Exhibit 10.29

 

PURCHASE AND SALE AGREEMENT

 

By And Among

 

GABLES OF HUDSON, LLC

a Delaware limited liability company

 

as “Buyer”;

 

GREAT-HUDSON, LLC,

an Ohio limited liability company

 

and

 

GABLES-HUDSON, LLC,

an Ohio limited liability company

 

Collectively, as “Sellers”; and

 

STEWART TITLE GUARANTY COMPANY

 

 

 

as “Escrow Agent”

 

Dated as of

 

September 11, 2014

 

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE I TERMINOLOGY 1 1.1 Defined Terms 1 1.2 Additional
Defined Terms 4       ARTICLE II PURCHASE AND SALE 5 2.1 Property 5 2.2
Assumption of Liabilities. 6 2.3 Purchase Price 7 2.4 Earnest Money Deposit 7
2.5 Adjustment of Purchase Price. 7 2.6 Escrow Agent. 9       ARTICLE III DUE
DILIGENCE PERIOD 10 3.1 Due Diligence Period 10 3.2 Buyer’s Responsibilities 10
3.3 Title Commitment 10 3.4 Continuing Diligence and Inspection Rights 11      
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER 12 4.1 Organization; Good
Standing 12 4.2 Consent of Third Parties 12 4.3 Authority; Enforceability 12 4.4
Absence of Conflicts 12 4.5 No Judgments 12 4.6 No Governmental Approvals 12 4.7
Insurance 13 4.8 Litigation 13 4.9 Compliance with Laws 13 4.10 Environmental
Matters 13 4.11 Assessments 13 4.12 Property Agreements 14 4.13 Licenses 14 4.14
Resident Agreements 14 4.15 Medicare; Medicaid 14 4.16 Condemnation 14 4.17
Condition of Property 14 4.18 Independent Property 15 4.19 Full Disclosure 15
4.20 Financial Statements 15 4.21 Zoning 15 4.22 FIRPTA 15 4.23 Interests; Title
16 4.24 Title Encumbrances 16 4.25 Affordable Housing Units 16

 

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4.26 No New Survey Matters 16 4.27 Loans 16 4.28 Patriot Act Compliance 16 4.29
Broker’s or Finder’s Fees 16 4.30 Insolvency 17       ARTICLE V REPRESENTATIONS
AND WARRANTIES OF BUYER 17 5.1 Organization and Good Standing 17 5.2
Authorization and Binding Effect of Documents 17 5.3 Absence of Conflicts 17 5.4
Consents 17 5.5 Patriot Act Compliance 18 5.6 Broker’s or Finder’s Fees 18      
ARTICLE VI OTHER COVENANTS 18 6.1 Conduct of Business Prior to the Closing 18
6.2 Notification of Certain Matters 19 6.3 Title; Additional Documents 19 6.4
Other Consents 20 6.5 Inspection and Access 20 6.6 Confidentiality. 20 6.7
Publicity 21 6.8 Commercially Reasonable Efforts 21 6.9 Reports 21 6.10
Post-Closing Obligations of Seller 21 6.11 No Other Representations or
Warranties. 21 6.12 Noncompetition 22 6.13 Exclusivity 22       ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE 22 7.1 Accuracy of
Representations and Warranties; Closing Certificate. 22 7.2 Performance of
Agreement 23 7.3 No Material and Adverse Change 23 7.4 [Reserved.] 23 7.5
[Reserved.] 23 7.6 Title Insurance and Survey. 23 7.7 [Reserved.] 24 7.8
[Reserved.] 24 7.9 Delivery of Closing Documents 24 7.10 Licenses. 24 7.11
Termination of Existing Leases & Management Agreements 25 7.12 Governmental
Approvals. 25 7.13 Third-Party Consents 25 7.14 Management Agreement 25

 

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ARTICLE VIII CONDITIONS PRECEDENT TO THE  OBLIGATION OF SELLER TO CLOSE 25 8.1
Accuracy of Representations and Warranties. 26 8.2 Performance of Agreements 26
8.3 Delivery of Closing Documents 26       ARTICLE IX CLOSING 26 9.1 Closing
Date and Place 26 9.2 Deliveries of Seller 26 9.3 Deliveries of Buyer 27 9.4
Closing Costs 28       ARTICLE X INDEMNIFICATION 29 10.1 General 29 10.2
Indemnification by Seller 29 10.3 Indemnification by Buyer 29 10.4
Administration of Indemnification 30 10.5 Guaranty 31       ARTICLE XI DEFAULT
AND TERMINATION 31 11.1 Right of Termination 31 11.2 Remedies upon Default. 32
11.3 Specific Performance 32 11.4 Obligations Upon Termination 33 11.5
Termination Notice 33 11.6 Sole and Exclusive Remedy 33       ARTICLE XII
MISCELLANEOUS 33 12.1 Further Actions 33 12.2 Notices 33 12.3 Entire Agreement
34 12.4 Binding Effect; Benefits 34 12.5 Assignment 35 12.6 Governing Law 35
12.7 Amendments and Waivers 35 12.8 Joint and Several 35 12.9 Severability 35
12.10 Headings 35 12.11 Counterparts 35 12.12 References 35 12.13 Schedules and
Exhibits 36 12.14 Attorneys’ and Expert Witness Fees 36 12.15 Reserved. 36 12.16
Casualty 36 12.17 Condemnation 37 12.18 Limited Liability 37 12.19
Non-controlled Affiliates 37

 

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12.20 Survival of Defined Terms 37 12.21 Time of Essence 37 12.22 No Third-Party
Beneficiary 38 12.23 WAIVER OF JURY TRIAL 38

  

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SCHEDULES       Schedule 2.1(a) Excluded Real Property Schedule 2.2(c) Assumed
Obligations Schedule 2.3 Purchase Price Allocation Schedule 4.2 Consents of
Third Parties Schedule 4.5 Judgments Schedule 4.7 Seller’s Insurance Schedule
4.8 Litigation Schedule 4.14 Exceptions to Rent Roll Schedule 4.17 Condition of
the Property Schedule 4.18 Independent Property Schedule 4.23 Exceptions to
Seller’s Ownership Schedule 4.24 Title Encumbrances Schedule 4.27 Loans Schedule
4.29 Broker’s of Finder’s Fees Schedule 7.12 Required Consents     EXHIBITS    
  EXHIBIT A Legal Description of the Property EXHIBIT B List of Required Due
Diligence Items for The Property EXHIBIT C List of Property Agreements EXHIBIT D
List of Licenses Required for the Property EXHIBIT E Financial Statements
EXHIBIT F Rent Roll EXHIBIT G Form Resident Agreement EXHIBIT H Outstanding
Citations EXHIBIT I Form of Audit Letter EXHIBIT J  Form of Guaranty EXHIBIT K
 Form of Earnout Agreement EXHIBIT L  Form of Transition Period Sublease EXHIBIT
M  Form of Management Agreement EXHIBIT N  Intellectual Property License

 

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PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is dated the 11th day of
September, 2014, by and among: GABLES OF HUDSON, LLC, a Delaware limited
liability company, or its successors or assigns (the “Buyer”), GABLES-HUDSON,
LLC, and GREAT-HUDSON, LLC, each an Ohio limited liability company (each
referred to as the “Seller” and together the “Sellers”), and STEWART TITLE
GUARANTY COMPANY (the “Escrow Agent”).

 

RECITALS:

 

A.           Sellers owns that certain 112-unit assisted living and memory care
property known as The Gables of Hudson, located at 5400 Darrow Road, Hudson,
Ohio 44236, and certain real and personal property associated therewith (the
“Hudson Facility”).

 

B.           Buyer desires to acquire, and Sellers are willing to convey to
Buyer, the Hudson Facility and certain real and personal property associated
therewith pursuant to the terms described herein.

 

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

 

ARTICLE I

TERMINOLOGY

 

1.1           Defined Terms. Throughout this Agreement, wherever the term
“Seller” is used, such term will apply to each Seller unless otherwise stated
and will apply with respect to each Seller to the Land, the Real Property and
the Property owned by that Seller, as applicable. Throughout this Agreement,
wherever the terms “Land”, “Real Property”, or “Property” are used, such terms
will refer to each Seller’s interest in the Land, Real Property or Property, as
applicable, unless otherwise stated. The term “party” shall refer either to
Buyer or to Sellers collectively. As used herein, the following terms shall have
the meanings indicated:

 

Accrued Employee Benefits: Shall mean any accrued wages, salary, vacation or
other accrued paid time off or benefits for the employees of the Property,
including without limitation those employees who will continue to be employed at
the Property after the Closing.

 

Adjustment Amount: The amount computed under Section 2.5 hereof.

 

Affiliate: With respect to any specified person or entity, any other person or
entity which, directly or indirectly controls, is controlled by, or is under
common control with, the specified person or entity.

 

 

 

   

Applicable Law: Any federal, state, municipal, county, local, foreign or other
statute, law, ordinance, rule or regulation or any order, writ, injunction,
judgment, plan or decree of any court, arbitrator, department, commission,
board, bureau, agency, authority, instrumentality or other body, whether
federal, state, municipal, county, local, foreign or other.

 

Closing: The consummation of the purchase and sale of the Property in accordance
with the terms of this Agreement on the Closing Date or at such earlier or later
date and time as may be agreed upon by the parties.

 

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

 

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

 

Due Diligence Period: The period commencing on the Effective Date and ending at
6:00 PM Eastern Time on the date which is forty-five (45) days after the
Effective Date, during which time Buyer may, at reasonable times with prior
notice to Seller, investigate the financial, legal, operational, environmental
and all other aspects of the Property as Buyer may desire.

 

Earnout Agreement: That certain Earnout Agreement by and between Buyer and
Seller in substantially the form attached hereto as Exhibit K, to be executed by
Buyer and Seller at Closing.

 

Effective Date: The date first written above.

 

Existing Manager: The entity (an Affiliate of Seller) responsible for the
management of the Property as of the Effective Date.

 

GAAP: Generally accepted accounting principals as applied in the United States.

 

Knowledge: As used in this Agreement, the term “knowledge” when used to refer to
the knowledge of Seller shall mean the actual knowledge of any member, site
manager, or officer of Seller upon reasonable inquiry of Existing Manager and
the executive director of the Hudson Facility.

 

Licenses: All certificates, licenses, and permits issued by governmental
authorities which are required to be held by an owner or tenant in connection
with the ownership, use, occupancy, operation, and maintenance of the Property
as an assisted living and memory care facility.

 

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

 

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Loss: Any and all costs, obligations, liabilities, demands, claims, settlement
payments, awards, judgments, fines, penalties, damages and reasonable
out-of-pocket expenses, including court costs, expert witness fees and
reasonable attorneys’ fees, whether or not arising out of a third-party claim.

 

Other Assets: The Resident Agreements, Resident Deposits, Property Agreements,
Intellectual Property and all other property and assets included within the
definition of "Property" in Section 2.1 of this Agreement other than Real
Property and Personal Property.

 

Permitted Lien: Any (i) statutory liens that secure a governmentally required
payment, including without limitation Taxes, not yet due, (ii) zoning
regulations and restrictive covenants and easements of record that do not
detract in any material respect from the present use of the Property and do not
materially and adversely affect, impair or interfere with the use of any
property affected thereby, (iii) public utility easements of record, in
customary form, to serve the Property, and (iv) any other condition of title as
may be approved by Buyer in writing prior to the end of the Due Diligence
Period.

 

Post-Closing Licensee: The Buyer, Tenant or their designee to whom all Licenses
will be transferred or otherwise obtained in accordance with Applicable Law for
the operation of the Property as an assisted living and memory care facility.

 

Property Condition Report: The property condition report to be obtained by Buyer
prior to the end of the Due Diligence Period, which details the physical
condition of the Property.

 

Taxes: All federal, state, local and foreign taxes including, without
limitation, income, gains, transfer, unemployment, withholding, payroll, social
security, real property, personal property, excise, sales, use and franchise
taxes, levies, assessments, imposts, duties, licenses and registration fees and
charges of any nature whatsoever, whether or not recorded, including interest,
penalties and additions with respect thereto and any interest in respect of such
additions or penalties, but excluding all transfer, conveyance, intangibles,
mortgage transfer, and documentary stamp taxes payable in connection with the
transactions contemplated by this Agreement.

 

Tenant: That entity established by Buyer to lease the Property upon purchase by
the Buyer.

 

Title Insurer: The Title Insurer is as follows:

 

Stewart Title Guaranty Company

c/o Terrance Miklas

One Washington Mall- Suite 1400

Boston, MA 02108

O 617-933-2415 | M 617-293-8171 | F 617-727-8372

TMiklas@stewart.com

 

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

 

Agreed Upon Title Defects Section 7.6(b) Agreement Preamble Assumed Obligations
Section 2.2(c) Buyer Preamble CERCLA Section 4.10 Closing Date Section 9.1
Earnest Money Deposit Section 2.4 Environmental Laws Section 4.10 Escrow Agent
Preamble Escrowed Funds Section 2.6 Floor Section 10.4(f) Guaranty Section 10.5
Hudson Facility Recital A Improvements Section 2.1(a) Indemnified Party Section
10.4(a) Indemnifying Party Section 10.4(a) Land Section 2.1(a) Management
Agreement Section 7.14 Non-controlled Affiliates Section 12.19 OFAC Section 4.28
Patriot Act Section 4.28 Permitted Buyer-Assignee Section 12.5 Permitted
Exception Section 3.3 Personal Property Section 2.1(a) Post-Closing Adjustment
Amounts Section 2.5(f) Preliminary Adjustment Amount Section 2.5(f) Property
Section 2.1 Property Agreements Section 2.1(c) Proration Date Section 2.5(a)
Proration Schedule Section 2.5(a) Purchase Price Section 2.3 Real Property
Section 2.1(a) Records Section 6.10 Rent Roll Section 4.14 Required Cure Items
Section 0 Resident Agreements Section 2.1(d) Resident Deposits Section 2.1(d)
SEC Section 6.6(c) Seller Preamble Survey Section 7.6(b) Title Commitment
Section 3.3 Title Defect Section 3.3 Title Notice Section 3.3 Transaction Costs
Section 9.4 Transition Period Sublease Section 7.9(c)

 

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ARTICLE II

PURCHASE AND SALE

 

2.1           Property. Upon and subject to the terms and conditions provided
herein, at Closing, Seller will sell, transfer, assign and convey to Buyer, and
Buyer will purchase from Seller the following (collectively, the “Property”):

 

(a)          Real Property. All of Seller’s right, title, and interest in and to
that certain parcel of real property consisting of land (“Land”) and all
buildings, structures, fixtures and other improvements (“Improvements”) located
thereon. The Land is more particularly described on Exhibit A attached to this
Agreement. The Land and Improvements (collectively, the “Real Property”) shall
be deemed to include all licenses, and all rights-of-way, beneficial easements
and appurtenances related to the Real Property, other than as set forth on
Schedule 2.1(a).

 

(b)          Personal Property. All furnishings, machinery, equipment, vehicles,
supplies, inventory, linens, medicine, foodstuffs, consumable and other personal
property of any type or description, including, without limitation, all beds,
chairs, sofas, wheelchairs, tables, kitchen and laundry equipment associated
with and present at the Property (collectively, the “Personal Property”).

 

(c)          Property Agreements. To the extent assignable, all rights of Seller
in, to and under all contracts, leases, agreements, commitments and other
arrangements, and any amendments, modifications, supplements, renewals and
extensions thereof, used or useful in the operation of the Property made or
entered into by Seller as of the Effective Date, or between the Effective Date
and the Closing in compliance with this Agreement (the “Property Agreements”).
Notwithstanding the foregoing, Property Agreements expressly excludes any
contracts, leases, agreements, commitments and other arrangements, and any
amendments, modifications, supplements, renewals and extensions entered into by
Seller after the Effective Date and prior to the Closing in breach of Section
6.1, and any Property Agreements for which consents to the assignment thereof to
the Buyer have not been obtained as of the Closing, unless waived by Buyer.
Buyer shall have no obligation under the Property Agreements unless such
Property Agreements are listed on Schedule 2.2(c).

 

(d)          Resident Agreements. All rights of Seller in, to and under all
occupancy, residency, leases, tenancy and similar written agreements entered
into in the ordinary course of business with residents of the Property,
including any amendments, modifications, supplements, renewals and extensions
thereof (“Resident Agreements”), and all deposits, initial service fees and
advances of any kind or nature from any resident of the Property (“Resident
Deposits”).

 

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(e)          Records. True and complete copies of all the books, records,
accounts, files, logs, ledgers, journals and architectural, mechanical and
electrical plans and specifications pertaining to or used in the operation of
the Property, however such data is stored.

 

(f)          Licenses. To the extent they are transferable, any and all Licenses
now held in the name of the Seller, or any Affiliate(s) of the Seller, and any
renewals, extensions, amendments or modifications thereof.

 

(g)          Claims and Causes of Action. Rights in and to any claims or causes
of action to the extent they are in the nature of enforcing a guaranty,
warranty, or a contract obligation to complete improvements, make repairs, or
deliver services to the Property.

 

(h)          Intellectual Property. Seller shall grant a cost-free limited
license in the form attached hereto as Exhibit N (the “Intellectual Property
License”), to use the name “Gables of Hudson” and all trade names, trademarks,
service marks, copyrights, patents, jingles, slogans, symbols, logos,
inventions, computer software, operating manuals, designs, drawings, plans and
specifications, marketing brochures, logos, symbols, trademarks and web sites,
or other proprietary material, process, trade secret or trade right used by
Seller or its Affiliates in the operation of the Property.

 

2.2         Assumption of Liabilities.

 

(a)          Reserved.

 

(b)          Any Property Agreements assumed by Buyer and any Licenses
transferred to Buyer, Buyer is assuming no liabilities attributable to the
operation or ownership of the Property which accrued or occurred on or prior to
the Closing, all of which Seller shall pay, discharge and perform when due.
Specifically, without limiting the foregoing, Buyer shall not assume (i) any
claim, action, suit, or proceeding pending as of the Closing or any subsequent
claim, action, suit, or proceeding arising out of or relating to any event
occurring prior to Closing, with respect to the manner in which Seller conducted
its businesses on or prior to the Closing (ii) any liability for Taxes other
than real property taxes from and after Closing, or (iii) any liability under
any Property Agreements, except for the Assumed Obligations listed in Schedule
2.2(c).

 

(c)          Buyer acknowledges that, effective as of the Closing, Buyer shall
assume and undertake to pay, discharge, and perform only the liabilities and
obligations of Seller under the Property Agreements and Licenses listed in
Schedule 2.2(c) (but not the Property Agreements which are entered into after
the Effective Date hereof not in compliance with this Agreement or Property
Agreements for which consents to the assignment thereof to the Buyer hereunder
have not been obtained as of the Closing), to the extent such liabilities and
obligations arise during and relate to any period from and after the Closing
(collectively, the “Assumed Obligations”).

 

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2.3           Purchase Price. The purchase price for the Property shall be an
amount equal to SIXTEEN MILLION SEVEN HUNDRED FIFTY THOUSAND AND NO/100 U.S.
DOLLARS ($16,750,000.00), (the “Purchase Price”), plus or minus (whichever is
applicable) the Adjustment Amount, and shall be paid by Buyer to Seller at
Closing in cash via wire transfer of immediately available funds. Buyer and
Seller have agreed upon an allocation of the Purchase Price for local, state and
federal tax purposes as shown on Schedule 2.3; provided, however, the parties
may amend the agreed upon allocation of the Purchase Price in the event an
appraisal obtained prior to Closing reflects an allocation which differs by more
than ten percent (10%) in any respect from the allocation set forth on Schedule
2.3. The Purchase Price may also be adjusted subsequent to Closing pursuant to
the terms of the Earnout Agreement.

 

2.4           Earnest Money Deposit. On the Effective Date, Buyer shall deposit
EIGHTY THOUSAND AND NO/100 U.S. DOLLARS ($80,000.00), and, upon the expiration
of the Due Diligence Period, so long as Buyer has not terminated this Agreement,
an additional EIGHTY THOUSAND AND NO/100 U.S. DOLLARS ($80,000.00) (the “Earnest
Money Deposit”) with Escrow Agent. The Earnest Money Deposit will be refunded to
Buyer if Buyer terminates this Agreement prior to the expiration of the Due
Diligence Period as permitted under Section 11.1(a). After the expiration of the
Due Diligence Period, the Earnest Money Deposit will be non-refundable to Buyer
and will be paid to Seller if this Agreement is terminated for any reason other
than Buyer's termination of this Agreement under Section 6.2, Section 11.1(b),
Section 11.1(c), Section 11.1(e), Section 11.1(f) , or Section 11.2(a)(i). Upon
Closing, the Earnest Money Deposit shall be applied to the Purchase Price.

 

2.5         Adjustment of Purchase Price.

 

(a)          All income and expenses (including prepaid expenses) of the
Property shall be prorated on a daily basis between Seller and Buyer as of 11:59
p.m., on the date (the “Proration Date”) immediately preceding the Closing. Such
items to be prorated shall include, without limitation:

 

(i)Payments under Assumed Obligations;

 

(ii)The amount of Accrued Employee Benefits;

 

(iii)Utility charges, if any, based on utility charges for the month immediately
preceding the Closing;

 

(iv)Real property taxes, which for the year 2014 shall be pro-rated based upon
the actual 2014 tax amounts, if available, and if not, available, then upon the
estimated assessed value of $16,750,000 for 2014 and applying either (a) the
2014 tax rate, or (b) to the extent the 2014 tax rate is unavailable, the 2013
tax rate. Should actual taxes for the current year vary from estimated taxes,
each party shall have the right to demand and receive from the other a
re-proration of taxes and reimbursement for the prorated amount or variation
thereof up to one (1) year after Closing; and

 

Buyer and Seller shall prepare a proposed schedule (the “Proration Schedule”)
prior to Closing, that shall include the items listed above and any other
applicable income and expenses with regard to the Property. Seller and Buyer
will use all reasonable efforts to finalize and agree upon the Proration
Schedule at least two (2) business days prior to Closing.

 

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(b)          Any escrow accounts held by any utility companies, and any cash
deposits made by Seller or Seller’s Affiliates prior to Closing to secure
obligations under Assumed Obligations shall be either paid to Seller or, if
assigned to Buyer, Seller shall receive a credit at Closing for any such
deposits.

 

(c)          With respect to any amounts held by Seller in a resident escrow or
trust account under any Property Agreement, at or promptly following Closing,
Seller shall return the same to the depositor thereof (to the extent the amounts
held in any such accounts have not been applied against amounts owing by the
depositor thereof in accordance with the terms of the applicable Property
Agreement). With respect to any cash security or other deposits actually held by
Seller pursuant to the Property Agreements (i.e., other than amounts held in a
resident escrow or trust account), at Closing Seller shall credit Buyer for all
such deposits (to the extent such security or other deposits have not been
applied against delinquent amounts owing under such Property Agreements as
provided therein).

 

(d)          Seller shall receive all income from and shall be responsible for
all expenses of the Property attributable to the period prior to the Proration
Date, unless otherwise provided for in this Agreement. In the event Buyer
receives any payment from a tenant for rent due for any period prior to the
Proration Date or payment of any other receivable of Seller, Buyer shall forward
such payment to Seller. To the extent not prorated as of Closing, payments
received by Seller shall be first applied by Buyer and Seller to those amounts
which were billed first.

 

(e)          Buyer shall receive all income from and shall be responsible for
all expenses of the Property attributable to the period from and after the
Proration Date, unless otherwise provided for in this Agreement. In the event
Seller or Seller’s Affiliates receive any payment from a tenant for rent due for
any period from and after the Proration Date, Seller shall forward such payment
to Buyer.

 

(f)          The parties agree that any amounts that may become due under this
Section 2.5 shall be paid at Closing as can best be determined (such amount, the
“Preliminary Adjustment Amount”). A post-Closing reconciliation of pro-rated
items shall be made by the Buyer and Seller within ninety (90) days after
Closing and any amounts due at that time shall be promptly forwarded to the
respective party in a lump sum payment. Any additional amounts which may become
due after such determination shall be forwarded at the time they are received.
Any amounts due under this Section 2.5 which cannot be determined within ninety
(90) days after Closing shall be reconciled as soon thereafter as such amounts
can be determined. Any amounts due under this Section 2.5 after the Closing
shall be referred to as the “Post-Closing Adjustment Amounts”. Buyer and Seller
agree that each shall have the right to audit the records of the other for up to
one (1) year following Closing in connection with any such post-Closing
reconciliation.

 

(g)          Buyer shall receive a credit towards the Purchase Price for the
Accrued Employee Benefits and any other obligations as otherwise expressly
agreed by the Buyer and Seller.

 

(h)          This Section 2.5 shall survive the Closing.

 

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2.6         Escrow Agent.

 

(a)          By its execution and delivery of this Agreement, Escrow Agent
agrees to be bound by the terms and conditions in Section 2.4 of this Agreement
to the extent applicable to its duties, liabilities and obligations as “Escrow
Agent.” Escrow Agent shall hold and dispose of the funds deposited with the
Escrow Agent pursuant to this Agreement (“Escrowed Funds”) in accordance with
the terms of this Agreement. Escrow Agent shall incur no liability in connection
with the safekeeping or disposition of the Escrowed Funds for any reason other
than Escrow Agent’s breach of contract, willful misconduct or gross negligence.
Escrow Agent shall be reimbursed by Buyer and Seller for all out-of-pocket costs
and expenses incurred in connection with its obligations hereunder with each
Buyer and Seller being responsible for ½ of the amounts due Escrow Agent unless
due to the default of one particular party under this Agreement, in which case
all of the out-of-pocket costs shall be attributable to the Party at fault. If
Escrow Agent is in doubt as to its duties or obligations with regard to the
Escrowed Funds, or if the Escrow Agent receives conflicting instructions from
Buyer and Seller with respect to the Escrowed Funds, the Escrow Agent shall not
be required to disburse the Escrowed Funds and may, at its option, continue to
hold the Escrowed Funds until both Buyer and Seller agree as to their
disposition, or until a final judgment is entered by a court of competent
jurisdiction directing their disposition, or the Escrow Agent may interplead the
Escrowed Funds in accordance with the laws of the State of Ohio. Escrow Agent
shall not be responsible for the preservation of principal or any interest on
the Escrowed Funds except as is actually earned, or for the loss of any interest
or principal resulting from the withdrawal of the Escrowed Funds prior to the
date interest is posted thereon.

 

(b)          The Escrow Agent may resign upon written notice to the Seller and
Buyer. If a successor escrow agent is not appointed by the Seller and Buyer
within this thirty (30) day period, the Escrow Agent may, but shall have no duty
to, petition a court of competent jurisdiction to name a successor. If no
successor escrow agent is appointed within thirty (30) days after such written
notice, the Escrow Agent may withhold performance by it pursuant to Section
2.6(a) until such time as a successor escrow agent is appointed and, at such
time, the Escrow Agent shall deliver the Escrowed Funds or other documents,
instruments or items, if any, delivered to the Escrow Agent hereunder to any
such successor escrow agent; provided, however, the Escrow Agent shall act in
accordance with any joint written instructions from the Seller and Buyer.

 

(c)          The Escrow Agent may be removed, with or without cause, by the
Buyer and Seller acting jointly at any time by providing written notice to the
Escrow Agent.

 

(d)          This Section 2.6 shall survive the Closing or the expiration or any
termination of this Agreement.

 

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ARTICLE III

DUE DILIGENCE PERIOD

 

3.1           Due Diligence Period. During the Due Diligence Period, Buyer shall
have the right to a complete physical inspection of the Property as the Buyer
deems appropriate to review and evaluate the Property, the nature and extent of
the Property, and operations of the Property, and all rights and liabilities
related thereto and shall provide Phil Daetwyler (or such other person as may be
designated by Seller) at least two (2) business days’ notice of each and every
inspection, Property Agreement correspondence, license application, transfer or
assignment (the “Due Diligence Coordination Notice”). Buyer acknowledges that
Seller desires to keep the sale and terms of the sale confidential and out of
the knowledge of certain of its employees until Closing. In consideration of the
execution of this Agreement, Seller agrees to cause to be provided to or made
available to Buyer, at no cost to Buyer, all items requested on the attached
Exhibit B, via electronic mail submission or electronic data room, in an
electronic format from which Buyer can generate an accurate and complete paper
copy that is both legible and suitable for inspection and review. Buyer may
request that other items be provided by Seller in addition to those specifically
listed in Exhibit B, which items shall be mutually agreed upon by the Buyer and
Seller in their reasonable discretion. During the Due Diligence Period, Buyer
shall have reasonable access to the Property at all reasonable times during
normal business hours for the purpose of conducting reasonably necessary tests,
including surveys and architectural, engineering, geotechnical and environmental
inspections and tests, provided that, (a) Buyer will give Seller prior notice of
any such inspection or test in accordance with the Due Diligence Coordination
Notice and (b) all such tests shall be conducted by Buyer in compliance with
Buyer’s responsibilities set forth in Section 3.2 below. In the course of its
investigation of the Property, Buyer may make inquiries to third parties such as
Existing Manager, parties to Property Agreements and municipal, local and other
government officials and representatives; provided that Buyer shall not contact
any parties to Property Agreements (other than the applicable Seller or the
Existing Manager) without Seller’s prior written consent (not to be unreasonably
withheld, conditioned or delayed). Notwithstanding the foregoing, Buyer may
contact and file permit applications with any governmental authorities required
to obtain the permits and approvals described in Section 7.8(a) hereof subject
to the Due Diligence Coordination Notice. Seller shall cooperate with Buyer’s
due diligence during normal business hours so long as Buyer conducts such due
diligence during normal business hours and is not disruptive to the operation of
Seller’s business at the Property.

 

3.2           Buyer’s Responsibilities. In conducting any inspections,
investigations or tests of the Property, Buyer shall (i) not unreasonably
disturb the tenants or interfere with their use of the Property; (ii) not
materially or unreasonably interfere with the operation and maintenance of the
Property; (iii) not materially damage any part of the Property or any personal
property owned or held by any tenant or any third party; (iv) not injure or
otherwise cause bodily harm to Seller or its agents, guests, invitees,
contractors and employees or any tenants or their guests or invitees; (v) comply
in all material respects with all Applicable Laws; and (vi) not permit any Liens
to attach to the Property by reason of the exercise of its rights hereunder.

 

3.3           Title Commitment. Within five (5) days after the execution of this
Agreement, Buyer shall order commitments for owner’s policies of title insurance
(the “Title Commitment”) issued by the Title Insurer covering fee simple title
to the Property, in which the Title Insurer shall agree to insure, in such
amount as Buyer deems adequate, merchantable title to such interests free from
the Schedule B standard printed exceptions (to the extent Buyer complies with
the necessary requirements to remove them such as obtaining an appropriate ALTA
survey) and all other exceptions except for (i) exceptions which, under
applicable state rules and regulations, cannot be deleted or modified and (ii)
Permitted Exceptions, with such endorsements as Buyer shall reasonably require
and with insurance coverage over any “gap” period. Such Title Commitments shall
have attached thereto complete, legible copies of all instruments noted as
exceptions therein, and shall be delivered promptly to Buyer upon receipt by
Seller. Buyer shall furnish Seller with a copy of the title commitment and
attachments, and all subsequent revisions thereof, promptly upon receipt of
same. Seller will provide Buyer with copies of any existing boundary surveys for
the Property. Buyer may order one or more boundary surveys for the Property (the
“Survey”) prepared by a registered land surveyor or surveyors satisfactory to
Buyer.

 

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If (i) any update to the Title Commitments reflect any exceptions to title other
than Permitted Liens which are not acceptable to Buyer in Buyer’s sole
discretion, or (ii) the Survey to be obtained by Buyer pursuant to this Section
discloses anything not acceptable to Buyer in Buyer’s sole discretion, or
(iii) at any time prior to the Closing, title to Seller’s interests in the
Property is encumbered by any exception to title other than Permitted Liens,
which was not on the initial Title Commitment for the Property and is not
acceptable to Buyer in Buyer’s sole discretion (any such exception or
unacceptable statement of fact being referred to herein as a “Title Defect”),
then Buyer shall, on or before the earlier of five (5) days before the end of
the Due Diligence Period or ten (10) days following receipt of such Title
Commitment, as the case may be, give Seller written notice of such Title Defect
(the “Title Notice”). Such Title Notice shall include a copy of the relevant
Title Commitment and copies of the exceptions. Any exception to title that is
(x) disclosed in the Title Commitment, or (y) identified on a Survey, which, in
either case, is not identified as a Title Defect in the Title Notice, shall be
deemed to be a “Permitted Exception” for purposes of this Agreement. Seller
shall, within ten (10) days after receipt of any such Title Notice, notify Buyer
whether Seller will take the action necessary to remove the Title Defects. On or
before the Closing, Seller shall provide Buyer with reasonable evidence of
removal of the items it notifies Buyer that it will cure (the “Agreed Upon Title
Defects”). Notwithstanding anything contained herein to the contrary, the
following items (the “Required Cure Items”) must be cured prior to or at Closing
(with Seller having the right to apply the portion of the Purchase Price
allocated to either such party pursuant to Section 2.3 hereof, or a portion
thereof, for such purpose): (w) all mechanics’, materialmen’s, repairmen’s,
contractors’ or other similar Liens which encumber the Property as of the
Effective Date created by, through or under Seller or which may be filed against
the Property after the Effective Date created by, through or under Seller and on
or prior to the Closing Date (x) all mortgages, security deeds, and other
security instruments, (y) all Taxes due and payable, and (z) all judgments
against the Seller which may constitute a Lien.

 

All Title Expenses shall be paid by the parties in accordance with Section 9.4
hereof. “Title Expenses” shall include all costs and expenses of obtaining the
Survey and Title Commitment, together with any endorsements required by any
lender financing the Buyer’s acquisition of the Property. “Title Expenses” shall
exclude any costs and expenses incurred or required to be incurred to cure any
Title Defects or Required Cure Items.

 

3.4           Continuing Diligence and Inspection Rights. Following the
expiration of the Due Diligence Period, and prior to the Closing or any earlier
termination of this Agreement, at reasonable times and upon reasonable notice,
Buyer or Buyer’s agent(s), consultants, or other retained professionals shall
have the right, at Buyer’s expense, to perform or complete such further
inspections and assessments of the Property as Buyer deems necessary or
desirable to comply with Buyer’s internal requirements or the requirements of
Buyer’s lenders, investors, or members, including, without limitation, further
inspection of environmental and structural aspects, assessments of the
compliance of the Property with all Applicable Laws, and customary pre-closing
walk-throughs. Notwithstanding the foregoing, all such inspections and
assessments by Buyer shall be subject to the terms and conditions of Section 3.2
above and shall not extend Buyer’s rights to terminate this Agreement pursuant
to Section 11.1(a) hereof.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer as of the Effective Date and as of the
Closing as follows:

 

4.1           Organization; Good Standing. Seller is validly existing and in
good standing under the laws of the State of Ohio, with all requisite company
power and authority to carry on its business in the manner and in the location
in which such business has been and is now being conducted, to execute and
deliver this Agreement, and to perform its obligations hereunder. 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.

 

4.2           Consent of Third Parties. Except as otherwise set forth on
Schedule 4.2, no consent or approval of any third party is required as a
condition to the entering into, material performance or material delivery of
this Agreement by Seller other than such consent as has been previously obtained
or will be obtained as of Closing.

 

4.3           Authority; Enforceability. The execution and delivery of this
Agreement has been duly authorized by Seller, and this Agreement constitutes the
valid and binding obligation and agreement of Seller, enforceable against Seller
in accordance with its terms.

 

4.4           Absence of Conflicts. Subject to obtaining the consents and
approvals as described on Schedule 4.2, neither the execution, delivery or
performance of this Agreement will (i) conflict with or result in any breach of
any of the terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in a violation of, or (iv) give any third party the right to
modify, terminate, or accelerate any obligation under, the provisions of the
articles of organization or operating agreement of Seller and/or its Affiliates,
any indenture, mortgage, lease, loan agreement or other agreement or instrument
to which Seller and/or its Affiliates is bound or affected, the Property
Agreements or any Applicable Law.

 

4.5           No Judgments. Except as set forth on Schedule 4.5, there are no
judgments presently outstanding and unsatisfied against the Property, the Seller
or any of Seller’s assets.

 

4.6           No Governmental Approvals. Other than any Licenses that will be
received by, transferred to or assigned to Buyer at or before closing, no
material order, permission, consent, approval, license, authorization,
registration or validation of, or filing with, or exemption by, any governmental
agency, commission, board or public authority is required to authorize, or is
required in connection with the execution, delivery and performance by Seller of
this Agreement or the taking of any action contemplated by this Agreement which
has not been obtained and such failure would have a material adverse effect on
the Buyer or the Property.

 

12

 

  

4.7           Insurance. Schedule 4.7 sets forth an accurate summary of all
general liability, fire, theft, professional liability and other insurance
maintained with respect to the Property, currently and for the last three (3)
years. Neither Seller, nor to Seller’s Knowledge, Existing Manager has taken any
action or failed to act in a manner, including the failure of Seller or Existing
Manager to give any notice or information, which would limit or impair the
rights of Seller or Existing Manager under such insurance policies. Seller shall
provide Buyer with current loss runs within fifteen (15) days after the end of
each month from the Effective Date until the Closing. Prior to Closing Seller
will promptly notify Buyer of any potential losses or claims that may be covered
by the insurance.

 

4.8           Litigation. Except as set forth on Schedule 4.8, there is no
pending or, to Seller’s Knowledge, considered or threatened judgment,
litigation, proceeding, investigation or inquiry (by any person, governmental or
quasi-governmental agency or authority or otherwise) to which Seller or the
Property is a party, including without limitation, litigation brought by Seller
against any third party.

 

4.9           Compliance with Laws. The Property has been constructed and has
been and is presently used and operated in compliance in all respects with, and
in no way in violation of, any Applicable Laws affecting the Property or any
part thereof. Neither the Seller nor the Existing Manager has received notice of
any violation of any Applicable Laws.

 

4.10         Environmental Matters. Except for any biohazards which have been
handled and disposed of in accordance with the Laws, to Sellers’ Knowledge
neither Seller nor Existing Manager has generated, stored or disposed of any
hazardous substance at or on the Property, and other than any condition which
may have been previously disclosed to Seller and included in any Phase I or
Phase II tests conducted by Seller prior to the Purchase of the Real Property,
Seller has no Knowledge of any previous or present generation, storage, disposal
or existence of any hazardous substance at or on the Property other than in
accordance with all Applicable Laws. The term “hazardous substance” shall mean
“hazardous waste,” “toxic substances,” “petroleum products,” “pollutants,” or
other similar or related terms as defined or used from time to time in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (“CERCLA”) (42 U.S.C. §§ 1801, et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. § 6921, et seq.), similar state laws, and
regulations (the “Environmental Laws”) adopted thereunder. Neither Seller, nor,
to Seller’s Knowledge, Existing Manager, has filed or been required to file any
notice reporting a release of any hazardous substance into the environment, and
no notice pursuant to Section 103(a) or (c) of the CERCLA, 42 U.S.C. § 9601, et
seq. or any other Environmental Law has been or was required to be filed.
Neither Seller, nor, to Seller’s Knowledge, Existing Manager, has received any
notice letter under any Environmental Law or any notice or claim, and there is
no investigation pending, contemplated, or to Seller’s Knowledge threatened, to
the effect that Seller or Existing Manager is or may be liable for or as a
result of the release or threatened release of hazardous substance into the
environment or for the suspected unlawful presence of any hazardous waste on the
Property.

 

4.11         Assessments. Except as may be disclosed in the Title Commitment, to
Sellers’ Knowledge there are no special or other assessments for public
improvements or otherwise now affecting the Property, now pending or threatened
special assessments affecting the Property, and no contemplated improvements
affecting the Property that may result in special assessments affecting the
Property.

 

13

 

  

4.12         Property Agreements. The Property Agreements listed on Exhibit C
hereto are in full force and effect and are all of the agreements relating to or
affecting the Property. Seller is not in default of any of its obligations under
any of the Property Agreements, and Seller has no Knowledge of any default on
the part of any other party thereto.

 

4.13         Licenses. Exhibit D attached hereto is a true and complete list of
all Licenses held by the Seller. The Licenses listed on Exhibit D are valid and
no material violations exist with respect to such Licenses. No other Licenses
are required to be held by the Seller for the lawful ownership, use, occupancy,
operation and maintenance of the Property as an assisted living and memory care
facility. No applications, complaints or proceedings are pending or, to the
Knowledge of Seller, contemplated or threatened which may (i) result in the
revocation, modification, non-renewal or suspension of any License or of the
denial of any pending applications, (ii) the issuance of any cease and desist
order, or (iii) the imposition of any fines, forfeitures, or other
administrative actions with respect to the Property or its operation. A list of
all unsatisfied or otherwise outstanding citations with respect to the Property
or its operation is shown on Exhibit H.

 

4.14         Resident Agreements. Except as otherwise noted on Schedule 4.14,
the rent roll attached hereto as Exhibit F (the “Rent Roll”) is true and
complete, and no Resident Agreement currently in effect with respect to the
Property contains any material financial concession from the standard form of
Resident Agreement for the Property attached hereto as Exhibit G. Seller is not
in default under any of its material obligations under any Resident Agreement or
any lease, and, except as set forth on the Rent Roll, Seller has no Knowledge of
any material default on the part of any other party thereto. All of the Resident
Agreements identified on the Rent Roll are currently in full force and effect as
of the date of the Rent Roll.

 

4.15         Medicare; Medicaid. No portion of the income from any Property is
attributable to Medicare, Medicaid or any public or private third party payor or
other program, except for certain payment from private insurers pursuant to
long-term care policies. All billing practices of Seller and Existing Manager
with respect to private insurance companies have been in compliance with all
Applicable Laws.

 

4.16         Condemnation. Neither Seller nor Existing Manager has received any
written notice of any pending or contemplated condemnation, eminent domain or
similar proceeding, with respect to all or any portion of the Property.

 

4.17         Condition of Property.

 

(a)          Real Property. Except as described on Schedule 4.17, with regard to
the Property, to Seller’s Knowledge: (i) there are no material structural
defects, (ii) there is no insect or rodent infestation, (iii) the roof is free
of leaks, (iv) there are no leaks in the foundation, (v) there are no toxic mold
or mold-related problems, and (vi) all mechanical and utility systems servicing
the Real Property are in good condition and proper working order, free of
material defects and in substantial compliance with all Applicable Laws.

 

14

 

   

(b)          Personal Property. Except as described on Schedule 4.17: (i) the
Personal Property comprises all material assets, rights or property used in the
operation of the assisted living facility located on the Real Property and
constitutes all of the personal property used or required for the operation of
the Property as an assisted living facility, and (ii) to Seller’s Knowledge all
of the Personal Property is in good condition, working order and repair
(ordinary wear and tear excepted).

 

(c)          Intellectual Property. Except as described on Schedule 4.17, to
Sellers’ Knowledge the Intellectual Property comprises all material assets,
rights or property used in operation of the operation of the assisted living
facility located on the Real Property and constitutes all the intellectual
property used for the operation of the Property as an assisted living facility.

 

4.18         Independent Property. Except as described on Schedule 4.18,to
Sellers’ Knowledge the Property is an independent unit which does not rely on
facilities (other than facilities of public utility, sewer and water companies)
located on any property not included in the Property (i) to fulfill any zoning,
building code, or other municipal or governmental requirement, or (ii) for
structural support or the furnishing of any essential building systems or
utilities, including, but not limited to, electric, plumbing, mechanical,
heating, ventilating and air conditioning systems. No building or other
improvements not included in the Property relies on any part of the Property to
fulfill any zoning, building code, or other municipal or governmental
requirement or for structural support or the furnishing of any essential
building systems or utilities.

 

4.19         Full Disclosure. To Sellers’ Knowledge none of the representations
or warranties in this Agreement by Seller, any descriptive information
concerning the Property set forth in this Agreement, or any Schedule or Exhibit
attached hereto and referenced herein contains any untrue statement of a fact or
omits to state a fact necessary to make the statements of fact contained therein
not misleading.

 

4.20         Financial Statements. The following documents attached hereto as
Exhibit E, and to be provided again at Closing, are substantially true, complete
and correct in all material respects: (i) detailed operating statements for
Seller’s period of ownership of the Facility; and (ii) current accounts
receivable.

 

4.21         Zoning. Except as provided on Schedule 4.21, to Seller’s Knowledge
the current use of the Property is permitted under the applicable municipal
zoning ordinances, or special exceptions, variances, or conditions thereto, and
the Property complies, to the extent required (including any waiver or
grandfathering), with all conditions, restrictions and requirements of such
zoning ordinances and all amendments thereto.

 

4.22         FIRPTA. Seller is not a “foreign person” within the meaning of
Section 1445 of the Code and the Regulations issued thereunder.

 

15

 

  

4.23         Interests; Title. Except as described on Schedule 4.23, Seller owns
one hundred percent (100%) of the ownership interest in the Property, free and
clear of all Liens except Permitted Exceptions and Permitted Liens. There are no
outstanding options or other rights to purchase or otherwise acquire any
ownership interest in the Property.

 

4.24         Title Encumbrances. Except as described on Schedule 4.24, Seller is
not in default under any of its material obligations under any recorded
agreement, easement or instrument encumbering title to the Property, and Seller
has no Knowledge of any material default on the part of any other party thereto.

 

4.25         Affordable Housing Units. To Seller’s Knowledge, no bedroom or unit
in the Property is leased or reserved for lease as an affordable housing unit or
for low- or moderate-income residents. The Property is not required to lease or
reserve any unit or bedroom as an affordable housing unit or bedroom or for
low-income or moderate-income residents pursuant to a presently existing
agreement or Applicable Law.

 

4.26         No New Survey Matters. Since the dates of the most recent surveys
for the Real Property (complete and accurate copies of which have been or will
be provided to Buyer, to Seller’s Knowledge no new survey matters have arisen in
connection with the Real Property which would otherwise be required under the
applicable ALTA/ACSM standards to be shown thereon.

 

4.27         Loans. Except as otherwise described on Schedule 4.27, there are no
loans secured by the Property.

 

4.28         Patriot Act Compliance. To the extent applicable to Seller, to
Seller’s Knowledge Seller has complied in all material respects with the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001, which comprises Title III of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (the “Patriot Act”) and the regulations promulgated thereunder, and the
rules and regulations administered by the U.S. Treasury Department’s Office of
Foreign Assets Control (“OFAC”), to the extent such laws are applicable to
Seller. Seller is not included on the List of Specially Designated Nationals and
Blocked Persons maintained by the OFAC, nor is it a resident in, or organized or
chartered under the laws of, (A) a jurisdiction that has been designated by the
U.S. Secretary of the Treasury under Section 311 or 312 of the Patriot Act as
warranting special measures due to money laundering concerns or (B) any foreign
country that has been designated as non-cooperative with international
anti-money laundering principles or procedures by an intergovernmental group or
organization, such as the Financial Action Task Force on Money Laundering, of
which the United States is a member and with which designation the United States
representative to the group or organization continues to concur.

 

4.29         Broker’s or Finder’s Fees. Except as provided on Schedule 4.29, no
agent, broker, investment banker or other person or firm acting on behalf of or
under the authority of Seller or any Affiliate of Seller is or will be entitled
to any broker’s or finder’s fee or any other commission or similar fee, directly
or indirectly, in connection with the transactions contemplated by this
Agreement. This Section 4.29 shall survive the Closing or the expiration or any
termination of this Agreement.

 

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4.30         Insolvency. Neither Seller nor any of its Affiliates have, and to
Seller’s Knowledge, Existing Manager has not (i) commenced a voluntary case or
had entered against them a petition for relief under any Applicable Law relative
to bankruptcy, insolvency, or other relief for debtors, (ii) caused, suffered or
consented to the appointment of a receiver, trustee, administrator, conservator,
liquidator, or similar official in any federal, state or foreign judicial or
non-judicial proceeding to hold, administer, and/or liquidate all or
substantially all of their respective assets, (iii) had filed against them any
involuntary petition seeking relief under any Applicable Law relative to
bankruptcy, insolvency, or other relief to debtors which involuntary petition is
not dismissed within sixty (60) days, or (iv) made a general assignment for the
benefit of creditors.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller as of the Effective Date and as of the
Closing as follows:

 

5.1           Organization and Good Standing. Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. Buyer has all requisite corporate power to own, operate,
and lease the Property and carry on business as it is now being conducted and as
the same will be conducted following the Closing.

 

5.2           Authorization and Binding Effect of Documents. The execution and
delivery of this Agreement has been duly authorized by Buyer, and this Agreement
constitutes the valid and binding obligation and agreement of Buyer, enforceable
in accordance with its terms (subject to the effect of bankruptcy, insolvency
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditor’s rights and remedies generally, and to limitations imposed by general
principles of equity, whether applied by a court of law or of equity).

 

5.3           Absence of Conflicts. Neither the execution and delivery of this
Agreement, nor compliance with the terms and provisions hereof, will
(i) conflict with or result in any breach of any of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) result in a violation of,
or (iv) give any third party the right to modify, terminate, or accelerate any
obligation under, the provisions of the articles of organization or operating
agreement of Buyer and/or its Affiliates, any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which Buyer and/or its Affiliates
is bound or affected, or any Applicable Law to which Buyer and/or its Affiliates
is subject.

 

5.4           Consents. The execution, delivery and performance by Buyer and/or
its Affiliates of this Agreement and the other Documents, and consummation by
Buyer and/or its Affiliates of the transactions contemplated hereby and thereby,
do not and will not require the authorization, consent, approval, exemption,
clearance or other action by or notice or declaration to, or filing with, any
court or administrative or other governmental body, or the consent, waiver or
approval of any other person or entity, excluding consents that Seller is
obligated to obtain under Section 7.13 below.

 

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5.5           Patriot Act Compliance. To the extent applicable to Buyer, to
Buyer’s actual knowledge upon reasonable inquiry, Buyer has complied in all
material respects with the Patriot Act and the regulations promulgated
thereunder, and the rules and regulations administered by OFAC, to the extent
such laws are applicable to Buyer. Buyer is not included on the List of
Specially Designated Nationals and Blocked Persons maintained by the OFAC, nor
is it a resident in, or organized or chartered under the laws of, (A) a
jurisdiction that has been designated by the U.S. Secretary of the Treasury
under Section 311 or 312 of the Patriot Act as warranting special measures due
to money laundering concerns or (B) any foreign country that has been designated
as non-cooperative with international anti-money laundering principles or
procedures by an intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering, of which the United States is a member
and with which designation the United States representative to the group or
organization continues to concur.

 

5.6           Broker’s or Finder’s Fees. No agent, broker, investment banker, or
other person or firm acting on behalf of Buyer or any of its Affiliates or under
its authority, is or will be entitled to any broker’s or finder’s fee or any
other commission or similar fee, directly or indirectly, from Buyer or any of
its Affiliates in connection with the transactions contemplated by this
Agreement. This Section 5.6 shall survive the Closing or the expiration or any
termination of this Agreement.

 

ARTICLE VI
OTHER COVENANTS

 

6.1           Conduct of Business Prior to the Closing. Seller covenants and
agrees that from the Effective Date through the Closing, unless Buyer otherwise
consents in writing, Seller, its Affiliates and Existing Manager shall:

 

(a)          Operate the Property in the ordinary course of business, including
(i) incurring expenses consistent with the past practices and in accordance with
the duties of Seller under this Agreement, (ii) using commercially reasonable
efforts to preserve the Property’s present business operations, organization and
goodwill and its relationships with residents, customers, employees,
advertisers, suppliers and other contractors, and (iii) maintaining the Licenses
listed on Exhibit D.

 

(b)          Operate the Property and otherwise materially conduct business in
accordance with the terms or conditions of the Licenses listed on Exhibit D, all
Applicable Laws having jurisdiction over any aspect of the operation of the
Property and all applicable insurance requirements.

 

(c)          Maintain the books and records for the Property.

 

(d)          Timely comply in all material respects with the Property
Agreements.

 

(e)          Not sell, lease, grant any rights in or to or otherwise dispose of,
or agree to sell, lease or otherwise dispose of, the Property in whole or in
part, except to residents of the facility in the ordinary course of business
using a form of resident agreement agreed upon by Seller and Buyer.

 

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(f)          Take commercially reasonable efforts to maintain the Personal
Property currently in use in reasonably good operating condition and repair,
except for ordinary wear and tear, in a manner consistent with past practices.

 

(g)          Perform all covenants, terms, and conditions and make all payments
in a timely fashion, under any loans listed on Schedule 4.27.

 

(h)          Not amend or modify the Property Agreements or take or fail to take
any action thereunder outside the ordinary course of Seller’s business.

 

(i)          Subject to Section 12.16 below, not make any alterations or
improvements to the Property or make any capital expenditure with respect to the
Property in excess of ONE HUNDRED THOUSAND AND NO/100 U.S. DOLLARS ($100,000.00)
other than those that are required by Applicable Law or that are necessary to
preserve the coverage under or comply with the terms of any insurance policy
with respect to the Property.

 

(j)          Not enter into any agreement which calls for annual payments in
excess of FIFTY THOUSAND AND NO/100 U.S. DOLLARS ($50,000.00) or for a term in
excess of one year, unless such agreement can be terminated upon not more than
sixty (60) days prior written notice without the payment of any termination fee
or penalty payment, unless otherwise approved in writing by Buyer.

 

(k)          Provide the Buyer with a current Rent Roll on the first day of each
month.

 

6.2           Notification of Certain Matters. Seller shall give prompt written
notice to Buyer, and Buyer shall give prompt written notice to Seller (each, a
“Notice Letter”), of (i) the occurrence, or failure to occur, of any event that
would be likely to cause any of its respective representations or warranties
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the Effective Date to the Closing, and (ii) any failure to
comply with or satisfy, in any material respect, any covenant, condition, or
agreement to be complied with or satisfied under this Agreement. Upon receipt of
a Notice Letter by Buyer pursuant to this Section 6.2, Buyer shall be entitled
to terminate this Agreement by providing written notice to Sellers and Escrow
Agent within ten (10) days after receipt of the Notice Letter. In the event this
Agreement is terminated pursuant to this Section 6.2, the Earnest Money Deposit
shall be refunded to Buyer, whereupon, except as provided for herein, this
Agreement and all rights and obligations of the parties hereunder shall be null
and void. If the Closing still occurs after Buyer’s receipt of the Notice
Letter, then Buyer shall be deemed to have waived any claim hereunder with
respect to the matter discussed in such Notice Letter. If, prior to Closing,
either Buyer or Seller obtains Knowledge of any matter that causes the
representations or warranties of the other party contained in this Agreement to
be untrue or inaccurate in any material respect, such party shall promptly
notify the other party thereof in writing.

 

6.3           Title; Additional Documents. At the Closing, Seller shall transfer
and convey to Buyer good and indefeasible fee simple title to the Property, free
and clear of any Liens except Permitted Exceptions and Permitted Liens. At the
Closing, all warranties and guaranties, to the extent assignable or
transferable, relating to the Property shall be transferred by Seller to and
shall be held and owned by Buyer. Except for the representations, warranties and
obligations of Seller provided in this Agreement, at Closing, Seller is
transferring the Property to Buyer “As-Is-Where-Is” and with all faults.

 

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6.4           Other Consents. Seller shall obtain the material consents or
waivers to the transactions contemplated by this Agreement required under the
Property Agreements.

 

6.5           Inspection and Access. Seller shall, commencing on the Effective
Date of this Agreement, open the assets, books, accounting records,
correspondence and files of Seller (to the extent related to the operation of
the Property) for examination by Buyer, its officers, attorneys, accountants and
agents, with the right to make copies of such books, records and files or
extracts therefrom. Subject to the Due Diligence Coordination Notice, such
access will be available to Buyer during normal business hours, upon notice, in
such manner as will not unreasonably interfere with the conduct of the business
of the Property. Seller will make available to Buyer such additional data and
other available information regarding the Property as Buyer may reasonably
request. Those books, records and files which relate to the Property that are
not transferred to Buyer shall be preserved and maintained by Seller for two (2)
years after the Closing, or such greater amount of time required by Applicable
Law, and those books, records and files relating to the Property the possession
of which is being transferred to Buyer hereunder shall be maintained and
preserved by Buyer for a period of two (2) years after the Closing, or such
greater amount of time required by Applicable Law.

 

6.6           Confidentiality.

 

(a)          Confidential Information. Any and all nonpublic information,
documents, and instruments delivered to Buyer by Seller or its agents or
Affiliates and any and all nonpublic information, documents, and instruments
delivered to Seller by Buyer or its agents or Affiliates, including, without
limitation, this Agreement, the Documents and all agreements referenced herein,
are of a confidential and proprietary nature. Buyer and Seller agree that prior
to Closing, each will maintain the confidentiality of all such confidential
information, documents or instruments delivered to each by the other party or
its agents in connection with the negotiation of, or in compliance with, this
Agreement, and only disclose such information, documents, and instruments to
their duly authorized officers, directors, representatives and agents, or as
otherwise required by Applicable Law. Buyer and Seller further agree that if the
transactions contemplated hereby are not consummated and this Agreement is
terminated, each will return all such documents and instruments and all copies
thereof in their possession to the other party. This Section 6.6(a) shall only
survive Closing as to Seller (and not Buyer) but shall survive as to both Seller
and Buyer in the event this Agreement is terminated prior to Closing.

 

(b)          Confidentiality of Agreement. Seller and Buyer will not disclose
the terms or existence of this Agreement to any third party without the prior
written consent of the other party or its agents, except that Seller and Buyer
may disclose such terms to their respective attorneys, accountants, consultants,
engineers, other advisers, members, shareholders, lenders, the Buyer’s potential
investors or lenders, and as required by Applicable Law or by Section 7.10
without such prior written consent. This Section 6.6(b) shall survive Closing
and shall survive in the event this Agreement is terminated prior to Closing
with respect to the Seller.

 

20

 

  

(c)          Permitted Uses of Information. Notwithstanding the forgoing,
nothing in this Section 6.6 shall prevent the Buyer from making any disclosure
regarding this Agreement to the Securities and Exchange Commission (the “SEC”)
necessary to comply with any reporting, disclosure, or filing requirements
imposed upon the Buyer by the SEC.

 

(d)          Irreparable Harm. Seller and Buyer recognize that any breach of
this Section 6.6 would result in irreparable harm to the other party; therefore,
the Seller or the Buyer shall be entitled to an injunction to prohibit any such
breach or anticipated breach, without the necessity of proving actual damages or
posting a bond, cash or otherwise, in addition to all of other legal and
equitable remedies.

 

6.7           Publicity. Seller agrees that no public release or announcement
concerning the transactions contemplated hereby shall be issued by any party
without the prior written consent of Buyer, except as required by Applicable
Law.

 

6.8           Commercially Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each party will use its commercially reasonable
efforts to satisfy any condition for which such party is responsible hereunder
and to consummate and make effective as soon as practicable the transactions
contemplated by this Agreement.

 

6.9           Reports. Seller shall file on a current and timely basis until the
Closing, all reports and documents required to be filed with respect to the
Licenses. True and complete copies of all such reports filed as of the Effective
Date and continuing through the Closing shall be promptly supplied to Buyer by
Seller.

 

6.10         Post-Closing Obligations of Seller. Following Closing, at no
out-of-pocket cost to Seller, Seller shall use, and shall cause Seller’s
Affiliates to use, reasonable diligent efforts to cooperate with Buyer and its
Affiliates to (a) confirm that all Licenses are obtained and held by the proper
entity for operation of the Property, and (b) to the extent not previously
transferred to Buyer, to provide any records in Seller’s custody or control
which may be requested of Buyer by any authorized governmental agency. Further,
upon Buyer’s request, for a period of one (1) year after Closing, Seller shall
make the operating statements and any and all books, records, correspondence,
financial data, leases, delinquency reports and all other documents and matters
maintained by Seller or its agents and relating to receipts and expenditures
pertaining to the Property for the three (3) most recent full calendar years and
the current calendar year (collectively, the “Records”) available to Buyer for
inspection, copying and audit by Buyer's designated accountants, and at Buyer's
expense. This Section 6.10 shall survive the Closing.

 

6.11         No Other Representations or Warranties.

 

(a)          Buyer agrees that, except for the representations and warranties
made by Seller and expressly set forth in this Agreement, neither the Seller nor
any of its Affiliates or its respective representatives have made (and shall not
be construed as having made) to Buyer or any representatives thereof any
representation or warranty of any kind.

 

(b)          Seller agrees that, except for the representations and warranties
made by Buyer and expressly set forth in this Agreement, neither Buyer nor any
of its Affiliates or its representatives have made (and shall not be construed
as having made) to Seller or to any of Seller’s Affiliates or any respective
representatives thereof any representation or warranty of any kind.

 

21

 

  

6.12         Noncompetition. After the Closing, Seller and Seller’s Affiliates
shall not directly or indirectly (unless acting in accordance with Buyer’s
written consent) own, manage, operate, finance or participate in the ownership,
management, operation or financing of, or permit its name to be used by or in
connection with, any “competitive business or enterprise” located within a ten
(10) mile radius of the Real Property for a period of five (5) years following
the Closing Date. For purposes of this Section 6.12, the term “competitive
business or enterprise” shall mean a nursing home, memory care facility,
independent living facility, or assisted living facility. This Section 6.12
shall survive Closing.

 

6.13         Exclusivity. From and after the Effective Date, Seller shall not
take any action, directly or indirectly, to encourage, initiate or engage or
participate in discussions or negotiations with, or provide any information to,
any party, other than Buyer, concerning a potential transaction involving the
purchase and sale of the Property, the purchase and sale of all or substantially
all of the ownership interest of Seller, or any transaction similar to the
foregoing. The provisions of this Section 6.13 shall not survive the termination
or Closing of this Agreement.

 

ARTICLE VII
CONDITIONS PRECEDENT TO THE
OBLIGATION OF BUYER TO CLOSE

 

Buyer’s obligation to close pursuant to the terms of this Agreement is subject
to the satisfaction, on or prior to the Closing, of each of the following
conditions, unless waived by Buyer in writing:

 

7.1           Accuracy of Representations and Warranties; Closing Certificate.
Except for any changes permitted by the terms of this Agreement or consented to
in writing by Buyer, each of the representations and warranties made by Seller
in this Agreement or in any certificate delivered pursuant to Section 9.2 that
is qualified as to knowledge or materiality shall be true and correct in all
respects when made and shall be true and correct in all respects at and as of
the Closing as though such representations and warranties were made or given on
and as of the Closing, and each of such representations and warranties that is
not qualified as to knowledge or materiality shall be true and correct when made
and shall be true and correct in all material respects at and as of the Closing
as though such representations and warranties were made or given on and as of
the Closing. For purposes of determining whether the representations and
warranties made by the Seller pursuant to this Agreement are true and correct at
and as of the Closing, the Schedules and Exhibits shall be deemed to include
only that information contained therein on the date such Schedules and Exhibits
are acknowledged pursuant to Section 12.13 and, and shall be deemed to exclude
any information disclosed to Buyer pursuant to Section 6.2 or otherwise.

 

22

 

  

7.2           Performance of Agreement. Seller and its Affiliates shall have
performed in all material respects all of their covenants, agreements and
obligations required by this Agreement to be performed or complied with by them
prior to or upon the Closing.

 

7.3           No Material and Adverse Change. No change or development shall
have occurred which has or is likely to materially and adversely affect the
Property, its use or its value.

 

7.4           [Reserved.]

 

7.5           [Reserved.]

 

7.6           Title Insurance and Survey.

 

(a)          In the event (x) the Agreed Upon Title Defects specified are not
cured on or before the Closing, (y) a Required Cure Item is not cured on or
before the Closing, or (z) if Seller does not timely notify Buyer that Seller
will remove Title Defects within the ten (10) days as specified above (in which
case Buyer shall make its election pursuant to this subsection (a) prior to five
(5) days following the date of such Title Notice), Buyer shall have the option
to:

 

(i)          accept Seller’s interest in the Real Property subject to such Title
Defect(s) or Required Cure Item(s), in which event such Title Defect(s) or
Required Cure Item(s) shall become part of the Permitted Exceptions, and to
close the transaction contemplated hereby in accordance with the terms of this
Agreement;

 

(ii)         pay any amount necessary, not to exceed $200,000, to cure the
Agreed Upon Title Defect or Required Cure Item(s) and deduct such amount from
the Purchase Price; or

 

(iii)        by giving Seller written notice of Buyer’s election, terminate this
Agreement and receive a refund of the Earnest Money Deposit, in which event no
party shall have any further rights or obligations to the other hereunder,
except for such rights and obligations that, by the express terms hereof,
survive any termination of this Agreement. If Buyer elects to proceed with the
Closing without giving notice of its election of this option (ii), it will be
deemed to have accepted such Title Defect(s) or Required Cure Item(s)as
Permitted Exceptions.

 

Notwithstanding the foregoing, nothing contained in section shall limit the
right of the Buyer to pursue any and all remedies provided in Section 11.2 of
this Agreement as a result of Seller’s default.

 

23

 

  

(b)          Notwithstanding anything in this Agreement to the contrary, Seller
covenants and agrees that at or prior to Closing, Seller shall (i) pay or cause
to be paid in full and cause to be canceled and discharged or otherwise bond and
discharge as liens against the Property all mechanics’, materialmen’s,
repairmen’s, contractors’ or other similar Liens which encumber the Property as
of the Effective Date created by, through or under Seller or which may be filed
against the Property after the Effective Date created by, through or under
Seller and on or prior to the Closing Date, (ii) pay or cause to be paid in full
all past due ad valorem taxes and assessments of any kind constituting a lien
against the Property which are due and payable, and (iii) all judgments which
have attached to and become a lien against the Property by, through or under
Seller. In the event Seller fails to cause such liens and encumbrances to be
paid and canceled at or prior to Closing, Buyer shall be entitled to pay such
amount to the holder thereof as may be required to pay and cancel same, and to
credit the amount so paid against the Purchase Price allocated to the Buyer
pursuant to Section 2.3 hereof.

 

(c)          At Closing, the Title Insurer shall be prepared to issue a title
insurance policy in accordance with the Title Commitment, with all endorsements
reasonably required by Buyer and with coverage over any “gap” period.

 

7.7           [Reserved.]

 

7.8           [Reserved.]

 

7.9           Delivery of Closing Documents. Seller shall have delivered or
caused to be delivered to Buyer on the Closing each of the Documents required to
be delivered pursuant to Section 9.2.

 

7.10         Licenses.

 

(a)          To the extent necessary and permitted or required by Applicable
Laws, Seller shall have completed the transfer and assignment of all the
Licenses listed on Exhibit D to the Post-Closing Licensee at or prior to the
Closing. To the extent that any such Licenses are not transferable or assignable
by Seller, the Post-Closing Licensee shall have obtained, at the Buyer’s sole
cost and expense, in the Post-Closing Licensee’s own name, the Licenses, and
Seller shall, and shall cause Existing Manager to, reasonably cooperate with the
Post-Closing Licensee in obtaining such Licenses at or prior to Closing. The
Post-Closing Licensee shall submit all necessary License applications within ten
(10) business days after the Effective Date and shall thereafter diligently
pursue all required Licenses. If any Licenses cannot be obtained by the
Post-Closing Licensee at or prior to the Closing Date, Buyer shall have the
right to extend the Closing as provided for in Section 11.2(a) for a period of
ninety (90) days.

 

(b)          In the event the regulatory authorities (i) assert that there are
violations and require repairs or alterations to be made to cure such violations
which are, in the aggregate, greater than $5,000.00, or (ii) assess fines as a
result of operational issues and require such fines to be paid prior to issuing
Licenses to the Post-Closing Licensee or prior to confirming to Buyer that the
Licenses are in place, no material violations exist, and the Property is in good
standing, the Seller’s performance of all such required repairs and alterations
at Seller’s expense and payment of any and all such fines by Seller shall be a
condition to Buyer’s Closing. If any operational changes are required by such
regulatory authorities as a condition to issuing Licenses, Seller’s implementing
such action at Seller’s expense shall be a material obligation and condition to
Closing. If Seller fails to take such foregoing actions, Buyer shall have the
remedy available under Section 11.2(a).

 

24

 

  

(c)          If any of the Licenses cannot be obtained by the Post-Closing
Licensee at or prior to the Closing, alternative arrangements that are
reasonably satisfactory to Buyer, Seller, and Tenant shall have been implemented
to assure that the Post-Closing Licensee shall, to the extent permitted by
Applicable Laws, rules and regulations, have the benefit of such Licenses, and
Seller and the Post-Closing Licensee shall cooperate and use their respective
commercially reasonable efforts to obtain the Licenses for the Post-Closing
Licensee or to complete the transfer and assignment of the Licenses by Seller,
whichever is applicable, as contemplated in the foregoing sentences promptly
after the Closing. For example, but not by way of limitation, in the event the
required Licenses have not been transferred, issued or re-issued as of the
Closing with respect to the Property, as required by Applicable Law and
regulations, Seller, Tenant and the Buyer shall enter into a sublease (the
“Transition Period Sublease”), on terms and conditions mutually acceptable to
the parties thereto in the form substantially to that attached hereto as Exhibit
L, so that the Property may continue to be operated on and after the Closing
pending the transfer, issuance or re-issuance of such required Licenses. This
subsection shall survive the Closing until the earlier to occur of (i) the
issuance of the Licenses to Buyer or Tenant, or (ii) the termination of the
Transition Period Sublease, if any.

 

(d)          Sections 7.10(a) and (b) shall survive Closing.

 

7.11         Termination of Existing Leases & Management Agreements Buyer shall
have received evidence from Seller, satisfactory to Buyer in its sole
discretion, that the lease agreement entered into between Seller and any master
tenant, and the management agreement between Seller and Existing Manager have
been terminated without fee or cost to Buyer.

 

7.12         Governmental Approvals. Seller shall have obtained all
authorizations, consents, orders, or approvals of, shall have made all
declarations or filings with, and shall have allowed the expiration of waiting
periods imposed by, any governmental agencies necessary for the consummation of
the transactions contemplated by this Agreement. For the avoidance of doubt,
this Section 7.11 shall not apply to the acquisition of any of the Licenses set
forth in Exhibit D.

 

7.13         Third-Party Consents. Seller shall have obtained the consents to
assignment, waivers and similar instruments described on Schedule 7.13 hereto,
which schedule shall be agreed upon and completed by the parties prior to the
expiration of the Due Diligence Period.

 

7.14         Management Agreement. On or before the Closing Date, Buyer and
Existing Manager shall have entered into an agreement (the “Management
Agreement”) for the continued management of the Property by Existing Manager in
substantially the form attached hereto as Exhibit M.

 

ARTICLE VIII
CONDITIONS PRECEDENT TO THE
OBLIGATION OF SELLER TO CLOSE

 

The obligation of the Seller to close pursuant to the terms of this Agreement is
subject to the satisfaction, on or prior to the Closing, of each of the
following conditions, unless waived by Seller in writing:

 

25

 

  

8.1           Accuracy of Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects on the Effective Date and as of the Closing with the same
effect as though made at such time, except for changes that are not materially
adverse to Seller.

 

8.2           Performance of Agreements. Buyer shall have performed in all
material respects all of its covenants, agreements, and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing.

 

8.3           Delivery of Closing Documents. Buyer shall have delivered or
caused to be delivered to Seller on the Closing each of the Documents required
to be delivered pursuant to Section 9.3.

 

ARTICLE IX
CLOSING

 

9.1           Closing Date and Place. The Closing shall take place on the date
which is the later of i) forty-five (45) days following the expiration of the
Due Diligence Period, or ii) the completion of the transfer of the Licenses (the
“Closing Date”). The Closing shall be accomplished by the Buyer and Seller
depositing the Closing Documents into escrow with the Title Insurer and Buyer
and Seller issuing their respective instructions to the Title Insurer without
the need for attending in person unless the parties mutually agree otherwise.

 

9.2           Deliveries of Seller. At the Closing, Seller shall deliver or
cause to be delivered to Buyer the following, in each case in form and substance
reasonably satisfactory to Buyer:

 

(a)          A governmental certificate, dated as of a date as near as
practicable to the Closing, showing that Seller (i) is duly organized and in
good standing in the state of organization of Seller, and (ii) is qualified to
do business in the state in which the Property is located.

 

(b)          A certificate of the secretary (or the equivalent thereto if none)
of Seller attesting as to the incumbency of each manager, officer, and
authorized representative of Seller who executes this Agreement and any of the
other Documents, certifying that resolutions and consents necessary for Seller
to act in accordance with the terms of this Agreement have been adopted or
obtained (with copies thereof attached) and to similar customary matters.

 

(c)          A warranty deed customary in the State of Ohio and a bill of sale
(with general warranty of title) and other instruments of transfer and
conveyance transferring the Property held or owned by Seller (or Seller’s
Affiliates) to Buyer free of all Liens other than the Permitted Exceptions and
Permitted Liens.

 

(d)          A certificate of non-foreign status under Section 1445 of the Code,
complying with the requirements of the Income Tax Regulations promulgated
pursuant to such Section.

 

(e)          A certificate that the conditions specified in Sections 7.1 and 7.2
are satisfied as of the Closing.

 

26

 

  

(f)          A true, correct and complete Rent Roll for the Property certified
by Seller listing each resident as of the Closing, the unit, bed or room number
of such resident, the amount of monthly fees to be paid by such resident, the
amount of security deposit, the date of the Resident Agreement, and the
expiration date of such Resident Agreement.

 

(g)          Assignments of the Property Agreements and Licenses from Seller,
duly executed by Seller.

 

(h)          All third-party consents described in Section 7.13.

 

(i)          A Transition Period Sublease, if applicable, duly executed by
Seller.

 

(j)          The Guaranty, duly executed by Michael Wojno, Randy Theken and
Philip Maynard, in the form attached hereto as Exhibit J.

 

(k)          The Intellectual Property License, duly executed by Seller in the
form attached hereto as Exhibit N.

 

(l)          The Earnout Agreement, duly executed by Seller in the form attached
hereto as Exhibit K.

 

(m)          Any historical financials and any representation from Seller
related to matters related thereto (including, without limitation a
representation that such audited financials have been prepared in a way that
accurately depicts the financial condition of the company) required to allow the
Buyer to comply with any reporting, discloser, or filing requirements imposed
upon the Buyer by the Securities and Exchange Commission with respect to the
transactions contemplated by this Agreement. Additionally, Seller shall provide
Buyer, but without expense to Seller, with (a) an audit letter in substantially
the form as EXHIBIT I attached hereto and made a part hereof, and (b) copies of,
or access to, such factual information as may be reasonably requested by Buyer
or its designated accountants, and in the possession or control of Seller, to
enable Buyer to file any filings required by the SEC in connection with the
purchase of the Property.

 

(n)          Such additional information, materials, affidavits and certificates
as Buyer shall reasonably request to evidence the satisfaction of the conditions
to Seller’s obligations hereunder, including without limitation, evidence that
all consents and approvals required as a condition to Buyer’s obligation to
close hereunder have been obtained, title affidavits, such affidavits and
indemnities as the Title Insurer may reasonably require to issue the Title
Insurance policies, the gap coverage and all endorsements and any other
documents expressly required by this Agreement to be delivered by Seller at
Closing, or as may be reasonably required by the Title Insurer.

 

9.3           Deliveries of Buyer. At the Closing, Buyer shall deliver or cause
to be delivered to Seller the following, in each case in form and substance
reasonably satisfactory to Seller:

 

(a)          The Purchase Price in accordance with Section 2.3, subject to the
adjustments under Section 2.5.

 

27

 

  

(b)          A certificate that the conditions specified in Sections 8.1 and
8.2. are satisfied as of the Closing.

 

(c)          An agreement by Buyer assuming the Assumed Obligations.

 

(d)          The Intellectual Property License, duly executed by Buyer in the
form attached hereto as Exhibit N.

 

(e)          The Earnout Agreement, duly executed by Buyer in the form attached
hereto as Exhibit K.

 

(f)          A governmental certificate, dated as of a date as near as
practicable to the Closing, showing that Buyer is (i) duly organized and in good
standing in the state of its formation, and (ii) is qualified to do business in
the state where the Property is located.

 

(g)          A certificate of the secretary (or the equivalent thereto if none)
of Buyer attesting as to the incumbency of each officer or authorized
representative of Buyer who executes this Agreement and/or any of the other
Documents, certifying that resolutions and consents necessary for Buyer to act
in accordance with the terms of this Agreement have been adopted or obtained
(with copies thereof attached) and to similar customary matters.

 

(h)          Such additional information and materials as Seller shall have
reasonably requested to evidence the satisfaction of the conditions to its
obligations hereunder.

 

9.4           Closing Costs.

 

a.       Buyer shall pay all costs and fees associated with its studies and
inspections related to its due diligence review and pursuit of its approvals,
including survey costs, except such third party reports expressly provided by
Seller to Buyer.

 

b.       Seller shall pay or Buyer shall be credited for an amount equal to all
unpaid real property taxes and assessments relating to the period prior to the
Closing Date. Buyer shall pay all real property taxes for the period commencing
on the Closing Date.

 

c.       Buyer and Seller shall each pay (i) their respective attorneys’ fees
and expenses (ii) broker fees and commissions engaged by such party,
respectively, and (iii) except as set forth below, due diligence costs.

 

d.       Seller shall pay for the cost of the title search and title
examination.

 

e.       Seller and Buyer shall each pay one half (1/2) of the premium for title
insurance.

 

f.       Buyer shall pay the costs for any endorsements or special exceptions to
the title policy.

 

28

 

  

g.       Any other costs of transfer, conveyance, intangible, and documentary
stamp taxes (collectively, the “Transaction Costs”) shall be allocated between
Seller and Buyer and paid in accordance with customary closing cost allocations
in the County and State where the Property is located.

 

ARTICLE X
INDEMNIFICATION

 

10.1         General. The rights to indemnification set forth in this ARTICLE X
and the other rights described in this Agreement shall be in addition to all
other rights to monetary damages that any party (or the party’s successors or
permitted assigns) would otherwise have by Applicable Law in connection with the
transactions contemplated by this Agreement or any other Document; provided,
however, that neither party shall have the right to be compensated more than
once for the same monetary damage.

 

10.2         Indemnification by Seller. From and after Closing, Seller shall
indemnify, defend, and hold harmless Buyer, Tenant and each of their officers,
directors, employees, agents, representatives, Affiliates, successors and
assigns from and against, and pay or reimburse each of them for and with respect
to, any Loss relating to, arising out of or resulting from any of the following:

 

(a)          Any breach by Seller of any of its representations, warranties,
covenants or agreements in this Agreement or any other Document; and

 

(b)          The ownership, operation or control of the Property prior to the
Closing, including without limitation, any and all liabilities which relate to
events occurring prior to the Closing, regardless of when they are asserted or
whether such was disclosed to Buyer and regardless of whether such was a breach
of any representation, warranty, or covenant by Seller, except for (i) Assumed
Obligations, and (ii) obligations, indebtedness or liabilities to the extent of
any Adjustment Amount credited to the Buyer.

 

(c)          Claims by any other party claiming to have represented Seller as
broker or agent in connection with the transactions contemplated by this
Agreement.

 

10.3         Indemnification by Buyer. From and after Closing, Buyer shall
indemnify, defend and hold harmless Seller and its officers, directors,
employees, agents, representatives, Affiliates, successors and assigns from and
against, and pay or reimburse each of them for and with respect to any Loss
relating to, arising out of or resulting from any of the following:

 

(a)          Any material breach by Buyer of any of its representations,
warranties, covenants or agreements in this Agreement or any other Document; and

 

(b)          The ownership, operation or control of the Property after the
Closing, including the Assumed Obligations, but excluding any obligations,
indebtedness or liabilities to the extent of any Adjustment Amount credited to
Seller.

 

(c)          Claims by any other party claiming to have represented Buyer as
broker or agent in connection with the transactions contemplated by this
Agreement.

 

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10.4         Administration of Indemnification. For purposes of administering
the indemnification provisions set forth in Section 10.2 and Section 10.3, the
following procedure shall apply:

 

(a)          Whenever a claim shall arise for indemnification under this ARTICLE
X, the party entitled to indemnification (the “Indemnified Party”) shall give a
reasonably prompt written notice to the party from whom indemnification is
sought (the “Indemnifying Party”) setting forth in reasonable detail, to the
extent then available, the facts concerning the nature of such claim and the
basis upon which the Indemnified Party believes that it is entitled to
indemnification hereunder.

 

(b)          In the event of any claim for indemnification resulting from or in
connection with any claim by a third party, the Indemnifying Party shall be
entitled, at its sole expense, either (i) to participate in defending against
such claim or (ii) to assume the entire defense with counsel which is selected
by it and which is reasonably satisfactory to the Indemnified Party, provided
that no settlement shall be made and no judgment consented to without the prior
written consent of the Indemnified Party, which shall not be unreasonably
withheld. If, however, (x) the claim, action, suit or proceeding would, if
successful, result in the imposition of damages for which the Indemnifying Party
would not be solely responsible, or (y) representation of both parties by the
same counsel would otherwise be inappropriate due to actual or potential
differing interests between them, then the Indemnifying Party shall not be
entitled to assume the entire defense and each party shall be entitled to retain
counsel who shall cooperate with one another in defending against such claim. In
the case of clause (x), the Indemnifying Party shall be obligated to bear only
that portion of the expense of the Indemnified Party’s counsel that is in
proportion to the damages indemnifiable by the Indemnifying Party compared to
the total amount of the third-party claim against the Indemnified Party. In the
case of clause (y), the Indemnifying Party shall pay all costs of defense of
both itself and the actual, reasonable, out-of-pocket costs of the Indemnified
Party.

 

(c)          If the Indemnifying Party does not choose to defend against a claim
by a third party, the Indemnified Party may defend in such manner as it deems
appropriate or settle the claim (after giving notice thereof to the Indemnifying
Party) on such terms as the Indemnified Party may deem appropriate, and the
Indemnified Party shall be entitled to periodic reimbursement from the
Indemnifying Party of reasonable defense expenses incurred and prompt
indemnification from the Indemnifying Party in accordance with this ARTICLE X.

 

(d)          Failure or delay by an Indemnified Party to give a reasonably
prompt notice of any claim shall not release, waive or otherwise affect an
Indemnifying Party’s obligations with respect to the claim, except to the extent
that the Indemnifying Party can demonstrate actual Loss or prejudice as a result
of such failure or delay. Notwithstanding anything to the contrary contained
herein, the parties agree that no indemnification right or obligation shall
apply to the extent any such Loss or expense is paid to an Indemnified Party by
an insurance company.

 

(e)          The right to pursue indemnification as set forth in Sections
10.2(a) and 10.3(a) shall survive the Closing hereunder for a period of eighteen
(18) months following the Closing, and the right to pursue indemnification as
set forth in all other Sections of this ARTICLE X shall survive the Closing
hereunder indefinitely.

 

30

 

  

(f)          Notwithstanding anything to the contrary in this Agreement, the
right to pursue indemnification as set forth in this ARTICLE X shall be
actionable or payable only if valid claims for Losses, if any, collectively
aggregate more than TWENTY FIVE THOUSAND and No/100 U.S. Dollars ($25,000.00
(the “Floor”), provided, however, that the foregoing limitation shall not apply
in the case of fraud on the part of Buyer, Seller or any of their respective
Affiliates, or to any claims arising under Section 10.2(b) or Section 10.3(b)
(none of which shall be limited in any manner whatsoever). In addition, Buyer
agrees to concurrently seek recovery against Seller, under any insurance
policies, the Title Policy and other applicable agreements, and Seller shall not
be liable to Buyer to the extent Buyer’s claim is actually satisfied from any
sums recovered from such insurance policies, Title Policy or other applicable
agreements. FINALLY, IN NO EVENT SHALL EITHER PARTY EVER BE LIABLE FOR ANY
CONSEQUENTIAL OR PUNITIVE DAMAGES OTHER THAN IN THE EVENT OF FRAUD.

 

10.5         Guaranty. In order to secure the indemnities provided by Seller and
other obligations of Seller provided for herein, at Closing, Michael Wojno,
Randy Theken and Philip Maynard agree to provide a personal, joint and several,
guaranty to Buyer in the cumulative amount of Five Hundred Thousand Dollars
($500,000) (the “Guaranty”) for a period of eighteen (18) months from the
Closing in the form attached as Exhibit J to this Agreement.

 

ARTICLE XI
DEFAULT AND TERMINATION

 

11.1         Right of Termination. This Agreement may be terminated prior to
Closing as follows:

 

(a)          By Buyer, in its sole and absolute discretion, at any time during
the Due Diligence Period for any reason or for no reason whatsoever; or

 

(b)          By written agreement of Seller and Buyer; or

 

(c)          By Buyer if, as of the Closing or such earlier date as specified in
this Agreement, all conditions in ARTICLE VII have not been met, or as
specifically provided for in Sections 6.2, 7.6, 11.2(a)(i), 12.16, and 12.17;
provided, however, that nothing contained in this Section 11.1(c) shall limit
Seller’s rights pursuant to 11.2 below;

 

(d)          By Seller if, as of Closing or such earlier date as specified in
this Agreement, all conditions in ARTICLE VII have been met but the conditions
in ARTICLE VIII have not been met and Buyer defaults on its obligation to close
this transaction; provided, however, that nothing contained in this Section
11.1(d) shall limit Seller’s rights pursuant to 11.2 below; or

 

(e)          By Seller or Buyer if a court of competent jurisdiction or other
governmental agency shall have issued an order, decree, or ruling or taken any
other action (which order, decree, or ruling the parties hereto shall use their
diligent efforts to lift), in each case permanently retraining, enjoining, or
otherwise prohibiting the transactions contemplated by this Agreement, or
otherwise determining that the consummation of such transactions would be
unlawful, and such order, decree or ruling shall have become final and
nonappealable.

 

31

 

  

(f)          By Buyer if Buyer obtains Knowledge of any matter that causes any
representation or warranty of the Seller contained herein to be untrue or
inaccurate in any material respect.

 

(g)          By Seller, if Closing has not occurred prior to March 31, 2015 and
such failure to close is not due to any default of Seller;

 

(h)          In the event this Agreement is terminated pursuant to this Section
11.1 or pursuant to any other express provision of this Agreement for any reason
other than a default by the Seller or Buyer hereunder, then (i) this Agreement
shall be of no further force or effect as of the date of delivery of such
written notice of termination, (ii) the Buyer and Seller shall equally share the
cancellation charges, if any, of the Escrow Agent and Title Insurer, (iii) no
party shall have any further rights or obligations hereunder other than pursuant
to any provision hereof which expressly survives the termination of this
Agreement, and (iv) all Escrowed Funds shall be released to the party entitled
to the same in accordance with Section 2.4 hereof.

 

11.2         Remedies upon Default.

 

(a)          If Seller defaults on any of Seller’s obligations hereunder, and
such default continues for ten (10) days after written notice thereof specifying
such default, Buyer may serve notice in writing to the Seller in the manner
provided in this Agreement, and either:

 

(i)          If specific performance is unavailable, terminate this Agreement,
receive a refund of the Earnest Money Deposit and receive from Seller
reimbursement of all actual and reasonable third-party, out-of-pocket expenses
and due diligence costs incurred by Buyer in pursuing the transactions
contemplated by this Agreement, and pursue all legal remedies available at law
against Seller for Buyer’s actual damages arising from Seller’s default
hereunder; or

 

(ii)         Waive any such conditions, title objections or defaults and
consummate the transaction contemplated by this Agreement in the same manner as
if there had been no title objections, conditions or defaults without any
reduction in the Purchase Price and without any further claim against the Seller
therefor and, if necessary, pursue an action for specific performance.

 

(b)          If Buyer defaults on its obligation to close this transaction,
Seller’s exclusive remedy shall be to terminate this Agreement and receive the
Earnest Money Deposit as liquidated damages.

 

11.3         Specific Performance. Seller specifically agrees that Buyer shall
be entitled, in the event of a default by Seller, to enforcement of this
Agreement by a decree of specific performance or injunctive relief requiring
Seller to fulfill its obligations under this Agreement. If Buyer pursues an
action for specific performance and prevails, Buyer shall not be entitled to any
monetary damages, except as set forth in Section 12.14.

 

32

 

 

 11.4         Obligations Upon Termination. Except as otherwise provided herein,
if this Agreement is terminated, each of the parties shall bear its own costs
incurred in connection with the transactions contemplated by this Agreement.

 

11.5         Termination Notice. Each notice given by a party to terminate this
Agreement shall specify the Subsection of ARTICLE XI pursuant to which such
notice is given. If at the time a party gives a termination notice, such party
is entitled to give such notice pursuant to more than one Subsection of ARTICLE
XI, the Subsection pursuant to which such notice is given and termination is
effected shall be deemed to be the section specified in such notice provided
that the party giving such notice is at such time entitled to terminate this
Agreement pursuant to the specified section.

 

11.6         Sole and Exclusive Remedy. Seller and Buyer each acknowledge and
agree that prior to the Closing, such party’s sole and exclusive remedy with
respect to any and all claims made prior to the Closing for any breach or
liability under this Agreement or otherwise relating to the subject matter of
this Agreement and the transactions contemplated hereby shall be solely in
accordance with, and limited to, Sections 2.4, 11.1, 11.2 and 11.3. The
foregoing shall in no manner limit the rights and obligations of the parties
provided in ARTICLE X from and after the Closing. In addition, in no event shall
the provisions of this ARTICLE XI limit the non-prevailing party’s obligation to
pay the prevailing party’s attorneys’ fees and costs pursuant to Section 12.14
hereof.

 

ARTICLE XII
MISCELLANEOUS

 

12.1         Further Actions. From time to time before, at and after the
Closing, each party will execute and deliver such other documents as reasonably
requested by the Buyer, Seller or Escrow Agent to consummate the transactions
contemplated hereby.

 

12.2         Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be sufficiently given if delivered by
facsimile (with written confirmation of receipt), by courier (including
overnight delivery service) or sent by registered or certified mail, first
class, postage prepaid, addressed as follows:

 

If to Seller, to: Michael G. Wojno   450 Grant Street, Suite 220   Akron, Ohio
44311   Telephone: (330) 697-0853   Facsimile:  (330) 237-0080   E-mail:
mike.wojno@wojnodevelopment.com     with copies to: Mark E. Krohn, Esq.   Brouse
McDowell   388 South Main Street, Suite 500

 

33

 

  

    Akron, Ohio 44311     Telephone:(330) 697-6581     Facsimile: (330) 253-8601
    E-mail: mkrohn@brouse.com       (a) If to Buyer, to: Gables of Hudson, LLC  
  Attn: John Mark Ramsey     Attn:  Spencer Smith     189 S. Orange Ave., Suite
1700     Orlando, Florida 32801     Telephone:  407-999-2426     Fax:  (407)
999-5210         and: Michael A. Okaty, Esq.     Foley & Lardner LLP     111 N.
Orange Avenue, Suite 1800     Orlando, FL 32801     Telephone:  407-423-7656    
Fax:  407-648-1743     E-mail:  mokaty@foley.com

 

or such other address as a party may from time to time notify the other parties
in writing (as provided above). Any such notice, demand or communication shall
be deemed to have been given (i) if so sent by facsimile, upon receipt as
evidenced by the sender’s written confirmation of receipt, (ii) if so mailed, as
of the date delivered, and (iii) if so delivered by courier, on the date
received, except that whenever under this Agreement a notice is either received
on a day which is not a business day or is required to be delivered on or before
a specific day which is not a business day, the day of receipt or required
delivery shall automatically be extended to the next business day.

 

12.3         Entire Agreement. This Agreement and the other Documents constitute
the entire agreement and understanding between the parties with respect to the
subject matter hereof and supersede any prior negotiations, agreements,
understandings, or arrangements between the parties hereto with respect to the
subject matter hereof.

 

12.4         Binding Effect; Benefits. Except as otherwise provided herein, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors or permitted assigns. Except to the extent
specified herein, nothing in this Agreement, express or implied, shall confer on
any person other than the parties hereto and any Indemnified Party and their
respective successors or permitted assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.

 

34

 

  

12.5         Assignment. This Agreement may not be assigned by any party prior
to Closing without the written consent of the Buyer and Seller, which consent
may be given or withheld in each such party’s sole and absolute discretion,
except that Buyer may assign this Agreement and its rights hereunder without the
consent of Seller (i) to an Affiliate of Buyer, (ii) to a partnership in which
Buyer or any Affiliate of Buyer is a general partner, (iii) a limited liability
company in which Buyer or any Affiliate of Buyer is a manager or managing member
or (iv) any other lawful entity entitled to do business in the state in which
the Property is located provided such entity is controlled by, controlling or
under the common control with Buyer or any Affiliate of Buyer (each, a
“Permitted Buyer-Assignee”). In the event of such an assignment to a Permitted
Buyer-Assignee, Buyer shall not be released from any of its duties, covenants,
obligations or representations and warranties under this Agreement and, from and
after any such assignment, Buyer and such Permitted Buyer-Assignee shall be
jointly and severally liable under this Agreement, and from and after any such
assignment, the term “Buyer” shall be deemed to mean such Permitted
Buyer-Assignee under any such assignment.

 

12.6         Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the state in which the Real
Property is located without regard to its principles of conflicts of laws. Venue
for any dispute shall be in Summit County, Ohio.

 

12.7         Amendments and Waivers. No term or provision of this Agreement may
be amended, waived, discharged, or terminated orally, except by an instrument in
writing signed by: (i) Buyer and Seller with respect to any provision contained
herein; and (ii) Buyer, Seller, and Escrow Agent with respect to Section 2.6
hereof. Any waiver shall be effective only in accordance with its express terms
and conditions.

 

12.8         Joint and Several. If there is more than one Seller hereunder,
Seller shall be jointly and severally liable with the other Seller for
performing all obligations of Seller under this Agreement.

 

12.9         Severability. Any provision of this Agreement which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by Applicable Law, the parties hereto hereby waive any
provision of Applicable Law now or hereafter in effect which renders any
provision hereof unenforceable in any respect.

 

12.10         Headings. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.

 

12.11         Counterparts. This Agreement may be executed and accepted in one
or more counterparts for the convenience of the parties, each of which will be
deemed an original and all of which, taken together, shall constitute one and
the same instrument. Delivery of a counterpart hereof via facsimile transmission
or by electronic mail transmission shall be as effective as delivery of a
manually executed counterpart hereof.

 

12.12         References. All references in this Agreement to Articles and
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.

 

35

 

  

12.13         Schedules and Exhibits. Each Schedule and Exhibit referred to in
this Agreement shall be deemed to be attached hereto and incorporated by
reference even though it may be maintained separately from this Agreement or
completed after the Effective Date so long as it is acknowledged as a Schedule
or an Exhibit to this Agreement by the parties hereto as of Closing. Any item
disclosed hereunder (including in the Schedules and Exhibits hereto) shall be
deemed disclosed for all purposes hereof irrespective of the specific
representation or warranty to which it is explicitly referenced. The Schedules
and Exhibits shall be prepared by Seller and mutually agreed to by the parties
within five (5) business days after the Effective Date. The parties agree to
cooperate and act in good faith during the preparation of such documents.

 

12.14         Attorneys’ and Expert Witness Fees. In the event either party
brings an action to enforce or interpret any of the provisions of this
Agreement, the “prevailing party” in such action shall, in addition to any other
recovery, be entitled to its costs, fees and expenses incurred in the dispute,
including but not limited to reasonable attorneys’ and expert witness. For
purposes of this Section 12.14, “prevailing party” shall mean, in the case of a
person asserting a claim, such person is successful in obtaining substantially
all of the relief sought, and in the case of a person defending against or
responding to a claim, such person is successful in denying substantially all of
the relief sought.

 

12.15         Reserved.

 

12.16         Casualty. The risk of any loss or damage to the Property by fire
or other casualty before the Closing shall continue to be borne by Seller.
Seller shall promptly give Buyer written notice of any fire or other casualty
(in any event within five (5) days after Seller first has Knowledge of the
occurrence of same), which notice shall include a description thereof in
reasonable detail and an estimate of the cost of time to repair. If (i) any
portion of the Property is damaged by fire or casualty after the Effective Date
and is not repaired and restored substantially to its original condition prior
to Closing, or (ii) at the time of Closing the estimated cost of repairs as to
the Property is ONE HUNDRED THOUSAND U.S. DOLLARS ($100,000.00) or less, as
determined by an independent adjuster selected by Seller, Buyer shall be
required to purchase the Property in accordance with this Agreement, and Buyer
shall, at Buyer’s option, either: (x) receive a credit at Closing of the
estimated cost or repairs to the Property, as determined by the aforesaid
independent adjuster, plus any reasonably estimated lost revenue following
Closing arising from such fire or casualty; or (y) receive from Seller at
Closing (I) an assignment, without representation or warranty by or recourse
against Seller, of all insurance claims and proceeds with respect thereto, plus
(II) an amount equal to Seller’s insurance deductible, plus (III) a credit for
the amount of any reasonably estimated lost revenue following Closing arising
from such fire or casualty. If the estimated cost of repairing such damage to
the Property is more than ONE HUNDRED THOUSAND U.S. DOLLARS ($100,000.00), as
determined by such independent adjuster, Buyer may, at its sole option:
(x) terminate this Agreement by notice to Seller on or before the earlier of the
Closing or the tenth (10th) day after receipt of such notice described above, in
which event no party shall have any further liability to the party under this
Agreement; or (y) proceed to Closing as provided in this Section 12.16. In no
event shall the amount of insurance proceeds assigned to Buyer under this
subparagraph (plus the amount of the deductible) exceed the lesser of (i) the
cost of repair or (ii) the Purchase Price. The parties’ obligations, if any,
under this Section 12.16 shall survive the expiration or any termination of this
Agreement.

 

36

 

  

12.17         Condemnation. The risk of any loss or damage to the Property by
condemnation before the Closing shall continue to be borne by Seller. In the
event any condemnation proceeding is commenced or threatened, Seller shall
promptly give Buyer written notice thereof (in any event within five (5) days
after Seller first has Knowledge of the occurrence of same), together with such
reasonable details with respect thereto as to which Seller may have Knowledge.
If, prior to Closing, there is a material taking by eminent domain at the
Property, this Agreement shall become null and void at Buyer’s option, and upon
receipt by Seller of the written notice of an election by Buyer to treat this
Agreement as null and void, this Agreement shall be deemed null and void. If
Buyer elects to proceed and to consummate the purchase despite said material
taking, or if there is less than a material taking prior to Closing, there shall
be no reduction in or abatement of the Purchase Price and Buyer shall be
required to purchase the Property in accordance with the terms of this
Agreement, and Seller shall assign to Buyer, without representation of warranty
by or recourse against Seller, all of Seller’s right, title and interest in and
to any award made or to be made in the condemnation proceeding (in which event
Buyer shall have the right to participate in the adjustment and settlement of
any insurance claim relating to said damage). For the purpose of this Section
12.17, the term “material” shall mean any taking of in excess of five percent
(5%) of the square footage of the Property or ten percent (10%) of the Real
Property associated with the Property. The parties’ obligations, if any, under
this Section 12.17 shall survive the expiration or any termination of this
Agreement.

 

12.18         Limited Liability. Except as it relates to the Guaranty, no past,
present, or future member, partner, shareholder, director, officer of employee
of any party to this Agreement shall have any liability or obligation of any
nature whatsoever in connection with or under this Agreement or Document
contemplated hereby or in connection with the transactions contemplated by this
Agreement or any such other agreement.

 

12.19         Non-controlled Affiliates. Notwithstanding anything to the
contrary provided elsewhere in this Agreement, none of the provisions of this
Agreement shall in any way limit the activities of Affiliates of Buyer that are
not under Buyer’s control (“Non-controlled Affiliates”), including, without
limitation, Sentinel RE Investment Holdings LP (“Sentinel”) or any other
Affiliates of Sentinel, KKR & Co., L.P. or KKR Financial Holdings, LLC, or the
respective directors, officers, employees, equity-holders, managers, members,
general or limited partners, advisors, agents or other representatives of such
Non-controlled Affiliates. For purposes of this Section 12.18, "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity or enterprise, whether
through the ownership of voting securities, through other voting rights, by
contract or otherwise.

 

12.20         Survival of Defined Terms. Where this Agreement provides that a
term or provision shall survive the Closing or the expiration or earlier
termination of this Agreement, any defined terms contained in ARTICLE I that are
used in such surviving term or provision shall also survive.

 

12.21         Time of Essence. Time shall be of the essence with respect to all
matters contemplated by this Agreement.

 

37

 

  

12.22         No Third-Party Beneficiary. The provisions of this Agreement and
of the documents to be executed and delivered at Closing are and will be for the
benefit of the Buyer, Seller, and Escrow Agent only and are not for the benefit
of any third party; and, accordingly, no third party shall have the right to
enforce the provisions of this Agreement or of the documents to be executed and
delivered at Closing.

 

12.23         WAIVER OF JURY TRIAL. EACH PARTY HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THIS AGREEMENT, OR ANY OTHER DOCUMENT RELATED TO THIS
AGREEMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY EACH PARTY, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. ANY PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACH PARTY HERETO.

 

(The remainder of this page is intentionally left blank.)

 

38

 

  

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the Effective Date.

 

BUYER:   SELLER:       GABLES OF HUDSON, LLC,   GREAT-HUDSON, LLC, an Ohio
limited a Delaware limited liability company   liability company       By: /s/
John Mark Ramsey   By: /s/ Philip H. Maynard Name: John Mark Ramsey   Name:
Philip H. Maynard Title: Authorized Signatory   Title: Authorized Representative
          GABLES-HUDSON, LLC, an Ohio limited liability company           By:
/s/ Philip H. Maynard     Name: Philip H. Maynard     Title: Authorized
Representative           ESCROW AGENT:           STEWART TITLE GUARANTY COMPANY
          By: /s/ Joseph P Sullivan     Name: Joseph P. Sullivan     Title:
Underwriting Counsel

 

 

 

 

Schedule 2.1(a)

Excluded Real Property

 

 

 

  

Schedule 2.2(c)
Assumed Obligations

 

 

 

  

Schedule 2.3
Purchase Price Allocation

  

Facility  Real Property   Personal Property   Other Assets Total  The Gables of
Hudson  $15,500,000   $1,250,000   $2,150,000* $ 18,900,000.00 

 

*Payment of this amount is contingent on certain terms and conditions more
particularly set forth in the Earnout Agreement.

 

 

 

  

Schedule 4.2
Consents of Third Parties

 

 

 

  

Schedule 4.5
Judgments

 

 

 

  

Schedule 4.7
Seller’s Insurance

 

 

 

 

Schedule 4.8
Litigation

 

 

 

  

Schedule 4.14
Exceptions to Rent Roll

 

 

 

  

Schedule 4.17
Condition of the Property

 

 

 

  

Schedule 4.18
Independent Property

 

 

 

  

Schedule 4.23
Exceptions to Seller Ownership

 

 

 

  

Schedule 4.24
Title Encumbrances

 

 

 

  

Schedule 4.27
Loans

 

 

 

  

Schedule 4.29
Broker’s or Finder’s Fees

 

 

 

 

Schedule 7.12
Required Consents

 

None.

 

 

 

 

EXHIBIT A

Legal Description of the Property

 

A-1

 

  

EXHIBIT B

List of Required Due Diligence Items

for the Property

 

B-1

 

  

EXHIBIT C

 

List of Property Agreements

 

C-1

 

 

EXHIBIT D

List of Licenses Required for the Property

 

D-1

 

  

EXHIBIT E

Financial Statements

 

E-1

 

  

EXHIBIT F

Rent Roll

 

F-1

 

  

EXHIBIT G

Form Resident Agreement

 

G-1

 

  

EXHIBIT H

Outstanding Citations

 

H-1

 

  

EXHIBIT I

 

Form of Audit Letter

 

I-1

 

  

EXHIBIT J

 

Form of Guaranty

 

J-1

 

  

EXHIBIT K

 

Form of Earnout Agreement

 

K-1

 

  

EXHIBIT L

 

Form of Transition Period Sublease

 

L-1

 

 

EXHIBIT M

 

Form of Management Agreement

 

M-1

 

  

EXHIBIT N

 

Intellectual Property License

 

N-1