Exhibit 10.1

PURCHASE AND SALE AGREEMENT

by and among

US ASSISTED LIVING FACILITIES III, INC.,

a Delaware corporation,

SUNRISE SENIOR LIVING INVESTMENTS, INC.,

a Virginia corporation

and

CNL INCOME PARTNERS, LP,

a Delaware limited partnership

and

CC3 ACQUISITION, LLC,

a Delaware limited liability company

December 8, 2010

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TABLE OF CONTENTS

 

Article I.           INTERPRETATION

   2

Section 1.01

  

Defined Terms

   2

Section 1.02

  

Additional Defined Terms

   7

Section 1.03

  

Exhibits

   9

Article II.          AGREEMENT TO SELL AND PURCHASE SELLER’S INTEREST

   9

Section 2.01

  

Sale of Seller’s Interest

   9

Section 2.02

  

Owned Assets

   10

Section 2.03

  

Distribution of Certain Cash

   12

Section 2.04

  

Down Payment

   12

Article III.        DUE DILIGENCE

   13

Section 3.01

  

Investigation of Facilities

   13

Section 3.02

  

Title.

   14

Section 3.03

  

Satisfaction of Conditions Precedent; Extension of Closing Date

   15

Article IV.        REPRESENTATIONS AND WARRANTIES OF NEW INVESTOR

   16

Section 4.01

  

Organization, Good Standing and Entity Authority

   16

Section 4.02

  

Authorization and Binding Effect of Documents

   16

Section 4.03

  

ERISA

   17

Section 4.04

  

Absence of Conflicts

   17

Section 4.05

  

Consents

   17

Section 4.06

  

Broker’s or Finder’s Fees

   17

Section 4.07

  

No Judgments

   17

Section 4.08

  

No Insolvency

   18

Section 4.09

  

Specially Designated National or Blocked Person

   18

Section 4.10

  

New Investor Financials

   18

Article V.         REPRESENTATIONS AND WARRANTIES OF PURCHASER

   18

Section 5.01

  

Organization, Good Standing and Entity Authority

   18

Section 5.02

  

Authorization and Binding Effect of Documents

   19

Section 5.03

  

ERISA

   19

Section 5.04

  

Absence of Conflicts

   19

Section 5.05

  

Consents

   19

Section 5.06

  

Broker’s or Finder’s Fees

   20

Section 5.07

  

No Judgments

   20

Section 5.08

  

No Insolvency

   20

Section 5.09

  

Specially Designated National or Blocked Person

   20

Article VI.        REPRESENTATIONS AND WARRANTIES OF SELLER

   21

Section 6.01

  

Organization and Good Standing and Entity Authorization

   21

Section 6.02

  

Authorization and Binding Effect of Documents

   21

Section 6.03

  

Absence of Conflicts

   21

Section 6.04

  

Consents and Approvals

   22

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Section 6.05

  

Broker’s or Finder’s Fees

     22   

Section 6.06

  

Ownership of Seller’s Interest

     22   

Section 6.07

  

ERISA

     22   

Section 6.08

  

No Judgments

     23   

Section 6.09

  

No Insolvency

     23   

Section 6.10

  

FIRPTA

     23   

Section 6.11

  

Specially Designated National or Blocked Person

     23   

Section 6.12

  

Financial Statements

     23   

Article VII.      REPRESENTATIONS AND WARRANTIES OF SSLII

     24   

Section 7.01

  

Organization, Good Standing, Entity Authority and Qualification

     24   

Section 7.02

  

Authorization and Binding Effect of Documents

     24   

Section 7.03

  

Absence of Conflicts

     24   

Section 7.04

  

Consents

     24   

Section 7.05

  

Broker’s or Finder’s Fees

     25   

Section 7.06

  

Ownership of SSLII’s Interest

     25   

Section 7.07

  

ERISA

     25   

Section 7.08

  

No Judgments

     25   

Section 7.09

  

No Governmental Approvals

     25   

Section 7.10

  

No Insolvency

     26   

Section 7.11

  

Ownership and Control of Purchaser

     26   

Article VIII.     BUSINESS REPRESENTATIONS

     26   

Section 8.01

  

Financial Statements; No Undisclosed Liabilities; Absence of Certain Changes

     26   

Section 8.02

  

Books and Records; Internal Controls

     28   

Section 8.03

  

Obligations

     28   

Section 8.04

  

Medicare; Medicaid

     28   

Section 8.05

  

No Possessory Rights

     28   

Section 8.06

  

Employees

     29   

Section 8.07

  

Licenses

     29   

Section 8.08

  

Litigation

     29   

Section 8.09

  

Environmental Matters

     29   

Section 8.10

  

Facility Leases

     30   

Section 8.11

  

Compliance with Laws

     30   

Section 8.12

  

Residence Agreements

     30   

Section 8.13

  

Taxes

     30   

Section 8.14

  

Personal Property

     30   

Section 8.15

  

Title

     30   

Section 8.16

  

Real Property Ground Leases

     31   

Section 8.17

  

Contracts

     31   

Section 8.18

  

Insurance

     31   

Section 8.19

  

Ownership of Facility Lessees

     31   

Article IX.        COVENANTS

     32   

Section 9.01

  

Publicity

     32   

 

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Section 9.02

  

Commercially Reasonable Efforts

     32   

Section 9.03

  

No Recordation

     33   

Section 9.04

  

Licenses

     33   

Section 9.05

  

Casualty

     33   

Section 9.06

  

Condemnation

     34   

Section 9.07

  

Operation of Business:

     34   

Section 9.08

  

Acquisition of Facility Owners

     34   

Article X.         CONDITIONS PRECEDENT TO THE OBLIGATION OF NEW INVESTOR, SSLII
AND SELLER TO CLOSE

     34   

Section 10.01

  

Conditions to New Investor’s Obligation to Close

     34   

Section 10.02

  

Conditions to Seller’s Obligation to Close

     35   

Section 10.03

  

Conditions to SSLII’s Obligation to Close

     35   

Article XI.        CLOSING

     36   

Section 11.01

  

Time and Place

     36   

Section 11.02

  

Delivery of Documents at Closing

     36   

Section 11.03

  

Closing Costs

     39   

Article XII.      INDEMNITY; DEFAULT; DAMAGES

     39   

Section 12.01

  

Survival

     39   

Section 12.02

  

New Investor’s, SSLII’s and Purchaser’s Remedies for Seller’s Defaults

     40   

Section 12.03

  

Seller’s Remedies for New Investor’s Defaults

     40   

Section 12.04

  

Seller’s Remedies for SSLII’s and Purchaser’s Defaults

     40   

Section 12.05

  

New Investor’s Remedies for SSLII’s or Purchaser’s Defaults

     41   

Section 12.06

  

SSLII’s and Purchaser’s Remedies for New Investor’s Defaults

     41   

Section 12.07

  

Limitation on Liability for Business Representations

     42   

Section 12.08

  

Seller not Liable for Representations of Other Parties

     42   

Section 12.09

  

Indemnification by New Investor

     42   

Section 12.10

  

Indemnification by Arcapita Bank and Seller

     42   

Section 12.11

  

Indemnification by SSLII

     42   

Section 12.12

  

Indemnification by Purchaser and SSLII

     43   

Section 12.13

  

Indemnification by Purchaser, SSLII and New Investor

     43   

Section 12.14

  

Administration of Indemnification

     43   

Section 12.15

  

Exclusivity

     44   

Article XIII.     DOWN PAYMENT AND ESCROW

     44   

Section 13.01

  

Investment of Down Payment

     44   

Section 13.02

  

Disbursement of Down Payment

     44   

Section 13.03

  

Disputes

     46   

Section 13.04

  

Compensation

     46   

Section 13.05

  

Liability of Escrow Agent

     46   

Article XIV.    MISCELLANEOUS

     47   

Section 14.01

  

Further Actions

     47   

Section 14.02

  

Consents under Old Venture Agreement

     47   

Section 14.03

  

Notices

     47   

 

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Section 14.04

  

Entire Agreement

     48   

Section 14.05

  

Not Construed Against Drafter

     48   

Section 14.06

  

Binding Effect; Benefits

     49   

Section 14.07

  

Assignment

     49   

Section 14.08

  

Governing Law

     49   

Section 14.09

  

Amendments and Waivers

     49   

Section 14.10

  

Severability

     49   

Section 14.11

  

Headings

     49   

Section 14.12

  

Counterparts

     49   

Section 14.13

  

References

     50   

Section 14.14

  

Exhibits

     50   

Section 14.15

  

Attorneys’ Fees

     50   

Section 14.16

  

Waiver of Jury Trial

     50   

Section 14.17

  

Facsimile and PDF Signatures

     50   

EXHIBITS

 

A Facilities; Facility Owners; Facility Lessees

 

B. Facility Leases

 

C. Form of Assignment and Assumption of Interest Agreement

 

D. Disclosure Statement

 

E. Rent Roll

 

F. Non-Foreign Status Affidavit

 

G. Form of Mutual Release

 

H. New Investor’s Access Schedule

 

I Seller’s Non-Imputation Affidavit

 

iv

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PURCHASE AND SALE AGREEMENT

(Sale of Interests in Sunrise Third Senior Living Holdings, LLC)

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is dated as of the 8th day
of December, 2010, by and among US ASSISTED LIVING FACILITIES III, INC., a
Delaware corporation (“Seller”), CC3 ACQUISITION, LLC, a Delaware limited
liability company (“Purchaser”), SUNRISE SENIOR LIVING INVESTMENTS, INC., a
Virginia corporation (“SSLII”) and CNL INCOME PARTNERS, LP, a Delaware limited
partnership (“New Investor”). Certain capitalized terms used herein are defined
in Section 1.01.

RECITALS:

A. Seller and SSLII are the sole members of Sunrise Third Senior Living
Holdings, LLC (“Old Venture”), in which Seller owns a ninety percent
(90%) membership interest and SSLII owns a ten percent (10%) membership interest
and is the managing member. Seller’s interest in Old Venture is referred to
herein as “Seller’s Interest” and SSLII’s interest in Old Venture is referred to
herein as “SSLII’s Interest.”

B. Old Venture is governed by that certain Amended and Restated Operating
Agreement, dated as of September 23, 2003 (as amended, the “Old Venture
Agreement”).

C. Through the Facility Lessees (as defined in Section 1.01 below) Old Venture
owns the leasehold interests in each of the twenty-nine (29) senior living
facilities described in Exhibit A (the “Facilities”) pursuant to the Facility
Leases (as defined in Section 1.01 below).

D. Each Facility is owned or ground leased by the entity listed across from such
Facility’s name on Exhibit A (the “Facility Owners” and each a “Facility
Owner”).

E. SSLII and AL Funding III, Inc. (“ALF”) are the sole members of the Facility
Owners designated on Exhibit A as the “List A Facility Owners,” in which SSLII
owns a 0.01% interest (the “List A MM Interest”) and ALF owns a 99.99% interest
(the “List A ALF Interest”).

F. ALF is the sole member and owner of 100% of the interests (the “List B ALF
Interest”) of the Facility Owners designated on Exhibit A as the “List B
Facility Owners.”

G. ALF and ALF Subfunding III, LLC (“ALF Sub”) are the sole partners of the
Facility Owners designated on Exhibit A as the “List C Facility Owners,” in
which ALF Sub owns a 1% interest (the “List C GP Interest”) and ALF owns a 99%
interest (the “List C ALF Interest”).

H. GSS Contract Services III, Inc. (“GSS”) is the sole shareholder of ALF.

I. Pursuant to a separate management agreement and related documents for each
Facility, each of the Facilities is managed by Sunrise Senior Living Management,
Inc., an Affiliate of SSLII (“Manager”).

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J. At Closing, Purchaser intends to purchase Seller’s Interest and Seller has
agreed to sell Seller’s Interest to Purchaser pursuant to the terms and
conditions set forth herein, and upon receipt of the Purchase Price, Seller has
agreed to withdraw from Old Venture pursuant to the terms and conditions set
forth herein.

K. At Closing, Seller and SSLII intend to cause ALF to sell the List A ALF
Interest, the List B ALF Interest and the List C ALF Interest to Purchaser, and
Purchaser intends to acquire the List A ALF Interest, the List B ALF Interest
and the List C ALF Interest from ALF (the “ALF Interest Sales”).

L. At Closing, Purchaser intends to form a new Delaware limited liability
company wholly owned by Purchaser ( “List C GP”), and Seller and SSLII intend to
cause ALF Sub to sell the List C GP Interest to List C GP, and Purchaser intends
to cause List C GP to acquire the List C GP Interest (the “ALF Sub Interest
Sale” and together with the ALF Interest Sales, the “ALF Sales”), such ALF Sales
to be consummated for consideration of equal to the ALF Sales Purchase Price.

Accordingly, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

Article I.

INTERPRETATION

Section 1.01 Defined Terms. As used herein, the following terms shall have the
meanings indicated:

Affiliate: With respect to any specified Person that is not an individual,
another Person which, directly or indirectly, controls, is controlled by, or is
under common control with, the specified Person; provided, however, the Old
Venture shall not be considered to be an Affiliate of Seller.

ALF Sales Purchase Price. An amount equal to Three Thousand and No/100 Dollars
($3,000.00).

Assignment and Assumption of Interest Agreement: Assignment and Assumption
Agreement substantially in the form of Exhibit C.

Business Day: Any day, other than a Saturday, a Sunday or a day on which banks
in New York City are required or authorized to close.

Charter Documents: (i) with respect to any Person which is a corporation, the
certificate of incorporation an bylaws of such Person, (ii) with respect to any
Person which is a limited liability company, the certificate of formation and
operating or limited liability company agreement of such Person, and (iii) with
respect to any Person which is a limited partnership, the certificate of limited
partnership and partnership agreement of such Person.

Code: The United States Internal Revenue Code of 1986, as amended.

 

2

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Contract Date: The date of this Agreement, set forth in the introductory
paragraph.

Disclosure Statement: The Disclosure Statement prepared by SSLII attached hereto
as Exhibit D.

Documents: This Agreement and all Exhibits hereto, and each other agreement,
certificate or instrument delivered pursuant to this Agreement.

Down Payment: The sum of Ten Million Dollars ($10,000,000).

Due Diligence Period: A period ending at 5:00pm EST on December 27, 2010, as the
same may be extended by the mutual written consent of the parties hereto.

Environmental Claims: All claims for reimbursement, remediation, abatement,
removal, clean up, contribution, personal injury, property damage, damage to
natural resources or violations of Environmental Laws, made by any Governmental
Entity or other Person arising from or in connection with the (i) spill, leak,
emission, discharge or release of any Hazardous Materials over, on, in, under or
from the Real Property, or (ii) violation of any Environmental Laws with respect
to the Real Property.

Environmental Laws: Any federal, state or local law, statute, rule, regulation,
order, ordinance, decree, injunction, judgment, governmental restriction or any
other requirement of law (including common law) regulating Hazardous Materials
or relating to the protection of human health and safety from Hazardous
Materials or relating to the protection of natural resources or the environment
and applicable to the Owned Assets.

Environmental Liabilities: All Liabilities under any Environmental Laws arising
from or in connection with the Real Property, including, without limitation, any
obligations to manage, control, contain, remove, remedy, respond to, clean up or
abate any spill, leak, emission, discharge or release of any Hazardous
Materials, pollution, contamination or radiation into any water, soil, sediment,
air or other environmental media.

ERISA: The Employee Retirement Income Security Act of 1974, as amended.

Escrow Agent: Fidelity National Title Insurance Company, New York Office.

Existing Owner Financing: The existing mortgage financing obtained by the
Facility Owners with respect to the Facilities.

Facility Leases: Collectively, the following documents between each Facility
Lessee and each Facility Owner: (i) the Master Lease Financing Facility
Agreement, (ii) the Put Option Letter, (iii) the Call Option Letter, (iv) the
Supplemental Agreement, and (v) the Tax Matters Agreement. The Facility Leases
are more particularly described on Exhibit B.

Facility Lessee(s): Individually, the lessee of a Facility, and collectively the
lessees of the Facilities, more specifically identified as the following five
Delaware limited liability companies and the following two California limited
partnerships: (i) Sunrise Third

 

3

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(Pool I), LLC; (ii) Sunrise Third (Pool II), LLC; (iii) Sunrise Third (Pool
III), LLC; (iv) Sunrise Third (Pool IV), LLC; (v) Sunrise Third (Pool V), LLC;
Sunrise Third (Pool I), LP; and Sunrise Third (Pool IV), LP.

GAAP: United States generally accepted accounting principles, consistently
applied.

Governmental Entity: Any governmental authority, agency, commission, board or
public authority.

Hazardous Materials: Any material that: (i) is or contains asbestos, urea
formaldehyde insulation, polychlorinated biphenyls, petroleum or petroleum
products, radon gas, or microbiological contamination, (ii) the presence of
which in the environment requires remediation or abatement pursuant to any
Environmental Law, or is defined, listed or identified pursuant to any
Environmental Law as a “hazardous waste,” “hazardous substance,” “toxic
substance” or words of similar import, or (iii) is regulated under any
Environmental Law; provided, however, that Hazardous Material shall not include
(a) cleaning material, pre-packaged supplies, and petroleum products customarily
used in the operation and maintenance of comparable properties, (b) cleaning
materials, personal grooming items, and other items sold in pre-packaged
containers for consumer use and used by tenants and residents in the Facilities,
(c) any pharmaceuticals, vaccines or medical products or devices, or medical
waste or biological waste, including those materials defined as “medical waste”
or “biological waste” under Environmental Laws, and (d) petroleum products used
in the operation and maintenance of motor vehicles from time to time located on
the Facilities’ parking areas and equipment, so long as, to the extent required,
all applicable Licenses for the use of any of the foregoing have been obtained
and are in full force and effect and so long as all the foregoing are used,
stored, handled, transported and disposed of, and otherwise managed in
quantities and types appropriate for such activities and in compliance with all
Environmental Laws.

Healthcare Permits: All licenses, permits, certifications or approvals issued by
Governmental Entities necessary for Facility Owners, Facility Lessees and
Manager to provide healthcare and other assisted living services to Residents as
are provided or offered by Facility Owners, Facility Lessees or Manager as of
the Contract Date.

Leased Real Property: The Real Property identified in Exhibit A that is leased
by the relevant Facility Owners as ground tenants pursuant to Real Property
Ground Leases.

Lease Financing: The aggregate acquisition cost outstanding under the Facility
Leases, which is acknowledged to equal the outstanding mortgage financing
obtained by the Facility Owners with respect to the Facilities and to have the
same payment / amortization schedule and terms.

Liabilities: Liabilities, obligations, commitments or responsibilities of any
nature whatsoever, whether direct or indirect, matured or unmatured, fixed or
unfixed, known or unknown, accrued, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, secured or unsecured, absolute, contingent or
otherwise, including any direct or indirect indebtedness, guaranty, endorsement,
claim, Loss, Taxes, damage, deficiency, cost or expense, but excluding,

 

4

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with respect to the relationships among the parties to this Agreement created
hereunder, consequential damages.

Licenses: All certificates, licenses, and permits issued by Governmental
Entities in connection with the ownership, leasing, use, occupancy, operation,
and maintenance of the Facilities, including the Healthcare Permits.

Lien: Any mortgage, deed of trust, pledge, hypothecation, title defect, right of
first refusal, security or other adverse interest, voting trust agreement,
community property interest, encumbrance, claim, option, lien, lease or charge
of any kind, whether voluntarily incurred or arising by operation of law or
otherwise, affecting any assets or property, including any agreement to give or
grant any of the foregoing, any conditional sale or other title retention
agreement, and the filing of or agreement to give any financing statement with
respect to any assets or property under the Uniform Commercial Code or
comparable law of any jurisdiction.

Loss: With respect to any Person, any and all costs, obligations, liabilities,
demands, claims, settlement payments, awards, judgments, fines, penalties,
damages, and reasonable out-of-pocket expenses, including court costs and
reasonable attorneys’ fees, whether or not arising out of a third party claim,
but excluding consequential damages.

Material Adverse Effect: Any change, event, development or effect that
individually or in the aggregate has a material adverse effect on (a) the
assets, business, operations, capitalization, financial condition (including
Liabilities) or results of operations of Old Venture, the Facilities, the
Facility Owners, the Facility Lessees or the Real Property in the aggregate,
(b) the ability of the parties to consummate the transactions contemplated by
this Agreement or (c) the ability of Purchaser to consummate the transactions
contemplated by this Agreement.

Medicaid/Medicare Contracts: Any contracts with any Governmental Entity or other
Person, which are necessary for the Facility Owners, Facility Lessees or Manager
to be reimbursed, paid or otherwise compensated for the care of elderly,
disabled or low income individuals at the Facilities, pursuant to Title XVIII or
Title XIX of the Social Security Act, Title 42 United States Code, Chapter 7, as
amended from time to time, or any similar state law governing the care of
elderly, disabled or low income individuals. For purposes of this definition,
the term ‘care’ includes any acute health care, long term care, preventive care
or other type of health care, or any goods or services provided in connection
with the provision of such care.

Old Venture: As defined in Recital A to this Agreement, it being understood that
reference to Old Venture hereunder shall be deemed references to the
relationship between Seller and SSLII as established pursuant to the Old Venture
Agreement.

Owned Real Property: The Real Property identified in Exhibit A that is owned in
fee simple by the relevant Facility Owners.

Permitted Exceptions: (i) The Lien of real estate taxes and assessments and
other charges by Governmental Entities that are not yet delinquent, (ii) the
rights of Residents under the Residence Agreements, (iii) such matters as are
shown on the Pro Forma Title Policies, (iv)

 

5

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the lien of any equipment lease or financing or purchase money Lien, in each
case incurred in the ordinary course of business consistent with past practice,
(v) Liens set out in Section 1.01 of the Disclosure Statement and (vi) such
other matters as are approved by New Investor in writing (such approval to be
deemed given upon completion of the Closing after written disclosure to New
Investor of such other matters) or that are permitted pursuant to the terms of
this Agreement.

Person: Any individual, partnership, corporation, limited liability company,
trust or other legal entity.

Pro-Forma Title Policies: The Pro-Forma Title Policies prepared and delivered by
the Escrow Agent to Purchaser and New Investor on or before the expiration of
the Due Diligence Period, with respect to the issuance by the Escrow Agent of an
owner’s policy of title insurance insuring each Facility Owner’s title to, or
leasehold interest in, the Real Property, effective as of the acquisition by
Purchaser of the ownership of the ALF Interests as provided herein.

Purchase Price: Two Hundred and Sixty One Million, One Hundred and Eleven
Thousand, Seven Hundred and Eighteen and No/100 Dollars ($261,111,718.00),
subject to Section 2.01(b).

Real Property: The Owned Real Property and the Leased Real Property consisting
of Land and all buildings, structures, fixtures and other improvements located
thereon, as more fully described in Exhibit A, including all permits, easements,
Licenses, rights-of-way, rights and related appurtenances.

Real Property Ground Leases: The ground leases pursuant to which the relevant
Facility Owners own a leasehold interest in and to the Leased Real Property.

Resident: Each individual resident at the Facilities in his/her capacity as
such.

Resident Deposits: All deposits or advances of any kind or nature from any
Resident.

Resident Pre-paid Rent: All rental amounts paid in advance of the date when such
payment is due by any Resident.

Specially Designated National or Blocked Person: (i) A person or entity
designated by the U.S. Department of the Treasury’s Office of Foreign Assets
Control from time to time as a “specially designated national or blocked person”
or similar status, (ii) a person or entity described in Section 1 of U.S.
Executive Order 13224, issued on September 23, 2001 (the “Executive Order”), or
(iii) a person or entity otherwise identified by Governmental Entity or legal
authority as a person with whom a United States Person is prohibited from
transacting business. As of the date hereof, a list of such designations and the
text of the Executive Order are published under the internet website address
www.ustreas.gov/offices/enforcement/ofac.

SSLI: Sunrise Senior Living, Inc., a Delaware corporation, which is the sole
owner of SSLII.

 

6

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Taxes: All federal, state, local and foreign taxes including, without
limitation, income, gains, transfer, unemployment, withholding, payroll, social
security, real property, personal property, excise, sales, use and franchise
taxes, levies, assessments, imposts, duties, licenses and registration fees and
charges of any nature whatsoever, including interest, penalties and additions
with respect thereto and any interest in respect of such additions or penalties,
but excluding impact fees or other similar exactions levied or payable in
connection with the development or operation of any of the Facilities and
excluding special assessments.

Tax Return: Any return, filing, report, declaration, questionnaire or other
document required to be filed for any period with any taxing authority (whether
domestic or foreign) in connection with any Taxes (whether or not payment is
required to be made with respect to such document).

Title Commitment: A current commitment for title insurance for each of the
Facilities.

Title Policy: An owner’s policy of title insurance insuring each Facility
Owner’s title to, or leasehold interest in, the Real Property, effective as of
the acquisition by Purchaser of the ownership of the ALF Interests as provided
herein.

United States Person: (i) Any individual or business entity, regardless of
location, that is a resident of the United States; (ii) any individual or
business entity physically located within the United States; (iii) any business
entity organized under the laws of the United States or of any state, territory,
possession, or district thereof; and (iv) any business entity, wheresoever
organized or doing business, which is owned or controlled by an individual or
business entity specified in (i) or (iii) above.

Section 1.02 Additional Defined Terms. As used herein, the following terms shall
have the meanings defined in the recitals or sections indicated below:

 

Access Indemnified Parties    Section 3.01(b) Agreement    Preamble ALF   
Recital E ALF Interests    Section 9.08(b) ALF Interest Sales    Recital K ALF
Sales    Recital L ALF Sub    Recital G ALF Sub Interest Sale    Recital L
Business Representations    Introductory paragraph to Article VIII Closing   
Section 11.01 Closing Date    Section 3.03 Closing Distribution Period   
Section 2.03

 

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Closing Statement    Section 11.02(a)(vi) Contracts    Section 8.17 Due
Diligence Materials    Section 3.01(f) Enterprise Valuation    Section 2.01(b)
Environmental Reports    Section 8.09 Estoppel Certificates    Section
3.02(a)(ii) Extended Lease Payment    Section 2.01(b) Facility Agreements   
Section 2.02(c) Facility/Facilities    Recital C Facility Leases    Recital C
Facility Owners    Recital D Failure of Condition Notice    Section 13.02(e) GSS
   Recital H Improvements    Section 2.02(a)(i) Indemnified Party    Section
12.12(a) Indemnifying Party    Section 12.12(a) Land    Section 2.02(a)(i) Lease
Payment    Section 2.01(b) List A ALF Interest    Recital E List A Facility
Owners    Recital E List A MM Interest    Recital E List B ALF Interest   
Recital F List B Facility Owners    Recital F List C ALF Interest    Recital G
List C Facility Owners    Recital G List C GP    Recital L List C GP Interest   
Recital G Manager    Recital I Mutual Release    Section 11.02(a)(viii) New
Investor    Preamble Old Venture    Recital B

 

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Old Venture Agreement    Recital B Old Venture Financials    Section 8.01(a)
Owned Assets    Section 2.02 Personal Property    Section 2.02(b)(iv) Property
Representation Damage Cap    Section 12.07 Purchase Price    Section 2.01(b)
Purchaser    Preamble Purchaser Default Notice    Section 13.02(d) Purchaser’s
Objection Notice    Section 13.02(d) Rent Rolls    Section 8.12 Residence
Agreements    Section 2.02(c) Seller    Preamble Seller Default Notice   
Section 13.02(c) Seller’s Interest    Recital A Seller Non-Imputation Affidavit
   Section 3.02(a) Seller’s Failure of Condition Objection Notice    Section
13.02(e) Seller’s Objection Notice    Section 13.02(c) SSLII    Preamble SSLII’s
Interest    Recital A Survey    Section 3.02(a)(i)

Section 1.03 Exhibits. The inclusion of any information on any one exhibit will
constitute disclosure of such information for all purposes hereunder, and
information need not be repeated on multiple exhibits.

Article II.

AGREEMENT TO SELL AND PURCHASE SELLER’S INTEREST

Section 2.01 Sale of Seller’s Interest.

(a) Upon and subject to the terms and conditions provided herein, at the
Closing, Purchaser will pay the Purchase Price as follows: Purchaser shall pay
to Seller an amount equal to the Purchase Price less the Down Payment, which
shall be credited and paid to Seller pursuant to Article XIII.

(b) Notwithstanding the provisions of Section 2.01(a) above, (i) in the event
that the Closing Date occurs on January 3, 2011, then the Purchase Price shall
be increased by an

 

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amount equal to seventy-five percent (75%) of the amount of any regularly
scheduled payment of the unpaid acquisition cost that was or is due and payable
under the Lease Financing (without regard to any grace period or whether such
acquisition cost payment is actually made) after December 31, 2010 and on or
prior to January 3, 2011 (the “Lease Payment”) and (ii) in the event that the
Closing Date is extended pursuant to Section 3.03 below, then the Purchase Price
shall be increased by an amount equal to seventy-five percent (75%) of the
amount of any regularly scheduled payment of the unpaid acquisition cost that
was or is due and payable under the Lease Financing (without regard to any grace
period or whether such acquisition cost payment is actually made) after
December 31, 2010 and on or prior to the extended Closing Date (the “Extended
Lease Payment”). At least five (5) Business Days prior to the Closing Date,
SSLII shall deliver to Seller a detailed statement showing the calculation of
the Lease Payment or the Extended Lease Payment, as applicable. In the event
that Seller does not agree with SSLII’s calculation of the Lease Payment or the
Extended Lease- Payment, then the parties shall submit the calculation (and any
reasonably required backup documentation) to an independent accounting firm and
the parties shall cause such accounting firm to notify the parties hereto of its
calculation of the Lease Payment or the Extended Lease Payment, as applicable,
within three (3) days of such submission, which calculation shall be binding on
the parties. The increase of the Purchase Price required to be made pursuant to
this Section does not limit the obligation of SSLII to make the distributions of
cash flow and cash specified in Section 2.03.

Section 2.02 Owned Assets. As of the Closing, SSLII shall cause Old Venture to
take such steps (and Seller consents to all such steps) as may be necessary so
that all tangible and intangible assets, excluding any assets leased or licensed
from a third party, used in, and material to, the operation of the Facilities as
they are currently being operated by the Facility Owners or the Facility Lessees
(as further described below, the “Owned Assets”) will be owned by the Facility
Owners, the Facility Lessees or Old Venture (as the case may be) free of all
Liens, other than Permitted Exceptions. The Owned Assets include the following:

(a) Real Property.

(i) The Real Property, including, but not limited to, a fee simple or leasehold
interest, as applicable, in those certain real properties consisting of land
(“Land”) and all buildings, structures, fixtures and other improvements located
thereon (“Improvements”), such Land and Improvements being more particularly
described in Exhibit A.

(ii) All right, title and interest of the Facility Lessees as landlord (whether
named as such therein, or by assignment or otherwise), including, but not
limited to, in any leases and subleases (including Residence Agreements), if
any, regarding the Real Property now existing or in effect at the Closing, and
all amendments, modifications, supplements, renewals and extensions thereof,
together with any security deposits made by the lessees or Residents thereunder.

(b) Personal Property.

(i) Any and all furniture, fixtures, furnishings, inventory, machinery and
equipment used in connection with the Facilities, and all other personal
property used

 

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in connection with the Real Property and located upon the Real Property now or
as of the Closing. In no event shall the Personal Property include any property
owned by any Resident or Manager, notwithstanding Manager’s use of such property
in connection with its management and administration of the Facilities.

(ii) Goodwill and going concern value.

(iii) All existing warranties and guaranties (express or implied) issued to the
Facility Owners or the Facility Lessees (or any prior owner or lessee of the
Facilities, to the extent Old Venture has an interest therein) in connection
with the Improvements or the Personal Property described in paragraph (b)(i)
above.

(iv) All petty cash, all unrecognized community fees and all rights to hold
Resident Deposits or other tenant security deposits received or held in
connection with each Facility.

(v) The tangible and intangible property described in Sections 2.02(b)(i)
through 2.02(b)(iv) shall be referred to herein as the “Personal Property.”

(c) Facility Agreements and Residence Agreements. All rights of Facility Owners
and the Facility Lessees in, to and under all contracts, leases, subleases,
agreements, commitments and other arrangements, and any amendments or
modifications thereof, used or useful in the operation of the Facilities as of
the date hereof or made or entered into by the Facility Owners, Facility Lessees
or Manager between the date hereof and the Closing Date in compliance with this
Agreement (the “Facility Agreements”), and all occupancy, residency, tenancy and
similar written agreements entered into in the ordinary course of business with
Residents, and all amendments, modifications, supplements, renewals, and
extensions thereof (“Residence Agreements”).

(d) Records. True and complete copies of all of the books, records, accounts,
files, logs, ledgers and journals pertaining to or used in the operation of the
Facilities, including, but not limited to, any electronic data stored on
computer disks or tapes, and originals of any of the foregoing that relate to
the Facilities, together with the basic corporate, partnership or limited
liability company documents and records of Old Venture, the Facility Lessees and
the Facility Owners.

(e) Licenses. Any and all Licenses now held in the name of SSLII, Manager, Old
Venture, the Facility Lessees, the Facility Owners, or any of their Affiliates
and used or useful in the operation of the Facilities, and any renewals,
extensions, amendments or modifications thereof, except to the extent not
transferable or assignable under applicable law.

(f) Miscellaneous Assets. Any other tangible or intangible assets, properties or
rights of any kind or nature not otherwise described above in this Section 2.02
and now or hereafter owned by the Facility Owners or Facility Lessees and used
in connection with the operation of the Facilities, including, without
limitation, any and all rights of the Facility Owners and the Facility Lessees
in and to (i) all web sites, URLs, domain names, trade names, trademarks,
service marks, logos and all copyrights used exclusively in connection with the
Facilities, (ii) phone numbers and phone listings for the Facilities, (iii) all
deposits in connection

 

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with any Facility Agreement or utility service, (iv) all deposits, letters of
credit and guarantees of future performance from third parties held by the
Facility Owners or the Facility Lessees and (v) all software, video tapes,
films, brochures, marketing packages and other advertising and promotional
materials used solely in connection with the Facilities.

(g) Excluded Assets. At Closing, the following assets shall not be considered
Owned Assets: (i) all assets owned solely by Manager, SSLII or SSLI, including,
without limitation, all web sites, URLs, domain names, trade names, trademarks,
service marks, logos and copyrights, (ii) all assets owned by tenants (other
than the Facility Lessees) or licensees and (iii) all assets owned by Residents.

Section 2.03 Distribution of Certain Cash. Notwithstanding anything to the
contrary contained herein, the parties acknowledge that (x) prior to Closing,
SSLII shall continue to cause Old Venture to make distributions of Net Cash Flow
(as defined in the Old Venture Agreement) to Seller in accordance with and
subject to the provisions of Section 9.1(a) of the Old Venture Agreement and in
accordance with prior practice and (y) at Closing, SSLII shall cause Old Venture
to make a distribution of Net Cash Flow to Seller in accordance with the
provisions of Section 9.1(a) of the Old Venture Agreement with respect to the
period from (a) the last distribution of Net Cash Flow made prior to the Closing
Date through (b) the Closing Date, as reasonably estimated by SSLII (the
“Closing Distribution Period”). Within sixty (60) days after the Closing Date,
SSLII shall deliver to Seller a statement, which shall be subject to the
reasonable approval of Seller, showing the actual Net Cash Flow for the Closing
Distribution Period and to the extent the calculation of the distribution
referenced in the previous sentence was in error, the party in whose favor such
error was made (i.e., Seller on the one hand and Purchaser, as successor to the
Old Venture, on the other hand) shall pay such difference to the other party
promptly (but in no event more than five (5) days) after such statement is
provided and approved by Seller in its reasonable discretion, and this sentence
shall survive the Closing. All other cash and working capital held by the Old
Venture or the Facility Lessees (whether on hand or in bank accounts) shall be
retained by the Purchaser, Old Venture and the Facility Lessees as of the
Closing Date.

Section 2.04 Down Payment.

(a) Not later than three (3) Business Days after the Contract Date, New Investor
and SSLII shall deposit with Escrow Agent the Down Payment. The failure of the
Down Payment to be timely deposited in accordance with this Section 2.04(a)
shall render this Agreement immediately terminable at any time thereafter by
Seller upon written notice to Purchaser and Escrow Agent, unless prior to such
termination New Investor and/or SSLII makes the delinquent Down Payment and
receives written acceptance thereof from Seller.

(b) If New Investor and SSLII shall have deposited the Down Payment with the
Escrow Agent in accordance with Section 2.04(a), then, upon the expiration of
the Due Diligence Period the Down Payment shall become non-refundable to New
Investor and SSLII, except as otherwise provided herein.

(c) The Down Payment shall be held, invested and, along with all amounts earned
thereon, credited and disbursed in accordance with the provisions of Article
XIII.

 

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Article III.

DUE DILIGENCE

Section 3.01 Investigation of Facilities. SSLII shall provide New Investor with
the following rights of access for purposes of conducting due diligence with
respect to the Facilities and Old Venture, and Seller consents to the providing
of such access, subject to the terms and conditions of this Section 3.01.

(a) To the extent not already delivered, Seller and/or SSLII shall deliver, or
direct Manager to deliver, to New Investor accurate and complete copies of all
due diligence materials reasonably requested by New Investor that are in
Seller’s SSLII’s, Old Venture’s or Manager’s possession or under SSLII’s Old
Venture’s or Manager’s direct or indirect control, it being understood that
delivery of all due diligence materials relating to the Facilities, their
assets, their management, financial performance and operations, shall be the
responsibility of SSLII and not Seller.

(b) Subject to the rights of the Residents under the Residence Agreements, New
Investor, and its agents, contractors and representatives, shall have the right
to enter onto the Facilities prior to Closing for purposes of conducting
property surveys, environmental studies, engineering tests and such similar
property-related tests, studies and/or investigations as New Investor deems
necessary or desirable to evaluate the Facilities. All such tests, studies and
investigations shall be conducted at New Investor’s sole risk and expense. New
Investor shall give Seller and SSLII reasonable prior notice of New Investor’s
entry onto the Facilities for purposes of conducting such tests, studies and
investigations, and Manager (and if requested by Seller, the representatives of
Seller, but only provided that Seller shall make such representatives available
at such times as requested by New Investor) shall have the right to accompany
New Investor or its agents, employees, contractors and representatives during
any such tests, studies and investigations. New Investor hereby gives Seller and
SSLII notice that it, or its agents, employees, contractors and representatives,
intend to enter onto the Facilities on the dates and for the purposes set forth
on Exhibit H. In performing its diligence activities, New Investor shall use
reasonable efforts to minimize any interference with the activities of Residents
and to take such measures as Seller or SSLII may reasonably request in order to
minimize, to the extent reasonably practicable, any disruption to the operation
of the Facilities and the occupancy of its Residents. New Investor and its
agents, contractors and representatives shall not perform any soil, groundwater,
or other environmental sampling, drilling, coring or other invasive sampling or
testing without Seller’s and SSLII’s consent, which consent shall not be
unreasonably withheld. New Investor shall at all relevant times have liability
insurance coverages in amounts reasonably acceptable to Seller and SSLII to
cover the activities undertaken by New Investor and its agents, employees,
contractors and representatives pursuant to this Section 3.01(b). New Investor
shall indemnify, defend and hold Seller, Old Venture, Purchaser and Manager and
their respective direct and indirect Affiliates (the “Access Indemnified
Parties” harmless from and against any Loss, for damage to property and injury
to persons, arising out of the entry by New Investor or its agents, employees,
contractors or representatives onto the Facilities, and their activities
thereon, such indemnification to survive the Closing or termination of this
Agreement. Notwithstanding anything to the contrary herein, the Access
Indemnified Parties agree that in connection with any loss, liability, damage or
claim incurred by the Access Indemnified Parties and for which the Access
Indemnified Parties are indemnified hereunder, the Access Indemnified

 

13

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Parties shall first seek recovery against any insurance provided by New Investor
covering such loss, liability, damage or claim before seeking recovery against
New Investor; provided that to the extent the Access Indemnified Parties have
not made such recovery within ninety (90) days after the occurrence of any such
loss, liability, damage or claim, the Access Indemnified Parties may seek
recovery against New Investor. New Investor represents and warrants that to its
knowledge, as of the date hereof, no event has occurred which could be the basis
for a claim under the indemnity contained in this Section 3.01(b).

(c) In the event that New Investor is not satisfied, in its sole and absolute
discretion, with the proposed acquisition, ownership, financing or operation of
Seller’s Interest by Purchaser, then New Investor shall have the absolute right
to terminate this Agreement at any time on or prior to the end of the Due
Diligence Period. Such right to terminate shall be exercised by New Investor
giving written notice to Seller in accordance with Article XIII, which written
notice must be received by Seller prior to the end of the Due Diligence Period.

(d) Upon a termination of this Agreement by New Investor in accordance with
Section 3.01(c), New Investor and SSLII shall be entitled to receive a
disbursement of the Down Payment in accordance with the provisions hereof, and
Seller, SSLII, Purchaser, Old Venture and New Investor shall be released from
any and all further liabilities and obligations under this Agreement, except to
the extent otherwise expressly provided in this Agreement.

(e) If this Agreement shall not have been terminated in accordance with
Section 3.01(c), then this Agreement shall continue in full force in accordance
with its terms and the Down Payment shall become non-refundable to New Investor
and SSLII, except as may otherwise be provided in this Agreement.

(f) Upon any termination of this Agreement (whether pursuant to this
Section 3.01 or otherwise), New Investor shall (i) return all original due
diligence materials provided by Manager, SSLII or the Old Venture and destroy
all other due diligence materials prepared by New Investor (collectively, the
“Due Diligence Materials”), (ii) use its commercially reasonable efforts to
cause all persons to whom New Investor has provided any original Due Diligence
Materials to return such materials and to destroy all other Due Diligence
Materials, and (iii) certify to Manager, SSLII and the Old Venture that, to New
Investor’s knowledge, all original Due Diligence Materials have been returned to
Manager, SSLII or the Old Venture and all other Due Diligence Materials have
been destroyed. The provisions of this Section 3.01(f) shall survive the
termination of this Agreement.

Section 3.02 Title.

(a) (i) SSLII, on behalf of Old Venture has delivered to New Investor a Title
Commitment and a survey (“Survey”) for each Facility. Purchaser shall pay at
Closing the costs of such Title Commitment, each Title Policy, any endorsements
to the Title Policies and a Survey for each Facility. Seller shall execute a
non-imputation Affidavit in the form attached hereto as Exhibit I (the “Seller
Non-Imputation Affidavit”) and SSLII shall cause a non-imputation endorsement to
be issued with each Title Policy and shall execute any and all affidavits,
indemnification agreements or other agreements necessary and reasonably
requested by Escrow Agent for the issuance of said

 

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endorsement, each Title Policy and all other endorsements to each Title Policy,
at the time of Closing.

(ii) Within five (5) Business Days after the Contract Date, SSLII shall cause
Old Venture to deliver an estoppel certificate to each of the landlords under
the Real Property Ground Leases for execution by such landlord, and thereafter
SSLII shall cause Old Venture to use commercially reasonable efforts to obtain
such executed estoppel certificates from each landlord and to deliver to New
Investor and Purchaser the fully executed estoppel certificate by the end of the
Due Diligence Period, each in form and substance as expressly provided for in
the applicable Real Property Ground Lease, or if no such form is provided for,
to contain substantially the following certifications to New Investor and
Purchaser (in either case, the “Estoppel Certificates”): (A) the attached ground
lease is an accurate and complete copy; (B) rent and other amounts due under
said lease have been paid in full as of the date of the Estoppel Certificate;
(C) the Facility Owner under the applicable ground lease has fully performed its
obligations thereunder and is not in default and no event has occurred, to
landlord’s knowledge that, with the lapse of time or otherwise, could be deemed
a default under the ground lease; (D) the amount of rent due each month and any
security deposit delivered by a Facility Owner; (E) landlord consents, or
acknowledges no consent is necessary, to the transfer of ownership of the
Facility Owner in accordance with this Agreement and, (i) with respect to the
Facility located in Belmont, California, the landlord consents to the Facility
Owner and the Facility Lessee entering into a new operating lease and (ii) with
respect to the Facility located in East Meadows, New York, the Town of Hempstead
Industrial Development Agency, as “lessor” under that certain Lease Agreement
dated December 1, 2001, as amended, between the Town of Hempstead Industrial
Development Agency and East Meadow A.L., LLC applicable to said Facility,
consents to the Facility Owner and the Facility Lessee (or replacement lessee in
lieu of the Facility Lessee) entering into a new operating lease; and (F) the
Facility Owner has not exercised any right of first refusal or option to
purchase the ground lease property.

(iii) Any real estate transfer taxes, fees or similar charges incurred in
connection with the transactions contemplated by this Agreement will be paid by
Purchaser.

(b) Notwithstanding any other provision of this Section 3.02, Seller shall cause
to be released at or prior to Closing all Liens encumbering Seller’s Interest,
the ALF Interests and/or List C GP Interest other than, in the case of ALF
Interests or the List C GP Interests acquired from SSLII or any of its
Affiliates, any Liens in existence at the time such interests were acquired by
ALF from SSLII or its Affiliate.

(c) Neither Seller nor SSLII shall cause any change in the status of title to,
or the leasehold interest in, the Facilities prior to Closing which would
reasonably be anticipated to have a Material Adverse Effect.

Section 3.03 Satisfaction of Conditions Precedent; Extension of Closing Date.
Seller, SSLII, New Investor and Purchaser will endeavor diligently and in good
faith to satisfy as promptly as practical all conditions precedent set forth in
this Agreement to the respective

 

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obligations of Seller, SSLII, New Investor and Purchaser hereunder. The Closing
shall take place, as provided in Section 11.01, on or before January 3, 2011
(such date, the “Closing Date”); provided that, so long as none of Purchaser,
SSLII or New Investor is in default under any material terms of this Agreement,
then Purchaser, SSLII and New Investor, acting together, shall be permitted to
extend the Closing Date until January 31, 2011, exercisable by (i) delivering
written notice to Seller no later than 5 days prior to the scheduled Closing
Date, and the Closing Date specified in such notice shall be the Closing Date
hereunder and (ii) causing Old Venture to make a non-refundable payment (the
“Extension Payment”) to Seller and SSLII (in accordance with Seller’s Interest
and SSLII’s Interest in Old Venture) on or prior to January 3, 2011 in the
amount of Two Million, Two Hundred Twenty-Two Thousand Two Hundred Twenty-Two
Dollars ($2,222,222.00), which amount shall be funded from cash held by the Old
Venture. If all conditions precedent have not been satisfied or waived on or
prior to the Closing Date, then the party in whose favor such condition
precedent runs may terminate this Agreement and all other Documents (except for
those provisions of this Agreement and such other Documents that by their terms
survive such termination), whereupon the parties hereto shall have no further
obligations to each other in relation to this Agreement, such other Documents or
the transactions contemplated hereunder or thereunder (except for those
obligations set forth in provisions of this Agreement and such other Documents
that by their terms survive such termination), and provided that the provisions
of Article XIII shall control the disposition of the Down Payment.

Article IV.

REPRESENTATIONS AND WARRANTIES OF NEW INVESTOR

New Investor represents and warrants to Seller and SSLII as follows:

Section 4.01 Organization, Good Standing and Entity Authority. New Investor is a
limited partnership, duly organized, validly existing and in good standing under
the laws of Delaware, and has all requisite corporate power to own and operate
its properties and carry on its business.

Section 4.02 Authorization and Binding Effect of Documents. New Investor (and
any applicable Affiliate) has all requisite power and authority to enter into
this Agreement and, at Closing, shall have all requisite power and authority to
enter into the other Documents to which New Investor is to be a party and to
consummate the transactions contemplated by this Agreement and such other
Documents. The execution and delivery of this Agreement by New Investor and the
consummation by New Investor of the transactions contemplated hereby, on the
terms and subject to the conditions herein have been duly authorized by all
necessary action on the part of New Investor and New Investor’s board of
directors. This Agreement has been, and each of the other Documents to which New
Investor is to be a party will be, duly executed and delivered by New Investor
at or prior to Closing. This Agreement constitutes (and each of the other
Documents to which New Investor is to be a party, when executed and delivered,
will constitute) the valid and binding obligation of New Investor enforceable
against New Investor in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors generally and to the exercise of judicial
discretion in accordance with general principles of equity, whether applied by a
court of law or of equity.

 

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Section 4.03 ERISA.

(a) New Investor is not an employee pension benefit plan subject to the
provisions of Title IV of ERISA or subject to the minimum funding standards
under Part 3, Subtitle B, Title I of ERISA or Section 412 of the Code or
Section 302 of ERISA, and none of its assets constitutes assets of any such
employee benefit plan subject to Part 4, Subtitle B, Title I of ERISA.

(b) New Investor is not a “governmental plan” within the meaning of
Section 3(32) of ERISA and the funds used by New Investor to acquire the
Facilities are not assets of any such governmental plan and are not subject to
state statutes regulating investments of and fiduciary obligations with respect
to governmental plans. The consummation of the transactions contemplated by this
Agreement will not violate such statutes.

Section 4.04 Absence of Conflicts. The execution, delivery and performance by
New Investor of this Agreement and the other Documents to which New Investor is
to be a party, and consummation by New Investor of the transactions contemplated
hereby and thereby, do not and will not (i) conflict with or result in any
breach of any of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in a violation of, or (iv) give any third party the
right to modify, terminate or accelerate any obligation under the provisions of
any certificate or articles of incorporation, bylaws, operating or partnership
agreement or other charter documents of New Investor (or its Affiliates), any
law, regulation, judgment, rule, order or decree to which New Investor (or its
Affiliates) is subject, or any indenture, mortgage, lease, loan agreement or
other agreement or instrument to which New Investor (or its Affiliates) is
subject.

Section 4.05 Consents. Except for such reports and filings that an Affiliate of
New Investor may be required to make with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, the execution,
delivery and performance by New Investor of this Agreement and the other
Documents to which New Investor is to be a party do not require any order,
permission, consent, approval, authorization, registration or validation of, or
exemption, clearance or other action by, or notice or declaration to, or filing
with, any Governmental Entity, or the consent, waiver or approval of any other
Person which has not been obtained and is currently in full force and effect.

Section 4.06 Broker’s or Finder’s Fees. No agent, broker, investment banker or
other person or firm acting on behalf of or under the authority of New Investor
(or any of its Affiliates) is or will be entitled to any broker’s or finder’s
fee or any other commission or similar fee, directly or indirectly, from Seller
or SSLII in connection with the transactions contemplated by this Agreement. New
Investor agrees to indemnify and hold Seller and SSLII harmless from any Loss
resulting from a breach of this representation and warranty.

Section 4.07 No Judgments. Except as set forth in Section 4.07 of the Disclosure
Statement, there are no judgments presently outstanding and unsatisfied directly
against New Investor, and New Investor is not involved in any litigation at law
or in equity, or in any proceeding before any court, or by or before any
Governmental Entity, which judgment, litigation or proceeding could reasonably
be anticipated to have a Material Adverse Effect and which is not fully covered
by insurance and, to New Investors’s knowledge, (i) no such

 

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judgment, litigation or proceeding is threatened against New Investor which
could reasonably be anticipated to have a Material Adverse Effect and (ii) no
investigation looking toward such a proceeding has begun or is contemplated.

Section 4.08 No Insolvency. New Investor has not committed an act of bankruptcy,
proposed a compromise or arrangement to its creditors generally, had any
petition for a receiving order in bankruptcy filed against it, instituted any
proceeding with respect to a compromise or arrangement, instituted any
proceeding to have itself declared bankrupt or wound-up, instituted any
proceeding to have a receiver appointed in connection with any of its assets,
had any emcumbrancer take possession of any of its assets, or had any execution
or distress become enforceable or become levied upon any of its assets.

Section 4.09 Specially Designated National or Blocked Person. Neither New
Investor (including, without limitation, any and all of its partners, directors
and officers), nor any of its Affiliates is a Specially Designated National or
Blocked Person. Neither New Investor nor any of its Affiliates is directly or
indirectly owned or controlled by the government of any country that is subject
to an embargo by the United States government. Neither New Investor nor any of
its Affiliates is acting on behalf of a government of any country that is
subject to such an embargo.

Section 4.10 New Investor Financials. The audited and unaudited financial
statements of New Investor for the period ending September 30, 2010, copies of
which have been provided to Seller, fairly present in all material respects the
financial condition and the results of operations of New Investor as at the
respective dates and for the periods covered by such financial statements, all
in accordance with GAAP, consistently applied, subject, in the case of unaudited
financial statements, to normal recurring year-end adjustments, and the absence
of notes.

As used in this Agreement, the phrase “to New Investor’s knowledge” and similar
phrases shall mean the current, actual (not constructive, imputed, or implied)
knowledge, after due inquiry, of Raymon Byron Carlock, Jr. and Tammie A.
Quinlan, who New Investor represents are the persons most knowledgeable about
New Investor’s overall business and affairs. Notwithstanding anything herein to
the contrary, New Investor shall have no Liability to Seller or SSLII for a
breach of any representation or warranty hereunder, if the breach in question is
based on a condition, state of facts or other matter which was currently and
actually known (and not constructively, by imputation or by implication) by the
party claiming such breach, or disclosed in writing to the party claiming such
breach, on or prior to the date hereof.

Article V.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller and New Investor as follows:

Section 5.01 Organization, Good Standing and Entity Authority. Purchaser is a
limited liability company, duly organized, validly existing and in good standing
under the laws of Delaware, and has all requisite corporate power to own and
operate its properties and carry on its business.

 

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Section 5.02 Authorization and Binding Effect of Documents.

(a) Purchaser (and any applicable Affiliate) has all requisite power and
authority to enter into this Agreement and, at Closing, shall have all requisite
power and authority to enter into the other Documents to which Purchaser is to
be a party and to consummate the transactions contemplated by this Agreement and
such other Documents. The execution and delivery of this Agreement by Purchaser
and the consummation by Purchaser of the transactions contemplated hereby, on
the terms and subject to the conditions herein, have been duly authorized by all
necessary action on the part of Purchaser and Purchaser’s equity holders and/or
board of directors or managers. This Agreement has been, and each of the other
Documents to which Purchaser is to be a party will be, duly executed and
delivered by Purchaser at or prior to Closing. This Agreement constitutes (and
each of the other Documents to which Purchaser is to be a party, when executed
and delivered, will constitute) the valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the rights of creditors generally and to the exercise of judicial
discretion in accordance with general principles of equity, whether applied by a
court of law or of equity.

Section 5.03 ERISA.

(a) Purchaser is not an employee pension benefit plan subject to the provisions
of Title IV of ERISA or subject to the minimum funding standards under Part 3,
Subtitle B, Title I of ERISA or Section 412 of the Code or Section 302 of ERISA,
and none of its assets constitutes assets of any such employee benefit plan
subject to Part 4, Subtitle B, Title I of ERISA.

(b) Purchaser is not a “governmental plan” within the meaning of Section 3(32)
of ERISA and the funds used by Purchaser to acquire the Facilities are not
assets of any such governmental plan and are not subject to state statutes
regulating investments of and fiduciary obligations with respect to governmental
plans. The consummation of the transactions contemplated by this Agreement will
not violate such statutes.

Section 5.04 Absence of Conflicts. The execution, delivery and performance by
Purchaser of this Agreement and the other Documents to which Purchaser is to be
a party, and consummation by Purchaser of the transactions contemplated hereby
and thereby, do not and will not (i) conflict with or result in any breach of
any of the terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in a violation of, or (iv) give any third party the right to
modify, terminate or accelerate any obligation under the provisions of any
certificate or articles of incorporation, bylaws, operating or partnership
agreement or other charter documents of Purchaser (or its Affiliates), any law,
regulation, judgment, rule, order or decree to which Purchaser (or its
Affiliates) is subject, or any indenture, mortgage, lease, loan agreement or
other agreement or instrument to which Purchaser (or its Affiliates) is subject.

Section 5.05 Consents. Except for and such reports and filings that an Affiliate
of Purchaser may be required to make with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, the execution,
delivery and performance by Purchaser of this Agreement and the other Documents
to which Purchaser is to be a party do not

 

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require any order, permission, consent, approval, authorization, registration or
validation of, or exemption, clearance or other action by, or notice or
declaration to, or filing with, any Governmental Entity, or the consent, waiver
or approval of any other Person which has not been obtained and is currently in
full force and effect.

Section 5.06 Broker’s or Finder’s Fees. No agent, broker, investment banker or
other Person acting on behalf of or under the authority of Purchaser (or any of
its Affiliates) is or will be entitled to any broker’s or finder’s fee or any
other commission or similar fee, directly or indirectly, from Seller in
connection with the transactions contemplated by this Agreement. Purchaser
agrees to indemnify and hold Seller and its Affiliates harmless from any Loss
resulting from a breach of this representation and warranty.

Section 5.07 No Judgments. Except as set forth in Section 5.07 of the Disclosure
Statement, there are no judgments presently outstanding and unsatisfied directly
against Purchaser, and Purchaser is not involved in any litigation at law or in
equity, or in any proceeding before any court, or by or before any Governmental
Entity, which judgment, litigation or proceeding could reasonably be anticipated
to have a Material Adverse Effect and which is not fully covered by insurance
and, to Purchaser’s knowledge, (i) no such judgment, litigation or proceeding is
threatened against Seller which could reasonably be anticipated to have a
Material Adverse Effect and (ii) no investigation looking toward such a
proceeding has begun or is contemplated.

Section 5.08 No Insolvency. Purchaser has not committed an act of bankruptcy,
proposed a compromise or arrangement to its creditors generally, had any
petition for a receiving order in bankruptcy filed against it, instituted any
proceeding with respect to a compromise or arrangement, instituted any
proceeding to have itself declared bankrupt or wound-up, instituted any
proceeding to have a receiver appointed in connection with any of its assets,
had any emcumbrancer take possession of any of its assets, or had any execution
or distress become enforceable or become levied upon any of its assets.

Section 5.09 Specially Designated National or Blocked Person. Neither Purchaser
(including, without limitation, any and all of its members, directors and
officers), nor any of its Affiliates is a Specially Designated National or
Blocked Person; provided that Purchaser makes no representations or warranties
whatsoever with respect to stockholders of SSLI. Neither Purchaser nor any of
its Affiliates is directly or indirectly owned or controlled by the government
of any country that is subject to an embargo by the United States government.
Neither Purchaser nor any of its Affiliate is acting on behalf of a government
of any country that is subject to such an embargo. Notwithstanding the
foregoing, Purchaser makes no representations or warranties whatsoever with
respect to stockholders of SSLI.

As used in this Agreement, the phrase “to Purchaser’s knowledge” and similar
phrases shall mean the current, actual (not constructive, imputed, or implied)
knowledge, after due inquiry, of Greg Neeb, Philip Kroskin, Edward Burnett and
Jerry Liang, who Purchaser represents are the persons most knowledgeable about
Purchaser’s overall business and affairs. Notwithstanding anything herein to the
contrary, Purchaser shall have no Liability to Seller or New Investor for a
breach of any representation or warranty hereunder, if the breach in question is
based on a condition, state of facts or other matter which was currently and
actually known

 

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(and not constructively, by imputation or by implication) by the party claiming
such breach, or disclosed in writing to the party claiming such breach, on or
prior to the date hereof.

Article VI.

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Purchaser, New Investor and SSLII as follows:

Section 6.01 Organization and Good Standing and Entity Authorization. Seller is
a corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware. Seller has all requisite corporate power to own,
operate and lease its properties and carry on its business.

Section 6.02 Authorization and Binding Effect of Documents.

(a) Seller has all requisite power and authority to enter into this Agreement
and, at Closing, shall have all requisite power and authority to enter into the
other Documents to which it is to be a party and to consummate the transactions
contemplated by this Agreement and such other Documents. The execution and
delivery of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby, on the terms and subject to the conditions
herein, have been duly authorized by all necessary action on the part of Seller
and Seller’s equity holders and/or board of directors. This Agreement has been,
and each of the other Documents to which Seller is to be a party will be, duly
executed and delivered by Seller at or prior to Closing. This Agreement
constitutes (and each of the other Documents to which Seller is to be a party,
when executed and delivered, will constitute) the valid and binding obligation
of Seller enforceable against Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the rights of creditors generally and to the exercise of judicial
discretion in accordance with general principles of equity, whether applied by a
court of law or of equity.

Section 6.03 Absence of Conflicts. The execution, delivery and performance by
Seller of this Agreement and the other Documents to which Seller is to be a
party, and consummation by Seller of the transactions contemplated hereby and
thereby, do not and will not (i) conflict with or result in any breach of any of
the terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in a violation of, (iv) give any third party the right to modify,
terminate or accelerate any obligation under, the provisions of the certificate
or articles of incorporation, bylaws, operating or partnership agreement or
other charter documents of Seller (or its Affiliates), any indenture, mortgage,
lease, loan agreement or other agreement or instrument by which Seller (or its
Affiliates) is bound or affected, or any law, regulation, rule, judgment, order
or decree to which Seller (or its Affiliates) is subject, except that the
approval and consent of SSLII is required for the consummation by Seller of the
transactions contemplated by this Agreement, which consent and approval shall be
evidenced by SSLII’s execution and delivery of this Agreement and provided that
Seller makes no representation or warranty with respect to agreements or
obligations of, or regulatory or licensing matters relating to, the Old Venture,
the Facility Lessees, the Facility Owners, the Manager or their respective
Affiliates, including, without limitation, the Existing Owner Financing, the
Real Property Ground Leases and the Licenses.

 

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Section 6.04 Consents and Approvals. The execution, delivery and performance by
Seller of this Agreement and the other Documents, and consummation by Seller of
the transactions contemplated hereby and thereby, do not and will not require
the authorization, consent, approval, exemption, clearance, order, permission,
license, registration or validation of, or exemption by, or other action by or
notice or declaration to, or filing with, any court or Governmental Entity, or
the consent, waiver or approval of any other Person which has not been obtained
and is currently in full force and effect, except that the approval and consent
of SSLII is required for the consummation by Seller of the transactions
contemplated by this Agreement, which consent and approval shall be evidenced by
SSLII’s execution and delivery of this Agreement and provided that Seller makes
no representation or warranty with respect to any authorization or consent (or
similar action of the nature referenced above) required to be obtained by, or
regulatory or licensing matters relating to, the Old Venture, the Facility
Lessees, the Facility Owners, the Manager or their respective Affiliates,
including, without limitation, with respect to the Existing Owner Financing, the
Real Property Ground Leases and the Licenses

Section 6.05 Broker’s or Finder’s Fees. No agent, broker, investment banker, or
other Person acting on behalf of or under the authority of Seller (or any of its
Affiliates) is or will be entitled to any broker’s or finder’s fee or any other
commission or similar fee, directly or indirectly, from Purchaser, SSLII or New
Investor in connection with the transactions contemplated by this Agreement.
Seller agrees to indemnify and hold Purchaser, SSLII, New Investor and their
respective Affiliates harmless from any Loss resulting from a breach of this
representation and warranty.

Section 6.06 Ownership of Seller’s Interest.

(a) Seller is the sole legal and beneficial owner of Seller’s Interest. Seller’s
Interest is free and clear of all Liens encumbering Seller’s Interest, and
Seller has good and marketable title to Seller’s Interest. Seller’s Interest is
validly issued, fully paid and non-assessable. There is no restriction or
limitation on Seller’s right to sell Seller’s Interest as contemplated by this
Agreement, except that the approval and consent of SSLII is required for the
consummation by Seller of the transactions contemplated by this Agreement, which
consent and approval shall be evidenced by SSLII’s execution and delivery of
this Agreement. At Closing, Seller will transfer to Purchaser good and
marketable title to Seller’s Interest, free and clear of all Liens.

Section 6.07 ERISA.

(a) Seller is not an employee pension benefit plan subject to the provisions of
Title IV of ERISA or subject to the minimum funding standards under Part 3,
Subtitle B, Title I of ERISA or Section 412 of the Code or Section 302 of ERISA,
and none of its assets constitute assets of any such employee benefit plan
subject to Part 4, Subtitle B, Title I of ERISA.

(b) Seller is not a “governmental plan” within the meaning of Section 3(32) of
ERISA. The consummation of the transactions contemplated by this Agreement will
not violate such statutes.

 

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Section 6.08 No Judgments. Except as set forth in Section 6.08 of the Disclosure
Statement, there are no judgments presently outstanding and unsatisfied directly
against Seller, and Seller is not involved in any litigation at law or in
equity, or in any proceeding before any court, or by or before any Governmental
Entity, which judgment, litigation or proceeding could reasonably be anticipated
to have a Material Adverse Effect and which is not fully covered by insurance
and, to Seller’s knowledge, (i) no such judgment, litigation or proceeding is
threatened against Seller which could reasonably be anticipated to have a
Material Adverse Effect and (ii) no investigation looking toward such a
proceeding has begun or is contemplated. Seller makes no representation with
respect to judgments, litigation or proceedings relating to the Facilitates or
their licensing or operation.

Section 6.09 No Insolvency. Seller has not committed an act of bankruptcy,
proposed a compromise or arrangement to its creditors generally, or had any
petition for a receiving order in bankruptcy filed against it, instituted any
proceeding to have itself declared bankrupt or wound-up, instituted any
proceeding to have a receiver appointed in connection with any of its assets,
had any emcumbrancer take possession of any of its assets, or had any execution
or distress become enforceable or become levied upon any of its assets.

Section 6.10 FIRPTA. Seller is not a “foreign person” within the meaning of
Section 1445 of the Code and the regulations issued thereunder.

Section 6.11 Specially Designated National or Blocked Person. Based solely on
publicly-available information or as otherwise disclosed to Seller, neither
Seller, nor any of its shareholders, directors or officers is a Specially
Designated National or Blocked Person. Neither Seller nor any of its
shareholders is directly or indirectly owned or controlled by the government of
any country that is subject to an embargo by the United States government.
Neither Seller nor any of its shareholders, directors or officers is acting on
behalf of a government of any country that is subject to such an embargo.

Section 6.12 Financial Statements. Seller has not taken any action with respect
to the Old Venture or the Seller’s Membership Interest which has not been
disclosed to SSLII and which would have or reasonably be expected to have a
Material Adverse Effect on the Old Venture Financials.

As used in this Agreement, the phrase “to Seller’s knowledge” and similar
phrases shall mean the current, actual (not constructive, imputed or implied)
knowledge, after due inquiry, of C. MacLaine Kenan, Michael Casey and Ann
Bargeron, who Seller represents are the persons most knowledgeable about
Seller’s Interest and the Facility Owners. Notwithstanding anything herein to
the contrary, Seller shall have no Liability to Purchaser, New Investor or SSLII
for a breach of any representation or warranty hereunder, if the breach in
question is based on a condition, state of facts or other matter which was
currently and actually known (and not constructively, by imputation or by
implication) by the party claiming such breach, or disclosed in writing to the
party claiming such breach, on or prior to the date hereof.

 

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Article VII.

REPRESENTATIONS AND WARRANTIES OF SSLII

SSLII represents and warrants to Seller and New Investor as follows:

Section 7.01 Organization, Good Standing, Entity Authority and Qualification.
SSLII is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia. SSLII has all requisite company
power to own, operate and lease its properties and carry on its business. Each
of Old Venture, the Facility Lessees and the Facility Owners are limited
liability companies or limited partnerships, as the case may be, duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of organization, have all requisite company power to own and
operate their properties and carry on their businesses, and are qualified to do
business in each of the jurisdictions in which the nature of their business or
the ownership of their properties make such qualification necessary.

Section 7.02 Authorization and Binding Effect of Documents.

(a) SSLII (and any applicable Affiliate) has all requisite power and authority
to enter into this Agreement and, at Closing, shall have all requisite power and
authority to enter into the other Documents to which it is a party and to
consummate the transactions contemplated by this Agreement and such other
Documents. The execution and delivery of this Agreement by SSLII and the
consummation by SSLII of the transactions contemplated hereby, on the terms and
subject to the conditions herein, have been duly authorized by all necessary
action on the part of SSLII and SSLII’s shareholders, members and board of
directors. This Agreement has been, and each of the other Documents to which
SSLII is to be a party will be, duly executed and delivered by SSLII at or prior
to Closing. This Agreement constitutes (and each of the other Documents to which
SSLII is to be a party, when executed and delivered, will constitute) the valid
and binding obligation of SSLII enforceable against SSLII in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the rights of creditors generally and to the
exercise of judicial discretion in accordance with general principles of equity,
whether applied by a court of law or of equity.

Section 7.03 Absence of Conflicts. The execution, delivery and performance by
SSLII of this Agreement and the other Documents to which SSLII is to be a party,
and consummation by SSLII of the transactions contemplated hereby and thereby,
do not and will not (i) conflict with or result in any breach of any of the
terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in a violation of, or (iv) give any third party the right to
modify, terminate or accelerate any obligation under, the provisions of the
certificate or articles of incorporation, bylaws, operating or partnership
agreement or other charter documents of SSLII, Old Venture, the Facility
Lessees, the Facility Owners or any of their Affiliates, any indenture,
mortgage, lease, loan agreement or other agreement or instrument by which SSLII,
Old Venture, the Facility Lessees, the Facility Owners or any of their
Affiliates is bound or affected, or any law, regulation, rule, judgment, order
or decree to which SSLII, Old Venture, the Facility Lessees, the Facility Owners
or any of their Affiliates is subject.

Section 7.04 Consents. Except as set forth in Section 7.04 of the Disclosure
Statement, the execution, delivery and performance by SSLII of this Agreement
and the other Documents to

 

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which it is a party, and consummation by SSLII of the transactions contemplated
hereby and thereby, do not and will not require the authorization, consent,
approval, exemption, clearance or other action by or notice or declaration to,
or filing with, any court or Governmental Entity, or the consent, waiver or
approval of any other Person.

Section 7.05 Broker’s or Finder’s Fees. No agent, broker, investment banker, or
other Person acting on behalf of Old Venture, SSLII (or any Affiliate of Old
Venture or SSLII) or under its authority is or will be entitled to any broker’s
or finder’s fee or any other commission or similar fee, directly or indirectly,
from Seller or New Investor in connection with the transactions contemplated by
this Agreement. SSLII agrees to indemnify and hold Seller, Purchaser and their
Affiliates harmless from any Loss resulting from a breach of this representation
and warranty. Notwithstanding the provisions of Section 12.01 below, such
agreement to indemnify shall survive the Closing without time limitation.

Section 7.06 Ownership of SSLII’s Interest. SSLII is the sole legal and
beneficial owner of SSLII’s Interest and the List A MM Interest. SSLII’s
Interest and the List A MM Interest are free and clear of all Liens and SSLII
has good and marketable title to SSLII’s Interest and the List A MM Interest.

Section 7.07 ERISA.

(a) SSLII is not an employee pension benefit plan subject to the provisions of
Title IV of ERISA or subject to the minimum funding standards under Part 3,
Subtitle B, Title I of ERISA or Section 412 of the Code or Section 302 of ERISA,
and none of its assets constitute assets of any such employee benefit plan
subject to Part 4, Subtitle B, Title I of ERISA.

(b) SSLII is not a “governmental plan” within the meaning of Section 3(32) of
ERISA and no funds received by SSLII in this transaction are assets of any such
governmental plan and are not subject to state statutes regulating investments
of and fiduciary obligations with respect to governmental plans. The
consummation of the transactions contemplated by this Agreement will not violate
such statutes.

Section 7.08 No Judgments. Except as set forth in Section 7.08 of the Disclosure
Statement, there are no judgments presently outstanding and unsatisfied against
SSLII, Old Venture, any of the Facility Lessees, or any of the Facility Owners,
and, to SSLII’s knowledge, none of SSLII, Old Venture, any of the Facility
Lessees or the Facility Owners is involved in any litigation at law or in
equity, or in any proceeding before any court, or by or before any governmental
or administrative agency, which judgment, litigation or proceeding would
reasonably be anticipated to have a Material Adverse Effect and which is not
fully covered by insurance and, to SSLII’s knowledge, no such judgment,
litigation or proceeding is threatened against SSLII, Old Venture, any of the
Facility Owners or any of the Facility Lessees.

Section 7.09 No Governmental Approvals. Except as set forth in Section 7.09 of
the Disclosure Statement, no order, permission, consent, approval, license,
authorization, registration or validation of, or filing with, or exemption by,
any Governmental Entity is required to authorize, or is required in connection
with the execution, delivery and performance by SSLII of this Agreement, any
Document to which SSLII is a party or SSLII’s taking of any action thereby

 

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contemplated, which has not been (or as of the Closing will not have been)
obtained and is (or as of Closing will be) in full force and effect.

Section 7.10 No Insolvency. None of Old Venture, the Facility Lessees or the
Facility Owners has committed an act of bankruptcy, proposed a compromise or
arrangement to its creditors generally, had any petition for a receiving order
in bankruptcy filed against it, taken any proceeding with respect to a
compromise or arrangement, taken any proceeding to have itself declared bankrupt
or wound-up, taken any proceeding to have a receiver appointed in connection
with its interest in any Facility, had any encumbrancer take possession of its
interest in any Facility, or had any execution or distress become enforceable or
become levied upon its interest in any Facility. SSLII has not committed an act
of bankruptcy, had any petition for a receiving order in bankruptcy filed
against it, filed in any court in lieu of bankruptcy any legal proceeding with
respect to a compromise or arrangement, filed any legal proceeding to have
itself declared bankrupt or wound-up, taken any proceeding to have a receiver
appointed in connection with its interest in any Facility, had any encumbrancer
take possession of its interest in any Facility, or had any execution or
distress become enforceable or become levied upon its interest in any Facility.

Section 7.11 Ownership and Control of Purchaser. Prior to Closing, SSLII will
control the business and affairs of Purchaser and will have the power and
authority to cause Purchaser to execute and deliver the documents to be provided
by Purchaser under this Agreement and to undertake the actions required to be
performed by Purchaser under this Agreement.

As used in this Agreement, the phrase “to SSLII’s knowledge” and similar phrases
shall mean the current, actual (not constructive, imputed, or implied)
knowledge, after due inquiry, of Greg Neeb, Philip Kroskin, Edward Burnett and
Jerry Liang, who SSLII represents are the persons most knowledgeable about
SSLII’s overall business and affairs. Notwithstanding anything herein to the
contrary, SSLII shall have no Liability to New Investor for a breach of any
representation or warranty hereunder, if the breach in question is based on a
condition, state of facts or other matter which was currently and actually known
(and not constructively, by imputation or by implication) by the party claiming
such breach, or disclosed in writing to the party claiming such breach, on or
prior to the date hereof.

Article VIII.

BUSINESS REPRESENTATIONS

SSLII represents and warrants to New Investor, Purchaser, each Facility Owner
and each Facility Lessee as follows (the following representations, the
“Business Representations”):

Section 8.01 Financial Statements; No Undisclosed Liabilities; Absence of
Certain Changes.

(a) All audited and unaudited financial statements of Old Venture as identified
in Section 8.01 of the Disclosure Statement (the “Old Venture Financials”),
copies of which have been provided to New Investor, fairly present in all
material respects the financial condition and the results of operations of Old
Venture as at the respective dates and for the

 

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periods covered by such financial statements, all in accordance with GAAP,
consistently applied, subject, in the case of unaudited financial statements, to
normal recurring year-end adjustments, and the absence of notes.

(b) Except as set forth in the Old Venture Financials, there are no material
Liabilities of Old Venture of any kind whatsoever of the type required to be
reflected on a balance sheet prepared in accordance with GAAP, other than:

(i) contingent Liabilities, which, in accordance with GAAP, are not required to
be reflected on a balance sheet;

(ii) any Liabilities incurred since September 30, 2010 in the ordinary course of
business of the Old Venture consistent with past practice or in connection with
this Agreement or the other Documents; and

(iii) in the case of unaudited financial statements, normal recurring year-end
adjustments and the absence of notes.

(c) Except as set forth in Section 8.01(c) of the Disclosure Statement, since
September 30, 2010, the Old Venture has conducted its business in the ordinary
course of business consistent with past practice and there has not been:

(i) any event, occurrence or development of a state of circumstances or facts
which, individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect;

(ii) other than dividends and distributions paid in the ordinary course of
business of Old Venture consistent with past practice, any declaration, setting
aside or payment of any dividend or other distribution with respect to any
equity interest of Old Venture (other than dividends or distributions in cash in
an amount consistent with the requirements of this Agreement), or any split,
combination or reclassification of any equity interest of Old Venture;

(iii) any amendment of any term of any outstanding equity interest of Old
Venture;

(iv) any incurrence, assumption or guarantee by Old Venture of any indebtedness
that would have a Material Adverse Effect;

(v) as of the expiration of the Due Diligence Period, any creation or assumption
by Old Venture of any Lien on any asset that would have a Material Adverse
Effect, except for Permitted Exceptions;

(vi) any (i) transaction or commitment made, or any Contract entered into, by
Old Venture relating to its assets or business (including the acquisition or
disposition of any assets) that involved the acquisition or disposition of
assets other than for fair value or that involved an amount in excess of One
Hundred Thousand Dollars ($100,000), or (ii) relinquishment by Old Venture of
any material Contract or other right

 

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outside of the ordinary course of business consistent with past practice that
would have Material Adverse Effect; and

(vii) any change in any method of accounting or accounting practice not required
by GAAP by Old Venture or any election for Taxes.

(d) SSLII has disclosed to New Investor any action taken by Seller and known to
SSLII with respect to the Old Venture or the Seller’s Membership Interest which
would have or reasonably would be expected to have a Material Adverse Effect on
the Old Venture Financials.

Section 8.02 Books and Records; Internal Controls. All records relating to Old
Venture, Facility Lessees and, to SSLII’s knowledge, the Facility Owners
(including books and records, contract documents, accounts receivable data,
financial statements and other similar records) are maintained, in all material
respects, to the extent applicable, in accordance with GAAP and the internal
controls on financial reporting of Old Venture, Facility Lessees and Facility
Owners.

Section 8.03 Obligations. Except (a) to the extent reflected or reserved against
in the Old Venture Financials, (b) normal trade creditors payable in the
ordinary and normal course of business since the dates of such Old Venture
Financials and (c) the Existing Owner Financing, none of Old Venture, the
Facility Lessees or the Facility Owners have any material outstanding
Liabilities, which in each case would reasonably be anticipated to have a
Material Adverse Effect.

Section 8.04 Medicare; Medicaid. Except as set forth in Section 8.04 of the
Disclosure Statement, none of Old Venture, Manager, any Facility Lessee or any
Facility Owner are party to any Medicaid/Medicare Contracts with respect to the
provision of services at the Facilities. Except as set forth in Section 8.04 of
the Disclosure Statement, no action, proceeding, or investigation in connection
with Medicare, Medicaid or other public or private third-party payor or other
programs is pending or, to SSLII’s knowledge, threatened against any of SSLII,
Old Venture, Manager, any Facility Lessee or any Facility Owner in connection
with the Facilities which would reasonably be anticipated to have a Material
Adverse Effect. To SSLII’s knowledge, none of SSLII, Old Venture, Manager, any
Facility Lessee or Facility Owner has received written notice of any threatened
or pending investigation in connection with the Facilities relating to (i) any
fraud, false statement or false claim applicable to its business or (ii) any
patient care, patient rights or other law applicable to its business, in each
case which would reasonably be anticipated to have a Material Adverse Effect.
None of SSLII, Old Venture, Manager, Facility Lessee or Facility Owner has
committed any material violation of the Medicare and Medicaid fraud and abuse
provisions of the Social Security Act, any similar state law or Title VI of the
Civil Rights Act, in each case which would reasonably be anticipated to have a
Material Adverse Effect.

Section 8.05 No Possessory Rights. Except for any parties in possession pursuant
to, and any rights of possession granted under, the Residence Agreements, and
except as shown in the Title Commitments or as set forth in Section 8.05 of the
Disclosure Statement, there are no parties in possession of any part of the
Facilities, and there are no other rights of possession

 

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which have been granted by the Old Venture, any Facility Lessees or any Facility
Owners to any third party or parties, except for licenses to use space which are
cancelable by the Old Venture, Facility Lessee or Facility Owners on ninety
(90) days or less notice.

Section 8.06 Employees. None of Old Venture, the Facility Lessees or the
Facility Owners has any employees. All personnel employed at the Facilities are
employees of Manager.

Section 8.07 Licenses. Except as set forth in Section 8.07 of the Disclosure
Statement, Old Venture, Manager, the Facility Owners and the Facility Lessees
have all material Licenses necessary to the conduct of their business as
presently conducted and all such Licenses are valid and in full force and
effect. Except with respect to the Healthcare Permits, no consent is required
from any issuer of a License, where the failure to obtain such consent would
reasonably be expected to have a Material Adverse Effect. There is no pending
or, to SSLII’s knowledge, threatened action, investigation or proceeding with
respect to revocation, cancellation, suspension or non-renewal of any License
for any Facility which would reasonably be anticipated to have a Material
Adverse Effect, and except as set forth in Section 8.07 of the Disclosure
Statement, no notice has been received by SSLII, the Facility Lessees, the
Facility Owners, Manager, or Old Venture from any Governmental Entity currently
asserting the violation of the terms of any Licenses or currently threatening to
revoke, cancel, suspend or not renew the terms of any such existing License,
which would reasonably be anticipated to have a Material Adverse Effect.

Section 8.08 Litigation. A true and correct listing and summary of all
litigation with respect to the Real Property, Facilities, Old Venture, Facility
Lessees, Facility Owners or (with respect to the Facilities) Manager which is
not fully covered by insurance in place (subject to applicable deductibles) with
respect to each of the Facilities and which would reasonably be anticipated to
have a Material Adverse Effect which is pending or, to SSLII’s knowledge,
threatened in writing against any of SSLII (as to the Facilities), the Real
Property, the Facility Lessees, the Facility Owners, Old Venture or the Manager
(as to the Facilities) is included as Section 8.08 of the Disclosure Statement.

Section 8.09 Environmental Matters. SSLII has provided New Investor with access
to or copies of all environmental reports and documentation related to the
environmental reports in the possession of SSLII, Old Venture, the Facility
Lessees, or Manager with respect to the Real Property and the Facilities (the
“Environmental Reports”). Except as set forth on Section 8.09 of the Disclosure
Statement, no written notice has been received by the Facility Lessees, Manager,
Old Venture or, to SSLII’s knowledge, the Facility Owners that the Real Property
or Facilities are in violation of Environmental Laws. Except as disclosed in the
Environmental Reports and in any additional environmental reports received by
New Investor prior to the Closing Date, to SSLII’s knowledge (a) there are no
underground storage tanks on the Real Property and (b) the Facilities do not
contain any Hazardous Substances other than to a de minimus extent and in any
event in compliance with Environmental Laws. Except as set forth on Section 8.09
of the Disclosure Statement or in any additional environmental reports and
documentation received by New Investor prior to the Closing Date, to SSLII’s
knowledge there are no Environmental Claims and no Environmental Liabilities
other than to a de minimus extent and in any event in compliance with
Environmental Laws.

 

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Section 8.10 Facility Leases. Except as set forth on Exhibit B, true and correct
copies of all the Facility Leases have been provided to New Investor.

Section 8.11 Compliance with Laws. Except as would not reasonably be anticipated
to have a Material Adverse Effect and except as set forth in Section 8.11 of the
Disclosure Statement or in any zoning letters provided to New Investor prior to
the end of the Due Diligence Period, no written notice has been received by the
Facility Owners, Facility Lessees, Manager or Old Venture, nor does SSLII have
knowledge, that the Facilities are in violation of any applicable statute, law,
regulation, rule, ordinance, order, License or permit.

Section 8.12 Residence Agreements. New Investor has been supplied with true and
correct copies of the forms (on a state-by-state basis) of the Residence
Agreement currently in use for new admissions at the Facilities. No Facility
Lessee is in default, and, to SSLII’s knowledge, no Resident is in default,
under any of its obligations under any Residence Agreement which default could
reasonably be anticipated to have a Material Adverse Effect. The Residence
Agreements identified on the Rent Rolls were in full force and effect as of the
date of the applicable Rent Roll, except as would not reasonably be anticipated
to have a Material Adverse Effect. The Rent Rolls are true and correct in all
respects except as would not reasonably be anticipated to have a Material
Adverse Effect, subject to the information on the then-current aged receivables
report. As used in this Section 8.12, the term “Rent Rolls” means the schedules
of Residents at the Facilities provided pursuant to Exhibit E.

Section 8.13 Taxes. To SSLII’s knowledge, each of SSLII, Old Venture, the
Facility Owners and the Facility Lessees has prepared and duly and timely filed
(or has filed as part of a consolidated tax filing) all tax reports and returns
required to be filed by it and all such returns are accurate in all material
respects. In addition, except as set forth in Section 8.13 of the Disclosure
Statement, to SSLII’s knowledge, whether or not shown on such returns or reports
to be due, of SSLII, Old Venture, the Facility Owners and the Facility Lessees
each has duly paid or provided for the payment of all taxes and other charges
due or claimed to be due from it by federal, state, local or foreign taxing
authorities (including, without limitation, those due in respect of the Real
Property and the Facilities, and the income, franchises, licenses, sales, usages
or payrolls associated therewith). There are no tax liens upon any property or
assets of SSLII, Old Venture, the Facility Owners and the Facility Lessees,
except liens for current taxes not yet delinquent.

Section 8.14 Personal Property. As of the expiration of the Due Diligence
Period, each Facility Owner or Facility Lessee shall own or lease all of the
Personal Property that is currently used in the operations of the applicable
Facility as it is currently conducted, free and clear of all Liens other than
Permitted Exceptions. There are no assets necessary or material to the operation
of the Facilities as currently operated that are not Owned Assets, other than
Excluded Assets.

Section 8.15 Title. To SSLII’s knowledge and subject to easements, covenants,
conditions and restrictions of record as of the date hereof and to Permitted
Exceptions in place on or prior to the expiration of the Due Diligence Period,
(a) each Facility Owner is the owner of a fee simple interest in the Owned Real
Property set forth across from such Facility Owner’s name as described on
Exhibit A attached hereto and/or a leasehold interest in the Leased Real
Property set forth across from such Facility Owner’s name as described on
Exhibit A attached hereto and

 

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(b) the Facility Owner or the Facility Lessee is, or will be at Closing, the
owner of all of the remaining property constituting the Personal Property with
respect to the Facility owned or leased by such Facility Owner or Facility
Lessee, free and clear of all Liens, except for Permitted Exceptions and as
otherwise expressly disclosed in this Agreement (including Section 1.01 of the
Disclosure Statement).

Section 8.16 Real Property Ground Leases.

(a) Section 8.16 of the Disclosure Statement sets forth a true, correct and
complete list of the Real Property Ground Leases and there exist no other leases
of real property pursuant to which a Facility Owner is a tenant or lessee. The
copies of the Real Property Ground Leases heretofore delivered to Purchaser are
true, correct and complete in all material respects.

(b) No Facility Owner, or, to SSLII’s knowledge, any other party to the Real
Property Ground Leases, is in breach or default under any material obligation
thereunder or any provisions thereof, and no condition exists that, with notice
or the passage of time, or both, will constitute a breach or default under any
obligation thereunder or any provisions thereof.

Section 8.17 Contracts. Except as would not be reasonably anticipated to have
Material Adverse Effect, (a) all service, maintenance, purchase order and other
contracts, agreements and equipment leases as are needed with respect to the
ownership, maintenance, operation, provisioning or equipping of the Facilities
as presently conducted (the “Contracts”) are in full force and effect and
(b) none of SSLII, Manager, any Facility Lessee or any Facility Owner, or, to
SSLII’s knowledge, any other party to the Contracts, is in breach or default
under any obligation thereunder or any provisions thereof, and no condition
exists that, with notice or the passage of time, or both, will constitute a
breach or default under any obligation thereunder or any provisions thereof.
Section 8.17 of the Disclosure Statement sets forth a true, correct and complete
list of those Contracts which were entered into pursuant to a master or other
agreement pertaining to each Facility.

Section 8.18 Insurance. Neither Old Venture, SSLII, Facility Owners, Facility
Lessees or Manager has received written notice from any insurance carrier of
defects or inadequacies in the Real Property or Facilities, which, if
uncorrected, would result in a termination of insurance coverage or a material
increase in the premiums charged therefor. Section 8.18 of the Disclosure
Statement attached hereto sets forth a correct and complete list of each
insurance policy maintained with respect to the Real Property and or Facilities.
With respect to each insurance policy shown on Section 8.18 of the Disclosure
Statement: (i) the policy is legal, valid, binding, enforceable and in full
force and effect, (ii) neither Old Venture, SSLII, Facility Owners, Facility
Lessees or Manager, nor to SSLII’s knowledge, any other party to the policy, is
in material breach or default thereunder, and to SSLII’s knowledge, no event has
occurred which, with notice or the lapse of time, would constitute such a
material breach or default, or permit termination or modification under such
policy against any insured party.

Section 8.19 Ownership of Facility Lessees. All of the equity units of the
Facility Lessees are validly issued, fully paid and non-assessable and all such
shares or equity units are owned directly or indirectly by Old Venture free and
clear of all Liens. Upon completion of the transactions contemplated by this
Agreement, all of the equity units of the Facility Lessees will

 

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be owned directly or indirectly by Purchaser free and clear of all Liens, which
units shall be validly issued, fully paid and non-assessable. Complete and
correct copies of the organizational documents of Old Venture, the Facility
Lessees and the Facility Owners have been previously delivered or made available
to New Investor. None of Old Venture or the Facility Lessees have any
outstanding options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments of any character obligating such entity
to issue or sell any shares, units, equity securities or obligations of any kind
convertible into or exchangeable for any shares, units or equity securities of
Old Venture or any Facility Lessee.

Notwithstanding anything to the contrary contained herein, the parties
acknowledge that the Business Representations shall run solely to the benefit of
New Investor, Purchaser, each Facility Owner and each Facility Lessee and Seller
shall not be entitled to bring any claim or cause of action against SSLII for
any breach of the Business Representations, subject to Section 12.07 below.

Article IX.

COVENANTS

Section 9.01 Publicity. The parties agree that, prior to the Closing, no public
release or announcement concerning the transactions contemplated hereby shall be
issued by any party without the prior written consent of the other parties,
except as required by law or applicable regulations. The parties may disclose,
and Seller may permit Arcapita Bank B.S.C.(c) to disclose, this Purchase
Agreement and matters relating to the subject matter hereof to (i) their
professional advisers (including legal and financial advisers) or (ii) to any
prospective or existing lenders, provided that in each case any such party
informs the recipient of the confidentiality obligations of such party
hereunder. In addition, Seller may permit Arcapita Bank B.S.C.(c) to notify the
indirect investors in Seller of the signing of this Agreement and the
transactions contemplated hereunder, provided that Arcapita Bank B.S.C. (c) also
notifies such indirect investors in Seller of the confidentiality obligations of
Seller hereunder. The parties understand and agree that if required by law, or
if required by applicable disclosure requirements under applicable securities
laws or other laws, one or more of the parties may (i) disclose certain
information concerning the transaction, (ii) issue one (1) or more press
releases concerning the execution of this Agreement and/or the purchase of the
Facilities, provided that with respect to any press release which identifies
Seller, Arcapita Bank B.S.C.(c), SSLII, SSLI, Purchaser, New Investor or their
respective Affiliates, the party issuing the release shall use its reasonable
best efforts to seek the prior approval of Seller (as to itself or Arcapita Bank
B.S.C.(c) or their Affiliates), SSLII (as to itself, Purchaser or their
Affiliates) or New Investor, as applicable, such approval not to be unreasonably
delayed or withheld and, in any event, such requirement to seek prior approval
not to preclude any party or its Affiliate from complying with applicable
disclosure obligations under law, and (iii) file a copy of this Agreement with
the Securities and Exchange Commission.

Section 9.02 Commercially Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each party will use its commercially reasonable
efforts to take all action and to do all things necessary, proper or advisable
to satisfy any condition hereunder in its power to satisfy and for which it is
responsible for the satisfaction of, and to consummate and make

 

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effective as soon as practicable the transactions contemplated by this
Agreement. Without limiting the foregoing, SSLII shall cause Purchaser to take
and do all such actions and things.

Section 9.03 No Recordation. SSLII, New Investor, Old Venture, Seller and
Purchaser each agrees that neither this Agreement nor any memorandum or notice
hereof shall be recorded and each of Purchaser and New Investor agrees (i) not
to file any notice of pendency or other instrument (other than a judgment)
against the Facilities or any interest therein in connection herewith and
(ii) to indemnify Seller and SSLII against all Losses or Liabilities incurred by
either of them by reason of the filing by Purchaser or New Investor, as
applicable, of such notice of pendency or other instrument.

Section 9.04 Licenses. During the Due Diligence Period, Purchaser shall apply
for, and diligently pursue (and SSLII will cause Manager, the Facility Lessees,
and/or the Facility Owners to apply for and diligently pursue), issuance of the
Licenses. SSLII shall cooperate, and shall cause the Facility Owners and the
Facility Lessees to cooperate, with Purchaser in such manner as Purchaser may
reasonably request in connection with the issuance to Purchaser, the Facility
Lessees, the Facility Owners and/or Manager (or other appropriate party) of the
Licenses. Without limiting the generality of the foregoing, SSLII shall promptly
provide to New Investor such information in its possession and control
concerning Old Venture, Manager, the Facility Owners, the Facility Lessees and
the Facilities as may be requested by any Governmental Entity in connection with
the issuance of the Licenses and, if requested by such Governmental Entity,
SSLII shall allow, or cause Old Venture, the Facility Owners, the Facility
Lessees or Manager to allow, representatives of the Governmental Entity to
inspect the Facilities in connection with the application for any Licenses.

Section 9.05 Casualty. In the event that all or any portion of the Facilities is
damaged or destroyed by fire or other casualty prior to Closing and the cost of
repair for all such damaged or destroyed Facilities in the aggregate is less
than Thirty One Million, Five Hundred Thousand and No/100 Dollars ($31,500,000),
subject to the terms of the Existing Lease Financing, the Old Venture shall
(after receipt of Seller’s approval in accordance with the Old Venture
Agreement) promptly cause the Facility Lessee to undertake such repair and
complete the same, and Seller shall not have any obligation, direct or indirect,
to fund any insurance deductible. Closing will not be extended to permit the
Facility Lessee or the Facility Owner to complete the same, but subject to the
terms of any financing of the Facility, the insurance proceeds will be escrowed
to pay the costs of restoration. In the event the cost of repair thereof is
equal to or greater than Thirty One Million, Five Hundred Thousand and No/100
Dollars ($31,500,000), New Investor, in its sole discretion, shall either
(i) proceed to Closing with no reduction in the Purchase Price, in which event
all insurance proceeds attributable to such damage or destruction shall be
retained by the Facility Lessee or the Facility Owner at Closing and the amount
of any deductible with respect to such damage or destruction shall be paid by
SSLII and New Investor or (ii) as New Investor’s sole and exclusive remedy in
such event, terminate this Agreement, in which event the Down Payment shall be
promptly returned to New Investor and SSLII, and SSLII, Seller, Purchaser New
Investor and Old Venture shall be released from any and all further liabilities
or obligations under this Agreement, except those liabilities or obligations
that expressly survive such termination.

 

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Section 9.06 Condemnation. In the event there is any permanent or temporary
actual or threatened taking or condemnation of any material portion of any
Facility, SSLII and Seller shall notify New Investor of the same as promptly as
commercially practicable, and New Investor shall have the right, at its sole
option, (i) to proceed to Closing with no reduction in the Purchase Price, in
which event any and all proceeds of such taking or condemnation shall be
delivered or assigned to the Facility Owner at Closing, or (ii) as New
Investor’s sole and exclusive remedy in such event, terminate this Agreement, in
which event the Down Payment shall be promptly returned to New Investor and
SSLII, and SSLII, Seller, Purchaser New Investor and Old Venture shall be
released from any and all further liabilities or obligations under this
Agreement, except those liabilities or obligations that expressly survive such
termination.

Section 9.07 Operation of Business: Through the Closing Date, SSLII shall cause
Manager to continue to manage and operate the Facilities, taken as a whole, in
the ordinary course of business in the manner it has previously managed and
operated the Facilities prior to the date of this Agreement.

Section 9.08 Acquisition of Facility Owners.

(a) Seller and SSLII will cause at the Closing (i) ALF to transfer to Purchaser
or its designee good and marketable title to the ALF Interests and (ii) ALF Sub
to transfer to List C GP the List C GP Interest, in each case free and clear of
all Liens other than, in the case of ALF Interests or the List C GP Interests
acquired from SSLII or any of its Affiliates, any Liens in existence at the time
such interests were acquired by ALF from SSLII or its Affiliate.

(b) Seller will represent as of the Closing Date, or shall cause GSS to
represent as of the Closing Date, that ALF is the sole legal and beneficial
owner of the List A ALF Interest, the List B ALF Interest, the List C ALF
Interest and 100% of the equity interest of ALF Sub (collectively, the “ALF
Interests”) and that ALF Sub is the sole legal and beneficial owner of the List
C GP Interest, subject only, in the case of ALF Interests or the List C GP
Interests acquired from SSLII or any of its Affiliates, to any Lien in existence
at the time such interests were acquired by ALF or ALF Sub, as applicable, from
SSLII or its Affiliate.

Article X.

CONDITIONS PRECEDENT TO THE OBLIGATION

OF NEW INVESTOR, SSLII AND SELLER TO CLOSE

Section 10.01 Conditions to New Investor’s Obligation to Close. The obligation
of New Investor to proceed to Closing is subject to the satisfaction of each of
the following conditions, any of which may be waived, in whole or in part, in
writing by New Investor at or prior to Closing:

(a) Seller, SSLII and Purchaser shall have performed in all material respects
all their respective obligations under this Agreement which are required to be
performed at or prior to Closing.

(b) All representations and warranties of Purchaser set forth in Article V of
this Agreement, of Seller set forth in Article VI of this Agreement and of SSLII
set forth in Article VII and Article VIII of this Agreement shall have been true
and correct as of the Contract

 

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Date and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date.

(c) Seller, SSLII and Purchaser shall have executed and/or delivered all of the
documents required to be delivered at Closing pursuant to Section 11.02(a) and
Section 11.02(c), respectively.

(d) The Licenses shall have been issued and shall be in full force and effect,
it being understood that this condition shall be deemed satisfied if any License
has been issued, but such license is subject to revocation, cancellation,
suspension or non-renewal in the event that post-licensure requirements that
have not been satisfied as of Closing are not completed subsequent to Closing.

(e) SSLII shall have obtained duly executed Estoppel Certificates from each
ground lessor.

Section 10.02 Conditions to Seller’s Obligation to Close. The obligation of
Seller to proceed to Closing is subject to the satisfaction of each of the
following conditions, any of which may be waived, in whole or in part, in
writing by Seller at or prior to Closing:

(a) New Investor, SSLII and Purchaser shall have performed in all material
respects their respective obligations under this Agreement which are required to
be performed at or prior to Closing.

(b) All representations and warranties of Purchaser set forth in Article V of
this Agreement, of SSLII set forth in Article VII of this Agreement and of New
Investor set forth in Article IV and 3.01(b) of this Agreement shall be true and
correct as of the Contract Date and as of Closing with the same force and effect
as though made on and as of the Closing Date.

(c) Purchaser, SSLII and New Investor shall have executed and delivered all of
the documents required to be delivered at Closing pursuant to Sections 11.02(b)
and 11.02(c).

Section 10.03 Conditions to SSLII’s and Purchaser’s Obligation to Close. The
obligation of SSLII and Purchaser to proceed to Closing is subject to the
satisfaction of each of the following conditions, any of which may be waived, in
whole or in part, in writing by SSLII (for itself and on behalf of Purchaser) at
or prior to Closing:

(a) Seller and New Investor shall have performed in all material respects their
respective obligations under this Agreement which are required to be performed
at or prior to Closing.

(b) All representations and warranties of Seller set forth in Article VI of this
Agreement and of New Investor set forth in Article IV and Section 3.01(b) of
this Agreement shall be true and correct as of the Contract Date and as of
Closing with the same force and effect as though made on and as of the Closing
Date.

(c) Seller and New Investor shall have executed and delivered all of the
documents required to be delivered at Closing pursuant to Sections 11.02(a) and
11.02(b).

 

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(d) Provided that Purchaser and SSLII are not in breach of their obligations
under Section 9.04, the Licenses shall have been issued and shall be in full
force and effect, it being understood that this condition shall be deemed
satisfied if any License has been issued, but such license is subject to
revocation, cancellation, suspension or non-renewal in the event that
post-licensure requirements that have not been satisfied as of Closing are not
completed subsequent to Closing.

Article XI.

CLOSING

Section 11.01 Time and Place. Closing of Purchaser’s acquisition of Seller’s
Interest pursuant to this Agreement (the “Closing”) shall take place at the
offices of Willkie Farr & Gallagher LLP in New York City (or at such other place
as New Investor, SSLII and Seller mutually agree) on the Closing Date or such
other date as is mutually agreed upon by Seller, New Investor and SSLII.

Section 11.02 Delivery of Documents at Closing.

(a) At Closing, Seller shall:

(i) Execute and deliver to Purchaser (or its designee) the Assignment and
Assumption of Interest Agreement, which shall constitute Seller’s relinquishment
of Seller’s Interest in Old Venture.

(ii) Deliver or cause to be delivered to Purchaser instruments of transfer
evidencing the assignment of the ALF Interests and the List C GP Interest,
executed by ALF and ALF Sub, in accordance with Section 9.08 above and at no
cost or expense to Purchaser other than payment of the ALF Sales Purchase Price.

(iii) Execute, cause to be acknowledged and deliver to Purchaser, New Investor
and SSLII a certificate confirming the matters set forth in Sections 10.01(a)
and (b) with respect to Seller as of the Closing Date, such certificate to be
signed by a duly authorized officer of Seller.

(iv) Provide to Purchaser (A) a copy of the Charter Documents of Seller
certified by a duly authorized officer of Seller, (B) a copy of resolutions or
other actions of the board of directors and shareholders of Seller certified by
a duly authorized officer of Seller, and (C) such other evidence of the power
and authority of Seller to consummate the transactions described in this
Agreement as Purchaser may reasonably require.

(v) Execute, cause to be acknowledged as appropriate and deliver to Purchaser
such additional documents as may be reasonably necessary or customary to
consummate the transactions contemplated by this Agreement.

(vi) Execute, cause to be acknowledged as appropriate and deliver to Purchaser a
closing statement or memorandum in a form reasonably acceptable to Purchaser and
Seller (the “Closing Statement”).

 

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(vii) Execute, cause to be acknowledged and deliver to Purchaser a non-foreign
status affidavit in the form of Exhibit F, as required by Section 1445 of the
Code.

(viii) Cause ALF and ALF Sub to execute, caused to be acknowledged and deliver a
non-foreign status affidavit in the form of Exhibit F, as required by
Section 1445 of the Code.

(ix) Execute and deliver a Mutual Release Agreement in the form attached hereto
as Exhibit G (the “Mutual Release”).

(x) Execute or cause to be executed, and cause to be acknowledged and filed, as
applicable, any and all transfer tax forms, or signature pages to transfer tax
forms, required by applicable law or advisable, in the reasonable opinion of
Purchaser, in connection with the transfer of Seller’s Interests or the indirect
interests in the Facility Companies to Purchaser (or its designee) as
contemplated hereunder.

(xi) Pay and fully satisfy all obligations which are evidenced by any Lien
encumbering Seller’s Interest, the ALF Interests or the List C GP Interest.

(xii) Execute, cause to be acknowledged and deliver to the Escrow Holder one or
more Seller’s Non-Imputation Affidavits.

(xiii) If a search of the title to the Seller’s Interests discloses judgments,
penalties or other returns against other Persons having names the same as or
similar to that of Seller, Seller will, on request, execute and deliver to
Purchaser (or cause to be delivered to Purchaser) an affidavit from Seller to
the effect that such judgments, penalties or other returns are not against
Seller.

(b) At Closing, New Investor shall:

(i) Execute, acknowledge and deliver a certificate to Seller and SSLII
confirming the matters set forth in Sections 10.02(a) and (b) with respect to
New Investor, as of the Closing Date, such certificates to be signed by an
officer of New Investor.

(ii) Provide to Seller (A) a copy of the Charter Documents of New Investor
certified by a duly authorized officer or partner of New Investor, (B) a copy of
resolutions or other actions of the partners of New Investor certified by a duly
authorized officer or partner of New Investor, and (C) such other evidence of
the power and authority of New Investor to consummate the transactions described
in this Agreement as Seller may reasonably require.

(iii) Execute, cause to be acknowledged as appropriate and deliver such
additional documents as may be reasonably necessary or customary to consummate
the transactions contemplated by this Agreement.

(iv) Execute, cause to be acknowledged as appropriate and deliver the Closing
Statement.

 

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(v) Execute and deliver the Mutual Release.

(vi) Execute, and cause to be notarized and filed, as applicable, any and all
transfer tax forms, or signature pages to transfer tax forms, required by
applicable law or advisable, in the reasonable opinion of Purchaser, in
connection with the transfer of the Membership Interests or the indirect
interests in the Facility Companies to Purchaser (or its designee), as
contemplated hereunder.

(c) At Closing, SSLII shall:

(i) Cause Purchaser to pay or cause to be paid the Purchase Price in accordance
with Section 2.01 hereof by wire transfer of immediately available funds to an
account designated by Seller and the other closing costs to be borne by
Purchaser hereunder.

(ii) Cause Purchaser to execute, acknowledge and deliver the Assignment and
Assumption of Interest Agreement.

(iii) Execute and deliver an instrument of transfer assigning the List A
Interest to Purchaser.

(iv) Provide to Seller (A) a copy of the Charter Documents of SSLII certified by
a duly authorized officer of New Investor and a copy of the Charter Documents of
Purchaser certified by a duly authorized officer or member of Purchaser, (B) a
copy of resolutions or other actions of the board of directors and shareholders
of SSLII certified by a duly authorized officer of SSLII and a copy of
resolutions or other actions of the board of directors or managers and members
of Purchaser certified by a duly authorized officer or member of Purchaser, and
(C) such other evidence of the power and authority of SSLII and Purchaser to
consummate the transactions described in this Agreement as Seller may reasonably
require.

(v) Execute, cause to be acknowledged as appropriate and deliver such additional
documents as may be reasonably necessary or customary to consummate the
transactions contemplated by this Agreement.

(vi) Execute, acknowledge and deliver a certificate to Seller confirming the
matters set forth in Sections 10.02(a) and (b) with respect to SSLII and
Purchaser, as of the Closing Date, such certificates to be signed by an officer
of SSLII.

(vii) Execute, acknowledge and deliver a certificate to New Investor confirming
the matters set forth in Sections 10.01(a) and (b) with respect to SSLII and
Purchaser, as of the Closing Date, such certificates to be signed by an officer
of SSLII.

(viii) Execute and deliver, and cause each of Old Venture, Purchaser and Manager
to execute and deliver the Mutual Release.

(ix) Cause Purchaser to execute, acknowledge and deliver the Closing Statement.

 

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(x) Execute, and cause to be notarized and filed, as applicable, any and all
transfer tax forms, or signature pages to transfer tax forms, required by
applicable law or advisable, in the reasonable opinion of Purchaser (as the case
may be), in connection with the transfer of the Membership Interests or the
indirect interests in the Facility Companies to Purchaser (or its designee).

Section 11.03 Closing Costs.

(a) Except as otherwise specifically provided in this Agreement, SSLII, New
Investor, Purchaser and Seller shall each, as appropriate, pay the fees and
expenses of their own attorneys, accountants, financial advisors, investment
bankers and employees.

(b) Neither Old Venture nor Seller shall have any responsibility for the winding
down or dissolution of any entity directly or indirectly holding title to any
Facility (or for the fees and expenses incurred in connection with any such
winding down or dissolution, regardless of when it occurs).

(c) Title insurance costs will be paid by Purchaser in accordance with
Section 3.02(a).

(d) Any transfer taxes, fees or similar charges incurred as a result of the
transactions contemplated by this Agreement will be paid by Purchaser in
accordance with Section 3.02(a).

(e) Any cost or expense (including transfer taxes) incurred in connection with
the termination of the Facility Leases at or in connection with Closing shall be
paid by Purchaser.

Article XII.

INDEMNITY; DEFAULT; DAMAGES

Section 12.01 Survival. Except for those representations, warranties, covenants
or agreements contained in this Agreement the obligations in relation to which
are expressly stated to survive the Closing beyond the below-referenced twelve
(12) month period or without time limitation, all claims for any breach by a
party of any representation, warranty, covenant or agreement made by it in this
Agreement or in any other Document must be set forth in reasonable detail in a
written notice received by such party not later than the date that is twelve
(12) months following the Closing Date and any litigation with respect to such
claim shall be commenced on or prior to the date that is sixty (60) days after
the expiration of such twelve (12) month period. The following representations
and warranties shall survive without time limit: (a) New Investor’s
representations and warranties contained in Sections 4.01 through 4.09,
(b) Purchaser’s representations and warranties contained in Sections 5.01
through 5.09 and (c) SSLII’s representations and warranties contained in
Sections 7.01 through 7.10. Notwithstanding the foregoing, Seller’s
representations and warranties contained in Sections 6.01 through 6.11 shall
survive for a period of eighteen (18) months following the Closing Date and all
claims for any breach by Seller of such representations must be set forth in
reasonable detail in a written notice received by Seller not later than the date
that is eighteen (18) months

 

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following the Closing Date and any litigation with respect to such claim shall
be commenced on or prior to the date that is sixty (60) days after the
expiration of such eighteen (18) month period.

Section 12.02 New Investor’s, SSLII’s and Purchaser’s Remedies for Seller’s
Defaults. If Seller breaches any of its representations and warranties
hereunder, or defaults on any of its obligations hereunder in any material
respect, and such default continues for ten (10) Business Days after written
notice thereof from SSLII and New Investor to Seller specifying such default,
including, without limitation, a breach of the obligation to sell Seller’s
Interest on the Closing Date, time being of the essence, SSLII and New Investor
acting unanimously may, as their and Purchaser’s sole remedy hereunder, by
delivering notice in writing to Seller in the manner provide in this Agreement,
either (i) terminate this Agreement and the other Documents and declare it and
them null and void (except for those Liabilities that expressly survive such
termination) and New Investor and SSLII shall receive a disbursement of the Down
Payment, (ii) seek enforcement of this Agreement by a decree of specific
performance or injunctive relief requiring Seller to fulfill its obligations
under this Agreement, including but not limited to the transfer of Seller’s
Interest and the performance of Seller’s obligations in connection with ALF
Interests and the List C GP Interest or (iii) waive any such conditions or
defaults and consummate the transactions contemplated by this Agreement and the
Documents in the same manner as if there had been no conditions or defaults
without any reduction in the Purchase Price and without any further claim
against Seller.

Section 12.03 Seller’s Remedies for New Investor’s Defaults. If New Investor
materially breaches any of its representations or warranties hereunder, or
defaults on any of its obligations hereunder in any material respect, and such
default continues for ten (10) Business Days after written notice thereof from
Seller to New Investor specifying such default, Seller may, as its sole remedy
hereunder, by delivering notice in writing to New Investor and SSLII in the
manner provided in this Agreement, either, (i) terminate this Agreement and the
other Documents and declare it and them null and void (except for those
Liabilities that expressly survive such termination), in which event Seller
shall retain the Down Payment as liquidated damages as the sole legal or
equitable remedy for New Investor’s default, the parties hereby acknowledging
and agreeing that the damages which Seller would suffer as a result of such
default and termination would be difficult, if not impossible, to determine and
that the liquidated damages provided for herein are a fair and reasonable
estimation of such damages, or (ii) waive any such conditions or defaults and
consummate the transactions contemplated by this Agreement and the Documents in
the same manner as if there had been no conditions or defaults without any
reduction in the Purchase Price and without any further claim against Purchaser,
SSLII or New Investor; it being expressly understood and agreed the Seller shall
have no right or remedy to seek specific performance or injunctive relief with
respect to any default by Purchaser, SSLII and/or New Investor. SSLII and
Purchaser consent to retention of the Down Payment by Seller as provided in
clause (i) of the immediately preceding sentence.

Section 12.04 Seller’s Remedies for SSLII’s and Purchaser’s Defaults. If SSLII
or Purchaser breaches any of their respective representations or warranties
hereunder, or defaults on any of their respective obligations hereunder in any
material respect, and such default continues for ten (10) Business Days after
written notice thereof from Seller specifying such default, Seller may, as its
sole remedy hereunder, by delivering written notice to SSLII and Purchaser in
the manner provided in this Agreement, either (i) terminate this Agreement and
the other Documents

 

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and declare it and them null and void (except for those Liabilities that
expressly survive such termination) in which event Seller shall retain the Down
Payment as liquidated damages as the sole legal or equitable remedy for SSLII’s
or Purchaser’s default, the parties hereby acknowledging and agreeing that the
damages which Seller would suffer as a result of such default and termination
would be difficult, if not impossible, to determine and that the liquidated
damages provided for herein are a fair and reasonable estimation of such damages
or (ii) waive any such conditions or defaults and consummate the transactions
contemplated by this Agreement and the Documents in the same manner as if there
had been no conditions or defaults without any reduction in the Purchase Price
and without any further claim against Purchaser, SSLII or New Investor; it being
expressly understood and agreed that Seller shall have no right or remedy to
seek specific performance or injunctive relief with respect to any default by
Purchaser, SSLII and/or New Investor. New Investor consents to retention of the
Down Payment by Seller as provided in clause (i) of the immediately preceding
sentence.

Section 12.05 New Investor’s Remedies for SSLII’s or Purchaser’s Defaults. If
SSLII or Purchaser breaches any of their respective representations or
warranties hereunder, or defaults on any of their respective obligations
hereunder in any material respect, and such default continues for ten
(10) Business Days after written notice thereof from New Investor specifying
such default, New Investor may, as its sole remedy hereunder, by delivering
notice in writing to SSLII and Purchaser in the manner provided in this
Agreement, either, (i) terminate this Agreement and the other Documents and
declare it and them null and void (except for those Liabilities that expressly
survive such termination) in which event Seller shall retain the Down Payment as
liquidated damages as the sole legal or equitable remedy, the parties hereby
acknowledging and agreeing that the damages which Seller would suffer as a
result of such default and termination would be difficult, if not impossible, to
determine and that the liquidated damages provided for herein are a fair and
reasonable estimation of such damages or (ii) waive any such conditions or
defaults and consummate the transactions contemplated by this Agreement and the
Documents in the same manner as if there had been no conditions or defaults
without any reduction in the Purchase Price. SSLII and Purchaser consent to
retention of the Down Payment by Seller as provided in clause (i) of the
immediately preceding sentence.

Section 12.06 SSLII’s and Purchaser’s Remedies for New Investor’s Defaults. If
New Investor breaches any of its representations or warranties hereunder, or
defaults on any of its obligations hereunder in any material respect, and such
default continues for ten (10) Business Days after written notice thereof from
SSLII specifying such default, SSLII and Purchaser may, as their sole remedy
hereunder, by delivering notice in writing to New Investor in the manner
provided in this Agreement, either, (i) terminate this Agreement and the other
Documents and declare it and them null and void (except for those Liabilities
that expressly survive such termination), in which event Seller shall retain the
Down Payment as liquidated damages as the sole legal or equitable remedy, the
parties hereby acknowledging and agreeing that the damages which Seller would
suffer as a result of such default and termination would be difficult, if not
impossible, to determine and that the liquidated damages provided for herein are
a fair and reasonable estimation of such damages or (ii) waive any such
conditions or defaults and consummate the transactions contemplated by this
Agreement and the Documents in the same manner as if there had been no
conditions or defaults without any reduction in the Purchase Price; it being
expressly understood and agreed that neither SSLII nor Purchaser shall have any
right or remedy to seek specific performance or injunctive relief with respect
to any default by

 

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New Investor. New Investor consents to retention of the Down Payment by Seller
as provided in clause (i) of the immediately preceding sentence.

Section 12.07 Limitation on Liability for Business Representations.
Notwithstanding anything to the contrary contained herein or in any other
Document, if the Closing of the transactions hereunder shall have occurred,
SSLII shall have no Liability to New Investor for the breach of the Business
Representations in excess of, individually or in the aggregate, Ten Million and
No/100 Dollars ($10,000,000.00) (the “Business Representations Damage Cap”). New
Investor shall not enter any judgment or collect an amount hereunder in excess
of the Business Representations Damage Cap.

Section 12.08 Seller not Liable for Representations of Other Parties.
Notwithstanding anything to the contrary contained herein or in any document
executed in connection herewith, Seller shall not be responsible for, or have
any liability with respect to, any representation or warranty of SSLII, Manager
or the Old Venture, whether made pursuant to this Agreement or otherwise, any of
the other Documents, or otherwise.

Section 12.09 Indemnification by New Investor. New Investor shall, during the
applicable survival period, indemnify, defend, and hold harmless SSLII,
Purchaser and Seller and their respective members, officers, directors,
employees, Affiliates, successors and assigns from and against, and pay or
reimburse each of them for and with respect to, any Loss relating to, arising
out of or resulting from any breach by New Investor of any of its
representations, warranties, covenants or agreements in this Agreement or any
other Document.

Section 12.10 Indemnification by Arcapita Bank and Seller. Seller shall, during
the applicable survival period, indemnify, defend, and hold harmless New
Investor, SSLII, Purchaser and their respective officers, directors, employees,
Affiliates, successors and assigns from and against, and pay or reimburse each
of them for and with respect to, any Loss relating to, arising out of or
resulting from any breach by Seller of any of its representations, warranties,
covenants or agreements in this Agreement or any other Document to which it is a
party, subject to the survival period limitations set forth herein. Arcapita
Bank B.S.C.(c) shall, jointly and severally with Seller, during the applicable
survival period, indemnify, defend, and hold harmless New Investor, SSLII,
Purchaser and their respective officers, directors, employees, Affiliates,
successors and assigns from and against, and pay or reimburse each of them for
and with respect to, any Loss relating to, arising out of or resulting from any
breach by Seller of any of Seller’s representations or warranties contained in
Article VI, subject to the survival period limitations set forth herein. The
indemnification obligations of Arcapita Bank B.S.C.(c) are limited to the
provisions of this Section 12.10 regardless of other provisions of this
Agreement that pertain to representations and warranties of Seller, the duration
of such representations and warranties and the time periods during which claims
relating to such representations and warranties may be made.

Section 12.11 Indemnification by SSLII. SSLII shall, during the applicable
survival period, indemnify, defend, and hold harmless Purchaser, New Investor,
Seller and their respective members, officers, directors, employees, Affiliates,
successors and assigns from and against, and pay or reimburse each of them for
and with respect to, any Loss relating to, arising out of, or resulting from any
breach by SSLII of any of its representations, warranties, covenants

 

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or agreements in this Agreement or any other Document, subject to the Business
Representations Damage Cap with respect to breaches of the Business
Representations.

Section 12.12 Indemnification by Purchaser and SSLII. Purchaser and SSLII,
jointly and severally, shall, during the applicable survival period, indemnify,
defend, and hold harmless Seller and its members, officers, directors,
employees, Affiliates, successors and assigns from and against, and pay or
reimburse each of them for and with respect to, any Loss relating to, arising
out of, or resulting from any breach by Purchaser of any of its representations,
warranties, covenants or agreements in this Agreement or any other Document.

Section 12.13 Indemnification by Purchaser, SSLII and New Investor. Purchaser,
SSLII and New Investor, jointly and severally, shall, during the applicable
survival period, indemnify, defend, and hold harmless Seller and its members,
officers, directors, employees, Affiliates, successors and assigns from and
against, and pay or reimburse each of them for and with respect to, any Loss
relating to, arising out of, or resulting from the failure to repay or prepay
the Existing Owner Financing pursuant to the prepayment notices submitted under
the Existing Owner Financing on or about December 1, 2010.

Section 12.14 Administration of Indemnification. For purposes of administering
the indemnification provisions set forth in Sections 12.09, 12.10, 12.11, 12.12
and 12.13, the following procedure shall apply:

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

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

 

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

(d) Failure or delay by an Indemnified Party to give prompt notice of any claim
(if given prior to expiration of any applicable survival period) shall not
release, waive or otherwise affect an Indemnifying Party’s obligations with
respect to the claim, except to the extent that the Indemnifying Party can
demonstrate actual loss or prejudice as a result of such failure or delay.

Section 12.15 Exclusivity. The rights and remedies set forth in this Article XII
shall be exclusive of all other rights to monetary damages that any party (or
any party’s successors or assigns) would otherwise have at law or in equity in
connection with the transactions contemplated by this Agreement or any other
Document, other than with respect to claims based on common law fraud or rights
which by law cannot be waived or limited.

Article XIII.

DOWN PAYMENT AND ESCROW

Section 13.01 Investment of Down Payment. Escrow Agent shall deposit the Down
Payment in an escrow account in the name of Escrow Agent in a commercial bank
designated by New Investor and SSLII and reasonably acceptable to Seller. Escrow
Agent shall invest the Down Payment in an insured non-interest bearing account,
or in non-interest bearing investments backed by securities issued by the U.S.
federal government, as New Investor, SSLII and Seller may from time to time
direct.

Section 13.02 Disbursement of Down Payment. Escrow Agent shall hold the Down
Payment in escrow and release the same as follows:

(a) If at any time prior to expiration of the Due Diligence Period, Escrow Agent
shall receive written notice from New Investor stating that (i) New Investor is
terminating this Agreement, and (ii) New Investor is simultaneously giving
Seller a copy of such notice, Escrow Agent shall promptly disburse the Down
Payment to New Investor and SSLII in the percentages as directed jointly by New
Investor and SSLII, without the need for further instructions from or approvals
by any other party to this Agreement.

(b) If at any time after the expiration of the Due Diligence Period, but prior
to Closing, Escrow Agent shall receive written notice from New Investor or SSLII
stating that (i) New Investor or SSLII, as applicable, is terminating this
Agreement for a reason other than a Seller default or another reason which would
permit New Investor and SSLII to receive the Down Payment, and (ii) New Investor
or SSLII, as applicable, is simultaneously giving Seller a copy of such notice,
Escrow Agent shall promptly disburse the Down Payment to Seller, without the
need for further instructions from or approvals by any other party to this
Agreement.

 

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(c) Except as provided in Section 13.02(e), if Escrow Agent shall receive
written notice from New Investor or SSLII (“Seller Default Notice”) stating that
(i) Seller has failed to complete Closing in accordance with the terms of this
Agreement, or has defaulted in any other manner under this Agreement,
(ii) Seller has not cured such failure or default in accordance with
Section 12.02, and (iii) New Investor and/or SSLII is demanding the return of
the Down Payment, then Escrow Agent shall immediately deliver a copy of the
Seller Default Notice to Seller. If on or before the date which is five
(5) Business Days following Seller’s receipt of the Seller Default Notice,
Seller shall object in writing (“Seller’s Objection Notice”) to the return of
the Down Payment to New Investor and SSLII, then Escrow Agent shall not return
the Down Payment to New Investor or SSLII. If Seller shall not deliver a
Seller’s Objection Notice to Escrow Agent on or before the date which is five
(5) Business Days following Seller’s receipt of the Seller Default Notice, then
Escrow Agent shall promptly return the Down Payment to New Investor and SSLII in
the percentages as directly jointly by New Investor and SSLII, without the need
for further instructions from or approvals by any other party to this Agreement.

(d) Except as provided in Section 13.02(e), if Escrow Agent shall receive a
written notice from Seller (“Purchaser Default Notice”) stating that
(i) Purchaser, SSLII or New Investor has failed to complete Closing in
accordance with the terms of the Purchase Agreement, or has defaulted in any
other manner under this Agreement, (ii) Purchaser, SSLII or New Investor, as
applicable, has not cured such failure or default in accordance with
Section 12.03, Section 12.04 or Section 12.05, as applicable, and (iii) Seller
is demanding the release of the Down Payment to Seller, Escrow Agent shall
promptly deliver a copy of the Purchaser Default Notice to SSLII and New
Investor. If on or before the date which is five (5) Business Days following New
Investor or SSLII’s receipt of the Purchaser Default Notice, SSLII, New Investor
or Purchaser shall object in writing (“Purchaser’s Objection Notice”) to the
release of the Down Payment to Seller, then Escrow Agent shall not release the
Down Payment to Seller. If SSLII or New Investor shall not deliver a Purchaser’s
Objection Notice to Escrow Agent on or before the date which is five
(5) Business Days following SSLII’s or New Investor’s receipt of the Purchaser
Default Notice, then Escrow Agent shall promptly release the Down Payment to
Seller, without the need for further instructions from or approvals by any other
party to this Agreement.

(e) If Escrow Agent shall receive written notice from New Investor or SSLII
(“Failure of Condition Notice”) stating that (i) New Investor has failed to
complete Closing in accordance with the terms of this Agreement solely due to a
failure of one or more of the conditions set forth in Section 10.01(d) or
(e) and confirming that Purchaser and SSLII are not in breach of their
obligations under Section 9.04 or Section 3.02(a)(ii), or (ii) Purchaser and
SSLII have failed to complete Closing in accordance with the terms of this
Agreement solely due to a failure of the condition set forth in Section 10.03(d)
and confirming that Purchaser and SSLII are not in breach of their obligations
under Section 9.04, then Escrow Agent shall immediately deliver a copy of the
Failure of Condition Notice to Seller. If on or before the date which is five
(5) Business Days following Seller’s receipt of the Failure of Condition Notice,
Seller shall object in writing (“Seller’s Failure of Condition Objection
Notice”) to the return of the Down Payment to New Investor and SSLII, then
Escrow Agent shall not return the Down Payment to New Investor or SSLII. If
Seller shall not deliver a Seller’s Failure of Condition Notice to Escrow Agent
on or before the date which is five (5) Business Days following Seller’s receipt
of the Seller Default Notice, then Escrow Agent shall promptly return the Down
Payment to New

 

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Investor and SSLII in the percentages as directly jointly by New Investor and
SSLII, without the need for further instructions from or approvals by any other
party to this Agreement.

(f) Unless the Down Payment shall have been previously released by Escrow Agent
pursuant to this Section 13.02, at Closing, Escrow Agent shall deliver the Down
Payment to Seller as part of the Purchase Price.

Section 13.03 Disputes. In the event of any dispute between Seller, on the one
hand, and Purchaser, SSLII or New Investor, on the other hand, regarding the
disbursement of the Down Payment pursuant to Sections 13.02(c) or (d), or in the
event Escrow Agent shall receive conflicting demands or instructions with
respect to the disbursement of the Down Payment, Escrow Agent shall withhold
disbursement of the Down Payment until it receives either (i) joint written
instructions from Seller, Purchaser, SSLII and New Investor (or, with respect to
a dispute among only SSLII and New Investor, then joint written instructions
from SSLII and New Investor) with respect to the disbursement of the Down
Payment or (ii) an order binding upon it from a court of competent jurisdiction
with respect to the disbursement of the Down Payment. Notwithstanding the
foregoing, in the event of any such dispute or conflicting demands or
instructions, Escrow Agent shall have the right to deliver the Down Payment into
the registry of any court of competent jurisdiction, and Escrow Agent shall
thereupon be released from any further liabilities or obligations with respect
to the Down Payment.

Section 13.04 Compensation. Escrow Agent shall receive no compensation for its
services performed pursuant to this Agreement except for reasonable attorneys’
fees and costs incurred as a result of any dispute between the parties hereto.
Such fees and costs shall be borne by the party adjudged by a court of competent
jurisdiction to have been at fault.

Section 13.05 Liability of Escrow Agent. The parties covenant and agree that in
performing any of its duties under this Agreement, Escrow Agent shall not be
liable for any Loss which it may incur as a result of serving as Escrow Agent
hereunder, except for any Loss arising out of its willful default or gross
negligence. Accordingly, Escrow Agent shall not incur any liability with respect
to (i) any action taken or omitted to be taken in good faith upon advice of its
counsel given with respect to any questions relating to its duties and
responsibilities (ii) to any action taken or omitted to be taken in reliance
upon any document, not only as to its due execution and the validity and
effectiveness of its provisions, but also to the truth and accuracy of any
information contained therein, which Escrow Agent shall in good faith believe to
be genuine, to have been signed or presented by a proper person or persons and
to conform with the provisions of this Agreement or (iii) failure, insolvency,
or inability of the depositary to pay said funds upon demand for withdrawal; or
(iv) levies by taxing authorities based upon the taxpayer identification number
used to establish this interest bearing account. Seller, Purchaser, SSLII and
New Investor hereby agree, jointly and severally, to indemnify and hold harmless
Escrow Agent against any and all Losses which may be imposed upon or incurred by
Escrow Agent in connection with its serving as Escrow Agent hereunder, except
for any Loss arising out of its willful default or gross negligence.

 

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Article XIV.

MISCELLANEOUS

Section 14.01 Further Actions. From time to time before, at and after the
Closing, each party, at its expense and without further consideration, will
execute and deliver such documents as reasonably requested by any other party in
order more effectively to consummate the transactions contemplated hereby.

Section 14.02 Consents under Old Venture Agreement. The parties acknowledge that
the transactions contemplated hereunder may require the consent of the SSLII and
Seller in accordance with the terms of the Old Venture Agreement, and the
execution and delivery by SSLII and by Seller of this Agreement shall evidence
any such required consent.

Section 14.03 Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be sufficiently given if delivered by
courier (including overnight delivery service) or sent by registered or
certified mail, first class, postage prepaid, or by electronic mail or facsimile
(provided that an additional copy is delivered by one of the foregoing methods),
addressed as follows:

(a) If to Seller, to:

c/o Arcapita Inc.

75 Fourteenth Street, 24th Floor Atlanta, GA 30309

Attention: C. MacLaine Kenan

Facsimile No: 404-920-9011

with a copy to:

King & Spalding LLP

1185 Avenue of the Americas

New York, NY 10036

Attention: Isam Salah, Esq.

Facsimile No.: 212-556-2222

(b) If to SSLII or Purchaser, to:

c/o Sunrise Senior Living, Inc.

7900 Westpark Drive, Suite T-900

McLean, Virginia 22102

Attn.: General Counsel

Telecopy No.: (703) 744-1990

Telephone No.: (703) 854-0334

with a copy to:

Willkie Farr & Gallagher LLP

787 Seventh Avenue

 

47

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New York, New York 10019

Attn.: Eugene A. Pinover, Esq.

Telecopy No.: (212) 728-9254

Telephone No.: (212) 728-8254

(c) If to New Investor, to:

CNL Income Partners, LP

CNL Center at City Commons

450 South Orange Avenue

Orlando, Florida 32801

Attn.:   Tammie A. Quinlan, EVP and CFO; and

            Holly Greer, VP and Associate General Counsel

Telecopy No.: (407) 540-2544

Telephone No.: (407) 540-7500]

with a copy to:

Lowndes, Drosdick, Doster, Kantor & Reed, PA

215 North Eola Drive

Orlando, Florida 32801

Attn.: Peter E. Reinert, Esq.

Telecopy No.: 407-843-4444

Telephone No.: 407-843-4600

or such other address as a party may from time to time notify the other party in
writing (as provided above). Any such notice, demand or communication shall be
deemed to have been given (i) if so mailed, as of the close of the fifth
Business Day following the date so mailed, (ii) if delivered by courier, on the
date received and (iii) if sent by facsimile, on the date transmitted if during
normal business hours of the recipient, and otherwise on the next Business Day
of the recipient, in each case as evidenced by receipt by the sending party of
electronic confirmation of successful transmission form the receiving party’s
facsimile machine.

Section 14.04 Entire Agreement. This Agreement, the Exhibits and the other
Documents contain the entire understanding among the parties with respect to the
subject matter hereof and are intended to be a full integration of all prior or
contemporaneous agreements, conditions or undertakings among the parties hereto.
There are no promises, agreements, conditions, undertakings, warranties or
representations, oral or written, express or implied, among the parties with
respect to the subject matter hereof other than as set forth in this Agreement
and the Exhibits and other Documents. This Agreement supersedes in its entirety
that certain Term Sheet between SSLII and Seller dated November 4, 2010.

Section 14.05 Not Construed Against Drafter. This Agreement has been negotiated
and prepared by the parties and their respective counsel, and should any
provision of this Agreement require judicial interpretation, the court
interpreting or construing the provision shall not apply the rule of
construction that a document is to be construed more strictly against one party.

 

48

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Section 14.06 Binding Effect; Benefits. Except as otherwise provided herein,
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors or permitted assigns. Except to the
extent specified herein, nothing in this Agreement, express or implied, shall
confer on any person other than the parties hereto and their respective
successors or permitted assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.

Section 14.07 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by any party without the
prior written consent of the other parties, provided that SSLII, New Investor or
Purchaser may assign all of their respective rights under this Agreement to an
Affiliate, provided further that (i) the respective representations and
warranties of Purchaser, SSLII or New Investor hereunder shall be true and
correct in all material respects as applied to the applicable assignee,
(ii) both Purchaser, SSLII or New Investor, as applicable, and the assignee
shall execute and deliver to the other parties hereto a written instrument in
form and substance satisfactory to such parties, in their reasonable discretion,
in which both Purchaser, SSLII or New Investor, as applicable, and the assignee
agree to be jointly and severally liable for performance of all of the
applicable assignee’s obligations under this Agreement, (iii) Purchaser, New
Investor or SSLII, as applicable, and the assignee shall deliver such other
documents and instruments as reasonably requested by the other parties hereto,
including appropriate certified resolutions of the members or boards of
directors of Purchaser, SSLII or New Investor, as applicable, and the assignee
and (iv) Purchaser, New Investor and SSLII, as applicable, shall remain fully
liable for its obligations under this Agreement.

Section 14.08 Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Delaware without
regard to its principles of conflicts of laws.

Section 14.09 Amendments and Waivers. No term or provision of this Agreement may
be amended, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought. Any waiver shall be effective only
in accordance with its express terms and conditions.

Section 14.10 Severability. Any provision of this Agreement which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto hereby waive any
provision of law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.

Section 14.11 Headings. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.

Section 14.12 Counterparts. This Agreement may be executed in any number of
counterparts, and by any party on separate counterparts, each of which shall be
an original, and all of which together shall constitute one and the same
instrument.

 

49

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Section 14.13 References. All references in this Agreement to Articles and
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.

Section 14.14 Exhibits. Unless otherwise specified herein, each Exhibit referred
to in this Agreement is attached hereto, and each such Exhibit (other than
Exhibits that are to be separately executed and delivered as Documents) is
hereby incorporated by reference and made a part hereof as if fully set forth
herein.

Section 14.15 Attorneys’ Fees. In the event any party brings an action to
enforce or interpret any of the provisions of this Agreement, the “prevailing
party” in such action shall, in addition to any other recovery, be entitled to
its reasonable attorneys’ fees and expenses arising from such action and any
appeal or any bankruptcy action related thereto, whether or not such matter
proceeds to court. For purposes of this Agreement, “prevailing party” shall
mean, in the case of a Person asserting a claim, such Person is successful in
obtaining substantially all of the relief sought, and in the case of a Person
defending against or responding to a claim, such Person is successful in denying
substantially all of the relief sought.

Section 14.16 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN
ANY PROCEEDINGS BROUGHT BY ANY OTHER PARTY IN CONNECTION WITH ANY MATTER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, SELLER’S
INTEREST, THE FACILITIES OR THE RELATIONSHIP OF THE PARTIES HEREUNDER. THE
PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING (AND NOT BE MERGED THEREIN)
OR ANY EARLIER TERMINATION OF THIS AGREEMENT.

Section 14.17 Facsimile and PDF Signatures. Signatures to this Agreement
transmitted by telecopy or by electronic mail in PDF format shall be valid and
effective to bind the party so signing. Each party agrees to promptly deliver an
execution original to this Agreement with its actual signature to the other
parties, but a failure to do so shall not affect the enforceability of this
Agreement, it being expressly agreed that each party to this Agreement shall be
bound by its own telecopied signature or signature transmitted by electronic
mail in PDF format and shall accept the telecopied signature or signature
transmitted by electronic mail in PDF format of each other party to this
Agreement.

[SIGNATURES FOLLOW ON NEXT PAGE]

 

50

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first written above.

 

PURCHASER: CC3 ACQUISITION, LLC, a Delaware limited liability company By:  
Sunrise Senior Living Investments, Inc., a Virginia corporation, its managing
member By:  

/s/ Edward W. Burnett

Name:   Edward W. Burnett Title:   Vice President SELLER: US ASSISTED LIVING
FACILITIES III, INC., a Delaware corporation By:  

/s/ C. MacLaine Kenan

Name:   C. MacLaine Kenan Title:   Vice President SSLII SUNRISE SENIOR LIVING
INVESTMENTS, INC., a Virginia corporation By:  

/s/ Edward W. Burnett

Name:   Edward W. Burnett Title:   Vice President NEW INVESTOR CNL INCOME
PARTNERS, LP, a Delaware limited partnership By:   CNL Income GP Corp., a
Delaware corporation, its general partner   By:  

/s/ Holly Greer

  Name:   Holly Greer   Title:   Vice President

 

S-i

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Executed solely for the purpose of acknowledging

and agreeing to the indemnity by the undersigned set forth in Section 12.10

ARCAPITA BANK B.S.C.(c) By:  

/s/ Mohammed Chowdhury

Name:   Mohammed Chowdhury Title:   Executive Director

 

iv

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Executed for the purpose of acknowledging and agreeing to the obligations of the
Escrow Agent hereunder: ESCROW AGENT FIDELITY NATIONAL TITLE INSURANCE COMPANY
By:  

/s/ Keren Baki Marti

Name:   Keren Baki Marti Title:   Vice President & Orlando NCS Operations
Manager

 

v

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Exhibit A

Facilities; Facility Owners; Facility Lessees

 

    

Facility

  

Facility Owner

  

Facility Lessee

  

List Facility
Owner

1.    Sunrise of Alta Loma, 9519 Baseline Rd. Rancho Cucamonga, CA 91730   
Sunrise Third Alta Loma SL, LP, a California limited partnership    Sunrise
Third (Pool I), LP, a California limited partnership    List C Facility Owner 2.
   Sunrise Senior Living of Basking Ridge, 4014 George Rd., Basking Ridge, NJ
07920    Sunrise Basking Ridge Assisted Living, L.L.C., a New Jersey limited
liability company    Sunrise Third (Pool IV), LLC, a Delaware limited liability
company    List B Facility Owner 3.    Sunrise Belmont, 1010 Alameda de las
Pulgas, Belmont, CA 94002    Sunrise Belmont Assisted Living, L.L.C., a
California limited liability company    Sunrise Third (Pool IV), LP, a
California limited partnership    List B Facility Owner 4.    Sunrise of
Chesterfield, 1880 Clarkson Rd., Chesterfield, MO 63017    Sunrise Chesterfield
Assisted Living, L.L.C., a Missouri limited liability company    Sunrise Third
(Pool I), LLC, a Delaware limited liability company    List B Facility Owner 5.
   Sunrise of Claremont, 2053 North Towne Ave., Claremont, CA 91711    Sunrise
Third Claremont SL, LP, a California limited partnership    Sunrise Third (Pool
I), LP, a California limited partnership    List C Facility Owner 6.    Sunrise
of Crystal Lake, 751 Terra Cotta Ave., Crystal Lake, IL 60014    Sunrise Third
Crystal Lake SL, LLC, an Illinois limited liability company    Sunrise Third
(Pool I), LLC, a Delaware limited liability company    List B Facility Owner 7.
   Sunrise Senior Living of Dix Hills, 337 Deer Park Ave., Huntington Station,
NY 11746    Sunrise Third Dix Hills SL, LLC, a New York limited liability
company    Sunrise Third (Pool IV), LLC, a Delaware limited liability company   
List B Facility Owner 8.    Sunrise of East Meadow, 1555 Glenn Curtiss Blvd.,
East Meadow/Hempstead, NY 11554    East Meadow A.L., LLC, a Delaware limited
liability company    Sunrise Third (Pool I), LLC, a Delaware limited liability
company    List A Facility Owner 9.    Sunrise Senior Living of East Setauket, 1
Sunrise Dr., East Setauket, NY 11733    Sunrise Third East Setauket SL, LLC, a
New York limited liability company    Sunrise Third (Pool II), LLC, a Delaware
limited liability company    List A Facility Owner

 

vi

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Facility

  

Facility Owner

  

Facility Lessee

  

List Facility
Owner

10.    Sunrise of Edgewater, 351 River Road, Edgewater, NJ 07020    Sunrise
Third Edgewater SL, LLC, a New Jersey limited liability company    Sunrise Third
(Pool I), LLC, a Delaware limited liability company    List B Facility Owner 11.
   Sunrise of Flossmoor, 19715 Governor’s Hwy., Flossmoor, IL 60422    Sunrise
Flossmoor Assisted Living, L.L.C., an Illinois limited liability company   
Sunrise Third (Pool I), LLC, a Delaware limited liability company    List B
Facility Owner 12.    Sunrise of Gahanna, 775 E. Johnstown Rd., Gahanna, OH
43230    Sunrise Gahanna Assisted Living, L.L.C., an Ohio limited liability
company    Sunrise Third (Pool I), LLC, a Delaware limited liability company   
List B Facility Owner 13.    Sunrise of Gurnee, 500 North Hunt Club Rd., Gurnee,
IL 60031    Sunrise Third Gurnee SL, LLC, an Illinois limited liability company
   Sunrise Third (Pool I), LLC, a Delaware limited liability company    List B
Facility Owner 14.    Sunrise of Holbrook, 320 Patchogue Holbrook Rd., Holbrook,
NY 11741    Sunrise Third Holbrook SL, LLC, a New York limited liability company
   Sunrise Third (Pool I), LLC, a Delaware limited liability company    List B
Facility Owner 15.    Sunrise Senior Living of Huntington Common, 1 Huntington
Common Dr., Kennebunk, ME 04043    Sunrise Kennebunk ME Senior Living, LLC, a
Delaware limited liability company    Sunrise Third (Pool V), LLC, a Delaware
limited liability company    List A Facility Owner 16.    Sunrise Senior Living
of Lincroft, 734 Newman Springs Rd., Lincroft, NJ 07738    Sunrise Third
Lincroft SL, LLC, a New Jersey limited liability company    Sunrise Third (Pool
III), LLC, a Delaware limited liability company    List A Facility Owner 17.   
Sunrise Senior Living of Marlboro, 3A South Main St., Marlboro, NJ 07746   
Sunrise Marlboro Assisted Living, L.L.C., a New Jersey limited liability company
   Sunrise Third (Pool IV), LLC, a Delaware limited liability company    List B
Facility Owner 18.    Sunrise of Montgomery Village, 19310 Club House Rd.,
Montgomery Village, MD 20886    Sunrise Village House, LLC, a Maryland limited
liability company    Sunrise Third (Pool I), LLC, a Delaware limited liability
company    List B Facility Owner 19.    Sunrise Senior Living of Naperville
North, 535 W. Ogden Ave., Naperville, IL 60563    Sunrise North Naperville
Assisted Living, L.L.C., an Illinois limited liability company    Sunrise Third
(Pool III), LLC, a Delaware limited liability company    List A Facility Owner
20.    Sunrise of Plainview, 1231    Sunrise Third    Sunrise Third (Pool I),
LLC, a    List A Facility

 

vii

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Facility

  

Facility Owner

  

Facility Lessee

  

List Facility
Owner

   Old Country Rd., Plainview (Oyster Bay), NY 11803    Plainview SL, LLC, a New
York limited liability company    Delaware limited liability company    Owner
21.    Sunrise Senior Living of Roseville, 2555 Snelling Ave., North, Roseville,
MN 55113    Sunrise Third Roseville SL, LLC, a Minnesota limited liability
company    Sunrise Third (Pool III), LLC, a Delaware limited liability company
   List A Facility Owner 22.    Sunrise Senior Living of Schaumburg, 790 N. Plum
Grove Rd., Schaumburg, IL 60173    Sunrise Third Schaumburg SL, LLC, an Illinois
limited liability company    Sunrise Third (Pool III), LLC, a Delaware limited
liability company    List A Facility Owner 23.    Sunrise of Silver Spring,
11621 New Hampshire Ave., Silver Spring, MD 20904    White Oak Assisted Living
L.L.C., a Delaware limited liability company    Sunrise Third (Pool I), LLC, a
California limited liability company    List A Facility Owner 24.    Sunrise at
Tustin, 12291 S. Newport Ave., Santa Ana, CA 92705    Sunrise Third Tustin SL,
LP, a California limited partnership    Sunrise Third (Pool I), LP, a California
limited partnership    List C Facility Owner 25.    Sunrise Senior Living of
University Park, 2105 University Park Blvd., Colorado Springs, CO 80918   
Sunrise Third University Park SL, LLC, a Colorado limited liability company   
Sunrise Third (Pool II), LLC, a Delaware limited liability company   
List A Facility Owner 26.    Sunrise Senior Living of West Babylon, 580 Montauk
Hwy., West Babylon, NY 11704    Sunrise Third West Babylon SL, LLC, a New York
limited liability company    Sunrise Third (Pool IV), LLC, a Delaware limited
liability company    List B Facility Owner 27.    Sunrise Senior Living of West
Bloomfield, 7005 Pontiac Trail, West Bloomfield, MI 48323    Sunrise Third West
Bloomfield SL, LLC, a Michigan limited liability company    Sunrise Third (Pool
II), LLC, a Delaware limited liability company    List A Facility Owner 28.   
Sunrise of West Hills, 9012 Topanga Canyon Blvd.. West Hills, CA, 91304   
Canoga Park Assisted Living, L.L.C., a Delaware limited liability company   
Sunrise Third (Pool I), LP, a California limited partnership    List A Facility
Owner 29.    Sunrise of Weston, 135 North Ave. (Rte. 117), Weston, MA 02493   
Sunrise Weston Assisted Living, Limited Partnership, a Massachusetts limited
partnership    Sunrise Third (Pool I), LLC, a Delaware limited liability company
   List C Facility Owner

 

viii

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Exhibit B

Facility Leases

 

FACILITY LESSEE

  

FACILITY LESSORS

  

LEASE DOCUMENTS

  

FACILITIES

Sunrise Third (Pool I), LP, a California limited partnership   

Sunrise Third Alta Loma SL, LP, a California limited partnership

 

Sunrise Third Claremont SL, LP, a California limited partnership

 

Sunrise Third Tustin SL, LP, a California limited partnership

 

Canoga Park Assisted Living, L.L.C., a Delaware limited liability company

  

Master Lease Financing Facility Agreement dated as of June 30, 2003 by and among
Sunrise Third Alta Loma SL, LP, Sunrise Third Claremont SL, LP and Sunrise Third
Tustin SL, LP, as Lessors, AL Funding III, Inc., as Agent, and Sunrise Third
(Pool I) LP, as Master Lessee, as amended by that certain First Master Amendment
to Lease Documents (Pool I- LP), dated February 20, 2004, adding Canoga Park
Assisted Living, L.L.C. as a party to the Pool I LP Master Lease , Pool I LP
Call Option Letter, Pool I LP Put Option Letter and Pool I LP Tax Matters
Agreement.

 

Call Option Letter dated June 30, 2003 for Sunrise Third (Pool I), LP

 

Put Option Letter dated June 30, 2003 for Sunrise Third (Pool I), LP

 

Supplemental Agreement dated June 30, 2003 for Sunrise Third (Pool I), LP

 

Tax Matters Agreement dated June 30, 2003 for Sunrise Third (Pool I), LP

  

Sunrise Senior Living of Alta Loma

 

Sunrise Senior Living of Claremont

 

Sunrise Senior Living of Tustin

 

Sunrise Senior Living of West Hills

Sunrise Third (Pool I), LLC, a Delaware limited liability company   

Sunrise Chesterfield Assisted Living, L.L.C., a Missouri limited liability
company

 

Sunrise Third Crystal Lake SL, LLC, an Illinois limited liability company

 

East Meadow A.L., LLC, a Delaware limited liability company

 

Sunrise Third

   Master Lease Financing Facility Agreement dated as of June 30, 2003 by and
among Sunrise Chesterfield Assisted Living, L.L.C., Sunrise Third Crystal Lake
SL, LLC, Sunrise Third Edgewater SL, LLC, Sunrise Flossmoor Assisted Living,
L.L.C., Sunrise Gahanna Assisted Living, L.L.C., Sunrise Third Gurnee SL, LLC,
Sunrise Third Holbrook SL, LLC, Sunrise Village House, LLC and Sunrise Weston
Assisted Living, LP, as Lessors, AL Funding III, Inc., as Agent, and Sunrise
Third (Pool I) LLC, as Master Lessee, as amended by that certain First Master   

Sunrise Senior Living of Chesterfield

 

Sunrise Senior Living of Crystal Lake

 

Sunrise Senior Living of East Meadow

 

Sunrise Senior Living of Edgewater

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

FACILITY LESSEE

  

FACILITY LESSORS

  

LEASE DOCUMENTS

  

FACILITIES

  

Edgewater SL, LLC, a New Jersey limited liability company

 

Sunrise Flossmoor Assisted Living, L.L.C., an Illinois limited liability company

 

Sunrise Gahanna Assisted Living, L.L.C., an Ohio limited liability company

 

Sunrise Third Gurnee SL, LLC, an Illinois limited liability company

 

Sunrise Third Holbrook SL, LLC, a New York limited liability company

 

Sunrise Village House, LLC, a Maryland limited liability company

 

Sunrise Plainview SL, LLC, a New York limited liability company

 

White Oak Assisted Living, L.L.C., a Delaware limited liability company

 

Sunrise Weston Assisted Living, LP, a Massachusetts limited partnership

  

Amendment to Lease Documents (Pool I) dated December 29, 2003, adding Sunrise
Third Plainview SL, LLC as a party to the Pool I LLC Master Lease , Pool I LLC
Call Option Letter, Pool I LLC Put Option Letter, and Pool I LLC Tax Matters
Agreement, and as amended by that certain Second Master Amendment to Lease
Documents (Pool I) dated February 20, 2004, adding White Oak Assisted Living
L.L.C. as a party to the Pool I LLC Master Lease , Pool I LLC Call Option
Letter, Pool I LLC Put Option Letter and Pool I LLC Tax Matters Agreement, and
as amended by that certain Third Master Amendment to Lease Documents (Pool I)
dated May 17,2004, adding East Meadow A.L., LLC as a party to the Pool I LLC
Master Lease , Pool I LLC Call Option Letter, Pool I LLC Put Option Letter, and
Pool I LLC Tax Matters Agreement.

 

Call Option Letter dated June 30, 2003 for Sunrise Third (Pool I), LLC

 

Put Option Letter dated June 30, 2003 for Sunrise Third (Pool I), LLC

 

Supplemental Agreement dated June 30, 2003 for Sunrise Third (Pool I), LLC

 

Tax Matters Agreement dated June 30, 2003 for Sunrise Third (Pool I), LLC

  

Sunrise Senior Living of Flossmoor

 

Sunrise Senior Living of Gahanna

 

Sunrise Senior Living of Gurnee

 

Sunrise Senior Living of Holbrook

 

Sunrise Senior Living of Montgomery

 

Sunrise Senior Living of Plainview

 

Sunrise Senior Living of Silver Spring

 

Sunrise Senior Living of Weston

Sunrise Third (Pool II), LLC, a Delaware limited liability company   

Sunrise Third East Setauket SL, LLC, a New York limited liability company

 

Sunrise Third University Park SL, LLC, a Colorado limited liability

   Master Lease Financing Facility Agreement dated as of September 30, 2005, by
and among Sunrise Third East Setauket SL, LLC, Sunrise Third University Park SL,
LLC and Sunrise Third West Bloomfield, LLC, as Lessors, AL Funding III, Inc., as
Agent, and Sunrise Third (Pool II) LLC, as Master Lessee.   

Sunrise Senior Living of East Setauket

 

Sunrise Senior Living of University Park

 

- 10 -

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FACILITY LESSEE

  

FACILITY LESSORS

  

LEASE DOCUMENTS

  

FACILITIES

  

company

 

Sunrise Third West Bloomfield, LLC, a Michigan limited liability company

  

 

Call Option Letter dated September 30, 2005 for Sunrise Third (Pool II), LLC

 

Put Option Letter dated September 30, 2005 for Sunrise Third (Pool II), LLC

 

Supplemental Agreement dated [June 30, 2003/September 30, 2005] for Sunrise
Third (Pool II), LLC*

 

Tax Matters Agreement dated [June 30, 2003/September 30, 2005] for Sunrise Third
(Pool II), LLC*

   Sunrise Senior Living of West Bloomfield Sunrise Third (Pool III), LLC, a
Delaware limited liability company   

Sunrise Third Lincroft SL, LLC, a New Jersey limited liability company

 

Sunrise Third North Naperville Assisted Living, L.L.C., an Illinois limited
liability company

 

Sunrise Third Roseville SL, LLC, a Minnesota limited liability company

 

Sunrise Third Schaumburg SL, LLC, an Illinois limited liability company

  

Master Lease Financing Facility Agreement dated as of September 30, 2005, by and
among Sunrise Third Lincroft SL, LLC, Sunrise Third North Naperville Assisted
Living, L.L.C., Sunrise Third Roseville SL, LLC and Sunrise Third Schaumburg SL
LLC, as Lessors, AL Funding III, Inc., as Agent, and Sunrise Third (Pool III)
LLC, as Master Lessee.

 

Call Option Letter dated September 30, 2005 for Sunrise Third (Pool III), LLC

 

Put Option Letter dated September 30, 2005 for Sunrise Third (Pool III), LLC

 

Supplemental Agreement dated [June 30, 2003/September 30, 2005] for Sunrise
Third (Pool III), LLC*

 

Tax Matters Agreement dated [June 30, 2003/September 30, 2005] for Sunrise Third
(Pool III), LLC*

  

Sunrise Senior Living of Lincroft

 

Sunrise Senior Living of North Naperville

 

Sunrise Senior Living of Roseville

 

Sunrise Senior Living of Schaumburg

Sunrise Third (Pool IV), LLC, a Delaware limited liability company   

Sunrise Basking Ridge Assisted Living, L.L.C., a New Jersey limited liability
company

 

Sunrise Third Dix Hills SL, LLC, a New York limited liability

   Master Lease Financing Facility Agreement dated as of September 30, 2005, by
and among Sunrise Marlboro Assisted Living, L.L.C., Sunrise Third Dix Hills SL,
LLC, Sunrise Basking Ridge Assisted Living, L.L.C. and Sunrise Third West
Babylon SL LLC, as Lessors,   

Sunrise Senior Living of Basking Ridge

 

Sunrise Senior Living of Dix Hills

 

- 11 -

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FACILITY LESSEE

  

FACILITY LESSORS

  

LEASE DOCUMENTS

  

FACILITIES

  

company

 

Sunrise Marlboro Assisted Living, L.L.C., a New Jersey limited liability company

 

Sunrise Third West Babylon SL, LLC, a New York limited liability company

  

AL Funding III, Inc., as Agent, and Sunrise Third (Pool IV) LLC, as Master
Lessee.

 

Call Option Letter dated September 30, 2005 for Sunrise Third (Pool IV), LLC

 

Put Option Letter dated September 30, 2005 for Sunrise Third (Pool IV), LLC

 

Supplemental Agreement dated [September 2003/September 30, 2005] for Sunrise
Third (Pool IV), LLC*

 

Tax Matters Agreement dated [September 23, 2003/September 30, 2005] for Sunrise
Third (Pool IV), LLC*

  

Sunrise Senior Living of Marlboro

 

Sunrise Senior Living of West Babylon

Sunrise Third (Pool IV), LP, a California limited partnership    Sunrise Belmont
Assisted Living, L.L.C., a California limited liability company   

Master Lease Financing Facility Agreement dated as of September 30, 2005, by and
among Sunrise Belmont Assisted Living, L.L.C., as Lessor, AL Funding III, Inc.,
as Agent, and Sunrise Third (Pool IV) LP, as Master Lessee.

 

Call Option Letter dated September 30, 2005 for Sunrise Third (Pool IV), LP

 

Put Option Letter dated September 30, 2005 for Sunrise Third (Pool IV), LP

 

Supplemental Agreement dated [September 23, 2003/September 30, 2005] for Sunrise
Third (Pool IV), LP*

 

Tax Matters Agreement dated [September 23, 2003/September 30, 2005] for Sunrise
Third (Pool IV), LP*

   Sunrise Senior Living of Belmont Sunrise Third (Pool V), LLC, a Delaware
limited liability company    Sunrise Kennebunk ME Senior Living, LLC, a Delaware
limited liability company    Master Lease Financing Facility Agreement dated as
of December 22, 2005, by and among Sunrise Kennebunk ME Senior Living, LLC,   
Sunrise Senior Living of Kennebunk

 

- 12 -

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FACILITY LESSEE

  

FACILITY LESSORS

  

LEASE DOCUMENTS

  

FACILITIES

     

as Lessor, AL Funding III, Inc., as Agent, and Sunrise Third (Pool V) LLC, as
Master Lessee.

 

Call Option Letter dated December 22, 2005 for Sunrise Third (Pool V), LLC

 

Put Option Letter dated December 22, 2005 for Sunrise Third (Pool V), LLC

 

Supplemental Agreement dated December 22, 2005 for Sunrise Third (Pool V), LLC

 

Tax Matters Agreement dated December 22, 2005 for Sunrise Third (Pool V), LLC

  

 

* Fully executed versions of the documents marked with an asterisk dated
September 23, 2003 have been delivered to New Investor. SSLII is in possession
of partially executed versions of such documents dated September 30, 2005. SSLII
will endeavor to deliver fully executed versions of such documents dated
September 30, 2005 to New Investor during the Due Diligence Period.

 

- 13 -

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Exhibit C

Form of Assignment and Assumption of Interest Agreement

ASSIGNMENT AND ASSUMPTION OF INTEREST

THIS ASSIGNMENT AND ASSUMPTION OF INTEREST (this “Assignment”) is made as of
                 , 201    , between US ASSISTED LIVING FACILITIES III, INC., a
Delaware corporation, a (“Assignor”) and CC3 ACQUISITION, LLC, a Delaware
limited liability company (“Assignee”).

RECITALS:

 

1. As of the date hereof, Assignor is the owner of a ninety percent
(90%) membership interest (the “Interest”) in Sunrise Third Senior Living
Holdings, LLC (the “Company”). The Company is governed by that certain Amended
and Restated Operating Agreement (the “Operating Agreement”), dated as of
September 23, 2003 among Assignor and Sunrise Senior Living Investments, Inc.
(“SSLII”).

 

2. Pursuant to that certain Purchase and Sale Agreement among Assignor,
Assignee, SSLII and CNL Income Partners, LP, dated as of                  , 2010
(the “Purchase Agreement”), Assignor desires to assign to Assignee the Interest,
including all rights, responsibilities and obligations of Assignor in, to and
under the Operating Agreement.

 

3. Pursuant to the Purchase Agreement, Assignee desires to accept an assignment
of Assignor’s Interest and to assume of all of Assignor’s rights,
responsibilities and obligations in, to and under the Operating Agreement.

NOW, THEREFORE, in consideration of the foregoing premises, of the mutual
covenants set forth in this Assignment, and of other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Assignor
and Assignee agree as follows:

 

  1. Assignment and Assumption of Interest. Assignor hereby assigns, transfers
and conveys to Assignee all of Assignor’s right, title and interest in, to and
under the Interest. Assignee hereby accepts the Interest and hereby assumes and
agrees to be bound by all of the obligations, duties and liabilities of Assignor
with respect to the Interest and under the Operating Agreement. This assignment
is made without representation, warranty or indemnity except as expressly set
forth in the Purchase Agreement.

 

  2.

Withdrawal and Substitution. By reason of the assignment effected pursuant to
Section 1 hereof, (i) Assignee is hereby entitled to exercise all rights, powers
and privileges and is hereby obligated to perform all of the duties and
obligations that may hereinafter exist in relation to the Interest,
(ii) Assignor hereby fully and completely

 

- 14 -

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withdraws from the Company as a member and Assignee is hereby admitted to the
Company as a substitute member and (iii) Assignor shall not have any further
rights, powers, privileges, duties and/or obligations with respect to the
Interest.

 

  3. Miscellaneous.

i. The obligations of the parties hereto shall be continuing, absolute and
unconditional and shall remain in full force and effect.

ii. Promptly upon request of any other party, each party hereto shall execute
and deliver such further assurances and take such further actions as may be
reasonably required or appropriate to perfect the assignment and assumption of
the Interest and otherwise carry out the intent and purpose of this Assignment.

iii. This Assignment shall be binding upon and inure to the benefit of Assignor,
Assignee, the Company, and their respective successors and assigns.

iv. Each of the parties hereto hereby waives any right to jury trial in the
event any party files an action relating to this Assignment.

v. This Assignment may be executed in any number of counterparts which, when
taken together, shall constitute a single binding instrument. Signatures to this
Assignment transmitted by telecopy or by electronic mail in PDF format shall be
valid and effective to bind the party so signing. Each party agrees to promptly
deliver an execution original to this Assignment with its actual signature to
the other parties, but a failure to do so shall not affect the enforceability of
this Assignment, it being expressly agreed that each party to this Assignment
shall be bound by its own telecopied signature or signature transmitted by
electronic mail in PDF format and shall accept the telecopied signature or
signature transmitted by electronic mail in PDF format of each other party to
this Assignment.

 

  4. Interpretation.

i. This Assignment shall be governed by and construed in accordance with the
laws of the State of Delaware (without reference to conflicts of laws
principles).

ii. Captions, numbering and headings of Sections in this Assignment are for
convenience of reference only and shall not be considered in the interpretation
of this Assignment.

iii. Whenever required by the context, the singular shall include the plural,
the neuter gender shall include the male gender and female gender, and vice
versa.

 

- 15 -

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iv. No modification of this Assignment shall be valid or effective unless the
same is in writing and signed by the parties hereto. No purported waiver of any
of the provisions of this Assignment shall be valid or effective unless the same
is in writing and signed by the party against whom it is sought to be enforced.

v. This Assignment has been negotiated and prepared by the parties and their
respective attorneys and, should any provision of this Assignment require
judicial interpretation, the court interpreting or construing such provision
shall not apply the rule of construction that a document is to be construed more
strictly against one party.

 

- 16 -

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IN WITNESS WHEREOF, the parties have executed this Assignment as of the date
first above written.

 

ASSIGNEE: CC3 ACQUISITION, LLC By:  

 

Name:   Title:   ASSIGNOR: US ASSISTED LIVING FACILITIES III, INC. By:  

 

Name:   Title:  

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Exhibit D

Disclosure Statement

Exhibit E

Rent Roll

 

2

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Exhibit F

Non-Foreign Status Affidavit

CERTIFICATION OF NON-FOREIGN STATUS

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S.
real property interest must withhold tax if the transferor is a foreign person.
To inform the transferee, CC3 ACQUISITION, LLC, a Delaware limited liability
company (“Transferee”), that withholding of tax is not required upon the
disposition of a U.S. real property interest by US ASSISTED LIVING FACILITIES
III, INC., a Delaware corporation (“Transferor”), the undersigned hereby
certifies to Transferee the following on behalf of Transferor:

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

2. The employer identification number of Transferor is 20-0036008.

3. Transferor has an office address of c/o Arcapita Inc., 75 Fourteenth Street,
24th floor, Atlanta, GA 30309.

Transferor understands that this certification may be disclosed to the Internal
Revenue Service by the 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
Transferor.

 

US ASSISTED LIVING FACILITIES III, INC., a Delaware corporation By  

 

  Name:   Title:

 

Sworn to and subscribed before me

this      day of             , 201    

 

Notary Public

 

My Commission Expires:  

 

 

3

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Exhibit G

Form of Mutual Release

RELEASE AGREEMENT

This RELEASE AGREEMENT (this “Release”) is made as of             ,
            (the “Effective Date”) by and among US ASSISTED LIVING FACILITIES
III, INC., a Delaware corporation (“USALF”), SUNRISE THIRD SENIOR LIVING
HOLDINGS, LLC, a Delaware limited liability company (“Old JV”), CC3 ACQUISITION,
LLC, a Delaware limited liability company (“New JV”), SUNRISE SENIOR LIVING
INVESTMENTS, INC., a Virginia corporation (“SSLII”), SUNRISE SENIOR LIVING
MANAGEMENT, INC., a Virginia corporation (“SSLMI”) and CNL INCOME PARTNERS, LP,
a Delaware limited partnership (“CNL”, and together with SSLII, SSLMI, Old JV
and New JV, the “Sunrise/CNL Parties”).

RECITALS:

WHEREAS, USALF, SSLII, New JV and CNL are parties to that certain Purchase and
Sale Agreement dated                  , 2010 (the “PSA”);

WHEREAS, Pursuant to the PSA, as of the Effective Date, USALF has assigned to
New JV (the “Assignment”) all of its membership interests in the Old JV and
USALF has withdrawn as a member of the Old JV;

WHEREAS, the Sunrise/CNL Parties, together with each of their parents,
affiliates, officers, board members, shareholders, trustees, directors,
partners, beneficial owners, attorneys-in-fact, employees and agents, heirs,
executors, administrators, attorneys, successors, legal representatives and
assigns (all hereinafter collectively referred to as the “Sunrise/CNL Released
Parties”) desire to receive from the USALF Releasing Parties (hereinafter
defined) a release of certain liabilities and obligations of any and all of the
Sunrise/CNL Released Parties (i) under that certain Amended and Restated
Operating Agreement of Old JV dated as of September 23, 2003 (the “Operating
Agreement”), (ii) under the Existing Management Agreements (as defined in the
PSA), (iii) under that certain Amended and Restated Master Owner/Management
Agreement dated as of September 23, 2003, by and between Old JV and SSLMI (the
“MOMA”), (iv) arising out of the management, operation, or funding of Old JV or
of Old JV’s direct or indirect subsidiaries and (v) arising out of the
acquisition, ownership, development and/or management of the Facilities (as
defined in the Operating Agreement); and

WHEREAS, USALF, together with its affiliates, officers, board members,
shareholders, trustees, directors, partners, beneficial owners,
attorneys-in-fact, employees and agents, heirs, executors, administrators,
attorneys, successors, legal representatives and assigns (all hereinafter
collectively referred to as the “USALF Released Parties” and together with the
Sunrise/CNL Released Parties, the “Released Parties”) desire to receive from the
Sunrise/CNL Releasing Parties (hereinafter defined) a release of certain
liabilities and obligations of any and all of the USALF Released Parties
(i) under the Operating Agreement, (ii) under the Existing Management

 

4

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Agreements, (iii) under the MOMA, (iv) arising out of the management, operation,
or funding of Old JV or of Old JV’s direct or indirect subsidiaries and
(v) arising out of the acquisition, ownership, development and/or management of
the Facilities.

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

AGREEMENT

1. Release of Released Parties. (a) From and after the Effective Date, USALF for
and on behalf of itself and the other USALF Released Parties and all persons
claiming by, through or under them (all hereinafter collectively referred to as
the “USALF Releasing Parties”), do hereby remise, release, acquit and forever
discharge the Sunrise/CNL Released Parties of, from and against any and all
manner of actions, causes of actions, suits, debts, dues, sums of money,
compensation, accounts, obligations, liabilities, damages, judgments, claims and
demands whatsoever, whether known or unknown, foreseen or unforeseen (regardless
of by whom raised) in law or in equity (or mixed), which the USALF Releasing
Parties, and/or any of them, now have, ever had or may ever have against the
Sunrise/CNL Released Parties or any of them, singly or in any combination, on
account of, arising out of, under or with respect to, or relating to (i) the
Operating Agreement and/or (ii) the Existing Management Agreements, and/or
(iii) the MOMA, and/or (iv) the management, operation, or funding of Old JV or
of Old JV’s direct or indirect subsidiaries and/or (v) the acquisition,
ownership, development and/or management of the Facilities, in each case
occurring before the Effective Date (collectively, the “USALF Claims”), provided
that the USALF Claims shall not include any actions, causes of actions, suits,
debts, dues, sums of money, compensation, accounts, obligations, liabilities,
damages, judgments, claims and demands (x) arising out of the fraud, negligence
and/or willful misconduct of the Sunrise/CNL Released Parties, (y) arising out
of the duties and obligations of the Sunrise/CNL Released Parties under the PSA,
the Documents (as defined in the PSA) and this Release, and/or (z) constituting
a cross-claim, counter-claim or claim for indemnification or contribution by the
USALF Releasing Parties against any or all of the Sunrise/CNL Released Parties
that arises out of a claim asserted against any of the USALF Releasing Parties
whether by any of the Sunrise/CNL Released Parties or any third party (including
by, or on behalf of, any current or former resident of a Facility or his or her
heirs, executors, administrators, successors, legal representatives and assigns)
and which is primarily attributable to an act or omission of any or all of the
Sunrise/CNL Released Parties.

(b) From and after the Effective Date, the Sunrise/CNL Parties for and on behalf
of themselves and the other Sunrise/CNL Released Parties and all persons
claiming by, through or under them (all hereinafter collectively referred to as
the “Sunrise/CNL Releasing Parties” and together with the USALF Releasing
Parties, the “Releasing Parties”) do hereby remise, release, acquit and forever
discharge the USALF Released Parties of, from and against any and all manner of
actions, causes of actions, suits, debts, dues, sums of money, compensation,
accounts, obligations, liabilities, damages, judgments, claims and demands
whatsoever, whether known or unknown, foreseen or unforeseen (regardless of by
whom raised) in law or in equity (or mixed), which the Sunrise/CNL Releasing
Parties, and/or any of them, now have, ever had or may ever have against the
USALF Released Parties or any of them, singly or in any combination, on

 

5

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account of, arising out of, under or with respect to, or relating to (i) the
Operating Agreement and/or (ii) the Existing Management Agreements, and/or
(iii) the MOMA, and/or (iv) the management, operation, or funding of Old JV or
of Old JV’s direct or indirect subsidiaries and/or (v) the acquisition,
ownership, development and/or management of the Facilities (collectively, the
“Sunrise/CNL Claims” and together with the USALF Claims, the “Claims”), provided
that the Sunrise/CNL Claims shall not include actions, causes of actions, suits,
debts, dues, sums of money, compensation, accounts, obligations, liabilities,
damages, judgments, claims and demands (x) arising out of the fraud, negligence
and/or willful misconduct of the USALF Released Parties, (y) arising out of the
duties and obligations of the USALF Released Parties under the PSA, the
Documents and this Release, and/or (z) constituting a cross-claim, counter-claim
or claim for indemnification or contribution by the Sunrise/CNL Releasing
Parties against any or all of the USALF Released Parties that arises out of a
claim asserted against any of the Sunrise/CNL Releasing Parties whether by any
of the USALF Released Parties or any third party (including by, or on behalf of,
any current or former resident of a Facility or his or her heirs, executors,
administrators, successors, legal representatives and assigns) and which is
primarily attributable to an act or omission of any or all of the USALF Released
Parties.

2. Covenant Not to Sue. Notwithstanding anything to the contrary set forth in
the Operating Agreement, (a) USALF hereby covenants and agrees, for and on
behalf of itself and the other USALF Releasing Parties, that each USALF
Releasing Party shall forever refrain, and is hereby estopped, from instituting,
prosecuting, asserting or otherwise pursuing or pressing against any of the
Sunrise/CNL Released Parties any of the USALF Claims and (b) the Sunrise/CNL
Parties hereby covenant and agree, for and on behalf of themselves and the other
Sunrise/CNL Releasing Parties, that each Sunrise/CNL Releasing Party shall
forever refrain, and is hereby estopped, from instituting, prosecuting,
asserting or otherwise pursuing or pressing against any of the USALF Released
Parties any of the Sunrise/CNL Claims.

3. Governing Law. This Release shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements executed
in and to be performed in New York. The parties to this Release irrevocably
submit to the sole and exclusive in personam jurisdiction of any federal or
state court sitting in New York County, New York and waive any objections to the
venue of a proceeding in any such court.

4. Integration; Amendment. This Release constitutes the sole agreement of the
parties with respect to the subject matter hereof and supersedes all oral
negotiations and prior writings with respect to the subject matter hereof. This
Release may not be modified or amended except in a writing executed by all of
the parties hereto.

5. Successors and Assigns. This Release (i) shall be binding upon each of the
Releasing Parties and, where applicable, each of their respective heirs,
executors, administrators, successors and assigns, and (ii) shall inure to the
benefit of the Released Parties and their respective heirs, executors,
administrators, successors and assigns.

6. Further Assurances. USALF and the Sunrise/CNL Parties each hereby covenants
and agrees, for and on behalf of itself and the other Releasing Parties, that
each Releasing Party shall cooperate with the Released Parties hereunder and
shall execute and/or cause to be delivered to any or all such Released Parties
such instruments and other documents, and shall

 

6

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take such other actions, as any or all such Released Parties may reasonably
request from time to time in order to effectuate or evidence the purposes and
provisions of this Release.

7. Severability and Consistency. The illegality, unenforceability or
inconsistency of any provisions of this Release shall not in any way affect or
impair the legality, enforceability or consistency of the remaining provisions
of this Release or any instrument or agreement executed in connection herewith.

[Signatures commence on the following page]

 

7

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IN WITNESS WHEREOF, the undersigned have delivered this Release on the day and
year first above written.

 

  US ASSISTED LIVING FACILITIES III, INC., a Delaware corporation   By:  

 

  Name:  

 

  Title:  

 

SUNRISE THIRD SENIOR LIVING HOLDINGS, LLC, a Delaware limited liability company
By: SUNRISE SENIOR LIVING INVESTMENTS, INC., its Managing Member   By:  

 

    Name:     Title: CC3 ACQUISITION, LLC, a Delaware limited liability company
By:   [                    ], its Managing Member   By:  

 

    Name:     Title: SUNRISE SENIOR LIVING INVESTMENTS, INC.,a Virginia
corporation

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

By:  

 

  Name:   Title: SUNRISE SENIOR LIVING MANAGEMENT, INC., a Virginia corporation
By:  

 

  Name:   Title: CNL INCOME PARTNERS, LP, a Delaware limited partnership By:  

 

  Name:   Title:

 

iv

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Exhibit H

New Investor’s Access Schedule

 

v

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Exhibit I

Seller’s Non-Imputation Affidavit

NON-IMPUTATION AFFIDAVIT

 

STATE OF  

 

   )   

        ) ss:. COUNTY OF  

 

   )   

The undersigned certifies as follows:

1. That the undersigned is presently a director of US Assisted Living Facilities
III, Inc., a corporation (the “Company”), duly formed and in good standing in
the State of Delaware. The Company is the passive investor member of Sunrise
Third Senior Living Holdings LLC, the current beneficial owner of the Premises
(as defined below), and the Company is not involved in the day-to-day operations
relating to the Premises or the current beneficial owner. Sunrise Senior Living
Investments, Inc., a Virginia corporation (“SSLII”) is presently the managing
member of the Company.

2. That Fidelity National Title Insurance Company (the “Insurer”) has been
requested to include a non-imputation endorsement as part of the title policy
(the “Title Policy”) to be issued to                    (the “Insured”) with
respect to the premises known as                    ,            ,         
   (the “Premises”), for the purpose of providing an assurance to the Insured
under the Title Policy that the Insurer will not deny liability under the policy
by reason of the possible imputation of knowledge by operation of law to the
Insured.

3. That the undersigned, as an inducement to the Insurer to provide such an
assurance, further states that, to the best of his knowledge and except as
otherwise set forth in (i) the Insurer’s owner’s or mortgagee’s policy of title
insurance; (ii) as would be disclosed by a complete and accurate survey of the
Premises, including rights of parties in possession of the Premises; (iii) as is
known to SSLII, except as to matters that are known to SSLII solely by
imputation from the Company; or (iv) as set forth in Schedule A hereto:

(a) That there are no existing unrecorded deeds, land contracts, leases (except
those leases disclosed herein or subleases thereunder and the rights of the
residents at the assisted living facilities located on the Premises), options to
purchase, mortgages, agreements or other instruments adversely affecting title
to the Premises, and that the undersigned has no knowledge that the Company has
done anything to create any lien, encumbrance, transfer of interest,
constructive trust, or other equity, whatsoever, in the Premises;

(b) That there is no outstanding right, title, interest, lien or estate, in
existence or being asserted in or against the Premises, except such as disclosed
by the public records of the

 

vi

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counties wherein the Premises are located (excluding the rights of tenants under
leases or subleases thereunder and the rights of residents at the assisted
living facilities located on the Premises);

(c) That there are no judgments, decrees or orders, by any court or officer, for
the payment of money against the Company, unsatisfied or not, before any court
or before any officer of the United States. Nor is there any suit or proceeding,
now pending, anywhere, which affects the Premises, except to the extent that
said judgments and pending suits are covered by insurance or constitute Landlord
and Tenant or Resident matters;

(d) That the undersigned make this affidavit to induce the Insurer to affix a
non-imputation endorsement to the Title Policy to be issued to the Insured and
realizes that the Insurer will rely upon the assurances and representations set
forth herein and that without such assurances and representations, the Insurer
would not issue the non-imputation endorsement; and

(e) As used herein, the term “knowledge” when used with reference to the
undersigned means the current, actual (not constructive, imputed or implied)
knowledge, without duty of inquiry, of the current officers and directors of the
undersigned.

IN WITNESS WHEREOF, the parties have hereunto set their hands and seals this

day    of            201    .

 

 

 

  Name:

Sworn to me this    day

of            , 2010.

 

 

 

Notary Public

 

vii