Exhibit 10.40

SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (this “Amendment”) is made and
entered effective as of August 8, 2014 (the “Effective Date”), by and between
AMERICAN REALTY CAPITAL HEALTHCARE TRUST II OPERATING PARTNERSHIP, L.P. a
Delaware limited partnership (“Purchaser”), ECI ACQUISITION 1, LLC, a Delaware
limited liability company, VILLAGE ASSISTED LIVING LLC, an Iowa limited
liability company, MT. PLEASANT ASSISTED LIVING LLC, an Iowa limited liability
company, BURLINGTON ASSISTED LIVING LLC, an Iowa limited liability company,
MUSCATINE ASSISTED LIVING LLC, an Iowa limited liability company, CARROLL
ASSISTED LIVING LLC, an Iowa limited liability company, FT. MADISON ASSISTED
LIVING LLC, an Iowa limited liability company and BURLINGTON INDEPENDENT LIVING
LLC, an Iowa limited liability company (collectively, the “Seller”).
WHEREAS, Purchaser and Seller entered into that certain Asset Purchase Agreement
dated August 1, 2014 as amended by that certain First Amendment to Asset
Purchase Agreement dated August 7, 2014 (the “Agreement”), and the parties
desire to amend the Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the agreements hereinafter set forth and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

1.
Recitals and Defined Terms. The foregoing recitals are true and correct and are
incorporated herein by reference. All capitalized terms used herein and not
expressly defined shall have the meaning given to them in the Agreement.

2.
Immediate Repair Credit. Upon the Closing of the transactions contemplated by
the Agreement, Purchaser shall receive a credit in a total amount equal to
$70,500.00 for certain repairs to the Facilities identified by the Purchaser’s
third party consultants as immediately necessary, which repairs are more
specifically described in Exhibit A attached hereto. Such credit shall be
reduced or, as applicable, eliminated to the extent Purchaser has determined to
its reasonable satisfaction that such conditions have been repaired or corrected
by the Seller prior to Closing. Without limiting the foregoing, the parties
further agree that Seller has agreed to repair, at Seller’s expense, recent
water damage occurring at the Cedar Rapids Facility as the result of a drainage
backup pursuant to agreements with agreements Jarvis and ServPro of Cedar
Rapids, and will provide to Purchaser evidence reasonably satisfactory to
Purchaser of the completion of such repairs prior to Closing (including proof of
payment and evidence of applicable lien releases for such repairs to the extent
requested by Purchaser).

3.
Ground Lease Estoppel and Amendment. In addition to the Ground Lease Estoppel
required by the Agreement (and without limiting Seller’s obligations with
respect thereto), Seller will make commercially reasonable efforts to have a
separate estoppel and amendment in a form to be provided by Purchaser and
relating to the Pennsylvania Facility Ground Lease executed by the tenant under
the Pennsylvania Facility Ground Lease prior to Closing. For the avoidance of

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doubt, the receipt of an executed copy of such separate estoppel and amendment
is not a condition to Closing that would otherwise allow Purchaser to delay
Closing.

4.
Prairie Hills Ottumwa Facility Condominium. As a condition to Purchaser’s
obligations to complete the transactions contemplated by the Agreement, Seller
shall cause all rights and entitlements of the Developer (as defined in the
Declaration (as herein defined)), and the professional manager identified in the
Declaration, in and pursuant to the Declaration of Submission of Property to
Horizontal Property Regime for Prairie Hills at Ottumwa, a Condominium (the
“Declaration”) to be assigned to Purchaser or Purchaser’s designee.

5.
Purchase Price Allocations. The parties agree that the allocations of Purchase
Price required by Section 3.3 of the Agreement have not yet been finalized and
may be amended by mutual agreement of Seller and Purchaser prior to Closing.
Without limiting the foregoing, Seller acknowledges and agrees that Purchaser
has no obligation to accept any allocation of the Purchase Price to any party
other than a party comprising Seller (provided, however, that this provision
shall not limit Seller’s ability to pay expenses with proceeds from the Purchase
Price or otherwise distribute portions of the Purchase Price to third-parties).

6.
Agreement Remains In Effect. The Agreement, as modified by this Amendment, is
hereby ratified and affirmed as binding and in full force and effect.

7.
Counterparts. This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original. This Amendment may be executed by
counterpart signatures and all counterpart signature pages shall constitute a
part of this Agreement. Delivery of a counterpart hereof via facsimile
transmission or by electronic mail transmission, including but not limited to an
Adobe file format document (also known as a PDF file), shall be as effective as
delivery of a manually executed counterpart hereof.

[Signature Pages Follow.]

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IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to
Asset Purchase Agreement as of the date first above written.

SELLER:

ECI ACQUISITION 1, LLC,
a Delaware limited liability company

By: Elliott Company of Iowa, Inc.,
its sole member

By:    /s/ James T. Elliott IV                
Name:     James T. Elliott IV                
Title:    President                    

VILLAGE ASSISTED LIVING LLC,
an Iowa limited liability company

By:    /s/ James T. Elliott IV                
Name:     James T. Elliott IV                
Title:    President                    

MT. PLEASANT ASSISTED LIVING LLC,
an Iowa limited liability company

By:    /s/ James T. Elliott IV                
Name:     James T. Elliott IV                
Title:    President                    

BURLINGTON ASSISTED LIVING LLC, an Iowa limited liability company

By:    /s/ James T. Elliott IV                
Name:     James T. Elliott IV                
Title:    President                    

[signature page to Second Amendment to Purchase Agreement]

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MUSCATINE ASSISTED LIVING LLC, an Iowa limited liability company

By:    /s/ James T. Elliott IV                
Name:     James T. Elliott IV                
Title:    President                    

CARROLL ASSISTED LIVING LLC, an Iowa limited liability company

By:    /s/ James T. Elliott IV                
Name:     James T. Elliott IV                
Title:    President                    

FT. MADISON ASSISTED LIVING LLC, an Iowa limited liability company

By:    /s/ James T. Elliott IV                
Name:     James T. Elliott IV                
Title:    President                    

BURLINGTON INDEPENDENT LIVING LLC, an Iowa limited liability company

By:    /s/ James T. Elliott IV                
Name:     James T. Elliott IV                
Title:    President                    

[signature page to Second Amendment to Purchase Agreement]

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PURCHASER:

AMERICAN REALTY CAPITAL HEALTHCARE TRUST II OPERATING PARTNERSHIP, L.P. a
Delaware limited partnership

        

By: American Realty Capital Healthcare Trust II, Inc.,
a Maryland corporation,
its general partner

By:   /s/ Edward M. Weil, Jr.         
Name: Edward M. Weil, Jr.
Title: President
      

[signature page to Second Amendment to Purchase Agreement]

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EXHIBIT A

Identified Repairs

Facility             Identified Repair             Credit

Mount Pleasant Facility
Concrete pavement repairs        $ 3,000

Subtotal for Facility:                        $ 3,000

Muscatine Facility
Concrete sidewalk and pavement
replacement                $ 8,500
Repair of parking lot lights and
entrance sign lights             3,000    
Subtotal for Facility:                        $11,500     

Cedar Rapids Facility
                
Replace damaged concrete walk     $ 450
Roof repairs              350
Subtotal for Facility:                         $ 800

Clinton Facility
Van-accessible handicapped space
with signage                 $ 350
                Replace missing handicapped
signage                  300
Concrete sidewalk full depth
replacement                 3,500
Subtotal for Facility:                         $ 4,150

Independence Facility
Replace damaged concrete
walkway                 $ 1,050
Subtotal for Facility:                         $ 1,050

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Pennsylvania Facility

Concrete pavement             $18,000
Retaining wall                 22,500
Roofing                 3,000
Semi-annual inspection and
preventative maintenance          2,400
Subtotal for Facility:                        $50,000                        
Total Credit:                                 $70,500