AGREEMENT OF SALE

 

BETWEEN

 

Three WM Real Estate, LLC,

Three WM Operating, LLC,

Four WM Real Estate, LLC,

 

AND

 

Four WM Operating, LLC,

 

collectively, as Seller

 

AND

 

Woodbury Mews III, LLC

Woodbury Mews IV, LLC

Woodbury Mews Land Parcels, LLC

 

collectively, as Purchaser

 

June 26, 2013 

 

 

 

 

TABLE OF CONTENTS

Page

 

[To be inserted]

 

1

 

 

AGREEMENT OF SALE

 

This AGREEMENT OF SALE (“Agreement”) is made on June 26, 2013 (the “Effective
Date”) between THREE WM REAL ESTATE, LLC (“Three Real Estate”), THREE WM
OPERATING, LLC (“Three Operating”), FOUR WM REAL ESTATE, LLC (“Four Real
Estate”), and FOUR WM OPERATING, LLC (“Four Operating”), each a Delaware limited
liability company (individually and collectively, the “Seller”), Woodbury Mews
III, LLC, Woodbury Mews IV, LLC, and Woodbury Mews Land Parcels, LLC, each a
Delaware limited liability company (individually and collectively, the
“Purchaser”).

 

WITNESSETH:

 

A.           Three Real Estate is the owner in fee simple of the land located at
124 Green Avenue, Woodbury, New Jersey, more particularly described on Exhibit
A-2 attached hereto (the “Three Land”), and has leased the Three Land to Three
Operating pursuant to a lease dated February 1, 2011 (the “Three Operating
Lease”) for purposes of operating an assisted living facility for senior
citizens as described on Exhibit A-1 annexed hereto (the “Three Facility”).

 

B.           Four Real Estate is the owner in fee simple of the land located at
122 Green Avenue, Woodbury, New Jersey, more particularly described on Exhibit
A-2 attached hereto (the “Four Land”), and has leased the Four Land to Four
Operating pursuant to a lease dated February 1, 2011 (the “Four Operating
Lease”) for purposes of operating an independent living facility for senior
citizens as described on Exhibit A-1 annexed hereto (the “Four Facility”). The
Three Operating Lease and the Four Operating Lease are hereinafter individually
referred to as an “Operating Lease” and collectively as the “Operating Leases.”

 

C.           Upon the terms and conditions hereinafter set forth, Seller agrees
to sell and convey fee title to the Three Facility and the Four Facility to
Purchaser (each, a “Facility,” and collectively, the “Facilities”).

 

D.           The Facilities are included in the Property (as hereinafter
defined).

 

E.           Seller wishes to sell the Property to Purchaser and Purchaser
wishes to purchase the Property in accordance with and subject to the terms and
conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the agreement set forth herein and for other
good and valuable consideration, the parties hereto agree as follows:

 

Definitions

 

“Accrued Employee Benefits” has the meaning set forth in Section 6(n)(ii).

 

“Addit” has the meaning set forth in Section 4(g).

 

“Adjacent Land” means those certain parcels of real estate adjacent to the Land,
identified as Block 142, Lots 1, 4, 5 and 6 on the Tax Maps of the City of
Woodbury, Gloucester County, New Jersey, which are the burdened parcels under a
certain Declaration of Easements recorded on February 2, 2011 in the Gloucester
County Clerk’s office in Deed Book 4843, Page 287, benefitting the Land.

 

2

 

 

“Agreed Upon Title Defect” has the meaning set forth in Section 4(b).

 

“Agreement” has the meaning set forth in the introductory paragraph.

 

“Affiliate” With respect to any person or entity, (A) all persons or entities
that, directly or indirectly, control, are controlled by, or under common
control with, such person or entity; or (B) all persons or entities that,
directly or indirectly, own, are owned by or under common ownership with, such
person or entity. For purposes of this definition, “control” and “own” shall
mean ownership, directly or indirectly, of more than fifty percent (50%) of the
issued and outstanding equity interests in an entity, together with the ability,
through the ownership of said equity interests, by contract, or otherwise, to
direct the management of such entity.

 

“Allocated Purchase Price” shall have the meaning set forth in Section 2(a).

 

“Annual Threshold” has the meaning set forth in Section 28(b).

 

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

 

“Appurtenances” has the meaning set forth in Section 3(a).

 

“Assumed Obligations” has the meaning set forth in Section 3(c).

 

“Business Day” means any day other than (i) Saturday, (ii) Sunday, or (iii) any
other day when federally insured banks in New York, New York are required or
authorized to be closed.

 

“Cap” has the meaning set forth in Section 18(d)(iv).

 

“City” has the meaning set forth in Section 26.

 

“City Agreement” has the meaning set forth in Section 26.

 

“Closing” has the meaning set forth in Section 9(a).

 

“Closing Date” has the meaning set forth in Section 9(a).

 

“Closing Statement” has the meaning set forth in Section 10(a)(xiv).

 

“Code” has the meaning set forth in Section 6(q).

 

“Commercial Leases” shall mean all leases, rental, use and occupancy agreements,
commitments, documents and instruments relating to any Property and all related
documents, instruments, agreements, letters of credit, deposits and other items
(including, without limitation, guarantees) other than the Residency Agreements
or the Operating Leases.

 

“Deeds” has the meaning set forth in Section 10(a)(i).

 

“Deposit” has the meaning set forth in Section 2(b)(ii).

 

“Diligence Materials” has the meaning set forth in Section 19.

 

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“Document” shall mean this Agreement, all Exhibits and Schedules hereto, and
each other agreement, certificate or instrument to be delivered pursuant to this
Agreement.

 

“Due Diligence Deadline” means 5 P.M. Eastern Standard Time on the date which is
forty-five (45) days after the Effective Date of this Agreement.

 

“Due Diligence Period” shall mean the period commencing on the Effective Date
and expiring on the Due Diligence Deadline.

 

“Effective Date” has the meaning set forth in the introductory paragraph.

 

“Employee Contracts” has the meaning set forth in Section 6(n)(i).

 

“Environmental Laws” means all past, present or future federal, state and local
laws, statutes, regulations, directives, ordinances, rules, policies,
guidelines, orders, decrees, arbitration awards, permits and the common law,
which pertain to environmental matters, contamination of any type whatsoever or
health and safety matters, as such have been amended, modified or supplemented
from time to time (including all present and future amendments thereto and
re-authorizations thereof).

 

“Environmental Reports” means those environmental reports set forth on Schedule
3 attached hereto.

 

“Escrow Agent” shall mean Acres Land Title Agency, Agent for Chicago Title
Insurance Company, c/o Debbie Bannworth, 55 Essex Street, Millburn, New
Jersey 07041, Phone: (973)376-4643, Fax: (973)912-8195.     

 

“Existing Manager” shall mean Senior Management of New Jersey, LLC.

 

“Facility” has the meaning set forth in the recitals.

 

“Facilities” has the meaning set forth in the recitals.

 

“Floor” has the meaning set forth in Section 18(d)(vi).

 

“Four Facility” has the meaning given in the recitals.

 

“Four Land” has the meaning given in the recitals.

 

“Four Operating” has the meaning given in the recitals.

 

“Four Operating Lease” has the meaning given in the recitals.

 

“Four Real Estate” has the meaning given in the recitals.

 

“GAAP” shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.

 

4

 

 

“Governmental Payor Program” has the meaning set forth in Section 6(u)(i).

 

“Guarantor” has the meaning set forth in Section 5(b)(ix).

 

“Guaranty” has the meaning set forth in Section 5(b)(ix).

 

“Hired Employees” has the meaning set forth in Section 10(e).

 

“Hazardous Materials” shall mean, without limitation, polychlorinated biphenyls,
urea formaldehyde, radon gas, lead paint, radioactive matter, medical waste,
asbestos, petroleum products, including crude oil or any fraction thereof,
natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable
for fuel (or mixtures of natural gas or such synthetic gas), and any substance,
material, waste, pollutant or contaminant that is listed or defined or that may
be considered as hazardous, infectious or toxic under any applicable federal,
state or local law, statute, regulation, directive, ordinances, rules, policies,
guidelines, orders, decrees or common law.

 

“HSR Act” has the meaning set forth in Section 8(e).

 

“Improvements” has the meaning set forth in Section 3(a).

 

“Income Support Agreement” has the meaning set forth in Section 28(a).

 

“Income Support Payment” has the meaning set forth in Section 28(a).

 

“Indemnification Loss” means, with respect to any Indemnified Party, any
liability, obligation, damage, loss, cost or expense of any kind or nature
whatsoever, whether accrued or unaccrued, including, without limitation,
reasonable attorneys’ fees and expenses and court costs, incurred by such
Indemnified Party as a result of the act, omission or occurrence in question.

 

“Indemnified Party” has the meaning set forth in Section 18(d)(i).

 

“Indemnifying Party” has the meaning set forth in Section 18(d)(i).

 

“Individual Property” has the meaning set forth in Section 2(a).

 

“Initial Deposit” has the meaning set forth in Section 2(b)(i).

 

“Intangibles” has the meaning set forth in Section 3(a).

 

“Interim Licensure Arrangements” means the agreement annexed hereto as
Exhibit H.

 

“Interim Period” means: in the event the Three Facility is subject to an Interim
Licensure Arrangement, the period of time from the Closing Date until the
Interim Licensure Arrangement expires or is earlier terminated in accordance
with its terms.

 

“Knowledge Parties” shall have the meaning set forth in Section 6.

 

“Land” has the meaning set forth in Section 3(a).

 

5

 

 

“Licenses” shall mean all certificates, licenses, and permits issued by
governmental authorities which are required to be held by an owner or tenant in
connection with the ownership, use, occupancy, operation, and maintenance of the
Property as an independent and assisted living facility.

 

“Lists” has the meaning set forth in Section 6(m)(i).

 

“LSRP” has the meaning set forth in Section 4(f)(ii).

 

“Management Agreement” has the meaning set forth in Section 4(g).

 

“Material Change in Occupancy” means, with respect to the Facilities, any
decrease in the Occupancy Rate at the Facilities by more than ten percent (10%)
from the Occupancy Rate of the Facilities as of the Due Diligence Deadline.

 

“NOI” shall mean, for any period, Operating Income for such period minus
Operating Expenses for such period.

 

“Occupancy Rate” shall mean the percentage derived by dividing the actual number
of occupied units by the total number of units in the Facilities, as determined
on the date each month that resident fees are billed; provided, however, that
units which provide for occupancy of more than one resident shall be considered
as a fraction. For illustration purposes only, a double occupancy unit which is
occupied by one resident would constitute ½ (0.5) of an occupied unit for
purposes of calculating the Occupancy Rate.

 

“OFAC” has the meaning set forth in Section 6(m).

 

“Operating Expenses” shall mean, for any period, without duplication, all
commercially reasonable expenses actually paid or payable by Purchaser during
such period in connection with the operation, management, maintenance, repair
and use of the Property, determined on an accrual basis, and in accordance with
GAAP. Operating Expenses specifically shall include (i) the property management
fees actually paid under the Management Agreement, (ii) administrative, payroll
(including all reasonable and customary bonuses paid or expected to be paid to
employees), security and general expenses for the Property, (iii) the cost of
utilities, inventories and fixed asset supplies consumed in the operation of the
Property, (iv) a reasonable reserve for uncollectible accounts, (v) costs and
fees of independent professionals (including, without limitation, legal,
accounting, consultants and other professional expenses) or other third parties
retained to perform services in connection with the operation of the Property in
the ordinary course of business, (vi) operational equipment and other lease
payments in the ordinary course of business, (vii) real property taxes and
payments under the PILOT Agreement with respect to the Real Property, (viii)
insurance premiums with respect to the Property, and (ix) all other commercially
reasonable expenses paid or payable, or reasonably expected to be incurred by
Purchaser during such period in connection with the operation, management,
maintenance, repair and use of the Property. Notwithstanding the foregoing,
Operating Expenses shall not include (1) depreciation or amortization,
(2) income taxes, (3) any expenses (including legal, accounting and other
professional fees, expenses and disbursements) incurred in connection with the
sale, exchange, transfer, financing or refinancing of all or any portion of the
Property, (4) amounts expended for replacements and alterations to the Property
and required to be capitalized according to GAAP, (5) the scheduled principal
and interest payments due under any mortgage financing with respect to the
Property; (6) costs or expenses outside the ordinary course of business; and (7)
costs or expenses associated with the operation of the legal entity (or
entities) that constitutes Purchaser to the extent they are separate and apart
from the costs of the operation of the Property.

 

6

 

 

“Operating Income” shall mean, for any period, all actual income of Purchaser
during such period from the use, ownership or operation of the Property,
including without limitation, (i) all amounts actually paid to Purchaser as Rent
and other amounts under lease, license or occupancy agreements relating to the
Property; (ii) all amounts payable by Medicaid with respect to the relevant
period; (iii) business interruption insurance proceeds allocable to the
applicable reporting period; and (iv) all other amounts (to the extent not
covered pursuant to clauses (i) through (iii) of this sentence) which in
accordance with GAAP, are included in Purchaser’s annual financial statements as
income attributable to the Property.

 

“Operating Lease or Operating Leases” has the meaning given in the recitals.

 

“Order or Orders” has the meaning set forth in Section 6(m).

 

“Permitted Exceptions” has meaning set forth in Section 4(b).

 

“Personalty” has the meaning set forth in Section 3(a).

 

“PILOT Agreement” has the meaning set forth in Section 26.

 

“PILOT Assignment” has the meaning set forth in Section 26.

 

“Prior Owner Diligence Materials” has the meaning set forth in Section 6.

 

“Property” has the meaning set forth in Section 3(a).

 

“Property Agreement” has the meaning set forth in Section 3(a).

 

“Purchaser’s Designee” has the meaning set forth in Section 2(d).

 

“Purchase Price” has the meaning set forth in Section 2(a).

 

“Purchaser” has the meaning set forth in introductory paragraph.

 

“Purchaser Commissioned Reports” means any and all reports commissioned at any
time prior to Closing by Purchaser or its agents or Affiliates relating to the
environmental or physical condition of any Individual Property, including
without limitation Phase I or Phase II environmental reports, survey, mechanical
reports, structural or engineering, and zoning reports.

 

“Purchaser Knowledge” shall mean in all cases the actual knowledge of the
following individuals (or any one of them): Purchaser Knowledge Parties, after
reasonable inquiry with the consultants performing due diligence for Purchaser.
In no event shall Seller be entitled to assert any cause of action against any
of the Purchaser Knowledge Parties with respect to this Agreement or any breach
hereof, nor shall any of the Purchaser Knowledge Parties have any personal
liability whatsoever for any matter under or related to this Agreement.

 

“Purchaser Knowledge Parties” shall mean John Mark Ramsey or Kevin Thomas.

 

“Purchaser Permits” has the meaning set forth in Section 7(b).

 

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“Quarter” has the meaning set forth in Section 28(a).

 

“Quarterly Threshold” has the meaning set forth in Section 28(a).

 

“Real Property” means the Land and the Improvements.

 

“Rent Roll” has the meaning set forth in Section 6(k)

 

“Rents” shall mean all rents, moneys payable as damages (including payments by
reason of the rejection of a lease in a bankruptcy proceeding) or in lieu of
rent, royalties (including all oil and gas or other mineral royalties and
bonuses), income, fees, receivables, receipts, revenues, deposits (including
security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, and other payment and consideration of whatever form or
nature received by or paid to or for the account of or benefit of Purchaser or
any of its agents or employees from any and all sources arising from or
attributable to the Property.

 

“Required Cure Items” has the meaning set forth in Section 4(b).

 

“Required Governmental Approvals” means all Licenses, permits, authorizations
and certifications from all governmental authorities or otherwise that are
necessary for the management and operation of the Facilities for their current
uses following the Closing Date, including any State of New Jersey facility
license, certificate of need and any certifications from Medicaid.

 

“Residency Agreements” shall mean all leases, rental, use, occupancy and
reservation agreements, commitments, documents and instruments relating to any
Property other than Commercial Leases or Operating Leases and all related
documents, instruments, agreements, letters of credit, deposits and other items
(including, without limitation, guarantees) which relate to the occupancy of
portions of the Property by individuals for independent living or assisted
living purposes, as applicable.

 

“Resident Deposit” has the meaning set forth in Section 3(a).

 

“Second Deposit” has the meaning set forth in Section 2(b)(ii).

 

“Seller” has the meaning set forth in introductory paragraph.

 

“SN” has the meaning set forth in Section 14.

 

“Substantial Portion” has the meaning set forth in Section 15(a)(ii).

 

“Survey” has the meaning set forth in Section 4(d).

 

“Survival Period” has the meaning set forth in Section 18(d)(v).

 

“Taking” has the meaning set forth in Section 15(a)(i).

 

“Tax Foreclosure Actions” has the meaning set forth in Section 25.

 

“Tax Sale Certificates” has the meaning set forth in Section 25.

 

“Tests” has the meaning set forth in Section 4(d)(i).

 

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“Three Facility” has the meaning given in the recitals.

 

“Three Land” has the meaning given in the recitals.

 

“Three Operating” has the meaning given in the recitals.

 

“Three Operating Lease” has the meaning given in the recitals.

 

“Three Real Estate” has the meaning given in the recitals.

 

“Title Commitment” has the meaning set forth in Section 4(a).

 

“Title Company” has the meaning set forth in Section 4(a).

 

“Title Defect” has the meaning set forth in Section 4(b).

 

“Title Expenses” has the meaning set forth in Section 4(e).

 

“Title Insurance Policy and Title Insurance Policies” has the meaning set forth
in Section 5(b)(i).

 

“Title Notice” has the meaning set forth in Section 4(b).

 

“Transactions” means the transactions contemplated by this Agreement.

 

“WMA” has the meaning set forth in Section 25.

 

“Year” has the meaning set forth in Section 28(a).

 

1.                           Purchase and Sale. Seller agrees to sell and
assign, as applicable, to Purchaser, and Purchaser agrees to purchase and
assume, as applicable, from Seller, the Property, as hereinafter defined, for
the Purchase Price, as hereinafter defined, and subject to the terms and
conditions set forth in this Agreement.

 

2.                           Purchase Price.

 

(a)          The purchase price (the “Purchase Price”) for the Property shall be
THIRTY NINE MILLION and 00/100 DOLLARS ($39,000,000.00), subject to prorations
and the adjustments expressly set forth in this Agreement. Prior to the
expiration of the Due Diligence Period, Seller and Purchaser shall agree on a
reasonable allocation of the Purchase Price payable for each individual property
described on Exhibit A-2 (each, an “Individual Property”) which shall be
allocated in the form set forth on Exhibit B (each such allocated portion, an
“Allocated Purchase Price”). In addition, Seller and Purchaser shall agree on a
reasonable further allocation of the Purchase Price as between (a) the Land and
the Improvements, (b) the Personalty, and (c) the Intangibles prior to the
expiration of the Due Diligence Period.

 

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(b)          The Purchase Price shall be payable by Purchaser to Seller as
follows:

 

(i)          Within three (3) Business Days after the Effective Date, the sum of
Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) (the “Initial
Deposit”) shall be paid by electronic wire transfer of immediately available
federal funds to an interest bearing account designated by Escrow Agent or by
certified check of Purchaser or bank teller’s check to the order of Escrow
Agent.

 

(ii)         If Purchaser has not terminated this Agreement prior to the Due
Diligence Deadline in accordance with Section 4(d)(iii) below, then within two
(2) Business Days after the Due Diligence Deadline, the sum of Five Hundred
Thousand and No/100 Dollars ($500,000.00) (the “Second Deposit”, the Initial
Deposit and the Second Deposit are hereinafter collectively referred to as the
“Deposit”) shall be paid by electronic wire transfer of immediately available
federal funds to an interest bearing account designated by Escrow Agent or by
certified check of Purchaser or bank teller’s check to the order of Escrow
Agent. The Deposit shall include all interest earned thereon. In the event any
check in payment of the Deposit is cancelled or returned uncollected, Seller, at
its sole option, may cancel this Agreement and/or pursue any legal remedies
Seller may have against Purchaser on such check at the sole expense of
Purchaser, such remedies being cumulative and not exclusive.

 

(iii)        On the Closing Date, the sum of Thirty Eight Million Two Hundred
Fifty Thousand and No/100 Dollars ($38,250,000.00), subject to adjustment and
proration as expressly set forth in this Agreement, to be paid by electronic
wire transfer of immediately available federal funds pursuant to wiring
instructions to be given by Escrow Agent or as Escrow Agent may direct to
Purchaser prior to the Closing and Purchaser shall cause Escrow Agent to
distribute such funds to Seller in accordance with this Agreement.

 

(c)          Escrow Agent shall hold and disburse the Deposit (or so much
thereof as Escrow Agent is then holding) as follows:

 

(i)          Upon the Closing, Escrow Agent is authorized and directed to pay
the Deposit to Seller (or as Seller may direct).

 

(ii)         In the event Seller terminates this Agreement pursuant to
Section 13(a) below, Escrow Agent shall pay the Deposit to Seller, who shall
retain the Deposit in accordance with Section 13(a) below.

 

(iii)        In the event this Agreement is terminated as provided in this
Agreement by reason other than Purchaser's default, Escrow Agent shall pay the
Deposit to Purchaser.

 

(iv)        Escrow Agent shall invest and reinvest the proceeds of the Deposit,
and any interest earned thereon, in United States Government Treasury Bills or
Certificate(s) of Deposit or bank money market account(s) as Seller and
Purchaser shall agree. If the Closing occurs, then any interest earned on the
Deposit shall be paid to Purchaser. If the Closing does not occur, then such
interest shall follow the Deposit. The party entitled to receive the interest
earned on the Deposit shall pay all income taxes owed in connection therewith.
The employer identification numbers of Seller and Purchaser are respectively set
forth on the signature page hereof.

 

(v)         Escrow Agent, by signing this Agreement at the end hereof where
indicated, signifies its agreement to hold the Deposit for the purposes as
provided in this Agreement. In the event of any dispute, Escrow Agent shall have
the right to deposit the Deposit in court to await the resolution of such
dispute. Escrow Agent shall not incur any liability by reason of any action or
non-action taken by it in good faith or pursuant to the judgment or order of a
court of competent jurisdiction. Escrow Agent shall have the right to rely upon
the genuineness of all certificates, notices and instruments delivered to it
pursuant hereto, and all the signatures thereto or to any other writing received
by Escrow Agent purporting to be signed by any party hereto, and upon the truth
of the contents thereof.

 

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(vi)        Except as otherwise provided for in Section 2(c)(i) and in this
paragraph below, Escrow Agent shall not pay or deliver the Deposit to any party
unless written demand is made therefor and a copy of such written demand is
delivered to the other party. If Escrow Agent does not receive a written
objection from the other party to the proposed payment or delivery within five
(5) Business Days after such demand is served by personal delivery on such
party, Escrow Agent is hereby authorized and directed to make such payment or
delivery. If Escrow Agent does receive such written objection within such five
(5) Business Day period or if for any other reason Escrow Agent in good faith
shall elect not to make such payment or delivery, Escrow Agent shall forward a
copy of the objections, if any, to the other party or parties, and continue to
hold the Deposit unless otherwise directed by written instructions from the
parties to this Agreement or by a judgment of a court of competent jurisdiction.
In any event, Escrow Agent shall have the right to refrain from taking any
further action with respect to the subject matter of the escrow until it is
reasonably satisfied that such dispute is resolved or action by Escrow Agent is
required by an order or judgment of a court of competent jurisdiction.
Notwithstanding anything to the contrary contained herein, if Purchaser makes a
demand for the Deposit before the Due Diligence Deadline, then the Deposit shall
automatically be returned to Purchaser, and Seller shall have no right to
object.

 

(vii)       In the event that Escrow Agent shall receive conflicting
instructions or objections from Purchaser or Seller, Escrow Agent shall be
entitled to consult with counsel in connection with its duties hereunder. Each
of Seller and Purchaser agree to reimburse Escrow Agent, upon demand, for one
half (1/2) of the reasonable costs and expenses incurred by Escrow Agent in
connection with such consultation. In the event of litigation relating to the
subject matter of the escrow, whichever of Seller or Purchaser is not the
prevailing party shall reimburse the prevailing party for any reasonable costs
and fees paid by the prevailing party or paid from the escrowed funds to Escrow
Agent.

 

(viii)      Except for any claim, action or proceeding resulting in a final
determination that Escrow Agent acted in bad faith, negligently or engaged in
any type of willful misconduct, Escrow Agent shall not be responsible for any
loss or delay occasioned by the closure or insolvency of the institution with
which any funds are invested in accordance with this Agreement, and shall have
no liability for interest on such funds. Escrow Agent shall not be liable for
any loss or delay occasioned by the failure of said financial institution to
wire funds in a timely manner.

 

(d)          Purchaser’s Designated Transferee. Purchaser may assign the right
to take title to the Facilities to (i) a special purpose entity that is an
Affiliate of Purchaser subject to and in accordance with Section 17(e), or (ii)
an entity formed by a real estate investment trust at the request of Purchaser
for the sole purposes of holding the fee simple title to either or both of the
Facilities and leasing them to Purchaser or its Affiliate (“Purchaser’s
Designee”); provided, however, that such designation shall not delay the Closing
Date and Purchaser shall notify Seller of such assignment not less than five (5)
Business Days prior to the Closing Date. Any assignment by Purchaser to
Purchaser’s Designee shall not release or relieve Purchaser from any duties,
obligations or rights arising under this Agreement.

 

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3.                           Property.

 

(a)          “Property” means, except for the items listed in Section 3(b), all
of Seller’s right, title and interest in: (i) the Three Land and the Four Land
(collectively, the “Land”); (ii) all easements, and other related rights
appurtenant to the Land (collectively, “Appurtenances”); (iii) all of the
buildings, structures, fixtures and other improvements comprising real property
and located on the Land and all property which might be considered personal
property except for the fact that it is inextricably related or attached to any
such buildings, structures, fixtures and/or other improvements (collectively,
“Improvements”); (iv) all furnishings, machinery, equipment, vehicles, supplies,
inventory, linens, medicine, foodstuffs, consumable and other personal property
of any type or description, including, without limitation, all beds, chairs,
sofas, wheelchairs, tables, kitchen and laundry equipment associated with and
present at the Property, including, but not limited to those items of personal
property more particularly set forth on Exhibit I attached hereto (the
“Personalty”), (v) any and all trademarks, trade names, brand names, Licenses,
intellectual property, guaranties, warranties, development rights, permits,
drawings, plans and business licenses (including, without limitation, healthcare
operating licenses) affecting each Individual Property (to the extent
assignable) (collectively, the “Intangibles”), (vi) all rights of Seller in, to
and under all contracts, leases, agreements, commitments and other arrangements,
and any amendments, modifications, supplements, renewals and extensions thereof,
used or useful in the operation of the Property made or entered into by Seller
as of the Effective Date, or between the Effective Date and the Closing in
compliance with this Agreement (the “Property Agreements”). (Notwithstanding the
foregoing, Property Agreements expressly exclude: Seller’s management agreement
with Existing Manager, the Management Agreement, the City Agreement, the PILOT
Agreement, the Residency Agreements, any contracts, leases, agreements,
commitments and other arrangements, and any amendments, modifications,
supplements, renewals and extensions entered into by Seller after the Effective
Date and prior to the Closing in breach of Section 7(a), and any Property
Agreements for which consents to the assignment thereof to the Purchaser have
not been obtained as of the Closing, unless waived by Purchaser.), (vii) all
rights of Seller in, to and under all Residency Agreements including any
amendments, modifications, supplements, renewals and extensions thereof, and all
deposits, initial service fees and advances of any kind or nature from any
resident of the Property (“Resident Deposits”), (viii) true and complete copies
of all the books, records, accounts, files, logs, ledgers, journals and
architectural, mechanical and electrical plans and specifications pertaining to
or used in the operation of the Property in Seller’s possession or control,
however such data is stored, (ix) rights in and to any claims or causes of
action (to the extent assignable) to the extent they are in the nature of
enforcing a guaranty, warranty, or a contract obligation to complete
improvements, make repairs, or deliver services to the Property, (x) the Tax
Sale Certificates, including any and all rights related to the Tax Foreclosure
Actions (as such terms are defined in Section 25) and the results therefrom, and
(xi) all rights of Seller in and to the City Agreement and PILOT Agreement
(subject to the consent of the City to the assignment of the PILOT Agreement)
(as those terms are more particularly defined in Section 26).

 

(b)          The Property relating to each Facility shall not include, and
Seller shall not sell, transfer or convey to Purchaser the following:

 

(i)          Accounts receivable relating to such Facility for periods prior to
Closing;

 

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(ii)         Those books and records relating to Seller which Seller is required
by Applicable Law to retain; provided, however, that Purchaser may retain copies
of such books and records;

 

(iii)        The computer software and systems set forth on Schedule 1;

 

(iv)        All Medicaid provider agreements in respect of such Facility;

 

(v)         All cash on hand at such Facility (subject to prorations of
Section 11 below), cash equivalents, bank accounts and similar type investments,
such as certificates of deposit, treasury bills and other marketable securities
wherever and however held;

 

(vi)        All proprietary materials and documents of Seller or Existing
Manager, provided that Seller shall transfer to Purchaser (to the extent in the
Seller’s possession or control) copies of operations handbooks, marketing
materials (other than marketing materials bearing Existing Manager’s logo or
other intellectual property) and manuals for all equipment, systems and personal
property acquired by Purchaser;

 

(vii)       The personal property of the Existing Manager set forth on Schedule
5; and

 

(viii)      All websites, URLs and domain names of the Existing Manager.

 

Notwithstanding the foregoing, Seller shall cooperate with Purchaser, and cause
the Existing Manager to cooperate with Purchaser, in order to affect the orderly
transfer of operation of the Facilities (including, without limitation, transfer
of electronic files and account information).

 

(c)          Assumption of Liabilities. Except as expressly set forth in this
Agreement, Purchaser is assuming no liabilities attributable to the operation or
ownership of the Property which accrued or occurred on or prior to the Closing.
Specifically, without limiting the foregoing, except as specifically set forth
herein, Purchaser shall not assume (i) any claim, action, suit, or proceeding
pending as of the Closing or any subsequent claim, action, suit, or proceeding
arising out of or relating to any event occurring prior to Closing, with respect
to the manner in which Seller conducted its businesses on or prior to the
Closing (ii) any liability for taxes other than real property taxes (and any
payments under the PILOT Agreement) from and after Closing, or (iii) any
liability under any Property Agreements, except for the Assumed Obligations
listed below. Purchaser acknowledges that, effective as of the Closing,
Purchaser shall assume and undertake to pay, discharge, and perform only the
liabilities and obligations of Seller under the Property Agreements listed in
Schedule 2 (but not the Property Agreements which are entered into after the
Effective Date hereof not in compliance with this Agreement or Property
Agreements for which consents to the assignment thereof to the Purchaser
hereunder have not been obtained as of the Closing), the City Agreement, the
PILOT Agreement, the Residency Agreements, and the Tax Foreclosure Actions
(subject to and in accordance with Section 25) to the extent such liabilities
and obligations arise during and relate to any period from and after the Closing
(collectively, the “Assumed Obligations”).

 

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4.                           Due Diligence.

 

(a)          Within five (5) days after the execution of this Agreement,
Purchaser shall order commitments for owner’s policies of title insurance (the
“Title Commitment”) issued by Acres Land Title Agency, Inc., Agent for Chicago
Title Insurance Company (the “Title Company”) covering fee simple title to the
Real Property, in which the Title Company shall agree to insure, in such amount
as Purchaser deems adequate, merchantable title to such interests free from the
Schedule B standard printed exceptions and all other exceptions except for (i)
exceptions which, under applicable state rules and regulations, cannot be
deleted or modified, and (ii) exceptions to which Purchaser does not object
pursuant to Section 4(b) below (collectively, “Permitted Exceptions”), with such
endorsements as Purchaser shall reasonably require and with insurance coverage
over any “gap” period. Such Title Commitments shall have attached thereto
complete, legible copies of all instruments noted as exceptions therein.
Purchaser shall furnish Seller with a copy of the title commitment and
attachments, and all subsequent revisions thereof, promptly upon receipt of
same, but in no event later than five (5) days before the Due Diligence
Deadline.

 

(b)          If (i) any of the Title Commitments reflect any exceptions to title
other than Permitted Exceptions which are not acceptable to Purchaser in
Purchaser’s sole discretion, or (ii) the Survey to be obtained by Purchaser
pursuant to Section 4(d) below discloses anything not acceptable to Purchaser in
Purchaser’s sole discretion (any such exception or unacceptable statement of
fact being referred to herein as a “Title Defect”), then Purchaser shall, on or
before the earlier of five (5) days before the end of the Due Diligence Period
give Seller written notice of such Title Defect (the “Title Notice”). Such Title
Notice shall include a copy of the relevant Title Commitment and copies of the
exceptions. Any exception to title that is (x) disclosed in the Title
Commitment, or (y) identified on a Survey, which, in either case, is not
identified as a Title Defect in the Title Notice, shall be deemed to be a
“Permitted Exception” for purposes of this Agreement. Seller shall, within ten
(10) days after receipt of any such Title Notice, notify Purchaser whether
Seller will take the action necessary to remove the Title Defects (the Title
Defects that Seller agrees to remove are hereinafter referred to as the “Agreed
Upon Title Defects”); it being understood that Seller shall have no obligation
to agree to remove any Title Defects other than Required Cure Items. If Seller
gives notice that it will not cure one or more Title Defects, or if Seller does
not respond to the Title Notice during said ten (10) day period (in which case
Seller shall be deemed to have refused to cure any Title Defects), Purchaser
shall have the right, in its sole discretion, to terminate this Agreement within
five (5) days after the earlier of (y) the date Purchaser receives Seller’s
notice, or (z) the expiration of said ten (10) day period, in which case this
Agreement shall terminate and the Deposit shall be returned to Purchaser and
neither party shall have any further obligations to the other party hereunder,
except as otherwise provided herein. Notwithstanding anything contained herein
to the contrary, the following items (the “Required Cure Items”) must be cured
prior to or at Closing (with Seller having the right to apply the portion of the
Purchase Price allocated to either such party pursuant to Section 2 hereof, or a
portion thereof, for such purpose): (x) all mortgages, security deeds, and other
security instruments created by Seller, (y) all mechanics’, materialmen’s,
repairmen’s, contractors’ or other similar liens which encumber the Real
Property as of the Effective Date created by, through or under Seller or which
may be filed against the Real Property after the Effective Date created by,
through or under Seller, and (z) all judgments against the Seller in a
liquidated monetary amount which may constitute a lien against the Real
Property. On or before the Closing, Seller shall provide Purchaser with
reasonable evidence of removal of the Agreed Upon Title Defects (with Seller
having the right to apply the portion of the Purchase Price allocated to an
Individual Property pursuant to Section 2 hereof, or a portion thereof, for such
purpose). Following the Due Diligence Deadline, Purchaser shall notify Seller
within five (5) days of receipt of an updated Title Commitment or Survey showing
any Title Defects that are not Permitted Exceptions, and Seller shall have the
same opportunity to respond and Purchaser the same remedies as set forth in this
Section 4(b). Any Title Defects that are not Permitted Exceptions that are not
timely objected to in the manner set forth in this Section 4(b) shall be deemed
Permitted Exceptions.

 

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(c)          In the event (x) the Agreed Upon Title Defects specified are not
cured on or before the Closing, or (y) a Required Cure Item is not cured on or
before the Closing, Purchaser shall have the option to:

 

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

 

(ii)pay up to an aggregate of Five Hundred Thousand Dollars ($500,000.00) to
cure the Agreed Upon Title Defect or Required Cure Items and deduct such amount
from the Purchase Price; or

 

(iii)by giving Seller written notice of Purchaser’s election, terminate this
Agreement and receive a refund of the Deposit, Seller shall reimburse Purchaser
for its actual out-of-pocket costs in negotiating and performing due diligence
under this Agreement, not to exceed $200,000 in the aggregate, and upon the
making of such refund and reimbursement, no party shall have any further rights
or obligations to the other hereunder, except for such rights and obligations
that, by the express terms hereof, survive any termination of this Agreement. If
Purchaser elects to proceed with the Closing without giving notice of its
election of this option (iii), it will be deemed to have accepted such Title
Defect(s) or Required Cure Item(s) as Permitted Exceptions.

 

Notwithstanding anything to the contrary contained in this Section 4(c), if on
the Closing Date the Real Property is affected by any Required Cure Item or
Agreed Upon Title Defect then in such event, Seller, at Seller’s election shall
have the privilege to (i) remove or satisfy the same, and shall, for that
purpose, be entitled to one or more adjournments of the Closing for a period not
to exceed thirty (30) days beyond the date scheduled for Closing, or (ii) if the
Required Cure Item or Agreed Upon Title Defect is of a liquidated monetary
amount, Seller may, at Seller’s election, post a bond, letter of credit or
escrow reasonably acceptable to the Title Company to cause the Title Company to
omit the applicable Required Cure Item or Agreed Upon Title Defect from the
Purchaser’s title insurance policy to be issued at the Closing, and Seller shall
use commercially reasonable efforts after the Closing to contest the applicable
Required Cure Item or Agreed Upon Title Defect and to cause the applicable
Required Cure Item or Agreed Upon Title Defect to be discharged of record.

 

(d)          Seller will provide Purchaser with copies of any existing boundary
surveys for the Real Property. Purchaser may order one or more boundary surveys
for the Real Property (the “Survey”) prepared by a registered land surveyor or
surveyors satisfactory to Purchaser.

 

15

 

 

(e)          All Title Expenses shall be paid by the Purchaser. “Title Expenses”
shall include all costs and expenses of obtaining the Survey, Title Commitment
and title policies, together with any endorsements required by any lender
financing the Purchaser’s acquisition of the Property. “Title Expenses” shall
exclude any costs and expenses incurred or required to be incurred to cure any
Title Defects or Required Cure Items.

 

(f)          Tests and Inspections.

 

(i)          From the Effective Date and continuing until the Closing, Purchaser
and/or its designees, shall have the right to enter, upon reasonable prior
notice to Seller (not less than two (2) Business Days) and during normal
business hours, each Individual Property, while this Agreement remains in full
force and effect, for the purpose of conducting such inspections, measurements,
surveys, studies, investigations, analyses and other tests, relating to all
aspects of the Property, including, without limitation, a close review and
analysis of the Diligence Materials, as Purchaser deems appropriate
(collectively, the “Tests”). In addition, Purchaser may investigate all other
aspects of the Property.

 

(ii)         Purchaser’s access to each Individual Property shall be subject to
the following: (A) Seller shall have the option to have an agent or employee
accompany Purchaser at all times during its investigation or inspection of the
Property; (B) Purchaser may only communicate with the employees of Seller or the
Existing Manager after obtaining the prior written consent of Seller in each
instance (not to be unreasonably withheld, conditioned or delayed) and then only
in the presence of an agent or representative of Seller; (C) Purchaser shall
conduct the Tests in a manner that does not unreasonably interfere with the
operations of the respective Facility and Purchaser shall coordinate all visits
to the Facilities in order to minimize the number of visits required; (D)
Purchaser shall not conduct any invasive testing without the prior written
consent of Seller; (E) Purchaser shall indemnify and hold harmless Seller from
and against all costs, claims, damages or liabilities incurred by Seller in
connection with or by reason of any damage, death, or injury to any person or
property occurring in connection with the Tests (other than any liability
incurred in connection with or by reason of Purchaser’s discovery of any
existing condition, including, without limitation, any Hazardous Materials);
(F) Purchaser’s delivering to Seller evidence of commercial general liability
insurance in the amount of $1,000,000.00, in form and substance reasonably
acceptable to the Seller, and naming Seller as an additional insured thereunder;
and (G) a Licensed Site Remediation Professional (“LSRP”), as defined in the
Site Remediation Reform Act, N.J.S.A. 58:10C-1 et seq., and the regulations
promulgated thereunder, shall not be utilized at any time in connection with
Purchaser's inspections or Tests, or be permitted access to either Individual
Property or to the results of the inspections or Tests. Without limiting the
generality of the foregoing indemnity, Purchaser shall (i) remove any mechanics’
or other lien which may be recorded against the Property (or any part thereof)
by any party providing labor, materials or services at the request of Purchaser
and (ii) not file or cause to be filed any application or make any request
(other than inquiries of the public records) with any governmental or
quasi-governmental agency (other than Fannie Mae or Freddie Mac) prior to
Closing which would or could lead to an investigation or hearing before any
governmental or quasi-governmental agency or which would or could lead to a
violation of Applicable Law or any change in zoning, parcelization, Licenses,
permits or other entitlements or any investigation or restriction on the use of
the Property, or any part thereof; provided, however, that Purchaser, within ten
(10) Business Days following the Effective Date, shall submit applications for
the Required Governmental Approvals. The foregoing indemnity shall survive the
expiration or any earlier termination of this Agreement. Notwithstanding
anything herein to the contrary, (1) Purchaser may contact governmental
authorities in regard to land use and licensing matters, but only to extent
required for due diligence, licensing of the new operators for the Facilities,
and operation of the Facilities, and (2) Purchaser shall not contact any
officials of the City without giving Seller a minimum of two (2) Business Days
advance notice and an opportunity to participate, and (3) Purchaser shall not
contact International Senior Properties or any of its principals, employees or
Affiliates without giving Seller a minimum of two (2) Business Days advance
notice and an opportunity for Seller to participate.

 

16

 

 

(iii)        Purchaser shall have the right to cancel this Agreement in its sole
and absolute discretion, for any reason (including any title or Survey concerns)
or no reason on or before the Due Diligence Deadline by written notice given to
Seller on or before Due Diligence Deadline. If Purchaser duly cancels this
Agreement in accordance with this Section 4(f)(iii), this Agreement shall be
deemed terminated and of no further force or effect, except for the provisions
expressly stated to survive termination, and the Deposit shall be returned to
Purchaser. If Purchaser does not duly cancel this Agreement by the Due Diligence
Deadline in accordance with this subparagraph or if Purchaser expressly waives
its right to cancel this Agreement pursuant to written notice thereof given to
Seller, (i) this Agreement shall remain in full force and effect and Purchaser
shall have no further right to cancel this Agreement under this Section and
(ii) Purchaser shall be deemed to have waived any liability of Seller and any
right to refuse to consummate the Closing by reason of any condition known to
Purchaser as of the Due Diligence Deadline, including, without limitation, a
misrepresentation known to Purchaser, Required Cure Items (other than those
which Seller has agreed or is otherwise obligated to cure) or any other
condition, except as otherwise expressly provided herein and except for Seller’s
default.

 

(iv)         All information obtained by Purchaser or its representatives
relating to the Property or the transactions contemplated hereby shall be
treated as confidential information. Purchaser shall not disclose any
information obtained by Purchaser, including, without limitation, the results of
environmental inspections or analysis, to any party (including Seller) without
obtaining Seller’s prior written consent, except that Purchaser may disclose
such information to its consultants, attorneys and prospective lenders engaged
in the review of same. Notwithstanding the foregoing, Purchaser shall have the
right to disclose confidential information to third parties if such disclosure
is required by an order of a court of competent jurisdiction, provided that
Purchaser delivers reasonable advance notice thereof to Seller. Notwithstanding
anything herein to the contrary, to the extent the transaction contemplated by
this Agreement proceeds through Closing, this provision shall no longer be
applicable.

 

(g)          Management Agreement. This Agreement is contingent upon and subject
to an Affiliate of Purchaser and an Affiliate of Capital Health Group
Management, LLC (“Addit”) entering into and delivering to the Escrow Agent an
executed Management Agreement in substantially the form and substance annexed
hereto as Exhibit G (“Management Agreement”) on or before July 12, 2013. If
Purchaser and Addit have not executed and delivered the Management Agreement to
Escrow Agent as provided in the preceding sentence, each of Seller and Purchaser
shall have the right to cancel this Agreement on or before July 12, 2013 by
written notice given to the other on or before July 12, 2013. If either party
duly cancels this Agreement in accordance with this Section 4(g), this Agreement
shall be deemed terminated and of no further force and effect, except for the
provisions expressly stated to survive termination, and the Deposit shall be
returned to Purchaser. If Purchaser or Seller does not timely cancel this
Agreement in accordance with this Section 4(g) or if Purchaser and Addit execute
and deliver the Management Agreement to the Escrow Agent on or prior to July 12,
2013, (i) this Agreement shall remain in full force and effect and Purchaser and
Seller shall have no further right to cancel this Agreement under this Section
4(g), and (ii) Purchaser and Seller shall be deemed to have waived any right to
refuse to consummate the Closing arising out of or in connection with the
Management Agreement.

 

17

 

 

5.                          Conditions to Closing.

 

(a)          Seller shall not be obligated to proceed with Closing unless and
until each of the following conditions have been fulfilled:

 

(i)          Seller’s satisfaction that there is no material pending or
threatened litigation regarding the Transactions.

 

(ii)         Seller shall have received payment of the Purchase Price in
accordance with Section 2 of this Agreement, subject to the adjustments and
prorations contemplated by this Agreement.

 

(iii)        The continuing validity (in all material respects) of all of the
representations and warranties of Purchaser set forth in Section 8.

 

(iv)        Purchaser shall have delivered or caused to be delivered to Seller
on the Closing each of the Documents required to be delivered pursuant to
Section 10.

 

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

 

(i)          The Title Company shall have delivered to Purchaser Title
Commitments to issue at the prevailing promulgated rates, ALTA standard owner’s
policies and extended lender’s policies of title insurance insuring fee title
and any lender’s mortgage interest, as the case may be, for each Individual
Property (collectively, the “Title Insurance Policies” and each individually a
“Title Insurance Policy”) in the amount of the Purchase Price (or the loan
amount for lender policies) for each Individual Property, as set forth on
Exhibit B, subject only to the Permitted Exceptions.

 

(ii)         All Property Agreements not assumed by Purchaser (other than those
automobile leases and equipment leases which Purchaser elects to assume or is
deemed to have elected to assume pursuant to the provisions of this Agreement)
and management agreements affecting the Property shall be terminated effective
as of the Closing Date (Seller hereby covenanting to so terminate all such
agreements, or otherwise make provision reasonably acceptable to Purchaser to
perform, effective as of the Closing Date).

 

(iii)        Except for any changes permitted by the terms of this Agreement,
including without limitation, Section 6 hereof, or consented to in writing by
Purchaser, each of the representations and warranties made by Seller in this
Agreement or in any certificate delivered at Closing that is qualified as to
knowledge or materiality shall be true and correct in all respects when made and
shall be true and correct in all respects at and as of the Closing as though
such representations and warranties were made or given on and as of the Closing,
and each of such representations and warranties that is not qualified as to
knowledge or materiality shall be true and correct when made and shall be true
and correct in all material respects at and as of the Closing as though such
representations and warranties were made or given on and as of the Closing. For
purposes of determining whether the representations and warranties made by the
Seller pursuant to this Agreement are true and correct at and as of the Closing,
the Schedules and Exhibits shall be deemed to include only that information
contained therein on the date such Schedules and Exhibits are acknowledged
pursuant to Section 29.

 

18

 

 

(iv)        Seller shall have obtained any approvals and given any notice
required of Seller by the New Jersey Department of Health to consummate the
transactions contemplated herein, which Seller covenants to diligently pursue.

 

(v)         Purchaser, at its sole cost and expense, shall within ten (10)
Business Days after the Effective Date, file for the Required Governmental
Approvals and shall diligently prosecute such Required Governmental Approval
applications (Seller hereby agreeing to cooperate with Purchaser, to obtain the
Required Governmental Approvals) and will copy Seller on such filings and all
related correspondence. If the Required Governmental Approvals have not been
obtained by the date then-scheduled for Closing, then to the extent allowed
under the laws of New Jersey, Seller and Purchaser shall enter into the Interim
Licensure Arrangements with respect to the Three Facility in the form attached
hereto as Exhibit H. The term of the Interim Licensure Arrangements shall not
exceed eighteen (18) months after the Closing; provided, however, that Purchaser
shall have the right to extend the term of said arrangements for up to six (6)
additional periods of one (1) month each, by written notice to Seller given
prior to the expiration of the then-current term, provided that Purchaser is
diligently pursuing the Required Governmental Approvals. Purchaser shall pay all
costs incurred by Seller to maintain any Required Governmental Approvals
required to operate the Facilities during the term of said Interim Licensure
Arrangements. Purchaser shall be entitled to receive all revenues and shall be
obligated to pay all operating costs during such period. Purchaser shall
indemnify, defend and hold Seller (and its Affiliates) harmless from any claims,
demands, costs, damages, losses or causes of action that may arise in relation
to Purchaser’s (or its designees) operation of the Facilities during such
temporary period, and Purchaser’s indemnification obligation shall be guaranteed
by an Affiliate of Purchaser acceptable to Seller in its sole discretion.

 

(vi)        Seller shall have obtained the consent to the assignment of the
PILOT Agreement from the City to Purchaser with respect to (i) the Three Land
and Four Land, and (ii) only in the event WMA has taken fee ownership of the
Adjacent Land, the Adjacent Land.

 

(vii)       Seller shall have delivered or caused to be delivered to Purchaser
on the Closing each of the Documents required to be delivered pursuant to
Section 10.

 

(viii)      Purchaser shall have received evidence from Seller, satisfactory to
Purchaser in its reasonable discretion, that the management agreement between
Seller and Existing Manager has been terminated without fee or cost to
Purchaser.

 

(ix)         Seller shall have caused Capital Health Group, LLC (the
“Guarantor”) to execute and deliver the guaranty in the form attached as Exhibit
D to this Agreement (the “Guaranty”).

 

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

 

(xi)         No Material Change in Occupancy shall have occurred.

 

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6.                          Certain Representations and Warranties by Seller.
Each Seller, for itself and its Individual Property, hereby represents and
warrants to Purchaser that:

 

(a)          Each Seller is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware,
authorized to conduct business in the State of New Jersey, with all requisite
limited liability company power and authority to carry on its business in the
manner and in the location in which such business has been and is now being
conducted, to execute and deliver this Agreement, and to perform its obligations
hereunder.

 

(b)          This Agreement has been duly authorized, executed and delivered by
each Seller and is the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.

 

(c)          All of the documents to be delivered by Seller at Closing will, at
Closing, be duly authorized, executed and delivered by Seller (and/or, if
applicable, its Affiliates), will be the legal, valid and binding obligations of
Seller (and/or, if applicable, its Affiliates), and be enforceable against
Seller (and/or, if applicable, its Affiliates) in accordance with their
respective terms (except as may be limited by bankruptcy, insolvency, or other
similar laws affecting the rights of creditors generally or the general
principles of equity), and the execution and delivery thereof and the
performance by Seller of the terms thereof will not violate any material
provision of any agreement, instrument, writ, order or decree to which Seller
(and/or, if applicable, its Affiliates) is a party, or to which any portion of
the Property is subject.

 

(d)          Except for (i) a certificate of continuing occupancy, (ii) any
notice to or consent or approval required by any governmental agency regulating
the issuance of Required Governmental Approvals to operate senior housing
facilities, (iii) notice to the New Jersey Division of Taxation Bulk Sale
Section, and (iv) the consent of the City to the assignment of the PILOT
Agreement, Seller is not required to give any notice to, make any filing with,
or obtain any authorization, consent or approval of any governmental agency in
order for the parties to consummate the Transactions contemplated by this
Agreement.

 

(e)          Attached hereto as Exhibit I is a list of all vehicles owned or
leased (and equipment that is leased) by Seller in connection with the operation
of the Facilities. Except as set forth on Exhibit I, Seller owns and has good
title to all Personalty, free and clear of any liens and encumbrances, except
for the Permitted Exceptions and liens that will be satisfied at Closing. Such
Personalty represents all material assets used in the operation of the
Facilities, other than the personal and intellectual property excluded by
Section 3(b) above.

 

(f)          Seller has not received any written notice of any condemnation
proceeding or other proceeding in the nature of eminent domain in connection
with the Real Property or any portion or portions thereof or any utilities,
sewers, roadways or other public improvements serving the Real Property.

 

(g)          Schedule 7 attached hereto is a true and complete list of all
Licenses held by the Seller in connection with the Facilities. To Seller’s
Knowledge, the Licenses listed on Schedule 7 are valid and no material
violations exist with respect to such Licenses. No applications, complaints or
proceedings are pending or, to the Knowledge of Seller, threatened in writing
which may (i) result in the revocation, modification, non-renewal or suspension
of any License or of the denial of any pending applications, (ii) the issuance
of any cease and desist order, or (iii) the imposition of any fines,
forfeitures, or other administrative actions with respect to the Facilities or
their operation.

 

20

 

 

(h)          Other than usual and customary annual assessments, and except for
the PILOT Agreement, Seller has no Knowledge of, nor has Seller received any
written notice of, any proposed assessment for public improvements or otherwise
in connection with the Property or any portion thereof.

 

(i)          Except for (i) the foreclosure of the Tax Sale Certificates by WMA
or (ii) the matters set forth on Schedule 8, there is no suit, action or
proceeding pending or to Seller’s Knowledge threatened against Seller or any
portion of the Property before or by any court, administrative agency or other
governmental or quasi-governmental authority, which brings into question the
validity of this Agreement or the Transactions or otherwise materially affects
the Property.

 

(j)          The Property Agreements listed on Schedule 2 hereto are in full
force and effect and are all of the Property Agreements relating to or affecting
the Property. Seller is not in material default of any of its obligations under
any of the Property Agreements, and Seller has no Knowledge of any default on
the part of any other party thereto.

 

(k)          Set forth on Exhibit J hereto is a true and complete rent roll for
each Facility (the “Rent Roll”). Except for the Operating Leases and as set
forth on the Rent Roll, to Seller’s Knowledge:

 

(i)          Other than the residents under the Residency Agreements and
Commercial Leases, no party has any right to possess all or any portion of the
Real Property.

 

(ii)         Seller has delivered, true, correct and complete copies of the
Residency Agreements and Commercial Leases, including any and all amendments and
guarantees.

 

(iii)        All information set forth in the Rent Roll is true and correct in
all material respects as of its date.

 

(iv)        Seller has not assigned or pledged any Residency Agreement or
Commercial Lease, or rents or any interest therein, to any person or entity
other than the lenders in connection with existing mortgage loans encumbering
the Real Property which will be discharged at Closing in accordance with the
terms of this Agreement.

 

(v)         Seller is not in default under any of its material obligations under
any Residency Agreement or any Commercial Lease, and, except as set forth on the
Rent Roll, Seller has no Knowledge of any material default on the part of any
other party thereto. All of the Residency Agreements identified on the Rent Roll
are currently in full force and effect as of the date of the Rent Roll.

 

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

 

21

 

 

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

 

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

 

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

 

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

 

(n)          Employee Matters.

 

(i)          All persons employed at the Real Property in connection with the
operation or maintenance of the Property are employees of Three Operating or
Four Operating, except for the Existing Manager and other third party service
providers. There are no employment contracts, operating agreements, management
contracts, listing agreements, consulting agreements, union contracts, labor
agreements, pension plans, profit sharing plans or employee benefit plans which
relate to the Facility (“Employee Contracts”) except as set forth in the
Schedule of Employee Contracts on Exhibit K attached hereto. Except as set forth
on the Schedule of Employee Contracts, none of the employees engaged in the
operation or maintenance of the Facility is employed pursuant to a written
agreement.

 

(ii)         Purchaser shall have no liability for any matter concerning any
individual employed by Seller or Existing Manager in the operation or management
of any Facility which accrues prior to Closing except for accrued vacation and
other accrued paid time off and benefits (“Accrued Employee Benefits”) related
to any employee hired by Purchaser or the Facilities’ property manager at
Closing with respect to which Purchaser receives a fully offsetting credit
against the Purchase Price in accordance with the provisions hereof. Seller
shall be solely liable to pay (or cause Existing Manager to pay) the employees
all severance and Accrued Employee Benefits to which the employees are entitled
through the Closing Date, except for any Accrued Employee Benefits for which
Purchaser receives a fully offsetting credit against the Purchase Price at
Closing as aforesaid, in which case Purchaser will provide the Accrued Employee
Benefits to such employees. For the purposes hereof, the term “Accrued Employee
Benefits” shall be deemed to include, without limitation, any bonus payable to
any employee to the extent that such bonus is attributable to services rendered
by such employee prior to the Closing Date, but payable after the Closing Date.

 

22

 

 

(o)          Lack of Conflict. Subject to any licensing requirements and
approvals otherwise set forth in this Agreement, neither the execution of this
Agreement nor the consummation of the transactions contemplated herein will
violate any restriction, court order, judgment, law, regulation, charter, bylaw,
instrument, or agreement to which Seller or the Property (or any portion
thereof) are subject.

 

(p)          Non-Foreign Seller. Seller is not a foreign seller as defined in
the “Foreign Investment in Real Property Tax Act.”

 

(q)          ERISA; Benefit Plans. Seller has not incurred and does not
presently expect to incur any liability under Title IV of ERISA that would
reasonably be expected to result in liability to Purchaser. Each of the Benefit
Plans that is a group health plan within the meaning of Section 5000(b)(1) of
the Internal Revenue Code (the “Code”) was in complete compliance with the
provisions of Section 4980B(f) of the Code.

 

(r)          Insurance Schedule 6 sets forth an accurate summary of all general
liability, fire, theft, professional liability and other insurance maintained
with respect to the Property, currently and for the last three (3) years.

 

(s)          Financial Disclosures. The following documents have been provided
or will be provided to Purchaser by Seller as part of the Diligence Materials
and to Seller’s Knowledge are substantially true, complete and correct in all
material respects:

 

(i)          Detailed operating statements for Seller’s period of ownership of
the Facilities

 

(ii)         Current List of Employees

 

(iii)        Current Rent Roll

 

(iv)        Current Accounts receivable.

 

(t)          Seller is not now nor will it be at Closing in default or breach of
any of its material obligations under the City Agreement, Pilot Assignment or
Pilot Agreement.

 

(u)          Medicaid.

 

(i)          Seller is receiving payment under Title XIX of the Social Security
Act and is certified for participation in the Medicaid program, (“Governmental
Payor Program”), and is a party to valid a participation agreement for payment
by the Governmental Payor Program, which agreement is in full force and effect.
A true and correct copies of such agreement shall be delivered to Purchaser, to
the extent not prohibited by Applicable Law. Without limiting the generality of
the foregoing, the facilities, equipment, staffing and operations of Seller
satisfy all material conditions of participation in the Governmental Payor
Program.  Seller has not received written notice of pending, threatened or
possible investigation by, or loss of participation in, the Governmental Payor
Program, and, to Seller’s Knowledge, there is no basis for any such notice.

 

23

 

 

(ii)         There are no pending or threatened material claims (including
potential penalties) by the Governmental Payor Program against Seller, and
Seller has not been subject to loss of waiver of liability for utilization
review denials with respect to the Governmental Payor Program during the past
two (2) years.

 

(iii)        All billing practices of Seller with respect to Governmental Payor
Programs and private insurance companies have been in material compliance with
Applicable Laws, and Seller has not billed or received any payment or
reimbursement in excess of amounts allowed by Applicable Laws.

 

(iv)        Seller has not (i) offered or paid any remuneration, in cash or in
kind, to, or made any financial arrangements with, any past, present or
potential customers, past or present suppliers, patients, medical staff members,
contractors or third-party payors of Seller in order to obtain business or
payments from such persons other than in the ordinary course of business;
(ii) given or agreed to give, or is aware that there has been made or that there
is any agreement to make, any gift or gratuitous payment of any kind, nature or
description (whether in money, property or services) to any customer or
potential customer, supplier or potential supplier, contractor, third
party-payor or any other person other than in connection with promotional or
entertainment activities in the ordinary course of business; (iii) made or
agreed to make, or is to its Knowledge aware that there has been made or that
there is any agreement to make, any contribution, payment or gift of funds or
property to, or for the private use of, any governmental official, employee or
agent where either the contribution, payment or gift or the purpose of such
contribution, payment or gift is or was illegal under Applicable Laws;
(iv) established or maintained any unrecorded fund or asset for any purpose or
to its Knowledge made any misleading, false or artificial entries on any of its
books or records for any reason; or (v) to its Knowledge made, or agreed to
make, or is aware that there has been made or that there is any agreement to
make, any payment to any person with the intention or understanding that any
part of such payment would be used for any purpose other than that described in
the documents supporting such payment.

 

(v)         Neither Seller, nor to its Knowledge, any partner, member, director,
or officer thereof, is a party to any contract, lease agreement or other
arrangement (including any joint venture or consulting agreement) with any
physician, health care facility, hospital, nursing facility, home health agency
or other person who is in a position to make or influence referrals to or
otherwise generate business for Seller, or otherwise influence the affairs of
the Seller, to provide services, lease space, lease equipment or engage in any
other venture or activity that is prohibited by law or that did not provide
commercially reasonable terms with fair market value consideration for the
goods, property, services or use of money provided, exchanged or acquired
thereunder at the time entered into.

 

(v)         Intentionally omitted.

 

(w)          Intentionally omitted.

 

(x)          Title Encumbrances. Seller is not in default under any of its
material obligations under any recorded agreement, easement or instrument
encumbering title to the Real Property, and Seller has no Knowledge of any
material default on the part of any other party thereto.

 

(y)          Intentionally omitted.

 

(z)          Intentionally omitted. 

 

24

 

 

(aa)         Intentionally omitted. 

 

(bb)         Environmental Matters. Seller has not generated, stored or disposed
of any Hazardous Substance at or on the Real Property other than in accordance
with Environmental Laws. Except as set forth in the Environmental Reports,
Seller has no Knowledge of any previous generation, storage, disposal or
existence of any Hazardous Substance at or on the Real Property other than in
accordance with all Environmental Laws. Except as set forth in the Environmental
Reports, neither Seller, nor, to Seller’s Knowledge, Existing Manager, has
received any notice letter under any Environmental Law or any notice or claim,
and there is no investigation pending or to Seller’s Knowledge threatened, to
the effect that Seller is or may be liable for or as a result of the release or
threatened release of hazardous substance into the environment or for the
suspected unlawful presence of any hazardous waste on the Real Property.

 

(cc)         Neither the Seller nor, to Seller’s Knowledge, the Existing Manager
has received written notice of any violation of Applicable Laws with respect to
the Facilities.

 

Purchaser acknowledges that Seller acquired the Facilities through foreclosure
on February 1, 2011 and that the Diligence Materials may include certain
financial statements, reports, documents, investigations, etc. prepared by or on
behalf of the prior owner of the Facilities (“Prior Owner Diligence Materials”).
Notwithstanding anything to the contrary contained in this Agreement, Seller
makes absolutely no representations or warranties of any kind, express or
implied, with respect to any Prior Owner Diligence Materials, including without
limitation, with respect to the accuracy or completeness thereof.

 

All representations and warranties made by Seller in this Section 6 shall be
true and correct on the date made and their continued validity in all material
respects as of the Closing Date shall be a condition precedent to Purchaser’s
obligation to close the Transactions hereby contemplated.

 

If before the Closing Purchaser acquires Purchaser Knowledge that any
representation or warranty set forth in Section 6 is untrue or incomplete or has
become untrue or incomplete due to a change in facts or circumstances, then
within five (5) days, Purchaser shall give Seller written notice, specifying the
manner in which such representation or warranty is untrue or incomplete. If
before the Closing Seller acquires Knowledge that any representation or warranty
set forth in Section 6 has become untrue or incomplete due to a change in facts
or circumstances (or Seller acquiring Knowledge of facts or circumstances of
which Seller did not previously have Knowledge), then Seller shall promptly
notify Purchaser of the representation or warranty which is untrue or
incomplete. In either case, Seller shall have the right to cure such condition
before the Closing, and Seller shall give Purchaser written notice within five
(5) days after (i) receipt of Purchaser’s notice pursuant to the first sentence
of this Section 6, or (ii) the giving of Seller’s notice pursuant to the
immediately preceding sentence, whether Seller will be able to cure such
condition prior to the Closing Date. If Seller is unable to cure any such
condition prior to the Closing Date, then, provided the condition is not the
result of the willful conduct of Seller in violation of this Agreement,
Purchaser's exclusive remedy shall be to terminate this Agreement by notice to
Seller and Escrow Agent given within ten (10) calendar days after Seller
notifies Purchaser that Seller will be unable to cure the same. In the event
this Agreement is terminated pursuant to this Section 6, the Deposit shall be
refunded to Purchaser, whereupon, except as provided herein, this Agreement and
all rights and obligations of the parties hereunder shall be null and void;
provided, however, if the condition is as a result of the willful conduct of
Seller in violation of this Agreement, Seller shall reimburse Purchaser for its
actual out-of-pocket costs in negotiating and performing due diligence under
this Agreement, not to exceed $200,000 in the aggregate, and upon the making of
such refund and reimbursement, this Agreement shall be null and void. If
Purchaser fails to terminate this Agreement within such ten (10) day period,
Purchaser shall be deemed to have waived any right to terminate under this
Section 6, or any other recourse against Seller, and the applicable
representation and warranty made by Seller hereunder shall be deemed waived by
Purchaser to the extent that it is untrue or incomplete.

 

25

 

 

The phrases “Knowledge” “to Seller’s Knowledge,” the “Knowledge of Seller and/or
of its Affiliates,” and similar terms used in this Agreement, shall mean in all
cases the actual knowledge of the following individuals (or any one of them):
Jordan S. Socaransky and Kenneth R. Assiran (the “Knowledge Parties”), after
reasonable inquiry with the executive director of the Facilities. In no event
shall Purchaser be entitled to assert any cause of action against any of the
Knowledge Parties with respect to this Agreement or any breach hereof, nor shall
any of the Knowledge Parties have any personal liability whatsoever for any
matter under or related to this Agreement.

 

7.                           Covenants of Seller.

 

(a)          Operation of the Facility. Subject to the terms of this Agreement,
Seller, during the term of this Agreement, shall carry on the business and
operations of each Facility in substantially the same manner as heretofore
carried on by it. Prior to the Closing Date, Seller shall maintain (or replace
with policies of like amounts) all existing insurance policies set forth on
Schedule 6 insuring the Property and the operation of the Facility, and such
policies shall be on an occurrence basis, where applicable. Seller shall provide
Purchaser with current loss runs within fifteen (15) days after the end of each
month from the Effective Date until the Closing. Prior to Closing Seller will
promptly notify Purchaser of any potential losses or claims that may be covered
by the insurance. Except for the items listed in Section 3(b), Seller shall not
remove any of the Personalty from the Facilities, unless Seller replaces the
same with like items that are of equal or better quality and condition. Seller
shall maintain the inventory consistent with Seller’s past practices and will
replenish the same consistent with its past practices. Seller shall complete all
capital improvements and renovations to the facilities in a good and workmanlike
manner. Seller may extend, amend, modify or terminate any of the Property
Agreements and Residency Agreements as Seller deems appropriate to operate,
service and maintain the Property consistent with normal business practices, and
may enter into new Property Agreements; provided, however, (A) from the date of
this Agreement to the Closing Date, Seller shall provide to Purchaser copies of
new Property Agreements and any terminations, amendments, extensions, or
modifications of existing Property Agreements, which Seller has entered into, or
intends to enter into, within two (2) business days thereof, (B) Seller shall
not, without the written consent of Purchaser (which consent shall not be
unreasonably withheld, conditioned or delayed), enter into (i) any leases of
furniture, fixtures or equipment for the Facility, (ii) any new Property
Agreement other than those that are consistent with past practices and that are
terminable with not more than thirty (30) days’ notice without penalty, or
(iii) any extension, amendment, modification, or termination of a Property
Agreement other than an extension of an existing Property Agreement on
substantially the same terms (provided that Purchaser has not delivered to
Seller Notice of its intent to not assume such Property Agreement) or consistent
with past practices, (C) no part of the Real Property, or any interest therein,
will be sold or otherwise transferred or encumbered without Purchaser’s prior
written consent, which approval shall not be unreasonably withheld, conditioned
or delayed, and (D) without the prior written approval of Purchaser (which
approval shall not be unreasonably withheld, conditioned or delayed), Seller
shall not make any material alterations to the Real Property, or remove or
otherwise dispose of any material portion of the Personalty.

 

26

 

 

(b)          Cooperation. Seller shall cooperate with Purchaser in all
commercially reasonable respects, including by (A) executing and/or delivering
necessary or desirable applications and other information and documents, to
facilitate the issuance to Purchaser of all Required Governmental Approvals,
certificates and approvals for operation of the Facilities and other
authorizations in connection with the operation of the Property (“Purchaser
Permits”) and (B) promptly notifying Purchaser of any communications to or from
any governmental agency with respect to matters that could reasonably be
expected to have a material adverse affect upon each Facility. In the event that
any of the Purchaser Permits required to be obtained prior to the Closing Date
are not obtained at such time, but all other conditions set forth herein are
satisfied (other than conditions which, by their nature, are to be satisfied on
the Closing Date), Seller agrees to cooperate in good faith with Purchaser and
to use commercially reasonable efforts in formulating and implementing mutually
acceptable alternatives (including, but not limited to the Interim Licensure
Arrangement) that permit the consummation of the transactions contemplated by
this Agreement in accordance with all legal requirements in the absence of such
Purchaser Permits, provided that any such arrangements are fully in compliance
with all legal requirements, that Purchaser either pays for or promptly
reimburses Seller for all out-of-pocket expenses incurred by Seller in
connection therewith, and that Purchaser indemnifies and holds harmless Seller
from and against any claims, damages, costs or liabilities arising in connection
therewith. If Purchaser is not able to obtain a license from the NJ Department
of Health to operate the Three Facility by the Closing Date, Seller and
Purchaser shall enter into an Interim Licensure Arrangement in the form attached
as Exhibit H on or before the Closing Date.

 

(c)          Audit. Seller at no material out of pocket cost to Seller, shall
assist Purchaser in conducting and completing, no later than seventy-four (74)
days following the Closing Date, an audit of property-level financials for the
Property as specified by Rule 3-05 of Regulation S-X of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended, provided
such audit shall be at the sole cost and expense of Purchaser. In connection
therewith, Seller agrees to use commercially reasonable efforts to obtain and
provide to the auditors any and all data and financial information in the
possession of Seller which are necessary or required by the auditors in
connection with their preparation and completion of the foregoing audit, which
additional data and financial information shall be true, correct and complete in
all material respects to Seller’s knowledge. Additionally, Seller shall provide
Purchaser, but without expense to Seller, with (a) an audit letter in
substantially the form as Exhibit N attached hereto and made a part hereof, and
(b) copies of, or access to, such factual information as may be reasonably
requested by Purchaser or its designated accountants, and in the possession or
control of Seller, to enable Purchaser to file any filings required by the SEC
in connection with the purchase of the Property. The rights and obligations of
Seller and Purchaser under this Section 7(c) shall survive the Closing;
provided, however, that any representation and warranty shall be subject to the
Survival Period, the Floor and the Cap.

 

(d)          Seller shall give prompt written notice to Purchaser, and Purchaser
shall give prompt written notice to Seller, of (i) the occurrence, or failure to
occur, of any event that would be likely to cause any of its respective
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the Effective Date to the
Closing, and (ii) any failure to comply with or satisfy, in any material
respect, any covenant, condition, or agreement to be complied with or satisfied
under this Agreement. If, prior to Closing, either Purchaser or Seller obtains
Knowledge of any matter that causes the representations or warranties of the
other party contained in this Agreement to be untrue or inaccurate in any
material respect, such party shall promptly notify the other party thereof in
writing.

 

27

 

 

8.                         Certain Representations and Warranties of Purchaser.
Each Purchaser hereby represents and warrants to Seller as follows:

 

(a)          This Agreement has been duly authorized, executed and delivered by
each Purchaser and is the legal, valid and binding obligation of each Purchaser,
enforceable against each Purchaser in accordance with its terms.

 

(b)          The execution and delivery of this Agreement by each Purchaser does
not violate any provision of any governance document, agreement or judicial
order to which any Purchaser is a party or to which any Purchaser is subject.

 

(c)          All the documents to be delivered by Purchaser at Closing will, at
Closing, be duly authorized, executed and delivered by Purchaser (and/or, if
applicable, its Affiliates), will be the legal, valid and binding obligations of
Purchaser (and/or, if applicable, its Affiliates), and be enforceable against
Purchaser (and/or, if applicable, its Affiliates) in accordance with their
respective terms, and the execution and delivery thereof will not violate any
provision of any governance document, agreement or judicial order to which
Purchaser (and/or, if applicable, its Affiliates) is a party or, to the best of
Purchaser’s Knowledge, to which the Property is subject.

 

(d)          Purchaser is not required to obtain the consent of any person or
entity to the Transactions hereby contemplated.

 

(e)          The Transactions contemplated under this Agreement do not meet the
“size of transaction” test, 15 U.S.C. § 18a(a)(2)(B)(ii), under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”),
and the regulations promulgated thereunder, and therefore the Transactions do
not need to be notified to the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act.

 

All representations and warranties made by Purchaser in this Section 8 shall be
true and correct on the date made and their continued validity as to any
material fact as of the Closing Date shall be a condition precedent to Seller’s
obligation to close the Transactions hereby contemplated.

 

9.                          Closing.

 

(a)          Closing Date. The closing of the sale of the Property (“Closing”)
shall take place at 1:00 p.m. (New York time) at the office of Escrow Agent or
at another place mutually agreed upon by the parties, or by mail, on the later
of (i) the first Business Day occurring thirty (30) days after the Due Diligence
Deadline, or (ii) the first Business Day occurring fifteen (15) days after the
consent of the City to the assignment of the PILOT Agreement is granted pursuant
to Section 26 below (“Closing Date”), or such earlier date as to which the
parties have mutually agreed; provided, however, in no event shall the Closing
Date occur after October 31, 2013. For the purpose of allocating revenue and
expense, the parties agree that 12:01 a.m. (New York time) on the day of Closing
shall be the cut-off time. The parties shall not attend the Closing in person
and shall close the transaction contemplated by this Agreement through escrow
with Escrow Agent pursuant to written closing escrow instructions, which
instructions shall be reasonably satisfactory to Seller and Purchaser, and shall
be consistent with the terms hereof.

 

28

 

 

(b)          Post-Closing Cooperation. Each party shall at any time and from
time to time after the Closing execute, acknowledge where required, and deliver
such further instruments and documents and take such other action as may be
reasonably requested by the other party in order to carry out the purposes of
this Agreement, in each event subject to the limitations on survival and
liability set forth in this Agreement.

 

10.                        Closing Documents.

 

(a)          Seller Closing Documents. At the Closing, Seller shall execute and
deliver, or cause to be executed and delivered, to Purchaser the following
documents:

 

(i)          With respect to each Individual Property comprising the Property, a
separate deed in the form of Exhibit C in favor of Purchaser, or at the written
request of Purchaser, Purchaser’s Designee (such deeds, collectively, the
“Deeds”);

 

(ii)         Affidavits, indemnities, and other similar instruments as are
reasonably required by the Title Company. All such affidavits, indemnities and
similar instruments shall be in form and substance reasonably satisfactory to
the Title Company;

 

(iii)        A certification of non-foreign status in the form of Exhibit E;

 

(iv)        All documents necessary to transfer title to all vehicles and
equipment owned by Seller, or to assign and assume vehicle and equipment leases
to the extent assumed by Purchaser;

 

(v)         A certification of Seller in form reasonably satisfactory to
Purchaser, containing an updated Rent Roll for the Property and certifying that
all of the representations and warranties of Seller contained in this Agreement
remain true and correct as of the Closing Date;

 

(vi)        A document terminating the Operating Leases as of the Closing;

 

(vii)       A Bill of Sale and General Assignment in the form of Exhibit M
attached hereto for each Facility;

 

(viii)      An assignment from Three Operating and Four Operating of the
applicable Residency Agreements and Commercial Leases for each Facility in the
form of Exhibit L attached hereto;

 

(ix)         If Purchaser is assuming any Property Agreements as set forth in
Section 3(c) above, an Assignment of Property Agreements in the form attached
hereto as Exhibit F-1 executed by the applicable Seller;

 

(x)          Seller’s Residency Certification (form GIT/REP-3);

 

(xi)         Affidavit of Consideration for Use by Seller (form RTF-1); 

 

29

 

 

(xii)        Interim Licensure Arrangements, if applicable;

 

(xiii)       Any other documentation reasonably required by the Title Company to
consummate the Transactions contemplated by this Agreement;

 

(xiv)      A statement showing all closing prorations (the “Closing Statement”);

 

(xv)       An Assignment of the Tax Sale Certificates in the form of
Exhibit F-2; or a Deed from WMA to Purchaser for the Adjacent Land, as provided
in Section 25.

 

(xvi)      An assignment of the City Agreement in the form attached hereto as
Exhibit F-3; and

 

(xvii)     An assignment of the PILOT Agreement in the form attached hereto as
Exhibit F-4.

 

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

 

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

 

(xx)        Affidavit of Title, in form reasonably acceptable to Title Company
and Seller.

 

(xxi)       Release or escrow letter from New Jersey Division of Taxation, Bulk
Sale Section, and if required, a Bulk Sales Tax Escrow Agreement in the form
annexed hereto as Exhibit O.

 

(xxii)      The Guaranty in the form attached hereto as Exhibit D.

 

(xxiii)     The Income Support Agreement in the form attached hereto as Exhibit
P.

 

(b)          Purchaser Closing Documents. At the Closing, Purchaser shall
execute and deliver, or cause to be executed and delivered, to Seller the
following documents:

 

(i)          An assignment of the applicable Residency Agreements and Commercial
Leases for each Facility in the form of Exhibit L attached hereto;

 

(ii)         If Purchaser is assuming any Property Agreements as set forth in
Section 3(c) above, an Assignment of Property Agreements in the form attached
hereto as Exhibit F-1.

 

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(iii)        Duly executed Affidavit of Consideration for Use by Purchaser (form
RTF-1EE).

 

(iv)        Documentation to establish to Seller’s reasonable satisfaction the
due authorization of Purchaser’s execution of all documents contemplated by this
Agreement.

 

(v)         Interim Licensure Arrangements, if applicable;

 

(vi)        Duly executed counterpart of the Closing Statement.

 

(vii)       Any other documentation reasonably required to consummate the
transaction contemplated by this Agreement.

 

(viii)      An Assignment of the Tax Sale Certificates in the form of
Exhibit F-2, if required by Section 25.

 

(ix)         An assignment of the City Agreement in the form attached hereto as
Exhibit F-3.

 

(x)          An assignment of the PILOT Agreement in the form attached hereto as
Exhibit F-4.

 

(xi)         if required, a Bulk Sales Tax Escrow Agreement in the form annexed
hereto as Exhibit O.

 

(xii)        The Income Support Agreement in the form attached hereto as Exhibit
P.

 

(c)          Amounts to be Paid at Closing. At the Closing, Purchaser shall pay
to Seller, by federally insured wire transfer, the total amount of the Purchase
Price, subject to proration’s and adjustments, and any sales taxes in accordance
with Section 12(b).

 

(d)          Further Assurances. Seller and Purchaser shall, at the Closing, and
from time to time thereafter, upon request, execute such additional documents as
are reasonably necessary in order to convey, assign and transfer the Property
pursuant to this Agreement and otherwise complete the Transactions contemplated
by this Agreement, provided that such documents are consistent with the terms of
this Agreement, and do not increase Seller’s or Purchaser’s obligations
hereunder or subject Seller or Purchaser to additional liability not otherwise
contemplated by this Agreement. Additionally, if this Agreement is terminated,
either party may request from time to time thereafter confirmation of such
termination from the other party, upon which request, the non-requesting party
shall promptly confirm to the requesting party in writing (by a recordable
instrument if requested by the requesting party) that this Agreement has been
terminated.

 

(e)          Employees. Except as expressly set forth herein, Seller shall
terminate all employees on the Closing Date. Addit may offer employment to
substantially all employees of Seller who, as of the Closing Date, are actively
working at a Facility. Addit may also offer employment upon the terms and
conditions set forth herein, to all employees of Seller at the applicable
Facility who, as of the Closing Date, are on a leave of absence pursuant to the
Seller’s Family and Medical Leave of Absence Policy or due to an injury or
illness, when and only when they return from such leave. All such employees
electing to accept employment with Purchaser (or its manager) are hereinafter
referred to as the “Hired Employees”.

 

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11.                        Prorations and Adjustments.

 

(a)          The following items shall be prorated and adjusted between Seller
and Purchaser as of 12:01 a.m. (New York time) on the day of the Closing, except
as otherwise specified:

 

(i)          all income and revenue from the Facilities including, without
limitation, all Resident Deposits, resident payments (uncollected rents and
other uncollected revenue shall not be adjusted at Closing and shall be subject
to the provisions of Section 11(b) below);

 

(ii)         water, electricity, gas, sewer, and other utility charges
(excluding telephone) and deposits with utility companies to the extent such
deposits are assignable and are assigned to Purchaser;

 

(iii)        real estate taxes and/or payments under the PILOT Agreement for the
Real Property for the fiscal year in which Closing occurs based on the most
recently ascertainable taxes for the Land and/or the Improvements with a
post-closing reconciliation of amounts owed promptly after final tax amounts are
determined;

 

(iv)        amounts payable under the Property Agreements to be assumed by the
Purchaser;

 

(v)         real estate taxes and/or payments under the PILOT Agreement for the
Adjacent Land for the fiscal year in which Closing occurs;

 

(vi)        Accrued Employee Benefits; and

 

(vii)       any other expenses normal to the operation and maintenance of the
Property; all installments of special assessments payable after the Closing,
shall be paid exclusively by Purchaser.

 

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(b)          On the date of the Closing, the amount of prorations and
adjustments as aforesaid shall be determined or estimated to the extent
practicable, and monetary adjustment shall be made between Seller and Purchaser.
If any prorations or adjustments are based on estimates as of Closing, when the
amount of such costs, expenses, charges or amounts upon which such prorations or
adjustments are finally known, Seller and Purchaser shall make a recalculation
of the apportionment of the same, and Seller or Purchaser, as the case may be,
shall make an appropriate payment to the other based on such recalculation,
provided such adjustment is claimed by such party within one hundred eighty
(180) days after the Closing Date. Subject to the prorations to be made pursuant
to this Section 11(b), if any resident sends payments to Seller after the
Closing, Seller shall promptly deliver such payment to Purchaser. As soon as
reasonably practicable following the Closing Date, but not more than ten (10)
days following the Closing Date, Seller shall provide Purchaser a schedule of
all unpaid accounts receivable relating to the period prior to the Closing Date.
Seller shall have the right to pursue such delinquent amounts following the
Closing; provided that Seller shall not have the right to cause any eviction or
to terminate any Residency Agreement or Commercial Lease following the Closing
on account of any delinquent amounts. Other than invoicing such past due amounts
in accordance with Purchaser’s customary practice, Purchaser shall have no
obligation to pursue any such delinquent amounts. To the extent such delinquent
rents and other amounts are collected by Purchaser, Purchaser may deduct from
the amount owed to Seller an amount equal to the attorneys’ fees and other
reasonable costs of collection and out of pocket costs actually incurred by
Purchaser in collecting such rents, as well as any other amounts due to
Purchaser. Subject to the foregoing sentence, any rent or other payment
collected after the Closing from any resident which owed a payment that was
delinquent as of the Closing Date shall be applied first to Purchaser’s unpaid
monetary obligations with respect to any periods from and after the Closing Date
through the end of the month in which such payment is made, in such order as
Purchaser may elect, until such monetary obligations have been paid in full; any
remaining amount of such payment shall be paid over to Seller, for application
against Seller’s delinquent monetary obligations with respect to any periods
before the Closing Date, in such order as Seller may elect, until such
delinquent monetary obligations have been paid in full, and any remaining amount
of such payment shall be retained by Purchaser for application against
Purchaser’s future obligations. In addition, in calculating the prorations
pursuant to this Section 11(b), Seller shall receive a credit in the amount of
any utility, municipality or other deposits relating to the Real Property made
by Seller and which are assigned to Purchaser at the Closing. Seller shall be
entitled to a refund from the utility or the municipality of any such deposits
not assigned to Purchaser.

 

(c)          If any refund of real property taxes or payments under the PILOT
Agreement regarding any of the Real Property or the Adjacent Land is made after
the date of the Closing for a period prior to the Closing, after deducting
Purchaser’s reasonable out-of-pocket costs, if any, in obtaining such refund,
the amount of such refund that is on account of the period prior to Closing
shall be paid to Seller or as Seller directs. The balance, if any, of such
refund that is on account of the period following Closing shall be paid to
Purchaser.

 

(d)          At Closing, Seller shall transfer the following sums or give
Purchaser a credit against the Purchase Price in the amount of all (i) Accrued
Employee Benefits for any Hired Employees accruing prior to the Closing Date;
(ii) security deposits (together with any interest earned thereon or otherwise
due to the residents under the terms of any residency agreement or Applicable
Law); and (iii) last months’ rents, and other prepaid rent or fees (together
with any interest earned thereon or otherwise due to the residents under the
terms of any residency agreements or Applicable Law).

 

12.                         Closing Costs.

 

(a)          Seller shall be responsible for the payment of: (i) the fees and
costs of Seller’s counsel and investment advisors representing it in connection
with the Transactions; (ii) one-half (1/2) of the escrow fees charged by Escrow
Agent; (iii) the real estate transfer fee (other than the “mansion tax”) payable
in connection with the conveyance of the Property; and (iv) all fees, costs and
expenses in connection with the prepayment and discharge of the financing
documents that encumber the Property; and

 

(b)          Purchaser shall be responsible for the payment of (i) the fees and
costs of Purchaser’s counsel and investment advisors representing it in
connection with the Transactions; (ii) the entire cost of the Title Insurance
Policies; (iii) survey costs, environmental inspection costs and all due
diligence costs and expenses; (iv) all recording fees; (v) one-half of the
escrow fees charged by Escrow Agent; (vi) any “mansion tax” payable pursuant to
N.J.S.A. 46:15-7.2 in connection with the conveyance of the Property; and (vii)
all other fees, costs and expenses incurred by Purchaser in connection with the
Transactions, not specifically provided for herein.

 

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13.                         Remedies.

 

(a)          Purchaser Default. If Purchaser should default under this
Agreement, and such default continues for ten (10) days after written notice
thereof specifying such default, Seller may elect to cancel this Agreement by
giving notice to Purchaser and Escrow Agent. The parties hereto agree that the
damages that Seller will sustain as a result of such default will be substantial
but will be difficult to ascertain. Accordingly, the parties agree that in the
event that Seller shall elect to terminate this Agreement as a result of such
default, and Seller is not otherwise in default under this Agreement, Escrow
Agent is hereby directed to pay the Deposit to Seller, who shall retain the
Deposit as and for its liquidated damages and sole remedy hereunder, in which
event this Agreement shall be null and void and of no further force or effect
except for those provisions expressly stated to survive the termination of this
Agreement; provided, however, nothing herein shall limit the Seller’s rights
under any indemnities set forth in this Agreement.

 

(b)          Seller Default. If Seller defaults on any of Seller’s obligations
under this Agreement, and such default continues for ten (10) days after written
notice thereof specifying such default, Purchaser’s sole remedy for Seller’s
default shall be to elect either to: (i) cause the refund of the Deposit to
Purchaser and reimburse Purchaser for its actual out-of-pocket costs in
negotiating and performing due diligence under this Agreement, not to exceed
$200,000 in the aggregate, and upon the making of such refund and reimbursement,
this Agreement shall be null and void and of no further force or effect except
for those provisions expressly stated to survive the termination of this
Agreement and the lien, if any, of Purchaser against the Property shall wholly
cease; or (ii) commence an action for specific performance. Purchaser hereby
waives all other rights and remedies that it might have, including but not
limited to, the right to sue for damages.

 

(c)          Collection Costs. If any legal action, arbitration or other similar
proceeding is commenced to enforce or interpret any provision of this Agreement,
the prevailing party shall be entitled to an award of its attorneys’ fees and
expenses. The phrase “prevailing party” shall include a party who receives
substantially the relief desired whether by dismissal, summary judgment,
judgment or otherwise. In the event that either party is entitled to an award of
its attorneys’ fees and expenses pursuant to the terms of this Section 13(c),
such award shall be available notwithstanding the limitations on remedies set
forth in Sections 13(a) and (b) above.

 

(d)          Survival.

 

(i)          Closing. None of the terms and conditions of this Agreement shall
survive the Closing, except for the following Sections: 4(f)(ii), 6 (subject to
the Survival Period), 7(c), 9(b), 10, 11, 12, 13, 14, 15, 16, 17(g), 17(k), 18
(subject to the Survival Period), 19, 20, 23, 24, 25, 26, 27, 28, 29 and 30.

 

(ii)         Termination. None of the terms and conditions of this Agreement
shall survive the termination of this Agreement, except for the following
Sections: 4(f)(ii) and (iv), 13, 14, and 16.

 

34

 

 

14.                       Broker. Seller and Purchaser represent to each other
that neither party has dealt with any broker or real estate consultant in
connection with the Transactions contemplated by this Agreement. Notwithstanding
the foregoing, Seller and Purchaser acknowledge that Seller has engaged Stifel,
Nicolaus & Company, Incorporated (“SN”) as its investment advisor and the Seller
shall pay the fees due to SN in accordance with a separate agreement between
Seller and SN. Seller and Purchaser shall indemnify and hold the other free and
harmless from and against any liabilities, damages, costs or expenses
(including, but not limited to, reasonable attorneys' fees and disbursements)
suffered by the indemnified party arising from a misrepresentation or a breach
of any covenant made by the indemnifying party pursuant to this Section 14. The
provisions of this Section 14 shall survive the Closing or termination of this
Agreement.

 

15.                        Risk of Loss.

 

(a)          Condemnation.

 

(i)          The risk of any loss or damage to the Real Property by condemnation
before the Closing shall continue to be borne by Seller. In the event any
condemnation proceeding is commenced or threatened, Seller shall promptly give
Purchaser written notice thereof (in any event within five (5) days after Seller
first has Knowledge of the occurrence of same), together with such reasonable
details with respect thereto as to which Seller may have Knowledge. If, prior to
Closing, there is a material taking by eminent domain at the Real Property, this
Agreement shall become null and void at Purchaser’s option, and upon receipt by
Seller of the written notice of an election by Purchaser to treat this Agreement
as null and void, this Agreement shall be deemed null and void. If Purchaser
elects to proceed and to consummate the purchase despite said material taking,
or if there is less than a material taking prior to Closing, there shall be no
reduction in or abatement of the Purchase Price and Purchaser shall be required
to purchase the Property in accordance with the terms of this Agreement, and
Seller shall assign to Purchaser, without representation of warranty by or
recourse against Seller, all of Seller’s right, title and interest in and to any
award made or to be made in the condemnation proceeding (in which event
Purchaser shall have the right to participate in the adjustment and settlement
of any insurance claim relating to said damage). For the purpose of this Section
15, the term “material” shall mean any taking of in excess of five percent (5%)
of the square footage of the buildings on the Real Property or ten percent (10%)
of the Land associated with the Real Property. The parties’ obligations, if any,
under this Section 15(a) shall survive the expiration or any termination of this
Agreement.

 

(b)          Destruction or Damage. The risk of any loss or damage to the Real
Property by fire or other casualty before the Closing shall continue to be borne
by Seller. Seller shall promptly give Purchaser written notice of any fire or
other casualty (in any event within ten (10) days after Seller first has
Knowledge of the occurrence of same), which notice shall include a description
thereof in reasonable detail and an estimate of the cost of time to repair. If
(i) any portion of the Real Property is damaged by fire or casualty after the
Effective Date and is not repaired and restored substantially to its original
condition prior to Closing, or (ii) at the time of Closing the estimated cost of
repairs as to the Real Property is THREE HUNDRED FIFTY THOUSAND U.S. DOLLARS
($350,000.00) or less, as determined by an independent adjuster selected by
Seller, Purchaser shall be required to purchase the Property in accordance with
this Agreement, and Purchaser shall receive from Seller at Closing (I) an
assignment, without representation of warranty by or recourse against Seller, of
all insurance claims and proceeds with respect thereto, plus (II) an amount
equal to Seller’s insurance deductible. If the estimated cost of repairing such
damage to the Real Property is more than THREE HUNDRED FIFTY THOUSAND U.S.
DOLLARS ($350,000.00), as determined by such independent adjuster, Purchaser
may, at its sole option: (x) terminate this Agreement by notice to Seller on or
before the earlier of the Closing or the tenth (10th) day after receipt of such
notice described above, in which event no party shall have any further liability
to the party under this Agreement; or (y) proceed to Closing as provided in this
Section 15(b). In no event shall the amount of insurance proceeds assigned to
Purchaser under this subparagraph (plus the amount of the deductible) exceed the
lesser of (i) the cost of repair or (ii) the Purchase Price. The parties’
obligations, if any, under this Section 15(b) shall survive the expiration or
any termination of this Agreement.

 

35

 

 

16.                        Limited Warranties; Disclaimer.

 

(a)          Limited Warranties. Notwithstanding anything to the contrary
contained in this Section 16, the purchase, sale and conveyance of the Property
shall be made with the limited warranties from Seller to Purchaser contained in
this Agreement and the Deeds.

 

(b)          Disclaimer. Purchaser agrees that, except as and to the extent
provided in this Agreement or in the documents to be delivered by Seller at
Closing (subject to the provisions set forth in Section 16(a) of this
Agreement), Purchaser is purchasing the Property in “AS IS”, “WHERE IS”, “WITH
ALL FAULTS” condition, and without any other warranties, representations or
guarantees, either express or implied, of any kind, nature, or type whatsoever
from, or on behalf of, Seller.

 

(i)          Except as and to the extent provided in the representations and
warranties contained in this Agreement and in the documents to be delivered by
Seller at Closing, each of Seller and its Affiliates, and its and their
officers, directors, employees, members, managers and agents, expressly
disclaims, has not made, will not make, and does not make, any warranties or
representations, express or implied, with respect to the Property or any portion
thereof, the physical condition or repair or disrepair thereof (whether patent
or latent), the value, profitability or marketability thereof or the title
thereto, or of any of the appurtenances, facilities or equipment thereon;

 

(ii)         Except as and to the extent provided in this agreement, Each of
Seller and its Affiliates, and its and their officers, directors, employees,
members, managers and agents, expressly disclaims, has not made, will not, and
does not, make, any warranties, express or implied, of merchantability,
habitability or fitness for a particular use;

 

(iii)        Except as and to the extent provided in this agreement, Purchaser
has not relied upon any statement or representation by or on behalf of Seller
unless such statement or representation is specifically set forth in this
Agreement or in the documents to be delivered by Seller at Closing;

 

36

 

 

(iv)        AS OF THE DATE HEREOF AND THROUGH THE END OF THE DUE DILIGENCE
PERIOD, PURCHASER HAS MADE AND WILL MAKE SUCH LEGAL, FACTUAL AND OTHER INQUIRIES
AND INVESTIGATIONS AS PURCHASER HAS DEEMED NECESSARY, DESIRABLE OR APPROPRIATE
WITH RESPECT TO THE PROPERTY AND THE VALUE AND MARKETABILITY THEREOF AND OF THE
APPURTENANCES, FACILITIES AND EQUIPMENT THEREOF. SUCH INQUIRIES AND
INVESTIGATIONS OF PURCHASER ARE HEREBY DEEMED TO INCLUDE, WITHOUT LIMITATION,
THE PHYSICAL COMPONENTS OF ALL PORTIONS OF THE IMPROVEMENTS, THE CONDITION OF
REPAIR OF THE PROPERTY OR ANY PORTION THEREOF, SUCH STATE OF FACTS AS A CURRENT
TITLE REPORT AND/OR AN ACCURATE SURVEY, ENVIRONMENTAL EXAMINATIONS, AND FLOOD
PLAIN EXAMINATIONS WOULD SHOW OR DISCLOSE, AND THE PRESENT AND FUTURE ZONING,
ORDINANCES, RESOLUTIONS AND REGULATIONS OF THE CITY, COUNTY AND STATE WHERE THE
IMPROVEMENTS ARE LOCATED.

 

(c)          Except as specifically set forth in this Agreement or in the
documents to be executed and delivered by Seller at Closing, each of Seller and
its Affiliates, and its and their officers, directors, members, managers,
partners, principals, employees and agents, expressly disclaims, has not made,
will not make, and does not make, any warranties or representations, express or
implied, that relate to, arise out of or with respect to (1) Purchaser’s
ability, or inability, to obtain or maintain temporary or final certificates of
occupancy or other licenses for the use or operation of the Improvements, and/or
certificates of compliance for the Improvements, (2) the actual or potential
income, or profits, to be derived from the Property, (3) the real estate, or
other, taxes or special assessments, now or hereafter payable on account of, or
with respect to, the Property, (4) Purchaser’s ability or inability to demolish
the Improvements or otherwise develop the Property, or (5) the environmental
condition of the Property.

 

17.                        General Provisions.

 

(a)          Entire Agreement. This Agreement and exhibits hereto constitute the
entire agreement of Seller and Purchaser with respect to sale of the Property
and supersedes all prior or contemporaneous written or oral agreements, whether
express or implied, related to the subject matter hereof.

 

(b)          Amendments. This Agreement may be amended only by a written
agreement executed and delivered by Seller and Purchaser.

 

(c)          Waivers. No waiver of any provision or condition of, or default
under, this Agreement by any party shall be valid unless in writing signed by
such party. No such waiver shall be taken as a waiver of any other or similar
provision or of any future event, act, or default.

 

(d)          Time. Time is of the essence of this Agreement. In the computation
of any period of time provided for in this Agreement or by law, the day of the
act or event from which the period of time runs shall be excluded, and the last
day of such period shall be included, unless it is not a Business Day, in which
case it shall run to the next day which is a Business Day.

 

37

 

 

(e)          Assignment. This Agreement may not be assigned by Purchaser without
the consent of Seller. A direct or indirect transfer, sale or assignment of the
majority stock interest in a corporate purchaser or the majority membership
interest in a limited liability company purchaser or the majority or any general
partnership interest of a partnership purchaser shall constitute an assignment
of this Agreement, which assignment or attempted assignment shall be void if
made without the written consent of Seller. Notwithstanding the foregoing,
Purchaser may assign its rights under this Agreement, without the consent of
Seller, to an Affiliate, including Purchaser’s Designee, provided the assignee
assumes in writing all of the obligations of Purchaser to be performed under
this Agreement in a form reasonably acceptable to Seller and an original of such
fully executed assignment and assumption agreement is delivered to Seller at
least five (5) Business Days prior to the Closing. Purchaser shall not assign
this Agreement to an entity or individual which would make any of the
statements, representations or warranties set forth in Section 8 of this
Agreement untrue or incorrect in any material respect and any such assignment
shall be null and void and without force and effect. No assignment of this
Agreement shall relieve Purchaser from any of its obligations set forth herein
arising prior to or after the effective date of the assignment.

 

(f)          Notices. Any notices or other communications permitted or required
to be given hereunder shall be in writing, shall be delivered (i) personally, in
which case notice shall be deemed delivered upon receipt or refusal of delivery,
(ii) by reputable overnight delivery service, in which case notice shall be
deemed delivered on the date of deposit with such courier, or (iii) by fax, in
which case notice shall be deemed delivered upon the mechanical confirmation of
delivery, and shall be addressed to the respective party as set forth in this
subsection (f). Notices on behalf of the respective parties may be given by
their attorneys and such notices shall have the same effect as if in fact
subscribed by the party on whose behalf it is given.

 

To Seller: c/o WCP Investment Manager LLC   40 Danbury Road   Wilton,
CT  06897-4406   Attention: Mr. Jordan S. Socaransky   Facsimile: 203-429-8599  
  with a copy to: c/o WCP Investment Manager LLC   40 Danbury Road   Wilton,
CT  06897-4406   Attention: Marc Porosoff, Esquire   Facsimile: 203-429-8599    
with a copy to: c/o Capital Health Group, LLC   Capital Health Group, LLC   1422
Clarkview Road   Baltimore, MD 21209   Attention: Mr. Kenneth R. Assiran  
Facsimile: 410 342 7101     with a copy to: Drinker Biddle & Reath LLP   500
Campus Drive   Florham Park, NJ 07932-1047   Attention:  Michael San Giacomo,
Esq.   Facsimile: 973-360-9831

 

38

 

 

To Purchaser: Woodbury Mews III, LLC   Woodbury Mews IV, LLC   Woodbury Mews
Land Parcels, LLC   Attn: John Mark Ramsey   Attn: Kevin Thomas   189 S. Orange
Avenue, Suite 1700   Orlando, FL 32801   Phone:  407-999-7679  
Fax:  407-999-5210     with a copy to: Michael A. Okaty, Esq.   Foley & Lardner
LLP   111 N. Orange Avenue, Suite 1800   Orlando, FL 32801  
Telephone:  407-423-7656   Fax:  407-648-1743   E-mail:  mokaty@foley.com

 

(g)          Governing Law. This Agreement shall be governed in all respects by
the internal laws of the State of New Jersey without regard to the laws
regarding conflicts of laws.

 

(h)          Counterparts. This Agreement may be executed in any number of
identical counterparts, any or all of which may contain the signatures of less
than all of the parties, and all of which shall be construed together as a
single instrument.

 

(i)          Construction. Seller and Purchaser agree that each party and its
counsel have reviewed and approved this Agreement, and that any rules of
construction that provide that ambiguities be resolved against the drafting
party shall not be used in the interpretation of this Agreement or any
amendments or exhibits hereto. The words “include”, “including”, “includes” and
any other derivation of “include” means “including, but not limited to” unless
specifically set forth to the contrary. As used in this Agreement, the neuter
shall include the feminine and masculine, the singular shall include the plural,
and the plural shall include the singular, except where expressly provided to
the contrary. The words “herein”, “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
Section, subsection or other subdivision. Headings of sections herein are for
convenience of reference only, and shall not be construed as a part of this
Agreement. Except to the extent expressly provided otherwise in this Agreement,
references to “sections” or “subsections” in this Agreement shall refer to
sections and subsections of this Agreement, and references to “exhibits” in this
Agreement shall mean exhibits attached to this Agreement.

 

(j)          No Recording. Purchaser shall not, and shall not cause or permit
any other person to, record this Agreement or any memorandum or other evidence
thereof in any public records. If Purchaser violates the terms of this
Subsection (j), then this Agreement shall be deemed to be breached by Purchaser
and, in Seller’s sole discretion, ipso facto terminated. Nothing herein shall be
deemed to prevent Purchaser from filing a Notice of Settlement.

 

(k)          Public Announcement. Seller and Purchaser agree to cooperate with
each other to make joint and/or coordinated public announcements disclosing this
Agreement and the Transactions contemplated hereby.

 

39

 

 

(l)          Radon. Radon is a naturally occurring radioactive gas that, when it
has accumulated in a building in sufficient quantities, may present health risks
to persons who are exposed to it over time. Levels of radon that exceed federal
and state guidelines may have been found in buildings in the state in which the
Real Property is located. Additional information regarding radon and radon
testing may be obtained from public health units of the county in which the Real
Property is located.

 

18.                        Indemnification.

 

(a)          Reserved.

 

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

 

(i)          Subject to the provisions of Section 6, any material breach by
Seller of any of its representations, warranties, covenants or agreements in
this Agreement or any other Document;

 

(ii)         The operation, ownership or control of the Property prior to
Closing, including without limitation, any and all liabilities which relate to
events occurring prior to the Closing, regardless of when they are asserted,
except for (x) facts disclosed in or pursuant to Section 6 of this Agreement,
the Diligence Materials, or in the Purchaser Commissioned Reports, but only to
the extent such information constitutes Purchaser Knowledge; (y) Assumed
Obligations, and (z) obligations, indebtedness or liabilities to the extent of
any Adjustment Amount credited to the Purchaser; and

 

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

 

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

 

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

 

(ii)         The ownership and operation of the Property post-Closing, and the
Assumed Obligations.

 

(iii)        Claims by any other party, other than SN, claiming to have
represented Purchaser as broker or agent in connection with the transactions
contemplated by this Agreement.

 

(d)          Administration of Indemnification. For purposes of administering
the indemnification provisions set forth in Section 18(b) and Section 18(c), the
following procedure shall apply:

 

40

 

 

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

 

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

 

(iii)        If the Indemnifying Party does not choose to defend against a claim
by a third party, the Indemnified Party may defend in such manner as it deems
appropriate or settle the claim (after giving notice thereof to the Indemnifying
Party) on such terms as the Indemnified Party may deem appropriate, and the
Indemnified Party shall be entitled to periodic reimbursement from the
Indemnifying Party of defense expenses incurred and prompt indemnification from
the Indemnifying Party in accordance with this Section 18.

 

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

 

(v)         The right to pursue indemnification as set forth in this Section 18
shall survive the Closing hereunder for a period of eighteen (18) months
following the Closing (the “Survival Period”).

 

41

 

 

(vi)        Notwithstanding anything to the contrary in this Agreement, (i) the
right to pursue indemnification as set forth in this Section 18 shall be
actionable or payable only if valid claims for Losses, if any, collectively
aggregate more than TWENTY FIVE THOUSAND and No/100 U.S. Dollars ($25,000.00)
(the “Floor”); and (ii) the aggregate maximum liability of the entities
comprising the Seller under this Section 18 shall not exceed $1,500,000.00 (the
“Cap”); provided, however, that the foregoing limitation shall not apply in the
case of fraud on the part of Purchaser, Seller or any of their respective
Affiliates. In addition, Purchaser shall first seek recovery under any insurance
policies, the Title Insurance Policy and other applicable agreements, and Seller
shall not be liable to Purchaser to the extent Purchaser’s claim is actually
satisfied from any sums recovered from such insurance policies, Title Insurance
Policy or other applicable agreements. FINALLY, IN NO EVENT SHALL EITHER PARTY
EVER BE LIABLE FOR ANY CONSEQUENTIAL OR PUNITIVE DAMAGES OTHER THAN IN THE EVENT
OF FRAUD.

 

(vii)       The indemnification provisions in this Section 18 shall be the sole
and exclusive remedy of any Indemnified Party with respect to any claim for
Indemnification Loss arising from or in connection with this Agreement.

 

19.                           Diligence Materials. Seller has delivered or will
make available to Purchaser all plans, maps, descriptions, permits,
certifications, Licenses, approvals, environmental assessments, environmental
audits, and other diligence materials (but not including any appraisals) (the
“Diligence Materials”) respecting the Property in Seller's possession or
control, which material shall be returned to Seller by Purchaser if Closing is
not completed and Purchaser will not retain any copies. For purposes of this
Agreement, Diligence Materials shall be deemed to include all Title Commitments,
Surveys and results of Tests, including environmental reports and engineering
reports relating to the physical condition of the Property, but shall not be
deemed to include any appraisals. Purchaser shall make no claim under this
Agreement, for breach of representation or warranty, indemnification or
otherwise, in respect of a fact, circumstance or condition of which Purchaser
has Purchaser Knowledge prior to the Closing, except that the foregoing shall
not prevent Purchaser from raising an objection as to any fact, circumstance or
condition disclosed in the Title Commitments, Surveys, the Diligence Materials
or in the Purchaser Commissioned Reports and shall not prevent Purchaser from
exercising any right to terminate this Agreement as provided herein on account
of any such fact, circumstance or condition disclosed in the Diligence Materials
or in the Purchaser Commissioned Reports whether or not such fact, circumstance
or condition is contrary to a representation or warranty of Seller contained in
this Agreement. The provisions of this Section 19 shall survive the closing of
title.

 

20.                           Facsimile and PDF Signatures. The execution of
this Agreement and all notices given hereunder and all amendments hereto, may be
effected by facsimile signatures or signatures in portable document format (pdf)
delivered by electronic mail, all of which shall be treated as originals;
provided, however, that the party receiving a document with a facsimile or pdf
signature may, by notice to the other, require the prompt delivery of an
original signature to evidence and confirm the delivery of the facsimile or pdf
signature. Purchaser and Seller each intend to be bound by its respective
facsimile transmitted or pdf signature, and is aware that the other party will
rely thereon, and each party waives any defenses to the enforcement of the
Agreement, and documents, and any Notices delivered by facsimile transmission or
transmission by electronic mail of pdf signatures.

 

21.                          Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each such term and provision of this Agreement shall be valid and
be enforced to the fullest extent permitted by law.

 

42

 

 

22.                           Calculation of Time Periods. Unless otherwise
specified, in computing any period of time described herein, the day of the act
or event on which the designated period of time begins to run shall not be
included and the last day of the period so computed shall be included, unless
such last day is a Saturday, Sunday or legal holiday, in which event the period
shall run until the next day which is not a Saturday, Sunday or a legal holiday.

 

23.                           Like-Kind Exchange. Purchaser acknowledges that
Seller may, at Seller’s option, include Seller’s sale of the Property in a
like-kind exchange under the Code. Purchaser shall reasonably cooperate with
Seller and shall execute any documents reasonably required to permit Seller to
effect such a like-kind exchange pursuant to the Code, provided that such
like-kind exchange shall not delay the Closing or cause Purchaser to incur any
additional liability or expense. Seller acknowledges that Purchaser may, at
Purchaser’s option, include Purchaser’s acquisition of the Property in a
like-kind exchange under the Code. Seller shall reasonably cooperate with
Purchaser and shall execute any documents reasonably required to permit
Purchaser to effect such a like-kind exchange pursuant to the Code, provided
that such like-kind exchange shall not delay the Closing or cause Seller to
incur any additional liability or expense.

 

24.                           Certificate of Occupancy; etc. If any certificate
of occupancy, certificate of continued occupancy, site plan waiver, smoke
detector certificate or other approval is necessary to legally convey title to
the Real Property, Seller shall use commercially reasonable efforts to obtain
any such approval at its sole cost and expense prior to the Closing Date. If any
alterations or improvements to the Real Property are required in order to obtain
any such certificate or approval, then Seller shall use commercially reasonable
efforts to perform such alterations and improvements prior to the Closing Date,
and Seller shall have the right to postpone the Closing Date for up to thirty
(30) days in order to perform such alterations and improvements. The costs and
expenses of performing any alterations or improvements for any Real Property
shall be the sole responsibility of the Seller. The provisions of this Section
24 shall survive the Closing.

 

25.                          Tax Sale Certificates. Seller represents and
warrants that WM Acquisitions, LLC (“WMA”), an Affiliate of Seller, has good and
marketable title (subject to liens in connection with the existing mortgage
financing) to the following tax sale certificates encumbering the Adjacent Land:
Tax Sale Certificate No. 05-0074; Tax Sale Certificate No. 05-0075; Tax Sale
Certificate No. 05-0076; Tax Sale Certificate No. 2007-0058; Tax Sale
Certificate No. 2010-0112; Tax Sale Certificate No. 2010-0115; and Tax Sale
Certificate No. 2010-0116 (collectively, the “Tax Sale Certificates”), which are
the subject of tax sale certificate foreclosure actions by WMA currently pending
in the Superior Court of New Jersey, Chancery Division, Docket nos. F-007892-12,
F-007893-12, F-007894-12 and F-007895-12 (collectively, the “Tax Foreclosure
Actions”). Seller represents and warrants that it has paid all outstanding taxes
on the Adjacent Lands as of the date of execution of this Agreement, and will
continue to pay all taxes that accrue on the Adjacent Lands up to and including
the quarterly taxes for the quarter during which Closing occurs. It is the
intention of the parties to have title to the Adjacent Land prior to Closing and
in that regard, Seller shall prosecute the pending Tax Foreclosure Actions as
promptly as permitted by Rules of Court and Orders of the Court having
jurisdiction, Seller agrees time is of the essence. At the Closing, Seller shall
cause WMA to (i) if final judgments have not yet been entered in the Tax
Foreclosure Actions, assign to Purchaser the Tax Sale Certificates, and its
rights to proceed in the Tax Foreclosure Actions, pursuant to an Assignment of
Tax Sale Certificates in the form attached hereto as Exhibit F-2; and (ii) if
final judgments have been entered in one or more of the Tax Foreclosure Actions,
convey the Adjacent Land to Purchaser by Deed in the form annexed hereto as
Exhibit C. Seller shall manage the Tax Foreclosure Actions on behalf of
Purchaser after the Closing, and, except for the costs expressly required to be
borne by Seller under this Section 25, Purchaser shall indemnify, defend and
hold Seller (and its Affiliates) harmless from any claims, demands, costs,
damages, losses or causes of action with respect to the Tax Sale Certificates or
the Tax Foreclosure Actions after the Closing. For the avoidance of doubt,
Purchaser shall assume at Closing all risk in connection with the completion of
the Tax Foreclosure Actions on the condition that the Tax Foreclosure Actions
have been properly filed and prosecuted as of Closing and the Title Company
issues a certificate of regularity as to the Tax Foreclosure Actions. Purchaser
shall pay all attorneys’ fees and disbursements in connection with the Tax
Foreclosure Actions incurred after the Closing, up to $25,000.00, and Seller
shall pay all attorneys’ fees and disbursements in connection with the Tax
Foreclosure Actions incurred after the Closing in excess of $25,000.00. The
provisions of this Section 25 shall survive the Closing.

 

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26.                           City Agreement and PILOT Agreement. Purchaser
acknowledges that Seller is a party to that certain Sale and Assignment
Agreement with the City of Woodbury (the “City”), dated March 7, 2012 (the “City
Agreement”) and that certain Assignment of Financial Agreement from the City,
dated March 30, 2012 (the “PILOT Assignment”) pursuant to which the City
assigned to Seller a certain PILOT Agreement (as defined in the PILOT
Assignment, the “PILOT Agreement”). Seller shall use all commercially reasonable
efforts to assign to Purchaser all of Seller’s right, title and interest in the
City Agreement and the Pilot Agreement pursuant to an Assignment of City
Agreement in the form attached hereto as Exhibit F-3, Assignment of Pilot
Agreement in the form attached hereto as Exhibit F-4; or such other form as may
be acceptable to the City. Purchaser acknowledges that: (i) the consent of the
City is required under the terms of the City Agreement and the PILOT Agreement
to the assignment of the PILOT Agreement; (ii) under applicable legal
requirements, Purchaser may be required to organize as an urban renewal entity
in order to become a party to the PILOT Agreement; and (iii) the conveyance of
certain tax sale certificates from the City to WMA, as contemplated by the City
Agreement, has already taken place, and such tax sale certificates are included
in the Tax Sale Certificates to be conveyed to Purchaser pursuant to Section 25.
In the event that Seller has not obtained the consent of the City to the
assignment of the PILOT Agreement to Purchaser with respect to the Adjacent Land
prior to the Closing, then Seller and Purchaser shall continue to use
commercially reasonable efforts to pursue such assignments until the City
consents or irrevocably rejects such assignment, in which event the Seller shall
have no further obligation to pursue the assignment and no liability to the
Purchaser for the failure to complete such assignments. The provisions of this
Section 26 shall survive the closing of title.

 

27.         Non-compete. Except for those properties currently being owned or
operated by Seller and shown on Schedule 4, Seller agrees that for three (3)
years following the Closing Date, Seller and Seller’s Affiliates shall not
directly or indirectly (unless acting in accordance with Purchaser’s written
consent) own, manage, operate or participate in the ownership, management or
operation of, or permit its name to be used by or in connection with, any
business or enterprise that develops, owns, operates or manages any facility
that is used or intended for use, in whole or in part, for occupancy as an
independent or assisted living facility for senior citizens and that is located
within a five (5) mile radius of the Real Property; provided, however, that the
foregoing shall not restrict loans made or acquired by Capital Funding Group,
Inc., CFG Community Bank, Westport Capital Partners LLC, or their Affiliates.
The provisions of this Section 27 shall survive the Closing.

 

44

 

 

28.         Income Support. (a) Subject to and in accordance with the provisions
of this Section 28 and the Income Support Agreement attached hereto as Exhibit P
(the “Income Support Agreement”), if, after the Closing, the NOI for the
Property for any Quarter is less than $775,000.00 (the “Quarterly Threshold”),
Seller shall pay to Purchaser the difference between the Quarterly Threshold and
the actual NOI for such Quarter (the “Income Support Payment”) within thirty
(30) days after receipt of notice from Purchaser, setting forth in reasonable
detail the calculation of NOI for such Quarter. A “Quarter” shall be a period of
three (3) consecutive calendar months, commencing, with respect to the first
Quarter, on the first day of the first (1st) calendar month after the month in
which the Closing Date occurs, and with respect to each subsequent Quarter, on
the day immediately following the end of the preceding Quarter. A “Year” shall
be a period of four (4) consecutive Quarters, commencing, with respect to the
first Year, on the first day of the first Quarter as defined in the immediately
preceding sentence, and with respect to each subsequent Year, on the day
immediately following the end of the preceding Year.

 

(b)          At the end of any Year during which Seller has made any Income
Support Payments pursuant to Section 28(a), Seller and Purchaser shall reconcile
any Income Support Payments made over such Year as follows: (i) if the NOI for
the Property for such Year is less than $3,100,000.00 (the “Annual Threshold”),
Seller shall pay to Purchaser the difference between the Annual Threshold and
the actual NOI for such Year, less the amount of any Income Support Payments
paid by Seller during such Year, and (ii) if the NOI for the Property for such
Year is equal to or more than the Annual Threshold, Purchaser shall pay to
Seller the amount of any Income Support Payments paid by Seller during such
Year. The reconciliation pursuant to this Section 28(b) shall occur within
thirty (30) days after the end of a Year, and Seller or Purchaser, as
applicable, will make any required payment to the other party within thirty (30)
days after the reconciliation. Notwithstanding anything to the contrary
contained in this Section 28(b), Seller shall not be required to make the
payment set forth in clause (i) of the first sentence of this Section 28(b) if
Seller’s obligations under this Section 28 have terminated pursuant to Section
28(c) prior to the reconciliation.

 

(c)          Notwithstanding anything to the contrary contained in this Section
28, Seller’s liability under this Section 28 shall not exceed $2,000,000.00 in
the aggregate. Seller’s obligations under this Section 28 shall terminate on the
later to occur of (i) the last day of the first Year after the Closing Date
occurs, or (ii) the last day of the second (2nd) consecutive Quarter in which
the NOI from the Property is in excess of the Quarterly Threshold.

 

(d)          The provisions of this Section 28 shall survive the Closing.

 

29.         Schedules and Exhibits. Each Schedule and Exhibit referred to in
this Agreement shall be deemed to be attached hereto and incorporated by
reference even though it may be maintained separately from this Agreement or
completed after the Effective Date so long as it is acknowledged as a Schedule
or an Exhibit to this Agreement by the parties hereto as of Closing. Any item
disclosed hereunder (including in the Schedules and Exhibits hereto) shall be
deemed disclosed for all purposes hereof irrespective of the specific
representation or warranty to which it is explicitly referenced. The Schedules
and Exhibits not attached hereto as of the Effective Date will be prepared and
mutually agreed to by the parties within five (5) business days of the Effective
Date, except for (i) Exhibit B, which will be prepared in the time frame set
forth in Section 2(a); (ii) the Management Agreement, which will be prepared in
the time frame set forth in Section 4(g); and (iii) the Interim Licensure
Arrangements, which shall be finalized prior to July 12, 2013. The parties agree
to cooperate and act in good-faith during the preparation of such documents.

 

45

 

 

30.         Bulk Sale Tax Compliance. The parties will comply with and file any
and all necessary notifications arising from this Agreement with the New Jersey
Division of Taxation Bulk Sale Section in accordance with N.J.S.A. 54:50-38, and
comply with any escrow or other requirements relating thereto. No later than
twenty (20) days prior to Closing, Seller shall provide Purchaser with New
Jersey Division of Taxation forms C-9600, completed by Seller with Seller
information required, and Asset Transfer Tax Declaration. Purchaser will
complete form C-9600 with Purchaser information and file with the New Jersey
Division of Taxation Bulk Sale Section no later than fifteen (15) days prior to
Closing. Any notice or response received by either party from the New Jersey
Division of Tax Bulk Sale Section shall be promptly provided to the other party.
Receipt of a response from the New Jersey Division of Taxation Bulk Sale Section
with a release or escrow directive, shall be a condition of Closing.

 

[SIGNATURES CONTINUE ON FOLLOWING PAGES.]

 

46

 

 

IN WITNESS WHEREOF, the Purchaser has executed this Agreement on the date first
above written.

 

  PURCHASER:       Woodbury Mews III, LLC       By: /s/ John Mark Ramsey   Name:
John Mark Ramsey   Its:  Authorized Signatory       Woodbury Mews IV, LLC      
By: /s/ John Mark Ramsey   Name: John Mark Ramsey   Its:  Authorized Signatory  
    Woodbury Mews Land Parcels, LLC       By: /s/ John Mark Ramsey   Name: John
Mark Ramsey   Its:  Authorized Signatory

 

 

 

 

IN WITNESS WHEREOF, the Seller has executed this Agreement on the date first
above written.

 

    SELLER:             Employer Identification No.:  

THREE WM REAL ESTATE, LLC,

a Delaware limited liability company

                By: WMRE THREE, LLC, a Delaware limited liability company, its
sole member and manager                   By: CHG WMRE, LLC, a Delaware limited
        liability company, its manager

                  By: /s/ Ken Assiran         Name: Ken Assiran         Title:
President

                        Employer Identification No.:   THREE WM OPERATING, LLC,
    a Delaware limited liability company                 By: WMRE THREE, LLC, a
Delaware limited liability company, its sole member and manager                
  By: CHG WMRE, LLC, a Delaware limited         liability company, its manager

 

      By: /s/ Ken Assiran         Name: Ken Assiran         Title: President

 

 

[SIGNATURES CONTINUE ON FOLLOWING PAGE.] 

 

 

 

 

    SELLER:             Employer Identification No.:  

FOUR WM REAL ESTATE, LLC,

a Delaware limited liability company

                By: WMRE FOUR, LLC, a Delaware limited liability company, its
sole member and manager                   By: CHG WMRE, LLC, a Delaware limited
        liability company, its manager            

      By: /s/ Ken Assiran         Name: Ken Assiran         Title: President

 

          Employer Identification No.:   FOUR WM OPERATING, LLC,     a Delaware
limited liability company                 By: WMRE FOUR, LLC, a Delaware limited
liability company, its sole member and manager                   By: CHG WMRE,
LLC, a Delaware limited         liability company, its manager          

      By: /s/ Ken Assiran         Name: Ken Assiran         Title: President

 

 

 

 

 

ACCEPTANCE AND APPROVAL BY ESCROW HOLDER

 

Escrow Holder hereby (i) acknowledges receipt of a fully executed copy or
counterpart copies of the foregoing Agreement on this 26th day of June, 2013,
and (ii) agrees to establish an escrow and act as the Escrow Holder in
accordance with the provisions of the Agreement. Escrow Holder further agrees to
deliver immediately to Purchaser and Seller fully executed copies of the
Agreement

 

  Acres Land Title Agency, Agent for Chicago Title Insurance Company,        
By: /s/ Deborah Bannworth   Printed: Deborah Bannworth   Title:  

 

 

  

Escrow No.:    

  

Escrow Officer and   Address for Notices: Acres Land Title Agency   Agent for
Chicago Title Insurance Company   c/o Debbie Bannworth   55 Essex Street  
Millburn, New Jersey 07041   Phone: (973)376-4643   Fax: (973)912-8195

 

Wire Transfer Information:

 

  OUR BANK:           ABA ROUTING:     OUR ACCOUNT NAME:     ACCOUNT NUMBER:    
REFERENCE:     Project Name:     CLIENT NAME:     Attention:  

  

 

 

 

Exhibits and Schedules to the Agreement

 

Exhibit A-1 Description of Facilities     Exhibit A-2 Description of Land    
Exhibit B Purchase Price Allocation     Exhibit C Form of Deeds     Exhibit D
Form of Guaranty     Exhibit E FIRPTA Affidavit     Exhibit F – 1 Form of
Assignment of Property Agreements     Exhibit F – 2 Form of Assignment of Tax
Sale Certificates     Exhibit F – 3 Form of Assignment of City Agreement    
Exhibit F – 4 Form of Assignment of Pilot Agreement     Exhibit G Form of
Management Agreement     Exhibit H Form of Interim Licensure Arrangements    
Exhibit I Schedule of Vehicles and Equipment     Exhibit J Rent Roll     Exhibit
K Employee Contracts and Matters     Exhibit L Form of Assignment of Residency
Agreements and Commercial Leases     Exhibit M Form of Bill of Sale and General
Assignment     Exhibit N Form of Audit Letter     Exhibit O Form of Bulk Sales
Tax Escrow Agreement     Exhibit P Form of Income Support Agreement     Schedule
1 Retained Computer Software     Schedule 2 Property Agreements     Schedule 3
Environmental Reports     Schedule 4 Exclusions from Noncompete     Schedule 5
Existing Manager Property     Schedule 6 Insurance     Schedule 7 Licenses    
Schedule 8 Litigation

  

 

 

 

EXHIBIT A-1

 

DESCRIPTION OF FACILITIES

 

Facility Name   Address   Number of Beds/Units           Three Woodbury Mews  

124 (a/k/a 160) Green Avenue

Block 142, Lot 2

City of Woodbury, Gloucester
County, New Jersey

  118 Beds           Four Woodbury Mews  

122 Green Avenue

Block 142, Lot 3

City of Woodbury, Gloucester
County, New Jersey 

  130 Units          

 

 

 

EXHIBIT A-2

 

DESCRIPTION OF LAND

 

(See Attached) 

 

 

 

 

EXHIBIT B

 

PURCHASE PRICE ALLOCATION

 

Facility  Amount  Three Facility  $  Four Facility  $  [OTHER ALLOCABLE ITEMS] 
$  TOTAL PURCHASE PRICE  $ 

  

 

 

 

EXHIBIT C

 

Form of Deed

Prepared by:

_______________

_______________

_______________

 

BARGAIN AND SALE DEED

 

This Bargain and Sale Deed is made on ________________, 2013.

 

BETWEEN ___________________, a ___________________,   whose address is
___________________________.       referred to as Grantors     AND
________________________, a ____________,   whose address is,
___________________________.       referred to as Grantees.

 

The words “Grantor” and “Grantee” shall mean all Grantors and Grantees listed
above.

 

TRANSFER OF OWNERSHIP. The Grantor does hereby grant, bargain, sell, convey and
transfer ownership of the property (called the “Property”) described below to
the Grantee. This transfer is made for the sum of _____________________ Dollars
($____________). The Grantor acknowledges receipt of this money.

 

TAX MAP REFERENCE. (N.J.S.A. 46:15-1.1)

 

  Municipality: ___________________.     Description: ___________________.  

 

PROPERTY. The Property consists of the land (the “Land”) and all the buildings
and structures on the Land in the City of Woodbury, County of Gloucester, State
of New Jersey and the easements benefitting such Land, building and structures.

 

SEE LEGAL DESCRIPTION ATTACHED HERETO AS EXHIBIT A AND MADE A PART HEREOF.

 

The street address of the Property is: ____________________________________.

 

Being the same premises conveyed to Grantor by Deed dated [____________] from
[____________] which Deed was recorded in the Office of the County Clerk of
[___________] County in Deed Book [_____], page [______].

 

 

 

 

Promises by Grantor. The Grantor promises that, except for easements, covenants,
and restrictions of record, the Grantor has done no act to encumber the
property. This promise is called a “covenant as to grantor's acts” (N.J.S.A.
46:4-6). This promise means that the Grantor has not allowed anyone else to
obtain any legal rights which affect the property (such as by making a mortgage
or allowing a judgment to be entered against the Grantor).

 

SIGNATURES. The Grantor signs this Deed as of the date at the top of the first
page.

 

WITNESSES:   GRANTOR:           ________________________________     a
______________________________ ___________________________     Printed Name:    
      ___________________________   By: ______________________________ Printed
Name:   Name: ______________________________     Title:
_______________________________

 

 

 

 

STATE OF ____________ )   ) ss. COUNTY OF __________ )

 

Before me this ______ day of ____________, 2013, personally appeared
________________, who acknowledged himself to be the ________________ of
_______________________, a ___________________, and as such, being authorized to
do so, executed the foregoing instrument on behalf of said corporation.

 

WITNESS my hand and Notarial Seal this ____ day of ____________, 2013.

 

My Commission Expires:   _____________ Notary Public – Signature     My County
of Residence:   _________________ Notary Public – Printed

 

RECORD AND RETURN TO: 

 

 

 

 

EXHIBIT D

 

Form of Guaranty

 

GUARANTY OF agreement of sale

 

THIS GUARANTY OF AGREEMENT OF SALE, dated as of __________, 2013 (the
“Guaranty”), is executed by CAPITAL HEALTH GROUP, LLC (“Guarantor”), and
extended to Woodbury Mews III, LLC, Woodbury Mews IV, LLC, and Woodbury Mews
Land Parcels, LLC, each a Delaware limited liability company (individually and
collectively, the “Purchaser”), for the benefit of THREE WM REAL ESTATE, LLC,
THREE WM OPERATING, LLC, FOUR WM REAL ESTATE, LLC, and FOUR WM OPERATING, LLC,
each a Delaware limited liability company (each a “Seller” and collectively
“Sellers”).

 

RECITALS:

 

WHEREAS, Purchaser has agreed to purchase, and Sellers have agreed to sell and
cause to be transferred to Purchaser, an assisted living facility and
independent living facility located in Woodbury, New Jersey (the “Facilities”),
described in the Purchase Agreement, and real and personal property associated
therewith pursuant to the terms and conditions of that certain Agreement of Sale
between Seller and Purchaser dated June __, 2013 (the “Purchase Agreement”).

 

WHEREAS, without this Guaranty, Purchaser would be unwilling to consummate the
transactions contemplated in the Purchase Agreement.

 

WHEREAS, because of the direct benefit to Guarantor, as a holder of direct or
indirect beneficial ownership interests in each Seller, from the transaction
described in the Purchase Agreement, and as an inducement to Purchaser to enter
into the Purchase Agreement, Guarantor agree to guarantee to Purchaser certain
obligations of Sellers pursuant to the Purchase Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the benefits received by Guarantor as a
result of the Purchaser’s execution of and performance under the Purchase
Agreement, the receipt and sufficiency of which is hereby acknowledged by
Guarantor, Guarantor hereby covenants and agrees as follows:

 

1.          Guaranty of Payment. Guarantor hereby unconditionally guarantees to
Purchaser the payment, when due, of all Seller Obligations. For the purposes
hereof, the term “Seller Obligations” shall include any and all payment,
reimbursement, and indemnity obligations of Seller to Purchaser pursuant to
Section 18 and Section 28 of the Purchase Agreement, as such Seller Obligations
may be modified, amended, increased, or extended from time to time by agreement
of the Sellers. The guaranty of Guarantor, as set forth in this section, is a
guaranty of payment.

 

 

 

 

2.          Subordination. All rights and claims of Guarantor now or hereafter
existing including, without limitation, rights to distributions or dividends
from the Seller (collectively the “Guarantor Claims”) against Seller or any of
Seller’s property which Seller now owns or shall acquire in the future or
hereafter existing shall be subordinate and subject in right of payment to the
prior payment in full of the Seller Obligations to Purchaser by Seller;
provided, however that nothing herein shall limit Sellers’ ability to pay
Guarantor Claims in the ordinary course of business.

 

3.          Guarantor Waivers. Guarantor hereby waives and agrees not to assert
or take advantage of (a) any right or claim of right to cause a marshalling of
any of Sellers’ assets or the assets of any other party now or hereafter held as
security for the Seller Obligations; (b) any defense that may arise by reason of
the incapacity, lack of authority, death or disability of Guarantor, any other
guarantor of the Seller Obligations, or any Seller or any other person or
entity, or the voluntary or involuntary dissolution of any Seller or Guarantor,
or the failure of Purchaser to file or enforce a claim against the estate
(either in administration, bankruptcy, or any other proceeding) of any Seller or
any other person or entity; (c) any action or non-action on the part of any
other person whomsoever; (d) any defense based upon an election of remedies by
Purchaser which destroys or otherwise impairs any subrogation rights of
Guarantor or any other guarantor of the Seller Obligations or the right of
Guarantor to proceed against Seller or any other guarantor for reimbursement, or
both; (e) any defense based upon failure of Purchaser to commence an action
against any Seller; (f) any defense based upon acceptance of this Guaranty by
Purchaser; (g) any defense based upon the invalidity or unenforceability of the
Purchase Agreement or any of the Seller Obligations; (h) any defense based upon
the failure of Purchaser to perfect any security or to extend or renew the
perfection of any security; and (i) any other legal or equitable defenses
whatsoever to which Guarantor might otherwise be entitled, other than to the
extent related to the underlying merits of whether or not a Seller Obligation
exists.

 

4.          Consent to Purchaser’s Actions or Inactions. Guarantor consents that
Purchaser may, at any time and from time to time, before or after any default by
any Seller pursuant to the Purchase Agreement, without reducing the liability of
Guarantor hereunder and with or without further notice to or assent from
Guarantor:

 

(a)          Waive or delay the exercise of any of its rights or remedies
against any Seller or any other person or entity, including without limitation,
Guarantor guaranteeing payment of any portion of the Seller Obligations;
notwithstanding any waiver or delay, Purchaser shall not be precluded from
further exercise of any of its rights, powers or privileges expressly provided
for herein or otherwise available, it being understood that all such rights and
remedies are cumulative;

 

(b)          Waive or extend the time of any Seller’s or any other guarantor’s
performance of any and all terms, provisions and conditions set forth in the
Purchase Agreement;

 

(c)          Release any Seller or any other person or entity, including without
limitation any other guarantor guaranteeing the payment of any portion of the
Seller Obligations, from their obligations to repay all or any portion of the
Seller Obligations;

 

 

 

 

(d)          Proceed against Guarantor without first proceeding against or
joining any Seller or any other guarantor guaranteeing payment of any portion of
the Seller Obligations; and

 

(e)          Generally deal with any Seller or other person or party as
Purchaser may see fit.

 

Guarantor shall remain bound under this Guaranty notwithstanding any such
exchange, release, surrender, subordination, waiver (whether or not such waiver
is oral or written), delay, proceeding, renewal, extension, modification, act or
failure to act, or other dealings or events described in Subsections 4(a)
through (e) above, even if done without notice or consent from Guarantor.

 

5.          Waiver of Notice. Guarantor waives all notices whatsoever with
respect to the Purchase Agreement, this Guaranty, and the Seller Obligations,
including, but not limited to, notice of:

 

(a)          Purchaser’s acceptance of this Guaranty or its intention to act, or
its action, in reliance hereon;

 

(b)          Presentment and demand for payment of any Seller Obligations or any
portion thereof;

 

(c)          Protest and notice of dishonor or non-payment with respect to any
Seller Obligations or any portion thereof;

 

(d)          Any default by any Seller or any pledgor, grantor of security, or
any other guarantor guaranteeing the payment of any portion of the Seller
Obligations;

 

(e)          Any other notices to which Guarantor may otherwise be entitled; and

 

(f)          Any demand for payment under this Guaranty.

 

6.          Primary Liability of Guarantor. Guarantor agrees that this Guaranty
may be enforced by Purchaser without the necessity at any time of resorting to
or exhausting any other security or collateral, and Guarantor hereby waives any
rights to require Purchaser to proceed against any Seller or any other guarantor
or to require Purchaser to pursue any other remedy or enforce any other right,
except as otherwise provided in the Purchase Agreement. Guarantor further agrees
that Guarantor shall have no right of subrogation, reimbursement or indemnity
whatsoever, nor any right of recourse to security for the Seller Obligations
against any Seller or any other guarantor, unless and until all of the Seller
Obligations have been paid in full to Purchaser or otherwise satisfied to
Purchaser’s satisfaction. Guarantor further agrees that nothing contained herein
shall prevent Purchaser from exercising any other rights available to it under
the Purchase Agreement or any instrument of security if any Seller fails to
timely perform the obligations of any Seller thereunder, and the exercise of the
aforesaid rights shall not constitute a discharge of any of Guarantor’s
obligations hereunder; it being the purpose and intent of Guarantor that
Guarantor’s obligations hereunder shall be absolute, independent and
unconditional under any and all circumstances. Neither Guarantor’s obligations
under this Guaranty nor any remedy for the enforcement thereof shall be
impaired, modified, changed or released in any manner whatsoever by an
impairment, modification, change, release or limitation of the liability of any
Seller or any other guarantor or by reason of any Seller’s or any other
guarantor’s bankruptcy, insolvency, death, or dissolution.

 

 

 

 

7.          Subrogation Rights. Guarantor irrevocably waives any present or
future right to which Guarantor is or becomes entitled to be subrogated to
Purchaser’s rights against any Seller or to seek contribution, reimbursement,
indemnification, or the like from any Seller on account of this Guaranty or to
assert any other claim or right of action against any Seller on account of,
arising under, or relating to this Guaranty.

 

8.          Cost of Enforcement. In the event that the Seller Obligations or
this Guaranty are not paid when due, or should it be necessary for Purchaser to
enforce any other of its rights under the Purchase Agreement or this Guaranty,
Guarantor will pay to Purchaser, in addition to payment of all Seller
Obligations, all third party costs of collection or enforcement, including
reasonable attorneys’ fees, paralegals’ fees, legal assistants’ fees, costs and
expenses, whether incurred with respect to collection, litigation, bankruptcy
proceedings, interpretation, dispute, negotiation, trial, appeal, defense of
actions instituted by a third party against Purchaser arising out of or related
to a Seller Obligation under the Purchase Agreement, enforcement of any judgment
based on this Guaranty or otherwise related to a Seller Obligation, whether or
not a suit to collect such amounts or to enforce such rights is brought or, if
brought, is prosecuted to judgment.

 

9.          Term of Guaranty; Warranties. Notwithstanding any statute of
limitations applicable hereto, this Guaranty shall continue in full force and
effect (i) with respect to the Seller Obligations under Section 18 of the
Purchase Agreement, for eighteen months following the date hereof and (ii) with
respect to the Seller Obligations under Section 28 of the Purchase Agreement,
until the termination of such Seller Obligations pursuant to the terms of said
Section 28; provided, however, that if any claim for Seller Obligations has been
made and remains outstanding, then this Guaranty shall not terminate until such
claim for Seller Obligations is fully paid or otherwise finally resolved. This
Guaranty covers the Seller Obligations whether presently outstanding or arising
subsequent to the date hereof. Guarantor warrants and represents to Purchaser,
(i) that this Guaranty is binding upon and enforceable against Guarantor and its
successors and assigns in accordance with its terms, (ii) that the execution and
delivery of this Guaranty does not violate any applicable laws or constitute a
breach of any agreement to which Guarantor is a party, and (iii) that except as
may have been specifically disclosed to Purchaser in writing, there is no
litigation, claim, action or proceeding pending, or, to the knowledge of such
Guarantor, threatened against such Guarantor which would materially adversely
affect its ability to fulfill its obligations hereunder. Guarantor agrees to
promptly inform Purchaser of the adverse determination of any litigation, claim,
action or proceeding or the institution of any litigation, claim, action or
proceeding against Guarantor which does or could materially adversely affect its
ability to fulfill its obligations hereunder.

 

 

 

 

10.         Additional Liability of Guarantor. If Guarantor is or becomes liable
for any indebtedness owing by any Seller to Purchaser by endorsement or
otherwise than under this Guaranty, such liability shall not be in any manner
impaired or reduced hereby but shall have all and the same force and effect it
would have had if this Guaranty had not existed and Guarantor’s liability
hereunder shall not be in any manner impaired, reduced, enhanced or expanded
thereby.

 

11.         Cumulative Rights. Except as otherwise provided in the Purchase
Agreement, all rights of Purchaser hereunder or otherwise arising under the
Purchase Agreement or any documents executed in connection with or as security
for the Seller Obligations are separate and cumulative and may be pursued
separately, successively or concurrently, or not pursued without affecting,
reducing or limiting any other right of Purchaser and without affecting,
reducing, or impairing the liability of Guarantor.

 

12.         Pronouns; Captions; Severability. The pronouns used in this
instrument shall be construed as masculine, feminine or neuter as the occasion
may require. Use of the singular includes the plural, and vice versa. Captions
are for reference only and in no way limit the terms of this Guaranty.
Invalidation of any one or more of the provisions of this Guaranty shall in no
way affect any of the other provisions hereof, which shall remain in full force
and effect. Use of the term “include” or “including” is always without
limitation. “Person” or “party” means any natural person or artificial entity
having legal capacity.

 

13.         Purchaser Assigns. This Guaranty is intended for and shall inure to
the benefit of Purchaser and its successors or assignees, and each and every
reference herein to Purchaser shall include and refer to each and every
successor or assignee of Purchaser at any time holding or owning any part of or
interest in any part of the Seller Obligations. Guarantor expressly waives
notice of transfer or assignment, and agrees that the failure of the Purchaser
to give notice will not affect the liabilities of Guarantor hereunder.

 

14.         Application of Payments. Purchaser may apply any payments received
by it from any source against that portion of the Seller Obligations it deems
appropriate in such priority and fashion as it may deem appropriate.

 

15.         Notices. Except as otherwise provided in this Guaranty, all notices
or other communications under this Guaranty shall be sent by hand, by overnight
courier, or by registered or certified mail, postage prepaid, to the parties at
the following addresses:

 

to Guarantor: Capital Health Group, LLC   1422 Clarkview Road   Baltimore, MD
21209   Attention: Mr. Kenneth R. Assiran       Facsimile: 410 342 7101

 

 

 

 

with copies to: Drinker Biddle & Reath LLP       500 Campus Drive   Florham
Park, NJ 07932-1047   Attention:  Michael San Giacomo, Esq.   Facsimile:
973-360-9831     to Purchaser: Woodbury Mews III, LLC   Woodbury Mews IV, LLC  
Woodbury Mews Land Parcels, LLC   Attn: John Mark Ramsey   Attn: Kevin Thomas  
189 S. Orange Avenue, Suite 1700   Orlando, FL 32801   Phone:  407-999-7679  
Fax:  407-999-5210     with copies to: Michael A. Okaty, Esq.   Foley & Lardner
LLP   111 N. Orange Avenue, Suite 1800   Orlando, FL 32801   Phone
No.:  407-423-7656   Fax No.:  407-648-1743   E-mail:  mokaty@foley.com

 

This section shall not be construed in any way to affect or impair any waiver of
notice or demand herein provided or to require giving of notice or demand to or
upon Guarantor in any situation or for any reason.

 

16.         Governing Law. This Guaranty shall be governed by and construed in
accordance with the laws of the State of New Jersey without regard to its
principles of conflict of laws.

 

17.         Submission to Jurisdiction. Guarantor irrevocably and
unconditionally (a) agrees that any suit, action or other legal proceeding
arising out of or relating to this Guaranty may be brought, at the option of
Purchaser, in a court of competent jurisdiction in Gloucester County, New Jersey
or any United States District Court having jurisdiction in Gloucester County,
New Jersey; (b) consents to the jurisdiction of each such court in any such
suit, action or proceeding; and (c) waives any and all personal rights under the
laws of any state to object to the laying of venue of any such suit, action or
proceeding in Gloucester County, New Jersey.

 

18.         Oral Modification Ineffective. Any amendment to or modification of
this Guaranty, and any waiver of any provision hereof, shall be in writing and
shall require the prior written approval of the Purchaser as evidenced by the
handwritten, non-electronic signature of the Purchaser affixed by the Purchaser
to a paper document. This Guaranty shall be irrevocable by Guarantor until all
outstanding Seller Obligations are fully paid or otherwise finally resolved, at
which time Purchaser will promptly terminate this Guaranty. This Guaranty shall
continue in full force and effect unless and until discharged or released by
Purchaser pursuant to a written instrument properly executed by the Purchaser.

 

 

 

 

19.         Counterparts. This Guaranty may be executed in separate
counterparts, each of which shall constitute an original and both of which, when
taken together, shall be constituted one Guaranty.

 

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

 

 

 

 

IN WITNESS WHEREOF, Guarantor has executed this GUARANTY OF AGREEMENT OF SALE as
of the day and year first above written.

 

           

 

STATE OF _____________

COUNTY OF ___________

 

I HEREBY CERTIFY that on this day before me, an officer duly authorized in the
State and County aforesaid to take acknowledgements, personally appeared
___________________________________ who [___] are personally known to me or
[___] produced ______________________________ as identification, and that they
acknowledged executing the same, freely and voluntarily, for the uses and
purposes therein expressed.

 

WITNESS my hand and official seal in the County and State last aforesaid this
____ day of ______________, 2013.

 

      Signature of Notary           Name of Notary (Typed, Printed or Stamped)  
    Commission Number (if not legible on seal):     My Commission Expires (if
not legible on seal):  

  

 

 

 

EXHIBIT E

 

FIRPTA AFFIDAVIT

 

CERTIFICATION OF NON-FOREIGN STATUS

 

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S.
real property interest must withhold tax if the transferor is a foreign person.
To inform the transferee that withholding of tax is not required upon the
disposition of a U.S. real property interest by _____________________________
(“Seller”), the undersigned hereby certifies the following on behalf of Seller:

 

1.Seller is a “United States Person” and is not a “foreign person” in accordance
with and for the purpose of the provisions of Sections 7701 and 1445 (as may be
amended) of the Internal Revenue Code of 1986 (the “Code”), as amended, and any
regulations promulgated thereunder.

 

2.Seller’s U. S. Employer Identification Number is [              ].

 

3.Seller is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii)
of the Code.

 

4.Seller’s office address is [              ].

 

The undersigned and Seller understand that this certification may be disclosed
to the Internal Revenue Service by transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.

 

Under penalties of perjury, I declare that I have examined this certification
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Seller.

 

Dated: ______________, 20___.

 

[Insert signature block]

 

Sworn to and subscribed before me this day of ________, 2013, in the state and
county aforesaid.

 

      Notary Public     My Commission Expires: [Notarial Seal]

  

 

 

 

EXHIBIT F-1

 

FORM OF ASSIGNMENT OF PROPERTY AGREEMENTS

 

KNOW ALL MEN that ______________________________ (“Assignor”), in consideration
of Ten and 00/100 ($10.00) Dollars and other good and valuable consideration,
received from [______________________] (“Assignee”), does hereby assign,
transfer and deliver onto Assignee, all of its right, title and interest in and
to those certain agreements relating to the operation or maintenance of the
premises known as [___________], which agreements are listed in Schedule A
annexed hereto (the “Contracts”).

 

TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns, forever,
from and after the date hereof, subject to the terms, covenants, conditions and
provisions contained in the Contracts and subject aforesaid.

 

AND Assignee does hereby acknowledge receipt of the Contracts so delivered, and
does hereby (a) accept the within assignment and (b) assume the performance of
all the terms, covenants and conditions of the Contracts on the Assignor’s part
to be performed thereunder accruing from and after the date hereof.

 

Except as expressly set forth in the Agreement of Sale by and between Assignor,
___________ and ____________, dated as of __________, 2013, and subject to the
limitations set forth therein, this assignment is made without warranty or
representation by the Assignor.

 

This assignment and assumption agreement shall inure to the benefit of Assignee
and Assignor and their respective successors and assigns, and shall be governed
by the laws of the State of New Jersey. This assignment and assumption agreement
may not be modified, altered or amended, or its terms waived, except by an
instrument in writing signed by the parties hereto.

 

None of the provisions of this instrument are intended to be, nor shall they be
construed to be, for the benefit of any third party.

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

 

 

IN WITNESS WHEREOF, Assignor and Assignee have executed this agreement this
_____ day of _______________.

 

  ASSIGNOR       [INSERT SIGNATURE BLOCK]       ASSIGNEE:       [INSERT
SIGNATURE BLOCK]

 

 

 

 

EXHIBIT F-2

 

FORM OF ASSIGNMENT OF TAX SALE CERTIFICATES

 

 

 

 

EXHIBIT F-3

 

FORM OF ASSIGNMENT OF CITY AGREEMENT

 

 

 

 

EXHIBIT F-4

 

FORM OF ASSIGNMENT OF PILOT AGREEMENT 

 

 

 

 

EXHIBIT G

 

FORM OF MANAGEMENT AGREEMENT

 

 

 

 

EXHIBIT H

 

FORM OF INTERIM LICENSURE ARRANGEMENTS 

 

 

 

 

EXHIBIT I

 

SCHEDULE OF VEHICLES AND EQUIPMENT

 

(See Attached) 

 

 

 

 

EXHIBIT J

 

RENT ROLL

 

(See Attached) 

 

 

 

 

EXHIBIT K

 

EMPLOYEE CONTRACTS AND MATTERS

 

(See Attached) 

 

 

 

 

EXHIBIT L

 

FORM OF ASSIGNMENT OF RESIDENCY
AGREEMENTS AND COMMERCIAL LEASES

 

THIS ASSIGNMENT AND ASSUMPTION OF RESIDENCY AGREEMENTS AND COMMERCIAL LEASES
(this “Assignment Agreement”) is made and entered into as of this _____ day of
__________, 2013 (the “Transfer Date”) by and between
___________________________ (the “Assignor”), and ____________________________
(the “Assignee”). Each party hereto is referred to individually as a “Party” and
collectively as the “Parties.”

 

BACKGROUND:

 

WHEREAS, the Assignor and Assignee (as successor to _________________) have
entered into that Agreement of Sale dated as of _______, 2012 (the “Sale
Agreement”), providing for, among other things, the transfer by the Assignor to
the Assignee of the [assisted/independent] living facility identified on Exhibit
A hereto (the “Facility”), all upon the terms and conditions contained in the
Settlement Agreement;

 

WHEREAS, pursuant to the terms of the Sale Agreement, the Assignor shall assign
all of its right, title and interest as lessor in and to all “Residency
Agreements” and “Commercial Leases” (as each term is defined in the Sale
Agreement); and

 

WHEREAS, attached hereto (i) as Schedule 1 is a list of all Residency Agreement
held by Assignor as of the Transfer Date, and (ii) as Schedule 2 is a list of
all Commercial Leases held by Assignor as of the Transfer Date.

 

NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Parties hereto, the Parties hereto, intending to be bound,
hereby agree as follows:

 

1.          Assignment. Assignor hereby assigns, transfers and conveys all of
its right, title and interest in, to, and under the Residency Agreement set
forth on Schedule 1 to Assignee. Assignor hereby assigns, transfers and conveys
all of its right, title and interest in, to, and under the Commercial Leases set
forth on Schedule 2 to Assignee. Except as expressly set forth in the Agreement
of Sale by and between Assignor, ___________ and ____________, dated as of
__________, 2013, and subject to the limitations set forth therein, this
Assignment is made without warranty or representation by the Assignor

 

2.          Assumption. Assignee hereby accepts all of the Assignor’s right,
title and interest in, to, and under the Residency Agreement and Commercial
Leases, each as set forth on Schedule 1 or Schedule 2, as applicable, and
assumes all of the Assignor’s obligations accruing thereunder from and after the
Transfer Date.

 

3.          Miscellaneous. Capitalized terms used but not defined in this
Assignment Agreement have the meaning given to them in the Sale Agreement.
Nothing contained herein is intended to amend, modify or affect the rights and
obligations of the Parties under the Sale Agreement. This Assignment Agreement
may be executed in counterparts, each of which shall be deemed an original and
all of which, taken together, shall be considered one and the same instrument.
This Assignment Agreement shall be governed by the laws of the State of New
Jersey.

 

 

 

 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have duly executed this Assignment Agreement on the date first above written.

 

  ASSIGNOR:       ASSIGNEE:

  

 

 

 

Schedule 1

To

ASSIGNMENT AGREEMENT

 

Residency Agreements

 

 

 

 

Schedule 2

To

ASSIGNMENT AGREEMENT

 

Commercial Leases 

 

 

 

 

EXHIBIT M

 

FORM OF BILL OF SALE AND GENERAL ASSIGNMENT

 

KNOW ALL MEN that __________________________ (“Assignor”), in consideration of
Ten ($10.00) Dollars and other good and valuable consideration, receipt whereof
is hereby acknowledged from ________________________ (“Assignee”), does hereby
assign, transfer and deliver unto Assignee, all of its right, title and interest
in and to any and all Personalty and Intangibles (each as defined in that
certain Agreement of Sale by and between Assignor, ___________ and ____________,
dated as of March __, 2013 presently held by Assignor affecting the premises
known as _____________________________ (the “Premises”).

 

TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns, forever,
from and after the date hereof.

 

Except as expressly set forth in the Agreement of Sale by and between Assignor,
___________ and ____________, dated as of __________, 2013, and subject to the
limitations set forth therein, this assignment is made without warranty or
representation by the Assignor, including, without limitation, any warranty or
representation that Assignor has any right in the Personalty and Intangibles or
that the Personalty and Intangibles are transferable, and without recourse to
Assignor in any manner whatsoever.

 

This assignment agreement shall inure to the benefit of Assignee and its
successors and assigns and shall be governed by the laws of the State of New
Jersey. This assignment agreement may not be modified, altered or amended, or
its terms waived, except by an instrument in writing signed by the parties
hereto.

 

None of the provisions of this instrument are intended to be, nor shall they be
construed to be, for the benefit of any third party.

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

 

 

IN WITNESS WHEREOF, Assignor has executed this agreement this _____ day of
___________, 2013.

 

ASSIGNOR:

 

ASSIGNEE: 

 

 

 

 

EXHIBIT N

 

FORM OF AUDIT LETTER

 

[DATE]

 

[ACCOUNTING FIRM]

[ADDRESS]

 

Ladies and Gentlemen:

 

We are providing this letter in connection with your audit of the balance
sheet(s) of the [PROPERTY OR PORTFOLIO] (“the Property”) as of [REPORTING
PERIODS] and the related combined statements of operations, owners’ equity, and
cash flows for the years then ended, for the purpose of expressing an opinion as
to whether these financial statements present fairly, in all material respects,
the financial position, and results of operations of the Property in conformity
with U.S. generally accepted accounting principles.

 

Certain representations in this letter are described as being limited to matters
that are material. Items are considered material, regardless of size, if they
involve an omission or misstatement of accounting information that, in the light
of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by
the omission or misstatement.

 

We confirm, to the best of our knowledge and belief, the following
representations made to you during your audit:

 

1.          The financial statements referred to above are fairly presented in
conformity with U.S. generally accepted accounting principles.

 

2.          We have made available to you:

 

a.All financial records and related data.

 

b.All minutes of the meetings of boards, or summaries of actions of recent
meetings for which minutes have not yet been prepared.

 

3.          There are no:

 

a.Violations or possible violations of laws or regulations, whose effects should
be considered for disclosure in the combined financial statements or as a basis
for recording a loss contingency.

 

b.We are not aware of any pending or threatened litigation, claims, or
assessments or unasserted claims or assessments that are required to be accrued
or disclosed in the financial statements in accordance with FASB ASC 450,
Contingencies, and we have not consulted a lawyer concerning litigation, claims,
or assessments.

 

c.Other liabilities or gain or loss contingencies that are required to be
accrued or disclosed by FASB ASC 450, Contingencies.

 

d.Material transactions that have not been properly recorded in the accounting
records underlying the financial statements.

 

 

 

 

e.Events that have occurred subsequent to the balance sheet date and through the
date of this letter that would require adjustment to or disclosure in the
financial statements, except as disclosed.

 

4.          There are no uncorrected financial statement misstatements.

 

5.          We acknowledge our responsibility for the design and implementation
of programs and controls to prevent, deter and detect fraud. We understand that
the term "fraud" includes misstatements arising from fraudulent financial
reporting and misstatements arising from misappropriation of assets.

 

6.          We have no knowledge of any fraud or suspected fraud affecting the
entity involving:

 

a.Management

 

b.Employees who have significant roles in internal control over financial
reporting, or

 

c.Others where the fraud could have a material effect on the financial
statements.

 

7.          We have no knowledge of any allegations of fraud or suspected fraud
affecting the entity received in communications from employees, former
employees, analysts, regulators, short sellers, or others.

 

8.          The Property has no plans or intentions that may materially affect
the carrying value or classification of assets and liabilities.

 

9.          We have no knowledge of any officer or trustee of the Property, or
any other person acting under the direction thereof, having taken any action to
fraudulently influence, coerce, manipulate or mislead you during your audit.

 

10.         The following have been properly recorded or disclosed in the
financial statements:

 

a.Related party transactions including sales, purchases, loans, transfers,
leasing arrangements, guarantees, ongoing contractual commitments and amounts
receivable from or payable to related parties.

 

The term "related party" refers to affiliates of the enterprise; entities for
which investments in their equity securities would, absent the election of the
fair value option under FASB ASC 825, Financial Instruments, be required to be
accounted for by the equity method by the enterprise; trusts for the benefit of
employees, such as pension and profit-sharing trusts that are managed by or
under the trusteeship of management; principal owners of the enterprise; its
management; members of the immediate families of principal owners of the
enterprise and its management; and other parties with which the enterprise may
deal if one party controls or can significantly influence the management or
operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests. Another party
also is a related party if it can significantly influence the management or
operating policies of the transacting parties or if it has an ownership interest
in one of the transacting parties and can significantly influence the other to
an extent that one or more of the transacting parties might be prevented from
fully pursuing its own separate interests.

 

b.Guarantees, whether written or oral, under which the Property is contingently
liable, including guarantee contracts and indemnification agreements pursuant to
FASB ASC 460, Guarantees.

 

c.Significant estimates and material concentrations known to management that are
required to be disclosed in accordance with FASB ASC 275, Risks and
Uncertainties.

 

 

 

 

Significant estimates are estimates at the balance sheet date, which could
change materially within the next year. Concentrations refer to volumes of
business, revenues, available sources of supply, or markets or geographic areas
for which it is reasonably possible that events could occur which would
significantly disrupt normal finances within the next year.

 

d.Significant common ownership or management control relationships requiring
disclosure.

 

11.         The Property has satisfactory title to all owned assets, and there
are no liens or encumbrances on such assets, nor has any asset been pledged as
collateral, except as disclosed.

 

12.         The Property has complied with all aspects of contractual agreements
that would have a material effect on the combined financial statements in the
event of noncompliance.

 

13.         There have been no:

 

a.Instances of fraud involving others that could have a material effect on the
adjustments.

 

b.Allegations, either written or oral, of misstatements or other misapplication
of accounting principles in the Property’s adjustments that have not been
disclosed to you in writing.

 

c.Allegations, either written or oral, of deficiencies in internal control that
could have a material effect on the Property’s adjustments that have not been
disclosed to you in writing.

 

d.False statements affecting the Property’s adjustments made to you, our
internal auditors, or other auditors who have audited entities under our control
upon whose work you may be relying in connection with your audit.

 

14.         There are no material transactions that have not been properly
recorded in the accounting records underlying the adjustments.

 

15.         Receivables reported in the combined financial statements represent
valid claims against debtors for sales or other charges arising on or before the
balance sheet date and have been appropriately reduced to their estimated net
realizable value.

 

16.         The Portfolio has appropriately grouped long-lived assets together
for purposes of assessing impairment in accordance with FASB ASC 360, Property,
Plant and Equipment. We have reviewed long-lived assets, including amortizable
intangible assets, to be held and used, for impairment whenever events or
changes in circumstances have indicated that the carrying amount of the assets
might not be recoverable. Provision has been made for any material adjustments
to long-lived assets including amortizable intangible assets.

 

17.         We are responsible for making the fair value measurements and
disclosures included in the combined financial statements in accordance with
FASB ASC 820, Fair Value Measurement and Disclosures, including determining the
fair value of assets and liabilities for which there has been a significant
decrease in the volume and level of activity in relation to the normal market
activity for those assets or liabilities (or similar assets or liabilities) or
for which transactions are deemed not orderly. As part of fulfilling this
responsibility, we have established an accounting and financial reporting
process for determining the fair value measurements and disclosures, in
accordance with the fair value techniques included in FASB ASC 820, considered
the appropriateness of valuation techniques, adequately supported any
significant assumptions used, and ensured that the presentation and disclosure
of the fair value measurements are in accordance with U.S. generally accepted
accounting principles including the disclosure requirements of FASB ASC 820. We
believe the assumptions and techniques used by us, including those used by
specialists engaged by us, are in accordance with the definition of fair value
in FASB ASC 820 and the disclosures adequately describe the level of the inputs
used in the fair value measurement, in accordance with the fair value hierarchy
in FASB ASC 820.

 

 

 

 

18.         The Portfolio is responsible for determining the fair value of
financial instruments as required by FASB ASC 825, Financial Instruments. The
amounts disclosed represent the Portfolio’s best estimate of fair value of
financial instruments required to be disclosed under the FASB ASC 825. The
Portfolio also has disclosed the methods and significant assumptions used to
estimate the fair value of financial instruments and any changes to those
methods and significant assumptions, if any, as required by FASB ASC 825.

 

19.         Uncertain tax positions have been accounted for in accordance with
the provisions of FASB ASC 740, Income Taxes.

 

Further, we confirm that we are responsible for the fair presentation in the
financial statements of financial position, results of operations, and cash
flows in conformity with U.S. generally accepted accounting principles.

 

Very truly yours,

 

[SELLER]

 

    [NAME]   [TITLE]  

 

 

 

 

EXHIBIT O

 

BULK SALES TAX ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT (this “Agreement”) is made as of _________ by and among
[___________], a [____________], having an address at [___________________]
(“Escrow Agent”), [_________], a [____________], having an address at
[__________] (“Seller”) and [___________], a [______________], having an address
at [_________________] (“Purchaser”).

 

PRELIMINARY STATEMENT

 

Seller and Purchaser are parties to that certain Agreement of Sale, dated
[________] (the “Contract”), relating to certain real property known and located
at [________________].

 

Section [__] of the Contract provides that simultaneously with the conveyance of
the Property to Purchaser, Purchaser shall post an escrow (the “Tax Escrow”)
required by the New Jersey Division of Taxation (the “Division”) on Seller’s
behalf. This Agreement shall govern the terms of such escrow and the
disbursement of amounts from such escrow.

 

Capitalized terms used in this Agreement, which are not defined in this
Agreement, shall have the meanings given to such terms in the Contract.

 

NOW, THEREFORE, for and in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

 

1.          Tax Escrow Funds. Simultaneously herewith, Purchaser has deposited
the sum of $[___________], which amount has been withheld from the Purchase
Price, to be held by Escrow Agent as the Tax Escrow, in accordance with the
provisions hereof. [Simultaneously herewith, Seller has deposited the sum of
$[___________], which amount represents the difference between the amount of the
Deficiency and the Purchase Price, to be held by Escrow Agent as the Tax Escrow,
in accordance with the provisions hereof.] Escrow Agent shall hold the Escrowed
Sums (as hereinafter defined) in an interest bearing trust account at [INSERT an
FDIC insured banking institution authorized to do business in New Jersey, with
offices located in New Jersey, which is acceptable to Seller and Purchaser]. As
used herein, the term “Escrowed Sums” shall mean the amount of the initial
deposit hereunder, as increased by any interest earned thereon and as decreased
by any sums which have been disbursed from escrow in accordance with the terms
hereof.

 

2.          Payment to Division of Taxation. Within five (5) days after receipt
from the Division, Seller or Purchaser, as the case may be, shall forward to
Escrow Agent and the other party hereunder a copy of any written instructions of
the Division regarding the disbursement of Escrowed Sums (“Disbursement
Instructions”). No sooner than five (5) days after receipt, Escrow Agent shall
disburse all or a portion of the Escrowed Sums in accordance with such
Disbursements Instructions.

 

 

 

 

3.          Release of Funds to Seller. Within five (5) days after receipt from
the Division, Seller or Purchaser, as the case may be, shall forward to Escrow
Agent and the other party hereunder a copy of any written confirmation (“Release
Authorization”) from the Division that the Deficiency has been paid in full or
that Purchaser has no further liability for the Deficiency. Upon receipt of such
Release Authorization, Escrow Agent shall release to Seller any Escrowed Sums
which remain in escrow (and which the Division has not required to be paid to
the Division pursuant to any Disbursement Instructions or Release
Authorization); provided, however, that Escrow Agent shall not release any
Escrowed Sums to Seller until at least ten (10) days after Escrow Agent receives
the Release Authorization, nor thereafter if Escrow Agent shall have received
written notice of objection from Purchaser within such ten (10) day period.

 

4.          Objection to Disbursement. If Escrow Agent shall receive any
objection from Purchaser to the release of any Escrowed Sums to Seller pursuant
to Paragraph 3, then Escrow Agent shall release any undisputed amount and shall
continue to hold the disputed amount in escrow under the terms and conditions
hereof, until the earlier of (a) receipt by Escrow Agent of joint instructions
signed by Seller and Purchaser regarding the release or disbursement of the
disputed sums, or (b) receipt by Escrow Agent of a final, unappealable judgment,
order or decree from a court of competent jurisdiction instructing Escrow Agent
as to release and/or disbursement of the disputed sum.

 

5.          Reliance; Duties. Escrow Agent may act in reliance on any writing or
instrument or signature which it believes to be genuine, and may assume the
validity and accuracy of any statement or assertion contained in such a writing
or instrument and may assume that any person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has been
duly authorized to do so.

 

6.          Dispute. In the event of any dispute between the parties regarding
the Escrowed Sums, Escrow Agent, at its option, may disregard all instructions
received and either (i) hold the Escrowed Sums until the dispute is mutually
resolved and Escrow Agent is advised of this fact in writing by both Seller and
Purchaser, or Escrow Agent is otherwise instructed by a final unappealable
judgment of a court of competent jurisdiction, or (ii) deposit the Escrowed Sums
into a court of competent jurisdiction (whereupon Escrow Agent shall be released
and relieved of any and all liability and obligations hereunder from and after
the date of such deposit).

 

7.          Uncertainty. In the event Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive conflicting instructions, claims or
demands from the parties hereto, or instructions which conflict with any of the
provisions of this Agreement or the Contract, Escrow Agent shall be entitled
(but not obligated) to refrain from taking any action other than to keep safely
the Escrowed Sums until Escrow Agent shall be instructed otherwise in writing
signed by both Seller and Purchaser, or by final judgment of a court of
competent jurisdiction.

 

8.          Indemnity. Seller and Purchaser shall jointly and severally hold
Escrow Agent harmless against any loss, damage, liability or expense incurred by
Escrow Agent, arising out of or in connection with its entering into this
Agreement and the carrying out of its duties hereunder, including the reasonable
costs and expenses of defending itself against any claim of liability or
participating in any legal proceeding. Escrow Agent may consult with counsel of
its choice, and shall have full and complete authorization and protection for
any action taken or suffered by it hereunder in good faith and in accordance
with the opinion of such counsel.

 

 

 

 

9.          Resignation. Escrow Agent may resign at will and be discharged from
its duties or obligations hereunder by giving notice in writing of such
resignation specifying a date when such resignation shall take effect; provided,
however, that (i) prior to the effective date of such resignation a substitute
escrow agent is approved in writing by Seller and Purchaser, which approval
shall not be unreasonably withheld or delayed, or (ii) Escrow Agent shall
deposit the Escrowed Sums with a court of competent jurisdiction. After such
resignation, Escrow Agent shall have no further duties or liability hereunder.

 

10.         Termination. Purchaser and Seller, together, shall have the right to
terminate the appointment of Escrow Agent hereunder by giving to it notice of
such termination, specifying the date upon which such termination shall take
effect and designating a replacement Escrow Agent, who shall sign a counterpart
of this Agreement. Upon demand of such successor Escrow Agent, the Escrowed Sums
shall be turned over and delivered to such successor Escrow Agent, who shall
thereupon be bound by all of the provisions hereof. Escrow Agent’s agreements
and obligations hereunder shall terminate and Escrow Agent shall be discharged
from further duties and obligations hereunder upon final payment of the Escrowed
Sums in accordance with the terms of this Agreement.

 

11.         Continued Representation of a Party. Notwithstanding that Escrow
Agent is acting as an escrow agent for the Escrowed Sums, and, further,
notwithstanding any subsequent dispute which may arise between the parties
related to this Agreement, the Contract, the Escrowed Sums or otherwise, if
Escrow Agent is legal counsel to a party hereunder, each party agrees that
Escrow Agent may continue to represent such party as legal counsel in connection
with this Agreement, the Contract and the transactions contemplated hereby or
thereby and/or with respect to any dispute or litigation arising out of the
Contract or this Agreement.

 

12.         Entire Agreement. This Agreement embodies the entire understanding
and agreement of the parties to this Agreement concerning Escrow Agent’s
obligations, and supersedes all prior and contemporaneous agreements,
understandings, negotiations, offers and expressions of intent, whether oral or
written. None of the terms and conditions of this Agreement may be modified
except by a writing, signed by Seller, Purchaser and Escrow Agent. In the event
of any inconsistency between this Agreement and the Contract, the terms of this
Agreement shall control.

 

13.         Binding Effect. This Agreement shall be binding upon and inure to
the benefit of Seller, Purchaser and Escrow Agent and their respective
successors in interest.

 

14.         Notices. Any demand, notice or other communication required or
permitted to be given hereunder shall be in writing, and shall be delivered
personally, by recognized overnight national courier service (such as Federal
Express) for next business day delivery, by telecopy (with a hard copy and a
transmission confirmation sent by a recognized overnight national courier
service), or by certified mail, return receipt requested, first-class postage
prepaid to the parties at the addresses set forth below (or to such other
addresses as the parties may specify by due notice to the other):

 

 

 

 

To Purchaser:

 

                 

 

copy to:

 

                 

 

To Seller:

 

                 

 

copy to:

 

                 

 

To Escrow Agent:

 

                 

 

 

 

 

Any notice delivered to a party’s designated address by (a) personal delivery,
(b) recognized overnight national courier service, or (c) certified mail, return
receipt requested, shall be deemed to have been received by such party at the
time the notice is delivered to such party. Any notice sent by fax to the
party’s designated fax number shall be effective upon receipt, provided receipt
occurs before 5:00 PM on a business day in the State of New Jersey. Confirmation
by the courier delivering any notice given pursuant to this Paragraph 14 shall
be conclusive evidence of receipt of such notice. Each party hereby agrees that
it will not refuse or reject delivery of any notice given hereunder, that it
will acknowledge, in writing, receipt of the same upon request by any other
party and that any notice rejected or refused by it shall be deemed for all
purposes of this Agreement to have been received by the rejecting party on the
date so refused or rejected, as conclusively established by the records of the
U.S. Postal Service or the courier service. Any notice given by an attorney for
a party shall be effective for all purposes.

 

15.         Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.

 

16.         Section Headings. The respective section and subsection headings
contained in this Agreement are for convenience of reference only, and shall not
be deemed to modify, limit, define or describe in any respect any of the
provisions of this Agreement.

 

17.         Execution in Counterparts. This Agreement may be executed in several
counterparts, all of which when taken together shall constitute a single
Agreement.

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date of
this Agreement.

 

  ESCROW AGENT:       [_____________]         By:     Name:   Title:        
SELLER:       [______________]         By:       Name:     Title:        
PURCHASER:       [________________]         By:       Name:     Title:

 

 

 

 

EXHIBIT P

 

INCOME SUPPORT AGREEMENT

 

 

 

 

SCHEDULE 1

 

Retained Computer Software

 

 

 

 

SCHEDULE 2

 

Property Agreements

 

 

 

 

SCHEDULE 3

 

Environmental Reports

 

 

 

 

SCHEDULE 4

 

Exclusions to Noncompete

 

 

 

 

SCHEDULE 5

 

Property of Existing Manager

 

 

 

 

SCHEDULE 6

 

Insurance

 

 

 

 

SCHEDULE 7

 

Licenses

 

 

 

 

SCHEDULE 8

 

Litigation