant Leases that are entered into by any Seller or any amendments
or modifications to the existing Contracts or Tenant Leases, which new Contracts
or modifications will survive Closing or otherwise affect the use, operation or
enjoyment of the Property after Closing (collectively, “New Contracts and
Leases”), and (ii) Seller will instruct Manager to provide Buyer with copies of
all New Contracts and Leases. If Buyer prepares an estoppel certificate
(“Estoppel”) or subordination and non-disturbance agreement (“SNDA”) in respect
of any Tenant Lease and requests that Seller endeavor to have the applicable
Tenant complete, execute and return such Estoppel and/or SNDA, Seller will
request (promptly upon receipt thereof from Buyer) that such Tenant, and will
use commercially reasonable efforts to cause such Tenant to, complete and
execute such Estoppel and/or SNDA, as applicable, and return it to Buyer as
promptly as reasonably practicable thereafter; provided, however in no event
shall Seller’s failure to obtain such Estoppel and/or SNDA be deemed to be a
breach by Seller under this Agreement, nor shall the receipt of any such
Estoppel and/or SNDA be a condition precedent to Closing. Subsequent to the date
which is three (3) Business Days prior to the expiration of the Due Diligence
Period, and continuing until Closing (provided this Agreement has not been
terminated), Sellers shall not (and, to the extent a Seller’s consent is
required under the applicable Management Agreement, shall not consent to),
without Buyer’s prior written consent which shall not be unreasonably withheld,
conditioned or delayed (and which consent will be deemed to have been given by
Buyer if Buyer does not notify Sellers in writing to the contrary within three
(3) Business Days after Sellers provide written notice to Buyer thereof), (i)
amend, extend, renew (except pursuant to renewal rights solely in favor of the
then applicable Tenant or counterparty expressly set forth in a Tenant Lease or
Material Contract) terminate, waive any rights under or consent to any matter to
which a Seller is entitled to consent thereunder, any existing Tenant Leases or
Material Contracts, nor (ii) enter into any new Tenant Leases or Material
Contracts, unless such new or existing Tenant Lease or Material Contract is
entered into in the Ordinary Course of Business, is terminable by Buyer without
any termination fee, penalty or premium upon not more than ninety (90) days’
notice and is disclosed promptly in writing to Buyer.
11.1.2    Required Governmental Approvals. Sellers shall cooperate with (and
instruct Manager to cooperate with) and do (and instruct Manager to do) all
things reasonably practicable to assist Buyer in its efforts to obtain all of
the Required Governmental Approvals; provided, however, that, no Seller nor any
of their respective Affiliates shall be required to make payments or incur any
other liability to pursue or secure any such Required Governmental Approvals
(all of which costs, including application fees, shall be Buyer’s
responsibility). Sellers further agree

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to reasonably cooperate (at no cost or expense to Sellers other than any de
minimis cost or expense or any cost or expense which Buyer agrees in writing to
reimburse) with Buyer in any post-Closing transition with respect to the
Required Government Approvals. For clarification purposes, the parties
acknowledge and agree that, to the extent permitted by Applicable Law and to the
extent assignable, Buyer shall not acquire or assume any of Sellers’ Medicare or
Medicaid provider numbers used in the operation of the Communities or the
conduct of the Business unless and until new Medicare and Medicaid provider
numbers with respect to the operation of the Communities or the conduct of the
Business are issued to Buyer (whether before or after Closing). For greater
certainty, this Section 11.1.2 shall survive Closing.
11.1.3    Operation in the Ordinary Course. Subject to Sections 11.1.1 and
11.1.2 above, from the Effective Date until Closing, Sellers shall (i) instruct
Manager to operate and manage the Property in the Ordinary Course of Business in
substantial accordance with Applicable Law in all material respects, including
Health Care Laws, and (ii) instruct Manager to perform when due, and otherwise
comply with, all of Sellers’ material obligations and duties under the Tenant
Leases, the Residency Agreements and the Contracts. From the Effective Date
until Closing, Seller shall (a)  instruct Manager to maintain inventories at
levels consistent with the normal operation of the Communities; (b) not remove
from the Real Property any Personal Property except in the Ordinary Course of
Business; (c)  promptly notify Buyer in writing of any casualty, condemnation or
other material adverse change in the Property of which any Seller receives
notice; (d)  maintain in effect all existing fire and extended coverage
insurance, and theft, liability, business interruption and other existing
insurance pertaining to the Property and/or the operation of the Communities;
and (e)  use its commercially reasonable efforts to maintain existing Licenses
and Permits and renew the same, as necessary, at Seller’s cost and direction;
(f) not create or permit to be created any new Title Matters affecting any Real
Property that will not be removed at or prior to Closing; (g) not apply for any
change in the zoning of any Real Property or apply for a variance with respect
to such Property; and (h) not commence any material alterations to any Community
other than in the Ordinary Course of Business.
11.1.4    Non-Solicitation. Throughout the term of this Agreement, Sellers shall
not, and shall cause its subsidiaries and its and their respective officers,
directors, employees, investment bankers, attorneys, accountants, financial
advisors, agents and other representatives (collectively, the “Representatives”)
not to, directly or indirectly: (i) initiate, solicit, encourage or knowingly
facilitate or induce the submission of any inquiries, proposals or offers that
constitute, or may reasonably be expected to lead to, any Alternative
Transaction Proposal; (ii) engage or participate in any discussions or
negotiations regarding, or provide or cause to be provided any non-public
information or data relating to Sellers or any of their subsidiaries in
furtherance of, or have any discussions with any Person relating to, an actual
or proposed Alternative Transaction Proposal; or (iii) enter into any letter of
intent, agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar statement of intention or agreement relating to any

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Alternative Transaction Proposal. Each Seller agrees that it shall take all
necessary steps to promptly inform its subsidiaries and its and their respective
officers, directors, employees, investment bankers, attorneys, accountants,
financial representatives, agents and other representatives involved in the
transactions contemplated by this Agreement of the obligations undertaken in
this Agreement.
11.1.5    Residency Agreements. From and after the date hereof until the earlier
of Closing or the termination of this Agreement pursuant to the terms hereunder,
Sellers shall not, except as consented to by Buyer (which consent shall not be
unreasonably withheld, conditioned or delayed), (i) enter into any Residency
Agreement with respect to the Real Property (or any portion thereof), other than
Residency Agreements for residential occupancy on market terms that are
substantially on the form of the Residency Agreement(s) attached hereto as
Schedule 11.1.4 without any material modification to such form(s), or (ii) apply
for or obtain any additional operating license (or modify the scope of any
Existing Operating License) for the provision of nursing, assisted living,
congregate care or other health care services at the Community (including any
beds or units at any Community), except in the Ordinary Course of Business.
11.1.6    Reports. From and after the Effective Date and until the Closing Date,
Sellers shall instruct Manager to provide Buyer with the following reports on a
monthly basis: (i) daily occupancy reports substantially in the form previously
delivered to Buyer, (ii) profit and loss statements for each of the Communities
and (iii) a report of all Entrance Fees received with respect to any Residency
Agreements executed between the Effective Date and the Closing Date, and any
Entrance Fees refunded by Seller between the Effective Date and the Closing
Date.
11.1.7    Tax Clearance Certificates. Seller shall file with the applicable
department of revenue and any department of labor (each a “Department of
Revenue”) in each jurisdiction where each Community is located any available
application for a sales and use tax clearance certificate (each, a “Tax
Clearance Certificate”) within sixty (60) days of Closing or such shorter period
required by law and shall deliver each Tax Clearance Certificate from each such
Department of Revenue to Buyer if and when such certificate is issued and
received by Seller. For greater certainty, this Section 11.1.7 shall survive
Closing.
11.1.8    SEC Filings. Seller acknowledges that it has been advised that Buyer
is a subsidiary or affiliate of a publicly registered company (the “Company”).
Seller further acknowledges that, as a publicly registered company, the Company
is required to make certain filings with and/or disclosures to the Securities
and Exchange Commission (collectively, the “SEC Filings”) that relate, among
other things, to the most recent pre-acquisition fiscal year (the “Audited
Year”) and the current fiscal year through the date of acquisition (the “Stub
Period”) for the Communities. To assist the Company in preparing the SEC
Filings, Seller agrees to instruct Manager to, and otherwise use commercially
reasonable efforts to, provide Buyer, at or before Closing, with the following:
(i) access to bank statements for the Audited Year and Stub Period, (ii) rent
roll as

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of the end of the Audited Year and Stub Period, (iii) operating statements for
the Audited Year and Stub Period (iv) access to the general ledger for the
Audited Year and Stub Period, (v) cash receipts schedule for each month in the
Audited Year and Stub Period, (vi) access to invoices for expenses and capital
improvements in the Audited Year and Stub Period, (vii) accounts payable ledger
and accrued expense reconciliations in the Audited Year and Stub Period,
(viii) check register for the three (3) months following the Audited Year and
Stub Period, (ix) each Operating Lease and five (5) year lease schedules, to the
extent applicable, (x) copies of all insurance documentation for the Audited
Year and Stub Period, (xi) copies of accounts receivable aging as of the end of
the Audited Year and Stub Period along with an explanation for all accounts over
thirty (30) days past due as of the end of the Audited Year and Stub Period, and
(xii) signed representation letter and audit inquiry letter substantially in the
forms attached hereto as Exhibit J and Exhibit K, respectively. Buyer agrees
that, to the extent that any of the items described in the foregoing clauses (i)
through (xi) are in Manager’s possession and Buyer obtains such items directly
from Manager, Seller shall be deemed to have satisfied the foregoing obligations
with respect thereto. Seller agrees that if after Closing Buyer is required by
the Securities and Exchange Commission to provide any additional financial or
other information regarding any SEC Filings, Seller shall instruct Manager to,
and Seller will otherwise use commercially reasonable efforts to cooperate (at
no cost or expense to Seller other than any de minimis cost or expense or any
cost or expense which Buyer agrees in writing to reimburse) with Buyer in
connection with the preparation of such information, including providing access
to certain information at the Communities or at Seller’s offices, as applicable.
Further, Seller agrees that if Buyer is required by the Securities and Exchange
Commission to provide additional items related to such information, Seller shall
instruct Manager to, and Seller will otherwise use commercially reasonable
efforts to, cooperate with Buyer (at no cost or expense to Seller other than any
de minimis cost or expense or any cost or expense which Buyer agrees in writing
to reimburse) to deliver such related items. Seller acknowledges that the
foregoing provisions are of material importance to Buyer as a subsidiary of a
publicly registered company. For greater certainty, this Section 11.1.8 shall
survive Closing.
11.1.9    REIT Status. Seller acknowledges that the Company is a publicly
registered real estate investment trust (“REIT”). Seller further acknowledges
that as a publicly registered REIT, the Company is subject to certain filing and
reporting requirements in accordance with federal laws and regulations,
including regulations promulgated by the Securities and Exchange Commission.
Accordingly, and notwithstanding any provision of this Agreement or the
provisions of any other existing agreement between the parties hereto to the
contrary, the Company may publicly file, disclose, report or publish any and all
information related to this transaction that it reasonably and in good faith
interprets as being required by federal law or regulation in connection with
qualifying, maintaining or preserving Buyer’s status as a REIT or a publicly
registered company. Seller further agrees that it shall reasonably cooperate
with Buyer (at no cost or expense to Seller other than any de minimis cost or
expense or any cost or expense which Buyer agrees in writing to

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reimburse) in complying with any and all laws, regulations, ordinances,
requirements and restrictions in maintaining the Company’s status as a REIT or a
publicly registered company in connection with the transaction contemplated by
this Agreement. For greater certainty, this Section 11.1.9 shall survive
Closing.
11.1.10    Insurance. In addition, Sellers covenant and agree that they will
endeavor in good faith to cause Buyer and Manager and such as their Affiliates
as are identified to Sellers prior to Closing to be named as additional insureds
on the general liability insurance policy maintained by Sellers.
11.2    Covenants of Buyer. Buyer hereby covenants with Sellers as follows:
11.2.1    Governmental Approvals. Buyer shall promptly commence, diligently
pursue and use its commercially reasonable efforts to obtain all Required
Governmental Approvals prior to the Closing Date, and shall keep Sellers
informed of Buyer’s progress with respect thereto. For greater certainty, this
Section 11.2.1 shall survive Closing.
11.2.2    Communication with Governmental Authorities. Except in connection with
Buyer’s efforts to obtain Required Governmental Approvals as contemplated in
this Agreement, Buyer shall not, through its officers, employees, managers,
contractors, consultants, agents, representatives or any other Person (including
Buyer’s Representatives), directly or indirectly, communicate with any
Governmental Authority or any official, employee or representative thereof,
involving any matter with respect to the Properties or the Businesses without
Sellers’ prior written consent, which may be withheld in Sellers’ sole
discretion, unless such communication is arranged by Sellers. Notwithstanding
the foregoing, Buyer and its representatives, attorneys, advisors and
consultants shall have the right, without any requirement to obtain the consent
of Sellers, to (i) review building department, health department and other local
Governmental Authority records with respect to the Real Properties and the
operation of the Businesses and to request confirmations or certifications from
zoning or land use authorities or departments regarding the compliance of the
Property with zoning and land use laws, and (ii) apply to the applicable
Governmental Authority for any licenses or permits necessary or desirable for
Buyer’s continued operation of the Businesses after Closing.
11.2.3    Communication with Residents and Employees. Buyer shall not, through
its officers, employees, managers, contractors, consultants, agents,
representatives or any other Person (including Buyer’s Representatives),
directly or indirectly, communicate with any Resident or Employee or any Person
representing any Resident or Employees involving any matter with respect to the
Properties or the Businesses, the Residents, the Employees or this Agreement,
without the applicable Seller’s prior written consent, which consent shall not
be unreasonably or arbitrarily withheld, delayed or conditioned. Notwithstanding
the foregoing, upon no less than two

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(2) Business Day’s prior notice to Sellers and Manager, Buyer may as part of its
inspections, hold discussions with the Executive Director of each Community, and
at Sellers’ option, Sellers or their designee shall be present during any such
discussions.
11.3    Licenses and Permits.
11.3.1    Licenses and Permits. Buyer shall be responsible for obtaining the
transfer of all transferable Licenses and Permits (which may include transfers
of the Existing Operating Licenses) or the issuance of new licenses and permits,
including the licenses and permits required for Buyer’s continued and
uninterrupted operation of the Communities as currently operated (the “New
Operating Licenses”). Buyer, at its cost and expense, shall submit all necessary
applications and other materials to the appropriate Governmental Authority and
take such other actions to effect the transfer of Licenses and Permits or
issuance of new licenses and permits, including the New Operating Licenses, as
of Closing, and Sellers shall use commercially reasonable efforts (at no cost or
expense to Sellers other than any de minimis cost or expense or any cost or
expense which Buyer agrees in writing to reimburse) to cooperate and to instruct
Manager to cooperate with Buyer to cause the Licenses and Permits to be
transferred or new licenses and permits to be issued to Buyer. If this Agreement
is terminated and Buyer has filed an application or otherwise commenced the
processing of obtaining new licenses and permits, Buyer shall withdraw all such
applications and cease all other activities with respect to such new licenses
and permits.
11.3.2    No Closing Condition. Subject to the provisions of this Section,
without limiting the obligations of the Parties under Section 11.2.1 and 11.3.1,
the Parties do hereby specifically acknowledge and agree that to the extent the
Existing Operating Licenses for any of the Communities are not transferable
and/or have not been effectively transferred to Buyer on the Closing Date,
subject to Seller’s delivery at Closing of all required Interim Bridging
Documents as provided in Section 11.3.3 below, such failure shall not constitute
a Buyer Closing Condition Failure, shall not affect in any manner whatsoever the
Closing, and Closing shall proceed without any delay or interruption whatsoever.
11.3.3    Interim Bridging Document. The Parties acknowledge and agree that
certain factors outside the reasonable control of the Parties (such as delays in
processing applications by the requisite Governmental Authorities) may prevent
the Parties from obtaining the Required Governmental Approvals with respect to
one or more Communities on or before the Closing Date. In such event, the
Parties will enter into an interim bridging arrangement in order to allow the
Existing Operating License(s) for such Community(ies) to remain in full force
and effect following Closing until such time as the New Operating Licenses have
been issued to Buyer (and all such documents, whether one or more, respecting
each such bridged Community, the “Interim Bridging Document”). The Parties will
agree upon the form of each such Interim Bridging Document on or prior to the
expiration of the Due Diligence Period, with appropriate modifications
thereafter

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to accommodate requirements of the specific jurisdictions in which the
Communities are located. If required by Applicable Law, the Parties shall submit
a copy of any such Interim Bridging Document and timely provide such other
required notifications or filings to the appropriate Governmental Authority(ies)
to permit Closing to occur as scheduled, and to the extent any notifications or
filings to the appropriate Governmental Authority(ies) are required after
Closing, the Parties shall timely provide the same.. Nothing contained herein
shall operate to relieve Buyer from its obligations under Section 11.2.1 to
promptly commence, diligently pursue and use its commercially reasonable efforts
to obtain all Required Governmental Approvals prior to the Closing Date.
11.3.4    Survival. For greater certainty, this Section 11.3. shall survive the
Closing.
11.4    Employees.
11.4.1    Termination and Rehiring of Employees. Buyer shall cause Employer to
continue the employment of, such Employees as Buyer deems appropriate, with such
employment to continue in effect as of the Closing; provided, however, that
Buyer shall cause Employer to continue the employment of a sufficient number of
Employees and upon such terms and conditions as are necessary to prevent any
Seller Entity from incurring any Liability under the WARN Act. Buyer shall be
responsible for all Liabilities (including Liabilities arising under the WARN
Act and Liabilities for severance pay or similar payments) with respect to the
termination of any Employees from and after the Closing Date, and Buyer shall
indemnify and hold each Seller Entity harmless with respect to all such
Liabilities. The Employees who continue in employment with Employer, are
referred to collectively herein as the “Hired Employees”. Within ten (10)
Business Days after the Effective Date, Sellers shall instruct Manager to
provide to Buyer the number of Employees terminated within the previous ninety
(90) days at each Community. Buyer shall, at least five (5) Business Days prior
to Closing, provide Sellers a list of any Employees that Buyer intends not to
retain after Closing, and promptly after the Closing Buyer shall provide written
notice to Seller identifying those Employees not retained by Employer.
11.4.2    Compensation of Hired Employees. The employment of the Hired Employees
shall be on such terms as Buyer (or Employer) deems appropriate and consistent
with Buyer’s (or Employer’s) standard policies and practices; provided, however,
that such terms of employment shall comply with all Applicable Laws relating to
the Employees and be sufficient to prevent any Seller Entity from incurring any
Liability under the WARN Act.
11.4.3    Service Credit for Hired Employees. For all purposes, under the
employee benefit plans of Buyer and or its manager and Affiliates from and after
the Closing (the “Post-Closing Plans”), each Hired Employee will be credited
with his or her years of service with

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Sellers, Manager and Employer through the Closing (including predecessor or
acquired entities or any Affiliates or other entities for which Sellers, Manager
or Employer have given credit for prior service), to the same extent as such
Hired Employee was entitled, immediately prior to the Closing, to credit for
such service under the corresponding employee benefit plan of Sellers, Manager
or Employer, except (i) for purposes of benefit accrual under defined benefit
plans and (ii) to the extent such credit would result in a duplication of
benefits. To the extent permitted by Applicable Law, Buyer shall (and shall
cause its manager and other Affiliates, as applicable) to assume and honor all
paid time off that each Hired Employee has accrued with Sellers, Manager and/or
Employer that remains unused as of immediately prior to the Closing, and such
amounts shall not be subject to proration. In addition, and without limiting the
generality of the foregoing, Buyer shall cause each Hired Employee to continue
to be eligible to participate, without any waiting time, in any and all
Post-Closing Plans upon the implementation thereof to the extent coverage under
such Post-Closing Plans replaces coverage under a similar or comparable employee
benefit plan of Sellers, Manager or Employer in which such Hired Employee
participated immediately before the Closing. If applicable, Buyer shall also
credit the Hired Employees and their eligible dependents under its and its
manager’s and Affiliates’ health care plans for any amounts paid toward
deductibles and out-of-pocket maximums by such Hired Employees and enrolled
dependents for the year of the Closing under a health care plan maintained by
Sellers, Manager or Employer.
11.4.4    Survival. For greater certainty, this Section 11.4 shall survive the
Closing.
11.5    Tax Contests.
11.5.1    Taxable Period Terminating Prior to Closing Date. Sellers shall retain
the right to commence, continue and settle any proceeding to contest any Taxes,
at Seller’s sole cost and expense, for any taxable period which terminates prior
to the Closing Date, and shall be entitled to any refunds or abatements of Taxes
for such periods prior to the Closing Date awarded in such proceedings. For
greater certainty, this Section 11.5.1 shall survive the Closing.
11.5.2    Taxable Period Including the Closing Date. Sellers, at the sole
expense of Sellers (except for the reimbursement rights set forth below) shall
have the right to commence, continue and settle any proceeding to contest any
Taxes for any taxable period which includes the Closing Date subject to Buyer’s
right to approve any such contests commenced after the expiration of the Due
Diligence Period. Notwithstanding the foregoing, if Buyer desires to contest any
Taxes for such taxable period and the applicable Seller has not commenced any
proceeding to contest any such Taxes for such taxable period, Buyer shall
provide written notice requesting that such Seller contest such Taxes. If such
Seller desires to contest such Taxes, such Seller shall provide written notice
to Buyer within ten (10) days after receipt of Buyer’s request confirming that
such Seller will contest such Taxes, in which case such Seller shall proceed to

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contest such Taxes, and Buyer shall not have the right to contest such Taxes. If
such Seller fails to provide such written notice confirming that it will contest
such Taxes within such ten (10) day period, Buyer shall have the right to
contest such Taxes. Any refunds or abatements awarded in such proceedings shall
be used first to reimburse the Party contesting such Taxes for the reasonable
costs and expenses incurred by such Party in contesting such Taxes, and the
remainder of such refunds or abatements shall be prorated between the applicable
Seller and Buyer as of the Cut-Off Time, and the Party receiving such refunds or
abatements promptly shall pay such prorated amount due to the other Party. This
Section 11.5.2 shall survive the Closing. For purposes of determining each
Party’s prorated amount of refunds or abatements, (1) in the case of Taxes based
upon or related to income or receipts or imposed on a transactional basis, the
amount shall be determined according to the extent to which Seller or Buyer was
the owner of fee title in and to the relevant Property or Properties at the time
of such income, receipt or transaction and (2) in the case of other Taxes, on a
pro rata per diem basis.
11.5.3    Taxable Period Commencing After Closing Date. Buyer shall have the
right to commence, continue and settle any proceedings to contest Taxes for any
taxable period which commences after the Closing Date, and shall be entitled to
any refunds or abatements of Taxes awarded in such proceedings. For greater
certainty, this Section 11.5.3 shall survive the Closing.
11.5.4    Cooperation. Sellers and Buyer shall (and, if applicable, shall cause
their respective managers to) use commercially reasonable efforts to cooperate
with the Party contesting the Taxes (at no cost or expense to the Party not
contesting the Taxes other than any de minimis cost or expense or any cost or
expense which the requesting Party agrees in writing to reimburse) and to
execute and deliver any documents and instruments reasonably requested by the
Party contesting the Taxes in furtherance of the contest of such Taxes. For
greater certainty, this Section 11.5.4 shall survive the Closing.
11.6    Notices and Filings. Sellers and Buyer shall use commercially reasonable
efforts (and shall cause their respective managers to) to cooperate with each
other (at no cost or expense to the Party whose cooperation is requested, other
than any de minimis cost or expense or any cost or expense which the requesting
Party agrees in writing to reimburse) to provide written notice to any Person
under any Resident Agreements, Tenant Leases, Contracts, and Licenses and
Permits, and to effect any registrations or filings with any Governmental
Authority or other Person, regarding the change in ownership of the Properties
or the Businesses. For greater certainty, this Section 11.6 shall survive the
Closing.
11.7    Access to Information. After the Closing, (at no cost or expense to
Buyer other than any de minimis cost or expense or any cost or expense which
Sellers agree in writing to reimburse), Buyer shall provide to the officers,
employees, agents and representatives of any of the

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Seller Entities reasonable access to (i) the Books and Records with respect to
the Communities applicable to the periods prior to the Closing, (ii) the
Properties and (iii) the employees at the Communities, for any purpose
reasonably deemed necessary or advisable by Sellers to prepare any documents
required to be filed by Sellers under Applicable Law or to investigate, evaluate
and defend any claim, charge, audit, litigation or other proceeding made by any
Person or insurance company involving any Seller Entity; provided, however, that
(A) such Seller Entities shall provide reasonable prior notice to Buyer; (B)
Buyer shall not be required to provide such access during non-business hours;
(C) Buyer shall have the right to accompany the officer, employees, agents or
representatives of such Seller Entities in providing access to the Books and
Records, the Properties or the employees of Buyer (or Buyer’s manager) as
provided in this Section 11.7; (D) Buyer shall not be required to provide such
access to materials or information to the extent the same (x) are legally
privileged or constitute attorney work product, (y) are subject to a
confidentiality agreement or to Applicable Law prohibiting their disclosure by
Buyer, or (z) constitute confidential internal assessments, reports, studies,
memoranda, notes or other correspondence prepared by or on behalf of any officer
or employee of Buyer, (E) such access shall not unreasonably interfere with
Community operations, and (F) nothing contained herein shall be deemed to impose
upon Buyer to maintain any Books and Records other than to the extent required
to permit Buyer to comply with its obligations under this Section 11.7. Buyer,
at its cost and expense, shall retain all Books and Records with respect to the
Communities for a period equal to the applicable statute of limitations for the
matter for which Seller is requesting such access. For greater certainty, this
Section 11.7 shall survive the Closing.
11.8    Privacy Laws. To the extent Buyer reviews, is given access to or
otherwise obtains any Resident Data as part of the purchase of the Properties
and the Businesses, Buyer shall at all times comply in all material respects
with all Applicable Law concerning (i) the privacy and use of such Resident Data
and the sharing of such information and data with third parties (including any
restrictions with respect to Buyer’s or any third party’s ability to use,
transfer, store, sell, or share such information and data), and (ii) the
establishment of adequate security measures to protect such Resident Data. For
greater certainty, this Section 11.8 shall survive the Closing.
11.9    Further Assurances. From the Effective Date until the Closing or
termination of this Agreement, and subject to the other terms and conditions set
forth in this Agreement, Sellers and Buyer shall (and Seller shall instruct
Manager to) use commercially reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate the transaction described in this Agreement, including
(i) obtaining all necessary consents, approvals and authorizations required to
be obtained from any Governmental Authority or other Person under this Agreement
or Applicable Law, and (ii) effecting all registrations and filings required
under this Agreement or Applicable Law. After the Closing, Sellers and Buyer
shall (and shall instruct their respective managers to) use commercially
reasonable efforts (at no cost or expense to such Party, other than any de
minimis cost or expense or any cost or expense

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which the requesting Party agrees in writing to reimburse) to further effect the
transaction contemplated in this Agreement. For greater certainty, the
immediately preceding sentence of this Section 11.9 shall survive the Closing.
12.    Conditions Precedent to Closing.
12.1    Mutual Conditions Precedent.
12.1.1    Satisfaction of Mutual Conditions. The respective obligations of
Sellers and Buyer to close the transaction contemplated in this Agreement are
subject to the satisfaction or waiver at or prior to Closing of the following
conditions precedent (the “Mutual Closing Conditions”):
(a)    Adverse Proceedings. No litigation or other court action shall have been
commenced seeking to obtain an injunction or other relief from such court to
enjoin the consummation of the transaction described in this Agreement, and no
preliminary or permanent injunction or other order, decree or ruling shall have
been issued by a court of competent jurisdiction or by any Governmental
Authority, that would make illegal or invalid or otherwise prevent the
consummation of the transaction described in this Agreement.
(b)    Adverse Law. No Applicable Law shall have been enacted that would make
illegal or invalid the consummation of the transaction described in this
Agreement.
(c)    Required Governmental Approvals.  Each Required Governmental Approval
(other than Required Governmental Approvals the failure of which to obtain would
not, individually or in the aggregate, materially impact Sellers’ or Buyer’s
ability to rent or sell units, or provide care, at any Community in accordance
with Applicable Law in the Ordinary Course of Business) shall have been obtained
with respect to all Communities; or, to the extent such Required Governmental
Approvals have not been obtained for any one or more Community(ies), Buyer and
Seller shall have executed and delivered the Interim Bridging Document for such
Community(ies).
12.1.2    Failure of Mutual Closing Condition. If any of the Mutual Closing
Conditions is not satisfied or waived at Closing, then Sellers and/or Buyer
shall have the right to adjourn the Closing one time each for up to fifteen (15)
days in the aggregate each (or, in the event that the condition set forth in
Section 12.1.1(c) is not satisfied and the failure of such condition is not the
result of the breach by such extending party of its obligations under this
Agreement, including Section 11.3, thirty (30) days) in order to attempt to
satisfy such Mutual Closing Conditions failing which either Party shall have the
right to terminate this Agreement by providing written notice to the other
Party, in which case the Deposit shall be disbursed to Buyer, and the Parties
shall have no further rights or obligations under this Agreement except (a) in
the event that such failure of condition

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also constitutes a Buyer Default or Seller Default in which case the applicable
Party shall have the rights and remedies set forth in Section 19, and (b) for
those rights and obligations which expressly survive such termination.
12.2    Buyer Closing Conditions.
12.2.1    Satisfaction of Buyer Conditions. The obligation of Buyer to purchase
the Property pursuant to this Agreement shall be subject to the satisfaction or
waiver, on or before the Closing Date, of all of the conditions set forth in
this Section 12.2.1 (“Buyer Closing Conditions”):
(a)    Seller’s Deliveries. All of the Seller Closing Deliveries shall have been
delivered to Buyer or deposited with Escrow Holder with instructions to be
delivered to Buyer at Closing subject only to the terms and conditions of this
Agreement.
(b)    Representations and Warranties. Subject to the provisions of Section 9.2,
the representations or warranties of Sellers in this Agreement (as qualified by
any schedules to this Agreement and any amendments or supplements to such
schedules) shall be true and correct in all material respects (except that (i)
those representations and warranties which are qualified as to materiality or
material adverse effect (or any correlative terms) and (ii) the representations
and warranties set forth in Section 9.1.7 shall be true and correct in all
respects) as of the Closing (or as of such other date to which such
representation or warranty expressly is made).
(c)    Covenants and Obligations. The covenants and obligations of Sellers in
this Agreement shall have been performed in all material respects.
(d)    Title Policies. The Title Company shall have irrevocably and
unconditionally committed to issue the Title Policies with extended coverage in
the full amount of the Tax Purchase Price Allocation applicable to each of the
Properties, insuring marketable fee title to the Properties vested in Buyer,
subject only to deliveries required under this Agreement or of Buyer and the
payment of any premium therefor and the Permitted Exceptions.
(e)    Tail Insurance Policy. Sellers shall have (i) paid in full all premiums
that are due or may become due under the Tail Insurance Policy and shall provide
Buyer evidence of such payment, and (ii) provided to Buyer a certificate
evidence the Tail Insurance Policy, together with all terms and conditions
thereof. “Tail Insurance Policy” means that certain tail insurance policy
relating to professional liability insurance purchased by Sellers in connection
with the Transactions, providing coverage effective as of the Closing Date and
through at least the third (3rd) anniversary of the Closing Date in the
aggregate amount of Ten Million and no/100 dollars ($10,000,000.00), naming
Manager (and/or certain affiliates of Manager) as an additional insured,

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and in all other respects consistent with the current professional liability
coverage in place on the Effective Date.
(f)    Termination of Management Agreements.  The Management Agreements shall
have been terminated with respect to those Communities that are not subject to
an Interim Bridging Document.
12.2.2    Failure of Buyer Closing Condition. Except as expressly provided in
Section 12.4, if any of the Buyer Closing Conditions is not satisfied or waived
at Closing (a “Buyer Closing Condition Failure”), then Buyer shall have the
right to adjourn the Closing for up to fifteen (15) days in the aggregate in
order to attempt to satisfy and allow Seller to attempt to satisfy such Buyer
Closing Conditions, failing which Buyer shall, as Buyer’s sole and exclusive
remedy, have the right, by providing written notice to Sellers, (i) subject to
Sellers’ right to cure under Section 19.2, to terminate this Agreement, in which
case the Deposit (less the Independent Contract Consideration) shall be
disbursed to Buyer, and the Parties shall have no further rights or obligations
under this Agreement, except those which expressly survive such termination, or
(ii) to waive in writing all Buyer Closing Condition Failures and proceed to
Closing without any reduction in the Purchase Price.
12.3    Seller Closing Conditions.
12.3.1    Satisfaction of Seller Conditions. The obligation of Sellers to sell
the Property pursuant to this Agreement shall be subject to the satisfaction or
waiver, on or before the Closing Date, of all of the conditions set forth in
this Section 12.3.1 (“Seller Closing Conditions”):
(a)    Buyer’s Deliveries. All of the Buyer Closing Deliveries shall have been
delivered to Sellers or deposited with Escrow Holder with instructions to be
delivered to Sellers at Closing subject only to the terms and conditions of this
Agreement.
(b)    Representations and Warranties. The representations or warranties of
Buyer in this Agreement shall be true and correct in all material respects as of
the Closing (or as of such other date to which such representation or warranty
is expressly made).
(c)    Covenants and Obligations. The covenants and obligations of Buyer in this
Agreement shall have been performed in all material respects.
12.3.2    Failure of Seller Closing Condition. Except as expressly provided in
Section 12.4, if any of the Seller Closing Conditions is not satisfied or waived
at Closing, then Sellers shall have the right to adjourn the Closing for up to
fifteen (15) days in the aggregate in order to attempt to satisfy and allow
Buyer to attempt to satisfy such Seller Closing Conditions,

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failing which Sellers shall, as Sellers’ sole and exclusive remedy, have the
right to (i) terminate this Agreement by providing written notice to Buyer, in
which case the Deposit shall be disbursed to Seller and the Parties shall have
no further rights or obligations under this Agreement, except those which
expressly survive such termination, or (ii) waive in writing any of the Seller
Closing Conditions at or prior to Closing.
12.4    Frustration of Closing Conditions. Sellers and Buyer may not rely on the
failure of Mutual Closing Conditions, Seller Closing Conditions or Buyer Closing
Conditions, respectively, if such failure was caused by such Party’s failure to
act in good faith or to use its commercially reasonable efforts to cause the
Closing to occur. The Closing shall constitute conclusive evidence that the
Parties have waived any conditions that are not satisfied as of the Closing.
13.    Closing.
13.1    Seller Closing Deliveries. On or before the Closing Date (or such
earlier date as is specified in any subsection below), each Seller shall deliver
to Escrow Holder the following with respect to its Property (“Seller Closing
Deliveries”):
13.1.1    Closing Certificate. A closing certificate substantially in the form
of Exhibit E-1 together with all exhibits thereto.
13.1.2    Deed. One (1) original Deed for the Real Property of each Community
(together with such local conforming changes as Seller may require or be
required to include), each duly executed and acknowledged by the applicable
Seller and in proper form for recording, conveying to Buyer fee title to the
Real Property described therein;
13.1.3    Bill of Sale. A Bill of Sale in the form of Exhibit C, transferring
the tangible Personal Property to Buyer on the terms set forth therein;
13.1.4    Assignment Agreement. Two (2) originals of an Assignment and
Assumption Agreement in the form attached hereto as Exhibit D (the “Assignment
Agreement”), duly executed by Seller assigning the Residency Agreements
(including all Entrance Fee Liabilities thereunder), the Contracts and the
Tenant Leases, the Licenses and Permits and the Intangible Property;
13.1.5    Transferor’s Certification of Non-Foreign Status. One (1) original
certification as to Seller’s non-foreign status which complies with the
provisions of Section 1445(b)(2) of the Internal Revenue Code of 1986, as
amended, any regulations promulgated thereunder (“Internal Revenue Code”), and
any revenue procedures or other officially published announcements

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of the Internal Revenue Service or the U.S. Department of the Treasury in
connection therewith (“FIRPTA”);
13.1.6    Title Documents. Such other documents and instruments as Title Company
may reasonably require from Sellers in order to issue the Title Policies;
13.1.7    Closing Statement. The Closing Statement executed by each Seller;
13.1.8    Interim Bridging Document. Two (2) originals of the Interim Bridging
Document for each of the applicable Community(ies), duly executed by the
applicable Seller;
13.1.9    Escrow Holdback. Three (3) originals of the Escrow Holdback Agreement,
duly executed by Seller; and
13.1.10    Other Documents. Such other documents as may be required by this
Agreement or as may reasonably be requested by Buyer to carry out the terms and
intent of this Agreement, provided that such documents shall not increase
Seller’s liability or result in a material expense to Seller.
13.2    Buyer’s Closing Deliveries. On or before the Closing Date, Buyer shall
deliver to Escrow Holder the following (“Buyer Closing Deliveries”):
13.2.1    Purchase Price. The Closing Payment;
13.2.2    Direction Letter. A letter of direction to Escrow Holder directing
Escrow Holder to disburse the Deposit to Sellers;
13.2.3    Closing Certificate. A closing certificate in the form of Exhibit E-2,
together with all exhibits thereto;
13.2.4    Assignment Agreement. Two (2) originals of the Assignment Agreement,
duly executed by Buyer;
13.2.5    Interim Bridging Document. Two (2) originals of the Interim Bridging
Document for each of the applicable Community(ies), duly executed by Buyer;
13.2.6    Escrow Holdback. Three (3) originals of the Escrow Holdback Agreement,
duly executed by Buyer;
13.2.7    Other Documents. Two (2) originals of a counterpart of each of the
documents and instruments to be delivered by Sellers under Section 13.1 which
require execution by Buyer or an Affiliate of Buyer;

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13.2.8    Title Documents. On or before the Closing Date, such other payments or
documents as the Title Company may reasonably require from Buyer in order to
issue the Title Policies;
13.2.9    Closing Statement. The Closing Statement executed by Buyer; and
13.2.10    Other Documents. Such other documents as may be required by this
Agreement or as may reasonably be requested by any Seller to carry out the terms
and intent of this Agreement, provided that such documents shall not increase
Buyer’s liability or result in a material expense to Buyer.
13.3    Post-Closing Deliverables. Within one (1) Business Day after the Closing
Date, each Seller shall deliver to Buyer the following, to the extent within
such Seller’s Possession:
13.3.1    Keys. All keys to all buildings and other improvements located on the
Property, combinations to any safes thereon, and security devices therein in
Seller’s Possession;
13.3.2    Contracts. The original Leases (together with any documents held by
Seller in connection therewith, including any guaranties, pledge or security
agreements or membership certificates held by Seller pursuant to such pledge
agreements), Assumed Contracts and Warranties; and
13.3.3    Records. All records and files relating to the management or operation
of the Property, including all Resident and Tenant files (including
correspondence), employee files and property Tax bills.
14.    Costs and Expenses.
14.1    Seller Costs. In addition to other costs payable by Sellers as may be
provided elsewhere in this Agreement, Sellers shall pay the following costs and
expenses in connection with the transaction:
14.1.1    One-half (½) of Escrow Holder’s fee, costs and expenses;
14.1.2    All transfer, recordation and documentary fees and Taxes imposed by
any Governmental Authority or the Title Company on each Deed, and the conveyance
of the Real Property pursuant to this Agreement to the extent customarily borne
by sellers of real property in the city and county where each Property is
located for similar transactions;
14.1.3    Any sales, use, personal property transfer, or similar Tax (and any
associated amounts, including interest and penalties) payable in connection with
the conveyance

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pursuant to this Agreement to the extent customarily borne by sellers of real
property in the city and county where each Property is located for similar
transactions;
14.1.4    The CLTA portion of the premium costs and expenses of each Title
Policy (including all costs related to title searches, examinations and issuance
of the Commitment);
14.1.5    Fees and expenses of Seller’s attorneys, accountants and other
consultants; and
14.1.6    All other costs customarily borne by sellers of real property in the
city and county where each Property is located for similar transactions.
The provisions of this Section 14.1 shall survive the termination of this
Agreement.
14.2    Buyer’s Costs    . In addition to other costs payable by Buyer as may be
provided elsewhere in this Agreement, Buyer shall pay the following costs and
expenses in connection with the transaction:
14.2.1    One-half (½) of Escrow Holder’s fees, costs and expenses;
14.2.2    All transfer, recordation and documentary fees and Taxes imposed by
any Governmental Authority or the Title Company on each Deed, and the conveyance
of the Real Property pursuant to this Agreement to the extent customarily borne
by buyers of real property in the city and county where each Property is located
for similar transactions;
14.2.3    Any sales, use, personal property transfer, or similar Tax (and any
associated amounts, including interest and penalties) payable in connection with
the conveyance pursuant to this Agreement to the extent customarily borne by
buyers of real property in the city and county where each Property is located
for similar transactions;
14.2.4 Any fees or expenses payable for the assignment, transfer or conveyance
of the any Tenant Leases, Equipment Leases, Residency Agreement, Operating
Agreements, Licenses and Permits, and Warranties, if any;
14.2.5 Any mortgage, intangibles, intangible recording or similar Taxes (and any
associated amounts, including interest and penalties), title insurance fees and
expenses for any loan title insurance policies (and endorsements thereto), and
recording charges or other amounts payable in connection with any financing
obtained by Buyer;
14.2.6    The cost of New Surveys,

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14.2.7    any premium for “extended coverage” title insurance and the cost of
any Endorsements to the Title Policy;
14.2.8    Fees and expenses of Buyer’s attorneys, accountants and other
consultants; and
14.2.9    All other costs customarily borne by buyers in the city and county
where each Property is located for similar transactions.
14.3    The provisions of this Section 14.2 shall survive the Closing or earlier
termination of this Agreement.
15.    Prorations and Adjustments.
15.1    Items to Be Prorated. The items of revenue and expense set forth in this
Section 15 shall be prorated between Seller and Buyer as of the Cutoff Time (or
such other time as expressly set forth herein) with Buyer being deemed the owner
of the Property as of the Closing Date and with Buyer receiving credit for or
charged with the entire day of the Closing. Notwithstanding the foregoing,
however, the items of revenue and expense set forth in this Section 15 that
pertain to the operation (excluding, for example, those pertaining to the Land,
Appurtenances, Improvements and Personal Property) of the nursing facility
component of The Fountains at Canterbury, Oklahoma City, Oklahoma, shall be
prorated between Seller and Buyer as of the date when Buyer receives all
Governmental Approvals to become the licensed operator of the nursing facility
component, and solely for the purposes of such prorations, Buyer shall be
treated as the owner of those items of Property that pertain to the operation of
the nursing facility component and that can only be transferred upon Buyer’s
receipt of the Required Governmental Approvals as of said date and with Buyer
receiving credit for or charged with the entire day of said date. Except as
hereinafter expressly provided, all prorations shall be done on the basis of the
actual number of days in the year in which Closing occurs for the actual number
of days elapsed prior to the Closing Date or the actual number of days in the
month in which the Closing occurs and the actual number of days elapsed in such
month prior to the Closing Date, as applicable. Any net credit due to Seller as
a result of the adjustments and prorations under this Section 15 shall be paid
to Seller in cash at the time of the Closing. Any net credit due to Buyer as a
result of the adjustments and prorations under this Section 15 shall be credited
against the Purchase Price at the time of the Closing.
15.1.1    Taxes. Except as provided in Section 11.5.2, all Taxes shall be
prorated as of the Cutoff Time with the amount allocable to each Party
determined in accordance with the methodology set forth in the last sentence of
Section 11.5.2. If the amount of any such Taxes is not ascertainable on the
Closing Date, the proration for such Taxes shall be based on 105% of the most
recent available bill; provided, however, that after the Closing, Sellers and
Buyer shall reprorate the Taxes and pay any deficiency in the original proration
to the other Party promptly

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upon receipt of the actual bill for the relevant taxable period in accordance
with Section 15.3. For greater certainty, this Section 15.1.1 shall survive the
Closing.
15.1.12    Tenant Leases. Any rents and other amounts prepaid, accrued or due
and payable under the Tenant Leases shall be prorated as of the Cut-Off Time
between Sellers and Buyer, with Buyer being credited for amounts prepaid. If
there are any arrearages under the Tenant Leases as of the Closing Date relating
to any period prior to the month in which the Closing occurs, such arrearages
shall not be prorated; provided that Buyer shall use commercially reasonable
efforts after the Closing Date to collect any such arrearages, and shall
promptly remit any amounts so collected (less reasonable collection costs) to
Sellers; further provided, however, that Buyer shall not be obligated to sue any
Tenants or terminate any of the Tenant Leases. Any rents collected by Sellers or
Buyer after the Closing Date with respect to such Tenant Leases shall be applied
first to the calendar month in which the Closing occurs and prorated as between
Sellers and Buyer in accordance with this Section 15.1.2 and then to any
arrearages for month(s) prior to the calendar month in which the Closing occurs.
Payments from Tenants for electricity, operating expenses and Taxes which are
billed to Tenants in arrears or on an estimated basis shall be prorated on such
basis and readjusted if, as and when such amounts are finally determined and
collected. Buyer shall receive a credit for all assignable security deposits
held by Sellers under the Tenant Leases which are not transferred to Buyer, and
Buyer thereafter shall be obligated to refund or apply such deposits in
accordance with the terms of such Tenant Leases. Buyer shall not receive a
credit for any non-assignable security deposits held by Sellers, which Sellers
shall return to the Tenant under such Tenant Lease, and Buyer shall obtain any
replacement security deposit from such Tenant.
15.1.3    Residency Agreements. Any rents and other amounts prepaid, accrued or
due and payable under the Residency Agreements (other than Entrance Fees and
Entrance Fee Liabilities, which shall be prorated in accordance with Section
15.1.4 below) shall be prorated as of the Cut-Off Time between Sellers and Buyer
on an if, as and when collected basis, with Buyer being credited for amounts
prepaid. Any amounts payable under the Residency Agreements attributable to the
night immediately preceding the Closing Date shall be shared equally between
Buyer and Sellers. Buyer shall receive a credit for all assignable deposits held
by Sellers under the Residency Agreements which are not transferred to Buyer,
and Buyer thereafter shall be obligated to refund or apply such deposits in
accordance with the terms of such Residency Agreements.
15.1.4    Entrance Fee Liabilities. The Parties acknowledge and agree that there
shall be no proration with respect to Entrance Fees. At Closing, Buyer shall
receive a credit for all Current Entrance Fee Liabilities. At Closing, each
Seller shall assign to Buyer all of its rights to receive payments of Entrance
Fees, and Buyer shall assume all Entrance Fee Liabilities.

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15.1.5    Medicaid/Medicare Receivables. Sellers shall assign to Buyer at
Closing all outstanding Medicaid/Medicare Receivables as of the Closing Date and
Seller shall be credited for such amounts outstanding in accordance with
Schedule 15.1.5.
15.1.6    Contracts. Any amounts prepaid, accrued or due and payable under the
Contracts (other than for utilities, which proration is addressed separately in
Section 15.1.8) shall be prorated as of the Cut-Off Time between Sellers and
Buyer. Buyer shall receive a credit for all deposits held by Sellers under the
Contracts (together with any interest thereon) which are not transferred to
Buyer, and Buyer thereafter shall be obligated to refund or apply such deposits
in accordance with the terms of such Contracts. Sellers shall receive a credit
for all deposits made by Sellers under the Contracts (together with any interest
thereon to the extent any such deposit is held by the applicable counterparty in
an interest bearing account) which are transferred to Buyer or remain on deposit
for the benefit of Buyer.
15.1.7    Licenses and Permits. All amounts prepaid, accrued or due and payable
under any Licenses and Permits transferred to Buyer shall be prorated as of the
Cut-Off Time between Sellers and Buyer. Sellers shall receive a credit for all
deposits made by Sellers under the Licenses and Permits which are transferred to
Buyer or which remain on deposit for the benefit of Buyer.
15.1.8    Utilities. All utility services shall be prorated as of the Cut-Off
Time between Sellers and Buyer. The Parties shall use commercially reasonable
efforts to obtain readings for all utilities as of the Cut-Off Time. If readings
cannot be obtained as of the Closing Date, the cost of such utilities shall be
prorated between Sellers and Buyer by estimating such cost on the basis of the
most recent bill for such service; provided, however, that after the Closing,
the Parties shall reprorate the amount for such utilities and pay any deficiency
in the original proration to the other Party promptly upon receipt of the actual
bill for the relevant billing period, which obligation shall survive the
Closing. Sellers shall receive a credit for all fuel stored at the Communities
based on Sellers’ cost for such fuel. Sellers shall receive a credit for all
deposits transferred to Buyer or which remain on deposit for the benefit of
Buyer with respect to such utility contracts.
15.1.9    Employee Costs. The cost of the Hired Employees’ Compensation for the
calendar month in which the Closing occurs shall be prorated between Buyer and
the applicable Seller based on the day of such month that the Closing occurs.
15.1.10    Compensation. Unless Applicable Law requires that such amounts be
paid out to the Employees at Closing, Buyer shall receive a credit in the amount
of all Compensation payable to or otherwise accruing in favor of all Employees
through the date immediately prior to the Closing Date, and Buyer shall assume
all Liabilities with respect thereto.

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15.1.11    Resident Deposits; Refund Liabilities. Other than with respect to
Entrance Fees, which shall not be prorated, Buyer shall receive a credit for all
deposits paid by a Resident or a Tenant, except to the extent such deposits are
transferred to Buyer.
15.1.12    Vending Machines. Sellers shall remove all monies from all vending
machines, laundry machines, pay telephones and other coin-operated equipment as
of the Cut-Off Time and shall retain all monies collected therefrom as of the
Cut-Off Time, and Buyer shall be entitled to any monies collected therefrom
after the Cut-Off Time.
15.1.13    Trade Payables. Except to the extent an adjustment or proration is
made under another subsection of this Section 15.1, (i) Sellers shall pay in
full in the Ordinary Course of Business all amounts payable to vendors or other
suppliers of goods or services for the Businesses (the “Trade Payables”) which
are due and payable as of the Closing Date for which goods or services have been
delivered to the Communities prior to Closing (and to the extent such Trade
Payables have been delivered but are not due and payable as of the Closing Date,
Buyer shall receive a credit in the amount so payable, and Buyer shall be
responsible for the payment thereof), and (ii) Buyer shall be responsible for
and shall pay for all Trade Payables for goods or services delivered to the
Communities on or after the Closing Date incurred in the Ordinary Course of
Business.
15.1.14    Accounts Receivable. Buyer shall purchase all other accounts
receivable at Closing and Seller shall receive a credit for such amounts
outstanding in accordance with Schedule 15.1.14.
15.1.15    Cash on Hand. Sellers shall receive a credit for all cash on hand at
or petty cash (if any) held at the Communities which shall remain at the
Communities for the benefit of Buyer.
15.1.16    Supplies; F&B. Sellers shall receive a credit for all unopened
Supplies and F&B based on the applicable Seller’s cost for such items.
15.1.17    Other Adjustments and Prorations. All other items of income and
expense as are customarily adjusted or prorated upon the sale and purchase of
senior housing properties similar to the Properties shall be adjusted and
prorated as of the Closing Date in the manner customary for transactions of a
similar nature.
15.2    Closing Statement. No later than five (5) Business Days prior to the
Closing Date, the Parties, through their respective employees, agents or
representatives, jointly shall make such examinations, audits and inventories of
the Communities as may be necessary to make the adjustments and prorations to
the Purchase Price as set forth in this Section 15 or any other provisions of
this Agreement. Based upon such examinations, audits and inventories, the
Parties jointly shall

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prepare prior to Closing a closing statement (the “Closing Statement”), which
shall set forth their best estimate of the amounts of the items to be adjusted
and prorated under this Agreement. The Closing Statement shall be approved and
executed by the Parties at Closing, and such adjustments and prorations shall be
final with respect to the items set forth in the Closing Statement, except to
the extent any such items shall be reprorated after the Closing as provided
herein. Any item which cannot be finally prorated because of the unavailability
of information shall be tentatively prorated on the basis of the best data then
available and adjusted when the information is available in accordance with this
subsection. The Parties shall attempt in good faith to reconcile any differences
or disputes regarding such estimated closing statement prior to the Closing
Date; provided, however, that if the Parties are unable to agree upon one or
more matters on the Closing Statement, then Manager’s good faith estimate with
respect to such matters shall prevail for purposes of Closing and pending the
re-adjustment contemplated by this Section 15.
15.3    Post-Closing Adjustments. If the prorations and credits made under the
Closing Statement shall prove to be incorrect or incomplete for any reason, then
either Party shall be entitled to an adjustment to correct the same; provided,
however, that any adjustment shall be made, if at all, within one hundred and
twenty (120) days after the Closing Date, and if a Party fails to request an
adjustment to the Closing Statement by a written notice delivered to the other
Party within the applicable period set forth above (such notice to specify in
reasonable detail the items within the Closing Statement that such Party desires
to adjust and the reasons for such adjustment), then the prorations and credits
set forth in the Closing Statement shall be binding and conclusive against such
Party. Any amounts due under Section 15 which cannot be determined within such
one hundred and twenty (120)-day period shall be reconciled as soon as possible
thereafter as such amounts can be determined, but in no event later than the
expiration of the Survival Period, and the Parties shall have the right to audit
the applicable records of each other in connection with any such post-Closing
reconciliation.
15.4    Items Not Prorated. Seller and Buyer agree that (a) on the Closing Date,
the Property will not be subject to any financing arranged by Seller; (b) none
of the insurance policies relating to the Property will be assigned to Buyer and
Buyer shall be responsible for arranging for its own insurance as of the Closing
Date; and (c) utilities, including telephone, electricity, water and gas, shall
be read on the Closing Date and Buyer shall be responsible for all the necessary
actions needed to arrange for utilities to be transferred to the name of Buyer
on the Closing Date, including the posting of any required deposits and except
to the extent Seller has received a credit at Closing as provided herein, Seller
shall be entitled to recover and retain from the providers of such utilities any
refunds or overpayments to the extent applicable to the period prior to the
Closing Date, and any utility deposits which it or its predecessors may have
posted. Accordingly, there will be no prorations for debt service, or insurance.
15.5    Survival. For greater certainty, this Section 15 shall survive the
Closing.

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16.    Survival, Indemnification and Release.
16.1    Seller Retained Liabilities.
16.1.1    Subject to any other express provision in this Agreement, and except
to the extent Buyer has received a credit for such liabilities under this
Agreement, pursuant to Section 15 or otherwise, Seller shall exclusively retain
all liabilities with respect to the following matters, but only to the extent
such matters arise out of or relate to the ownership, use, management, or
operation of any of the Property prior to the Closing Date: (a) the payment of
any amounts due and payable to third parties or accrued to third parties under
any leases, contracts, agreements, and licenses and permits, (b) the payment of
all taxes, including personal property, sales and use taxes due and payable or
accrued for the period prior to the Closing Date, (c) any fine, penalty or
charge assessed by a Governmental Authority, and (d) any claim for personal
injury or property damage to a person (other than Seller or any Person claiming
by or through Seller, and other than in connection with any matter for which
Buyer is obligated to indemnify Seller pursuant to this Agreement) (the “Seller
Retained Liabilities”); provided, however, that except as set forth in the
foregoing clause (d), Seller Retained Liabilities shall not include any
liabilities with respect to the physical or environmental condition of the
Property (regardless of whether such condition existed prior to or exists after
the Closing), including the design, construction, maintenance, engineering or
environmental condition of the Property, whether or not such condition arose out
of or related to the ownership, use, management or operation of any of the
Property prior to the Closing. Subject to Section 16.1.2 below, Seller shall
indemnify and hold harmless Buyer from and against any Liabilities incurred by
Buyer to the extent resulting from the Seller Retained Liabilities. 
16.1.2    All covenants of Sellers set forth in this Agreement which by their
terms expressly survive the Closing, and all representations and warranties of
Seller set forth in this Agreement, and all indemnification obligations of
Sellers set forth in this Agreement (including the indemnity provided in Section
16.1.1 above) (collectively, the “Post-Closing Obligations”) will survive the
Closing for a period commencing on the Closing Date and terminating at 5:00 p.m.
(New York time) on the later of (a) March 31, 2016, and (b) the date that is
nine (9) months after the Closing Date (such period being referred to herein as
the “Survival Period”). No claim for any Post-Closing Obligation (a
“Post-Closing Claim”) will be actionable or payable if (i) Buyer does not notify
Seller and Escrow Holder in writing of such Post-Closing Claim within the
Survival Period and commence a “legal action” thereon within three (3) months
after the expiration of the Survival Period, or (ii) the Post-Closing Claim in
question results from or is based on a condition, state of facts or other
matters which Buyer obtains Knowledge of prior to Closing. Notwithstanding
anything contained herein to the contrary, Sellers shall have no obligation to
Buyer pursuant to this Section 16 to the extent that the aggregate amount of all
Liabilities incurred by Buyer for Post-Closing Claims (A) does not exceed One
Million and no/100 Dollars ($1,000,000.00) (the “Deductible”), and if such
Liabilities exceed the Deductible, Buyer shall not be entitled to recover

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from Sellers any Liabilities up to the Deductible, or (B) which exceed, in the
aggregate, one percent (1%) of the Purchase Price (the “Cap”). At Closing,
Sellers shall deposit an amount equal to the Cap into escrow with Escrow Holder
pursuant to the terms of the Escrow Agreement attached hereto as Exhibit H in
order to secure the performance by Sellers of its Post-Closing Obligations (the
“Escrow Holdback Agreement”). Notwithstanding anything contained herein to the
contrary, in no event shall Sellers have any liability to Buyer for
consequential, punitive, exemplary, special, treble or other forms of multiple
or other non-actual damages. Notwithstanding anything to the contrary set forth
in this Agreement, Sellers covenant and agree that (i) Fountains Senior Living
Holdings, LLC shall not be dissolved, wound up or otherwise terminated prior to
the end of the Survival Period, and (ii) none of the other Sellers shall be
dissolved, wound up or otherwise terminated prior to December 31, 2015; provided
that if any such Seller is dissolved, wound up or otherwise terminated prior to
the end of the Survival Period that, in connection with such dissolution,
winding up or termination Fountains Senior Living Holdings, LLC shall assume
such Seller’s obligations under this Agreement.
16.2    Buyer Assumed Liabilities. Without limiting the Liabilities Buyer is
responsible for as the purchaser and/or owner of the Properties, at Closing,
Buyer shall assume (1) any and all Liabilities attributable to the Properties to
the extent that the same first arise or accrue from and after the Closing or are
attributable to events or circumstances (such as any tort claims, actions,
omissions, accidents, injuries, breach of obligations, or other loss or damage)
that first occur on or after the Closing; (2) any and all Entrance Fee
Liabilities any obligation to refund the same, whether such obligation accrued
prior to or after Closing (and such assumption shall be without adjustment to
the Purchases Price), (3) all Liabilities accruing from and after the Closing
Date in respect of or relating to the Hired Employees, and (4) any and all
Liabilities to the extent that Buyer has received a credit at Closing (the
“Assumed Liabilities”). For greater clarity, the Parties’ rights and obligations
under this Section 16.2 shall survive the Closing. Buyer shall indemnify and
hold harmless the Seller Entities from and against any Loss incurred by any
Seller Entity to the extent resulting from (i) any breach of any express
representations or warranties of Buyer in this Agreement which expressly
survives the Closing or termination of this Agreement (as the case may be), (ii)
any breach by Buyer of any of its covenants or obligations under this Agreement
which expressly survives the Closing or termination of this Agreement (as the
case may be) and (iii) Assumed Liabilities. In no event shall Assumed
Liabilities include any Seller Retained Liabilities.
16.3    Indemnification Procedures.
16.3.1    Notification. A Person that may be entitled to be indemnified under
this Agreement (the “Indemnified Party”), shall promptly notify the Party or
Parties liable for such indemnification (the “Indemnifying Party”) in writing of
any pending or threatened claim or demand that the Indemnified Party has
determined gives or would reasonably be expected to give rise to a

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right of indemnification under such agreement (including a pending or threatened
claim or demand asserted by a third party against the Indemnified Party, such
claim being a “Third Party Claim”), describing in reasonable detail the facts
and circumstances with respect to the subject matter of such claim or demand;
provided, however, that the failure to provide such notice shall not release the
Indemnifying Party from any of its obligations under this Section 16 except to
the extent the Indemnifying Party is materially prejudiced by such failure, it
being agreed that notices for claims in respect of a breach of a representation,
warranty, covenant or agreement must be delivered prior to the expiration of any
applicable survival period specified in this Agreement for such representation,
warranty, covenant or agreement.
16.3.2    Defense of Claim. Upon receipt of a notice of a Third Party Claim for
indemnity from an Indemnified Party pursuant to Section 16.1 or Section 16.2,
the Indemnifying Party will be entitled, by notice to the Indemnified Party
delivered within ten (10) Business Days of the receipt of notice of such Third
Party Claim, to assume the defense and control of such Third Party Claim (with
counsel reasonably satisfactory to the Indemnified Party and at the expense of
such Indemnifying Party); provided that the Indemnifying Party shall allow the
Indemnified Party a reasonable opportunity to participate in the defense of such
Third Party Claim with its own counsel and at its own expense; and provided,
further, that if the parties to the action or proceeding include both the
Indemnifying Party and the Indemnified Party and the Indemnified Party has been
advised in writing by legal counsel that it has available to it one or more
defenses or counterclaims which are inconsistent with one or more defenses or
counterclaims which may be alleged by the Indemnifying Party, as a result of
which representation of both parties by the same counsel would be inappropriate
under applicable standards of professional conduct, the reasonable expense of
one separate counsel for such Indemnified Party shall be paid by the
Indemnifying Party. If the Indemnifying Party does not assume the defense and
control of any Third Party Claim pursuant to this Section 16.3.2, the
Indemnified Party shall be entitled to assume and control such defense, but the
Indemnifying Party may nonetheless participate in the defense of such Third
Party Claim with its own counsel and at its own expense. If the Indemnifying
Party assumes the defense and control of a Third Party Claim, the Indemnifying
Party shall select counsel and shall use commercially reasonable efforts in the
defense or settlement of such Third Party Claim. Buyer or Seller, as the case
may be, shall, and shall cause each of their Affiliates and representatives to,
reasonably cooperate with the Indemnifying Party in the defense of any Third
Party Claim, including by furnishing books and records, personnel and witnesses,
as appropriate for any defense of such Third Party Claim. If the Indemnifying
Party has assumed the defense and control of a Third Party Claim, it shall be
authorized to consent to a settlement of, or the entry of any judgment arising
from, any Third Party Claim, in its sole discretion and without the consent of
any Indemnified Party; provided that such settlement or judgment does not
involve any injunctive relief binding on any of the Indemnified Parties or
finding or admission of any violation of Law or admission of any wrongdoing by
any Indemnified Party and the Indemnifying Party shall (i) pay or cause to be
paid all amounts

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in such settlement or judgment at the time of such settlement (other than solely
with respect to the Deductible, to the extent such liabilities would constitute
Liabilities to which the Deductible would be applicable in accordance with the
applicable provisions of Section 16.1.2) and (ii) obtain, as a condition of any
settlement or other resolution, a complete and unconditional release of any
Indemnified Party potentially affected by such Third Party Claim. No Indemnified
Party will consent to the entry of any judgment or enter into any settlement or
compromise with respect to a Third Party Claim without the prior written consent
of the Indemnifying Party.
16.3.3    Mitigation; Additional Indemnification Provisions. Each Indemnified
Party shall use, and cause its Affiliates to use, commercially reasonable
efforts to mitigate any claim or liability that an Indemnified Party asserts
under this Section 16 (including by taking commercially reasonable efforts to
seek full recovery under all insurance and indemnity provisions covering any
Liabilities for which it is seeking indemnification hereunder, to the same
extent as it would if such Liability were not subject to indemnification
hereunder). In the event that an Indemnified Party shall fail to use or cause
its Affiliates to use such commercially reasonable efforts to mitigate any claim
or Liability, then notwithstanding anything else to the contrary contained in
this Agreement, no Party shall be required to indemnify any Indemnified Party
for any Liability that could reasonably be expected to have been avoided if the
Indemnified Party had made such efforts. For purposes of this Agreement,
Liabilities shall be calculated after giving effect to any related tax benefit
and amounts recovered from third parties, including amounts recovered under
insurance policies with respect to such Liabilities, net of any costs to recover
such amounts. Any Indemnified Party having a claim under these indemnification
provisions shall use commercially reasonable efforts to seek full recovery under
all insurance and indemnity provisions covering any Liabilities for which it is
seeking indemnification hereunder, to the same extent as it would if such
Liability were not subject to indemnification hereunder. For purposes of any
indemnification or similar obligation under this Agreement, including in this
Section 16, the indemnified party will not, in any event, be entitled to any
incidental, indirect, consequential, special, exemplary or punitive damages,
including actual or potential lost profits, diminution in value or measures of
damages based on a multiple; provided, for the avoidance of doubt, that any
damages recovered by a third party against an indemnified party entitled to
indemnification shall be included in such Indemnified Party’s Liabilities,
regardless of the nature of the damages recovered by such third party.
16.3.4    Subrogation. In the event of payment by or on behalf of any
Indemnified Party to any Indemnifying Party (including pursuant to this
Agreement) in connection with any claim or demand by any Person other than the
Parties hereto or their respective Affiliates, such Indemnified Party shall be
subrogated to and shall stand in the place of such Indemnifying Party as to any
events or circumstances in respect of which such Indemnified Party may have any
right, defense or claim relating to such claim or demand against any claimant or
plaintiff asserting such claim or demand. Such Indemnifying Party shall
cooperate with such Indemnified Party in a

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reasonable manner, and at the cost of such Indemnified Party, in presenting any
subrogated right, defense or claim.
16.3.5    No Duplication. Any Liability for indemnification under this Agreement
shall be determined without duplication of recovery due to the facts giving rise
to such liability constituting a breach of more than one representation,
warranty, covenant.
17.    Damage or Destruction.
17.1    Material Casualty. In the event any single Community is damaged in any
material respect, or destroyed by fire or any other casualty prior to the
Closing Date, Sellers shall promptly provide Buyer with written notice of such
casualty and Sellers’ estimate (based on the information available to Sellers at
such time) of the cost to repair the same. If the estimated cost to repair such
Community exceeds twenty million dollars ($20,000,000.00) (a “Material
Casualty”), Buyer shall have the right, which right shall be exercised within
five (5) Business Days after Buyer receives notice of such Material Casualty, to
either (a) terminate this Agreement upon written notice to Seller and Escrow
Holder, in which event this Agreement shall terminate, the Deposit (less the
Independent Consideration) shall be refunded to Buyer, and neither party shall
have any further rights or obligations under this Agreement except for those
obligations that expressly survive the termination hereof, or (b) proceed to
Closing as scheduled, in which case this Agreement shall not terminate and
(i) the applicable Seller shall cause all collected insurance proceeds to be
paid over to Buyer (or credited against the Purchase Price with an additional
credit for any deductible, self-insured or uninsured amounts) at Closing,
(ii) the applicable Seller shall assign to Buyer all right, title and interest
in and to all claims and proceeds such Seller may have with respect to all
policies of insurance relating to the Property at Closing (except for those
proceeds allocable to lost profits and costs incurred by Sellers prior to
Closing), and (iii) the applicable Seller shall pay over to Buyer all insurance
proceeds collected after Closing by such Seller promptly upon receipt thereof.
If Buyer shall fail to timely deliver the termination notice in accordance with
subparagraph (a) above, then Buyer shall be deemed to have elected to proceed
with Closing in accordance with subparagraph (b) above. In the event any single
Community is damaged in any material respect, or destroyed by fire or any other
casualty prior to the Closing Date, and such damage does not constitute a
Material Casualty, then the Parties shall proceed to Closing in accordance with
subparagraph (b) above.
17.2    Eminent Domain. If, before the Closing Date, proceedings are commenced
for the taking by exercise of the power of eminent domain of any part of the
Real Property comprising a Community, Sellers shall promptly provide Buyer with
written notice of such proceeding, together with an estimate (based on
information available to Seller at such time) of the value of the Real Property
that is the subject of the proceeding. If such estimated value exceeds Twenty
Million and 00/100 Dollars ($20,000,000.00) (a “Material Condemnation”), Buyer
shall have the right, which right shall be exercised within five (5) Business
Days after Buyer receives notice of such Material

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Condemnation, to either (a) terminate this Agreement upon written notice to
Seller and Escrow Holder, in which event this Agreement shall terminate, the
Deposit (less the Independent Contract Consideration) shall be refunded to
Buyer, and neither party shall have any further rights or obligations under this
Agreement except for those obligations that expressly survive the termination
hereof, or (b) proceed to Closing as scheduled in which case this Agreement
shall remain in full force and effect and, on the Closing Date, the condemnation
award (or, if not theretofore received, the right to receive such portion of the
award) payable on account of the taking shall be assigned, or paid to, Buyer. If
Buyer shall fail to timely deliver the termination notice in accordance with
subparagraph (a) above, then Buyer shall be deemed to have elected to proceed
with Closing in accordance with subparagraph (b) above. In the event any
proceedings are commenced for the taking by exercise of the power of eminent
domain of any part of the Real Property comprising a Community prior to the
Closing Date, and such proceeding do not constitute a Material Condemnation,
then the Parties shall proceed to Closing in accordance with subparagraph (b)
above.
18.    Notices. All notices, demands, or other communications of any type given
by any Party hereunder, whether required by this Agreement or in any way related
to the transaction contracted for herein, shall be void and of no effect unless
given in accordance with the provisions of this Section 18. All notices shall be
in writing and delivered to the person to whom the notice is directed, either
(a) in person, (b) by United States Mail, as a registered or certified item,
return receipt requested, (c) by facsimile transmission (with confirmation by a
nationally recognized overnight delivery service), (d) by a nationally
recognized overnight delivery service or (e) by email, with confirmation of
receipt. Notices transmitted to the then designated facsimile number of the
Party intended to be given notice shall be deemed received upon electronic
verification of receipt by the sending machine, notices sent by a nationally
recognized overnight delivery service shall be deemed received on the next
Business Day and notices delivered by certified or registered mail shall be
deemed delivered three (3) days following posting. Notices shall be given to the
following addresses:

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Buyer:
c/o Northstar Asset Management Group, Inc.
2 Bethesda Metro Center, Suite 1300
Bethesda, Maryland 20814
Attention: Doug Bath
Telephone: (240) 479-7121

 
E-mail: dbath@nsamgroup.com

With a copy to:

Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: Harry Silvera, Esq.
Telephone: (212) 351-2348
Facsimile: (212) 716-0849
E-mail: hsilvera@gibsondunn.com
With a copy to:
The Freshwater Group, Inc.
Attention: David Freshwater
2020 W. Rudasill Road
Tucson, Arizona 85704
Fax: 505-212-0987

 
The Freshwater Group, Inc.
Attention: Carl Mittendorff
2020 W. Rudasill Road
Tucson, Arizona 85704
Fax: 505-212-0987

 
Cox, Castle & Nicholson LLP
Attention:  Kevin Kinigstein, Esq.
2029 Century Park East, Suite 2100
Los Angeles, California  90067
Telephone:  (310) 277-4222
Facsimile:  (310) 277-7889
E-mail:  kkinigstein@coxcastle.com

Sellers:
c/o AIM Group Investment Management US Inc.
1180 Peachtree Street, Suite 3000
Atlanta, Georgia 30309
Attn: Michael K. Casey
Telephone: (404) 724-1830
Facsimile: (404) 724-1831
E-mail: mcasey@arcapita.com

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With a copy to:
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005 
Attn: Mark Mandel, Esq.  
Telephone: (212) 530-5026
Facsimile: (212) 530-5219 
E-mail: mmandel@milbank.com

If to Escrow Holder:
First American Title Insurance Company
666 Third Avenue
New York, New York 10017 
Attention: Brett Habermann 
Telephone: (212) 850-0628 
Facsimile: (212) 331-1469  
E-mail: bhabermann@firstam.com

19.    Remedies.
19.1    Seller Default. If any Seller fails to perform, defaults or breaches its
covenants, obligations, representations or warranties under this Agreement in
any material respect (or with respect to any covenant, obligation,
representation or warranty that is qualified by “materiality” or “material
adverse effect,” (or correlative terms) any Seller defaults in any respect with
respect to such covenant, obligation, representation or warranty), and no Buyer
Default has occurred which remains uncured, and such failure to perform, default
or breach continues for more than ten (10) days after written notice from Buyer
specifying the same in reasonable detail (provided, however, that there shall be
no cure period for Seller’s failure to deliver the Seller Closing Deliveries at
Closing) (a “Seller Default”), Buyer shall have the option, as its sole and
exclusive remedy at law or in equity, to either (a) terminate this Agreement by
delivery of written notice of termination to Sellers, whereupon this Agreement
shall terminate, Buyer and Sellers shall each be released from all liability
hereunder (except for those provisions which recite that they survive
termination), the Deposit (less the Independent Contract Consideration) shall be
returned to Buyer, and Sellers shall reimburse Buyer for all of Buyer’s
documented out-of-pocket costs and expenses incurred in connection with the
transaction contemplated by this Agreement, not to exceed One Million and no/100
Dollars ($1,000,000.00), or (b) waive such Seller Default and proceed to Closing
without any reduction in the Purchase Price, or (c) if the Seller Default is due
to Seller’s refusal or inability to deliver the Seller Closing Deliveries in
violation of its obligations under this Agreement, bring

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an equitable action to enforce this Agreement by specific performance; provided,
however, that with respect to an action for specific performance, (i) Buyer
shall provide written notice of Buyer’s intention to enforce this Agreement, the
specific performance, and (ii) Buyer’s suit for specific performance shall be
filed against the applicable Seller in a court having jurisdiction in the county
and state in which the applicable Property is located, on or before ninety (90)
days following the Seller Default, failing which, Buyer shall be barred from
enforcing this Agreement by specific performance and shall be deemed to have
elected to terminate this Agreement as provided herein. Nothing contained herein
is intended to or shall be construed to limit any right or remedy of Buyer after
the Closing for any Post-Closing Claim, which shall be governed by Section 16.1.
19.2    Buyer Default. If Buyer fails to perform, defaults or breaches its
covenants, obligations, representations or warranties under this Agreement in
any material respect (or with respect to any covenant, obligation,
representation or warranty that is qualified by “materiality” or “material
adverse effect,” (or correlative terms) Buyer defaults in any respect with
respect to such covenant, obligation, representation or warranty), and no Seller
Default has occurred which remains uncured, and such failure to perform, default
or breach continues for more than ten (10) days after written notice from
Sellers specifying the same in reasonable detail (provided, however, that there
shall be no cure period for Buyer’s failure to deliver the Purchase Price at
Closing) (a “Buyer Default”), Sellers shall have the option, as their sole and
exclusive remedy at law or in equity, to either (i) terminate this Agreement by
delivery of written notice of termination to Sellers, whereupon this Agreement
shall terminate, Buyer and Sellers shall each be released from all liability
hereunder (except for those provisions which recite that they survive
termination), the Deposit shall be paid to Sellers as liquidated damages, or
(ii) waive such Buyer Default and proceed to Closing without any increase in the
Purchase Price.
19.3    LIQUIDATED DAMAGES. BUYER AND SELLERS AGREE THAT IT WOULD BE IMPRACTICAL
AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLERS MAY SUFFER.
THEREFORE BUYER AND SELLERS DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE
TOTAL NET DETRIMENT THAT SELLERS WOULD SUFFER IN THE EVENT THAT THE CLOSING DOES
NOT OCCUR AS HEREIN PROVIDED ON OR BEFORE THE OUTSIDE CLOSING DATE BY REASON OF
ANY DEFAULT BY BUYER IS AND SHALL BE AN AMOUNT EQUAL TO THE DEPOSIT; AND, AS
SELLERS’ SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY) FOR THE CLOSING
NOT OCCURRING AS HEREIN PROVIDED ON OR BEFORE THE OUTSIDE CLOSING DATE BY REASON
OF ANY DEFAULT BY BUYER, SAID AMOUNT SHALL BE DISBURSED TO SELLERS AS THE FULL,
AGREED AND LIQUIDATED DAMAGES FOR A BREACH OF THIS AGREEMENT BY BUYER. SUCH
PAYMENT OF THE DEPOSIT IS NOT INTENDED AS A PENALTY, BUT AS FULL LIQUIDATED
DAMAGES FOR SUCH BREACH. NOTHING CONTAINED IN THIS SECTION 19.3 SHALL WAIVE,
AFFECT OR LIMIT BUYER’S INDEMNITY AND CONFIDENTIALITY OBLIGATIONS OR BUYER’S

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LIABILITY WITH RESPECT TO SUCH INDEMNITY AND CONFIDENTIALITY OBLIGATIONS.
____MKC________                _____RJL_______
Sellers’ Initials                 Buyer’s Initials
20.    Assignment. Buyer may not assign, transfer or convey its rights and
obligations under this Agreement or in the Property (each, an “Assignment”)
without the prior written consent of Sellers, which consent may be given or
withheld in Seller’s sole discretion; provided, that Buyer shall have the right,
without the consent of Sellers, to effectuate an Assignment to any one or more
of the following Persons: (a) NorthStar Asset Management Group, Inc. (“NSAM”),
(b) a managed company or strategic partnered vehicle of NSAM, (c) The Freshwater
Group, or (d) an Affiliate of a Person described in the foregoing clauses (a),
(b) and (c). Any Assignment, to the extent permitted or otherwise approved by
Sellers pursuant to this Section 20, shall (i) be in writing in a form
acceptable to Sellers, executed by Buyer and the assignee thereunder, and
delivered to Sellers at least five (5) Business Days prior to the Closing Date,
(ii) provide for the assignee to assume all of Buyer’s obligations hereunder and
succeed to all of Buyer’s rights and remedies hereunder, and (iii) not relieve
Buyer from any liability under this Agreement. Notwithstanding the foregoing,
Buyer shall have the right, without the consent of Sellers, and without
effectuating an Assignment, to designate one or more special purpose entities
controlled by Buyer to take title to any one or more individual Properties at
Closing; provided that in such event Buyer shall continue to be liable under
this Agreement. 
21.    Interpretation and Applicable Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of New York. Where required
for proper interpretation, words in the singular shall include the plural; the
masculine gender shall include the neuter and the feminine, and vice versa. The
terms “successors and assigns” shall include the heirs, administrators,
executors, successors, and assigns, as applicable, of any Party hereto. The
terms “include”, “includes”, and “including” shall be deemed to be followed by
“without limitation” whether or not they are in fact followed by such words or
words of similar import.
22.    Amendment. This Agreement may not be modified or amended, except by an
agreement in writing signed by the Parties. The Parties may waive any of the
conditions contained herein or any of the obligations of the other Party
hereunder, but any such waiver shall be effective only if in writing and signed
by the Party waiving such conditions and obligations.
23.    Attorneys’ Fees. In the event a dispute arises concerning the
performance, meaning or interpretation of any provision of this Agreement or any
document executed in connection with this Agreement, the prevailing party in
such dispute shall be awarded any and all costs and expenses incurred by the
prevailing party in enforcing, defending or establishing its rights hereunder or

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thereunder, including court costs and attorneys and expert witness fees. In
addition to the foregoing award of costs and fees, the prevailing party shall
also be entitled to recover its attorneys’ fees incurred in any post judgment
proceedings to collect or enforce any judgment.
24.    Entire Agreement; Survival. This Agreement, including all Exhibits and
Schedules attached hereto, together with the Non-Disclosure Agreement and the
Access and Exclusivity Agreement, constitutes the entire agreement among the
Parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of the Parties in connection
therewith. No representation, warranty, covenant, agreement, or condition not
expressed in this Agreement shall be binding upon the Parties hereto nor shall
affect or be effective to interpret, change, or restrict the provisions of this
Agreement. The obligations of the Parties hereunder and all other provisions of
this Agreement shall survive the Closing of this Agreement, except as expressly
limited herein.
25.    Counterparts. This Agreement may be executed in any number of
counterparts, all of which when taken together shall constitute the entire
agreement of the Parties.
26.    Time Is of the Essence; Calculation of Time Periods. Time is of the
essence in this Agreement as to each provision in which time is an element of
performance. Unless otherwise specified, in computing any period of time
described herein, the day of the act or event after which the designated period
of time begins to run is not to be included and the last day of the period so
computed is to be included, except that if such last day falls upon a Saturday,
Sunday, or legal holiday under the Federal law or laws of the State(s) where the
Property is located, then such period shall run until the end of the next day
that is neither a Saturday, Sunday, or legal holiday under Federal law or the
laws of the State(s) where the Property is located. Unless otherwise provided
herein, the last day of any period of time described herein shall be deemed to
end at 11:59 p.m. New York, NY time.
27.    Real Estate Commission. Seller and Buyer each represent and warrant to
the other that neither Seller nor Buyer has contacted or entered into any
agreement with any real estate broker, agent, finder or any other Party in
connection with this transaction, and that neither Party has taken any action
which would result in any real estate broker’s, finder’s or other fees or
commissions being due and payable to any Party with respect to the transaction
contemplated hereby, except that Seller will pay a commission to Brokers under
the terms of a separate agreement among Sellers and Brokers. Such commission
shall be payable on the Closing Date from the proceeds of the Purchase Price
deposited by Buyer. Each Party hereby indemnifies and agrees to hold the other
Party harmless from any Liability resulting to the other Party by reason of a
breach of the representation and warranty made by such Party in this Section 27.

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28.    Severability. If any provision of this Agreement, or the application
thereof to any person, place, or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect.
29.    Intentionally Omitted.
30.    No Option; Binding Effect. The submission of this Agreement for
examination and review does not constitute an option to purchase the Property,
an offer to sell the Property or an agreement to purchase and sell. This
Agreement shall have no binding effect and will only be effective upon Sellers’
and Buyer’s execution and mutual receipt of the executed version of this
Agreement. Escrow Holder’s execution of this Agreement shall not be a
prerequisite to the effectiveness of this Agreement.
31.    Public Announcements. Buyer shall have the right to make a public
announcement regarding the transaction described in this Agreement only after
the Closing; provided, however, that Sellers shall approve the form and
substance of any such public announcement, which approval shall not be
unreasonably withheld, conditioned or delayed.
32.    No Recording. Buyer shall not record this Agreement, nor any memorandum
or other notice of this Agreement, in any public records, and any such
recordation shall be a material default by Buyer hereunder.  Buyer hereby grants
a power of attorney to each Seller (which power is coupled with an interest and
shall be irrevocable) to execute and record on behalf of Buyer a memorandum or
other notice removing this Agreement or any memorandum or other notice of this
Agreement from the public records, or evidencing the termination of this
Agreement.
33.    Joint and Several Liability of Sellers. All liabilities and obligations
of Sellers under this Agreement shall be joint and several.

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Signatures begin on following page]

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

BUYER:

Fountains Portfolio Owner, LLC, a Delaware limited liability company

By: __/s/ Ronald J. Lieberman
Name: Ronald J. Lieberman
Title: Executive Vice President,
General Counsel and Secretary

S-1

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SELLER:
FOUNTAINS ALBEMARLE SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS BOCA CIEGA SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS BRONSON PLACE SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS CANTERBURY SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS CARLOTTA SL, L.P.
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS CRYSTAL LAKE AP, LLC

S-2

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By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS FRANKLIN SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS GREENBRIAR SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS LA CHOLLA SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS LAKE WOODS POINTE SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS MILLBROOK SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS MILLBROOK AP, LLC

S-3

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By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS RIVERVUE SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS SEA BLUFFS SL, LP
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS WASHINGTON HOUSE SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS BELLEVUE SL, LLC
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

FOUNTAINS LA JOLLA SL, LP
By:
/s/ Michael K. Casey
Name:
Michael K. Casey
Its:
Vice President

ESCROW HOLDER:

S-4

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The undersigned Escrow Holder accepts the foregoing Purchase and Sale Agreement
and Joint Escrow Instructions and agrees to act as Escrow Holder under this
Agreement in strict accordance with its terms.
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
/s/ Brett Habermann
Name:
Brett Habermann
Its:
Underwriting Counsel