Exhibit 10.3

PURCHASE AND SALE AGREEMENT

between

OKLAHOMA CARE GROUP, LP

as Seller,

and

CHP PARTNERS, LP,

as Purchaser

Dated as of July 3, 2013

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TABLE OF CONTENTS

 

                Page   I.   DEFINITIONS      1    II.   SALE AND PURCHASE OF
PROPERTY      9      2.1      Purchase of Property      9      2.2      Purchase
Price and Terms of Payment      9      2.3      Due Diligence Period      10   
  2.4      Assumption of the Leases and Contracts      10      2.5     
Assumption of the Resident Agreements      10      2.6      Assumed Liabilities
     10      2.7      Purchase Price      11      2.8      Discharge of Liens   
  11      2.9      Negotiation and Execution of Management Documents      11   
III.   ESCROW      11      3.1      Escrow      11      3.2      Deposit of
Funds      12    IV.   TITLE AND SURVEY      12      4.1      Title Examination;
Commitment for Title Insurance      12      4.2      Survey      12      4.3
     Title Objections; Cure of Title Objections      12      4.4      Conveyance
of Title      13    V.   INSPECTIONS      14      5.1      Purchaser’s
Independent Inspection      14      5.2      Access      15      5.3     
Confidential Nature of Due Diligence Materials      16      5.4      Continuing
Nature of Purchaser’s Obligations      16    VI.   PROPERTY      16      6.1
     Condition of Property      16      6.2      Survival of Article VI      18
   VII.   CLOSING      18      7.1      Closing Date      18      7.2     
Action Prior to the Closing Date by Seller      19   

 

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TABLE OF CONTENTS

(continued)

 

                Page     7.3      Action Prior to the Closing Date by Purchaser
     21      7.4      Recording of Deeds      22      7.5      Prorations     
22      7.6      Closing Costs      25      7.7      Possession      25      7.8
     Post-Closing Audit      25    VIII.   ADDITIONAL COVENANTS AND INDEMNITIES
     25      8.1      Purchaser’s Covenants      25      8.2      Seller
Covenants      26      8.3      Employee Matters      28      8.4      Bridging
of Licenses      29    IX.   REPRESENTATIONS AND WARRANTIES      30      9.1
     Purchaser’s Representations and Warranties      30      9.2      Seller’s
Representations and Warranties      31      9.3      Seller’s Knowledge      33
     9.4      Failure of Condition But No Seller Breach      34      9.5     
Survival Period      34    X.   CONDITIONS PRECEDENT TO CLOSING      34     
10.1      Conditions to Seller’s Obligations      34      10.2      Conditions
to Purchaser’s Obligations      35      10.3      Failure of Conditions to
Closing      35    XI.   REMEDIES FOR PRE-CLOSING AND POST-CLOSING DEFAULTS ;
LIQUIDATED DAMAGES      36      11.1      Default by Purchaser Prior to Closing
     36      11.2      Default by Seller Prior to Closing      37      11.3     
Limitations of Purchaser’s Post-Closing Claims      37      11.4      Survival
of Purchaser’s Claims      38      11.5      Limitations on Liability      39   
  11.6      Survival      39    XII.   FINANCIAL ADVISOR      39    XIII.  
NOTICES      40   

 

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TABLE OF CONTENTS

(continued)

 

                Page   XIV.   MISCELLANEOUS      41      14.1      Governing Law
     41      14.2      Exhibits and Schedules a Part of This Agreement      41
     14.3      Executed Counterparts      41      14.4      Assignment      41
     14.5      IRS – Form 1099-S      41      14.6      Successors and Assigns
     41      14.7      Time is of the Essence      42      14.8      Entire
Agreement      42      14.9      Further Assurances      42      14.10     
Waiver      42      14.11      Headings      42      14.12      Risk of Loss   
  42      14.13      Construction of Agreement      44      14.14      No Public
Disclosure      44      14.15      Covenants, Representations and Warranties   
  45      14.16      Confidentiality      45      14.17      No Third-Party
Beneficiaries      46      14.18      Electronic Signatures      46      14.19
     Severability      46      14.20      Cumulative Remedies      46      14.21
     WAIVER OF JURY TRIAL      46   

 

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PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is dated as of this 3rd day
of July, 2013 (the “Effective Date”), and is made by and between Oklahoma Care
Group, LP, a Texas limited partnership (“Seller”), and CHP Partners, LP, a
Delaware limited partnership (“Purchaser”).

RECITALS

A. Seller is the owner of that certain improved real property located at 13000
N. May Avenue, Oklahoma City, OK 73120 and known as “Town Village” (the
“Property”).

B. Purchaser desires to purchase the Property and to acquire all of Seller’s
right, title and interest in and to the Property, on the terms and conditions
set forth in this Agreement.

C. Seller desires to sell to Purchaser the Property and to convey to Purchaser
all of its right, title and interest in the Property, on the terms and
conditions set forth in this Agreement.

D. All capitalized terms used in this Agreement and not otherwise defined shall
have the meanings ascribed to such terms in Article I.

AGREEMENT

NOW, THEREFORE, for valuable consideration, including the promises, covenants,
representations and warranties hereinafter set forth, the receipt and adequacy
of which are hereby acknowledged, the parties, intending to be legally and
equitably bound, agree as follows.

I.

DEFINITIONS

As used in this Agreement, the following terms have the meanings ascribed to
them in this Article I:

“Accounts Receivable.” All accounts receivable and other sums owing to Seller in
connection with the operation of the Facility existing prior to the Cut-Off
Time.

“Additional Deposit.” As set forth in Section 2.2(a) hereof.

“Affiliate.” With respect to any person or entity, (i) all persons or entities
that, directly or indirectly, control, are controlled by, or under common
control with, such person or entity; or (ii) all persons or entities that,
directly or indirectly, own, are owned by or under common ownership with, such
person or entity.

“Agreement.” As set forth in the preamble hereof.

“Assignment and Assumption of Leases and Contracts.” As set forth in
Section 7.2(d) hereof.

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“Assignment and Assumption of Intangible Property.” As set forth in
Section 7.2(c) hereof.

“Assignment and Assumption of Resident Agreements.” As set forth in
Section 7.2(e) hereof.

“Assumed Contracts.” As set forth in Section 2.4 hereof.

“Bill of Sale.” As set forth in Section 7.2(b) hereof.

“Books and Records.” All documentation, third party reports and studies, land
surveys, land use applications, land use permits and approvals, operating
permits and other documents in printed or electronic form (but with respect to
items in electronic format, excluding software which is proprietary to Seller,
its Affiliates or any third party, or is licensed from third parties by Seller
or its Affiliates) that is in the possession or under the control of Seller or
its Affiliates and that pertains to the use, operation, ownership or condition
of the Property, including (i) all correspondence, billing, and other files,
(ii) all structural reviews, environmental assessments or audits, architectural
drawings and engineering, geophysical, soils, seismic, geologic, environmental
(including with respect to the impact of materials used in the construction or
renovation of the Improvements) and architectural reports, studies and
certificates pertaining to the Property, and (iii) all financial statements and
other accounting, tax, financial, and other books and records relating to the
use, maintenance, and operation of the Property, but excluding (x) any Excluded
Documents and (y) those items that are consolidated with items from other
facilities owned, leased or managed by Seller or its Affiliates and not being
conveyed to Purchaser, if any.

“Bridging Lease.” As set forth in Section 8.4(b) hereof.

“Bridging Management Agreement.” As set forth in Section 8.4(b) hereof.

“Bridging Sublease.” As set forth in Section 8.4(b) hereof.

“Business Agreements.” Any Lease, rental agreement, loan agreement, mortgage,
easement, covenant, restriction or other agreement or instrument affecting all
or a portion of the Property other than a Contract.

“Cap Amount.” As set forth in Section 11.3(a) hereof.

“Casualty.” As set forth in Section 14.12(a) hereof.

“Casualty Notice.” As set forth in Section 14.12(a) hereof.

“Casualty Renovation Cost.” As set forth in Section 14.12(a) hereof.

“Claims.” Collectively, damages, claims (including without limitation, any claim
for damage to property of others or injury to or death of any persons),
penalties, obligations, liabilities, fines, losses, causes of action, fees,
injuries, liens, encumbrance, proceedings, judgments, actions, rights, demands,
costs and expenses (including without limitation, reasonable attorneys’ fees
whether or not legal proceedings are instituted and court and litigation costs).

 

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“Claim Notice.” As set forth in Section 11.3(b) hereof.

“Closing.” The sale and assignment of the Property to Purchaser on the Closing
Date and the performance by each party of the obligations on its part then to be
performed under and in accordance with this Agreement.

“Closing Date.” As set forth in Section 7.1 hereof.

“Closing Documents.” As set forth in Section 11.3(a) hereof.

“Closing Payment.” As set forth in Section 2.2(b) hereof.

“Closing Statement.” As set forth in Section 7.2(k) hereof.

“Contracts.” All leases of furniture, fixtures and equipment, all contracts
(excluding Resident Agreements), all third party payor provider agreements
(excluding Governmental Entity third party payor provider agreements) and all
other agreements relating to the ownership and/or operation of the Facility
and/or the Property, together with all related written warranties and
guaranties, but excluding: (a) any leases of furniture, fixtures and equipment,
contracts, or agreements that apply to any property other than the Property (all
of which shall be amended or terminated at Seller’s expense such that they no
longer apply to the Property as of the Closing Date), (b) any leases of
furniture, fixtures and equipment, contracts, or agreements that are with an
Affiliate of Seller (which shall be terminated as of the Closing Date at
Seller’s sole cost and expense), (c) any property management agreement (which
shall be terminated as of the Closing Date at Seller’s sole cost and expense),
(d) any leases of furniture, fixtures and equipment, contracts, or agreements
entered into in violation of Section 8.2 and (e) any Leases.

“Current Month.” As set forth in Section 7.5(i) hereof.

“Cut-Off Time.” As set forth in Section 7.5(c) hereof.

“Deed.” As set forth in Section 7.2(a) hereof.

“Deposit.” As set forth in Section 2.2(a) hereof.

“Due Diligence Materials.” All of the documents and other materials delivered to
or otherwise made available for inspection (including in a website data room) by
Purchaser and its representatives during the Due Diligence Period.

“Due Diligence Period.” The period commencing on the Effective Date and ending
at 5:00 p.m. (Eastern Time) on the date which is forty-five (45) days from the
Effective Date.

“Eastern Time.” Eastern Standard Time or Eastern Daylight Time, as applicable.

“Effective Date.” As set forth in the preamble hereof.

 

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“Environmental Damages.” All claims, judgments, damages, losses, penalties,
fines, liabilities (including strict liability), encumbrances, liens, costs, and
expenses of investigation and defense of any claim, whether or not such claim is
ultimately defeated, and of any good faith settlement of judgment, of whatever
kind or nature, contingent or otherwise matured or unmatured, foreseeable or
unforeseeable, including without limitation reasonable attorneys’ fees and
disbursements and consultants’ fees, any of which are incurred at any time as a
result of the existence of Hazardous Materials upon, about or beneath the Real
Property or migrating to or from the Real Property, or the existence of a
violation of Environmental Requirements pertaining to the Real Property,
regardless of whether the existence of such Hazardous Materials or the violation
of Environmental Requirements arose prior to the present ownership or operation
of the Real Property.

“Environmental Requirements” All applicable present and future statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises, and similar items, of all
governmental agencies, departments, commissions, boards, bureaus, or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial, administrative, and regulatory decrees,
judgments, and orders relating to Hazardous Materials.

“Escrow.” As set forth in Section 3.1 hereof.

“Escrow Agent.” Fidelity National Title Insurance Company, 1900 West Loop South,
Suite 200, Houston, TX 77027, Attention: Selina I. Parelskin,
sparelskin@fnf.com, Phone: (310) 701-7813.

“Escrow Agreement.” As set forth in Section 3.1 hereof.

“Excluded Assets.” The Excluded Documents, the Excluded Intellectual Property
Rights, cash, cash equivalents, checks and other funds, including, without
limitation, the Accounts Receivable (other than the proration of rent for the
Current Month as set forth in Section 7.5(i) below and payments received from
third-party payors in connection with the Licensed Facility, as set forth in
Section 7.5(i) below), and balances on deposit to the credit of Seller with
banking institutions, all of which shall be retained by Seller.

“Excluded Documents.” All (a) casualty, liability, and life insurance policies
owned or obtained by Seller on behalf or in connection with Seller’s business at
the Facility, (b) the corporate minute books and stock registers of Seller,
(c) internal memoranda, correspondence, analyses, documents or reports prepared
by or for Seller or its Affiliates in connection with the sale of the Property,
including, without limitation, tax returns or financial statements of Seller
(exclusive of operating statements and the general ledger of the Facility and
any supporting information which shall be available for review by Purchaser) for
or in connection with its ownership or operation of the Property,
(d) communications between Seller or any Affiliate and their respective
attorneys, (e) employee personnel files of Seller, (f) appraisals, assessments
or other valuations of the Property in the possession or control of Seller,
(g) original bills, invoices, receipts and checks relating to expenses incurred
prior to the Cut-Off Time (provided that Purchaser shall be entitled to copies
of such items and to retain copies of all of the other Due Diligence Materials
after Closing, which right shall survive the Closing), and (h) any confidential
or proprietary information of Seller or any confidential information of a
resident (unless the transfer of such confidential information of a resident is
made in compliance with all Legal Requirements), in each case however embodied.

 

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“Excluded Intellectual Property Rights.” As set forth on Schedule “1” attached
hereto.

“Existing Liens.” As set forth in Section 2.8 hereof.

“Facility.” The senior living community located on the Real Property.

“Filing Date.” As set forth in Section 8.1(b) hereof.

“Financial Advisor.” As set forth in Article XII hereof.

“Financial Statements.” The statements of income and expenses for calendar years
2011 and 2012 and year-to-date monthly statements of income and expenses for
2013, including any such subsequent statements issued prior to Closing.

“Good Funds.” A deposit of cashier’s check, certified funds, or confirmed wire
transfer of funds.

“Hazardous Materials.” Any substance (i) the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation, ordinance or policy; or (ii) which is defined as a “hazardous waste”
or “hazardous substance” under any federal, state or local statute, regulation
or ordinance, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and
amendments thereto and regulations promulgated thereunder; or (iii) which is
toxic, explosive, corrosive, infectious or otherwise hazardous or is regulated
by any federal, state or local governmental authority; or (iv) without
limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde other than cleaning supplies, solvents and other substances
typically used at the Property and other comparable properties held and used in
commercially reasonable amounts and methods and in accordance with Environmental
Requirements.

“Healthcare Permits.” A license, certification, permit, authorization,
registrations or similar document or authority issued or required under
Healthcare Requirements applicable to the ownership, leasing and/or operation of
the Facility.

“Healthcare Requirements” All applicable Legal Requirements relating to the
operation of senior housing nursing, memory and/or dementia care facilities.

“Improvements.” The buildings, structures, fixtures, and other permanent
improvements located on the Land, including, without limitation, the Facility,
electrical distribution systems, HVAC systems, walkways, driveways, parking
lots, plumbing, lighting, and mechanical equipment and fixtures installed
thereon, and all rights, benefits and privileges appurtenant thereto.

“Initial Deposit.” As set forth in Section 2.2(a) hereof.

 

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“Intangible Property.” All (a) Intellectual Property Rights, (b) local telephone
and facsimile exchange numbers identified exclusively with the Facility,
(c) certificates (including the Certificate of Occupancy for the Real Property),
licenses, permits (including the Permits) and warranties now in effect with
respect to the Property permitted to be transferred pursuant to the applicable
Legal Requirements and at no cost to Seller, (d) all general intangibles
relating to design, development, operation and use of the Property, all rights
and work product under construction, service, consulting, engineering,
architectural, design and construction agreements (including any warranties
contained therein) and other Assumed Contracts, plans and specifications of any
portion of the Property, and all development rights and goodwill related to any
portion of the Property, and (e) all other intangible property used by Seller
exclusively in connection with the ownership and operation of the Property, but
excluding the Excluded Assets.

“Intellectual Property Rights.” Subject to the last sentence of this paragraph,
all patents, copyrights, trade secrets, trademarks, trade names, service marks,
and other know-how owned by Seller, including but not limited to (a) Seller’s
rights to the name “Town Village”, (b) marketing and management intangibles,
(c) computer software developed and owned by Seller or its Affiliates and used
in the operation of the Facility, and (d) manuals, instructions, policies,
procedures and directives issued by Seller or its Affiliates to its employees at
the Facility that relate solely to the operation of the Facility. The term
“Intellectual Property Rights” includes the Proprietary Marks and the specific
data and information stored or maintained on the Intellectual Property Rights
that uniquely pertains to the Facility or those served at the Facility (unless
such data and information is confidential or proprietary to Seller). The term
“Proprietary Marks” means all trademarks, service marks, trade names, trade
dress, symbols, logos, slogans, designs, insignia, emblems, devices, domain
names, distinctive designs of signs, or any other source identifying feature, or
combinations thereof, which are used to identify Seller’s or its Affiliates’
services at the Facility, or which are used in connection with the operation of
the Facility by Seller or its Affiliates. The Intellectual Property Rights shall
exclude the Excluded Assets.

“Inventory.” All inventories, materials and supplies used in connection with the
operation of the Property and located thereat.

“Land.” The land, as more particularly described on Exhibit “A” attached hereto
and upon which the Improvements are located, including all easements,
rights-of-way, rights of ingress and egress, strips, zones, licenses,
transferable hereditaments, privileges, tenements and appurtenances in any way
belonging to or appertaining to the same or the Improvements, and any right or
interest in any open or proposed highways, streets, roads, avenues, alleys,
easements, strips, gores and rights-of-way in, across, in front of, contiguous
to, abutting or adjoining the Land, and other rights and benefits running with
the Land and/or the owner of the Land.

“Leases.” All leases, subleases, licenses, service agreements, concessions or
other agreements granting an interest to any Person for the use and occupancy of
a portion of such Facility, which are in effect or executed as of the Effective
Date or which become effective or executed between the Effective Date and the
Closing Date, together with all security deposits thereunder, if any, but
excluding Resident Agreements.

 

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“Legal Requirement.” Any applicable federal, state, local or municipal
constitution, law, ordinance, rule, order, regulation or statute of any
governmental authority bearing on the construction, alteration, rehabilitation,
maintenance, use, operation, sale, transfer or any other aspect of all or any
portion of the Property, including the Environmental Requirements and the
Healthcare Requirements.

“Licensed Facility.” The assisted living component of the Facility.

“New Manager” shall mean Integrated Senior Living LLC, a Texas limited liability
company, which is an Affiliate of Seller.

“Management Documents.” As set forth in Section 2.9 hereof.

“Material Contract.” Any Contract that has a value, or involves payment by (or
to) Seller or its Affiliates, of at least Five Thousand and No/100 Dollars
($5,000.00) during any twelve (12) month period.

“Non-Foreign Affidavit.” As set forth in Section 7.2(f) hereof.

“Notice to Residents.” As set forth in Section 7.2(n) hereof.

“Notice.” As set forth in Article XIII hereof.

“Official Records.” The office of the recorder of deeds and other real estate
records in the jurisdiction in which the Property is located.

“Other Permits.” The licenses and permits, approvals, entitlements, and other
governmental authorizations issued by a governmental or administrative agency or
authority (whether federal, state or local) in Seller’s possession or control in
connection with the ownership, operation, planning, development, constructions,
use, or maintenance of the Property, including certificates of occupancy, but
excluding the Healthcare Permits.

“Pending Claim.” As set forth in Section 11.4 hereof.

“Permits.” Collectively, the Healthcare Permits and the Other Permits.

“Permitted Exceptions.” As set forth in Section 4.4 hereof.

“Personal Property.” All (a) keys and combinations to all doors, cabinets,
enclosures and other locks on or about the Real Property, (b) furniture,
equipment, televisions, telephone systems; mechanical systems, fixtures and
equipment; electrical systems, fixtures and equipment; heating fixtures,
systems, and equipment; air conditioning fixtures, systems and equipment;
plumbing fixtures, systems, and equipment; security systems and equipment;
carpets, drapes, artwork and other furnishings; refrigerators, microwaves,
ovens, stoves, and all other appliances; vehicles, office equipment, furniture
and fixtures not considered improvements, spare parts, supplies and other
physical assets, machinery, tools, trade fixtures, utensils, china, glassware,
and other personal property owned by Seller, which are used exclusively in
connection with the maintenance and operation of the Facility and/or the Real
Property, (c) copies of files maintained or generated by Seller in the course of
the operation of the Property (excluding the Excluded Documents) which are
located on the Real Property, (d) the Inventory, (e) the Books and

 

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Records, and (h) all other personal property which Seller is the owner thereof
and which is used by Seller exclusively in connection with the ownership,
maintenance, and operation of the Facility and/or the Real Property; but
excluding, however, (i) the Excluded Assets, (ii) the personal property owned by
any resident or employee, and (iii) all tax and utilities and other deposits.

“Post-Closing Escrow Agreement.” As set forth in Section 11.3(a) hereof.

“Post-Closing Liability Escrow.” As set forth in Section 11.3(a) hereof.

“Property.” As set forth in Recital A, with the Property comprised of the Land,
the Improvements, the Facility, the Personal Property, the Leases, the
Contracts, and the Intangible Property owned or entered into, as applicable, by
Seller.

“Proprietary Information.” As set forth in Section 14.16 hereof.

“Purchaser.” As set forth in the preamble hereof.

“Purchase Price.” As set forth in Section 2.2 hereof.

“Purchaser Permits.” As set forth in Section 8.1(b) hereof.

“Real Property.” The Land and the Improvements.

“Rejected Contracts.” As set forth in Section 2.4 hereof.

“Rent Roll.” As set forth in Section 9.2(n) hereof.

“Required Deletion Items.” As set forth in Section 4.3 hereof.

“Resident Agreements.” Those leases, occupancy, residency, and similar written
agreements entered into with residents of the Facility, and all amendments,
modifications, supplements, renewals, and extensions thereof.

“Retained Liabilities.” As set forth in Section 2.6 hereof.

“Seller.” As set forth in the preamble hereof.

“Survey.” As set forth in Section 4.2 hereof.

“Survival Date.” As set forth in Section 11.4 hereof.

“Termination Notice.” As set forth in Section 2.3 hereof.

“Threshold Amount.” As set forth in Section 11.3(a) hereof.

“Title Commitment.” As set forth in Section 4.1 hereof.

“Title Objection Date.” As set forth in Section 4.3 hereof.

 

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“Utility Deposits.” All deposits made by Seller in connection with providing
water, sewer, gas, electricity, telephone and other public utilities to the Real
Property.

“WARN Act.” As set forth in Section 8.3(b) hereof.

II.

SALE AND PURCHASE OF PROPERTY

2.1 Purchase of Property. On the Closing Date, and subject to the terms and
conditions of this Agreement, Seller shall sell, assign, convey, transfer and
deliver to Purchaser, and Purchaser shall purchase and acquire from Seller,
Seller’s right, title, and interest in and to the Land and Improvements, good
and marketable title in the Personal Property, and all of Seller’s right, title
and interest in and to the Leases, Assumed Contracts, the Resident Agreements
and the Intangible Property, free and clear of all monetary liens and
encumbrances (other than the Leases, the Assumed Contracts, the Resident
Agreements, and the Permitted Exceptions), as further described in Section 2.7
hereof, at the purchase price provided in Section 2.2 hereof.

2.2 Purchase Price and Terms of Payment. The purchase price for the Property
(“Purchase Price”) shall be Twenty Two Million Five Hundred Thousand and No/100
Dollars ($22,500,000.00) and shall consist of and be payable as follows:

(a) Within one (1) business day after the Effective Date, Purchaser shall
deliver to Escrow Agent, in Good Funds, the sum of One Hundred Twelve Thousand
Five Hundred and No/100 Dollars ($112,500.00) (together with all interest
accrued thereon, the “Initial Deposit”). If this Agreement is not terminated
pursuant to Section 2.3, within one (1) business day after the expiration of the
Due Diligence Period, Purchaser shall deliver to Escrow Agent, in Good Funds, as
an additional deposit, the sum of One Hundred Twelve Thousand Five Hundred and
No/100 Dollars ($112,500.00) (together with all interest accrued thereon, the
“Additional Deposit”; the Initial Deposit together with the Additional Deposit
shall hereinafter individually and collectively be referred to as the
“Deposit”). The Deposit shall be non-refundable to Purchaser, except (i) if a
condition precedent to Purchaser’s obligations as set forth in Section 10.2
below is not satisfied or cured as of the Closing Date and such failure is not
due to a default by Purchaser, or (ii) as specifically provided in Section 2.3,
Section 4.3, Section 9.4, Section 10.3 or Section 11.2 below, and in any such
event Purchaser’s right to such refund will survive any termination of this
Agreement. The Deposit shall be applied to the Purchase Price on the Closing
Date.

(b) Not later than 1:00 p.m. (Eastern Time) on the Closing Date, Purchaser shall
deposit with Escrow Agent, in Good Funds, the balance of the Purchase Price,
reduced or increased by such amounts as are required to take into account any
prorations, credits, costs or other adjustments which are required by this
Agreement and which can be computed and determined as of the time for the
required deposit hereunder. The amount to be paid under this Section 2.2(b) is
referred to in this Agreement as the “Closing Payment.”

 

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2.3 Due Diligence Period. At any time prior to the expiration of the Due
Diligence Period, Purchaser shall be free, in its sole and absolute discretion,
and for any or no reason whatsoever to terminate this Agreement by written
notice to Seller (the “Termination Notice”) delivered on or prior to the
expiration of the Due Diligence Period. Upon delivery of the Termination Notice
prior to the expiration of the Due Diligence Period, Purchaser shall receive a
return of the Deposit (to the extent previously deposited) and the parties shall
equally share the cancellation charges, if any, of Escrow Agent. If the
Termination Notice is not delivered on or prior to the expiration of the Due
Diligence Period, Purchaser shall be deemed to have waived its right to
terminate this Agreement pursuant to this Section 2.3.

2.4 Assumption of the Leases and Contracts. As additional consideration,
Purchaser shall, on and as of the Closing Date, at its sole cost and expense,
assume and agree to pay all sums and perform, fulfill and comply with all other
covenants and obligations which are to be paid, performed and complied with by
Seller under the Leases and Assumed Contracts which first arise or accrue on and
after the Closing Date. Prior to the expiration of the Due Diligence Period,
Purchaser shall notify Seller in writing the identity of all Material Contracts
that Purchaser elects to terminate (collectively, the “Rejected Contracts”). Any
Material Contracts existing as of the Effective Date that Purchaser does not
notify Seller that Purchaser elects to terminate prior to the expiration of the
Due Diligence Period, together with those Contracts that do not meet the
definition of “Material Contract” but are terminable without fee or penalty upon
no more than sixty (60) days’ notice shall be “Assumed Contracts.”
Notwithstanding anything to the contrary set forth herein, Purchaser shall be
responsible for payment of (i) all fees due for the period after Closing through
the termination date of each Rejected Contract, and (ii) all termination fees
associated with the termination of each Rejected Contract.

2.5 Assumption of the Resident Agreements. As additional consideration,
Purchaser shall on and as of the Closing Date, at its sole cost and expense,
assume and agree to perform, fulfill and comply with all covenants and
obligations which are to be performed and complied with by Seller under the
Resident Agreements in effect at the Facility which first arise or accrue on and
after the Closing Date.

2.6 Assumed Liabilities. Except as expressly set forth herein, Purchaser shall
not assume, in connection with the transaction contemplated hereby, any
liability or obligation of Seller whatsoever, and, to this end, Seller shall
retain responsibility for all liabilities and obligations accrued or incurred
from its operations prior to Closing and all liabilities and obligations arising
from its operations prior to Closing, whether or not accrued and whether or not
disclosed (the “Retained Liabilities”). The terms of this Section 2.6 shall
survive Closing.

 

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2.7 Purchase Price. Within five (5) days before the end of the Due Diligence
Period, the parties shall use their commercially reasonable efforts to agree on
an allocation of the Purchase Price for the Property among the Real Property and
the various items of Personal Property and Intangible Property. Each party
agrees to file federal, state and local tax returns consistent with such
allocations agreed upon between the parties. If Seller and Purchaser do not
agree on how the Purchase Price shall be allocated among the Real Property and
the various items of Personal Property and Intangible Property, each party shall
file federal, state and local tax returns based on each party’s own
determination of the proper allocations, each bearing its own consequences of
any discrepancies.

2.8 Discharge of Liens. Seller shall cause all bond financing, mortgages, deeds
of trust, and monetary liens (including liens for delinquent taxes and
mechanics’ and judgment liens properly charged to Seller) affecting the Property
and all indebtedness secured thereby (the “Existing Liens”) to be fully
satisfied, released, and discharged of record on the Closing Date with the use
of the Closing Payment, so that Purchaser shall take title to the Property free
of the same. All costs related to the discharge of the Existing Liens at the
Property shall be borne by Seller. Seller acknowledges that such satisfaction,
release, and discharge may involve prepayment penalties or premiums and other
costs or expenses, all of which shall be paid by Seller at its sole cost and
expense in connection with the Closing (and the Closing Payment shall be used
for such purpose).

2.9 Negotiation and Execution of Management Documents. On or before the
Effective Date, and continuing throughout the Due Diligence Period, New Manager
and Purchaser shall negotiate in good faith to enter into definitive, binding
documents with respect to the management of the Property following Closing (the
“Management Documents”). The terms of the Management Documents shall be
substantially in accordance with the terms set forth in that certain letter of
intent dated June 4, 2013 between New Manager and Purchaser, with other such
terms as the parties thereto may negotiate. If New Manager and Purchaser have
not fully executed the Management Documents by the date of expiration of the Due
Diligence Period, then either Seller or Purchaser shall have the right to
terminate this Agreement by giving written notice to the other by not later than
three (3) business days after the expiration of the Due Diligence Period. Upon
any such termination, Purchaser shall receive a return of the Deposit (to the
extent previously deposited) and the parties shall equally share the
cancellation charges, if any, of Escrow Agent.

III.

ESCROW

3.1 Escrow. Purchaser and Seller have established or will establish an escrow
(“Escrow”) with Escrow Agent by depositing with Escrow Agent the Deposit and
having three (3) copies of the Escrow Agreement in the form attached hereto as
Exhibit “B” duly executed (in counterparts or otherwise) by Seller, Purchaser
and Escrow Agent (the “Escrow Agreement”). The Deposit shall be held by Escrow
Agent in accordance with the terms of the Escrow Agreement. In the event of any
conflict between this Agreement and the Escrow Agreement, the terms of this
Agreement shall control.

 

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3.2 Deposit of Funds. Except as otherwise provided in this Agreement, all funds
deposited into the Escrow by Purchaser shall be immediately deposited by Escrow
Agent into an interest bearing account, subject to the control of Escrow Agent
in a bank or savings and loan association, or such other institution approved by
Purchaser, or such other investment as may be approved by Purchaser; provided,
however, that such funds must be readily available as necessary to comply with
the terms of this Agreement and the Escrow Agreement, and for the Escrow to
close within the time specified in Section 7.1 of this Agreement. Except as may
be otherwise specifically provided herein, interest on amounts placed by Escrow
Agent in any such investments or interest bearing accounts shall accrue to the
benefit of Purchaser, and Purchaser shall promptly provide to Escrow Agent
Purchaser’s Tax Identification Number.

IV.

TITLE AND SURVEY

4.1 Title Examination; Commitment for Title Insurance. Prior to or on the
Effective Date, Seller has obtained from Escrow Agent and delivered to
Purchaser, at Seller’s sole cost and expense, a current commitment for an
A.L.T.A. Owner’s Policy of Title Insurance 2006 Form (or, if not available, the
local equivalent) (the “Title Commitment”) covering the Real Property and a copy
of each document referenced in the Title Commitment as an exception to title.

4.2 Survey. Prior to or on the Effective Date, Seller has delivered to
Purchaser, at Seller’s sole cost and expense, the existing survey for the Real
Property (the “Survey”). In the event that Purchaser elects to have a new or
updated Survey of the Real Property performed, it shall deliver a copy thereof
to Seller within five (5) days of receipt of any such Survey.

4.3 Title Objections; Cure of Title Objections. Purchaser shall have until
fifteen (15) days prior to the expiration of the Due Diligence Period (the
“Title Objection Date”) to provide Notice to Seller, in writing, of such
objections as Purchaser may have to any item contained in the Title Commitment
and any matter shown on the Survey (or any update thereto received prior to the
Title Objection Date). Any item contained in the Title Commitment or any matter
shown on the Survey to which Purchaser does not object prior to the Title
Objection Date shall be deemed a Permitted Exception. In the event Purchaser
provides Notice to Seller of objections to any items contained in the Title
Commitment or any matters shown on the Survey prior to the Title Objection Date,
Seller shall have the right, but not the obligation (except as otherwise
provided below), to cure such objections. Within five (5) days after receipt of
Purchaser’s notice of objections, Seller shall notify Purchaser in writing as to
whether Seller elects to attempt to cure such objections. Any failure by Seller
to respond within five (5) days after receipt of Purchaser’s notice of
objections shall be deemed a refusal by Seller to cure any objections to which a
response was not delivered. If Purchaser does not terminate this Agreement prior
to the expiration of the Due Diligence Period pursuant to Section 2.3, all items
contained in the Title Commitment or matters shown on the Survey, other than the
Required Deletion Items and those items or matters with respect to which
Purchaser has objected and Seller has affirmatively elected to cure, shall be
deemed Permitted Exceptions. The Permitted Exceptions shall, inter alia, include
(and Purchaser shall not be permitted to object to) any exceptions relating to
interests and rights of parties in possession under any Leases or Resident
Agreements, liens for all real estate taxes and assessments, water rates, water
meter charges, sewer rates, sewer charges

 

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and similar matters imposed by any governmental authority and not yet due and
payable as of the Closing Date, including special assessments and special
improvement district or local improvement district bonds, any and all present
and future laws, ordinances, restrictions, requirements, resolutions, orders,
rules and regulations of any governmental authority, as now or hereafter
existing or enforced (including those related to zoning and land use), and any
exceptions caused by Purchaser, its agents, representatives or employees. If
Seller elects to attempt to cure, and provided that Purchaser shall not have
terminated this Agreement in accordance with Section 2.3 hereof, Seller shall
have until the Closing Date to attempt to remove, satisfy or cure the same and
for this purpose Seller shall be entitled to a reasonable adjournment of the
Closing if additional time is required, but in no event shall the adjournment
exceed thirty (30) days after the Closing Date. If Seller is unable to effect a
cure prior to the Closing Date (or any date to which the Closing has been
adjourned) then Purchaser shall have the option, in its sole discretion, to
(a) accept a conveyance of the Real Property subject to the Permitted Exceptions
and any matter objected to by Purchaser that Seller is unable to cure, and
without reduction of the Purchase Price or (b) terminate this Agreement by
sending written notice thereof to Seller, and upon delivery of such notice of
termination, this Agreement shall terminate and the Deposit shall be returned to
Purchaser. Following any termination of this Agreement in accordance with
subsection (b) of the previous sentence, neither party hereto shall have any
further rights, obligations or liabilities hereunder except to the extent that
any right, obligation or liability set forth herein expressly survives
termination of this Agreement. Except as provided in the next sentence, Seller
shall have no obligation to bring any action or proceeding or otherwise to incur
any expense to correct, discharge or otherwise remove title exceptions or
defects with respect to the Property or to remove, remedy or comply with any
other grounds for Purchaser’s refusing to approve title. Seller shall, however,
be obligated to remove or discharge, or otherwise cause the Escrow Agent to omit
as an exception to title or to insure against collection thereof from or against
the Property, (y) any Existing Liens and (z) any liens and encumbrances created
by through or under Seller after the Effective Date, that are not Permitted
Exceptions (collectively, the “Required Deletion Items”). If, on the Closing
Date, there are any Required Deletion Items, Seller may use any portion of the
Closing Payment to satisfy same, provided the Escrow Agent shall omit such lien
or encumbrance as an exception to title. If Seller shall fail to authorize the
Escrow Agent to use the Closing Payment to satisfy a Required Deletion Item, and
such Required Deletion Item therefore is not omitted as an exception to title,
such failure shall be deemed to be a default by Seller, and Purchaser shall have
the remedies set forth in Section 11.2.

4.4 Conveyance of Title. At the Closing, Seller shall deliver to Purchaser, in
escrow through Escrow Agent, the Deed, subject to no exceptions other than the
Permitted Exceptions. The acceptance by Purchaser of the Deed shall be deemed to
be a full performance and discharge of every obligation on the part of Seller to
be performed under this Agreement with respect to the Property, other than those
that are specifically stated herein or in any Closing Document to survive the
Closing.

 

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V.

INSPECTIONS

5.1 Purchaser’s Independent Inspection.

(a) Seller shall provide the full opportunity during the Due Diligence Period to
inspect and investigate each and every aspect of the Property, either
independently or through agents, representatives or experts of Purchaser’s
choosing, as Purchaser considers necessary or appropriate. Such independent
investigation by Purchaser may include (but is not limited to):

(i) all matters relating to title to the Property;

(ii) all matters relating to Legal Requirements with respect to the Property,
such as taxes, assessments, zoning, use permit requirements and building codes;

(iii) all zoning, land use, building, environmental and other statutes, rules,
or regulations applicable to the Real Property;

(iv) the physical condition of the Real Property, including the interior, the
exterior, the square footage of the Improvements, the structure, the roof, the
paving, the utilities, and all other physical, structural and functional aspects
of the Real Property;

(v) reports, studies, assessments, investigations and other materials related to
the presence of Hazardous Materials at, on or under the Real Property and the
compliance of the Real Property with all Environmental Requirements, including
environmental assessment reports;

(vi) any easements and/or access rights affecting the Real Property;

(vii) the form of Resident Agreement with respect to the Real Property;

(viii) the Material Contracts and Leases affecting the Property;

(ix) all matters that would be revealed by a Survey, a physical inspection or an
environmental site assessment of the Real Property; and

(x) all matters relating to the income and operating or capital expenses of the
Property and all other financial matters.

(b) Except as expressly provided herein or in any Closing Documents, Seller
makes no representations or warranties as to the truth, accuracy or completeness
of any materials, data or other information, if any, supplied to Purchaser in
connection with Purchaser’s inspection of the Property (e.g., that such
materials are complete, accurate or the final version thereof, or that all such
materials are in Seller’s possession). Except for

 

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Purchaser’s reliance on any representation and warranties expressly provided
herein, it is the parties’ express understanding and agreement that any such
materials are to be provided only for Purchaser’s convenience in making its own
examination and determination as to whether it wishes to purchase the Property
and, in doing so, Purchaser shall rely exclusively on its own independent
investigation and evaluation of every aspect of the Property and not on any
materials supplied by Seller. Except for Purchaser’s reliance on any
representation and warranties expressly provided herein or in any Closing
Documents with respect to any such materials, Purchaser expressly disclaims any
intent to rely on any such materials provided to it by Seller in connection with
its inspection and agrees that it shall rely solely on its own independently
developed or verified information.

(c) Purchaser acknowledges and agrees that (i) on or prior to the expiration of
the Due Diligence Period it will have completed its independent inspection and
investigation of the Property and the Due Diligence Materials and (ii) it shall
have no right after the expiration of the Due Diligence Period to terminate this
Agreement based on any further investigations of the Property or the Due
Diligence Materials. The failure of Purchaser to send a Termination Notice prior
to the expiration of the Due Diligence Period shall conclusively constitute
Purchaser’s approval of each and every aspect of the Property, subject to the
terms and conditions of this Agreement.

5.2 Access.

(a) Seller shall cooperate and provide Purchaser with reasonable access to the
Real Property upon commercially reasonable Notice to Seller for the purpose of
Purchaser’s inspection (provided, however, that Purchaser shall not perform any
invasive testing of the Real Property without Seller’s prior written consent in
each instance, which may be granted or withheld in Seller’s sole and absolute
discretion). Neither Purchaser nor any of its employees, agents or
representatives shall contact or otherwise discuss this transaction and/or the
operation of the Facility with any on-site employees of the Facility without
Seller’s prior written consent; provided, however, that Purchaser may meet with
the Facility’s Executive Director upon commercially reasonable Notice to Seller
but, if required by Seller, only in the presence of Seller’s representative.
Seller shall have the right to have a representative of Seller present during
all inspections or examinations of the Real Property by Purchaser. Prior to any
entry by Purchaser or any of Purchaser’s designees onto the Property, Purchaser
shall: (i) if Purchaser does not then have such a policy in force, procure a
policy of commercial general liability insurance, issued by an insurer
reasonably satisfactory to Seller, covering all Purchaser’s activities, with a
single limit of liability (per occurrence and aggregate) of not less than Two
Million and No/100 Dollars ($2,000,000.00); and (ii) deliver to Seller a
Certificate of Insurance, evidencing that such insurance is in force and effect,
and evidencing that Seller have been named as an additional insured thereunder
with respect to any Purchaser’s activities. Such insurance shall be written on
an “occurrence” basis, and shall be maintained in force until the earlier of
(x) the termination of this Agreement and the conclusion of all of Purchaser’s
activities on the Property, or (y) the Closing Date.

 

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(b) Purchaser, at all times, will conduct all inspections and reviews in
compliance with all Legal Requirements, and in a manner so as to not cause
damage, loss, cost or expense to Seller, the Property or the residents of the
Property, and without unreasonably interfering with or disturbing any employee
or resident at the Facility. Prior to Closing, the results of or any other
information acquired pursuant to Purchaser’s inspections shall be subject to the
terms and conditions of Section 14.16 below. Purchaser will promptly restore any
damage to the Property caused by Purchaser’s inspection to substantially the
same condition immediately preceding such inspections and examinations and will
keep the Property free and clear of any mechanic’s liens or materialmen’s liens
caused by Purchaser or its representatives in connection with such inspections
and examinations.

(c) The cost of the inspections and tests undertaken pursuant to this
Section 5.2 shall be borne solely by Purchaser.

5.3 Confidential Nature of Due Diligence Materials. Purchaser covenants and
agrees that, until the Closing Date, all information and materials disclosed
and/or delivered to it by Seller, or Seller’s agents, employees and
representatives (including without limitation, the Due Diligence Materials), are
confidential and proprietary information, and that Purchaser shall hold the same
in accordance with the terms and conditions of Section 14.16 below. Purchaser
also agrees that, in the event the transaction contemplated in this Agreement is
not consummated as provided herein, Purchaser shall promptly return to Seller or
notify Seller in writing that Purchaser has destroyed all such information and
documentation and all copies thereof other than any copies required to be
retained to comply with Purchaser’s internal records retention policy, which
copies shall continue to be subject to the terms of Section 14.16.

5.4 Continuing Nature of Purchaser’s Obligations. The obligations of Purchaser
under this Article V (including its indemnification obligations under
Section 8.1(a)) shall survive Closing or the termination of this Agreement.

VI.

PROPERTY

6.1 Condition of Property. THE FOLLOWING PROVISIONS IN THIS SECTION 6.1 ARE
SUBJECT TO THE EXPRESS REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS, AND
OTHER PROVISIONS OF THIS AGREEMENT (INCLUDING WITHOUT LIMITATION THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 9.2) AND THE CLOSING
DOCUMENTS:

(a) BY ENTERING INTO THIS AGREEMENT, PURCHASER HAS AGREED TO, AND WILL, PERFORM
(AND PURCHASER REPRESENTS AND WARRANTS TO SELLER THAT PURCHASER IS CAPABLE OF
PERFORMING) AN INDEPENDENT INVESTIGATION, ANALYSIS AND EVALUATION OF THE
PROPERTY. PURCHASER WILL CONDUCT ITS OWN THOROUGH AND INDEPENDENT INSPECTION,
INVESTIGATION, ANALYSIS AND EVALUATION OF ALL INSTRUMENTS, RECORDS AND DOCUMENTS
WHICH PURCHASER DETERMINES TO BE APPROPRIATE OR ADVISABLE TO REVIEW IN
CONNECTION WITH PURCHASER’S ACQUISITION OF THE PROPERTY AND THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT.

 

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(b) PURCHASER FURTHER ACKNOWLEDGES THAT PURCHASER HAS SUBSTANTIAL EXPERIENCE
WITH REAL PROPERTY AND SENIOR LIVING FACILITIES AND THEIR OPERATIONS, AND THAT
PURCHASER WILL ACQUIRE THE PROPERTY IN “AS IS, WHERE IS, WITH ALL FAULTS”
CONDITION, AND SOLELY IN RELIANCE ON PURCHASER’S OWN INSPECTION AND EXAMINATION
AND SELLER’S REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED HEREIN OR IN ANY
CLOSING DOCUMENTS.

(c) EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
THIS AGREEMENT AND THE CLOSING DOCUMENTS, IT IS EXPRESSLY UNDERSTOOD AND AGREED
THAT SELLER MAKES NO REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND,
NATURE OR SORT, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION,
PAST, PRESENT OR FUTURE OPERATION AND/OR PERFORMANCE, OR VALUE, OF THE PROPERTY
AND THAT SELLER CONVEYS THE PROPERTY TO PURCHASER “AS IS AND WHERE IS, WITH ALL
FAULTS,” AND PURCHASER ACKNOWLEDGES THAT SELLER MAKES NO REPRESENTATIONS,
GUARANTIES OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE QUALITY,
CHARACTER, EXTENT, PERFORMANCE, CONDITION OR SUITABILITY OF THE PROPERTY FOR ANY
PURPOSE.

(d) PURCHASER’S INSPECTION, INVESTIGATION AND SURVEY OF THE PROPERTY SHALL BE IN
LIEU OF ANY NOTICE OR DISCLOSURE REQUIRED BY ANY APPLICABLE HEALTH AND SAFETY
CODE, OR BY ANY OTHER PROVISION OF APPLICABLE LAW, RULE OR REGULATION,
INCLUDING, WITHOUT LIMITATION, LAWS REQUIRING DISCLOSURE BY SELLER OF FLOOD,
FIRE, MOLD, SEISMIC HAZARDS, LEAD PAINT, LANDSLIDE AND LIQUEFACTION, OTHER
GEOLOGICAL HAZARDS, RAILROAD AND OTHER UTILITY ACCESS, SOIL CONDITIONS AND OTHER
CONDITIONS WHICH MAY AFFECT THE USE OF THE REAL PROPERTY, AND PURCHASER HEREBY
WAIVES ANY REQUIREMENT FOR A NOTICE PURSUANT TO THOSE PROVISIONS AND HEREBY
ACKNOWLEDGES AND AGREES THAT IT WILL CONDUCT ITS OWN INSPECTIONS AND REVIEWS
WITH RESPECT TO ALL MATTERS COVERED THEREBY, AND HEREBY RELEASES SELLER FROM
LIABILITY IN CONNECTION WITH ANY SUCH MATTERS THAT ARE NOT THE SUBJECT OF ANY OF
SELLER’S COVENANTS REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN OR ANY
CLOSING DOCUMENTS.

 

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(e) PURCHASER ALSO ACKNOWLEDGES AND AGREES THAT, ALTHOUGH SELLER HAS PROVIDED TO
PURCHASER THE DUE DILIGENCE MATERIALS AND THE BOOKS AND RECORDS, SELLER HAS NOT
VERIFIED THE ACCURACY THEREOF AND MAKE NO REPRESENTATIONS OR WARRANTIES
REGARDING THE MATTERS SET FORTH THEREIN EXCEPT AS MAY BE EXPRESSLY SET FORTH
HEREIN OR ANY CLOSING DOCUMENTS, IT BEING THE RESPONSIBILITY OF PURCHASER TO
VERIFY THE ACCURACY OF SUCH MATERIALS.

(f) FURTHERMORE, EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS AGREEMENT AND THE CLOSING DOCUMENTS, PURCHASER ACKNOWLEDGES THAT
SELLER HAS NOT AND DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES IN CONNECTION
WITH THE PRESENCE OR INTEGRATION OF HAZARDOUS MATERIALS UPON OR WITHIN THE REAL
PROPERTY. IN THAT REGARD, PURCHASER WILL CONDUCT ITS OWN INVESTIGATIONS TO
DETERMINE IF THE REAL PROPERTY CONTAINS ANY HAZARDOUS MATERIALS OR TOXIC WASTE,
MATERIALS, DISCHARGE, DUMPING OR CONTAMINATION, WHETHER SOIL, GROUNDWATER OR
OTHERWISE, WHICH VIOLATES ANY FEDERAL, STATE, LOCAL OR OTHER GOVERNMENTAL LAW,
REGULATION OR ORDER OR REQUIRES REPORTING TO ANY GOVERNMENTAL AUTHORITY.

BY INITIALING THIS CLAUSE BELOW, PURCHASER ACKNOWLEDGES THAT THIS ARTICLE HAS
BEEN READ AND FULLY UNDERSTOOD, AND THAT PURCHASER HAS HAD THE CHANCE TO ASK
QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE.

 

                  /s/ TBB                     PURCHASER’S INITIALS  

6.2 Survival of Article VI. THE PROVISIONS OF THIS ARTICLE VI SHALL SURVIVE
CLOSING.

VII.

CLOSING

7.1 Closing Date. The “Closing Date” for purposes of this Agreement shall be the
date which is fifteen (15) days after the expiration of the Due Diligence
Period, or such earlier date as may be agreed upon, in writing, by Seller and
Purchaser; subject, however, to (i) the automatic extension of the Closing Date
as set forth in Section 8.1(b) herein, and (ii) Seller’s right, at its option,
to extend the Closing Date as set forth in Section 4.3 and Section 9.4 herein.

 

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7.2 Action Prior to the Closing Date by Seller. Seller agrees that, provided
Purchaser has complied with its obligations under Section 7.3 hereof, on or
before 1:00 p.m. (Eastern Time) on the Closing Date, Seller will deposit with
Escrow Agent such items and instruments (executed and acknowledged, if
appropriate) as may be necessary in order for Escrow Agent to comply with this
Agreement, including, without limitation, the following:

(a) A special warranty deed substantially in the form and content attached
hereto as Exhibit “C” prepared and executed by Seller and acknowledged before a
Notary Public in the manner provided under the laws of the State of Oklahoma,
reflecting the sale and transfer to Purchaser of the Real Property and the
Improvements owned by Seller (the “Deed”), subject only to the Permitted
Exceptions.

(b) Two (2) duplicate originals of a Bill of Sale, in the form and content
attached hereto as Exhibit “D”, prepared and executed by Seller assigning,
conveying and transferring to Purchaser the Personal Property owned by Seller
(“Bill of Sale”);

(c) Two (2) duplicate originals of an Assignment and Assumption of Intangible
Property, in the form and content attached hereto as Exhibit “E”, prepared and
executed by Seller assigning and conveying to Purchaser, at no cost or expense
to Seller and without representation or warranty (other than as expressly set
forth herein), all of Seller’s right, title and interest in the Intangible
Property owned by Seller (“Assignment and Assumption of of Intangible
Property”);

(d) Two (2) duplicate originals of an Assignment and Assumption of Leases and
Contracts, in the form and content attached hereto as Exhibit “F”, prepared and
executed by Seller assigning and conveying to Purchaser, at no cost or expense
to Seller and without representation or warranty (other than as expressly set
forth herein), all of Seller’s right, title and interest under the Leases and
Assumed Contracts relating to the Property (“Assignment and Assumption of Leases
and Contracts”);

(e) Two (2) duplicate originals of an Assignment and Assumption of Resident
Agreements, in the form and content attached hereto as Exhibit “G”, prepared and
executed by Seller assigning and conveying to Purchaser, at no cost or expense
to Seller and without representation or warranty (other than as expressly set
forth herein), all of such right, title and interest under the Resident
Agreements (including any pre-paid rents attributable to the time period on and
after the Closing Date and/or refundable security deposits thereunder) relating
to the Facility (“Assignment and Assumption of Resident Agreements”);

(f) A non-foreign affidavit, in the form and content attached hereto as Exhibit
“H”, prepared and executed by Seller (“Non-Foreign Affidavit”), any state tax
withholding affidavits as applicable, and an IRS Form 1099;

(g) A Bringdown Certificate executed by a duly authorized officer of Seller
certifying to Purchaser that, as of the Closing Date, the representations and
warranties made by Seller set forth in Section 9.2 of the Agreement remain true
and correct in all material respects.

(h) All transfer tax and other tax returns, if any, which Seller is required by
law to execute and acknowledge and to deliver, either individually or together
with Purchaser, to any governmental authority as a result of the sale, if and to
the extent the same are available as of the Closing Date;

 

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(i) All of the plans (including “as built” plans), drawings, blueprints and
specifications relating to the Property where available, which are in Seller’s
possession or control;

(j) All written warranties of manufacturers, suppliers and contractors, if any,
in possession or control of Seller and in effect on the Closing Date;

(k) All keys to the Property which are in the possession or control of Seller
(which will be available at the Facility);

(l) A closing statement prepared by Escrow Agent and reasonably approved by
Seller and Purchaser setting forth, among other things, all payments to and from
Escrow in connection with the purchase and sale of the Property (the “Closing
Statement”);

(m) One (1) original of the owner’s affidavit (including a gap indemnity), in
the form attached hereto as Exhibit “I”, prepared and executed by Seller.

(n) All other documents consistent with the express provisions of this Agreement
and reasonably required by Escrow Agent (including without limitation, evidence
reasonably satisfactory to Escrow Agent that all necessary authorizations of the
transaction contemplated hereby have been obtained by Seller), each in form and
substance reasonably acceptable to Seller;

(o) A form Notice to Residents, in the form and content attached hereto as
Exhibit “J,” prepared and executed by Seller (collectively, the “Notices to
Residents”);

(p) For the Licensed Facility, two (2) duplicate originals of a Bridging Lease,
if applicable, pursuant to and as defined in Section 8.4(b) below, prepared and
executed by Seller;

(q) For the Licensed Facility, two (2) duplicate originals of a Bridging
Management Agreement, if applicable, pursuant to and defined in Section 8.4(b)
below, prepared and executed by Seller;

(r) Any documents or certificates necessary to transfer title to, or leasehold
interests in, any motor vehicles being conveyed in connection herewith, each of
which will be located at the Property;

(s) To the extent not previously delivered to Purchaser and within the
possession or control of Seller or its Affiliates, originals (or copies, if
originals are not available) of all items within the Due Diligence Materials
(including, to the extent available, originals of all Resident Agreements,
Assumed Contracts, and Permits and copies of all resident correspondence and
billing files and records), which need not be deposited with Escrow Agent but
instead may be left at the Facility;

(t) Any releases necessary to extinguish the Existing Liens, as required hereby;

 

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(u) A termination of property management agreement executed by Seller and the
existing property manager of the Facility.

(v) Evidence that Seller has sent termination notices with respect to any
Rejected Contracts relating to the Facility owned by Seller, as applicable; and

(w) Such other instruments or documents as may be reasonably necessary to effect
or carry out the covenants and obligations to be performed by Seller pursuant to
this Agreement.

7.3 Action Prior to the Closing Date by Purchaser. Purchaser agrees that on or
before 1:00 p.m. (Eastern Time) on the Closing Date, Purchaser will deposit with
Escrow Agent the Closing Payment and all documents (executed and acknowledged,
if appropriate) necessary to comply with the terms of this Agreement, including
without limitation:

(a) To the extent that applicable law requires that the Deed, transfer tax or
other tax forms, or recording forms be executed by the grantee, such instruments
shall be executed by Purchaser and acknowledged in the presence of a Notary
Public in accordance with the laws of the State of Oklahoma;

(b) If applicable, pursuant to Section 14.4 below, for the Property, two
(2) fully executed duplicate originals of the Assignment of Purchase Contract to
Applicable Property executed by Purchaser and its assignee in the form and
content attached hereto as Exhibit “K”;

(c) Two (2) duplicate originals of the Assignment and Assumption of Intangible
Property, executed by Purchaser;

(d) Two (2) duplicate originals of the Assignment and Assumption of Leases and
Contracts executed by Purchaser;

(e) Two (2) duplicate originals of the Assignment and Assumption of Resident
Agreements executed by Purchaser;

(f) A Bringdown Certificate executed by a duly authorized officer of Purchaser
certifying to Seller that, as of the Closing Date, the representations and
warranties made by Purchaser set forth in Section 9.1 of the Agreement remain
true and correct in all material respects.

(g) An executed Closing Statement;

(h) For the Licensed Facility, two (2) fully executed duplicate originals of the
Bridging Lease, if applicable, pursuant to Section 8.4(b) below, executed by
Purchaser;

(i) For the Licensed Facility, two (2) fully executed duplicate originals of the
Bridging Management Agreement, if applicable, pursuant to Section 8.4(b) below,
executed by Purchaser; and

(j) Such other funds, instruments or documents as may be reasonably necessary to
effect or carry out the covenants and obligations to be performed by Purchaser
pursuant to this Agreement.

 

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7.4 Recording of Deeds. Subject to Section 10.3 below, Escrow Agent will cause
the Deed to be dated as of the Closing Date and thereafter promptly recorded in
the Official Records, and all other conveyance documents deposited with Escrow
Agent to be dated as of the Closing Date, when (but in no event after the
Closing Date) Escrow Agent (i) is prepared to issue the title insurance policy
to be issued to Purchaser as contemplated in this Agreement, and (ii) holds for
the account of Seller and Purchaser all items and funds (if any) to be delivered
to Seller and Purchaser through the Escrow, after payment of costs, expenses,
disbursements and prorations chargeable to Seller or Purchaser pursuant to the
provisions of this Agreement.

7.5 Prorations.

(a) All non-delinquent real estate and personal property general and special
taxes and assessments for the Property and the Land for the current assessment
year of the applicable taxing authority in which the Closing Date occurs shall
be prorated as of the Closing Date. If the exact amount of taxes is not known at
Closing, the proration will be based on an amount equal to one hundred five
percent (105%) of the prior assessment year’s taxes and shall be adjusted
directly between Seller and Purchaser once actual figures become available after
Closing. Notwithstanding anything to the contrary in this Agreement, (i) Seller
shall retain all right, title and interest in and to any and all property tax
(both real property and personal property) refunds and claims for refunds with
respect to the Property for any period prior to the Closing Date, and
(ii) Seller is responsible for all taxes due and payable prior to the Closing
Date in connection with the Property. Purchaser shall assume all obligations
accruing from and after the Closing Date with respect to any agreements relating
to the appealing of real estate taxes or real estate tax assessments, including
the obligation to pay portions of amounts of real estate tax savings and costs
and expenses related thereto. With respect to the Property, Seller shall be
responsible for all sales, use and other transfer taxes imposed in connection
with the sale and transfer of the Personal Property and the Intangible Property.

(b) Seller shall request each utility company providing utility service to the
Real Property to cause all utility billings to be closed and billed as of the
Closing Date in order that utility charges may be separately billed for the
period prior to the Closing Date and the period on and after the Closing Date.
In the event any such utility charges are not separately billed, the same shall
be prorated. In connection with any such proration, it shall be presumed that
utility charges were uniformly incurred during the billing period in which the
Closing Date occurs. Seller shall receive a credit at Closing for any Utility
Deposits with respect to the Facility that are transferred or made available to
Purchaser. Purchaser shall arrange for placing all utility services and bills in
its own name as of the Closing Date.

(c) All revenues from Facility operations accruing or relating to the period up
to and including 11:59 p.m. in the jurisdiction in which the Property is located
on the day immediately preceding the Closing Date (“Cut-Off Time”) shall belong
to Seller. All revenues from Facility operations accruing or relating to the
period after the Cut-Off Time shall belong to Purchaser. Without limiting the
foregoing, it is the agreement and intent of the parties that all revenues shall
be prorated as of the Closing Date.

 

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(d) All obligations and liabilities and accounts payable for the Facility and
the Real Property owing as of the Closing Date for merchandise, equipment,
supplies and other materials and services paid, incurred or ordered shall be
prorated between Seller and Purchaser as of the Closing Date based on whether
the merchandise, equipment, supplies and other materials remain in inventory as
of the Closing Date and when the services were, or are, be rendered, i.e., prior
to, or on or after the Closing Date.

(e) Except as covered by the terms of Section 7.5(a) above, all water and sewer
charges, taxes (other than ad valorem property taxes), and any unpaid taxes
payable in arrears, shall be prorated as of the Closing Date. Seller will be
credited for that portion of taxes and fees paid by Seller allocable to the
period after the Closing Date.

(f) All payments and receipts, as applicable, under the Assumed Contracts shall
be prorated between Purchaser and Seller as of the Closing Date. Seller shall
receive a credit for all prepayments and deposits thereunder which are
transferred to Purchaser. In consideration for Purchaser’s agreement to honor
(i) any written policy currently in place at the Facility with respect to
waitlist deposits or (ii) the terms of those Assumed Contracts entered into by
and between Seller and a prospective resident (i.e., to admit the prospective
resident as a resident of the Facility on the same terms and conditions as such
prospective resident would have been admitted to the Facility had Seller still
owned the Facility), Purchaser shall receive a credit for all waitlist deposits
made by prospective residents.

(g) All other income derived by Seller from the Property accruing or relating to
the period up to and including the Cut-Off-Time shall be paid to Seller. All
other income derived by Seller from the Property accruing or relating to the
period on and after the Cut-Off-Time shall be paid to Purchaser.

(h) Subject to Section 7.5(i) below, the Accounts Receivable shall be and remain
the property of Seller subsequent to the Closing of the transaction contemplated
hereby. At the Closing, Seller shall prepare a list of its outstanding Accounts
Receivable as of the Cut-Off Time, specifying the name of each account and the
amount due to it. Purchaser shall hold in trust for Seller any funds which are
received by Purchaser as payment of Seller’s Accounts Receivable, i.e., if
Purchaser actually collects any such amounts, Purchaser shall pay the monies
collected in respect thereof (net of actual collection costs) to Seller promptly
following the end of the calendar month in which such amounts are collected,
accompanied by a statement showing the amount collected on each such account.
Other than the foregoing, Purchaser shall have no obligation with respect to any
such account, and Purchaser shall not be required to take any legal proceeding
or action to effect collection on behalf of Seller. It is the intention of
Purchaser and Seller that although the Accounts Receivable shall be and remain
the property of Seller, if any such accounts are paid to Purchaser, then
Purchaser shall collect same and remit to Seller in the manner above provided.
Nothing herein contained shall

 

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be deemed to preclude Seller from enforcing collection of the Accounts
Receivable which are owed to Seller; provided, in no event shall Seller be
entitled to commence termination or eviction proceedings with respect to any
Lease or Resident Agreement. The provisions of this Section shall survive
Closing.

(i) All rentals and other resident charges, including any community fees and
reimbursements, in respect to the month in which the Closing Date occurs (the
“Current Month”) shall be prorated as of the Cut-Off Time, whether or not
actually received prior to the Closing Date. All rentals and other charges
received by Purchaser from a resident under a Resident Agreement or a tenant
under a Lease after the Closing Date that are not Seller’s Accounts Receivable
shall be applied first to collection costs and then to the most recently accrued
obligation of such resident or tenant, as applicable. After application as set
forth above, Purchaser shall promptly remit to Seller that portion of rentals
and other resident charges received after the Closing Date attributable to
periods prior to the Cut-Off Time. Notwithstanding any language to the contrary
herein, (i) to the extent that Seller receives any payment with respect to the
Licensed Facility that was owned by Seller after the Cut-Off Time from a
third-party payor that relates to periods after the Cut-Off Time, Seller shall
hold in trust for Purchaser such funds and pay such funds to Purchaser promptly
following the end of the calendar month in which such funds are collected and
(ii) to the extent that Purchaser receives any payment with respect to the
Licensed Facility after the Cut-Off Time from a third-party payor that relates
to periods before the Cut-Off Time, Purchaser shall hold in trust for Seller
such funds and pay such funds to Seller at the end of the calendar month in
which such funds are collected. Seller shall retain, with respect to the
Property, the right to pursue directly collection of amounts due on account of
the period prior to the Cut-Off Time, provided, in no event shall Seller be
entitled to commence termination or eviction proceedings with respect to any
Lease or Resident Agreement.

(j) Purchaser shall receive a credit for (a) prepaid rents and other resident
charges, including any community fees, applicable to periods after the Cut-Off
Time, and (b) any refundable security deposits (and if Legal Requirements or any
agreements require a landlord to be accountable for interest on such refundable
security deposits, any accrued interest owed thereon), which credit shall be
applied against the Purchase Price.

(k) Except as otherwise expressly provided in this Agreement, all apportionments
and adjustments shall be made in accordance with generally accepted accounting
principles. The computation of the adjustments shall be jointly prepared by
Seller and Purchaser. In the event any prorations or apportionments made under
this Section 7.5 shall prove to be incorrect for any reason, then any party
shall be entitled to an adjustment to correct the same in accordance with the
remaining terms of this Section 7.5(k). To the extent the exact amount of any
adjustment item provided for in this Section 7.5 cannot be precisely determined
on the Closing Date, such prorations and apportionments shall be tentatively
prorated on the basis of the best data then available and re-prorated when the
information is available. Notwithstanding the foregoing, any adjustment or
re-proration pursuant to the two immediately preceding sentences shall be made,
if at all, within one hundred eighty (180) days after the Closing Date (except
with respect to taxes and assessments, in which case such re-proration shall be
made within

 

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sixty (60) days after the information necessary to perform such re-proration is
available). All payments to be made as a result of the final results of the
adjustments shall be paid to the party entitled to the same within thirty
(30) days after the final determination thereof. Seller and Purchaser agree that
none of the insurance policies relating to the Property will be assigned to
Purchaser (and Seller shall pay any cancellation fees or minimum earned premiums
resulting from the termination of the policies relating the Property) and
Purchaser shall be responsible for arranging for its own insurance as of the
Closing Date.

7.6 Closing Costs. With respect to the title insurance policy insuring
Purchaser’s title to the Property, Purchaser shall bear the cost of the premium
for the title insurance policy, including the cost of any and all endorsements
to the title insurance policy requested by Purchaser or its lender. Purchaser
shall bear the cost of any update to the Survey obtained by Purchaser, the cost
to record the Deed (including the nominal per page recording fees but excluding
the documentary stamps to be placed on the Deed) and one-half of all escrow and
closing fees relating to the sale of the Property imposed by Escrow Agent.
Seller shall pay any compensation due to Financial Advisor, the cost of the
documentary stamps to be placed on the Deed) and one-half (1/2) of all escrow
and closing fees relating to the sale of the Property (but, in each case, not in
connection with any financing by Purchaser, which shall be paid solely by
Purchaser). Each party shall pay its own attorneys’ fees pertaining to the sale
of the Property. Purchaser shall be responsible for the payment of any mortgage
taxes or recording fees for the mortgage securing Purchaser’s loan. All other
costs pertaining to the sale of the Property shall be allocated as is customary
for real estate transactions where the Property is located.

7.7 Possession. Purchaser shall be entitled to sole possession of the Property
on the Closing Date, subject to the possessory rights of any resident of the
Facility and the terms of the Leases and Assumed Contracts.

7.8 Post-Closing Audit. Seller acknowledges and agrees to assist Purchaser in
conducting, 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 obtain and
provide to the auditors, at no cost to Seller, any and all data and financial
information, except for information constituting Excluded Assets, in the
possession of Seller that are necessary or required by the auditors in
connection with their preparation and conducting of the foregoing audit. The
rights and obligations of Purchaser and Seller under this Section 7.8 shall
survive Closing.

VIII.

ADDITIONAL COVENANTS AND INDEMNITIES

8.1 Purchaser’s Covenants.

(a) Purchaser covenants and agrees to defend, indemnify, protect, defend, and
hold harmless Seller, and its affiliates, owners, members, partners, employees,
lenders, agents and representatives, from and against any and all Claims
(i) arising from the acts

 

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and omissions of Purchaser and its agents, employees and contractors occurring
in connection with or as a result of, any inspections, tests or examinations of
or to the Property prior to the Closing Date, and (b) caused by or arising out
of any material misrepresentation by Purchaser in connection with this
Agreement. This indemnity shall survive Closing for the Survival Period.

(b) Prior to Closing, Purchaser shall use its commercially reasonable efforts to
apply for and diligently pursue all required licenses and approvals necessary to
permit Purchaser to operate the Licensed Facility as an assisted living and
Alzheimer’s care facility (“Purchaser Permits”). In furtherance of the preceding
sentence, Purchaser shall use commercially reasonable efforts to file all
applications and other documents required by the applicable governmental or
administrative agency or authority for all such required Purchaser Permits as
soon as reasonably practical and, in all events, on or prior to the date which
is thirty (30) days after the Effective Date (the “Filing Date”). In addition,
Purchaser shall file as soon as reasonably practical and, in all events, on or
prior to the Filing Date, any documentation (including, to the extent required,
the Bridging Lease and the Bridging Management Agreement) necessary to permit
the current license-holder for the Licensed Facility to remain in place pending
confirmation by the Oklahoma Department of Health that the parties can
consummate the transaction contemplated by this Agreement with respect to the
Licensed Facility. In the event that Purchaser has not received confirmation
from the Oklahoma Department of Health that the parties can consummate the
transaction contemplated by this Agreement with respect to the Licensed Facility
prior to the Closing Date, the terms of Section 8.4 below shall control. As more
particularly described on Schedule “9.2(h)” attached hereto, the assisted living
center license expired on September 19, 2012, and Seller is awaiting receipt of
a renewal license from the Oklahoma State Department of Health. Notwithstanding
anything herein to the contrary, if the renewal license has not been received on
or prior to the Filing Date, the Filing Date shall be extended until one
(1) business day following the receipt of the renewal license, provided,
however, that in no event shall the Filing Date be extended beyond the
expiration of the Due Diligence Period. If the Filing Date is extended pursuant
to the immediately preceding sentence, the Closing Date shall be extended for
the same number of days as the Filing Date was extended.

8.2 Seller Covenants. Seller (but solely for itself and its own Property, and
not for any other Seller or any other Property) covenants to Purchaser as
follows:

(a) Subject to the terms of this Agreement, Seller, during the term of this
Agreement, shall carry on the business and operations of the Facility in
substantially the same manner as heretofore carried on by it including incurring
operating expenses consistent with past practices. Seller shall, during the term
of this Agreement, use commercially reasonable efforts to comply in all material
respects with all Legal Requirements affecting the Property and all terms,
covenants and conditions of any Assumed Contracts, Leases, Resident Agreements
or other Business Agreements affecting the Property. Prior to the Closing Date,
Seller shall maintain (or replace with policies of like amounts) all existing
insurance policies insuring its Property and the operation of the Facility.
Seller shall maintain its Inventory consistent with its past practices and shall
replenish the same consistent with its past practices. Seller may

 

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extend, amend, modify or terminate any of the Contracts relating to its Property
as it deems appropriate to operate, service and maintain its Property consistent
with normal business practices, and may enter into new Contracts; provided,
however, that so long as Purchaser is not in default of any of its obligations
under this Agreement beyond the expiration of any applicable notice or cure
period, then Seller shall not without the written consent of Purchaser (which
consent shall not be unreasonably withheld, conditioned or delayed), enter into
(i) any new Contract or amend or modify any existing Contract that would be
binding on Purchaser or the Real Property following the Closing other than those
involving payments of less than Five Thousand and No/100 Dollars ($5,000.00) per
annum or which are terminable with not more than sixty (60) days’ notice without
penalty except to the extent such amendment or modification is required under
the Legal Requirements, or (ii) any additional Business Agreements or Resident
Agreements or amend or modify any existing Business Agreement or Resident
Agreement affecting its Property that would be binding on Purchaser following
Closing (other than new Resident Agreements, renewals or modifications of
existing Resident Agreements and Leases entered into in the ordinary course of
business at its Property, which, in the case of Resident Agreements, shall be on
the standard form of resident lease for the Facility, and at rental rates,
promotional allowances, concessions, length of term and on other terms and
conditions consistent in all material respects with past practices), except to
the extent such amendment or modification is required under the Legal
Requirements. Other than in the ordinary course of business at its Property, no
part of Seller’s 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 or delayed.

(b) Seller shall cooperate with Purchaser in all commercially reasonable
respects, including by executing and/or delivering necessary or desirable
applications and other information and documents, to facilitate the issuance
and/or transfer of the Purchaser Permits (as defined in Section 8.1(b) above).
Without limiting the foregoing, Seller shall cause New Manager to provide such
information and documents as may be required of New Manager in connection with
Purchaser’s application for the Purchaser Permits, which shall include causing
New Manager to file, as soon as reasonably practical and, in all events, on or
prior to the date which is thirty (30) days after the Effective Date, any
documentation necessary to report to the Oklahoma Department of Health the
change of property manager from the property manager as of the Effective Date to
New Manager. If Purchaser requests Seller or New Manager to advance (or
otherwise consents to the advancement of) any governmental or other
administrative agency fees in connection with such cooperation, Purchaser shall
promptly reimburse Seller or New Manager, as applicable, for any such fees so
advanced on behalf of Purchaser. In the event that Purchaser has not received
confirmation from the Oklahoma Department of Health that the parties can
consummate the transaction contemplated by this Agreement with respect to the
Licensed Facility prior to the Closing Date, Seller agrees to implement a
Bridging Lease and Bridging Management Agreement pursuant to Section 8.4 below
that permit the consummation of the transaction contemplated by this Agreement
in accordance with all Legal Requirements in the absence of such confirmation.

 

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(c) Seller shall promptly notify Purchaser to the extent Seller receives written
notice from a third party or otherwise acquires knowledge of any event or
occurrence that could be reasonably anticipated to have a material adverse
effect on the operation, leasing, or condition of the Property, including fire
or other casualty loss, or receipt of notice of condemnation or violation of any
Legal Requirement or order, including without limitation, any Legal Requirement
relating to health, safety, fire, environmental or zoning that could be
reasonably anticipated to have a material adverse effect on the operation,
leasing, or condition of the Property.

(d) Until such time as this Agreement terminates, Seller shall not solicit or
initiate any inquiries or proposals from, negotiate with, or consider the merits
of any inquiries or proposals from, any person relating to any sale of the
Property.

8.3 Employee Matters. With respect to the Property:

(a) On the Closing Date, Seller shall pay the applicable employees or (at
Purchaser’s election) credit Purchaser with all employee salaries, wages, and
other compensation (including accrued vacation days but not including sick
leave), including any applicable federal, state and local taxes, for any
employees of the Facility that have accrued up to the Cut-Off Time and remain
unpaid. Subject to the provisions of Sections 8.3(b), Seller shall indemnify,
defend and hold harmless Purchaser against any and all labor or employment
claims, liabilities or obligations (including, without limitation, reasonable
attorneys’ fees and costs) that arise or accrue before, or arise out of events
occurring before, the Closing Date, which indemnity shall survive Closing.
Purchaser shall be responsible for any severance pay due to any employees who
accept employment with Purchaser or New Manager as of Closing and who Purchaser
later elects to terminate on or after the Closing Date. Seller shall cooperate
with New Manager to effectuate the transition of the employment of the employees
of the Facilities to New Manager upon Closing.

(b) On or before the day that is five (5) days after the end of the Due
Diligence Period, Seller shall provide Purchaser with a list of all employees at
the Property and, to the extent permitted under the applicable Legal
Requirements, access to other pertinent information as reasonably requested by
Purchaser (including, to the extent permitted under the applicable Legal
Requirements, access to review the employee file and information on the terms of
employment of each employee). After the expiration of the Due Diligence Period,
except with respect to the Facility’s Executive Director (access to whom is
governed by the terms of Section 5.2), Seller shall afford Purchaser with
opportunities to meet with any employees of Seller or New Manager who are
involved in the operation of the Facility and the Property. Such meetings shall
be at such times as mutually agreed to by Seller and Purchaser and Seller shall
be entitled to have a representative present at any such meetings with the
employees at the Property. As of the Closing Date, Purchaser shall instruct New
Manager to offer employment to a sufficient number of the then-current employees
of the Facility (and to hire those employees who accept such offers) such that
no notices shall be required or due to any person or entity under the federal
Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any other
comparable state law. Nothing in this Section 8.3(b) shall, however, create

 

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any rights in favor of any person not a party to this Agreement, including
employees of the Facility, or constitute an employment agreement or condition of
employment for any employee of Seller (or its property manager) or any affiliate
of Seller (or its property manager) who is hired by Purchaser. Purchaser shall
indemnify, defend and hold harmless Seller, and its Affiliates, owners and
employees from and against (i) any and all claims, penalties, damages,
liabilities, actions, costs and expenses (including reasonable attorneys’ fees)
under the WARN Act or any comparable state law, to the extent that such claims,
penalties, damages and expenses arise in connection with Purchaser’s failure to
comply with the provisions of this Section 8.3(b) and (ii) any and all labor or
employment claims, liabilities and obligations (including, without limitation,
reasonable attorneys’ fees and costs) that arise or accrue from or after, or
arise out of events occurring from or after the Closing Date, including, without
limitation, all claims arising as a result of the termination by Purchaser of
the Facility employee or personnel performing services at or for the Facility.
The foregoing indemnity shall survive Closing.

(c) Seller shall and hereby agree to indemnify and save Purchaser, and its
Affiliates and property managers, harmless from and against any liability for
wages, salaries, bonuses, and accrued vacation days to be paid to employees on
account of services rendered prior to Closing, except to the extent the same is
credited to Purchaser pursuant to Section 8.3(a) above for any employees
retained by Purchaser or New Manager following Closing. Notwithstanding anything
to the contrary herein contained, there shall be no apportionment or proration
of medical, pension, welfare benefits, other employee benefits or other fringe
benefits (hereinafter collectively referred to as “benefits”) and Seller shall
remain liable for and hereby indemnify and save Purchaser, and its affiliates,
harmless from and against all benefits due to employees under plans in which
employees participate prior to Closing, and all payments due on the plans
providing such benefits. Seller agrees to give all affected employees written
notice of termination of participation of employees working at the Property in
any applicable 401(K) or other pension or retirement plan affecting the
employees. The obligations of Seller and Purchaser set forth in this Section 8.3
shall survive Closing.

8.4 Bridging of Licenses.

(a) Without limiting Purchaser’s obligations set forth in Section 8.1(b) above
and Seller’s agreement to cooperate as set forth in Section 8.2(b) above, from
and after the date hereof, Purchaser and Seller shall cooperate and work
together diligently and in good faith to obtain confirmation from the Oklahoma
Department of Health that the parties can consummate the transaction
contemplated by this Agreement with respect to the Licensed Facility.

(b) In the event that Purchaser has not received confirmation from the Oklahoma
Department of Health that the parties can consummate the transaction
contemplated by this Agreement with respect to any Licensed Facility prior to
the Closing Date, Purchaser and Seller shall enter into such other mutually and
reasonably acceptable documents and agreements as may be necessary and permitted
under applicable Healthcare Requirements to cause the Seller as the current
license-holder for the Licensed Facility to remain in place pending receipt of
such confirmation from the

 

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Oklahoma Department of Health. If Purchaser requests Seller and/or New Manager
to advance (or otherwise consents to the advancement of) any governmental or
other administrative agency fees in connection with the activities specified in
the immediately preceding sentence, Purchaser shall be responsible for, or for
reimbursing Seller for, any fees incurred by Seller and New Manager in
connection therewith. Without limiting the foregoing, Purchaser and Seller shall
enter into a lease from Purchaser to Seller in the form and content attached
hereto as Exhibit “L” (a “Bridging Lease”) and a management agreement between
the current license-holder and New Manager, in the form and content attached
hereto as Exhibit “M” (a “Bridging Management Agreement”). Notwithstanding the
foregoing, Seller acknowledges that Purchaser or its designee taking title to
the Property intends to lease the Property to an affiliate of Purchaser, in
which event Purchaser or its designee taking title to the Property shall enter
into the Bridging Lease with such affiliate, and such affiliate shall enter into
a sublease (the “Bridging Sublease”) with Seller in substantially the same form
and content as attached hereto as Exhibit “L”.

(c) Purchaser and Seller shall promptly notify, consult with, and keep the other
advised as to the status of the matters referred to in this Section 8.4,
including with respect to any communications to or from any governmental agency
or other party in connection with the transfer or issuance of the Purchaser
Permits.

IX.

REPRESENTATIONS AND WARRANTIES

9.1 Purchaser’s Representations and Warranties. Purchaser represents and
warrants to Seller that as of the date hereof and as of the Closing Date:

(a) Purchaser (i) is a limited partnership, duly formed, validly existing, and
in good standing under the laws of the State of Delaware, (ii) is, or on the
Closing Date will be, duly qualified to do business in each state where such
qualification is necessary with respect to the Property, and (iii) has the full
power and authority to enter into this Agreement and to carry out the
transaction contemplated hereby to be carried out by it.

(b) Subject only to the approval of its Board of Directors, which approval will
be deemed to have been obtained prior to the end of the Due Diligence Period if
Purchaser does not terminate this Agreement pursuant to Section 2.3, the
performance of this Agreement and the transaction contemplated hereunder by
Purchaser have been duly authorized by all necessary action on the part of
Purchaser, and this Agreement is binding on and enforceable against Purchaser in
accordance with its terms. Purchaser shall, on or prior to the Closing Date,
furnish Seller with certified resolutions evidencing that Purchaser has been
duly authorized to enter into and perform this Agreement and the transaction
contemplated hereunder. No further consent of any shareholder, creditor, board
of directors, governmental authority or other party to such execution, delivery
and performance hereunder is required. The person(s) signing this Agreement, and
any document pursuant hereto on behalf of Purchaser, has full power and
authority to bind Purchaser.

 

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(c) Neither the execution of this Agreement nor the consummation of the
transaction contemplated hereby will violate any restriction, court order,
judgment, law, regulation, charter, bylaw, instrument or agreement to which
Purchaser is subject.

(d) Purchaser has not (i) made any general assignment for the benefit of
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition in bankruptcy by Purchaser’s creditors,
(iii) suffered the appointment of a receiver to take possession of all, or
substantially all, of Purchaser’s assets, or (iv) suffered the attachment or
other judicial seizure of all, or substantially all, of Purchaser’s assets,
(v) admitted in writing its inability to pay its debts as they come due, and has
no current plans to do or undertake, any of the foregoing.

9.2 Seller’s Representations and Warranties. Subject to the provisions of
Section 9.5, Section 11.3, Section 11.4, and Section 14.15, Seller represents
and warrants to Purchaser that as of the date hereof and as of the Closing Date:

(a) Seller is a limited partnership, duly organized under the laws of the State
of Texas, validly existing, and in good standing under the laws of such state,
qualified or registered to do business in the State of Oklahoma, and has the
full power and authority to enter into this Agreement and to carry out the
transaction contemplated hereby to be carried out by it.

(b) The performance of this Agreement and the transaction contemplated hereunder
by Seller have been duly authorized by all necessary action on the part of
Seller, and this Agreement is binding on and enforceable against Seller in
accordance with its terms. Seller shall, on or prior to the Closing Date,
furnish Purchaser with certified resolutions evidencing that Seller has been
duly authorized to enter into and perform this Agreement and the transaction
contemplated hereunder. No further consent of any member, manager, creditor,
governmental authority or other party to such execution, delivery and
performance hereunder is required. The person(s) signing this Agreement, and any
document pursuant hereto on behalf of Seller, has full power and authority to
bind Seller.

(c) Neither the execution of this Agreement nor the consummation of the
transaction 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.

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

(e) There are no demands, complaints, actions, suits or arbitrations pending or,
to Seller’s actual knowledge, threatened nor, to Seller’s actual knowledge, are
there any governmental investigations or other proceedings pending or threatened
against or affecting Seller and the Property (or any portion thereof) except
demands, complaints, actions, suits, arbitrations, governmental investigations
or other proceedings that (i) are fully covered by insurance policies (subject
to customary deductibles) or (ii) are listed on Schedule “9.2(e)” attached
hereto.

 

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(f) Neither Seller nor any general partner of Seller has (i) made any general
assignment for the benefit of creditors, (ii) filed any voluntary petition in
bankruptcy or suffered the filing of an involuntary petition in bankruptcy by
Seller’s or such general partner’s creditors, (iii) suffered the appointment of
a receiver to take possession of all, or substantially all, of Seller’s or such
general partner’s assets, (iv) suffered the attachment or other judicial seizure
of all, or substantially all, of Seller’s or such general partner’s assets, or
(v) admitted in writing its inability to pay its debts as they come due and has
no current plans to do or undertake any of the foregoing.

(g) Attached hereto as Schedule “9.2(g)” is a true and complete, in all material
respects, list of all Material Contracts as of the Effective Date, and, to
Seller’s knowledge, is inclusive of all Contracts as of the Effective Date.
Except as set forth on Schedule “9.2(g)” attached hereto, as of the Effective
Date, Seller has not received written notice from any party to the Material
Contracts of the occurrence of a material default by Seller in the performance
of any of its material obligations under the Material Contracts that remains
uncured as of the Effective Date. To Seller’s knowledge, except as set forth on
Schedule “9.2(g),” Seller has performed in all material respects all of its
obligations under each Material Contract to which it is a party and, to Seller’s
knowledge, no fact or circumstance has occurred, which by itself or with the
passage of time or the giving of notice or both would constitute a default by
Seller under any such Material Contract. Further, to Seller’s knowledge, as of
the Effective Date, except as set forth on Schedule “9.2(g),” all other parties
to such Material Contracts have performed all of their obligations thereunder in
all material respects and are not in default thereunder.

(h) Except as set forth on Schedule “9.2(h)”, as of the Effective Date, Seller
has not received any written notice from any governmental authority nor does
Seller possess any actual knowledge that all or any portion of the Facility is
or was at any time within the one-year period immediately prior to the Effective
Date in material violation of any of the Legal Requirements, which material
violation has not been cured.

(i) Seller is not and is not acting, directly or indirectly, for, or on behalf
of, any person or Governmental Entity named by any Executive Order (including
the September 24, 2001, Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism)
or named by the United States Treasury Department as a terrorist, “Specially
Designated National and Blocked Person,” or other banned or blocked Person or
Governmental Entity pursuant to any Legal Requirement that is enforced or
administered by the Office of Foreign Assets Control, and is not engaging in the
transaction contemplated by this Agreement, directly or indirectly, on behalf
of, or instigating or facilitating the transaction contemplated by this
Agreement, directly or indirectly, on behalf of, any such person or Governmental
Entity.

 

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(j) Attached hereto as Schedule “9.2(j)” is a true and complete, in all material
respects, list of all material Healthcare Permits. To the knowledge of Seller,
all of the Permits necessary for the operation of the Facility as it is
currently being operated are valid, in good standing and in full force and
effect and, to Seller’s knowledge, none of Seller or its property manager have
received written notice of any default or violation of any Permit which if
unremedied would have a material adverse effect on the operation, leasing, or
condition of the Facility. To the knowledge of Seller, no governmental authority
is considering suspending or revoking any Permit.

(k) Attached hereto as Schedule “9.2(k)” is a true and complete, in all material
respects, list of all Leases as of the Effective Date. Each Lease in place is in
full force and effect as of the Effective Date in accordance with the terms
thereof. To the knowledge of Seller, as of the Effective Date, neither Seller
nor any Affiliate of Seller has given or received any notice claiming the
existence of any default under any Lease in place, which default remains
uncured.

(l) Seller has delivered to Purchaser copies of all final environmental reports
or studies prepared for Seller by third party consultants in Seller’s possession
or control relating to the Real Property, which reports are listed on Schedule
“9.2(l)” attached hereto. To Seller’s actual knowledge and except for any
matters which are disclosed in the reports listed on Schedule “9.2(l)”, Seller
is not aware that the Real Property is not in compliance with any Environmental
Requirement. Seller has not received any written notice of any pending action or
proceeding arising out of the environmental condition of the Real Property,
Hazardous Materials located on the Real Property, or any alleged violation of
Environmental Requirements, which either (i) has not been remediated or
otherwise addressed in all material respects or (ii) would reasonably be
expected to be material to the operation of the Facility.

(m) The Financial Statements for the Property are the operating statements used
in Seller’s ordinary course of business and, to each of Seller’s knowledge, are
in accordance with the books and records of Seller and, to Seller’s knowledge,
do not contain any material inaccuracies.

(n) To Seller’s knowledge, Schedule “9.2(n)” sets forth a true and correct, in
all material respects, “rent roll” for the Facility (the “Rent Roll”) as of the
date identified on such Rent Roll. True and correct, in all material respects,
copies of the form(s) of Resident Agreements used by Seller in the ordinary
course of business has/have been made available to Purchaser as part of the Due
Diligence Materials.

9.3 Seller’s Knowledge. Wherever the phrase “to Seller’s actual knowledge” or
any similar phrase stating or implying a limitation on the basis of knowledge
appears in this Agreement, unless specifically otherwise qualified or except as
otherwise provided herein, such phrase shall mean the present actual knowledge
of Craig W. Spaulding or Patrick McGonigle, after inquiry of the Executive
Director of the Facility, but otherwise without any duty of inquiry, any
imputation of the knowledge of another, or independent investigation of the
relevant matter by any individual(s), and without any personal liability.
Wherever the phrase “in Seller’s possession”, “in the possession of Seller” or
similar phrase appears in this Agreement, such phrase shall be deemed to mean
only to the extent the material or other item referred to by such phrase is
located at the Property or in Seller’s offices in Dallas, Texas.

 

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9.4 Failure of Condition But No Seller Breach. Notwithstanding any provision of
this Agreement to the contrary (including Section 11.1 below), should any of the
representations and warranties of Seller become false or inaccurate prior to the
Closing Date or if Seller discovers that any representations and warranties are
false or inaccurate and informs Purchaser in writing prior to the Closing Date,
then Purchaser’s sole recourse shall be to either (i) terminate this Agreement
and cancel the Escrow, in which case the Deposit shall be returned to Purchaser
and neither Seller nor Purchaser will have any further liability or obligation
under this Agreement (except for those obligations which survive in accordance
with their terms), or (ii) proceed with the closing, without reservation, in
which case Purchaser shall be deemed to have waived all Claims against Seller
with respect to such false or inaccurate representation and warranty.
Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, in the event of any right by Purchaser to terminate this Agreement
(including without limitation, pursuant to Sections 10.3 and 11.2 below), Seller
shall first have the right, at its sole option by written Notice to Purchaser
within two (2) business days of the date of Seller’s receipt of such Notice of
termination by Purchaser, to elect to cure any failure of a covenant, condition
or inaccurate representation or warranty, by the payment of money or otherwise
(but, in all events, in a manner reasonably acceptable to Purchaser), in which
case, (a) the Closing Date will be extended at Seller’s option for a period of
time not to exceed ten (10) days for Seller to effectuate such cure, and
(b) Purchaser and Seller shall each act reasonably and in good faith to agree on
the sufficiency of such cure. If Seller is unable to cure any such failure,
inaccuracy, misrepresentation, failed covenant or obligation or other condition,
then Purchaser’s sole recourse shall be to either (i) to terminate this
Agreement and cancel the Escrow, in which case the Deposit shall be returned to
Purchaser and neither Seller nor Purchaser will have any further liability or
obligation under this Agreement (except for those obligations which survive in
accordance with their terms), or (ii) proceed with the closing, without
reservation, in which case Purchaser shall be deemed to have waived all Claims
against Seller with respect to such false or inaccurate representation and
warranty.

9.5 Survival Period. Subject to Section 11.5 below, the representations and
warranties of Seller and Purchaser set forth in this Agreement shall survive
until the Survival Date (as hereinafter defined), at which time such
representations and warranties shall terminate.

X.

CONDITIONS PRECEDENT TO CLOSING

10.1 Conditions to Seller’s Obligations. The obligation of Seller to close the
transaction contemplated hereunder shall be subject to the satisfaction or
Notice of its waiver (delivered to Purchaser and Escrow Agent), in whole or in
part, by Seller of each of the following conditions precedent:

(a) Except by reason of a default by Seller, Escrow Agent is in a position to
and will deliver to Seller the instruments and funds accruing to Seller pursuant
to the provisions of this Agreement and the Escrow Agreement;

 

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(b) There is no existing uncured material breach of any of the covenants,
representations, warranties or obligations of Purchaser set forth in this
Agreement that has not been waived by Seller; and

(c) Purchaser shall have obtained confirmation from the Oklahoma Department of
Health that Purchaser may consummate the transaction contemplated by this
Agreement or Purchaser shall have executed a Bridging Lease and a Bridging
Management Agreement as needed to permit the Purchaser to own the Licensed
Facility as of the Closing Date.

The foregoing conditions contained in this Section 10.1 are intended solely for
the benefit of Seller. Seller shall at all times have the right to waive any
condition precedent, provided that such waiver is in writing and delivered to
Purchaser and Escrow Agent.

10.2 Conditions to Purchaser’s Obligations. The obligations of Purchaser to
close the transaction contemplated hereunder shall be subject to the
satisfaction or Notice of its waiver (delivered to Seller and Escrow Agent), in
whole or in part, by Purchaser of each of the following conditions precedent,
and Purchaser shall have no right to terminate this Agreement or delay the
Closing for any other reason:

(a) Except by reason of a default by Purchaser, Escrow Agent is in a position to
and will deliver to Purchaser the instruments and funds, if any, accruing to
Purchaser pursuant to the provisions of this Agreement;

(b) There is no existing uncured material breach of any of the covenants,
representations, warranties or obligations of Seller set forth in this Agreement
that has not been waived by Purchaser, and Seller’s representations and
warranties contained in or made pursuant to this Agreement shall be true and
correct in all material respects as if made again on the Closing Date, but
subject to Seller’s right to cure any of the same pursuant to Section 9.4 above;
and

(c) Purchaser shall have obtained confirmation from the Oklahoma Department of
Health that Purchaser may consummate the transaction contemplated by this
Agreement or Seller shall have executed a Bridging Lease and a Bridging
Management Agreement as needed to permit the Purchaser to own the Licensed
Facility as of the Closing Date.

The foregoing conditions contained in this Section 10.2 are intended solely for
the benefit of Purchaser. Purchaser shall at all times have the right to waive
any condition precedent, provided that such waiver is in writing and delivered
to Seller and Escrow Agent.

10.3 Failure of Conditions to Closing. Escrow Agent shall be responsible for
confirming, on or before the Closing Date, that the conditions to Closing set
forth in Sections 10.1 and 10.2 hereof, and as set forth elsewhere in this
Agreement, have been satisfied. Purchaser and Seller hereby agree to deliver
their Notices to Escrow Agent, on or before the Closing Date, of the
satisfaction or waiver of all conditions to Closing hereunder, and, in the event
that both Purchaser and Seller specifically notify and instruct Escrow Agent, in
writing, to proceed to Closing hereunder, all such conditions to Closing
hereunder that are not otherwise

 

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satisfied shall be deemed to have been waived by both Purchaser and Seller.
Escrow Agent shall not proceed to Closing hereunder unless both Purchaser and
Seller specifically notify and instruct Escrow Agent to do so. Seller and
Purchaser shall use commercially reasonable efforts to satisfy the closing
conditions set forth herein. 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. Except as otherwise expressly provided herein, in the event any of
the conditions to closing set forth in this Agreement are not satisfied (other
than as the result of a default by Purchaser or Seller under the terms of this
Agreement) or waived by the applicable party by the Closing Date, then either
Seller or Purchaser (as applicable) shall have the right at its option to
declare this Agreement terminated and null and void, in which case the Deposit
shall be immediately returned to Purchaser (and such right shall survive any
termination of this Agreement) and each of the parties shall be relieved from
further liability to the other.

XI.

REMEDIES FOR PRE-CLOSING AND POST-CLOSING DEFAULTS ; LIQUIDATED

DAMAGES

11.1 Default by Purchaser Prior to Closing. IN THE EVENT THE CLOSING AND THE
CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN
PROVIDED BY REASON OF ANY MATERIAL DEFAULT OF PURCHASER, PURCHASER AND SELLER
AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE
DAMAGES WHICH SELLER MAY SUFFER. THEREFORE, PURCHASER AND SELLER DO HEREBY AGREE
THAT, IN THE EVENT OF SUCH DEFAULT, A REASONABLE ESTIMATE OF THE TOTAL DAMAGES
THAT SELLER WOULD SUFFER IN THE EVENT THAT PURCHASER DEFAULTS AND FAILS TO
COMPLETE THE PURCHASE OF THE PROPERTY IS AND SHALL BE, AS SELLER’S SOLE AND
EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), AN AMOUNT EQUAL TO THE DEPOSIT.
SAID AMOUNT SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE FAILURE OF
PURCHASER TO CLOSE AND CONSUMMATE THE TRANSACTION HEREIN CONTEMPLATED. ALL OTHER
CLAIMS TO DAMAGES OR OTHER REMEDIES IN CONNECTION WITH PURCHASER’S FAILURE TO
CLOSE AND CONSUMMATE THE TRANSACTION CONTEMPLATED HEREIN ARE EXPRESSLY WAIVED BY
SELLER. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO
SELLER. UPON SUCH DEFAULT BY PURCHASER THAT REMAINS UNCURED AFTER THE EXPIRATION
OF ANY APPLICABLE CURE PERIOD, THIS AGREEMENT SHALL BE TERMINATED AND NEITHER
PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER,
EXCEPT ANY INDEMNIFICATION OBLIGATIONS, THE RIGHTS OF SELLER AND PURCHASER THAT
SHALL SURVIVE AS PROVIDED HEREIN, AND FOR THE RIGHT OF SELLER TO COLLECT SUCH
LIQUIDATED DAMAGES FROM PURCHASER AND ESCROW AGENT. EXCEPT AS EXPRESSLY PROVIDED
IN THIS SECTION 11.1, NOTHING HEREIN SHALL LIMIT SELLER’S RECOVERY IN CONNECTION
WITH ANY EXPRESS INDEMNITY BY PURCHASER PROVIDED IN THIS AGREEMENT.

 

               /s/ CWS                                   /s/ TBB                
      SELLER’S INITIALS       PURCHASER’S INITIALS   

 

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11.2 Default by Seller Prior to Closing. IN THE EVENT THE CLOSING AND THE
CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN
PROVIDED BY REASON OF ANY DEFAULT OF SELLER, THEN PURCHASER AND SELLER AGREE
THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES
WHICH PURCHASER MAY SUFFER. THEREFORE, PURCHASER AND SELLER DO HEREBY AGREE
THAT, IN THE EVENT OF SUCH DEFAULT, PURCHASER MAY, AS ITS SOLE RECOURSE AND
REMEDY (AT LAW OR IN EQUITY), EITHER: (a) PURSUE AN ACTION AGAINST SELLER FOR
SPECIFIC PERFORMANCE, PROVIDED THAT SUCH ACTION IS INITIATED WITHIN NINETY
(90) DAYS FOLLOWING THE CLOSING DATE SET FORTH HEREIN; OR (b) TERMINATE THIS
AGREEMENT AND RECEIVE THE RETURN OF THE DEPOSIT PLUS DAMAGES FROM SELLER IN AN
AMOUNT EQUAL TO PURCHASER’S THIRD-PARTY EXPENSES ACTUALLY INCURRED IN CONNECTION
WITH THE TRANSACTION CONTEMPLATED HEREIN, INCLUDING WITHOUT LIMITATION THE
NEGOTIATION OF THIS AGREEMENT, WHICH DAMAGES (NOT INCLUDING THE RETURN OF THE
DEPOSIT) SHALL NOT EXCEED TWO HUNDRED THOUSAND DOLLARS ($200,000.00). ALL OTHER
CLAIMS TO DAMAGES OR OTHER REMEDIES IN CONNECTION WITH SELLER’S FAILURE TO CLOSE
AND CONSUMMATE THE TRANSACTION CONTEMPLATED HEREIN (OTHER THAN AS SPECIFIED IN
(a) AND (b) HEREOF) ARE EXPRESSLY WAIVED BY PURCHASER. UPON DEFAULT BY SELLER,
IF THIS AGREEMENT IS TERMINATED BY PURCHASER, NEITHER PARTY SHALL HAVE ANY
FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY
INDEMNIFICATION OBLIGATIONS, AND THE RIGHTS OF SELLER AND PURCHASER THAT SHALL
SURVIVE AS PROVIDED HEREIN.

 

          /s/CWS                             /s/ TBB                            
SELLER’S INITIALS   PURCHASER’S INITIALS  

11.3 Limitations of Purchaser’s Post-Closing Claims.

(a) Notwithstanding any provision to the contrary herein or in any document or
instrument (including any deeds, bill of sale or assignments) executed by Seller
and delivered to Purchaser at or in connection with the Closing (excluding the
Bridging Lease and the Bridging Management Agreement, if applicable)
(collectively, “Closing Documents”), Seller shall not have (and Seller is
exculpated and released from any) liability whatsoever with respect to any
Claims under, and Purchaser shall be forever barred from making or bringing any
Claims with respect to, any of the representations and warranties, covenants and
indemnities contained in this Agreement or in any Closing Document, except to
the extent (and only to the extent) that the aggregate amount of all Claims for
breach of Seller’s representations and warranties, covenants and indemnities
exceed One Hundred Thousand and No/100 Dollars ($100,000.00) (the “Threshold

 

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Amount”) (but if any such Claims are valid and are finally determined (or
settled) to be in excess of the Threshold Amount, then Seller’s liability shall
extend to the “first dollar” of Purchaser’s Claims); provided, however,
notwithstanding any provision to the contrary herein or in any Closing Document,
the total liability of Seller for any or all Claims with respect to the Property
may not exceed Three Hundred Thousand and No/100 Dollars ($300,000.00) (such
amount, the “Cap Amount”). The Cap Amount shall be placed in escrow with the
Post-Closing Escrow Agent at Closing out of funds that would otherwise be
payable to Seller (the “Post-Closing Liability Escrow”), pursuant to the terms
and conditions of a Post-Closing Escrow Agreement, in form and content as
attached hereto as Exhibit “M” (the “Post-Closing Escrow Agreement”). The
Post-Closing Escrow Agreement shall further provide that on the date which is
six (6) months after the Closing Date, the Post-Closing Escrow Agent shall
refund to Seller fifty percent (50%) of the Cap Amount unless there exists a
Pending Claim, as hereinafter provided, and on the Survival Date, the
Post-Closing Escrow Agent shall refund to Seller any remaining balance of the
Post-Closing Liability Escrow (including any interest earned thereon), unless
there is a Pending Claim, in which event the Post-Closing Liability Escrow shall
remain in place until the Pending Claim is definitively resolved by agreement of
the parties or final court order but all funds in the Post-Closing Liability
Escrow, other than those funds that are to be retained by the Post-Closing
Escrow Agent in accordance with the terms of the Escrow Agreement, shall be
released to Seller as of the Survival Date. If any amount remains in the
Post-Closing Liability Escrow following the definitive resolution of the Pending
Claim by agreement of the parties or final court order, such amount should be
released to Seller. For purposes of clarification, the terms of this
Section 11.3 shall not apply to any liability of Seller to any third parties
unaffiliated with Purchaser regarding the Retained Liabilities.

(b) Purchaser shall not make any Claim with respect to the Property or deliver
any notice of a Claim with respect to the Property (a “Claim Notice”) unless in
good faith, it believes the Claim or all of the Claims with respect to the
Property in the aggregate would exceed the applicable Threshold Amount.

11.4 Survival of Purchaser’s Claims. Except as otherwise specifically set forth
in this Agreement, the representations and warranties, covenants and indemnities
of Seller contained herein or in any Closing Document shall survive only until
the date that is nine (9) months after the Closing Date (the “Survival Date”).
Any Claim that Purchaser may have at any time against Seller for breach of any
such representation, warranty, covenant or indemnity, whether known or unknown,
with respect to which a Claim Notice has not been delivered to Seller on or
prior to the Survival Date, shall not be valid or effective and the party
against whom such Claim is asserted shall have no liability with respect
thereto. Any Claim that Purchaser may have at any time against Seller for a
breach of any such representation or warranty, or its covenants and indemnities
whether known or unknown, with respect to which a Claim Notice has been
delivered to Seller on or prior to the Survival Date (a “Pending Claim”) may be
the subject of subsequent litigation brought by Purchaser against Seller. For
avoidance of doubt, on the Survival Date, Seller shall be fully discharged and
released (without the need for separate releases or other documentation) from
any liability or obligation to Purchaser and/or its successors and assigns with
respect to any Claims or other matters relating to this Agreement or any Closing
Document, except solely for those matters that are then the subject of a Claim
Notice delivered by Purchaser to Seller on or prior to the Survival Date that is
still pending on the Survival Date.

 

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11.5 Limitations on Liability. To the maximum extent permitted by applicable
law, no shareholder, director, officer or employee of any party to this
Agreement shall have any personal liability with respect to the liabilities or
obligations of such party under this Agreement or any document executed by such
party pursuant to this Agreement.

11.6 Survival. Article XI shall survive the Closing.

XII.

FINANCIAL ADVISOR

Seller represents and warrants to Purchaser, and Purchaser represents and
warrants to Seller, that except for KeyBanc Capital Markets Inc. (“Financial
Advisor”), no financial advisor, broker or commission agent has been engaged by
it or their affiliates, respectively, in connection with the transaction
contemplated by this Agreement or to its knowledge is in any way connected with
this transaction. Purchaser shall be responsible for the payment of any
commission, finder’s fee or other sum initiated by any financial advisor,
broker, commission agent or other person engaged or retained by Purchaser in
connection with the transaction contemplated by this Agreement. Seller shall be
responsible for the payment of any compensation, commission, finder’s fee or
other sum initiated by any financial advisor, broker, commission agent or other
person engaged or retained by Seller in connection with the transaction
contemplated by this Agreement, including without limitation, Financial Advisor.
Seller and Purchaser (except with respect to the compensation which shall be
paid by Seller to Financial Advisor) each agree to indemnify, protect, defend
and hold the other harmless from and against any claims, actions, suits or
demands for payment of any compensation, commission, finder’s fee or other sum
initiated by any financial advisor, broker, commission agent or other person
which such party or its representatives has engaged or retained or with which it
has had discussions concerning or which shall be based upon any statement or
agreement alleged to have been made by such party, in connection with the
transaction contemplated by this Agreement or the sale of the Property by
Seller. The provisions of this Article XII shall survive the Closing.

 

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XIII.

NOTICES

Except as otherwise expressly provided in this Agreement, all notices, requests,
demands and other communications hereunder (“Notice”) shall be in writing and
shall be deemed delivered by (i) hand delivery upon receipt, (ii) registered
mail or certified mail, return receipt requested, postage prepaid, upon delivery
to the address indicated in the Notice, (iii) by confirmed telecopy or facsimile
transmission when sent, and (iv) overnight courier (next business day delivery)
on the next business day at 12:00 noon, whichever shall occur first, as follows:

If to Seller:

c/o South Bay Partners, Ltd.

5307 E Mockingbird Lane, Ste.1010

Dallas, TX 75206

Attn: Craig W. Spaulding

Telephone: (214) 370-2600

Facsimile: (214) 370-2699

With a copy to:

Arent Fox LLP

1717 K Street, N.W.

Washington, D.C. 20036-5339

Attention: Kenneth S. Jacob, Esq.

Telephone: (202) 775-5750

Facsimile: (202) 857-6395

If to Purchaser:

CHP Partners, LP

c/o CNL Healthcare Properties, Inc.

450 South Orange Avenue, Suite 1200 Orlando, FL 32801-3336

Attention: Tracey B. Bracco, Esq.

Telephone: (407) 540-7500

Facsimile: (407) 540-2544

Email: tracey.bracco@cnl.com

With a copy to:

Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

215 North Eola Drive

Orlando, Florida 32801

Attention: William T. Dymond, Jr., Esq.

Telephone: (407) 843-4600

Facsimile: (407) 843-4444

Email: william.dymond@lowndes-law.com

Any correctly addressed Notice that is refused, unclaimed or undelivered because
of an act or omission of the party to be notified shall be considered to be
effective as of the first day that the Notice was refused, unclaimed or
considered undeliverable by the postal authorities, messenger or overnight
delivery service. The parties hereto shall have the right from time to time, and
at any time, to change their respective addresses and each shall have the right
to specify as its address any other address within the United States of America,
by giving to the other party at least five (5) days prior Notice thereof, in the
manner prescribed herein; provided, however, that to be effective, any such
change of address must be actually received (as evidenced by a return

 

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receipt). Telephone numbers and email addresses, if listed, are listed for
convenience purposes only and not for the purposes of giving Notice pursuant to
this Agreement. Any Notice that is required or permitted to be given by either
party to the other under this Agreement may be given by such party or its legal
counsel, who are hereby authorized to do so on the party’s behalf.

XIV.

MISCELLANEOUS

14.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oklahoma. If any legal action is
necessary to enforce the terms and conditions of this Agreement, the parties
hereby agree that the courts in the State of Oklahoma shall be the sole
jurisdiction and venue for the bringing of the action.

14.2 Exhibits and Schedules a Part of This Agreement. The Exhibits and Schedules
attached hereto are incorporated in this Agreement by reference and are hereby
made a part hereof.

14.3 Executed Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Agreement shall become effective upon the due execution
and delivery of this Agreement to the parties hereto.

14.4 Assignment. Purchaser may not assign, convey and otherwise transfer all or
any part of its interest or rights herein without the prior written consent of
Seller, which consent may be withheld in Seller’s sole discretion.
Notwithstanding the foregoing, however, Purchaser may (without Seller’s consent
but with advance written notice to Seller), by not later than one (1) business
day prior to Closing, assign and transfer in whole or in part all of its rights
and obligations under this Agreement to one (1) or more wholly owned
subsidiary(ies) thereof, or to a one hundred percent (100%) owned affiliate(s)
thereof, or to any entity controlled (directly or indirectly, through voting or
equity ownership) by Purchaser in the form of the Assignment of Purchase
Agreement attached hereto as Exhibit “K”; provided, however, that Purchaser
shall not be released of its obligations under this Agreement as a result of any
such assignment. No transfer or assignment in violation of the provisions hereof
shall be valid or enforceable.

14.5 IRS—Form 1099-S. For purposes of complying with Section 6045 of the
Internal Revenue Code of 1986, as amended, Escrow Agent shall be deemed the
“person responsible for closing the transaction” and shall be responsible for
obtaining the information necessary to file with the Internal Revenue Service
Form 1099-S, “Statement for Recipients of Proceeds from Real Estate, Broker and
Barter Exchange Transactions.”

14.6 Successors and Assigns. Subject to the provisions of Section 14.4 hereof,
this Agreement shall be binding upon and inure to the benefit of the parties’
respective successors and permitted assigns.

 

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14.7 Time is of the Essence. Time is of the essence of this Agreement.

14.8 Entire Agreement. This Agreement, and Exhibits and Schedules and other
documents and instruments attached to or referenced herein, contain the entire
understanding and agreement between the parties hereto with respect to the
purchase and sale of the Property, and all prior and contemporaneous
understandings, letters of intent, agreements and representations, whether oral
or written, are entirely superseded. Except for any of the following expressly
contained in this Agreement, Seller and Purchaser each expressly disclaim any
reliance on any oral or written representations, warranties, comments,
statements or assurances made by Seller, Purchaser, and any of their respective
affiliates, and their respective agents, employees, representatives, attorneys,
financial advisors or brokers, as an inducement or otherwise, to Purchaser’s and
Seller’s respective execution hereof. No amendment of this Agreement shall be
binding unless in writing and executed by the parties hereto.

14.9 Further Assurances. Whenever and so often as requested by a party, the
other party will promptly execute and deliver or cause to be executed and
delivered all such other and further instruments, documents or assurances, and
promptly do or cause to be done all such other and further things as may be
necessary and reasonably required in order to further and more fully vest in
such requesting party all rights, interests, powers, benefits privileges and
advantages conferred or intended to be conferred upon it by this Agreement, or
to effectuate the termination of this Agreement and cancellation of the Escrow
(if otherwise permitted hereunder). The terms of this Section shall survive
Closing and/or termination of this Agreement.

14.10 Waiver. Failure or delay by either party to insist on the strict
performance of any covenant, term, provision or condition hereunder, or to
exercise any option herein contained, or to pursue any claim or right arising
herefrom, shall not constitute or be construed as a waiver of such covenant,
term, provision, condition, option, claim or right (except that if a party
proceeds to Closing, notwithstanding the failure of a condition to its
obligation to close, then such condition shall be deemed waived by virtue of the
Closing). Any waiver by either party shall be effective only if in a writing
delivered to the other party hereto and setting forth, with specificity, the
covenant, term, provision or condition so waived. Any such waiver shall not
constitute or be construed as a continuing waiver of any subsequent default.

14.11 Headings. The headings of this Agreement are for purposes of convenience
only and shall not limit or define the meaning of the provisions of this
Agreement.

14.12 Risk of Loss. With respect to the Property, the risk of loss shall be as
follows:

(a) Until the Closing Date, Seller shall bear the risk of loss should there be
damage to the Property by fire or other casualty (collectively “Casualty”). If,
prior to the Closing Date, the Property shall be damaged by any Casualty, Seller
shall promptly deliver to Purchaser a Notice (“Casualty Notice”) of such event.
Upon Purchaser’s receipt of a Casualty Notice, Seller and Purchaser shall meet
promptly to estimate the cost to repair and restore the Improvements to good
condition and to replace the damaged Personal Property (“Casualty Renovation
Cost”). If the parties are unable to agree on the cost of restoration, the
matter will be submitted to an engineer designated by Seller and an engineer
designated by Purchaser, each licensed to practice in the state in which the
Land is located, and the engineers shall resolve the dispute. Each party hereto
shall bear the costs and expenses of its own engineer.

 

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(b) If the Casualty Renovation Costs for the Facility exceeds One Million and
No/100 Dollars ($1,000,000.00), then, Purchaser may, at its option, elect to
terminate this entire Agreement by Notice to Seller within ten (10) business
days after the date that the Casualty Renovation Cost is determined. If
Purchaser does not elect to terminate this Agreement, then the Closing shall
take place as provided herein without reduction of the Purchase Price and Seller
shall assign the insurance proceeds to Purchaser in the event the Casualty is
insured against and shall pay to Purchaser the amount of any deductible not
already otherwise paid by Seller under applicable insurance policies, or have
the Purchase Price reduced by the Casualty Renovation Cost in the event the
Casualty is not fully insured against (subject to further adjustment for actual
restoration costs).

(c) If the Casualty Renovation Cost is One Million and No/100 Dollars
($1,000,000.00) or less, then, in any such event, neither party hereto shall
have any right to terminate this Agreement, the Closing shall take place as
provided herein without reduction of the Purchase Price, and Seller shall assign
the insurance proceeds to Purchaser in the event the Casualty is insured against
and shall pay to Purchaser the amount of any deductible, under applicable
insurance policies, or have the Purchase Price reduced by the Casualty
Renovation Cost in the event the Casualty is not fully insured against (subject
to further adjustment for actual restoration costs).

(d) If, prior to the Closing Date, Seller receives notice that a material
portion of the Property (or access or other material rights in connection
therewith) as would materially adversely affect the operation of the Facility or
uses of the Property is, or has been threatened in writing by a governmental
authority of competent jurisdiction, to be taken by condemnation or eminent
domain, Seller shall promptly notify Purchaser, and at the election of Purchaser
this Agreement shall, upon the giving of Notice of such event or of the
condemning authorities’ intention so to take the Property, to the extent that
the taking or condemnation is reasonably anticipated to materially adversely
affect the operation of the Facility or uses of the Property, Purchaser may
terminate this Agreement. If Purchaser does not elect to terminate this
Agreement prior to the Closing Date, on the Closing Date all of the proceeds of
any award or payment made or to be made by reason of such taking shall be
assigned by Seller to Purchaser, and any money theretofore received by Seller in
connection with such taking shall be paid over to Purchaser, whereupon Purchaser
shall pay the Purchase Price without abatement by reason of such taking. Seller
shall not settle, agree to, or accept any award or payment in connection with a
taking of less than all of the Property without obtaining Purchaser’s prior
written consent in each case, which consent shall not be unreasonably withheld
or delayed.

(e) In the event of any termination of this Agreement in its entirety by
Purchaser pursuant to this Section 14.12, the Deposit shall be returned to
Purchaser and neither party shall have any further liability with respect to
this Agreement, except to the extent of such provisions which expressly survive
such transaction.

 

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(f) Notwithstanding any language to the contrary herein, the parties acknowledge
that the roof of the Facility has suffered storm damage, that Purchaser’s sole
right to terminate this Agreement on account of such roof damage shall be during
the Due Diligence Period, that the occurrence of such roof damage shall not
constitute a Casualty for the purposes of this Section 14.12, and that the roof
damage shall be addressed as provided in the remainder of this paragraph. Seller
shall use its commercially reasonable efforts to cause the roof damage to be
repaired prior to Closing. To the extent the roof damage has not been repaired
by Closing, Seller shall (i) assign to Purchaser its right to receive any
additional insurance proceeds on account of such roof damage, plus (ii) to the
extent the remaining insurance proceeds are insufficient to complete the roof
repair, provide Purchaser a credit against the Purchase Price in the amount
necessary to complete the roof repair less the amount of the assigned insurance
proceeds. Following Closing, Seller shall have no further liability on account
of such roof damage.

14.13 Construction of Agreement. The parties hereto have negotiated this
Agreement at length, and have had the opportunity to consult with, and be
represented by, their own competent counsel. This Agreement is, therefore,
deemed to have been jointly prepared. In determining the meaning of, or
resolving any ambiguity with respect to, any word, phrase or provision of this
Agreement, no uncertainty or ambiguity shall be construed or resolved against
any party under any rule of construction, including the party primarily
responsible for the drafting and preparation of this Agreement. The words
“herein,” “hereof,” “hereunder” and words of similar reference shall mean this
Agreement. The words “this Agreement” include the exhibits, schedules addenda
and any future written modifications, unless otherwise indicated by the context.
All words in this Agreement shall be deemed to include any number or gender as
the context or sense of the Agreement requires. The words “will,” “shall” and
“must” in this Agreement indicate a mandatory obligation. The use of the words
“include,” “includes” and “including” followed by one or more examples is
intended to be illustrative and is not a limitation on the scope of the
description or term for which the examples are provided. All dollar amounts set
forth in this Agreement are stated in United States Dollars, unless otherwise
specified. The words “day” and “days” refer to calendar days unless otherwise
stated. The words “business day” refers to a day other than a Saturday, Sunday
or Legal Holiday (hereinafter defined). The words “month” and “months” refer to
calendar months unless otherwise stated. The words “year” and “years” refer to
calendar years unless otherwise stated. If any date herein set forth for the
performance of any obligations by Seller or Purchaser or for the delivery of any
instrument or notice as herein provided should fall on a Saturday, Sunday or
Legal Holiday, the compliance with such obligations or delivery will be deemed
acceptable on the next business day following such Saturday, Sunday or Legal
Holiday. As used herein, the term “Legal Holiday” will mean any local or federal
holiday on which post offices are closed in the State of Oklahoma.

14.14 No Public Disclosure. The parties agree that no party shall, with respect
to this Agreement and the transactions contemplated hereby, contact or conduct
negotiations with public officials, make any public pronouncements, issue press
releases or otherwise furnish information regarding this Agreement or the
transactions contemplated hereby to any third party without the consent of the
other party, which consent shall not be unreasonably withheld, conditioned or
delayed, except as may be required by law or securities regulations or as may be
reasonably necessary, on a confidential basis, to inform any rating agencies,
potential sources of

 

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financing, financial analysts, or to entities involved with a sale of a
controlling interest in Seller, Purchaser or any of their Affiliates or to
receive legal, accounting and/or tax advice; provided, however, that, if such
information is required to be disclosed by law, the party so disclosing the
information will use reasonable efforts to give notice to the other parties as
soon as such party learns that it must make such disclosure. Notwithstanding the
foregoing, if such information is required to be disclosed to any governmental
authority to facilitate the issuance of Permits or obtain zoning information,
the disclosing party may disclose such information without the consent of the
other parties and shall promptly give written notice to the other parties of
such information which was disclosed. This Section 14.14 shall be subject to the
terms of the confidentiality provisions of Section 14.16.

14.15 Covenants, Representations and Warranties. By proceeding with the closing
of the sale transaction, Seller and Purchaser shall be deemed to have waived,
and so covenant to waive, any claims of defaults or breaches by the other party
existing on or as of the Closing Date whether under this Agreement or any other
document or instrument executed by the other party in connection with this
transaction, of which the waiving party was made aware by Notice from the
defaulting or breaching party (and, if applicable, which is described on
Seller’s certification of representations and warranties to be delivered at
Closing) prior to the Closing Date for which the other party shall have no
liability.

14.16 Confidentiality. Other than as required or permitted by the terms of this
Agreement or required by any Legal Requirements (including without limitation,
any disclosures required or advisable by Seller or Purchaser under any
applicable securities laws or practices), no party hereto shall release or cause
or permit to be released any press notices or releases or publicity (oral or
written) or advertising promotion relating to, or otherwise announce or disclose
or cause or permit to be announced or disclosed, in any manner whatsoever, the
terms and conditions of the purchase and sale transaction for the Property, nor
shall Purchaser or its agents or representatives disclose, in any manner
whatsoever, (a) the information provided to Purchaser by Seller or its
representatives, or (b) any analyses, compilations, studies or other documents
or records prepared by or on behalf of Purchaser, in connection with Purchaser’s
investigation of the Property, without first obtaining the written consent of
Seller (collectively, “Proprietary Information”). Proprietary Information shall
not include (i) publicly available information or (ii) information that becomes
publicly available for reasons other than a breach of this section by Purchaser.
The foregoing shall not preclude Purchaser (i) from discussing the Proprietary
Information with any person who is employed by Purchaser or who, on behalf of
Purchaser, is actively and directly participating in the purchase and sale of
the Property, including, without limitation, to Purchaser’s shareholders,
partners, members, existing or prospective lenders, attorneys, accountants and
other consultants and advisors, or (ii) from complying with all laws, rules,
regulations and court orders, including, without limitation, governmental
regulatory, disclosure, tax and reporting requirements; provided, however, that
if Purchaser is required by applicable law or legal process to disclose any
Proprietary Information, Purchaser agrees to use its commercially reasonable
efforts to obtain assurance that, if possible, confidential treatment will be
accorded to the Proprietary Information. Purchaser shall inform its respective
representatives of the confidential nature of the Proprietary Information and
shall direct them to be bound by the terms of this Section. In addition to any
other remedies available to Seller, Seller shall have the right to seek
equitable relief, including, without limitation, injunctive relief or specific
performance, against Purchaser in order to enforce the provisions of this
Section. The provisions of such confidentiality agreement shall survive any
termination of this Agreement.

 

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14.17 No Third-Party Beneficiaries. Except as otherwise expressly provided
herein, Seller and Purchaser agree that there are no third parties who are
intended to benefit from or who are entitled to rely on any of the provisions of
this Agreement. No third party shall be entitled to assert any claims or to
enforce any rights whatsoever pursuant to this Agreement. Except as otherwise
expressly provided herein, the covenants and agreements provided in this
Agreement are solely for the benefit of Seller and Purchaser and their permitted
successors and assigns respectively.

14.18 Electronic Signatures. The execution of this Agreement and all Notices
given hereunder and all amendments hereto, may be effected by portable document
format (“.pdf”) signatures, all of which shall be treated as originals;
provided, however, that the party receiving a document with a .pdf signature
may, by Notice to the other, require the prompt delivery of an original
signature to evidence and confirm the delivery of the .pdf signature. Purchaser
and Seller each intend to be bound by its respective .pdf transmitted 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 or .pdf transmission.

14.19 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.

14.20 Cumulative Remedies. No remedy conferred upon a party in this Agreement is
intended to be exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law, in equity or by
statute (except as otherwise expressly herein provided).

14.21 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Purchase and Sale
Agreement to be executed effective as of the Effective Date.

 

OKLAHOMA CARE GROUP, LP,

a Texas limited partnership

By:  

OKLAHOMA CARE GROUP GP, LLC, a Texas

limited liability company, its general partner

  By:   /s/ Craig W. Spaulding     Craig W. Spaulding     Manager

 

PURCHASER: CHP PARTNERS, LP, a Delaware limited partnership By:   CHP GP, LLC, a
Delaware limited liability company, its general partner   By:     CNL Healthcare
Properties, Inc., a Maryland corporation, its sole member       By:   /s/ Tracey
B. Bracco       Name:   Tracey B. Bracco       Title:   Vice President

 

S-1

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LIST OF EXHIBITS TO PURCHASE AGREEMENT

 

Exhibit “A”    Legal Description of Property Exhibit “B”    Form of Escrow
Agreement for Earnest Money Deposit Exhibit “C”    Form of Deed Exhibit “D”   
Form of Bill of Sale Exhibit “E”    Form of Assignment and Assumption of
Intangible Property Exhibit “F”    Form of Assignment and Assumption of Leases
and Contracts Exhibit “G”    Form of Assignment and Assumption of Resident
Agreements Exhibit “H”    Form of FIRPTA Certificate Exhibit “I”    Form of
Owner’s Affidavit Exhibit “J”    Form of Notice to Residents Exhibit “K”    Form
of Assignment of Purchase Agreement Exhibit “L”    Bridging Lease Exhibit “M”   
Bridging Management Agreement Exhibit “N”    Post-Closing Escrow Agreement

LIST OF SCHEDULES TO PURCHASE AGREEMENT

 

Schedule 1    Excluded Intellectual Property Rights Schedule “9.2(e)”   
Litigation Schedule “9.2(g)”    Material Contracts Schedule “9.2(h)”    Notice
of Material Violation of Legal Requirements Schedule “9.2(j)”    Material
Healthcare Permits Schedule “9.2(k)”    Leases Schedule “9.2(l)”   
Environmental Reports Schedule “9.2(n)”    Rent Roll

--------------------------------------------------------------------------------

EXHIBIT “A”

LEGAL DESCRIPTION OF PROPERTY

(as described in the vesting deed)

[Intentionally Omitted]

EXHIBIT “B”

FORM OF

EARNEST MONEY DEPOSIT ESCROW AGREEMENT

[Intentionally Omitted]

EXHIBIT “C”

FORM OF DEED

[Intentionally Omitted]

EXHIBIT “D”

FORM OF BILL OF SALE

[Intentionally Omitted]

EXHIBIT “E”

FORM OF ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PROPERTY

[Intentionally Omitted]

EXHIBIT “F”

FORM OF ASSIGNMENT AND ASSUMPTION OF LEASES AND CONTRACTS

[Intentionally Omitted]

--------------------------------------------------------------------------------

EXHIBIT “G”

FORM OF ASSIGNMENT AND ASSUMPTION OF RESIDENT AGREEMENTS

[Intentionally Omitted]

EXHIBIT “H”

FORM OF FIRPTA CERTIFICATE

[Intentionally Omitted]

EXHIBIT “I”

FORM OF OWNER’S AFFIDAVIT

[Intentionally Omitted]

EXHIBIT “J”

FORM OF NOTICE TO RESIDENTS

[Intentionally Omitted]

EXHIBIT “K”

FORM OF ASSIGNMENT OF PURCHASE CONTRACT

TO APPLICABLE PROPERTY

[Intentionally Omitted]

EXHIBIT “L”

FORM OF BRIDGING LEASE

[Intentionally Omitted]

--------------------------------------------------------------------------------

EXHIBIT “M”

FORM OF BRIDGING MANAGEMENT AGREEMENT

[Intentionally Omitted]

EXHIBIT “N”

FORM OF POST-CLOSING ESCROW AGREEMENT

[Intentionally Omitted]

SCHEDULE “1”

EXCLUDED INTELLECTUAL PROPERTY RIGHTS

[Intentionally Omitted]

SCHEDULE “9.2(e)”

LITIGATION

[Intentionally Omitted]

SCHEDULE “9.2(g)”

MATERIAL CONTRACTS

[Intentionally Omitted]

SCHEDULE “9.2(h)”

NOTICE OF MATERIAL VIOLATION OF LEGAL REQUIREMENTS

[Intentionally Omitted]

--------------------------------------------------------------------------------

SCHEDULE “9.2(j)”

MATERIAL HEALTHCARE PERMITS

[Intentionally Omitted]

SCHEDULE “9.2(k)”

LEASES

[Intentionally Omitted]

SCHEDULE “9.2(l)”

ENVIRONMENTAL REPORTS

[Intentionally Omitted]

SCHEDULE “9.2(n)”

RENT ROLL

[Intentionally Omitted]