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EXECUTION VERSION

 
PURCHASE AND SALE AGREEMENT
 
 
This PURCHASE AND SALE AGREEMENT (the “Agreement”) is made and entered into as
of October 16, 2012 (the “Execution Date”) by and among BRE/SW Portfolio LLC, a
Delaware limited liability company (“Seller JV”), those owner entities listed on
Schedule 1 (the Seller JV and each such entity, a “Seller” and, collectively,
“Sellers”), HCP, Inc., a Maryland corporation (“Purchaser”), and Emeritus
Corporation, a Washington corporation (“E”).
 
 
BACKGROUND
 
 
WHEREAS, Sellers own or ground lease, as applicable, those certain senior living
facilities (each, a “Facility”) listed on Schedule 1(a) to the Disclosure Letter
(as defined below), in each case consisting, collectively, of (x) the real
property legally described in Exhibit A hereto, together with all rights,
easements and interests appurtenant thereto including, but not limited to, any
streets or other public ways adjacent to such real property and any water or
mineral rights owned by, or leased to, Sellers (collectively, the “Land”); and
(y) all buildings and other improvements located on the Land, including such
listed senior living facilities, and all other structures, systems, fixtures and
utilities associated with, and utilized in, the ownership and operation of such
facilities (collectively, the “Improvements” and, together with the Land, the
“Real Property”);
 
 
WHEREAS, Sellers desire to sell to Purchaser the Property (as hereinafter
defined) and Purchaser desires to purchase the Property from Sellers, on the
terms and conditions set forth in this Agreement;
 
 
WHEREAS, E is the administrative member of Seller JV which is the indirect
parent of each Seller, and manages certain of the Real Property pursuant to the
Current E Management Agreements (as defined herein) with certain Sellers; and
 
 
WHEREAS, concurrently with the Closing (as defined herein), Purchaser and/or
Affiliates of Purchaser and E will enter into one or more lease agreements in
the form attached as Exhibit B hereto pursuant to which Purchaser will lease the
Real Property to E (such lease agreements, collectively, the “OpCo Lease
Agreement”).
 
 
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
for such other good and valuable consideration, the receipt of which is hereby
acknowledged, the Parties hereto hereby agree as follows:
 
 
ARTICLE I
 
 

 
 
DEFINITIONS; INCORPORATION OF RECITALS AND EXHIBITS;
 
 
PRINCIPLES OF CONSTRUCTION
 
 
1.1           The following terms shall have the following meanings in this
Agreement:
 
 
“Accounting Referee” shall have the meaning assigned to such term in Section
2.2(c) of this Agreement.
 

 
 

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“Action” shall mean any claim, action, suit, audit, assessment, arbitration or
inquiry, or any proceeding or investigation, whether judicial, arbitral,
administrative or other, by or before any Governmental Entity.
 
 
“Affiliate” shall mean, with respect to a Person, any other Person that directly
or indirectly Controls, is Controlled by, or is under common Control with such
Person.
 
 
“Allocation Statement” shall have the meaning assigned to such term in Section
2.2(c) of this Agreement.
 
 
“Assumed Liabilities” means the obligations of Sellers (i) arising from and
after the Closing Date and attributable to periods from and after the Closing
Date, under the Leases, the Resident Agreements, the Contracts, the Other
Current Management Agreements (to the extent such agreement has not been
terminated prior to the Closing Date), the Assumed Loans, the Assumed Personal
Property Debt and the Ground Leases and (ii) arising under the Entrance Fees,
the Concessions of Rent and the CHOW Liabilities.
 
 
 “Assumed Loan Amount” shall mean the outstanding principal amount of the
Assumed Loans assumed at the Closing by Purchaser in connection with the
transactions contemplated herein.
 
 
“Assumed Loans” shall mean Existing Loans assumed at the Closing by Purchaser in
connection with the transactions contemplated herein.
 
 
“Assumed Loan Assignment Approval” shall mean (A) the applicable Existing
Lender’s approval of the assumption of the applicable Existing Loan by Purchaser
or its designee and (B) either (x) the release by the applicable Existing Lender
of the Existing Guarantor under any applicable guaranties with respect to
liabilities arising from and after the Closing Date or (y) execution by
Purchaser of the indemnification agreement described in the last sentence of
Section 3.5(b).
 
 
“Assumed Loan Existing Guaranties” shall mean the Existing Guaranties pertaining
to the Assumed Loans.
 
 
“Audited Financial Statements” shall mean the financial statements listed on
Schedule 1.1(a) of the Disclosure Letter and identified as being audited.
 
 
 “Assumed Personal Property Debt” means those loans held by certain lenders,
secured by certain Personal Property, a summary of which is set forth on
Schedule 1.1(b) of the Disclosure Letter.
 
 
“Basket Amount” shall have the meaning assigned to such term in Section 11.4(b)
of this Agreement.
 
 
“Business” shall mean the operation of the Facilities and other ancillary uses
relating thereto as conducted at the Real Property as of the Execution Date.
 

 
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“Business Records” shall mean, to the extent maintained by, issued to or held by
Sellers:  all books and records relating to the Real Property or the Business or
the ownership thereof, including all Tax Returns (excluding income tax returns),
files, invoices, correspondence, studies, reports or summaries relating to any
environmental matters, and other books and records relating to the ownership or
maintenance of any of the Real Property or the Business, surveys, engineering or
environmental reports and other studies, investigations or depictions of the
Real Property or the Business.
 
“Buy-In Agreement” means any agreement with residents at the Real Properties
providing for lump-sum payment to the owner of a Facility or its Affiliates of
an amount equal to more than two months occupancy payments at the inception of
residency in the Real Property, coupled with an undertaking to return to such
resident or to such resident's successors in interest a portion of such payment
following such resident's death, move-out, sale of such resident's unit or any
other event.

“Cash Deposits” shall have the meaning assigned to such term in Section 8.3 of
this Agreement.

“CHOW Corrective Actions” shall mean any physical plant or other changes
required to bring the Real Properties into compliance with the currently
effective licensing and certification and other legal requirements if and to the
extent such Real Properties are not currently in such compliance and such
compliance is required as a matter of Legal Requirement, whether such costs or
actions are required to be performed prior to the issuance of the Required
Governmental Consents or are required as a further condition to be satisfied
after such issuance.

“CHOW Liabilities” shall mean any and all costs associated with the change of
ownership and/or licensure and/or certification survey process including, but
not limited to, any CHOW Corrective Actions, and any fines payable in connection
with the West Virginia Certificate of Need filings.
 
“Claims” shall have the meaning assigned to such term in Section 7.1 of this
Agreement.
 
 
 “Closing” shall mean the closing of the transactions contemplated by this
Agreement.
 
 
“Closing Date” shall have the meaning assigned to such term in Section 2.3 of
this Agreement.
 
 
“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
 
 
“Concessions of Rent” means any financial incentives in the form of future rent
abatement, rent deferral or rent freezes granted to residents of the Real
Properties which are still continuing in effect as of the date of this
Agreement.
 

 
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               “Continuing E Manager Contracts” shall have the meaning assigned
to such term in Section 12.21 of this Agreement.
 
 
“Contracts” shall mean, collectively, any and all agreements relating to the
ownership, use, leasing, management, operation, development, construction,
maintenance or repair of, or provision of materials, labor or services to, any
Facility or any of the Real Property or any other Property, to which any Seller
is party or is bound, but specifically excluding the Current Management
Agreements, the Ground Leases, the Leases and the Resident Agreements.
 
 
“Control” (including the corollary terms “controlled by” and “under common
control with”) shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
 
 
“Current E Management Agreements” shall mean, with respect to each Real
Property, the management agreements listed opposite such Real Property in
Schedule 1.1(c) of the Disclosure Letter.
 
 
“Current E Manager” shall mean the manager under the Current E Management
Agreement with respect each applicable Real Property.
 
 
“Current Management Agreements” shall mean, the Current E Management Agreements
and the Other Current Management Agreements.
 
 
“Current Manager” shall mean, with respect to each Real Property, the manager
listed opposite such Real Property in Schedule 1.1(d) of the Disclosure Letter.
 
 
“Damages” means all actions, suits, proceedings, governmental investigations,
injunctions, demands, charges, judgments, awards, orders, decrees, rulings,
damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, Taxes, liens, losses, fees and expenses (including reasonable
attorneys’ and accountants’ fees and expenses), equitable relief or conduct
restriction; including consequential, lost profits and diminution in value, but
specifically excluding punitive, treble or similar damages, except to the extent
payable to a third party.
 
 
“Dataroom”  shall mean the Lightserve Corporation website data room that has
been prepared by the E or CSCA and last modified on October 15, 2012, and to
which access has been provided to Purchaser in connection with the execution and
delivery of this Agreement.
 
 
“Deficit Amount” shall have the meaning assigned to such term in Section 11.7 of
this Agreement.
 
 
“Delayed Closing Properties” shall have the meaning assigned to such term in
Section 12.18 of this Agreement.
 
 
“Disclosure Letter” shall mean the disclosure letter that has been prepared by
the Sellers and delivered by the Sellers to Purchaser in connection with the
execution and delivery of this Agreement.
 

 
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“E” shall have the meaning set forth in the Preamble to this Agreement.
 
 
“E Transferred Items” shall have the meaning assigned to such term in Section
12.21 of this Agreement.
 
 
 “Eligible Existing Loans” shall mean the Existing Loans set forth on Exhibit C.
 
 
“Eligible Loan Documents” shall have the meaning assigned to such term in
Section 3.1(d)(xvi) of this Agreement.
 
 
“Environmental Laws” shall mean all federal, state, local and foreign Legal
Requirements relating to pollution or the environment, including laws relating
to releases or threatened releases of or exposure to Hazardous Materials or
relating to the manufacture, processing, distribution, use, treatment, storage,
transport or handling of Hazardous Materials and Legal Requirements with regard
to recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Materials.
 
 
“Environmental Liabilities” shall mean any and all Damages and other liabilities
arising in connection with or in any way relating to the Property, or the use,
operation or ownership of the Property by Sellers or any Affiliates of Sellers,
whether vested or unvested, contingent or fixed, actual or potential, that (i)
arise under or relate to Environmental Laws, Hazardous Materials, or arise in
connection with or relate to any matter disclosed or required to be disclosed in
Schedule 1.1(e) of the Disclosure Letter and (ii) arise from or relate in any
way to actions (and failures to act) occurring or conditions existing prior to
the Closing Date.
 
 
 “Entrance Fees” means any and all unpaid obligations to residents of Facilities
pursuant to Buy-In Agreements at any of the Facilities.
 
 
“Excluded Assets” shall have the meaning assigned to such term in Section 2.1(c)
of this Agreement.
 
 
“Excluded Liabilities” shall have the meaning assigned to such term in Section
2.1 of this Agreement.
 
 
“Execution Date” shall have the meaning assigned to such term in the Preamble of
this Agreement.
 
 
“Existing Guaranties” shall mean those guaranty or indemnity agreements relating
to the Eligible Existing Loans listed in Schedule 1.1(f) of the Disclosure
Letter.
 
 
“Existing Guarantor” shall mean each of the Persons relating to the Eligible
Existing Loans listed in Schedule 1.1(g) of the Disclosure Letter.
 
 
“Existing Lender” shall mean each of the lenders listed in Schedule 1.1(h) of
the Disclosure Letter.
 
 
“Existing Loan” shall mean each of the loans listed in Schedule 1.1(i) of the
Disclosure Letter.
 

 
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“Existing Policies” shall have the meaning assigned to such term in Section 4.1
of this Agreement.
 
 
“Facility” shall have the meaning set forth in the Recitals to this Agreement.
 
 
“Final Adjustment Date” shall have the meaning assigned to such term in Section
8.1(f) of this Agreement.
 
 
“GAAP” means United States generally accepted accounting principles as in effect
from time to time, consistently applied.
 
 
“Governmental Entity” means any federal, state or local government, any court,
administrative agency or commission or other governmental authority or
instrumentality, including the Health Departments.
 
 
“Ground Lease Estoppels” shall have the meaning assigned to such term in Section
3.5(j).
 
 
“Ground Leases” means, collectively, all ground leases, subleases and similar
agreements, and all other agreements and documents related thereto, pursuant to
which any Seller owns or holds any interest in any Ground Leased Property.
 
 
“Ground Leased Properties” means, collectively, those Facilities which are
denoted as ‘ground leased property’ on Schedule 1 of the Disclosure Letter.
 
 
“Hazardous Materials” shall mean (A) those substances included within the
definitions of any one or more of the terms “hazardous substances,” “toxic
pollutants,” “hazardous materials,” “toxic substances,” and “hazardous waste” or
otherwise characterized as hazardous, toxic or harmful to human health or the
environment, under any Environmental Law, (B) petroleum, radon gas, lead  based
paint, asbestos or asbestos containing material and polychlorinated biphenyls
and (C) mold or water conditions which may exist at such Property or other
matters governed by any applicable federal, state or local law or statute.
 
 
“Health Departments” shall mean departments of health, and/or any Governmental
Entity of each of the states where the Real Property is located which have
jurisdiction over the licensing, ownership and/or operations of the Real
Property as healthcare facilities.
 
 
“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
 
 
“Identified Financial Statements” shall mean the Audited Financial Statements
and the Unaudited Financial Statements.
 
 
“Impermissible Defects” shall have the meaning assigned to such term in Section
4.5 of this Agreement.
 

 
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“Improvements” shall have the meaning assigned to such term in the Recitals of
this Agreement.
 
 
“Indemnification Amount” shall mean Eighty Million Dollars ($80,000,000.00).
 
 
“Indemnification Claim” shall have the meaning assigned to such term in Section
11.3 of this Agreement.
 
 
 “Indemnification Funds” shall have the meaning assigned to such term in Section
11.9 of this Agreement.
 
 
“Indemnified Party” shall have the meaning assigned to such term in Section 11.3
of this Agreement.
 
 
“Indemnitor” shall mean the party required to provide indemnification pursuant
to Section 11.2 of this Agreement.
 
 
“Initial Closing” shall have the meaning assigned to such term in Section 11.18
of this Agreement.
 
 
“Insurance Policies” shall have the meaning assigned to such term in Section
3.1(d)(xviii) of this Agreement.
 
 
“Intangible Personal Property” shall mean all interest of Sellers in and to the
Intangibles.
 
 
“Intangibles” means any and all of the following: (i) the interest, if any, of
Sellers in the identity or business of the Real Property as a going concern,
including any names or trade names by which the Real Property or any part
thereof may be known including names, if any, used on the date hereof in
connection with the ownership and operation of the Real Property, and all
registrations for such names, if any, and all intangible rights or interests
associated with the Real Property, including goodwill and going concern value,
and the registrations therefor; (ii) to the extent assignable or transferable,
the interest, if any, of Sellers in and to each and every bond, guaranty and
warranty concerning the Improvements and the Personal Property, including any
roofing, air conditioning, heating, elevator or other bond, guaranty and
warranty relating to the construction, maintenance or replacement of the
Improvements or any portion thereof; (iii) the interest of Sellers in and to all
guaranties and warranties given to Sellers that have not expired (either on a
“claims made” or occurrence basis) in connection with the operation,
construction, improvement, alteration or repair of the Improvements; (iv) the
interest, if any, of Seller in the Permits, and (v) in each case to the extent
arising or relating to periods of time after the Closing, any other non-real
property and non-Personal Property interest of Sellers in the Facility or
pertaining thereto and any and all interests of other intangible property of
every kind and character owned or utilized by Sellers in connection with the
ownership and operation of the Facilities.
 
 
“Interim Operating Agreements” shall have the meaning assigned to such term in
Section 3.5(c)(iii).
 

 
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 “Inventory” shall mean, if any, building materials, supplies, hardware,
carpeting and other inventory maintained in connection with Sellers’ ownership
and operation of the Real Property.
 
 
“IRS” shall mean the United States Internal Revenue Service.
 
 
“Land” shall have the meaning assigned to such term in the Recitals of this
Agreement.
 
 
“Leases” shall mean all written leases, subleases, license agreements or other
occupancy agreements affecting the Real Property under which Seller is the
landlord or lessor, and all rent, income and proceeds arising therefrom and
security and other deposits made by the tenants thereunder, provided that none
of the Resident Agreements, the Other Current Management Agreements or the
Ground Leases shall be deemed to be Leases.
 
 
“Legal Requirements” means any statute, rule, regulation, ruling or requirement
of any Governmental Entity.
 
 
 “Liens” shall have the meaning assigned to such term in Section 2.1(a) of this
Agreement.
 
 
“Loan Assumption Election” shall mean Purchaser’s election, at its sole
discretion, to assume any of the Eligible Existing Loans.
 
 
“Management Agreement” shall have the meaning assigned to such term in the
Recitals of this Agreement.
 
 
“Manager” means Current Manager or a replacement manager for the Real Property.
 
 
“Material Adverse Effect” means any event, circumstance, change or effect that
(i) has had, or would reasonably be expected to have, a material adverse effect
on the Properties or the operation or condition thereof, taken as a whole;
provided, however, that in no event shall any of the following, alone or in
combination, be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has been, or will be, a “Material
Adverse Effect”: any event, circumstance, change, or effect relating to (a)
changes in conditions in the U.S. or global economy or capital or financial
markets in general, including changes in interest or exchange rates or to the
senior living industry in general, (b) changes in general legal, tax,
regulatory, political or business conditions that, in each case, generally
affect the geographic regions in which the Real Property is located or the
senior living industry, (c) changes in Legal Requirements and/or GAAP that are
adopted or enacted after the date hereof or the interpretation thereof, (d) the
announcement of this Agreement or the consummation of transactions contemplated
hereby, including the impact thereof on relationships, contractual or otherwise,
with tenants, suppliers, lenders, vendors, investors, venture partners or
employees, provided that the exception in this clause (d) shall not be deemed to
apply to “Material Adverse Effect” qualifications in the representations and
warranties set forth in Section 3.1(b) and/or Section 3.1(c) or the conditions
in Section 5.2(a) or Section 5.2(c) (in each case, solely to the extent relating
to the representations and warranties in Section 3.1(b) and/or Section 3.1(c)),
(e) any
 

 
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failure, in and of itself, to meet any internal projections of the Sellers or
BRE/SW (it being understood and agreed that any event, circumstance, change or
effect giving rise to such failure shall be taken into account in determining
whether there has been a Material Adverse Effect unless such event,
circumstance, change or effect does not constitute, and is not taken into
account in determining whether there has been, a Material Adverse Effect
pursuant to the provisions of this definition other than this clause (e)), (f)
declaration by the U.S. of a natural emergency or war, acts of war, hostilities,
sabotage or terrorism, or any escalation or worsening of any such acts of war,
hostilities, sabotage or terrorism threatened or underway as of the date of this
Agreement, (g) earthquakes, hurricanes or other natural disasters, or (h) any
action taken by Sellers at the express request or with the prior written consent
of Purchaser (excluding any such consent which under the terms and provisions
hereof Purchaser was not permitted to unreasonably withhold), which in the case
of each of clauses (a), (b), (f), and (g) do not disproportionately affect the
Properties, or the operation or condition thereof, taken as a whole, relative to
similar properties owned or leased by other participants in the industries and
geographic areas in which the Business operates, and (ii) will, or would
reasonably be expected to, prevent or materially impair the ability of the
Sellers to consummate the transactions contemplated hereby.
 
 
“Material Contracts” shall mean all Contracts, other than those Contracts which
are terminable on 30 days’ notice without cost or penalty and require the
payment of no more than $50,000 in any calendar year. “Material Contracts” shall
not include any Existing Loans, Assumed Personal Property Debt, Resident
Agreements, Current Management Agreements, Leases or Ground Leases.
 
 
 “OpCo Lease Agreement” shall have the meaning assigned to such term in the
Recitals of this Agreement.
 
 
 “Operations Licenses” shall mean all permits, licenses, regulatory approvals,
approvals, accreditations and comparable authorizations from all applicable
Governmental Entities necessary or advisable for the use, operation, management
and maintenance of the applicable Real Property and the conduct of the Business.
 
 
“Other Current Management Agreements” shall mean, with respect to each Real
Property, the management agreement listed opposite such Real Property in
Schedule 1.1(j) of the Disclosure Letter, other than any management agreement
with E or its Affiliates.
 
 
“Outside Date” shall have the meaning assigned to such term in Section
10.1(b)(i) of this Agreement.
 
 
“Parties” means Purchaser, each Seller and E.
 
 
“Permits” shall mean all governmental permits, licenses, certificates and
authorizations relating to the use or operation of any of the Property and/or
the Business (including licenses held by any Current Manager), permits,
accreditations, approvals and certificates used in or relating to the ownership,
occupancy or operation of all or any part of the Property and/or the Business,
including any permit, license, accreditation or other approval
 

 
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necessary under applicable federal, state or local law in order to permit the
operation of the Property as healthcare facilities.
 
 
“Permitted Exceptions” shall mean those matters set forth on Exhibit F attached
hereto and made a part hereof and any other exception which shall be deemed to
be a Permitted Exception in accordance with Article IV of this Agreement.
 
 
“Person” shall mean any individual, partnership, limited partnership,
association, body corporate, trustee, trust, executor, administrator, legal
representative, government (including any Governmental Entity) or any other
entity, whether or not having a legal status.
 
 
“Personal Property” shall mean those items of equipment, any buses and other
motor vehicles and other tangible personal property which are used by Sellers or
Current Manager in connection with the ownership, maintenance and/or operation
of the Real Property, including all Inventory, but not including any Excluded
Assets.
 
 
“Per-Claim Basket” shall have the meaning assigned to such term in Section
11.4(b) of this Agreement.
 
 
“Pre-Closing Rents and Reimbursements” shall have the meaning assigned to such
term in Section 8.1(e) of this Agreement.
 
 
“Prepayment Fees” shall have the meaning assigned to such term in Section 8.3 of
this Agreement.
 
 
“Property” shall mean, collectively, the Real Property, the Personal Property
and the Intangibles, but excluding the Excluded Assets.
 
 
“Purchase Price” shall have the meaning assigned to such term in Section 2.2 of
this Agreement.
 
 
“Purchaser Indemnified Parties” shall have the meaning assigned to such term in
Section 11.2(a) of this Agreement.
 
 
“Purchaser Waived Representation” shall have the meaning assigned to such term
in Section 11.4(d).
 
 
“Purchaser’s Knowledge” or words of similar import shall be deemed to refer
exclusively to matters within the actual, present, conscious knowledge of the
Purchaser Knowledge Individual without any obligation to investigate or make
inquiries of other Persons with respect to any of the representations and
warranties contained in this Agreement.
 
 
“Purchaser Knowledge Individual” shall mean Timothy M. Schoen.
 
 
“Qualifying Income” shall mean income described in Sections 856(c)(2) or
856(c)(3) of the Code.
 

 
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“Real Property” shall have the meaning assigned to such term in the Recitals of
this Agreement.
 
 
“REIT Requirements” shall have the meaning assigned to such term in Section 11.7
of this Agreement.
 
 
“Releasees” shall have the meaning assigned to such term in Section 7.2 of this
Agreement.
 
 
 “Rents” shall mean all rents, rent equivalents, moneys payable as damages or in
lieu of rent or rent equivalents, royalties (including all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including security, utility and other deposits), accounts, cash,
issues, profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid to or for the account of or benefit
of Sellers from any and all sources arising from or attributable to the Real
Property.
 
 
“Required Filings” shall means those certain filings required to be made with
Government Entities in connection with the consummation of the transactions
contemplated herein, as set forth on Schedule 1.1(k) of the Disclosure Letter.
 
 
“Required Governmental Consents” shall mean those certain consents required from
Governmental Entities in connection with the consummation of the transactions
contemplated herein and listed on Schedule 1.1(l) of the Disclosure Letter.
 
 
“Resident Agreements” shall mean agreements for the use or occupancy of its
Property by a Person or Persons residing in the Facilities, or other Persons
residing at such Property, and all modifications and amendments thereto and
renewals or extensions thereof (including any agreements relating to any notes,
mortgages or other security granted to Sellers in connection with any
Concessions of Rent).
 
 
“Resident Rents” shall have the meaning assigned to such term in Section
8.1(b)(iv) of this Agreement.
 
 
“Residents” shall mean the residents or tenants under the Resident Agreements.
 
 
“Seller Indemnified Parties” shall have the meaning assigned to such term in
Section 11.2(b) of this Agreement.
 
 
“Seller JV” shall have the meaning assigned to such term in the Preamble this
Agreement.
 
 
“Seller JV Rollover Investor” shall mean Sunwest Rollover Member LLC, a Delaware
limited liability company which is the holder of certain ownership interests in
Seller JV.
 
 
“Sellers’ Knowledge” or words of similar import shall be deemed to refer
exclusively to matters within the actual knowledge of any Seller Knowledge
Individual, after due inquiry of Current E Manager but without any other
obligation to investigate or make inquiries
 

 
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of other Persons with respect to any of the representations and warranties
contained in this Agreement.
 
 
“Seller Knowledge Individuals” shall mean David Roth and William Stein.
 
 
“Substitute Guarantor” shall have the meaning assigned to such term in Section
3.5(b) of this Agreement.
 
 
“Surveys” shall have the meaning assigned to such term in Section 4.1 of this
Agreement.
 
 
“Survey Update” shall have the meaning assigned to such term in Section 4.3 of
this Agreement.
 
 
“Survival Expiration Date” shall have the meaning assigned to such term in
Section 11.1 of this Agreement.
 
 
“Taxes” shall mean (a) any federal, state, county, local or non-United States
taxes, charges, fees, levies, or other assessments, including all net income,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipt, production, business,
occupation, disability, employment, payroll, license, estimated, stamp, custom
duties, severance or withholding taxes, charges imposed by any Governmental
Entity, and including any interest and penalties (civil or criminal) on or
additions to any such taxes, (b) any liability for the obligations of others
with respect to any such item described in clause (a) as a result of being (or
ceasing to be) a member of a group which files returns or reports or pays such
items on a consolidated, combined, unitary or similar basis, or being included
(or being required to be included) in any Tax Return related to such group and
(c) any and all liability for the payment of any amounts as a result of any
express or implied obligation to indemnify any other person, or any successor or
transferee liability, in respect of any items described in clause (a) or (b)
above.
 
 
“Tax Returns” means any returns, declarations, reports, claims for refund,
information returns or statements filed or required to be filed with any
Governmental Entity with respect to Taxes, including any Schedules or
attachments thereto, and including any amendments thereof.
 
 
“Tenant Rents” shall have the meaning assigned to such term in Section 8.1(b)(v)
of this Agreement.
 
 
“Tenants” shall mean the tenants under the Leases.
 
 
“Title Company” shall mean Chicago Title Insurance Company.
 
 
“Title Consent” shall have the meaning assigned to such term in Section 12.19 of
this Agreement.
 
 
 “Title Objection Notice” shall have the meaning assigned to such term in
Section 4.4 of this Agreement.
 

 
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“Title Option” shall have the meaning assigned to such term in Section 12.19 of
this Agreement.
 
 
“Title Update” shall have the meaning assigned to such term in Section 4.3 of
this Agreement.
 
 
“Updates” shall have the meaning assigned to such term in Section 4.3 of this
Agreement.
 
 
“Unaudited Financial Statements” shall mean the financial statements listed in
Schedule 1.1(a) of the Disclosure Letter and identified as being unaudited.
 
 
1.2           The Recitals set forth above and the Exhibits and Schedules
attached to this Agreement and the Disclosure Letter are hereby incorporated by
this reference.
 
 
1.3           All references to Sections are to Sections in or to this Agreement
and all references to Schedules are to Schedules of the Disclosure Letter unless
otherwise specified. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP. When used herein, the term “financial
statements” shall include the notes and Schedules thereto. Unless otherwise
specified herein, all terms defined in this Agreement shall have the definitions
given them in this Agreement when used in any certificate or other document made
or delivered pursuant thereto. All uses of the word “including” shall mean
including, without limitation unless the context shall indicate otherwise.
Unless otherwise specified, the words hereof, herein and hereunder and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
specified, all meanings attributed to defined terms herein shall be equally
applicable to both the singular and plural forms of the terms so defined.
 
 
1.4           The representations, warranties, obligations and rights of each
Seller, shall be those of all the parties comprising Sellers, such that each
such Party shall be jointly and severally liable for all obligations of Sellers
hereunder, and any consent, acceptance, amendment or waiver agreed to or given
by any Seller shall be deemed binding on all Sellers.
 
 
ARTICLE II
 
 

 
 
SALE, PURCHASE PRICE, CLOSING
 
 
2.1 Purchase and Sale
 
 
(a) . On the Closing Date, pursuant to the terms and subject to the conditions
set forth in this Agreement, (i) Sellers shall sell and transfer to Purchaser
and Purchaser shall purchase and accept from Sellers, all of Seller’s right,
title and interest in and to the Property, free and clear of all mortgages,
deeds of trust, pledges, hypothecations, assignments, security interests, liens,
claims, encumbrances, easements or other title exceptions (collectively,
“Liens”), except for Permitted Exceptions and the Assumed Liabilities, and (ii)
Purchaser agrees to (A) purchase the Property from Sellers and shall accept
title thereto, subject to the Permitted Exceptions and the Assumed Liabilities
(which shall be assumed) and (B) assume the Assumed Liabilities.
 

 
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(b) Except as otherwise expressly set forth in this Agreement, Purchaser does
not agree to assume, pay, perform, satisfy or discharge any liability or
obligation of Sellers existing on the Closing Date or arising out of any
transactions entered into, or any state of facts existing, or attributable to
time periods, prior to the Closing Date (the “Excluded Liabilities”), and
Purchaser expressly reserves any and all rights it may have against Sellers
following the Closing Date on account of any Excluded Liability.  Without
limiting the generality of the foregoing, the term “Excluded Liabilities” shall
include the following:
 
 
(i) any liabilities or obligations of Sellers relating to employee benefits or
compensation arrangements of any nature;
 
 
(ii) any liability or obligation of Sellers for breach of contract, personal
injury or property damage (whether based on negligence, breach of warranty,
strict liability or any other theory) caused by, arising out of or resulting
from, directly or indirectly, any alleged or actual acts or omissions occurring
prior to the Closing Date;
 
 
(iii) any liability or obligation of Sellers for money borrowed other than the
Assumed Loans up to the Assumed Loan Amount and for the Assumed Personal
Property Debt, and any accrued and unpaid interest thereon for which Purchaser
receives a proration credit under Article 8; and
 
 
(iv) except as set forth in Section 8.1 or 8.2 or any other provision hereof
(including provisions with respect to any Taxes for which Purchaser receives a
credit against the Purchase Price under Article 8), (i) all liabilities,
obligations and expenses of any kind or nature relating to Taxes of the Sellers
and, with respect to the Property, for any period ending on or before the
Closing Date (including, without limitation, any liabilities, obligations and
expenses pursuant to any Tax sharing agreement, Tax indemnification or similar
arrangement entered into on or prior to the Closing Date) and (ii) any Taxes
payable by Sellers in connection with the transactions contemplated by this
Agreement.
 
 
(c) Notwithstanding anything to the contrary contained in this Agreement, it is
expressly agreed by the parties hereto that the following items are expressly
excluded from the Property to be sold to the Purchaser (collectively, the
“Excluded Assets”):
 
 
(i) Cash.  Subject to Article VIII of this Agreement, all cash on hand or on
deposit in any house bank, operating account or other account maintained in
connection with the ownership, operation or management of any Property,
including, without limitation, any cash held in any reserves or escrow in
connection with the Existing Loans and escrows or reserves maintained by the
Sellers or any Current Manager pursuant to the terms of any Current Management
Agreement;
 
(ii) Third Party Property.  Any fixtures, personal property, equipment,
trademarks or other intellectual property or other assets
 

 
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which are owned by (A) the supplier or vendor under any Contract, (B) the tenant
under any Lease or Resident Agreement, (C) any employees, (D) any tenant, guest
or customer of any Property, or (E) any Current Manager, but excluding (i.e.,
the following shall be included in Property and transferred to the Purchaser at
Closing) any rights and/or interests the Sellers may have in the foregoing; and
 
 
(iii) Insurance Claims.  Any insurance claims or proceeds arising out of or
relating to events that occur prior to the Closing Date, other than insurance
claims and proceeds which are to be assigned to the Purchaser pursuant to the
terms of Section 9.1 of this Agreement in connection with a casualty.
 
 
2.2 Purchase Price.
 
 
(a) The aggregate purchase price for the transfer of the Property and the
consummation of the transactions described herein is One Billion Seven Hundred
Ninety Million Dollars ($1,790,000,000.00) (as such amount may be adjusted
pursuant to Article VIII, clause (2) of the proviso of the last sentence of
Section 4.1, the proviso of the last sentence of Section 3.4(h), and/or the last
sentence of Section 12.19, the “Purchase Price”), which amount shall be
allocated among the respective Real Property as provided in this Section 2.2.
 
 
(b) The Purchase Price shall be paid by Purchaser to Sellers at the Closing by
wire transfer of immediately available funds.
 
 
(c) Allocation of Purchase Price.
 
 
(i) Sellers and Purchaser agree that the allocation of the Purchase Price and
any Assumed Liabilities between and among each Facility will be the amounts set
forth in Schedule 2.2.  Either the Sellers or Purchaser may request of the other
Party modifications to Schedule 2.2 of the Disclosure Letter solely with respect
to Facilities which are not marked with an asterisk on Schedule 2.2, and such
other Party shall not unreasonably withhold its consent to any such
modification.
 
 
(ii) Sellers and Purchaser shall negotiate in good faith to agree upon an
allocation statement of the different components of Property within each
Facility (the “Allocation Statement”), which Allocation Statement shall be
prepared in a manner consistent with Section 1060 of the Code and the treasury
regulations thereunder and which in all events will be consistent with Schedule
2.2 of the Disclosure Letter.   To the extent Sellers and Purchasers have not
agreed to the Allocation Statement before the Closing Date, they shall continue
to negotiate in good faith after the Closing Date.  If Sellers and Purchaser
have not agreed to the Allocation Statement on or before the  30th day after the
Closing Date, any disputed items shall be resolved by a firm of independent
nationally recognized accountants chosen and mutually accepted by both parties
(the “Accounting Referee”), whose determination shall be final and binding on
the parties.  The Accounting Referee shall resolve the dispute within thirty
(30) days after the item has been referred to it.
 

 
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(iii) The costs, fees and expenses of the Accounting Referee shall be borne
equally by the Sellers, on the one hand, and the Purchaser, on the other
hand.  Purchaser, Sellers and their Affiliates shall report, act and file Tax
Returns and reports (including, but not limited to, Internal Revenue Service
Form 8594) in all respects and for all purposes consistent with the Allocation
Statement. Purchaser and Sellers shall timely and properly prepare, execute,
file and deliver all such documents, forms and other information as may be
reasonably required to prepare such Allocation Statement.  Neither Purchaser nor
Sellers shall take any position (whether in audits, Tax Returns or otherwise)
that is inconsistent with the Allocation Statement unless required to do so by
applicable law or a good faith resolution of a Tax contest.
 
 
2.3 Closing.  The closing of the sale and purchase of the Property (the
“Closing”) shall occur as promptly as practicable (but in no event later than
the fifth (5th) business day) after all of the conditions set forth in Article V
(other than those conditions that by their terms are required to be satisfied or
waived at the Closing, but subject to the satisfaction or waiver of such
conditions) shall have been satisfied or waived by the party entitled to the
benefit of the same (such date, the “Closing Date”); provided, however, that,
consistent with Section 12.18, the Parties desire to effect the Closing prior to
December 31, 2012, but in any event prior to the Outside Date. The Closing shall
take place at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington
Avenue, New York, New York 10017, or at such other place as agreed to by the
Parties hereto.
 
 
ARTICLE III
 
 

 
 
REPRESENTATIONS, WARRANTIES AND COVENANTS
 
 
3.1 Sellers Representations and Warranties.
 
 
Sellers hereby jointly and severally represent and warrant to Purchaser, as
follows:
 
 
(a) Capacity; Authority; Validity. Each Seller is a limited liability company,
duly organized, validly existing and in good standing under the laws of its
state of formation. Each Seller is duly qualified to do business and is in good
standing in every domestic and foreign jurisdiction in which it owns Real
Property, except for failures to be so qualified or in good standing as has not
had and would not reasonably be expected to have a Material Adverse
Effect.  Each Seller has all necessary limited liability company power and
authority to enter into this Agreement, to perform the obligations to be
performed by such Seller hereunder and to consummate the transactions
contemplated hereby. This Agreement, the sale of the Property, and the
consummation by Sellers of the transactions contemplated hereby, have been duly
and validly authorized by all necessary limited liability company action of each
Seller. This Agreement has been duly executed and delivered by each Seller and
constitutes the legal, valid and binding obligation of each Seller, enforceable
against such Seller in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors’ rights and by general principles of equity (whether
applied in a proceeding at law or in equity).
 

 
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(b) Restrictions. Neither the execution, delivery and performance of this
Agreement by Sellers nor the consummation of the transactions contemplated
hereby will conflict with or result in a breach of any term or provision of, or
constitute a default or violation under, accelerate performance under, or create
or impose any encumbrance pursuant to (i) the organizational or governing
documents of any Seller or any of its Affiliates, (ii) any agreement, contract
or instrument to which any Seller or any of its Affiliates is a party,  is a
party subject, in the case of the Existing Loans and the Ground Leases, to the
consent of the counterparties under such agreements to the assignment and
assumption of such agreement as contemplated hereby, and as otherwise set forth
on Schedule 3.1(b) of the Disclosure Letter, or (iii) any Legal Requirement to
which any Seller or any of its Affiliates is subject, except as to clauses (ii)
and (iii), as individually or in the aggregate, has not had and would not be
reasonably expected to have a Material Adverse Effect; provided, however, for
purposes of this Section 3.1(b), E shall not be deemed an Affiliate of the
Sellers.
 
 
(c) Consents, Filings, etc. Other than (i) any consent, filing or approval set
forth on Schedule 3.1(c) of the Disclosure Letter, and (ii) such consents and
approvals as have been made or obtained, the execution, delivery and performance
of this Agreement and the consummation by Sellers of the transactions
contemplated hereby will not require any filing with, or consent or approval
from, any Governmental Entity except (a) compliance with any applicable
requirements of the HSR Act, (b) Required Governmental Consents, (c) Required
Filings, or (d) as, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect.
 
 
(d) Real Property.
 
(i) Interests in Property.  Other than as set forth on Schedule 3.1(d)(i), the
applicable Seller is the owner of fee simple title to, or in the case of Ground
Leased Properties, a valid leasehold interest in, such Seller’s Real Property
identified as being owned by such Seller on Schedule 1 of the Disclosure Letter
, in each case, free and clear of Liens other than any Permitted Exceptions
applicable to such Seller’s Real Property.  Sellers have good and valid title
to, or a valid and enforceable right to the Personal Property and the same is
(or will be at Closing) free and clear of all liens, charges and encumbrances,
other than the rights of any vendors or suppliers under Contracts, any Assumed
Personal Property Debt and the rights, if any of any Current Manager under any
applicable Current Management Agreement.
 
 
(ii) Possession.  Except for Leases of less than one thousand (1,000) square
feet and the Leases set forth on Schedule 3.1(d)(ii) of the Disclosure Letter,
the Other Current Management Agreements and the Resident Agreements, there are
no lease, license or other occupancy agreements pursuant to which any Person is
the lessee, licensee or occupant of any space at any Facility.  On the Closing
Date, except for the Tenants or Residents, no Person (other than the Sellers and
the Current Managers) is entitled to present or future possession of or a right
to use all or any part of the Real Propert
 

 
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(iii) Provisions Affecting the Real Property. Except as set forth in Schedule
3(d)(iii) of the Disclosure Letter, as of the date hereof, to Seller’s
Knowledge, there are no, pending or overtly threatened in writing condemnation
or any similar proceedings relating to the Real Property or the Business.
 
 
(iv) No Notice of Violation. Except as set forth in Schedule 3(d)(iv) of the
Disclosure Letter, as of the date hereof, no Seller has received any written
notice of any, and to Seller’s Knowledge, there are no, material violations of
any Legal Requirements pertaining to the Real Property or the Business, which in
either case have not been cured except that, individually or in the aggregate,
would not be reasonably expected to have a Material Adverse Effect.
 
 
(v) Environmental Matters.  Except as described on Schedule 3.1(d)(v) of the
Disclosure Letter, to Seller’s Knowledge (i)  no Seller has received any written
notice of any Actions pursuant to Environmental Laws arising out of violations
of any Environmental Laws or any release of Hazardous Materials on the Real
Property and (ii) no material remediation of Hazardous Materials is currently
being performed or currently required to be performed on the Real Property.  No
written claims, complaints, notices, or requests for information have been
received by any Seller concerning any violation or alleged violation of any
Environmental Law or any releases of Hazardous Materials on the Real Property or
any portion thereof by any Governmental Entity which remains unresolved.
 
 
(vi) Real Estate Taxes.  Except as set forth in Schedule 3.1(d)(vi)(A), there is
not now pending, and Sellers agree that they will not, without the prior written
consent of Purchaser (which consent will not be unreasonably withheld or
delayed), institute prior to the Closing Date, any material proceeding or
application for a reduction in the real estate Tax assessment of the Land or the
Improvements or any other relief for any Tax year.  Except as set forth in
Schedule 3.1(d)(vi)(B) of the Disclosure Letter, there are no outstanding
written agreements with attorneys or consultants with respect to real estate
Taxes that will be binding on Purchaser or any Real Property after the Closing.
 
 
(vii) No Lawsuits. Except as set forth on Schedule 3.1(d)(vii) of the Disclosure
Letter, as of the date hereof, there is no claim, lawsuit, proceeding or
investigation pending or, to Sellers’ Knowledge, overtly threatened in writing,
against any Seller or any of the Real Property that would prevent or materially
delay consummation of the transactions contemplated hereby or that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 
                                                                  
(viii) Financial Statements. Sellers have delivered to Purchaser the Identified
Financial Statements. The Identified Financial Statements
 

 
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 have been prepared in accordance with GAAP in all material respects,
consistently applied (except, in the case of the Unaudited Financial Statements,
for the absence of footnotes (that, if presented, would not differ materially
from those included in the Audited Financial Statements) and normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be material)). The Identified Financial Statements fairly present in
all material respects the result of the operations (with respect to the
Unaudited Financial Statements), and the result of the operations and the assets
and liabilities (with respect to all of the other Identified Financial
Statements), of the Sellers on a consolidated basis with respect to the periods
covered therein.  No Seller has any material liabilities or obligations, and to
Seller’s Knowledge, there is no basis for any assertion against Sellers of any
material liability or obligation, except those liabilities or obligations which
are (a) fully reflected or adequately reserved against in the Identified
Financial Statements, (b) disclosed in this Agreement or in the Schedules
hereto, or (c) incurred in the ordinary course of Business consistent with past
practice from and after the date of the last Audited Financial Statements.
 
 
(ix) Tax Status. No Seller is a foreign person as defined in Section 1445 of the
Code.
 
 
(x) Permits. Except as set forth in Schedule 3.1(d)(x) of the Disclosure Letter,
Sellers or the Current Managers hold all material Permits from Governmental
Entities necessary for the ownership and operation of the Real Property and the
Business under applicable Legal Requirements except for (i) incidental Permits
which would be readily obtainable by any qualified applicant without undue
burden in the event of any lapse, termination, cancellation or forfeiture
thereof or (ii) those that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.  Sellers, and to
Seller’s Knowledge, the Current Managers, are in compliance in all material
respects with the terms of the Permits covered by the preceding sentence and all
such Permits are valid and in full force and effect in all material respects
except to the extent any non-compliance or failure of Permits to be in full
force and effect would not reasonably be expected to have a Material Adverse
Effect.   Sellers have not received any written notice alleging that any Seller
or Current Manager is in default under any of the Permits and to Seller’s
Knowledge there does not exist a default under any of the Permits which default,
individually or in the aggregate, has had or would be reasonably expected to
have a Material Adverse Effect.
 
 
(xi) Contracts. Each Current Management Agreement and each Ground Lease and the
other party thereto, is identified on Schedule 3.1(d)(xi) attached hereto, and
Sellers have delivered to Purchaser true and complete copies of all Other
Current Management Agreements and all Ground Leases listed on Schedule
3.1(d)(xi) of the Disclosure Letter.  Each of the Material Contracts has been
entered into in the ordinary course of business.  Sellers have not received any
written notice alleging that any Seller or Current
 

 
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               Manager is in default under any of the Contracts and to Seller’s
Knowledge there does not exist a default under any of the Contracts which
default, individually or in the aggregate, has had or would be reasonably
expected to have a Material Adverse Effect.
 
 
(xii) Absence of Certain Changes.  Since September 30, 2012, Sellers, and to
Seller’s Knowledge, the Current Managers, have operated the Real Property in the
ordinary course, consistent with past practice, and no Seller and, to Seller’s
Knowledge, no Property, has:  suffered any adverse change, event, occurrence,
development or state of circumstances or facts which has had or could reasonably
be expected to result in or have a Material Adverse Effect.
 
 
(xiii) Affiliated Transactions.  Since January 1, 2011, no Seller has entered
into any transaction with any of their respective Affiliates with respect to any
Facility, and no such transaction is in effect, other than in the ordinary
course of, and pursuant to the reasonable requirements of, the business at the
Real Property and upon terms that are no less favorable than could be obtained
in a comparable transaction with a Person who was not such an Affiliate.
 
 
(xiv) Insurance Policies.  The current insurance policies that any Seller or any
Current Manager maintain with respect to the Facilities are set forth on
Schedule 3.1(d)(xiv) of the Disclosure Letter (such insurance policies, the
“Insurance Policies”).
 
 
(xv) Ground Leases.  Schedule 3.1(d)(xv) of the Disclosure Letter is a true,
complete and correct schedule of all Ground Leases.  Seller has heretofore
delivered or made available to Purchaser true, correct and complete copies of
all Ground Leases (including all modifications, amendments and supplements
thereto).  Each Ground Lease is valid, binding and in full force and effect, all
rent and other sums and charges payable by the applicable Seller as tenant
thereunder are current, no notice of default or termination under any Ground
Lease is outstanding, no termination event or condition or uncured default on
the part of the tenant or (to Seller’s Knowledge) Landlord exists under any
Ground Lease, and no event has occurred and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute such a default
or termination event or condition on the part of tenant.
 

                                                                 (xvi) Existing
Loans.  The Dataroom contains true, correct, and complete copies of all of the
material documents and instruments (the “Eligible Loan Documents”) whether or
not of record, evidencing or securing the Eligible Existing Loans.   The
outstanding principal balance of each of the Eligible Existing Loans as of the
date hereof is set forth on Schedule 3.1(d)(xvi) of the Disclosure Letter.  All
required payments of principal and interest due and payable under the Eligible
Loan Documents have been paid.  The reserves on deposit with each Eligible
Existing Lender as of the date hereof are set forth in Schedule 3.1(d)(xvi) of
the Disclosure Letter.  The prepayment restrictions and
 
 
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and penalties of the Eligible Existing Loans are set forth on Schedule
3.1(d)(xvi) of the Disclosure Letter.
 
 
(e) No Operation of Nursing Facilities.  With the exception of the Facilities
located in California, none of the Sellers: (1) currently operate or manage a
skilled nursing facility, assisted living facility or other licensed health care
facility; (2) hold a license to operate or manage a skilled nursing facility,
assisted living facility or other licensed health care facility; or (3)
participate in any federal, state or local health care benefit program or are
otherwise reimbursed for services from such programs.
 
 
(f) None of the Sellers or their respective Affiliates (1) appears on the
Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Control in the United States Department of the Treasury (“OFAC”) or the
Annex to United States Executive Order 132224-Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism,
or (2) is a prohibited party under the laws of the United States.
 
 
(g) No Sellers have any employees.
 
3.2 Representations and Warranties of Purchaser
 
.  Purchaser hereby represents and warrants to Sellers and E, as follows:
 
 
(a) Capacity; Authority; Validity. Purchaser is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Maryland.
Purchaser has all necessary power and authority to enter into this Agreement, to
perform the obligations to be performed by Purchaser hereunder and to consummate
the transactions contemplated hereby. This Agreement and the consummation by
Purchaser of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action of Purchaser. This Agreement has
been duly executed and delivered by Purchaser and constitutes the legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
and by general principles of equity (whether applied in a proceeding at law or
in equity).
 
 
(b) Restrictions.  Neither the execution, delivery and performance of this
Agreement by Purchaser nor the consummation of the transactions contemplated
hereby will conflict with or result in a material breach of any term or
provision of, or constitute a default or violation under or accelerate
performance under, or result in the creation or imposition of any encumbrance
pursuant to, (i) the organizational or governing documents of Purchaser, (ii)
any material agreement, contract or instrument to which Purchaser is a party or
(iii) any Legal Requirement to which Purchaser is subject except as to clauses
(ii) and (iii), as would not, individually or in the aggregate, be reasonably
expected to prevent or materially delay the consummation of the transactions
contemplated by this Agreement).
 
(c) Consents, Filings, etc. Other than such consents, filings and approvals as
are referenced in clauses (a)-(d) of Section 3.1(c) or have been made or
obtained and such consents, filings and approvals set forth on Schedule 3.1(c)
of the Disclosure Letter,
 
 

 
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and assuming the accuracy of the representations and warranties made by the
Sellers hereunder, the execution and delivery of this Agreement and the
performance and consummation by Purchaser of the transactions contemplated
hereby will not require any filing, consent or approval from any Governmental
Authority except as would not, individually or in the aggregate, be reasonably
expected to prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
 
 
(d) No Lawsuits. There is no lawsuit, proceeding or investigation pending or, to
the Purchaser’s Knowledge, threatened, against Purchaser that would prevent or
materially delay consummation of the transactions contemplated hereby.
 
 
(e) Neither Purchaser nor any of its Affiliates (1) appears on the Specially
Designated Nationals and Blocked Persons List of the OFAC or the Annex to United
States Executive Order 132224-Blocking Property and Prohibiting Transactions
with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (2) is a
prohibited party under the laws of the United States.
 
 
3.3 Representations and Warranties of E. E  hereby represents and warrants to
Sellers and Purchaser, as follows:
 
 
(a) Capacity; Authority; Validity. E is a Washington corporation, duly
organized, validly existing and in good standing under the laws of the State of
Washington. E has all necessary power and authority to enter into this
Agreement, to perform the obligations to be performed by E hereunder and to
consummate the transactions contemplated hereby. This Agreement and the
consummation by E of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action of E. This Agreement has
been duly executed and delivered by E and constitutes the legal, valid and
binding obligation of E, enforceable against E in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights and by
general principles of equity (whether applied in a proceeding at law or in
equity).
 
 
(b) Restrictions. Neither the execution, delivery and performance of this
Agreement by E nor the consummation of the transactions contemplated hereby will
conflict with or result in a breach of any term or provision of, or constitute a
default or violation under or accelerate performance under, or result in or
impose any encumbrance pursuant to (i) the organizational or governing documents
of E, (ii) any material contract, agreement or instrument to which E is a party
or (iii) any Legal Requirement to which E is subject, except, in the case of
clauses (ii) and (iii), as would not, individually or in the aggregate, be
reasonably expected to prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
 
(c) Consents, Filings, etc.  Other than as described on Schedule 3.3(c) of the
disclosure letter that has been prepared by E and delivered by E to Purchaser in
connection with the execution and delivery of this Agreement, such consents,
filings and approvals as have been made or obtained, such consents, filings and
approvals as are referenced in clauses (a)-(d) of Section 3.1(c) and such
consents, filings and approvals set forth on Schedule 3.1(c) of the Disclosure
Letter, the execution and delivery of this Agreement and the performance and
 
 

 
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consummation by E of the transactions contemplated hereby will not require any
filing with, or consent or approval from, any Governmental Entity, except as
would not, individually or in the aggregate, be reasonably expected to prevent
or materially delay the consummation of the transactions contemplated by this
Agreement.
 
3.4 Covenants of Sellers
 
 and E. Sellers (and E, where expressly indicated) hereby covenant as follows:
 
 
(a) Operation of Property.  For the period from the Execution Date until the
Closing Date, Sellers shall use commercially reasonable efforts to cause the
Current Managers to (and each Seller shall itself to the extent within its
control), and E agrees to cause the Current E Managers under the Current E
Management Agreements (to the extent within their control) to: (i) operate the
Property and the Business (A) substantially in the ordinary course consistent
with past practice while maintaining present services and (B) substantially in
accordance with Legal Requirements, (ii) keep on hand sufficient materials,
supplies, equipment and other personal property for the efficient operation and
management of the Real Property in the ordinary course consistent with past
practice; (iii) except as otherwise provided in this Agreement, not amend,
modify, supplement, or terminate any of the Ground Leases or allow a default by
the Seller thereunder; (iv) other than as contemplated by this Agreement, not
amend, modify,  or supplement (or, with respect to any Assumed Loan, allow a
default under) the Eligible Loan Documents or satisfy, in whole or in part, any
Eligible Existing Loan; (v) not make any material alterations to the Real
Property other than repairs in the ordinary course, in each case, without
obtaining Purchaser’s prior written consent, not to be unreasonably withheld;
(vi) not, without the consent of the Purchaser, cancel or waive any claims or
rights of material value held by Sellers and related to the Business or the
Property, or settle or compromise any Action with respect to Sellers’ interest
in the Business or the Property, to the extent any such cancellation, waiver,
settlement or compromise would bind Purchaser or the Property after the Closing
Date or would affect Purchaser in any material respect or the ability to operate
the Property, or the Property’s profitability, after the Closing Date ; and
(vii) not incur, assume or guarantee any material indebtedness for money
borrowed that is secured by any portion of the Property, or incur any
liabilities or obligations relating to the Property other than in the ordinary
course of business other than those which will be satisfied or discharged prior
to Closing.
 
 
(b) Solicitation. For a period commencing on the Execution Date and continuing
to the earlier to occur of the Closing or the termination of this Agreement in
accordance with its terms, Sellers shall not, and Sellers shall cause their
respective Affiliates, officers, managers, employees, agents, representatives or
any other person acting at the direction of any Seller not to, directly or
indirectly, sell, assign, alienate, lien, encumber or otherwise transfer or
finance the Property or any portion thereof (or solicit, negotiate, accept any
offers or enter into any agreement, arrangement, letter of intent or
understanding, formal or informal, to do any of the foregoing), other than
Permitted Exceptions and the sale, assignment, alienation, encumbering or other
transfer of any Personal Property in the ordinary course of business consistent
with past practice (including for the use and consumption of inventory, office
and other supplies and spare parts and the replacement of worn out, obsolete and
defective tools, equipment and appliances).  For a period commencing on the
Execution Date and continuing to the earlier to occur of the Closing and the
termination of this Agreement in accordance with its terms, E shall not, and E
shall cause its Affiliates, officers, managers, employees, agents,
 

 
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representatives or any other person acting at the direction of E, not to,
directly or indirectly, sell, assign, alienate, lien, encumber or otherwise
transfer or finance the Property or any portion thereof (or solicit, negotiate,
accept any offers or enter into any agreement, arrangement, letter of intent or
understanding, formal or informal, to do any of the foregoing), other than
Permitted Exceptions and the sale, assignment, alienation, encumbering or other
transfer of any Personal Property in the ordinary course of business consistent
with past practice (including for the use and consumption of inventory, office
and other supplies and spare parts and the replacement of worn out, obsolete and
defective tools, equipment and appliances). Any transactions (or discussions
regarding possible transactions) between E and any of its Affiliates and
Purchaser and any of its Affiliates shall not be deemed a violation of this
paragraph (b).
 
 
(c) Insurance.  Sellers shall keep continuously in force through and including
the Closing Date the Insurance Policies, or insurance policies in substantially
the same or better coverage and amounts.
 
 
(d) Change in Conditions.  Sellers shall, to the extent any Seller obtains
knowledge thereof, and E shall, to the extent any Current E Manager obtains
knowledge thereof, without prejudice to Purchaser’s rights and remedies,
promptly notify Purchaser of any change in any condition with respect to the
Property, or of the occurrence of any event or circumstance, that makes any
representation or warranty of Sellers to Purchaser under this Agreement untrue
or misleading, or any covenant of Sellers under this Agreement incapable or
materially less likely to be performed, or any condition precedent incapable or
materially less likely to be satisfied.  Promptly, and in any event within five
(5) business days, after receipt, delivery, filing or preparation, as the case
may be, Sellers shall deliver to Purchaser true and complete copies of: (i)  any
reports, filings, applications, or petitions made by any Seller to any
Governmental Entity with respect to any Real Property; (ii) any material written
correspondence or notices to or from any Seller or Governmental Entity with
respect to any Real Property (excluding tax invoices); and (iii) any other
document, information, material, notice or comparable report or item that would
be required to be delivered hereunder as of the Execution Date but either did
not exist, was not discovered or was not in Sellers’ possession or reasonable
control as of the Execution Date.
 
 
(e) SEC Requirements. At Purchaser’s request, at any time after the Execution
Date, upon reasonable advance notice, Sellers shall provide to Purchaser’s
designated independent auditor reasonable access to the books and records of
Sellers pertaining to the Property, and all related information regarding the
period for which Purchaser is required to have the  Property audited under the
regulations of the Securities and Exchange Commission.
 
(f) Transfer of Permits.  Sellers shall use commercially reasonable efforts to,
and Sellers and E shall use commercially reasonable efforts to cause the Current
Managers to, transfer and assign, to the extent transferable or assignable, at
Purchaser’s sole cost and expense, to Purchaser or its designee at Closing any
Permit designated by Purchaser to be so transferred or assigned.  In addition
Sellers shall reasonably assist Purchaser, and E shall cause Current E Managers
to reasonably assist Purchaser, in its efforts to obtain the Required
Governmental Consents, any replacement Permit and to make the Required Filings.
 

 
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(g) Consents. Sellers, at Purchaser’s sole cost and expense, shall use
commercially reasonable efforts to assist Purchaser and E in their efforts to
obtain, the Required Governmental Consents and any other consents required or
necessary for the consummation of the transactions contemplated herein. In
connection therewith, (a) Purchaser shall promptly provide such information and
applications as are reasonably requested by the applicable Governmental Entity
and have its officers and representatives attend any meetings, as reasonably
requested by the applicable Governmental Entity, and (b) E shall cause the
Current E Managers to reasonably cooperate and assist in such efforts.
 
 
(h) Loan Assumption Election. If Purchaser timely makes a Loan Assumption
Election, Sellers shall reasonably cooperate with Purchaser in obtaining
assignments of the applicable Eligible Loans including obtaining any Assumed
Loan Assignment Approval. Purchaser agrees that, in connection with obtaining an
Assumed Loan Assignment Approval, Sellers shall not be required to pay or commit
to pay any cash or other consideration or to incur any liability in connection
with obtaining such Assumed Loan Assignment Approval, except that Sellers shall
be required to pay its own legal fees. With respect to the Existing Loans that
are not Assumed Loans (including any Eligible Existing Loan where Purchaser has
made a Loan Assumption Election but failed to obtain an Assumed Loan Assignment
Approval prior to the Closing Date), Sellers shall cause such Existing Loans to
be paid in full and the lien created by such Existing Loans to be discharged of
record at or prior to the Closing (or, if any such lien is not so discharged but
the Title Company insures over it, Sellers shall provide Purchaser with
reasonably satisfactory evidence that such lien will be discharged of record
promptly after the Closing); provided, however that if such prepayment in full
is prohibited under the terms governing any such Existing Loan and the
applicable Existing Lender refuses to waive such prohibition against prepayment,
then Purchaser shall have the right to elect in its sole discretion, by written
notice to Seller at any time prior to the Closing, to either (1) subject to
Section 12.18, exclude the applicable Facility and all Property comprising or
relating to such Facility from the transactions contemplated by this Agreement
in which case (w) the Purchase Price shall be reduced by the portion of the
Purchase Price allocable to such Facility, (x) such Facility and such Property
shall not be transferred to Purchaser at the Closing, (y) the OpCo Lease
Agreement shall not include such Facility or Property, and (z) from and after
the Closing Date none of the Parties hereto shall have any claims against any
other Party hereto in connection with such Facility and such Property, or (2)
proceed with the acquisition of such Facility and such Property on the Closing
Date as contemplated herein (provided that if Purchaser makes an election to
proceed with an acquisition under this clause (2), then Purchaser shall
indemnify and hold harmless the Sellers and the Existing Guarantor for all
Damages suffered by Sellers and the Existing Guarantor as a result of any
default under the applicable Existing Loan due to such acquisition).
 
 
(i) Access to Premises and Information.
 
 
(i) From the date hereof until the Closing Date, or the earlier termination of
this Agreement, Sellers shall, and shall cause the Current Managers to, permit
Purchaser, and its respective representatives to have reasonable access to the
Real Properties (including for the purposes of conducting a Phase I
environmental site assessment, which shall not include any monitoring or any
type of sample collection), and to the Business Records as shall be
 

 
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reasonably requested to verify the accuracy of the representations and
warranties contained in this Agreement, to verify that the covenants of Sellers
contained in this Agreement have been completed and to determine whether the
conditions set forth in Section 5.2 have been satisfied (provided, however,
Seller shall not be required by this Section 3.4 to provide Purchaser, and its
respective representatives with access to or to disclose information (x) that is
subject to the terms of a confidentiality agreement with a third party
(provided, however, that the withholding party shall use its commercially
reasonable efforts to obtain the required consent of such third party to such
access or disclosure), (y) the disclosure of which would violate any Legal
Requirement or fiduciary duty (provided, however, that the withholding party
shall use its commercially reasonable efforts to make appropriate substitute
arrangements to permit reasonable disclosure not in violation of any Legal
Requirement or fiduciary duty) or (z) that is subject to any attorney-client
privilege (provided, however, that the withholding party shall use its
commercially reasonable efforts to allow for such access or disclosure to the
maximum extent that does not result in a loss of attorney-client privilege);
provided that in each instance in which Seller elects to withhold information
described in the foregoing clauses (x), (y) and/or (z), Seller promptly notifies
Purchaser that such information is being withheld); provided that in each such
instance in which Purchaser intends to enter the Real Property pursuant to this
Section 3.4(i)(i), (i) Purchaser notifies Sellers in writing of its intent to
enter the Real Property to conduct its due diligence not less than forty-eight
(48) hours prior to such entry; (ii) such entry shall be during normal business
hours; (iii) the date and time period are scheduled with Sellers (which shall
act reasonably in such scheduling); (iv) Sellers shall have the right to have a
representative present at the time of any such discussion or entry upon the Real
Property; and (v) Purchaser shall not in any event conduct any invasive testing
or invasive investigation or sampling of any environmental media or building
materials with respect to the Real Property.  Notwithstanding the foregoing, (A)
Purchaser shall not have the right to interview the Tenants under Leases or
residents under Resident Agreements or any employee without the prior written
consent of Sellers not to be unreasonably withheld, conditioned or delayed and
(B) Purchaser’s rights hereunder shall be subject to the terms and limitations
of any Ground Lease. In the event Purchaser is granted permission to conduct its
inspection Purchaser shall conduct such inspections so as to minimize
interference with the Business and the use of the Real Property by any of the
Tenants or Residents.  Failure of Sellers to grant Purchaser access to a Real
Property due to Sellers’ obligations under or, restrictions contained in the
Leases, shall not constitute a breach of this Section 3.4 or this Agreement by
Sellers if Sellers are acting reasonably. Sellers shall use commercially
reasonable efforts to arrange for such access.
 
 
                                                                             
(ii) To the extent that Purchaser damages the Property or any portion thereof,
Purchaser shall repair the same at its sole cost and expense. Purchaser shall
reimburse Sellers and hold Sellers and their affiliates (and each of their
respective officers, directors, partners, advisors, managers, employees and
agents) (collectively, the “Indemnitees”) harmless from and against all  claims
for
 

 
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losses, liabilities, expenses, costs (including without limitation, reasonable
attorney’s fees), damages or injuries suffered or incurred as a result of the
entering upon the Real Property by Purchaser or Purchaser’s representatives or
consultants or otherwise incurred in connection with Purchaser’s inspection.
Purchaser shall deliver to Sellers certificates reasonably satisfactory to
Sellers evidencing that Purchaser and Purchaser’s representatives carry and
maintain such general liability insurance policies with such companies and in
such scope and amounts as are acceptable to Sellers in their reasonable
discretion.
 
 
(iii) The obligations of Purchaser under this Section 3.4(i) shall survive the
Closing or the earlier termination of this Agreement.
 
 
(j) Ground Lease Estoppels. The Seller shall request and use commercially
reasonable efforts to obtain an executed estoppel certificate from the landlord
under each Ground Lease in substantially the same form as the applicable form
attached as Exhibit D or such other form as such landlord is required or
permitted to deliver under the relevant Ground Lease (each a “Ground Lease
Estoppel”) (without the obligation to incur any material cost or liability in
connection with such efforts or making any payments or granting any concessions
under the Ground Lease and without the obligation to declare any Ground Lease in
default or to initiate any proceeding thereunder).  Subject to Section 8.4, the
receipt of any Ground Lease Estoppel or any matter raised in any Ground Lease
Estoppel shall not be a condition to the Purchaser’s obligation to close and
shall not constitute grounds to refuse to close.
 
3.5 Covenants of Purchaser
 
. Purchaser hereby covenants with Seller as follows:
 
 
(a) Consents. Purchaser, at Purchaser’s sole cost and expense, shall use
commercially reasonable and good faith efforts to obtain the Required
Governmental Consents and promptly provide such information and applications as
are reasonably requested by the applicable Governmental Entity and have its
officers and representatives attend any meetings, as reasonably requested by
such Governmental Entity.
 
 
(b) Loan Assumption Election.  Purchaser shall have the right to make a Loan
Assumption Election by notifying Seller within ten (10) Business Days of the
Execution Date. If Purchaser timely makes a Loan Assumption Election, Purchaser
shall diligently pursue such assignments in a commercially reasonable manner. In
connection with obtaining the Assumed Loan Assignment Approval, Purchaser shall,
at its sole cost and expense (other than legal fees of Sellers), use diligent
efforts, in good faith, to obtain from the applicable Existing Lender the
approval of one or more entities, acceptable to such Existing Lender, at its
sole discretion, as a substitute guarantor in lieu of the Existing Guarantor
(such person, a “Substitute Guarantor”) under each of the Assumed Loan Existing
Guaranties still in effect and shall (i) cause the Substitute Guarantor to
execute, as and to the extent required by the Existing Lender, replacement
guaranties or indemnities and other related agreements in a form substantially
similar to the applicable Existing Guaranties, with modifications reasonably
required by Existing Lender and reasonably acceptable to Purchaser (provided
that no such modifications shall (other than to a de minimis extent) expand the
scope or amount of liability thereunder) , as applicable,
 

 
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with respect to all obligations guaranteed thereunder accruing from and after
the Closing, and (ii) use diligent good faith efforts to cause Existing
Guarantor to be released and discharged from any and all obligations, claims,
actions, damages, judgments, settlements and liabilities, arising under the
Existing Guaranties on or after the Closing Date. In connection therewith,
Purchaser shall cause the Substitute Guarantor to promptly provide such
information and applications as are reasonably requested by the applicable
Existing Lender. If an Existing Lender does not consent to replacement of the
Existing Guarantor with a Substitute Guarantor, or does not release Existing
Guarantor from any and all obligations, claims, actions, damages, judgments,
settlements (at Purchaser’s option) and liabilities, arising under any Existing
Guaranties on or after the Closing Date, then either (x) Purchaser and
Substitute Guarantor will execute in favor of Existing Guarantor an
indemnification agreement reasonably and mutually acceptable to Existing
Guarantor and Purchaser, indemnifying Existing Guarantor from and against all
liabilities under such Existing Guaranties then in effect accruing from and
after the Closing (which agreement shall survive the Closing) or (y) such
Existing Loan shall (subject to the proviso clause of the last sentence of
Section 3.4(h)) be repaid at Closing.
 
 
(c) Required Governmental Consents; Required Filings; CHOW Corrective Actions.
 
 
(i) Purchaser and E shall submit to the appropriate Governmental Entity
completed applications with schedules and required background information in
order to obtain the Required Governmental Consents and to make the Required
Filings as and when due as set forth on Schedule 1.1(l) and Schedule 1.1(k) of
the Disclosure Letter respectively.
 
 
(ii) Purchaser shall be solely responsible for any and all CHOW Liabilities.
 
 
(iii) With respect to the Real Properties located in California, if Purchaser
and/or E has not obtained all Required Governmental Consents on or before the
Closing Date, then at Closing, the applicable Seller and E shall enter into an
interim sublease and services agreement in a form reasonably satisfactory to
Sellers, Purchaser and E (collectively, the “Interim Operating Agreements”) and
upon the execution of the Interim Operating Agreement, the Required Government
Consent shall be deemed obtained.
 
3.6 Covenants With Respect to the Related Transactions.
 
 
(a) At the Closing, each of Purchaser and E shall, and (in the case of E) shall
cause any applicable Affiliates to, duly execute and deliver the OpCo Lease
Agreement.
 
 
(b) At the Closing, each of E and the applicable Seller shall, or shall cause
its applicable Affiliate to, duly execute and deliver such documents as
reasonably necessary to effect and evidence the termination of the Current E
Management Agreements.
 
 
3.7 Covenants with Respect to HSR Act.
 
 

 
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(a) The parties shall cooperate with one another (i) in determining whether any
action by or in respect of, or filing with, any Governmental Entity is required
or advisable under the HSR Act in connection with the consummation of the
transactions contemplated by this Agreement, and (ii) in seeking and obtaining
any such actions or making any such filings and furnishing information required
in connection therewith.  Each of the Parties will give any notices to, make any
filings with, and use its commercially reasonable efforts to obtain any
authorizations, consents, and approvals of Governmental Entities required under
the HSR Act.  Each of the Parties will make all required filings (if any) under
the HSR Act as promptly as practicable.  Purchaser shall be responsible for
payment of the filing fees with regard to such filing. To the extent reasonably
requested, in connection with any filing required under the HSR Act, the Parties
shall have the right to review in advance, and to the extent reasonably
practicable each will consult with the other on, all the information relating to
the other and its respective affiliates that appears in any filing made with, or
written materials submitted to, any Governmental Entity in connection with the
transactions contemplated by this Agreement.  Each Party agrees to supply as
promptly as practicable any additional information and documentary material that
may be requested by applicable Governmental Entity pursuant to the HSR Act and
to use commercially reasonable efforts to cause the expiration or termination of
the applicable waiting periods under the HSR Act in order to facilitate a
Closing as soon as practicable.
 
 
(b) In furtherance and not in limitation of the covenants of the Parties
contained in this Section 3.7 if any objections are asserted by any Governmental
Entity or any third party with respect to the transactions contemplated hereby
under the HSR Act, then each of Purchaser and Seller shall use their
commercially reasonable efforts to resolve any such objections so as to permit
the consummation of the transactions contemplated by this Agreement.
 
 
ARTICLE IV
 
 

 
 
TITLE MATTERS
 
4.1 Title and Survey
 
. Purchaser acknowledges receipt of a copy of (a) the existing title policy for
each Real Property as provided in the Dataroom (collectively, the “Existing
Policies”) and (b) an existing survey of each Real Property as provided in the
Dataroom (collectively, the “Surveys”). Purchaser acknowledges that it has had
sufficient opportunity to review the Existing Policies and the Surveys, and
accepts the state of facts revealed therein, and agrees that except as set forth
in Schedule 4.1, in no event may any matters disclosed in the Existing Policies
or the Surveys constitute Title Objections, and shall in all instances
constitute Permitted Exceptions.  At the Closing, Sellers shall convey and
Purchaser shall accept fee simple title to, or with respect to the Ground Leased
Properties, valid leasehold interest in, the Real Property, in each case, free
and clear of Liens other than Permitted Exceptions; provided, however, in the
event that at Closing the Real Property is encumbered by one or more Liens which
are not Permitted Exceptions and (i) Seller is not obligated to remove such
Liens under Section 4.5, (ii) the Title Company will neither remove such Liens
as an exception from any new or updated applicable title policy nor insure over
such Liens in a manner reasonably acceptable to Purchaser, and (iii) such Liens
do not have a Material Adverse Effect, then either (1) Purchaser shall accept
such title to the Real Property but shall reserve its right to make a claim for
breach of the representation under Section 3.1(d)(i) following the Closing in
accordance with Article XI, or (2) if such Liens materially adversely affect the
value or
 

 
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operations of the applicable Real Property or materially interfere with the
current use thereof,  Purchaser may elect, in its sole discretion but subject to
the treatment of such Facility as a Delayed Closing Property pursuant to Section
12.18, to exclude the applicable Facility and all Property comprising or
relating to such Facility from the transactions contemplated by this Agreement,
in which case (w) the Purchase Price shall be reduced by the portion of the
Purchase Price allocable to such Facility, (x) such Facility and such Property
shall not be transferred to Purchaser at the Closing, (y) the OpCo Lease
Agreement shall not include such Facility or Property, and (z) from and after
the Closing Date none of the Parties hereto shall have any claims against any
other Party hereto in connection with such Facility and such Property.
 
4.2 UCC Searches
 
. Purchaser may obtain, at Purchaser’s sole cost, state and local UCC searches,
fixture searches, federal and state tax liens searches, local and federal
litigation searches, judgment liens searches and bankruptcy searches with
respect to any Seller and such other persons or entities as Purchaser deems
appropriate in such jurisdictions as Purchaser deems necessary and appropriate
or the Real Property in such jurisdictions as Purchaser deems necessary and
appropriate (collectively, the “Search Reports”). Purchaser shall promptly after
receipt forward a copy of any Search Report to Sellers.
 
4.3 Updated Commitment and Survey
 
. Purchaser may order new title search reports from the Title Company (each a
“Title Update”) at 50% Purchaser’s cost and 50% Sellers’ cost. Purchaser shall
instruct Title Company to simultaneously deliver directly to Purchaser and
Sellers copies of each Title Update (including tax and departmental searches)
ordered by Purchaser or otherwise issued by Title Company, and copies of all
underlying documentation referenced as an exception to the title policy as soon
as available. Purchaser may order updates of any Survey or new surveys (each a
“Survey Update”, and together with Title Updates and Search Reports, “Updates”)
at Purchaser’s sole cost and expense, and shall instruct the surveyor to forward
a copy of any Survey Update and any further updates thereof to Sellers’ attorney
and the Title Company simultaneously with the issuance thereof to Purchaser.
 
4.4 Objections
 
. Purchaser shall have the right to deliver a written notice (a “Title Objection
Notice”) to Sellers objecting to any items contained in an Update which are not
Permitted Exceptions within ten (10) business days after Purchaser’s receipt of
such Update (it being understood and agreed that Schedule 4.1 shall be deemed a
delivery of the Title Objection Notice on the Execution Date with respect to the
items set forth therein).  Failure of Purchaser to provide a Title Objection
Notice within such ten (10) business day period (or to include any such matters
in a timely delivered and valid Title Objection Notice) shall be deemed
Purchaser’s approval of all items contained in such Update which are not
Permitted Exceptions. All such items that are not objected to by Purchaser in a
timely delivered and valid Title Objection Notice shall be deemed to be
Permitted Exceptions.  Sellers shall use such efforts and expend such amounts as
they may, in their sole judgment, deem appropriate to remove or cure prior to
the Closing any title exceptions which are not Permitted Exceptions to which
Purchaser properly objects in the Title Objection Notice; it being understood
and agreed that causing the Title Company to insure over any such title
exception in a manner reasonably acceptable to Purchaser shall be deemed a cure
of such title exception.  Except as set forth herein, Sellers shall not have the
obligation, however, to cure any such exceptions or pay any amounts to cure or
remove the same.  Sellers shall notify Purchaser in writing within fifteen (15)
days after receipt of notice from Purchaser regarding such exceptions whether
Sellers elect to attempt to remove or cure any

 
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such exceptions, and Sellers’ failure to deliver such notice in a timely manner
shall be deemed an election by Sellers not to remove or cure such exceptions. If
Sellers notify Purchaser that Sellers have elected to remove or cure any such
exceptions, then Sellers shall be entitled to one or more adjournments of the
Closing for a period of time not to exceed forty-five (45) days in the aggregate
in order to remove or cure such exceptions. If Sellers notify Purchaser that
Sellers have elected not to remove or cure any such exceptions (or are deemed to
have elected not to remove or cure such exceptions), and if any such exception
can reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect,  then Purchaser shall notify Sellers within fifteen (15)
Business Days after receipt of such notice (or date of deemed election, as
applicable), whether Purchaser elects to terminate this Agreement or to proceed
to Closing taking title subject to such title exceptions and waiving any claim
on account of such exception. Failure of Purchaser to provide such notice in a
timely manner shall be deemed an election by Purchaser to proceed to Closing
taking title subject to such title exceptions and waiving any claim on account
of such exception.
 
4.5 Cure
 
. Notwithstanding anything contained herein to the contrary, Sellers shall be
obligated to cause to be either (x) released, satisfied and otherwise discharged
of record (except with respect to clause (A) of this sentence) or (y) cause the
Title Company to remove as an exception from any new or updated applicable title
policy, or insure over in a manner reasonably acceptable to Purchaser all of the
following defects which are a lien on the Real Property and are not Permitted
Exceptions:  (A) a mortgage, security agreement, financing statement, or any
other instrument which evidences or secures indebtedness for money borrowed by
Sellers or which Sellers have assumed (for the avoidance of doubt, other than
any such item related to the Assumed Loans or the Assumed Personal Property
Debt), (B) a mechanics’ lien created by, through or under Sellers or any prior
owners of the Real Property, (C) any other monetary liens which can be satisfied
by the payment of a liquidated sum, and (D) any encumbrances (including Liens)
voluntarily recorded by Sellers against the Real Property after the Execution
Date and not approved by Purchaser (the items described in the preceding (A),
(B), (C) and (D), the “Impermissible Defects”). Sellers shall be entitled to one
or more adjournments of the Closing for a period of time not to exceed, in
combination with any prior adjournments by Sellers, thirty (30) days in the
aggregate in order to remove any Impermissible Defect.  Notwithstanding anything
in this Agreement to the contrary, Sellers shall not be obligated to spend more
than Twenty Million Dollars ($20,000,000) in the aggregate to remove any
Impermissible Defects described under clauses (B) and (C) above. If Sellers
breach their covenant relating to Impermissible Defects described in subclauses
(A), (B) and (C) of the first sentence of this Section 4.5 (as such sentence is
modified by the immediately preceding sentence), caused by Sellers or any of its
Affiliates or any Person acting by, through or under any of them, and Purchaser
nonetheless elects to close, Purchaser shall be entitled to a credit against the
Purchase Price in an amount equal to the amount necessary to discharge of record
all of such unsatisfied Impermissible Defects.
 
 
ARTICLE V
 
 

 
 
CONDITIONS PRECEDENT TO CLOSING
 
 
5.1 Conditions Precedent to Sellers’ Obligations
 

. The obligation of Sellers to consummate the transfer of the Property to
Purchaser on the Closing Date is subject to the

 
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satisfaction (or waiver by Sellers) as of the Closing of the following
conditions, provided that Sellers may waive such conditions in its sole
discretion:
 
 
(a) (i) The representations and warranties made by Purchaser in Section 3.2(a)
or Section 12.1 shall be true and correct in all respects when made and on and
as of the Closing Date as though such representations and warranties were made
on and as of the Closing Date and (ii) each of the other representations and
warranties made by Purchaser in this Agreement shall be true and correct when
made and on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date except (x) in each case,
representations and warranties that are made as of a specific date shall be true
and correct only on and as of such date and (y) in the case of clause (ii) where
the failure of such representations or warranties to be true and correct
(without giving effect to any “materiality” qualifications set forth therein)
does not, and would not reasonably be expected to, individually or in the
aggregate, prevent or materially impair the ability of Purchaser to consummate
the transactions contemplated by this Agreement before the Outside Date.
 
 
(b) Purchaser shall have performed or complied in all material respects with
each obligation and covenant required by this Agreement to be performed or
complied with by Purchaser on or before the Closing and which is not otherwise
specifically referred to as a condition to closing in this Section 5.1.
 
 
(c) Purchaser shall have delivered to Sellers a certificate dated as of the
Closing Date and signed by an executive officer of Purchaser certifying to the
effect that the conditions set forth in Sections 5.1(a) and 5.1(b) have been
satisfied.
 
 
(d) No order or injunction of any court or administrative agency of competent
jurisdiction nor any statute, rule, regulation or executive order promulgated by
any Governmental Entity of competent jurisdiction (whether temporary,
preliminary or permanent) shall be in effect as of the Closing, which has the
effect of making the purchase and sale of the Property or the transactions
contemplated herein illegal or otherwise preventing or prohibiting the purchase
and sale of the Property or the transactions contemplated herein or otherwise
restraining, enjoining, preventing, prohibiting or making illegal the purchase
and sale of the Property or the transactions contemplated herein.
 
(e) Sellers shall have received all of the documents required to be delivered by
Purchaser under Section 6.2.
 
 
(f) Sellers shall have received the Purchase Price in accordance with Section
2.2 and all other amounts due to Sellers hereunder.
 
 
(g) If Purchaser makes a Loan Assumption Election, in connection therewith
either (i) the Assumed Loan Assignment Approval shall have been obtained or (ii)
if the condition set forth in clause (i) above cannot be satisfied by the
Closing Date, the applicable Existing Loan shall be prepaid at or prior to
Closing.
 
 
(h) The Required Governmental Consents listed on Schedule 1.1(l) of the
Disclosure Letter to be obtained prior to Closing shall have been obtained and
the Required Filings listed on Schedule 1.1(k) of the Disclosure Letter to be
made prior to Closing shall have
 
 

 
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been made.  Any waiting period (and any extension thereof) applicable to the
consummation of the transactions contemplated by this Agreement under the HSR
Act shall have expired or been terminated, and any approval required under the
HSR Act shall have been obtained.
 
 
5.2 Conditions Precedent to Purchaser’s Obligations
 

. Purchaser acknowledges and agrees that Purchaser has completed its due
diligence of the Property. However, the obligation of Purchaser to purchase the
Property on the Closing Date is subject to the satisfaction (or waiver by
Purchaser) as of the Closing of the following conditions, provided that
Purchaser may waive such conditions in its sole discretion:
 
 
(a) (i) The representations and warranties made by Sellers in Section 3.1(a) and
Section 12.1 shall be true and correct in all respects when made and on and as
of the Closing Date as though such representations and warranties were made on
and as of the Closing Date and (ii) each of the other representations and
warranties made by Sellers in this Agreement shall be true and correct when made
and on and as of the Closing Date as though such representations and warranties
were made on and as of the Closing Date except (x) in each case, representations
and warranties that are made as of a specific date shall be true and correct
only on and as of such date and (y) in the case of clause (ii), where the
failure of such representations or warranties to be true and correct (without
giving effect to any “materiality” or "Material Adverse Effect" qualifications
set forth therein) does not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
 
 
(b) Sellers shall have performed or complied in all material respects with each
obligation and covenant required by this Agreement to be performed or complied
with by Sellers on or before the Closing and which is not otherwise specifically
referred to as a condition to closing in this Section 5.2.

 
 
(c) Sellers shall have delivered to Purchaser a certificate dated as of the
Closing Date and signed by an executive officer of Sellers certifying to the
effect that the conditions set forth in Sections 5.2(a) and 5.2(b) have been
satisfied.
 
 
(d) No order or injunction of any court or administrative agency of competent
jurisdiction nor any statute, rule, regulation or executive order promulgated by
any Governmental Entity of competent jurisdiction (whether temporary,
preliminary or permanent) shall be in effect as of the Closing, which has the
effect of making the purchase and sale of the Property or the transactions
contemplated herein illegal or otherwise preventing or prohibiting the purchase
and sale of the Property or the transactions contemplated herein or otherwise
restraining, enjoining, preventing, prohibiting or making illegal the purchase
and sale of the Property or the transactions contemplated herein.
 
 
(e) Purchaser shall have received all of the documents required to be delivered
by Sellers under Section 6.3.
 
 
(f) With respect to the Existing Loans that are not Assumed Loans, such Existing
Loans shall have been paid in full and the lien created by such Existing Loans
shall have been discharged of record concurrently with the Closing (or, if any
such lien is not so discharged but the Title Company insures over it, Sellers
shall have provided Purchaser with
 

 
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reasonably satisfactory evidence that such lien will be discharged of record
promptly after the Closing).
 
 
(g) The Required Governmental Consents listed on Schedule 1.1(l) of the
Disclosure Letter to be obtained prior to Closing shall have been obtained and
the Required Filings listed on Schedule 1.1(k) of the Disclosure Letter to be
made prior to Closing shall have been made.
 
 
(h) The OpCo Lease Agreement shall have been executed and delivered by E and its
applicable Affiliate.
 
 
(i) Any waiting period (and any extension thereof) applicable to the
consummation of the transactions contemplated by this Agreement under the HSR
Act shall have expired or been terminated, and any approval required under the
HSR Act shall have been obtained.
 
 
(j) (i) The representations and warranties made by E in Section 3.3(a) and
Section 12.1 shall be true and correct in all respects when made and on and as
of the Closing Date as though such representations and warranties were made on
and as of the Closing Date and (ii) each of the other representations and
warranties made by E in this Agreement shall be true and correct when made and
on and as of the Closing Date as though such representations and warranties were
made on and as of the Closing Date except (x) in each case, representations and
warranties that are made as of a specific date shall be true and correct only on
and as of such date and (y) in the case of clause (ii), where the failure of
such representations or warranties to be true and correct (without giving effect
to any “materiality” or "Material Adverse Effect" qualifications set forth
therein) does not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
 
 
(k) E shall have performed or complied in all material respects with each
obligation and covenant required by this Agreement to be performed or complied
with by E on or before the Closing and which is not otherwise specifically
referred to as a condition to closing in this Section 5.2.
 
 
(l) E shall have delivered to Purchaser a certificate dated as of the Closing
Date and signed by an executive officer of E certifying to the effect that the
conditions set forth in Sections 5.2(j) and 5.2(k) have been satisfied.
 
Notwithstanding anything in this Agreement to the contrary, if the
representations and warranties relating to the Leases and Material Contracts set
forth in Section 3.1 and the status of its tenants and contract parties
thereunder (other than the Sellers) were true and correct as of the date of this
Agreement, no change in circumstance or status of such tenants or contract
parties (e.g. defaults, bankruptcies or other adverse matters relating to such
tenants or contract parties) occurring after the date hereof shall permit the
Purchaser to terminate this Agreement or constitute grounds for the Purchaser’s
failure to close.
 
 
5.3 Conditions Precedent to E’s Obligations
 
 
 

 
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The obligation of E to consummate the transactions contemplated by this
Agreement on the Closing Date is subject to (a) the execution and delivery by
Purchaser on the Closing Date of the OpCo Lease Agreement, provided that E may
waive such conditions in its sole discretion, and (b) the Required Governmental
Consents listed on Schedule 1.1(l) of the Disclosure Letter to be obtained prior
to Closing shall have been obtained and the Required Filings listed on Schedule
1.1(k)  of the Disclosure Letter to be made prior to Closing shall have been
made.
 

 
 
ARTICLE VI
 
 

 
 
CLOSING DELIVERIES.
 
6.1 Mutual Deliveries
 
. At the Closing, Purchaser and Sellers shall (or shall cause its applicable
Affiliates to) deliver the following to each other or the Title Company, as
applicable, (provided that where delivery of documents, signatures or funds to
the other Party is required, such delivery shall be deemed satisfied if such
documents or funds are delivered to Title Company to be held in escrow, provided
such items are released therefrom at Closing):
 
 
(a) to the other Party, an assignment and assumption agreement substantially
similar to the form attached as Exhibit H duly executed and acknowledged by each
Seller and Purchaser, as applicable, (or Purchaser’s designee), pursuant to
which Sellers shall transfer to Purchaser all of their right, title and interest
in and Purchaser assumes all of the obligations (other than Excluded
Liabilities) under the (i) Contracts, (ii) Leases, (iii) Ground Leases, (iv)
Resident Agreements, (v) the transferable Permits, if any, relating to the Real
Property, (vi) any Personal Property, (vii) any transferable Intangibles and
(viii) the Assumed Liabilities;
 
 
(b) to the Title Company, the Tax Returns and other documents as may be required
under the laws and regulations related to the applicable real property transfer
taxes, if any, and any other Tax laws applicable to the transactions
contemplated hereby;
 
 
(c) to the Title Company, to the extent required, such Party’s and its
Affiliates’ organizational documents and resolutions evidencing its authority to
close the transactions contemplated hereby; and
 
 
(d) to the other Party, one or more settlement statements reflecting the
Purchase Price and all adjustments and prorations to be made thereto at the
Closing pursuant to this Agreement, as agreed to among the Parties.
 
 
6.2 Purchaser Deliveries
 
 At the Closing, Purchaser shall deliver the following to Sellers (provided that
where delivery of documents, signatures or funds to the other Party is required,
such delivery shall be deemed satisfied if such documents or funds are delivered
to Title Company to be held in escrow, provided such items are released
therefrom at Closing):
 
(i) a duly executed certificate as contemplated by Section 5.1(c) hereof;
 

 
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(ii) such other assignments, instruments of transfer, and other documents as
Sellers may reasonably require in order to complete the transactions
contemplated hereunder or to evidence compliance by Purchaser with the
covenants, agreements, representations and warranties made by it hereunder, in
each case, duly executed by Purchaser;  and
 
 
(iii) any documentation required by any Existing Lender to obtain an Assumed
Loan Assignment Approval, provided that if such documentation with respect to an
Existing Loan cannot be delivered by the Closing Date, such Existing Loan shall
be prepaid at or prior to Closing.
 
 
6.3 Sellers Deliveries.
 
 
(a) At the Closing, each Seller shall (or shall cause its applicable Affiliates
to) deliver the following to Purchaser (provided that where delivery of
documents, signatures or funds to the other Party is required, such delivery
shall be deemed satisfied if such documents or funds are delivered to Title
Company to be held in escrow, provided such items are released therefrom at
Closing):
 
 
(i) duly executed deeds substantially in the form attached hereto as Exhibit I
with Purchaser or Purchaser’s designee as grantee, as may be amended as
reasonably required to conform such deed to the customary practice in the
jurisdiction the Real Property is located and to reflect items noted in the
vesting deed for such Real Property;
 
 
(ii) duly executed bills of sale for the benefit of Purchaser or Purchaser’s
designee, in the form attached hereto as Exhibit J;
 
 
(iii) a duly executed certificate as contemplated by Section 5.2(c) hereof;
 
 
(iv) duly executed FIRPTA certificates of each Seller’s non-foreign status that
comply with Section 1445 of the Code in the form attached hereto as Exhibit K;
 
 
(v) originals or copies of all of the Business Records in Sellers’ or its
Affiliates possession or reasonable control;
 
 
(vi) keys to all locks located in the Improvements, to the extent in Sellers’
possession or reasonable control;
 
 
(vii) an owner’s title affidavit in the form attached hereto as Exhibit L with
respect to each Property, subject to changes reasonably requested by the Title
Company;
 
 
(viii) to the extent not previously delivered to Purchaser, originals or copies
of the Ground Leases, the Leases, the Resident Agreements Contracts, and the
Permits;

 
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(ix) all plans and specifications related to the Improvements in Sellers’
possession or reasonable control or otherwise available to Sellers; and
 
 
(x) such other assignments, instruments of transfer, and other documents as the
Purchaser may reasonably require (or as may be required under applicable law)
and including, without limitation, a customary and reasonably satisfactory
operations transfer agreement with respect to the Facilities and the Business,
in order to complete the transactions contemplated hereunder in each case, duly
executed by Sellers; provided that none of the documents described in this
clause (x) shall increase, other than to a de minimis extent, the liability or
obligations of the Sellers.
 
6.4 Frustration of Closing Conditions
 
. No Party hereto may rely on the failure of any condition set forth in Sections
6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was caused
by such Party’s failure to use its commercially reasonable efforts to consummate
the transactions contemplated hereby, as required by and subject to Section
12.17.
 
ARTICLE VII
 
 
7.1 “As Is” Condition of Property. PURCHASER ACKNOWLEDGES AND AGREES THAT,
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
SECTION 3.1 AND ARTICLE XI HEREOF, SELLERS HAVE NOT MADE, DO NOT MAKE AND
SPECIFICALLY DISCLAIM ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH
RESPECT TO (A) THE NATURE, QUALITY OR CONDITION OF THE REAL PROPERTY, INCLUDING
THE WATER, SOIL AND GEOLOGY, (B) THE INCOME TO BE DERIVED FROM THE REAL PROPERTY
OR THE FINANCEABILITY OF THE REAL PROPERTY, (C) THE SUITABILITY OF THE REAL
PROPERTY AND BUILDINGS THEREON FOR ANY AND ALL ACTIVITIES AND USES WHICH
PURCHASER MAY CONDUCT THEREON, (D) ANY PROPOSED OR THREATENED CONDEMNATION OF
ALL OR ANY PORTION OF THE REAL PROPERTY OR DESIGNATION OF ANY PORTION OF THE
REAL PROPERTY AS PART OF A REDEVELOPMENT ZONE, (E) THE COMPLIANCE OF OR BY THE
REAL PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES, DESIGNATIONS OR
REGULATIONS OF ANY APPLICABLE GOVERNMENTAL ENTITY OR BODY, (F) THE CURRENT OR
FUTURE REAL ESTATE TAX LIABILITY, ASSESSMENT OR VALUATION OF THE REAL PROPERTY,
(G) THE AVAILABILITY OR NON-AVAILABILITY OR WITHDRAWAL OR REVOCATION OF ANY
BENEFITS OR INCENTIVES CONFERRED BY ANY FEDERAL, STATE OR MUNICIPAL AUTHORITIES,
OR (H) THE PHYSICAL CONDITION OF THE LAND AND IMPROVEMENTS INCLUDING THE STATE
OF MAINTENANCE AND REPAIR THEREOF, AND SPECIFICALLY THAT EXCEPT TO THE EXTENT
PROVIDED IN THIS AGREEMENT SELLERS HAVE NOT MADE, DO NOT MAKE AND SPECIFICALLY
DISCLAIM ANY REPRESENTATIONS REGARDING SOLID WASTE, AS DEFINED BY
 

 
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THE U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40 C.F.R., PART 261, OR
THE DISPOSAL OR EXISTENCE, IN OR ON THE REAL PROPERTY, OF ANY HAZARDOUS
SUBSTANCE, AS DEFINED BY THE COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION
AND LIABILITY ACT OF 1980, AS AMENDED, AND APPLICABLE STATE LAWS, AND
REGULATIONS PROMULGATED THEREUNDER. PURCHASER FURTHER ACKNOWLEDGES AND AGREES
THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY, EXCEPT TO THE
EXTENT PROVIDED IN THIS AGREEMENT PURCHASER IS RELYING SOLELY ON ITS OWN
INVESTIGATION OF THE PROPERTY AND NOT ON ANY INFORMATION PROVIDED OR TO BE
PROVIDED BY SELLERS. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT ANY
INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE REAL PROPERTY WAS
OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLERS, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR
VERIFICATION OF SUCH INFORMATION. PURCHASER FURTHER ACKNOWLEDGES AND AGREES
THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, AND AS A MATERIAL
INDUCEMENT TO THE SELLERS’ EXECUTION AND DELIVERY OF THIS AGREEMENT, THE SALE
AND CONVEYANCE OF THE REAL PROPERTY TO PURCHASER (AND THE ACCEPTANCE THEREOF BY
PURCHASER) AS PROVIDED FOR HEREIN IS ON AN “AS IS, WHERE IS” CONDITION AND BASIS
WITH ALL FAULTS, AND WITHOUT ANY WRITTEN OR VERBAL REPRESENTATIONS OR WARRANTIES
WHATSOEVER (INCLUDING THE IMPLIED WARRANTY OF MERCHANTABILITY), WHETHER EXPRESS
OR IMPLIED OR ARISING BY OPERATION OF LAW. Purchaser acknowledges, represents
and warrants that Purchaser is not in a significantly disparate bargaining
position with respect to Sellers in connection with the transaction contemplated
by this Agreement; that Purchaser freely and fairly agreed to this waiver as
part of the negotiations for the transaction contemplated by this Agreement; and
that Purchaser is represented by legal counsel in connection with this
transaction and Purchaser has conferred with such legal counsel concerning this
waiver. The terms and provisions of this article Vii shall survive the Closing
and/or termination of this Agreement.
 
 
7.2 RELEASE.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, SECTION 11.9 HEREOF, THE PURCHASER HEREBY AGREES THAT EACH SELLER,
AND EACH OF ITS PARTNERS, MEMBERS, TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, PROPERTY MANAGERS, ASSET MANAGERS, AGENTS, ATTORNEYS,
AFFILIATES AND RELATED ENTITIES, HEIRS, SUCCESSORS, AND ASSIGNS (COLLECTIVELY,
THE “RELEASEES”) SHALL BE, AND ARE HEREBY, FULLY AND FOREVER RELEASED AND
DISCHARGED FROM ANY AND ALL LIABILITIES, LOSSES, CLAIMS (INCLUDING THIRD PARTY
CLAIMS), DEMANDS, DAMAGES (OF ANY NATURE WHATSOEVER), CAUSES OF ACTION, COSTS,
PENALTIES, FINES, JUDGMENTS, REASONABLE ATTORNEYS’ FEES, CONSULTANTS’ FEES AND
COSTS AND EXPERTS’ FEES (COLLECTIVELY, THE “CLAIMS”) WITH RESPECT TO ANY AND ALL
CLAIMS, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN
 

 
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OR UNFORESEEN, THAT MAY ARISE ON ACCOUNT OF OR IN ANY WAY BE CONNECTED WITH THE
ASSETS OR THE PROPERTY OF SUCH SELLER, INCLUDING, WITHOUT LIMITATION, THE
PHYSICAL, ENVIRONMENTAL AND STRUCTURAL CONDITION OF THE PROPERTY OF SUCH SELLER
OR ANY LAW OR REGULATION APPLICABLE THERETO, INCLUDING, WITHOUT LIMITATION, ANY
CLAIM OR MATTER (REGARDLESS OF WHEN IT FIRST APPEARED) RELATING TO OR ARISING
FROM (A) THE PRESENCE OF ANY ENVIRONMENTAL PROBLEMS, OR THE USE, PRESENCE,
STORAGE, RELEASE, DISCHARGE, OR MIGRATION OF HAZARDOUS MATERIALS ON, IN, UNDER
OR AROUND SUCH PROPERTY, REGARDLESS OF WHEN SUCH HAZARDOUS MATERIALS WERE FIRST
INTRODUCED IN, ON OR ABOUT SUCH PROPERTY, INCLUDING, WITHOUT LIMITATION ANY
RIVER SITE CLAIMS, (B) ANY PATENT OR LATENT DEFECTS OR DEFICIENCIES WITH RESPECT
TO SUCH PROPERTY, (C) ANY AND ALL MATTERS RELATED TO SUCH PROPERTY OR ANY
PORTION THEREOF, INCLUDING WITHOUT LIMITATION, THE CONDITION AND/OR OPERATION OF
SUCH PROPERTY AND EACH PART THEREOF, AND (D) THE PRESENCE, RELEASE AND/OR
REMEDIATION OF ASBESTOS AND ASBESTOS CONTAINING MATERIALS IN, ON OR ABOUT SUCH
PROPERTY REGARDLESS OF WHEN SUCH ASBESTOS AND ASBESTOS CONTAINING MATERIALS WERE
FIRST INTRODUCED IN, ON OR ABOUT SUCH PROPERTY; PROVIDED, HOWEVER, THAT IN NO
EVENT SHALL RELEASEES BE RELEASED FROM ANY CLAIMS ARISING PURSUANT TO THE
PROVISIONS OF THIS AGREEMENT OR WITH RESPECT TO EXCLUDED LIABILITIES OR ANY
SELLER’S OBLIGATIONS, IF ANY, UNDER THE CLOSING DOCUMENTS TO WHICH IT IS A
PARTY. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, SECTION 11.9 HEREOF, THE PURCHASER HEREBY WAIVES AND AGREES NOT TO
COMMENCE ANY ACTION, LEGAL PROCEEDING, CAUSE OF ACTION OR SUITS IN LAW OR
EQUITY, OF WHATEVER KIND OR NATURE, INCLUDING, BUT NOT LIMITED TO, A PRIVATE
RIGHT OF ACTION UNDER THE FEDERAL SUPERFUND LAWS, 42 U.S.C. SECTIONS 9601 ET
SEQ. AND CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 25300 ET SEQ. (AS SUCH LAWS
AND STATUTES MAY BE AMENDED, SUPPLEMENTED OR REPLACED FROM TIME TO TIME),
DIRECTLY OR INDIRECTLY, AGAINST THE RELEASEES OR THEIR AGENTS IN CONNECTION WITH
THE CLAIMS DESCRIBED ABOVE.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, SECTION 11.9 HEREOF, IN THIS CONNECTION AND TO
THE GREATEST EXTENT PERMITTED BY LAW, THE PURCHASER HEREBY AGREES, REPRESENTS
AND WARRANTS THAT THE PURCHASER REALIZES AND ACKNOWLEDGES THAT FACTUAL MATTERS
NOW KNOWN TO IT MAY HAVE GIVEN OR MAY HEREAFTER GIVE RISE TO CAUSES OF ACTION,
CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES, COSTS, LOSSES AND EXPENSES WHICH
ARE PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED, AND  THE PURCHASER FURTHER
AGREES, REPRESENTS AND WARRANTS THAT THE WAIVERS AND RELEASES HEREIN HAVE BEEN
NEGOTIATED AND AGREED UPON IN LIGHT OF THAT REALIZATION AND THAT THE PURCHASER
NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND ACQUIT THE SELLERS FROM
ANY SUCH UNKNOWN CLAIMS, DEBTS, AND CONTROVERSIES WHICH MIGHT IN ANY WAY BE
INCLUDED AS A MATERIAL
 

 
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PORTION OF THE CONSIDERATION GIVEN TO THE SELLERS BY THE PURCHASER IN EXCHANGE
FOR THE SELLERS’ PERFORMANCE HEREUNDER.  THE SELLERS HAVE GIVEN THE PURCHASER
MATERIAL CONCESSIONS REGARDING THIS TRANSACTION IN EXCHANGE FOR THE PURCHASER
AGREEING TO THE PROVISIONS OF THIS SECTION 7.2.  THE PROVISIONS OF THIS SECTION
7.2 SHALL SURVIVE THE CLOSING AND SHALL NOT BE DEEMED MERGED INTO ANY INSTRUMENT
OR CONVEYANCE DELIVERED AT THE CLOSING.
 
 
NOTWITHSTANDING THE FOREGOING, THE RELEASES SET FORTH IN THIS SECTION 7.2 SHALL
NOT APPLY TO ANY CLAIMS ARISING OUT OF OR IN CONNECTION WITH (I) THE ENFORCEMENT
OF THE PROVISIONS OF THIS AGREEMENT OR ANY AGREEMENT ENTERED INTO IN CONNECTION
HEREWITH OR CONTEMPLATED HEREBY TO BE ENTERED INTO AT CLOSING, (II) EXCLUDED
LIABILITIES, (III) FRAUD, OR (IV) THE OBLIGATIONS OF THE PARTIES IN RESPECT OF
AGREEMENTS UNRELATED TO THE PROPERTY, THE BUSINESS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
 
 
7.3 California Specific Provisions,
 
(a) Section 25359.7 of the California Health and Safety Code requires owners of
nonresidential property who know or have reasonable cause to believe that a
release of a Hazardous Material have come to be located on or beneath real
property to provide written notice of that condition to a purchaser of said real
property. There is a possibility that a release of Hazardous Material may have
come to be located on or beneath one or more Properties.  By the Purchaser’s
execution of this Agreement, the Purchaser (i) acknowledges the Purchaser’s
receipt of the foregoing notice given pursuant to Section 25359.7 of the
California Health and Safety Code and that it is aware of the benefits conferred
to the Purchaser by Section 1542 of the California Civil Code and the risks it
assumes by any waiver of the Purchaser’s benefits thereunder and (ii) as of the
date hereof and as of the Closing and after receiving advice of the Purchaser’s
legal counsel, waives any and all rights or remedies whatsoever, express,
implied, statutory or by operation of law, the Purchaser may have against any
Seller, including remedies for actual damages under Section 25359.7 of the
California Health and Safety Code, arising out of or resulting from any unknown,
unforeseen or unanticipated presence or releases of hazardous substances or
other hazardous materials from, on or about any Property.  The foregoing shall
not qualify any of the representations and warranties expressly set forth in
this Agreement.
 
 
(b)  The Purchaser and the Sellers acknowledge that the Sellers are required to
disclose if any Property in California lies within the following natural
hazardous areas or zones: (i) a special flood hazard area (any type Zone “A” or
“V”) designated by the Federal Emergency Management Agency (Cal. Gov. Code
§8589.3); (ii) an area of potential flooding shown on a dam failure inundation
map designated pursuant to Cal. Gov. Code § 8589.5 (Cal. Gov. Code §8589.4);
(iii) a very high fire hazard severity zone designated pursuant to Cal. Gov.
Code § 51178 or 51179 (in which event the owner maintenance obligations of Cal.
Gov. Code § 51182 would apply) (Cal. Gov. Code §51183.5); (iv) a wildland area
that may contain substantial forest fire risks and hazards designated pursuant
to Cal. Pub. Resources Code § 4125 (in which event (A) the property owner would
be subject to maintenance requirements of Cal. Pub. Resources Code § 4291 and
(B) it would not be the State’s responsibility to provide fire

 
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protection services to any building or structure located within the wildland
area except, if applicable, pursuant to Cal. Pub. Resources Code § 4129 or
pursuant to a cooperative agreement with a local agency for those purposes
pursuant to Cal. Pub. Resources Code §4142) (Cal. Pub. Resources Code § 4136);
(u) an earthquake fault zone (Cal. Pub. Resources Code § 2621.9); or (v) a
seismic hazard zone (and, if applicable, whether a landslide zone or
liquefaction zone) (Cal. Pub. Resources Code § 2694).  The Purchaser and the
Sellers further acknowledge that (x) they have employed the services of a
natural hazard expert (which, in such capacity is herein called “Natural Hazard
Expert”) to examine the maps and other information specifically made available
to public by government agencies for the purpose of enabling each of the Sellers
to fulfill its disclosure obligations with respect to the natural hazards
referred to the above-referenced statutory provisions, and (y) the Natural
Hazard Expert has provided a report in writing to the Sellers and the Purchaser
showing the results of its examination (the receipt of which is hereby
acknowledged by the Sellers and the Purchaser).  As contemplated in the
above-referenced statutory provisions, if an earthquake fault zone, seismic
hazard zone, very high fire hazard severity zone or wildland fire area map or
accompanying information is not of sufficient accuracy of scale for the Natural
Hazard Expert to determine if a Property in California is within the respective
natural hazard zone, then for purposes of the disclosure such Property shall be
considered to lie within such natural hazard zone.  The Purchaser acknowledges
and agrees that the written report prepared by the Natural Hazard Expert
regarding the results of its examination fully and completely discharges the
Sellers for errors or omission not within in its personal knowledge shall be
deemed to apply and the Natural Hazard Expert shall be deemed to be an expert,
dealing with matters within the scope of its expertise with respect to the
examination and written report regarding the natural hazards referred to
above.  In no event shall any Seller have any responsibility for matters not
actually known to such Seller.  THESE HAZARDS MAY LIMIT THE PURCHASER’S ABILITY
TO DEVELOP A PROPERTY, TO OBTAIN INSURANCE, OR TO RECEIVE ASSISTANCE AFTER A
DISASTER.  THE MAPS ON WHICH THESE DISCLOSURES ARE BASED ESTIMATE WHERE NATURAL
HAZARDS EXIST.  THEY ARE NOT DEFINITIVE INDICATORS OF WHETHER OR NOT A PROPERTY
WILL BE AFFECTED BY A NATURAL DISASTER.  PURCHASER MAY WISH TO OBTAIN
PROFESSIONAL ADVICE REGARDING THOSE HAZARDS AND OTHER HAZARDS THAT MAY AFFECT
ANY OF THE PROPERTIES.
 
 
(c) The provisions of this Section 7.3 shall survive the Closing.
 
 
ARTICLE VIII
 
 

 
 
ADJUSTMENTS
 
 
8.1 Adjustments
 
 
 
(a) The Purchase Price shall not be subject to adjustment except as provided in
Sections 8.1, 8.3 and 8.4.
 
 
(b) The following shall be prorated and adjusted between Sellers and Purchaser
as of 11:59 p.m. Eastern Standard Time on the day immediately prior to the
Closing Date on the basis of the actual number of days of the month which shall
have elapsed as of the Closing Date and based upon the actual number of days in
the month and a 365 day year:
 

 
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(i) All assessments, general or special, with Sellers being responsible for any
installments of assessments which are due prior to the Closing Date and
Purchaser being responsible for any installments of assessments which are due on
or after the Closing Date;
 
 
(ii) All real estate Taxes on the Real Property and personal property Taxes on
the Personal Property and similar Taxes levied against the Property (but, for
the avoidance of doubt, excluding any income, gain or similar Taxes);  provided
that, to the extent a Tax is not fixed as of the Closing, proration of such Tax
shall be based upon the tax rate for the preceding taxable year applied to the
latest assessed valuation of the applicable Property; provided further, that
Purchaser shall pay any supplemental Taxes (other than transfer taxes and sales
and use taxes governed by Section 8.2) resulting from any change in ownership or
reassessment occurring as of the Closing Date;
 
 
(iii) Fuel, water, electricity, sewer, gas, telephone and other utility charges
for the Real Property (including any Taxes thereon) based, to the extent
practicable, on final meter readings and final invoices; provided, however,
Sellers shall be entitled to a refund from the applicable utility company of all
deposits held by utility companies and if retained by such utility company with
respect to the Property, then Sellers shall be entitled to a credit equal to
such deposit;
 
 
(iv)  all rental and similar payments (other than Entrance Fees) received from
any Tenant under any Lease (“Tenant Rents”);
 
 
(v) all rental and similar payments received from any Resident under any
Resident Agreement (“Resident Rents”);
 
 
(vi) all rental payments required to be made by any Seller under any Ground
Lease;
 
 
(vii) all fees and other amounts payable to the Current Managers or Sellers
under the Current Management Agreements which are not terminated at or prior to
the Closing and without duplication of any other adjustments in this Section
8.1;
 
 
(viii) prepaid fees for Permits assigned to Purchaser at the Closing;
 
 
(ix) any amounts prepaid by Sellers under the Contracts with respect to any
periods after the Closing Date;
 
 
(x) amounts owed under the Assumed Personal Property Debt.
 
 
(xi) any dues, fees, common charges, maintenance fees relating to any homeowners
associations, planned unit developments and

 
 
 
 

 
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reciprocal easement agreements, and any other expenses pertaining to the
Property; and
 
 
(xii) Such other items as are customarily apportioned in real estate closings
of similar transactions except to the extent otherwise specifically provided in
this Agreement;
 
 
(c) There shall be no adjustment to the Purchase Price on account of (1) CHOW
Liabilities, (2) Concessions of Rent, and (3) any reserves required to be funded
or maintained by Purchaser with respect to the Facilities as a Continuing Care
Retirement Community or in connection with the Permits, and any costs or
expenses relating to the foregoing shall be assumed by and be the sole
responsibility of Purchaser.
 
(d) There shall be no adjustment to the Purchase Price on account of cash
maintained by Seller or Current Manager with respect to each Property through
the Closing Date, and Sellers shall be entitled to retain or receive all such
cash.
 
 
(e) Seller shall retain its right, title and interest in and to all unpaid
accounts receivable with respect to the Properties (including any Tenant Rents,
Resident Rents and payments owed to Sellers under the Other Current Management
Agreements, as applicable) which relate to the period prior to the Closing Date
and any amount received by Seller or Purchaser in reimbursement of Medicaid,
Medicare or VA services attributable to periods prior to the Closing Date
(collectively the “Pre-Closing Rents and Reimbursements”).  On the Closing Date,
with respect to Tenant Rents and Resident Rents, Sellers shall provide Purchaser
with a schedule setting forth by Property and by Tenant or Resident, as
applicable their outstanding accounts receivable as of the Closing Date and
showing dates of service related to each such outstanding account
receivable.  Sellers shall be entitled to retain any amounts received by Seller
or Current Manager with respect to Pre-Closing Rents and Reimbursements and
Purchaser and Purchaser’s tenant shall be required to promptly pay to Sellers
any Pre-Closing Rents and Reimbursements received on behalf of Purchaser or E,
in its capacity as the tenant of the Facilities after the Closing.  Until the
Final Adjustment Date Purchaser shall provide to Seller on a quarterly basis to
enable Seller to track Purchaser’s obligations under this Section 8.1(e), (i) a
schedule setting forth by Property and by Resident the Resident’s outstanding
accounts receivable; (ii) a schedule setting forth by Property and by each
Tenant, the Tenant’s outstanding accounts receivable; and (iii) a rent roll for
each Property. Seller shall use such information solely for the purpose set
forth in this Section 8.1(e) and for no other purpose.  Until the Final
Adjustment Date, Seller shall provide to Purchaser on a quarterly basis a
written accounting of the payments it has received under this Section 8.1(e).
 
 
(f) If any errors or omissions in computing the apportionments under Section 8.1
shall be discovered, Sellers and Purchaser shall promptly make appropriate
adjusting payments to each other to correct such errors or omissions.  All
amounts owing from or to Sellers, or from or to Purchaser, that require
adjustment after the Closing Date shall be settled within 180 days after the
Closing Date (the “Final Adjustment Date”).  Purchaser and Sellers shall each
make such records available for inspection by the other party as are reasonable
to demonstrate the accuracy of any adjustments.  In connection with determining
the amount of adjustments payable on the Final Adjustment Date under this
Section 8.1(f), all such amounts

 
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shall be aggregated together and the party responsible for the net payment as a
result of such adjustments shall make such payment within two (2) business days
of the Final Adjustment Date.
 
 
(g) Sellers, in their sole discretion and at their sole expense, (i) may
prosecute an appeal of real or personal property Taxes for any taxable year up
to and including the taxable year in which the Closing occurs and (ii) may take
any related action which Sellers deem appropriate in connection with such
appeal. Purchaser shall reasonably cooperate with Sellers in connection with
such appeal and the collection of any refund of real or personal property Taxes
paid. Any such refunds shall be distributed and promptly paid over by the Party
receiving the refund as follows: first, to reimburse Sellers and Purchaser for
all reasonable costs incurred in connection with the appeal; second, to Sellers
to the extent such refund relates to periods prior to the Closing Date; and
third, to Purchaser to the extent such refund relates to the Closing Date or
periods thereafter.  To the extent any such appeal relates to the Closing Date
or periods thereafter, Purchaser shall have the right to participate in such
appeal at its sole cost and expense.  Notwithstanding anything in this Section
8.1(g) to the contrary, Sellers may not take any action pursuant to this Section
8.1(g) that could reasonably be expected to increase the Tax liability of
Purchaser with respect to the Property to the extent not payable by Sellers
pursuant to this Agreement without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, conditioned, or delayed.
 
8.2 Transfer and Sales Taxes; Transaction Costs
 
. All transfer, sales and use taxes imposed with respect to the transactions
contemplated by this Agreement, and the costs and expenses of preparing and
filing the reports and/or Tax Returns with respect thereto, shall be paid 50% by
Sellers and 50% by Purchaser. Sellers shall prepare and timely file all
necessary Tax Returns with respect to the foregoing, and Purchaser shall
reasonably cooperate with Sellers as necessary for Sellers to prepare and file
such Tax Returns. The costs and expenses of title insurance (but only with
respect to “standard coverage” as opposed to “extended coverage” endorsements)
and Title Updates shall be paid 50% by Sellers and 50% by Purchaser and
Purchaser shall pay all other title insurance premiums and costs. Except as
otherwise expressly provided in this Agreement, each of Sellers and Purchaser
will pay its own costs and expenses (including attorneys’ fees) in connection
with this Agreement and the transactions contemplated hereby.  Each Party shall
indemnify and hold harmless the other Party from any liability for its failure
to pay any Taxes as provided in this Section 8.2, which indemnity shall survive
the Closing.
 
8.3 Assumed Loans, other Existing Loan and Entrance Fees
 
Purchaser shall receive a credit against the Purchase Price in the amount of
(x) the Assumed Loan Amount at the Closing and (y) all Entrance Fees (less the
restricted cash deposits currently maintained in respect thereof, provided that
at Closing Seller shall transfer all of its right, title and interest in and to
such restricted cash deposits (“Cash Deposits”) to Purchaser or its designee).
Sellers shall be given a credit for all escrows and reserves held under the
Assumed Loans, the rights to which shall be assigned to Purchaser. Purchaser
shall be given a credit for any accrued and unpaid interest, and any due but
unpaid amounts, under the Assumed Loans related to periods prior to the Closing
Date.  Sellers shall be given a credit for all prepayment fees, premiums,
penalties, exit fees, yield maintenance payments or other charges incurred in
connection with the prepayment of the Existing Loans which are not Assumed
Loans, but only to the extent such charges are not due to a default by the
applicable Sellers thereunder (the “Prepayment Fees”).  
 

 
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To the extent Sellers breach their obligation under the second sentence of
Section 3.4(h) to pay in full an Existing Loan (which is not an Assumed Loan)
and cause the lien created thereby to be discharged of record at or prior to the
Closing (or, if any such lien is not so discharged but the Title Company insures
over it, Sellers shall provide Purchaser with reasonably satisfactory evidence
that such lien will be discharged of record promptly after the Closing), or
their obligation under clause (vii) of Section 3.4(a) with respect to either
secured indebtedness or liabilities or obligations relating to the Property and
outside of the ordinary course of business (but only to the extent Purchaser or
the Property would be bound by such liabilities or obligations after the
Closing), Purchaser shall receive a credit against the Purchase Price in the
amount necessary to pay such Existing Loan in full (less any Prepayment Fees)
and cause such lien to be discharged of record or satisfy and discharge such
secured indebtedness, liabilities or obligations, as applicable.
 
 
8.4 Excluded Ground Leases.  Notwithstanding any other provision of this
Agreement to the contrary, but subject to Section 12.18, in the event that
either (a) a Ground Lease Estoppel is not obtained prior to Closing, (b) such
Ground Lease Estoppel is obtained but indicates a breach of any of the
representations set forth in Section 3.1(d)(v), or (c) such Ground Lease
Estoppel is obtained but does not include a consent to the assignment of the
applicable Ground Lease to the Purchaser (to the extent the applicable ground
lessor has such consent right) or a waiver of the applicable ground lessor’s
right of first refusal, purchase option and/or termination right with respect to
an assignment of such Ground Lease (to the extent the applicable ground lessor
has such right of first refusal, purchase option and/or termination right), then
Purchaser shall have the right to elect in its sole discretion, by written
notice to Seller at any time prior to the Closing, to either (1) exclude from
the transactions contemplated by this Agreement the applicable Facility and all
Property comprising or relating to such Facility, in which case (w) the Purchase
Price shall be reduced by the portion of the Purchase Price allocable to such
Facility, (x) such Facility and such Property shall not be transferred to
Purchaser at the Closing, (y) the OpCo Lease Agreement shall not include such
Facility or Property, and (z) from and after the Closing Date none of the
Parties hereto shall have any claims against any other Party hereto in
connection with such Facility and such Property, (2) acquire all of the direct
equity interests in the Seller that owns such Facility and such Property, in
which event the Closing deliveries described in Article VI shall be
appropriately modified, in a manner reasonably satisfactory to Sellers and
Purchaser, to document and reflect such acquisition, or (3) proceed with the
acquisition of such Facility and such Property on the Closing Date as
contemplated herein (provided that if Purchaser makes an election to proceed
with an acquisition under this clause (3), then Purchaser shall indemnify and
hold harmless the Sellers for all Damages suffered by Sellers as a result of any
default under the applicable Ground Lease due to such acquisition).
 
 
ARTICLE IX
 
 

 
 
CASUALTY; CONDEMNATION; ENVIRONMENTAL LIABILITY
 
 
9.1 No Purchase Price Adjustment
 

If prior to Closing, any of the Improvements are damaged by any casualty, any
Seller learns of any actual or threatened taking in condemnation or by eminent
domain (or a sale in lieu thereof) of all or any portion of the Real Property,
or Seller learns of any Environmental Liability, such Seller shall promptly give
 

 
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Purchaser written notice of such occurrence and with respect to a casualty, give
Purchaser access to the Real Property to examine the casualty. Notwithstanding
anything to the contrary herein, in the event of any casualty or condemnation
with respect to any Real Property, Purchaser shall purchase the applicable
Property without any adjustment to the Purchase Price, provided, however:
 
 
(a) in the case of a casualty, (i) the applicable Seller shall give Purchaser a
credit at Closing equal to any insurance proceeds received by such Seller prior
to Closing on account of such casualty and at Closing shall designate Purchaser
as loss payee under the applicable insurance policies in respect of such
casualty and shall assign to Purchaser, and Purchaser shall have the right to
make a claim for and to retain any casualty insurance proceeds received under
the casualty insurance policies in effect with respect to such Real Property on
account of such physical damage or destruction and (ii) for any loss due to
cancellation or lapse of an insurance policy due to such Seller’s gross
negligence or willful conduct, Seller shall pay to Purchaser any other amounts
as may be required to perform repairs to such Real Property or rebuild such Real
Property to substantially the same condition as it existed prior to the
occurrence of such casualty up to and in no event exceeding the Purchase Price
allocated to such Real Property; and
 
 
(b) in the case of a condemnation, applicable Seller shall assign to Purchaser
the right to receive all condemnation awards with respect to such Real Property,
together with the right to file any claim and the right to contest, negotiate,
settle and/or litigate any such claim.
 
 
ARTICLE X
 
 

 
 
TERMINATION; DEFAULT
 
10.1 Termination
 
. This Agreement may be terminated at any time prior to the Closing Date, as
follows:
 
 
(a) by written agreement of Seller and Purchaser; or
 
 
(b) by Sellers or Purchaser, if:
 
 
(i) the Closing shall not have occurred on or before March 31, 2013 (the
“Outside Date”) provided, however, that the right to terminate this Agreement
pursuant to this Section 10.1(b)(i) shall not be available to any Party if the
failure of such Party or its Affiliates to perform any of its obligations under
this Agreement has been a principal cause of, or resulted in, the failure of the
transactions contemplated herein to be consummated on or before such date; or
 
 
(ii) any Governmental Entity of competent jurisdiction shall have issued an
order or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated herein, and such order or other action
shall have become final and non-appealable; provided, however, that the right to
terminate this Agreement under this Section 10.1(b)(ii)
 

 
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shall not be available to a Party if the issuance of such final, non-appealable
order was primarily due to the failure of such Party or its Affiliates to
perform any of its obligations under this Agreement.

 
(c) by Sellers if Purchaser shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements set forth in this Agreement, which breach or failure to perform (x)
would, or would reasonably be expected to, result in a failure of a condition
set forth in Section 5.1(a) or Section 5.1(b) and (y) cannot be cured on or
before the Outside Date or, if curable, is not cured by Purchaser within twenty
(20) days of receipt by Purchaser of written notice of such breach or failure;
provided that no Seller shall have the right to terminate this Agreement
pursuant to this Section 10.1(c) if Sellers or their Affiliates are then in
breach of any of their respective representations, warranties, covenants or
agreements set forth in this Agreement such that the conditions set forth in
either Section 5.2(a) or Section 5.2(b) would not be satisfied.
 
 
(d) by Purchaser, if Sellers shall have breached or failed to perform in any
material respect any of their representations, warranties, covenants or other
agreements set forth in this Agreement, which breach or failure to perform (x)
would, or would reasonably be expected to, result in a failure of a condition
set forth in Section 5.2(a) or Section 5.2(b) and (y) cannot be cured on or
before the Outside Date or, if curable, is not cured by Sellers within twenty
(20) days of receipt by Sellers of written notice of such breach or failure;
provided that Purchaser shall not have the right to terminate this Agreement
pursuant to this Section 10.1(d) if Purchaser is then in breach of any of its
respective representations, warranties, covenants or agreements set forth in
this Agreement such that the conditions set forth in either Section 5.1(a) or
Section 5.1(b) would not be satisfied.
 
 
10.2 Effect of Termination
 
.  In the event that this Agreement is terminated and the transactions
contemplated by this Agreement are abandoned pursuant to Section 10.1, written
notice thereof shall be given to the other Party or Parties, specifying the
provisions hereof pursuant to which such termination is made and describing the
basis therefor in reasonable detail, and this Agreement shall forthwith become
null and void and of no further force or effect whatsoever without liability on
the part of any Party hereto, and all rights and obligations of any Party hereto
shall cease and each party shall be relieved of any liability or damages
resulting out of any breach of this Agreement which is no willful or
intentional; provided, however, that, notwithstanding anything in the foregoing
to the contrary, no such termination shall relieve any Party hereto of any
liability or damages resulting from or arising out of any willful or intentional
breach of this Agreement.  The Parties acknowledge and agree that the failure of
Purchaser to pay the Purchase Price if Seller has satisfied the conditions in
Section 5.2(a) and Section 5.2(b) is deemed a willful and intentional breach of
this Agreement.
 
ARTICLE XI
 
 
INDEMNIFICATION
 
 
11.1 Survival of Representations and Warranties. . Notwithstanding anything in
this Agreement to the contrary, each representation and warranty contained
herein and each covenant contained herein to be performed prior to the Closing
Date, will survive the Closing
 

 
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and continue in full force and effect until the date that is six (6) months
following the Closing Date (the "Survival Expiration Date"), and no claim for
indemnification for breach of any such representation or warranty or covenant
may be asserted  and no action or proceeding thereon shall be valid or
enforceable at law or equity pursuant to this Agreement unless, at or before
midnight on the Survival Expiration Date, the Indemnified Party delivers written
notice of claim to the Indemnitor setting forth, in reasonable detail, the
nature and basis of the claim and (to the extent known at such time) an estimate
of the amount of Damages reasonably expected to arise in connection with such
claim (it being understood that in no event shall such estimate limit any claim
for Damages hereunder); provided, however, that the obligation to indemnify
shall continue following the Survival Expiration Date with respect to any claim
for indemnification as to which notice was provided in accordance with this
Section 11.1 prior to the Survival Expiration Date.   Notwithstanding the
foregoing, no claim for indemnification for breach of the representation or
warranty contained in the first sentence of Section 3.1(d)(i) may be asserted
after the Closing by the Purchaser if the applicable title exception was insured
over or omitted in the applicable title policy issued by Title Company on the
Closing Date.
 
 
11.2 Indemnification.
 
 
(a) Subject to the terms and conditions of this Article XI, Sellers shall
jointly and severally indemnify from and after the Closing, Purchaser, its
Affiliates and their respective directors, officers, employees, agents,
successors and permitted assigns (collectively, the “Purchaser Indemnified
Parties”) for any and all Damages to the extent arising from any (i) breach by
Sellers of any of their representations or warranties contained in this
Agreement to be true and correct on the date hereof or on the Closing Date, as
if made on such date (except in the case of any representations or warranties
that address matters only as of a particular date, as of such date) or (ii)
breach by Sellers of any of their covenants contained in this Agreement to be
performed at or prior to Closing.
 
 
(b) Subject to the terms and conditions of this Article XI, from and after the
Closing, Purchaser shall indemnify and defend Sellers and their Affiliates and
their respective members, directors, officers, employees, agents, successors and
assigns (collectively, the “Seller Indemnified Parties”) for, and hold the
Seller Indemnified Parties harmless from, any and all Damages to the extent
arising from any (i) breach of any representation or warranty by Purchaser
contained in this Agreement to be true and correct on the date hereof or on the
Closing Date, as if made on such date (except, in the cases of any
representations or warranties that address matters only as of a particular date,
as of such date), or (ii) breach by Purchaser of any of its covenants contained
in this Agreement to be performed at or prior to Closing.
 
 
(c) The amount of indemnification to which an Indemnified Party shall be
entitled under this Article XI shall be determined: (i) by written agreement
between the Indemnified Party and the Indemnitor; (ii) by a judgment or decree
of any court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree.  Without limiting a party’s
obligation to make payment upon the earliest event specified in the preceding
sentence, from and after the date on which the amount of Damages for which an
Indemnified Party is entitled to indemnification under this Article XI is
determined in accordance with this Section 11.2(c), interest will accrue on such
amount from such date until the date of payment at 10% per annum, compounding
monthly; provided, however, that no such
 

 
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interest will be payable in the event that a final judgment or decree of any
court of competent jurisdiction subsequently determines that the Indemnified
Party was not entitled to indemnification for the underlying amount under this
Article XI.
 
 
(d) For purposes of this Article XI and for purposes of determining whether a
Purchaser Indemnified Party is entitled to indemnification pursuant to Section
11.2(a) and whether a Seller Indemnified Party is entitled to indemnification
pursuant to Section 11.2(b), any inaccuracy in or breach of any representation
or warranty made by any Seller or Purchaser, as applicable, shall be determined
without regard to any qualification as to “Material Adverse Effect” or
“materiality” set forth in such representation or warranty or in any document
delivered or made available in connection herewith, and all references to the
terms “material”, “materiality”, “materially”, “ Material Adverse Effect” or any
similar terms shall be ignored for purposes of determining whether such
representation or warranty was true and correct.
 
11.3 Indemnification Claim Procedures
 
.
 
 
(a) If any Action is commenced or threatened that may give rise to a claim for
indemnification pursuant to this Article XI (an “Indemnification Claim”) by any
person entitled to indemnification under this Agreement (each, an “Indemnified
Party”), then such Indemnified Party shall promptly (i) notify the Indemnitor
and (ii) deliver to the Indemnitor a written notice (A) describing in reasonable
detail the nature of and the facts giving rise to the Action, (B) including a
copy of all papers served, if any, with respect to such Action, (C) to the
extent known at such time, including the Indemnified Party’s estimate of the
amount of Damages (including the method of calculation thereof) that may arise
from such Action (it being understood that in no event shall such estimate limit
any claim for Damages hereunder), and (D) describing in reasonable detail the
basis for the Indemnified Party’s request for indemnification under this
Agreement.  Failure to notify the Indemnitor in accordance with this Section
11.3(a) will not relieve the Indemnitor of any liability that it may have to the
Indemnified Party, except to the extent (1) the Indemnitor is actually and
materially prejudiced by the Indemnified Party’s failure to give such notice or
(2) the Indemnified Party fails to notify the Indemnitor of such Indemnification
Claim in accordance with this Section 11.3(a) prior to the Survival Expiration
Date.
 
 
(b) An Indemnitor may elect at any time to assume and thereafter conduct the
defense, compromise or settlement of any Action subject to any such
Indemnification Claim with counsel of the Indemnitor’s choice (which counsel
shall be reasonably satisfactory to the Indemnified Party), and the Indemnified
Party shall bear any fees, costs and expenses of its counsel in connection with
such Action; provided, however, an Indemnitor may not assume and thereafter
conduct the defense of any Action subject to any such Indemnification Claim in
the event that (A) the amount of such Indemnification Claim is (i) less than the
Basket Amount or (ii) greater than the Indemnification Amount, (B) such
Indemnification Claim involves criminal allegations or any Governmental
Authority or (C) such Indemnification Claim seeks any equitable
remedy.  Notwithstanding the foregoing, the Indemnitor will bear the reasonable
fees, costs and expenses of one such separate counsel to the Indemnified Party
in each jurisdiction (and shall pay such fees, costs and expenses as incurred),
if the defendants in, or targets of, any such action or proceeding include both
the Indemnified Party and the Indemnitor, and the Indemnified Party shall have
reasonably concluded that there

 
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 are or are reasonably likely to be legal defenses available to it which are
different from or additional to those available to the Indemnitor or that
representation by the same counsel is or is reasonably likely to be a conflict
of interest.  If the Indemnitor assumes such defense, the Indemnified Party
shall have the right, but not the obligation, to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnitor, it being understood that the Indemnitor shall
control such defense.  If the Indemnitor assumes such defense, it shall be
permitted to settle or compromise any such Action, and each Indemnified Party
shall reasonably cooperate in all respects with the conduct of such defense by
the Indemnitor (including the making of any related claims, counterclaim or
cross complaint against any Person in connection with the Action) and/or the
settlement of such Action by the Indemnitor; provided, however, that the
Indemnitor will not approve of the entry of any judgment or enter into any
settlement or compromise with respect to the Indemnification Claim without the
Indemnified Party’s prior written approval, unless (i) the terms of such
settlement provide for a full and complete release by the third-party claimant
of the claims that are the subject of such Action in favor of the Indemnified
Party, (ii) the Indemnitor does not admit or otherwise acknowledge in writing to
the relevant court of Governmental Entity or third-party claimant any liability,
wrongdoing or misconduct on behalf of the Indemnified Party or any of its
Affiliates and (iii) such settlement is only for money damages that are paid by
Indemnitor and does not include any equitable relief.  If the Indemnified Party
gives an Indemnitor notice of an Indemnification Claim and the Indemnitor does
not, within thirty (30) days after such notice is given, (i) give notice to the
Indemnified Party of its election to assume the defense of the Action or Actions
subject to such Indemnification Claim and (ii) thereafter promptly assume such
defense, then the Indemnified Party may conduct the defense of such Action,
provided, however, that the Indemnified Party will not agree to the entry of any
judgment or enter into any settlement or compromise with respect to the Action
or Actions subject to any such Indemnification Claim without the prior written
consent of the Indemnitor (which consent shall not be unreasonably withheld or
delayed).  The Indemnitor may participate in any defense or settlement
controlled by the Indemnified Party pursuant to this Section 11.3(a) and the
Indemnitor shall bear its own costs and expenses with respect to such
participation.
 
 
(c) If any Indemnified Party becomes aware of any circumstances that it
reasonably expects would give rise to an Indemnification Claim for any matter
not involving an Action, then such Indemnified Party shall promptly (i) notify
the Indemnitor and (ii) deliver to the Indemnitor a written notice
(A) describing in reasonable detail the nature of and the facts giving rise to
the circumstances giving rise to the Indemnification Claim and (B) to the extent
known at such time, including the Indemnified Party’s estimate of the amount of
Damages (including the method of calculation thereof) that may arise from such
circumstances (it being understood that in no event shall such estimate limit
any claim for Damages hereunder).  Failure to notify the Indemnitor in
accordance with this Section 11.3(c) will not relieve the Indemnitor of any
liability that it may have to the Indemnified Party, except to the extent
(1) the Indemnified Party is materially prejudiced by the Indemnified Party’s
failure to give such notice or (2) the Indemnified Party fails to notify the
Indemnitor of such Indemnification Claim in accordance with this Section 11.3(c)
prior to the Survival Expiration Date.
 
 
(d) At the reasonable request of the Indemnitor or the Indemnified Party, each
such party shall grant the other party and its representatives, upon reasonable
prior notice, all reasonable access to the books, records, employees and
properties of such Indemnified
 

 
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Party to the extent reasonably related to the matters to which the applicable
Indemnification Claim relates.  All such access shall be granted during normal
business hours and shall be granted under the conditions which shall not
unreasonably interfere with the business and operations of such Indemnified
Party.
 
11.4 Limitations on Indemnification Liability. Notwithstanding any provision of
this Agreement to the contrary, any claims an Indemnified Party makes under this
Article XI) will be limited as follows:
 
 
(a) Indemnification Cap.  The aggregate amount of Damages for which the
Purchaser Indemnified Parties shall be entitled to indemnification pursuant to
Section 11.2(a) will not exceed the Indemnification Amount.
 
 
(b) Claims Basket.  The Purchaser Indemnified Parties shall not be entitled to
indemnification pursuant to this Article XI with respect to any claim for
indemnification pursuant to clause (i) of Section 11.2(a) unless and until the
amount of Damages (excluding costs and expenses of the Purchaser Indemnified
Parties incurred in connection with making such claim under this Agreement)
incurred by the Purchaser Indemnified Parties that are the subject of such claim
(or any series of related claims arising out of similar circumstances) exceeds
Fifty Thousand Dollars ($50,000) (the “Per-Claim Basket”), and the Purchaser
Indemnified Parties shall only be entitled to indemnification pursuant to this
Article XI with respect to any claim for indemnification pursuant to clause (i)
of Section 11.2(a) to the extent the aggregate amount of all Damages (excluding
costs and expenses of Purchaser Indemnified Parties incurred in connection with
making such claim under this Agreement) incurred by the Purchaser Indemnified
Parties for which the Purchaser Indemnified Parties are entitled to
indemnification pursuant to this Article XI (excluding amounts below any
applicable Per-Claim Basket) exceeds Twenty Million Dollars ($20,000,000) (the
“Basket Amount”), and then only to the extent of such excess.  The Seller
Indemnified Parties shall not be entitled to indemnification pursuant to this
Article XI with respect to any claim for indemnification pursuant to clause (i)
of Section 11.2(b) unless and until the amount of Damages incurred by the Seller
Indemnified Parties that are the subject of such claim exceeds the Per-Claim
Basket, and the Seller Indemnified Parties shall only be entitled to
indemnification pursuant to this Article XI with respect to any claim for
indemnification pursuant to clause (i) of Section 11.2(b) to the extent the
aggregate amount of Damages in connection with any such claim incurred by the
Seller Indemnified Parties for which the Seller Indemnified Parties are entitled
to indemnification pursuant to this Article XI (excluding amounts below any
applicable Per-Claim Basket) exceeds the Basket Amount, and the Seller
Indemnified Parties shall only be entitled to indemnification for such Damages
to the extent such Damages exceed the Basket Amount and then only to the extent
of such excess.
 
 
(c) Assignment of Claims.  If any Indemnified Party receives any indemnification
payment pursuant to this Article XI, at the election of the Indemnitor, such
Indemnified Party shall use commercially reasonable efforts to assign to the
Indemnitor all of its claims for recovery against third persons as to such
Damages, whether by insurance coverage, contribution claims, subrogation or
otherwise.
 
 
 

 
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(d) Purchaser Waived Breach.  In the event that (i) Purchaser obtains knowledge
prior to the Closing of any inaccuracy or breach of any representation or
warranty of the Seller contained in this Agreement that would give Purchaser the
right to not consummate the Closing under Section 5.2 (a “Purchaser Waived
Representation”) (ii) Sellers acknowledge in writing prior to the Closing that
Purchaser has such right to not consummate the Closing, and (iii) Purchaser
nonetheless proceeds with and consummates the Closing, then the Purchaser and
any Purchaser Indemnified Party shall be deemed to have waived and forever
renounced any right to assert a claim for indemnification under this Article XI
for, or any other claim or cause of action under this Agreement, at law or in
equity on account of any such Purchaser Waived Representation.
 
 
(e) Punitive Damages.  No Indemnified Party shall be entitled to indemnification
for any punitive Damages related to the breach or alleged breach of this
Agreement except to the extent such punitive Damages are owed to a third party.
 
 
(f) Tax Treatment of Indemnity Payments.  It is the intention of the parties to
treat any indemnity payment made under this Agreement as an adjustment to the
Purchase Price for all federal, state, local and non-United States Tax purposes,
and the parties agree to file their Tax Returns accordingly, except as otherwise
required by applicable Law or a final determination.
 
 
11.5 No Duplication.  Any liability for indemnification under this Agreement
shall be determined without duplication of recovery due to the facts giving rise
to such liability constituting a breach of more than one representation,
warranty, covenant or agreement.  Without limiting the foregoing, all Damages
for which any Indemnified Party would otherwise be entitled to indemnification
under this Article XI shall be reduced by the amount of any indemnification
payments or other recoveries actually received by such Indemnified Party from
any third party, net of any costs incurred by the Indemnified Parties in
recovering such amounts.
 
 
11.6 Mitigation.  An Indemnified Party shall use commercially reasonable efforts
to mitigate any Damages for which it is entitled to indemnification pursuant to
this Article XI.
 
11.7 Indemnification Sole and Exclusive Remedy.  Following the Closing, except
for the remedies described in Section 12.2 (which shall not include any action
for monetary damages) and in the case of fraud, indemnification pursuant to this
Article XI shall be the sole and exclusive remedy against the Sellers in the
case of the Purchaser Indemnified Parties  and the sole and exclusive remedy
against the Purchaser in the case of the Seller Indemnified Parties, related to
or arising from any breach of any representation, warranty, covenant or
agreement contained in, or otherwise pursuant to, this Agreement which survives
Closing, excluding covenants contained herein which are to be performed after
the Closing Date.  The preceding sentence shall not apply with respect to any
Purchaser claims against the Sellers relating to Excluded Liabilities or Seller
claims against Purchaser relating to Assumed Liabilities.
 
11.8 REIT Savings Clause.  Notwithstanding anything in this Agreement to the
contrary, in no event shall any amount paid to any Purchaser Indemnified Party
pursuant to this
 

 
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Article XI in any taxable year exceed the maximum amount that can be paid in
such year without causing any Parent Indemnified Party, or any direct or
indirect owner of such Parent Indemnified Party, in each case which is REIT, to
fail to meet the requirements of Sections 856(c)(2) and (3) of the Code (the
“REIT Requirements”) for such year, determined as if the payment of such amount
did not constitute Qualifying Income as determined by independent accountants to
Parent.  If the maximum amount that can be paid for any taxable year under the
preceding sentence is less than the amount which Sellers would otherwise be
obligated to pay to the Purchaser Indemnified Parties pursuant to Article XI
(the amount of such deficit, the “Deficit Amount”), the Purchaser Indemnified
Parties shall so notify Sellers, and Sellers shall (at the Purchaser Indemnified
Parties’ sole cost and expense) place the Deficit Amount in escrow and shall not
execute any instrumentation permitting a release of any portion thereof to the
Purchaser Indemnified Parties, and the Purchaser Indemnified Parties shall not
be entitled to any such amount, unless and until Sellers and escrow holder
receive (all at the Purchaser Indemnified Parties’ sole cost and expense) notice
from Purchaser, together with either (a) an opinion of Purchaser’s tax counsel
to the effect that such amount, if and to the extent paid, would not constitute
gross income which is not Qualifying Income, (b) a ruling from the IRS holding
that the receipt by the Purchaser Indemnified Parties of the Deficit Amount
would either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code or (c) a letter
from Purchaser’s independent accountants indicating the maximum amount that can
be paid at that time to the Purchaser Indemnified Parties without causing any
Purchaser Indemnified Party or any direct or indirect owner of such Purchaser
Indemnified Party, in each case which is a REIT, to fail to meet the REIT
Requirements for any relevant taxable year, together with either a ruling from
the IRS issued to Purchaser or an opinion of Purchaser’s tax counsel to the
effect that such payment would not be treated as includible in the income of the
applicable Purchaser Indemnified Party for any prior taxable year, in which
event the escrow holder shall pay such maximum amount.  Sellers' and escrow
holder’s obligation to pay any Deficit Amounts shall terminate ten (10) years
from the date of this Agreement and, upon such date, the escrow holder shall
remit any remaining funds in escrow to Sellers and Sellers shall have no
obligation to make any further payments to the Purchaser Indemnified Parties
notwithstanding that such Deficit Amounts have not been paid as of such
date.  For all purposes of this Agreement, (i) the Purchaser Indemnified Parties
release Sellers from any claims that may arise from actions taken by Sellers at
the request of the Purchaser Indemnified Parties or their agents under this
Section 11.8, and (ii) the Purchaser Indemnified Parties’ right to receive
Deficit Amounts shall be limited to the amounts in escrow and Sellers shall have
no obligation to make any further payments to any Purchaser Indemnified Party
with respect to such Deficit Amounts.
 
 
11.9 Indemnification Funds.  At all times following the Closing Date and prior
to the Survival Expiration Date, Seller JV shall (i) hold and maintain funds in
its own name in an amount not less than the Indemnification Amount plus such
additional amount as may reasonably be expected to be necessary to satisfy any
and all liabilities of Seller JV other than under this Article XI (such funds,
as reduced by any payments to Purchaser on account of the Indemnification
Amount, the “Indemnification Funds”), (ii) not sell, transfer, pledge,
hypothecate, encumber or grant any direct or indirect interest in or to the
Indemnification Funds, (iii) not conduct any new operations or incur any new
liabilities or indebtedness other than with respect to any Property that remains
owned by the Sellers, and (iv) not liquidate, wind-up or dissolve; provided,
however, that in the event that Purchaser has made any Indemnification
 

 
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Claim as to which notice was provided in accordance with Section 11.1 prior to
the Survival Expiration Date, Seller JV’s obligations in this sentence shall
continue with respect to the amount of Damages estimated by Purchaser with
respect to such Indemnification Claim until the date upon which the obligations
of Sellers pursuant to Article XI with respect to such claim shall have been
satisfied in full or such Indemnification Claim has been resolved.
 
 
ARTICLE XII
 
 

 
 
MISCELLANEOUS
 
 
12.1 Brokers. Each Party hereby represents and warrants to the other Party
hereto that it has dealt with no broker, salesman, finder or consultant with
respect to this Agreement or the transactions contemplated hereby other than (a)
CSCA Capital Advisors, LLC, whose fees shall be paid by E, and (b) any other
broker, salesman, finder or consultant whose fees are paid by such Party.
 
12.2 Specific Performance. The Parties hereto agree that irreparable damage, for
which monetary damages (even if available) would not be an adequate remedy,
would occur in the event that the Parties hereto intentionally and materially
breach their obligations under this Agreement (including intentionally and
materially failing to take such actions as are required of it hereunder to
consummate the transactions contemplated herein).  Accordingly, the Parties
acknowledge and agree that the Parties shall be entitled to an injunction,
specific performance and other equitable relief to prevent any such intentional
and material breaches of this Agreement and to enforce specifically the terms
and provisions hereof, in addition to any other remedy to which they are
entitled at law or in equity.  Each Party agrees that it will not oppose the
granting of an injunction, specific performance and other equitable relief on
the basis that any other Party has an adequate remedy at law or that any award
of specific performance is not an appropriate remedy for any reason at law or in
equity.  Any Party seeking an injunction or injunctions to prevent any such
intentional and material breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement shall not be required to provide any
bond or other security in connection with any such order or injunction.
 
 
12.3 Intentionally Omitted
 
.
 
12.4 Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned by any Party without the
prior written consent of the other Party hereto; provided, however, no such
consent shall be required in the event of an assignment by Purchaser, in whole
or in part, prior to the Closing Date of its rights or obligations hereunder to
an entity which is Controlled by Purchaser, provided, however, that no such
assignment shall relieve Purchaser of its obligations
hereunder.  Notwithstanding the foregoing, Purchaser shall also be entitled,
without the consent of Sellers, to designate E or any affiliate of E to take
title to one or more of the Facilities (and all related Property) at the
Closing, provided, however, any such designation shall not relieve Purchaser of
its obligations hereunder.
 
 
12.5 Entire Agreement. This Agreement (together with all schedules and exhibits
hereto) supersedes any other agreement, whether written or oral, which may have
been made or entered into by the Parties hereto relating to the matters
contemplated hereby, and
 
 

 
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constitutes the entire agreement of the Parties. Except as expressly set forth
in this Agreement, no Party hereto is making any representations or warranties,
express or implied, as to such Party or the Property.
 
 
12.6 Amendments and Waivers. This Agreement may be amended, modified,
superseded, or canceled, and any of the terms, representations, warranties or
covenants hereof may be waived, only by written instrument executed by the
Parties hereto or, in the case of a waiver, by the Party waiving
compliance.  Notwithstanding the foregoing or anything to the contrary in this
Agreement, the Sellers and the Purchaser may amend, modify, or supplement any
provision of this Agreement, other than to the extent such modification
adversely affects E, without the approval or consent of E.
 
 
12.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
 
 
12.8 Successors and Assigns, No Third Party Beneficiaries. This Agreement shall
be binding upon, inure to the benefit of, and may be enforced by, each of the
Parties to this Agreement and its successors and permitted assigns and nothing
herein express or implied shall give or be construed to give any person or
entity (including, for the avoidance of doubt, the Seller JV Rollover Investor),
other than the parties hereto and such assigns, any legal or equitable rights.
 
 
12.9 Governing Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of Delaware.
 
 
12.10 Submission to Jurisdiction. Purchaser, E and each Seller irrevocably
submits to the exclusive jurisdiction of the Delaware Chancery Court (or, if the
Delaware Chancery Court shall be unavailable, any other court of the State of
Delaware or, in the case of claims to which the federal courts have exclusive
subject matter jurisdiction, the United States District Court for the District
of Delaware) for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby. Purchaser, E and
each Seller further agrees that service of any process, summons, notice or
document by U.S. registered mail to such Party’s respective address set forth
above shall be effective service of process for any action, suit or proceeding
in Delaware with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence.
Purchaser, E and Seller irrevocably and unconditionally waive trial by jury and
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in Delaware Chancery Court (or, if the Delaware Chancery
Court shall be unavailable, any other court of the State of Delaware or, in the
case of claims to which the federal courts have exclusive subject matter
jurisdiction, the United States District Court for the district of Delaware),
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
 

 
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12.11 Cooperation and Further Assurances
 

. Sellers, E and Purchaser agree to execute any further instruments or perform
any acts which are or may become reasonably necessary to carry out the intent of
this Agreement.
 
 
12.12 Severability
 

. Each provision of this Agreement shall be considered separable, and if, for
any reason, any provision or provisions hereof are determined to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
 
 
12.13 Headings
 

. Section titles are for convenience of reference only and shall not control or
alter the meaning of this Agreement set forth in the text.
 
12.14 Bulk Sales Laws
 
. Purchaser and Sellers hereby waive compliance by the other with the provisions
of any bulk sales, bulk transfer or similar laws of any jurisdiction that may
otherwise be applicable with respect to the sale of all or any portion of the
Property to Purchaser.
 
12.15 Notices
 
. All notices, demands or requests made pursuant to, under or by virtue of this
Agreement must be in writing and shall be (a) personally delivered, (b)
delivered by express mail, Federal Express or other comparable overnight courier
service, or (c) faxed (and confirmed by telephone), as follows:
 
 
To E or Purchaser:
 
Emeritus Corporation
 
3131 Elliott Ave., Ste. 500
 
Seattle, WA 90121
 
Fax No. (206) 204-6706
 
Attention: Mark A. Finkelstein
 
E-mail: mark.finkelstein@emeritus.com
 
HCP, Inc.
 
3760 Kilroy Airport Way, Suite 300
 
Long Beach, California 90806
 
Fax No. (562) 733-5200
 
Attention: Brian J. Maas
 
E-mail: bmaas@hcpi.com
 
(562) 733-5119 with copies thereof to:
 
 

 
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Skadden, Arps, Slate, Meagher & Flom LLP
 
4 Times Square
 
New York, New York 10036-6522
 
Fax No. (917) 777-3000
 
Attention: Joseph A. Coco, Audrey L. Sokoloff, and Peter D. Serating
 
E-mails: joseph.coco@skadden.com, audrey.sokoloff@skadden.com, and
peter.serating@skadden.com
 
and
 
Paul, Weiss, Rifkind, Wharton & Garrison LLP
 
1285 Avenue of the Americas
 
New York, NY 10019-6064
 
Fax No. (212) 757-3990
 
Attention: Robert B. Schumer, Harris B. Freidus, and Justin Hamill
 
E-mails: rschumer@paulweiss.com, hfreidus@paulweiss.com, and
jhamill@paulweiss.com
 
To Sellers:
 
c/o BRE/SW Portfolio LLC
 
345 Park Avenue
 
New York, NY 10154
 
Attention: David Roth
 
Facsimile: (212) 583-5202
 
E-mail:  roth@blackstone.com
 
with copies thereof to:
 
Simpson Thacher & Bartlett LLP
 
425 Lexington Avenue
 
New York, New York 10017
 
Attention: Erik Quarfordt, Esq.
 
Facsimile:  (212) 455-2502
 
E-mail:  equarfordt@stblaw.com
 
All notices (A) shall be deemed to have been given on the date that the same
shall have been received in accordance with the provisions of this Section and
(B) may be given either by a Party or by such Party’s attorneys. Any Party may,
from time to time, specify as its address for purposes of this Agreement any
other address upon the giving of 10 days’ prior written notice thereof to the
other Parties.
 
12.16 Dates. If any date set forth in this Agreement for the delivery of any
document or the happening of any event (other than the Closing Date) should,
under the terms hereof, fall on a weekend or holiday, then such date shall be
automatically extended to the next succeeding weekday that is not a holiday.
 

 
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12.17 Commercially Reasonable Efforts
 
. Upon the terms and subject to the conditions set forth in this Agreement, each
of the Parties agree to use commercially reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other Parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated herein.
 
12.18 Cooperation for Multiple Closings
 
. Notwithstanding anything in this Agreement to the contrary, if (1) any Party
shall reasonably determine that the Closing is not expected to occur on or prior
to December 31, 2012 because of a failure to satisfy the closing conditions with
respect to some but not all of the Facilities (other than those conditions that
by their terms are required to be satisfied or waived at the Closing and would
be capable of being satisfied as of such time), (2) clause (a), (b) or (c) of
Section 8.4 applies with respect to any Ground Lease, (3) clause (2) of the
proviso of the last sentence of Section 4.1 applies with respect to any
Facility, (4) the proviso of the last sentence of Section 3.4(h) applies with
respect to any Existing Loan, or (5) the last sentence of Section 12.19 applies
with respect to any Title Consent or Title Waiver (any Facility covered by any
of the foregoing clauses (1) – (5), a “Delayed Closing Property”), then,
provided at least one hundred twenty (120) Facilities are not Delayed Closing
Properties, the Parties shall (at the request of Seller or Purchaser) cooperate
to consummate the transactions contemplated by this Agreement with respect to
each of the Facilities that are not Delayed Closing Properties (such
consummation, (the “Initial Closing”) and shall reasonably agree to appropriate
changes to this Agreement and adjustments on account of the Delayed Closing
Properties, including the Purchase Price payable at the Initial Closing being
reduced by the portion of the Purchase Price allocable to the Delayed Closing
Properties.  The Parties acknowledge and confirm that in all events there shall
be no Initial Closing unless and until all conditions precedent to the Closing
have, with respect to the Facilities that are not Delayed Closing Properties,
been satisfied (or waived by the Party entitled to waive).  After such Initial
Closing, the Parties shall cooperate to provide for the consummation of the
transactions contemplated by this Agreement with respect to any Delayed Closing
Properties as and when the applicable closing conditions applicable thereto have
been satisfied or waived.
 
 
12.19 Required Title Consents and Waivers.  Sellers and Purchaser acknowledge
that there are certain Real Properties that have title exceptions which require
(i) the consent of third parties in order to consummate the transactions
contemplated by this Agreement (as more particularly described on Schedule 12.19
of the Disclosure Letter, each a “Title Consent”) or (ii) the waiver of a right
of first refusal or purchase option in order to consummate the transactions
contemplated by this Agreement (as more particularly described on Schedule 12.19
of the Disclosure Letter, a “Title Waiver”).  The Parties agree that the
foregoing exceptions are not Permitted Exceptions in the absence of the
applicable Title Consent in a form reasonably satisfactory to Purchaser;
provided, however, once the Title Consent or Title Waiver shall be obtained,
such exception shall be deemed a Permitted Exception.  In the event that a Title
Consent or Title Waiver is not obtained prior to the Outside Closing Date, the
applicable Facility and all Property comprising or relating to such Facility
shall be excluded from the transactions contemplated by this Agreement, in which
case (w) the Purchase Price shall be reduced by the portion of the Purchase
Price allocable to such Facility (x) such Facility and such Property shall not
be transferred to Purchaser at the Closing, (y) the OpCo Lease Agreement shall
not include such Facility or Property, and (z) from and after the Closing Date
none of the Parties hereto shall
 

 
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have any claims against any other Party hereto in connection with such Facility
and such Property.
 
 
12.20 Alternative Transaction Structure.  Purchaser and E agree to consider in
good faith any alternative transaction structures proposed by Sellers or the
Seller JV Rollover Investor in order to mitigate potential adverse tax
consequences to the holders of interests in the Seller JV Rollover Investor,
provided that such alternative transaction structure is without cost or
increased liability to Purchaser or E (including, without limitation, with
respect to Taxes) and without any delay in the performance of any of the
obligations of the Parties under this Agreement.  The parties hereto acknowledge
and agree that the failure to agree to and implement such an alternative
transaction structure mutually acceptable to Sellers, Purchaser, E and the
Seller JV Rollover Investor shall not constitute a breach of this Agreement or
failure of a condition precedent to Seller’s obligations to close under Section
5.1(b).
 
 
12.21 Cooperation with E.  Notwithstanding any other provision of this
Agreement, the Parties shall cooperate to use commercially reasonable efforts
(at Purchaser’s sole cost and expense) to cause the transfer of the Resident
Agreements, Leases, Contracts, Other Current Management Agreements (to the
extent such agreements have not been terminated prior to the Closing Date), the
Assumed Personal Property Debt, the Entrance Fees, the Concessions of Rent, the
CHOW Liabilities (exclusive of any CHOW Corrective Actions) and other applicable
operational assets and agreements of Sellers (but excluding any Leased Property
(as defined in the OpCo Lease Agreement)) and excluding, for the avoidance of
doubt, any Existing Loans, Assumed Loans or Prepayment Fees (collectively, the
“E Transferred Items”) to E or an Affiliate of E at the Closing (and, consistent
with Section 45.20.2 of the OpCo Lease Agreement, Purchaser will designate E as
the transferee of such items, as applicable, pursuant to this Agreement),
together with the economic benefits and obligations solely with respect to such
items in respect of periods beginning after the Closing (including for purposes
of proration adjustments pursuant to Article VIII, with such benefits and
obligations, including any Tenant Rents and Resident Rents, allocated to E).  In
connection with the transfer of the Entrance Fees to E (and without limiting
anything in this Section 12.21), at the Closing, Purchaser shall cause to be (i)
transferred to E the Cash Deposits and (ii) paid to E an amount in cash equal to
the excess of the Entrance Fees over the Cash Deposits, in each case, as of
Closing.  Without limiting the generality of the foregoing, in connection with
the foregoing assignments to E or an Affiliate of E, E will (a) assume the
Assumed Liabilities relating to the E Transferred Items (and excluding, for the
avoidance of doubt, any obligations arising under the CHOW Corrective Actions,
Existing Loans, Assumed Loans, Prepayment Fees or Ground Leases), (b) cooperate
with Sellers and Purchaser as reasonably requested by Sellers and Purchaser in
connection with providing the information and records required to be provided by
Purchaser under Sections 8.1(e) and 8.1(f) and taking the actions required to be
taken by Purchaser under Section 8.1(g).  In addition, E will use commercially
reasonable efforts to make modifications, if any, as required to give effect to
the transactions contemplated by this Agreement under any agreements relating to
the Property or the Business to which E (but not Sellers) is a party (the
“Continuing E Manager Contracts”), it being the intention of the parties that
after the Closing E shall continue to have the rights, and be subject to its
obligations under, such Continuing E Manager Contracts.  If requested by E and
to the extent reasonably practicable, the Parties will cooperate at E’s sole
cost and expense to provide for the termination of any Other Current Management
Agreement, provided, however, it shall not be a condition to Purchaser’s or
Sellers’ obligation to close that
 

 
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such Other Current Management Agreements are terminated.  E (i) acknowledges
that certain of the Contracts may be held in the name of the Sellers and an
assignment or transfer of those Contracts to E at the Closing may require the
consent of the counterparty thereto and (ii) waives any claim against the
Sellers arising out of a breach of any such Contracts arising out of any such
assignment or transfer.  With respect to any CHOW Corrective Actions, E and
Purchaser shall reasonably agree whether such CHOW Corrective Actions are
appropriate and, if agreed, will reasonably agree on adjustments to the rent
under the OpCo Lease Agreement to reflect the costs of such CHOW Corrective
Actions.
 
 

 

 
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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of
the date first written above.
 
SELLERS:

BRE/SW Absaroka LLC
   
BRE/SW Alpine Court LLC
   
BRE/SW Alpine Springs LLC
 
BRE/SW Beacon Pointe LLC
BRE/SW Waterford Bellevue LLC
BRE/SW Brentmoor LLC
BRE/SW Brookside LLC
BRE/SW Buckingham Estates LLC
BRE/SW Cambridge Place LLC
BRE/SW Canterbury Court LLC
BRE/SW Canterbury Gardens LLC
BRE/SW Canyonview Estates LLC
BRE/SW Carriage Inn LLC
BRE/SW Cedar Ridge LLC
BRE/SW Century Fields LLC
BRE/SW Champlin Shores LLC
BRE/SW Chandler Place LLC
BRE/SW Chehalem Springs LLC
BRE/SW Chesterley Court LLC
BRE/SW Chesterley Meadows LLC
BRE/SW Chestnut Lane LLC
BRE/SW Chris Ridge LLC
BRE/SW Churchill LLC
BRE/SW Clearlake LLC
BRE/SW Cliff View LLC
BRE/SW Cordova Estates LLC
BRE/SW Cottage Village LLC
BRE/SW Cottages LLC
BRE/SW Cougar Springs LLC
BRE/SW Courtyard Gardens LLC
BRE/SW Crimson Ridge LLC
BRE/SW Crown Pointe LLC
BRE/SW Culpepper Place LLC
BRE/SW Dry Creek LLC
BRE/SW Eagle Cove LLC
BRE/SW Eagle Meadows LLC
BRE/SW Eden Estates LLC
BRE/SW Eldorado Heights LLC
BRE/SW Emerald Estates LLC
BRE/SW Emerald Pointe LLC
BRE/SW Englewood Arbor LLC
BRE/SW Fishers Landing LLC
BRE/SW Flint River LLC
BRE/SW Fox River LLC
BRE/SW Grayson View LLC
BRE/SW Hawthorne Inn Greenville LLC
BRE/SW Hawthorne Inn Hilton Head LLC
BRE/SW Heartland Park LLC
BRE/SW Heritage Place LLC
BRE/SW Bridgeport Heritage LLC
BRE/SW Hermiston Terrace LLC
BRE/SW Heron Pointe Cottages LLC
BRE/SW Heron Pointe LLC
BRE/SW Apple Ridge LLC
BRE/SW Hillside LLC
BRE/SW Holiday Lane LLC
BRE/SW La Villa LLC
BRE/SW Lake Pointe LLC
BRE/SW Lake Springs LLC
BRE/SW Lakeside LLC
BRE/SW Lakeside Cottages LLC
BRE/SW Lassen House LLC
BRE/SW Laurel Gardens LLC
BRE/SW Legacy Crossing LLC
BRE/SW Legacy Gardens LLC
BRE/SW Lexington Gardens LLC
BRE/SW Magnolia Gardens LLC
BRE/SW Bluegrass Terrace LLC
BRE/SW Manor House LLC
BRE/SW Maplewood LLC
BRE/SW Meadowlark LLC
BRE/SW Minnetonka LLC
BRE/SW Monroe House LLC
BRE/SW Montclair Park LLC
BRE/SW Moses Lake LLC
BRE/SW Mountain Laurel LLC
BRE/SW Mountain View LLC
BRE/SW Glendale Place LLC
BRE/SW Georgian Place LLC
BRE/SW Northpark Place LLC
BRE/SW Northridge LLC
BRE/SW Oak Tree Village LLC
BRE/SW Oakridge LLC
BRE/SW Orchard Glen LLC

 
 

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BRE/SW Orchard Park LLC
BRE/SW Osprey Court LLC
BRE/SW Oswego Springs LLC
BRE/SW Azalea Gardens LLC
BRE/SW Palm Meadows LLC
BRE/SW Palm Meadows Village LLC
BRE/SW Palms LLC
BRE/SW Paradise Valley LLC
BRE/SW Park Avenue LLC
BRE/SW Park Place LLC
BRE/SW Peachtree Village-GA LLC
BRE/SW Peridot LLC
BRE/SW River Plaza LLC
BRE/SW Medallion LLC
BRE/SW Quail Hollow LLC
BRE/SW Quakers Landing LLC
BRE/SW Remington House LLC
BRE/SW River Road LLC
BRE/SW River Valley Landing LLC
BRE/SW Riverstone Terrace LLC
BRE/SW Rose Terrace LLC
BRE/SW Rose Valley LLC
BRE/SW Rose Valley Cottages LLC
BRE/SW Sandia Springs LLC
BRE/SW Sellwood Landing LLC
BRE/SW Sequoia Springs LLC
BRE/SW Sequoia Springs Cottages LLC
BRE/SW Parkway Village LLC
BRE/SW Spring Arbor LLC
BRE/SW Spring Creek LLC
BRE/SW Spring Estates LLC
BRE/SW Spring Meadows Cottages LLC
BRE/SW Spring Mountain LLC
BRE/SW Spring Pointe LLC
BRE/SW Spring Village LLC
BRE/SW Briarwood LLC
BRE/SW Woodside Village LLC
BRE/SW Manchester House LLC
BRE/SW Stone Mountain LLC
BRE/SW Stonebridge LLC
BRE/SW Sugarland Ridge LLC
BRE/SW Sunrise Creek LLC
BRE/SW Sunshine Village LLC
BRE/SW Sweetwater Springs LLC

 
 

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BRE/SW Jasper Terrace LLC
BRE/SW Oaks LLC
BRE/SW Sun Mountain Plaza LLC
BRE/SW Spring Meadows LLC
BRE/SW Del Ray Villa LLC
BRE/SW West Park Place LLC
BRE/SW Willow Ridge LLC
BRE/SW Willows at Sherman LLC
BRE/SW Windfield Village LLC
BRE/SW Woodstock Estates LLC
BRE/SW Woodstock Terrace LLC

 
By:           /s/  David
Roth                                                      
Name: David Roth
Title: Managing Director

BRE/SW PORTFOLIO LLC, a Delaware limited liability company

BRE/SW Member LLC,
a Delaware limited liability company

By:           _/s/ David Roth________________
                 Name: David Roth
                 Title:   Managing Director

EMERITUS CORPORATION,
a Washington corporation

By: _/s/ Eric Mendelsohn_____________________
Name: Eric Mendelsohn
Title:   SVP Corporate Development
 

 
HCP, INC.,
a Maryland corporation

By: _/s/ Paul F. Gallagher_____________________
Name: Paul F. Gallagher
Title:   Executive Vice President and
                                                                                                               
Chief Investment Officer

 
 

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EXHIBIT F
 
 
Permitted Exceptions
 
 
1) All liens, encumbrances or other title exceptions set forth on Schedule B-1
to the applicable Existing Policies.
 
 
2) Any state of facts disclosed on the applicable Survey.
 
 
3) Any liens or encumbrances pursuant to the Assumed Loan documents or the
Assumed Personal Property Debt.
 
 
4) The standard printed exceptions appearing on the title policy issued by Title
Company.
 
 
5) Zoning regulations and ordinances and municipal building restrictions,
provided that the current use of all of the Real Property does not violate any
such regulations or restrictions.
 
 
6) Sewer usage charges, not yet due and payable, subject to the terms of the
Purchase Agreement.
 
 
7) Any liens or encumbrances for Taxes not yet due and payable.
 
 
8) Encroachments projecting from the Real Property over any street or highway or
over any adjoining property and encroachments of similar elements projecting
from adjoining property over the Real Property, provided that such encroachments
do not materially adversely affect the value or operations of the applicable
Real Property or materially interfere with the current use thereof.
 
 
9) Utility and telephone company rights and easements to maintain poles, wires,
cables, pipes, boxes and other facilities and equipment in, over and upon the
Real Property, provided that such rights and easements do not materially
adversely affect the value or operations of the applicable Real Property or
materially interfere with the current use thereof.
 
 
10) Rights and easements for the installation, maintenance and replacement of
water pipes and mains and sewer lines, facilities and equipment in, over and
upon the Real Property, whether or not of record, provided that such rights and
easements do not materially adversely affect the value or operations of the
applicable Real Property or materially interfere with the current use thereof.
 
 
11) Any other non-monetary title encumbrance that does not materially adversely
affect the value or operations of the applicable Real Property or materially
interfere with the current use thereof.
 
 
12) The rights of Tenants and Residents under the Leases and the Resident
Agreements.
 
 
13) Any other matter that would otherwise constitute an objection and that is
consented to by Purchaser in writing or waived by Purchaser (or deemed waived by
Purchaser pursuant to the Purchase Agreement).
 

 
 

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EXHIBIT K
 
 
Certificate of Non-Foreign Status
 
 
Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”),
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person.  For U.S. tax purposes (including Section
1445 of the Code), the owner of a disregarded entity (which has legal title to a
U.S. real property interest under local law) will be the transferor of the
property and not the disregarded entity.  To inform HCP, Inc., a Maryland
corporation (“Purchaser”) that withholding of tax will not be required in
connection with the disposition of a U.S. real property interest pursuant to
that certain Purchase and Sale Agreement, dated as of October 16, 2012 by and
among Purchaser and Seller (as defined in such Purchase and Sale Agreement), the
undersigned certifies the following on behalf of BRE/SW Portfolio LLC:
 
 
 
1.
Seller is treated as an entity disregarded as separate from BRE/SW Portfolio LLC
for U.S. federal income tax purposes as defined in Treasury Regulation Section
1.1445-2(b)(2)(iii);

 
 
 
2.
BRE/SW Portfolio LLC is not a foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in the Code and the
regulations promulgated thereunder);

 
 
 
3.
BRE/SW Portfolio LLC is not a disregarded entity as defined in Treasury
Regulation Section 1.1445-2(b)(2)(iii);

 
 
 
4.
BRE/SW Portfolio LLC’s U.S. employer identification number is [__]; and

 
 
 
5.
BRE/SW Portfolio LLC’s office address is [__].

 
 
BRE/SW Portfolio LLC understands that this certificate may be disclosed to the
Internal Revenue Service by Purchaser and that any false statement contained
herein could be punished by fine, imprisonment or both.
 
 
Under penalties of perjury I declare that I have examined this certification and
to the best of my knowledge and belief it is true, correct and complete, and I
further declare that I have authority to sign this document on behalf of BRE/SW
Portfolio LLC.
 

 
Date: __________________, 2012
 
Name: ___________________________
 
Title: ____________________________

 
 

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