PURCHASE AGREEMENT

 

BY AND BETWEEN

 

THE ENTITY SET FORTH UNDER THE HEADING “PURCHASER”
ON THE SIGNATURE PAGES HERETO

 

AND

 

EACH OF THE ENTITIES SET FORTH UNDER THE HEADING “SELLERS”
ON THE SIGNATURE PAGES HERETO

 

November 18, 2013

 

 

 

TABLE OF CONTENTS

 

Page

ARTICLE I PURCHASE AND SALE     1 Section 1.1  Transfer       1 Section 1.2 
Closing       4 Section 1.3  Purchase Price       4 Section 1.4  Reserved      
4 Section 1.5  Payment of Purchase Price       5 Section 1.6  Assumed
Liabilities       5 Section 1.7  Excluded Liabilities       5 Section 1.8 
Allocation of Purchase Price       5         ARTICLE II REPRESENTATIONS AND
WARRANTIES OF THE SELLERS      6 Section 2.1  Organization and Qualification 
     7 Section 2.2  Authority; Binding Effect; Approvals; No Conflicts;
Capitalization       7 Section 2.3  Permits; Licenses       7 Section 2.4 
Governmental Approvals       8 Section 2.5  Financial Statements       8 Section
2.6  Absence of Certain Changes, Events and Conditions       8 Section 2.7 
Title to Personal Property       8 Section 2.8  Condition and Sufficiency of
Assets       8 Section 2.9  Real Property       8 Section 2.10  Compliance with
Laws       9 Section 2.11  Hazardous Substances       9 Section 2.12  No
Litigation       10 Section 2.13  Employees       10 Section 2.14  ERISA      
10 Section 2.15  Insurance       10 Section 2.16  Brokers and Finders       10
Section 2.17  OFAC       11        ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER      11 Section 3.1  Organization; Etc       11 Section 3.2 
Authority, Binding Effect       12 Section 3.3  No Litigation       12 Section
3.4  Governmental Approvals       12 Section 3.5  Brokers and Finders       12
Section 3.6  Available Funds       13              ARTICLE IV COVENANTS OF THE
SELLERS      13 Section 4.1  Interim Operating Covenants       13 Section 4.2 
Liens       13 Section 4.3  Inspection Rights       14 Section 4.4  Title
Insurance and Surveys       14

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Section 4.5  Further Assurances       16 Section 4.6  8-K Requirements       16
Section 4.7  Phase I Updates       18           ARTICLE V COVENANTS OF THE
PURCHASER       18 Section 5.1  Cooperation       18 Section 5.2  Further
Assurances       18              ARTICLE VI OTHER COVENANTS       18 Section
6.1  Confidentiality       18 Section 6.2  Casualty Event       19 Section 6.3 
Condemnation Event       20              ARTICLE VII INDEMNIFICATION       20
Section 7.1  Indemnification by the Sellers       20 Section 7.2 
Indemnification by the Purchaser       21 Section 7.3  Notification of Claims 
     22 Section 7.4  Survival of Representations       23 Section 7.5  No
Punitive Damages       24 Section 7.6  Broker’s Fee       24 Section 7.7 
Treatment of Indemnification Payments       25 Section 7.8  Survival       25   
       ARTICLE VIII CONDITIONS       25 Section 8.1  Conditions to Each Party’s
Obligations       25 Section 8.2  Conditions to Obligations of the Purchaser 
     25 Section 8.3  Conditions to Obligations of the Sellers       26          
ARTICLE IX CLOSING          26 Section 9.1  Possession       26 Section 9.2 
Closing Documents       26 Section 9.3  Closing Adjustments       29 Section
9.4  Closing Costs; Transfer Taxes       29 Section 9.5  Survival       30   
    ARTICLE X TERMINATION AND ABANDONMENT       30 Section 10.1  Method of
Termination       30 Section 10.2  Procedure Upon Termination       31 Section
10.3  Effect of Termination; Remedies for Default; Break Up Fees       31      
    ARTICLE XI MISCELLANEOUS PROVISIONS       32 Section 11.1  Amendment and
Modification       32 Section 11.2  Waiver of Compliance; Consent       32
Section 11.3  Notice       32 Section 11.4  Bulk Sales Laws       33 Section
11.5  Expenses       33 Section 11.6  Assignment       33

 

 

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Section 11.7  Governing Law       34 Section 11.8  Business Day       34 Section
11.9  Counterparts       34 Section 11.10  Headings       34 Section 11.11 
Entire Agreement       34 Section 11.12  Warranty of Authority       34 Section
11.13  Publicity       34 Section 11.14  Waiver of Jury Trial       34 Section
11.15  Third Party Beneficiaries       34 Section 11.16  Interpretation       35
Section 11.17  Submission to Jurisdiction       35 Section 11.18   
Severability       36

 

 

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LIST OF EXHIBITS AND SCHEDULES

 

 

Exhibit A Facilities     Exhibit B Purchase Price Allocation     Exhibit
9.2(a)(ii) Form of Bill of Sale     Exhibit 9.2(a)(iii) Form of Assignment and
Assumption of Other Property     Exhibit 9.2(a)(v) Form of FIRPTA Certificate  
  Exhibit 9.2(a)(vii) Form of Seller Certificate     Exhibit 9.2(a)(xii) Form of
Master Lease and Sublease     Exhibit 9.2(a)(xiii) Form of Assignment of
Leasehold Interests     Exhibit 9.2(b)(ii) Form of Purchaser Certificate    
Schedule 1 Required Approvals     Schedule 2.3 Permits and Licenses     Schedule
2.4 Governmental Approvals     Schedule 2.9 Real Estate Matters     Schedule
2.11 (a) Environmental Matters     Schedule 2.11(b) Hazardous Substances Storage
    Schedule 2.11(c) CERLCIS     Schedule 2.11(d) Hazardous Substance Release  
  Schedule 2.12 Legal Proceedings     Schedule 2.15 Insurance     Schedule 2.16
Brokers

 

 

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INDEX OF DEFINED TERMS

 

As used herein the following terms shall have the meanings indicated below:

 

“Affiliate” shall mean, as applied to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with or by such
Person. For purposes of this definition, “control” (including the terms
“controlling,” “controlled by” and “under common control with”) will 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 or by contract or otherwise.

 

“Agreement” shall have the meaning set forth in the preamble.

 

“Ancillary Assets” shall have the meaning set forth in Section 1.1(b).

 

“Applicable Laws” shall mean all statutes, laws, ordinances, rules, regulations,
requirements, judgments, orders and decrees of any Governmental Authority
applicable to Sellers, Purchaser, and/or the Assets, including applicable
zoning, building, safety and environmental laws, ordinances and codes and other
federal, state and municipal requirements.

 

“Approvals” shall mean (i) all waivers, permits, consents, approvals or other
authorizations from Governmental Authorities or third parties including joint
venture partners, and (ii) all registrations, filings and notices with or to
Governmental Authorities or third parties, in each case, as are required for
Sellers to consummate the transactions contemplated by this Agreement.

 

“Assets” shall have the meaning set forth in Section 1.1(a).

 

“Assigned Records” shall have the meaning set forth in Section 1.1(a)(v).

 

“Assumed Liabilities” shall have the meaning set forth in Section 1.6.

 

“Books and Records” shall have the meaning set forth in Section 1.1(a)(vi).

 

“Break Up Fee” shall mean Ten Million Dollars ($10,000,000).

 

“Business” shall have the meaning set forth in the recitals.

 

“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which banks are authorized to be closed in the State of New York. Time is of
the essence with respect to all terms, provisions, covenants and conditions
contained in this Agreement.

 

“Casualty Event” shall mean damage or loss to or destruction by fire or other
casualty of any one or more of the Facilities, the costs of repair for which are
reasonably estimated to exceed Ten Million Dollars ($10,000,000) in the
aggregate.

 

“Closing” shall have the meaning set forth in Section 1.2.

 

“Closing Date” shall have the meaning set forth in Section 1.2.

 

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“Closing Statement” shall have the meaning set forth in Section 9.2(a)(ix).

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.

 

“Common Products” shall have the meaning set forth in Section 2.11(b).

 

“Confidential Information” shall mean all non-public, proprietary or
confidential information that any Party obtains from the other in connection
with, or pursuant to, this Agreement.

 

“Contracts” shall have the meaning set forth in Section 1.1(b)(vi).

 

“Copied Records” shall have the meaning set forth in Section 1.1(a)(vi).

 

“Data Site” shall mean the data site created by Sellers at
http://holidayretirement.firmex containing information related to the Assets.

 

“Disclosure Schedules” shall have the meaning set forth in Article II.

 

“Effective Date” shall have the meaning set forth in the preamble.

 

“Environmental Laws” shall have the meaning set forth in Section 2.11.

 

“Excluded Assets” shall have the meaning set forth in Section 1.1(b).

 

“Excluded Documents” shall have the meaning set forth in Section 1.1(b)(iii).

 

“Excluded Liabilities” shall have the meaning set forth in Section 1.7.

 

“Facility” or “Facilities” shall have the meaning set forth in the recitals.

 

“Facility Balance Sheets and Income Statements” shall have the meaning set forth
in Section 2.5.

 

“Facility Material Adverse Effect” shall mean, with respect to any Facility, any
event, occurrence, change or effect that is, or is reasonably likely in the
future to be, individually or in the aggregate materially adverse to the
business, operations, results of operations, condition (financial or otherwise),
properties (including intangible properties), rights, obligations or assets of
such Facility; provided, however, that a Facility Material Adverse Effect shall
not include any event, change or effect arising out of or relating to (i)
general political, economic or financial market conditions (or changes in such
conditions), (ii) changes generally affecting the industries in which such
Facility operates, (iii) any change in Applicable Law or interpretations thereof
by a Governmental Authority thereof or any change in GAAP or other accounting
principles or requirements, (iv) any natural disaster, epidemic, acts of
terrorism, sabotage or war, including any escalation or general worsening of any
such events, changes or events, (v) the execution, delivery or announcement of
this Agreement if done in accordance with the terms of this Agreement (including
as to the identity of the Purchaser) or the pendency or consummation of the
transactions contemplated hereunder, including any losses or threatened losses
of employees, customers, suppliers, distributors or others having relationships
with the Sellers and their

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Affiliates, (vi) any failure to meet any internal or published projections,
forecasts or revenue or earnings predictions for any period ending on or after
the Effective Date, (vii) compliance with the terms of, or the taking of any
action permitted or required by, this Agreement or with the prior written
consent or at the direction of the Purchaser (or any action not taken as a
result of a failure of the Purchaser to consent to an action otherwise requiring
the Purchaser’s consent) or (viii) any of the items listed in the Disclosure
Schedules.

 

“Financial Statements” shall have the meaning set forth in Section 1.1(a)(vi).

 

“Governmental Authority” shall mean any court, board, agency, commission, office
or authority of any nature whatsoever for any governmental unit (federal, state,
county, district, municipal, city, foreign or otherwise) whether now or
hereafter in existence having jurisdiction over any Seller, any of the Assets,
or Purchaser, as applicable.

 

“Hazardous Substance” shall have the meaning set forth in Section 2.11.

 

“Immaterial Taking” shall mean any condemnation or taking by any Governmental
Authority with respect to one or more Facilities other than a condemnation or
taking which renders such Facility or Facilities less than a functional
structure in all material respects within which to continue to operate the
Business thereon and the portion of the Purchase Price allocated to such
Facility or Facilities pursuant to Section 1.7 of this Agreement is in excess of
Ten Million Dollars ($10,000,000).

 

“Improvements” shall mean, collectively, the Seller Improvements.

 

“Indebtedness” means, for any Person, without duplication: (a) all indebtedness
of such Person for borrowed money (including the principal amount thereof, any
accrued interest thereon and any prepayment premiums or termination fees with
respect thereto), for amounts drawn under a letter of credit, or for the
deferred purchase price of property for which such Person is liable, (b) all
unfunded amounts under a loan agreement, letter of credit (unless secured in
full by cash), or other credit facility for which such Person would be liable or
subject, if such amounts were advanced under the credit facility, (c) any
indebtedness arising under any capital lease, conditional sales contract and
other similar title retention instrument, whether short term or long term, (d)
all liabilities, including judgments, secured by any Liens on any of the Assets,
(e) all liabilities under any interest rate protection agreement, interest rate
future agreement, interest rate option agreement, interest rate swap agreement
or other similar agreement designed to protect the Seller against fluctuations
in interest rates, (f) any indebtedness evidenced by any note, bond, debenture
mortgage or other debt instrument or debt security, (g) all interest, fees and
other expenses owed with respect to indebtedness described in the foregoing
clauses (a) through (f), and (h) all indebtedness referred to in the foregoing
clauses (a) through (g) which is directly or indirectly guaranteed by any Seller
or that is secured by the Assets.

 

“Inspection Period” means the period beginning on the Effective Date and ending
at 6:00 p.m. ET on the seven (7) day anniversary of the Effective Date.

 

“Indemnified Party” shall have the meaning set forth in Section 7.3(b).

 

“Indemnifying Party” shall have the meaning set forth in Section 7.3(b).

 

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“Initial Surveys” shall have the meaning set forth in Section 4.4(a).

 

“Initial Title Commitments” shall have the meaning set forth in Section 4.4(a).

 

“Inventory” shall have the meaning set forth in Section 1.1(b)(x).

 

“Land” shall mean, collectively, the Seller Land.

 

“Leases” shall have the meaning set forth in Section 1.1(b)(v).

 

“Leasehold Interests” (i) the right, title and interest of Santa Clara
Retirement Residence Limited Partnership under (a) that certain Ground Lease,
dated August 19, 1988, between Masonic Hall Corporation of Santa Clara, as
lessor, and Santa Clara Retirement Residence Limited Partnership (as successor
by assignment to Matrix Properties, Inc.), as lessee (as amended, modified,
assigned and supplemented from time to time) (as further amended, modified,
assigned and supplemented from time to time) and (b) that certain Premises
Lease, dated August 19, 1988 between Santa Clara Retirement Residence Limited
Partnership, as lessor and Masonic Hall Corporation of Santa Clara, as lessee
(as amended, modified, assigned and supplemented from time to time) and (ii) the
right, title and interest of Rock Hill Land Limited Partnership under that
certain Ground Lease, dated February 26, 1999, between LM Rocky Hill Land
Holding Limited Partnership, as lessor, and Rock Hill Land Limited Partnership,
as lessee, as amended by that certain Amendment to Ground Lease, dated June 30,
2003 (as further amended, modified, assigned and supplemented from time to
time).

 

“Legal Proceedings” shall have the meaning set forth in Section 2.12.

 

“License” or “Licenses” shall have the meaning set forth in Section 2.3.

 

“Lien” shall mean any lien, claim, charge, encumbrance, security interest,
mortgage, pledge, easement, or conditional sale or other title retention
contract.

 

“Manager” shall mean Harvest Management Sub LLC.

 

“Master Lease” shall have the meaning set forth in Section 9.2(a)(xii).

 

“Master Tenant” shall have the meaning set forth in Section 9.2(a)(xii).

 

“Monetary Lien Condition” shall mean the removal of any and all Liens securing
the Outstanding Debt.

 

“New Manager” shall mean Holiday AL Management Sub LLC.

 

“New Title Matter” shall have the meaning set forth in Section 4.4(b).

 

“OFAC” shall have the meaning set forth in Section 2.17.

 

“Other Property” shall have the meaning set forth in Section 1.1(a)(iii).

 

“Outside Date” shall mean December 31, 2013.

 

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“Outdated Initial Surveys” shall have the meaning set forth in Section 4.4(b).

 

“Outstanding Debt” means indebtedness evidenced by the following agreement: Loan
Agreement (as amended, restated, supplemented or modified from time to time),
dated as of February 28, 2007, by and among the borrowers identified therein and
Citigroup Global Markets Realty Corp., and Goldman Sachs Commercial Mortgage
Capital, L.P., as succeeded by Fannie Mae, in the original principal amount of
$1,756,094,352.47.

 

“Party” or “Parties” shall have the meaning set forth in the preamble.

 

“Permitted Liens” shall have the meaning set forth in Section 4.4(b).

 

“Person” shall mean an individual, partnership, joint venture, corporation,
trust, estate, association, Governmental Authority or other legal entity.

 

“Personal Property” shall have the meaning set forth in Section 1.1(a)(iv).

 

“Proprietary Software” shall have the meaning set forth in Section 1.1(b)(ix).

 

“Purchase Price” shall have the meaning set forth in Section 1.3.

 

“Purchaser” shall have the meaning set forth in the preamble.

 

“Purchaser Basket” shall have the meaning set forth in Section 7.2(b).

 

“Purchaser Certificate” shall have the meaning set forth in Section 9.2(b)(ii).

 

“Purchaser Documents” shall have the meaning set forth in Section 9.2(b).

 

“Purchaser Indemnified Losses” shall have the meaning set forth in Section
7.1(a).

 

“Purchaser Indemnified Parties” shall have the meaning set forth in Section
7.1(a).

 

“Purchaser Knowledge Individual” shall have the meaning set forth in Article
III.

 

“Purchaser Material Adverse Effect” shall mean, with respect to the Purchaser, a
material adverse effect on the ability of the Purchaser to timely perform its
obligations hereunder or under any Purchaser Documents or to timely consummate
the transactions contemplated by this Agreement.

 

“Purchaser Representative” shall have the meaning set forth in Section 4.3(b).

 

“Purchaser’s Expenses” shall mean all actual out-of-pocket costs and expenses
incurred by the Purchaser in connection with the transactions contemplated by
this Agreement, including, without limitation, due diligence expenses, legal
expenses, and expenses in connection with preparations for Closing, but,
excluding any hedging costs; provided however, Purchaser’s Expenses, for which
the Sellers may have a reimbursement obligation hereunder, shall not include any
underwriting fees, discounts, commissions or similar expenses incurred in
connection with any equity offering or debt financing.

 

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“Purchaser’s Knowledge” shall have the meaning set forth in Article III.

 

“Required Approvals” shall mean those Approvals listed on Schedule 1.

 

“Reimbursement Cap” shall mean Seven Hundred and Fifty Thousand Dollars
($750,000).

 

“Resident Records” shall have the meaning set forth in Section 1.1(b)(viii).

 

“Section 4.3 Indemnified Parties” shall have the meaning set forth in Section
4.3(b).

 

“Seller” or “Sellers” shall have the meaning set forth in the preamble.

 

“Seller Basket” shall have the meaning set forth in Section 7.1(b).

 

“Seller Certificate” shall have the meaning set forth in Section 9.2(a)(vii).

 

“Seller Documents” shall have the meaning set forth in Section 9.2(a).

 

“Seller Improvements” shall have the meaning set forth in Section 1.1(a)(i).

 

“Seller Indemnified Losses” shall have the meaning set forth in Section 7.2(a).

 

“Seller Indemnified Parties” shall have the meaning set forth in Section 7.2(a).

 

“Seller Knowledge Individuals” shall have the meaning set forth in Article II.

 

“Seller Land” shall have the meaning set forth in Section 1.1(a)(i).

 

“Seller Material Adverse Effect” shall mean any event, occurrence, change or
effect that is, or is reasonably likely in the future to be, individually or in
the aggregate materially adverse to the business, operations, results of
operations, condition (financial or otherwise), properties (including intangible
properties), rights, obligations or assets of the Facilities or the Business, in
each case taken as a whole; provided, however, that a Seller Material Adverse
Effect shall not include any event, change or effect arising out of or relating
to (i) general political, economic or financial market conditions (or changes in
such conditions), (ii) changes generally affecting the industries in which the
Facilities operate, (iii) any change in Applicable Law or interpretations
thereof by a Governmental Authority or any change in GAAP or other accounting
principles or requirements, (iv) any natural disaster, epidemic, acts of
terrorism, sabotage or war, including any escalation or general worsening of any
such events, changes or events, (v) the execution, delivery or announcement of
this Agreement if done in accordance with the terms of this Agreement (including
as to the identity of the Purchaser) or the pendency or consummation of the
transactions contemplated hereunder, including any losses or threatened losses
of employees, customers, suppliers, distributors or others having relationships
with the Sellers and their Affiliates, (vi) any failure to meet any internal or
published projections, forecasts or revenue or earnings predictions for any
period ending on or after the Effective Date, (vii) compliance with the terms
of, or the taking of any action permitted or required by, this Agreement or with
the prior written consent or at the direction of the Purchaser (or any action
not taken as a result of a

 

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failure of the Purchaser to consent to an action otherwise requiring the
Purchaser’s consent) or (viii) any of the items listed in the Disclosure
Schedules.

 

“Seller Real Property” shall have the meaning set forth in Section 1.1(a)(ii).

 

“Seller Representations” shall have the meaning set forth in Article II.

 

“Seller Response Period” shall have the meaning set forth in Section 4.4(b).

 

“Sellers’ Knowledge” shall have the meaning set forth in Article II.

 

“Survival Period” shall have the meaning set forth in Section 7.4(a).

 

“Surviving Obligations” shall mean those obligations which expressly survive
termination of this Agreement or the Closing, as applicable.

 

“Title Company” shall have the meaning set forth in Section 4.4(a).

 

“Title Matters” shall have the meaning set forth in Section 4.4(b).

 

“Title Objection Notice” shall have the meaning set forth in Section 4.4(b).

 

“Title Objection Response Notice” shall have the meaning set forth in Section
4.4(b).

 

“Title Policy” or “Title Policies” shall have the meaning set forth in Section
4.4(c).

 

“Transfer Taxes” shall have the meaning set forth in Section 9.4(a).

 

“Unsatisfied Party” shall have the meaning set forth in Section 8.4.

 

“Updated Report” shall have the meaning set forth in Section 4.7.

 

“Work Product” shall have the meaning set forth in Section 1.1(a)(iii).

 

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PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT (this “Agreement”), dated as of this 18th day of
November, 2013 (the “Effective Date”), is made and entered into by and among the
entity set forth under the heading “Purchaser” on the signature pages hereto
(the “Purchaser”), each entity set forth under the heading “Seller” on the
signature pages hereto (individually a “Seller” and, together, the “Sellers”).
Each entity comprising the Sellers and the Purchaser is sometimes referred to
herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

A. Each Seller is in the business (the “Business”) of owning, operating and
maintaining the senior living facility identified next to such Seller’s name, on
Schedule 2.9 (each such facility, a “Facility” and, collectively, the
“Facilities”).

 

B. The Purchaser desires to purchase and acquire from the Sellers, and the
Sellers desire to sell and transfer to the Purchaser, all of the Assets (as
defined herein), on the terms and conditions set forth in this Agreement.

 

Now, therefore, in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.

 

ARTICLE I

PURCHASE AND SALE

 

Section 1.1            Transfer.

 

(a)                For the consideration hereinafter provided, in accordance
with the terms and subject to the conditions in this Agreement, at the Closing
the Sellers shall sell, convey, transfer and assign to the Purchaser, and the
Purchaser shall purchase and acquire from the Sellers, free and clear of all
Liens, other than Permitted Liens, the Sellers’ right, title and interest in and
to, the following (specifically excluding the Excluded Assets, hereinafter
collectively referred to as the “Assets”):

 

(i)                 the land, as more particularly described in Exhibit A
(collectively, the “Seller Land”), and all buildings, structures, fixtures,
facilities, amenities, driveways, walkways, parking lots and other improvements
located on the Seller Land (collectively, the “Seller Improvements”);

 

(ii)               all easements, rights-of-way, rights of ingress and egress,
strips, zones, licenses, transferable hereditaments, privileges, tenements and
appurtenances in any way belonging to or appertaining to the Seller Land or the
Seller Improvements, and any right or interest in any open or proposed highways,
streets, roads, avenues, alleys, easements, strips, gores and rights-of-way in,
across, in front of, contiguous to, abutting or adjoining the Seller Land
(collectively with the Seller Land and the Seller Improvements, the “Seller Real
Property”);

 

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(iii)             (A) to the extent any Seller’s interest is assignable pursuant
to Applicable Law and to the extent the Purchaser in its sole discretion elects
to assume the same, all licenses, permits, approvals, entitlements, land use
applications, land use permits and approvals, other operating permits and other
governmental authorizations (including certificates of occupancy) issued by any
Governmental Authority for the benefit of the Seller Real Property in connection
with the ownership, operation, planning, development, use or maintenance of any
Seller Real Property and the Business, as applicable, that an operator of a
Facility would not be required to maintain in its own name but which may be held
by the owner of the Seller Real Property separate and apart from those permits
required to be maintained in the name of the operator of a Facility under
Applicable Law, (B) all rights and work product under outstanding construction,
service, consulting, engineering, architectural, design and construction
agreements relating exclusively to the Seller Real Property (the “Work
Product”), (C) to the extent assignable, all construction warranties,
manufacturers’ warranties and other warranties applicable to the Seller Real
Property or the Business, and (D) all development rights related to any portion
of any Seller Real Property (collectively, the “Other Property”);

 

(iv)             all furniture, appliances, equipment, fixtures, and other
tangible personal property owned by the Sellers and which is used by the Sellers
in connection with the Business (collectively, and together with the Inventory,
the “Personal Property”);

 

(v)               except for the Excluded Documents, the following documents
that relate exclusively to the Seller Real Property: (A) third party reports and
studies (excluding appraisals), land surveys, structural reviews, environmental
assessments or audits, architectural drawings and engineering, geophysical,
soils, seismic, geologic, environmental (including with respect to the impact of
materials used in the construction or renovation of the Improvements) and
architectural reports, studies and certificates pertaining to the Seller Real
Property, and (B) building designs ((A) and (B) collectively, the “Assigned
Records”);

 

(vi)             copies of the following records (the parties agreeing that the
originals and all other rights associated therewith shall be retained by the
Sellers): (A) accounting records, including billing records and invoices, (B)
regulatory surveys and reports and incident tracking reports and (C) all
financial statements and other accounting, tax, financial and other books and
records, in each case, relating exclusively to the use, maintenance and
operation of the Seller Real Property and any Facility and/or the Business
(collectively, the “Financial Statements”), but excluding any Excluded Documents
(collectively, the “Copied Records,” and, together with the Assigned Records,
the “Books and Records”); and

 

(vii)           the Leasehold Interests.

 

(b)               Notwithstanding anything to the contrary contained herein, no
Seller shall sell, assign, transfer, convey or deliver to the Purchaser, and the
Purchaser shall not purchase, and the Assets shall not include any of the
Sellers’ right, title and interest in the following items (collectively, the
“Excluded Assets”):

 

2

 

(i)                 any bank accounts, cash, cash equivalents, securities and
accounts receivable, prepaid accounts, deposits and advance payments made by the
Sellers and held by third parties with respect to any of the Assets or the
Business, real estate tax, insurance, maintenance, replacement and other
escrows, reserves and impounds held in connection with any loans and any causes
of action (but only to the extent such causes of action relate to periods prior
to the Closing);

 

(ii)               refunds, rebates and dividends paid in respect of insurance
premiums paid by the Sellers relating to periods prior to the Closing Date, and
refunds and additional recoveries by or payments to the Sellers from any Person
for services, goods or supplies which were provided by such Person to the
Sellers prior to the Closing Date;

 

(iii)             the following books and records: income tax returns and
records, minute books and other books and records relating solely to the
corporate or similar governance of each Seller as a legal entity (collectively,
the “Excluded Documents”);

 

(iv)             originals of the Copied Records;

 

(v)               all leases of all machinery, equipment and other tangible
property leased to any Sellers which are used exclusively at the Seller Real
Property and all leases of any portion of each Facility by any Sellers to any
third party other than a resident (excluding the Leasehold Interests) (the
“Leases”);

 

(vi)             the agreements and contracts entered into in connection with
the operation of each Facility by the Sellers, Manager or certain affiliates
thereof, as applicable (the “Contracts”);

 

(vii)          the residency agreements together with any leads regarding
prospective residents;

 

(viii)         all records and reports relating to residents at the Facilities,
(collectively, the “Resident Records”);

 

(ix)            all licensed software and proprietary software (the “Proprietary
Software”) used in the operation of the Facilities;

 

(x)             all materials, supplies, inventory, consumables, perishable and
nonperishable food products, and other similar tangible property used
exclusively in connection with the Business and located on the Seller Real
Property (collectively, the “Inventory”);

 

(xi)            all motor vehicles used by the Sellers in connection with the
Business; and

 

(xii)           the trademarks, trade names, service marks, web addresses and
telephone numbers used in connection with the Assets.

 

3

 

Notwithstanding anything to the contrary contained in this Agreement, any
correspondence and/or communications between counsel, on the one hand, and the
Sellers whether or not covered by attorney-client privilege, and whether or not
related to the transactions contemplated by this Agreement shall remain the
property of the Sellers and the Sellers shall have no obligation to deliver the
same to the Purchaser.

 

Purchaser and each Seller agree that, upon entry into the Master Lease, all
property, assets, contracts and permits necessary for the operation of the
Assets consistent with past practice that are owned or controlled by the Sellers
immediately prior to the Closing, including, without limitation, the Contracts,
the Leases and residency agreements (the “Ancillary Assets”), shall be leased,
assigned, licensed or otherwise made available to Master Tenant pursuant to the
terms of the Master Lease. In connection therewith, Purchaser hereby directs the
Sellers to, upon the Closing, assign all Ancillary Assets owned or leased by
Sellers after taking into account the transactions described herein, excluding
the Work Product (which Work Product shall be licensed to the Master Tenant
pursuant to the Master Lease), to Master Tenant, for and on behalf of Purchaser.

 

Section 1.2            Closing.

 

(a)               Unless this Agreement shall have been terminated pursuant to
Article X, the closing of the transactions contemplated herein (the “Closing”)
shall occur on December 20, 2013 or as soon as possible thereafter. The date on
which the Closing occurs is hereinafter referred to as the “Closing Date”. The
Closing hereunder shall be deemed to be effective as of 11:59 p.m. (ET) on the
Closing Date.

 

(b)              If the Purchaser does not obtain equity or debt financing for
the acquisition of the Assets on or prior to December 20, 2013, the Purchaser,
at its option, may extend the Closing up to and including the Outside Date by
delivering written notice thereof to the Sellers on or prior to such date,
provided that, in no event may the Purchaser extend the Closing beyond the
Outside Date (except as provided pursuant to Section 4.4(b)).

 

(c)              If the Sellers do not satisfy the Monetary Lien Condition on or
prior to December 20, 2013, the Sellers, at their option, may extend the Closing
up to and including the Outside Date by delivering written notice thereof to the
Purchaser on or prior to such date, provided that, in no event may the Sellers
extend the Closing beyond the Outside Date (except as provided pursuant to
Section 4.4(b)).

 

(d)              Notwithstanding anything to the contrary contained herein, if
the Purchaser elects to extend the date of Closing pursuant to Section 1.2(b),
any closing condition that was satisfied as of December 20, 2013 shall be deemed
satisfied as of the extended closing date (notwithstanding any change of
circumstance that would result in the failure of such condition).

 

Section 1.3           Purchase Price. The aggregate purchase price for the
Assets shall be One Billion Nine Million Dollars ($1,009,000,000) (the “Purchase
Price”), subject to the prorations and further adjustments as provided for in
this Agreement.

 

Section 1.4            Reserved. Reserved.

         

4

 

 

Section 1.5        Payment of Purchase Price. At the Closing, the Purchaser
shall pay to Sellers the Purchase Price adjusted for any credits and additions
for the benefit of the Purchaser and/or the Sellers as specified in Article IX.
The Purchase Price as adjusted per the foregoing sentence, shall be paid by wire
transfer of immediately available federal funds to the Escrow Agent and such
funds shall then be disbursed to or for the benefit of the Sellers in accordance
with the Closing Statement.

 

Section 1.6            Assumed Liabilities. From and after the Closing, the
Purchaser shall assume and thereafter pay, perform or otherwise discharge, as
and when the same shall become due and payable, subject to the terms and
conditions of the Master Lease, all liabilities and all obligations arising out
of or related to periods from and after the Closing, or as otherwise expressly
set forth herein, with respect to all of the Assets (the “Assumed Liabilities”).

 

Section 1.7            Excluded Liabilities. “Excluded Liabilities” shall mean
(i) any obligation or liability accruing, arising out of, or relating to acts or
omissions of any Person in connection with the Assets, the Excluded Assets, the
Facilities or the operation of the Business, in each case, prior to the Closing,
(ii) any Indebtedness of any Seller, (iii) any obligation or liability accruing,
arising out of, or relating to any of the Leases or Contracts for the period, in
each case, prior to the Closing, (iv) any obligation or liability for any
federal, state or local taxes, whether or not accrued, assessed or currently due
and payable, related to the Assets, the Facilities or the Business for the
period, in each case, prior to the Closing, (v) any civil or criminal obligation
or liability accruing, arising out of, or relating to any acts or omissions of
any Seller, any of their respective Affiliates or any of their respective
directors, officers, employees and agents claims to violate any Applicable Laws,
(vi) any obligation or liability accruing, arising out of, or relating to any
federal, state or local investigations, claims or actions with respect to acts
or omissions (or suspected or alleged acts or omissions) of any Seller, their
respective Affiliates or any of their respective employees, agents, or vendors,
(vii) any other obligation or liability, fixed or contingent, known or unknown,
relating to or arising out of the ownership, operation or use of the Assets or
the Facilities, or the operation of the Business, in each case, prior to
Closing; and (viii) any liability or obligation of the Sellers or its affiliates
that is not an Assumed Liability.

 

Section 1.8            Allocation of Purchase Price. Sellers and the Purchaser
agree that the Purchase Price shall be allocated among the Assets at the Closing
as provided and as described in the allocation statement attached hereto as
Exhibit B, which Exhibit B shall show the aggregate amount of the Purchase Price
being allocated to each Facility. Within forty five (45) days following the
Closing Date (or such other time period as reasonably agreed by Purchaser and
Sellers), the Parties will mutually agree on the amount of the Purchase Price
allocated to the Personal Property. The Sellers shall timely and properly
prepare, execute (with the Purchaser, as required), file and deliver all such
documents, forms and other information as the Purchaser may reasonably request
to prepare and determine such allocation. Each Party hereby covenants and agrees
(i) to timely file all forms (including IRS Form 8594) and tax returns required
to be filed in connection with such allocation and (ii) to take no position on
any income tax return or form, before any governmental agency charged with the
collection of any income tax, in any judicial proceeding or otherwise with any
Governmental Authority that is any way inconsistent with the terms of this
Section 1.7, unless otherwise required by Applicable Law.

 

5

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

The disclosure schedules attached hereto (the “Disclosure Schedules”) are
arranged in sections and subsections corresponding to the numbered and lettered
sections and subsections contained in this Agreement to which such sections and
subsections of the Disclosure Schedules relate. Notwithstanding the foregoing,
information disclosed in any section or subsection of the Disclosure Schedules
shall be deemed to be disclosed with respect to all other sections or
subsections of this Agreement. An exception to a representation or warranty in
this Article II set forth in the Disclosure Schedules effectively modifies the
corresponding representation or warranty in this Article II, notwithstanding
whether such representation and warranty specifically references the Disclosure
Schedules. Any fact or item disclosed in any section of the Disclosure Schedules
shall not be deemed, solely by reason of such inclusion, to be material and
shall not be employed as a point of reference in determining any standard of
materiality under this Agreement. In connection with the remaking of
representations and warranties as of the Closing (but not as to representations
and warranties made as of the Effective Date), Sellers shall be permitted to
update the Disclosure Schedules to accurately reflect the current state of
matters as of the Closing.

 

Notwithstanding anything to the contrary contained herein, any reference in this
Agreement to “Sellers’ Knowledge,” or words of similar import, shall be deemed
to refer exclusively to the matters within the actual knowledge of Kai Hsiao,
Scott Shanaberger and Christopher Bouchard (“Seller Knowledge Individuals”),
which individuals are the individuals in the Sellers’ organization who are most
knowledgeable of the matters set forth herein. As regards any representations or
warranties in this Agreement that are qualified to the extent of “Sellers’
Knowledge”, the Seller Knowledge Individuals shall have a duty of reasonable
inquiry of the appropriate persons employed by the Manager into the matters
which are the subject of such representations or warranties; provided that, in
no event will the Seller Knowledge Individuals have any duty of reasonable
inquiry with respect to persons employed at the Facility level.

 

The Purchaser acknowledges and agrees that neither the Sellers nor any of their
representatives or agents have made, nor are they making, any representations or
warranties whatsoever regarding the Assets or the subject matter of this
Agreement, express or implied, except for the Seller Representations, and that
the Purchaser is not relying, and has not relied, on any representations or
warranties whatsoever regarding the Assets or the subject matter of this
Agreement, express or implied, except for the representations and warranties in
this Agreement or in the Seller Documents delivered to Purchaser at the Closing
(collectively, the “Seller Representations”).

 

Each Seller represents and warrants, as applicable, to the Purchaser, as of the
Effective Date and as of the Closing Date (unless otherwise expressly provided),
that except as set forth in the Disclosure Schedules:     

 

6

 

Section 2.1  Organization and Qualification.

 

(a)                (i) Each Seller is duly organized and validly existing and in
good standing under the laws of the jurisdiction in which it is formed with all
requisite power and authority to carry on its respective business as currently
being conducted and to own or lease and operate the assets it owns or leases as
and in the places now owned, leased or operated, respectively; and (ii) each
Seller is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership,
management or operation of the Facilities makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, has not resulted in, and would
not be reasonably expected to result in, a Seller Material Adverse Effect.

 

Section 2.2            Authority; Binding Effect; Approvals; No Conflicts;
Capitalization.

 

(a)                (i) Each Seller has, and at the Closing each Seller will
have, the requisite limited liability company or limited partnership right,
power and authority, as applicable, to execute, deliver and perform its
obligations with respect to this Agreement and its Seller Documents and (ii) the
execution, delivery, performance and consummation of this Agreement, the
applicable Seller Documents and all of the transactions contemplated herein and
therein have been duly authorized and approved by all necessary partnership or
limited liability company action of each Seller, as applicable.

 

(b)               This Agreement and each Seller Document, upon due execution
and delivery by each Seller party thereto, will constitute the legal, valid, and
binding obligation of such Seller, enforceable against such Seller in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by application of equitable principles.

 

(c)                The execution, delivery and performance of this Agreement and
the Seller Documents by each Seller party thereto does not and will not: (i)
conflict with or result in any breach or violation of the provisions of, or
constitute a default under the organizational documents of any Seller, (ii)
subject to obtaining the Required Approvals, violate (or give rise to any right
of termination, cancellation or acceleration under) any mortgage, deed of trust,
license, permit, lease, indenture, contract, agreement, obligation, commitment,
arrangement, understanding, instrument or other agreement or instrument, whether
oral or written, to which any Seller is a party, or by which it or any of its
assets are bound, or result in the termination of any such instrument or
termination of any provisions in such instrument, in each case that would,
individually or in the aggregate, have a Facility Material Adverse Effect; (iii)
result in the creation or imposition of any Lien (other than Permitted Liens,
and whether arising by contract or by operation of law) upon the Assets that
would, individually or in the aggregate, have a Facility Material Adverse
Effect; or (iv) violate any Applicable Law that would, individually or in the
aggregate, have a Facility Material Adverse Effect.

 

Section 2.3            Permits; Licenses. Schedule 2.3 sets forth all material
permits, licenses and other authorizations issued and required by any
Governmental Authority in connection with the ownership or operation of any
Facility as conducted by the Sellers in accordance with past practice (each a
“License”, collectively, the “Licenses”). Except as disclosed on Schedule 2.3,

7

 

each License is in good standing and the Sellers have not received written
notice that the Sellers are in violation of any License or any restriction, rule
or regulation affecting possession and use thereof that would, individually or
in the aggregate, have a Facility Material Adverse Effect.

 

Section 2.4            Governmental Approvals. Except as set forth in Schedule
2.4, to Sellers’ Knowledge (a) no Seller is required to submit any notice,
report or other filing with any Governmental Authority in connection with its
execution or delivery of this Agreement or any Seller Documents or the
consummation of the transactions contemplated hereby, and (b) no consent,
approval or authorization of any Governmental Authority is required to be
obtained by any Seller in connection with the execution, delivery and
performance of this Agreement.

 

Section 2.5            Financial Statements. The Sellers have provided the
following financial statements with respect to each Facility in the Data Site at
least five (5) days prior to the Effective Date: (i) balance sheets of each
Facility as of December 31, 2011, December 31, 2012 and September 30, 2013, and
(ii) income statements of each Facility for the twelve (12) month periods ended
December 31, 2011 and December 31, 2012 and for the nine (9) month period ended
September 30, 2013 ((i) and (ii) collectively, the “Facility Balance Sheets and
Income Statements”). The Facility Balance Sheets and Income Statements are true,
correct and complete in all material respects and present fairly the financial
condition of each Facility as of their respective dates or for the periods
indicated.

 

Section 2.6            Absence of Certain Changes, Events and Conditions. Since
September 30, 2013, there has not been any event, occurrence or development that
has had, or could reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect.

 

Section 2.7            Title to Personal Property. Seller has good and valid
title to, or interest in, all of the Personal Property owned by the Sellers.

 

Section 2.8            Condition and Sufficiency of Assets. The Assets, when
taken together with the Ancillary Assets, are sufficient for the continued
conduct of the Business after the Closing in substantially the same manner as
conducted prior to the Closing and constitute, when taken together with the
Ancillary Assets, all of the rights, property and assets necessary to conduct
the Business as currently conducted.

 

Section 2.9            Real Property. (a) Exhibit A sets forth the complete and
accurate legal description of each parcel of Seller Real Property. Schedule 2.9
sets forth an accurate street address of each parcel of Seller Real Property.
The Seller Real Property is all of the real property used in or necessary for
the conduct of the Business as currently conducted. With respect to each parcel
of the Sellers Real Property, the Sellers have good, valid and insurable fee
simple title, free and clear of all Liens, except Permitted Liens.

 

(b)               To Sellers’ Knowledge, Sellers have not received any written
notice of (i) violations that remain pending or unresolved of building codes
and/or zoning ordinances or other governmental or regulatory laws affecting the
Seller Real Property, (ii) existing, pending or threatened condemnation
proceedings affecting the Seller Real Property, (iii) existing, pending or
threatened zoning, building code or other moratorium proceedings, or similar
matters, or (iv) any violation that remains pending or unresolved of any
Applicable Law affecting the Seller Real

 

8

 

Property, in each case, which could reasonably be expected to have, individually
or in the aggregate, a Facility Material Adverse Effect.

 

Section 2.10        Compliance with Laws. The Sellers have operated the Business
and have maintained the Assets in compliance with all Applicable Laws in all
material respects.

 

Section 2.11        Hazardous Substances. For purposes of this Agreement,
“Environmental Laws” means the Resource Conservation and Recovery Act (RCRA), 42
U.S.C. Section 6901 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA), 42 U.S.C. Sections 9601 et seq., the
Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic Substances Control
Act, the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Safe Drinking Water
Act 42 U.S.C. Section 300(f) et seq. and all other applicable state, county,
municipal, administrative or other environmental, hazardous waste or substance,
ordinances, rules, regulations, judgments, and orders relating or pertaining to
(A) the protection, preservation or reclamation of the environment or natural
resources or (B) the management, release and threatened release of Hazardous
Substances. For purposes of this Agreement, “Hazardous Substance” shall mean any
and all substances, wastes, materials, pollutants, contaminants, compounds,
chemicals or elements which are defined or classified as a “hazardous
substance,” “hazardous material,” “toxic substance,” “hazardous waste,”
“pollutant,” “contaminant” or words of similar import under any Environmental
Law, including all dibenzodioxins and dibenzofurans, polychlorinated biphenyls
(PCBs), petroleum hydrocarbon, including crude oil or any derivative thereof,
asbestos-containing materials in any form, and radon gas.

 

(a)                Except as would not reasonably be expected to result in a
Facility Material Adverse Effect or except as disclosed on Schedule 2.11(a) or
in any Phase I environmental report made available to the Purchaser on the Data
Site: (i) to Sellers’ Knowledge the operations of Sellers with respect to the
Facilities and the other Assets are and have been in compliance with all
material applicable Environmental Laws; and (ii) the Sellers have not received
from any Person, with respect to the Seller Real Property, any (A) written
notice or claim alleging liability or a breach of any Environmental Laws or (B)
written request for information pursuant to Environmental Law, which, in each
case, either remains pending or unresolved, or is the source of ongoing
obligations or requirements as of the Closing Date.

 

(b)               Except as would not reasonably be expected to result in a
Facility Material Adverse Effect or except as disclosed on Schedule 2.11(b) or
in any Phase I environmental report made available to Purchaser on the Data
Site, to Sellers’ Knowledge, Sellers do not currently store or use any Hazardous
Substances at any Seller Real Property, except for Hazardous Substances used in
the ordinary course of business at any Facility, including cleaning fluids,
insecticides, medicines and similar items (the “Common Products”), which Common
Products have been used, transported, stored and disposed of by the Sellers in
compliance, in all material respects, with all applicable Environmental Laws.

 

(c)                Except as would not reasonably be expected to result in a
Facility Material Adverse Effect or except as disclosed on Schedule 2.11(c) or
in any Phase I environmental report made available to the Sellers on the Data
Site, to Sellers’ Knowledge none of the Seller Real Property is listed on, or
has been proposed for listing on, the National Priorities List or the

 

9

 

CERCLIS pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. § 9601, et. seq. or any similar state list.

 

(d)               Except as would not reasonably be expected to result in a
Facility Material Adverse Effect or except as disclosed on Schedule 2.11(d) or
in any Phase I environmental report made available to the Purchaser on the Data
Site, to Sellers’ Knowledge there has been no release of Hazardous Substances in
contravention of Environmental Law with respect to the Seller Real Property, and
the Sellers have not received any written notice of any such release which would
reasonably be expected to result in a claim under Environmental Laws or a
violation of Environmental Laws or a violation of the term of any License issued
to Sellers pursuant to applicable Environmental Laws.

 

(e)                The Sellers have, prior to the Effective Date, made available
to the Purchaser on the Data Site for each Facility a copy of the most recent
Phase I environmental reports, none of which are dated prior to the date which
is six (6) months prior to the Effective Date, other than the report for the
Westmont Facility, which is dated June 20, 2012 and for the Simi Hills Facility,
which is dated June 20, 2012.

 

Section 2.12        No Litigation. As of the Effective Date, and except as set
forth in Schedule 2.12, there are no actions, suits, claims, arbitrations,
governmental investigations or other legal or administrative proceedings (“Legal
Proceedings”), or any orders, decrees or judgments in progress or pending in any
state or federal court, or, any other local court or other tribunal, or, to
Sellers’ Knowledge, threatened against any Seller relating to the Assets or the
Seller Real Property which could reasonably be expected to have a Seller
Material Adverse Effect.

 

Section 2.13        Employees. None of the Sellers has any employees. Seller is
not a party to any collective bargaining agreement, and no collective bargaining
agreement is currently being negotiated by the Sellers. To the Sellers’
Knowledge, no petitions for representation are currently filed against any
Facility nor have any demands been made for recognition.

 

Section 2.14        ERISA. Seller does not hold any “plan assets” within the
meaning of Section 3(42) of the Employee Retirement Income Security Act of 1974,
as amended.

 

Section 2.15        Insurance. Schedule 2.15 contains a description of all
insurance policies insuring the Facilities, as of the Effective Date. All such
policies are in full force and effect, and to Sellers’ Knowledge, have been
issued by licensed insurers, all premiums with respect thereto covering all
periods up to and including the Closing Date have been paid, and none of the
Sellers has received written notice of cancellation or termination with respect
to any such policies that remains pending or unresolved. The insurance policies
described in Schedule 2.15 are not being assigned or transferred to the
Purchaser.

 

Section 2.16        Brokers and Finders. Except as set forth in Schedule 2.16,
no Seller has employed or engaged any investment banker, broker or finder in
connection with the transactions contemplated by this Agreement who might be
entitled to any fee or any commission in connection with or upon consummation of
the Closing.

 

10

 

Section 2.17    OFAC. Neither the Sellers nor, to the Sellers’ Knowledge, any of
their respective direct equity owners nor their respective officers or
directors, is a person or entity with whom U.S. persons or entities are
restricted from doing business under regulations of the Office of Foreign Asset
Control of the Department of the Treasury (“OFAC”), (including those named on
OFAC’s Specially Designated and Blocked Persons List) or under any similar
statute, executive order (including the September 24, 2001, Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism) or other similar governmental regulations.

 

THE PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT WITH RESPECT TO THE
SELLER REPRESENTATIONS, THE ASSETS ARE HEREBY SOLD, AND THE PURCHASER SHALL TAKE
AND ACCEPT TITLE TO AND POSSESSION OF THE ASSETS ON THE CLOSING DATE, “AS IS,
WHERE IS, WITH ALL FAULTS,” WITH NO RIGHT OF SET-OFF, CONTRIBUTION, COST
RECOVERY OR REDUCTION IN THE PURCHASE PRICE, AND THAT, EXCEPT FOR THE SELLER
REPRESENTATIONS, SUCH SALE SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF ANY
KIND OR NATURE WHATSOEVER BY THE SELLERS, WHETHER EXPRESS, IMPLIED, STATUTORY,
OR OTHERWISE, INCLUDING, WARRANTY OF INCOME POTENTIAL, OPERATING EXPENSES, USES,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND EACH SELLER DOES HEREBY
DISCLAIM AND RENOUNCE ANY SUCH REPRESENTATION OR WARRANTY. THE PURCHASER
SPECIFICALLY ACKNOWLEDGES THAT, EXCEPT FOR THE SELLER REPRESENTATIONS, THE
PURCHASER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
NATURE WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS, IMPLIED, STATUTORY, OR
OTHERWISE, FROM SELLER AS TO ANY MATTERS CONCERNING THE ASSETS. THE PURCHASER
FURTHER ACKNOWLEDGES AND AGREES THAT (A) EXCEPT FOR THE SELLER REPRESENTATIONS,
THE PURCHASER IS RELYING SOLELY UPON THEIR OWN INSPECTION OF THE ASSETS AND NOT
UPON ANY REPRESENTATIONS OR WARRANTIES MADE TO THEM BY ANY PERSON WHOMSOEVER,
(B) EXCEPT AS PROVIDED HEREIN, ANY REPORTS, REPAIRS, OR WORK REQUIRED BY THE
PURCHASER OR PROVIDED BY THE SELLERS TO THE PURCHASER IN CONNECTION WITH THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT ARE TO BE THE SOLE RESPONSIBILITY OF
THE PURCHASER AND (C) EXCEPT AS PROVIDED HEREIN, THERE IS NO OBLIGATION ON THE
PART OF THE SELLERS TO MAKE ANY CHANGES, ALTERATIONS, OR REPAIRS TO THE ASSETS.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The Purchaser represents and warrants to the Sellers, as of the Effective Date,
as follows:

 

Section 3.1            Organization; Etc. The Purchaser is (i) duly organized
and validly existing and in good standing under the laws of the jurisdiction in
which it is formed with all requisite power and authority to carry on its
business as currently being conducted and to own or lease and operate the assets
it owns or leases as and in the places now owned, leased or operated;

11

 

and (ii) the Purchaser is duly qualified or licensed to do business and is in
good standing in the jurisdiction in which the nature of its business or the
ownership, construction, management or operation of its assets makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed, individually or in the aggregate, has
not resulted in, and would not reasonably be expected to result in, a Purchaser
Material Adverse Effect.

 

Section 3.2            Authority, Binding Effect.

 

(a)                The Purchaser has, and at the Closing the Purchaser will
have, the requisite limited liability company right, power and authority, to
execute, deliver and perform its obligations with respect to this Agreement and
the Purchaser Documents. The execution, delivery, performance and consummation
of this Agreement, the Purchaser Documents and all of the transactions
contemplated herein and therein have been duly authorized and approved by all
necessary limited liability action of the Purchaser.

 

(b)               This Agreement and the Purchaser Documents, upon due execution
and delivery by the Purchaser, will constitute the legal, valid, and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by application of equitable principles.

 

(c)                The execution, delivery and performance of this Agreement and
the Purchaser Documents by the Purchaser does not and will not: (i) conflict
with or result in any breach or violation of the provisions of, or constitute a
default under its organizational documents, (ii) violate any mortgage, deed of
trust, license, permit, lease, indenture, contract, agreement, obligation,
commitment, arrangement, understanding, instrument or other agreement or
instrument, whether oral or written, to which the Purchaser is a party, or by
which it or any of its assets are bound, or result in the termination of any
such instrument or termination of any provisions in such instrument in each case
that would, individually or in the aggregate, have a Purchaser Material Adverse
Effect, or (ii) violate any Applicable Law.

 

Section 3.3            No Litigation. As of the Effective Date, the Purchaser is
not a party to, or defending or subject to, any Legal Proceeding, nor, to
Purchaser’s Knowledge, is any such Legal Proceeding threatened in each case,
which would have a Purchaser Material Adverse Effect on the Purchaser’s ability
to execute, deliver and perform this Agreement, the Purchaser Documents and any
other documents and transaction contemplated hereby.

 

Section 3.4            Governmental Approvals. To the Purchaser’s Knowledge, the
Purchaser is not required to submit any notice, report or other filing with any
Governmental Authority in connection with its execution or delivery of this
Agreement or any Purchaser Document or the consummation of the transactions
contemplated hereby and no consent, approval or authorization of any
Governmental Authority is required to be obtained by the Purchaser in connection
with the execution, delivery and performance of this Agreement.

 

Section 3.5            Brokers and Finders. Except as set forth in Section 3.5,
the Purchaser has not employed or engaged any investment banker, broker or
finder in connection with the

12

 

transactions contemplated by this Agreement who might be entitled to any fee or
any commission in connection with or upon consummation of the Closing.

 

Section 3.6            Available Funds. Upon the Closing, Purchaser will have
immediately available to it, sufficient funds to pay the Purchase Price and all
costs and expenses as required by this Agreement.

 

Notwithstanding anything to the contrary contained herein, any reference in this
Agreement to “Purchaser’s Knowledge” or words of similar import shall be deemed
to refer exclusively to matters within the actual knowledge of Jonathan Brown
(“Purchaser Knowledge Individual”), which individual is the individual in
Purchaser’s organization who is most knowledgeable of the matters set forth
herein, but without any obligation to investigate or make inquiries of other
Persons with respect to any of the representations and warranties contained in
this Agreement. Without limiting the foregoing, the Sellers acknowledges that
the Purchaser Knowledge Individual has not performed and is not obligated to
perform any investigation or review of any files or other information in the
possession of the Purchaser, or to make any inquiry of any persons, or to take
any other actions in connection with the representations and warranties of the
Purchaser set forth in this Agreement other than as required herein. Neither the
actual, present, conscious knowledge of any other individual or entity, nor the
constructive knowledge of the Purchaser Knowledge Individual or of any other
individual or entity, shall be imputed to the Purchaser Knowledge Individual.
Notwithstanding anything to the contrary contained in this Agreement, the
Purchaser’s Knowledge shall be deemed to include the information provided on the
Disclosure Schedules and the Phase I environmental reports and property
condition reports for the Seller Real Property posted to the Data Site on or
prior to the Effective Date.

 

ARTICLE IV

COVENANTS OF THE SELLERS

 

From and after the Effective Date and, subject to earlier termination of this
Agreement, until the Closing, except as otherwise consented to or approved by
the Purchaser in writing, the Sellers covenant and agree as follows:

 

Section 4.1            Interim Operating Covenants. Except as expressly
contemplated by this Agreement, the Business shall be conducted in the ordinary
course of business consistent with past practice, and the Sellers shall use
commercially reasonable efforts to (a) maintain the Facilities, or cause the
Facilities to be maintained, in substantially their condition as of the
Effective Date, reasonable wear and tear, and casualty and condemnation,
excepted; (b) comply in all material respects with all Applicable Laws; and (c)
keep in full force and effect insurance policies with substantially the same
terms as existing policies.

 

Section 4.2            Liens. The Sellers shall not create or permit to become
effective any Liens upon the Assets, other than the Permitted Liens and any
other Lien arising in the ordinary course of business and consistent with past
practice so long as such other Lien is removed, satisfied or otherwise bonded
over at or prior to the Closing, such that such Lien is not included as an
exception to a Title Policy.

 

13

 

Section 4.3           Inspection Rights

 

(a)                The Sellers shall, upon not less than forty-eight (48) hours
prior notice from the Purchaser, at reasonable business hours and subject to the
rights of residents under the residency agreements, the Leases and all
Applicable Laws, afford to the Purchaser reasonable access, subject to the
Purchaser’s obligation to comply with this Agreement, (i) to the Seller Real
Property in order to examine and inspect such Seller Real Property, including
the Books and Records and (ii) to meet with the managers at the Facilities;
provided, however, such access shall not include the right to meet with any
residents, any tenants or any other employees of the Manager; provided, further,
however, Sellers and/or their agents shall be given the opportunity and
permitted to supervise all meetings, calls or other contact or communications
with the Sellers’ personnel including but not limited to meetings with the
managers at the Facilities.

 

(b)               The Purchaser shall use commercially reasonable efforts to not
cause damage, loss, cost or expense to the Seller Real Property, the Facilities,
the Sellers, any residents, any tenants, the Manager and its employees or any
invitee at any Facility (collectively, the “Section 4.3 Indemnified Parties”).
To the extent of any damage caused by the Purchaser or any agent, representative
or contractor or other Person entering onto the Seller Real Property on behalf
of, or at the direction of, the Purchaser (each a “Purchaser Representative”) to
the Seller Real Property, any Facility or assets located thereat, the Purchaser
shall promptly restore such property to its condition immediately preceding such
inspections and examinations and shall keep all such property free and clear of
any mechanic’s liens or materialmen’s liens arising as a result such inspections
and investigations (and promptly cause, at the Purchaser’s sole cost and
expense, the removal of any such mechanic’s liens or materialmen’s liens). The
Purchaser shall indemnify, defend, and hold harmless for, from, and against any
and all claims, liabilities costs and/or expenses incurred by any such Section
4.3 Indemnified Party in connection with, or as a result of, the entry of any
Purchaser Representative onto the Seller Real Property or resulting from the
action or inaction of any of the Purchaser Representatives while at the Seller
Real Property prior to the Closing Date including, costs and expenses arising or
resulting from (i) loss, injury to or death of any Purchaser Representative or
any Section 4.3 Indemnified Party, as applicable (waiving all limitations under
workers’ compensation), and (ii) any loss, damage, cost and/or expense to or
destruction of any property owned by any Section 4.3 Indemnified Party
(including claims or liabilities for loss of use of any property).

 

(c)                The obligations of the Purchaser under this Section 4.3 shall
survive the Closing or earlier termination of this Agreement.

 

Section 4.4            Title Insurance and Surveys.

 

(a)                Prior to the Effective Date, the Sellers have provided to the
Purchaser (i) title commitments for each Seller Real Property (collectively, the
“Initial Title Commitments”), issued by First American Title Insurance Company
(the “Title Company”), together with copies of all recorded exceptions to title
referred to therein and (ii) a survey of each Seller Real Property
(collectively, the “Initial Surveys”). All matters contained in the Initial
Title Commitments and Initial Surveys are hereinafter referred to as the
“Existing Title Matters”. On or before the expiration of the Inspection Period,
the Purchaser shall have the right to object, in writing and in its reasonable
discretion, to an Existing Title Matter that (i) has a material adverse effect
on the

 

14

 

current use and value of a Facility or (ii) may be removed or cured by the
payment of a readily ascertainable amount, by delivering a written notice to
Sellers specifying any Existing Title Matter to which the Purchaser objects
(such notice being referred to herein as the “Existing Title Objection Notice”).
The failure of the Purchaser to object to any Existing Title Matter within said
period shall be deemed a waiver by the Purchaser of its right to object to such
Existing Title Matter and, in such event, such Existing Title Matter shall be
deemed approved by the Purchaser and shall be a Permitted Lien.

 

(b)               The Sellers acknowledge that certain of the Initial Surveys
provided in the Data Site were completed more than ninety (90) days prior to the
Effective Date (the “Outdated Initial Surveys”). On or before the expiration of
the Inspection Period, Seller will provide in the Data Site updates (or new
surveys, as the case may be) to the Outdated Initial Surveys that will have been
prepared recently enough to reasonably satisfy the Purchaser and the Title
Company. Prior to the Closing Date, the Purchaser shall have the right to order
updates to the Initial Title Commitments and/or Initial Surveys, and in the
event that any such update reveals any new matter not previously shown or
disclosed on the Initial Title Commitments or Initial Surveys which (i) would
reasonably be expected to have a material adverse effect on the current use and
value of a Facility or (ii) may be removed or cured by the payment of a readily
ascertainable amount (each, a “New Title Matter”), the Purchaser shall have the
right to object, in writing and in its reasonable discretion, to such New Title
Matter by the earlier of (i) the Closing Date and (ii) the date which is three
(3) Business Days after receipt of such update, as applicable, with any such
objection notice specifying any New Title Matter to which the Purchaser objects
(such notice being referred to herein as the “New Title Objection Notice”) (the
Existing Title Objection Notice and the New Title Objection Notice are
hereinafter collectively referred to as the “Title Objection Notice”). The
failure of the Purchaser to object to any New Title Matter within said period
shall be deemed a waiver by the Purchaser of its right to object to such New
Title Matter and, in such event, such New Title Matter shall be deemed approved
by the Purchaser and shall be a Permitted Lien. Notwithstanding the foregoing,
the Purchaser shall not have the right to disapprove any of the following, all
of which (together with all other matters deemed approved by the Purchaser
pursuant to terms hereof) shall be deemed to be “Permitted Liens” hereunder: (A)
matters created or consented to in a separate written consent by the Purchaser,
(B) the Assumed Liabilities, (C) all Liens for taxes, assessments, water rates,
water meter charges, water frontage charges and sewer taxes, rents and charges,
if any, provided that such items are not due and payable. If the Purchaser
delivers a Title Objection Notice to the Sellers within either of the
above-described periods, the Sellers shall have three (3) Business Days after
receipt of the Title Objection Notice (such period is the “Seller Response
Period”) in which to send the Purchaser a written notice (the “Title Objection
Response Notice”) informing the Purchaser of which Existing or New Title Matters
(collectively the “Title Matters”), as applicable, the Sellers will and will not
agree to cure prior to the Closing Date (as the same may be extended as provided
herein). If the Sellers fail to deliver the Title Objection Response Notice with
respect to any Title Matters to the Purchaser on or before the expiration of the
Seller Response Period, the Sellers shall be deemed to have refused to cure such
Title Matter. The Closing Date may be extended by the Sellers to accommodate the
giving of notices and the cure periods contemplated herein, provided that the
Closing Date shall not be extended by the Sellers for a period beyond the date
which is ten (10) days after the last Title Objection Notice is delivered by
Purchaser, for the purposes of curing any Title Matter to which the Purchaser
has objected and which the Sellers have informed the Purchaser they have agreed
to cure and, in

 

15

 

such event, the Closing shall occur upon the curing of such Title Matters. If
the Sellers are unable after using commercially reasonable efforts (considered
in the context of the allotted time) during such period to cure any such Title
Matter, the Sellers shall be deemed to have refused to cure such Title Matter.
If the Sellers refuse (or are deemed to have refused) to cure any Title Matter
set forth in the Title Objection Notice, the Purchaser shall have three (3)
Business Days after receipt of Sellers’ Title Objection Response Notice (or, if
Seller has not responded to the Title Objection Notice, then within three (3)
Business Days following the expiration of the Seller Response Period) in which
to advise the Sellers in writing of the Purchaser’s election (x) to waive its
objection to the Title Matters that Sellers either refused to cure, or could not
cure, and to proceed to the Closing or (y) to terminate this Agreement, in which
event the Parties shall have no further obligations or liabilities under this
Agreement other than the Surviving Obligations, which, solely to the extent this
Agreement was terminated due to Purchaser objecting to Title Matters consented
to or created by the Sellers, shall include the obligation of the Sellers to
reimburse the Purchaser in the amount equal to the lesser of (i) Purchaser
Expenses and (ii) the Reimbursement Cap in accordance with Section 10.1(d)
hereof. If the Purchaser does not terminate this Agreement pursuant to the
preceding sentence, then all Title Matters appearing in the Title Objection
Notice that Sellers either did not agree to cure (as set forth in the Title
Objection Response Notice) or could not cure by Closing shall be deemed
Permitted Liens. The Purchaser agrees that the Sellers may cure any
objectionable matter by causing the Title Company to remove the same as an
exception in the applicable Title Policy or to affirmatively insure over such
matter.

 

(c)                The title insurance policies issued to the Purchaser as of
the Closing shall be dated as of the date of Closing, insure the fee simple
interest or leasehold interest, as applicable, of the Purchaser in the Seller
Real Property or Leasehold Interests, as applicable, in the form of the Pro
Forma 2006 ALTA Title Policies (except for Facilities located in the state of
Texas), each subject to only the Permitted Liens (each a “Title Policy” and
collectively the “Title Policies”) and cover the “gap period”. The Sellers and
the Purchaser shall execute customary affidavits, gap indemnities and other
instruments, in forms reasonably agreed by the party(ies) thereto, as reasonably
requested by the Title Company to cause the Title Company to issue the Title
Policies.

 

Section 4.5          Further Assurances. In addition to the acts and deeds
recited herein and contemplated to be performed, executed or delivered by the
Sellers, the Sellers hereby agree to perform, execute and deliver, or cause to
be performed, executed and delivered, on the Closing Date or thereafter any and
all such further acts, deeds and assurances the Purchaser may reasonably require
in order to consummate fully the transactions contemplated hereunder The
obligation of the Parties under this Section 4.5 shall survive the Closing.

 

Section 4.6            8-K Requirements.

 

(a)                For a period from the date hereof until three (3) years after
Closing, the Sellers shall from time to time upon Purchaser’s request, make the
Facility Balance Sheets and Income Statements, Financial Statements, any
underlying financial data associated therewith, and all other books, records and
files relating to any period prior to the Closing (whether in paper or
electronic format) available to the Purchaser for inspection, copying and audit
by Purchaser and Purchaser’s designated accountants, at the Purchaser’s expense.
Provided that Purchaser

 

16

 

agrees to bear any associated third-party expense (i.e. excluding expenses of
Sellers’ personnel and other overhead expenses), the Sellers shall provide the
Purchaser with copies of, or access to, such factual information as may be
reasonably requested by the Purchaser, and in the possession or under the direct
or indirect control of the Sellers, to enable the Purchaser or an affiliate (or
their respective successors) to (x) include such information in registration
statements, offering memoranda or prospectuses, or similar disclosure documents
in connection with syndications, private placements or public offerings of
equity or debt securities or interests of the Purchaser or any of its
affiliates, and (y) comply with all reporting and disclosure requirements of
Purchaser or any of its affiliates under applicable federal and state laws and
the rules and regulations promulgated thereunder, as such requirements are
interpreted in good faith by Purchaser or any such affiliate.

 

(b)               Without limiting the foregoing, the Purchaser or its
designated independent or other accountants may audit the Financial Statements
and any other financial statements of the Sellers, and the Sellers shall supply
such documentation in their possession or under their direct or indirect control
as the Purchaser or its accountants may reasonably request in order to complete
such audit, and the Sellers shall execute the form of audit and representation
letter reasonably required by such accountants, and take such other actions as
shall be reasonably necessary, in order to (i) permit such accountants to
provide an unqualified audit opinion in accordance with generally accepted
accounting principles with respect to such audit, (ii) obtain the consent of
such accountants to the inclusion of such opinion in one or more reports or
registration statements that may be filed by Purchaser or an affiliate with the
Securities and Exchange Commission, or in any offering memorandum or similar
disclosure documents in connection with any syndications or private placements,
(iii) cause such accounting firm to issue one or more customary comfort letters
with respect to financial information of the Sellers, and (iv) cause such
accounting firm to perform a review of any interim financial periods in
accordance with AU 722 in order to be able to provide customary comfort with
respect to such periods. The Sellers shall otherwise reasonably cooperate with
the Purchaser and its affiliates, accountants and auditors in connection with
any public or private offering of equity or debt securities which, in
Purchaser’s (or such affiliate’s) good faith judgment, may require disclosure of
information relating to Seller Real Property or the Business for any period
prior to the Closing. In this connection, Sellers shall cause to be made
reasonably available to the Purchaser and its affiliates, accountants and
auditors such personnel of Sellers or of any affiliate of Sellers (including,
without limitation, management personnel employed in connection with any of the
Seller Real Property) to address questions relating to the financial statements,
financial data, and/or the ownership, operation and/or financial performance of
the Seller Real Property and the Business for any period prior to the Closing.

 

(c)                In addition, from the date hereof in connection with any
financing sought to be obtained by the Purchaser for its acquisition of Seller
Real Property at the Closing, the Sellers shall reasonably cooperate (and shall
cause associated management personnel reasonably to cooperate) to expedite and
assist with the consummation such financing, provided that Purchaser bears any
associated third-party expense. Without limitation, such cooperation shall
include, upon the Purchaser’s request (with the Purchaser bearing any associated
third-party expenses): establishing special purpose entities and associated
structuring changes, implementing documentation and other changes to facilitate
“sale” treatment of the Purchaser’s acquisition of the Assets for accounting
and/or “true sale” legal purposes, implementing changes in accounts as

 

17

 

the lender may reasonably request, and making appropriate personnel reasonably
available to address questions and issues. The obligations of the Parties under
this Section 4.6 shall survive the Closing.

 

Section 4.7            Phase I Updates. The Sellers shall provide an updated
Phase I environmental report for the Westmont Facility and the Simi Hills
Facility on the Data Site (the “Updated Report”) on or prior to Closing. If the
Updated Report recommends that the Sellers take any further action with respect
to any environmental matter not already disclosed on the prior Phase I
environmental report that was provided on the Data Site on or prior to the
Effective Date, the Sellers, as applicable, shall either (i) take such
recommended action at the Sellers’ sole cost and expense, or (ii) cause the
Master Tenant under the Master Lease, or the applicable Subtenant, to take such
recommended action at Master Tenant’s or such Subtenant’s sole cost and expense;
provided, however, that any costs or expenses incurred by tenant or such
subtenant to take such recommended action shall not be counted towards the
satisfaction of the obligation of Master Tenant to incur capital expenditures
under the Master Lease.

 

ARTICLE V

COVENANTS OF THE PURCHASER

 

The Purchaser covenants and agrees with the Sellers that:

 

Section 5.1            Cooperation. After the Closing Date, the Purchaser, at
Sellers’ expense, shall cooperate with the Sellers and provide reasonable access
to the Books and Records in the Purchaser’s possession that are required by the
Sellers to respond to any third party litigation, government audit, other audit
or any other reasonable purpose, upon reasonable advance notice. The Sellers
shall be responsible for the cost and expense of copying any records in the
Purchaser’s possession. The obligation of the Parties under this Section 5.1
shall survive the Closing.

 

Section 5.2            Further Assurances. In addition to the acts and deeds
recited herein and contemplated to be performed, executed or delivered by the
Purchaser, the Purchaser hereby agrees to perform, execute and deliver, or cause
to be performed, executed and delivered, on the Closing Date or thereafter any
and all such further acts, deeds and assurances Sellers may reasonably require
in order to consummate fully the transactions contemplated hereunder. The
obligation of the Parties under this Section 5.2 shall survive the Closing.

 

ARTICLE VI

OTHER COVENANTS

 

Section 6.1            Confidentiality. From and after the Effective Date
through the Closing and thereafter, each Party shall use all information that it
obtains from the other in connection with, or pursuant to, this Agreement and
observe the terms of this Section 6.1. Except as otherwise permitted under this
Agreement, each Party shall use the Confidential Information solely for the
effectuation of the transactions contemplated by this Agreement or for other

18

 

purposes consistent with the intent of this Agreement and shall not use any of
such information for any other purpose, including the competitive detriment of
the other Parties.

 

(a)                Each Party may disclose (i) such information to its
respective Affiliates, counsel, accountants, underwriters, tax advisors and
consultants as necessary to consummate this transaction. Additionally, the
Parties hereby agree that neither Party shall make any announcement or press
release regarding the nature or existence of this Agreement without the consent
of the other Party; provided that, each Party shall reasonably cooperate with
the other Party in connection with the wording of any press release or other
public announcement. The terms of this Section 6.1 shall not prohibit the use or
disclosure of confidential any information pursuant to court order or which has
otherwise become publicly available through no fault of the recipient party;

 

(b)               Purchaser (or any of its Affiliates) shall be able to disclose
such Confidential Information as is, in the good faith judgment of Purchaser’s
counsel, accountants or advisors, required or reasonably advisable to be
disclosed because of the operation of law, rule, regulation or legal process, a
governmental agency such as the Internal Revenue Service or Securities and
Exchange Commission, or a stock exchange such as the New York Stock Exchange,
court order or requirement of any Governmental Authority; and

 

(c)                Purchaser (or any of its Affiliates) shall be able to
disclose such Confidential Information as is, in the good faith judgment of
Purchaser’s counsel, accountants or advisors, required or reasonably advisable
to be disclosed in connection with Purchaser’s (or any of its Affiliates’)
quarterly earnings results or financing activities.

 

(d)               Notwithstanding anything to the contrary contained herein,
prior to the expiration of the Inspection Period, the terms and existence of
this Agreement shall be strictly confidential subject to any disclosure
requirements imposed by any applicable Governmental Authority and to the extent
this Agreement is terminated at the expiration of the Inspection Period, its
existence and terms shall remain strictly confidential subject to any disclosure
requirements imposed by any applicable Governmental Authority. This Section
6.1(d) shall survive termination of this Agreement.

 

If this Agreement is terminated for any reason prior to Closing, the provisions
of this Section 6.1 shall survive the Closing for a period of twenty-four (24)
months.

 

Section 6.2            Casualty Event. If between the Effective Date and the
Closing a Casualty Event shall occur with respect to any one or more Facilities,
the Sellers shall be required to provide the Purchaser with prompt written
notice of such occurrence and the Purchaser or the Sellers may elect, within ten
(10) Business Days of receipt of such notice, to terminate this Agreement, in
which event the Parties shall have no further obligations or liabilities under
this Agreement. If between the Effective Date and the Closing (i) a Casualty
Event shall occur with respect to any one or more Facilities and neither the
Purchaser nor the Sellers have elected to terminate this Agreement in accordance
with this Section 6.2 and not to proceed to Closing or (ii) a casualty has
occurred with respect to one or more Facilities that does not constitute a
Casualty Event (provided the Sellers shall be required to provide the Purchaser
with prompt written notice of such occurrence in any event), all insurance
proceeds and/or awards attributable to any such

19

 

casualty shall be assigned to the Purchaser at Closing and the Sellers shall
provide a credit against the Purchase Price in the amount of any applicable
insurance deductible payable or uninsured amount in connection therewith (and if
any casualty is uninsured, the amount of such uninsured casualty), and Purchaser
agrees to make all such amounts immediately available to Master Tenant if, as
and when required under the Master Lease, which funds will be treated as if the
Casualty Event or casualty occurred during the term of the Master Lease.

 

Section 6.3            Condemnation Event. If, prior to Closing, Sellers receive
notice of any actual or threatened taking in condemnation or by eminent domain
(or a sale in lieu thereof) of all or any portion of any Seller Real Property,
Sellers will notify the Purchaser promptly thereof. Other than with respect to
an Immaterial Taking, any actual or threatened taking or condemnation for any
public or quasi-public purpose or use by any competent authority in appropriate
proceedings or by any right of eminent domain of all or any part of a Seller
Real Property between the Effective Date and the Closing shall, at the
Purchaser’s or the Sellers’ option, cause a termination of this Agreement in
which event the Parties shall have no further obligations or liabilities under
this Agreement with respect to such Facility or Facilities. The election to
terminate provided hereby must be exercised by the Purchaser or the Sellers (and
if not timely exercised, shall be deemed waived by Purchaser or the Sellers) by
written notice to the other party given within ten (10) Business Days following
the Purchaser’s receipt of Sellers’ notice of the condemnation of all or any
portion of any Seller Real Property. If neither party shall elect to terminate
this Agreement or in the event of an Immaterial Taking, Sellers shall assign at
Closing to the Purchaser all net proceeds of any such taking or condemnation to
the extent not yet expended for the restoration of the Seller Real Property by
the Sellers, and the Purchaser agrees to make all such amounts immediately
available to Master Tenant if, as and when required under the Master Lease,
which funds will be treated as if the condemnation or taking occurred during the
term of the Master Lease.

 

ARTICLE VII

INDEMNIFICATION

 

Section 7.1            Indemnification by the Sellers.

 

(a)                Subject to the limitations set forth in this Article VII,
each Seller shall, jointly and severally, indemnify, protect, defend, exculpate
and hold the Purchaser and their Affiliates and their respective partners,
directors, managers, members, shareholders, officers, employees and agents
(collectively, the “Purchaser Indemnified Parties”) harmless from and against,
and defend the Purchaser Indemnified Parties from and reimburse the Purchaser
Indemnified Parties for, any and all actual losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including costs of
investigation, reasonable attorneys’ fees and other legal costs and expenses,
but not including consequential, punitive, treble or other similar damages, lost
profits, special or indirect damages, including loss of future revenue, profits
or income or loss of business reputation or opportunity related to the breach or
alleged breach of this Agreement) (the “Purchaser Indemnified Losses”) which the
Purchaser Indemnified Parties shall at any time suffer or incur, or become
subject to, as a result of or in connection with:

 

20

 

(i)                 Any breach or inaccuracy in any of the representations or
warranties (other than a breach of Section 2.2(d)) as and when made by the
Sellers in or pursuant to this Agreement or any Seller Documents;

 

(ii)               Any breach of any covenant, agreement or undertaking made by
the Sellers under this Agreement;

 

(iii)             Any failure by any Seller to satisfy any Excluded Liability;
and

 

(iv)             Any breach of Section 2.2(d) as and when made by the Sellers in
or pursuant to this Agreement.

 

(b)               Except as provided otherwise herein, (i) the aggregate
liability of the Sellers for Purchaser Indemnified Losses under Section
7.1(a)(i) and Section 7.1(a)(ii) shall not exceed the amount of Fifteen Million
($15,000,000) in the aggregate, and (ii) the Sellers shall be liable for
Purchaser Indemnified Losses under Section 7.1(a)(i) or Section 7.1(a)(ii) only
if the aggregate Purchaser Indemnified Losses exceed the amount of Five Hundred
Thousand Dollars ($500,000) (the “Seller Basket”), at which point the Sellers
shall be liable for all Purchaser Indemnified Losses (i.e., from the first
dollar of such Purchaser Indemnified Losses); provided, that Sellers’
obligations hereunder shall be reduced by the amount of insurance proceeds, tax
benefits, indemnification payments and other third-party payments, actually
received in connection with such claims (net of any costs incurred in recovering
such amounts). For the avoidance of doubt, the limitations set forth in this
Section 7.1(b) shall not apply in the case of any claim made pursuant to Section
7.1(a)(iii).

 

Section 7.2            Indemnification by the Purchaser.

 

(a)                The Purchaser shall indemnify, protect, defend, exculpate and
hold the Sellers and their Affiliates and their respective partners, directors,
managers, members, shareholders, officers, employees and agents (collectively,
the “Seller Indemnified Parties”), harmless from and against, and defend the
Seller Indemnified Parties from and reimburse the Seller Indemnified Parties
for, any and all losses, damages, costs, expenses, liabilities, obligations and
claims of any kind (including costs of investigation, reasonable attorneys’ fees
and other legal costs and expenses, but not including consequential, punitive,
treble or other similar damages, lost profits, special or indirect damages,
including loss of future revenue, profits or income or loss of business
reputation or opportunity related to the breach or alleged breach of this
Agreement) (the “Seller Indemnified Losses”) which the Seller Indemnified
Parties shall at any time suffer or incur, or become subject to, as a result of
or in connection with:

 

(i)                 Any breach or inaccuracy of any of the representations or
warranties made by the Purchaser in this Agreement;

 

(ii)               Any breach of any covenant, agreement or undertaking made by
the Purchaser under this Agreement; and

 

(iii)             Any failure by Purchaser to satisfy the Assumed Liabilities.

 

21

 

(b)               Except as provided otherwise herein, (i) the aggregate
liability of the Purchaser for Seller Indemnified Losses pursuant to Section
7.2(a)(i) and Section 7.2(a)(ii) shall not exceed the amount of Fifteen Million
Dollars ($15,000,000) in the aggregate and (ii) the Purchaser shall be liable
for Seller Indemnified Losses pursuant to Section 7.2(a)(i) or Section
7.2(a)(ii) only if the aggregate Seller Indemnified Losses exceed the amount of
Five Hundred Thousand Dollars ($500,000) (the “Purchaser Basket”), at which
point the Purchaser shall be liable for all Seller Indemnified Losses (i.e.,
from the first dollar of such Seller Indemnified Losses); provided, that
Purchaser’s obligations hereunder shall be reduced by the amount of insurance
proceeds, tax benefits, indemnification payments and other third-party payments,
actually received in connection with such claims (net of any costs incurred in
recovering such amounts). For the avoidance of doubt, the limitations set forth
in this Section 7.2(b) shall not apply in the case of any claim made pursuant to
Section 7.2(a)(iii).

 

Section 7.3            Notification of Claims.

 

(a)                Any and all claims by any Indemnified Party pursuant to this
Article VII must be made in writing prior to 5:00 p.m. (ET) on the last day of
the Survival Period. Failure by any Section VII Indemnified Party to provide
written notice of claim to the Indemnifying Party prior to 5:00 p.m. (ET) on the
last day of the Survival Period shall forever bar such Indemnified Party from
making any claim of any sort, including claims under this Agreement and all
other agreements related to the sale and purchase of the Assets, by statute, at
common law or otherwise, and whether known or unknown, contingent, liquidated or
unliquidated.

 

(b)               A Party entitled to be indemnified pursuant to Sections 7.1 or
7.2 (the “Indemnified Party”) shall notify the Party liable for such
indemnification (the “Indemnifying Party”) in writing of any claim or demand
which the Indemnified Party has determined gives rise or will likely give rise
to a right of indemnification under this Agreement, promptly after the
Indemnified Party becomes aware of such claim or demand and has made such
determination; provided, however, that the Indemnified Party’s failure to give
such notice to the Indemnifying Party in a timely fashion shall not result in
the loss of the Indemnified Party’s rights with respect thereto except to the
extent any Party to this Agreement is prejudiced by the delay, and then only to
the extent of such prejudice. Subject to the Indemnifying Party’s right to
defend in good faith third party claims as hereinafter provided, the
Indemnifying Party shall satisfy its obligations under this Article VII within
thirty (30) days after the receipt of written notice thereon from the
Indemnified Party.

 

(c)                If the Indemnified Party shall notify the Indemnifying Party
of any claim or demand pursuant to Section 7.3(a), and if such claim or demand
relates to a claim or demand asserted by a third party against the Indemnified
Party which the Indemnifying Party acknowledges is a claim or demand for which
it must indemnify or hold harmless the Indemnified Party under Sections 7.1 or
7.2, the Indemnifying Party shall have the right to either (i) pay such claim or
demand or (ii) employ counsel reasonably acceptable to the Indemnifying Party to
defend any such claim or demand asserted against the Indemnified Party. The
Indemnified Party, at its own expense, shall have the right to participate in
the defense of any such claim or demand. The Indemnifying Party shall notify the
Indemnified Party in writing, as promptly as possible (but in any case
reasonably in advance of the due date for the answer or response to a claim)
after the date of the notice of claim given by the Indemnified Party to the

 

22

 

Indemnifying Party under Section 7.3(a) of its election to defend in good faith
any such third party claim or demand. So long as the Indemnifying Party is
defending in good faith any such claim or demand asserted by a third party
against the Indemnified Party, the Indemnified Party shall not settle or
compromise such claim or demand. The Indemnified Party shall make available to
counsel engaged by the Indemnifying Party all records and other materials in the
Indemnified Party’s possession reasonably requested for its use in contesting
any third party claim or demand. Whether or not the Indemnifying Party elects to
defend any such claim or demand, the Indemnified Party shall have no obligations
to do so. Notwithstanding the foregoing, if the actual or potential defendants
in, or targets of, such third party claim include both the Indemnifying Party
and the Indemnified Party, and the Indemnified Party shall have reasonably
concluded that there are or are reasonably likely to be legal defenses available
to it that are different from or additional to those available to the
Indemnifying Party or that there exists or is reasonably likely to exist a
conflict of interest, in either case that would make it inappropriate in the
reasonable judgment of the Indemnified Party for the same counsel to represent
both the Indemnified Party and the Indemnifying Party, then the Indemnified
Party shall be entitled to participate in the defense of such third party claim,
in which case the Indemnifying Party shall bear the reasonable fees, costs and
expenses of one separate counsel to the Indemnified Party in each jurisdiction
(and shall pay reasonable fees, costs and expenses as incurred); provided that
the Indemnified Party shall use diligent and good faith efforts in such defense.

 

(d)               An Indemnifying Party may not, without the prior written
consent of the Indemnified Party, settle or compromise any claim against an
Indemnified Party or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless such settlement, compromise or
consent includes an unconditional release of the Indemnified Party from all
liability arising out of such claim and does not contain any equitable order,
judgment or term which in any manner affects, restrains or interferes with the
business of the Indemnified Party or any of the Indemnified Party’s Affiliates.

 

Section 7.4            Survival of Representations.

 

(a)                Except as otherwise provided in this Section 7.4, (i) all
representations and warranties contained in this Agreement other than those set
forth in Section 2.2(d) (and any claims for any breach thereof) or any Seller
Document or Purchaser Document (and any claims for any breach thereof) shall
survive the Closing for a period of eighteen (18) months, and (ii) obligations
of the Parties with respect to Assumed Liabilities, Excluded Liabilities and for
breaches of Section 2.2(d) shall survive indefinitely (the “Survival Period”).

 

(b)               Unless another date is specified herein, all of the
representations and warranties made by Sellers or the Purchaser in this
Agreement are made as of the Effective Date and (without prejudice to the
representations and warranties made as of the Effective Date) shall be deemed
remade as of the Closing pursuant to the Seller Certificate or the Purchaser
Certificate, as applicable. In connection with the remaking of representations
and warranties as of the Closing (but not as to representations and warranties
made as of the Effective Date), Sellers and the Purchaser shall be permitted to
update their representations and warranties (for all purposes under this
Agreement other than for purposes of satisfying the condition to Closing
contained in Article VIII), to accurately reflect the current state of matters
as of the Closing, provided neither

 

23

 

Sellers nor the Purchaser shall be permitted to update their respective
representations and warranties to reflect matters caused by the willful or
intentional breach of this Agreement by the Purchaser or Sellers, as applicable.

 

(c)                All covenants and agreements contained in this Agreement (and
any claims for any breach thereof) that by their terms apply or are to be
performed in whole or in part after the Closing shall remain in full force and
effect after the Closing in accordance with their terms (or, if no survival
period is stated therein, then such covenants and agreements shall survive
indefinitely). All covenants and agreements contained in this Agreement that by
their terms apply or are to be performed in their entirety on or prior to the
Closing shall terminate at the Closing.

 

(d)               Notwithstanding the foregoing, if prior to 5:00 p.m. (ET) on
the last day of the Survival Period, an Indemnifying Party shall have been
properly notified of a claim for indemnity hereunder and such claim shall not
have been finally resolved or disposed of at such date, such claim shall
continue to survive and shall remain a basis for indemnity hereunder until such
claim is finally resolved or disposed of in accordance with the terms in this
Agreement.

 

(e)                Notwithstanding anything to the contrary contained in this
Agreement, Sellers shall have no liability with respect to any of Sellers’
representations or warranties herein or in any representations or warranties in
any Seller Document if, prior to the Closing, the Purchaser has actual knowledge
of any breach by Sellers of such representation or warranty, or the Purchaser
obtains actual knowledge (from whatever source, as a result of the Purchaser’s
due diligence tests, investigations and inspections of the Assets, or as a
result of written disclosure by Sellers or any of Sellers’ agents,
representatives or employees) that contradicts any of Sellers’ representations
or warranties herein or in any representation or warranty in any Seller Document
(and the representations and warranties of Sellers shall be deemed modified
thereby to be accurate), and the Purchaser nevertheless consummates the
transaction contemplated by this Agreement (in which event any such breach or
contradiction shall be deemed waived by the Purchaser).

 

Section 7.5            No Punitive Damages. No Indemnified Party shall be
entitled to indemnification for any punitive, consequential, special or indirect
damages, including business interruption, loss of future revenue, profits or
income or loss of business reputation or opportunity related to the breach or
alleged breach of this Agreement.

 

Section 7.6            Broker’s Fee. Sellers agree to indemnify and hold
harmless the Purchaser from and against any loss, liability, damage, cost or
expense (including court costs and reasonable attorneys’ fees) paid or incurred
by the Purchaser by reason of any claim to any broker’s, finder’s or other fee
in connection with this transaction by any party, claiming by, through or under
Sellers. The Purchaser agrees to indemnify and hold harmless Sellers from and
against any loss, liability, damage or expense (including court costs and
reasonable attorneys’ fees) paid or incurred by Sellers by reason of any claim
to any broker’s, finder’s or other fee in connection with this transaction
claiming by, through or under the Purchaser.

 

24

 

Section 7.7            Treatment of Indemnification Payments. Any payments made
pursuant to the indemnification obligations arising under this Article VII shall
be treated as adjustments to the Purchase Price for all tax purposes.

 

Section 7.8            Survival. The provisions of this Article VII shall
survive the Closing or earlier termination of this Agreement.

 

ARTICLE VIII

CONDITIONS

 

Section 8.1            Conditions to Each Party’s Obligations. The respective
obligations of each Party to effect the Closing are subject to the satisfaction
or waiver delivered to the other Party of each of the following conditions
precedent:

 

(a)              There shall not be in force any order, decree, judgment or
injunction of any Governmental Authority enjoining or prohibiting the
consummation of the transactions contemplated by this Agreement or any Seller
Document or Purchaser Document; and

 

(b)              No Legal Proceeding shall be pending wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement, or (ii) cause
the transaction contemplated by this Agreement to be rescinded following
consummation.

 

Section 8.2            Conditions to Obligations of the Purchaser. The
obligation of the Purchaser to effect the Closing is subject to the satisfaction
or waiver delivered to the Sellers of each of the following conditions
precedent:

 

(a)             The representations and warranties of the Sellers set forth in
this Agreement and in the Seller Documents that are qualified as to materiality
shall be true and correct and the representations and warranties of the Sellers
that are not qualified as to materiality shall be true and correct in all
material respects, in each case, as of the Closing as though made as of the
Closing; provided that, to the extent that any such representation or warranty
speaks as of a specified date, it need only be true and correct as of such date.

 

(b)             Each of the Sellers shall have performed and complied, in all
material respects, with its agreements and covenants (in each case, disregarding
any materiality qualifiers contained therein) required to be performed or
complied with under this Agreement as of or prior to the Closing.

 

(c)              The Title Company shall, at the Closing, be irrevocably and
unconditionally committed to issue each of the Title Policies upon payment of
the premium and the application of the Purchase Price to the repayment of any
Indebtedness encumbering the Assets , and such Title Policies shall not contain
any exceptions to title other than the standard preprinted exceptions (unless
the Purchaser pays for extended coverage, in which case the standard preprinted
exceptions shall not appear in the Title Policy) and the Permitted Liens.

 

25

 

(d)               Each of the Sellers shall have executed and delivered to the
Purchaser or the Title Company their respective Seller Documents and provided
the Purchaser the items listed in Section 9.2(a).

 

(e)               Purchaser shall have obtained from a bank, insurance company,
institutional lender or other financing source satisfactory to Purchaser, a loan
secured by a first priority security Lien on the Seller Real Property in such
amount and upon such other terms as Purchaser may approve in Purchaser’s sole
and absolute discretion, and such loan shall be funded contemporaneously with
the Closing.

 

Section 8.3            Conditions to Obligations of the Sellers. The obligation
of each of the Sellers to effect the Closing is subject to the satisfaction or
waiver delivered to the Purchaser of each of the following conditions precedent:

 

(a)               The representations and warranties of the Purchaser set forth
in this Agreement and the Purchaser Documents that are qualified as to
materiality shall be true and correct and the representations and warranties of
the Purchaser that are not qualified as to materiality shall be true and correct
in all material respects, in each case, as of the Closing as though made as of
the Closing; provided that, to the extent that any such representation or
warranty speaks as of a specified date, it need only be true and correct as of
such date.

 

(b)              The Purchaser shall have performed and complied with in all
material respects its agreements and covenants (in each case, disregarding any
materiality qualifiers contained therein) required to be performed or complied
with under this Agreement as of or prior to the Closing.

 

(c)               The Purchaser shall have executed and delivered their
respective Purchaser Documents and provided the Sellers the items listed in
Section 9.2(b).

 

(d)               The Purchaser shall have wired the balance of the Purchase
Price to be paid at the Closing to the Sellers.

 

(e)                The Monetary Lien Condition has been, or simultaneously with
the Closing will be, satisfied.

 

ARTICLE IX

CLOSING

 

Section 9.1            Possession. Possession of all Facilities and the other
Assets sold hereunder shall be delivered to the Purchaser on the Closing Date.

 

Section 9.2            Closing Documents.

 

(a)            The Sellers shall deliver to the Purchaser on the Closing Date,
the following:

 

26

 

(i)                Deeds. Duly executed grant deeds for the Seller Real Property
located in the State of California and special warranty deeds (or the state
equivalent) for the Seller Real Property located in the remaining states, in
recordable form and otherwise sufficient to convey such Seller Real Property to
the Purchaser, subject to no Liens except Permitted Liens, and pursuant to the
laws of the state in which such Seller Real Property is located, as reasonably
approved by the Purchaser and the Title Company;

 

(ii)               Bill of Sale. A Bill of Sale duly executed by the Sellers, in
the form of Exhibit 9.2(a)(ii) , sufficient to convey such Personal Property to
the Purchaser, subject to no Liens except Permitted Liens;

 

(iii)             Assignment of Other Property. An Assignment and Assumption of
Other Property duly executed by the Sellers in the form of Exhibit 9.2(a)(iii);

 

(iv)             Other Conveyance Instruments. Such other appropriate
instruments of assignment and conveyance, in form mutually but reasonably
satisfactory to the Parties, dated as of the Closing Date, conveying all of the
Sellers’ right, title and interest in and title to the Assets, free and clear of
all Liens except as otherwise permitted herein;

 

(v)              FIRPTA Certificate. Certificate and affidavit of the Sellers’
non-foreign status that complies with Section 1445 of the Code, in the form
attached hereto as Exhibit 9.2(a)(v);

 

(vi)             Evidence of Seller Authority. Evidence of the authority of each
Seller to execute and deliver the applicable Seller Documents in order to
effectuate the Closing, including certificates of foreign qualification of the
applicable Seller from the Secretary of State or other applicable Governmental
Authority in the jurisdiction where the applicable Seller Real Property is
located;

 

(vii)           Bring-Down Certificate. A bring-down certificate executed by
Sellers reaffirming that the representations and warranties are true and correct
as of the Closing Date in the form of Exhibit 9.2(a)(vii) (the “Seller
Certificate”);

 

(viii)         Tax Declarations. Such applicable sales tax or real property
transfer tax forms or declarations or similar forms as prepared by Purchaser and
executed by Sellers as required by Applicable Law;

 

(ix)             Closing Statement. The Closing Statement, executed by the
Sellers and in form agreed to by the Sellers and the Purchaser (the “Closing
Statement”);

 

(x)               Rent Roll. A rent roll for each Facility for the period ending
not earlier than thirty (30) days prior to Closing, certified by the Sellers as
of the Closing Date as true, complete and accurate in all material respects as
of the date indicated therein;

 

(xi)             Title Insurance. Customary owners’ affidavits, gap indemnities,
in form reasonably agreed by the parties thereto, as reasonably requested by the
Title Company to cause the Title Company to issue the Title Policies; and

 

27

 

(xii)           Master Lease. Seller shall cause an Affiliate of Sellers
(“Master Tenant”) to (A) execute (i) a Master Lease and Sublease in the form
attached hereto as Exhibit 9.2(a)(xii) (the “Master Lease”) pursuant to which
Master Tenant will lease the Facilities from the Purchaser, and (ii) all
documents required to be delivered in connection with the Master Lease,
including all guaranty agreements, security agreements, pledge agreements and
subleases, and (B) execute an agreement with the New Manager (or other manager
party thereto) subordinating its interests in and to the management agreement(s)
set forth in accordance with the Master Lease.

 

(xiii)         Assignment of Leasehold Interests. An Assignment and Assumption
of Leasehold Interests duly executed by applicable Sellers in the form of
Exhibit 9.2(a)(xiii)

 

(xiv)         Other Deliveries. Such other documents a reasonably necessary to
effectuate the transactions described herein.

 

(Items (i) through (xiii) hereafter are referred to as the “Seller Documents.”)

 

(b)               The Purchaser shall deliver to the Sellers or cause to be
delivered to the Sellers on the Closing Date the following:

 

(i)                 Assignment of Other Property. An Assignment of Other
Property duly executed by the Purchaser in the form of Exhibit 9.2(a)(iii);

 

(ii)               Bring-Down Certificate. A bring-down certificate executed by
the Purchaser reaffirming that the representations and warranties are true and
correct as of the Closing Date in the form of Exhibit 9.2(b)(ii) (the “Purchaser
Certificate”);

 

(iii)             Tax Declarations. Such applicable sales tax or real property
transfer tax forms or declarations or similar forms as prepared and executed by
the Purchaser as required by Applicable Law;

 

(iv)             Closing Statement. The Closing Statement executed by the
Purchaser;

 

(v)               Title Insurance. Customary owners’ affidavits, gap indemnities
and other instruments, in form reasonably acceptable to the parties thereto, as
reasonably requested by the Title Company to cause the Title Company to issue
the Title Policies;

 

(vi)             Evidence of Purchaser Authority. Evidence of the authority of
the Purchaser to execute and deliver the applicable Purchaser Documents in order
to effectuate the Closing, including a good standing certificate of the
Purchaser from the Secretary of State in its state of organization; and

 

(vii)           Master Lease. The Master Lease duly executed by Purchaser and
all other documents required to be delivered by the Master Lease to the extent
such documents require Purchaser’s signature.

 

28

 

(viii)         Other Deliveries. Such other documents a reasonably necessary to
effectuate the transactions described herein;

 

(Items (i) through (viii) hereafter are referred to as the “Purchaser
Documents”).

 

Section 9.3            Closing Adjustments. As the Master Lease is a triple net
lease and the Master Tenant (as the tenant thereunder) is entitled thereunder to
all revenue of the Facilities and is liable for all expenses of the Facilities
from and after Closing, including the payment of real property taxes, there
shall be no credits or prorations at the Closing between Purchaser and Sellers
with respect to the revenues or costs associated with owning or operating the
Facilities. As applicable, all such credits and prorations shall be made between
Sellers and Master Tenant under terms outside of this Agreement.

 

Section 9.4            Closing Costs; Transfer Taxes.

 

(a)                Each Party shall pay its own legal, accounting and other
professional fees incurred by such Party in connection with the transactions
described in this Agreement and any other cost or expense not specifically
enumerated in Section 9.4(b). Purchaser shall pay one hundred percent (100%) of
any and all costs and expenses, including all documentary or similar taxes and
recording fees, that relate solely to borrowings by Purchaser to finance the
acquisition of the Assets.

 

(b)               Subject to Section 9.4(c), at or before the Closing, the
Sellers shall pay all of the following transaction expenses incurred in
connection with the transactions described in this Agreement: (i) any escrow or
closing charges of the Title Company; (ii) any and all sales, documentary,
stamp, transfer, sales, use, gross receipts or similar taxes or recording fees
related to the transfer of the Assets (collectively, the “Transfer Taxes”);
(iii) any search fees and costs for the Initial Title Commitments and any
updates Purchaser deems reasonably necessary thereto; (iv) the cost of the
Initial Surveys and any updates Purchaser deems reasonably necessary thereto;
(v) the cost of any reasonable U.C.C., judgment, bankruptcy, tax and other
appropriate searches reasonably acceptable to Purchaser, (vi) the premium for
each Title Policy issued to the Purchaser, which premium shall include the cost
to obtain extended coverage and the following endorsements, to the extent
available: zoning, comprehensive, access, tax parcel (single or multiple as
need), same as survey, contiguity (as needed), utility facility, (vii) the cost
of any endorsement required to cure or insure over any exceptions identified by
the Purchaser in any Title Objection Notice which Sellers agreed to cure, and
(viii) the costs associated any Phase I environmental reports, property
inspection reports and all other reports, inspections and investigations placed
in the Data Site by the Sellers.

 

(c)                At Closing, the Closing Statement will reflect that Purchaser
shall reimburse or pay, as the case may be, One Million Five Hundred Thousand
Dollars ($1,500,000) toward the expenses incurred by Sellers pursuant to Section
9.4(b).

 

(d)               The Purchaser shall prepare and cause to be filed at Closing
all applicable sales tax or real property transfer tax forms or declarations or
similar forms as required by Applicable Law. Sellers agree to reasonably
cooperate in the preparation of such declarations or forms.

 

 

29

 

Section 9.5            Survival. The terms of this Article IX shall survive the
Closing.

 

ARTICLE X

TERMINATION AND ABANDONMENT

 

Section 10.1        Method of Termination. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time on or before
the Closing:

 

(a)               by either Party in its sole discretion prior to the expiration
of the Inspection Period;

 

(b)               by mutual written consent of the Parties;

 

(c)                by the Purchaser giving written notice to the Sellers at any
time prior to the Closing in the event the Sellers have breached any
representation, warranty or covenant contained in this Agreement in any material
respect, provided that the Purchaser has notified the Sellers of the breach and
the breach has continued without cure for a period of fifteen (15) days
following the notice of breach;

 

(d)               by the Purchaser giving written notice to the Sellers at any
time after the later to occur of (i) the Outside Date (regardless of whether the
cure period set forth in Section 10.1(c) has expired) and (ii) the date to which
the Sellers have postponed the Closing pursuant to and in accordance with
Section 4.4(b) hereof, if (i) Purchaser is ready, willing and able to close on
the date such notice is provided, which for purposes hereof, shall be based upon
the Purchaser’s ability to demonstrate the ability to fund all amounts necessary
to consummate the Closing; provided however, the Purchaser shall be able to
demonstrate such ability to fund without having to actually fund such required
amounts, and (ii) Sellers are unwilling or unable to close on the date of such
notice despite all of the conditions to Sellers’ obligation to close being
satisfied in full, including, without limitation, the Monetary Lien Condition
(other than those conditions that by their nature cannot be satisfied or waived
until the Closing Date);

 

(e)                by the Purchaser giving written notice to the Sellers at any
time after the Outside Date if the Sellers are unable or unwilling to close the
transaction described herein on the basis that the Monetary Lien Condition has
not been and simultaneously with the Closing will not have been, satisfied;

 

(f)                by the Sellers giving written notice to the Purchaser at any
time prior to the Closing in the event the Purchaser has breached any
representation, warranty or covenant contained in this Agreement in any material
respect, provided that the Sellers have notified the Purchaser of the breach and
the breach has continued without cure for a period of fifteen (15) days
following the notice of breach;

 

(g)               by the Sellers giving written notice to the Purchaser at any
time after the Outside Date (regardless of whether the cure period set forth in
Section 10.1(f) has expired) if (i) Sellers are is ready, willing and able to
close on the date such notice is provided, and (ii) Purchaser is unwilling or
unable to close on the date of such notice despite all of the conditions

 

30

 

to Purchaser’s obligation to close being satisfied in full (other than those
conditions that by their nature cannot be satisfied or waived until the Closing
Date);

 

(h)               by the Purchaser or the Sellers pursuant to Sections 4.4(b),
6.2 or 6.3; or

 

(i)                 by either Party, by giving written notice to the other
Party, if a court of competent jurisdiction or other Governmental Authority
shall have issued a non-appealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby, unless
the Party relying on such order, decree or ruling or other action has not
complied in all material respects with its obligations under this Agreement.

 

Section 10.2        Procedure Upon Termination. In the event either party
exercises its right to terminate this Agreement pursuant to Section 10.1, this
Agreement shall immediately terminate and shall be abandoned, without further
action by any of the Parties. If this Agreement is terminated for any reason, no
Party shall have any liability or further obligation except as set forth in
Section 10.3 and for the Surviving Obligations.

 

Section 10.3        Effect of Termination; Remedies for Default; Break Up Fees.

 

(a)                Reserved.

 

(b)               Purchaser Defaults. If the Sellers terminate this Agreement
pursuant to Section 10.1(f) or Section 10.1(g), then within three (3) Business
Days following such termination the Purchaser shall pay to the Sellers cash in
good funds in the amount of the Break Up Fee. In addition, the Surviving
Obligations shall remain in effect.

 

(c)                Specific Performance. If the Purchaser has the right to
terminate this Agreement pursuant to Section 10.1(d), the Parties agree that
because Purchaser will not have an adequate remedy at law, Purchaser shall have
the right, in lieu of termination of this Agreement, to seek specific
performance.

 

(d)               Representation and Warranty Defaults. In the event that the
Purchaser terminates this Agreement pursuant to Section 10.1(c), as a result of
the Sellers’ breach of a material representation and warranty which breach (i)
existed as of Effective Date or (ii) occurred after the Effective Date but prior
to the Closing Date as a result of the Sellers’ intentional, willful or
negligent actions, the Sellers shall pay to the Purchaser an amount equal to the
lesser of (i) Purchaser’s Expenses and (ii) the Reimbursement Cap within three
(3) Business Days following such termination.

 

(e)                Other Termination. If this Agreement is terminated pursuant
to Section 10.1(a), Section 10.1(b), Section 10.1(c) (other than as a result of
breaches covered by Section 10.3(d)(i) or Section 10.3(d)(ii)), Section 10.1(e),
Section 10.1(h) or Section 10.1(i), then the only obligations of the Parties
shall be the Surviving Obligations.

 

(f)                Liquidated Damages. The Parties have agreed that the actual
damages of either Party, in the event of a failure of the other Party to
consummate the transactions described herein due to a default or breach of its
covenants hereunder, would be extremely difficult or

 

31

 

impracticable to determine. After negotiation, the Parties have agreed that,
considering all the circumstances existing on the date of this Agreement, in the
circumstances set forth in this Agreement requiring payment of the same, an
amount equal to the Break Up Fee is a reasonable estimate of the damages that
the applicable Party would incur in such event.

 

ARTICLE XI

MISCELLANEOUS PROVISIONS

 

Section 11.1        Amendment and Modification. This Agreement may be amended,
modified and supplemented only by written agreement signed by all of the
Parties.

 

Section 11.2        Waiver of Compliance; Consent. Any failure of the Sellers on
the one hand, or the Purchaser, on the other hand, to comply with any
obligation, covenant agreement or condition herein may be waived in writing by
the other Party, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any
Party, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 11.2.

 

Section 11.3        Notice. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
personally delivered, or sent by facsimile transmission or electronic mail
(provided a copy is thereafter promptly mailed or delivered as hereinafter
provided), or sent by overnight commercial delivery service (provided a receipt
is available with respect to such delivery), and shall be effective when
received during business hours (a business hour being the hours from 8:00 a.m.
to 5:00 p.m. on Business Days and if notice is received after business hours it
shall be deemed delivered on the next Business Day), if sent by personal
delivery, by facsimile transmission, electronic mail or by overnight delivery
service:

 

(a)           If to the Purchaser, to:

 

NIC Acquisitions LLC
c/o Fortress Investment Group LLC
1345 Avenue of the Americas, 46th Floor
New York, NY  10105
Telephone:     (212) 798-6100
Attention: Jonathan Brown

32

 

With a copy to:

 

Donald A. Stern
Cleary Gottlieb Steen & Hamilton LLP
c/o Donald A. Stern  
One Liberty Plaza, New York NY 10006
Telephone: (212) 225-2640
Facsimile: (212) 225-3999
Email: dstern@cgsh.com

 

(b)           If to the Sellers, to:

 

c/o - Holiday Retirement
5885 Meadows Rd., Suite 500
Lake Oswego, OR 97035
Attn: Chief Legal Officer
E-mail: legal@holidaytouch.com

 

with a copy (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, New York 10036
Attn: Neil Rock
Tel: (212) 735-3787
Fax: (917) 777-3787
Email: neil.rock@skadden.com

 

or to such other person or address as any Party shall furnish to the other Party
in writing pursuant to this Section 11.3. Notice shall be deemed given to any
Person in accordance with the terms of this Section 11.3 if and when rejected by
such Person.

 

Section 11.4       Bulk Sales Laws. The 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 Assets to the Purchaser.

 

Section 11.5        Expenses. Except as otherwise provided herein, each Party
shall bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby.

 

Section 11.6        Assignment. This Agreement and all of the terms, covenants
and conditions in this Agreement shall be binding upon and inure to the benefit
of the Parties and their respective heirs, successors and permitted assigns.
Neither the Purchaser nor the Sellers may assign this Agreement without first
obtaining the other Party’s prior written consent, which may be withheld in the
other Party’s sole discretion. No permitted assignment of this Agreement shall
release the Purchaser from its obligations hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by Purchaser to one or more Affiliates
of Purchaser at Closing;

33

 

provided that (i) Purchaser and any assignees by accepting assignment of this
Agreement, expressly agrees to defend and indemnify the Sellers from any
litigation arising out of the assignment; (ii) no further assignment shall occur
without the prior written consent of the Seller; and (iii) written notice of the
assignment, is provided to the Sellers no fewer than five (5) Business Days
prior to Closing.

 

Section 11.7        Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of New York, without giving
effect to any principles regarding conflict of laws to the extent such
principles would require or permit the application of the laws of another
jurisdiction.

 

Section 11.8        Business Day. If the date for giving of notice or
performance of any duty or obligation hereunder falls on a day that is not a
Business Day hereunder, such date shall be automatically extended to the next
Business Day hereunder.

 

Section 11.9        Counterparts. This Agreement may be executed by facsimile
signature or other electronic form of signature, (including “pdf”) and in two
(2) or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

Section 11.10     Headings. The Article and Section headings and table of
contents contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.

 

Section 11.11    Entire Agreement. This Agreement, as such term is used
throughout, includes the Exhibits and Disclosure Schedules hereto and embodies
the entire agreement and understanding of the Parties in respect of the subject
matter contained herein. There are no restrictions, promises, representations,
warranties, covenants, agreements or undertakings, other than those expressly
set forth or referred to herein. This Agreement supersedes all prior agreements
and understandings among the Parties with respect to such subject matters
contained herein.

 

Section 11.12    Warranty of Authority. Each of the Parties warrants that the
persons signing on their behalf have the right and power to enter into this
Agreement and to bind them to the terms of this Agreement.

 

Section 11.13    Publicity. All pre-Closing publicity concerning the
transactions contemplated by this Agreement and all notices respecting publicity
shall be jointly planned, coordinated and released by and among the Parties;
provided, however, that nothing herein shall prohibit either Party from making
any press release or disclosure as may be required to comply with Applicable
Law, regulation or stock market rule provided that the releasing or disclosing
Party provides notice to the other of the substance of such release or
disclosure in advance thereof.

 

Section 11.14    Waiver of Jury Trial. EACH OF THE PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION BROUGHT ON IN
CONNECTION WITH ANY MATTER ARISING

34

 

OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. THE PROVISIONS OF THIS SECTION 11.14 SHALL SURVIVE THE CLOSING OR
EARLIER TERMINATION OF THIS AGREEMENT.

 

Section 11.15    Third Party Beneficiaries. Nothing in this Agreement, expressed
or implied, is intended or shall be construed to confer upon any third party
other than the Parties hereto and the Indemnified Parties as set forth in
Article IV and Article VII any right, remedy or claim under or by reason of this
Agreement.

 

Section 11.16    Interpretation. When a reference is made in this Agreement to
an Article, a Section, Exhibit or section of the Disclosure Schedules, such
reference shall be to an Article of, a Section of, or an Exhibit or section of
the Disclosure Schedules to, this Agreement unless otherwise indicated. Whenever
the words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation.” 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. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns. The Parties have participated jointly in the negotiating and drafting
of this Agreement. In the event of an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties, and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any provisions of this
Agreement. In the event of a conflict between this Agreement and any Exhibit
hereto, this Agreement shall govern.

 

Section 11.17    Submission to Jurisdiction. Each Party (i) submits to the
exclusive jurisdiction of the state courts of the State of New York in New York
County and to the jurisdiction of the United States District Court for the
Southern District of New York for the purposes of each and every suit, action or
other proceeding arising out of or based upon this Agreement or the subject
matter hereof brought by the Parties, it being expressly understood and agreed
that this consent to jurisdiction shall be self-operative and no further
instrument or action, other than service of process as required by law, shall be
necessary in order to confer jurisdiction upon a party in any such court; and
(ii) waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any suit, action or proceeding brought in any such court, any
claim that either the Purchaser or Sellers are not subject personally to the
jurisdiction of the above-named courts, that the Purchaser’s or Sellers’
property is exempt or immune from attachment or execution, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court, and further agrees to waive, to
the fullest extent permitted under Applicable Law, the benefit of any defense
that would hinder, fetter or delay the

35

 

levy, execution or collection of any amount to which Sellers, the Purchaser or
its respective successors or assigns are entitled pursuant to the final judgment
of any court having jurisdiction.

 

Section 11.18    Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Applicable Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible to the fullest extent
permitted by Applicable Law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

36

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement as of the
date first written above.

 

    SELLERS:           Blair House Retirement Residence LP
St. Louis Retirement Residence LP
Denton Retirement Residence LP
Lemoyne Retirement Residence LP
Greeley Retirement Residence LP
Harrisburg Retirement Residence LP
Flower Mound Retirement Residence LP
Holiday Retirement Associates III LP
Simi Valley Retirement Residence LP
Boyertown Retirement Residence LP
Durham Retirement Residence LP
          By: Harvest General Partner II LLC, Its     General Partner          
By:       Name: Scott Shanaberger     Title: Chief Financial Officer      

 

 

Signature Pages to NCT Purchase Agreement

 

 

 

         

Yorktown Retirement Residence LLC

Sarasota Retirement Residence LLC

Greece Retirement Residence, LLC

Paducah Retirement Residence LLC

Cary Retirement Residence LLC

Rocky Hill Retirement Residence LLC

Fayetteville Retirement Residence LLC

Eau Claire Retirement Residence LLC

St. Louis Retirement Residence III LLC

Logan Retirement Residence LLC

Madrona Ridge, L.L.C.

Rock Creek Retirement Residence LLC

Corvallis Retirement Residence LLC

Shreveport Retirement Residence II LLC

Topeka Retirement Residence LLC

Surprise Retirement Residence LLC

          By: Harvest General Partner II LLC, Its     General Partner          
By:       Name: Scott Shanaberger     Title: Chief Financial Officer      

 

 

Signature Pages to NCT Purchase Agreement

 

 

         

Harvest Arlington Retirement Residence LLC

Harvest Bentley Retirement Residence LLC

Port Huron Retirement Residence LLC

Harvest Citation - Chateau Ridgeland Retirement Residence LLC

Tallahassee Retirement Residence LLC

Harvest Country Squire Retirement Residence LLC

Harvest Citation - Lakewood LLC

Harvest El Dorado Retirement Residence LLC

Harvest Hidden Lakes Retirement Residence LLC

Harvest Grasslands Estates Retirement Residence LLC

Harvest Grizzly Peak Retirement Residence LLC

Harvest Fountains at Hidden Lakes Retirement Residence LLC

Harvest Illahee Hills Retirement Residence LLC

Harvest Madison Estates LLC

Harvest Palmer Hills Retirement Residence LLC

Harvest Parkwood Estates Retirement Residence LLC

Harvest Pueblo Regent Retirement Residence LLC

Harvest Regency Residence Retirement Residence LLC

Harvest Sky Peaks Retirement Residence LLC

Harvest Uffelman Estates Retirement Residence LLC

Harvest Ventura Place Retirement Residence LLC

Harvest Village Gate Retirement Residence LLC

Harvest Westmont Retirement Residence LLC

Harvest Whiterock Court Retirement Residence LLC

          By: Harvest Mezzanine II LLC             By:       Name: Scott
Shanaberger     Title: Chief Financial Officer      

 

Signature Pages to NCT Purchase Agreement

 

 

 

          HARVEST REGENT CORVALLIS LLC           By: Harvest Facility Holdings
II LP,               By: Harvest Facility Holdings II GP         LLC, Its
General Partner    

 

          By:       Name: Scott Shanaberger     Title: Chief Financial Officer  
   

 

 

[END OF SELLERS’ SIGNATURE PAGES]

 

 

Signature Pages to NCT Purchase Agreement 

 

 

 

 

PURCHASER:         NIC ACQUISITIONS LLC          By:

  Name: Jonathan Brown   Title: Chief Financial Officer  

 

 

 

[END OF PURCHASER’S SIGNATURE PAGES]

 

 

 

 

JOINDER BY HARVEST FACILITY HOLDINGS LP:

 

Harvest Facility Holdings LP (“Sellers’ Guarantor”), hereby joins in the
execution of this Agreement and hereby unconditionally guaranties to the
Purchaser the full and faithful payment and performance by the Sellers of all of
their obligations to the Purchaser under this Agreement. The liability of
Sellers’ Guarantor hereunder shall in no way be affected, diminished or released
by any extension of time or forbearance that may be granted by the Purchaser to
the Sellers or by the acceptance by the Purchaser of additional security for
performance of the Agreement or any release, substitution or changes in any such
security, or by any modifications, amendments or extensions of the Agreement
agreed upon by the Sellers and the Purchaser. The Purchaser, in its sole
discretion, may waive or release any provision or provisions of the Agreement as
the Purchaser may deem proper or desirable, without any notice to or further
assent from Sellers’ Guarantor and without in any manner impairing or affecting
this guaranty as to any provision(s) not so waived or released or any of the
Sellers’ Guarantor’s obligations hereunder. Sellers’ Guarantor waives all rights
and defenses arising out of an election of remedies by the Purchaser, even
though that election of remedies has destroyed Sellers’ Guarantor’s rights of
subrogation and reimbursement against the Sellers. Sellers’ Guarantor waives all
suretyship rights or defenses under applicable law. The Purchaser may enforce
this guaranty against the Sellers’ Guarantor without the necessity at any time
of resorting to or exhausting any other remedy or any other security or
collateral and without the necessity at any time of having recourse to any of
its rights or remedies under the Agreement, and without the necessity of
proceeding against the Sellers. This is a guaranty of payment and performance
and not merely of collection. The obligations of Sellers’ Guarantor hereunder
are absolute, primary, unconditional and irrevocable obligations, enforceable by
the Purchaser at the Purchaser’s election, simultaneously with or after
proceeding against Sellers or without the necessity of any suit or proceedings
against the Sellers, and in any event, without the necessity of any notice of
non-payment, non-performance or non-observance, or of any notice of acceptance
of this guaranty or any other notice or demand to which Sellers’ Guarantor might
otherwise be entitled or that may be required to preserve any rights against
Sellers’ Guarantor, all of which Sellers’ Guarantor expressly waives.

 

 

HARVEST FACILITY HOLDINGS LP               By:         Name:       Title:  

 

 

 

 

JOINDER BY NEWCASTLE SENIOR LIVING HOLDINGS LLC:

 

Newcastle Senior Living Holdings LLC (“Purchaser’s Guarantor”), hereby joins in
the execution of this Agreement and hereby unconditionally guaranties to the
Sellers the full and faithful payment and performance by the Purchaser of all of
their obligations to the Sellers under this Agreement. The liability of
Purchaser’s Guarantor hereunder shall in no way be affected, diminished or
released by any extension of time or forbearance that may be granted by the
Sellers to the Purchaser or by the acceptance by the Sellers of additional
security for performance of the Agreement or any release, substitution or
changes in any such security, or by any modifications, amendments or extensions
of the Agreement agreed upon by the Purchaser and the Sellers. The Sellers, in
their sole discretion, may waive or release any provision or provisions of the
Agreement as the Sellers may deem proper or desirable, without any notice to or
further assent from Purchaser’s Guarantor and without in any manner impairing or
affecting this guaranty as to any provision(s) not so waived or released or any
of the Purchaser’s Guarantor’s obligations hereunder. Purchaser’s Guarantor
waives all rights and defenses arising out of an election of remedies by the
Sellers, even though that election of remedies has destroyed Purchaser’s
Guarantor’s rights of subrogation and reimbursement against the Purchaser.
Purchaser’s Guarantor waives all suretyship rights or defenses under applicable
law. The Sellers may enforce this guaranty against the Purchaser’s Guarantor
without the necessity at any time of resorting to or exhausting any other remedy
or any other security or collateral and without the necessity at any time of
having recourse to any of its rights or remedies under the Agreement, and
without the necessity of proceeding against the Purchaser. This is a guaranty of
payment and performance and not merely of collection. The obligations of
Purchaser’s Guarantor hereunder are absolute, primary, unconditional and
irrevocable obligations, enforceable by the Sellers at the Sellers’ election,
simultaneously with or after proceeding against Purchaser or without the
necessity of any suit or proceedings against the Purchaser, and in any event,
without the necessity of any notice of non-payment, non-performance or
non-observance, or of any notice of acceptance of this guaranty or any other
notice or demand to which Purchaser’s Guarantor might otherwise be entitled or
that may be required to preserve any rights against Purchaser’s Guarantor, all
of which Purchaser’s Guarantor expressly waives.

 

NEWCASTLE SENIOR LIVING HOLDINGS LLC               By:         Name:      
Title: