EXECUTION
VERSION

 

PURCHASE AND SALE AGREEMENT

 

BY AND BETWEEN

 

NANTUCKET ACQUISITION LLC

 

AND

 

NORTHBRIDGE COMMUNITIES, LLC

 

 

 

 

ARTICLE 1: DEFINITIONS 1       1.1. Definitions 1       ARTICLE 2:
CONSIDERATION, DEPOSIT AND ESCROW PROVISIONS 1       2.1. Purchase Price 1      
2.2. Deposit; Escrow Agent 1       2.3. Escrow Provisions 2       2.4. Payment
of Monies 2       ARTICLE 3: ACCESS; INSPECTIONS 2       3.1. Seller’s Delivery
of Specified Documents 2       3.2. Access and Inspection Rights 2       3.3.
Title and Survey Review 3       3.4. Condition of Property; AS-IS SALE 3      
ARTICLE 4: OPERATIONS; RISK OF LOSS; LICENSING 4       4.1. Ongoing Operations 4
      4.2. Damage 6       4.3. Condemnation 7       4.4. Operations Transfer
Agreement 7       ARTICLE 5: CLOSING 7       5.1. Closing 7       5.2.
Conditions to the Parties’ Obligations to Close 8       5.3. Failure of
Condition 9       5.4. Seller’s Deliveries 10       5.5. Buyer’s Deliveries 11  
    5.6. Possession 12

 

 

 

 

ARTICLE 6: PRORATIONS; COSTS; ADJUSTMENTS 12       6.1. Prorations 12       6.2.
Sales, Transfer, and Documentary Taxes; Closing Costs 12       6.3. Brokerage
Commissions 13       6.4. Post-Closing Corrections 13       6.5. No Other
Obligations 13       ARTICLE 7: REPRESENTATIONS AND WARRANTIES 13       7.1.
Seller’s Representations and Warranties 13       7.2. Buyer’s Representations
and Warranties 16       7.3. Indemnity 18       7.4. Survival of
Representations, Warranties and Indemnity; Holdback Deposit 19       ARTICLE 8:
DEFAULT AND REMEDIES 20       8.1. Buyer’s Remedies 20       8.2. Seller’s
Remedies 20       8.3. Other Expenses 20       ARTICLE 9: NON SOLICITATION; NON
COMPETE 20       9.1. Non-Solicitation 20       9.2. Non-Compete 20       9.3.
Enforcement 21       ARTICLE 10: MISCELLANEOUS 21       10.1. Parties Bound 21  
    10.2. Headings 21       10.3. Invalidity and Waiver 21       10.4. Governing
Law 22

  

 

 

 

10.5. Survival 22       10.6. No Third Party Beneficiary 22       10.7. Entirety
and Amendments 22       10.8. Time 22       10.9. Confidentiality 22      
10.10. Enforcement Expenses 22       10.11. Notices 22       10.12. Construction
23       10.13. Calculation of Time Periods 23       10.14. Execution in
Counterparts 23       10.15. Further Assurances 23       10.16. Waiver of Jury
Trial 23       10.17. Bulk Sales 23

 

 

 

 

PURCHASE AND SALE AGREEMENT

 

This Purchase and Sale Agreement (this “Agreement”) is made as of __________,
2012, by and between NANTUCKET ACQUISITION LLC, a Delaware limited liability
company authorized to transact business in Massachusetts under the name
"Nantucket Senior Housing Acquisition” (“Seller”), and NORTHBRIDGE COMMUNITIES,
LLC, a Massachusetts limited liability company (“Buyer”).

 

RECITALS

 

A.           Seller owns the Property which includes the Senior Housing Facility
described on Exhibit B attached hereto; and

 

B.           Seller desires to sell and Buyer desires to purchase the Property
upon and subject to the terms and conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller hereby agrees to sell and Buyer hereby
agrees to purchase the Property upon and subject to the following terms and
conditions:

 

ARTICLE 1: DEFINITIONS

 

1.1.         Definitions. Initially capitalized terms which are used but not
otherwise defined in this Agreement shall have the meanings ascribed to them in
Exhibit A attached hereto and incorporated herein by this reference.

 

ARTICLE 2: CONSIDERATION, DEPOSIT AND ESCROW PROVISIONS

 

2.1.         Purchase Price. The Purchase Price, subject to the prorations and
adjustments set forth herein, shall be paid as follows:

 

(a)          Buyer shall pay a deposit to Escrow Agent in the amount of One
Hundred Thousand and 00/100 Dollars ($100,000.00) (such amount, together with
any Additional Deposit paid under Article 5 hereof, collectively, the “Deposit”)
on or before the date which is two (2) business days after the execution and
delivery of this Agreement by both Seller and Buyer; and

 

(b)          The balance of the Purchase Price shall be paid in cash at the time
of Closing.

 

The Deposit shall be applied to the Purchase Price at Closing, notwithstanding
any provision hereof as to the non-refundability of the Deposit or any portion
thereof.

 

2.2.         Deposit; Escrow Agent.

 

(a)          Upon receipt from Buyer of the Deposit, Escrow Agent shall invest
the Deposit in an interest-bearing account or money market fund mutually
acceptable to Seller and Buyer. Escrow Agent shall agree to hold and dispose of
the Deposit in accordance with the terms and provisions of this Agreement. If
the Closing occurs, any interest on the Deposit shall be credited to Buyer and
applied to the Purchase Price. If the Closing does not occur, any interest
earned on the Deposit shall follow the Deposit.

 

(b)          The parties hereto do hereby certify that they are aware that the
Federal Deposit Insurance Corporation (“FDIC”) coverages may apply only to a
cumulative maximum amount of $250,000 for each individual deposit for all of
depositor’s accounts at the same or related institution. The parties hereto
further understand that certain banking instruments such as, but not limited to,
repurchase agreements and letters of credit are not covered at all by FDIC
insurance. Further the parties hereto understand that Escrow Agent assumes no
responsibility for, nor will the parties hereto hold Escrow Agent liable for,
any loss occurring which arises from the fact that the amount of the above
account may cause the aggregate amount of any individual depositor’s accounts to
exceed $250,000 and that the excess amount is not insured by the Federal Deposit
Insurance Corporation or that FDIC insurance is not available on certain types
of bank instruments.

 

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2.3.          Escrow Provisions. Escrow Agent agrees to hold, keep and deliver
the Deposit and all other sums delivered to it pursuant hereto in accordance
with the terms and provisions of this Agreement. Escrow Agent shall not be
entitled to any fees or compensation for its services hereunder other than its
customary one-time escrow fee. Escrow Agent shall be liable only to hold said
sums and deliver the same to the parties named herein in accordance with the
provisions of this Agreement, it being expressly understood that by acceptance
of this Agreement Escrow Agent is acting in the capacity of a depository only
and shall not be liable or responsible to anyone for any damages, losses or
expenses unless same shall have been caused by the gross negligence or willful
malfeasance of Escrow Agent. In the event of any disagreement between Buyer and
Seller resulting in any adverse claims and demands being made in connection with
or for the monies involved herein or affected hereby, Escrow Agent shall be
entitled to refuse to comply with any such claims or demands so long as such
disagreement may continue; and in so refusing Escrow Agent shall make no
delivery or other disposition of any of the monies then held by it under the
terms of this Agreement, and in so doing Escrow Agent shall not become liable to
anyone for such refusal; and Escrow Agent shall be entitled to continue to
refrain from acting until (a) the rights of the adverse claimants shall have
been finally adjudicated in a court of competent jurisdiction of the monies
involved herein or affected hereby, or (b) all differences shall have been
adjusted by agreement between Seller and Buyer, and Escrow Agent shall have been
notified in writing of such agreement signed by the parties hereto. Escrow Agent
shall not be required to disburse any of the monies held by it under this
Agreement unless in accordance with either a joint written instruction of Buyer
and Seller or an Escrow Demand from either Buyer or Seller in accordance with
the provisions hereinafter. Upon receipt by Escrow Agent from either Buyer or
Seller (the “Notifying Party”) of any notice or request (an “Escrow Demand”) to
perform any act or disburse any portion of the monies held by Escrow Agent under
the terms of this Agreement, Escrow Agent shall give written notice to the other
party (the “Notified Party”). If within five (5) days after the giving of such
notice, Escrow Agent does not receive any written objection to the Escrow Demand
from the Notified Party, Escrow Agent shall comply with the Escrow Demand. If
Escrow Agent does receive written objection from the Notified Party in a timely
manner, Escrow Agent shall take no further action until the dispute between the
parties has been resolved pursuant to either clause (a) or (b) above. Further
Escrow Agent shall have the right at all times to pay all sums held by it (i) to
the appropriate party under the terms hereof, or (ii) into any court of
competent jurisdiction after a dispute between or among the parties hereto has
arisen, whereupon Escrow Agent's obligations hereunder shall terminate. Seller
and Buyer, jointly and severally agree to indemnify and hold harmless said
Escrow Agent from any and all costs, damages and expenses, including reasonable
attorneys' fees, that said Escrow Agent may incur in compliance with and in good
faith in accordance with the terms of this Agreement; provided, however, this
indemnity shall not extend to any act of gross negligence or willful malfeasance
on the part of the Escrow Agent.

 

2.4.          Payment of Monies. Any monies payable under this Agreement, unless
otherwise specified in this Agreement, shall be paid by wire transfer or
certified or cashier’s check.

 

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ARTICLE 3: ACCESS; INSPECTIONS

 

3.1.          Seller’s Delivery of Specified Documents. On or before the date
hereof, Seller has delivered to Buyer true, correct and complete originals or
copies of each item described in Exhibit C attached hereto (the "Seller
Deliverables") in Seller's possession or control.

 

3.2.          Access and Inspection Rights. Buyer and its agents, employees and
representatives, contractors and consultants shall at any time, and from time to
time, between the Effective Date and the Closing Date, have reasonable access
during normal business hours to the Facility and all books and records for the
Facility that are in Seller’s or the Existing Manager’s possession or control
for the purpose of conducting surveys, inspections, tests and studies,
including, without limitation, engineering, geotechnical and environmental
inspections and tests; provided, however, that Buyer will work directly with the
Existing Manager to conduct any and all investigations necessary of all books
and records for the Facility that are in the possession or control of the
Existing Manager. In the course of its investigation of the Property, Buyer may
make inquiries to third parties, including, without limitation, lenders,
contractors, Existing Manager (including, without limitation, employees
thereof), parties to any service contracts affecting the Facility, and
municipal, local and other government officials and representatives. Seller
shall cooperate with Buyer's due diligence during normal business hours so long
as Buyer gives at least forty-eight (48) hours' notice to Seller and the
Existing Manager, conducts such due diligence during normal business hours and
is not disruptive to the operation of the business at the Facility or the quiet
enjoyment thereof by its residents, and shall be paid for by Buyer as and when
due. Buyer shall indemnify, defend, protect and hold Seller harmless from any
and all claims, liabilities, losses, expenses (including reasonable attorneys'
fees), damages, including those for injury to person or to the Property, arising
out of or relating to Buyer's due diligence activities (except for any
pre-existing conditions). If Buyer is not satisfied in its sole discretion with
any of survey, inspection, test or study or with any other matter concerning the
Property, then Buyer may terminate this Agreement by written notice given to
Seller on before the date of expiration of the Due Diligence Period, whereupon
the Deposit plus accrued interest shall be refunded to Buyer, and neither party
shall have any further rights or obligations pursuant to this Agreement, except
those that survive the termination of this Agreement as expressly stated herein.
If the written notice of termination is not given to Seller and the Escrow
Holder prior to the expiration of the Due Diligence Period, then (a) any due
diligence contingency, and any and all objections with respect to the review and
inspection of the Property, shall be deemed to have been waived by Buyer for all
purposes hereof; provided, however, that Buyer's closing contingencies set forth
in Section 5.2(a) below shall remain; and (b) the Deposit shall be nonrefundable
to Buyer except in the event of the failure of any of Buyer's closing
contingencies set forth in Section 5.2(a) below, or a breach of this Agreement
by Seller. If this Agreement is terminated pursuant to this Section 3.2, the
cost for cancellation of Escrow and all title company costs shall be borne by
Buyer

 

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3.3.         Title and Survey Review.

 

(a)          Buyer shall have the right to obtain a title commitment for owner's
title insurance policy (the "Title Commitment") and survey of the Real Property
(the "Survey"). No later than ten (10) business days prior to the expiration of
the Due Diligence Period, Buyer shall give notice to Seller of any objection to
any exception or other matter shown in the Title Commitment or Survey on or
before the date of expiration of the Due Diligence Period. Within five (5)
business days of Seller's receipt of Buyer's notice of objection(s), Seller
shall notify Buyer in writing of Seller's election to either (i) remove such
exceptions (in which case Buyer's objections shall be deemed waived), or (ii)
terminate this Agreement. Seller's failure to make an election shall be deemed
an election to terminate. Without limiting the foregoing, Seller shall be
obligated to fully discharge on or before Closing all mortgages, security
interests and other monetary liens and encumbrances of a definite and
ascertainable amount (each a "Monetary Lien"). In the event that any additional
title exceptions are discovered after the reports are issued, then if Buyer is
not willing to accept such exceptions as-is, then Seller shall elect in writing
to either eliminate such exceptions (in which case this Agreement shall remain
in effect) or terminate this Agreement (in which case the Deposit shall be
returned to Buyer). If Buyer fails to give written notice to Seller of any
objection to title or survey within the Due Diligence Period, then Buyer shall
be deemed to have approved the state of title and survey as of the date of such
title and survey reports are issued, except for Monetary Liens.

 

(b)          If Seller fails to cure an objection to title or survey in the
manner set forth above, then Buyer may elect, on or prior to the Closing Date,
to (i) terminate this Agreement, in which event the Deposit and all interest
earned thereon shall be returned to Buyer and no party shall have any further
obligations hereunder, except as specifically set forth herein, or (ii) accept
the Property subject to such objections and proceed to Closing, with the further
right to deduct from the Purchase Price amounts secured by any Monetary Lien
which Seller has failed to remove as provided herein. If Buyer makes no such
election, then Buyer shall be deemed to have elected to waive its right to
terminate this Agreement as provided above in this Section 3.3(b).

 

3.4.         Condition of Property; AS-IS SALE. BUYER ACKNOWLEDGES AND
REPRESENTS THAT THEY HAVE CONDUCTED OR WILL CONDUCT THEIR OWN INSPECTION AND
INVESTIGATION OF THE PROPERTY, AND OF PUBLIC RECORDS PERTAINING TO SELLER AND
THE FACILITY AND AGREES TO ACCEPT AT CLOSING, SUBJECT TO THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN SECTION 7.1, THE PROPERTY IN ITS "AS IS, WHERE IS"
CONDITION AS OF THE EFFECTIVE DATE, AND "WITH ALL FAULTS"; AND FURTHER
ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER HAS NOT MADE AND DOES NOT MAKE,
AND SELLER HEREBY EXPRESSLY DISCLAIMS, ANY OTHER REPRESENTATIONS OR WARRANTIES
OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED WITH RESPECT TO
THE PROPERTY, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO (A) THE COMPLIANCE OF THE PROPERTY, INCLUDING ITS USE
OR OPERATION, WITH THE AMERICANS WITH DISABILITIES ACT, ANY OTHER DISCRIMINATION
LAW, OR ANY FEDERAL, STATE OR LOCAL LAW, RULE OR REGULATION RELATING TO THE
LICENSING AND CERTIFICATION OF THE PROPERTY AS A SENIOR HOUSING FACILITY OR
PARTICIPATION IN THE MEDICARE AND MEDICAID PROGRAMS, (B) THE ASSIGNMENT OR
TRANSFERABILITY OF ANY OF THE GOVERNMENTAL LICENSES, CERTIFICATES OR PERMITS TO
OPERATE THE PROPERTY AS A SENIOR HOUSING FACILITY, AND (C) THE EFFECT ON THE
PROPERTY, CONDITION OF THE PROPERTY (FINANCIAL OR OTHERWISE), OR THE RESULTS OF
ANY ENACTED, PUBLISHED OR REPORTED LAWS, RULES, REGULATIONS OR JUDICIAL OR
ADMINISTRATIVE DECISIONS OR ACTIONS OF ANY GOVERNMENTAL OR QUASI-GOVERNMENTAL
AGENCY HAVING REGULATORY OR OTHER AUTHORITY (WHETHER HAVING RETROACTIVE OR
PROSPECTIVE EFFECT) RESPECTING MATTERS OF LICENSURE, SURVEY, OR REIMBURSEMENT.
THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE THE CLOSING.

 

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ARTICLE 4: OPERATIONS; RISK OF LOSS; LICENSING

 

4.1.         Ongoing Operations. From the Effective Date through the Closing
Date:

 

(a)          Operation of Property; Construction. Seller shall continue to own
the Property and shall not terminate the Existing Management Agreement with the
Existing Manager; provided, however, that the parties hereto acknowledge that
they might enter into future discussions relating to the replacement of the
Existing Manager with an Affiliate of Buyer, but any definitive arrangement
relating thereto will be subject to the mutual written agreement of the parties.
Seller shall not make (or suffer or permit to be made) any renovations,
alterations, or capital expenditures to the Facility or any portion thereof
costing more than $10,000, individually or in the aggregate, or enter into any
contracts or agreements (whether binding or not) regarding any such renovations,
alterations, or capital expenditures. Seller will perform all of the obligations
of Seller under the Ground Lease and the Existing Management Agreement.

 

(b)          Ground Lease. Seller shall comply in all material respects with the
terms and conditions of the Ground Lease and shall not do or permit anything to
be done, the doing of which, or refrain from doing anything, the omission of
which, will be grounds for declaring a default or forfeiture of the Ground
Lease. Seller shall not modify, cancel, change, waive, supplement, alter or
amend the Ground Lease in any respect.

 

(c)          Listings and Other Offers. Seller will not list the Property with
any broker or otherwise solicit or make or accept any offers to sell all or any
part of the Property or any direct or indirect interest therein, engage in any
discussions or negotiations with any third party with respect to the sale or
other disposition of the Property or any direct or indirect interest therein, or
enter into any contracts or agreements (whether binding or not) regarding any
disposition of all or any part of the Property or any direct or indirect
interest therein, except as provided in Section 4.1(a) above.

 

(d)          Removal and Replacement of Tangible Personal Property; Transfer or
Conveyance of Other Property. Seller will not remove or suffer or permit to be
removed on Seller's behalf any Personal Property from the Facility except as may
be required for necessary repair or replacement in the ordinary course of
business. Without limiting the foregoing, all repairs and replacements shall be
of equivalent quality and quantity as existed as of the time of removal of the
applicable Personal Property. Except as permitted by the preceding sentence,
Seller shall not make (or suffer or permit to be made on Seller's behalf) any
transfers or conveyances of the Property.

 

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(e)          Maintenance of Insurance. Seller shall carry commercial general
liability insurance in the amounts it currently holds and property damage
insurance for the full replacement value of the Improvements through the Closing
Date. Seller shall not allow any breach, default, termination or cancellation of
any such insurance policies or agreements to occur or exist prior to Closing.

 

(f)          Incurrence of Indebtedness. Seller shall not incur any indebtedness
or other liabilities other than in the ordinary course of business and
consistent with past practices or enter into any contracts or agreements
(whether binding or not) regarding the incurrence of any such indebtedness or
other liabilities.

 

(g)          Approvals. Seller shall work diligently and cooperate with Buyer to
obtain all waivers, consents, approvals and authorizations required in
connection with the transactions contemplated hereunder, including without
limitation those required with respect to the Ground Lease and all licenses and
approvals required by governmental agencies charged with regulating or licensing
senior housing facilities.

 

(h)          Agreements to Effect Prohibited Actions. Seller will not enter into
any contracts or agreements (whether binding or not) regarding any of the
matters prohibited by paragraphs above.

 

4.2.         Damage. Risk of loss with respect to the Real Property up to and
including the Closing Date shall be borne by Seller.  Seller shall promptly give
Buyer written notice of any damage to the Facility, describing such damage,
stating whether such damage and loss of rents is covered by insurance and the
estimated cost of repairing such damage. In the event of any material damage
(described below) to or destruction of the Facility or any portion thereof,
Buyer may, at its option, by notice to Seller given within ten (10) business
days after Seller has provided the above described notice to Buyer together with
all relevant information concerning the nature and extent of such damage (and if
necessary the Closing Date shall be extended to give Buyer the full ten (10)
business day period to make such election): (i) terminate this Agreement, in
which event the Deposit and all interest earned thereon shall be returned to
Buyer and no party shall have any further obligations hereunder, except as
expressly set forth herein, or (ii) proceed under this Agreement as to all of
the Property, receive any insurance proceeds (including any rent loss insurance
applicable to any period on and after the Closing Date) due Seller as a result
of such damage or destruction and assume responsibility for such repair. If
Buyer fails to timely make such election, Buyer shall be deemed to have elected
to proceed under clause (ii) above. If the Facility is not materially damaged,
then (A) Buyer shall not have the right to terminate this Agreement, (B) Seller
shall, to the extent requested and directed by Buyer, repair the damage before
the Closing in a manner reasonably satisfactory to Buyer utilizing any available
insurance proceeds, and (C) at Closing, Buyer shall receive any insurance
proceeds (including any rent loss insurance applicable to any period on and
after the Closing Date) due Seller as a result of such damage or destruction. To
the extent Seller has incurred reasonable costs in effecting the repairs
requested and directed in writing by Buyer (which costs have not been assumed by
Buyer), Seller shall be paid a portion of such insurance proceeds in an amount
equal to such costs. “Material damage” and “materially damaged” means, with
respect to the Facility, damage (x) which, in Buyer’s reasonable estimation,
exceeds $150,000 to repair, or (y) which, in Buyer’s reasonable estimation, will
take longer than ninety (90) days to repair or restore.

 

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4.3.          Condemnation. In the event any proceedings in eminent domain are
contemplated, threatened or instituted by any body having the power of eminent
domain with respect to the Real Property or any portion thereof, Buyer may, at
its option, by notice to Seller given within ten (10) business days after Seller
provides written notice to Buyer of such proceedings together with all relevant
information concerning such proceedings (and if necessary the Closing Date shall
be extended to give Buyer the full ten (10) business day period to make such
election): (i) terminate this Agreement, in which event the Deposit and all
interest earned thereon shall be returned to Buyer and no party shall have any
further obligations thereunder, except as expressly set forth herein, or
(ii) proceed under this Agreement as to all of the Property, in which event
Seller shall, at the Closing, assign to Buyer its entire right, title and
interest in and to any condemnation award, and Buyer shall have the sole right
during the pendency of this Agreement to negotiate and otherwise deal with the
condemning authority in respect of such matter. If Buyer fails to timely make
such election, Buyer shall be deemed to have elected to proceed under
clause (ii) above.

 

4.4.          Operations Transfer Agreement. Seller shall use commercially
reasonable efforts to cause the Operations Transfer Agreement (in the form
approved as of the date hereof by Buyer) to be executed (with all schedules and
exhibits thereto completed) by the parties thereto (other than Buyer, who agrees
to execute the Operations Transfer Agreement promptly following its execution by
the other parties thereto). The execution and delivery of the Operations
Transfer Agreement by the other parties thereto shall be a condition precedent
to Buyer’s obligation to close on its purchase of the Property.

 

ARTICLE 5: CLOSING

 

5.1.          Closing. The consummation of the transactions contemplated herein
(the “Closing”) shall occur on the date that is the forty-fifth (45th) day after
the Town Lease Amendment Approval Date. The date of Closing shall be referred to
herein as the “Closing Date.” Closing shall be effectuated through an escrow
with the Escrow Agent. Buyer and Seller shall execute such supplemental escrow
instructions as may be reasonably requested by either party or Escrow Agent to
comply with the terms of this Agreement, so long as such instructions are not in
conflict with this Agreement. Buyer shall have the right to accelerate the
Closing Date to such earlier date as may be selected by Buyer on ten (10) days’
written notice to Seller. In addition, Buyer shall have the right to extend the
Closing Date for up to thirty (30) days if necessary in connection with
financing of the acquisition of the Property (it being acknowledged and agreed
that Buyer does not have any contingency for financing). Within two (2) business
days of Buyer's exercise of its extension option, Buyer shall deposit an
additional sum of Fifty Thousand Dollars ($50,000) ("Additional Deposit") with
Title Company, which Additional Deposit shall be non-refundable except in the
event that the Closing does not occur due to Seller's default or the failure of
one or more of Buyer's closing conditions set forth in Section 5.2(a) below, in
which case the Additional Deposit and Deposit plus interest accrued thereon
shall be returned to Buyer

 

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5.2.         Conditions to the Parties’ Obligations to Close.

 

(a)          Conditions to Buyer’s Obligation to Close. As a condition to
Buyer’s obligation to close with respect to the Property on the Closing Date:

 

(i)          All instruments and other documents required to be delivered by
Seller and described in Section 5.5 have been delivered to the Escrow Agent.

 

(ii)         The representations and warranties of Seller contained herein shall
be true and correct in all material respects as of the Effective Date and as of
the Closing Date.

 

(iii)        There shall be no default with respect to any material obligation
of Seller hereunder which Seller has not cured within thirty (30) days after
written notice from Buyer.

 

(iv)        There shall be no notice issued after the Effective Date of any
violation or alleged violation of any law, rule, regulation or code, including,
without limitation, any building code, with respect to the Facility, which has
not been corrected to the satisfaction of the issuer of the notice.

 

(v)         There shall be no material default on the part of Seller or any
other party under any agreement to be assigned to, or obligation to be assumed
by, Buyer under this Agreement, including, without limitation the Ground Lease.

 

(vi)        All licenses, consents, approvals or other authorizations from third
parties or governmental authorities required in connection with the transactions
contemplated hereunder, including, without limitation, all consents and
approvals of the ground lessor under the Ground Lease and all licenses and
approvals by agencies charged with regulating or licensing Senior Housing
Facilities, shall have been obtained by, and issued in the name of, Buyer or its
property manager or designee.

 

(vii)       There shall have been no material adverse change in the business,
properties, operations or condition (financial, physical, title, licensing,
environmental or otherwise) of Seller or the Facility since the Effective Date.

 

(viii)      As of the Closing Date, the number of residents in the Facility
(based upon the number of beds in the Facility) who receive any assistance under
any government assistance program shall not be more than the number of such
residents for the Facility set forth in the Rent Roll attached hereto, and the
number of beds or units in the Facility which are subject to affordability or
income-based restrictions shall not be more than the number of such beds or
units for the Facility as required by the Ground Lease.

 

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(ix)         No proceedings shall be pending or threatened that could or would
involve the change, redesignation, redefinition or other modification of the
zoning classifications (or any building, environmental or code requirements
applicable to) in a manner that would adversely affect the Property.

 

(x)          Seller shall have obtained payoff letters good through the Closing
Date from all holders of mortgages or other indebtedness encumbering the
Property stating the amount required to pay off such debt as of the Closing
Date. Such letters shall be referred to as the “Payoff Letters.”

 

(xi)         The representations and warranties of the parties to the Operations
Transfer Agreement (other than Buyer) shall be true and correct in all material
respects as of the Effective Date and as of the Closing Date.

 

(xii)        There shall be no default with respect to any material obligation
of any party to the Operations Transfer Agreement (other than Buyer) which such
party has not cured within thirty (30) days after written notice from Buyer.

 

(b)          Conditions to Seller’s Obligation to Close. As a condition to
Seller’s obligation to close with respect to the Property on the Closing Date:

 

(i)          All funds, instruments and other documents required to be delivered
by Buyer and described in Section 5.5 have been delivered to the Escrow Agent.

 

(ii)         The representations and warranties of Buyer contained herein shall
be true and correct in all material respects as of the Effective Date and as of
the Closing Date.

 

(iii)        There shall be no default with respect to any material obligation
of Buyer hereunder which Buyer has not cured within thirty (30) days after
written notice from Seller.

 

5.3.         Failure of Condition. Provided that a party is not in default of
any material obligation of such party, if any condition to such party’s
obligation to proceed with the Closing set forth in this Agreement has not been
satisfied as of the Closing Date, then such party may, in its sole discretion,
elect, by notice given to the other party on or before the Closing Date, to:
(i) terminate this Agreement, in which event the Deposit and all interest earned
thereon shall be paid to the party whose condition was not met and no party
shall have any further obligation hereunder, except as expressly set forth
herein; (ii) extend the time available for the satisfaction of such condition by
up to a total of thirty (30) days; or (iii) close, notwithstanding the
non-satisfaction of such condition, in which event such party shall be deemed to
have waived such condition. If such party elects to proceed pursuant to clause
(ii) above, and such condition remains unsatisfied after the end of such
extension period, then, at such time, such party may elect to proceed pursuant
to either clause (i) or (iii) above. Any failure to timely elect to proceed
under clauses (i), (ii) or (iii) above, shall be deemed an election to proceed
under clause (ii) above.

 

9

 

 

5.4.         Seller’s Deliveries. On or before the Closing Date, Seller shall
deliver in escrow to the Escrow Agent or outside of escrow to Buyer the
following, each duly executed and, where appropriate, in recordable form and
notarized:

 

(a)          Assignment of Ground Lease. An assignment of the Ground Lease in
the form of Exhibit D attached hereto (the “Ground Lease Assignment”), executed
and acknowledged by Seller, vesting in Buyer good, indefeasible and marketable
title to the Ground Lease, subject only to the Permitted Exceptions;

 

(b)          Bill of Sale and Assignment Agreement. A bill of sale and
assignment agreement in the form of Exhibit E attached hereto (the “Bill of
Sale”), executed and acknowledged by Seller, vesting in Buyer good title to the
Personal Property described therein free of any claims, except for the Permitted
Personal Property Liens;

 

(c)          Payoff Letters. The Payoff Letters;

 

(d)          Notice to Residents. A notice to each resident in form as
reasonably requested by Buyer;

 

(e)          State Law Disclosures. Such disclosures and reports as are required
by applicable state and local law in connection with the conveyance of real
property;

 

(f)          FIRPTA. An affidavit of Seller substantially in the form of
Exhibit F attached hereto. If Seller fail to provide the necessary affidavit
and/or documentation of exemption on the Closing Date, Buyer may proceed in
accordance with the withholding provisions imposed by Section 1445 of the
Internal Revenue Code of 1986, as amended;

 

(g)          Certificates of Title. Certificates of title (if applicable) and
leases (if applicable) for each Vehicle.

 

(h)          Authority. Evidence of the existence, organization and authority of
Seller and of the authority of the persons executing documents on behalf of
Seller reasonably satisfactory to the Title Company and Buyer;

 

(i)          Title Documents. Affidavits required by the Title Company
sufficient to have the general exceptions deleted together with such other
documents and instruments required by the Title Company in order to issue the
Title Policy;

 

(j)          Due Diligence Materials. To the extent not previously delivered to
Buyer, true, correct and complete originals, or copies, if originals are not
available, of each Seller Deliverable.

 

(k)          Closing Certificate. A certificate, signed by Seller, certifying to
Buyer that the representations and warranties of Seller contained in this
Agreement are true and correct in all material respects as if made on and as of
the Closing Date and that all covenants required to be performed by Seller prior
to the Closing Date have been performed in all material respects;

 

10

 

 

(l)          Settlement Statement. A settlement statement, duly executed by
Seller;

 

(m)          Permits and Approvals. All licenses, permits and approvals in
Seller’s possession related to the construction, development ownership,
operation and use of the Property, including without limitation, certificate(s)
of occupancy and all licenses required to operate the Facility as a Senior
Housing Facility;

 

(n)          Plans and Specifications. All material plans and specifications
relating to the Property in Seller’s possession and control or otherwise
reasonably available to Seller;

 

(o)          Ground Lease Matters. (i) A consent executed and acknowledged by
the ground lessor under the Ground Lease, in form and substance reasonably
acceptable to Buyer, evidencing the consent of the ground lessor to the Ground
Lease Assignment, (ii) an estoppel certificate executed and acknowledged by the
ground lessor as to such matters relating to the Ground Lease as reasonably
requested by Buyer and its lender, and (iii) an amendment to the Ground Lease
executed and acknowledged by the ground lessor, in the form of Exhibit G
attached hereto;

 

(p)          Other Deliveries. Such other documents, certificates and
instruments as are reasonably necessary in order to effectuate the transaction
described herein, including, without limitation, gap indemnity agreements,
transfer tax declarations, broker lien waivers and any documents or
representations necessary to comply with any applicable environmental transfer
disclosure laws and any other Closing deliveries required to be made by or on
behalf of Seller.

 

5.5.         Buyer’s Deliveries. On or before the Closing Date, Buyer shall
deposit the balance of the Purchase Price, plus or minus applicable prorations
and adjustments as set forth herein, in immediately available, same-day federal
funds wired for credit into the Escrow Agent’s escrow account. In addition,
except as specified below, on or before the Closing Date, Buyer shall deliver in
escrow to the Escrow Agent or outside of escrow to Seller the following, each
duly executed and, where appropriate, in recordable form and notarized:

 

(a)          Bill of Sale. The Bill of Sale, executed by Buyer;

 

(b)          Authority. Evidence of the existence, organization and authority of
Buyer and of the authority of the persons executing documents on behalf of Buyer
reasonably satisfactory to the Title Company and Seller;

 

(c)          Assignment of Residency Agreements. The Assignment of Residency
Agreements, executed by Buyer;

 

(d)          State Law Disclosures. Such disclosures and reports as are required
by applicable state and local law in connection with the conveyance of real
property;

 

(e)          Settlement Statement. A settlement statement, duly executed by
Buyer;

 

11

 

 

(f)          Other Deliveries. Such other documents, certificates and
instruments reasonably necessary in order to effectuate the transactions
described herein and any other Closing deliveries required to be made by or on
behalf of Buyer.

 

5.6.         Possession. Seller shall deliver possession of the Property to
Buyer at the Closing, subject only to the Permitted Exceptions.

 

ARTICLE 6: PRORATIONS; COSTS; ADJUSTMENTS

 

6.1.         Prorations. Not less than three (3) business days prior to Closing,
Seller shall provide to Buyer such information and verification reasonably
necessary to support the prorations under this Article 6. The items in this
Section 6.1 shall be pro rated between Seller and Buyer as of the close of
business on the day immediately preceding the applicable Closing Date, the
Closing Date being a day of income and expense to Buyer. Credits to Buyer shall
be credited against the Purchase Price to be paid hereunder and, if such amount
is exhausted, shall be paid in cash by Seller to Buyer at the Closing.
Post-closing re-prorations and adjustments shall be paid in cash. Subject to the
foregoing and for the other provisions of this Article 6, the following items
shall be pro rated and adjusted at Closing:

 

(a)          Taxes and Assessments. Buyer shall receive a credit for any accrued
but unpaid real estate taxes, personal property taxes, special assessments and
betterments (“Taxes”) (including, without limitation, any assessments imposed by
private covenant) applicable to any period before the Closing Date, whether or
not such Taxes are not yet due and payable, and Seller shall receive a credit
for any Taxes applicable to any period after the Closing Date paid in advance by
Seller. If the amount of any such Taxes have not been determined as of the
Closing Date, then such credit shall be based on the most recent ascertainable
taxes. Such undetermined Taxes shall be reprorated upon issuance of the final
tax bill. Notwithstanding the foregoing, (i) Buyer shall receive from Seller a
credit for any special assessments and betterments which are levied or charged
against the Property or the Real Property with respect to any infrastructure
improvements specifically made to serve the Facility, whether or not then due
and payable, and (ii) any other special assessments and betterments shall be
prorated only for the year of Closing.

 

(b)          Ground Rent. Buyer shall receive from Seller a credit for any rent
and other charges under the Ground Lease accrued or payable on or before Closing
that applies to any period prior to Closing but is unpaid as of Closing.

 

6.2.         Sales, Transfer, and Documentary Taxes; Closing Costs.

 

(a)          Seller shall pay all sales, gross receipts, conveyancing, stamp,
excise, documentary, transfer, deed or similar taxes or fees imposed in
connection with this transaction under applicable state, county or local law.
Seller and Buyer shall execute any applicable city, county and state transfer
tax or other declarations.

 

(b)          Buyer shall pay: (i) one-half of the Escrow Agent’s escrow fee,
closing charges and any cancellation fee, (ii) the costs associated with Buyer’s
due diligence activities, (iii) the cost of the Title Policy and Survey. Seller
shall pay (x) one-half of the Escrow Agent’s escrow fee, closing charges and any
cancellation fee, and (y) all recording fees or other charges incurred in
connection with clearing title, including without limitation any prepayment or
release fees. Each party shall be responsible for its own attorney’s and other
professional fees.

 

12

 

 

6.3.         Brokerage Commissions. Seller and Buyer each represents and
warrants to the other that it has not dealt with any real estate broker, sales
person or finder in connection with this transaction other than Cushman &
Wakefield, Inc. (“Broker”). Seller shall be responsible for any fee or
commission due to Broker pursuant to a separate agreement between Seller and
Broker. Buyer shall indemnify, defend and hold harmless Seller from and against
any claim to a broker’s or finder’s fee or commission by any party other than
Broker based upon any actual or alleged statement, representation or agreement
of Buyer. Seller shall indemnify, defend and hold harmless Seller from and
against any claim to a broker’s or finder’s fee or commission made by Broker or
by any other party based upon any actual or alleged statement, representation or
agreement of Seller.

 

6.4.         Post-Closing Corrections. Notwithstanding any provision hereof to
the contrary, within sixty (60) days after Closing, the parties shall complete a
good faith reconciliation of all closing costs, prorations and adjustments under
this Article 6 and shall make any payments due to the other party pursuant
thereto.

 

6.5.         No Other Obligations. No other expense related to the ownership or
operation of the Property prior to the Closing Date shall be charged to or paid
or assumed by Buyer under this Agreement, other than those obligations expressly
assumed by Buyer in writing.

 

ARTICLE 7: REPRESENTATIONS AND WARRANTIES

 

7.1.         Seller’s Representations and Warranties. As a material inducement
to Buyer to execute this Agreement and consummate this transaction, Seller
represents and warrants to Buyer as follows as of the date hereof (which
representations, warranties shall also be true on the Closing Date as if made on
the Closing Date):

 

(a)          Organization and Authority of Seller. Seller has been duly
organized, is validly existing, and is in good standing as a limited liability
company in the State of Delaware. Seller is in good standing and is qualified to
do business in the Commonwealth of Massachusetts under the name "Nantucket
Senior Housing Acquisition”. Seller has the full right, power and authority and
has obtained any and all consents required to enter into this Agreement, all of
the documents to be delivered by Seller at the Closing and to consummate or
cause to be consummated the transactions contemplated hereby. This Agreement has
been, and all of the documents to be delivered by Seller at the Closing will be,
authorized and properly executed and constitutes, or will constitute, as
appropriate, the valid and binding obligation of Seller, enforceable in
accordance with its terms subject to applicable bankruptcy and insolvency laws
and laws affecting creditor’s rights generally.

 

(b)          Pending Actions or Proceedings. There is no action or proceeding
pending or, to Seller’s knowledge, threatened against Seller. To Seller’s
knowledge, no condemnation, eminent domain or similar proceedings are pending or
threatened with regard to the Facility. Seller has not received any notice and
has no knowledge of any pending or threatened liens, special assessments,
impositions or increases in assessed valuations to be made against the Facility.
This Agreement constitutes the legal, valid and binding obligation of Seller
enforceable in accordance with its terms.

 

13

 

 

(c)          Conflicts; Filings. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will:
(i) violate any law to which Seller is subject, or any provision of its
operating agreement or certificate of formation; or (b) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Seller is a party or by which it is bound or to which any
of its assets is subject other than the notices and consents which constitute
conditions precedent under this Agreement. Except for such notices and consents
which constitute conditions precedent under this Agreement, Seller is not
required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement.

 

(d)          Title. Seller has good, clear record and marketable title to the
Property, free and clear of all liens, encumbrances and restrictions, other than
the matters described in Exhibit H attached hereto.

 

(e)          Ground Lease. The Ground Lease has not been modified, altered or
terminated. No default or event of default now exists, or, but for the passage
of time, will exist, under the Ground Lease.

 

(f)          Operating Statements. The operating statements of Seller and
Existing Manager with respect to the Facility for the fiscal year ended
December 31, 2011 and the year-to-date interim operating statements for the
period through August 31, 2012, delivered to Buyer pursuant to this Agreement
show all items of income and expense incurred in connection with the ownership,
operation, and management of the Property for the periods indicated and are
true, correct, and complete in all material respects. No material adverse change
has occurred from the respective dates of such operating statements to the date
hereof.

 

(g)          Permits, Legal Compliance, and Notice of Defects. Seller has all
licenses, permits and certificates necessary to be held by Seller for the
ownership of the Property, including, without limitation, all certificates of
occupancy necessary for the occupancy of the Property (the "Permits"). All of
the Permits are in full force and effect, and Seller has not taken or failed to
take any action that would result in their revocation, suspension or limitation,
nor received any written notice of an intention to revoke, suspend or limit any
of them. Neither the Property nor the use thereof violates any Permit,
governmental law or regulation or any covenants or restrictions encumbering the
Property. Seller has not received any written notice from any insurance company
or underwriter, or is otherwise aware, of any defects that would materially
adversely affect the insurability of the Property or cause an increase in
insurance premiums. Seller has not received notice from any governmental
authority or other person of, nor has any knowledge of, any violation of zoning,
building, fire, health, environmental, or other statutes, ordinances,
regulations or orders (including, without limitation, those respecting the
Americans with Disabilities Act), or any restriction, condition, covenant or
consent in regard to the Property or any part thereof which have not been
corrected to the satisfaction of the issuer.

 

14

 

 

(h)          Environmental. Seller has no knowledge of any violation of any
Environmental Law related to the Real Property or the presence or release of any
Hazardous Materials on or from the Real Property except as disclosed in the
environmental reports listed in Exhibit I attached hereto (the "Environmental
Reports"). Except for de minimis amounts of Hazardous Materials used, stored and
disposed of in accordance with Environmental Laws, and used in connection with
the ordinary maintenance and operation of the Property, Seller has no knowledge
of any Hazardous Materials or any toxic wastes, substances or materials
(including, without limitation, asbestos) manufactured, introduced, released or
discharged from or onto the Property and Seller has no knowledge of the
generation, treatment, storage, handling or disposal of any Hazardous Materials
at the Property. Except as set forth in the Environmental Reports, there are no
underground storage tanks located on the Real Property. Seller is not aware of
any environmental assessments or studies which exist with respect to the Real
Property except for the Environmental Reports.

 

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

 

(j)          PATRIOT Act. Seller is in compliance with the requirements of
Executive Order No. 133224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the “Order”)
and other similar requirements contained in the rules and regulations of the
Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and in any
enabling legislation or other Executive Orders or regulations in respect thereof
(the Order and such other rules, regulations, legislation, or orders are
collectively called the “Orders”). Further, Seller covenants and agrees to make
its policies, procedures and practices regarding compliance with the Orders, if
any, available to Buyer for its review and inspection during normal business
hours and upon reasonable prior notice. Neither Seller nor any beneficial owner
of Seller:

 

(i)          is listed on the Specially Designated Nationals and Blocked Persons
List maintained by OFAC pursuant to the Order and/or on any other list of
terrorists or terrorist organizations maintained pursuant to any of the rules
and regulations of OFAC or pursuant to any other applicable Orders (such lists
are collectively referred to as the “Lists”);

 

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

 

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

 

15

 

 

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

 

(k)          Utilities. Public utility services (including, without limitation,
all applicable electric lines, sewer and water lines, gas, cable, television and
telephone lines) are available to service the Property at the property line
without the need for any non public utility easements over land of others, and,
to Seller’s knowledge, said public utility services are adequate to service the
requirements of the Property and its tenants and occupants as presently
operated, and, to Seller’s knowledge, all payments currently due for the same
have been made, and, to Seller’s knowledge, all necessary easements, permits,
licenses and agreements in respect of any of the foregoing exist and are in full
force and effect and are installed and operating and all installation and
connection charges have been paid for in full. Neither Seller, nor to Seller’s
knowledge, any prior owner of the Property has received notice of any fact or
condition existing and would or could result in the termination or reduction of
the current access from the Property to existing roads and highways, or to sewer
or other utility services available to the Property.

 

(l)          Disclosure. Other than this Agreement, the documents delivered at
Closing pursuant hereto, the Permitted Exceptions, the Residency Agreements,
there are no contracts or agreements of any kind relating to the Property to
which Seller is a party and which would be binding on Buyer after Closing.
Seller has delivered to Buyer all written materials in Seller’s possession or
control which contain information or disclose facts or conditions that would
have a material adverse impact on the use, operation or marketability of the
Property. The originals and copies of Seller Deliverables delivered to Buyer
pursuant to Section 3.1 hereof are true, correct and complete originals or
copies of the respective documents, instruments, agreements or other items, and
Seller is not aware of any material inaccuracy or omission in the information in
Seller Deliverables.

 

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

 

As used in this Agreement, the "knowledge" of Seller means the actual knowledge
of Kent Eikanas, and shall not include any imputed or constructive knowledge, or
any implied duty to investigate or verify any matters represented to herein.

 

7.2.         Buyer’s Representations and Warranties. As a material inducement to
Seller to execute this Agreement and consummate this transaction, Buyer
represents and warrants to Seller as follows as of the date hereof (which
representations, warranties shall also be true on the Closing Date as if made as
of the date thereof):

 

16

 

 

(a)          Organization and Authority. Buyer has been duly organized and is
validly existing as a Massachusetts limited liability company. Buyer has the
full right and authority and has obtained any and all consents required to enter
into this Agreement and to consummate or cause to be consummated the
transactions contemplated hereby. This Agreement has been, and all of the
documents to be delivered by Buyer at the Closing will be, authorized and
properly executed and constitutes, or will constitute, as appropriate, the valid
and binding obligation of Buyer, enforceable in accordance with their terms.

 

(b)          Pending Action. There is no agreement to which Buyer is a party or
to Buyer's knowledge binding on Buyer which is in conflict with this Agreement.
There is no action or proceeding pending or, to Buyer's knowledge, threatened
against Buyer which challenges or impairs Buyer's ability to execute or perform
its obligations under this Agreement. This Agreement constitutes the legal,
valid and binding obligation of Buyer enforceable in accordance with its terms.

 

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

 

(d)          Conflicts; Filings. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will:
(i) violate any law to which Buyer is subject, or any provision of its operating
agreement or certificate of formation; or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Buyer is a party or by which it is bound or to which any of
its assets is subject. Buyer is not required to give any notice to, make any
filing with, or obtain any authorization, consent or approval of any government
or governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement.

 

(e)          PATRIOT Act. Buyer is in compliance with the requirements of the
Order and other similar requirements contained in the rules and regulations of
OFAC and in any enabling legislation or other Orders. Further, Buyer covenants
and agrees to make its policies, procedures and practices regarding compliance
with the Orders, if any, available to Seller for its review and inspection
during normal business hours and upon reasonable prior notice. Neither Buyer nor
any beneficial owner of Buyer:

 

(i)          is listed on the Lists;

 

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

 

17

 

 

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

 

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

 

7.3.         Indemnity.

 

(a)          Seller hereby agrees to indemnify, defend and hold Buyer harmless
from any liability, claim, demand, loss, expense or damage, including, without
limitation, attorneys' fees and costs (collectively, "Claims") arising out of
(i) any breach of any representation or warranty of Seller set forth herein;
(ii) any act or omission of Seller or any of its agents, employees or
contractors; (iii) the ownership of the Property accruing prior to the Closing
Date, including, without limitation, any Claims made under or relating to the
Ground Lease; (iv) any breach by Seller, Principal or any of their respective
Affiliates of the covenants set forth in Section 9.1 and Section 9.2 hereof; (v)
any breach of any representation or warranty of any party to the Operations
Transfer Agreement (other than Buyer); and (vi) any default with respect to any
material obligation of any party to the Operations Transfer Agreement (other
than Buyer) which such party has not cured within thirty (30) days after written
notice from Buyer. Notwithstanding the foregoing or anything to the contrary in
this Agreement, with respect to any Claims arising under the foregoing
subsections (v) and (vi), Buyer hereby agrees that (i) Buyer will first pursue
its remedies and indemnification rights under the Operations Transfer Agreement
prior to any indemnification rights it is entitled to under this Agreement, and
(ii) the aggregate liability of Seller shall not exceed the Holdback Deposit set
forth in Section 7.4(c) below.

 

(b)          Buyer hereby agrees to indemnify, defend and hold Seller harmless
from any Claim arising out of (i) any breach of any of representation or
warranty of Buyer set forth herein, (ii) any act or omission of Buyer, its
agents, employees or contractors, or (iii) the ownership or operation of the
Property accruing on or after the Closing Date, including, without limitation,
any Claims made by or relating to any employee accruing on or after the Closing
Date.

 

18

 

 

(c)          The following provisions govern all actions for indemnity under
this Section 7.3 and any other provision of this Agreement. Promptly after
receipt by an indemnitee of notice of any claim, such indemnitee will, if a
claim in respect thereof is to be made against the indemnitor, deliver to the
indemnitor written notice thereof. After such notice, the indemnitor shall be
entitled, if it so elects at its own cost, risk and expense, (i) to take control
of the defense and investigation of such lawsuit or action, (ii) to employ and
engage attorneys of its own choice to handle and defend the same unless the
named parties to such action or proceeding include both the indemnitor and the
indemnitee and the indemnitee has been advised in writing by counsel that there
exists a bona fide and recognized ethical conflict which would require that such
counsel obtain a waiver or similar consent from each of the indemnitor and the
indemnitee to undertake such joint defense, in which event the indemnitor shall
be entitled, at the indemnitor’s cost, risk and expense, to separate counsel of
its own choosing only if it reasonably determines in good faith that such waiver
or consent cannot be given, and (iii) to compromise or settle such claim, which
compromise or settlement shall be made only with the written consent of the
indemnitee, such consent not to be unreasonably withheld. If the indemnitor
fails to assume the defense of such claim within thirty (30) calendar days after
receipt of the claim notice, the indemnitee against which such claim has been
asserted will (upon delivering notice to such effect to the indemnitor) have the
right to undertake, at the indemnitor’s sole cost and expense (to be reimbursed
as accrued), the defense, compromise or settlement of such claim on behalf of
and for the account and risk of the indemnitor. In the event the indemnitee
assumes the defense of the claim, the indemnitee will keep the indemnitor
reasonably informed of the progress of any such defense, compromise or
settlement. The indemnitor shall be liable for any settlement of any action
effected pursuant to and in accordance with this Section 7.3 subject to the
written consent of the indemnitor and for any final judgment (subject to any
right of appeal), and the indemnitor agrees to indemnify and hold harmless an
indemnitee from and against any losses by reason of such settlement or judgment;
provided, however, that if an indemnitee settles a claim without the prior
written consent of the indemnitor, then the indemnitor shall be released from
liability with respect to such claim unless the indemnitor has unreasonably
withheld such consent. The failure of indemnitee to deliver written notice to
the indemnitor within a reasonable time after indemnitee receives notice of any
such claim shall relieve such indemnitor of any liability to the indemnitee
under this indemnity only if and to the extent that such failure is prejudicial
to the indemnitor’s ability to defend such action, and the omission so to
deliver written notice to the indemnitor will not relieve it of any liability
that it may have to any indemnitee other than under this indemnity.

 

7.4.         Survival of Representations, Warranties and Indemnity; Holdback
Deposit.

 

(a)          The representations and warranties set forth in this Article 7 are
made as of the Effective Date, and each party shall be deemed to have remade all
of their respective representations and warranties as of the Closing Date. No
representations or warranties shall be deemed to be merged into or waived by the
instruments of Closing, but shall survive the Closing for a period of six (6)
months.

 

(b)          The indemnity obligations of the parties under Section 7.3 shall
survive the Closing for a period of six (6) months.

 

(c)          At the Closing Seller shall deposit with Escrow Agent the sum of
$100,000 (the “Holdback Deposit”) to serve as a source of payment of any Claims
that may become due or owing from Seller under Section 7.3(a) above. Upon
receipt of the Holdback Deposit, Escrow Agent shall invest the Holdback Deposit
in an interest-bearing account or money market fund mutually acceptable to
Seller and Buyer. Escrow Agent shall agree to hold and dispose of the Holdback
Deposit in accordance with the terms and provisions of Section 2.3 hereof and
this Section 7.4. Any interest earned on the Holdback Deposit shall follow the
Holdback Deposit. In the event of any Claim, Buyer shall be entitled to make an
Escrow Demand for the payment of such Claim under Section 2.3 above. Any
insufficiency in the amount of the Holdback Deposit shall not limit or release
Seller’s obligations under Section 7.3(a) above. Subject to the other terms in
this Section 7.5 or Section 2.3 above, and if not sooner exhausted through the
payment of Escrow Demands, the escrow of the Holdback Deposit shall terminate
six (6) months after the Closing Date, whereupon Escrow Agent shall pay and
distribute the then available amount of the Holdback Deposit to Seller, unless
any Escrow Demands are then unresolved or pending, in which case an amount equal
to the aggregate dollar amount of such Escrow Demands shall be retained by
Escrow Agent and the balance (if any) paid to Seller. Any amount so retained by
Escrow Agent shall continue to be held by Escrow Agent until the dispute between
the parties has been resolved pursuant to either clause (a) or (b) of Section
2.3 above.

19

 

 

ARTICLE 8: DEFAULT AND REMEDIES

 

8.1.          Buyer’s Remedies. If this transaction fails to close as a result
of any default on the part of Seller which has not been cured by the earlier of
the thirtieth (30th) day after written notice thereof from Buyer or the Closing
Date, then Buyer shall be entitled to such remedies for breach of contract as
may be available at law and in equity, including, without limitation, immediate
refund of the Deposit and all interest earned thereon and the remedy of specific
performance.

 

8.2.          Seller’s Remedies. If this transaction fails to close as a result
of any default on the part of Buyer which has not been cured within thirty (30)
days after written notice thereof from Seller, then Seller’s sole remedy shall
be to terminate this Agreement and receive the Deposit, as liquidated damages,
as Seller’s sole and exclusive remedy at law or in equity (Seller waiving all
other rights or remedies in the event of such default by Buyer and the parties
hereby acknowledging that Seller’s actual damages in the event of a default by
Buyer under this Agreement will be difficult to ascertain, and that such
liquidated damages represent the parties’ best estimate of such damages).

 

8.3.          Other Expenses. If this Agreement is terminated due to the default
of any party, then the defaulting party shall pay any fees due to the Escrow
Agent.

 

ARTICLE 9: NON SOLICITATION; NON COMPETE

 

9.1.          Non-Solicitation. In consideration of the premises contained
herein, the consideration to be received hereunder and in consideration of and
as an inducement to Buyer to consummate the transactions contemplated hereby,
Seller hereby agrees that until the first (1st) anniversary of the Closing Date,
Seller shall not and shall not suffer or permit any of its Affiliates to,
directly or indirectly (i) solicit or attempt to induce any employee of Buyer or
any Affiliate of Buyer to terminate his or her employment with Buyer or any
Affiliate of Buyer; or (ii) hire or attempt to hire any employee of Buyer or any
Affiliate of Buyer except on an unsolicited basis at the request of such
employee.

 

9.2.          Non-Compete. In consideration of the premises contained herein,
the consideration to be received hereunder and in consideration of and as an
inducement to Buyer to consummate the transactions contemplated hereby, Seller
hereby agrees that, if the Closing hereunder occurs, Seller shall not, and shall
not suffer or permit the Principal to, develop, construct, own, lease, acquire,
manage, operate or otherwise directly or indirectly participate in any Competing
Project prior to the first (1st) anniversary of the Closing Date.

 

20

 

 

9.3.          Enforcement. Seller acknowledges and recognizes the highly
competitive nature of the senior housing industry. Seller has carefully
considered the nature and extent of the restrictions set forth herein and
acknowledges that the same are reasonable with respect to scope, duration and
territory. It is the desire and intent of the parties that the provisions of
this Article 9 be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Article 9 shall be adjudicated
to be invalid or unenforceable, such provision without any action by any party
shall be deemed amended to delete therefrom or to modify the provisions thereof
so as to restrict (including, without limitation, a reduction in duration,
geographical area or prohibited business activity) the portion adjudicated to be
invalid or unenforceable, such deletion or modification to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made, and such deletion or modification to be made
only to the extent necessary to cause the provision as amended to be valid and
enforceable. The parties hereto recognize and acknowledge that a breach by
Seller of this Article 9 will cause irreparable and material loss and damage to
Buyer as to which Buyer will not have an adequate remedy at law or in damages.
Accordingly, each party acknowledges and agrees that the issuance of an
injunction or other equitable remedy is an appropriate remedy for any such
breach in addition to, and without limiting, any other remedies that the Buyer
may have at law or in equity.

 

ARTICLE 10: MISCELLANEOUS

 

10.1.          Parties Bound. Neither party may assign this Agreement without
the prior written consent of the other, and any such prohibited assignment shall
be void; provided, however, that Buyer may assign its rights and obligations
under this Agreement without Seller's consent, but with prior written notice to
Seller, to any entity which is owned by or under common control with Buyer.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the respective legal representatives, successors, assigns, heirs, and
devises of the parties.

 

10.2.          Headings. The article and paragraph headings of this Agreement
are for convenience only and in no way limit or enlarge the scope or meaning of
the language hereof.

 

10.3.          Invalidity and Waiver. If any portion of this Agreement is held
invalid or inoperative, then so far as is reasonable and possible the remainder
of this Agreement shall be deemed valid and operative, and, to the greatest
extent legally possible, effect shall be given to the intent manifested by the
portion held invalid or inoperative. The failure by either party to enforce
against the other any term or provision of this Agreement shall not be deemed to
be a waiver of such party’s right to enforce against the other party the same or
any other such term or provision in the future.

 

21

 

 

10.4.          Governing Law. This Agreement shall, in all respects, be
governed, construed, applied, and enforced in accordance with the laws of the
Commonwealth of Massachusetts.

 

10.5.          Survival. The provisions of this Agreement that contemplate
performance after the Closing including, without limitation, Section 5.7,
Article 6, Article 7 and Article 9, the obligations of the parties not fully
performed at the Closing, and all indemnities set forth in this Agreement shall
survive the Closing and shall not be deemed to be merged into or waived by the
instruments of Closing, subject to the provisions of Section 7.4 hereof.

 

10.6.          No Third Party Beneficiary. This Agreement is not intended to
give or confer any benefits, rights, privileges, claims, actions, or remedies to
any person or entity as a third party beneficiary, decree, or otherwise.

 

10.7.          Entirety and Amendments. This Agreement embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings relating to the Property. This Agreement may be amended or
supplemented only by an instrument in writing executed by the party against whom
enforcement is sought.

 

10.8.          Time. Time is of the essence in the performance of this
Agreement.

 

10.9.          Confidentiality. Neither party shall make any public announcement
or other disclosure of this Agreement or any information related to this
Agreement to outside brokers or third parties, before or after the Closing,
without the prior written consent of the other party; provided, however, that
each party may make disclosure of this Agreement to its lenders, creditors,
officers, employees, representatives, investors, consultants and agents as
necessary or appropriate to consummate the transactions contemplated herein.

 

10.10.         Enforcement Expenses. Should either party employ attorneys to
enforce any of the provisions hereof, the party against whom any final judgment
is entered agrees to pay the prevailing party all reasonable costs, charges, and
expenses, including attorneys’ fees and costs, expended or incurred in
connection therewith.

 

10.11.         Notices. All notices required or permitted hereunder shall be in
writing and shall be served on the parties at the addresses set forth in
Exhibit J. Any such notices shall be either (i) sent by overnight delivery using
a nationally recognized overnight courier, in which case notice shall be deemed
delivered on the date of deposit with such courier, (ii) sent by certified or
regular U.S. mail, postage prepaid, in which case notice shall be deemed
delivered on the date of deposit with the U.S. Postal Service, (iii) sent by
email or facsimile, in which case notice shall be deemed delivered upon
transmission thereof so long as a copy thereof is also sent by overnight
delivery using a nationally recognized overnight courier by depositing such copy
on such date of delivery by email or facsimile with such courier, or (iv) sent
by personal delivery, in which case notice shall be deemed delivered upon
receipt or refusal of delivery. A party’s address may be changed to another
address in the United States by written notice to the other party; provided,
however, that no notice of a change of address shall be effective until actual
receipt of such notice. Copies of notices are for informational purposes only,
and a failure to give or receive copies of any notice shall not be deemed a
failure to give notice. Notices given by counsel to Buyer shall be deemed given
by Buyer and notices given by counsel to Seller shall be deemed given by Seller.

 

22

 

 

10.12.         Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and the documents to be
executed at the Closing and agree that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be applied in the interpretation of this Agreement, the documents to be
delivered at Closing or any exhibits or amendments thereto.

 

10.13.         Calculation of Time Periods. 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 such period is to be included, unless such last day is a Saturday,
Sunday or legal holiday for national banks in the Commonwealth of Massachusetts,
in which event the period shall run until the end of the next day which is
neither a Saturday, Sunday, nor legal holiday.

 

10.14.         Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of such counterparts shall constitute one Agreement. To facilitate execution of
this Agreement, the parties may execute and exchange by telephone facsimile
counterparts of the signature pages.

 

10.15.         Further Assurances. In addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or delivered by either
party at Closing, each party agrees to perform, execute and deliver, but without
any obligation to incur any additional liability or expense, on or after the
Closing any further deliveries and assurances as may be reasonably necessary to
consummate the transactions contemplated hereby or to further perfect the
conveyance, transfer and assignment of the Property to Buyer.

 

10.16.         Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

10.17.         Bulk Sales. If any applicable provisions of law require that any
state or local taxation authorities be notified of the transactions contemplated
herein, or if clearance is required of such authorities, each in order to permit
the transfer of the Real Property as contemplated herein without liability to
Buyer for any state or local taxes required to be paid or collected by Seller
prior to the Closing Date, it shall be a condition precedent to the obligations
of Buyer hereunder that all such notification and clearance requirements shall
have complied with and the Buyer shall have received the requisite clearances
and releases from further liability. Seller shall, within ten (10) days after
the Effective Date make all filings necessary to obtain such clearances, and
shall contemporaneously provide Buyer with copies of all such filings.

 

[Remainder of this page intentionally left blank; signature page follows]

 

23

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement on the day and year written below.

 

    SELLER:           NANTUCKET ACQUISITION LLC, a Delaware limited liability
company           Dated:     By:           Name:         Title:

 

      BUYER:                 NORTHBRIDGE COMMUNITIES, LLC, a Massachusetts
limited liability company         Dated:     By:           Name:         Title:

 

24

 

 

JOINDER

 

Commonwealth Land Title Insurance Company hereby joins this Agreement for the
sole purpose of agreeing to be bound by the provisions of Sections 2.2 and 2.3
hereof.

 

  COMMONWEALTH LAND TITLE INSURANCE COMPANY         By:       Name:     Title:

 

 

 

 

JOINDER

 

Kent Eikanas, as owner of beneficial interests in Seller (“Principal”), hereby
acknowledges and agrees that he will derive substantial benefits from the
consummation of the transactions herein described. Accordingly, Principal hereby
agrees to comply with the covenants and requirements of Article 9 of the
Agreement as though each reference therein to “Seller” were instead a reference
to “Principal.” The provisions of this Joinder shall survive Closing.

 

Executed under seal as of the date first above written.

 

  PRINCIPAL:           Name: Kent Eikanas

 

 

 

 

List of Exhibits

        Exhibit   Description           A   Definitions       B   Property
Information       C   Seller Deliverables       D   Form of Ground Lease
Assignment       E   Form of Bill of Sale and General Assignment       F   Form
of FIRPTA Affidavit       G   Form of Ground Lease Amendment       H   Title
Matters       I   Environmental Reports       J   Notice Addresses       K  
Description of Land

 

 

 

 

Exhibit A

Definitions

 

"Affiliate" shall mean (i) as to Seller: Principal, any entity that directly or
indirectly controls, is controlled by, or is under common control with Seller or
Principal, or any entity at least a ten percent (10%) of whose economic interest
is owned, directly or indirectly, by Seller or Principal; and (ii) as to Buyer:
James C. Coughlin, Wendy A. Nowokunski, any entity that directly or indirectly
controls, is controlled by, or is under common control with Buyer, James C.
Coughlin, or Wendy A. Nowokunski, or any entity at least a ten percent (10%) of
whose economic interest is owned, directly or indirectly, by Buyer, James C.
Coughlin, or Wendy A. Nowokunski; and the term "control" means the power to
direct the management of such entity through voting rights, ownership or
contractual obligations.

 

"Competing Project" shall mean, as to the Facility, any Senior Housing Facility
located within the town of Nantucket, Massachusetts.

 

"Due Diligence Period" shall mean the period beginning on the Effective Date and
ending at 11:59 p.m. on the thirtieth (30th) day following the Effective Date;
provided, however that if Buyer does not receive the Operations Transfer
Agreement (with all schedules and exhibits thereto completed) executed and
delivered by the other parties thereto on or before the fifteenth (15th) day
following the Effective Date, then the last day of the Due Diligence Period
shall be extended on a day-for-day basis for each day beyond said fifteenth
(15th) day until Buyer receives the Operations Transfer Agreement (with all
schedules and exhibits thereto completed) executed and delivered by the other
parties thereto.

 

"Effective Date" shall mean the date that this Agreement has been executed and
delivered by all parties hereto.

 

"Environmental Laws" shall mean all applicable federal, state, county, municipal
and other local laws governing or relating to Hazardous Materials or the
environment, together with their implementing regulations, ordinances and
guidelines, including without limitation, the Resource Conservation and Recovery
Act and the Comprehensive Environmental Response Compensation and Liability Act.

 

"Escrow Agent" shall mean Commonwealth Land Title Insurance Company (Boston
Office).

 

"Existing Management Agreement" shall mean the Pre-Acquisition Services and
Management Agreement dated November 2, 2009, by and between Seller’s tenant,
Sherburne Commons Residences, LLC dba Sherburne Commons, a Massachusetts limited
liability company and Existing Manager with respect to the Facility, as amended.

 

"Existing Manager" shall mean Riverwood Retirement Management, Incorporated, a
Florida corporation.

 

"Facility" shall mean the Senior Housing Facility operated by Existing Manager
set forth on Exhibit B attached hereto.

 

Exhibit A-1

 

 

"Ground Lease" shall mean that certain Second Amended and Restated Ground Lease
dated as of December 9, 2009, by and among Seller, as lessee, Town of Nantucket,
Massachusetts, as lessor, and Sherburne Commons, Inc., a notice of lease of
which is recorded in Book 1213 at Page 226 of the Nantucket Registry of Deeds.

 

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

 

"Improvements" shall mean all buildings, improvements, fixtures, structures,
parking areas and landscaping located on or appurtenant to the Land, including,
but not limited to, the Facility and the buildings currently used for employee
housing on the easterly portion of the Land along South Shore Road.

 

"Intangible Property" shall mean all right, title and interest of Seller in and
to all intangible personal property owned by Seller and now or hereafter used in
connection with the ownership of the Facility, including, without limitation,
any and all of the following: trade names and trademarks associated with the
Facility, including, without limitation, the name "Sherburne Commons" and the
trade names set forth on Exhibit B attached hereto; web sites, domain names, and
web addresses; the plans and specifications for the Improvements, including
as-built plans; warranties, guarantees, indemnities and claims against third
parties benefiting Seller; contract rights related to the ownership of the
Facility; pending permit or approval applications as well as existing permits,
approvals and licenses (to the extent assignable); and insurance proceeds and
condemnation awards to the extent provided in Sections 4.2 or 4.3 of this
Agreement.

 

"Land" shall mean all of the land described in and subject to the Ground Lease
and all and singular the rights, benefits, privileges, easements, tenements,
hereditaments, and appurtenances thereon or in anywise appertaining to such
land, including any and all mineral rights, development rights, water rights and
the like; and all right, title, and interest of Seller in and to all strips and
gores and any land lying in the bed of any street, road or alley, open or
proposed, adjoining such land.

 

"Lease" shall mean and refer to any lease, license or other agreement other than
residency agreements, pursuant to which any person or entity has the right to
occupy or use the Real Property or any portion thereof.

 

"Operations Transfer Agreement" shall mean that certain Operations Transfer
Agreement dated on or after the date hereof, by and among Buyer, the Existing
Manager, and Sherburne Commons Residences, LLC.

 

"Permitted Exceptions" shall mean: (i) title and survey exceptions approved by
Buyer pursuant to Section 3.3 of this Agreement; (ii) provisions of existing
building and zoning laws; (iii) any liens for municipal betterments assessed
after the date of this Agreement; (iv) existing rights and obligations in party
walls which are not the subject of written agreement; (v) such taxes for the
then current year as are not due and payable on the Closing Date; and
(vi) parties in possession of individual senior housing units as residents only.

 

Exhibit A-2

 

 

"Permitted Personal Property Liens" shall mean, for the Property (i) leases,
license rights or restrictions incurred in the ordinary course of business which
do not in any case materially detract from the value of the property subject
thereto; (ii) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under self-insurance arrangements;
(iii) deposits to secure the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business; and (iv) purchase money security interest in
respect of new equipment in an aggregate amount not in excess of $50,000 at any
time, provided Buyer shall receive a credit against the Purchase Price in an
amount equal to any such purchase money indebtedness.

 

"Personal Property" shall mean all Tangible Personal Property and Intangible
Personal Property.

 

"Principal" shall mean Kent Eikanas.

 

"Property" shall mean the Real Property and the Personal Property.

 

"Purchase Price" shall mean, subject to adjustments and prorations as set forth
herein, the sum of Four Million and 00/100 Dollars ($4,000,000.00).

 

"Real Property" shall mean (i) all right, title and interest of Seller, as
lessee, in and to the leasehold estate created pursuant to the Ground Lease and
(ii) the Improvements.

 

"Rents" shall mean all rental income from the Real Property, including without
limitation, base rent and additional rent or fees paid by residents pursuant to
the Residency Agreements.

 

"Residency Agreements" shall mean all residency agreements or other occupancy
agreements between Seller or its agents and any other person or entity with
respect to the Facility.

 

"Senior Housing Facility" shall mean a facility which provides any one or more
of the following types of senior housing: independent living for seniors,
assisted living for seniors or Alzheimer's/memory care for seniors.

 

"Tangible Personal Property" shall mean all right, title and interest of Seller
in and to all tangible personal property now or hereafter used in connection
with the use, operation, maintenance or management of the Real Property,
including, without limitation, all tools, equipment, machinery, heating,
ventilating and air conditioning units, furniture, art work, furnishings, trade
fixtures, office equipment and supplies.

 

"Title Company" shall mean Commonwealth Land Title Insurance Company (Boston
office).

 

“Town Lease Amendment Approval Date” shall mean the date that the Town of
Nantucket has informed the parties hereto in writing that it has approved the
form of the ground lease amendment required under Section 5.4 hereof and has
authorized the execution and delivery thereof (subject only to such reasonable
and customary contingencies that Seller and Buyer deem to be capable of
satisfaction within the succeeding 30-day period) and the expiration of all
appeal periods that may be applicable with respect to such actions of the Town
of Nantucket.

 

Exhibit A-3

 

 

 

Exhibit B

Property Information

 

Facility/Address Tradename Units Sherburne Commons, 40 Sherburne Commons,
Nantucket, MA Sherburne Commons

60 Units in total:

38 Independent Living Units;

14 Assisted Living Units; and

8 Alzheimer’s /Memory Care Units

 

Exhibit B-1

 

 

 

Exhibit C

 

Seller Deliverables

 

1.All title insurance policies or other evidence of title, together with copies
of all encumbrances, easements and restrictions and other matters referenced
therein or otherwise affecting the property.

 

2.Current ALTA survey.

 

3.Copies of real estate tax bills and other municipal, county, state or other
assessments for current and up to two prior years.

 

4.Evidence of connection and operating of all gas, water, electric, sewer and
other utility services (may be shown of survey). Copies of utility invoices for
prior twelve months.

 

5.All building and occupancy permits and licenses and all other governmental
permits, licenses and approvals and notices of violation. This should include
zoning opinions and other evidence of compliance with zoning (use, building
dimensions, parking, loading and access), variances, special permits, site plan
approvals, subdivision, building code, wetlands, curb cuts, historic
regulations, environmental and similar land use laws and regulations as well as
operational licenses for the facility.

 

6.All plans and specifications prepared in connection with the property
including as-built plans, site plans, floor plans and model unit plans.

 

7.The Ground Lease.

 

8.All leases, license agreements or similar agreements for use and occupancy
allowing any lessees or third parties to use or occupy any portion of the
property, together with all amendments, notices, estoppel certificates or
agreements or documentation regarding security deposits.

 

9.All environmental reports on the property, including Phase I reports, Phase II
reports; repairs re: air quality, asbestos, lead; all logs of borings and
testing wells and test results on the property. Any notices, citations or
correspondence to or from the DEP, DEQE, local, state or national agencies; all
environmental opinions on the property.

 

10.Roof study and any other engineering or structural studies performed on the
property over the past five (5) years.

 

11.Any existing geotechnical, engineering, ADA or other reports or documentation
regarding the status of the land and structures and the mechanical, electrical,
utility and other building systems.

 

12.A list of all personal property and equipment used in the operation and
management of the property and included in the sale, including all on site
vehicles.

 

Exhibit C-1

 

 

13.All management contracts or other service agreements regarding maintenance or
operation of the property. Agreements to include: elevator maintenance,
landscaping, snow removal, fire alarm systems, and all other service agreements
or contracts related to the property.

 

14.Copies of all warranties of guarantees for HVAC, roof, elevators and
equipment.

 

15.Aerial photographs (if available).

 

16.List of all outstanding litigation.

 

Financial Due Diligence

 

17.Current Rent Roll, including prepaid rent and security/last month’s rent
deposits.

 

18.Current listing of ancillary revenue utilization and charges by
unit/resident.

 

19.Lease expiration report.

 

20.Current year capital budget.

 

21.Capital expenditure recap for last two years.

 

22.Current operating budgets broken down by month, including detailed staffing
schedules.

 

23.Current month and prior 12 months detailed internal operating statements.

 

24.Staffing patterns by month for past two years including hours by position,
wages by position and wage totals.

 

Operations Due Diligence

 

25.Standard form and all residency agreements including any modifications,
addendum’s attachments and Resident Handbooks or House Rules.

 

26.Incident reports for the prior one year.

 

27.Outline of existing benefits for all associates (including health, vacation,
401k etc.).

 

28.Current site organizational chart and job descriptions.

 

29.Property Bonus Program.

 

30.Prior two years inspection reports and correspondence from licensing
agencies; including department of health, state licensing/certification and all
other regulatory agencies.

 

31.All service agreements related to the operations, including but not limited
to pharmacy, beauty shop, transfer, and medical services.

 

Exhibit C-2

 

 

Information Systems

 

32.An inventory of computers, hardware, software applications per community and
home office.

 

33.Outline payroll process to include pay periods, process, vendors, inventory
of time clocks, etc.

 

Marketing & Sales

 

34.All marketing materials including collaterals, schedule of fees, current and
past one-year ads, brochures, newsletters, direct mailings and disclosure
statements.

 

35.Financial and medical criteria for move-in.

 

36.24-month occupancy trend on a monthly basis or from opening to the present,
itemized by unit type (i.e. IL, AL).

 

37.Market feasibility studies; demographics, target markets, etc.

 

38.One complete collateral kit per project.

 

39.New resident move in packet; lease, forms, handbooks, etc.

 

Insurance Due Diligence

 

40.General and Professional Liability Long Term Care Applications for various
insurers, completed for each location.

 

41.Statement of property values by location.

 

42.Construction, protection and exposure information by property.

 

43.Vehicle schedule.

 

44.Driver schedule.

 

45.Workers Compensation remuneration, by location, by classification.

 

46.Copy of the most recent Workers Compensation experience modification and
accompanying worksheets.

 

47.Detailed descriptions of all open and closed claims over $25,000 in the last
five years (minimum).

 

48.Most recent State Surveys including re-visits and compliance letters.

 

49.Admission Material and Agreements.

 

50.Copy of all Licenses.

 

51.Contracts with Vendors.

 

52.Copy of Safety Program.

 

Exhibit C-3

 

 

 

Exhibit D

GROUND LEASE ASSIGNMENT

 

ASSIGNMENT OF GROUND LEASE

 

THIS ASSIGNMENT OF GROUND LEASE (this “Assignment”) is made as of ____________,
20___ (“Effective Date”) by and among THE TOWN OF NANTUCKET, MASSACHUSETTS,
acting by and through its Board of Selection (“Landlord”), NANTUCKET
ACQUISITION, LLC, a Delaware limited liability company (“Assignor”), and
______________________________ (“Assignee”), with reference to the following
facts:

 

RECITALS

 

A.           By Second Amended and Restated Ground Lease dated as of December 9,
2009, as amended to date (the “Lease”), Landlord leased to Assignor certain
property located at 21 South Shore Road, Nantucket, Massachusetts as such
property is further described therein (the “Property”).

 

B.           Assignor has entered into a purchase and sale agreement (the
“Purchase Agreement”) to sell the Property to Assignee.

 

C.           Pursuant to the Purchase Agreement, Assignor is obligated to assign
to Assignee all of Assignor’s right, title and interest in and to the Lease.

 

D.           Assignor and Assignee desire to enter into this Assignment to set
forth their respective rights and obligations with respect to the Lease.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.          Incorporation of Recitals. The Recitals are incorporated herein by
this reference as though fully set forth.

 

2.          Definitions. Except as otherwise expressly provided in this
Assignment to the contrary, any capitalized words shall have the meaning
ascribed to them in the Lease.

 

Exhibit D-1

 

 

3.          Assignment of Lease. Assignor hereby grants, sells, bargains,
conveys, transfers and assigns to Assignee all of Assignor’s right, title and
interest in the Lease.

 

4.          Assumption of Lease. Assignee hereby accepts the sale, bargain,
conveyance, transfer and assignment by Assignor to Assignee, its successors and
assigns, of all of Assignor’s right, title and interest in the Lease and hereby
assumes all of Assignor’s obligations and liabilities under the Lease arising on
or after the Effective Date (the “Assumed Obligations”), notwithstanding the
later execution and delivery of this Agreement.

 

5.          Consent. Landlord hereby consents to the assignment made herein from
Assignor to Assignee and confirms that it has waived its right of first refusal
relating thereto contained in the Lease and that no assignment or transfer fee
is due and payable to Landlord under Section 12 of the Lease on account of such
transfer.

 

6.          Indemnity. Assignee shall indemnify, protect, defend and hold
harmless Assignor from and against any and all Assumed Obligations from and
after the Effective Date. Assignors shall indemnify, protect, defend and hold
Assignee harmless from and against any and all liabilities and obligations under
the Lease arising and accruing prior to the Effective Date.

 

7.          Successors and Assigns. This Assignment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors in
interest and assigns.

 

8.          Counterparts. This Assignment may be executed in one (1) or more
counterparts, each of which shall be deemed an original, but all of which when
assembled together shall constitute one (1) and the same instrument.

 

Exhibit D-2

 

 

IN WITNESS WHEREOF, the parties have executed this Assignment as of the date
first written above.

 

ASSIGNOR:   ASSIGNEE:       NANTUCKET ACQUISITION, LLC,
a Delaware limited liability company  

_____________________________, a

________________________

      By: Cornerstone Ventures, Inc., a California corporation, its
______________    By:         Name:  

 

By:       Name:             LANDLORD:       TOWN OF NANTUCKET       By its Board
of Selectmen                                

  

           

 

Exhibit D-3

 

 

Exhibit E

BILL OF SALE AND GENERAL ASSIGNMENT

 

THIS BILL OF SALE AND GENERAL ASSIGNMENT (this “Assignment”) is made as of the
___ day of ______________, 20___ (the “Transfer Date”), by and between
____________________, a _________________ (“Assignor”), and
____________________, a _________________ (“Assignee”).

 

A.           Assignor and certain affiliates thereof, as seller, and Northbridge
Communities, LLC (“Northbridge”), as buyer, entered into that certain Purchase
and Sale Agreement dated as of ___________, 20___ (the “Purchase Agreement”) in
connection with, inter alia, that certain senior housing facility commonly known
as ____________, located in ________________ (the “Facility”).

 

B.           Northbridge’s rights under the Purchase Agreement with respect to
the Facility have been assigned to Assignee pursuant to an assignment agreement
by and between Northbridge and Assignee of even date herewith.

 

C.           Pursuant to the Purchase Agreement, Assignor has agreed to assign,
transfer and convey all of its rights, title and interest in, to and under the
Personal Property with respect to the Facility to Assignee.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:

 

1.          Personal Property. Assignor hereby sells, assigns, transfers and
conveys unto Assignee all of Assignor’s rights, title and interest in, to and
under all Personal Property, including, without limitation, (i) all trade names
and trademarks associated with the Facility, including, without limitation, the
name "Sherburne Commons" and the trade names set forth in Exhibit B to the
Purchase Agreement, and (ii) all vehicles and equipment listed on Exhibit A
attached hereto, subject only to the Permitted Personal Property Liens, as is,
where is and without warranty, express or implied, of merchantability or fitness
for a particular purpose, except as set forth in the Purchase Agreement, TO HAVE
AND TO HOLD all of said Personal Property unto Assignee, its successors and
assigns, to its own use forever.

 

2.          Indemnity by Assignor. Assignor agrees to indemnify, defend and hold
Assignee harmless from and against any and all losses, costs, claims, damages,
liabilities and expenses, including, without limitation, reasonable attorneys’
fees and expenses, accruing prior to the Transfer Date relating to the Personal
Property.

 

3.          Indemnity of Assignee. Assignee agrees to indemnify, defend and hold
Assignor harmless from and against any and all losses, costs, claims, damages,
liabilities and expenses, including, without limitation, reasonable attorneys’
fees and expenses, accruing on or after the Transfer Date relating to the
Personal Property.

 

Exhibit E-1

 

 

4.          Prevailing Party. In the event of any legal or equitable proceeding
to enforce any of the terms or conditions of this Assignment, or any alleged
disputes, breaches, defaults or misrepresentations in connection with any
provision of this Assignment, the prevailing party in such proceeding shall be
entitled to recover its reasonable costs and expenses, including, without
limitation, reasonable attorneys’ fees and costs of defense paid or incurred in
good faith.

 

5.          Counterparts. This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signature pages may be
detached from the counterparts and attached to a single copy of this Assignment
to physically form one document.

 

6.          Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings given to such terms in the Purchase Agreement.

 

Exhibit E-2

 

 

IN WITNESS WHEREOF, the parties have executed this Assignment as of the
__________ day of __________, 20___.

 

  ASSIGNOR:       ___________________________, a                      
___________________________                By:      _______________________, a
      
            _______________________       By: ___________________________    
Name:     Title:

 

  ASSIGNEE:       ____________________________,
a                                      
_________________ limited liability company       By:
___________________________     Name:     Title:

 

Exhibit E-3

 

 

Exhibit F

FIRPTA Affidavit

 

Section 1445 of the Internal Revenue Code of 1986, as amended, provides that a
transferee of a United States real property interest must withhold tax if the
transferor is a foreign person. To inform the Transferee (hereinafter defined)
that withholding of tax is not required upon the disposition of a United States
real property interest by _________________________________, a __________ (the
“Transferor”) to ___________________________________, a ___________ (the
“Transferee”), the undersigned, being first duly sworn upon oath, does hereby
depose and say, and does hereby certify the following on behalf of the
Transferor:

 

1.          The undersigned is the ____________________ of the Transferor and is
familiar with the business of the Transferor;

 

2.          The Transferor is not a foreign person; that is, the Transferor is
not a nonresident alien, a foreign corporation, foreign partnership, foreign
trust or foreign estate (as all such terms are defined in the Internal Revenue
Code of 1986, as amended, and United States Treasury Department Income Tax
Regulations in effect as of the date hereof);

 

3.          The Transferor is a corporation duly organized, validly existing and
in good standing under the laws of the State of ____________;

 

4.          The Transferor’s United States employer identification number is
__________;

 

5.          The Transferor’s office address and principal place of business is
___________________; and

 

6.          This certificate and affidavit is made to induce the Transferee to
consummate the transactions contemplated by the Transferor and Transferee.

 

The Transferor understands that this affidavit and certification may be
disclosed to the United States Internal Revenue Service by the Transferee and
that any false statement contained herein could be punished by fine,
imprisonment, or both.

 

Under penalties of perjury, the undersigned declares that he has examined this
affidavit and certificate, and to the best of the undersigned’s knowledge and
belief, it is true, correct and complete. The undersigned further declares that
he has authority to sign this affidavit and certificate on behalf of the
Transferor.

 

Exhibit F-1

 

 

This affidavit and certificate is executed and delivered as of the ___ day of
_______________, 20___.

 

          ,   a    

 

  By:       Name:     Title:

  

STATE OF ____________ )

                              ) SS.

COUNTY OF                     )

 

I, _____________________, a notary public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that ______________________ personally known to me
to be the __________________ of _______________________________________, a
_________, and personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person
and acknowledged that as such _____________, he/she signed and delivered the
said instrument, pursuant to authority, given by the Board of Directors of said
corporation as his/her free and voluntary act, and as the free and voluntary act
of said corporation, for the uses and purposes herein set forth.

 

GIVEN under my hand and official seal this _____ day of ___________, 20__.

 

  Notary Public           My Commission Expires:__________

 

Exhibit F-2

 

 

Exhibit G

Form of Ground Lease Amendment

 

AMENDMENT TO SECOND AMENDED AND RESTATED GROUND LEASE

 

This AMENDMENT TO SECOND AMENDED AND RESTATED GROUND LEASE (this “Amendment”) is
dated as of ___________, 2012 and is made by and between THE TOWN OF NANTUCKET,
MASSACHUSETTS, acting by and through its Board of Selection (the “Landlord”) and
NANTUCKET ACQUISITION, LLC, a Delaware limited liability company (“Ground
Tenant”).

 

RECITALS

 

A.           WHEREAS, by Second Amended and Restated Ground Lease dated as of
December 9, 2009 (the “Lease”), Landlord leased to Ground Tenant certain
property located at 21 South Shore Road, Nantucket, Massachusetts as such
property is further described therein (the “Property”).

 

B.           WHEREAS, Ground Tenant desires to market for sale all of its right,
title and interest in the Lease and, in connection with such marketing, has
requested that the Landlord enter into this amendment of the Lease; and

 

NOW, THEREFORE, in consideration of the foregoing recitals, the obligations,
rights and benefits contained herein, and for other valuable consideration the
receipt and sufficiency of which is hereby acknowledged, Landlord and Ground
Tenant (collectively, the “Parties”) hereby agree as follows:

 

1.          Side Letter re: Adult Community Day Care and Skilled Nursing.
Landlord and Tenant acknowledge and agree that the undertakings set forth in
Paragraph 4(p) of the Lease have been satisfied and that said Paragraph 4(p) is
hereby deleted from the Lease.

 

2.          Assignments and Transfers. The Lease is hereby amended by adding the
following as a new sentence at the end of the fourth full paragraph of Paragraph
12 of the Lease:

 

“Notwithstanding anything herein to the contrary contained in this Amended
Ground Lease, the Ground Tenant shall be permitted, without the Landlord’s prior
written consent, to: (i) mortgage, collaterally assign, or grant security
interests in its leasehold estate and other interests in the Property and this
Amended Ground Lease pursuant to Paragraph 23 hereof and (ii) to enter into
leases, subleases, and occupancy agreements with commercial tenants or service
providers for less than 500 square feet of space or with tenants or occupants of
any residential units.”

 

 

 

 

3.          Condemnation. If title to, or the permanent or temporary use of, all
or a part of the Property is taken under the exercise of the power of eminent
domain to such extent that in the Ground Tenant’s reasonable determination, (i)
the Property and the improvements thereon cannot reasonably be expected to be
restored, within a period of six months from the commencement of restoration, to
a condition of usefulness comparable to that existing prior to the taking, or
(ii) as a result of the taking, normal use and operation of the Project is
reasonably expected to be prevented for a period of six consecutive months or
more, then, within 90 days following the date of entry of a final order in any
eminent domain proceeding, the Ground Tenant may elect to terminate this Amended
Ground Lease by giving at least 30 days written notice to Landlord. In the event
of such termination, the net proceeds or award of such eminent domain shall be
applied as follows: first, to payment of the outstanding principal balance,
unpaid interest and other amounts due under any Leasehold Mortgages; second, to
reimburse the Ground Tenant in an amount equal to the Ground Tenant's
unamortized cost of acquiring, constructing, installing and/or equipping any
buildings and other improvements on the Property; and the balance to the
Landlord and Ground Tenant to be apportioned between them based on their
respective interests in the Property as encumbered by this Amended Ground Lease.
If the Ground Tenant does not elect to terminate this Amended Ground Lease, the
net proceeds or award of such eminent domain shall be paid to the Ground Tenant
and/or its Leasehold Mortgagee and used to repair and replace the Property and
the buildings and other improvements thereon as nearly as practicable to the
condition and character thereof existing immediately prior to such taking, with
such changes or alterations, however, as the Ground Tenant may reasonably deem
necessary for proper operation of the Property.

 

4.          Skilled Nursing Facility. The parties hereto agree that
notwithstanding anything to the contrary contained in Section 13 of the Lease
regarding the footprint for any skilled nursing facility, the location of such
footprint and the portion of Ground Tenant’s leasehold interest that may be
taken back by Landlord shall be located in and limited to the area designated as
“Possible Future Skilled Nursing Facility” on the map attached hereto as Exhibit
A and made a part hereof. If Ground Tenant does not exercise its right to
develop such skilled nursing facility, the following costs incurred by Ground
Tenant and necessitated by the development, construction or operation of such
skilled nursing facility shall be paid for or reimbursed by Landlord and the
developer and operator of such facility: (a) architectural, engineering,
construction and legal services or work; (b) utilities, access, parking,
landscaping, or other site work; and (c) redevelopment, replacement and
reconstruction of any buildings, improvements or appurtenances used or owned by
Ground Tenant and located within the footprint of such skilled nursing facility
or affected by its development, construction or operation.

 

5.          Leasehold Mortgages. The Lease is hereby amended by adding the
following as a new Paragraph 23 of the Lease:

 

2

 

 

“23.        Leasehold Mortgages.

 

Ground Tenant shall have the right to mortgage any or all of its interest in
this Amended Ground Lease. If Ground Tenant shall mortgage its leasehold
interest hereunder pursuant to any leasehold mortgage or similar security
instrument (each, a “Leasehold Mortgage”), and if the holder of any such
Leasehold Mortgage (together with its successors and/or assigns, a “Leasehold
Mortgagee”) shall forward written notice setting forth the name and address of
said Leasehold Mortgagee, then, until the time that said mortgage has been
irrevocably satisfied:

 

(a)          This Lease shall not be amended, amended, modified, subordinated,
cancelled, or surrendered without the prior written consent of Leasehold
Mortgagee.

 

(b)          If Landlord shall give any notice, demand, election or other
communication (hereafter in this Paragraph (only) collectively referred to as
“Notices”, and individually, as a “Notice”) to Ground Tenant hereunder, Landlord
shall at the same time give a copy of each such Notice to said Leasehold
Mortgagee at the address theretofore designated by said Leasehold Mortgagee.
Such copies of Notices shall be given in the same manner and subject to the same
terms and conditions as other notices given under this Amended and Restated
Lease. No Notice given by Landlord to Ground Tenant shall be binding upon or
affect said Leasehold Mortgagee unless a copy of said Notice shall be given to
said Leasehold Mortgagee pursuant to this Paragraph.

 

(c)          Until such time as any leasehold mortgage has been irrevocably
satisfied in full, Leasehold Mortgagee shall have the right, but not the
obligation, to perform any term, covenant, condition or agreement, to exercise
any and all of Ground Tenant’s rights under this Amended Ground Lease
(specifically including, but not limited to, the option to extend the term as
provided for in this Amended and Restated Lease), and to remedy any default by
Ground Tenant hereunder. Landlord shall accept such performance by said
Leasehold Mortgagee with the same force and effect as if performed, exercised
and/or remedied by Ground Tenant.

 

(d)          In case of a default by Ground Tenant in the performance or
observance of any term, covenant, condition or agreement on Ground Tenant’s part
to be performed under this Amended and Restated Lease, then Landlord shall not
serve a notice of election to terminate this Amended and Restated Lease pursuant
to this Amended and Restated Lease, or otherwise terminate the leasehold estate
of Ground Tenant hereunder by reason of such default, if and so long as:

 

3

 

 

(i)          in the case of a default in the payment of basic rent, said
Leasehold Mortgagee shall make such payment, together with any late fee or
penalty, if any (collectively, the “Rent”) within thirty (30) days after written
notice thereof by Landlord;

 

(ii)         in the case of a default which can be practicably cured by said
Leasehold Mortgagee without taking possession of the Property, said Leasehold
Mortgagee shall cure such default within ninety (90) days after written notice
thereof by Landlord or if such default is not reasonably susceptible of being
cured within such ninety (90) day period, such longer period of time as is
necessary to cure such default so long as Leasehold Mortgagee has commenced and
is diligently pursuing said cure;

 

(iii)        in the case of a default which cannot practicably be cured by said
Leasehold Mortgagee without taking possession of the Property, said Leasehold
Mortgagee shall proceed diligently to obtain possession of the Property as
mortgagee (including possession by a receiver), and, upon obtaining such
possession, shall proceed diligently to cure such default; and

 

(iv)        in the case of default which is not susceptible of being cured by
said Leasehold Mortgagee, said Leasehold Mortgagee shall institute foreclosure
proceedings and diligently prosecute the same to completion (unless in the
meantime said Leasehold Mortgagee shall acquire Ground Tenant’s estate
hereunder, either in its own name or through a nominee, by assignment in lieu of
foreclosure).

 

Notwithstanding anything to the contrary contained herein, Leasehold Mortgagee
shall not be required to continue to proceed to obtain possession, or to
continue in possession as mortgagee, of the Property pursuant to Paragraph
23(d)(iii) above, or to continue to prosecute foreclosure proceedings pursuant
to Paragraph 23(d)(iv) above, if and when such default shall be cured. If said
Leasehold Mortgagee, or its nominee, or a purchaser at a foreclosure sale, shall
acquire title to Ground Tenant’s leasehold estate hereunder, and shall cure all
defaults of Ground Tenant hereunder which are susceptible of being cured by said
Leasehold Mortgagee, or by said purchaser, as the case may be, then the defaults
of any prior holder of Ground Tenant’s leasehold estate hereunder which are not
susceptible of being cured by said Leasehold Mortgagee (or by said purchaser)
shall no longer be deemed to be defaults hereunder. Leasehold Mortgagee shall
have no liability under this Amended Ground Lease unless it forecloses and
actually operates the Property after such foreclosure or assignment in lieu of
foreclosure.

 

4

 

 

(e)          If Ground Tenant shall reject or disaffirm this Amended and
Restated Lease pursuant to any bankruptcy law, Landlord shall give to Leasehold
Mortgagee written notice of such rejection or disaffirmance, together with a
statement of all Rent then due and payable by Ground Tenant under this Amended
and Restated Lease (without giving effect to any acceleration of the due date of
any such payment of Rent), and of all other defaults under this Amended and
Restated Lease. Leasehold Mortgagee shall have the right (but not the
obligation), to give to Landlord within thirty (30) days after receipt by such
Leasehold Mortgagee of such notice from Landlord, a notice that such Leasehold
Mortgagee elects to (a) assume this Amended and Restated Lease, and (b) cure all
then-existing outstanding balance of Rent concurrently with such assumption of
all non-monetary defaults (except for defaults of the type specified in Section
365(b)(2) of the Bankruptcy Code or which are impossible for Leasehold Mortgagee
to cure) with reasonable diligence. In the event of such election, (i) Ground
Tenant’s rejection or disaffirmance of this Amended and Restated Lease shall not
constitute a termination of this Amended and Restated Lease, (ii) Ground Tenant
and such Leasehold Mortgagee’s interest in the Facility shall remain in effect
(except to the extent Ground Tenant’s interest therein shall have terminated or
been transferred in connection with any enforcement of any Leasehold Mortgage)
and shall not be terminated or subjected to any divestiture or defeasance as a
result of such rejection or disaffirmance, (iii) such Leasehold Mortgagee may
assume the obligations of Ground Tenant without any instrument of assignment or
transfer from Ground Tenant, (iv) such Leasehold Mortgagee’s rights under this
Amended and Restated Lease shall be free and clear of all rights, claims and
encumbrances of or in respect of Ground Tenant, (v) such Leasehold Mortgagee
shall consummate the assumption of this Amended and Restated Lease and the
payment of the amounts payable by it to Landlord as provided above at a closing
to be held at the office of such Leasehold Mortgagee on the thirtieth (30th)
business day after such Leasehold Mortgagee shall have given to Landlord the
notice hereinabove provided for, and (vi) upon an assignment of this Amended and
Restated Lease by such Leasehold Mortgagee, such Leasehold Mortgagee shall be
relieved of all obligations and liabilities arising from and after the date of
such assignment.

 

(f)          If Landlord (whether as debtor in possession or otherwise) or any
trustee of Landlord shall reject or disaffirm this Amended and Restated Lease
pursuant to the Bankruptcy Code, (i) Ground Tenant, without further act or deed,
shall be deemed to have elected to remain in possession of the Property for the
balance of the term hereof (including any extension or renewal terms) (unless
Leasehold Mortgagee shall otherwise consent in writing), and (ii) this Amended
and Restated Lease shall not be terminated, or be deemed to have terminated,
unless Ground Tenant (with the written consent of Leasehold Mortgagee) shall
elect to treat this Amended and Restated Lease as terminated under Section 365
of the Bankruptcy Code. Any exercise or attempted exercise by Ground Tenant of
any right to treat this Amended and Restated Lease as terminated after any
rejection or disaffirmance of this Amended and Restated Lease by Landlord
(whether as debtor in possession or otherwise) or any trustee of Landlord shall
be void unless consented to in writing by Leasehold Mortgagee. In the absence of
such election with such consent, this Amended and Restated Lease shall not be
treated as terminated under any provision of the Bankruptcy Code, and this
Amended and Restated Lease shall continue in full force and effect in accordance
with its terms (except that Ground Tenant shall have the rights conferred under
Section 365 of the Bankruptcy Code), and the rights of any Leasehold Mortgagee
shall not be affected or impaired by such rejection or disaffirmance.

 

5

 

 

(g)          If this Amended and Restated Lease shall terminate pursuant to the
terms hereof, or shall otherwise terminate by reason of a default of Ground
Tenant hereunder, and if within thirty (30) days after such termination said
Leasehold Mortgagee, by written notice to Landlord, shall request Landlord to
enter into a new lease pursuant to this Paragraph, then Landlord shall enter
into a new lease of the Property and all improvements thereon with said
Leasehold Mortgagee (or its nominee which is approved by Landlord), within
thirty (30) days after the giving of said written notice by said Leasehold
Mortgagee, if said Leasehold Mortgagee shall comply with the following
provisions of this Paragraph. Leasehold Mortgagee shall agree to cure all of the
defaults of the Ground Tenant under this Amended and Restated Lease which are
susceptible of being cured by said Leasehold Mortgagee. Said new lease shall
commence, and rent and all obligations of the Ground Tenant under the new lease
shall accrue, as of the date of termination of this Amended and Restated Lease.
The term of said new lease shall continue for the period which would have
constituted the remainder of the term of this Amended and Restated Lease had
this Amended and Restated Lease not been terminated, and shall be upon all of
the terms, covenants, conditions, conditional limitations and agreements
contained herein which were in force and effect on the date of termination of
this Amended and Restated Lease, but excluding such terms, covenants, agreements
and conditions which have been fully performed prior to that time or which are
not reasonably susceptible to being kept, observed or performed by such
Leasehold Mortgagee or which are otherwise inapplicable. Said new lease, and
this covenant, shall be superior to all rights, liens and interests intervening
between the date of this Amended and Restated Lease and the granting of said new
lease, and shall be free of any and all rights of Ground Tenant hereunder. The
provisions of the immediately preceding sentence shall be self-executing, and
Landlord shall have no obligation to do anything, other than to execute said new
lease as herein provided, to assure to said Leasehold Mortgagee or to the Ground
Tenant under the new lease good title to the leasehold estate granted thereby.
Each subtenant of space in the Property, if any, whose sublease was in force and
effect immediately prior to the delivery of said new lease shall attorn to the
Ground Tenant under the new lease, unless said Ground Tenant shall, at its
option, elect to dispossess said subtenant or otherwise terminate the sublease
held by said subtenant. Each subtenant who hereafter subleases space within the
Property shall be deemed to have agreed to the provisions of this paragraph. The
foregoing shall not be deemed to obligate Landlord to keep any sublease in force
and effect after the termination of this Amended and Restated Lease, nor shall
Landlord have any obligation to terminate any sublease simultaneously with the
termination of this Amended and Restated Lease. Said Leasehold Mortgagee shall,
simultaneously with the delivery of the new lease by Landlord, pay to Landlord
all Rent due under this Amended and Restated Lease on the date of termination of
this Amended and Restated Lease and then remaining unpaid. Simultaneously
therewith, Landlord shall pay or credit to said Leasehold Mortgagee any rentals,
less costs and expenses of collection, received by Landlord between the date of
termination of this Amended and Restated Lease and the date of execution of said
new lease, from subtenants or other occupants of the Property, if any, which
shall not theretofore have been applied by Landlord towards the payment of rent
or any other sum of money payable by Ground Tenant hereunder or towards the cost
of operating the Property and all buildings and improvements thereon or
performing the obligations of Ground Tenant hereunder.

 

6

 

 

(h)          Except as provided in the foregoing Paragraph 23(g) no mortgage now
or hereafter a lien upon this Amended and Restated Lease shall extend to or
affect in any manner whatsoever the reversionary interest and estate of Landlord
in and to the Property or in any manner attach to or affect the Property from
and after any expiration or termination of this Amended and Restated Lease.

 

(i)          Notwithstanding anything to the contrary contained herein, in the
event of any foreclosure proceeding or deed-in-lieu of foreclosure transaction:
(A) Landlord’s consent shall not be required for the sale, purchase, conveyance,
transfer or acquisition of the Property or any interest in this Amended Ground
Lease pursuant to any such proceeding or transaction; (B) Leasehold Mortgagee,
or any other party who purchases or acquires the Property or any interest in
this Amended Ground Lease in such proceeding or transaction shall not be
obligated to pay to Landlord the fee specified in Paragraph 12 hereof and
payment of such fee is hereby waived by Landlord; and (C) the ROFR set forth in
Paragraph 12 hereof shall not apply to such proceeding or transaction and is
hereby waived by Landlord.

 

(j)          There shall be no merger of Ground Tenant’s leasehold estate under
this Amended and Restated Lease with the fee estate in the Property by reason of
the fact that Ground Tenant’s leasehold estate may be held directly or
indirectly by or for the account of any person who shall also hold directly or
indirectly the fee estate, or any interest in such fee estate, no shall there be
any such merger by reason of the fact that all or any part of Ground Tenant’s
leasehold estate may be conveyed or mortgaged to a Leasehold Mortgagee who shall
also hold directly or indirectly the fee estate, or any part thereof, in the
Property or any interest of Landlord under this Amended and Restated Lease.

 

7

 

 

(k)          Landlord waives and relinquishes any landlord’s lien, all rights of
levy, distress or distraint and all claims and demands of every kind against any
of the Ground Tenant’s property now or hereafter located at the Property,
including, without limitation, Ground Tenant’s present and future inventory,
equipment and all tangible property now owned or hereafter acquired by the
Ground Tenant (collectively, the “Goods”, which term, as used herein, shall not
include any property owned by the Landlord or required to support the structure
of, or to heat or cool as a whole, the building located on the Property or which
would cause material structural damage or constitute a material adverse
alteration to the structure of the Property if removed). Without limiting the
foregoing provisions of this Paragraph, Leasehold Mortgagee or its receiver or
any officer or other representative of Leasehold Mortgagee, may, at its option,
from time to time enter the Property for the purpose of inspecting, possessing,
removing, selling (by way of public or private auction), advertising for sale or
otherwise dealing with the Goods, and such license shall be irrevocable and
shall continue from the date the Leasehold Mortgagee enters the Property for as
long as it deems necessary but not to exceed a period of ninety (90) days after
the receipt by the Leasehold Mortgagee of written notice by the Landlord
directing removal of the Goods.

 

(l)          Landlord hereby represents and warrants that there are no fee
mortgages encumbering the Property as of the date hereof. Landlord shall not
grant any fee mortgage after the date hereof unless and until the Landlord’s
mortgagee shall have entered into a satisfactory non-disturbance agreement with
Leasehold Mortgagee providing, among other things, that the Landlord’s mortgagee
shall not take any action to terminate this Amended Ground Lease as a result of
a default thereunder unless and until Leasehold Mortgagee shall have first been
given notice and opportunity to cure such default as is required herein.

 

(m)          In the case of any casualty or similar event, any proceeds from the
policies of insurance maintained by Ground Tenant or otherwise for the benefit
of said Leasehold Mortgagee shall be applied to pay the costs of repair and
restoration resulting from such casualty or similar event, provided that any and
all conditions contained in the Leasehold Mortgage and the loan documents
related thereto regarding the disposition of insurance proceeds have been
satisfied; otherwise, such insurance proceeds shall be applied and used as
provided for in the Leasehold Mortgage and the loan documents related thereto.
In the case of any condemnation, any awards for a total taking received by
Ground Tenant shall be paid to the Leasehold Mortgagee and any awards for a
partial taking shall be payable to the Leasehold Mortgagee or an insurance
trustee for restoration with the excess, if any, to be payable to the Leasehold
Mortgagee, provided that any and all conditions contained in the Leasehold
Mortgage and the loan documents related thereto regarding the disposition of
condemnation awards have been satisfied; otherwise, such condemnation awards
shall be applied and used as provided for in the Leasehold Mortgage and the loan
documents related thereto.

 

8

 

 

(n)          Leasehold Mortgagee shall be named as an additional insured on each
and every hazard-type insurance policy required hereunder.

 

(o)          Landlord and Ground Tenant will from time to time upon not less
than twenty (20) days’ prior written request deliver an estoppel certificate in
favor of the other party to this Amended Ground Lease or any proposed mortgagee
or purchaser certifying (i) whether this Amended Ground Lease is in full force
and effect, (ii) whether this Amended Ground Lease has been modified or amended
and, if so, describing any such modification or amendment, (iii) the date to
which rent and other charges have been paid and the amounts and due dates of the
remaining installments of rent due under the Lease, (iv) whether the party
furnishing such certificate knows of any default on the part of the other party
or has any claim against such party and, if so, specifying the nature of such
default or claim, (v) if applicable, Landlord’s receipt of the name and address
of any Leasehold Mortgagee and that the terms and conditions of this Agreement
shall exist for the benefit of said Leasehold Mortgagee, and (v) any other
matters reasonably requested concerning the Lease.”

 

6.            Condominium.

 

(a)          Subparagraph d. of Paragraph 4 of the Lease is hereby deleted and
replaced with the following: “d. Intentionally Omitted.”

 

(b)          The Lease is hereby amended by adding the following as a new
Paragraph 24 of the Lease:

 

“24.        Condominimum. Ground Tenant shall have the right to adopt one or
more condominium, co-operative, tenancy in common, or other similar forms of
multiple owner ownership of the Facility or units therein and to market, sell or
lease parts of the Facility or units therein or other rights; provided, however,
that in each case: (a) this Amended Ground Lease shall be superior to any such
condominiums, co-operatives, tenancies in common, and other forms of ownership,
which shall remain subject and subordinate to the terms and conditions of this
Amended Ground Lease; (b) Ground Tenant shall be liable for the payment of any
remaining amounts due to “EF Current Residents” to the extent required under
Section 4.7 of the Liquidating Trust Agreement dated as of December __, 2009
entered in the Chapter 11 Case No. 08-18026-WCH of the U.S. Bankruptcy Court for
the District of Massachusetts as a result of re-sales of the residential units
of such “EF Current Residents”; and (c) any and all documents and actions
executed and taken by Ground Tenant in connection with such condominiums,
co-operatives, tenancies in common, and other forms of ownership shall be done
in compliance with all applicable statutes, regulations, and other legal
requirements.”

 

9

 

 

7.          On or after the date hereof, each reference in the Lease to this
“Lease”, “this Amended and Restated Lease”, “hereunder”, “herein”, “hereof” or
words of similar meaning shall mean and be a reference to the Lease as amended
hereby.

 

8.          Except as specifically set forth herein, the Lease shall remain in
full force and effect and is hereby ratified and confirmed.

 

9.          If any term or provision of this Agreement is to any extent held
invalid or unenforceable, the remaining terms of this Agreement will not be
affected thereby, but each term and provision of this Agreement will be valid
and enforceable to the fullest extent permitted by law. This Agreement shall be
governed by the laws of the Commonwealth of Massachusetts and shall be binding
upon and inure to the benefit of the successors and assigns of each party
hereto.

 

[Remainder of this page intentionally left blank; Signature Page follows]

 

10

 

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment of the Lease on
and as of the date first above set forth.

 

  LANDLORD:       TOWN OF NANTUCKET       By its Board of Selectmen            
                          GROUND TENANT:       NANTUCKET ACQUISITION, LLC, a
Delaware limited liability company

 

  By: Cornerstone Ventures, Inc., a California corporation, its ________________

 

  By:       Name:     Title:

 

Exhibit G-1

 

 

Exhibit H

Title Matters

 

1.Rights of residents under Residency Agreements.

 

2.Liens for taxes and municipal charges not yet due and payable as of the
Closing Date.

 

3.Terms and provisions of that certain Amended and Restated Lease, dated
December 9, 2009, among the Town of Nantucket, as Landlord, Sherburne Commons,
Inc. and Nantucket Acquisition LLC, as Ground Tenant, Notice of which is
recorded with said Deeds, Book 1213, Page 226.

 

4.Terms and provisions of an Order of Taking for Sewer Easement to the Town of
Nantucket dated August 12, 1981, recorded in Book 185, Page 6.

 

5.Terms and provisions of a License Agreement between Sherburne Commons, Inc.,
and Nantucket Electric Company, dated August 4, 2006 and recorded in Book 1036,
Page 168.

 

6.Terms and provisions of a License Agreement between Sherburne Commons, Inc.,
and Verizon New England, Inc., dated October 10, 2006 and recorded in Book 1049,
Page 281.

 

7.Terms and provisions of an Order Confirming First Amended Plan of Liquidation
filed November 30, 2009 with the United States Bankruptcy Court District of
Massachusetts as Case 08-18026 recorded on December 28, 2009 in Book 1213, page
163.

 

8.Order of Conditions (SE48-1643) dated August 8, 2003 and recorded at Book 870,
Page 43.

 

Exhibit H-1

 

 

Exhibit I

List of Environmental Reports

 

None

 

Exhibit I-1

 

 

Exhibit J

 

Notice Addresses

 

(a) Seller: With a copy to:         Nantucket Acquisition LLC Jennifer R.
Berland, Esq.   c/o Cornerstone 425 Market St., 26th Floor   1920 Main St, Suite
400, San Francisco, CA 90275   Irvine, California 92614 Phone: 415-995-5837  
Attention: Kent Eikanas                                    Fax: 415-995-3409  
Facsimile: (949) 852-2729 Email: JBerland@hansonbridgett.com   E-Mail:
KEikanas@crefunds.com         (b) Buyer: With a copy to:   Northbridge
Communities, LLC     15 Third Avenue Frank A. Appicelli, Esq.   Burlington, MA
01803 Bingham McCutchen LLP   Attn:  James C. Coughlin, Managing Member One
State Street, Hartford, CT 06103   Phone: (781) 238-4851 Phone:  860-240-2984  
Fax: (781) 272-0846 Fax:  860-240-2540   Email: jcoughlin@northbridgecos.com
Email: frank.appicelli@bingham.com       (c) Escrow Agent and Title Company:    
Commonwealth Land Title Insurance Company     265 Franklin Street, 8th Floor    
Boston, MA 02110     Attn:  Robert Capozzi     Phone: (617) 619-4810     Fax:
(617) 851-8294     Email: Robert.Capozzi@fnf.com  

 

Exhibit J-1