EXHIBIT 10.1

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of February 6,
2008 (the “Effective Date”), is entered into by and among NATIONWIDE HEALTH
PROPERTIES, INC., a Maryland corporation (“NHP”), and its Affiliated signatories
hereto that are listed in Schedule 1, as “Seller” (collectively, “Seller”), and
EMERITUS CORPORATION, a Washington corporation (“Buyer”), with respect to the
following Recitals:

R E C I T A L S:

A. Seller is the owner of the assisted living and dementia care facilities
identified on Schedule 2 attached hereto (the “Facilities”) and located on the
parcels of real property described in Exhibit A attached hereto (collectively,
the “Real Property”).

B. Seller is interested in selling the Real Property together with Seller’s
interest in the Personal Property defined below to Buyer and Buyer is interested
in purchasing the same from Seller, all under the terms and conditions set forth
in this Agreement.

C. Buyer and the other entities identified on Schedule 3 attached hereto as
“tenant” are the current tenants in possession of the Real Property
(collectively, the “Tenant”). As used herein, “Affiliate” shall mean an entity
owned or controlling, controlled by, or under common control with the first
party.

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:

AGREEMENT

1. Purchase and Sale. On the terms and conditions set forth herein, Seller shall
sell to Buyer and Buyer shall purchase from Seller the following:

(a) Real Property. The Real Property, together with all tenements,
hereditaments, rights, privileges, interests, easements and appurtenances now or
hereafter belonging or in any way pertaining to the Real Property, which are
herein incorporated in the definition of “Real Property”.

(b) Improvements. The existing buildings, fixtures, structures and other
improvements located upon the Real Property, together with, to the extent not
owned by Tenant and not constituting Personal Property, apparatus, equipment and
appliances incorporated therein and used in connection with the operation and
occupancy thereof (the “Improvements”); and

(c) Personal Property. All tangible and intangible personal property owned by
Seller which is located on and used in connection with the Improvements or the
Real Property, including, without limitation, all licenses, permits, warranties
or contract rights and any other personal property relating thereto (the
“Personal Property”).

 

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Hereinafter the Real Property, Improvements and Personal Property shall
sometimes be collectively referred to as “Seller’s Assets.”

2. Purchase Price and Earnest Money.

(a) The purchase price for Seller’s Assets (“Purchase Price”) shall be Three
Hundred Five Million Dollars ($305,000,000). Buyer and Seller acknowledge and
agree that the portion of the Purchase Price allocable to the facility known as
Autumn Ridge and located in Herculaneum, Missouri (the “Autumn Ridge Facility”)
is Five Million Five Hundred Thousand Dollars ($5,500,000) (the “Autumn Ridge
Purchase Price”). The Purchase Price, subject to the prorations and adjustments
set forth herein, shall be paid by Buyer to Seller in cash at Closing. Buyer and
Seller acknowledge that the purchase of Seller’s Assets is subject to the
assumption by Buyer and/or payoff by Seller at Closing of the existing debt
encumbering certain Facilities in the approximate amount of Fifty-Six Million
Two Hundred Thousand Dollars ($56,200,000), which existing debt obligations are
more particularly described on Schedule 4 attached hereto (collectively, the
“Existing Debt”). At Closing, Buyer shall receive a credit against the Purchase
Price for the then outstanding principal balance of the Existing Debt assumed by
Buyer.

(b) Within two (2) business days after the Effective Date, Buyer shall deliver
to Escrow Agent (as hereinafter defined) an earnest money deposit in the amount
of Three Million Fifty Thousand Dollars ($3,050,000), which sum, together with
all interest accrued thereon, is sometimes hereinafter referred to as the
“Deposit”. Escrow Agent shall hold the Deposit pursuant to an escrow agreement
reasonably acceptable to Buyer and Seller and shall invest the Deposit in one or
more interest bearing accounts mutually acceptable to Seller and Buyer. At
Closing, the Deposit shall be disbursed by Escrow Agent to Seller and applied
against the Purchase Price payable at Closing and Buyer shall receive a credit
therefor. In the event that this Agreement is terminated by either Buyer or
Seller pursuant to an express right to terminate as herein provided, the Deposit
shall be disbursed by Escrow Agent pursuant to the express terms hereof.

(c) At Buyer’s election, which shall be evidenced by Buyer’s delivery of written
notice thereof to Seller not less than forty-five (45) days prior to Closing,
Seller shall provide Buyer with a loan at Closing in the amount of Thirty
Million Dollars ($30,000,000) (the “Seller Carry-back Loan”). The Seller
Carry-back Loan shall bear interest at an annual rate of Seven and one-quarter
percent (7.25%) and be payable monthly on an interest only basis for a term of
not more than four (4) years. The Seller Carry-back Loan may be prepaid by Buyer
at any time upon not less than one hundred eighty (180) days prior written
notice to Seller. In the event Buyer exercises its rights under Section 13(d) to
assign its rights hereunder to an Affiliate or Affiliates of Buyer at or prior
to Closing, then the Seller Carry-back Loan shall be made to Buyer’s assignee(s)
and the Seller Carry-back Loan shall be guaranteed by Buyer. In addition, the
Seller Carry-back Loan shall be cross-defaulted to the Summerville Master Lease
(as hereinafter defined). Such Seller Carry-back Loan shall be evidenced by a
promissory note and guaranty in form and substance acceptable to the parties and
a Third Amendment to the Summerville Master Lease (the “Seller Carry-back Loan
Documents”). At Closing, Buyer shall receive a credit against the Purchase Price
for the principal

 

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amount of the Seller Carry-back Loan. As used herein, “Summerville Master Lease”
means that certain Master Lease dated as of October 2, 2006 by and among
Nationwide Health Properties, Inc. and NHP McClain, LLC, as landlord, and
Summerville at Camelot Place LLC, Summerville at Hillen Vale LLC, Summerville at
Lakeview LLC, Summerville at Ridgewood Gardens LLC, Summerville at North Hills
LLC, and The Inn at Medina LLC, collectively as tenant, as amended by (i) that
certain First Amendment to Master Lease dated as of December 1, 2006, and
(ii) that certain Second Amendment to Master Lease dated as of January 2, 2007.

3. Closing.

(a) The Closing Date. Provided the conditions to closing set forth in Section 9
have been satisfied or waived, Buyer and Seller agree to use their good faith
efforts to close the purchase and sale transaction contemplated under this
Agreement (the “Closing”) as soon as practicable on or following April 1, 2008,
provided, however, the date of such Closing shall occur on or before June 30,
2008 (the “Closing Date”). The Closing will be a so-called “New York” style
escrow closing with Chicago Title Insurance Company (the “Escrow Agent”),
whereby Seller, Buyer and their attorneys need not be physically present at
Closing and may deliver documents and proceeds to the Escrow Agent to be
exchanged, disbursed and delivered pursuant to customary escrow arrangements.

(b) The Closing Process. Closing shall occur through escrow and accordingly, at
or prior to the Closing Date, Buyer and Seller shall deposit in escrow with
Escrow Agent all documents and monies necessary to close this transaction as
herein provided. Time is of the essence of this Agreement. Closing shall occur
in accordance with the procedures and instructions given by Seller and Buyer to
the Escrow Agent prior to Closing.

(c) Autumn Ridge Closing. Provided that the Title Due Diligence Period (as
hereinafter defined) has expired with respect to the Autumn Ridge Facility (as
such period may be shortened with respect to the Autumn Ridge Facility by
agreement of the parties), Buyer shall have the right to elect to close early on
the acquisition of the Autumn Ridge Facility by delivering written notice of
such election to Seller no less than fifteen (15) days prior to such closing
date (unless another date is mutually agreed to by the parties). If such
election is made by Buyer, the Autumn Ridge Purchase Price, subject to the
prorations and adjustments set forth herein, shall be paid by Buyer to Seller in
cash at the closing of the purchase of the Autumn Ridge Facility (the “Autumn
Ridge Closing”). In no event shall any amount of the Deposit delivered to Escrow
Agent be applied to the payment of the Autumn Ridge Purchase Price.

4. Conveyances.

At Closing, Seller shall (a) convey the Real Property to Buyer by limited or
special warranty deed (the “Deeds”), generally in the form attached hereto as
Exhibit B (or comparable state form), (b) execute and deliver Bills of Sale to
Buyer in the form attached hereto as Exhibit C in order to convey the Personal
Property to Buyer, and (c) execute and deliver such other conveyancing and
closing documents as are reasonable and customary in the jurisdiction in which
each parcel of Real Property is located. In addition, at Closing each of the
entities comprising Seller shall deliver (i) to

 

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the Title Company (as hereinafter defined), such owner’s affidavits and
indemnities, including, but not limited to gap indemnities where recording and
funding cannot occur on the same date, as may reasonably be required to be
executed by the seller of real estate in connection with the sales transaction
contemplated under this Agreement; and (ii) to Buyer, an affidavit executed by
such entity under penalty of perjury, stating such entity’s United States
taxpayer identification number and that such entity is not a foreign person, in
accordance with the Internal Revenue Code, Section 1445(b)(2), in the form
attached hereto as Exhibit D .

5. Closing Costs And Prorations.

At or prior to Closing, as appropriate, Seller and Buyer shall be responsible
for the following costs and expenses of, and prorations related to, the
transaction, all of which, to the extent not paid prior to Closing, will be
included on the closing statement to be executed and delivered by Buyer and
Seller at Closing:

(a) Attorneys’ Fees. Each party shall pay its own attorneys’ fees and costs
incurred in connection with the transactions contemplated under this Agreement.

(b) Survey. Buyer shall pay for all costs of any ALTA surveys required by Buyer.

(c) Due Diligence Expenses. Buyer shall pay all of the costs incurred in
conducting its Due Diligence Review (as defined below).

(d) Proration of Real and Personal Property Taxes. All real and personal
property taxes shall not be prorated, it being understood and agreed that Buyer
and the other entities comprising the Tenant shall be responsible for them for
the periods both before and after the Closing Date.

(e) Escrow Fees and Charges. Buyer and Seller shall each pay one-half (1/2) of
all escrow fees and charges.

(f) Other Closing Costs. At or prior to Closing, as appropriate, Seller and
Buyer shall be responsible for the other costs and expenses of the transaction
as set forth on Exhibit E.

(g) Amounts Under the Facility Leases. Any rent payable under the leases between
Seller and Tenant described on Schedule 3 hereto (the “Facility Leases”) shall
be prorated and Buyer shall receive a credit for any prepaid rent for any period
after the Closing Date. In addition, Buyer shall either receive a credit at
Closing for any security deposits (other than security deposits held in the form
of Letters of Credit, which shall be returned to Tenant at Closing), escrows for
property taxes, capital expenditures or other impounds held by Seller as of the
Closing Date pursuant to the Facility Leases or, at Buyer’s option, Seller shall
remit the same to Buyer or its designee at Closing.

(h) Existing Debt. Buyer shall be required to pay any loan costs, including
without limitation, assumption fees or prepayment penalties/defeasance fees
associated with the assumption or payoff/defeasance of the Existing Debt.

 

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6. Title Insurance.

(a) The following provisions shall apply with respect to the delivery of the
title commitments to Buyer with respect to each of the parcels of land
comprising the Real Property and Buyer’s review thereof:

(i) Within fifteen (15) days after the Effective Date, Buyer shall cause Chicago
Title Insurance Company (the “Title Company”) to issue title reports or
commitments to Buyer (the “Title Commitments”), along with legible copies of all
of the exception documents referenced therein.

(ii) Within twenty (20) days after the later to occur of (i) the Effective Date
or (ii) Buyer’s receipt of the last of the Title Commitments, along with legible
copies of all of the exception documents referenced therein, Buyer shall advise
Seller by written notice of its objections, if any, to the matters reflected in
the Title Commitments (the “Title Objection Letter”).

(iii) Within ten (10) days after Seller’s receipt of the Title Objection Letter,
Seller shall specify by written notice delivered to Buyer (the “Seller Response
Notice”) which of the title defects to which Buyer has objected it will correct
at or prior to Closing and which of such defects it refuses to correct at or
prior to Closing. If Seller fails to deliver any such notice within such ten
(10) day period, Seller shall be deemed to have refused to correct any of the
defects to which Buyer has objected. If Seller refuses or is deemed to have
refused to correct some or all of the title defects objected to by Buyer, Buyer
shall have five (5) business days after the delivery (or the deadline for the
delivery) of the Seller Response Notice to advise Seller by written notice of
its decision to close, notwithstanding the defects, or of its election to
terminate this Agreement (“Buyer’s Acceptance Notice”). Buyer’s failure to
deliver the Buyer’s Acceptance Notice within such five (5) business day period
shall be deemed to be Buyer’s election to terminate this Agreement.

(iv) In the event Buyer elects or is deemed to have elected to terminate this
Agreement as a result of the existence of title defects which Seller refuses to
correct by Closing, the Deposit shall be returned to Buyer and neither party
shall have any further rights or obligations hereunder except for Seller’s
rights to indemnification provided in Section 7(b) below.

(v) All matters reflected on the Title Commitments and not objected to or not
deemed to be objected to by Buyer in accordance with the terms hereof, together
with such other matters approved by Buyer pursuant to Buyer’s Acceptance Notice,
shall be deemed accepted by Buyer and shall for purposes hereof be deemed to be
the “Permitted Exceptions”. Prior to Closing, Buyer and Seller shall prepare the
written list of the applicable Permitted Exceptions to be attached to each of
the Deeds to be delivered at Closing.

 

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(vi) Buyer and Seller hereby agree that, notwithstanding anything to the
contrary set forth in this Section 6(a) (but subject to the obligations of Buyer
under Section 5(h) above), (I) Seller shall have no right to refuse to correct
any objections related to (A) the Facility Leases unless Buyer elects to have
them assigned to Buyer at Closing pursuant Section 9(a)(vii), or (B) any liens
and security interests granted by Seller to secure debt obligations of Seller
other than any of the Existing Debt which Buyer elects to assume at Closing and
(II) the following shall be deemed to be accepted by Buyer as Permitted
Exceptions: (A) any non-delinquent real property taxes (whether general or
special); (B) the standard printed exceptions set forth in the title reports or
commitments, except for any that are removed by title endorsements, title
affidavits and indemnities which Seller has agreed to provide under Section 4
hereof or which are or can be provided by Buyer or any of the other entities
comprising Tenant in its capacity as the tenant of the Facilities or by extended
coverage; (C) any matters affecting the condition of title created by or with
the consent of Tenant; and (D) the liens and security instruments relating to
the Existing Debt if and to the extent assumed by Buyer at Closing pursuant to
the terms of this Agreement.

(vii) The overall title review period described in clauses (i) through (iii) of
Section 6(a) of this Agreement is sometimes referred to herein as the “Title Due
Diligence Period”.

(b) At Closing, Buyer shall cause the Title Company to issue extended coverage
title insurance policies to Buyer in the full amount of the Purchase Price and
in accordance with the Title Commitments, subject to no exceptions other than
the Permitted Exceptions and the liens of any security instruments executed by
Buyer at Closing (the “Title Policies”). The parties will agree on an allocation
of the Purchase Price among the Facilities if necessary to facilitate the
issuance of the Title Policies and the allocation of the Closing costs for which
the parties are responsible under Section 5.

(c) Seller agrees to provide, or to cause its Affiliates to provide, all such
resolutions, good standing certificates, affidavits and other documentation as
the title company may reasonably request (and as sellers customarily provide in
such applicable jurisdiction) in connection with the issuance of the Title
Policies.

7. Due Diligence Review.

(a) Buyer acknowledges that it is familiar with the operations of the Real
Property because Tenant is currently in possession of the Real Property and
operating the Facilities. Nonetheless, in addition to the Title Due Diligence
Period, Buyer shall have a period of thirty (30) days after the Effective Date
(the “Due Diligence Review Period”) in which to satisfy itself as to any and all
matters affecting the Real Property and Buyer’s proposed use thereof, including,
but not limited to, zoning and county ordinances, soils reports, existing and
necessary easements, topography, the environmental condition of the Real
Property and the structural condition of the improvements located thereon, but
specifically excluding any matters related to the operations thereof (the “Due
Diligence Review”).

 

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(b) Buyer hereby agrees to indemnify, defend and hold harmless Seller, its
directors, officers, members, partners and employees from and against any and
all costs and expenses and any and all claims and liabilities asserted by third
parties against Seller as a result of any entry onto the Real Property or
investigation, study or test conducted by Buyer, its agents, invitees, employees
or representatives in connection with the Due Diligence Review. If any such
investigation, study or test disturbed the condition of the Real Property or the
Personal Property and Buyer does not consummate the transaction provided for in
this Agreement, then Buyer shall, to the extent feasible, replace or restore
such property to the same or to substantially the same condition as existed
prior to any such inspection, test or study.

(c) At or prior to the expiration of the Due Diligence Review Period, Buyer
shall advise Seller in writing whether it is prepared to proceed with the
transaction contemplated by this Agreement or whether it intends to terminate
this Agreement (the “Due Diligence Notice”). Buyer’s failure to deliver the Due
Diligence Notice shall be an election to proceed with the transaction
contemplated by this Agreement. In the event Buyer elects to terminate this
Agreement then the Deposit shall be returned to Buyer and neither party shall
have any further rights or obligations hereunder except for Seller’s rights to
indemnification provided in Section 7(b) above.

8. Representations, Warranties and Covenants. As is more particularly set forth
in Section 13(n) below, the sale of Seller’s Assets to Buyer is AS-IS, WHERE IS,
without express or implied warranties of any nature including merchantability or
fitness for any purpose, other than the express representations and warranties
of Seller set forth herein and in the documents and instruments delivered by
Seller at Closing.

(a) Seller does hereby represent and warrant to Buyer as follows:

(i) Status. Nationwide Health Properties, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland.
NH Texas Properties Limited Partnership is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Texas. MLD
Delaware Trust is a business trust duly organized, validly existing and in good
standing under the laws of the State of Delaware. MLD Properties, LLC is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware. NHP Senior Housing, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. NHP CM Investment, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. NHP Joliet, Inc. is a corporation duly organized, validly existing and
in good standing under the laws of the State of Illinois. QR Lubbock Texas
Properties, L.P. is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Texas. BIP Sub I, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of the entities comprising Seller is duly
authorized and qualified to do all things required of it under this Agreement.

 

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(ii) Authority. Each of the entities comprising Seller has full power and
authority to enter into this Agreement and all documents and instruments to be
delivered at or prior to Closing and to carry out the terms hereof and the
consummation of the transactions provided for herein does not result in a breach
of the terms and conditions of nor constitute a default under or violation of
any of the Seller’s charter documents or any law, regulation, court order,
agreement, license or other instrument or obligation to which any of such
entities is a party. This Agreement is valid, binding and enforceable as against
each of the entities comprising Seller in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, creditor’s rights
laws or principles of equity.

(iii) Litigation. There is no litigation, investigation, or other proceeding
pending or, to the knowledge of Seller, threatened against or relating to any of
the entities comprising Seller which is material to Seller’s Assets or this
Agreement or which would prevent Seller from performing its obligations
hereunder.

(b) Buyer does hereby represent and warrant to Seller as follows:

(i) Status. Emeritus Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Washington. ESC IV,
LP is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Washington. ESC IV, LP is qualified to
do business in the State of Texas as “Texas – ESC IV, L.P.” Each of the entities
comprising Buyer is duly authorized and qualified to do all things required of
it under this Agreement.

(ii) Authority. Each of the entities comprising Buyer has full power and
authority to execute and to deliver this Agreement and all documents and
instruments to be delivered at or prior to Closing, and to carry out the
transactions contemplated herein and the same do not result in a breach of the
terms and conditions of nor constitute a default under or violation of any of
the Buyer’s charter documents or law, regulation, court order, mortgage, note,
bond, indenture, agreement, license or other instrument or obligation to which
any of the entities comprising Buyer is a party or by which the entities
comprising Buyer or any of their respective assets may be bound or affected.
This Agreement is valid, binding and enforceable as against each of the entities
comprising Buyer in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, creditor’s rights laws, or principles of
equity.

(iii) Litigation. There is no litigation, investigation or other proceeding
pending or, to the knowledge of Buyer, threatened against or relating to any of
the entities comprising Buyer or which is material to this Agreement, or which
would prevent Buyer from performing its obligations hereunder.

 

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9. Conditions.

(a) All obligations of Buyer under this Agreement are subject to the fulfillment
of each of the following conditions, any one or more of which may be waived in
writing by Buyer prior to the Closing:

(i) The representations and warranties of Seller contained in this Agreement
shall be true and correct at and as of the Closing Date as though such
representations and warranties were then again made and at Closing, Seller shall
deliver a reaffirmation of all representations and warranties hereunder signed
by Seller and certified as of the Closing Date.

(ii) Seller shall have performed all of its obligations under this Agreement
that are to be performed by it prior to or as of the Closing Date.

(iii) Buyer and Seller shall have executed and delivered all documents to be
executed and delivered at Closing pursuant to the terms hereof.

(iv) Buyer shall have received the Title Policies in accordance with the
requirements of Section 6(b) or the written assurances of the Title Company that
the Title Policies meeting the requirements of this Agreement will be issued
within a reasonable period of time after Closing.

(v) To the extent required by applicable law, Buyer shall have received the
regulatory approvals of any governmental authorities regulating the Facilities
or the transaction which is the subject of this Agreement in order to enable
Buyer to take title to Seller’s Assets or any portion thereof and any applicable
waiting period under such laws shall have expired.

(vi) Either Buyer shall have received written consent from the applicable
lenders with respect to Buyer’s assumption of the Existing Debt (the “Lenders’
Consent”) at Closing or Seller shall have provided any required notices for the
prepayment or defeasance of the Existing Debt at Closing and any applicable
prepayment/defeasance notice periods shall have expired. Notwithstanding the
foregoing, Buyer acknowledges that the receipt of the Lenders’ Consent is not a
condition of Closing and, if such consent is not available within the timeline
for Closing provided in this Agreement, Seller shall be entitled to payoff
Existing Debt at Closing from the proceeds of the sale and/or cause Buyer to
defease such debt (where prepayment is not permitted by the terms of the
applicable loan documents), and Buyer shall be responsible for any and all
prepayment fees and/or defeasance costs associated therewith as provided in
Section 5(h) above.

(vii) Tenant and Seller shall have entered into lease termination agreements
with respect to the Facility Leases (the “Lease Termination Agreements”),
pursuant to which the Facility Leases shall be terminated effective as of
Closing. Notwithstanding the foregoing, if

 

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reasonably requested by Buyer in connection with the assumption of the Existing
Debt or in order to facilitate the continued licensing of any applicable
Facility comprising a part of the Seller’s Assets, Seller shall execute and
deliver an assignment of any of the Facility Leases (and related ancillary
agreements) at Closing to Buyer or an Affiliate of Buyer designated by Buyer
(the “Lease Assignments”).

(vi) Prior to the expiration of the Due Diligence Review Period, Seller and
Buyer shall have agreed upon the form of the Seller Carry-back Loan Documents,
which Seller Carry-back Loan Documents shall be executed and delivered
concurrently with the Closing.

(b) All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions, any one or more of which may be waived by Seller in writing:

(i) The representations and warranties of Buyer contained in this Agreement
shall be true and correct at and as of the Closing Date as though such
representations and warranties were then again made and at Closing, Buyer shall
deliver a reaffirmation of all representations and warranties hereunder signed
by Buyer and certified as of the Closing Date.

(ii) Buyer shall have performed all of its obligations under this Agreement that
are to be performed by it prior to or as of the Closing Date.

(iii) Buyer and Seller shall have executed and delivered all documents to be
executed and delivered at Closing pursuant to the terms hereof.

(iv) Tenant and Seller shall have entered into the Lease Termination Agreements
and/or Lease Assignments, as the case may be.

(v) Prior to the expiration of the Due Diligence Review Period, Seller and Buyer
shall have agreed upon the form of the Seller Carry-back Loan Documents, which
Seller Carry-back Loan Documents shall be executed and delivered concurrently
with the Closing.

10. Termination; Default and Remedies; No Cross Defaults.

(a) Termination. This Agreement may be terminated upon written notice by Buyer
or Seller upon the following conditions:

(i) By mutual written consent of the parties;

(ii) By Buyer if the conditions to Closing set forth in Section 9(a) have not
been satisfied or waived by the Closing Date other than as a result of a breach
or default by Buyer of its obligations hereunder.

 

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(iii) By Seller if the conditions to Closing set forth in Section 9(b) have not
been satisfied or waived by the Closing Date other than as a result of a breach
or default by Seller of its obligations hereunder;

(iv) By Buyer in the event that prior to the Closing Date a material portion of
the Real Property or the improvements thereon is damaged or destroyed or taken
or condemned by any public or quasi-public authority under the power of eminent
domain; provided, however, that in the event Buyer fails to exercise its
termination rights hereunder, then it shall be conclusively deemed to have
waived said right and Seller shall assign to Buyer all of its rights to any
insurance proceeds and condemnation award and all claims in connection
therewith.

(v) By Seller in the event the Closing does not occur on or prior to June 30,
2008 other than as a result of either (A) a breach or default by Seller, beyond
any applicable cure period provided for in this Section 10, of its obligations
hereunder or (B) the existence of any other event or circumstance which prevents
Seller from consummating the transaction provided for herein.

(vi) By Buyer in the event the Closing does not occur on or prior to June 30,
2008 as a result of either (A) a breach or default by Seller, beyond any
applicable cure period provided for in this Section 10, of its obligations
hereunder or (B) the existence of any other event or circumstance which prevents
Seller from consummating the transaction provided for herein.

(vii) By Buyer pursuant to Section 6(a)(iii).

(viii) By Buyer pursuant to Section 7(c).

(b) Seller’s Breach. In the event Buyer has the right to terminate this
Agreement as a result of Seller being in material breach of any representation,
warranty or covenant of Seller under this Agreement, Buyer shall first be
required to give written notice of such breach to Seller, which notice shall set
forth in reasonable detail the nature of Seller’s breach (“Buyer’s Notice”) and
Seller will have a period (“Seller’s Cure Period”) expiring on the tenth
(10th) day after the date Seller receives Buyer’s Notice, to correct or cure
Seller’s breach and if such breach is cured, then Buyer may not exercise any
such termination rights.

(c) Buyer’s Default. In the event Seller has the right to terminate this
Agreement as a result of Buyer being in material breach of any representation,
warranty or covenant of Buyer under this Agreement, Seller shall first be
required to give written notice of such breach to Buyer, which notice shall set
forth in reasonable detail the nature of Buyer’s breach (“Seller’s Notice”) and
Buyer will have a period (“Buyer’s Cure Period”) expiring on the tenth
(10th) day after the date Buyer receives Seller’s Notice to correct or cure
Buyer’s breach and if such breach is cured, then Buyer may not exercise any such
termination rights.

 

11

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(d) Rights on Termination.

(i) Return of Deposit. Buyer shall be entitled to the return of the Deposit in
the event this Agreement is terminated pursuant to any of the following
provisions: (a) pursuant to Section 10(a)(i), (b) pursuant to Section 10(a)(ii)
if the failure of the condition to Closing either (I) is the result of a
material breach by Seller of its obligations under this Agreement, beyond any
applicable cure period provided for in this Section 10, or (II) regardless of
the fault of Seller, arises out of any event or circumstance that prevents
Seller from consummating the transaction provided for herein, (c) pursuant to
Section 10(a)(iv), (d) pursuant to Section 10(a)(vi), (e) pursuant to
Section 10(a)(vii) or (f) pursuant to Section 10(a)(viii). In addition, if such
termination by Buyer is due to a material breach by Seller of its obligations
under this Agreement, beyond any applicable cure period provided for in this
Section 10, then Seller shall also reimburse Buyer on demand for its actual out
of pocket costs and expenses incurred to the date of termination, not to exceed
Three Hundred Thousand and no/100 Dollars ($300,000) (the “Buyer’s Transaction
Costs”).

(ii) Forfeiture of Deposit. Buyer shall not be entitled to the return of the
Deposit but instead the Deposit shall be released by Escrow Agent to Seller as
liquidated damages and not as a penalty in the event of the termination of this
Agreement pursuant to any of the following provisions: (a) pursuant to
Section 10(a)(ii) if such termination occurs after the expiration of the Title
Due Diligence Period and the failure of the condition to Closing is not due to
any of the events described in Section 10(d)(i)(b), (b) pursuant to
Section 10(a)(iii) or (c) pursuant to Section 10(a)(v) and in such event Seller
and Buyer further acknowledge and agree as follows:

THE DEPOSIT SHALL BE RELEASED TO SELLER AS SELLER’S SOLE AND EXCLUSIVE
LIQUIDATED DAMAGES, AND IN FULL AND COMPLETE SETTLEMENT AND LIQUIDATION OF ALL
DAMAGES SUSTAINED BY SELLER, IT BEING ACKNOWLEDGED BY SELLER AND BUYER THAT THE
AMOUNT OF DAMAGES INCURRED BY SELLER AS A RESULT OF A TERMINATION OF THIS
AGREEMENT PURSUANT TO ANY OF THE PROVISIONS SET FORTH IN THIS SECTION 10(d)(ii)
WOULD BE SUBSTANTIAL BUT DIFFICULT, IF NOT IMPOSSIBLE, TO ASCERTAIN AND THAT
SUCH LIQUIDATED DAMAGES REPRESENT THE PARTIES’ BEST ESTIMATE OF THE DAMAGES
SELLER WILL INCUR AS A RESULT OF SUCH TERMINATION. SELLER SHALL NOT BE ENTITLED
TO EXERCISE ANY OTHER RIGHTS, POWERS AND REMEDIES AT LAW OR IN EQUITY, OTHER
THAN ITS RIGHT TO RECEIVE THE DEPOSIT PURSUANT HERETO, AND, SUBJECT TO SELLER’S
RECEIPT OF THE DEPOSIT IN FULL AND COMPLETE SETTLEMENT AND LIQUIDATION OF ALL
DAMAGES SUSTAINED BY SELLER, SELLER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ALL
SUCH OTHER RIGHTS, POWERS OR REMEDIES AND HEREBY COVENANTS NOT TO SUE BUYER AS A
RESULT OF THE TERMINATION OF THIS AGREEMENT.

 

/s/ EM              

  

/s/ AHK          

Buyer’s Initials    Seller’s Initials

 

12

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(e) No Cross Default. Notwithstanding anything to the contrary herein, no
default by Buyer or Seller under this Agreement shall be deemed to constitute a
default or event of default under any other document or instrument now or
hereafter in effect between Seller, Buyer, Tenant or any Affiliates of the
foregoing, including without limitation any of the Facility Leases or any other
leases or loans between Seller or its Affiliates, on the one hand, and Buyer or
its Affiliates, on the other hand. It is the intent of the parties that this
Agreement and the parties’ rights, duties and obligations hereunder are intended
to be separate and distinct from any other contract, lease, loan document or
other contractual or other relationship and not subject to any so-called “cross
default” provisions or other provisions and that any termination of this
Agreement prior to Closing, pursuant to this Section 10, whether as a result of
a default by either party or as otherwise permitted by the terms of this
Section 10, shall not affect Tenant’s continued rights under the Facility
Leases.

(f) Indemnity. The termination of this Agreement, whether by Seller or Buyer,
shall not serve to terminate Buyer’s indemnity obligations under Section 7(b),
which obligations shall specifically survive the termination of this Agreement.

(g) Specific Performance in Lieu of Termination. Notwithstanding anything to the
contrary set forth in this Section 10, if Seller is in material breach of its
obligations hereunder and, as a result, Buyer has the right under this
Section 10 to terminate this Agreement and to demand a return of the Deposit and
the payment of the Buyer’s Transaction Costs, in lieu thereof, Buyer shall have
the right to seek specific performance of the Seller’s obligations hereunder,
provided that Buyer must commence any action for specific performance within
sixty (60) days after the scheduled Closing Date.

11. Broker.

Each party represents and warrants to the other that it has not retained the
services of any broker or finder in connection with the transaction contemplated
by this Agreement and each agrees to pay any commission or finder’s fee which
may be due on account of this Agreement to any other broker or finder allegedly
employed by it and each party agrees to indemnify the other party against any
claim for any commission made by any broker allegedly employed by it.

12. Indemnity.

(a) Buyer shall indemnify and hold Seller harmless from and against:

(i) Any and all obligations relating to the ownership of the Real Property which
relate to the period from and after the Closing Date;

(ii) Any and all actions, suits, proceedings, demands, assessments, judgments,
reasonable costs and other reasonable expenses, including, but not limited to,
reasonable attorneys’ fees, incident to any of the foregoing.

(b) Seller shall indemnify and hold Buyer harmless from and against:

 

13

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(i) Any and all obligations relating to the ownership of the Real Property which
relate to the period prior to the Closing Date, except to the extent the same
are due to the acts or omissions of Tenant under the Facility Leases;

(ii) Any and all actions, suits, proceedings, demands, assessments, judgments,
reasonable costs and other reasonable expenses, including, but not limited to,
reasonable attorneys’ fees, incident to any of the foregoing.

13. Miscellaneous.

(a) Any notice, request or other communication to be given by any party
hereunder shall be in writing and shall be sent by registered or certified mail,
postage prepaid, by overnight courier guaranteeing overnight delivery or by
facsimile transmission (if confirmed verbally or in writing by mail as
aforesaid), to the following address:

 

Seller:

   Nationwide Health Properties, Inc.    610 Newport Center Drive, Suite 1150   
Newport Beach, California 92660    Attention: President and CFO   
Facsimile:        (949) 759-6876

With a copy to:

   Sherry Meyerhoff Hanson & Crance LLP    610 Newport Center Drive, Suite 1200
   Newport Beach, California 92660    Attention: Kevin L. Sherry, Esq.   
Facsimile:        (949) 719-1212

Buyer:

   Emeritus Corporation    3131 Elliott Avenue, Suite 500    Seattle, Washington
98121    Attention: Mr. Eric Mendelsohn    Facsimile:        (206) 357-7388

With a copy to:

   The Nathanson Group PLLC    One Union Square    600 University Street, Suite
2000    Seattle, Washington 98101-1195    Attention: Randi Nathanson, Esq.   
Facsimile:        (206) 623-1738

Notice shall be deemed given on actual receipt or refusal of receipt regardless
of the method of delivery used.

(b) This Agreement may not be amended or modified in any respect whatsoever
except by instrument in writing signed by the parties hereto. This Agreement and
the other documents and instruments executed and delivered simultaneously
herewith constitutes the entire agreement

 

14

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between the parties hereto and supersedes all prior negotiations, discussions,
writings and agreements between them including, but not limited to, that Letter
of Intent dated December 18, 2007 and accepted by Buyer on December 28, 2007.

(c) This Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of California, without regard to the
conflict of laws rules thereof.

(d) This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their heirs, successors and permitted assigns. Buyer may assign its
rights hereunder without the prior written consent of Seller, in whole or in
part, including with respect to one or more Facility comprising part of the
Seller’s Assets or any portion thereof, provided that any assignee is an
Affiliate of Buyer and such assignment shall not be deemed or construed to
release Buyer from its obligations hereunder. Buyer shall also be entitled to
designate an unaffiliated third party transferee to take title to the Autumn
Ridge Facility at the Autumn Ridge Closing. Otherwise, Buyer may not assign its
rights or obligations hereunder without the prior written consent of Seller,
which may be granted or withheld in Seller’s sole discretion. Each of the
entities comprising Seller or Buyer shall be jointly and severally liable with
all other entities comprising Seller or Buyer, respectively.

(e) The waiver by any party of any breach of any of the provisions of this
Agreement shall not be effective unless in writing and signed by the party
granting the waiver and shall not constitute a continuing waiver or a waiver of
any subsequent breach of any provision of this Agreement.

(f) Each recital set forth and exhibit referenced in this Agreement is
incorporated and becomes an integral part of this Agreement.

(g) The captions of this Agreement are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.

(h) Time is of the essence of this Agreement and of all of the terms and
provisions of this Agreement.

(i) In the event of litigation or other proceedings involving the parties to
this Agreement to enforce any provision of this Agreement, to enforce any remedy
available upon default under this Agreement, or seeking a declaration of the
rights of either party under this Agreement, the prevailing party shall be
entitled to recover from the other such reasonable attorneys’ fees and costs as
may be actually incurred, including its costs and fees on appeal.

(j) Should any one or more of the provisions of this Agreement be determined to
be invalid, unlawful or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.

 

15

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(k) This Agreement may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one
and the same instrument.

(l) This Agreement and the other documents and instruments executed and
delivered simultaneously herewith is the entire and final agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior negotiations, discussions, writings or agreements.

(m) Each of the parties acknowledges and agrees that it has participated in the
drafting and negotiation of this Agreement. Accordingly, in the event of a
dispute between the parties hereto with respect to the interpretation or
enforcement of the terms hereof, no provision shall be construed so as to favor
or disfavor either party hereto.

(n) BUYER ACKNOWLEDGES THAT SELLER’S ASSETS ARE BEING SOLD IN THEIR AS-IS WHERE
IS WITH ALL FAULTS CONDITION AND THAT EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT OR IN THE DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED AT CLOSING
BY SELLER, SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED WITH RESPECT TO (A) THE DESIGN, CONSTRUCTION, LOCATION, SIZE, CHARACTER,
PHYSICAL CONDITION OR STATE OF REPAIR OF SELLER’S ASSETS OR ANY PORTION THEREOF;
(B) THE TOPOGRAPHY, DRAINAGE OR CONDITION OF THE SURFACE AND SUBSURFACE SOILS OF
OR ON THE REAL PROPERTY, (C) THE PRESENCE OR ABSENCE OF HAZARDOUS WASTE OR
HAZARDOUS SUBSTANCES ON OR FROM THE REAL PROPERTY OR THE IMPROVEMENTS; (D) THE
MERCHANTABILITY, HABITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF SELLER’S
ASSETS, (E) THE PAST OR FUTURE TAXES OR ASSESSMENTS OF SELLER’S ASSETS, (F) THE
COMPLIANCE OF SELLER’S ASSETS WITH ANY APPLICABLE GOVERNMENTAL REQUIREMENT,
(G) THE FINANCIAL ASPECTS OF THE OPERATION OF THE REAL PROPERTY, OR (H) ANY
OTHER REPRESENTATION OR WARRANTY NOT EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN
THE DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED AT CLOSING BY SELLER. BY
EXECUTION OF THIS AGREEMENT, BUYER REPRESENTS AND WARRANTS TO SELLER THAT BUYER
IS AN EXPERIENCED, SOPHISTICATED BUYER OF COMMERCIAL REAL ESTATE, WITH KNOWLEDGE
AND EXPERIENCE SUFFICIENT TO ENABLE IT TO EVALUATE THE MERITS AND RISKS OF THE
SALE, AND THAT IT IS REPRESENTED BY KNOWLEDGEABLE AND EXPERIENCED LEGAL COUNSEL
OF ITS OWN CHOOSING AND AGREES, THAT NEITHER SELLER NOR ITS AGENTS OR
REPRESENTATIVES HAS MADE AND THAT BUYER HAS NOT RELIED UPON ANY REPRESENTATION
OR WARRANTY OF ANY KIND WHICH IS NOT EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN
THE DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED AT CLOSING BY SELLER IN
CONNECTION WITH THE SALE OF SELLER’S ASSETS OR BUYER’S ACTUAL PURCHASE THEREOF
PURSUANT TO THE TERMS OF THIS AGREEMENT, IT BEING UNDERSTOOD AND AGREED THAT ANY
SUCH PURCHASE WILL BE OTHERWISE BASED ONLY UPON BUYER’S OWN DUE DILIGENCE REVIEW
AND UPON THE KNOWLEDGE OF TENANT.

 

16

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  /s/ EM              

[Buyer’s Initials]

(o) Seller or Buyer, or both of them, may close this transaction as part of a
like-kind exchange of properties under Section 1031 of the Internal Revenue Code
of 1986, as amended, and applicable rules and regulations. The exchanging party
shall bear all costs of the exchange. The other party shall cooperate with the
exchanging party and do all things reasonably required and requested by the
exchanging party (provided that such actions do not increase the other party’s
obligations or liabilities under this Agreement) to effect and facilitate such
an exchange. The exchanging party shall and does hereby indemnify, defend and
hold the other party harmless for and from all liabilities arising as a result
of the exchange that would not have arisen had the exchanging party not closed
this transaction as part of a like-kind exchange. Anything in this section to
the contrary notwithstanding: (a) no party makes any representation or warranty
to the other as to the effectiveness or tax impact of any proposed exchange;
(b) in no event shall any party be required to take title to any exchange or
replacement property; (c) in no event shall completion of any such exchange be a
cause or excuse for any delay in the Closing; and (d) no party shall be required
to incur any costs or expenses or incur any additional liabilities or
obligations in order to accommodate any exchange requested by the other party or
any exchange intermediary or facilitator.

(p) Public Announcements. Except with respect to public filings required to be
made by either party in accordance with applicable securities and health care
laws and regulations, each of Seller and Buyer shall consult with the other
regarding, and shall use reasonable best efforts to agree upon, the form and
content of any press release with respect to this Agreement or the transactions
contemplated herein.

(q) Survival. All of the representations and warranties of the parties set forth
herein, other than the indemnities set forth in Section 12, shall terminate and
be of no further force and effect as of the Closing or, as to the Autumn Ridge
Facility, the Autumn Ridge Closing, if such closing precedes the Closing with
respect to the remainder of the Facilities.

 

17

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IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day and
year first set forth above.

 

        “SELLER”        

NATIONWIDE HEALTH PROPERTIES, INC.,

a Maryland corporation

WITNESSES:        

/s/ Kevin Sherry

    By:  

/s/ Abdo H. Khoury

Printed name: Kevin Sherry     Name:   Abdo H. Khoury     Title:   Chief
Financial & Portfolio Officer Senior Vice President

/s/ Jon Eckhardt

        Printed name: Jon Eckhardt            

NH TEXAS PROPERTIES LIMITED PARTNERSHIP,

a Texas limited partnership

    By:  

MLD TEXAS CORPORATION,

a Texas corporation,

its General Partner

WITNESSES:        

/s/ Kevin Sherry

      By:  

/s/ Abdo H. Khoury

Printed name: Kevin Sherry       Name:   Abdo H. Khoury       Title:   Chief
Financial & Portfolio Officer Senior Vice President

/s/ Jon Eckhardt

        Printed name: Jon Eckhardt            

MLD DELAWARE TRUST,

a Delaware business trust

WITNESSES:        

/s/ Kevin Sherry

    By:  

/s/ Abdo H. Khoury

Printed name: Kevin Sherry     Name:   Abdo H. Khoury     Title:   Not in his
individual capacity, but solely as Trustee

/s/ Jon Eckhardt

        Printed name: Jon Eckhardt        

 

S-1

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MLD PROPERTIES, LLC,

a Delaware limited liability company

WITNESSES:           By:   MLD PROPERTIES, INC.,

/s/ Kevin Sherry

      a Delaware corporation, Printed name: Kevin Sherry       its Sole Member

/s/ Jon Eckhardt

      Printed name: Jon Eckhardt           By:  

/s/ Abdo H. Khoury

    Name:   Abdo H. Khoury     Title:   Chief Financial & Portfolio Officer
Senior Vice President    

NHP SENIOR HOUSING, INC.,

a California corporation

WITNESSES:      

/s/ Kevin Sherry

    By:  

/s/ Abdo H. Khoury

Printed name: Kevin Sherry     Name:   Abdo H. Khoury     Title:   Chief
Financial & Portfolio Officer Senior Vice President

/s/ Jon Eckhardt

      Printed name: Jon Eckhardt          

NHP CM INVESTMENT, INC.,

a Delaware corporation

WITNESSES:      

/s/ Kevin Sherry

    By:  

/s/ Abdo H. Khoury

Printed name: Kevin Sherry     Name:   Abdo H. Khoury     Title:   Chief
Financial & Portfolio Officer Senior Vice President

/s/ Jon Eckhardt

      Printed name: Jon Eckhardt          

NHP JOLIET, INC.,

an Illinois corporation

WITNESSES:      

/s/ Kevin Sherry

    By:  

/s/ Abdo H. Khoury

Printed name: Kevin Sherry     Name:   Abdo H. Khoury     Title:   Chief
Financial & Portfolio Officer Senior Vice President

/s/ Jon Eckhardt

      Printed name: Jon Eckhardt      

 

S-2

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QR LUBBOCK TEXAS PROPERTIES, L.P.,

a Texas limited partnership

    By:  

QR LUBBOCK GP, LLC,

a Texas limited liability company,

its General Partner

WITNESSES:           By:   Nationwide Health Properties, Inc.,

/s/ Kevin Sherry

      a Maryland corporation, Printed name: Kevin Sherry       its sole member

/s/ Jon Eckhardt

      Printed name: Jon Eckhardt       By:  

/s/ Abdo H. Khoury

      Name:   Abdo H. Khoury       Title:   Chief Financial & Portfolio Officer
Senior Vice President    

BIP SUB I, INC.,

a Delaware corporation

WITNESSES:      

/s/ Kevin Sherry

    By:  

/s/ Abdo H. Khoury

Printed name: Kevin Sherry     Name:   Abdo H. Khoury     Title:   Chief
Financial & Portfolio Officer Senior Vice President

/s/ Jon Eckhardt

      Printed name: Jon Eckhardt      

 

S-3

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“BUYER”

EMERITUS CORPORATION,

    a Washington corporation WITNESSES:      

/s/ Marrji Padden

    By:  

/s/ Eric Mendelsohn

Printed name: Marrji Padden     Name:   Eric Mendelsohn     Title:   SVP
Corporate Development

/s/ Paige Bae

      Printed name: Paige Bae      

The “Tenant” entities below hereby execute this Agreement for the purpose of
evidencing such Tenant’s agreement to enter into the Lease Termination
Agreements and/or Lease Assignments, as the case may be, at the time of Closing,
and to otherwise comply with the obligations of such Tenant set forth herein.

 

    ESC IV, LP, a Washington limited partnership   By:   ESC G.P. II, INC.,    
a Washington corporation,     its General Partner WITNESSES:         By:  

/s/ Eric Mendelsohn

/s/ Marrji Padden

    Name:   Eric Mendelsohn Printed name: Marrji Padden     Title:   SVP
Corporate Development

/s/ Paige Bae

      Printed name: Paige Bae         ESC IV, LP, a Washington limited
partnership (doing business in the State of Texas as “Texas – ESC IV, L.P.”)  
By:   ESC G.P. II, INC.,     a Washington corporation, WITNESSES:     its
General Partner

/s/ Marrji Padden

    Printed name: Marrji Padden     By:  

/s/ Eric Mendelsohn

    Name:   Eric Mendelsohn

/s/ Paige Bae

    Title:   SVP Corporate Development Printed name: Paige Bae      

 

S-4

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SCHEDULE 1

ENTITIES COMPRISING “SELLER”

 

1. Nationwide Health Properties, Inc., a Maryland corporation

Fee owner of:

Charleston Gardens - Charleston, WV;

Silverleaf Manor - Meridian, MS;

Loyalton of Rockford - Rockford, IL;

Heritage Hills ALZ - Columbus, GA;

Pine Meadow - Hattiesburg, MS;

Austin Gardens ALZ - Lodi, CA; and

Clare Bridge - Corona, CA.

 

2. NH Texas Properties Limited Partnership, a Texas limited partnership

Fee owner of:

Beckett Meadows - Austin, TX;

Creekside ALZ - Plano, TX;

Oak Hollow ALZ - Bedford, TX;

Pinehurst ALZ - Tyler, TX;

Stonebridge ALZ - Dallas, TX;

and Desert Springs ALZ - El Paso, TX.

 

3. MLD Delaware Trust, a Delaware business trust

Fee owner of:

Autumn Ridge - Herculaneum, MO

 

4. MLD Properties, LLC, a Delaware limited liability company

Fee owner of:

Kingsley Place of Shreveport - Shreveport; LA; and

Pines of Goldsboro - Goldsboro, NC.

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

5. NHP Senior Housing, Inc., a California corporation

Fee owner of:

The Lakes - Fort Myers, FL;

Loyalton of Folsom - Folsom, CA; and

Canterbury Woods - Attleboro, MA.

 

6. NHP CM Investment, Inc., a Delaware corporation

Fee owner of:

Loyalton of Cape May - Cape May, NJ

 

7. NHP Joliet, Inc., an Illinois corporation

Fee owner of:

Loyalton of Joliet - Joliet, IL; and

Joliet ALZ Expansion - Joliet, IL.

 

8. QR Lubbock Texas Properties, L.P., a Texas limited partnership

Fee owner of:

Quail Ridge ALZ - Lubbock, Texas

 

9. BIP Sub I, Inc., a Delaware corporation

Fee owner of:

Richland Gardens - Richland, WA

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SCHEDULE 2

SCHEDULE OF FACILITIES

 

Facility Name

  

Facility Address

  

Type of

Facility

  

No. of Units

Beckett Meadows

  

7709 Beckett Road

Austin, TX 78749

   ALF    72

Charleston Gardens

  

800 Association Drive

Charleston, WV 25311

   ALF    96

Kingsley Place at Shreveport

  

7110 University Drive

Shreveport, LA 71105

   ALF    80

Silverleaf Manor

  

4555 35th Avenue

Meridian, MS 39305

   ALF    98

Pines at Goldsboro

  

380 Country Day Road

Goldsboro, NC 27530

   ALF    99

Autumn Ridge

  

300 Autumn Ridge Drive

Herculaneum, MO 63048

   ALF    94

Loyalton of Rockford

  

1545 Temple Lane

Rockford, IL 61112

   ALF    97

Creekside

  

2000 West Spring Creek

Pkwy

Plano, TX 75023

   ALZ    30

Heritage Hills

  

3607 Weems Road

Columbus, GA 31909

   ALZ    30

 

S-2-1

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Facility Name

  

Facility Address

  

Type of

Facility

  

No. of Units

Oak Hollow

  

2016 L Don Dodson Pkwy

Bedford, TX 76095

   ALZ    30

Pine Meadows

  

107 Fox Chase Drive

Hattiesburg, MS 39402

   ALZ    30

Pinehurst

  

5403 Plantation Drive

Tyler, TX 75703

   ALZ    30

Stonebridge

  

9271 White Rock Trail

Dallas, TX 75238

   ALZ    30

Austin Gardens

  

2150 West Kettleman Lane

Lodi, CA 95242

   ALZ    30

Desert Springs

  

5901 Bandolero Drive

El Paso, TX 79912

   ALZ    30

Arbor Gardens at Corona

  

2005 Kellogg

Corona, CA 92879

   ALZ    45

Loyalton of Folsom

  

780 Harrington Way

Folsom, CA 95630

   ALF    101

The Lakes

  

7460 Lake Breeze Drive

Fort Myers, FL 33919

   ALF    151

Canterbury Woods

  

100 Garfield Avenue

Attleboro, MA 02703

   ALF    130

 

S-2-2

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Facility Name

  

Facility Address

  

Type of

Facility

  

No. of Units

Loyalton of Cape May

  

601 Rte 9 South

Cape May, NJ 08210

   ALF    100

Quail Ridge

  

5204 Elgin Avenue

Lubbock, TX 79413

   ALZ    30

Richland Gardens

  

770 Gage Boulevard

Richland, WA 99352

   ALF    100

Loyalton of Joliet

  

3320 Executive Drive

Joliet, IL 60431

   ALF    101

Loyalton of Joliet

(ALZ Facility) TO BE
CONSTRUCTED

   Joliet, IL    ALZ    38

 

S-2-3

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SCHEDULE 3

SCHEDULE OF EXISTING LEASES

 

1. That certain Master Lease dated as of March 31, 2004 by and among Nationwide
Health Properties, Inc., a Maryland corporation, NH Texas Properties Limited
Partnership, a Texas limited partnership, MLD Delaware Trust, a Delaware
business trust, and MLD Properties, LLC, a Delaware limited liability company,
collectively as landlord, and Emeritus Corporation, a Washington corporation,
and ESC IV, LP, a Washington limited partnership, collectively as tenant, as
subsequently amended from time to time.

 

2. That certain Master Lease dated as of March 31, 2004 by and between NHP
Senior Housing, Inc., a California corporation, as landlord, and Emeritus
Corporation, a Washington corporation, as tenant.

 

3. That certain Lease dated as of March 1, 2005 by and between BIP Sub I, Inc.,
a Delaware corporation, as landlord, and Emeritus Corporation, a Washington
corporation, as tenant.

 

4. That certain Lease dated as of March 1, 2005 by and between QR Lubbock Texas
Properties, L.P., a Texas limited partnership, as landlord, and ESC IV, LP, a
Washington limited partnership (doing business in the State of Texas as Texas –
ESC IV, L.P.) , as tenant.

 

5. That certain Lease dated as of October 1, 2004 by and between NHP Joliet,
Inc., an Illinois corporation, as landlord, and Emeritus Corporation, a
Washington corporation, as tenant.

 

6. That certain Lease dated as of October 22, 2004 by and between NHP CM
Investment, Inc., a Delaware corporation, as landlord, and Emeritus Corporation,
a Washington corporation, as tenant.

 

S-3-1

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SCHEDULE 4

SCHEDULE OF EXISTING DEBT

 

Facility

  

Lender

   Interest
Rate     Debt Balance
(12/20/07)    Maturity    Prepayment
Option    Prepayment
Penalty1

Quail Ridge

   Wachovia    8.55 %   $ 3,841,188    2010    Defeasance    $ 469,759

Cape May

  

Collateral

Mortgage

Capital

   6.29 %   $ 6,866,540    2013    Yes    $ 611,850

The Lakes

and

   GEMSA (A)    5.73 %   $ 15,592,249    2013    Yes                     $
918,552

Canterbury

Woods

   GEMSA (B)    8.33 %   $ 10,858,012    2013    Yes   

Folsom

   GEMSA (A)    5.08 %   $ 3,639,441    2010    Yes                     $
175,376    GEMSA (B)    7.46 %   $ 3,510,103    2010    Yes   

Richland Gardens

   Wachovia    8.65 %   $ 6,196,144    2010    Defeasance    $ 738,465

Joliet

  

NorthMarq

Capital

   7.24 %   $ 5,698,665    2012    Yes    $ 593,322

Total

        $ 56,202,342          $ 3,507,324

 

 

1

The amounts set forth herein as the anticipated prepayment penalties and/or
defeasance costs are based on the estimates of Buyer and or its consultants.
Seller makes no representations or warranties as to the accuracy of such
amounts.

 

S-4-1

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EXHIBIT A

LEGAL DESCRIPTION OF REAL PROPERTY

includes all improvements thereon and all appurtenances thereto.

 

[SEE ATTACHED]

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EXHIBIT B

FORM OF LIMITED/SPECIAL WARRANTY DEEDS

Prepared by and when recorded, return to:

The Nathanson Group PLLC

One Union Square

600 University Street

Suite 2000

Seattle, Washington 98101

Attention: Randi Nathanson, Esq.

SPECIAL WARRANTY DEED

THIS SPECIAL WARRANTY DEED is made as of this             day of
                    , 2008, by and between [INSERT APPLICABLE SELLING ENTITY]
(“Grantor”) whose post office address is 610 Newport Center Drive, Suite 1150,
Newport Beach, CA 92660-6429, and [INSERT APPLICABLE BUYER ENTITY] (“Grantee”),
whose post office address is 3131 Elliott Avenue, Suite 500, Seattle, WA 98121.

Whenever used herein the terms “Grantor” and “Grantee” include the parties to
this Instrument and the heirs, legal representatives and assigns of individuals,
and the successors and assigns of trustees, partnerships and corporations.)

W I T N E S S E T H:

That Grantor, for and in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, hereby grants, bargains, sells, aliens, remises, releases,
conveys and confirms unto Grantee, all of Grantor’s right, title and interest in
and to that certain real property situate, lying and being in
                    County,                     (the “Property”), and being more
particularly described in Exhibit “A” attached hereto and made a part hereof.

TOGETHER with all of the tenements, hereditaments and appurtenances thereto
belonging or in anywise appertaining.

TO HAVE AND TO HOLD the same in fee simple forever.

AND Grantor hereby covenants with Grantee that Grantor is lawfully seized of the
Property in fee simple; that Grantor has good right and lawful authority to sell
and convey the Property, and hereby warrants the title to the Property and will
defend the same against the lawful

 

B-1

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claims of all persons claiming by, through or under Grantor, but against no
others. This conveyance is subject to those matters set forth on Exhibit “B”
attached hereto and made a part hereof.

IN WITNESS WHEREOF, Grantor has caused this instrument to be executed in its
name by its corporate officer thereunto duly authorized, has caused its
corporate seal to be hereunto affixed and has intended this instrument to be and
become effective as of the day and year first above written.

Signed, sealed and delivered                                 [INSERT APPLICABLE
SELLING ENTITY]

in the presence of:                                                   
a                                        
                                        
                                                                  

                                                                               
                                        
                                        
                                                                   

Print Name:                                      
                                        
                                        
                                        
                                             

                                                                               
                                        
                                        
                                                                   

Print Name:                                      
                                        
                                        
                                        
                                             

STATE OF CALIFORNIA                )

                                  ) ss.

COUNTY OF ORANGE                    )

On                                                      , 2008, before me,
                                                                                
                             , Notary

Public, personally appeared

                                                                               
                                        
                                                                        ,

Name of Signer(s)

who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 

 

  

Signature

   (Seal)

 

B-2

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EXHIBIT C

FORM OF BILL OF SALE AND ASSIGNMENT

In consideration of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
[INSERT APPLICABLE SELLING ENTITY] (“Seller”) does hereby grant, bargain, sell,
convey and transfer to [INSERT APPLICABLE BUYER ENTITY] (“Buyer”), all of its
right, title and interest, in and to, all Personal Property (as such term is
defined in that certain Purchase and Sale Agreement dated as of February __,
2008 between Seller and its Affiliates and Buyer and its Affiliates (the
“Purchase Agreement”)), which is located on that certain real property described
on Exhibit A attached hereto.

TO HAVE AND TO HOLD, all and singular, the Personal Property hereby sold,
assigned, transferred and conveyed to Buyer, its successors and assigns, to and
for its own use and benefit free and clear of all liens, claims and encumbrances
other than those, if any, set forth on Schedule 1 attached hereto. BUYER HEREBY
ACKNOWLEDGES AND AGREES THAT ANY AND ALL PERSONAL PROPERTY BEING TRANSFERRED
HEREUNDER IS ON AN AS-IS, WHERE-IS BASIS WITH ALL FAULTS AND CONDITIONS. EXCEPT
AS SET FORTH IN SECTION 8(a) OF THE PURCHASE AGREEMENT, WHICH ARE INCORPORATED
HEREIN BY REFERENCE, SELLER MAKES NO EXPRESS OR IMPLIED WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR NATURE WHATSOEVER, INCLUDING ANY REPRESENTATIONS
OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE.

Dated this             day of                     , 2008.

[INSERT SIGNATURE BLOCK FOR

APPLICABLE SELLER ENTITY]

 

C-1

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Schedule 1 to Bill of Sale

Permitted Encumbrances

 

C-2

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EXHIBIT D

FORM OF NONFOREIGN CERTIFICATION

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S.
real property interest must withhold tax if the transferor is a foreign person.
To inform the transferee that withholding of tax is not required upon the
disposition of certain premises located in             ,             , as more
particularly described in Exhibit A attached hereto, the undersigned hereby
certifies the following on behalf of                                       
                                          (“Seller”):

1. Seller is not a foreign person, foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);

2. Seller is not a “disregarded entity” as defined in §1445-2(b)(2)(iii);

3. Seller’s employer identification number is                     ;

4. Seller’s office address is 610 Newport Center Drive, Suite 1150, Newport
Beach, California 92660;

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

Under penalties of perjury, I declare that I have examined this certification
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Seller this         day of                     , 2008.

[INSERT SIGNATURE BLOCK FOR

APPLICABLE SELLER ENTITY]

 

D-1

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EXHIBIT E

ALLOCATION OF OTHER CLOSING COSTS

Allocation of Closing Costs for Facilities located in California:

Seller shall pay the cost of: (i) recording the Deeds; (ii) all state and county
transfer taxes due and payable as a result of the sale of the Real Property; and
(iii) the standard owners coverage title insurance policy to be obtained by
Buyer at Closing.

Buyer shall pay for: (i) the cost of recording any documents other than the
Deeds and other documents necessary to cure title; (ii) any applicable mortgage
taxes; (iii) any loan policy and extended owners title insurance coverage,
including any endorsements required by Buyer and Buyer’s lender (excluding any
endorsements Seller may agree to obtain during the Title Due Diligence Review
Period in response to title objections); and (iv) any sales tax due and payable
as a result of the sale of the Personal Property.

Allocation of Closing Costs for Facilities located in Florida:

Seller shall pay the cost of: (i) all state and county transfer taxes due and
payable as a result of the sale of the Real Property; and (ii) the standard
owners coverage title insurance policy to be obtained by Buyer at Closing.

Buyer shall pay for: (i) the cost of recording the Deeds, any mortgage and any
other documents necessary to cure title; (ii) any applicable mortgage taxes;
(iii) any title search fees, loan policy and extended owners title insurance
coverage, including any endorsements required by Buyer and Buyer’s lender
(excluding any endorsements Seller may agree to obtain during the Title Due
Diligence Review Period in response to title objections); and (iv) any sales tax
due and payable as a result of the sale of the Personal Property.

Allocation of Closing Costs for Facilities located in Georgia:

Seller shall pay the cost of: (i) documentary stamp taxes; (ii) all state and
county transfer taxes due and payable as a result of the sale of the Real
Property; and (iii) the standard owners coverage title insurance policy to be
obtained by Buyer at Closing.

Buyer shall pay for: (i) the cost of recording the Deeds, any mortgage and any
other documents necessary to cure title; (ii) any applicable mortgage taxes;
(iii) any extended owners title insurance coverage, including any endorsements
required by Buyer and Buyer’s lender (excluding any endorsements Seller may
agree to obtain during the Title Due Diligence Review Period in response to
title objections); and (iv) any sales tax due and payable as a result of the
sale of the Personal Property.

 

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Allocation of Closing Costs for Facilities located in Illinois:

Seller shall pay the cost of: (i) all state and county transfer taxes due and
payable as a result of the sale of the Real Property; (ii) the cost of recording
documents necessary to cure title; and (iii) the standard owners coverage title
insurance policy to be obtained by Buyer at Closing.

Buyer shall pay for: (i) the cost of recording the Deeds and any mortgage;
(ii) any applicable mortgage taxes; (iii) any loan policy and extended owners
title insurance coverage, including any endorsements required by Buyer and
Buyer’s lender (excluding any endorsements Seller may agree to obtain during the
Title Due Diligence Review Period in response to title objections); and (iv) any
sales tax due and payable as a result of the sale of the Personal Property.

Allocation of Closing Costs for Facilities located in Louisiana:

Seller shall pay the cost of recording documents necessary to cure title.

Buyer shall pay for: (i) the cost of recording the Deeds and any mortgage;
(ii) all state and county transfer taxes (if any) and any applicable mortgage
taxes; (iii) any title search fees and the cost of the owners title policy, loan
policy and any extended owners title insurance coverage, including any
endorsements required by Buyer and Buyer’s lender (excluding any endorsements
Seller may agree to obtain during the Title Due Diligence Review Period in
response to title objections); and (iv) any sales tax due and payable as a
result of the sale of the Personal Property.

Allocation of Closing Costs for Facilities located in Massachusetts:

Seller shall pay the cost of: (i) all state and county transfer taxes due and
payable as a result of the sale of the Real Property; and (ii) the cost of
recording documents necessary to cure title.

Buyer shall pay for: (i) the cost of recording the Deeds and any mortgage;
(ii) any applicable mortgage taxes; (iii) any title search fees and the cost of
the owners title policy, loan policy and any extended owners title insurance
coverage, including any endorsements required by Buyer and Buyer’s lender
(excluding any endorsements Seller may agree to obtain during the Title Due
Diligence Review Period in response to title objections); and (iv) any sales tax
due and payable as a result of the sale of the Personal Property.

 

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Allocation of Closing Costs for Facilities located in Mississippi:

Seller shall pay the cost of the standard owners coverage title insurance policy
to be obtained by Buyer at Closing.

Buyer shall pay for: (i) the cost of recording the Deeds, any mortgage and any
other documents necessary to cure title; (ii) all state and county transfer
taxes (if any) and any applicable mortgage taxes; (iii) any loan policy and
extended owners title insurance coverage, including any endorsements required by
Buyer and Buyer’s lender (excluding any endorsements Seller may agree to obtain
during the Title Due Diligence Review Period in response to title objections);
and (iv) any sales tax due and payable as a result of the sale of the Personal
Property.

Allocation of Closing Costs for Facilities located in Missouri:

Seller shall pay the cost of (i) the cost of recording documents necessary to
cure title; and (ii) the standard owners coverage title insurance policy to be
obtained by Buyer or its assignee at the Autumn Ridge Closing.

Buyer shall pay for: (i) the cost of recording the Deeds and any mortgage;
(ii) all state and county transfer taxes (if any) and any applicable mortgage
taxes; (iii) any title search fees and the cost of the loan policy and any
extended owners title insurance coverage, including any endorsements required by
Buyer and Buyer’s lender (excluding any endorsements Seller may agree to obtain
during the Title Due Diligence Review Period in response to title objections);
and (iv) any sales tax due and payable as a result of the sale of the Personal
Property.

Allocation of Closing Costs for Facilities located in New Jersey:

Seller shall pay the cost of: (i) all state and county transfer taxes due and
payable as a result of the sale of the Real Property; and (ii) the cost of
recording documents necessary to cure title.

Buyer shall pay for: (i) the cost of recording the Deeds and any mortgage;
(ii) any applicable mortgage taxes; (iii) any title search fees and the cost of
the owners title policy, loan policy and any extended owners title insurance
coverage, including any endorsements required by Buyer and Buyer’s lender
(excluding any endorsements Seller may agree to obtain during the Title Due
Diligence Review Period in response to title objections); and (iv) any sales tax
due and payable as a result of the sale of the Personal Property.

 

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Allocation of Closing Costs for Facilities located in North Carolina:

Seller shall pay the cost of: (i) all state and county transfer taxes due and
payable as a result of the sale of the Real Property; and (ii) the cost of
recording documents necessary to cure title.

Buyer shall pay for: (i) the cost of recording the Deeds and any mortgage;
(ii) any applicable mortgage taxes; (iii) any title search fees and the cost of
the owners title policy, loan policy and any extended owners title insurance
coverage, including any endorsements required by Buyer and Buyer’s lender
(excluding any endorsements Seller may agree to obtain during the Title Due
Diligence Review Period in response to title objections); and (iv) any sales tax
due and payable as a result of the sale of the Personal Property.

Allocation of Closing Costs for Facilities located in Texas:

Seller shall pay the cost of: (i) all state and county transfer taxes (if any)
due and payable as a result of the sale of the Real Property; (ii) the cost of
recording documents necessary to cure title; and (iii) the standard owners
coverage title insurance policy to be obtained by Buyer at Closing.

Buyer shall pay for: (i) the cost of recording the Deeds and any mortgage;
(ii) any applicable mortgage taxes; (iii) any loan policy and extended owners
title insurance coverage, including any endorsements required by Buyer and
Buyer’s lender (excluding any endorsements Seller may agree to obtain during the
Title Due Diligence Review Period in response to title objections); and (iv) any
sales tax due and payable as a result of the sale of the Personal Property.

Allocation of Closing Costs for Facilities located in Washington:

Seller shall pay the cost of: (i) all state and county transfer taxes due and
payable as a result of the sale of the Real Property; (ii) the cost of recording
documents necessary to cure title; and (iii) the standard owners coverage title
insurance policy to be obtained by Buyer at Closing.

Buyer shall pay for: (i) the cost of recording the Deeds and any mortgage;
(ii) any applicable mortgage taxes; (iii) any loan policy and extended owners
title insurance coverage, including any endorsements required by Buyer and
Buyer’s lender (excluding any endorsements Seller may agree to obtain during the
Title Due Diligence Review Period in response to title objections); and (iv) any
sales tax due and payable as a result of the sale of the Personal Property.

 

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Allocation of Closing Costs for Facilities located in West Virginia:

Seller shall pay the cost of: (i) all state and county transfer taxes due and
payable as a result of the sale of the Real Property; and (ii) the cost of
recording documents necessary to cure title.

Buyer shall pay for: (i) the cost of recording the Deeds and any mortgage;
(ii) any applicable mortgage taxes; (iii) any title search fees and the cost of
the owners title policy, loan policy and any extended owners title insurance
coverage, including any endorsements required by Buyer and Buyer’s lender
(excluding any endorsements Seller may agree to obtain during the Title Due
Diligence Review Period in response to title objections); and (iv) any sales tax
due and payable as a result of the sale of the Personal Property.

 

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