Exhibit 10.1

 

PURCHASE AGREEMENT

 

By and Among

 

HEALTHCARE TRUST, INC.,

 

as “Purchaser Parent”

 

HEALTHCARE TRUST OPERATING PARTNERSHIP, L.P.

 

and

 

ARHC TRS HOLDCO II, LLC,

 

as “Purchaser”

 

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC.,

 

as “Seller Parent”

 

and

 

American Realty Capital Healthcare Trust III Operating Partnership, L.P.

 

and

 

ARHC TRS HOLDCO III, LLC,

 

as “Seller”

 

Dated as of

 

June 16, 2017

 

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE 1 Definitions and Certain Rules of Construction 2 Section
1.1 Defined Terms 2 Section 1.2 Certain Definitions 9 Section 1.3 Other Defined
Terms 9 Section 1.4 Rules of Construction 11       ARTICLE 2 Purchase and Sale
11 Section 2.1 Purchase and Sale 11 Section 2.2 SPE-level Property 11      
ARTICLE 3 Purchase Price; Payment of Purchase Price; Allocation 12 Section 3.1
Purchase Price 12 Section 3.2 Payment of Purchase Price and Escrow Amount 12
Section 3.3 Prorations 12 Section 3.4 Allocation of Purchase Price. 14      
ARTICLE 4 Certain Other Covenants and Agreements 15 Section 4.1 Conduct of
Business Prior to the Closing Date 15 Section 4.2 Notification of Certain
Matters. 17 Section 4.3 Confidentiality. 17 Section 4.4 Expenses and Taxes. 18
Section 4.5 Waiver of Bulk Sales 18 Section 4.6 Preparation of Proxy Statement;
Seller Parent Stockholder Meeting 18 Section 4.7 Exclusivity 20 Section 4.8
Consents; Cooperation 23 Section 4.9 Further Assurances 24 Section 4.10 Updates
to Schedules 24 Section 4.11 Liens. 24 Section 4.12 Purchaser Assumption of
Philip Center Loan 25 Section 4.13 Monthly Insurance Updates 25       ARTICLE 5
Closing 26 Section 5.1 Closing 26 Section 5.2 Conditions to Seller Parent’s and
Seller’s Obligations 26 Section 5.3 Conditions to Purchaser’s Obligations 27
Section 5.4 Deliveries by Seller 27 Section 5.5 Deliveries by Purchaser 28
Section 5.6 Non-Fulfillment of Closing Conditions 29 Section 5.7 Post-Closing
Actions 30       ARTICLE 6 Representations and Warranties of Seller Parent and
Seller 30 Section 6.1 Organization and Standing 30 Section 6.2 Valid and Binding
Obligations 30

 

i

 

 

Section 6.3 Capitalization 31 Section 6.4 Title; SPE-level Property Complete;
Condition 31 Section 6.5 Taxes and Tax Returns 32 Section 6.6 Execution and
Delivery 32 Section 6.7 Contracts and Leases 33 Section 6.8 Residency Agreements
and Related Matters 33 Section 6.9 Permits and Licenses 33 Section 6.10
Insurance 34 Section 6.11 Employees 34 Section 6.12 Litigation 35 Section 6.13
Compliance with Laws 35 Section 6.14 Financial Statements 35 Section 6.15 Real
Property 36 Section 6.16 Environmental Matters 36 Section 6.17 Brokers, Finders
37 Section 6.18 FIRPTA 37 Section 6.19 Consent of Third Parties 37 Section 6.20
No Governmental Approvals 37 Section 6.21 Assessments 37 Section 6.22 Title
Encumbrances 37 Section 6.23 Loans and Debts 37 Section 6.24 Intellectual
Property 38 Section 6.25 Ground Lease 38 Section 6.26 Joint Ventures 38 Section
6.27 Insolvency 38 Section 6.28 Access 39 Section 6.29 Medicare; Medicaid and
Compliance with Healthcare Laws 39 Section 6.30 Opinion of Financial Advisor 39
Section 6.31 No Other Representations or Warranties 39       ARTICLE 7
Representations and Warranties of Purchaser Parent and Purchaser 39 Section 7.1
Organization and Standing 39 Section 7.2 Valid and Binding Obligations 40
Section 7.3 Execution and Delivery 40 Section 7.4 Solvency 40 Section 7.5
Consent of Third Parties 41 Section 7.6 No Governmental Approvals 41 Section 7.7
Brokers, Finders 41 Section 7.8 Opinion of Financial Advisor 41 Section 7.9 No
Other Representations or Warranties 41       ARTICLE 8 Indemnification 41
Section 8.1 Indemnification by Seller Parent and Seller 41 Section 8.2
Indemnification by Purchaser Parent and Purchaser 42 Section 8.3 Indemnification
Limits; Survival 42 Section 8.4 Procedures Regarding Third Party Claims 43
Section 8.5 General Qualifications on Indemnification 44 Section 8.6 Effective
Upon Closing 45

 

ii

 

 

ARTICLE 9 Termination 45 Section 9.1 Termination 45 Section 9.2 Effect of
Termination 46 Section 9.3 Payment of Termination Fee 47       ARTICLE 10
Miscellaneous 48 Section 10.1 Access to Books and Records after Closing 48
Section 10.2 Notices 48 Section 10.3 Good Faith; Cooperation 49 Section 10.4
Assignment; Exchange Cooperation; Successors in Interest 49 Section 10.5 No
Third Party Beneficiaries 49 Section 10.6 Severability 50 Section 10.7 Reserved
50 Section 10.8 Controlling Law; Integration; Amendment; Waiver 50 Section 10.9
Time 50 Section 10.10 Survival 50 Section 10.11 Eminent Domain; Condemnation 50
Section 10.12 Risk of Loss 51 Section 10.13 Attorneys’ Fees 52 Section 10.14
Waiver of Jury Trial 52 Section 10.15 Construction 52 Section 10.16 Execution in
Counterparts 52

 

Exhibit

 

Exhibit   Title Exhibit A   Wells Fargo Escrow Agreement

 

Schedules

 

Schedule   Title Schedule 1.1(a)   Seller Parent’s Affiliates Schedule 1.1(c)  
OP Seller’s Local Property Managers Schedule 1.1(c)   Local Management
Agreements Schedule 1.1(d)   Permitted Title Exceptions Schedule 1.1(e)  
Prepaids and Deposits Schedule 1.1(f)   Description of Company-held Real
Property Schedule 2.2   SPE-level Property / SPE Cash Held by OP Seller Schedule
3.3(a)   Form for Proration Schedule Schedule 3.4   Tax Allocation of Purchase
Price Schedule 4.4(b)   Recording and Title Costs Schedule 4.8   Estoppels
Schedule 4.11   Liens

 

iii

 

 

Schedule 5.4(h)   Third Party Consents Schedule 6.4   Material Assets or Rights
Not Included in Real Property and SPE-level Property Schedule 6.7   Contracts
and Leases Schedule 6.8   Rent Roll regarding Residency Agreements and Related
Matters Schedule 6.9   Permits and Licenses Schedule 6.10   Insurance; Three
Year Claim History Schedule 6.12   Litigation, etc. Schedule 6.13   Compliance
with Laws Schedule 6.14   Cedarhurst Financial Statements Schedule 6.15   Real
Property Compliance Schedule 6.16   Environmental Matters Schedule 6.19   Seller
Third Party Consents Schedule 6.20   Seller Government Approvals Schedule 6.22  
Title Encumbrances Schedule 6.23   Loans and Debts Schedule 6.24   Intellectual
Property Schedule 7.5   Purchaser Third Party Consents Schedule 7.6   Purchaser
Governmental Approvals

 

iv

 

 

PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT (this “Agreement”) is made and entered into this 16th
day of June, 2017 (the “Effective Date”), by and among (i) HEALTHCARE TRUST,
INC., a Maryland corporation (“Purchaser Parent”), (ii) HEALTHCARE TRUST
OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“OP Purchaser” ),
(iii) ARHC TRS HOLDCO II, LLC, a Delaware limited liability company (“Holdco
Purchaser” and, collectively with OP Purchaser, the “Purchaser” ) (iv) AMERICAN
REALTY CAPITAL HEALTHCARE TRUST III, INC., a Maryland corporation (“Seller
Parent”), (v) American Realty Capital Healthcare Trust III Operating
Partnership, L.P., a Delaware limited partnership (“OP Seller” ) and (vi) ARHC
TRS HOLDCO III, LLC, a Delaware limited liability company (“Holdco Seller” and,
collectively with OP Seller, the “Seller”).

 

Recitals:

 

OP Seller owns (a) all of the issued and outstanding membership interests in
each of the following entities: (i) ARHC DDLARFL01, LLC, a Delaware limited
liability company, (ii) ARHC DDHUDFL01, LLC, a Delaware limited liability
company, (iii) ARHC RACLWFL01, LLC, a Delaware limited liability company, (iv)
ARHC RMRWLTX01, LLC, a Delaware limited liability company, (v) ARHC DMDCRGA01,
LLC, a Delaware limited liability company, (vi) ARHC MHCLVOH01, LLC, a Delaware
limited liability company, (vii) ARHC PPLVLGA01, LLC, a Delaware limited
liability company, (viii) Holdco Seller,  (ix) ARHC CCGBGIL01, LLC, a Delaware
limited liability company, (x) ARHC VAGBGIL01, LLC, a Delaware limited liability
company, (xi) ARHC ACRICKY01, LLC, a Delaware limited liability company, (xii)
ARHC WLWBYMN01, LLC, a Delaware limited liability company, (xiii) ARHC
GFGBTAZ01, LLC, a Delaware limited liability company, (xiv) ARHC LMFMYFL01, LLC,
a Delaware limited liability company, (xv) ARHC BMWRNMI01, LLC, a Delaware
limited liability company, (xvi) ARHC MMJLTIL01, LLC, a Delaware limited
liability company and (b) ninety-five percent (95%) of the membership interests
of ARHC Quad Cities Portfolio Member, LLC, a Delaware limited liability company
(the “JV Membership Interests,” and together with the membership interests of
the other entities named in this paragraph, the “Membership Interests”). ARHC
Quad Cities Portfolio Member, LLC, in turn, owns all of the membership interests
in ARHC UPMUSIA01, LLC and ARHC UPMOLIL01, LLC, Delaware limited liability
companies (collectively, the “Quad Cities SPEs” ).

 

Holdco Seller owns all of the issued and outstanding membership interests (the
“Holdco Interest”) in ARHC CHCOLIL01 TRS, LLC, a Delaware limited liability
company which holds the license for the Cedarhurst Facility (the “Cedarhurst TRS
Facility Master Tenant” ).

 

Seller, through its Affiliates, owns (A) seventeen medical office buildings and
(B) two assisted living facilities, namely (1) the Cedarhurst Facility which is
(a) owned by ARHC CHCOLIL01, LLC, (b) leased to Cedarhurst TRS Facility Master
Tenant (which entity holds a license issued by the Illinois Department of Public
Health, Division of Assisted Living (the “IDPH License”)) under the Cedarhurst
Facility RIDEA Lease, and (c) managed by the Cedarhurst Manager under the
Cedarhurst Management Agreement and (2) the Arcadian Cove Facility (as
hereinafter defined) which is owned by ARHC ACRICKY01, LLC (the “Arcadian Cove
Lessor” ), which is leased to WP-ARC Arcadian Cove Holdings, LLC, a Delaware
limited liability company which is not an Affiliate of Seller (the “Arcadian
Cove Lessee”) under that Lease Agreement dated August 25, 2015 (the “Arcadian
Cove Net Lease”), and managed by Meridian Senior Living, LLC, a North Carolina
limited liability company which is not an Affiliate of Seller (the “Arcadian
Cove Manager”) under that Management Agreement dated August 25, 2014 by and
between the Arcadian Cove Lessee and the Arcadian Cove Manager.

 

 

 

 

OP Seller desires to sell to OP Purchaser, and OP Purchaser desires to purchase
from OP Seller, the Membership Interests, and Holdco Seller desires to sell to
Holdco Purchaser, and Holdco Purchaser desires to purchase from Holdco Seller,
the Holdco Interest, subject to the terms and conditions set forth herein.

 

This Agreement sets forth the terms and conditions to which the parties have
agreed.

 

Agreements:

 

NOW, THEREFORE, in consideration of the premises and the mutual promises set
forth below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:

 

ARTICLE 1

Definitions and

Certain Rules of Construction

 

Section 1.1           Defined Terms. The following capitalized terms shall have
the meanings specified in this section. Other terms are defined in the text of
this Agreement, and throughout this Agreement, those terms shall have the
meanings respectively ascribed to them.

 

“Acquisition Proposal” means any proposal, offer, indication of interest or
inquiry, whether in one transaction or a series of related transactions,
relating to any (a) merger, consolidation, share exchange, business combination
or similar transaction involving Seller Parent or any Subsidiary of Seller
Parent that would constitute a “significant subsidiary” (as defined in Rule 1-02
of Regulation S-X), (b) sale, lease, exchange, mortgage, pledge, license,
transfer or other disposition, by merger, consolidation, share exchange,
business combination or any similar transaction, of any assets of Seller Parent
or any of the Subsidiaries of Seller Parent representing 20% or more of the
consolidated assets of Seller Parent and the Subsidiaries of Seller Parent,
taken as a whole, as determined on a book-value basis, (c) issue, sale or other
disposition by Seller Parent or any of the Subsidiaries of Seller Parent of
(including by way of merger, consolidation, share exchange, business combination
or any similar transaction) securities (or options, rights or warrants to
purchase, or securities convertible into, such securities) representing 20% or
more of the voting power of the outstanding Seller Parent Common Stock, (d)
tender offer or exchange offer in which any person or “group” (as such term is
defined under the Exchange Act) shall acquire beneficial ownership (as such term
is defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership, of 20% or more of the voting power of the outstanding
Seller Parent Common Stock, (e) recapitalization, restructuring, liquidation,
dissolution or other similar type of transaction with respect to Seller Parent
in which a third party shall acquire beneficial ownership of 20% or more of the
shares of any class of voting securities of Seller Parent, or (f) transaction
that is similar in form, substance or purpose to any of the foregoing
transactions; provided, however, that the term “Acquisition Proposal” shall not
include (i) any of the transactions contemplated by this Agreement or (ii) any
merger, consolidation, business combination, reorganization, recapitalization or
similar transaction solely among Seller Parent and one or more of the
Subsidiaries of Seller Parent or solely among the Subsidiaries of Seller Parent.

 

 2

 

 

“Advisor” means Healthcare Trust Advisors, LLC in respect to Purchaser Parent
and its Affiliates and American Realty Capital Healthcare III Advisors, LLC in
respect to Seller Parent and its Affiliates.

 

“Affiliate” of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person. For purposes of this definition,
“control” (including, with correlative meanings, the terms “controlling,”
“controlled by” and “under common control with”), as applied to any person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that person, whether through the
ownership of voting securities, by Contract or otherwise. Notwithstanding
anything herein to the contrary, Seller Parent and its Subsidiaries, on the one
hand, and Purchaser Parent and its Subsidiaries, on the other hand, shall not be
deemed to be Affiliates of each other. Accordingly, Seller Parent’s only
Affiliates are OP Seller and those Companies more particularly described on
Schedule 1.1(a) (as disclosed by Seller).

 

“Arcadian Cove Facility” means that assisted living facility known as the
“Arcadian Cove” assisted living facility located at 532 Cady Drive, Richmond,
Kentucky 62234.

 

“Arcadian Cove Residency Agreement” means any agreement between Arcadian
Assisted Living, LLC and an individual contracting for such individual’s
residency at the Arcadian Cove Facility.

 

“Business” means all aspects of each Company’s real estate operations and, in
the case of Cedarhurst TRS Facility Master Tenant, its operation of the
Cedarhurst Facility.

 

“Cedarhurst Facility” means that assisted living facility known as the
“Cedarhurst of Collinsville” assisted living facility located at 1207 Vandalia
Street, Collinsville, Illinois 62234.

 

“Cedarhurst Facility RIDEA Lease” means that certain Lease Agreement dated
August 21, 2015 between ARHC CHCOLIL01, LLC, as landlord, and Cedarhurst TRS
Facility Master Tenant, as tenant.

 

“Cedarhurst Management Agreement” means that Management Agreement dated August
21, 2015 by and between Cedarhurst TRS Facility Master Tenant, as tenant,
Cedarhurst Operator, as subtenant, and Cedarhurst Manager, as manager.

 

“Cedarhurst Manager” means Cedarhurst Living, LLC, a Missouri limited liability
company which is not an Affiliate of Seller, which is an eligible independent
contractor, and which is the manager under the Cedarhurst Management Agreement.

 

 3

 

 

“Cedarhurst Operator” means Cedarhurst of Collinsville Operator, LLC, an
Illinois limited liability company which is not an Affiliate of Seller and which
is the subtenant under the Cedarhurst Management Agreement.

 

“Cedarhurst Residency Agreement” means any agreement between the Cedarhurst
Operator and an individual contracting for such individual’s residency at the
Cedarhurst Facility.

 

“Closing” means the consummation of the transactions contemplated by this
Agreement. Neither party will need to be present at Closing, it being
anticipated that the parties will deliver all Closing documents and deliverables
in escrow to Purchaser Parent’s and Seller Parent’s counsel prior to the date of
Closing.

 

“Company” or “Companies” means individually or collectively (i) ARHC DDLARFL01,
LLC, a Delaware limited liability company, (ii) ARHC DDHUDFL01, LLC, a Delaware
limited liability company, (iii) ARHC RACLWFL01, LLC, a Delaware limited
liability company, (iv) ARHC RMRWLTX01, LLC, a Delaware limited liability
company, (v) ARHC DMDCRGA01, LLC, a Delaware limited liability company, (vi)
ARHC MHCLVOH01, LLC, a Delaware limited liability company, (vii) ARHC PPLVLGA01,
LLC, a Delaware limited liability company, (viii) ARHC TRS Holdco III, LLC, a
Delaware limited liability company, (ix) ARHC CHCOLIL01, LLC, a Delaware limited
liability company, (x) ARHC CCGBGIL01, LLC, a Delaware limited liability
company, (xi) ARHC VAGBGIL01, LLC, a Delaware limited liability company, (xii)
ARHC ACRICKY01, LLC, a Delaware limited liability company, (xiii) ARHC
WLWBYMN01, LLC, a Delaware limited liability company, (xiv) ARHC GFGBTAZ01, LLC,
a Delaware limited liability company, (xv) ARHC LMFMYFL01, LLC, a Delaware
limited liability company, (xvi) ARHC BMWRNMI01, LLC, a Delaware limited
liability company, (xvii) ARHC MMJLTIL01, LLC, a Delaware limited liability
company, (xviii) ARHC Quad Cities Portfolio Member, LLC, a Delaware limited
liability company, (xix) Cedarhurst TRS Facility Master Tenant, and (xx) the
Quad Cities SPEs.

 

“Company Organizational Documents” means the certificates of formation,
amendments thereto, and limited liability company agreements of each of the
Companies, collectively.

 

“Decatur Ground Lease” means that certain Ground Lease Agreement, dated as of
November 16, 2007, by and between Redd Investments, LLC and GCS Stemmer
Properties, LLC, which is subject to that certain Assignment and Assumption of
Ground Lease, dated July 24, 2015, by GCS Stemmer Properties, LLC in favor of
ARHC DMDCRGA01, LLC.

 

“Encumbrance” means any charge, claim, community property interest, pledge,
condition, equitable interest, lien (statutory or other), option, security
interest, mortgage, easement, encroachment, right of way, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.

 

 4

 

 

“Environmental Laws” means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.,
Hazardous Materials Transportation Act, 49 U.S.C. § 1802, the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Toxic Substance
Control Act of 1976, as amended, 15 U.S.C. § 2601 et seq., or any other federal,
state, local or other governmental legislation, statute, law, code, rule,
regulation or ordinance identified by its terms as pertaining to the protection
of the environment, including laws relating to the treatment, storage or
disposal of Hazardous Substances, in each case as in effect on the Effective
Date.

 

“Escrow Amount” means Six Million and No/100 U.S. Dollars ($6,000,000).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Government Program” means the federal Medicare program, any state Medicaid
program, and such other similar federal, state, or local reimbursement or
governmental programs for which the Cedarhurst Facility is eligible.

 

“Ground Leases” means, collectively, the Decatur Ground Lease, Madison Ground
Lease, and Philip Professional Center Ground Lease.

 

“Hazardous Substance” means petroleum, including crude oil or any fraction
thereof, flammable explosives, radioactive materials, asbestos, urea
formaldehyde foam insulation, any material containing polychlorinated biphenyls,
and any of the substances defined as “hazardous substances” or “toxic
substances” or otherwise identified and regulated under any Environmental Laws.

 

“Improvements” means all buildings and other improvements constructed on the
Real Property as of the date of Closing.

 

“Intellectual Property” means all trademarks, trademark applications, service
marks, trade names, copyrights, trade secrets, licenses, domain names, mask
works, patents, patent applications, information and proprietary rights and
processes.

 

“IRC” means the Internal Revenue Code of 1986, as amended, and any regulations
or guidance issued thereunder.

 

“Lease” means any space lease, lease, license or concession agreement which
provides for the use or occupancy of space or facilities at any Real Property to
which Seller or any Company is a party, including any leases or licenses for
antennae and related equipment; but excluding (i) the Ground Leases, and (ii)
the Residency Agreements.

 

“Lien” means any mortgage, deed to secure debt, deed of trust, pledge,
hypothecation, title defect, right of first refusal, security or other adverse
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.

 

 5

 

 

“Madison Ground Lease” means that certain Lease Agreement, dated April 16, 2003,
by and between Presence Hospitals PRV, an Illinois not-for-profit corporation,
successor by merger to Provena Hospitals, an Illinois not-for-profit corporation
(“Madison Ground Lessor”), and Alter Medical Fund Joliet, L.L.C., as amended by
that certain First Amendment to Lease Agreement, dated July 1, 2003, that
certain Amendment to Lease dated December 15, 2003 (which was intended to be
entitled “Second Amendment to Lease Agreement”), that certain Third Amendment to
Lease Agreement dated December 6, 2005, that certain Fourth Amendment to Lease
Agreement dated June 11, 2010, that certain Fifth Amendment to Lease Agreement
by and between Madison Ground Lessor and Acquisition Advisors, LLC, a Florida
limited liability company, dated June 15, 2010, subject to that certain
Assignment and Assumption of Ground Lease, dated September 30, 2010, by and
between Madison Ground Lessor and Joliet Investors LLLP, a Florida limited
liability limited partnership, and as further amended by that certain Sixth
Amendment to Lease Agreement, dated December 3, 2015, by and between Madison
Ground Lessor and ARHC MMJLTIL01, LLC.

 

“Material Adverse Change” means any occurrence between the Effective Date and
the Closing Date which results in, or is reasonably likely to result in, a
material adverse change in the assets, financial condition, or results of
operations of the Facilities, taken as a whole; provided, however, that none of
the following shall in any event be deemed a Material Adverse Change: (i) any
change resulting from changes in any law or regulation following the Effective
Date; (ii) any change resulting from announcement or pendency of the
transactions contemplated herein; or (iii) any change made pursuant to the terms
of this Agreement or with Purchaser’s express written consent.

 

“OP-held SPE Operating Cash” means all cash held by the OP Seller on behalf of
any Company.

 

“OP Seller Organizational Documents” means the partnership agreement and any
amendments thereto of Seller OP.

 

“OP Seller’s Local Property Managers” means those property managers listed on
Schedule 1.1(c), which provide management services to the Companies pursuant to
the management agreements also listed on Schedule 1.1(c) (as disclosed by
Seller).

 

“OP Seller’s Property Manager” means American Realty Capital Healthcare III
Properties, LLC, a Delaware limited liability company.

 

“Permitted Encumbrances” means (i) liens for taxes not yet due or which are
being contested in good faith and by appropriate proceedings and which are
satisfied or discharged of record at or prior to Closing pursuant to Section
4.11; (ii) the rights of Tenants under Leases and of residents under Residency
Agreements; (iii) as to the Real Property, the Cedarhurst Management Agreement,
(iv) all matters arising by, through or under Purchaser or for which Purchaser
is obligated to indemnify Seller; and (v) the Permitted Title Exceptions.

 

“Permitted Title Exceptions” means the exceptions specified as permitted
exceptions listed on Schedule 1.1(d) hereto (as agreed upon by Seller and
Purchaser).

 

“Philip Center Guaranty” means that certain Separate Guaranty of Carveout
Obligations dated August 14, 2015 by Seller Parent in favor of RGA Reinsurance
Company.

 

 6

 

 

“Philip Center Loan” means that certain loan in the original principal amount of
Five Million Two Hundred Thousand and No/100 U.S. Dollars ($5,200,000.00)
evidenced by, among other things, that certain Promissory Note, dated September
26, 2012, by ICM VI-Philip Center, LP in favor of RGA Reinsurance Company, which
was assumed by ARHC PPLVLGA01, LLC by that Consent and Assumption Agreement with
Release dated August 14, 2015 (the “Philip Center Consent and Assumption
Agreement”).

 

“Philip Professional Center Ground Lease” means that certain Lease Agreement,
dated as of February 16, 2016, by and between Philips Land, LLC and ARHC
PPLVLGA01, LLC.

 

“Prepaids and Deposits” means all pre-paid amounts paid by any Tenant pursuant
to any Lease, if paid or deposited to the account of Seller or any Company, for
or attributable to the periods from and after the Closing Date as well as any
security deposits paid to Seller or any Company as of the Closing Date and not
previously applied by Seller or such Company against amounts payable by such
Tenant under the applicable Lease (to the extent such deposits can be
transferred in accordance with applicable law) together with any interest
thereon to the extent such interest is or may be payable to the Tenants (or
their respective Representatives, successors, heirs or assigns) at any time
following the Closing Date each as more particularly described (as of June 13,
2017) on Schedule 1.1(e) (as disclosed by Seller).

 

“Property Management and Leasing Agreement” means that certain Property
Management and Leasing Agreement dated as of August 20, 2014, by and among
Seller Parent, OP Seller, and American Realty Capital Healthcare III Properties,
LLC, a Delaware limited liability company.

 

“Real Property” means those certain parcels of real estate described in
Schedule 1.1(f) (as agreed upon by Seller and Purchaser), together with all
right, title and interest of Seller or any Company in and to: (i) all the
Improvements thereon, (ii) all easements and rights of way serving or benefiting
such property, (iii) all strips and gores appurtenant thereto, and (iv) any land
lying in the bed of any streets, roads and alleys appurtenant thereto.

 

“Representative” of a person means any officer, trustee, director, Affiliate,
employee, investment banker, financial advisor, attorney, accountant,
consultant, broker, finder or other agent or representative of such person. In
the case of Seller Parent and Seller, Representative shall also include American
Realty Capital Healthcare III Advisors, LLC and its employees, officers and
directors.

 

“Residency Agreements” means the Arcadian Cove Residency Agreements and the
Cedarhurst Residency Agreements, collectively.

 

“Seller Parent Organizational Documents” means the Seller Parent’s charter and
by-laws, as amended to date.

 

“Seller Parent Board” means the Board of Directors of Seller Parent.

 

 7

 

 

“Seller Parent Intervening Event” means a material event, effect, circumstance,
change, development or state of facts that was not known to the Seller Parent
Board prior to the execution of this Agreement (or if known, the magnitude or
consequences of which were not known or reasonably foreseeable as of the date
hereof), which event, effect, circumstance, change, development or state of
facts, or any material consequence thereof, becomes known to the Seller Parent
Board prior to the Closing Date; provided, however, that in no event shall the
receipt, existence or terms of an Acquisition Proposal or any matter relating
thereto or consequence thereof constitute a Seller Parent Intervening Event.

 

“Seller Parent Stockholder Approval” means the affirmative vote of a majority of
the outstanding shares of Seller Parent Common Stock entitled to vote on each of
(i) the transactions contemplated by this Agreement and (ii) the plan of
liquidation and dissolution of Seller Parent.

 

“Seller Parent Common Stock” means the outstanding shares of the common stock of
Seller Parent, par value $0.01 per share.

 

“Seller Parent Special Committee” means a special transaction committee
consisting solely of independent directors of Seller Parent.

 

“Seller’s Knowledge” means the actual knowledge of each person identified as an
executive officer of Seller Parent on Seller Parent’s Proxy Statement after
inquiry reasonable under the circumstances.

 

“STRH” means SunTrust Robinson Humphrey, Inc., the financial advisor to Seller
Parent Special Committee.

 

“STRH Engagement Letter” means that engagement letter dated March 30, 2016
between Seller Parent and STRH, as amended.

 

“Subsidiary” or “Subsidiaries” means any other person or persons that a person
directly or indirectly owns or has the power to vote or control 50% or more of
any class or series of capital stock or equity interests of such person or
persons.

 

“Superior Proposal” means a written Acquisition Proposal made by a third party
(except for purposes of this definition, the references in the definition of
“Acquisition Proposal” to “20%” shall be replaced with “50%”) which the Seller
Parent Board (based on the recommendation of the Seller Parent Special
Committee) determines in its good faith judgment (after consultation with its
legal and financial advisors and after taking into account (a) all of the terms
and conditions of the Acquisition Proposal and this Agreement (as it may be
proposed to be amended by the Seller Parent) and (b) the feasibility and
certainty of consummation of such Acquisition Proposal on the terms proposed
(taking into account all legal, financial, regulatory and other aspects of such
Acquisition Proposal deemed relevant by the Seller Parent Board (based on the
recommendation of the Seller Parent Special Committee) and conditions to
consummation thereof) to be more favorable from a financial point of view to the
stockholders of Seller Parent (in their capacities as stockholders) than the
transactions contemplated by this Agreement (as it may be proposed to be amended
by the Purchaser).

 

“Takeover Statute” means any “fair price,” “business combination,” “moratorium,”
“control share acquisition” or any other anti-takeover statute or similar
statute enacted under state or federal laws of the U.S. or similar statute or
regulation.

 

 8

 

 

“Tenant” means any lessee, licensee, concessionaire or other person with the
right to use or occupy space or facilities at a Real Property under a Lease,
excluding, for clarity, residents under any Residency Agreement.

 

“Termination Fee” means Three Million Six Hundred Thousand and No/100 U.S.
Dollars ($3,600,000.00).

 

Section 1.2           Certain Definitions. For purposes of this Agreement:

 

“business day” is any day other than a Saturday, Sunday, or a day on which all
banking institutions in New York, New York are authorized or obligated by law or
executive order to close (provided that, with respect to filings made with the
SEC, a day on which a filing is to be made is a Business Day only if the SEC is
open to accept filings). Furthermore, if any date upon which or by which action
is required under this Agreement is not a business day, then the date for such
action shall be extended to the first day that is after such date and is a
business day.  When calculating the period of time before which, within which or
following which any act is to be done or step taken pursuant to this Agreement,
the date that is the reference date in calculating such period shall be
excluded.  If the last day of such period is a non-business day, the period in
question shall end on the next succeeding business day;

 

“herein,” “hereunder,” “hereof,” “hereinbefore,” “hereinafter” and other
equivalent words refer to this Agreement in its entirety and not solely to the
particular portion of this Agreement in which such word is used, and references
to “this article,” “this section,” “this paragraph,” “this subparagraph” or
similar references to a specific part of this Agreement shall refer to the
particular article, section, paragraph, subparagraph or specific part in which
such reference appears;

 

“party” or “parties” means each or all, as appropriate, of the entities who have
executed and delivered this Agreement, each permitted successor or assign of a
party, and when appropriate to effect the binding nature of this Agreement for
the benefit of another party, any other successor or assign of a party; and

 

“person” means any individual, sole proprietorship, partnership, joint venture,
corporation, estate, trust, unincorporated organization, association, limited
liability company, institution or other entity, including any that is a
governmental authority.

 

Section 1.3           Other Defined Terms. For purposes of this Agreement, the
following terms have the respective meanings set forth in the section referenced
opposite such term:

 

Term   Section 2016 Cedarhurst Financial Statement   Section 6.14 Adjustments  
Section 3.1 Agreement   Preamble Arcadian Cove Lessee   Recitals Arcadian Cove
Lessor   Recitals Arcadian Cove Manager   Recitals Arcadian Cove Net Lease  
Recitals Asset Acquisition Statement   Section 3.4(b)

 

 9

 

 

Casualty Threshold   Section 10.12 Cedarhurst Financial Statements   Section
6.14 Cedarhurst TRS Facility Master Tenant   Recitals Closing Date   Section 5.1
Effective Date   Preamble Escrow Agent   Section 3.2 Escrow Agreement   Section
3.2 First Quarter 2017 Cedarhurst Financial Statement   Section 6.14 HIPAA  
Section 6.29(b) Holdco Interest   Recitals Holdco Purchaser   Preamble Holdco
Seller   Preamble IDPH License   Recitals Indemnification Cap   Section 8.3(a)
Indemnified Party   Section 8.4(a) Indemnifying Party   Section 8.4(a) JV
Membership Interests   Recitals Loan Documents   Section 6.23 Losses   Section
8.1 Madison Ground Lessor   Section 1.1 Material Contracts   Section 6.7
Membership Interests   Recitals OP Purchaser   Preamble OP Seller   Preamble
Percentage   Section 10.12 Permits and Licenses   Section 6.9 Philip Center
Consent and Assumption Agreement   Section 1.1 Proration Date   Section 3.3(a)
Proration Schedule   Section 3.3(a) Proxy Statement   Section 4.6(a) Purchase
Price   Section 3.1 Purchaser   Preamble Purchaser Indemnification Cap   Section
8.3(b) Purchaser Parent   Preamble Purchaser Threshold   Section 8.3(b) Quad
Cities SPEs   Recitals Revised Statements   Section 3.4(b) Scheduled Closing
Date   Section 5.1 SEC   Section 4.6(a) Seller   Preamble Seller Parent  
Preamble Seller Parent Change in Recommendation   Section 4.7(a) Seller Parent
Change Notice   Section 4.8(d)(ii)(C) Seller Parent Recommendation   Section
4.6(d) Seller Parent Stockholder Meeting   Section 4.6(d) Seller Threshold  
Section 8.3(a) SPE-level Property   Section 2.2

 

 10

 

 

Section 1.4           Rules of Construction. For purposes of this Agreement:

 

(a)          “including” and any other words or phrases of inclusion shall not
be construed as terms of limitation, so that references to “included” matters
shall be regarded as non-exclusive, non-characterizing illustrations; “copy” or
“copies” means that the copy or copies of the material to which it relates are
true, correct and complete;

 

(b)          “shall,” “will,” and “agrees” are mandatory, and “may” is
permissive;

 

(c)          titles and captions of or in this Agreement are inserted only as a
matter of convenience and in no way define, limit, extend or describe the scope
of this Agreement or the intent of any of its provisions;

 

(d)          whenever the context so requires, the singular includes the plural
and the plural includes the singular, and the gender of any pronoun includes the
other gender;

 

(e)          each Exhibit and Schedule referred to in this Agreement and each
attachment to any of them or this Agreement is hereby incorporated by reference
into this Agreement and is made a part of this Agreement as if set out in full
in the first place that reference is made to it; and

 

(f)          every covenant, term and provision of this Agreement shall be
construed simply according to its fair meaning and not strictly for or against
any party hereto, regardless of which party was more responsible for the
preparation of this Agreement.

 

ARTICLE 2

Purchase and Sale

 

Section 2.1           Purchase and Sale. Subject to the provisions of this
Agreement:

 

(a)          OP Seller shall sell to OP Purchaser, and OP Purchaser shall
purchase from OP Seller, all of OP Seller’s right, title and interest in and to
the Membership Interests, free and clear of all Liens and liabilities
whatsoever, for the consideration specified in Section 3.1; and

 

(b)          Holdco Seller shall sell to Holdco Purchaser, and Holdco Purchaser
shall purchase from Holdco Seller, all of Holdco Seller’s right, title and
interest in and to the Holdco Interest, free and clear of all Liens and
liabilities whatsoever, for the consideration specified in Section 3.1.

 

(c)          For purposes of this Section 2.1, the term “Liens” refers to Liens
against the Membership Interests and not Liens against the underlying Real
Property.

 

 11

 

 

Section 2.2           SPE-level Property. To the extent that Seller Parent
and/or Seller itself holds or controls any property of any of the Companies
(including, but not limited to, the Prepaids and Deposits, OP-held SPE Operating
Cash (subject to Section 3.3(b) and Section 3.3(c)), and books and records of
such Companies with respect to the period prior to the Closing), such property
shall be transferred to Purchaser (or at the direction of Purchaser) upon
Closing. For the avoidance of doubt, the intent of the parties is that the sale
of the Membership Interests and the Holdco Interest to Purchaser will enable
Purchaser, through its ownership of such Interests, to control all of the assets
of the Companies, as may be owned or used by such Companies in the conduct of
their respective Businesses as of the Closing Date, including, but not limited
to, as set forth on Schedule 2.2 (as disclosed by Seller), such cash as is held
in bank accounts maintained in the names of certain Companies (subject to
Section 3.3(b) and Section 3.3(c)) and any utility deposits paid by any Company
to any utility company to be held as a deposit for such Company (the “SPE-level
Property”).

 

ARTICLE 3

Purchase Price; Payment of Purchase Price; Allocation

 

Section 3.1           Purchase Price. Subject to any adjustments and prorations
expressly provided for in this Agreement, including those described in Section
3.3, Section 10.11, and Section 10.12 (collectively, “Adjustments”), the
purchase price (the “Purchase Price”) for the Membership Interests and the
Holdco Interest shall be a total of One Hundred Twenty Million and No/100 U.S.
Dollars ($120,000,000.00).

 

Section 3.2           Payment of Purchase Price and Escrow Amount. The Purchase
Price (as adjusted) and any credits and additions shall be paid by Purchaser, at
Closing, as follows: One Hundred Twenty Million and No/100 U.S. Dollars
($120,000,000.00), (a) minus the outstanding principal balance of the Philip
Center Loan as of the Closing Date (if such loan is assumed by the Purchaser),
and (b) minus the Escrow Amount, and as adjusted for any Adjustments pursuant to
Section 3.3, shall be paid at Closing by wire transfer in accordance with wire
instructions provided by Seller at least three (3) business days before Closing.
At the Closing, Purchaser shall also pay to Wells Fargo Bank, National
Association (the “Escrow Agent”) an amount equal to the Escrow Amount for
deposit into an escrow account to be held and distributed in accordance with the
applicable provisions of this Agreement and as provided in an escrow agreement
substantially in the form of Exhibit A attached hereto (the “Escrow Agreement”),
to be entered into at Closing by Purchaser Parent, the Escrow Agent, and Seller
Parent (which Escrow Agreement provides, subject to such agreement, for the
Escrow Amount to be held for fourteen (14) months following the Closing).

 

Section 3.3           Prorations.

 

(a)          The following items (whether paid or accrued but not yet paid)
shall be prorated between Seller and Purchaser as of 11:59 p.m. on the date
immediately preceding the Closing Date (the “Proration Date”); prorations
credited to Purchaser shall reduce the Purchase Price and prorations credited to
Seller shall increase the Purchase Price at Closing as follows:

 

 12

 

 

(i)          city, state, and county ad valorem taxes for the year in which the
Closing occurs based on the ad valorem tax bills for the Real Property that is
owned by the Companies or for which a Company is responsible under the terms of
a ground lease with respect to the Real Property that is leased by the
Companies, if then available for such year, or if not, then on the basis of the
ad valorem tax bill for the Real Property for the immediately preceding year,
excluding taxes for any Real Property where the Tenant pays taxes directly to
the taxing authority. (If such proration is based on an ad valorem tax bill for
the immediately preceding year and should such proration prove to be inaccurate
on receipt of the ad valorem tax bill for the Real Property for the year of
Closing, then either Seller or Purchaser, as applicable, may demand at any time
after Closing a payment from the other party in an amount sufficient to correct
such malapportionment);

 

(ii)         operating expenses (including amounts payable to Cedarhurst
Operator or Cedarhurst Manager under the Cedarhurst Management Agreement),
sanitary sewer taxes, and utility charges, if any, that are the obligation of
any Company; provided, however, that Seller or Purchaser may elect, prior to
Closing, to require that the meters for all utility charges be read and
terminated as of the end of the last business day preceding the Closing Date, in
which case Seller shall be responsible for and shall pay for all such charges
accruing during or relating to the period prior to the Closing Date; and
provided, further, that Seller shall pay any and all amounts payable under any
reciprocal easement agreement or other title documents (which payments shall be
prorated if paid for a year, a month, or other period extending in part beyond
the Closing);

 

(iii)        Rents paid (or accrued and not yet paid) under any Lease, revenues
received (or accrued but not yet received) by Cedarhurst TRS Facility Master
Tenant accruing to such Company from the operation of the Cedarhurst Facility,
and other revenues (including Prepaids and Deposits, if any);

 

(iv)        all rent and other charges payable to the lessors under the Ground
Leases;

 

(v)         all interest, fees and other charges payable in connection with the
Philip Center Loan (except as set forth in Section 4.12); and

 

(vi)        unless otherwise transferred by Seller to Purchaser (or otherwise
paid at the direction of Purchaser) in accordance with Section 2.2, Purchaser
shall receive a credit for (A) the Prepaids and Deposits, (B) subject to Section
3.3(b) and Section 3.3(c), OP-held Operating Cash, and (C) the Funded
Maintenance Account reserve held by ARHC PPLVLGA01, LLC in respect to a lease
with the United States of America for the Philip Professional Center.

 

Purchaser and Seller shall prepare a proposed schedule in the form set forth on
Schedule 3.3(a) (the “Proration Schedule”) prior to Closing, including the items
listed above and any other items the parties determine necessary. Such Proration
Schedule shall include all applicable income and expenses with regard to each
Real Property and each Company. Seller and Purchaser will use all reasonable
efforts to finalize and agree upon the Proration Schedule at least two (2)
business days prior to Closing.

 

 13

 

 

(b)          Seller shall receive all income from each Company attributable to
the period prior to the Proration Date and shall, unless otherwise provided for
in this Agreement, be responsible for all expenses of each Company attributable
to the period prior to the Proration Date. In the event that Purchaser receives
any payment from a Tenant for rent due for any period prior to the Proration
Date or payment of any other receivable of Seller (and such rent or receivable
had not already been credited in accordance with Section 3.3(a) to Seller),
Purchaser shall forward such payment to Seller. Payments received from a
resident, to the extent such payments were previously made directly to Seller or
any of its Affiliates, shall be allocated first to any current balances due from
such resident that have accrued since the Proration Date and any costs of
collection of such amounts incurred by Purchaser.

 

(c)          Purchaser shall receive all income from each Company attributable
to the period from and after the Proration Date and shall, except as otherwise
provided for in this Agreement, be responsible for all expenses of each Company
attributable to the period from and after the Proration Date. In the event
Seller or its Affiliates receive any payment from a Tenant for rent due for any
period from and after the Proration Date, Seller shall forward such payment to
Purchaser.

 

(d)          Purchaser shall be entitled to all insurance and casualty proceeds
payable to any of the Companies with respect to any casualty or condemnation
prior to the Closing Date, except (i) as set forth in Section 10.11 or in
Section 10.12 or (ii) such amounts as have previously been paid to repair or
restore such casualty or condemnation or for Seller’s costs in addressing same.

 

(e)          The parties agree that any amounts that may become due under this
Section 3.3 shall be paid at Closing as can best be determined. A post-Closing
reconciliation of prorated items shall be made by the parties within sixty (60)
days after the Closing Date and any amounts due at that time shall be promptly
forwarded to the respective party to whom such amounts are due in a lump sum
payment. Any additional amounts that may become due after such determination
shall be forwarded at the time they are received. Any amounts due under this
Section 3.3 which cannot be determined within sixty (60) days after the Closing
Date (such as, for example, fiscal year-end real estate taxes) shall be
reconciled as soon thereafter as such amounts can be determined. Purchaser and
Seller agree that each shall have the right to audit the records of the other in
connection with any such post-Closing reconciliation. Any payments made pursuant
to this Section 3.3 shall be treated as a purchase price adjustment for income
tax purposes.

 

Section 3.4           Allocation of Purchase Price.

 

(a)          With respect to the individual Companies, the Purchase Price shall
be allocated on an asset-by-asset basis and as set forth on Schedule 3.4, which
allocation shall be confirmed and, in respect to any adjustments hereunder,
modified at least five (5) business days prior to the Closing. Any adjustments
to the Purchase Price provided herein that are attributable solely to a
particular Company shall result in an adjustment of the Purchase Price allocated
to such Company. Any adjustments to the Purchase Price provided herein that are
attributable to one or more of the Companies shall result in a pro-rata
adjustment (determined in accordance with the proportional amount of Purchase
Price allocated to each Company) of the Purchase Price allocated to each Company
with respect to which such adjustment is attributable.

 

 14

 

 

(b)          Additionally, the parties acknowledge that the transactions
contemplated hereunder must be reported in accordance with Section 1060 of the
IRC. The parties shall report the transactions contemplated hereunder for all
purposes in accordance with the purchase price allocation set forth on
Schedule 3.4 hereto, which schedule the parties acknowledge and agree will be
confirmed and finalized at least five (5) business days prior to the Closing
Date. The parties shall share information and cooperate to the extent necessary
to permit the transactions to be properly, timely, and consistently reported. At
least five (5) business days prior to the Closing Date, Purchaser and Seller
shall confirm and finalize the allocation of the Purchase Price for local, state
and federal tax purposes (as set forth on Schedule 3.4), which allocation will
specify the Purchase Price for each Company. Any revised allocation will be
attached to this Agreement in the form shown on Schedule 3.4). In accordance
with such allocation, Purchaser shall prepare and deliver to Seller copies of
Form 8594 and any required exhibits thereto (the “Asset Acquisition Statement”).
Purchaser shall prepare and deliver to Seller from time to time revised copies
of the Asset Acquisition Statement (the “Revised Statements”) so as to report
any matters on the Asset Acquisition Statement that need updating (including
purchase price adjustments, if any) as agreed to by Purchaser and Seller. The
Purchase Price for the Companies shall be allocated in accordance with the Asset
Acquisition Statement or, if applicable, the last Revised Statements, provided
by Purchaser to Seller, and all income Tax Returns and reports filed by
Purchaser or Seller (whether together or independently) shall be prepared
consistently with such allocation.

 

ARTICLE 4

Certain Other Covenants and Agreements

 

Section 4.1           Conduct of Business Prior to the Closing Date. Seller
covenants and agrees with Purchaser that from the Effective Date hereof through
the Closing Date, except as otherwise expressly contemplated in this Agreement,
unless Purchaser otherwise consents in writing (which consent shall not be
unreasonably withheld, conditioned or delayed) Seller shall, and shall cause
each Company (and, within the terms of and subject to the Cedarhurst Management
Agreement, the Cedarhurst Operator and the Cedarhurst Manager) to:

 

(a)          Use good faith efforts to operate the Business in all material
respects in the ordinary course of business as currently conducted, including
(i) incurring expenses consistent with Seller’s past practices in the operation
of the Business and (ii) to the extent applicable, using commercially reasonable
efforts to preserve the Business’ present business operations, organization and
goodwill and its relationships with customers, employees, advertisers, suppliers
and other contractors.

 

(b)          Operate the Business and otherwise conduct business in all material
respects in accordance with the terms or conditions of all applicable licenses
and permits, all applicable rules and regulations of the state where each Real
Property is located, and all other rules, regulations, laws, and orders of all
governmental authorities having jurisdiction over any aspect of the operation of
the Business and all applicable insurance requirements; provided, however, that
the foregoing shall not impose on Seller any obligation to make unbudgeted
capital improvements or repairs, or to incur any cost or expense in order to
comply with any of the foregoing to the extent Seller was not in compliance as
of the Effective Date, except to the extent Seller is ordered to do so by a
governmental authority having jurisdiction over Seller.

 

 15

 

 

(c)          Maintain the books, records, and financial statements for the
Business consistent with past practices.

 

(d)          Timely comply in all material respects with all Leases, all Company
contacts and agreements with third parties, and, in respect to the Cedarhurst
Facility, with the Cedarhurst Management Agreement, the Cedarhurst Facility
RIDEA Lease, and all Company contracts and agreements with third parties related
to the Cedarhurst Facility or the operation of that business.

 

(e)          Not sell, lease, grant any rights in or to or otherwise dispose of
or otherwise relinquish control of, or agree to sell, lease or otherwise dispose
of, the SPE-level Property in whole or in part except for dispositions of assets
that are in the ordinary course of business, and if material, are replaced by
similar assets of substantially equal or greater value and utility, it being
recognized that the Cedarhurst Operator, not Cedarhurst TRS Facility Master
Tenant, and Arcadian Assisted Living, LLC, which is not an Affiliate of the
Seller, and not the Arcadian Cove Lessor, enters into the applicable Residency
Agreements.

 

(f)          Take commercially reasonable efforts to maintain the Real Property
and any SPE-level Property in the same condition as it exists as of the
Effective Date, except for ordinary wear and tear, in a manner consistent with
past practices.

 

(g)          Not default on the Philip Center Loan or any other loans to Seller
or any Company which are not fully cured or satisfied at Closing.

 

(h)          Not enter into or amend any Leases or any contracts other than
contracts which impose no obligation on Purchaser following the Closing or
Residency Agreements in the ordinary course of business.

 

(i)          Not make any alterations or improvements to the Real Property or
make any capital expenditure with respect to the Real Property in excess of
Fifty Thousand and No/100 U.S. Dollars ($50,000.00) other than those that are
currently budgeted or are required by law, necessary to preserve the coverage
under or comply with the terms of any insurance policy with respect to the
Business, or are in Seller’s business judgment necessary to address emergency
conditions or to maintain the goodwill and competitive standing of the Business.

 

(j)          Make available to Purchaser copies of all internally generated
monthly financial reports.

 

(k)          Provide Purchaser with a rent roll on the tenth (10th) day of each
calendar month, that will be current through the last day of the previous
calendar month.

 

(l)          Inform Purchaser promptly regarding the resignation, termination or
hiring of an administrator, executive director or assistant director, as
applicable (if any), of the Cedarhurst Facility.

 

 16

 

 

Section 4.2           Notification of Certain Matters.

 

Seller shall give prompt written notice to Purchaser, and Purchaser shall give
prompt written notice to Seller, to the extent either such party becomes aware
of (i) the occurrence, or failure to occur, or reasonable likelihood of failure
to occur, of any event that would be reasonably likely to cause any of their
respective representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Closing Date, and (ii) any failure on their respective parts to comply with
or satisfy, in any material respect, any covenant, condition, or agreement to be
complied with or satisfied by any of them under this Agreement.

 

Section 4.3           Confidentiality.

 

(a)          Subject to the requirements of confidentiality agreements with
third parties, upon twenty-four (24) hours prior written notice, Seller shall
cause each of the Companies and/or OP Seller’s Property Manager to, afford to
Purchaser and its officers, employees, accountants, counsel, financial advisors
and other Representatives, reasonable access during normal business hours during
the period beginning on the Effective Date and ending on the Closing Date, to
all their respective properties, books, contracts, commitments, personnel and
records and, during such period, Seller shall cause each of the Companies and/or
OP Seller’s Property Manager to furnish promptly to Purchaser (i) a copy of each
report, schedule and other document filed by such party during such period
pursuant to the requirements of federal or state securities laws, (ii) a copy of
each debt agreement, ground lease, owner’s or leasehold title insurance policy,
existing survey, financial report of the SPE-level Properties, property
improvement plan for the Companies and the Real Property and SPE-level
Properties and existing environmental audit for the Real Property, and (iii) all
other information concerning its business, properties and personnel as Purchaser
may reasonably request, including financial statements, tax returns, leases,
certificates of occupancy, tax statements, service agreements, license or
franchise agreements and Permits and Licenses. Notwithstanding the foregoing,
none of Seller Parent, Seller or the Companies shall be required by this Section
4.3 to provide Purchaser or its Representatives with access to or to disclose
information (w) relating to the consideration, negotiation and performance of
this Agreement and related agreements, (x) to the extent such information is
subject to the terms of a confidentiality agreement with a third party entered
into prior to the date of this Agreement (provided, however, that the
withholding party shall use its commercially reasonable efforts to obtain the
required consent of such third party to such access or disclosure), (y) the
disclosure of which would, based on the advice of counsel, violate any law or
fiduciary or legal duty (provided, however, that the withholding party shall use
its commercially reasonable efforts to make appropriate substitute arrangements
to permit reasonable disclosure not in violation of any law or fiduciary or
legal duty) or (z) to the extent such information, based on the advice of
counsel, is subject to any attorney-client, attorney work product or other legal
privilege (provided, however, that the withholding party shall allow for such
access or disclosure to the maximum extent that does not result in a loss of any
such attorney-client, attorney work product or other legal privilege). Purchaser
will use its commercially reasonable efforts to minimize any disruption to the
businesses of Seller Parent, Seller and the Companies that may result from the
requests for access, data and information hereunder.

 

 17

 

 

(b)          Each of Purchaser, Seller Parent, Seller, and the Companies shall
comply with the terms of the Mutual Nondisclosure Agreement dated February 4,
2016 by and between Seller and Purchaser, as amended, with respect to all
information concerning the other parties provided to their respective officers,
employees, accountants, counsel, financial advisors and other Representatives
and Affiliates.

 

Section 4.4           Expenses and Taxes.

 

(a)          Each party shall pay its own expenses and costs incurred in
connection with the negotiation and consummation of this Agreement and the
transactions contemplated by this Agreement.

 

(b)          Notwithstanding the foregoing:

 

(i)          To the extent applicable to the sale of Membership Interests and
the sale of the Holdco Interest, any real estate transfer tax and any filing and
recording costs shall be paid by Purchaser and/or Seller, on a
property-by-property and cost-by-cost basis, as is the custom in each of the
states where the Real Property is located, as described on Schedule 4.4(b)
hereto;

 

(ii)         The costs of title searches and title insurance policies shall be
paid by Purchaser and/or Seller, on a property-by-property and cost-by-cost
basis, as is the custom in each of the states where the Real Property is
located, as described on Schedule 4.4(b); and

 

(iii)        Purchaser shall pay any person who is entitled to any brokerage
commission or finder’s fee in connection with any of the transactions
contemplated by this Agreement by reason of any act or omission of Purchaser,
and shall indemnify Seller and hold Seller harmless against any claims for such
commissions or finder’s fees. Seller shall pay any person who is entitled to any
brokerage commission or finder’s fee in connection with any of the transactions
contemplated by this Agreement by reason of any act or omission of Seller, and
shall indemnify Purchaser and hold Purchaser harmless against any claims for
such commissions or finder’s fees.

 

Section 4.5           Waiver of Bulk Sales. Purchaser hereby waives compliance
by Seller and Seller hereby waives compliance by Purchaser, with the
requirements of any applicable bulk sales laws and similar laws, if and to the
extent applicable; the parties acknowledge that their respective obligations
with respect to taxes are described in Section 3.3.

 

 18

 

 

Section 4.6           Preparation of Proxy Statement; Seller Parent Stockholder
Meeting.

 

(a)          As promptly as practicable following the Effective Date, Seller
Parent shall prepare and cause to be filed with the Securities and Exchange
Commission (the “SEC”) a proxy statement with respect to the Seller Parent
Stockholder Meeting in connection with the transactions proposed herein as well
as the liquidation and dissolution of the Seller Parent (the “Proxy Statement”)
in preliminary form. Purchaser Parent shall furnish all information concerning
itself, its Affiliates and its management and provide such other assistance as
may be reasonably requested in connection with the preparation, filing and
distribution of the Proxy Statement. The Proxy Statement shall include all
information, in respect to Purchaser and Purchaser Parent, reasonably requested
by Purchaser Parent to be included therein. Seller Parent shall promptly notify
Purchaser Parent upon the receipt of any comments from the SEC or any request
from the SEC for amendments or supplements to the Proxy Statement, and shall, as
promptly as practicable after receipt thereof, provide Purchaser Parent with
copies of all correspondence between Seller Parent and its Representatives, on
one hand, and the SEC, on the other hand, and all written comments with respect
to the Proxy Statement received from the SEC and promptly advise Purchaser
Parent of any oral comments with respect to the Proxy Statement received from
the SEC. Seller Parent shall use its commercially reasonable efforts to respond
as promptly as practicable to any comments from the SEC with respect to the
Proxy Statement. Notwithstanding the foregoing, prior to filing the Proxy
Statement (including with respect to the preliminary proxy statement), mailing
the Proxy Statement (or any amendment or supplement thereto) or responding to
any comments of the SEC with respect thereto, Seller Parent shall cooperate and
provide Purchaser Parent a reasonable opportunity to review and comment on such
document or response (including the proposed final version of such document or
response) and shall give due consideration to all changes provided by Purchaser
Parent.

 

(b)          None of the information supplied or to be supplied in writing by or
on behalf of Seller Parent or any its Subsidiaries for inclusion or
incorporation by reference in the Proxy Statement will, at the date the Proxy
Statement is first mailed to the shareholders of Seller Parent, at any time it
is amended or supplemented or at the time of the Seller Parent Stockholder
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading. 
None of the information supplied or to be supplied by or on behalf of Purchaser
Parent or any of its Subsidiaries for inclusion in any of the filings made or to
be made by Seller Parent or its Affiliates with the SEC or with any stock
exchange of or other regulatory authority will, at the time filed with the SEC,
any stock exchange or other regulatory authority, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading.  All documents that Seller
Parent is responsible for filing with the SEC in connection with the
transactions contemplated herein, to the extent relating to Seller Parent or any
of its Subsidiaries or other information supplied by or on behalf of Seller
Parent or any of its Subsidiaries for inclusion therein, will comply as to form,
in all material respects, with the provisions of the Securities Act of 1933 or
the Securities Exchange Act of 1934, as applicable, and the rules and
regulations of the SEC thereunder and each such document required to be filed
with any governmental entity (other than the SEC) will comply in all material
respects with the provisions of any applicable law as to the information
required to be contained therein.

 

(c)          If, at any time prior to the receipt of the Seller Parent
Stockholder Approval, any information relating to Seller Parent or Purchaser
Parent, or any of their respective Affiliates should be discovered by Seller
Parent or Purchaser Parent which, in the reasonable judgment of Seller Parent or
Purchaser Parent, as the case may be, should be set forth in an amendment of, or
a supplement to, the Proxy Statement, so that such document would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties hereto, and Seller Parent or Purchaser Parent
shall cooperate in the prompt filing with the SEC of any necessary amendment of,
or supplement to, the Proxy Statement and, to the extent required by law, in
disseminating the information contained in such amendment or supplement to
stockholders of Seller Parent. Nothing in this Section 4.6(c) shall limit the
obligations of any party under Section 4.6(a). For purposes of Section 6.30 and
this Section 4.6 any information concerning or related to Seller Parent, its
Affiliates or the Seller Parent Stockholder Meeting will be deemed to have been
provided by Seller Parent, and any information concerning or related to
Purchaser Parent or its Affiliates (including with respect to their properties,
management or businesses) will be deemed to have been provided by Purchaser
Parent.

 

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(d)          Seller Parent shall take all steps to hold the Seller Parent
Stockholder Meeting within a reasonable time after it has cleared or resolved
any comments, if any, received from the SEC and shall, in accordance with
applicable law and the Seller Parent Organizational Documents, establish a
record date for, duly call, give notice of, convene and hold a meeting of its
stockholders (including any adjournments or postponements thereof, the “Seller
Parent Stockholder Meeting”). Seller Parent shall cause the definitive Proxy
Statement to be mailed to the stockholders of Seller Parent entitled to vote at
the Seller Parent Stockholder Meeting as soon as practicable after it has
cleared or resolved any comments, if any, received from the SEC. Seller Parent
shall, through the Seller Parent Board, recommend to its stockholders that they
give the Seller Parent Stockholder Approval, include such recommendation in the
Proxy Statement (the “Seller Parent Recommendation”) and solicit and use its
commercially reasonable efforts to obtain the Seller Parent Stockholder
Approval, except to the extent that the Seller Parent Board shall have made a
Seller Parent Change in Recommendation as permitted by Section 4.7. Seller
Parent shall keep Purchaser Parent updated on a periodic basis with respect to
proxy solicitation results as reasonably requested by the Purchaser Parent.
Notwithstanding the foregoing provisions of this Section 4.6(d), if, on a date
for which the Seller Parent Stockholder Meeting is scheduled, Seller Parent has
not received proxies representing a sufficient number of shares to obtain the
Seller Parent Stockholder Approval, whether or not a quorum is present, Seller
Parent shall have the right to make one or more successive postponements or
adjournments of the Seller Parent Stockholder Meeting, provided, however, that
the Seller Parent Stockholder Meeting may not be postponed or adjourned to a
date that is more than 120 days after the record date for the Seller Parent
Stockholder Meeting.

 

Section 4.7           Exclusivity.

 

(a)          From the date hereof through the Closing Date or the earlier
termination of this Agreement pursuant to ARTICLE 9, except as permitted by, and
subject to, Section 4.7(c), Section 4.7(d), Section 4.7(e) and Section 4.8,
Seller Parent shall not, and shall cause each of its Subsidiaries not to, and
shall not authorize or permit any of its Representatives to, (i) initiate,
solicit, knowingly encourage or facilitate any inquiries or the making of any
proposal, offer or other action that constitutes, or may reasonably be expected
to lead to, any Acquisition Proposal, (ii) enter into, continue or otherwise
participate in any discussions or negotiations with any person, or furnish to
any person other than Seller Parent any non-public information, in furtherance
of such inquiries or to obtain an Acquisition Proposal, (iii) release any person
from or fail to enforce any standstill agreement or similar obligation to Seller
Parent or any of the Subsidiaries of Seller Parent, (iv) withdraw, modify or
amend the Seller Parent Recommendation in any manner adverse to Purchaser or
fail to make the Seller Parent Recommendation or fail to include the Seller
Parent Recommendation in the Proxy Statement, (v) approve, endorse or recommend
any Acquisition Proposal, (vi) enter into any agreement in principle,
arrangement, understanding, contract or agreement (whether binding or not)
relating to an Acquisition Proposal, or (vii) take any action to exempt any
person from any Takeover Statute or similar restrictive provision of the Seller
Parent Organizational Documents for purposes of facilitating an Acquisition
Proposal (any event described in clause (iv), clause (v), clause (vi) or clause
(vii), whether taken by the Seller Parent Board or a committee thereof, a
“Seller Parent Change in Recommendation”). Seller Parent agrees that in the
event any Representative of Seller Parent or any Subsidiary of Seller Parent
takes any action on behalf of Seller Parent that, if taken by Seller Parent,
would constitute a material violation of this Section 4.7(a), then Seller Parent
shall be deemed to be in violation of this Section 4.7(a) for all purposes of
this Agreement.

 

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(b)          Except as permitted by, and subject to, Section 4.7(a), Section
4.7(c), Section 4.7(d) and Section 4.7(e), Seller Parent shall, and shall cause
each of its Subsidiaries and their respective Representatives to, immediately
cease any discussions, negotiations or communications with any person (other
than Purchaser) with respect to any Acquisition Proposal or potential
Acquisition Proposal and immediately terminate all physical and electronic data
room access previously granted to any such person (other than Purchaser).

 

(c)          If prior to receipt of the Seller Parent Stockholder Approval,
Seller Parent, Seller, or any of its Subsidiaries or their respective
Representatives receives a bona fide written Acquisition Proposal which has not
been initiated, solicited, encouraged or facilitated in violation of Section
4.7(a), and which the Seller Parent Special Committee has determined in good
faith following consultation with its legal and financial advisors is or could
be reasonably expected to result in a Superior Proposal, Seller Parent and its
Subsidiaries or any of their respective Representatives thereafter may take the
following actions: (i) furnish, make available or provide access to non-public
information with respect to Seller Parent and its Subsidiaries to the person who
made such Acquisition Proposal and such person’s Representatives (provided that
Seller Parent (A) has previously furnished, made available or provided access to
such non-public information to Purchaser and (B) furnishes, makes available or
provides access to such non-public information pursuant to a confidentiality
agreement in a form reasonably acceptable to Purchaser), (ii) participate in
negotiations regarding such Acquisition Proposal, and (iii) disclose to the
stockholders of Seller Parent any information required to be disclosed under
applicable law. In the event Seller Parent, any of its Subsidiaries or any of
their respective Representatives receives from a person or group of related
persons (x) an Acquisition Proposal or an amended or modified proposal or offer
with respect to any such Acquisition Proposal, (y) any request for information
relating to Seller Parent any or its Subsidiaries from a person who informs
Seller Parent or any of its Subsidiaries that it is considering making or has
made an Acquisition Proposal or (z) any inquiry or request for discussions or
negotiations regarding any Acquisition Proposal, Seller Parent shall promptly
notify Purchaser of (but in no event more than 48 hours following) such receipt.
Such notification shall include, to the extent then known, the identity of the
parties and a copy of such Acquisition Proposal, inquiry or request or, if not
made in writing, a written description of the material terms thereof. Seller
Parent shall keep Purchaser apprised on a current basis of (and in any event no
later than 24 hours after) any material developments, discussions and
negotiations concerning, any such Acquisition Proposal, inquiry or request,
including by furnishing copies of any documentation and written correspondence
that supplements or amends any such Acquisition Proposal, inquiry or request.
Notwithstanding anything to the contrary in this Agreement, but subject to the
preceding three sentences, nothing herein shall prohibit Seller Parent, its
Subsidiaries and their respective Representatives from contacting in writing any
person submitting an Acquisition Proposal (that was not the result of a
violation of this Section 4.7) solely to clarify the terms of the Acquisition
Proposal for the sole purpose of the Seller Parent Board (or the Seller Parent
Special Committee) informing itself about such Acquisition Proposal. Neither
Seller Parent nor any of its Subsidiaries shall, after the date of this
Agreement, enter into any confidentiality agreement that would prohibit it from
providing such information to Purchaser.

 

 21

 

 

(d)          At any time prior to receipt of the Seller Parent Stockholder
Approval, the Seller Parent Board may, if the Seller Parent Board determines in
good faith after consultation with its legal advisor (and based on the
recommendation of the Seller Parent Special Committee) that the failure to do so
would be reasonably likely to be inconsistent with the standard of conduct
applicable to Seller Parent’s directors under applicable law,

 

(i)          upon receipt by Seller Parent of an Acquisition Proposal that
constitutes a Superior Proposal, make a Seller Parent Change in Recommendation
(and Seller Parent may so terminate this Agreement in accordance with Section
9.1(e) of this Agreement and enter into an agreement relating to, or for the
implementation of, such Superior Proposal); or

 

(ii)         otherwise make a Seller Parent Change in Recommendation in response
to a Seller Parent Intervening Event in circumstances not involving an
Acquisition Proposal; provided that:

 

(A)in the case of a Seller Parent Change in Recommendation under clause (i) of
this Section 4.7(d), (1) such Acquisition Proposal did not result from Seller
Parent’s breach of its obligations under this Section 4.7, and (2) the Seller
Parent Board has determined in good faith, after consultation with its legal and
financial advisors (and based on the recommendation of the Seller Parent Special
Committee), that such Acquisition Proposal constitutes a Superior Proposal and,
after consultation with its legal advisor, that the failure of Seller Parent to
terminate this Agreement in accordance with Section 9.1(e) or make a Seller
Parent Change in Recommendation, as the case may be, would be inconsistent with
directors’ duties under applicable law, taking into account all adjustments to
the terms of this Agreement that have been offered by Purchaser pursuant to
Section 4.7(d)(ii)(D);

 

(B)in the case of a Seller Parent Change in Recommendation under clause (ii) of
this Section 4.7(d), the Seller Parent Board has determined in good faith, after
consultation with its legal advisor (and based on the recommendation of the
Seller Parent Special Committee), that failure of Seller Parent to make a Seller
Parent Change in Recommendation would be reasonably likely to be inconsistent
with the standard of conduct applicable to Seller Parent’s directors under
applicable law, taking into account all adjustments to the terms of this
Agreement that have been offered by Purchaser pursuant to Section 4.7(d)(ii)(D);

 

 22

 

 

(C)Seller Parent has notified Purchaser in writing that the Seller Parent Board
intends to make a Seller Parent Change in Recommendation or enter into an
agreement related to the Superior Proposal, attaching the most current version
of such agreement (including any amendments, supplements or modifications) to
such notice (a “Seller Parent Change Notice”); and

 

(D)during the three (3) Business Day period following Purchaser’s receipt of a
Seller Parent Change Notice, Seller Parent shall have offered to negotiate with
(and, if accepted, negotiated in good faith with), and shall have caused its
respective financial and legal advisors to offer to negotiate with (and, if
accepted, negotiate in good faith with), Purchaser in making adjustments to the
terms and conditions of this Agreement such that (1) in circumstances involving
or relating to an Acquisition Proposal, the Superior Proposal ceases to be a
Superior Proposal; provided that any amendment, supplement or modification to
any Acquisition Proposal shall be deemed a new Acquisition Proposal and Seller
Parent may not terminate this Agreement pursuant to Section 9.1(e) or make a
Seller Parent Change in Recommendation pursuant to clause (i) of this Section
4.7(d) unless Seller Parent has complied with the requirements of this Section
4.7(d) with respect to each such new Acquisition Proposal including sending a
Seller Parent Change Notice with respect to each such new Acquisition Proposal
(except that the new negotiation period under this Section 4.7(d)(ii)(D) shall
be two (2) business days instead of three (3) business days), and (2) in
circumstances not involving an Acquisition Proposal, as may be proposed by
Purchaser.

 

(e)          Nothing in this Section 4.7 or elsewhere in this Agreement shall
prevent the Seller Parent Board or Seller Parent, directly or indirectly, from
(i) taking and disclosing to the stockholders of Seller Parent a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act
with respect to an Acquisition Proposal, making any required disclosure to the
stockholders of the Seller Parent under applicable law, including Rule 14d-9
promulgated under the Exchange Act or Item 1012(a) of Regulation M-A or (ii)
making any disclosure to the stockholders of Seller Parent if the Seller Parent
Board determines in good faith after consultation with its legal advisors (and
based on the recommendation of the Seller Parent Special Committee) that the
failure to do so would be inconsistent with directors’ duties under applicable
law; provided, however, that a Seller Parent Change in Recommendation may only
be effected in accordance with Section 4.7(d).

 

 23

 

 

Section 4.8           Consents; Cooperation. Each of Seller Parent and Seller
will use its commercially reasonable efforts prior to the Closing to obtain all
consents that may be required from third parties with respect to the
transactions contemplated by this Agreement and Purchaser shall cooperate
therewith. Each of Seller Parent and Seller will use its commercially reasonable
efforts prior to the Closing to obtain all estoppel certificates from Tenants in
accordance with their respective Leases and the lessors in accordance with their
respective Ground Leases and from any other person identified on Schedule 4.8.
Purchaser shall cooperate with Seller in preparing and sending a notice to the
Illinois Department of Public Health upon Closing in connection with Cedarhurst
TRS Facility Master Tenant’s license for the operation of the Cedarhurst
Facility and its continued operation of the Business following the Closing.
Seller shall provide reasonable cooperation and assistance to Purchaser in
confirming or obtaining any licenses and permits. Notwithstanding the foregoing,
neither party will be required to pay or commit to pay any amount to (or incur
any liability or obligation to) a person from whom or which a consent may be
required (other than payment by Seller of past due amounts under contracts or
Leases or past due taxes, or payment by Purchaser of any fees or other costs
imposed by governmental authorities with respect to licenses and permits, or
transfer fees, if any, required by the express terms of any Material Contract)
or otherwise enter into or modify any agreement with such person that involves
any cost, liability or obligation.

 

Section 4.9           Further Assurances. Each party covenants and agrees that,
following the Closing, it will execute, deliver and acknowledge (or cause to be
executed, delivered and acknowledged), from time to time, at the reasonable
request of the other party and without further consideration, all such further
instruments as may be reasonable acceptable to such party and take all such
further action as may be reasonably necessary or appropriate to transfer more
effectively to Purchaser, or to perfect or record Purchaser’s interest in the
Companies or to enable Purchaser to use or otherwise to confirm or carry out the
provisions and intent of this Agreement.

 

Section 4.10         Updates to Schedules. Any fact or item disclosed on any
Schedule to this Agreement shall be deemed disclosed with regard to all other
representations and warranties to which such fact or item may reasonably apply
to the extent such disclosure would provide notice to a reasonable person that
the information disclosed would also qualify, or constitute an exception to,
such other representations and warranties. Seller may from time to time
supplement and update such Schedules to reflect any changes since the date of
delivery of the original Schedules or any matters of which Seller’s Knowledge
was first acquired following the original delivery date of such Schedules. Any
such updates or supplements shall be deemed to amend the Schedules for all
purposes retroactively to the Effective Date, except that (i) no amendment to
Schedule 1.1(d) may be made without Purchaser’s written consent, and (ii) any
amendments permitted above shall be disregarded (x) in determining if the
conditions to Closing set forth in Section 5.3(a) or Section 5.3(d) have been
satisfied, and (y) for all purposes under this Agreement if Seller intentionally
omitted such information from the original Schedules.

 

 24

 

 

Section 4.11         Liens.

 

(a)          Notwithstanding anything in this Agreement to the contrary, Seller
covenants and agrees that at or prior to Closing, Seller shall (i) pay in full
and cause to be canceled and discharged or otherwise bond and discharge as liens
against the Real Property all mechanics’ materialmen’s, repairmen’s,
contractors’ or other similar Liens which encumber the Real Property as of the
date hereof created by, through or under Seller or which may be filed against
the Real Property after the date hereof created by, through or under Seller and
on or prior to the Closing Date (ii) pay in full all past due ad valorem taxes
and assessments of any kind constituting a lien against the Real Property which
are due and payable, and (iii) except for the Philip Center Loan (which
Purchaser shall assume in accordance with Section 4.12), pay in full or cause to
be canceled and discharged all security deeds or other security instruments
encumbering the Real Property and all judgments which have attached to and
become a lien against the Real Property by, through or under Seller. In the
event Seller fails to cause such liens and Encumbrances to be paid and canceled
at or prior to Closing, Purchaser shall be entitled to pay such reasonable
amount to the holder thereof as may be required to pay and cancel same, and to
credit against the Purchase Price the amount so paid.

 

(b)          Except as set forth on Schedule 4.11 (as disclosed by Seller),
Seller has not granted any license, lease, easement or other right relating to
the use or possession of the Real Property (except (i) under the Leases, the
Residency Agreements and the Cedarhurst Management Agreement existing as of the
Effective Date and entered into by Seller in the ordinary course of business in
accordance with Section 4.1 hereof; or (ii) as may be a Permitted Encumbrance),
and Seller agrees that, other than as expressly permitted by Section 4.1 hereof,
it shall not grant any such right prior to Closing without the prior written
approval of Purchaser, which may be withheld in Purchaser’s sole and absolute
discretion.

 

Section 4.12         Purchaser Assumption of Philip Center Loan. Purchaser shall
use commercially reasonable efforts to assume the Philip Center Loan upon terms
that are substantially similar to the Philip Center Consent and Assumption
Agreement, including, but not limited to Purchaser Parent providing a guaranty
substantially similar to the Philip Center Guaranty and entering into an
Environmental Indemnity Agreement, providing all financial information to RGA
Reinsurance Company as such Lender may reasonably request, and paying fees not
to exceed Two Hundred Thousand and No/100 U.S. Dollars ($200,000.00) and
providing such information as is set forth in the Philip Center Consent and
Assumption Agreement. Purchaser shall also use commercially reasonable efforts
to cause Seller Parent to be released from its Philip Center Guaranty with
respect to matters arising from and after Purchaser’s assumption of the Philip
Center Loan upon such assumption. In the event the Philip Center Loan is not
assumed by Purchaser or Seller Parent is not released from its Philip Center
Guaranty, such loan shall be paid off at Closing, and any early termination fee
in excess of Two Hundred Thousand and No/100 U.S. Dollars ($200,000.00) shall be
an additional deduction to the Purchase Price set forth in Section 3.2.

 

Section 4.13         Monthly Insurance Updates. Seller Parent and Seller shall
provide (and shall cause the Companies to provide) Purchaser with current loss
runs for all such policies held by Seller or any Company within fifteen (15)
days after the end of each calendar month from the Effective Date until the
Closing. Prior to the Closing, Seller will promptly notify Purchaser of any
potential losses or claims that may be covered by such insurance policies.

 

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ARTICLE 5

Closing

 

Section 5.1           Closing. The Closing of the transactions contemplated by
this Agreement shall occur remotely, upon the exchange of signatures to the
documents contemplated by this Agreement and the other required deliveries of
each party hereto described below five (5) business days after the satisfaction
or (to the extent permitted by applicable law) waiver by the party or parties
entitled to the benefits thereof of the conditions set forth in Section 5.2 and
Section 5.3 (other than those conditions that by their nature are to be
satisfied by actions taken at the Closing, but subject to the satisfaction or
waiver (to the extent permitted by applicable Law) of such conditions), unless
extended by mutual agreement of Purchaser Parent and Seller Parent or pursuant
to Section 5.6, Section 10.11 and Section 10.12. The date on which the Closing
is scheduled to occur (as such date may be extended from time to time pursuant
to this Agreement) shall be the “Scheduled Closing Date” hereunder. The date on
which the Closing actually occurs shall be the “Closing Date” for purposes of
this Agreement.

 

Section 5.2           Conditions to Seller Parent’s and Seller’s Obligations.
Subject to Section 5.6(a), except as may be waived in writing by Seller Parent,
Seller Parent’s and Seller’s obligation to make its deliveries at the Closing
and to effect and consummate the transactions contemplated hereby shall be
subject to the following conditions:

 

(a)          Each of Purchaser’s and Purchaser Parent’s representations and
warranties contained in this Agreement, taken as whole, shall be true in all
material respects as of the Closing Date with the same effect as though made on
such date (except for representations and warranties made as of a specified
date, which shall have been true and correct as of such date with the same
effect as though made on such date), and Purchaser Parent shall have executed
and delivered to Seller Parent at Closing a certificate confirming the
foregoing.

 

(b)          Each of Purchaser’s and Purchaser Parent’s covenants and agreements
contained in this Agreement to be performed at or prior to the Closing shall
have been performed in all material respects at or prior to the Closing,
including but not limited to the full payment of the Purchase Price, and
Purchaser Parent shall have executed and delivered to Seller Parent at Closing a
certificate confirming the foregoing.

 

(c)          Purchaser and Purchaser Parent shall have delivered, and where
applicable shall have duly executed, all the documents, certificates and other
instruments required to be delivered at the Closing in accordance with Section
5.5 or any other express provision of this Agreement.

 

(d)          The Seller Parent Stockholder Approval shall have been obtained.

 

(e)          No temporary restraining order, preliminary or permanent
injunction, or other order issued by any court of competent jurisdiction, or
other legal restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect. No action shall have been
taken nor any statute, rule, or regulation shall have been enacted by any
governmental agency that makes the consummation of the transactions contemplated
hereby illegal.

 

 26

 

 

Section 5.3           Conditions to Purchaser’s Obligations. Subject to Section
5.6, except as may be waived in writing by Purchaser Parent, Purchaser’s
obligation to make its deliveries at the Closing and to effect and consummate
the transactions contemplated hereby shall be subject to the following
conditions:

 

(a)          Each of Seller Parent and Seller’s representations and warranties
contained in this Agreement, taken as a whole, shall be true in all material
respects as of the Closing Date with the same effect as though made on such date
(except for representations and warranties made as of a specified date, which
shall have been true and correct as of such date), and Seller Parent shall have
executed and delivered to Purchaser Parent at Closing a certificate confirming
the foregoing.

 

(b)          Each of Seller Parent and Seller’s covenants and agreements
contained in this Agreement to be performed at or prior to the Closing shall
have been performed in all material respects at or prior to the Closing, and
Seller Parent and Seller shall have executed and delivered to Purchaser Parent
at the Closing a certificate confirming the foregoing.

 

(c)          Seller and Seller Parent shall have delivered, and where applicable
shall have duly executed, all the documents, certificates and other instruments
required to be delivered at the Closing in accordance with Section 5.4 or any
other express provision of this Agreement.

 

(d)          No Material Adverse Change shall have occurred during the period
between the Effective Date and the Closing Date.

 

(e)          Purchaser shall have received reasonably acceptable estoppel
certificates from Tenants in accordance with their respective Leases and the
lessors in accordance with their respective Ground Leases and from any other
person identified with an asterisk on Schedule 4.8.

 

(f)          The Seller Parent Stockholder Approval shall have been obtained.

 

(g)          No temporary restraining order, preliminary or permanent
injunction, or other order issued by any court of competent jurisdiction, or
other legal restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect. No action shall have been
taken nor any statute, rule, or regulation shall have been enacted by any
governmental agency that makes the consummation of the transactions contemplated
hereby illegal.

 

Section 5.4           Deliveries by Seller. Seller Parent shall deliver to
Purchaser Parent on or before the Closing the following for each Company:

 

(a)          An assignment of the Membership Interests and the Holdco Interest
to Purchaser in form and substance reasonably satisfactory to Purchaser, duly
executed by Seller.

 

(b)          Such further instruments of conveyance and transfer as Purchaser
may reasonably require to cause any SPE-level Property held or controlled by
Seller to be transferred to Purchaser (or at Purchaser’s direction), in form and
substance reasonably acceptable to Purchaser.

 

 27

 

 

(c)          A certified copy of the company resolutions authorizing
consummation of this Agreement and authorizing Seller to execute all documents
necessary for Closing as provided herein.

 

(d)          The certificates required pursuant to Section 5.3(a) and Section
5.3(b), identifying such changes to the representations and warranties as shall
be necessary to make such representations true, complete and accurate in all
material respects as of the date and time of Closing.

 

(e)          A certificate of non-foreign status pursuant to Treasury Regulation
Section 1.1445-2(b)(2) signed by Seller under penalties of perjury stating
Seller’s name, address and U.S. taxpayer identification number and stating that
Seller is not a foreign person as defined by Section 1445(f)(3) of the IRC.

 

(f)          A certificate of existence or good standing as of a date which is
within fifteen (15) days of Closing, reflecting the Seller’s and each Company’s
good standing in its jurisdiction of organization and the authorization to do
business in each jurisdiction where the character of the Real Property owned,
operated or leased by Seller or such Company or the nature of its business makes
such qualification, licensing or good standing necessary.

 

(g)          A true, correct, and complete rent roll certified by an officer of
Seller, for the Cedarhurst Facility listing each resident as of a date which is
within five (5) business days prior to the Closing Date, the unit, bed or room
number of such resident, and the amount of the monthly fees to be paid by such
resident (including room, meal and other applicable monthly fees), the amount of
security deposit, if any, date of Residency Agreement and the expiration date of
such Residency Agreement, if applicable.

 

(h)          The third party consents listed on Schedule 5.4(h).

 

(i)          Possession and control of books and records included as part of the
SPE-level Property which are not physically located at each Company’s Real
Property as of the Closing Date.

 

(j)          The Escrow Agreement, executed by Seller Parent and the Escrow
Agent.

 

Section 5.5           Deliveries by Purchaser. Purchaser Parent shall deliver to
Seller Parent on or before the Closing the following:

 

(a)          The items described in Section 3.2 hereof representing payment of
the Purchase Price.

 

(b)          The certificates required pursuant to Section 5.2(a) and Section
5.2(b).

 

(c)          If the Philip Center Loan is not paid off at Closing, an agreement
reasonably satisfactory to Purchaser for the Purchaser’s assumption of the
Philip Center Loan, Purchaser providing to RGA Reinsurance Company a Separate
Guaranty of Carveout Obligations by Purchaser Parent with respect to matters
arising from and after Purchaser's assumption of the Philip Center Loan (in all
material respects the same as Seller Parent’s Guaranty), and the release of
Seller from the Philip Center Guaranty.

 

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(d)          The Escrow Agreement, executed by Purchaser.

 

Section 5.6           Non-Fulfillment of Closing Conditions. Notwithstanding
anything in this Agreement to the contrary, the following shall apply
exclusively if any of the conditions in Section 5.2 (other than Section 5.2(d),
in which case Section 9.1(c), (e) or (f) shall apply, or Section 5.2(e), in
which case Section 9.1(g) shall apply) and Section 5.3 (other than Section
5.3(f), in which case Section 9.1(c), (e) or (f) shall apply, or Section 5.3(g),
in which Section 9.1(g) shall apply) are not fulfilled as of the Scheduled
Closing Date:

 

(a)          Except as otherwise provided in the last sentence of this Section
5.6(a), if any of the conditions set forth in Section 5.2 (other than Section
5.2(d) or Section 5.2(e)) have not been fulfilled as of the Scheduled Closing
Date, but all the conditions set forth in Section 5.3 have been fulfilled or
expressly waived by Purchaser, Seller Parent may elect to (i) proceed to Closing
and waive such failure to fulfill for all purposes hereunder (in which case
Seller may enforce specific performance, if applicable); or (ii) terminate this
Agreement and, if such termination was pursuant to Section 5.2(a), Section
5.2(b), or Section 5.2(c), Purchaser Parent shall reimburse Seller for Seller’s
actual third party expenses, including actual non-Advisor legal and accounting
fees and any fee paid to STRH upon the delivery of a fairness opinion incurred
by Seller in connection with the transactions contemplated by this Agreement;
provided, however, such reimbursements shall not exceed Seven Hundred Fifty
Thousand and No/100 U.S. Dollars ($750,000.00) and after which Purchaser shall
have no further liability to Seller Parent except with respect to the surviving
provisions described in ARTICLE 9; or (iii) if the knowing or willful breach by
Purchaser Parent, Purchaser or their respective Affiliates of their respective
representations, obligations and commitments under this Agreement has been the
principal cause of the failure to fulfill such condition, pursue any other legal
or equitable remedies to which Seller Parent may be entitled. In the event of a
termination in accordance with Section 5.6(a)(ii), Seller Parent and Seller
hereby waive any right to recover the balance of the Purchase Price, or any part
thereof, and the right to pursue any other remedy permitted at law or in equity
against Purchaser. In no event under this Section 5.6 or otherwise shall
Purchaser be liable to Seller Parent or Seller for any punitive, speculative or
consequential damages. Notwithstanding the foregoing, if any of the conditions
in Section 5.3 are not satisfied, then Seller Parent’s and Seller’s rights under
this Section 5.6(a) are subject to Purchaser’s rights under Section 5.6(b)
below.

 

(b)          If the conditions set forth in Section 5.3 (other than Section
5.3(f) or Section 5.3(g) have not been fulfilled as of the Scheduled Closing
Date, then Purchaser shall give Seller Parent written notice of such failure,
which notice shall state Purchaser’s election: (i) to proceed with the Closing
and waive such failure to fulfill for all purposes hereunder (in which case
Purchaser may enforce specific performance, if applicable); or (ii) to extend
the Scheduled Closing Date for an additional thirty (30) days in order to
provide Seller Parent and Seller the opportunity to fulfill such condition and,
if such condition is not fulfilled within such thirty (30) day additional
period, Purchaser may terminate this Agreement, in which case Seller Parent
shall reimburse Purchaser for Purchaser’s actual third party, non-Advisor
expenses, including non-Advisor legal fees and any fee paid to KeyBanc Capital
Markets, Inc., incurred by Purchaser in connection with the transactions
contemplated by this Agreement; provided, however, such reimbursements shall not
exceed Seven Hundred Fifty Thousand and No/100 U.S. Dollars ($750,000.00), and
after which Seller Parent and Seller shall have no additional liability to
Purchaser for such failure, except for the surviving provisions described in
ARTICLE 9; or (iii) if the knowing or willful breach by Seller Parent, Seller or
their respective Affiliates of their respective representations, obligations and
commitments under this Agreement has been the principal cause of the failure to
fulfill such condition, pursue any other legal or equitable remedies to which
Purchaser Parent may be entitled. In no event under this Section 5.6(b) or
otherwise shall Seller be liable to Purchaser Parent or Purchaser for any
punitive, speculative, or consequential damages.

 

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Section 5.7           Post-Closing Actions. Seller Parent shall promptly deliver
to Purchaser the original of any mail or other communication received by it or
Seller after the Closing Date pertaining to the Companies, the Real Property, or
the Business and, subject to the provisions of Section 3.2, any payments to
which Purchaser is entitled. Purchaser shall promptly deliver to Seller Parent
the original of any mail or other communication received by Purchaser after the
Closing Date and addressed to Seller Parent or Seller which does not pertain to
the Companies, the Real Property, or the Business and, subject to the provisions
of Section 3.2, any payments to which Seller Parent or Seller is entitled.

 

ARTICLE 6

Representations and Warranties of Seller Parent and Seller

 

The following representations and warranties are given by Seller Parent and
Seller. Seller Parent and Seller hereby represents and warrants, jointly and
severally, to Purchaser Parent that as of the date hereof and the Effective
Date:

 

Section 6.1           Organization and Standing. Seller Parent is a corporation,
duly organized, validly existing, and in good standing under the laws of the
State of Maryland, OP Seller is a limited partnership duly formed, validly
existing, and in good standing under the laws of the state of Delaware, and each
Company is a limited liability company duly organized, validly existing, and in
good standing under the laws of the State of Delaware. Each of Seller Parent,
Seller and the Companies has the requisite power and authority to own, sell,
lease and operate its properties and to carry on its business as it is now being
conducted. Each of Seller Parent, Seller and the Companies is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
character of the Real Property owned, operated or leased by them or the nature
of their businesses makes such qualification, licensing or good standing
necessary. Each of Seller Parent and Seller has the power and authority to
execute and deliver this Agreement and to consummate the transactions and
perform its obligations contemplated by this Agreement.

 

Section 6.2           Valid and Binding Obligations. The execution, delivery and
performance of this Agreement and all other agreements and instruments to be
executed and delivered by Seller Parent, Seller or any Company hereunder, and
the consummation of the transactions contemplated by this Agreement, have been
duly authorized by all necessary action of Seller Parent, Seller and each
Company. This Agreement constitutes, and all instruments required to be executed
and delivered by Seller Parent, Seller or any Company before or at the Closing
will constitute, the valid and binding obligations of Seller Parent, Seller or
the applicable Company, enforceable against Seller Parent, Seller and the
applicable Company, in accordance with their respective terms. All persons who
have executed this Agreement on behalf of Seller Parent or Seller have been duly
authorized to do so by all necessary company action of Seller Parent and/or
Seller and all persons who execute instruments required to be executed and
delivered by Seller Parent, Seller or any Company before or at the Closing shall
have been duly authorized to do so by all necessary company action of Seller
Parent, Seller and the applicable company.

 

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Section 6.3           Capitalization.

 

(a)          OP Seller is the record owner of and has good and valid title to
the Membership Interests and Holdco Seller is the record owner of and has good
and valid title to the Holdco Interest, free and clear of all Encumbrances.
Other than with respect to ARHC Quad Cities Portfolio Member, LLC, the
Membership Interests constitute 100% of the total issued and outstanding
membership interests in the Companies. The Holdco Interest constitutes 100% of
the total issued and outstanding membership interests in Cedarhurst TRS Master
Facility Tenant.  The JV Membership Interests constitute 95% of the total issued
and outstanding membership interests in ARHC Quad Cities Portfolio Member, LLC.
The Membership Interests and the Holdco Interest have been duly authorized and
are validly issued, fully-paid and non-assessable. Upon consummation of the
transactions contemplated by this Agreement, Purchaser shall own all of the
Membership Interests and the Holdco Interest, free and clear of all
Encumbrances.

 

(b)          The Membership Interests and the Holdco Interest were issued in
compliance with applicable laws. The Membership Interests and the Holdco
Interest were not issued in violation of the limited liability company agreement
of any of the Companies or any other agreement, arrangement, or commitment to
which Seller or any Company is a party and are not subject to or in violation of
any preemptive or similar rights of any person.

 

(c)          There are no outstanding or authorized options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
of any character relating to any membership interests in any of the Companies or
obligating Seller or any Company to issue or sell any membership interests
(including the Membership Interests and the Holdco Interest), or any other
interest, in the respective Company. Other than the limited liability company
agreements of each Company, there are no voting trusts, proxies or other
agreements or understandings in effect with respect to the voting or transfer of
any of the Membership Interests.

 

Section 6.4           Title; SPE-level Property Complete; Condition. Each
Company has, or prior to Closing will acquire, good and marketable title to all
of the SPE Personal Property associated with its Real Property, and after the
Closing, each Company shall continue to own the SPE Personal Property, free and
clear of all Encumbrances, except for Permitted Encumbrances. Seller has the
unrestricted right to convey and assign the Membership Interests and the Holdco
Interest. Except as set forth in Schedule 6.4, the Real Property and the
SPE-level Property comprises all material assets, rights or property used by
Seller and each Company in the operation of the Business and constitutes all of
the personal property used or reasonably required for the operation of the
Business and, to Seller’s Knowledge, all of the SPE-level Property is in good
condition, working order and repair (ordinary wear and tear excepted).

 

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Section 6.5           Taxes and Tax Returns. Seller Parent, Seller and/or each
Company has filed when due or will file when due in correct form all federal and
state income tax returns for all periods ending on or prior to the Closing Date
which are required to be filed by Seller Parent, Seller and/or each Company on
or prior to the Closing Date. Other than extensions to file Seller Parent’s,
Seller’s or each Company’s tax returns, there are no agreements by Seller
Parent, Seller or any Company for the extension of time for the assessment of
any tax. All federal, state, county and local taxes due and payable by Seller
Parent, Seller and/or any Company on or before the Effective Date have been paid
and any taxes due and payable at any time between the Effective Date through the
Closing will be paid prior to Closing, and there are no federal, state or local
tax liens pending or threatened against Seller Parent, Seller, any Company or
the Real Property. There is no open audit of any of Seller Parent’s, Seller’s or
any Company’s federal, state, local income, sales use or property tax returns
pending, and none of Seller Parent, Seller or any Company has received a notice
of the pendency of any such audit or examination. None of Seller Parent, Seller
or any Company holds or had held a certificate or other authorization issued by
any tax collection body for the purpose of avoiding the payment by Seller
Parent, Seller or any Company of sales and use taxes upon Seller Parent’s,
Seller’s or such Company’s purchases of goods and services, nor has Seller
Parent, Seller or any Company applied for such a certificate or other
authorization.

 

Section 6.6           Execution and Delivery. Neither the execution and delivery
of this Agreement (nor any related instrument or agreement) nor the consummation
of the transactions contemplated by this Agreement will:

 

(a)          violate any provisions of the Seller Parent Organizational
Documents, the limited partnership agreement of OP Seller or any limited
liability company agreement of any Company;

 

(b)          with the consent of the lender under the Philip Center Loan,
violate any contract or agreement relating to borrowed money, or any judgment,
order, injunction, decree or award against, or binding upon Seller Parent,
Seller or any Company or upon the property or business of Seller Parent, Seller
or any Company, which violation would prevent, delay or materially hinder
consummation of the transactions contemplated by this Agreement;

 

(c)          result in the creation of any Encumbrance upon the Real Property
pursuant to the terms of any agreement or instrument to which Seller Parent,
Seller OP Seller’s Property Manager, any Company is a party or by or to which
Seller Parent, Seller OP Seller’s Property Manager, any Company, the Cedarhurst
Manager (to Seller’s Knowledge), or the Real Property may be bound, subject or
affected;

 

(d)          violate any judgment, order, injunction, decree or award against,
or binding upon, Seller Parent, Seller, OP Seller’s Property Manager, any
Company, or upon the Real Property or the Business; or

 

(e)          with the consent of the lender under the Philip Center Loan, result
in any breach, violation, acceleration, default, or cancellation, as applicable,
of any contract, agreement, mortgage, lien, franchise, permit, deed to secure
debt, or lease to which Seller Parent, Seller, OP Seller Property Manager, or
any Company, or to Seller’s Knowledge, any Manager, is a party or by which
Seller Parent, Seller, OP Seller’s Property Manager or any Company is bound or
the Real Property is subject that could have a material adverse effect on the
Real Property or the operations of the Business.

 

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Section 6.7           Contracts and Leases. Schedule 6.7 hereto sets forth all
contracts, leases or agreements to which Seller Parent, Seller, any Company, or
the Cedarhurst Manager is a party, written or oral, currently in effect that are
material to the operation or management of the Business or the ownership and use
of the Real Property as currently operated, managed, owned or used by Seller
Parent, Seller, any Company, OP Seller Property Manager, or the Cedarhurst
Manager, as applicable (the “Material Contracts” ), which (for clarity) excludes
the Residency Agreements to which no Seller Affiliate is a party, as described
in Section 6.8. Each of the Material Contracts is in full force and effect in
accordance with its terms. Seller has made available to Purchaser true and
correct copies of all Material Contracts, including all material amendments or
modifications to same. None of Seller Parent, Seller, any Company OP Property
Manager, or to Seller’s Knowledge, or the Cedarhurst Manager, is in material
breach, default or violation of any of the Material Contracts and, to Seller’s
Knowledge, no other party to any such contract or lease is in material breach,
default or violation thereof. No event has occurred and no condition exists that
with the passage of time or the giving of notice, or both, would constitute a
material default by Seller Parent, Seller, any Company, or OP Property Manager
or, to Seller’s Knowledge, by any other party to any Material Contract.

 

Section 6.8           Residency Agreements and Related Matters. Schedule 6.8
contains a rent roll regarding the Residency Agreements currently in effect as
provided by the Cedarhurst Manager. The providers under the Residency Agreements
are third parties unaffiliated with the Seller. To Seller’s Knowledge, each of
the Residency Agreements is in full force and effect in accordance with its
terms. Seller has made available to Purchaser true and correct copies of all
such Residency Agreements, including all material amendments or modifications to
same. To Seller’s Knowledge, Cedarhurst Manager is not in material breach,
default or violation of any Residency Agreement and, to Seller’s Knowledge, no
other party to any such contract is in material breach, default or violation
thereof. To Seller’s Knowledge, no event has occurred and no condition exists
that, with the passage of time or the giving of notice, or both, would
constitute a material default by Cedarhurst Manager or, to Seller’s Knowledge,
any other party to any Residency Agreement. Except as otherwise noted on
Schedule 6.8, to Seller’s Knowledge, the Cedarhurst Manager does not have any
obligation with respect to refund of any deposits, interest on deposits or
similar obligations with respect to any Residency Agreement. Any and all
deposits paid by the residents under the Residency Agreements are paid to
unaffiliated third parties. To Seller’s Knowledge, the rent rolls provided by
the Cedarhurst Manager in accordance with the Cedarhurst Management Agreement in
respect to the Cedarhurst Facility are true and correct in all material respects
as of the date thereof. Except as indicated on the standard form of Residency
Agreement made available to Purchaser prior to the Effective Date or as
otherwise required by state law, to Seller’s Knowledge, all Residency Agreements
are terminable by the respective residents thereunder on thirty (30) days’
notice or less.

 

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Section 6.9           Permits and Licenses. Schedule 6.9 contains a complete
list of all material governmental permits, variances, licenses, certificates and
authorizations held by Seller Parent, Seller, any Company, OP Seller’s Property
Manager, or the Cedarhurst Manager that relate to the ownership, use, operation
or management of the Real Property, the Business, and/or the Cedarhurst Facility
(the “Permits and Licenses”). Seller has made available to Purchaser true and
correct copies of all Permits and Licenses. The Permits and Licenses are in full
force and effect, and have not been revoked or rescinded, nor to Seller’s
Knowledge has any governmental agency or authority threatened to revoke or
rescind any such Permit or License. To Seller’s Knowledge, Seller Parent,
Seller, the Companies, OP Seller’s Property Manager, and the Cedarhurst Manager
are using, operating and managing the Business and the Real Property in
compliance with the terms and conditions of the Permits and Licenses, and except
as noted in periodic inspection or survey reports by agencies having
jurisdiction over Seller Parent, Seller, any Company, OP Seller’s Property
Manager, the Cedarhurst Manager, copies of which have been made available to
Purchaser, none of Seller Parent, Seller, any Company, or OP Seller’s Property
Manager and, to Seller’s Knowledge, the Cedarhurst Manager, has received written
notice of any uncured deficiency or violation of any such term or condition from
any applicable government body or agency. Except for the Permits and Licenses
shown on said Schedule 6.9, there are no other material governmental permits,
licenses, certificates or authorizations required for Seller Parent, Seller, any
Company, OP Seller’s Property Manager, or the Cedarhurst Manager, to own, use,
operate or manage the Business as currently owned, used, operated or managed by
any of the foregoing, as applicable. In addition, none of Seller Parent, Seller,
any Company, OP Seller’s Property Manager, or to Seller’s Knowledge, the
Cedarhurst Manager has received written notice that any agreement, easement or
other right that is necessary to permit the current use of the buildings and
improvements on the Real Property or that is necessary to permit the current use
of all parking areas, driveways, roads and other means of egress and ingress to
and from the Real Property has failed to be obtained. To Seller’s Knowledge,
none of the Permits and Licenses will terminate as a result of the Closing.

 

Section 6.10         Insurance. Schedule 6.10 lists all of Seller Parent’s,
Seller’s, each Company’s, OP Seller’s Property Manager’s, and the Cedarhurst
Manager’s policies of property and casualty insurance and liability insurance
currently in effect and covering the Business and the Real Property, copies of
which have been made available for review by Purchaser. Each such policy held by
Seller Parent, Seller, each Company and OP Seller’s Property Manager currently
is in full force and effect and, to Seller’s Knowledge, each such policy of the
Cedarhurst Manager currently is in full force and effect. To Seller’s Knowledge,
none of Seller Parent, Seller, any Company, OP Seller’s Property Manager, or the
Cedarhurst Manager has taken or failed to take any action, including, without
limitation, the failure to give any notice or information, which would limit or
impair any of Seller Parent’s, Seller’s, OP Seller’s Property Manager, any
Company’s, or the Cedarhurst Manager’s rights thereunder with respect to any
matter for which Purchaser could be held liable as a successor to Seller Parent
or Seller. Schedule 6.10 lists any pending, unresolved claims under (a) Seller
Parent’s, Seller’s, any Company’s or OP Seller’s Property Manager’s policies of
property and casualty or liability insurance and (b) to Seller’s Knowledge, the
Cedarhurst Manager’s policies covering the Real Property or the Business, as
well as all claims made and resolved within the past three (3) years. None of
Seller Parent, Seller, any Company or OP Seller’s Property Manager, or, to
Seller’s Knowledge, the Cedarhurst Manager, has received written, or to Seller’s
Knowledge, oral, notice of any pending cancellation or nonrenewal of such
policies.

 

Section 6.11         Employees. Since their respective dates of formation, no
Company has had any employees.

 

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Section 6.12         Litigation. Except as described on Schedule 6.12, there is
no litigation, action, suit, or other proceeding currently pending, or to
Seller’s Knowledge, threatened against Seller Parent, Seller, any Company, OP
Seller’s Property Manager and/or the Cedarhurst Manager (in the case of the
Cedarhurst Manager, relating to the Real Property or the Business), at law or in
equity, or before any federal, state, municipal, local or other governmental or
quasi-governmental authority, or before any arbitrator. To Seller’s Knowledge,
there is no pending investigation of Seller Parent, Seller, any Company, OP
Seller’s Property Manager or the Cedarhurst Manager (in the case of the
Cedarhurst Manager, relating to the Real Property or the Business) and/or in
respect to the Business by any governmental or quasi-governmental authority.
Without limiting the foregoing, there is no pending proceeding that has been
commenced against Seller Parent, Seller, any Company or OP Seller’s Property
Manager or to Seller’s Knowledge, against the Cedarhurst Manager, that
challenges, or may have the effect of preventing, delaying, making illegal or
otherwise interfering with, the transaction contemplated by this Agreement. To
Seller’s Knowledge, no such proceeding has been threatened against Seller
Parent, Seller, any Company, OP Seller’s Property Manager or the Cedarhurst
Manager (in the case of the Cedarhurst Manager, relating to the Real Property or
the Business). None of Seller Parent, Seller, OP Seller’s Property Manager, the
Companies or, to Seller’s Knowledge, the Cedarhurst Manager, is subject to any
judgment, injunction, order, writ or decree of any court or other governmental
authority or agency relating specifically to Seller Parent, Seller, OP Seller’s
Property Manager, any Company or the Cedarhurst Manager or to the ownership,
operation or management of the Real Property and/or the operations of the
Business.

 

Section 6.13         Compliance with Laws. Except as otherwise noted on
Schedule 6.13, or in any inspection or survey report of any governmental
authority made available to Purchaser, Seller Parent, Seller, the Companies, and
OP Seller’s Property Manager, and to Seller’s Knowledge, the Cedarhurst Manager
are in compliance in all material respects with all applicable laws, rules and
regulations in connection with its ownership, use, operation or management of
the Real Property and the Business, including without limitation all laws, rules
and regulations related to Government Programs, and none of Seller Parent,
Seller, any Company or OP Seller’s Property Manager and to Seller’s Knowledge,
the Cedarhurst Manager has received notice of any violation thereof which has
not been cured as of the Effective Date. For the avoidance of doubt, except as
otherwise noted on Schedule 6.13, none of Seller Parent, Seller, any Company or
OP Seller’s Property Manager and to Seller’s Knowledge, the Cedarhurst Manager
has received written notice (i) that any agreement, easement or other right of
an unlimited duration that is necessary to permit the lawful use and operation
of the buildings and improvements on the Real Property or that is necessary to
permit the lawful use and operation of all utilities, parking areas, retention
ponds, driveways, roads and other means of egress and ingress to and from the
Real Property is not in full force and effect as of the Effective Date or (ii)
of any default under any such agreement, easement or right, or any material
uncured violation or pending written threat of modification or cancellation of
any of the same.

 

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Section 6.14         Financial Statements. Each of the consolidated financial
statements contained or incorporated by reference in the Seller Parent’s SEC
filings (as amended, supplemented or restated, if applicable), including the
related notes and schedules, was prepared (except as indicated in the notes
thereto) in accordance with GAAP applied on a consistent basis throughout the
periods indicated, and each such consolidated financial statement presented
fairly, in all material respects, the consolidated financial position, results
of operations, stockholders’ equity and cash flows of Seller Parent and its
consolidated subsidiaries as of the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
quarterly financial statements, to normal year-end adjustments). Cedarhurst TRS
Facility Master Tenant’s financial statements pertaining to the operations of
the Cedarhurst Facility for the period ended December 31, 2016 (the “2016
Cedarhurst Financial Statement”) and for the three months ended March 31, 2017
(the “First Quarter 2017 Cedarhurst Financial Statement” ) are attached hereto
as Schedule 6.14 (the 2016 Cedarhurst Financial Statement and the First Quarter
2017 Cedarhurst Financial Statement collectively, the “Cedarhurst Financial
Statements”). Except as otherwise set forth on Schedule 6.14, the Cedarhurst
Financial Statements have been prepared consistently applied throughout the
periods indicated and present fairly in all material respects the results of
operations and financial condition of the Cedarhurst Facility for the respective
periods indicated. The monthly financial reports to be provided to Purchaser
pursuant to Section 4.1(j) will be based upon the books and records of Seller
Parent consistent with Seller Parent’s current reporting practice, and will
present fairly in all material respects the information purported to be
presented therein.

 

Section 6.15         Real Property. To Seller’s Knowledge, and except as may be
disclosed on Schedule 6.15, Seller Parent’s, Seller’s, each Company’s, OP
Seller’s Property Manager’s and the Cedarhurst Manager’s use of the Real
Property complies in all material respects with applicable zoning and land use
laws, rules and regulations and with all applicable building codes, and none of
Seller Parent, Seller, any Company, or OP Seller’s Property Manager or (to
Seller’s Knowledge) the Cedarhurst Manager has received written notice of any
zoning, land use or building code violation relative to the Real Property which
has not been cured prior to the date hereof. To Seller’s Knowledge (unless
Seller Parent, Seller or any Company is a party thereto), there is no pending
litigation or dispute concerning the location of the lines and corners of the
Real Property. None of Seller Parent, Seller or any Company has received any
written notice of, and has no other Knowledge of, pending, threatened or
contemplated actions by any governmental authority or agency having the power of
eminent domain, which might result in any part of the Real Property being taken
by condemnation or conveyed in lieu thereof. To Seller’s Knowledge, there is no
claim of adverse possession with respect to any part of the Real Property.
Except as may be disclosed on Schedule 6.15, there are no ongoing improvements,
construction projects or similar development of the Real Property that is
currently in process or otherwise uncompleted. Except as may be disclosed on
Schedule 6.15, for the past three years, there has been no material change in
the physical condition of any real property or Improvements.

 

Section 6.16         Environmental Matters. Except as may be disclosed on
Schedule 6.16, or in any environmental audit or inspection report made available
by Seller to Purchaser or the reports generated by Purchaser’s environmental
consultants, to Seller’s Knowledge: (a) no areas exist on the Real Property
where Hazardous Substances have been generated, disposed of, released, stored or
found in violation of any Environmental Laws, and Seller has no Knowledge and
has received no written notice of the existence of any such areas for the
generation, storage or disposal of any Hazardous Substances on the Real Property
in violation of any Environmental Laws; (b) neither Seller nor any of its agents
has violated in any material respect any of the applicable Environmental Laws
relating to or affecting the Real Property; (c) the Real Property is presently
in compliance in all material respects with all Environmental Laws; (d) Seller
has obtained all material licenses, permits and/or other governmental or
regulatory approvals necessary to comply with Environmental Laws relating to its
use of the Real Property, and Seller is in compliance in all material respects
with the terms and provisions of all such licenses, permits and/or other
governmental or regulatory approvals; (e) no underground storage tanks are
currently located on the Real Property; (f) the Real Property has not been
previously used as a landfill or as a dump for garbage or refuse; and (g) no
asbestos containing building material or lead based paint are present in any
structures located on the Real Property.

 

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Section 6.17         Brokers, Finders. Neither Seller Parent nor Seller has
retained any broker, finder, or investment banker in connection with the
transactions contemplated hereby so as to give rise to any claim against
Purchaser for any brokerage or finder’s commissions, fee, or similar
compensation.

 

Section 6.18         FIRPTA. None of Seller Parent, Seller or any Company is a
“foreign person” as that term is defined in the Internal Revenue Code of 1986,
as amended, and the regulations promulgated pursuant thereto, and Purchaser has
no obligation under Internal Revenue Code Section 1445 to withhold and pay over
to the Internal Revenue Service any part of the amount realized by Seller in the
transaction contemplated hereby (as such term is defined in the regulations
issued under IRC Section 1445.

 

Section 6.19         Consent of Third Parties. Except for Seller Parent
Stockholder Approval and as otherwise set forth on Schedule 6.19, no consent of
any third party is required as a condition to the entering into, performance or
delivery of this Agreement by Seller Parent and Seller, other than such consents
as would not, in any individual case or in the aggregate, have a material
adverse effect upon Purchaser’s ability to complete the purchase of the
Companies and operate the Business in the manner in which it is currently being
operated by Seller Parent, Seller, OP Seller’s Property Manager, and the
Cedarhurst Manager.

 

Section 6.20         No Governmental Approvals. To Seller’s Knowledge, except as
set forth in on Schedule 6.20, no order, permission, consent, approval, license,
authorization, registration or validation of, or filing with, or exemption by,
any governmental agency, commission, board or public authority is required to
authorize, or is required in connection with the execution, delivery and
performance by Seller Parent or Seller of this Agreement or the taking of any
action contemplated by this Agreement, which has not been obtained.

 

Section 6.21         Assessments. To Seller’s Knowledge, there are no (i)
special or other assessments for public improvements or otherwise now affecting
the Real Property, (ii) any pending or threatened special assessments affecting
the Real Property, or (iii) any contemplated improvements affecting the Real
Property that may result in special assessments affecting the Real Property.

 

Section 6.22         Title Encumbrances. Except as described on Schedule 6.22,
none of Seller Parent, Seller or any Company is in default under any of its
material obligations under any recorded agreement, easement or instrument
encumbering title to the Real Property, and to Seller’s Knowledge, there is no
default on the part of any other party thereto.

 

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Section 6.23         Loans and Debts. There are no loans or debts secured by any
of the Real Property except for (i) the loans and debts described on
Schedule 6.23 or (ii) loans and debts that constitutes a Permitted Title
Exception. Schedule 6.23 identifies all of the agreements, instruments and other
documents evidencing and/or securing such loans and debts and any guaranty
thereof (collectively, “Loan Documents”). Each of the Loan Documents is in full
force and effect in accordance with its terms. Seller has made available to
Purchaser true and correct copies of all Loan Documents, including all
amendments or modifications to same. Neither Seller nor any Company is in
material breach, default or violation of any of the Loan Documents and, to
Seller’s Knowledge, no other party to any such contract or lease is in breach,
default or violation thereof. No event has occurred and no condition exists that
with the passage of time or the giving of notice, or both, would constitute a
default by Seller or any Company or, to Seller’s Knowledge, by any other party
to any Loan Documents.

 

Section 6.24         Intellectual Property. Schedule 6.24 is a true and complete
list of all Intellectual Property held or owned by Seller Parent, Seller, or any
Company or in which any has any interest, and is all the Intellectual Property
necessary for use of the Real Property and the operation of the Business as
currently conducted. Seller Parent, Seller, and/or each Company owns or has the
perpetual right to use, without payment to or interference from any third party,
all Intellectual Property listed (or required to be listed) on Schedule 6.24. To
Seller’s Knowledge, there is no conflict with the rights of others with respect
to any Intellectual Property. Seller Parent, Seller, and each Company, as
applicable, has the full right without payment or interference from any third
party to use the names listed on Schedule 6.24 and all variations and
derivations thereof to the full extent necessary for the operation of the
Business and none of Seller Parent, Seller, or any Company has authorized any
person in any jurisdiction to use such Intellectual Property.

 

Section 6.25         Ground Lease. Seller has provided to Purchaser a correct
and complete copy of the Ground Leases. The Ground Leases are in full force and
effect, and to Seller’s Knowledge, there are no defaults or events that with
notice or lapse of time or both would constitute a default by Seller, ARHC
MMJLTIL01, LLC, ARHC DMDCRGA01, LLC, ARHC PPLVLGA01, LLC or any other party
under the respective Ground Leases.

 

Section 6.26         Joint Ventures. Seller has provided to Purchaser correct
and complete copies of any and all agreements establishing joint venture or
partnership arrangements (other than between Seller Parent and its operating
partnership) in which Seller Parent or OP Seller, or any of their subsidiaries,
is a co-venturer or general partner established to own any of the Companies or
the Real Property.

 

Section 6.27         Insolvency. None of Seller Parent, Seller, OP Seller’s
Property Manager, the Companies or, to Seller’s Knowledge, the Cedarhurst
Manager has/have (i) commenced a voluntary case or had entered against it a
petition for relief under any applicable laws relative to bankruptcy,
insolvency, or other relief for debtors, (ii) caused, suffered or consented to
the appointment of a receiver, trustee, administrator, conservator, liquidator,
or similar official in any federal, state or foreign judicial or non-judicial
proceeding to hold, administer, and/or liquidate all or substantially all of its
respective assets, (iii) had filed against it any involuntary petition seeking
relief under any applicable laws relative to bankruptcy, insolvency, or other
relief to debtors which involuntary petition is not dismissed within sixty (60)
days, or (iv) made a general assignment for the benefit of creditors.

 

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Section 6.28         Access. To Seller’s Knowledge, there is no fact or
condition existing that would result or could result in the termination or
reduction of the current access from the Real Property to the existing roads and
highways or to sewer or other utility services presently serving the Real
Property.

 

Section 6.29         Medicare; Medicaid and Compliance with Healthcare Laws.

 

(a)          To Seller’s Knowledge, the Cedarhurst Manager is not receiving
payment under Titles XIX of the Social Security Act and is not certified for
participation in any governmental payor programs, and is not a party to
participation agreements for payment by any governmental payor program.

 

(b)          With respect to the Cedarhurst Facility, to Seller’s Knowledge,
each Company has complied with any applicable security and privacy standards
regarding protected health information under the Health Insurance Portability
and Accountability Act of 1996 and the implementing regulations at 45 CFR Parts
160 and 164, as amended by the Health Information Technology for Economic and
Clinical Health Act (collectively “HIPAA”), and all applicable state privacy and
security Laws.

 

Section 6.30         Opinion of Financial Advisor. The Seller Parent Special
Committee has received an opinion from SunTrust Robinson Humphrey, Inc., to the
effect that, as of the date of such opinion and based on and subject to the
assumptions, qualifications, limitations and other matters considered in
connection with the preparation of such opinion, the Purchase Price is to be
collectively received by Seller in exchange for the Membership Interests and the
Holdco Interests pursuant to this Agreement was fair, from a financial point of
view, to Seller.

 

Section 6.31         No Other Representations or Warranties. Except for the
express representations and warranties of Purchaser Parent and/or Purchaser
contained in ARTICLE 7, Seller Parent and Seller acknowledge that Purchaser
Parent and Purchaser have not made, and Seller Parent and Seller have not relied
upon, any other representation or warranty, express or implied, with respect to
Purchaser Parent, Purchaser, or the transactions contemplated herein.

 

ARTICLE 7

Representations and Warranties of Purchaser Parent and Purchaser

 

The following representations and warranties are given by Purchaser Parent and
Purchaser. Purchaser Parent and Purchaser hereby represents and warrants,
jointly and severally, to Seller Parent that as of the date hereof and the
Effective Date:

 

Section 7.1           Organization and Standing. Purchaser Parent is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of Maryland, OP Purchaser is a limited partnership duly
formed, validly existing, and in good standing under the laws of the state of
Delaware, and Holdco Purchaser is a limited liability company duly organized,
validly existing, and in good standing under the laws of the state of Delaware.
Each of Purchaser Parent and Purchaser has the requisite power and authority to
own, sell, lease and operate its properties and to carry on its business as now
being conducted. Each of Purchaser Parent and Purchaser has the power and
authority to execute and deliver this Agreement and to consummate the
transactions and perform its obligations contemplated by this Agreement.

 

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Section 7.2           Valid and Binding Obligations. The execution, delivery and
performance of this Agreement and all other agreements and instruments to be
executed and delivered by Purchaser Parent or Purchaser hereunder, and the
consummation of the transactions contemplated by this Agreement, have been duly
authorized by all necessary action of Purchaser Parent and Purchaser. This
Agreement constitutes, and all instruments required to be executed and delivered
by Purchaser Parent and Purchaser before or at the Closing will constitute, the
valid and binding obligations of Purchaser Parent and Purchaser, enforceable
against Purchaser Parent and Purchaser in accordance with their respective
terms. All persons who have executed this Agreement on behalf of Purchaser
Parent and Purchaser have been duly authorized to do so by all necessary company
action of Purchaser Parent and Purchaser and all persons who execute instruments
required to be executed and delivered by Purchaser Parent and Purchaser before
or at the Closing shall have been duly authorized to do so by all necessary
company action of Purchaser Parent and Purchaser.

 

Section 7.3           Execution and Delivery. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated by this
Agreement will:

 

(a)          violate any provisions of the charter or bylaws, as amended to
date, of Purchaser Parent, the limited partnership agreement of OP Purchaser, or
the limited liability company agreement of Holdco Purchaser;

 

(b)          violate any contract or agreement relating to borrowed money, or
any judgment, order, injunction, decree or award against, or binding upon
Purchaser Parent or Purchaser or upon the property or business of Purchaser
Parent or Purchaser, which violation would prevent, delay or materially hinder
consummation of the transactions contemplated by this Agreement;

 

(c)          violate any judgment, order, injunction, decree or award against,
or binding upon, Purchaser Parent or Purchaser; or

 

(d)          result in any breach, violation, acceleration, default or
cancellation, as applicable, of any contract, agreement, mortgage, lien,
franchise, permit, deed to secure debt, or lease to which Purchaser Parent or
Purchaser is a party or by which Purchaser Parent or Purchaser is bound and that
could have a material adverse effect upon Purchaser Parent or Purchaser’s
ability to consummate the transactions described herein.

 

Section 7.4           Solvency. None of Purchaser Parent or Purchaser are now
insolvent, or will be rendered insolvent by completion of the transactions
contemplated herein. For purposes of the preceding sentence, “insolvent” means,
upon completion of the Closing, (i) that the fair market value of Purchaser
Parent or Purchaser’s assets is less than the sum of Purchaser Parent or
Purchaser’s debts and other liabilities or (ii) Purchaser Parent or Purchaser
has inadequate cash flow to service its debts as they come due. Upon the
completion of the transactions contemplated herein, Purchaser Parent and
Purchaser will have adequate capital for the purposes of engaging in the
Business and any business or transaction in which Purchaser Parent or Purchaser
is or will engage.

 

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Section 7.5           Consent of Third Parties. Except as otherwise set forth on
Schedule 7.5, no consent of any third party is required as a condition to the
entering into, performance or delivery of this Agreement by Purchaser Parent or
Purchaser, other than such consents as would not, in any individual case or in
the aggregate, have a material adverse effect upon Purchaser Parent or
Purchaser’s ability to consummate the transactions contemplated by this
Agreement.

 

Section 7.6           No Governmental Approvals. To Purchaser Parent and
Purchaser’s knowledge, except as set forth on Schedule 7.6, no order,
permission, consent, approval, license, authorization, registration or
validation of, or filing with, or exemption by, any governmental agency,
commission, board or public authority is required to authorize, or is required
in connection with the execution, delivery and performance by Purchaser Parent
or Purchaser of this Agreement or the taking of any action contemplated by this
Agreement, which has not been obtained.

 

Section 7.7           Brokers, Finders. Purchaser Parent and Purchaser have not
retained any broker, finder, or investment banker in connection with the
transactions contemplated hereby so as to give rise to any valid claim against
Seller Parent for any brokerage or finder’s commission, fee, or similar
compensation.

 

Section 7.8           Opinion of Financial Advisor. The Purchaser Parent’s
Special Committee has received the opinion of KeyBanc Capital Markets Inc., to
the effect that, as of such opinion and based on and subject to the assumptions,
qualifications, limitations and other matters set forth in such opinion, the
Purchase Price is fair, from a financial point of view, to Purchaser Parent.

 

Section 7.9           No Other Representations or Warranties. Except for the
express representations and warranties of Seller and Seller Parent contained in
ARTICLE 6, Purchaser Parent and Purchaser acknowledge that Seller Parent and
Seller have not made, and Purchaser Parent has not relied upon, any other
representation or warranty, express or implied, with respect to Seller Parent,
Seller, any Company, the Business, the Real Property, the Cedarhurst Facility,
Cedarhurst Manager, or the transactions contemplated herein.

 

ARTICLE 8

Indemnification

 

Section 8.1           Indemnification by Seller Parent and Seller. Following the
Closing, Seller Parent and Seller shall jointly and severally indemnify, hold
harmless and defend Purchaser Parent and Purchaser from and against any and all
losses, damages, costs, expenses, liabilities, obligations and claims of any
kind (including, without limitation, reasonable attorneys’ fees and other legal
costs and expenses) (collectively, “Losses”) which Purchaser Parent and
Purchaser may at any time suffer or incur, or become subject to, as a result of
or in connection with:

 

(a)          any breach or inaccuracy of any of the representations and
warranties made by Seller Parent and Seller in this Agreement;

 

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(b)          any failure by Seller Parent or Seller to carry out, perform,
satisfy and discharge any of its covenants, agreements, undertakings,
liabilities or obligations under this Agreement;

 

(c)          any federal, state, or local income, payroll, sales and use, ad
valorem or other taxes payable by Seller, any of the Companies, or any of their
respective Affiliates, or for which Seller, any of the Companies or any of their
respective Affiliates is liable in connection with any taxable period, or
portion thereof, ending on or prior to the Closing Date, and any interest or
penalties thereon;

 

(d)          any amounts owed to STRH pursuant to the STRH Engagement Letter;
and

 

(e)          any stockholder litigation brought by stockholders of Seller Parent
directly or derivatively in connection with the transactions contemplated by
this Agreement.

 

Section 8.2           Indemnification by Purchaser Parent and Purchaser.
Following the Closing, Purchaser Parent and Purchaser shall jointly and
severally indemnify hold harmless and defend Seller Parent and Seller from and
against, and reimburse Seller Parent and Seller for, any and all Losses which
Seller Parent and Seller may at any time suffer or incur, or become subject to,
as a result of or in connection with:

 

(a)          any breach or inaccuracy of any of the representations and
warranties made by Purchaser Parent and Purchaser in this Agreement;

 

(b)          any failure by Purchaser Parent or Purchaser to carry out, perform,
satisfy and discharge any of its covenants, agreements, undertakings,
liabilities or obligations under this Agreement; and

 

(c)          any fees or expenses owed to KeyBanc Capital Markets Inc.

 

Section 8.3           Indemnification Limits; Survival.

 

(a)          Purchaser Parent and Purchaser shall not be entitled to any
indemnification from Seller Parent or Seller under Section 8.1(a) or Section
8.1(b) unless and until the aggregate amount of indemnifiable claims of
Purchaser under this Agreement exceeds Five Hundred Thousand and No/100 U.S.
Dollars ($500,000.00) (the “Seller Threshold”), at which point Seller Parent and
Seller shall be liable for all indemnifiable claims of Purchaser Parent or
Purchaser under Section 8.1(a) and Section 8.1(b). Seller Parent and Seller’s
liability for indemnification under Section 8.1(a) and Section 8.1(b) shall not
in any case exceed ten percent (10%) of the total Purchase Price (the
“Indemnification Cap” ); provided, however, that neither the Seller Threshold
nor the Indemnification Cap shall apply in the case of: (i) fraud on the part of
Seller; (ii) any claims arising under Section 8.1(a) with respect to the
representations and warranties contained in Section 6.1, Section 6.2, Section
6.4 (first sentence only), Section 6.6, or Section 6.17 (which shall be limited
to the Purchase Price); or (iii) any claims arising under Section 8.1(c),
Section 8.1(d), or Section 8.1(e). All of Seller Parent and Seller’s
representations and warranties under this Agreement shall survive for a period
of fourteen (14) months following the Closing Date. Purchaser’s right to make
any claim for indemnification against Seller Parent and Seller under Section
8.1(a), Section 8.1(b), Section 8.1(d) and Section 8.1(e) shall expire at the
end of the fourteenth (14th) month following the Closing; provided, however,
that any claim for which Purchaser Parent or Purchaser has given written notice
prior to expiration of such fourteenth (14th) month anniversary shall survive
until finally adjudicated; and further provided that Purchaser Parent or
Purchaser’s right to make any claim for indemnification pursuant to Section
8.1(c) shall not expire and any claim for indemnification pursuant to Section
8.1(c) shall survive for the applicable statute of limitations period for
collection of the applicable tax.

 

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(b)          Seller Parent and Seller shall not be entitled to any
indemnification from Purchaser Parent or Purchaser under Section 8.2(a) or
Section 8.2(b) unless and until the aggregate amount of indemnifiable claims of
Seller under this Agreement, exceeds Five Hundred Thousand U.S. Dollars and
No/100 ($500,000.00) (the “Purchaser Threshold” ), at which point Purchaser
Parent or Purchaser shall be liable for all indemnifiable claims of Seller or
Seller Parent under Section 8.2(a) and Section 8.2(b). Purchaser Parent and
Purchaser’s liability for indemnification under Section 8.2(a) and Section
8.2(b) shall not in any case exceed ten percent (10%) of the total Purchase
Price (the “Purchaser Indemnification Cap” ); provided, however, that neither
the Purchaser Threshold nor the Purchaser Indemnification Cap shall apply in the
case of: (i) fraud on the part of Purchaser Parent or Purchaser; (ii) any claims
arising under Section 8.2(a) with respect to the representations and warranties
contained in Section 7.1, Section 7.2 and Section 7.7 (which shall be limited to
the Purchase Price); (iii) any amounts owed to STRH; or (iv) any amounts payable
pursuant to Section 3.3. All of Purchaser Parent’s and Purchaser’s
representations and warranties under this Agreement shall survive for a period
of fourteen (14) months following the Closing Date.

 

(c)          For purposes of determining the amount of Losses that are subject
to indemnification hereunder with respect to any events, facts or circumstances,
after determining whether or not such facts, events or circumstances give rise
to a breach of a representation or warranty (after giving full effect to any
qualifications as to materiality or similar standards, or of lack of “material
adverse effect,” contained in such representation and warranty), the
determination of the amount of Losses for such breach of representation and
warranty, as it relates to such facts, events or circumstances, shall be made
without giving effect to any qualifications as to materiality or similar
standards, or the lack of “material adverse effect” contained in such
representation or warranty.

 

(d)          Any payments made pursuant to ARTICLE 8 of this Agreement shall be
treated as a purchase price adjustment for income tax purposes.

 

Section 8.4           Procedures Regarding Third Party Claims. The procedures to
be followed by Purchaser Parent, Purchaser, Seller Parent and Seller with
respect to indemnification hereunder regarding claims by third parties shall be
as follows:

 

(a)          Promptly after receipt by Purchaser or Seller, as the case may be,
of notice of the commencement of any action or proceeding or the assertion of
any claim by a third person, which the party receiving such notice has reason to
believe may result in a claim by it for indemnity pursuant to this Agreement,
such person (the “Indemnified Party”) shall give notice of such action,
proceeding or claim to the party against whom indemnification is sought (the
“Indemnifying Party”), setting forth in reasonable detail the nature of such
action or claim, including copies of any written correspondence from such third
person to such Indemnified Party.

 

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(b)          The Indemnifying Party shall be entitled, at its own expense, to
assume and control such defense with counsel chosen by the Indemnifying Party
and approved by the Indemnified Party, which approval shall not be unreasonably
withheld or delayed. The Indemnified Party shall be entitled to participate in
such defense after such assumption at the Indemnified Party’s own expense. Upon
assuming such defense, the Indemnifying Party shall have full rights to enter
into any monetary compromise or settlement which is dispositive of the matters
involved; provided that such settlement is paid in full by the Indemnifying
Party and will not have any continuing material adverse effect upon the
Indemnified Party.

 

(c)          With respect to any action, proceeding or claim as to which the
Indemnifying Party shall not have exercised its right to assume the defense, the
Indemnified Party may assume and control the defense of and contest such action,
proceeding or claim with counsel chosen by it. The Indemnifying Party shall be
entitled to participate in the defense of such action, the cost of such
participation to be at its own expense. The Indemnifying Party shall be
obligated to pay the reasonable attorneys’ fees and expenses of the Indemnified
Party to the extent that such fees and expenses relate to claims as to which
indemnification is due under Section 8.1 or Section 8.2 hereof, as the case may
be. The Indemnified Party shall have full rights to dispose of such action and
enter into any monetary compromise or settlement; provided, however, in the
event that the Indemnified Party shall settle or compromise any claims involved
in the action insofar as they relate to, or arise out of, the same facts as gave
rise to any claim for which indemnification is due under Section 8.1 or Section
8.2 hereof, as the case may be, it shall act reasonably and in good faith in
doing so.

 

(d)          Both the Indemnifying Party and the Indemnified Party shall
cooperate fully with one another in connection with the defense, compromise or
settlement of any such claim, proceeding or action, including, without
limitation, by making available to the other all pertinent information and
witnesses within its control.

 

Section 8.5           General Qualifications on Indemnification. Notwithstanding
any provision to the contrary, the indemnification rights set forth in Section
8.1 and Section 8.2 shall be subject to the following:

 

(a)          The liability of an Indemnifying Party with respect to any
indemnification claim shall be reduced by the amount of any tax benefit actually
realized or any insurance proceeds received by Indemnified Party as a result of
any damages, upon which such claim is based, and shall be increased by the
amount of any tax detriment actually suffered by the Indemnified Party as a
result of such damages. The amount of such tax benefit or detriment shall be
determined by taking into account the effect, if any, and to the extent
determinable, of timing differences resulting from the acceleration or deferral
of items of gain or loss resulting from such damages.

 

(b)          Damages shall include actual damages and shall not include any
special, punitive, multiplied or consequential damages, or lost profits, except
to the extent the same are included in a third-party judgment against the
Indemnified Party.

 

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(c)          Upon payment in full of any indemnification claim, the Indemnifying
Party shall be subrogated to the extent of such payment to the rights of the
Indemnified Party against any person or entity with respect to the subject
matter of such indemnification claim.

 

(d)          An Indemnified Party may not recover for any losses otherwise
indemnifiable under Section 8.1(a), Section 8.1(b), Section 8.2(a) or Section
8.2(b) if such Indemnified Party or its Advisor (or such Advisor’s executive
officers) had actual (and not merely imputed) knowledge prior to Closing of the
breach, inaccuracy or failure giving rise to such losses.

 

(e)          An Indemnifying Party shall be relieved of its duty to indemnify an
Indemnified Party hereunder if and to the extent the Indemnified Party fails to
use commercially reasonable efforts in good faith to mitigate its damages,
including, but not limited to, failure to give timely notice to its insurance
carriers and to pursue recovery under applicable policies of insurance.

 

(f)          Except in the case of fraud, any losses payable to Purchaser or
Purchaser Parent shall be satisfied (i) from the Escrow Amount and (ii) to the
extent the amount of losses exceeds the Escrow Amount, from Seller Parent and
Seller jointly and severally.

 

Section 8.6           Effective Upon Closing. The provisions of this ARTICLE 8
shall become effective upon completion of the Closing, and shall have no force
and effect prior to the Closing or if this Agreement is terminated prior to
Closing.

 

ARTICLE 9

Termination

 

Section 9.1           Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to Closing as follows:

 

(a)          by mutual agreement of Seller Parent and Purchaser Parent;

 

(b)          by Purchaser Parent, as and to the extent permitted pursuant to
Section 5.6(b);

 

(c)          by Purchaser Parent, (i) if, at any time prior to the Seller Parent
Stockholder Approval, the Seller Parent Board or any committee thereof, for any
reason, shall have effected a Seller Parent Change in Recommendation; or (ii)
if, at any time prior to the Seller Parent Stockholder Approval, (A) the Seller
Parent Board or any committee thereof shall have approved, adopted or publicly
endorsed or recommended any Acquisition Proposal, (B) the Seller Parent enters
into a contract or agreement relating to an Acquisition Proposal (other than a
confidentiality agreement entered into in compliance with Section 4.7(c)), (C) a
tender offer or exchange offer for any outstanding Seller Parent Common Stock
that constitutes an Acquisition Proposal (other than by Purchaser or any of its
Affiliates) is commenced and the Seller Parent Board fails to recommend against
acceptance of such tender offer or exchange offer by the stockholders of Seller
Parent and to publicly reaffirm the Seller Parent Recommendation within ten (10)
Business Days of being requested to do so by Purchaser, (D) the Seller Parent
Board or any committee thereof fails to include the Seller Parent Recommendation
in the Proxy Statement, or (E) Seller Parent shall have materially violated any
of its obligations under Section 4.7 (or shall be deemed pursuant to the last
sentence of Section 4.7(a) to have materially violated) any of its obligations
under Section 4.7 (other than any immaterial or inadvertent violations thereof
that did not result in an alternative Acquisition Proposal); in which case,
Seller Parent shall pay, within three (3) Business Days of such termination, to
Purchaser the Termination Fee in immediately available funds to an account
directed by Purchaser;

 

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(d)          by Seller Parent, as and to the extent permitted pursuant to
Section 5.6(a);

 

(e)          by either Purchaser Parent or Seller Parent, if either (i) the
Seller Parent Stockholder Approval shall not have been obtained at a duly held
Seller Parent Stockholder Meeting (including any adjournment or postponement
thereof) at which the transactions contemplated hereby have been voted upon or
(ii) the Seller Parent Stockholder Approval otherwise is not obtained within 120
days after the record date for the Seller Parent Stockholder Meeting;

 

(f)          by Seller Parent, if, prior to obtaining the Seller Parent
Stockholder Approval, the Seller Parent Board (based on the recommendation of
the Seller Parent Special Committee) approves and authorizes Seller Parent to
enter into a definitive agreement providing for the implementation of a Superior
Proposal in a manner permitted under Section 4.7(d)); provided, however, that
this Agreement may not be so terminated unless concurrently with the occurrence
of such termination Seller Parent pays the Termination Fee in full to Purchaser
and the definitive agreement relating to the Superior Proposal is entered into,
and in the event that such definitive agreement is not concurrently entered into
and such payment is not concurrently made, such termination shall be null and
void;

 

(g)          if a court of competent jurisdiction or other governmental agency
shall have issued an order, decree, or ruling or taken any other action (which
order, decree or ruling the parties hereto shall use their commercially
reasonable best efforts to lift), in each case permanently restraining,
enjoining, or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling, or other action shall have become
final and nonappealable;

 

(h)          by either Purchaser Parent or Seller Parent if Closing shall not
have occurred on or before March 16, 2018; provided, however, that the right to
terminate this Agreement pursuant to this Section 9.1(h) shall not be available
to any party if the failure of such party (and (A) in the case of Purchaser
Parent, including the failure of Purchaser and their Affiliates and (B) in the
case of the Seller Parent, including the failure of Seller and their Affiliates)
to perform any of its obligations under this Agreement has been a principal
cause of, or resulted in, the failure of the transactions to be consummated on
or before such date.

 

Section 9.2           Effect of Termination. Upon termination of this Agreement
prior to Closing, except as otherwise expressly provided herein, the parties
shall have no further liability hereunder except that the following provisions
shall survive any such termination: Section 4.3 and Section 4.4. In the event of
any termination of this Agreement pursuant to Section 9.1(e), Seller Parent
shall reimburse Purchaser for Purchaser’s actual third party, non-Advisor
expenses, including non-Advisor legal fees and any fee paid to KeyBanc Capital
Markets, Inc., incurred by Purchaser in connection with the transactions
contemplated by this Agreement; provided, however, such reimbursements shall not
exceed Eight Hundred Fifty Thousand and No/100 U.S. Dollars ($850,000.00).

 

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Section 9.3           Payment of Termination Fee.

 

(a)          If the Seller Parent is required to pay to Purchaser Parent the
Termination Fee, such Termination Fee shall be paid into escrow on the date such
payment is required to be paid by Seller Parent pursuant to this Agreement by
wire transfer of immediately available funds to an escrow account designated in
accordance with this Section 9.3. In the event that Seller Parent is obligated
to pay Purchaser the Termination Fee, the amount payable to Purchaser in any tax
year of Purchaser shall not exceed the lesser of (i) the Termination Fee payable
to Purchaser, and (ii) the sum of (A) the maximum amount that can be paid to
Purchaser without causing Purchaser to fail to meet the requirements of Section
856(c)(2) and (3) of the Code for the relevant tax year, determined as if the
payment of such amount did not constitute income described in Sections 856(c)(2)
or 856(c)(3) of the Code (“Qualifying Income”) and Purchaser has One Million and
No/100 U.S. Dollars ($1,000,000.00) of income from unknown sources during such
year which is not Qualifying Income (in addition to any known or anticipated
income which is not Qualifying Income), in each case, as determined by
Purchaser’s independent accountants, plus (B) in the event Purchaser receive
either (x) a letter from the Purchaser’s counsel indicating that Purchaser has
received a ruling from the Internal Revenue Service as described below in
Section 9.3(b) or (y) an opinion from Purchaser’s outside counsel as described
below in Section 9.3(b), an amount equal to the excess of the Termination Fee
less the amount payable under clause (A) above.

 

(b)          To secure Seller Parent’s obligation to pay these amounts, Seller
Parent shall deposit into escrow an amount in cash equal to the Termination Fee
with an escrow agent selected by Seller Parent on such terms (subject to this
Section 9.3) as shall be mutually agreed upon by Seller Parent, Purchaser and
the escrow agent. The payment or deposit into escrow of the Termination Fee
pursuant to this Section 9.3 shall be made at the time Seller Parent is
obligated to pay Purchaser such amount pursuant to Section 9.1 by wire transfer.
The escrow agreement shall provide that the Termination Fee in escrow or any
portion thereof shall not be released to Purchaser unless the escrow agent
receives any one or combination of the following: (A) a letter from Purchaser’s
independent accountants indicating the maximum amount that can be paid by the
escrow agent to Purchaser without causing Purchaser to fail to meet the
requirements of Sections 856(c)(2) and (3) of the Code determined as if the
payment of such amount did not constitute Qualifying Income and Purchaser has
One Million and No/100 U.S. Dollars ($1,000,000.00) of income from unknown
sources during such year which is not Qualifying Income (in addition to any
known or anticipated income which is not Qualifying Income), in which case the
escrow agent shall release such amount to Purchaser, or (B) a letter from
Purchaser’s counsel indicating that (x) Purchaser received a ruling from the
Internal Revenue Service holding that the receipt by Purchaser of the
Termination Fee would either constitute Qualifying Income or would be excluded
from gross income within the meaning of Sections 856(c)(2) and (3) of the Code
or (y) Purchaser’s outside counsel has rendered a legal opinion to the effect
that the receipt by Purchaser of the Termination Fee should either constitute
Qualifying Income or should be excluded from gross income within the meaning of
Sections 856(c)(2) and (3) of the Code, in which case the escrow agent shall
release the remainder of the Termination Fee to Purchaser. Seller Parent agrees
to amend this Section 9.3 at the reasonable request of Purchaser in order to (1)
maximize the portion of the Termination Fee that may be distributed to
Purchasers hereunder without causing Purchaser to fail to meet the requirements
of Sections 856(c)(2) and (3) of the Code, or (2) assist Purchaser in obtaining
a favorable ruling or legal opinion from its outside counsel, in each case, as
described in this Section 9.3. Any amount of the Termination Fee that remains
unpaid as of the end of a taxable year shall be paid as soon as possible during
the following taxable year, subject to the foregoing limitations of this Section
9.3.

 

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ARTICLE 10

Miscellaneous

 

Section 10.1         Access to Books and Records after Closing. Following the
Closing, Purchaser and Purchaser Parent shall give Seller and Seller Parent or
its authorized Representatives access, during normal business hours and upon
prior notice, to such books and records constituting or relating to the
Membership Interests, the Real Property, and the SPE-level Property as Seller
has provided to Purchaser in accordance with Section 2.2 and as shall be
reasonably requested by Seller and Seller Parent in connection with the
preparation and filing of the party’s tax returns, to comply with regulatory
requirements or for any other valid business purpose, and to make extracts and
copies of such books and records. Purchaser agrees to retain all books and
records included as part of the SPE-level Property for at least two (2) years
following the Closing Date.

 

Section 10.2         Notices. All notices, requests, demands and other
communications under this Agreement and related post-Closing notices, requests,
demands, and other communications, shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given, (ii) on the day of transmission if sent via
electronic mail (e.g. email) during regular business hours, with a confirmatory
copy delivered by FedEx or similar overnight courier, (iii) on the day after
delivery to FedEx® or similar overnight courier, or (iv) on the tenth (10th) day
after mailing, if mailed to the party to whom notice is to be given, by
first-class mail, registered or certified, return receipt requested, postage
prepaid and properly addressed, to the party as follows:

 

If to Purchaser Parent or Purchaser: Healthcare Trust, Inc.   Attn:  Legal
Department   405 Park Avenue, 4th Floor   New York, New York 10022   Email:
JGalloway@ar-global.com       Healthcare Trust Operating Partnership, L.P.  
Attn:  Legal Department   405 Park Avenue, 4th Floor   New York, New York 10022
  Email: JGalloway@ar-global.com

 

 48

 

 

with a copy   (which will not constitute notice) to: Arnold & Porter Kaye
Scholer LLP   Attn:  Kevin J. Lavin, Esq.   601 Massachusetts Avenue NW  
Washington, DC 20001   Email:  Kevin.Lavin@apks.com     If to Seller Parent or
Seller: American Realty Capital Healthcare Trust III, Inc.   Attn:  Legal
Department   405 Park Avenue, 4th Floor   New York, New York 10022   Email:
JGalloway@ar-global.com       American Realty Capital Healthcare   Trust III
Operating Partnership, L.P.   Attn:  Legal Department   405 Park Avenue, 4th
Floor   New York, New York 10022   Email: JGalloway@ar-global.com     with a
copy   (which will not constitute notice) to: Shapiro Sher Guinot & Sandler,
P.A.   Attn:  William E. Carlson, Esq.   250 West Pratt Street   Suite 2000  
Baltimore, Maryland 21201   Email: wec@shapirosher.com

 

Any party may change the address to which notices are to be sent to it by giving
written notice of such change of address to the other parties in the manner
herein provided for giving notice.

 

Section 10.3         Good Faith; Cooperation. The parties shall in good faith
undertake to perform their obligations in this Agreement, to satisfy all
conditions and to cause the transactions contemplated by this Agreement to be
carried out promptly in accordance with its terms. The parties shall cooperate
fully with each other and their respective Representatives in connection with
any actions required to be taken as part of their respective obligations under
this Agreement.

 

Section 10.4         Assignment; Exchange Cooperation; Successors in Interest.
Neither Purchaser, Seller Parent nor Seller may assign any of their respective
rights hereunder, except with the prior written consent of the other (which
shall not be unreasonably withheld or delayed). This Agreement is binding upon
the parties and their respective successors or assigns and inures to the benefit
of the parties and their permitted successors and assigns.

 

Section 10.5         No Third Party Beneficiaries. The parties do not intend to
confer any benefit under this Agreement on anyone other than the parties, and
nothing contained in this Agreement shall be deemed to confer any such benefit
on any other person, including any current or former employee or agent of Seller
or any dependent or beneficiary of any of them.

 

 49

 

 

Section 10.6         Severability. Any determination by any court of competent
jurisdiction of the invalidity of any provision of this Agreement that is not
essential to accomplishing its purposes shall not affect the validity of any
other provision of this Agreement, which shall remain in full force and effect
and which shall be construed as to be valid under applicable law.

 

Section 10.7         Reserved.

 

Section 10.8         Controlling Law; Integration; Amendment; Waiver.

 

(a)          Except to the extent Maryland law may be mandatorily applicable to
transactions contemplated by this Agreement and/or applicable to conduct,
decisions, and acts by the Seller Parent’s directors, this Agreement shall be
governed by and construed in accordance with the laws and case decisions of the
State of Delaware without giving effect to any choice or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction).

 

(b)          This Agreement and the other contracts, documents and instruments
to be delivered pursuant to this Agreement supersede all prior negotiations,
agreements, information memoranda, letters of intent and understandings between
the parties with respect to their subject matter, whether written or oral,
constitute the entire agreement of the parties with respect to their subject
matter, and may not be altered or amended except in writing signed by Purchaser
Parent, Purchaser Seller Parent, and Seller. Neither of the parties has made or
relied upon any representation, warranty or assurances in connection with the
transactions contemplated hereunder other than those expressly made herein.

 

(c)          The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect its
right to enforce the same, and no waiver by any party of any provision (or of a
breach of any provision) of this Agreement, whether by conduct or otherwise, in
any one or more instances shall be deemed or construed either as a further or
continuing waiver of any such provision or breach or as a waiver of any other
provision (or of a breach of any other provision) of this Agreement.

 

Section 10.9         Time. Time is of the essence with respect to this
Agreement.

 

Section 10.10        Survival. For the avoidance of doubt and notwithstanding
anything contrary in this Agreement, (a) Section 4.3, Section 4.4, Section 4.5,
Section 4.7, Section 4.9, Section 5.7, ARTICLE 8 and ARTICLE 10 of this
Agreement shall survive the Closing of this Agreement and (b) in respect to any
Real Property that (in accordance with Section 10.11 or Section 10.12 of this
Agreement) is not purchased, Section 4.3, Section 4.4, and ARTICLE 10 of this
Agreement shall survive.

 

 50

 

 

Section 10.11        Eminent Domain; Condemnation. If, prior to Closing, any
proceedings are instituted by any governmental authority that shall relate to
the proposed taking of all or any portion of any Real Property by eminent domain
or condemnation (or if all or any portion of any Real Property is taken by
eminent domain or deeded under threat of condemnation after the date of this
Agreement and prior to the Closing), Seller shall promptly notify Purchaser in
writing after Seller’s receipt of any notification (and provide copies of any
notices, Complaints, deeds and the like). Purchaser shall thereafter have the
right and option to elect not to purchase such Real Property by giving written
notice to Seller within fifteen (15) days after receipt by Purchaser of the
notice from Seller and the date of the Closing shall be extended if necessary to
afford Purchaser such full fifteen (15) day period. If Purchaser timely elects
not to purchase such Real Property, the Purchase Price shall be adjusted by
reducing the Purchase Price by the portion of the Purchase Price that is
allocated for such Real Property (as any such amount is set forth on Schedule
3.4, and neither party hereto shall have any obligations of any nature to the
other hereunder or by reason hereof in respect to such Real Property not being
purchased except for those obligations and liabilities that are expressly stated
to survive termination of this Agreement. If no such election is timely made,
Purchaser shall be deemed to have waived its rights under this Section 10.11
with respect to such Real Property, except that, if the transaction contemplated
hereby closes, Purchaser shall be entitled to the proceeds and the right to
negotiate, settle and collect the proceeds of such condemnation award, and
Seller shall execute and deliver all documents reasonably requested of Seller in
order to effectuate this Section 10.11. If no election not to purchase such Real
Property is made (and Purchaser expressly waives its rights under this Section
10.11 with respect to such Real Property), Purchaser shall have the right to
participate prior to the Closing in any discussions or proceedings with any
governmental authority relating to the proposed taking of any portions of the
Real Property. Notwithstanding anything in the foregoing to the contrary,
Purchaser shall not have any right and option under this Section 10.11 to elect
not to purchase such Real Property if such proceedings relate only to a road
widening or other minor taking that does not impact any leased or leasable
premises, reduce any parking area, or otherwise significantly decrease the
actual or potential income stream from such Real Property.

 

Section 10.12        Risk of Loss. Subject to the provisions of this Section
10.12, as among the parties to this Agreement and their Affiliates, the
Companies shall retain all risks and liability for loss, damage, destruction or
injury by fire, storm, accident or any other casualty to the Real Property from
all causes until the Closing has been consummated. In the event of any such
damage or destruction prior to Closing (a) with an estimated repair cost of
greater than Twenty-five Percent (25%) of the portion of the Purchase Price that
is allocated to such Real Property (as set forth on Schedule 3.4) (the “Casualty
Threshold”), or (b) that requires a legally nonconforming Real Property to be
rebuilt in accordance with current zoning requirements, as reasonably determined
by an engineer selected by Seller and reasonably satisfactory to Purchaser, or
(c) that affects the lobby, building-wide systems, parking facilities or common
areas or the continued operation of the balance of the Real Property not
damaged, or (d) gives rise to rent abatement or termination rights of tenants
under Leases covering more than Twenty-five Percent (25%) (the “Percentage”) of
the leased rentable square feet of the building, then Purchaser may elect to not
purchase such Real Property by providing notice given to Seller within fifteen
(15) days after Seller has given Purchaser notice that such damage occurred and
whether any of the circumstances described in clauses (a) through (d) has
occurred, and the Closing shall be extended if necessary to afford Purchaser
such full fifteen (15) day period. If Purchaser timely elects not to purchase
such Real Property, the Purchase Price shall be reduced by the portion of the
Purchase Price that is allocated for such Real Property (as set forth on
Schedule 3.4), and neither party hereto shall thereupon have any further
obligation to the other in respect to such Real Property not being purchased,
except for those obligations and liabilities that are expressly stated to
survive termination of this Agreement. If no such election is timely made,
Purchaser shall be deemed to have waived its rights under this Section 10.12
with respect to such Real Property, except as set forth below. If, prior to the
Closing, there shall occur damage to the Real Property that does not satisfy any
of clauses (a) through (d) above, then Purchaser shall not have the right under
this Section 10.12 to not purchase such Real Property. If Purchaser does not
exercise its right to elect not to purchase any Real Property, or if Purchaser
does not have the right to elect not to purchase any Real Property, with respect
to any fire or casualty, then Seller shall assign to Purchaser at the Closing,
by written instrument in form and substance reasonably satisfactory to
Purchaser, all claims against third parties relating to such damage, including
all of the insurance proceeds payable on account of any such fire or casualty,
and Purchaser shall be entitled to receive the full amount of any proceeds of
such insurance payable on account of loss, damage, destruction or casualty after
the date hereof. Seller shall deliver to Purchaser any such proceeds actually
paid prior to Closing, and Seller Parent and Seller shall be liable for the
payment to Purchaser of all deductibles under applicable insurance policies (net
of reasonable expenses of Seller, including, but not limited to the costs of
emergency repairs and safeguarding the Real Property). The proceeds of any rent
interruption insurance, if any, shall be appropriately apportioned between
Purchaser and Seller. Seller Parent and Seller covenant to execute such
assignments, drafts and other instruments as may be required to effectuate this
Section 10.12. If no election not to purchase such Real Property is made (and
Purchaser expressly waives its rights under this Section 10.12 with respect to
such Real Property), or if Purchaser does not have the right to elect not to
purchase under this Section 10.12, Purchaser shall have the right to participate
prior to the Closing in any discussions or proceedings with any insurer or other
third party relating to any claims made with respect to damage affecting the
Real Property.

 

 51

 

 

Section 10.13         Attorneys’ Fees. In the event either 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. This Section 10.13 shall not apply to
any action involving a claim not exceeding Five Hundred Thousand and No/100 U.S.
Dollars ($500,000.00).

 

Section 10.14         Waiver of Jury Trial. The parties agree that no party to
this Agreement shall seek a jury trial in any lawsuit, proceeding, counterclaim
or other litigation based upon, or arising out of, this Agreement or the
dealings or the relationship between them.

 

Section 10.15         Construction. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of the fact
that it may have been prepared by counsel for one of the parties, it being
recognized that both Seller and Purchaser have contributed with the advice of
counsel to the preparation of this Agreement.

 

Section 10.16         Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original. This
Agreement may be executed by counterpart signatures and all counterpart
signature pages shall constitute a part of this Agreement. Delivery of a
counterpart hereof via facsimile transmission or by electronic mail
transmission, including but not limited to an Adobe file format document (also
known as a PDF file), shall be as effective as delivery of a manually executed
counterpart hereof.

 

[Signatures commence on the following page.]

 

 52

 

 

IN WITNESS WHEREOF, each of the parties hereto has signed and sealed this
Purchase Agreement as of the day and year first above written.

 

  PURCHASER PARENT:       HEALTHCARE TRUST, INC., a Maryland corporation        
By: /s/ W. Todd Jensen   Name: W. Todd Jensen   Title: Interim Chief Executive
Officer and President

 

[Additional signature pages follow]

 

SIGNATURE PAGE TO

PURCHASE AGREEMENT

 

 

 

 

  OP PURCHASER:       HEALTHCARE TRUST OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership       By: Healthcare Trust, Inc., its general partner      
  By: /s/ W. Todd Jensen   Name: W. Todd Jensen   Title: Interim Chief Executive
Officer and President

 

[Additional signature pages follow]

 

SIGNATURE PAGE TO

PURCHASE AGREEMENT

 

 

 

 

  HOLDCO PURCHASER:       ARHC TRS HOLDCO II, LLC, a Delaware limited liability
company       By: Healthcare Trust Operating Partnership, L.P., its sole member
      By: Healthcare Trust, Inc., its general partner         By: /s/ W. Todd
Jensen   Name: W. Todd Jensen   Title: Interim Chief Executive Officer and
President

 

[Additional signature pages follow]

 

SIGNATURE PAGE TO

PURCHASE AGREEMENT

 

 

 

 

  SELLER PARENT:       AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC., a
Maryland corporation         By: /s/ W. Todd Jensen   Name: W. Todd Jensen  
Title: President and Interim Chief Executive Officer

 

SIGNATURE PAGE TO

PURCHASE AGREEMENT

 

 

 

 

  OP SELLER:       AMERICAN REALTY CAPITAL HEALTHCARE TRUST III OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership       By: American Realty
Capital Healthcare Trust III, Inc., its general partner         By: /s/ W. Todd
Jensen   Name: W. Todd Jensen   Title: President and Interim Chief Executive
Officer

 

[Additional signature pages follow]

 

SIGNATURE PAGE TO

PURCHASE AGREEMENT

 

 

 

 

  HOLDCO SELLER:       ARHC TRS HOLDCO III, LLC, a Delaware limited liability
company       By: American Realty Capital Healthcare Trust III Operating
Partnership, L.P., its sole member       By: American Realty Capital Healthcare
Trust III, Inc., its general partner         By: /s/ W. Todd Jensen   Name: W.
Todd Jensen   Title: President and Interim Chief Executive Officer

 

SIGNATURE PAGE TO

PURCHASE AGREEMENT

 

 

 

 

Exhibit A

Form of Wells Fargo Escrow Agreement

 

EXHIBIT A to PURCHASE AGREEMENT

 

ESCROW AGREEMENT

 

This Escrow Agreement (the “Escrow Agreement”), dated this ___ day of
_________________, 2017 (the “Effective Date”), is entered into by and among
Healthcare Trust, Inc., a Maryland corporation (“Purchaser Parent”), American
Realty Capital Healthcare Trust III, Inc., a Maryland corporation (“Seller
Parent,” and together with Purchaser Parent, the “Parties,” and individually, a
“Party”), and Wells Fargo Bank, National Association, a national banking
association organized under the laws of the United States, as escrow agent
(“Escrow Agent”).

 

RECITALS

 

A.           Purchaser Parent and Seller Parent are parties to that certain
Purchase Agreement, dated as of June 16, 2017, by and among (i) Purchaser
Parent, (ii) Healthcare Trust Operating Partnership, a Delaware limited
partnership (“OP Purchaser” ), (iii) ARHC TRS HOLDCO II, LLC, a Delaware limited
liability company (“Holdco Purchaser” and, collectively with OP Purchaser, the
“Purchaser” ) (iv) Seller Parent, (v) American Realty Capital Healthcare Trust
III Operating Partnership, L.P., a Delaware limited partnership and (vi) ARHC
TRS HOLDCO III, LLC, a Delaware limited liability company (as amended, the
“Purchase Agreement”). The Parties are entering into this Escrow Agreement
pursuant to and in connection with the consummation of the transactions
contemplated by the Purchase Agreement.

 

B.            The Parties agree to place in escrow certain funds and the Escrow
Agent agrees to hold and distribute such funds in accordance with the terms of
this Escrow Agreement.

 

C.           The Parties acknowledge that the Escrow Agent is not a party to, is
not bound by, and has no duties or obligations under, the Purchase Agreement,
that all references in this Escrow Agreement to the Purchase Agreement are for
convenience, and that the Escrow Agent shall have no implied duties beyond the
express duties set forth in this Escrow Agreement.

 

In consideration of the promises and agreements of the Parties and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties and the Escrow Agent agree as follows:

 

ARTICLE 1
ESCROW DEPOSIT

 

Section 1.1.          Receipt of Escrow Property. Following execution hereof
Purchaser Parent shall deliver to the Escrow Agent the amount of $6,000,000 (the
“Escrow Property”) in immediately available funds.

 

Section 1.2.          Investments.

 

(a)          The Escrow Agent is authorized and directed to deposit, transfer,
hold and invest the Escrow Property and any investment income thereon as set
forth in Exhibit A hereto or as set forth in any subsequent written instruction
signed by the Parties. Any investment earnings and income on the Escrow Property
shall become part of the Escrow Property, and shall be disbursed in accordance
with Section 1.3 or Section 1.6 of this Escrow Agreement.

 

 

 

 

(b)          The Escrow Agent is hereby authorized and directed to sell or
redeem any such investments as it deems necessary to make any payments or
distributions required under this Escrow Agreement. The Escrow Agent shall have
no responsibility or liability for any loss which may result from any investment
or sale of investment made pursuant to this Escrow Agreement. The Escrow Agent
is hereby authorized, in making or disposing of any investment permitted by this
Escrow Agreement, to deal with itself (in its individual capacity) or with any
one or more of its affiliates, whether it or any such affiliate is acting as
agent of the Escrow Agent or for any third person or dealing as principal for
its own account. The Parties acknowledge that the Escrow Agent is not providing
investment supervision, recommendations, or advice.

 

(c)          The Parties agree that confirmations of permitted investments are
not required to be issued by the Escrow Agent for each month in which a monthly
statement is rendered. No statement need be rendered for any fund or account if
no activity occurred in such fund or account during such month. The Parties may
obtain confirmations at no additional cost upon its written request.

 

Section 1.3.          Disbursements.

 

(a)          Purchaser Parent and Seller Parent may at any time jointly deliver
to the Escrow Agent joint written instructions (a “Joint Instruction”) directing
the Escrow Agent to distribute all or a portion of the Escrow Property. Within
two Business Days after the date on which the Escrow Agent receives such Joint
Instruction, the Escrow Agent shall disburse the amount set forth in the Joint
Instruction to the Purchaser Parent or Seller Parent to the accounts designated
in such Joint Instruction.

 

(b)          In the event and to the extent that Purchaser Parent determines
that it or Purchaser is entitled to any amount pursuant to the Purchase
Agreement, Purchaser Parent may, at any time on or prior to 11:59 p.m. Eastern
Time on _________, 20__1 (the “Claims End Date”), deliver a certificate or
certificates to the Escrow Agent and Seller Parent (each a “Purchaser Release
Certificate”) requesting that the Escrow Agent distribute all or a portion of
the Escrow Property to Purchaser Parent or a third-party designated by Purchaser
Parent, as the case may be, in satisfaction of such claim (the “Distribution
Request Amount”). If, within thirty (30) calendar days after the date on which
the Escrow Agent and Seller Parent receive such Purchaser Release Certificate
(the “Review Period”), Purchaser Parent and the Escrow Agent have not received
from Seller Parent a written certificate objecting to one or more of the matters
described in the Purchaser Release Certificate (the “Objection Notice”), then,
on the Business Day following the last day of the Review Period, the Escrow
Agent shall disburse to Purchaser Parent (or a third party designated by
Purchaser Parent) the Distribution Request Amount. If an Objection Notice is
delivered within the Review Period, then the matters set forth in the Objection
Notice shall be considered in dispute by Seller Parent (a “Disputed Claim”), in
which case (i) the Escrow Agent shall retain those amounts set forth in the
Purchaser Release Certificate that are in dispute pursuant to the Objection
Notice (the “Disputed Amounts”) until the Escrow Agent receives either (A) a
Joint Instruction authorizing the release to Purchaser Parent of the portion of
the Disputed Amounts that is agreed upon as the amount recoverable in respect of
the Disputed Claim, or (B) a Judgment directing the release to Purchaser Parent
of the portion of the Disputed Amounts that is determined to be the amount
recoverable in respect of the Disputed Claim, in which event the Escrow Agent
shall disburse the Disputed Amounts in accordance with such Joint Instruction or
Judgment, and (ii) the Escrow Agent shall disburse to Purchaser Parent (or a
third party designated by Purchaser Parent) those amounts set forth in the
Purchaser Release Certificate that are not in dispute pursuant to the Objection
Notice (the “Undisputed Amounts”) within three (3) Business Days following the
receipt by the Escrow Agent of the Objection Notice.

 

 

1 Date to be 14 months after the Closing Date.

 

 2 

 

 

(c)          On the date that is six (6) months following the Effective Date
(the “First Distribution Date”), the Escrow Agent shall reserve and hold aside
the aggregate amount that would be necessary to satisfy any then pending and
unsatisfied claims specified in any Purchaser Release Certificate delivered to
the Escrow Agent and Seller Parent prior to the First Distribution Date from
Purchaser Parent (“Initial Unresolved Claims”) as if such Initial Unresolved
Claims were ultimately to be resolved in full favor of Purchaser Parent or
Purchaser (such reserved amount, the “Initial Reserved Amount”). On the Initial
Distribution Date, the Escrow Agent shall distribute to Seller Parent ( to
Seller Parent’s account as Seller Parent shall designate in writing)
thirty-three and one third percent (331/3%) of the balance of the Escrow
Property, after the Escrow Property has been reduced by the Initial Reserved
Amount. Within two (2) Business Days following resolution of any Initial
Unresolved Claim, the Escrow Agent shall deliver the portion of the Initial
Reserved Amount, if any, not required to satisfy any other remaining Initial
Unresolved Claims, to Seller Parent (to Seller Parent’s account as Seller Parent
shall designate in writing).

 

(d)          On the date that is twelve (12) months following the Effective Date
(the “Second Distribution Date”), the Escrow Agent shall reserve and hold aside
the aggregate amount that would be necessary to satisfy any then pending and
unsatisfied claims specified in any Purchaser Release Certificate delivered to
the Escrow Agent and Seller Parent prior to the Second Distribution Date from
Purchaser Parent (“Second Unresolved Claims”) as if such Second Unresolved
Claims were ultimately to be resolved in full favor of Purchaser Parent or
Purchaser (such reserved amount, the “Second Reserved Amount”). On the Second
Distribution Date, the Escrow Agent shall distribute to Seller Parent (to Seller
Parent’s account as Seller Parent shall designate in writing) thirty-three and
one third percent (331/3%) of the balance of the Escrow Property, after the
Escrow Property has been reduced by the Initial Reserved Amount. Within two (2)
Business Days following resolution of any Second Unresolved Claim, the Escrow
Agent shall deliver the portion of the Second Reserved Amount, if any, not
required to satisfy any other remaining Second Unresolved Claims, to Seller
Parent (to Seller Parent’s account as Seller Parent shall designate in writing).

 

(e)          Within five (5) Business Days following the Claims End Date, the
Escrow Agent shall disburse to Seller Parent (to Seller Parent’s account as
Seller Parent shall designate in writing) an amount (the “Disbursement Amount”)
equal to the remaining Escrow Property less amounts, if any, that are
(i) Disputed Amounts, (ii) subject to a pending Joint Instruction or certified
copy of a final non-appealable judgment or order of a court of competent
jurisdiction (a “Judgment”) received by the Escrow Agent prior to the Claims End
Date but not yet paid by Escrow Agent, or (iii) subject to a Purchaser Release
Certificate delivered prior to the Claims End Date in respect of which the
Review Period has not expired. For the avoidance of doubt, all Undisputed
Amounts will be paid to Purchaser as provided in Section 1.3(b) above.

 

 3 

 

 

(d)         After disbursement of the Disbursement Amount, the remaining Escrow
Property shall be held by the Escrow Agent in accordance with the terms of this
Agreement until the earlier to occur of the following: (i) Seller Parent and
Purchaser Parent jointly directing the disbursement of such remaining Escrow
Property or any portion thereof by delivering a Joint Instruction to the Escrow
Agent or (ii) the Escrow Agent receiving a certified copy of a Judgment awarding
such remaining Escrow Property or any portion thereof to Purchaser Parent or
Seller Parent. Upon receipt of such Joint Instruction or on the 5th Business Day
after receipt of such Judgment, the Escrow Agent shall disburse such remaining
Escrow Property or any portion thereof as required by such Joint Instruction or
Judgment, as the case may be.

 

Section 1.4.          Security Procedure For Funds Transfers. The Escrow Agent
shall confirm each funds transfer instruction received in the name of a Party by
means of the security procedure selected by such Party and communicated to the
Escrow Agent through a signed certificate in the form of Exhibit B-1 or Exhibit
B-2 attached hereto, which upon receipt by the Escrow Agent shall become a part
of this Escrow Agreement. Once delivered to the Escrow Agent, Exhibit B-1 or
Exhibit B-2 may be revised or rescinded only by a writing signed by an
authorized representative of the Party. Such revisions or rescissions shall be
effective only after actual receipt and following such period of time as may be
necessary to afford the Escrow Agent a reasonable opportunity to act on it. If a
revised Exhibit B-1 or B-2 or a rescission of an existing Exhibit B-1 or B-2 is
delivered to the Escrow Agent by an entity that is a successor-in-interest to
such Party, such document shall be accompanied by additional documentation
satisfactory to the Escrow Agent showing that such entity has succeeded to the
rights and responsibilities of the Party under this Escrow Agreement.

 

The Parties understand that the Escrow Agent’s inability to receive or confirm
funds transfer instructions pursuant to the security procedure selected by such
Party may result in a delay in accomplishing such funds transfer, and agree that
the Escrow Agent shall not be liable for any loss caused by any such delay.

 

Section 1.5.          Income Tax Allocation and Reporting.

 

(a)          The Parties agree that, for tax reporting purposes, all interest
and other income from investment of the Escrow Property shall, as of the end of
each calendar year and to the extent required by the Internal Revenue Service,
be reported as having been earned by Seller Parent, whether or not such income
was disbursed during such calendar year.

 

 4 

 

 

(b)          For certain payments made pursuant to this Escrow Agreement, the
Escrow Agent may be required to make a “reportable payment” or “withholdable
payment” and in such cases the Escrow Agent shall have the duty to act as a
payor or withholding agent, respectively, that is responsible for any tax
withholding and reporting required under Chapters 3, 4, and 61 of the United
States Internal Revenue Code of 1986, as amended (the “Code”).  The Escrow Agent
shall have the sole right to make the determination as to which payments are
“reportable payments” or “withholdable payments.” All parties to this Escrow
Agreement shall provide an executed IRS Form W-9 or appropriate IRS Form W-8
(or, in each case, any successor form) to the Escrow Agent prior to the date
hereof, and shall promptly update any such form to the extent such form becomes
obsolete or inaccurate in any respect.  The Escrow Agent shall have the right to
request from any party to this Escrow Agreement, or any other person or entity
entitled to payment hereunder, any additional forms, documentation or other
information as may be reasonably necessary for the Escrow Agent to satisfy its
reporting and withholding obligations under the Code.  To the extent any such
forms to be delivered under this Section 1.5(b) are not provided prior to the
date hereof or by the time the related payment is required to be made or are
determined by the Escrow Agent to be incomplete and/or inaccurate in any
respect, the Escrow Agent shall be entitled to withhold (without liability) a
portion of any interest or other income earned on the investment of the Escrow
Property or on any such payments hereunder to the extent withholding is required
under Chapters 3, 4, or 61 of the Code, and shall have no obligation to gross up
any such payment. 

 

(c)          To the extent that the Escrow Agent becomes liable for the payment
of any taxes in respect of income derived from the investment of the Escrow
Property, the Escrow Agent shall satisfy such liability to the extent possible
from the Escrow Property. The Parties, jointly and severally, shall indemnify,
defend and hold the Escrow Agent harmless from and against any tax, late
payment, interest, penalty or other cost or expense that may be assessed against
the Escrow Agent on or with respect to the Escrow Property and the investment
thereof unless such tax, late payment, interest, penalty or other expense was
directly caused by the gross negligence or willful misconduct of the Escrow
Agent. The indemnification provided by this Section 1.5(c) is in addition to the
indemnification provided in Section 3.1 and shall survive the resignation or
removal of the Escrow Agent and the termination of this Escrow Agreement.

 

(d)          The Parties hereto acknowledge that, in order to help fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify and record information that identifies
each person or corporation who opens an account and /or enters into a business
relationship. The Parties hereby agree that they shall provide the Escrow Agent
with such information as the Escrow Agent may request including, but not limited
to, each Party’s name, physical address, tax identification number and other
information that will assist the Escrow Agent in identifying and verifying each
Party’s identity such as organizational documents, certificates of good
standing, licenses to do business, or other pertinent identifying information.

 

Section 1.6.         Termination.  This Escrow Agreement shall terminate upon
the disbursement of all of the Escrow Property, including any interest and
investment earnings thereon, except that the provisions of Sections 1.5(c), 3.1
and 3.2 hereof shall survive termination  and the Escrow Agent is authorized and
directed to disburse the Escrow Property in accordance with Section 1.3 of this
Escrow Agreement.

 

 5 

 

 

ARTICLE 2
DUTIES OF THE ESCROW AGENT

 

Section 2.1.          Scope of Responsibility. Notwithstanding any provision to
the contrary, the Escrow Agent is obligated only to perform the duties
specifically set forth in this Escrow Agreement, which shall be deemed purely
ministerial in nature. Under no circumstance will the Escrow Agent be deemed to
be a fiduciary to any Party or any other person under this Escrow Agreement. The
Escrow Agent will not be responsible or liable for the failure of any Party to
perform in accordance with this Escrow Agreement. The Escrow Agent shall neither
be responsible for, nor chargeable with, knowledge of the terms and conditions
of any other agreement, instrument, or document other than this Escrow
Agreement, whether or not an original or a copy of such agreement has been
provided to the Escrow Agent; and the Escrow Agent shall have no duty to know or
inquire as to the performance or nonperformance of any provision of any such
agreement, instrument, or document. References in this Escrow Agreement to any
other agreement, instrument, or document are for the convenience of the Parties,
and the Escrow Agent has no duties or obligations with respect thereto. The
Escrow Agent will not be responsible to determine or to make inquiry into any
term, capitalized, or otherwise, not defined herein. This Escrow Agreement sets
forth all matters pertinent to the escrow contemplated hereunder, and no
additional obligations of the Escrow Agent shall be inferred or implied from the
terms of this Escrow Agreement or any other agreement.

 

Section 2.2.          Attorneys and Agents. The Escrow Agent shall be entitled
to rely on and shall not be liable for any action taken or omitted to be taken
by the Escrow Agent in accordance with the advice of counsel or other
professionals retained or consulted by the Escrow Agent. The Escrow Agent shall
be reimbursed as set forth in Section 3.1 for any and all compensation (fees,
expenses and other costs) paid and/or reimbursed to such counsel and/or
professionals. The Escrow Agent may perform any and all of its duties through
its agents, representatives, attorneys, custodians, and/or nominees. The Escrow
Agent shall not be responsible for the conduct of agents or attorneys appointed
by it with due care.

 

Section 2.3.          Reliance. The Escrow Agent shall not be liable for any
action taken or not taken by it in accordance with the direction or consent of
the Parties or their respective agents, representatives, successors, or assigns.
The Escrow Agent shall not be liable for acting or refraining from acting upon
any notice, request, consent, direction, requisition, certificate, order,
affidavit, letter, or other paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, without
further inquiry into the person’s or persons’ authority. Concurrent with the
execution of this Escrow Agreement, the Parties shall deliver to the Escrow
Agent Exhibit B-1 and Exhibit B-2, which contain authorized signer designations
in Part I thereof. The Parties represent and warrant that each person signing
this Escrow Agreement are duly authorized and has legal capacity to execute and
deliver this Escrow Agreement, along with each exhibit, agreement, document, and
instrument to be executed and delivered by the Parties to this Escrow Agreement

 

Section 2.4.          Right Not Duty Undertaken. The permissive rights of the
Escrow Agent to do things enumerated in this Escrow Agreement shall not be
construed as duties.

 

Section 2.5.          No Financial Obligation. No provision of this Escrow
Agreement shall require the Escrow Agent to risk or advance its own funds or
otherwise incur any financial liability or potential financial liability in the
performance of its duties or the exercise of its rights under this Escrow
Agreement.

 

 6 

 

 

ARTICLE 3
PROVISIONS CONCERNING THE ESCROW AGENT

 

Section 3.1.          Indemnification. Seller Parent, and Purchaser Parent shall
jointly and severally , indemnify, defend and hold harmless the Escrow Agent
from and against all loss, liability, cost, damage and expense, including,
without limitation, attorneys’ fees and expenses or other professional fees and
expenses which the Escrow Agent may suffer or incur by reason of any action,
claim or proceeding brought against the Escrow Agent, arising out of or relating
in any way to this Escrow Agreement or any transaction to which this Escrow
Agreement relates, unless such loss, liability, cost, damage or expense shall
have been finally adjudicated to have been directly caused by the willful
misconduct or gross negligence of the Escrow Agent. The provisions of this
Section 3.1 shall survive the resignation or removal of the Escrow Agent and the
termination of this Escrow Agreement. As between Seller Parent, on the one hand
and Purchaser Parent, on the other hand, all costs of indemnification of the
Escrow Agent shall be born 50% by Seller Parent and 50% by the Purchaser Parent.
If either the Seller Parent or Purchaser Parent incurs greater than 50% of any
such costs of indemnification, the Seller Parent or Purchaser Parent, as
applicable, will promptly make payment to the other such that each of the Seller
Parent and Purchaser Parent has borne 50% of all amounts which are paid to the
Escrow Agent under this Section 3.1.

 

Section 3.2.          Limitation of Liability. the escrow agent SHALL NOT be
liable, directly or indirectly, for any (i) damages, Losses or expenses arising
out of the services provided hereunder, other than damages, losses or expenses
which have been finally adjudicated to have DIRECTLY resulted from the escrow
agent’s gross negligence or willful misconduct, or (ii) special, Indirect,
PUNITIVE, or consequential damages or LOSSES OF ANY KIND WHATSOEVER (INCLUDING
WITHOUT LIMITATION LOST PROFITS), even if the escrow agent has been advised of
the possibility of such LOSSES OR damages AND REGARDLESS OF THE FORM OF ACTION.

 

Section 3.3.          Resignation or Removal. The Escrow Agent may resign by
furnishing written notice of its resignation to the Parties, and the Parties may
remove the Escrow Agent by furnishing to the Escrow Agent a joint written notice
of its removal along with payment of all fees and expenses to which the Escrow
Agent is entitled through the date of removal. Such resignation or removal, as
the case may be, shall be effective thirty (30) calendar days after the delivery
of such notice or upon the earlier appointment of a successor, and the Escrow
Agent’s sole responsibility thereafter shall be to safely keep the Escrow
Property and to deliver the same to a successor escrow agent as shall be
appointed by the Parties, as evidenced by a joint written notice filed with the
Escrow Agent or in accordance with a court order. If the Parties have failed to
appoint a successor escrow agent prior to the expiration of thirty (30) calendar
days following the delivery of such notice of resignation or removal, the Escrow
Agent may petition any court of competent jurisdiction for the appointment of a
successor escrow agent or for other appropriate relief, and any such resulting
appointment shall be binding upon the Parties.

 

 7 

 

 

Section 3.4.          Compensation. The Escrow Agent shall be entitled to
compensation for its services as stated in the fee schedule attached hereto as
Exhibit C, which compensation shall be paid 50% by Purchaser Parent and 50% by
Seller Parent. The fee agreed upon for the services rendered hereunder is
intended as full compensation for the Escrow Agent's services as contemplated by
this Escrow Agreement; provided, however, that in the event that the conditions
for the disbursement of funds under this Escrow Agreement are not fulfilled, or
the Escrow Agent renders any service not contemplated in this Escrow Agreement,
or there is any assignment of interest in the subject matter of this Escrow
Agreement, or any material modification hereof, or if any material controversy
arises hereunder, or the Escrow Agent is made a party to any litigation
pertaining to this Escrow Agreement or the subject matter hereof, then the
Escrow Agent shall be compensated for such extraordinary services and reimbursed
for all costs and expenses, including reasonable attorneys’ fees and expenses,
occasioned by any such delay, controversy, litigation or event. If any amount
due to the Escrow Agent hereunder is not paid within thirty (30) calendar days
of the date due, the Escrow Agent in its sole discretion may charge interest on
such amount up to the highest rate permitted by applicable law. The Escrow Agent
shall have, and is hereby granted, a prior lien upon the Escrow Property with
respect to its unpaid fees, non-reimbursed expenses and unsatisfied
indemnification rights, superior to the interests of any other persons or
entities and is hereby granted the right to set off and deduct any unpaid fees,
non-reimbursed expenses and unsatisfied indemnification rights from the Escrow
Property.

 

Section 3.5.          Disagreements. If any conflict, disagreement or dispute
arises between, among, or involving any of the parties hereto concerning the
meaning or validity of any provision hereunder or concerning any other matter
relating to this Escrow Agreement, or the Escrow Agent is in doubt as to the
action to be taken hereunder, the Escrow Agent may, at its option, retain the
Escrow Property until the Escrow Agent (i) receives a Judgment directing
delivery of the Escrow Property, (ii) receives a written agreement executed by
each of the parties involved in such disagreement or dispute directing delivery
of the Escrow Property, in which event the Escrow Agent shall be authorized to
disburse the Escrow Property in accordance with such final court order,
arbitration decision, or agreement, or (iii) files an interpleader action in any
court of competent jurisdiction, and upon the filing thereof, the Escrow Agent
shall be relieved of all liability as to the Escrow Property and shall be
entitled to recover attorneys’ fees, expenses and other costs incurred in
commencing and maintaining any such interpleader action. Any such court order or
arbitration decision shall be accompanied by a written instrument of the
presenting Party certifying that such court order or arbitration decision is
final, non-appealable and from a court of competent jurisdiction or from a
competent arbitration panel, upon which instrument the Escrow Agent shall be
entitled to conclusively rely without further investigation. The Escrow Agent
shall be entitled to act on any such agreement, court order, or arbitration
decision without further question, inquiry, or consent.

 

Section 3.6.          Merger or Consolidation. Any corporation or association
into which the Escrow Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer all or substantially all of
its corporate trust business and assets as a whole or substantially as a whole,
or any corporation or association resulting from any such conversion, sale,
merger, consolidation or transfer to which the Escrow Agent is a party, shall be
and become the successor escrow agent under this Escrow Agreement and shall have
and succeed to the rights, powers, duties, immunities and privileges as its
predecessor, without the execution or filing of any instrument or paper or the
performance of any further act.

 

 8 

 

 

Section 3.7.          Attachment of Escrow Property; Compliance with Legal
Orders. In the event that any Escrow Property shall be attached, garnished or
levied upon by any court order, or the delivery thereof shall be stayed or
enjoined by an order of a court, or any order, judgment or decree shall be made
or entered by any court order affecting the Escrow Property, the Escrow Agent is
hereby expressly authorized, in its sole discretion, to respond as it deems
appropriate or to comply with all writs, orders or decrees so entered or issued,
or which it is advised by legal counsel of its own choosing is binding upon it,
whether with or without jurisdiction. In the event that the Escrow Agent obeys
or complies with any such writ, order or decree it shall not be liable to any of
the Parties or to any other person, firm or corporation, should, by reason of
such compliance notwithstanding, such writ, order or decree be subsequently
reversed, modified, annulled, set aside or vacated. The Escrow Agent shall
further have no obligation to pursue any action that is not in accordance with
applicable law.

 

Section 3.8           Force Majeure. The Escrow Agent shall not be responsible
or liable for any failure or delay in the performance of its obligation under
this Escrow Agreement arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including, without limitation, acts
of God; earthquakes; fire; flood; wars; acts of terrorism; civil or military
disturbances; sabotage; epidemic; riots; interruptions, loss or malfunctions of
utilities, computer (hardware or software) or communications services;
accidents; labor disputes; acts of civil or military authority or governmental
action; it being understood that the Escrow Agent shall use commercially
reasonable efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as reasonably practicable under the
circumstances.

 

ARTICLE 4
MISCELLANEOUS

 

Section 4.1.          Binding Agreement, Successors and Assigns. The Parties and
Escrow Agent represent and warrant that the execution and delivery of this
Escrow Agreement and the performance of such party’s obligations hereunder have
been duly authorized and that the Escrow Agreement is a valid and legal
agreement binding on such party and enforceable in accordance with its terms.
This Escrow Agreement shall be binding on and inure to the benefit of the
Parties and the Escrow Agent and their respective successors and permitted
assigns. No other persons shall have any rights under this Escrow Agreement.  No
assignment of the interest of any of the Parties shall be binding unless and
until written notice of such assignment shall be delivered to the other Party
and the Escrow Agent and shall require the prior written consent of the
other Party and the Escrow Agent (such consent not to be unreasonably withheld).

 

Section 4.2.          Escheat. The Parties are aware that under applicable state
law, property which is presumed abandoned may under certain circumstances
escheat to the applicable state. The Escrow Agent shall have no liability to the
Parties, their respective heirs, legal representatives, successors and assigns,
or any other party, should any or all of the Escrow Property escheat by
operation of law.

 

 9 

 

 

Section 4.3.          Notices. All notices, requests, demands, and other
communications required under this Escrow Agreement shall be in writing, in
English, and shall be deemed to have been duly given if delivered (i)
personally, (ii) by facsimile transmission with written confirmation of receipt,
(iii) on the day of transmission if sent by electronic mail (“e-mail”, as long
as such e-mail is accompanied by a PDF signature or similar version of the
relevant document bearing an authorized signature, which such signature shall,
in the case of each of the parties, be a signature set forth in Exhibit B-1 or
B-2, as applicable) to the e-mail address given below, and written confirmation
of receipt is obtained promptly after completion of transmission, (iv) by
overnight delivery with a reputable national overnight delivery service, or (v)
by mail or by certified mail, return receipt requested, and postage prepaid. If
any notice is mailed, it shall be deemed given five (5) Business Days after the
date such notice is deposited in the United States mail. For the purpose of this
Escrow Agreement, “Business Day” shall mean any day other than a Saturday, a
Sunday, a federal or state holiday, and any other day on which the Escrow Agent
is closed. If notice is given to a party, it shall be given at the address for
such party set forth below. It shall be the responsibility of the Parties to
notify the Escrow Agent and the other Party in writing of any name or address
changes. In the case of communications delivered to the Escrow Agent, such
communications shall be deemed to have been given on the date received by the
Escrow Agent.

 

If to Purchaser Parent:

Healthcare Trust, Inc.

405 Park Avenue, 4th Floor

New York, New York 10022

Attention: Legal Department

E-mail:   JGalloway@ar-global.com

 

with a copy to:

Arnold & Porter Kaye Scholer LLP

601 Massachusetts Avenue NW

Washington, DC 20001

Attn: Kevin J. Lavin, Esq.

Email:   Kevin.Lavin@apks.com

 

If to Seller Parent:

American Realty Capital Healthcare Trust III, Inc.

405 Park Avenue, 4th Floor

New York, New York 10022

Attention: Legal Department

E-mail:   JGalloway@ar-global.com

 

with a copy to:

Shapiro Sher Guinot & Sandler, P.A.

250 West Pratt Street

Suite 2000

Baltimore, Maryland 21201

Attn: William E. Carlson, Esq.

Email: wec@shapirosher.com

 

 10 

 

 

If to the Escrow Agent:

 

Wells Fargo Bank, National Association

150 East 42nd Street, 40th Floor

New York, NY 10017

Attention: Donna Nascimento; Corporate, Municipal and Escrow Solutions

Telephone: (917) 260-1552

Facsimile: (917) 260-1592

E-mail: donna.nascimento@wells fargo.com

 

Section 4.4.          Governing Law. This Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

 

Section 4.5.          Entire Agreement. This Escrow Agreement and the exhibits
hereto set forth the entire agreement and understanding of the parties related
to the Escrow Property.

 

Section 4.6.          Amendment. This Escrow Agreement may be amended, modified,
superseded, rescinded, or canceled only by a written instrument executed by the
Parties and the Escrow Agent.

 

Section 4.7.          Waivers. The failure of any party to this Escrow Agreement
at any time or times to require performance of any provision under this Escrow
Agreement shall in no manner affect the right at a later time to enforce the
same performance. A waiver by any party to this Escrow Agreement of any such
condition or breach of any term, covenant, representation, or warranty contained
in this Escrow Agreement, in any one or more instances, shall neither be
construed as a further or continuing waiver of any such condition or breach nor
a waiver of any other condition or breach of any other term, covenant,
representation, or warranty contained in this Escrow Agreement.

 

Section 4.8.          Headings. Section headings of this Escrow Agreement have
been inserted for convenience of reference only and shall in no way restrict or
otherwise modify any of the terms or provisions of this Escrow Agreement.

 

Section 4.9.          Counterparts. This Escrow Agreement may be executed in one
or more counterparts, each of which when executed shall be deemed to be an
original, and such counterparts shall together constitute one and the same
instrument. The exchange of copies of this Escrow Agreement and of signature
pages by facsimile or by electronic image scan transmission in .pdf format shall
constitute effective execution and delivery of this Escrow Agreement as to the
Parties and the Escrow Agent and may be used in lieu of the original Escrow
Agreement for all purposes.

 

 11 

 

 

Section 4.10.       Trial by Jury. Each of the parties hereto hereby irrevocably
waives all right to trial by jury to the extent permitted by law in any
litigation, action, proceeding in any court arising out of, relating to or in
connection with this Escrow Agreement.

 

Section 4.11.       Publication; disclosure. By executing this Escrow Agreement,
the Parties and the Escrow Agent acknowledge that this Escrow Agreement
(including related attachments) contains certain information that is sensitive
and confidential in nature and agree that such information needs to be protected
from improper disclosure, including the publication or dissemination of this
Escrow Agreement and related information to individuals or entities not a party
to this Escrow Agreement. The Parties further agree to take reasonable measures
to mitigate any risks associated with the publication or disclosure of this
Escrow Agreement and information contained therein, including, without
limitation, the redaction of the manual signatures of the signatories to this
Escrow Agreement, or, in the alternative, publishing a conformed copy of this
Escrow Agreement. If a Party must disclose or publish this Escrow Agreement or
information contained therein pursuant to any regulatory, statutory, or
governmental requirement, as well as any judicial, or administrative order,
subpoena or discovery request, it shall notify in writing the other Party and
the Escrow Agent at the time of execution of this Escrow Agreement of the legal
requirement to do so. If any Party becomes aware of any threatened or actual
unauthorized disclosure, publication or use of this Escrow Agreement, that Party
shall promptly notify in writing the other Party and the Escrow Agent and shall
be liable for any unauthorized release or disclosure.

 

[The remainder of this page left intentionally blank.]

 

 12 

 

 

IN WITNESS WHEREOF, this Escrow Agreement has been duly executed as of the date
first written above.

 

  HEALTHCARE TRUST, INC.         By:           Name:           Title:          
AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC.         By:           Name:  
        Title:           WELLS FARGO BANK, NATIONAL ASSOCIATION, as Escrow Agent
        By:             Name:           Title:  

 

 S-1 

 

 

EXHIBIT A

 

Agency and Custody Account Direction

For Cash Balances

Wells Fargo Money Market Deposit Accounts

 

Direction to use the following Wells Fargo Money Market Deposit Accounts for
Cash Balances for the escrow account or accounts (the “Account”) established
under the Escrow Agreement to which this Exhibit A is attached.

 

You are hereby directed to deposit, as indicated below, or as I shall direct
further in writing from time to time, all cash in the Account in the following
money market deposit account of Wells Fargo Bank, National Association:

 

Wells Fargo Money Market Deposit Account (MMDA)

 

I understand that amounts on deposit in the MMDA are insured, subject to the
applicable rules and regulations of the Federal Deposit Insurance Corporation
(FDIC), in the basic FDIC insurance amount of $250,000 per depositor, per
insured bank. This includes principal and accrued interest up to a total of
$250,000.

 

I acknowledge that I have full power to direct investments of the Account.

 

I understand that I may change this direction at any time and that it shall
continue in effect until revoked or modified by me by written notice to you.

 

 

 

 

EXHIBIT B-1

 

Purchaser Parent certifies that the names, titles, telephone numbers, e-mail
addresses and specimen signatures set forth in Parts I and II of this Exhibit
B-1 identify the persons authorized to provide direction and initiate or confirm
transactions, including funds transfer instructions, on behalf of Purchaser
Parent, and that the option checked in Part III of this Exhibit B-1 is the
security procedure selected by Purchaser Parent for use in verifying that a
funds transfer instruction received by the Escrow Agent is that of Purchaser
Parent.

 

Purchaser Parent has reviewed each of the security procedures and has determined
that the option checked in Part III of this Exhibit B-1 best meets its
requirements; given the size, type and frequency of the instructions it will
issue to the Escrow Agent. By selecting the security procedure specified in Part
III of this Exhibit B-1, Purchaser Parent acknowledges that it has elected to
not use the other security procedures described and agrees to be bound by any
funds transfer instruction, whether or not authorized, issued in its name and
accepted by the Escrow Agent in compliance with the particular security
procedure chosen by Purchaser Parent.

 

NOTICE: The security procedure selected by Purchaser Parent will not be used to
detect errors in the funds transfer instructions given by Purchaser Parent. If a
funds transfer instruction describes the beneficiary of the payment
inconsistently by name and account number, payment may be made on the basis of
the account number even if it identifies a person different from the named
beneficiary. If a funds transfer instruction describes a participating financial
institution inconsistently by name and identification number, the identification
number may be relied upon as the proper identification of the financial
institution. Therefore, it is important that Purchaser Parent take such steps as
it deems prudent to ensure that there are no such inconsistencies in the funds
transfer instructions it sends to the Escrow Agent.

 

Part I

Name, Title, Telephone Number, Electronic Mail (“e-mail”) Address and Specimen
Signature for person(s) designated to provide direction, including but not
limited to funds transfer instructions, and to otherwise act on behalf of
Purchaser Parent

 

Name   Title   Telephone Number   E-mail Address   Specimen Signature          
                                                                               
                 

 

Part II

Name, Title, Telephone Number and E-mail Address for

person(s) designated to confirm funds transfer instructions

 

Name   Title   Telephone Number   E-mail Address                                
                                                   

 

 

 

 

Part III

 

Means for delivery of instructions and/or confirmations

 

The security procedure to be used with respect to funds transfer instructions is
checked below:

 

¨Option 1. Confirmation by telephone call-back. The Escrow Agent shall confirm
funds transfer instructions by telephone call-back to a person at the telephone
number designated on Part II above. The person confirming the funds transfer
instruction shall be a person other than the person from whom the funds transfer
instruction was received, unless only one person is designated in both Parts I
and II of this Exhibit B-1.

¨CHECK box, if applicable:

If the Escrow Agent is unable to obtain confirmation by telephone call-back, the
Escrow Agent may, at its discretion, confirm by e-mail, as described in Option
2.

 

¨Option 2. Confirmation by e-mail. The Escrow Agent shall confirm funds transfer
instructions by e-mail to a person at the e-mail address specified for such
person in Part II of this Exhibit B-1. The person confirming the funds transfer
instruction shall be a person other than the person from whom the funds transfer
instruction was received, unless only one person is designated in both Parts I
and II of this Exhibit B-1. Purchaser Parent understands the risks associated
with communicating sensitive matters, including time sensitive matters, by
e-mail. Purchaser Parent further acknowledges that instructions and data sent by
e-mail may be less confidential or secure than instructions or data transmitted
by other methods. The Escrow Agent shall not be liable for any loss of the
confidentiality of instructions and data prior to receipt by the Escrow Agent.

¨CHECK box, if applicable:

If the Escrow Agent is unable to obtain confirmation by e-mail, the Escrow Agent
may, at its discretion, confirm by telephone call-back, as described in Option
1.

 

¨*Option 3. Delivery of funds transfer instructions by password protected file
transfer system only - no confirmation. The Escrow Agent offers the option to
deliver funds transfer instructions through a password protected file transfer
system. If Purchaser Parent wishes to use the password protected file transfer
system, further instructions will be provided by the Escrow Agent. If Purchaser
Parent chooses this Option 3, it agrees that no further confirmation of funds
transfer instructions will be performed by the Escrow Agent.

 

¨*Option 4. Delivery of funds transfer instructions by password protected file
transfer system with confirmation. Same as Option 3 above, but the Escrow Agent
shall confirm funds transfer instructions by ¨ telephone call-back or ¨ e-mail
(must check at least one, may check both) to a person at the telephone number or
e-mail address designated on Part II above. By checking a box in the prior
sentence, the party shall be deemed to have agreed to the terms of such
confirmation option as more fully described in Option 1 and Option 2 above.

*The password protected file system has a password that expires every 60 days.
If you anticipate having infrequent activity on this account, please consult
with your Escrow Agent before selecting this option.

 

Dated this ____ day of ___________, 20__.

 

By     Name:     Title:    

 

 

 

 

EXHIBIT B-2

 

Seller Parent certifies that the names, titles, telephone numbers, e-mail
addresses and specimen signatures set forth in Parts I and II of this Exhibit
B-2 identify the persons authorized to provide direction and initiate or confirm
transactions, including funds transfer instructions, on behalf of Seller Parent,
and that the option checked in Part III of this Exhibit B-2 is the security
procedure selected by Seller Parent for use in verifying that a funds transfer
instruction received by the Escrow Agent is that of Seller Parent.

 

Seller Parent has reviewed each of the security procedures and has determined
that the option checked in Part III of this Exhibit B-2 best meets its
requirements; given the size, type and frequency of the instructions it will
issue to the Escrow Agent. By selecting the security procedure specified in Part
III of this Exhibit B-2, Seller Parent acknowledges that it has elected to not
use the other security procedures described and agrees to be bound by any funds
transfer instruction, whether or not authorized, issued in its name and accepted
by the Escrow Agent in compliance with the particular security procedure chosen
by Seller Parent.

 

NOTICE: The security procedure selected by Seller Parent will not be used to
detect errors in the funds transfer instructions given by Seller Parent. If a
funds transfer instruction describes the beneficiary of the payment
inconsistently by name and account number, payment may be made on the basis of
the account number even if it identifies a person different from the named
beneficiary. If a funds transfer instruction describes a participating financial
institution inconsistently by name and identification number, the identification
number may be relied upon as the proper identification of the financial
institution. Therefore, it is important that Seller Parent take such steps as it
deems prudent to ensure that there are no such inconsistencies in the funds
transfer instructions it sends to the Escrow Agent.

 

Part I

Name, Title, Telephone Number, Electronic Mail (“e-mail”) Address and Specimen
Signature for person(s) designated to provide direction, including but not
limited to funds transfer instructions, and to otherwise act on behalf of Seller
Parent

 

Name   Title   Telephone Number   E-mail Address   Specimen Signature          
                                                                               
                 

 

Part II

Name, Title, Telephone Number and E-mail Address for

person(s) designated to confirm funds transfer instructions

 

Name   Title   Telephone Number   E-mail Address                                
                                                   

 

 

 

 

Part III

 

Means for delivery of instructions and/or confirmations

 

The security procedure to be used with respect to funds transfer instructions is
checked below:

 

¨Option 1. Confirmation by telephone call-back. The Escrow Agent shall confirm
funds transfer instructions by telephone call-back to a person at the telephone
number designated on Part II above. The person confirming the funds transfer
instruction shall be a person other than the person from whom the funds transfer
instruction was received, unless only one person is designated in both Parts I
and II of this Exhibit B-2.

¨CHECK box, if applicable:

If the Escrow Agent is unable to obtain confirmation by telephone call-back, the
Escrow Agent may, at its discretion, confirm by e-mail, as described in Option
2.

 

¨Option 2. Confirmation by e-mail. The Escrow Agent shall confirm funds transfer
instructions by e-mail to a person at the e-mail address specified for such
person in Part II of this Exhibit B-2. The person confirming the funds transfer
instruction shall be a person other than the person from whom the funds transfer
instruction was received, unless only one person is designated in both Parts I
and II of this Exhibit B-2. Seller Parent understands the risks associated with
communicating sensitive matters, including time sensitive matters, by e-mail.
Seller Parent further acknowledges that instructions and data sent by e-mail may
be less confidential or secure than instructions or data transmitted by other
methods. The Escrow Agent shall not be liable for any loss of the
confidentiality of instructions and data prior to receipt by the Escrow Agent.

¨CHECK box, if applicable:

If the Escrow Agent is unable to obtain confirmation by e-mail, the Escrow Agent
may, at its discretion, confirm by telephone call-back, as described in Option
1.

 

¨*Option 3. Delivery of funds transfer instructions by password protected file
transfer system only - no confirmation. The Escrow Agent offers the option to
deliver funds transfer instructions through a password protected file transfer
system. If Seller Parent wishes to use the password protected file transfer
system, further instructions will be provided by the Escrow Agent. If Seller
Parent chooses this Option 3, it agrees that no further confirmation of funds
transfer instructions will be performed by the Escrow Agent.

 

¨*Option 4. Delivery of funds transfer instructions by password protected file
transfer system with confirmation. Same as Option 3 above, but the Escrow Agent
shall confirm funds transfer instructions by ¨ telephone call-back or ¨ e-mail
(must check at least one, may check both) to a person at the telephone number or
e-mail address designated on Part II above. By checking a box in the prior
sentence, the party shall be deemed to have agreed to the terms of such
confirmation option as more fully described in Option 1 and Option 2 above.

 

*The password protected file system has a password that expires every 60 days.
If you anticipate having infrequent activity on this account, please consult
with your Escrow Agent before selecting this option.

 

Dated this ____ day of ___________, 20__.

 

By     Name:     Title:    

 

 

 

 

EXHIBIT C

 

FEES OF ESCROW AGENT

 

$3,500.00