Exhibit 10.5

NOMINATION AGREEMENT

by and between

CTR PARTNERSHIP, L.P.,

a Delaware limited partnership

and

The entities identified as “New Operator” herein

Dated as of July 30, 2015

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NOMINATION AGREEMENT

THIS NOMINATION AGREEMENT (“Agreement”) is made as of July 30, 2015, by and
between CTR Partnership, L.P., a Delaware limited partnership (“Buyer”), as
nominator, and those entities identified as “New Operator” on the signature
pages hereto (together or individually, as appropriate, “New Operator”), as
nominee.

RECITALS

A. Pursuant to that certain Purchase and Sale Agreement and Joint Escrow
Instructions dated as of May 13, 2015 (the “Purchase Agreement”) by and between
Buyer and certain entities listed as “Seller” therein and on the signature pages
attached hereto (collectively and individually, as appropriate, “Seller”), Buyer
agreed to acquire and Seller agreed to sell certain Property (as described in
the Purchase Agreement).

B. A portion of the Property consists of the following:

1. Certain real property located at 1865 Countryside Drive, Fremont, Ohio 43420
(the “Fremont Land”) and the Facility located on the Fremont Land (the “Fremont
Facility”), leased by Seller, as tenant, from the Board of County Commissioners,
Sandusky County, Ohio, a governmental body (“Fremont Landlord”), as landlord,
pursuant to that certain Lease Agreement dated as of January 29, 2002 (as
amended by that certain First Amendment to Lease Agreement dated as of April,
2002, and as further amended by that certain Second Amendment to Lease Agreement
dated as of March 6, 2012, the “Fremont Lease”); and

2. Certain real property located at 535 Lexington Avenue, Mansfield, Ohio 44907
(the “Mansfield Land”) and the Facility located on the Mansfield Land (the
“Mansfield Facility”), leased by Seller, as tenant, from Lynnhaven XII, LLC, a
Georgia limited liability company (“Mansfield Landlord”), as landlord, pursuant
to that certain Nursing Home Lease dated September 10, 2003 (as amended by that
certain First Amendment to Nursing Home Lease dated as of August 16, 2013, the
“Mansfield Lease”). The Fremont Land, Fremont Facility, Mansfield Land,
Mansfield Facility and all other rights and interests of Seller, as tenant,
under the Fremont Lease and Mansfield Lease are referred to collectively herein
as the “Leasehold Assets.”

C. In connection with the consummation of the transactions contemplated by the
Purchase Agreement and this Agreement with respect to the Leasehold Assets,
Buyer desires to nominate New Operator to take title to the Leasehold Assets and
New Operator desires to accept such nomination upon and subject to the terms and
conditions hereinafter set forth.

D. All initially-capitalized terms not otherwise defined in this Agreement shall
have the meanings given such terms in the Purchase Agreement.

 

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AGREEMENT

NOW, THEREFORE, taking the foregoing Recitals into account, and in consideration
of the mutual covenants, agreements and conditions set forth herein and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

1. Nomination.

Subject to the terms and conditions set forth in this Agreement, Buyer hereby
nominates New Operator to take title to the Leasehold Assets pursuant to the
Purchase Agreement. New Operator hereby accepts such nomination with respect to
the Leasehold Assets on the terms and conditions hereinafter set forth and, in
connection therewith, at Closing, New Operator agrees to have assigned to it,
and agrees to assume, all rights, responsibilities and obligations of the tenant
entity under the Fremont Lease and the Mansfield Lease. The phrase “New
Operator” in the Purchase Agreement shall be construed to mean “New Operator”
under this Agreement. In connection with this nomination, New Operator hereby
assumes all obligations and agrees to fulfill all requirements of Buyer and New
Operator under the Purchase Agreement that apply or relate to the Leasehold
Assets.

2. Obligations Assumed. Without limiting the generality of the foregoing, the
obligations and requirements of the Purchase Agreement assumed by New Operator
include, but are not limited to, the following:

2.1 With respect to Section 2(a) of the Purchase Agreement, in the event Buyer
is obligated to reimburse Seller any amount with respect to the Mansfield HUD
Escrow, then New Operator shall, within three (3) business days of demand
therefor, either (a) pay such amount to Seller directly or (b) pay such amount
to Buyer for subsequent payment to Seller, at Buyer’s election.

2.2 In the event New Operator elects to obtain Title Policies for the Leasehold
Assets as contemplated by the Purchase Agreement, Buyer shall reasonably
cooperate with New Operator to cause such Title Policies to be issued; provided,
however, in no event shall Buyer be responsible for any costs or expenses in
connection therewith. The premiums for such Title Policies, including without
limitation any endorsements requested by New Operator, shall be solely borne by
New Operator.

2.3 New Operator acknowledges and agrees that, subsequent to assignment of the
Mansfield Lease to New Operator, the Existing Mansfield Debt will remain an
encumbrance on the Mansfield Land. New Operator agrees to comply with the terms
and provisions of the underlying loan documents for the Existing Mansfield Debt
as may be required by the Mansfield Lease and the Mansfield Lease Assignment.

2.4 In compliance with the timing requirements set forth in the Purchase
Agreement, New Operator shall submit an application for the Mansfield MTPA in
order to secure Existing Mansfield Lender’s approval of New Operator’s occupancy
of the Mansfield Facility and the transfer of any applicable regulatory
agreements in connection therewith.

 

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2.5 New Operator acknowledges that the Closing for the Mansfield Facility and/or
Fremont Facility (a) may be postponed pursuant to Sections 3(h) and 3B of the
Purchase Agreement or (b) may not occur at all. If postponed, New Operator shall
comply with the seventh (7th) sentence of Section 3(h) and second (2nd) sentence
of Section 3B with respect to the Operator Approvals and the Mansfield MTPA. New
Operator acknowledges and agrees that, as set forth in Sections 3(h) and 3B of
the Purchase Agreement, Seller’s rights and obligations as tenant pursuant to
both the Fremont Lease and the Mansfield Lease are to be assigned by Seller to
New Operator and Buyer shall have no obligations with respect to the Fremont
Lease or the Mansfield Lease but all such obligations, following the assignment
thereof, shall be obligations of New Operator to Seller, Fremont Landlord, and
Mansfield Landlord, as applicable. In no event shall Buyer be liable to New
Operator if the Closing for the Mansfield Facility and/or Fremont Facility
do/does not occur.

2.6 New Operator shall be solely responsible for the processing of all
applications necessary to obtain the Operator Approvals in a timely and diligent
fashion so as to comply with the terms and provisions of the Operations Transfer
Agreement, Fremont Lease, Fremont Lease Assignment, Mansfield Lease and the
Mansfield Lease Assignment.

2.7 New Operator shall, prior to the Due Diligence Expiration Date, enter into
an Operations Transfer Agreement with Seller with respect to the Facilities,
which shall provide, inter alia, that the operations of the Mansfield Facility
and Fremont Facility shall be transitioned to New Operator at the Closing for
such Facilities. New Operator hereby agrees and acknowledges that if New
Operator breaches the Operations Transfer Agreement, the same may result in a
breach by Buyer under the Purchase Agreement and either the forfeiture of
Buyer’s earnest money deposit thereunder or incurring of damages owing to
Seller. As material part of the consideration for Buyer to enter into this
Agreement, New Operator hereby agrees to, and shall, indemnify, defend, protect
and hold harmless Buyer from and against any Losses that Landlord may incur
under the Purchase Agreement as a result of New Operator breaching its
obligations under the Operations Transfer Agreement.

2.8 New Operator shall deliver the following to Escrow Holder in a timely manner
to permit the closing of the transaction with respect to the Leasehold Assets by
the Close of Escrow therefor:

 

  (a) Original executed counterparts to the Mansfield Lease Assignment;

 

  (b) Original executed counteparts to the Fremont Lease Assignment;

 

  (c) Original executed counterparts of all documentation required by the Agency
Lender with respect to the assignment of the Mansfield Lease, together with
documentation that New Operator may be required to deliver to the Agency Lender
in connection with the same.

 

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2.9 New Operator shall pay all costs associated with the Mansfield MTPA and
obtaining Existing Mansfield Lender’s consent to assignment of the Mansfield
Lease. New Operator shall, within three (3) business days of demand therefor,
either (a) pay such amount to the Existing Mansfield Lender directly or (b) pay
such amount to Buyer for its subsequent payment, at Buyer’s election.

2.10 With respect to the Fremont Lease and the Mansfield Lease, because Buyer
will not be a party to either such lease following the assignment thereof to New
Operator, all prorations for costs and expenses in connection with such
Facilities shall be between Seller and New Operator pursuant to the Operations
Transfer Agreement. Buyer shall not pay or incur any costs, liabilities or
expenses whatsoever in connection with the foregoing.

2.11 Neither Buyer, New Operator, nor any broker employed or engaged by any of
them shall issue (or cause to be issued) any press releases or other
publicly-available disclosures or otherwise make disclosures to any unrelated
third parties concerning the subject matter hereof, structure of the
transactions or the status of negotiations conducted hereunder except as may be
jointly agreed to by Seller, Buyer and New Operator or as any of them may
reasonably consider necessary in order to satisfy the requirements of applicable
law; provided, however, that notwithstanding anything herein to the contrary,
Buyer may, free from the restrictions of this Section 2.11, report on the
transaction completed by this Agreement in connection with: (i) any investor
call concerning Buyer’s earnings or financial performance, (ii) any filings or
disclosures or releases required to be made to the Securities and Exchange
Commission or state securities’ commission in accordance with applicable law or
customarily made in connection therewith, or (iii) any meetings or conference
calls with, or disclosures made to, Buyer’s consultants, contractors, investors,
principals, employees, agents, attorneys, accountants and other advisors who
need to know such information. Seller and New Operator may, free from the
restrictions of this Section 2.11, report on the subject matter of this
Agreement or the structure of the transactions contemplated under this Agreement
in connection with any meetings or conference calls with, or disclosures made
to, Seller’s consultants, contractors, investors, principals, employees, agents,
attorneys, accountants and other advisors who need to know such information. The
foregoing restrictions shall survive the Close of Escrow for twelve (12) months.

2.12 New Operator acknowledges and agrees that: (a) at the Close of Escrow,
certain leases identified on Schedule 2.12 to this Agreement (the “Leases”)
shall be assigned directly from Seller to New Operator, (b) from and after the
Close of Escrow, New Operator shall comply and fulfill each of the terms and
conditions on the part of lessor set forth in such Leases, and (c) New Operator
shall sublease, operate, and administer the Leases in accordance with the terms
and provisions of that certain Master Lease between Buyer, as landlord, and New
Operator, as tenant, including, without limitation, Section 22.3 of such Master
Lease. Landlord makes no representations or warranties whatsoever regarding the
Leases.

 

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3. Representations and Warranties of New Operator. New Operator hereby
represents and warrants to Buyer that the following matters are true and correct
as of the execution of this Agreement and also will be true and correct as of
the Close of Escrow for the Leasehold Assets:

3.1 Organization. Each of New Operator is a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Ohio, and is duly qualified to transact business in the State of Ohio and is not
insolvent.

3.2 Authority; Enforceability; Conflict. This Agreement and all the documents to
be executed and delivered by New Operator or Escrow pursuant to the terms of
this Agreement (i) have been or will be duly authorized, executed and delivered
by New Operator; (ii) are or will be legal and binding obligations of New
Operator as of the date of their respective executions; (iii) are or will be
enforceable in accordance with their respective terms (except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, moratorium
and other principles relating to or limiting the rights of contracting parties
generally); and (iv) do not, and will not at the Close of Escrow, violate any
provision of any agreement to which New Operator is a party, any of New
Operator’s organizational documents or any existing obligation of or restriction
on New Operator under any order, judgment or decree of any state or federal
court or governmental authority binding on Buyer.

3.3 Litigation. To New Operator’s Knowledge, there are no material actions,
suits or proceedings pending or threatened before or by any governmental
authority or other person, against or affecting New Operator or any of its
affiliates affecting New Operator’s (or its successor’s or assign’s) right to
enter into this Agreement or that could materially impair or adversely affect
New Operator’s (or its successor’s or assign’s) ability to perform its
obligations hereunder.

3.4 Third Party Consents. New Operator has, or will have at the time requisite
for its performance, the full right and authority to consummate the transactions
contemplated by this Agreement pursuant to the terms and conditions contained
herein and no consents from third parties other than: (i) any consents required
by any governmental or quasi-governmental authority in connection with New
Operator’s assumption of the Fremont Lease and Mansfield Lease, (ii) the Agency
Lender with respect to the Existing Mansfield Debt, and (iii) the Mansfield
Landlord and the Fremont Landlord are required in connection therewith.

3.5 Knowledge. As used in this Agreement, the terms “to New Operator’s
Knowledge”, “to the Knowledge of New Operator”, “known to New Operator” or any
similar phrase, shall mean the knowledge of Christopher Cook; provided, however,
Christopher Cook shall not be personally liable for the breach of any
representation, warranty or covenant wherein the phrases “to New Operator’s
Knowledge”, “to the Knowledge of New Operator” or the like are used. New
Operator hereby represents and warrants that the foregoing individual(s) is/are
the representatives of New Operator most likely to have actual knowledge of the
accuracy of the representations and warranties contained in this Section 3.5.

 

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3.6 Survival. No representation or warranty made by New Operator in this
Agreement shall merge into any instrument of conveyance delivered at the Close
of Escrow but shall survive the Close of Escrow for a period of one (1) year,
with the exception of the representations and warranties made in Sections 3.1
and 3.2 above, which shall survive the Close of Escrow for a period of two
(2) years (as applicable, the “Rep Survival Termination Date”); provided,
however, that if Buyer notifies New Operator, on or before the sixtieth
(60th) day following the Rep Survival Termination Date, of any alleged breach of
a representation or warranty occurring prior to the Rep Survival Termination
Date (a “Notice of Breach of Rep”), and Buyer thereafter files a lawsuit in
connection therewith against New Operator within thirty (30) days following the
furnishing of said Notice of Breach of Rep, then the applicable Rep Survival
Termination Date shall be extended with respect to said representation and
warranty until the date on which a final judgment is obtained in said lawsuit,
beyond any possibility of appeal.

3.7 Indemnification by New Operator. New Operator shall hold harmless, indemnify
and defend Buyer from and against any Losses resulting from any inaccuracy in or
breach of any representation or warranty of New Operator or any breach or
default by such indemnifying party under any of such indemnifying party’s
covenants or agreements contained in this Agreement. The indemnity shall cover
the costs and expenses of the indemnitee, including reasonable attorneys’ fees
and costs (including expert fees), related to any actions, suits or judgments
incident to any of the matters covered by such indemnity.

4. Delivery of Information. Buyer has delivered to New Operator copies of, or
has made New Operator aware of, all material agreements, documents, information,
facts and conditions known to Buyer affecting the Leasehold Assets, whether such
agreements, documents, information, facts or conditions were delivered or
disclosed to Buyer by Seller or were located or discovered by Buyer as a result
of its due diligence in connection with the transactions contemplated by this
Agreement or the Purchase Agreement. To the best of Buyer’s knowledge, none of
the agreements, documents, or information delivered to New Operator by or on
behalf of Buyer and prepared by parties other than Buyer or any of its
affiliates or any of their agents or employees contain any untrue statement of
or omit any material fact. Further, none of the representations, warranties or
disclosures made in writing to New Operator by Buyer contain any untrue
statement of or omit any material fact.

5. Seller Representations. Seller made certain representations and warranties in
the Purchase Agreement for the benefit of Buyer. In the event the parties hereto
become aware that one or more such representations or warranties were breached
by Seller, and New Operator has or will suffer damage from such breach, then
Buyer shall either (at its election): (a) use its commercially reasonable
efforts to enforce its rights under the Purchase Agreement for such breach and,
in the event of a recovery, any recovered amount to the extent relating to New
Operator’s damages (less Landlord’s costs and expenses incurred in connection
therewith) shall be remitted to New Operator or (b) assign its rights to pursue
recovery to the extent of New Operator’s damages to New Operator as if such
representations and warranties were made to New Operator. New Operator
acknowledges that any claim or cause of action, and any potential recovery,
against Seller shall be subject to the limitations set forth in Sections 9 and
13 of the Purchase Agreement. New Operator hereby acknowledges and agrees that
Buyer has not made any representations or warranties whatsoever regarding the
Leasehold Assets and New Operator

 

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hereby waives and and all rights, remedies, or claims it may have at law or in
equity against Buyer (or any of its affiliates, owners, shareholders, or
representatives) with respect to the Leasehold Assets or New Operator’s
assumption of the Mansfield Lease and Fremont Lease.

6. Miscellaneous.

6.1 Survival. All warranties, representations, covenants, obligations and
agreements contained in this Agreement shall survive the Closing and the
assignment of the Leasehold Assets and any and all performances hereunder until
the earlier of: (i) the applicable survival date expressly provided elsewhere in
this Agreement, or (ii) the date that is two (2) years after the date of
Closing, after which they shall terminate and be of no further force or effect.
All warranties and representations shall be effective regardless of any
investigation made or which could have been made.

6.2 Further Instruments. Each party shall, whenever and as often as it shall be
requested so to do by another party, cause to be executed, acknowledged or
delivered any and all such further instruments and documents as may be
reasonably necessary or proper, in the reasonable opinion of the requesting
party, in order to carry out the intent and purpose of this Agreement.

6.3 Entire Agreement; Amendments; Captions. This Agreement and the instruments
referenced herein contain the entire agreement between the parties respecting
the matters herein set forth and supersede all prior or contemporaneous
agreements or understandings, verbal or written, between the parties respecting
such matters. This Agreement may be amended by written agreement of amendment
executed by the parties, but not otherwise. Section headings shall not be used
in construing this Agreement.

6.4 Time of the Essence. Subject to the next full sentence, time is of the
essence of this Agreement. Whenever action must be taken (including the giving
of notice or the delivery of documents) under this Agreement during a certain
period of time or by a particular date that ends or occurs on a non-business
day, then such period or date shall be extended until the immediately following
business day. As used herein, “business day” means any day other than Saturday,
Sunday or a federal holiday.

6.5 Terminology. Whenever the words “including”, “include” or “includes” are
used in this Agreement, they should be interpreted in a non-exclusive manner as
though the words,” without limitation,” immediately followed the same. Except as
otherwise indicated, all Section references in this Agreement shall be deemed to
refer to the Sections in or to this Agreement.

6.6 Attorneys’ Fees. If any party brings any action to interpret or enforce this
Agreement, or for damages for any alleged breach thereof, the prevailing party
in any such action shall be entitled to reasonable attorneys’ fees and costs as
awarded by the court in addition to all other recovery, damages and costs.

 

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6.7 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).

6.8 Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of Ohio, without regard to the conflict of law rules
of such State.

6.9 Successors and Assigns. None of the parties may assign or transfer its
rights or obligations under this Agreement without the prior written consent of
the other parties (in which event such transferee shall assume in writing all of
the transferor’s obligations hereunder, but such transferor shall not be
released from its obligations hereunder). No consent given by any of the parties
hereto to any transfer or assignment of another party’s rights or obligations
hereunder shall be construed as consent to any other transfer or assignment of
such other party’s rights or obligations hereunder. No transfer or assignment in
violation of the provisions hereof shall be valid or enforceable. Subject to the
foregoing, this Agreement and the terms and provisions hereof shall inure to the
benefit of and be binding upon the successors and assigns of the parties.

6.10 Counterparts. This Agreement may be executed by the parties in separate
counterparts, each of which when executed and delivered shall be an original,
but all of which together shall constitute one and the same instrument. This
Agreement may be signed through facsimile transmission, or by scanned and
emailed PDF, JPEG or TIF signatures.

6.11 Notices. All notices and demands, certificates, requests, consents,
approvals and other similar instruments under this Agreement shall be in writing
and sent by personal delivery or FedEx or similar generally recognized overnight
carrier regularly providing proof of delivery, addressed as follows:

 

If to New Operator:    If to Buyer:

c/o Pristine Senior Living, LLC

3301 West Purdue Avenue

Muncie, Indiana 47304

Attn: Christopher T. Cook, CEO

  

c/o CareTrust REIT, Inc.

905 Calle Amanecer, Suite 300

San Clemente, CA 92673

Attn: Gregory K. Stapley, CEO

With a copy to:    With a copy to:

Williams Mullen

222 Central Park Avenue, Suite 1700

Virginia Beach, Virginia 23462

Attn: Lawrence R. Siegel, Esq.

  

Sherry Meyerhoff Hanson & Crance LLP

610 Newport Center Drive, Suite 1200

Newport Beach, California 92660

Attention: James Callister, Esq.

 

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A party may designate a different address by notice as provided above. Any
notice or other instrument so delivered (whether accepted or refused) shall be
deemed to have been given and received on the date of delivery established by
U.S. Post Office return receipt or the carrier’s proof of delivery or, if not so
delivered, upon its receipt.

6.12 Interpretation. New Operator and Buyer have been represented by counsel and
this Agreement has been freely and fairly negotiated. Consequently, all
provisions of this Agreement shall be interpreted according to their fair
meaning and shall not be strictly construed against any party.

6.13 Brokerage. Buyer and New Operator each represent to the other that they
have not entered into any agreement or incurred any obligation which might
result in the obligation to pay a sales or brokerage commission or finder’s fee
with respect to this transaction. Buyer and New Operator each agree to
indemnify, defend and hold harmless the other from and against any and all
losses, claims, damages, costs or expenses (including attorneys’ fees) which the
other may incur as a result of any claim made by any person to a right to a
sales or brokerage commission or finder’s fee in connection with this
transaction to the extent such claim is based, or purportedly based, on the acts
or omissions of New Operator or Buyer, as the case may be. The obligations under
this Section shall survive the Close of Escrow.

6.14 Joint and Several. The obligations of New Operator hereunder shall be joint
and several in every respect. If Buyer delivers notice to one New Operator
hereunder, such notice shall be deemed delivered to each New Operator. The
actions of any one New Operator shall be binding on each other New Operator and
Buyer shall be entitled to rely on any such action, even if not specifically
unanimous.

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

BUYER:

 

CTR Partnership, L.P.,

a Delaware limited partnership

 

By:   CareTrust GP, LLC,  

a Delaware limited liability company

Its: general partner

  By:   CareTrust REIT, Inc.,    

a Maryland corporation

Its: sole member

    By:   /s/ Gregory K. Stapley     Name:   Gregory K. Stapley     Title:  
President

[Signatures continue on next page]

 

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NEW OPERATOR:

 

PRISTINE SENIOR LIVING OF MANSFIELD, LLC,

an Ohio limited liability company

 

By:   PRISTINE OHIO HOLDINGS, LLC,   a Delaware limited liability company,
Member   By:   /s/ Christopher T. Cook     Christopher T. Cook, Manager

PRISTINE SENIOR LIVING OF FREMONT, LLC,

an Ohio limited liability company

By:  

PRISTINE OHIO HOLDINGS, LLC,

a Delaware limited liability company, Member

  By:   /s/ Christopher T. Cook     Christopher T. Cook, Manager

 

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