Unassociated Document


    Exhibit
10.1

     

     

     

     

     

     

     

    MEMBERSHIP
INTERESTS SALE AND PURCHASE AGREEMENT

     

    by
and between

     

    ROYAL
SENIOR CARE, LLC

     

    and

     

    CORNERSTONE
OAKLEAF VILLAGE, LLC

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE OF
CONTENTS

     

    
      
        
          
            	
                    Section

                  	 
      	
                    Page

                  
	 
      	 
      	 
      	 
      
	
                    1.

                  	
                    Sale
      of Interests; The Property.

                  	 
      	
                    2

                  
	
                    2.

                  	
                    Purchase
      Price

                  	 
      	
                    4

                  
	
                    3.

                  	
                    Payment
      of Purchase Price; Deposit

                  	 
      	
                    4

                  
	
                    4.

                  	
                    Title.

                  	 
      	
                    8

                  
	
                    5.

                  	
                    Study
      of the Property.

                  	 
      	
                    10

                  
	
                    6.

                  	
                    Covenants
      by Seller

                  	 
      	
                    12

                  
	
                    7.

                  	
                    Seller’s
      Representations and Warranties.

                  	 
      	
                    15

                  
	
                    8.

                  	
                    Purchaser’s
      Representations, Warranties, Covenants and Other
    Obligations

                  	 
      	
                    23

                  
	
                    9.

                  	
                    Closing.

                  	 
      	
                    25

                  
	
                    10.

                  	
                    Closing
      Deliveries.

                  	 
      	
                    28

                  
	
                    11.

                  	
                    Prorations

                  	 
      	
                    30

                  
	
                    12.

                  	
                    Default.

                  	 
      	
                    33

                  
	
                    13.

                  	
                    Condemnation
      and Damage

                  	 
      	
                    35

                  
	
                    14.

                  	
                    Broker’s
      Commission

                  	 
      	
                    36

                  
	
                    15.

                  	
                    Assignment

                  	 
      	
                    36

                  
	
                    16.

                  	
                    Notices

                  	 
      	
                    37

                  
	
                    17.

                  	
                    Confidentiality

                  	 
      	
                    38

                  
	
                    18.

                  	
                    Right
      to Cure.

                  	 
      	
                    38

                  
	
                    19.

                  	
                    Captions/Interpretations

                  	 
      	
                    39

                  
	
                    20.

                  	
                    Entire
      Agreement; Modification

                  	 
      	
                    39

                  
	
                    21.

                  	
                    Binding
      Effect

                  	 
      	
                    39

                  
	
                    22.

                  	
                    Controlling
      Law; Interpretation

                  	 
      	
                    39

                  
	
                    23.

                  	
                    Severability

                  	 
      	
                    39

                  
	
                    24.

                  	
                    Survival

                  	 
      	
                    40

                  
	
                    25.

                  	
                    “As
      Is” Sale; Limitation on Liability.

                  	 
      	
                    40

                  
	
                    26.

                  	
                    Indemnification.

                  	 
      	
                    41

                  
	
                    27.

                  	
                    Recordation

                  	 
      	
                    42

                  
	
                    28.

                  	
                    Waiver
      of Jury Trial

                  	 
      	
                    42

                  
	
                    29.

                  	
                    Time
      of Essence; Calculation of Time Periods

                  	 
      	
                    42

                  
	
                    30.

                  	
                    Counterparts;
      Fax Signatures

                  	 
      	
                    42

                  
	
                    31.

                  	
                    Covenants
      by Purchaser and Seller.

                  	 
      	
                    42

                  
	
                    32.

                  	
                    Escrow
      Agent.

                  	 
      	
                    43

                  
	
                    33.

                  	
                    CRC
      Licenses.

                  	 
      	
                    43

                  
	
                    34.

                  	
                    Certain
      Definitions.

                  	 
      	
                    45

                  
	
                    35.

                  	
                    Post-Closing
      Obligations of Seller.

                  	 
      	
                    46

                  
	
                    36.

                  	
                    Exhibits
      and Schedules.

                  	 
      	
                    46

                  


          

        

      

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    EXHIBITS

     

    
      
        
          	
                  Exhibit
      A

                	
                  -

                	
                  Land

                
	 
      	 
      	 
      
	 
      	 
      	
                  A-1
      Lexington Land

                
	 
      	 
      	
                  A-2
      Greenville Land

                
	 
      	 
      	 
      
	
                  Exhibit
      B

                	
                  -

                	
                  Form
      of Title Affidavit

                
	 
      	 
      	 
      
	
                  Exhibit
      C

                	
                  -

                	
                  Amended
      and Restated Portofilo Operating Agreement

                
	 
      	 
      	 
      
	
                  Exhibit
      D

                	
                  -

                	
                  Lexington
      Owner Operating Agreement

                
	 
      	 
      	 
      
	
                  Exhibit
      E

                	
                  -

                	
                  Greenville
      Owner Operating Agreement

                
	 
      	 
      	 
      
	
                  Exhibit
      F

                	
                  -

                	
                  Amended
      and Restated Tenant Portofilo Operating Agreement

                
	 
      	 
      	 
      
	
                  Exhibit
      G

                	
                  -

                	
                  Lexington
      Operator Operating Agreement

                
	 
      	 
      	 
      
	
                  Exhibit
      H

                	
                  -

                	
                  Greenville
      Operator Operating Agreement

                
	 
      	 
      	 
      
	
                  Exhibit
      I

                	
                  -

                	
                  Form
      of of Subject Interests Assignment

                
	 
      	 
      	 
      
	
                  Exhibit
      J

                	
                  -

                	
                  Form
      of FIRPTA Affidavit

                
	 
      	 
      	 
      
	
                  Exhibit
      K

                	
                  -

                	
                  Form
      of Representation Letter to
Auditor

                


        

      

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    SCHEDULES

     

    
      
        
          	
                  Schedule
      1(b)

                	
                  -

                	
                  Intangibles

                
	 
      	 
      	 
      
	
                  Schedule
      3(b)

                	
                  -

                	
                  Loan
      Documents

                
	 
      	 
      	 
      
	
                  Schedule
      4(a)(iv)

                	
                  -

                	
                  Title
      Policy

                
	 
      	 
      	 
      
	
                  Schedule
      6(a)

                	
                  -

                	
                  Transfers
      and Easements

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(v)

                	
                  -

                	
                  Leases

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(vi)

                	
                  -

                	
                  Service
      Contracts

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(viii)

                	
                  -

                	
                  Employee
      Benefit Plans

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(x)

                	
                  -

                	
                  Environmental
      Reports

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(xiii)

                	
                  -

                	
                  Lexington
      Owner Financial Statements

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(xiv)

                	
                  -

                	
                  Greenville
      Owner Financial Statements

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(xv)

                	
                  -

                	
                  Lexington
      Operator Financial Statements

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(xvi)

                	
                  -

                	
                  Greenville
      Operator Financial Statements

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(xvii)

                	
                  -

                	
                  Uncured
      Violations

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(xx)

                	
                  -

                	
                  Liability
      and Worker’s Compensation Insurance [Carriers and Policy
      Numbers]

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(xxii)

                	
                  -

                	
                  CRC
      Licenses

                
	 
      	 
      	 
      
	
                  Schedule
      7(a)(xxvii)

                	
                  -

                	
                  Rent
      Roll

                
	 
      	 
      	 
      
	
                  Schedule
      10(a)(iv)

                	
                  -

                	
                  Organizational
      Documents

                
	 
      	 
      	 
      
	
                  Schedule
      11(b)

                	
                  -

                	
                  Leasing
      Commissions

                
	 
      	 
      	 
      
	
                  Schedule
      11(n)

                	
                  -

                	
                  Capital
      Expenditures

                


        

      

    

     

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

     

    MEMBERSHIP
INTERESTS SALE AND PURCHASE AGREEMENT

     

    This
Membership Interests Sale and Purchase Agreement (this “Agreement”) is made and
entered into as of the 5th day of March, 2010 (the “Effective Date”), by and among
ROYAL SENIOR CARE, LLC,
a Florida limited liability company (“Seller”) and CORNERSTONE OAKLEAF VILLAGE, LLC, a Delaware limited
liability company (“Purchaser”).

     

    RECITALS

     

    A.           Seller
owns one hundred percent (100%) of the issued and outstanding membership
interests in Royal Cornerstone South Carolina Portfolio, LLC, a Delaware limited
liability company (“Portfolio”) and one hundred
percent (100%) of the issued and outstanding membership interests in Royal
Cornerstone South Carolina Tenant Portfolio, LLC, a Delaware limited liability
company (“Tenant
Portfolio”).

     

    B.           Portfolio
owns one hundred percent (100%) of the issued and outstanding membership
interests of RSC Oakleaf Lexington, LLC, a Florida limited liability company
(“Lexington Owner”) and RSC Oakleaf
Greenville, LLC, a Florida limited liability company (“Greenville Owner”).  Portfolio,
Lexington Owner and Greenville Owner are collectively referred to herein as the
“Fee Companies”.  Lexington
Owner and Greenville Owner are collectively referred to herein as the “Fee Owners”.

     

    C.          
Tenant Portfolio owns one hundred percent (100%) of the issued and outstanding
membership interests of RSC Lexington, LLC, a Florida limited liability company
(“Lexington Operator”)
and RSC Greenville, LLC, a Florida limited liability company (“Greenville
Operator”).  Lexington Operator and Greenville Operator are
collectively referred to herein as the “Operators”. Tenant Portfolio,
Lexington Operator and Greenville Operator are collectively referred to herein
as the “Operating Companies”. The Operating
Companies and Fee Companies are collectively referred to herein as the “Companies”.

     

    D.           Lexington
Owner is the direct owner of that certain interest in real property located in
Lexington County, South Carolina, as more particularly described on Exhibit
A-1 attached to and made a part of this Agreement (collectively, the
“Lexington Land””).

     

    E.   
        Greenville Owner is the direct
owner of that certain interest in real property located in Greenville County,
South Carolina, as more particularly described on Exhibit
A-2 attached to and made a part of this Agreement (collectively, the
“Greenville Land””). The Lexington Land
and Greenville Land are collectively referred to herein as the “Land”.

     

    F.      
     Lexington Owner, as lessor and Lexington Operator,
as lessee, are parties to that certain Lease Agreement dated as of November 1,
2004 (the “Lexington
Master  Lease”) the with respect to the Lexington Real Property
(as hereinafter defined).

     

    G.           Greenville
Owner, as lessor and Greenville Operator, as lessee, are parties to that certain
Lease Agreement dated as of November 1, 2004 (the “Greenville Master Lease”) with
respect to the Lexington Real Property (as hereinafter defined). The Lexington
Master Lease and Greenville Master Lease are collectively referred to herein as
the “Master Leases”.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    H.           Pursuant
to the rights granted under the Lexington Master Lease, Lexington Operator
operates a licensed community residential care facility consisting of ninety
(90) units and related appurtenances, commonly known as “Oakleaf Village at
Lexington” (herein sometimes referred to as the “Lexington Facility”) with a
street address of 800 North Lake Drive, Lexington, South Carolina.

     

    I.        
   Pursuant to the rights granted under the Greenville Master
Lease, Greenville Operator operates a licensed community residential care
facility consisting of ninety (90) units and appurtenances, commonly known as
“Oakleaf Village at Greenville” (herein sometimes referred to as the “Greenville Facility”) with a
street address of 1560 Thornblade Boulevard, Greenville, South Carolina. The
Lexington Facility and Greenville Facility are collectively referred to herein
as the “Facilities”.

     

    J.      
     Seller desires to sell to Purchaser (i) an eighty
percent (80%) membership interest in Portfolio (such eighty percent (80%)
membership interest in Portfolio shall be referred to herein as the “Subject Portfolio Interests”)
and (ii) an eighty percent (80%) membership interest in Tenant Portfolio (such
eighty percent (80%) membership interest in Tenant Portfolio shall be referred
to herein as the “Subject
Tenant Portfolio Interests”, and collectively with the Subject Portfolio
Interests, the “Subject
Interests) and Purchaser desires to purchase the Subject Interests in
accordance with the terms hereof.

     

    NOW, THEREFORE, in
consideration of the foregoing Recitals, the mutual covenants and promises set
forth in this Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are acknowledged, Seller and Purchaser agree as
follows:

     

    1.           Sale of Interests; The
Property.

     

    (a)           Sale of
Interests. 
Subject
to the terms and conditions hereof, Seller shall sell to Purchaser, and
Purchaser shall purchase from Seller, all of Seller’s rights, title, and
interest in and to the Subject Interests.

     

    (b)           The Real
Property.  At
the time of Closing (as defined in Section 9 below), Portfolio
shall own all of the issued and outstanding membership interests in Lexington
Owner and Greenville Owner and Lexington Owner and Greenville Owner shall own
the following, as applicable:

     

    (i)           as
to Lexington Owner, the Lexington Land, as set forth on Exhibit
A-1, and as to Greenville Owner the Greenville Land as set forth on Exhibit
A-2;

     

    (ii)          as
to Lexington Owner, all buildings, other improvements and fixtures situated on
the Lexington Land as provided in this Agreement (collectively
the   “Lexington Improvements”) and as to
Greenville Owner, all buildings, other improvements and fixtures situated on the
Greenville Land as provided in this Agreement (collectively
the  “Greenville Improvements”, the Lexington
Improvements and Greenville Improvements are collectively, the “Improvements”). The
Improvements shall include, without limitation, the buildings located on the
Land, together with all HVAC systems, electrical systems, domestic water
systems, and life-safety systems used in connection with the operation or
occupancy of the buildings and located on the Land;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (iii)         all
appurtenances, rights, privileges and easements benefiting, belonging, or
pertaining to the Land or Improvements (the “Appurtenances”).  In
this Agreement, the Land, Improvements, and Appurtenances are collectively
referred to as the “Real
Property”).  In this Agreement, the Lexington Land, Lexington
Improvements and Appurtenances related thereto are collectively, the “Lexington Real Property”, the
Greenville Land, Greenville Improvements and Appurtenances related thereto are
collectively, the “Greenville
Real Property”;

     

    (iv)        all
furniture, machinery, apparatus, equipment, furnishings, financial records and
books and other personal property located upon and used in connection with or in
the operation, repair and/or maintenance of the applicable parcel of Real
Property, but excluding the personal property of (A) occupants and tenants under
the Leases (as defined in Section 1(c)(vii)) and (B) Royal Senior Care
Management Company, LLC, a Florida limited liability company, or any Affiliate
(as hereinafter defined) thereof, that is located at any management office it
operates in the Real Property (collectively, the “Personal
Property”);  and

     

    (v)         as
to Lexington Owner,  all interests as lessor in, to and under the
Lexington Master Lease and as to Greenville Owner, all interests as lessor, in,
to and under Greenville Master Lease, together with all security deposits, if
any (both cash and letter of credit) held by Lexington Owner and Greenville
Owner under the Master Leases.

     

    (c)           Property used in the
Operation of the Real Property.  At
the time of Closing (as defined in Section 9), Tenant Portfolio
shall own all of the issued and outstanding membership interests in Lexington
Operator and Greenville Operator and Lexington Operator and Greenville Operator
shall own the following, as applicable:

     

    (i)           as
to Lexington Operator, all interests as lessee in, to and under the Lexington
Master Lease and as to Greenville Operator, all interests as lessee, in, to and
under Greenville Master Lease.

     

    (ii)          all
rights, if any, in and to any and all governmental and quasi-governmental
consents, authorizations, variances or waivers, certificates of occupancy,
approvals, permits and licenses issued to the Operators thereof with respect to
the Real Property,  (the “Permits”), and all drawings,
plans, specifications, and surveys relating to the Real Property;

     

    (iii)         all
rights, if any, in and to any and all trade names, contract rights, and general
intangibles related exclusively to either parcel of the Real Property including,
without limitation, (A) the rights, if any, of the Operators,  in and
to the names by which the Real Property is known or identified (including the
building address) and listed on Schedule
1(b), and any goodwill (if any) associated with any such name, and (B)
any trademarks, logos, trade names, copyrights, service marks, business names
and telephone numbers exclusively related to either parcel of the Real Property
(collectively, the “Intangibles”);

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (iv)        all
service and maintenance contracts, subcontracts, licenses, concessions or other
service agreements entered into by, or on behalf of any of the Operators, or
otherwise binding on the Operators respecting any portion of the Real
Property  (collectively, the “Service
Contracts”);

     

    (v)         all
warranties and guaranties issued to the Operators in connection with, or
otherwise benefiting, any portion of the Real Property (collectively, the “Warranties”); and

     

    (vi)        all
of the interests of Lexington Operator and Greenville Operator as landlord under
any lease, resident agreement or other occupancy agreement for space within the
applicable parcel of Real Property (each a “Lease” and collectively the
“Leases”), together with
all security deposits, if any (both cash and letter of credit) held by Lexington
Operator and Greenville Operator under the Leases (collectively, the “Security Deposits”). For
avoidance of all doubt, the term Leases excludes the Master Leases.

     

    All of
the assets in Sections 1(b) and
(c) are referred to herein collectively as the “Property”.

     

    (d)           Excluded
Property.  The
parties expressly acknowledge that the definition of “Property” in Section 1(b) does not include
the interest of any of the Companies as of Closing in any bank accounts or other
accounts maintained at any financial institution, the treatment of which, for
purposes of this Agreement, is set forth in Section 11(j).

     

    2.           Purchase
Price.  In
consideration of the covenants contained herein, Seller hereby agrees to sell
and Purchaser hereby agrees to purchase the Subject Interests for a total
purchase price of Twenty-One Million Six Hundred Thousand and 00/100 Dollars
($21,600,000.00) (the “Purchase
Price”).  The Purchase Price was determined and calculated
based upon an agreed  value of Twenty-Seven Million and 00/100 Dollars
for the Property multiplied by eighty percent (80%), being the indirect interest
in the Property being purchased by Purchaser pursuant to the provisions of this
Agreement.

     

    3.           Payment of Purchase Price;
Deposit.  Purchaser
shall pay the Purchase Price to Seller as follows:

     

    (a)           Deposit.  Within
three (3) business days after the date hereof, Purchaser shall deliver the sum
of Two Hundred Thousand and No/100 Dollars ($200,000.00) (the “Initial Deposit”) by wire transfer of
“immediately available” funds to Carlton Fields, P.A. (the “Escrow
Agent”).  Prior to the expiration of the Study Period (as
hereinafter defined) provided Purchaser has not terminated this Agreement,
Purchaser shall deposit the additional amount of Three Hundred Thousand and
No/100 Dollars ($300,000.00) by wire transfer of “immediately available” funds
to Escrow Agent (the “Additional Deposit”). The
Initial Deposit and the Additional Deposit are herein collectively referred to
as the “Deposit.” Escrow
Agent shall hold and apply the Deposit in accordance with this Agreement. The
Deposit shall be nonrefundable upon the expiration of the Study Period subject
only to the satisfaction of Purchaser’s Conditions Precedent in Section
9(b).  Accrued interest on the Deposit shall be added to and
become part of the Deposit.  All such accrued interest shall be
treated for income tax purposes as accruing to the benefit of the party who
receives the Deposit and shall be reported for income tax purposes by such
party, except that if the Deposit is credited against the Purchase Price at
Closing, then all such accrued interest shall be treated for income tax purposes
as accruing to the benefit of Purchaser and shall be reported for income tax
purposes by Purchaser.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b)           Credit for Existing
Loan.  At
the Closing (as hereinafter defined), Purchaser shall purchase the Subject
Interests subject to the existing indebtedness encumbering the Property as
evidenced by (i) as to the Lexington Property, that certain Mortgage, Security
Agreement, Assignment of Rents, Security Agreement and Fixture Filing Statement
(the “Lexington Mortgage”) made by Lexington
Owner, with joinder by Lexington Operator, to and in favor of General Electric
Credit Corporation, Agent for itself and one or more lenders (“Lender”) dated as of January
10, 2006, and recorded in Book 10751, Page 107 of the Recorder of Deeds of
Lexington County, South Carolina and (ii) as to the Greenville Property, that
certain Mortgage, Security Agreement, Assignment of Rents, Security Agreement
and Fixture Filing Statement (the “Greenville Mortgage”) made by
Greenville Owner, with joinder by Greenville Operator, to and in favor of Lender
dated as of January 10, 2006, and recorded in Book 4498, Page 828 of the
Recorder of Deeds of Greenville County, South Carolina and all other documents
executed in connection therewith (that certain Promissory Note dated January 10,
2006, from Lexington Owner and Greenville Owner to and in favor of Lender in the
original principal amount of $13,500,000 (the “Note”) and such other
documents, including, but not limited to those documents identified on Schedule
3(b) attached hereto, as the same may have been amended and/or assigned,
are hereinafter collectively referred to as the “Loan Documents,” and the loan
evidenced thereby being hereinafter referred to as the “Loan”).  Seller
represents to Purchaser, to survive Closing, that it has delivered to Purchaser
full and complete copies of the Loan Documents. Purchaser acknowledges that it
has received copies of the Loan Documents from Seller prior to the Effective
Date.  If Purchaser does not terminate this Agreement prior to the
expiration of the Study Period, Purchaser shall be deemed to have acknowledged
that to its then actual knowledge, it is not aware of any requirement or
condition that it will be unable to meet in order to qualify and be approved by
Lender.   As of January 15, 2010, the principal amount of the
indebtedness due under the Loan was approximately $12,964,000.  At the
Closing, Purchaser shall receive a credit against the Purchase Price for (i)
eighty percent (80%) of the amount of the indebtedness due and outstanding under
the Loan (including all principal, interest, fees, costs and other outstanding
amounts) as of the Closing Date (as defined in Section 9) (but not including
any advances or future advances thereunder, if any). Further, at Closing,
Purchaser shall pay to Seller in addition to the Purchase Price an amount equal
to eighty percent (80%) of all existing cash loan reserves held by Lender (or
its designee) under the Loan Documents. The parties acknowledge and agree that
in the event that the Lender shall agree to advance any proceeds at, immediately
prior to, or immediately after, Closing in excess of the outstanding
indebtedness under the Note (as existing as of the date hereof), such proceeds
shall immediately be distributed eighty percent (80%) to Purchaser and twenty
percent (20%) to Seller.

    


    (c)           Balance of Purchase
Price.  Except
as adjusted herein to account for the Deposit and subject to Sections 3 and 11, Purchaser at Closing shall
tender the Purchase Price by wire transfer of immediately available
funds.  At and upon Closing, the Deposit shall be credited against the
Purchase Price and released by Escrow Agent in the manner directed by Seller in
writing prior to the Closing; provided, however, if Seller fails to provide such
written direction prior to Closing, Escrow Agent shall retain the Purchase Price
on Seller’s behalf and shall hold such funds in escrow until directed by Seller
in writing as to the distribution of such funds.  The funds due Seller
at Closing shall be received in its account by 2:00 p.m. (Eastern Standard Time)
on the Closing Date (as defined below).

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (d)           Existing
Loan.

     

    (i)           At
Closing, Purchaser agrees to acquire the Subject Interests subject to the Loan
and the Loan Documents.  In this regard, the purchase and sale
contemplated hereunder requires the approval of Lender.  In connection
with such approval, Purchaser agrees to (a) notify Seller in writing within five
(5) business days after the Effective Date of the name of the entities or
persons to assume the obligations of Gazit Senior Care, Inc., a Florida
corporation and ROICO Holdings, L.P., a Delaware limited partnership
(collectively, the “Existing
Principals”) arising from and after Closing under that certain Agreement
of Principals dated January 10, 2006 to and in favor of Lender (the “Agreement of Principals”),
with such assumption as between Seller and Purchaser (and expressly not Lender)
to be subject to a Recourse Contribution Agreement (as defined herein) between
Seller and Purchaser, (b) submit a transfer/assumption application (the “Application”) which appears
complete on its face to Lender or its servicer, together with all applicable
application fees (provided however, if that the transaction contemplated by this
Agreement closes, all such fees and costs shall be paid eighty percent (80%) by
Purchaser and twenty percent (20%) by Seller), within two (2) business days
after the Effective Date, and provide Seller with written notice of submission
of such Application and evidence of submission of the Application and
application fees simultaneously with delivery of the same to Lender or its
servicer, (c) promptly furnish to Lender or its servicing agent and Seller such
other information, financial or otherwise, as may be reasonably requested by
Lender or its servicing agent or counsel following Purchaser’s initial
submission of the Application, (d) proceed with diligence and use commercially
reasonable efforts to obtain Lender’s approval of Purchaser’s acquisition of the
Subject Interests at the earliest possible date, (e) keep Seller timely apprised
of the status thereof, and (f) provide Seller with copies of all correspondence
between Lender and Purchaser relating to the Application, provided, however,
that Purchaser may redact any financial or proprietary information contained
therein.

     

    (ii)          Purchaser
shall timely pay any and all fees and costs required by Lender in connection
with the Application and purchase of the Subject Interests, including, without
limitation, any application fees, any assumption fees, attorneys’ fees and costs
of Lender’s counsel, and any fees or costs associated with Lender’s counsel, and
any fees and costs associated with Lender’s title insurance coverage, if any;
provided however, that if the transaction contemplated by this Agreement closes,
all such fees and cost shall be paid eighty percent (80%) by Purchaser and
twenty percent (20%) by Seller. The Purchaser shall have the right, but not the
obligation, to include, with the Application or as a part thereof, an additional
application, request or such other documentation as Lender may require, for a
commitment or proposal from Lender to advance at Closing, under terms and
conditions that are acceptable to Purchaser and Seller, funds in excess of the
outstanding amount under the Loan (the “Additional Loan Advance”),
such Additional Loan Advance to be secured as a future advance under the
Greenville Mortgage and Lexington Mortgage, or by second priority mortgages and
security agreements upon the Greenville Facility and Lexington Facility. The
Purchaser shall timely pay any and all fees and costs required by Lender in
connection with the application or request for the Additional Loan Advance,
including, without limitation, any application fees, and origination fees,
break-up fees, attorneys’ fees and costs of Lender’s counsel, and any fees or
costs associated with Lender’s counsel, and any fees and costs associated with
Lender’s title insurance coverage, if any; provided however, that if the
transaction contemplated by this Agreement closes, all such fees and cost shall
be paid eighty percent (80%) by Purchaser and twenty percent (20%) by
Seller.

     

    
      
        
        

      

      
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    (iii)         If
(a) Lender does not approve of Purchaser’s purchase of the Subject Interests on
or before thirty (30) days after the Effective Date (the “Lender Approval Period”), as the same may be
extended, (b) the terms and conditions under which Lender will approve
Purchaser’s acquisition are materially and adversely different from a term sheet
that is anticipated to be provided by Lender, negotiated with Lender and as
between Purchaser and Seller, acceptable to Purchaser and Seller (such
acceptance to be evidenced in writing, including via email) during the Study
Period (as such Term Sheet may be thereafter amended with the written consent
(including consent via email) of Purchaser and Seller, the “Term Sheet”) and Purchaser is
unwilling to accept such different terms, or (c) Lender does not approve the
party proposed by Purchaser with respect to the Agreement of Principals under
Section 3 (d)(i),  such matter(s)  shall be deemed a failure
of condition under Section
9(d)(i) and Section 9(d)
(ii).  Notwithstanding anything to the contrary contained
herein, if Lender does not approve of Purchaser’s purchase of the Subject
Interests as set forth herein on or before the scheduled expiration of the
Lender Approval Period, either Purchaser or Seller may extend the Lender
Approval Period by up to an additional thirty (30) days. Purchaser
acknowledges and agrees that (w) if Purchaser requests an additional advance
from Lender and Lender grants such request, it is probable that the per annum
interest rate or so-called “spread” determining same under the provisions of the
Loan shall increase, (x) the Lender’s agreement that neither Gazit nor any other
Affiliates of Seller shall be obligated to be “Principals” under the Agreement
of Principals with respect to matters arising from and after Closing is
acceptable to Purchaser and is not a material and adverse modification of the
provisions of the Term Sheet, and (z) notwithstanding anything to the contrary,
the Lender agreeing to advance funds in addition to the outstanding amount due
under the Note as of the date hereof is not a condition to the obligation of
Purchaser to close this transaction.

     

    (e)           No Assumption of Pre-Closing
Liabilities. Purchaser shall not, and shall not be deemed to, assume any
liabilities which arose from any act or omission that occurred prior to
Closing.

     

    (f)           Recourse Contribution
Agreement.  As Closing, Seller and the entities or persons
designed by Purchaser and approved by Lender to assume the obligations
subsequent to Closing under the Agreement of Principals shall enter into a
so-called Recourse Contribution Agreement (the “Recourse Contribution
Agreement”), which shall provide that any obligations or liabilities
under the Agreement of Principals which arose from any act or omission that
occurred prior to the Closing shall be borne one hundred percent (100%) by
Seller, and which arise from any act or omission that occurred from and after
Closing shall be borne eighty percent (80%) by Purchaser and twenty percent
(20%) by Seller. Notwithstanding anything to the contrary, in each instance as
used herein, in the Recourse Contribution Agreement or any other document or
instrument executed in connection with this transaction, the phrase “omission
that occurred” shall not, and shall not be deemed or construed to, include
within its purview, or pertain or apply to any state of facts with respect to,
or condition of, the Real Property that existed as of Closing (“State of Facts”), except if
and to the extent that Seller shall represent and warrant otherwise in Section
7(a) of this Agreement; provided however that the phrase “State of Facts”
excludes those which give rise to third party claims for negligence or
intentional acts.

     

    
      
        
        

      

      
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    4.           Title.

     

    (a)           Condition of
Title.  At
Closing, each Fee Owner shall own good and indefeasible fee simple title to its
respective parcel of Real Property, free and clear of all liens and encumbrances
except as provided herein, subject only to the Permitted
Exceptions.  The “Permitted Exceptions” shall
consist only of the following:

     

    (i)           Non
delinquent real property taxes and all assessments and unpaid installments
thereof which are not delinquent.

     

    (ii)          The
Master Leases and all the Leases in effect as of the date hereof or any new
Leases entered into in accordance with Section 6(b), and the rights
of the tenants thereunder.

     

    (iii)         The
Mortgage and other Loan Documents.

     

    (iv)        All
exceptions (including printed exceptions) to title contained or disclosed in the
existing title policy covering the Real Property listed on Schedule
4(a)(iv) (the “Title
Policy”) or the Title Commitment (as defined in Section 4(b)) other than
applicable Title Objections (as defined in Section 4(b)) identified and
not thereafter waived by Purchaser.

    


    (v)          Laws,
ordinances, governmental regulations, and all building, zoning, land use and any
subdivision ordinances and regulations affecting the occupancy, use or enjoyment
of the Property.

     

    (vi)         All
matters, rights and interests identified on the Existing Survey (as defined in
Section 4(b)
below).

     

    (vii)       Any
matters created in accordance with Section 6(a)
below.

     

    (viii)       Any
matters caused primarily by or resulting primarily from the acts of the
Purchaser or any of its Affiliates, employees, officers, directors, agents,
contractors, invitees or licensees.

     

    (b)           Examination of
Title.

     

    (i)           Title Commitment and
Survey.  Purchaser acknowledges that it received from Seller a
copy of the Title Policy, that is, Lawyers Title Insurance Policy No.
A86-0038132 issued to the Fee Owners in the amount of $13,500,000 and having an
effective date of January 10, 2006. Within ten (10) days after the Effective
Date, Purchaser, shall obtain, a standard ALTA commitment for owner’s title
insurance for the Real Property from Lawyers Title Insurance Company (the “Title Company”), together, to
the extent available, with copies of the exceptions referenced therein (the
“Title
Commitment”).  Purchaser acknowledges it has received from
Seller the most recent survey of the Real Property prepared by a licensed
surveyor (collectively, the “Existing Survey”).  Seller
makes no warranties or representations as to the accuracy or completeness of the
Existing Survey or the qualifications of the surveyor who prepared the same, and
Purchaser shall have no right to rely upon any information contained in the
Existing Survey.  Purchaser may obtain an updated survey of the Real
Property (“New Survey”),
which New Survey shall be certified to Purchaser, Seller, Fee Owners, Operators,
Portfolio, Tenant Portfolio, Title Company and such other parties as Purchaser
may elect.  Promptly upon receipt of the New Survey, Purchaser shall
provide Seller and Title Company with a sealed original of the
same.

     

    
      
        
        

      

      
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    (ii)          Title
Objections.  Purchaser shall have until 5:00 p.m. (Eastern
Standard Time) on the business day which is fifteen (15) days following the
Effective Date to notify Seller of any objections (the “Title Objections”) with
respect to the Title Commitment and the New Survey based on its review
thereof.  Notwithstanding the foregoing, Purchaser shall have no right
to object to any of the matters contained or disclosed in the Title Policy or
the Existing Survey and the same shall remain, at all times, Permitted
Exceptions and shall be deemed approved by Purchaser.  If Purchaser
does not give such notice, such failure shall be conclusively deemed to be full
and complete approval of the Title Commitment and the Existing Survey, and any
matter disclosed therein.  If Purchaser does give such notice, Seller
shall have three (3) days after receipt thereof to notify Purchaser in writing
that Seller (a) will cause or (b) elects not to cause any or all of the Title
Objections disclosed therein to be removed or insured over by the Title
Company.  Seller’s failure to notify Purchaser within such three (3)
day period as to any Title Objection shall be deemed an election by Seller not
to remove or have the Title Company insure over such Title
Objection.  If Seller notifies or is deemed to have notified Purchaser
that Seller shall not remove nor have the Title Company insure over any or all
of the Title Objections, Purchaser shall have until the latter of the end of the
Study Period or five (5) business days after receipt of such notice or deemed
notice to (i) terminate this Agreement or (ii) waive such Title Objections and
proceed to Closing without any abatement or reduction in the Purchase Price on
account of such Title Objections.  If Purchaser does not give such
notice within said period, Purchaser shall be deemed to have elected to waive
such Title Objections.

     

    (c)           Existing
Liens.  Notwithstanding
the foregoing, no deeds of trust, mortgages or other monetary liens, including
mechanic’s liens, materialmen’s liens, judgment liens and tax liens of any type,
encumbering all or part of the Real Property (“Seller Liens”) (except the
liens created by any of the Loan Documents), shall be deemed to be Permitted
Exceptions.  At or before the Closing Date, Seller shall pay, insure
over, bond over or satisfy all Seller Liens. Seller may independently seek
reimbursement for those amounts, and Purchaser will cooperate with Seller in
those efforts.  Purchaser will promptly remit to Seller any proceeds
or funds received by Purchaser in connection with any Seller Liens paid or
satisfied by Seller.  The last three sentences of this Section 4(c), including this
sentence, shall survive Closing.

     

    (d)           Affidavits and Evidence of
Authority.  At
Closing, (i) Seller shall execute a title affidavit in the form of Exhibit
B, and (ii) Seller shall execute such instruments as are customarily and
reasonably required by the Title Company for compliance with tax reporting or
disclosure requirements and which are acceptable to Seller in its reasonable
discretion, and (iii) furnish such customary written evidence of Seller’s
organizational status and authority to consummate this transaction as the Title
Company may require.

     

    
      
        
        

      

      
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    5.           Study of the
Property.

     

    (a)           Physical Inspection of the
Real Property.

     

    (i)           Notice and Access.
Provided that Purchaser has given Seller at least one (1) business day advance
notice in writing (including notification via email), Seller shall allow
Purchaser and Purchaser’s engineers, architects or other employees and agents
reasonable access to the Property during normal business hours for the limited
purposes provided herein.

     

    (ii)          Scope of Inspections.
Purchaser and its engineers, architects and other employees and agents may
exercise such access solely for the purposes of: (A) reviewing contracts, books
and records relating to the Property (other than any privileged, proprietary or
confidential records), soil reports, environmental studies and reports, surveys,
and building and systems plans; (B) reviewing and copying records relating to
operating expenses and other instruments and correspondence relating to the
Property; and (C) inspecting the physical condition of the Property and
conducting non-intrusive physical and environmental tests and inspections
thereof.  PURCHASER SHALL NOT CONDUCT OR ALLOW ANY PHYSICALLY
INTRUSIVE TESTING OF, ON OR UNDER THE PROPERTY WITHOUT FIRST OBTAINING SELLER’S
WRITTEN CONSENT IN EACH INSTANCE AS TO THE TIMING AND SCOPE OF THE WORK TO BE
PERFORMED AND THE PARTIES ENTERING INTO AN AMENDMENT HERETO MEMORIALIZING SUCH
SCOPE OF WORK AND ANY ADDITIONAL AGREEMENTS OF THE PARTIES WITH RESPECT TO SUCH
TESTING; provided however that Purchaser is hereby expressly permitted to
conduct a Phase 1 environmental inspection and further consent is not
required).

     

    (iii)         Insurance.  Purchaser
agrees that it will cause it and any person accessing the Property hereunder to
be covered by not less than $1,000,000 commercial general liability insurance
(with, in the case of Purchaser’s coverage, a contractual liability endorsement,
insuring its indemnity obligation under this Agreement), insuring all activity
and conduct of such person while exercising such right of access and at Seller’s
written request (including notification via email) naming Seller as an
additional insured, issued by a licensed insurance company qualified to do
business in the State in which the Property is located.

     

    (iv)         No
Interference.  Purchaser agrees that, in the exercise of the
right of access granted hereby, it will not unreasonably interfere with or
permit unreasonable interference with any person occupying or providing service
at the Property.  Purchaser agrees that it or its agents will not
communicate or correspond with any tenants at the Property or any vendors
providing service to the Property without the prior, written consent of Seller,
such consent not to be unreasonably withheld or delayed.

     

    (v)          Indemnification.  Purchaser
agrees to indemnify, defend and hold harmless Seller and its Affiliates,
members, partners, subsidiaries, shareholders, officers, directors, employees
and agents from any loss, injury, damage, cause of action, liability, claim,
lien, cost or expense, including reasonable attorneys’ fees and costs, arising
from the exercise by Purchaser or its employees, consultants, agents or
representatives of the right of access under this Agreement or out of any of the
foregoing, but only with respect to the extent that such damage or loss is
caused by any of the same as compared to other parties that may have also caused
any such damage or loss.  The indemnity in this Section shall
survive the Closing or any termination of this Agreement.

     

    
      
        
        

      

      
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    (vi)         Seller’s Right to be
Present.  Purchaser agrees to give Seller prior written notice
(including notification via email) at least one (1) business day in advance of
its intent to conduct any inspections or tests so that Seller will have the
opportunity to have a representative present during any such inspection or test,
the right to do which Seller expressly reserves.  Purchaser agrees to
cooperate with any reasonable request by Seller in connection with the timing of
any such inspection or test.  Provided that Seller is not in breach of
this Agreement, Purchaser agrees to provide Seller with a copy of any written
inspection or test report or summary prepared by any third party at or prior to
Closing.

     

    (vii)        Compliance with
Laws.  Purchaser agrees that any inspection, test or other
study or analysis of the Real Property pursuant to this Section 5 shall be performed
in accordance with all applicable laws, ordinances, codes and other governmental
requirements.

     

    (viii)       Repair and/or Restoration of
the Property.  Purchaser agrees at its own expense to promptly
repair or restore the Property, or, at Seller’s option, to reimburse Seller for
any repair or restoration costs, if any inspection or test requires or results
in any damage to or alteration of the condition of the Property.  The
obligations set forth in this Section shall survive the Closing or any
termination of this Agreement.

     

    (b)           Study
Period.  Purchaser
shall have until 5:00 p.m. (Eastern Standard Time) on March 12, 2010 (such
period of time, the “Study
Period”), to notify Seller that, for any reason or no reason, it
disapproves of any matter or item affecting the Property and terminates this
Agreement.  If Purchaser fails to give such notice of disapproval and
termination with respect to any matter relating to the Property prior to the
expiration of the Study Period, such failure shall be conclusively deemed to be
full and complete approval of such matters and a satisfaction of this condition
and moreover, the Deposit shall become non-refundable other than as expressly
provided herein.

     

    (c)           Effect of
Termination. If
Purchaser terminates this Agreement in accordance with Section 5(b), then
subject to Section 5(a), all further
rights and obligations of the parties shall cease and terminate without any
further liability of either party to the other (except those obligations which
are specifically provided to survive such termination as provided in this
Agreement) and the Deposit shall be returned to Purchaser within three (3)
business days.

     

    (d)           Study
Materials.  Purchaser
acknowledges that it has received, or that Seller has made available to
Purchaser the following:

     

    (i)           Copies
of the Leases and Service Contracts;

     

    (ii)          Copies
of all plans and specifications for the Improvements;

     

    (iii)         Copies
of the most recent environmental report prepared by third parties;

     

    
      
        
        

      

      
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    (iv)         Copies
of the operating statements for year-to-date (to the extent same are available)
reflecting the operation of the Property.

     

    Except
for any representations and warranties set forth herein, Seller makes no
additional representations or warranties as to the accuracy, completeness, or
reliability of any information contained in any third-party reports or materials
delivered or made available to Purchaser under this Agreement.  If
requested by Seller, Purchaser shall provide written verification of its receipt
of those items listed in this Section.

     

    (e)           Delivery of Study
Materials.  If
the Study Period is extended for any reason, including by amendment to this
Agreement, or if Seller otherwise requests, Purchaser, within three (3) days
after such extension or request, shall provide Seller with copies of all third
party reports and work product generated with respect to the
Property.  If this Agreement is terminated for any reason, Purchaser
shall, within five (5) days following such termination, deliver to Seller all
documents and materials relating to the Property previously delivered to
Purchaser by Seller.  Such items shall be delivered without
representation or warranty as to accuracy or completeness and with no right of
Seller to rely thereon without the consent of the third party.

     

    6.           Covenants by Seller.   Except
as otherwise provided in Section 6 (i), after the Effective Date and until the
Closing Date or termination of this Agreement under the terms hereof, the
following shall apply:

     

    (a)           Transfers;
Easements. Except as disclosed on
Schedule
6(a) hereto
or otherwise provided in this Agreement, Seller will not permit or take any
action to cause the Fee Owners or Operators to transfer or encumber any of the
Property or any interest in the Property, or take any action to create or permit
to be created on the Real Property any easements, covenants, restrictions,
conditions or other matters of title affecting the Real Property, without
Purchaser’s prior written consent.

     

    (b)           Service Contracts and
Leases.   

     

    (i)           Modification of Existing
Service Contracts and Leases.  Prior to the expiration of the
Study Period, Seller may cause the Operators to cancel, amend and modify any of
the Leases and any of the Service Contracts, provided notice is given to
Purchaser within three (3) business days after the cancellation, amendment or
modification of any commercial Leases or material service contract and in any
event at least two (2) business days prior to the expiration of the Study
Period.  After the expiration of the Study Period, Seller may not
cause the Operators to cancel, amend, or modify any material Service Contracts
or commercial (as distinct from residential) Leases, in a manner binding upon
Purchaser after the Closing, unless Seller gives Purchaser notice in writing
(including notification via email) within three (3) business days after such
action and provided such action is (1) approved by Purchaser in its reasonable
discretion within three (3) business days of written request from Seller,
provided that if Purchaser does not timely respond, Purchaser shall be deemed to
have approved such action, or (2) required by any of the commercial Leases or
any of the material Service Contracts.

     

    
      
        
        

      

      
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    (ii)          New Service Contracts and
Leases.  Prior to the expiration of the Study Period, Seller
may cause the Operators to enter into, extend or renew (i) any residential lease
with an unrelated third party on terms and conditions generally consistent with
those of the existing tenants provided that the term of such lease (including
any options to renew) shall not exceed one (1) year and the rent payable
thereunder shall be at or above the then current market, which shall include the
granting of market incentives or concessions, including, without limitation,
so-called “free rent” and waiver of some of all or some of the community fee (an
“Acceptable Lease”) (ii)
material service contract affecting the Property, or any part thereof, provided
with respect to any new commercial leases or service contract notice is given to
Purchaser within three (3) business days after such action and in any event at
least two (2) business days prior to the expiration of the Study
Period.  After the expiration of the Study Period, Seller may not
cause the Operators to enter into, extend or renew any residential lease other
than an Acceptable Lease, any new commercial lease or service contract, in each
instance without Purchaser’s prior written consent, which consent will not be
unreasonably withheld, conditioned or delayed.  Notwithstanding the
preceding sentence, after the expiration of the Study Period, Seller may cause
the Operators to enter into any new service contracts without Purchaser’s
consent if doing so is in the ordinary course of operating the Property and the
service contract (1) will not be binding on Purchaser or (2) is cancelable on
thirty (30) days or less notice without penalty or premium.  If Seller
shall request Purchaser’s approval to any of the foregoing matters, Purchaser
shall have three (3) business days from its receipt of such request to give
Seller notice of its approval or disapproval of such matter.  If
Purchaser does not give such notice, such matter shall be deemed approved by
Purchaser. (For the purpose of Sections 6 (b) (i) and (ii) “material” service
contracts shall mean any contact or agreement related to any services provided
to any of the Facilities providing for payments in excess of $50,000 per year or
with a term (including any options to renew) in excess of one (1) year.
Notwithstanding the foregoing, all service contracts with Affiliates of Seller
are material service contracts.)

     

    (c)           Notices.  Seller
shall provide Purchaser with copies of any material written notices received by
or on behalf of Seller or the Companies, including material written notices from
any tenant under the Leases or from the Managers (as hereinafter defined) and
from any governmental authority with respect to the Property, including, without
limitation, any material written notice of violation of Legal Requirements (as
defined in Section
25(a)), within the earlier to occur of five (5) business days after
receipt or two (2) business days prior to Closing.  For the purpose of
this Section only, “material written notices” shall mean any written notices
that relate to any issue where the estimated damages to the Companies and the
Property would be reasonably estimated by Seller to exceed in the aggregate
$10,000.

     

    (d)           Property.  Seller
shall cause the Operators to maintain the Property in its current, “as-is”
condition, reasonable wear and tear, casualty and condemnation
excepted.  Seller shall cause Operators to continue to operate the
Property in the ordinary course of business consistent with its past practices
and market standards.  Seller shall cause Operators to not remove any
of the Personal Property from the Real Property, except as may be required for
repair and replacement in the ordinary course of operating the Facilities
(provided such Personal Property so removed is simultaneously replaced with
Personal Property of at least equal quality and
utility).  

     

    
      
        
        

      

      
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    (e)           Insurance
Coverage.  Seller
shall cause all Insurance Coverage (as defined in Section 11(f) below) to remain
in effect until the Closing Date.

     

    (f)           Zoning.  Seller
shall not request or consent to any zoning changes.

     

    (g)           Loan
Documents. Seller
shall, consistent with past practices, cause the Fee Owners and Operators to
keep and perform all of the covenants and obligations to be performed, and make
all payments of principal and interest due and payable, under the Loan
Documents.  Seller shall promptly communicate with and provide notices
to such appropriate lenders, servicers and third parties and shall use
commercially reasonable efforts, pursuant to the Loan Documents or otherwise, to
obtain consents for the transactions contemplated herein not to trigger a
default, or except as set forth in Section 3(d) and Section 11(m) hereof, cause
the imposition of a fee under any of the Loan Documents.

     

    (h)           Trade
Payables.  Seller
shall cause the Operators to pay all trade obligations arising in the ordinary
operations of the Property (“Trade Payables”) in the
ordinary course of business in accordance with past practices.

     

    (i)           Non-Competition. 
From the
Closing through the second anniversary of the Closing, neither Seller nor any of
its privately held (that is, not publicly traded) Affiliates shall directly or
indirectly (unless acting in accordance with Buyer’s written consent) own,
manage, operate, finance or participate in the ownership, management, operation
or financing of, or permit its name to be used by or in connection with, any
competitive business or enterprise located within a five (5) mile radius of the
Real Property unless such competitive business or enterprise was part of a
portfolio of at least 10 properties acquired by Seller in a single transaction
at a single closing.  For purposes of this Section
6(i), the term “competitive business or
enterprise” shall mean a community residential care
facility.  This Section 6(i) shall
survive Closing.

     

    
      
        
        

      

      
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    7.           Seller’s Representations and
Warranties.

     

    (a)           Representations and
Warranties by Seller.  The
matters set forth in this Section constitute representations and warranties
by Seller which are now and (subject to matters contained in any notice given
pursuant to the next succeeding sentence) shall, in all material respects, at
the Closing be true and correct.  If, prior to Closing, Seller has
actual knowledge that any of the representations and warranties contained in
this Section cease to be true, Seller shall give prompt notice to Purchaser
(which notice shall include copies of the instrument, correspondence, or
document, if any, upon which Seller’s notice is based), but such knowledge shall
not cause the condition in Section 9(b)(i) to be satisfied or such
representation to be deemed to be modified thereby, unless Purchaser shall close
this transaction.  As used in this Section, the phrase “to the extent
of Seller’s actual knowledge” or similar phrase shall mean the actual knowledge
of Aharon Soffer, Avi Bittan or Joshua Friedman, following reasonable inquiry,
including consultation with the administrator of each Facility. Notwithstanding
the foregoing, Aharon Soffer shall have no duty or obligation to make reasonable
inquiry.  There shall be no personal liability on the part of such
persons.  To the extent Purchaser has or acquires actual knowledge
prior to the expiration of the Study Period that these representations and
warranties are inaccurate, untrue or incorrect in any way, such representations
and warranties shall be deemed modified to reflect Purchaser’s actual knowledge.


     

    (i)           Organization.

     

    (1) Portfolio
Organization.  Portfolio was formed on March 26, 2010, by
filing a Certificate of Formation (the “Portfolio Certificate of
Formation”) with the Delaware Secretary of State and is a Delaware
limited liability company, duly organized and validly existing and in good
standing under applicable Delaware law.  The Portfolio Certification
of Formation is and remains in full force and effect and has not been amended,
and a true and correct copy of the Portfolio Certification of Formation has been
delivered to Purchaser. Portfolio is governed by that certain Limited Liability
Company Agreement dated as of April 30, 2010, and executed by Seller, as its
sole member (the “Existing
Portfolio Limited Liability Company Agreement”).  The Existing
Portfolio Limited Liability Company Agreement is and remains in full force and
effect and has not been amended, and a true and correct copy of the Existing
Portfolio Limited Liability Company Agreement has been delivered to Purchaser.
Immediately subsequent to the Closing, the parties shall cause the members of
Portfolio to enter into an Amended and Restated Limited Liability Company
Agreement substantially in the form attached hereto as Exhibit
C and incorporated by reference herein. Seller is, and at all times since
formation of Portfolio has been, the sole member and sole owner of one hundred
percent (100%) of the limited liability company membership interests in
Portfolio (the “Portfolio Owner
Membership Interest”).  There have been no options,
subscriptions, rights of first refusal or promises or agreements regarding any
of the foregoing issued by Seller or Portfolio to any third party with respect
to any limited liability company membership interests in Portfolio. The
Portfolio Owner Membership Interest is free and clear of liens, claims, charges,
options, rights of first refusal, pledges or encumbrances of any nature, except
as set forth in the Loan Documents.

     

    
      
        
        

      

      
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    (2) Lexington Owner
Organization. 
Lexington Owner was formed on August 16, 2004, by filing Articles of
Organization (the “Lexington
Owner Articles of Organization”) with the Florida Secretary of State and
is a Florida limited liability company, duly organized and validly existing and
in good standing under applicable Florida law.  The Lexington Owner
Articles of Organization is and remains in full force and effect and has not
been amended, and a true and correct copy of the Lexington Owner Articles of
Organization has been delivered to Purchaser. Lexington Owner is also qualified
to conduct business and its status is active in the State of South
Carolina.  Immediately subsequent to the Closing, the parties shall
cause Portfolio, as sole member of the Lexington Owner, to enter into an
Operating Agreement substantially in the form attached hereto as Exhibit
D and incorporated by reference herein.  Prior to the
assignment to Portfolio, Seller was, and was at all times since formation of
Lexington Owner, the sole member and sole owner of one hundred percent (100%) of
the limited liability company membership interests in Lexington Owner (the
“Lexington Owner Membership
Interest”).  Portfolio is, and at all times since the
assignment from Seller of Lexington Owner has been, the sole member and sole
owner of the Lexington Owner Membership Interest.  There have been no
options, subscriptions, rights of first refusal or promises or agreements
regarding any of the foregoing issued by Seller, Portfolio or Lexington Owner to
any third party with respect to any limited liability company membership
interests in Lexington Owner. The Lexington Owner Membership Interest is free
and clear of liens, claims, charges, options, rights of first refusal, pledges
or encumbrances of any nature, except as set forth in the Loan
Documents.

     

    (3) Greenville Owner
Organization. Greenville
Owner was formed on August 16, 2004, by filing Articles of Organization (the
“Greenville Owner Articles of
Organization”) with the Florida Secretary of State and is a Florida
limited liability company, duly organized and validly existing and in good
standing under applicable Florida law.  The Greenville Owner Articles
of Organization is and remains in full force and effect and has not been
amended, and a true and correct copy of the Greenville Owner Articles of
Organization has been delivered to Purchaser. Greenville Owner is also qualified
to conduct business and its status is active in the State of South
Carolina.  Immediately subsequent to the Closing, the parties shall
cause Portfolio, as the sole member of Greenville Owner, to enter into an
Operating Agreement substantially in the form attached hereto as Exhibit
E and incorporated by reference herein.  Prior to the
assignment to Portfolio, Seller was, and was at all times since formation of
Greenville Owner, the sole member and sole owner of one hundred percent (100%)
of the limited liability company membership interests in Greenville Owner (the
“Greenville Owner Membership
Interest”). Portfolio is, and at all times since the assignment from
Seller of Greenville Owner has been, the sole member and sole owner of the
Lexington Owner Membership Interest.  There have been no options,
subscriptions, or rights of first refusal or promises or agreements regarding
any of the foregoing issued by Seller, Portfolio or Greenville Owner to any
third party with respect to any limited liability company membership interests
in Greenville Owner. The Greenville Owner Membership Interest is free and clear
of liens, claims, charges, options, rights of first refusal, pledges or
encumbrances of any nature, except as set forth in the Loan
Documents.

     

    
      
        
        

      

      
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    (4) Tenant Portfolio
Organization.  Tenant Portfolio was formed on March 26, 2010,
by filing a Certificate of Formation (the “Tenant Portfolio Certificate of
Formation”) with the Delaware Secretary of State and is a Delaware
limited liability company, duly organized and validly existing and in good
standing under applicable Delaware law.  The Tenant Portfolio
Certification of Formation is and remains in full force and effect and has not
been amended, and a true and correct copy of the Tenant Portfolio Certification
of Formation has been delivered to Purchaser. Tenant Portfolio is governed by
that certain Limited Liability Company Agreement dated as of April 30, 2010, and
executed by Seller, as its sole member (the “Existing Tenant Portfolio Limited
Liability Company Agreement”).  The Existing Tenant Portfolio
Limited Liability Company Agreement is and remains in full force and effect and
has not been amended, and a true and correct copy of the Existing Tenant
Portfolio Limited Liability Company Agreement has been delivered to Purchaser.
Immediately subsequent to the Closing, the parties shall cause the members of
Tenant Portfolio to enter into an Amended and Restated Limited Liability Company
Agreement substantially in the form attached hereto as Exhibit
F and incorporated by reference herein. Seller is, and at all times since
formation of Tenant Portfolio has been, the sole member and sole owner of one
hundred percent (100%) of the limited liability company membership interests in
Tenant Portfolio (the “Tenant
Portfolio Membership
Interest”).  There have been no options, subscriptions, or
rights of first refusal or promises or agreements regarding any of the foregoing
issued by Seller or Tenant Portfolio to any third party with respect to any
limited liability company membership interests in Tenant Portfolio. The Tenant
Portfolio Membership Interest is free and clear of liens, claims, charges,
options, rights of first refusal, pledges or encumbrances of any nature, except
as set forth in the Loan Documents.

     

    (5) Lexington Operator
Organization. Lexington
Operator was formed on June 11, 2004, by filing Articles of Organization (the
“Lexington Operator Articles of
Organization”) with the Florida Secretary of State and is a Florida
limited liability company, duly organized and validly existing and in good
standing under applicable Florida law.  The Lexington Operator
Articles of Organization is and remains in full force and effect and has not
been amended, and a true and correct copy of the Lexington Operator Articles of
Organization has been delivered to Purchaser. Lexington Operator is also
qualified to conduct business and its status is active in the State of South
Carolina.  Immediately subsequent to the Closing, the parties shall
cause Tenant Portfolio, as sole member of Lexington Operator, to enter into an
Operating Agreement substantially in the form attached hereto as Exhibit
G and incorporated by reference herein. Prior to the assignment to Tenant
Portfolio, Seller was, and was at all times since formation of Lexington
Operator, the sole member and sole owner of one hundred percent (100%) of the
limited liability company membership interests in Lexington Operator (the “Lexington Operator Membership
Interest”).  Tenant Portfolio is, and at all times since the
assignment from Seller of Lexington Operator has been, the sole member and sole
owner of the Lexington Operator Membership Interest.  There have been
no options, subscriptions, rights of first refusal or promises or agreements
regarding any of the foregoing issued by Seller, Tenant Portfolio or Lexington
Operator to any third party with respect to any limited liability company
membership interests in Lexington Operator. The Lexington Operator Membership
Interest is free and clear of liens, claims, charges, options, rights of first
refusal, pledges or encumbrances of any nature, except as set forth in the Loan
Documents.

     

    
      
        
        

      

      
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    (6) Greenville Operator
Organization. Greenville
Operator was formed on June 11, 2004, by filing Articles of Organization (the
“Greenville Operator Articles of Organization“)
with the Florida Secretary of State and is a Florida limited liability
company, duly organized and validly existing and in good standing under
applicable Florida law.  The Greenville Operator Articles of
Organization is and remains in full force and effect and has not been amended,
and a true and correct copy of the Greenville Operator Articles of Organization
has been delivered to Purchaser. Greenville Operator is also qualified to
conduct business and its status is active in the State of South
Carolina.  Immediately subsequent to the Closing, the parties shall
cause Tenant, as sole member of Greenville Operator, to enter into an Operating
Agreement substantially in the form attached hereto as Exhibit
H and incorporated by reference herein. Prior to the assignment to Tenant
Portfolio, Seller was, and was at all times since formation of Grenville
Operator, the sole member and sole owner of one hundred percent (100%) of the
limited liability company membership interests in Greenville Operator (the
“Greenville Operator Membership
Interest”).  Tenant Portfolio is, and at all times since the
assignment from Seller of Greenville Operator has been, the sole member and sole
owner of the Lexington Operator Membership Interest.  There have been
no options, subscriptions, rights of first refusal or promises or agreements
regarding any of the foregoing issued by Seller, Tenant Portfolio or Greenville
Operator to any third party with respect to any limited liability company
membership interests in Greenville Operator. The Greenville Operator Membership
Interest is free and clear of liens, claims, charges, options, rights of first
refusal, pledges or encumbrances of any nature, except as set forth in the Loan
Documents.

     

    (ii)          Power and
Authority.  Seller and the Companies have the full legal power,
right and authority and all licenses, permits, and authorizations necessary to
carry on the businesses in which they are engaged and in which they presently
propose to engage and to own and use the properties owned and used by them.
Subject to the required consent of Lender and the South Carolina Department of
Health and Environmental Control, Seller has the full legal power, right and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby.  This Agreement has been duly executed by Seller,
and constitutes the valid and legally binding obligation of Seller, enforceable
against Seller in accordance with its terms and conditions.

     

    (iii)         Noncontravention.  Except
for the required consent of Lender and the South Carolina Department of Health
and Environmental Control, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(1) violate in any material respect any law, decree or other restriction of any
governmental authority to which the Facilities, the Real Property, Seller,
Portfolio, Tenant Portfolio or any of the other Companies is subject or (2)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any material agreement, contract, lease,
license, instrument, or other arrangement to which the Facilities, the Real
Property, Seller, Portfolio, Tenant Portfolio or any of the other Companies is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any encumbrance upon any of its
assets).  Except for the required consent of the South Carolina
Department of Health and Environmental Control, neither Seller, Portfolio,
Tenant Portfolio nor any of the other Companies is required to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any governmental authority in order for the parties to consummate the
transactions contemplated by this Agreement.

     

    (iv)         Litigation.  There
is no litigation, claim or proceeding pending against Seller, the Facilities or
the Real Property which would materially affect the ability of the Seller to
consummate the transactions contemplated by this Agreement. There is no
litigation, claim or proceeding pending, or to Seller’s knowledge threatened,
against the Facilities, the Real Property, Portfolio, Tenant Portfolio or any of
the Companies which would materially affect their respective properties, assets
or businesses.  To the extent of Seller’s knowledge, no state of facts
exists which could reasonably be expected to give rise to any such litigation,
claim, or proceeding.

     

    
      
        
        

      

      
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    (v)         Leases.  Except
for Leases modified or entered into pursuant to Section 6(b), the Leases set
forth on Schedule
7(a)(v) attached hereto comprise all of the leases and subleases
affecting the Property as of the date and on and after the Closing (without
implication or condition that any such Leases shall be in effect at
Closing)..

     

    (vi)         Service
Contracts.  Except for Service Contracts modified or entered
into pursuant to Section
6(b), the Service Contracts set forth on Schedule
7(a)(vi) attached hereto comprise all of the material service contracts
affecting the Property or by which Lexington Operator or Greenville Operator is
bound as of the date hereof and on and after the Closing (without implication or
condition that any such Service Contract shall be in effect at
Closing)..

     

    (vii)        No notice of non-compliance
with Loan Documents.  None of the Companies has received any
uncured written notice that any of them are not in material compliance with all
applicable representations, warranties and covenants set forth in the Loan
Documents.

     

    (viii)     
Employees and
Benefits. Portfolio, Tenant Portfolio, Lexington Owner and Greenville
Owner have never had any employees. Seller has no employees on-site at the
Property providing on-site services to the Property.  The Operating
Companies have had employees providing on-site services to the
Property.  Each of the Companies does not now, nor has it ever had,
any employee or participated in or had liability for contribution to any
(1) employee benefit plan (within the meaning of Section 3(3) of
ERISA), (2) plan within the meaning of Section 4975(e)(1) of the
Internal Revenue Code), or (3) any other retirement plan, bonus plan,
profit sharing plan or pension plan, except as set forth in attached Schedule
7(a)(viii). There are no pending, or to the knowledge of Seller,
threatened claims by or on behalf of any employee benefit plan (within the
meaning of Section 3(3) of ERISA), by any employee, beneficiary or alternate
payee against any such employee benefit plan, or otherwise involving any such
employee benefit plan (other than routine claims for benefits) against any
Company.

     

    (ix)         Tax
Status.  Each of the Companies is, and at all times has been
treated for federal, state and local income tax purposes as a single member
disregarded entity and has not filed any election to be treated as an
association taxable as a corporation or a Subchapter S
corporation.  Other than monthly sales tax returns, if applicable,
none of the Companies have filed any tax returns with any federal, state or
local taxing authority.

     

    (x)          Environmental
Reports.  Except as may be disclosed in the reports, studies or
analyses set forth in the attached Schedule
7(a)(x), or included in any environmental assessments or reports obtained
at the direction of Purchaser in connection with this Agreement, Seller has no
knowledge of any materially adverse environmental conditions affecting the
Property.

     

    
      
        
        

      

      
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    (xi)         Assets and Liabilities of
Portfolio. Other than the Lexington Owner Membership Interest and the
Greenville Owner Membership Interest, Portfolio does not own any
assets.  Other than those obligations, if any, existing under the Loan
Documents or the Portfolio Operating Agreement, Portfolio does not have any
liabilities or obligations.

     

    (xii)        Assets and Liabilities of
Tenant Portfolio. Other than the Lexington Operator Membership Interest
and the Greenville Operator Membership Interest Tenant, Tenant Portfolio does
not own any assets.  Other than those obligations, if any, existing
under the Loan Documents or the Tenant Portfolio Operating Agreement, Tenant
Portfolio does not have any liabilities or obligations.

     

    (xiii)       Financial Statement of
Lexington Owner; No Liabilities Except as Stated. The financial
statements of Lexington Owner attached hereto as Schedule
7(a)(xiii) are true, complete and correct in all material respects, were
prepared in the ordinary course of Seller’s business and are relied upon by
Seller in its operation of the Property, and there are no liabilities of any
kind whatsoever other than as disclosed in such financial statements, except in
each instance, any loans to and from Affiliates are omitted and as of Closing
shall all be repaid in full. Lexington Owner held (or is expressly authorized
prior to Closing to convey to an Affiliate of Seller) title to the approximately
one and one-half (1.5) acre parcel of land adjacent to the Lexington Real
Property described as a so-called less-out parcel in the description of the
Lexington Land in Exhibit A-1hereof, and further defined in this Agreement and
such Exhibit A-1 as the “Excluded 1.5 Acre Parcel.  The Purchaser
acknowledges and agrees that the Excluded 1.5 Acre Parcel is neither a part of
the Lexington Real Property nor an asset of Portfolio, Tenant Portfolio,
Lexington Owner or Lexington Tenant. Purchaser agrees, to survive Closing, that
it shall cooperate with Seller, with respect to performing or causing to be
performed any acts or deeds, at the sole cost, expense and risk of Seller, to
cause or permit the Excluded 1.5 Acre Parcel to be sold, developed, used and
occupied as a separate and distant parcel of real property.

     

    (xiv)       Financial Statement of
Greenville Owner; No Liabilities Except as Stated.  The
financial statements of Greenville Owner attached hereto as Schedule
7(a)(xiv) are
true, complete and correct in all material respects, were prepared in the
ordinary course of Seller’s business and are relied upon by Seller in its
operation of the Property, and there are no liabilities of any kind whatsoever
other than as disclosed in such financial statements, except in each instance,
any loans to and from Affiliates are omitted and as of Closing shall all be
repaid in full.

     

    (xv)        Financial Statement of
Lexington Operator; No Liabilities Except as Stated.  The
financial statements of Lexington Operator attached hereto as Schedule
7(a)(xv) are true, complete and correct in all material respects, were
prepared in the ordinary course of Seller’s business and are relied upon by
Seller in its operation of the Property, and there are no liabilities of any
kind whatsoever other than as disclosed in such financial statements, except in
each instance, any loans to and from Affiliates are omitted and as of Closing
shall all be repaid in full.

     

    (xvi)       Financial Statement of
Greenville Operator; No Liabilities Except as Stated.  The
financial statements of Greenville Operator attached hereto as Schedule
7(a)(xvi) are true, complete and correct in all material respects, were
prepared in the ordinary course of Seller’s business and are relied upon by
Seller in its operation of the Property, and there are no liabilities of any
kind whatsoever other than as disclosed in such financial statements, except in
each instance, any loans to and from Affiliates are omitted and as of Closing
shall all be repaid in full.

     

    
      
        
        

      

      
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    (xvii)      Absence of Certain
Notices.  Except as set forth on Schedule
7(a)(xvii) attached hereto, none of Seller or the Companies has received
notice of any uncured violation of any federal, state or local law relating to
the condition, use or operation of the Property.

     

    (xviii)     No Notice of
Condemnation. None of Seller or the Companies has received notice of any
condemnation proceedings relating to the Property.

     

    (xix)       No Notice from Insurance
Company.  None of Seller or the Companies has received any
notice from any insurance company which has issued a policy with respect to the
Property or from any board of fire underwriters (or other body exercising
similar functions) claiming any defects or deficiencies in the Property or
suggesting or requesting the performance of any repairs, alterations or other
work to the Property.

     

    (xx)         Insurance.  Commercial
General Liability Insurance in the minimum amount of $1,000,000.00 per
occurrence and Worker’s Compensation Insurance in the minimum amounts required
by law, each covering Fee Owner and each Operator have been (and will be) in
full force and effect without interruption from the date the Fee Owners acquired
the  Property through and including Closing, and attached as Schedule
7(a)(xx) are a true and correct list of the carriers and policy numbers
of such liability policies and Worker’s Compensation Insurance policies. To the
knowledge of Seller, (a) prior to November 1, 2007 the liability insurance
policy was on a so-called “claims-made basis”, (b) from November 1, 2007 through
February 28, 2010 the liability policy was on a so-called “occurrence basis” and
(c) effective as of March 1, 2010, the liability insurance policy is again on a
so-called “claims-made basis”.

     

    (xxi)       Seller
Compliance.  Seller’s funds are derived from legitimate
business activities.  Seller is not a person with whom Purchaser is
prohibited from engaging in this transaction due to any United States government
embargoes, sanctions, or terrorism or money laundering laws, including, without
limitation, due to Seller or any party that has ownership in or control over
Seller being (i) subject to United States government embargoes or sanctions,
(ii) in violation of terrorism or money laundering laws, or (iii) listed on a
published United States government list (e.g., Specially Designated Nationals
and Blocked Persons List maintained by the Office of Foreign Assets Control or
other lists of similar import).

     

    (xxii)      CRC
Licenses.  Attached hereto as Schedule 7(a)(xxii) is a list
containing the community residential care facility license issued to the
Lexington Operator to operate the Lexington Facility, and issued to the
Greenville Operator to operate the Greenville  Facility (collectively,
the “CRC Licenses”). The
CRC Licenses are valid and no material violations exist with respect to such CRC
Licenses.  No other licenses are required by South Carolina Department
of Health and Environmental Control to operate a community residential care
facility. No applications, complaints or proceedings are pending or, to the
knowledge of Seller, contemplated or threatened which may (i) result in the
revocation, modification, non-renewal or suspension of any CRC License or of the
denial of any pending applications, (ii) the issuance of any cease and desist
order, or (iii) the imposition of any fines, forfeitures, or other
administrative actions with respect to the Real Property, Facilities or their
operation as a community residential care facility.

     

    
      
        
        

      

      
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    (xxiii)     Other Licenses, Permits or
Approvals. None of Seller or the Companies has received notice of any
uncured violation under any license, permit or approval affecting the Real
Property or Facilities. None of Seller or the Companies has received an uncured
notice from any applicable governmental authority that it does not possesses or
hold any license, permit or approval with respect to the Real Property or
Facilities from any such governmental authority that is required to own, operate
or manage its business as currently being owned, operated or
managed.

     

    (xxiv)     Medicare;
Medicaid.  Neither Operator is receiving payment under
Titles XVIII and XIX of the Social Security Act and is neither is certified
for participation in those governmental payor programs (“Governmental Payor
Programs”), including but not limited to the Medicare and Medicaid
programs, and is not a party to valid participation agreements for payment by
the Governmental Payor Programs.

     

    (xxv)      Insolvency.  Neither
Seller, the Companies nor any of their Affiliates have (i) commenced a
voluntary case or had entered against them a petition for relief under any
applicable law 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 nonjudicial proceeding to hold,
administer, and/or liquidate all or substantially all of their respective
assets, (iii) had filed against them any involuntary petition seeking
relief under any Applicable Law 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.

     

    (xxvi)     Affordable Housing
Units.  No bedroom or unit in the Real Property is leased or
reserved for lease as an affordable housing unit or for low- or moderate-income
residents.  Neither the Real Property nor the Facilities is required
to lease or reserve any unit or bedroom as an affordable housing unit or bedroom
or for low-income or moderate-income residents pursuant to a presently existing
agreement or applicable law.

     

    (xxvii)    Rent
Roll.  The rent roll attached hereto as Schedule
7(a)(xxvii) (the “Rent
Roll”) is true and complete as of the date thereof, subject to a
variation in gross revenue of plus or minus $25,000 per Facility per
month.  Except as stated therein, neither the Operating Companies nor
Seller have received any notices claiming that any such entity is in default
under any of its material obligations under any Lease.

     

    (xxviii)   Absence of Knowledge
of Certain
Violations.  Except as set forth on Schedule
7(a)(xvii) attached hereto, none of Seller or the Companies has knowledge
of any uncured violation of any federal, state or local law relating to the
condition, use or operation of the Property.

     

    
      
        
        

      

      
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    (b)           Updated Representations and
Warranties.  The
representations and warranties made by Seller pursuant to Section 7 are true and correct
as of the date hereof and shall be true and correct on and as of the Closing
Date, as if remade on such date, unless any such representation and warranty is
expressly:  (i) specifically stated to be as of “the date
hereof”; (ii) specifically made as to another date; or (iii) subject
to another provision of this Agreement which provides for or contemplates a
change in any of the applicable facts, circumstances or conditions disclosed in
the applicable representation and warranty.  Notwithstanding the
foregoing, Purchaser shall have no right to terminate this Agreement, there
shall be no breach of the representations and warranties of Seller set forth in
Section 7 or reduction
in the Purchase Price, and Seller shall have no liability to Purchaser if any
representation and warranty made by Seller on the date hereof, which is required
to be remade on the Closing Date, shall not be true and correct on, or as of,
the Closing Date if such inaccuracy is due to the exercise by Seller of any
right permitted under this Agreement (including the execution, modification or
termination of any Lease or Service Contract after the date hereof pursuant to
Section 6(b)), or is due
to Purchaser’s actions; provided, however, the actions of Seller shall not be
imputed to Purchaser unless such actions were consented to by Purchaser in
writing.

     

    (c)           Survival.  The
representations and warranties set forth in Section 7(a) shall survive the
Closing for a period of twelve (12) months.

     

    8.           Purchaser’s Representations,
Warranties,
Covenants and Other Obligations.  Purchaser
represents, warrants and covenants to Seller that, as of the Effective Date and
the Closing Date:

     

    (a)           Authority.  Purchaser
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware.  Purchaser has the
requisite power and authority to enter into and perform its obligations under
this Agreement.  This Agreement has been duly authorized by all
necessary action on the part of Purchaser and is the valid and legally binding
obligation of Purchaser.  Purchaser’s execution, delivery and
performance of this Agreement does not and will not conflict with or result in a
violation of any agreement or instrument to which Purchaser is a party or which
is binding upon Purchaser or any law or regulation or any judgment, order or
decree of any court or administrative body to which Purchaser is
subject.

     

    (b)           Proceedings.  There
is no litigation or administrative proceeding pending or threatened against
Purchaser that would have an adverse effect on the ability of Purchaser to
perform its obligations under this Agreement.  Purchaser has
not:  (i) filed a petition in any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar proceeding in order to take
advantage of any law for the benefit of debtors, or had a petition in any such
proceeding filed against it; (ii) made an assignment for the benefit of
creditors; (iii) applied for, consented to, or been subjected to the
appointment of a receiver, trustee, liquidator or other similar official for
itself or for all or a substantial part of its assets, or (iv) admitted in
writing its inability to pay its debts as they come due or made an offer of
settlement, extension or composition to its creditors generally.

     

    
      
        
        

      

      
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    (c)           Restricted Securities;
Purchase for Investment Only; Rule 144.

     

    (i)           Purchaser
is an “accredited investor” within the meaning of Rule 501 under the Securities
Act of 1933, as amended (the “Securities Act”).

     

    (ii)          Purchaser
understands that the Subject Interests have not been registered under the
Securities Act, in reliance upon exemptions contained in the Securities Act and
any applicable regulations promulgated thereunder or interpretations thereof, or
under any state securities laws or other securities laws of any other
jurisdiction, and cannot be offered for sale, sold, or otherwise transferred
unless such Subject Interests are subsequently so registered or qualify for
exemption from registration under the Securities Act.

     

    (iii)         The
Subject Interests are being acquired or will be acquired by Purchaser without a
view toward resale or other distribution within the meaning of the Securities
Act; and the Subject Interests may not be offered for sale, sold, or otherwise
transferred without either registration or exemption from registration under the
Securities Act, provided, however, that Purchaser’s Affiliate is a public
investment company and sales or transfers of interests in such Affiliate shall
not constitute a resale/distribution for purposes of this subsection
(iii).

     

    (d)           Purchaser
Compliance.  Purchaser’s
funds are derived from legitimate business activities.  Purchaser is
not a person with whom Seller is prohibited from engaging in this transaction
due to any United States government embargoes, sanctions, or terrorism or money
laundering laws, including, without limitation, due to Purchaser or any party
that has ownership in or control over Purchaser being (i) subject to United
States government embargoes or sanctions, (ii) in violation of terrorism or
money laundering laws, or (iii listed on a published United States government
list (e.g., Specially Designated Nationals and Blocked Persons List maintained
by the Office of Foreign Assets Control or other lists of similar
import).

     

    (e)           Know Your
Customer.  Purchaser
acknowledges that Seller must complete certain “know your customer” procedures
regarding Purchaser, including, without limitation, understanding who Purchaser
is and Purchaser’s source of funds.  To this end, Purchaser shall
cooperate with Seller in these efforts, including, without limitation,
delivering to Seller upon reasonably request the full names of the individuals
and business entities involved in the transaction on Purchaser's behalf, all
parties contributing or receiving any money, compensation or ownership interests
(but excluding investors in Cornerstone Healthcare Plus REIT, Inc), and a
Purchaser organization chart.  Purchaser understands and agrees that,
in the event that Purchaser assigns its rights hereunder to any assignee (“Assignee”) pursuant to Section 15 hereof, Seller must
complete certain “know your customer” procedures regarding any such Assignee,
and Seller shall have the right to terminate this Agreement and refund the
Deposit to Purchaser in the event that such Assignee is not
approved.

     

    (f)           Purchaser
shall promptly engage an appraiser holding the MAI designation from the
Appraisal Institute to appraise the fair market value of the Real
Property.

     

    
      
        
        

      

      
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    9.           Closing.

     

    (a)           Time and
Place.  The
closing of the transactions contemplated by this Agreement (“Closing”) shall take place on
or before 11:00 A.M. (Eastern Standard Time) on April 1, 2010, with time being
of the essence; provided, however, that the Closing shall be postponed so as to
occur simultaneously with the Lender’s closing of the modification of the Loan,
and further, if the Lender Approval Period is extended pursuant to Section 3(d)(iii) above or the
Licensing Period is extended pursuant to Section 33(c) below, then the
Closing shall be postponed until the third business day after the
latest of such extensions.  The actual date upon which Closing is to
occur under this Section
9(a) is referred to as the “Closing
Date”.  

     

    (b)           Purchaser’s Conditions
Precedent to Closing.  Purchaser’s
obligation to consummate the transaction contemplated by this Agreement shall be
subject to satisfaction of each of the following conditions (“Purchaser’s Conditions
Precedent”):

     

    (i)           Representations and
Warranties and Other Obligations of Seller. The
representations and warranties of Seller set forth in Section 7 of this Agreement
shall be true and correct in all material respects as of the date hereof and the
Closing Date.  In the event that, between the date hereof and the
Closing Date, any claim against any of the Companies for death, bodily injury,
or property damage arises, the existence of such claim shall not be deemed to
render any of Seller’s representations and warranties inaccurate such that this
condition shall be deemed to be unsatisfied, so long as the claim is fully
covered (as reasonably estimated by Seller and Purchaser) by the Companies’
policy of liability insurance identified on Schedule
7(a)(xx) (or
Seller agrees to pay any applicable deductible) or the Companies’ equivalent
replacement policy as evidenced in writing by the insurer thereof, subject to
the deductible or self-retention amount applicable to such claim under that
policy which shall be credited to Purchaser at Closing.

     

    (ii)          Obligations of
Seller.  Seller shall have performed, on or before the Closing
Date, all of the obligations required to be performed by Seller under this
Agreement for Closing.

     

    (iii)         Title to the
Property.  Title to the Real Property, as of the Closing Date,
shall be in the condition required by Section 4(a) of this
Agreement.

     

    (iv)         Seller’s Closing
Documents.  Seller shall have executed and delivered, on or
before the Closing Date, all of the documents provided in Section 10(a).

     

    (v)          Lender
Consents.  Lender shall, on or before the Closing Date, confirm
in writing reasonably satisfactory to Purchaser that Purchaser is a Permitted
Successor (as defined in the Loan Documents) or Lender shall consent to the
transaction.

     

    (vi)         Modification of Loan.
The Lender shall close the modification of the Loan, substantially in accordance
with the Term Sheet (but expressly not including any of the provisions with
respect to the Additional Loan Advance, if any).

     

    (vii)        SC DHEC Consent. The
South Carolina Department of Health and Environmental Control, or appropriate
agency, body or authority thereof, shall, on or before the Closing Date, accept
Purchaser as a Licensee or as a direct or indirect owner of any eighty percent
(80%) interest in or to the Licensee or otherwise consent to the
transaction.

     

    
      
        
        

      

      
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    (viii)       Master Leases and Management
Agreements; Operating Agreements.  During the Study Period, (a)
the Master Leases and Management Agreements will be amended (to be effective at
Closing) in a manner that is satisfactory to Purchaser and Seller, in their sole
and absolute discretion and the same shall not be further amended or terminated
on or prior to Closing, and (b) Purchaser and Seller will enter into two
Operating Agreements (to be effective at Closing) in form and with content
acceptable to Purchaser and Seller, creating and providing for the operation of
the two entities that will own one hundred percent (100%) of the Portfolio and
the Tenant Portfolio, respectively, and also providing for how Purchaser and
Seller will fund their respective eighty percent (80%), and twenty percent (20%)
obligations under this Agreement.

     

    (ix)         Employee Leasing
Agreement. RSC-LSC Management Company, LLC, a Florida limited liability
company (“Lexington
Manager”), the property manager of the Lexington Facility and RSC-GSC
Management Company, LLC, a Florida limited liability company (“Greenville Manager”, collectively with
Lexington Manager, the “Managers”), the property
manager of the Greenville Facility, shall have entered in a so-called employee
leasing agreement with AlphaStaff, Inc., a Florida  corporation
(“AlphaStaff”),  to
furnish to the respective Facility the individuals employed at such Facility
immediately prior to Closing and other related services on such terms and
conditions as are generally consistent with that certain Service Agreement dated
December __, 2009, among AphaStaff, on one hand and Seller, Lexington Operator,
Greenville Operator and other parties, on the other hand.

     

    (x)           Current Rent
Roll.  Seller shall cause the Operators to deliver to Purchaser
a current Rent Roll for each Facility (without the same being, or deemed or
construed to be, a confirmation or ratification of the representation of Seller
as set forth in Section
7(a)(xxvii) as of the date of Closing, except that such representation
shall have to be accurate as of the date of the Rent Roll attached hereto as Schedule 7(a)(xxvii)
..

     

    (c)           Seller’s Conditions
Precedent to Closing.  Seller’s
obligation to consummate the transaction contemplated by this Agreement will be
subject to satisfaction of each of the following conditions (“Seller’s Conditions
Precedent”):

     

    (i)           Representations, Warranties,
Covenants and Other Obligations of Purchaser.  The
representations, warranties, covenants and other obligations of Purchaser set
forth in Section 8 of
this Agreement shall be true and correct as of the date hereof and the Closing
Date.

     

    (ii)          Obligations of
Purchaser.  Purchaser shall have performed, on or before the
Closing Date, all of the obligations required to be performed by Purchaser under
this Agreement for Closing.

     

    (iii)         Purchase
Price.  Purchaser shall have delivered the Purchase Price to
the Seller, on or before the Closing Date, subject to any adjustments described
in this Agreement.

     

    (iv)         Purchaser’s Closing
Documents.  Purchaser shall have executed and delivered, on or
before the Closing Date, all of the documents provided in Section 10(b).

     

    
      
        
        

      

      
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    (v)          Lender
Consents.  Lender shall confirm that Purchaser is a Permitted
Successor (as defined in the Loan Documents) or Lender shall consent to the
transaction.

     

    (vi)         Modification of Loan.
The Lender shall close the modification of the Loan, substantially in accordance
with the Term Sheet (but expressly not including any of the provisions with
respect to the Additional Loan Advance, if any).   Without
limiting the generality of the foregoing sentence, the Lender shall agree, in
form and substance reasonably acceptable to Seller, to release the Existing
Principals from all obligations arising out of the Agreement of Principals from
and after Closing.

     

    (vii)      
 SC DHEC
Consent. The South Carolina Department of Health and Environmental
Control, or appropriate agency, body or authority thereof, shall accept
Purchaser as a licensee or as a direct or indirect owner of any eighty percent
(80%) interest in or to the licensee or otherwise consent to the
transaction.

     

    (viii)       Master Leases and Management
Agreements; Operating Agreements.  During the Study Period, (a)
the Master Leases and Management Agreements will be amended (to be effective at
Closing) in a manner that is satisfactory to Purchaser and Seller, in their sole
and absolute discretion and the same shall not be further amended or terminated
on or prior to Closing, and (b) Purchaser and Seller will enter into two
Operating Agreements (to be effective at Closing) in form and with content
acceptable to Purchaser and Seller, creating and providing for the operation of
the two entities that will own one hundred percent (100%) of the Portfolio and
the Tenant Portfolio, respectively, and also providing for how Purchaser and
Seller will fund their respective eighty percent (80%), and twenty percent (20%)
obligations under this Agreement .

     

    (d)           Failure of Condition
Precedent.

     

    (i)           Purchaser’s Conditions
Precedent.  If any of Purchaser’s Conditions Precedent are not
satisfied as of the applicable date specified for satisfaction in Section 9(b), Purchaser shall
have the right to terminate this Agreement by written notice given to Seller
within ten (10) days after the date specified for satisfaction; however, Seller
shall have the right to nullify such termination if Seller gives written notice
to Purchaser within seven (7) days after receipt of the termination notice that
Seller will attempt to cure the unsatisfied condition and Seller does, in fact,
accomplish such cure within ten (10) days after receipt of the termination
notice.  If Seller gives timely notice of the intent to cure and
succeeds in timely curing the unsatisfied condition, this Agreement shall remain
in effect and assuming all of Purchaser’s conditions to Close are satisfied,
Closing shall be held within five (5) business days after the cure is
effectuated.  Provided that any of Purchaser’s Conditions Precedent
are not, in fact, satisfied, if Seller does not give such timely notice or give
such notice but does not succeed in timely curing the unsatisfied condition by
the end of such cure period, then this Agreement shall terminate unless such
condition is waived by Purchaser.   

     

    (ii)          Seller’s Conditions
Precedent.  If any of Seller’s Conditions Precedent are not
satisfied as of the applicable date specified for satisfaction in Section 9(c), Seller shall
have the right to terminate this Agreement by written notice given to Purchaser
within seven (7) days after the date specified for satisfaction.

     

    
      
        
        

      

      
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    (iii)         Effect of
Termination.  If this Agreement is terminated pursuant to this
Section 9(d) and there shall have
occurred no default by Purchaser, the Deposit shall be promptly delivered to
Purchaser and the parties shall be relieved of all further liability under this
Agreement, except for those obligations which, by the express terms of this
Agreement, survive termination.

     

    (iv)         Waiver.  Each
party shall have the unilateral right to waive any conditions precedent for its
benefit by written notice given to the other party.  Notwithstanding
anything to the contrary contained in this Section 9(d), if any party,
through its own acts or omissions, caused the conditions precedent not to be
satisfied for its benefit, such party shall not have the right to rely upon such
unsatisfied condition as a basis for terminating this Agreement.

     

    (e)           Companies’
Records.  The
books and records of the Companies shall be closed as of the Closing Date and
any and all tax reports and returns of any nature whatsoever required to be
filed by law for any period prior to the Closing Date will be duly filed by
Seller (with the approval of Purchaser) on behalf of the Companies, and all
payments, if any, reported on such reports and returns as due from the
Companies, and all late penalties, will be paid in full by Seller, subject to
Purchaser’s compliance with the next sentence.  After Closing,
Purchaser shall give Seller access to all books and records that relate to the
period prior to Closing (which access obligation survives Closing).

     

    10.         Closing
Deliveries.

     

    (a)           Seller’s Closing
Documents.  On
the Closing Date, Seller shall deliver, or cause to be delivered, to Purchaser
the following (collectively, “Seller’s Closing
Documents”):

     

    (i)           Assignment of Subject
Interests.  Properly executed instruments assigning all of the
Subject Interests in the Companies to Purchaser or Purchaser’s permitted
designee in the form attached to and made a part of this Agreement as Exhibit
I (collectively, the “Interest
Assignment”).

     

    (ii)          Title
Documents.  The documents referred to in Section 4(d).

     

    (iii)         Organizational
Documents.  Certificates attaching true, correct and complete
copies of the organizational documents of the Companies, all of which are listed
on Schedule 10(a)(iv),
including without limitation, good standing certificates and articles of
organization certified by the applicable Secretary of the State within thirty
(30) days of Closing.

     

    (iv)         Representations and
Warranties; Covenants.  A certificate stating that all
representations and warranties and covenants made by Seller pursuant to Section 7 of this Agreement
are true and correct at Closing.

     

    (v)          FIRPTA
Affidavit.  FIRPTA affidavit made by Seller in the form
attached hereto as Exhibit
J.

     

    
      
        
        

      

      
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    (vi)           Settlement
Statement.  An executed Settlement Statement reflecting the
prorations and adjustments required under Section 11.

     

    (vii)          Cash -
Prorations.  The amount, if any, required of Seller under Section 11.

     

    (viii)         Miscellaneous.  Such
other documents as are reasonably necessary to consummate the transaction
contemplated by this Agreement, each in a form reasonably approved by Seller and
Purchaser.

     

    (b)          Purchaser’s Closing
Documents.  On
the Closing Date, Purchaser shall deliver, or cause to be delivered, to Seller
the following (collectively, “Purchaser’s Closing
Documents”):

     

    (i)  
          Purchase
Price.  The Purchase Price, as adjusted under this Agreement,
by wire transfer of immediately available U.S. funds.

     

    (ii)  
         Assignment of Subject
Interests.  A properly executed counterpart of the Interest
Assignment.

     

    (iii)           Title
Documents.  Such documents of Purchaser as may be required by
the Title Company in order to issue a new title policy in favor of the Fee
Owners (if Purchaser shall opt to obtain the same).

     

    (iv)           Representations and
Warranties.  A properly executed certificate stating that all
representations and warranties made by Purchaser pursuant to Section 8 of this Agreement
are true and correct at Closing.

     

    (v)   
        Settlement
Statement.  A properly executed Settlement Statement reflecting
the prorations and adjustments required under Section 11.

     

    (vi)           Cash -
Prorations.  The amount, if any, required of Purchaser under
Section 11
below.

     

    (vii)          Loan
Documents.  All documents required by Lender in connection with
the Loan Documents, properly executed by Purchaser and one or more substitute
Principals acceptable to Lender under the Agreement of Principals.

     

    (viii)         Miscellaneous.  Such
other documents as are reasonably necessary to consummate the transaction
contemplated by this Agreement, each in a form reasonably approved by Seller and
Purchaser.

     

    (c)          Escrow
Closing.  This
transaction will be closed through an escrow in accordance with the terms and
conditions of this Agreement.  Payment of the Purchase Price and
delivery of Seller’s Closing Documents and Purchaser’s Closing Documents will be
made through such escrow.  The parties shall cooperate and use
reasonable efforts to effect Closing by delivery of documents and funds in a
manner that will not require personal attendance at Closing.

     

    
      
        
        

      

      
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    11.          Prorations.   Prior
to the Closing, Seller shall initially determine the amounts of the prorations
in accordance with this Agreement and notify Purchaser
thereof.  Purchaser shall review and approve such determination
promptly and prior to the Closing.

     

    (a)          Certain Items
Prorated. The
following shall be prorated between the parties, as of 11:59 p.m. of the day
prior to the Closing so that Seller shall receive credit from Purchaser for
eighty percent (80%) of all expenditures made pertaining to the Real Property or
Facilities for periods on or after Closing, Purchaser shall receive credit from
Seller for eighty percent (80%) of all income received by Seller attributable to
periods on or after Closing, Seller shall receive one hundred percent of the
income attributable to periods prior to Closing and shall pay one hundred
percent of the expenses attributable to periods prior to Closing, all with
respect to: all income and expenses with respect to the Property and payable to
or by the owner of the Property, including, without limitation:  (i)
all real property taxes and assessments on the basis of the fiscal period for
which assessed (if the Closing shall occur before the tax rate is fixed, the
apportionment of taxes shall be based on the tax rate for the preceding period
applied to the latest assessed valuation and after the Closing, when the actual
real property taxes are finally fixed, Seller and Purchaser shall make a
recalculation of such proration, and the appropriate party shall make the
applicable payment reflecting the recalculation to the other party);
(ii) rents and other tenant payments and tenant reimbursements
(collectively, “Tenant
Payments”) if any, received under the Leases, subject to Section 11(e);
(iii) charges for water, sewer, electricity, gas, fuel and other utility
charges, all of which shall be read promptly before Closing, unless Seller
elects to close its own applicable account, in which event Purchaser shall open
its own account and the respective charges shall not be prorated;
(iv) amounts prepaid and amounts accrued but unpaid on service contracts
and management contracts pertaining to the Real Property or Facilities; and
(v) periodic fees for licenses, permits or other authorizations with
respect to the Property.  The obligation of the parties to recalculate
the proration of taxes shall survive the Closing for a period of twelve (12)
months.

     

    (b)         Leasing
Commissions. At
the Closing, Purchaser shall pay or reimburse Seller for eighty (80%) percent of
all leasing commissions, tenant improvement costs and allowances, and other
charges payable by reason of or in connection with any Lease set forth on Schedule 11(b) (in the amounts
set forth therein) and any Lease entered into after the Effective Date, any
renewal or extension of an existing Lease after such date, and any new lease
referred to in Section 6(b).  The
applicable Operating Company shall be and remain responsible for any leasing
commissions, tenant improvement costs and allowances, tenant concessions and
other charges payable for any renewal, extension or other option under any
existing or future lease.

     

    (c)          Taxes.           

     

    (i)          
  Real property tax refunds and credits received after the Closing
which are attributable to a fiscal tax year prior to the Closing shall belong to
Seller.  Any such refunds and credits attributable to the fiscal tax
year during which the Closing occurs shall be apportioned between Seller and
Purchaser after deducting the reasonable out-of-pocket expenses of collection
thereof.  This apportionment obligation shall survive the Closing for
a period of six (6) months.

     

    
      
        
        

      

      
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    (ii)           
If any tax appeal or certiorari proceedings shall not have been finally resolved
or settled prior to the Closing and shall relate to any tax period a portion or
all of which precedes the Closing, Seller shall be entitled to control the
disposition of any such tax appeal or certiorari proceeding and any refunds
received therefrom, net of any expenses incurred by Seller in connection
therewith, shall be prorated between the parties on the basis of the portions
accruing to periods before and after the Closing.

     

    (d)          Security and Other
Deposits. At
the Closing, Seller shall cause the Operating Companies to notify Seller and
Purchaser of the amount of all unapplied refundable Security Deposits (plus
interest accrued thereon to the extent required to be paid by the applicable
Lease or applicable law) held by the Operating Companies under the Leases, but
such Security Deposits shall be and remain assets of the Operating Companies and
the obligations to return the same to the tenants in accordance with terms of
the applicable Leases and law, shall be and remain with the Operating
Companies.

     

    (e)          Adjustments. Delinquent
Tenant Payments, if any, shall not be prorated and all rights thereto shall be
retained by Seller, who reserves the right to collect and retain such delinquent
Tenant Payments. To the extent applicable, Purchaser agrees to cooperate with
Seller in causing the Operating Companies to use reasonable commercial efforts
to collect such delinquent Tenant Payments; provided, however, that Seller shall
not be entitled to commence any disposition or eviction
proceeding against the delinquent tenant.  If at any time after the
Closing, the Operating Companies shall receive any such delinquent Tenant
Payments, Purchaser acknowledges and aggress that such delinquent Tenant
Payments shall be remitted to or as directed by Seller, provided that any monies
received after Closing from a delinquent tenant shall be applied first to
current rents then due and payable and then to delinquent rents in the inverse
order in which they became due and payable.  If the Tenant Payments
required to be made by any tenants include escalation charges or reimbursements
for real property taxes, operating expenses or other charges (collectively,
“Additional Charges”), then any Additional
Charges due under the Leases for the calendar year 2010 shall be reconciled
within one hundred twenty (120) days after the end of such calendar year, and
Purchaser and Seller agree to prorate and adjust such Additional Charges based
upon the Closing Date, with Purchaser being reimbursed by Seller for any
over-collection of Additional Charges during Seller’s prior period of ownership
and applicable to calendar year 2010, and Purchaser reimbursing Seller for any
under-collection of Additional Charges by Seller during Seller’s period of
ownership and applicable to calendar year 2010.  The provisions of
this Section 11(e) shall
survive the Closing for a period of six (6) months after the conclusion of
calendar year 2010.

     

    (f)           Insurance. The
parties shall use reasonable commercial efforts to retain the existing liability
and property insurance affecting the Property in force subsequent to Closing
until the expiration of the applicable current policy period and the costs of
same shall be prorated at Closing (with all insurances expenses attributable to
periods after Closing to be borne 80% by Purchaser and 20% by Seller.) If and to
the extent that the parties are not able to cause such insurance to remain in
effect, Seller’s existing liability and property insurance pertaining to the
Property shall be canceled as of the Closing, and Seller shall receive any
premium refund due thereon.  Seller has advised Purchaser that the
some or all of the applicable insurance is carried under policies that cover
other properties in addition to the Real Property or Facilities, as applicable
and may not be transferable after Closing.

     

    
      
        
        

      

      
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    (g)          Purchaser’s Closing
Costs.  Purchaser
shall pay (i) the cost of the title search, Title Commitment, the title premium
for the title policy and the cost of any other title insurance endorsements
ordered by Purchaser or required by Lender, (ii) the cost of any New Survey,
(iii) any costs incurred in recording any documents contemplated herein, (iv)
any costs incurred in connection with Purchaser’s investigation of the Property
pursuant to Section 5,
including the cost of any new environmental assessment commissioned by
Purchaser, (v) all fees charged by the Title Company to conduct Closing, or
otherwise related to this transaction, (vi) Purchaser’s own attorneys’ fees and
(vii) cost to pursue the licensure change, if applicable; provided however, that
if the transaction contemplated by this Agreement closes, all such fees and cost
shall be paid eighty percent (80%) by Purchaser and twenty percent (20%) by
Seller.

     

    (h)          Seller’s Closing
Costs.  Seller
shall pay Seller’s own attorneys’ fees provided however, if that the transaction
contemplated by this Agreement closes, all such fees and cost shall be paid
eighty percent (80%) by Purchaser and twenty percent (20%) by
Seller.

     

    (i)           Pre-Closing
Accounting.  Not
less than five (5) business days prior to the Closing, Seller shall prepare and
deliver to Purchaser an unaudited statement for the Property (the “Preliminary Proration
Statement”) showing apportionments for the items set forth in subsections 11(a) through
11(g), calculated as of
11:59 p.m. (Eastern Standard Time) on the day preceding the Closing Date, on the
basis of the actual days in a particular month and a 365-day calendar
year.  Seller shall provide, or make available to Purchaser, Seller’s
work papers pertaining to the Preliminary Proration Statement and such records
as may be reasonably required to confirm the accuracy of the Preliminary
Proration Statement.  Seller and Purchaser shall agree upon any
adjustments to be made to the Preliminary Proration Statement prior to the
Closing, and at the Closing, Seller or Purchaser, as applicable, shall receive a
credit equal to the net amount due Seller or Purchaser, as applicable, pursuant
to the Preliminary Proration Statement as finally agreed upon by Seller and
Purchaser (as so approved by Seller and Purchaser, the “Settlement
Statement”).  If Seller and Purchaser do not collectively agree
upon the proposed adjustments to be made to the Preliminary Proration Statement
prior to the Closing, then such Preliminary Proration Statement shall be
submitted to a certified public accounting firm selected by Purchaser to resolve
such adjustments and such accounting firm shall prepare the Settlement Statement
that will be binding upon and deemed approved by Seller and
Purchaser.  The Closing shall be adjourned not more than ten (10) days
for such accounting firm to resolve such adjustments.

     

    (j)           Deposits, Escrows and
Reserves.  Prior
to Closing, Seller shall cause the Companies, to the extent within Seller’s
control, to distribute to Seller, all bank deposits (and expressly not security
deposits), escrows, reserves, cash on hand, accounts or other amounts of the
Companies or the Property prior to Closing.  Should any of the same
not be distributed at or before Closing, the Purchase Price shall be increased
by an amount equal to eighty percent (80%) of the aggregate the balance of any
bank deposits (and expressly not security deposits), escrows, reserves, cash on
hand, accounts or other amounts of the Companies which are not cashed out and
distributed to Seller prior to Closing under the prior sentence.  Any
refunds or reimbursements due to Seller or the Companies from Lender for
expenditures prior to the Closing which under the Loan Documents are to be paid
or reimbursed to Seller or the Companies pursuant to reserves established
pursuant to the Loan Documents shall belong to Seller. The provisions of this
sub-section shall survive the Closing for a period of six (6)
months.

     

    
      
        
        

      

      
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    (k)          Loan Balances.  At
the Closing, the Purchase Price shall be credited with an amount equal to eighty
percent (80%) of the outstanding balance of the Loan as of the Closing Date (to
avoid all doubt, but not the amount of the Additional Loan Advance, if
any).

     

    (l)           Post-Closing
Adjustments.  To
the extent that errors are discovered in, or additional information becomes
available with respect to, the prorations made at Closing, Seller and Purchaser
agree to make such post-Closing adjustments as may be necessary to correct any
such inaccuracy; however, all prorations will be deemed final twelve (12) months
after the Closing Date.  Seller agrees to deliver to Purchaser copies
of all invoices and payments related to the Property received by Seller within
two (2) years after Closing, and Purchaser shall do the same for Seller, to the
extent that any such invoices or statements relate to the post-Closing
adjustments described in this subsection.

     

    (m)         Loan Transfer Fees,
Additional Loan Advance Fees, Costs and Expenses.  Purchaser
shall pay all transfer fees and all other fees, costs and expenses respecting
the approval of the applicable lender or servicer under the Loan Documents with
respect to the assumption of the Loan and also with respect to the Additional
Loan Advance, if any, including, but not limited to, any fees, costs and
expenses in connection with obtaining nonconsolidation opinions or rating agency
approvals, incurred pursuant to the Loan Documents in connection with the
transactions contemplated by Purchaser that will take effect on the Closing
Date; provided however, that if the transaction contemplated by this Agreement
closes, all such fees and cost shall be paid eighty percent (80%) by Purchaser
and twenty percent (20%) by Seller.

     

    (n)          Capital
Expenditures.  At
the Closing, Purchaser shall pay or reimburse Seller for (i) eighty percent
(80%) of all capital expenditures set forth on Schedule 11(n) incurred by
Seller prior to the Effective Date, and (ii) except as otherwise provided in
Section 33(d) below, eighty percent (80%) of all capital expenditures incurred
by Seller after the Effective Date.

     

    12.          Default.

     

    (a)          Seller’s Default –
General.  If
Seller breaches any of the provisions of this Agreement (including without
limitation, if any of the representations or warranties of Seller in Section 7 are not true and
correct as of the Effective Date and the Closing Date or any of the covenants in
Section 6 have been
breached as of the Closing Date), then Purchaser shall be entitled, as the sole
and exclusive remedies available to Purchaser, either (i) to terminate this
Agreement (by delivering notice to Seller which includes a waiver of any right,
title or interest of Purchaser in the Subject Interests), in which event Escrow
Agent shall deliver the Deposit to Purchaser and the parties shall have no
further liability under this Agreement, at law or in equity, except with respect
to those obligations which, under the express terms of this Agreement, survive
termination, or (ii) to either (A) obtain specific performance of this
Agreement, or alternately (B) seek  damages for breach of this
Agreement by Seller equal to the actual, reasonable, direct, verifiable
out-of-pocket, third party expenses incurred by Purchaser in connection with
this Agreement and transaction, not to exceed One Hundred Fifty Thousand and
No/100 Dollars ($150,000.00) in the aggregate, provided, however, that Purchaser
must commence any action for specific performance or damages as set forth herein
within sixty (60) days after the scheduled Closing Date.  Except as
provided in Section
12(b), Purchaser shall not be entitled to seek or recover a purchase
price credit or monetary damages against Seller or the Companies for any breach
or default under this Agreement.   In no case shall Seller ever
be liable to Purchaser under any statutory, common law, equitable or other
theory of law, either prior to or following the Closing, for any lost rents,
profits, “benefit of the bargain,” business opportunities or any form of
special, consequential or punitive damages in connection with any claim,
liability, demand or cause of action in any way or manner relating to the
Property, the condition of the Property, this Agreement, or any transaction or
matter between the parties contemplated hereunder.

     

    
      
        
        

      

      
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    (b)          Seller’s Default –
Exception.  Notwithstanding
anything in Section
12(a) to the contrary, if, after Closing (and only if Closing has been
consummated), Purchaser determines that Seller has breached any of its
warranties, representations, covenants, or indemnities set forth in this
Agreement, Purchaser may bring an action against Seller for the direct and
actual damages that Purchaser suffers by reason of the breach, subject to the
following:  (i) in no event shall the aggregate damages
recoverable from Seller exceed Seven Hundred Fifty Thousand
Dollars ($750,000) (the
“Damages Cap”);
(ii) Purchaser’s right to bring an action for such breach shall be subject
to Section 24 below;
(iii) Purchaser shall not bring any action alleging aggregate damages of
less than Fifty Thousand Dollars ($50,000) (the “Damages Threshold”) or, if
prior to Closing, Purchaser had actual knowledge of such breach; and
(iv) Seller shall not be liable for special, consequential, punitive or secondary damages or
loss of profits.  Notwithstanding the foregoing, Seller’s liability
for breach of any of the following obligations under this Agreement (the “Excluded Obligations”) shall
not be limited by or aggregated with the Damages Threshold or the Damages
Cap:  (1) the obligation to make Closing adjustments and pay
Closing costs in accordance with Section 11; (2) the
obligation to indemnify Purchaser against claims for brokerage commissions in
accordance with Section
14; (3) the obligation of Seller to indemnify Purchaser and the Companies
under Section 26(a) for
damages and expenses incurred by any of them directly arising out of a breach by
Seller of its representations and warranties contained in Section 7(a)(i), 7(a)(ii), 7(a)(iii),
7(a)(v), 7(a)(vi), 7(a)(vii), 7(a)(viii), 7(a)(ix), 7(a)(xvii), 7(a)(xviii),
7(a)(xxi), 7(a)(xxiv), 7(a)(xxv) and 7(a)(xxvii) (but no other
representations and warranties of Seller); (4) Seller’s obligations under Section 6(d) of this
Agreement; (5)  the damages arising from any fraudulent act or
fraudulent omission of Seller or any of its Affiliates, and (6) any attorneys’
fees incurred by Purchaser in connection with Seller’s default
hereunder.

     

    (c)          Purchaser’s
Default -
General.  If, for any reason whatsoever (other than a failure
of a condition set forth in Section 9(b) and other than a
termination of this Agreement pursuant to Section 5, Section 12(a), or Section 13, Purchaser fails to
complete the transaction as herein provided, Purchaser shall be in breach of its
obligations hereunder and Seller shall be entitled to terminate this Agreement
by delivering notice to Purchaser and Escrow Agent, in which event Escrow Agent
shall immediately deliver the Deposit to Seller and Seller may retain the cash
portion of the Deposit as liquidated damages.  In the event of any
such termination, Seller and Purchaser shall be relieved of all further
liability under this Agreement, at law or in equity, except for those
obligations that, under the express terms of this Agreement, survive
termination.  Seller and Purchaser acknowledge that it would be
extremely impractical and difficult to ascertain the actual damages that would
be suffered by Seller if Purchaser fails to consummate the purchase of the
Subject Interests as and when contemplated by this Agreement.  Seller
and Purchaser have considered carefully the loss to Seller occasioned by taking
the Property off the market as a consequence of the negotiation and execution of
this Agreement and the other damages, general and specific, which Seller will
suffer as a result of Purchaser’s failure to close and Seller and Purchaser have
determined that the amount of the Deposit is a fair and reasonable estimate of
those damages.  Purchaser and Seller agree that Seller’s right to
retain the Deposit shall be the sole remedy of Seller at law in the event of
such a breach of this Agreement by Purchaser prior to
Closing.  Notwithstanding anything to the contrary contained in this
Section, if Purchaser brings an action against Seller for an alleged breach or
default by Seller of its obligations under this Agreement, records a lis pendens
or otherwise enjoins or restricts Seller’s ability to sell and transfer the
Subject Interests or refuses to consent to or instruct release of the Deposit to
Seller if required by Escrow Agent (each a “Purchaser’s Action”), Seller
shall not be restricted by the provisions of this Section from bringing an
action against Purchaser seeking expungement or relief from any improperly filed
lis pendens, injunction or other restraint, and/or recovering fees, costs and
expenses (including attorneys’ fees) which Seller may suffer or incur as a
result of any Purchaser’s Action but only to the extent that Seller is the
prevailing party, and the amount of any such fees, costs and expenses awarded to
Seller shall be in addition to the liquidated damages set forth herein and if
Purchaser is prevailing party then Purchaser is entitled to same.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    (d)          Purchaser’s
Default -
Exception.  Notwithstanding anything in Section 12(c) to the contrary,
nothing contained in this Agreement shall, however, be deemed to limit
Purchaser’s liability to Seller for damages or injunctive relief for any breach
or default by Purchaser in its obligations under Sections 5(a), 5(e), 11, 14 or
17 of this Agreement or
in any of its obligations under this Agreement to be performed after Closing, or
any attorneys’ fees incurred by Seller in connection with Purchaser’s default
hereunder, and Seller may exercise any and all rights and remedies, at law or in
equity, which may be available for any such breach or default.

     

    13.      
   Condemnation and
Damage.   Promptly
upon receipt of written notices thereof, Seller shall give Purchaser written
notice of any condemnation, damage or destruction of the Property occurring
prior to the Closing.  If prior to the Closing all or a material
portion (as defined below) of the Property is condemned, damaged or destroyed by
an insured casualty, Purchaser shall have the option of either (i) applying the
proceeds of any condemnation award or payment under any insurance policies
(other than business interruption or rental loss insurance) toward the payment
of the Purchase Price to the extent such condemnation awards or insurance
payments have been received by Seller, receiving from Seller an amount equal to
any applicable deductible under any such insurance policy and receiving an
assignment from Seller of Seller’s right, title and interest in any such awards
or payments not theretofore received by Seller, or (ii) terminating
this Agreement by delivering written notice of such termination to Seller and
Escrow Agent within ten (10) days after Purchaser has received written notice
from Seller of such material condemnation, damage or destruction.  If,
prior to the Closing, a portion of the Property is condemned, damaged or
destroyed and such portion is not a material portion of the Property, the
proceeds of any condemnation award or payment and any applicable deductible
under any insurance policies shall be applied toward the payment of the Purchase
Price to the extent such condemnation awards or insurance payments have been
received by Seller and Seller shall assign to Purchaser all of Seller’s right,
title and interest in any unpaid awards or payments.  For purposes of
this Section, the term “material portion” shall mean greater than ten percent
(10%) of the improvements on the Property or an absence of reasonable access to
the Property, or if the condemnation and/or damage results in the Property
failing to comply with the parking requirements under any applicable zoning
restrictions affecting the Property which cannot be cured or cannot be cured
without the benefit of a variance or exception. If the damage or destruction
arises out of an uninsured risk and shall exceed One Hundred Thousand Dollars
($100,000), as reasonably estimated by an engineer engaged by Seller and
reasonably acceptable to Purchaser, then either Seller or Purchaser may elect,
by written notice within ten (10) days of the occurrence of such damage or
destruction, either to terminate this Agreement or to close the transaction
contemplated hereby with a reduction of the Purchase Price equal to the costs of
repairing the Property, as so estimated by such engineer. If such damage or
destruction from such uninsured risk is One Hundred Thousand
Dollars  ($100,000) or less, as so estimated, then neither party shall
have the right to terminate this Agreement as a result of such damage or
destruction and the Purchase Price shall be reduced by such estimated cost of
repairing the Property.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    14.          Broker’s
Commission.   As,
if and when this transaction closes, Seller shall pay a brokerage commission to
CLW Realty Group, Inc. (“Disclosed Broker’) pursuant to
a separate agreement dated January 13, 2010 between Seller and Disclosed
Broker.  With the exception of Disclosed Broker, each party represents
and warrants to the other party that in connection with the transaction
contemplated by this Agreement, no third party broker or finder has been engaged
or consulted by it or is entitled to compensation or commission in connection
with such transaction.  The warranting party will indemnify, hold
harmless, and, upon request, defend the other party from and against any and all
claims of any brokers, finders or other third parties claiming by, through or
under it, or arising out of a breach of its representation and warranty
contained in the preceding sentence.  The indemnity obligations
pursuant to this Section will include, without limitation, all damages, losses,
liabilities and expenses (including, without limitation, reasonable attorneys’
fees and litigation costs) arising from and related to matters being indemnified
under this Section.  To avoid all doubt, the brokerage commission to
Disclosed Broker shall be borne entirely by Seller and expressly shall not be
paid eighty percent (80%) by Purchaser and twenty percent (20%) by Seller. This
Section shall survive any termination of this Agreement.

     

    15.          Assignment.   Purchaser
may not assign this Agreement or any of its rights under this Agreement, in
whole or in part, except that Purchaser may assign its rights under this
Agreement in whole or in part subject to the terms and conditions of Section 8(e) hereof and upon
the following conditions:  (a) the assignee(s) of Purchaser must be an
entity controlling, controlled by, or under common control with Purchaser, (b)
the assignee(s) of Purchaser shall assume all assigned obligations of Purchaser
hereunder, but Purchaser shall remain primarily liable for the performance of
Purchaser’s obligations hereunder, and (c) a copy of the fully executed written
assignment and assumption agreement(s) shall be delivered to Seller at least ten
(10) days prior to Closing.  Any assignment in violation of this
Section shall be void and without force and effect.  By written notice
to Seller, no later than twenty (20) days prior to Closing, Purchaser shall have
the right to allocate a reasonable and customary portion of the Purchase Price
to the purchase of the membership interests in Tenant Portfolio, such portion of
the Purchase Price not to exceed an amount to be agreed upon in writing (via
email is acceptable) during the Study Period.

     

    
      
        
        

      

      
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    16.          Notices.   All
notices, demands or other communications given hereunder shall be in writing and
shall be deemed to have been duly delivered (a) upon the delivery (or refusal to
accept delivery) by messenger or overnight express delivery service (or, if such
date is not on a business day, on the business day next following such date), or
(b) on the third (3rd)
business day next following the date of its mailing by certified mail, postage
prepaid, at a post office maintained by the United States Postal Service, or (c)
upon the receipt by facsimile transmission as evidenced by a receipt
transmission report followed by
delivery by one of the other means identified in (a)-(b), addressed as
follows:

     

    
      
        
          
            	
                    If
      to Seller:

                  	
                    Royal
      Senior Care, LLC

                    c/o
      Gazit Group USA, Inc.

                    1696
      N.E. Miami Gardens Drive

                    North
      Miami Beach, Florida 33179

                    Attention:  Joshua
      D. Friedman

                    Facsimile:  305.947.4200

                     

                  
	
                    with
      a copy to:

                  	
                    Carlton
      Fields, P.A.

                    100
      SE 2nd
      Street, Suite 4000

                    Miami,
      Florida 33131

                    Attention:   Roger
      S. Goldman, Esq.

                    Facsimile:   305.530.0055

                     

                  
	
                    If
      to Purchaser:

                     

                     

                     

                     

                  	
                    Cornerstone
      Oakleaf Village, LLC

                    c/o
      Cornerstone Healthcare Plus REIT, Inc.

                    Attn:  Sharon
      C. Kaiser, Chief Financial

                    Officer

                    1920
      Main Street, Suite 400

                    Irvine,
      California 92614

                    Telephone
      No.:  949.263.4326

                    Telecopy
      No.:    949.250.0592

                     

                  
	
                    with
      a copy to:

                     

                     

                     

                     

                     

                  	
                    Servant
      Healthcare Investments, LLC

                    Attn:
      Kevin Maddron

                    1000
      Legion Place, Ste. 1650

                    Orlando,
      FL 32801

                    Telephone
      No.:   407.999.7772

                    Telecopy
      No.:     407.999.7759

                     

                    and

                     

                    Foley
      & Lardner LLP,

                    111
      North Orange Avenue

                    Suite
      1800

                    Orlando,
      Florida

                    Attention:  Michael
      A. Okaty, Esq.

                    Facsimile:  407.648.1743

                  


          

        

      

    

     

    
      
        
        

      

      
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              If
      to Escrow Agent

            	
              Carlton
      Fields, P.A.

              100
      SE 2nd
      Street, Suite 4000

              Miami,
      Florida 33131

              Attention:  William
      D. Rohrer, Esq.

              Facsimile:  305.530.0055

            


    

     

    Either
party may, by notice given as aforesaid, change the address or addresses, or
designate an additional address or additional addresses, for its notices,
provided, however, that no notice of a change of address shall be effective
until actual receipt of such notice.

     

    17.          Confidentiality.   Except
for disclosure to Permitted Persons (as defined below),  Purchaser
shall not prior to Closing release, disclose, publish or otherwise disseminate
any information (“Confidential
Information”):  (a) concerning the terms and conditions of
this Agreement; or (b) obtained by Purchaser in connection with its review
of the Property, including, without limitation, information contained in any
documents made available by Seller, obtained by Purchaser or Purchaser’s agents
during the Study Period, or obtained from any third parties.  “Permitted Persons” shall
mean:  Lender, DHEC, members, officers, directors, shareholders,
and/or partners of Purchaser (as the case may be); persons employed by or
retained for the purpose of conducting studies of the Property; and Purchaser’s
accountants, attorneys, lenders, investors, contractors and
consultants.  In making any disclosure to a Permitted Person except
for Lender and DHEC, Purchaser shall instruct the Permitted Person to treat the
Confidential Information, and the results of their studies or analyses, as
confidential and to disclose any information related to this Agreement or the
Property only to Purchaser, Seller, or another Permitted
Person.  Notwithstanding the foregoing, if Purchaser is required by
any government authority or court to disclose any Confidential Information,
Purchaser shall immediately notify Seller and Purchaser shall cooperate with
Seller so that Seller may attempt to obtain an appropriate protective order,
and, in all events, Purchaser shall only disclose the portion of the
Confidential Information required by such government authority or court to be
disclosed.  After Closing, Seller and Purchaser shall cooperate with
each other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any public announcement or
statement with respect thereto prior to consultation with the Purchaser, in the
case of the Seller, and the Seller, in the case of the Purchaser. The parties
agree that the initial press release or releases to be issued in connection with
the execution of this Agreement shall be mutually agreed upon prior to the
issuance thereof. Moreover, after Closing, any party may make any required
disclosures in any required filings with the Securities and Exchange Commission
or other governmental authority, but each party shall notify the other parties
in advance of any such disclosure.  This Section shall survive the
Closing and any termination of this Agreement.

     

    18.          Right to
Cure. If
any title defect or other  matter which would entitle Purchaser to
terminate this Agreement shall first arise after Purchaser notifies Seller of
its Title Objections pursuant to Section 4(b)(ii) and
prior to the Closing or if Seller shall have breached any representation or
warranty hereunder, Seller may elect, by written notice to Purchaser, to cure
such title defect or other matter by causing it to be removed, insured over or
bonded to cure such breach and Seller may adjourn the Closing for up to thirty
(30) days to do so.  Nothing contained in this Section shall
require Seller to cure any such title defect or other matter or to incur any
liability or expense to do so.

     

    
      
        
        

      

      
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    19.          Captions/Interpretations.   The
section headings or captions appearing in this Agreement are for convenience
only, are not a part of this Agreement, and are not to be considered in
interpreting this Agreement. Words in the singular shall be deemed to include
the plural and vice versa and words of one gender shall be deemed to include the
other gender as the context requires.  The word “including” and words
of similar import when used in this Agreement shall mean “including, without
limitation,” unless the context otherwise requires or unless otherwise
specified.  The word “or” shall not be
exclusive.  References herein to this Agreement shall be deemed to
refer to this Agreement as of the date of such Agreement and as it may be
amended thereafter, unless otherwise specified. In the event any court or other
adjudicative body of competent jurisdiction is called upon to interpret this
Agreement, the language of this Agreement shall be construed as a whole,
according to its fair meaning and intent, and not strictly for or against any
party, regardless of which party drafted or was principally responsible for
drafting the Agreement or any specific term or condition hereof.  The
Agreement has been circulated for editing to all parties.  As such,
the Agreement shall be deemed to have been drafted by all parties jointly, and
no party shall be deemed to have drafted this Agreement, or any of its
individual terms or conditions.  No party may offer in evidence or
otherwise use, for purposes of suggesting any interpretation of this Agreement,
any prior drafts of this Agreement. In the context of any covenant of Seller
hereunder, such covenant shall also include the obligation of Seller to cause
its privately held (that is, non-publicly traded) Affiliates to comply with such
covenant, as appropriate.  Notwithstanding anything to the contrary,
all references to the Affiliates of Seller shall not include its publicly traded
Affiliates.

     

    20.          Entire Agreement;
Modification.   This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter contained in this Agreement and all prior negotiations,
discussions, writings and agreements between the parties with respect to the
subject matter of this Agreement are superseded and of no further force and
effect.  Except as otherwise provided in this Agreement, no covenant,
term or condition of this Agreement will be deemed to have been waived by either
party unless such waiver is in writing signed by the party charged with such
waiver; however, Escrow Agent shall not be required to join in any amendment to
this Agreement unless such amendment alters its rights or obligations under this
Agreement.  All amendments executed by Seller and Purchaser shall be
binding and effective as between Seller and Purchaser, whether or not Escrow
Agent has executed such amendments.

     

    21.          Binding
Effect.   Subject
to the restrictions on assignment set forth in Section 15, this Agreement
shall be binding upon and inure to the benefit of Seller, Purchaser, and their
respective successors and assigns.

     

    22.          Controlling Law;
Interpretation.   This
Agreement will be governed by and construed in accordance with the laws of the
State of Florida, excluding choice of law principles.

     

    23.          Severability.   The
unenforceability or invalidity of any provision of this Agreement will not
render any other provision of this Agreement unenforceable or
invalid.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    24.          Survival.   Unless
otherwise expressly herein stated to survive, all representations, covenants,
indemnities, conditions and agreements contained herein shall merge into and be
superseded by the various documents executed and delivered at Closing and shall
not survive the Closing.

     

    25.          “As Is” Sale; Limitation on
Liability.

     

    (a)          Condition of
Property.  Except
as otherwise expressly set forth in this Agreement, Purchaser acknowledges and
agrees that (i) it is purchasing the Subject Interests based solely upon
its own inspections and investigations of the Property, (ii) it accepts the
Property in its “as is”, “where is” and “how is” condition as of the Closing
Date, with all faults, and (iii) neither Seller, nor anyone on behalf of
Seller, have made any representations or warranties, express or implied, about
the Property, including, without limitation, any warranty of condition,
habitability, merchantability, or fitness for a particular
purpose.  Without limiting the generality of this Section 25, except as
otherwise expressly set forth in this Agreement, Purchaser acknowledges that
Seller does not make any representation or warranty with regard
to:  (1) the value, profitability, development potential,
marketability, or leasing of the Property; (2) the compliance or
noncompliance of the Property with any laws, rules, regulations, orders or
requirements of governmental authorities (collectively, “Legal Requirements”),
including, without limitation, zoning, subdivision, and other land use laws,
building and life safety codes, parking codes, and the Americans with
Disabilities Act; (3) the environmental condition of the Property,
including, without limitation, the presence or absence on or about the Property,
or the release from the Property, of any hazardous waste, hazardous materials,
or toxic substance as defined or regulated by Legal Requirements relating to
environmental protection, pollution control, air, water, or soils quality, or
conservation (collectively, “Hazardous Materials”);
(4) the physical condition of the Land or Improvements, including, without
limitation, the condition of any building components, systems, or equipment;
(5) any covenants, conditions and restrictions affecting the Property;
(6) the utilities serving the Property; (7) any matter relating to the
tenants under the Leases; or (8) any other matter relating to the
Property.  Except as otherwise set forth in this Agreement, Purchaser
releases Seller from any liability relating to these matters (1) through (8) of
this Section 25.  Purchaser
assumes the risk of adverse matters, including adverse physical conditions,
defects, construction defects, environmental, health, safety and welfare matters
which may not have been revealed by Purchaser’s inspections.  Each
party has been represented by adequate counsel, all drafts have been exchanged
by the parties, and accordingly no provision of this Agreement will be construed
against any party by reason of its preparation or
preparer.  Accordingly, any rule of law or equity or legal decision
that would require interpretation of any ambiguities in the Agreement against
any party that drafted it is of no application and is expressly
waived.  Each party waives any rights or remedies it may have or be
entitled to, deriving from disparity in size or from any significant disparate
bargaining position in relation to any other party.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    Except as
otherwise expressly set forth in this Agreement as to covenants,
representations, warranties and obligations to indemnify that expressly survive
Closing, and then only for the period of time that that such covenants,
representations, warranties and obligations to indemnify expressly survive
Closing, effective as of the Closing Date, Purchaser, for itself and its agents,
Affiliates, successors and assigns, hereby waives, releases and forever
discharges Seller from any and all rights, claims and demands at law or in
equity, whether known or unknown at the time of this Agreement, which Purchaser
has or may have in the future, arising out of the physical, environmental,
economic or legal condition of the Property, including, without limitation, all
claims in tort or contract and any claim for indemnification or contribution
arising under the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601, et seq.) or any similar
federal, state or local statute, rule or regulation, and all other title or due
diligence matters described above in this Section 25 or any other
provisions of this Agreement.  Purchaser hereby assumes the risk of
changes in applicable laws and regulations relating to past, present and future
environmental conditions and the risk that adverse physical characteristics and
conditions, including without limitation, the presence of Hazardous Materials or
other contaminants, may not have been revealed by its
investigation.  Purchaser waives all objections and complaints,
whether known or unknown, concerning the physical characteristics and any
existing conditions of the Property, including Seller’s obligations under the
Leases relating to the physical, environmental or legal compliance status of the
Property, whether arising before or after the Effective
Date.  Purchaser, upon Closing, shall be deemed to have waived,
relinquished and released Seller from and against any and all matters affecting
the Property, including any and all complaints or objections concerning the
physical characteristics of the Property or existing Property
conditions.  Purchaser waives the benefits of any law which generally
provides that a general release does not extend to claims which a creditor does
not know or suspect to exist in his favor at the time of executing the release
which, if known by him, may have materially affected his settlement with the
debtor. The provisions of this Section 25 shall not, and shall not be deemed or
construed to, release the parties from their obligations under the Operating
Agreements referenced in Section 9(b) (viii) and Section 9(c)
(viii).

     

    The
provisions of this Section shall survive the Closing or termination of this
Agreement indefinitely and will not merge into the closing
documents.

     

    (b)          Limited
Liability.  Seller’s
and Purchaser’s shareholders, members, directors, partners, authorized persons,
officers, agents, and employees shall have no personal liability under this
Agreement, without any exception whatsoever.

     

    26.          Indemnification.

     

    (a)          By Seller.  Seller
hereby agrees to indemnify and hold harmless Purchaser subsequent to Closing
from any and all actions and causes of action, suits, claims, controversies,
liabilities, damages and costs (including, specifically, attorneys’ fees and
costs in all trial, appellate, bankruptcy and post-judgment proceedings)
whatsoever, which Purchaser is subject to, incurs or pays by reason of the
inaccuracy of or breach by Seller of the representations, warranties or
covenants set forth in this Agreement.  The indemnification set forth
herein shall survive the Closing of the transactions contemplated by this
Agreement and the purchase of the Subject Interests by Purchaser from Seller for
a period of twelve (12) months.

     

    (b)          By the Companies and
Purchaser.  Purchaser
hereby agrees to indemnify and hold harmless Seller subsequent to Closing from
any and all actions and causes of action, suits, claims, controversies,
liabilities, damages and costs (including, specifically, attorneys’ fees and
costs in all trial, appellate, bankruptcy and post-judgment proceedings)
whatsoever, which Seller is subject to, incurs or pays by reason of the
inaccuracy of or breach by Purchaser of the representations, warranties or
covenants set forth in this Agreement.  The indemnification set forth
herein shall survive the Closing of the transactions contemplated by this
Agreement and the purchase of the Subject Interests by Purchaser from Seller for
a period of twelve (12) months.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    27.           Recordation.  Neither
this Agreement nor any notice or memorandum of this Agreement shall be recorded,
but may be disclosed by Purchaser if and to the extent required by the
applicable securities law, as provided in Section 17
hereof.

     

    28.           Waiver of Jury
Trial.   PURCHASER
AND SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING OUT
OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING
WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT OR ANY CLAIMS
OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS
OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR SELLER TO
ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS TO BE DELIVERED BY
PURCHASER AT CLOSING, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS
AGREEMENT.  Each party hereby authorizes and empowers the other to
file this Section and this Agreement with the clerk or judge of any court
of competent jurisdiction as a written consent to waiver of jury
trial.

     

    29.           Time of Essence; Calculation
of Time Periods.   Time
is of the essence as to each and every provision of this
Agreement.  If any date upon which action is required under this
Agreement shall be a Saturday, Sunday or legal holiday, the date for such action
shall be extended to the first business day after such date which is not a
Saturday, Sunday or legal holiday.

     

    30.           Counterparts; Fax
Signatures.   Signatures
to this Agreement transmitted by facsimile or telecopy shall be binding on the
party transmitting such signatures and such party shall not use as a defense
against the enforceability of this Agreement the fact that such signature so
transmitted is not original.  This Agreement may be signed in
counterparts, each of which shall be enforceable against the party executing and
delivering same, and all of which shall constitute a single and enforceable
agreement.

     

    31.           Covenants by
Purchaser and
Seller.  Purchaser
and Seller shall cooperate in a commercially reasonable manner with each other
in their respective efforts to obtain consents for the transactions contemplated
herein (including providing the lenders such information concerning Purchaser as
may be required pursuant to the Loan Documents) so as not to trigger a default,
or except as set forth in Section 3(d) and Section 11(m) hereof, cause a
fee under any of the Loan Documents.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    32.           Escrow
Agent.  Escrow
Agent shall hold the Deposit (and any interest earned thereon) for the purposes
as provided in this Agreement.  If Purchaser timely terminates this
Agreement pursuant to Section 5(b), Escrow Agent shall return the Deposit to
Purchaser pursuant to Section 5(c).  Except as expressly provided in
the prior sentence, in the event of any dispute, Escrow Agent shall have the
right to deposit the Deposit (and any interest earned thereon) in court to await
the resolution of such dispute.  Escrow Agent shall not incur any
liability by reason of any action or non-action taken by it in good faith or
pursuant to the judgment or order of a court of competent
jurisdiction.  Escrow Agent shall have the right to rely upon the
genuineness of all certificates, notices and instruments delivered to it
pursuant hereto, and all the signatures thereto or to any other writing received
by Escrow Agent purporting to be signed by any party hereto, and upon the truth
of the contents thereof. Escrow Agent shall not pay or deliver the Deposit (and
any interest earned thereon) to any party unless written demand is made therefor
and a copy of such written demand is delivered to the other party.  If
Escrow Agent does not receive a written objection from the other party to the
proposed payment or delivery within five (5) business days after such demand is
served in accordance with the Notice provision herein on such party, Escrow
Agent is hereby authorized and directed to make such payment or
delivery.  If Escrow Agent does receive such written objection within
such five (5) business day period or if for any other reason Escrow Agent in
good faith shall elect not to make such payment or delivery, Escrow Agent shall
forward a copy of the objections, if any, to the other party or parties, and
continue to hold the Deposit (and any interest earned thereon) unless otherwise
directed by written instructions from the parties to this Agreement or by a
judgment of a court of competent jurisdiction.  In any event, Escrow
Agent shall have the right to refrain from taking any further action with
respect to the subject matter of the escrow until it is reasonably satisfied
that such dispute is resolved or action by Escrow Agent is required by an order
or judgment of a court of competent jurisdiction. Purchaser acknowledges that
Escrow Agent is legal counsel to Seller and shall have the right to continue to
represent Seller in any matter, litigation or proceeding, including, without
limitation, any action brought by either party relating to the enforcement or
breach of this Agreement. The provisions of this Section 32 shall survive the
termination of this Agreement or the Closing (as the case may be).

     

    33.           CRC
Licenses.


     

    (a)           Purchaser’s
obligation to purchase the Subject Interests is conditioned upon Purchaser
securing, using reasonable diligence, at Purchaser’s sole cost and expense
(provided however, if the transaction contemplated by this Agreement closes,
such costs and expenses shall be paid eighty percent (80%) by Purchaser and
twenty percent (20%) by Seller) from the South Carolina Department of Health and
Environmental Control, or the applicable agency body or authority thereof
(collectively, “DHEC”)
consent to the transfer of a direct or indirect interest in Lexington Operator
and Greenville Operator, the current holders of Healthcare License Nos. CRC
[Community Residential
Care]-1329 and CRC-1330 DHEC, respectively (collectively, the “Licenses”) issued by DHEC to
operate community residential care facilities on the Lexington Real Property and
Greenville Real Property, respectively.  In connection therewith, the
Purchaser and Seller shall jointly apply for new community residential care
licenses (the “Replacement CRC
Licenses”) to replace the existing Licenses, or a so-called letter of
exemption (“Exemption
Letter”) which provides that for a period of six months after issuance
thereof, the Licenses shall remain in full force effect after the transfer of
indirect majority control of the Operators, as reasonably and jointly determined
by Purchaser and Seller.  In connection therewith, Purchaser agrees to
(i) properly complete, execute, deliver and submit to DHEC an application for
Replacement Licenses or application for Exemption Letter, as the case may be,
that appears complete on its face to DHEC, together with all applicable
application fees, within ten (10) business days after the Effective Date, and
all other applications, documents, instruments and petitions and take or cause
others to take all other actions as may be necessary or desirable, to obtain the
Replacement Licenses or Exemption Letter, as the case may be, (ii) promptly
furnish to DHEC and Seller such other information, financial or otherwise, as
may be requested by DHEC or counsel following Purchaser’s initial submission of
the application, (iii) proceed with diligence and use commercially reasonable
efforts to (A) obtain the written agreement of DHEC to issue the Replacement
Licenses immediately after Closing, such agreement to the form as customarily
issued by DHEC (the “DHEC
Comfort Letter”), or (B) cause the issuance of the Exemption Letter, as
the case may be, at the earliest possible date, (iv) keep Seller timely apprised
of the status thereof, and (v) provide Seller with copies of all correspondence
between DHEC and Purchaser.  Purchaser shall have a period of thirty
(30) days from the Effective Date (the “Licensing Period”) in which to
obtain the DHEC Comfort Letter or Exemption Letter, as the case may
be.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    (b)           In
connection with the Purchaser’s obligations under Section 33(a), Seller shall
(x) provide to Purchaser all information reasonably requested by Purchaser
related to the Operators or operations at the Real Property as is required to be
provided to DHEC to enable the Purchaser to file a completed application (e.g.
staff survey of employees with date of birth, social security numbers and job
duties, etc.) (herein referred to as the “Necessary Seller Filing Information”),
and (y) reasonably cooperate with Purchaser and join in and execute such
applications, filings, and consents reasonably necessary or appropriate, to
process Purchaser’s applications and/or requests made to DHEC; provided,
however, that (i) Purchaser shall deliver to Seller for its prior review and
approval within three (3) business days from its receipt (such approval not to
be unreasonably withheld, denied or delayed) any such application or filing to
be reviewed; and (ii) Seller shall not be obligated to undertake any action
which would jeopardize the existing Licenses, and it is recognized that the
existing Licenses shall not be deemed effectively transferred, to the extent
permitted by law, until immediately after Closing.

     

    (c)          
In the event Purchaser, having exercised diligent and commercially reasonable
efforts to secure the DHEC Comfort Letter or Exemption Letter, as the case may
be, is unable to secure either of the same within the Licensing Period,
Purchaser or Seller shall have the right, by sending written notice to the other
party prior to the expiration of the Licensing Period, to extend the termination
of the Licensing Period for a period of sixty (60) days.  In the event
Purchaser, having exercised diligent and commercially reasonable efforts is
unable to secure the DHEC Comfort Letter or Exemption Letter, as the case may
be, within the Licensing Period, as it may have been extended, Purchaser shall
have the right, by sending written notice to Seller prior to the expiration of
the Licensing Period, as it may have been extended, in its sole and absolute
discretion, to immediately terminate this Agreement and receive a refund of the
Deposit.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    (d)           In
the event that the DHEC shall require improvements, alterations or remodeling to
the Facilities or an agreement or undertaking to make improvements, alterations
or remodeling to the Facilities (collectively, a “Required Alteration”) as a
condition to the issuance as of the Replacement CRC Licenses, if the cost of the
Required Alteration shall exceed Two Hundred Thousand Dollars ($200,000) for
either Facility, as reasonably estimated by a general contractor or an engineer
engaged by Seller and reasonably acceptable to Purchaser, then either Seller or
Purchaser may elect, by written notice to the other party within five (5)
business days of the receipt of such estimate to terminate this Agreement.
Seller shall have the right, but not the obligation, in the event of such
termination of the Agreement by Purchaser to elect and agree to pay one hundred
percent (100%) of the overage (that is, to avoid all doubt,  all
amounts in excess of Two Hundred Thousand Dollars ($200,000) for the Lexington
Facility and all amounts in excess of Two Hundred Thousand Dollars ($200,000)
for the Greenville Facility, as and if applicable) by written notice from Seller
to Purchaser (“Seller’s
Nullification Notice”) within five (5) business days after receipt of
Purchaser’s notice of termination pursuant to this Section 33 (d),
whereupon  Purchaser’s notice of termination shall be nullified
by Seller’s Nullification Notice and the parties shall proceed to Closing,
subject to the other provisions of this Agreement. If (i) the estimated costs of
the Required Alteration are equal to or less than Two Hundred Thousand Dollars
($200,000) for each Facility, or (ii) this Agreement is not terminated, or
terminated and then reinstated pursuant to Seller’s Nullification Notice,
Purchaser shall pay eighty percent (80%) and Seller shall pay twenty percent
(20%) of the costs of the Required Alterations up to Two Hundred Thousand
Dollars ($200,000) per Facility, and provided that if neither party shall
terminate the Agreement after an estimate in excess of Two Hundred Thousand
Dollars ($200,000) per any Facility as provided herein, if applicable, Seller
shall pay one hundred percent (100%) of the costs of the Required Alterations in
excess of Two Hundred Thousand Dollars ($200,000) per Facility.

     

    34.          Certain
Definitions.  Certain
capitalized words and phrases used in this Agreement and not otherwise defined
in this Agreement shall have the meanings set forth in this Section
34:

     

    a.            “Affiliate” shall mean, as to
any Person, any other Person that, directly or indirectly, is in control of, is
Controlled by or is under common Control with such Person or of an Affiliate of
such Person.

     

    b.        
   “Control” or “Controlled” or "Controlling” and related
usages of those terms when used with respect to any specified Person, as such or
in any related meaning, shall mean the power to direct or cause the direction of
the management and policies of such Person, directly or indirectly, whether
through ownership of voting securities, membership or partnership interests, by
contract or otherwise.

     

    c.            “Person” shall mean an
individual, corporation, partnership, limited liability company, trust, estate,
unincorporated organization, association or other legally recognized
entity.

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    35.           Post-Closing Obligations of
Seller. Following
Closing, Seller shall use, and shall cause Seller’s Affiliates to use,
reasonable diligent efforts to cooperate with Purchaser and its Affiliates to
(a) confirm that all Licenses are obtained and held by the proper entity for
operation of the Property, and (b) to provide any records in Seller’s custody or
control pertaining to the Real Property or Facilities which may be reasonably
requested of Purchaser by any authorized governmental
agency.  Further, upon Purchaser’s reasonable request, for a period of
one (1) year after Closing, Seller shall make the operating statements and any
and all books, records, correspondence, financial data, leases, delinquency
reports and all other documents and matters maintained by Seller or its agents
and relating to receipts and expenditures pertaining to the Real Property or
Facilities for the three (3) most recent full calendar years and the current
calendar year (collectively, the “Records”) available to Buyer
for inspection, copying and audit by Purchaser's designated accountants, and at
Purchaser's sole expense.  “Records” shall include unaudited and
unreviewed historical financial statements pertaining to the Real Property or
Facilities and any other documents pertaining to the Real Property or Facilities
reasonably identified by Purchaser that are required to allow the Purchaser to
comply with any reporting, disclosure, or filing requirements imposed upon the
Purchaser by the SEC with respect to the transactions contemplated by this
Agreement.  Additionally, Seller shall provide
Purchaser, but without expense to Seller, with (a)
representation letter to auditor in substantially the form as Exhibit
K attached hereto and made a part hereof, and (b) copies of, or access
to, such factual information as may be reasonably requested by Purchaser or its
designated accountants, and in the possession or control of Seller, to enable
Purchaser to file any filings required by the SEC in connection with the Real
Property or Facilities or purchase of the Subject Interests.  This
Section
35 shall survive the Closing.

     

    36.           Exhibits and
Schedules.  All
Exhibits and Schedules hereto are deemed to be attached hereto and incorporated
by reference herein.  Notwithstanding the fact that this Agreement may
be executed and delivered without all of the Exhibits and Schedules being
completed, the parties shall complete and attach the same prior to the
expiration of the Study Period.

     

    
      
         


      

      
        46

        
          

        

      

      
         


      

    

     

    IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the date first above written.


     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          	
                                                                  WITNESSES:

                                                                	 
      	
                                                                  SELLER:

                                                                
	 
      	 
      	 
      
	 
      	 
      	
                                                                  ROYAL SENIOR CARE,
      LLC,

                                                                
	 
      	 
      	
                                                                  a
      Florida limited liability company

                                                                
	/s/
      Jon Ryan	 
      	 
      	 
      
	
                                                                  Name:

                                                                	Jon
      Ryan	 
      	
                                                                  By:

                                                                	 
      /s/ Aharon Soffer
	 
      	 
      	 
      	 
      	
                                                                    Aharon
      Soffer, Manager

                                                                
	 
      	 
      	 
      	 
      	 
      
	/s/
      Elizabeth Jimenez	 
      	
                                                                  By:

                                                                	 
      /s/ Avi Bittan
	
                                                                  Name:

                                                                	Elizabeth
      Jimenez	 
      	 
      	
                                                                   
      Avi Bittan, Manager

                                                                
	 
      	 
      	 
      	 
      
	
                                                                  WITNESSES:

                                                                	 
      	
                                                                  PURCHASER

                                                                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                                                                  CORNERSTONE OAKLEAF
      VILLAGE,

                                                                  LLC, a Delaware limited
      liability company

                                                                
	/s/
      Sharon Kaiser	 
      	 
      
	
                                                                  Name:

                                                                	Sharon
      Kaiser	 
      	
                                                                  By:

                                                                	/s/
      Terry G. Roussel
	 
      	 
      	 
      	
                                                                  Name: 

                                                                	Terry
      G. Roussel
	 
      	 
      	 
      	
                                                                  Title:

                                                                	President
	 
      	 
      	 
      	 
      
	/s/
      Sherry Landy	 
      	 
      
	
                                                                  Name:

                                                                	Sherry
      Landy	 
      	 
      


                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      


      Royal Senior
Care,
LLC/Cornerstone Oakleaf Village,
LLC

      Membership Interests Sale
and Purchase Agreement – Signature Page

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit A –
1

     

    Lexington
Land

    


    PARCEL
1:  LEXINGTON COUNTY:

    


    All that
certain piece, parcel or lot of land with improvements thereon, if any, situate,
lying and being near the Town of Lexington, County of Lexington, State of South
Carolina, as shown and delineated on a plat of 18.08 acres, prepared for
Carolina Senior Development, by Civil Engineering of Columbia, dated July 16,
1998 last revised July 28, 1998, recorded in Plat Slide 401 at Plat No.
6.

    


    TOGETHER
WITH:

    


    All that
certain piece, parcel or lot of land with improvements thereon, if any, situate,
lying and being near the Town of Lexington, County of Lexington, State of South
Carolina, shown and delineated as the "PROPOSED 50' R.O.W. FOR FUTURE ROADWAY"
including the circular area of land designated within the R.O.W. Easement Curve
Table as Curve C1 having an arc distance of 261.80' and chord bearing
S34°03'17"W together with that "50' INGRESS/EGRESS EASEMENT FOR LEXINGTON SENIOR
DEVELOPMENT, LLC AND LEXINGTON COUNTY SCHOOL DISTRICT #1"

    


    LESS AND
EXCEPTING THEREFROM that portion of the "PROPOSED 50' R.O.W. FOR FUTURE ROADWAY"
including the circular area of land designated within the R.O.W. Easement Curve
Table as Curve Cl having an arc distance of 261.80' and chord bearing of
S34°03'17"W together with that "50’ INGRESS/EGRESS EASEMENT FOR LEXINGTON SENIOR
DEVELOPMENT, LLC AND LEXINGTON COUNTY SCHOOL DISTRICT #1 which is a part of the
18.080 acres parcel of land owned by Lexington Senior Development, L.L.C. all as
shown on a plat prepared for Lexington Senior Development, L.L.C. by Civil
Engineering of Columbia, dated August 20, 1998, last revised October 23,1998,
and recorded February 5, 1999 in the Office of the Register of Deeds for
Lexington County in Plat Slide 452 at Plat No.6.

    


    ALSO
LESS AND EXCEPTING:

    


    All that
certain piece, parcel, or lot of land with improvements thereon, lying and being
in the County of Lexington, Town of Lexington, State of South Carolina and being
shown and delineated as 4.88 Acres as shown on a plat prepared by Carolina
Surveying Services Inc., R.L.S. dated July 31, 2003, and recorded in the
Register of Deeds Office for Lexington County in Plat Slide 730, Page 4, with
said tract having such metes and bounds as are shown on said plat. The metes and
bounds as shown on said plat are incorporated by reference herein.

    


    ALSO:

    


    Easement
Rights as contained in that certain Reciprocal Easement Agreement by and between
Lexington County School District Number One and Lexington Development, L.L.C
dated 2/4/1999 and recorded 2/5/1999 in the Office of the Register of Deeds for
Lexington County in Record Book 5089, page 254, which agreement is further
identified in Schedule B - Section 2, Exception 13 herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    LESS
AND EXCEPTING

    


    All that
certain piece, parcel or lot of land that consists of 1.5 acres located on the
southeast side of U.S. Route 378 in the Town of Lexington, Lexington County,
South Carolina.

    


    Commencing
from the center line intersection of U.S. Rte. 378 with S.C. Rte. 6. Thence
S89°33'08E for a distance of 201.26' to an old #5 rebar property corner on the
southern R.O.W. of 378 this being the point of beginning.

    


    Thence
from the point of beginning and in a clockwise direction:

    


    S39041'10"E
for a distance of 258.61' to a new #5 rebar, said line being bounded on the east
by lands of now or formerly P&H Properties of Lexington, LLC.

    


    Thence,
S39°39'12"E for a distance of 90.61' to a new #5 rebar.  Said line
being bounded on the east by lands of now or formerly Herndon Chevrolet,
Inc.

    


    Thence,
S50°21'41"W for a distance of 180.02' to an old #5 rebar.  Said line
being bounded on the east by lands of now or formerly Lexington Senior Care
Development LLC.

    


    Thence,
N39°41'08"W for a distance of 376.35' to an old #5 rebar.  Said line
being bounded on the west by lands of now or formerly Lexington Senior Care
Development LLC.

    


    Thence,
N58°52'07"E for a distance of 108.41' to an old #5 rebar.  Said line
being the southern R.O.W. of U.S. Rte. 378.

    


    Thence,
N59°00'45"E for a distance of 73.71' to an old #5 rebar.  Said line
being the southern R.O.W. of U.S. Rte. 378.  This being the point of
beginning.

    


    Excluded 1.5 Acre
Parcel

    


    All that
certain piece, parcel or lot of land that consists of 1.5 acres located on the
southeast side of U.S. Route 378 in the Town of Lexington, Lexington County,
South Carolina.

    


    Commencing
from the center line intersection of U.S. Rte. 378 with S.C. Rte. 6. Thence
S89°33'08E for a distance of 201.26' to an old #5 rebar property corner on the
southern R.O.W. of 378 this being the point of beginning.

    


    Thence
from the point of beginning and in a clockwise direction:

    


    S39041'10"E
for a distance of 258.61' to a new #5 rebar, said line being bounded on the east
by lands of now or formerly P&H Properties of Lexington, LLC.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Thence,
S39°39'12"E for a distance of 90.61' to a new #5 rebar.  Said line
being bounded on the east by lands of now or formerly Herndon Chevrolet,
Inc.

    


    Thence,
S50°21'41"W for a distance of 180.02' to an old #5 rebar.  Said line
being bounded on the east by lands of now or formerly Lexington Senior Care
Development LLC.

    


    Thence,
N39°41'08"W for a distance of 376.35' to an old #5 rebar.  Said line
being bounded on the west by lands of now or formerly Lexington Senior Care
Development LLC.

    


    Thence,
N58°52'07"E for a distance of 108.41' to an old #5 rebar.  Said line
being the southern R.O.W. of U.S. Rte. 378.

    


    Thence,
N59°00'45"E for a distance of 73.71' to an old #5 rebar.  Said line
being the southern R.O.W. of U.S. Rte. 378.  This being the point of
beginning.



    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    Exhibit A –
2

     

    Greenville
Land

    


    ALL THAT
CERTAIN PIECE, PARCEL OR TRACT OF LAND SITUATE, LYING AND BEING IN THE COUNTY OF
GREENVILLE, STATE OF SOUTH CAROLINA, CONTAINING 5.006 ACRES ACCORDING TO AN
"ALTA/ACSM LAND TITLE SURVEY FOR RSC GREENVILLE, LLC, 1560 THORNBLADE BOULEVARD,
GREENVILLE COUNTY, GREENVILLE, SOUTH CAROLINA (OAKLEAF VILLAGE @ THORNBLADE)",
DATED 7/07/04 BY SITE DESIGN, INC. WITH THE FOLLOWING METES AND BOUNDS TO
WIT:

     

    BEGINNING
AT AN OLD MAG NAIL LOCATED ON THE NORTHERN RIGHT OF WAY OF THORNBLADE BOULEVARD
AT ITS TERMINUS; THENCE RUNNING ALONG SAID RIGHT OF WAY S 88-21-05 W 55.64 FEET
TO AN OLD 5/8" REBAR IRON PIN; THENCE TURNING AND RUNNING N 81-00-31 W 32.56
FEET TO A POINT IN A BRICK WALL AT THE JOINT CORNER OF LOT 61, SECTION ONE, THE
GARDENS AT THORNBLADE; THENCE TURNING AND LEAVING SAID RIGHT OF WAY AND RUNNING
ALONG THE REAR LOT LINES OF LOTS 61, 60, 59, 58, 57, 56, AND 55, SECTION ONE,
THE GARDENS AT THORNBLADE N 14-50-53 E 99.70 FEET TO A POINT IN BRICK WALL;
THENCE TURNING AND RUNNING N 39-24-59 E 360.99 FEET TO POINT AT THE JOINT CORNER
OF WEKIVA SPRINGS PLAZA PROPERTY, NOW OR FORMERLY; THENCE TURNING AND RUNNING
ALONG THE LINE OF SAID WEKIVA SPRINGS PLAZA PROPERTY AND ALSO ALONG THE LINE OF
THORNBLADE, VILLAGE, LLC PROPERTY, NOW OR FORMERLY S 50-47-17 E 260.96 FEET TO
AN OLD 5/8" REBAR IRON PIN, CROSSING OVER AND OLD 1" OPEN TOP IRON PIN AT 0.53
FEET AND AN OLD 3/4" CRIMP TOP IRON PIN AT 119.67 FEET; THENCE TURNING AND
RUNNING S 73-14-35 E 136.25 FEET TO AN OLD 1" CRIMP TOP IRON PIN (BENT) LOCATED
ON THE WESTERN RIGHT OF WAY OF THE PARKWAY (S-23-1025); THENCE TURNING AND
RUNNING ALONG SAID RIGHT OF WAY AND ALONG A CURVE TO THE LEFT HAVING A RADIUS OF
756.20 FEET, AN ARC LENGTH OF 88.52 FEET AND A CHORD BEARING AND DISTANCE OF S
14-54-02 W 88.47 FEET TO AN OLD 3/4" CRIMP TOP IRON PIN; THENCE TURNING AND
RUNNING S 11-29-20 W 316.13 FEET TO AN OLD 1" CRIMP TOP IRON PIN LOCATED AT THE
JOINT CORNER OF SFH PROPERTIES, LLC PROPERTY, NOW OR FORMERLY; THENCE TURNING
AND LEAVING SAID RIGHT OF WAY AND RUNNING ALONG THE LINE OF SAID SFH PROPERTIES,
LLC PROPERTY AND ALSO ALONG THE LINE OF PCH, LTD., LP PROPERTY, NOW OR FORMERLY
AND ALONG THE LINE OF G.H. CONSTRUCTION OF EASLEY, INC. PROPERTY NOW OR FORMERLY
N 78-23-13 W 449.62 FEET TO AN OLD 5/8" REBAR IRON PIN LOCATED ON THE EASTERN
RIGHT OF WAY OF SONIA DRIVE; THENCE TURNING AND RUNNING ALONG SAID RIGHT OF WAY
N 00-01-56 E 47.48 FEET TO AN OLD 5/8" REBAR IRON PIN LOCATED AT THE SOUTHERN
END OF A SIGHT FLARE AT THE INTERSECTION OF SAID EASTERN RIGHT OF WAY OF SONIA
DRIVE AND THE EASTERN TERMINUS OF THORNBLADE BOULEVARD; THENCE TURNING AND
RUNNING ALONG SAID SIGHT FLARE N 48-42-59 E 33.04 FEET TO AN OLD 5/8" REBAR IRON
PIN LOCATED AT THE NORTHERN END OF SAID SIGHT FLARE ON THE EASTERN TERMINUS OF
THORNBLADE BOULEVARD; THENCE TURNING AND RUNNING ALONG SAID EASTERN RIGHT OF WAY
AND TERMINUS OF THORNBLADE BOULEVARD N 01-36-55 E 57.83 FEET TO THE POINT OF
BEGINNING.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    Exhibit
B

    


    Form
of Title Affidavit

    


    The
undersigned Affiant, being first duly sworn, and being duly authorized to do so
on behalf of the Owner named below, hereby makes the following affidavit to
Lawyers Title Insurance Company (“Title Company”) and
__________________ (“Title
Agent”) in connection with the transaction identified as
follows:

     

    
      	
              AFFIANT:

            	
              Royal
      Senior Care, LLC, a Florida limited liability
  company.

            


    

     

    
      	
              OWNER:

            	
              RSC
      Oakleaf Lexington, LLC, a Florida limited liability company (“Lexington
      Owner”) and RSC Oakleaf Greenville, LLC, a Florida limited liability
      company, as applicable

            


    

     

    
      	
              PROPERTY: 
      

            	
              Property
      located at _____________________ (as more particularly described in
      Schedule A to the Policy set forth
below).

            


    

     

    
      	
              POLICY:   
      

            	
              Lawyers
      Title Insurance Company Policy
  #_________________.

            


    

     

    
      	
              1.

            	
              Owner
      is the owner in fee simple of the Property, as more particularly described
      in the Policy, and there are no other parties who are in possession, or
      who have or claim a right to be in possession, of any part of Property,
      except for the tenants set forth in Exhibit A
      attached hereto.

            


    

     

    
      	
              2.

            	
              (a) No
      person has furnished any labor, services, or materials in connection with
      the construction or repair of any buildings or improvements on any of the
      Property within the last ninety (90) days; (b) there are no unpaid
      amounts due for any labor, material, or services in connection with the
      construction or repair of any improvements on any of the Property, or with
      respect to the Property itself, that could form the basis of a lien
      thereon; and (c) Owner has not received any notice of intention to
      file or record a lien in connection with any of the
    Property.

            


    

     

    
      	
              3.

            	
              There
      has been no material change in the exterior aspects of any improvements on
      any of the Property as shown in the respective survey plans referred to in
      the Policy.

            


    

     

    
      	
              4.

            	
              All
      real estate taxes and municipal or county charges currently due and owing
      with respect to the Property have been paid, or will be paid prior to the
      date on which same will become
delinquent.

            


    

     

    
      	
              5.

            	
              As
      an inducement to Title Company and Title Agent to insure over any matters
      attaching or created during the “gap” in time between the date of the
      Policy and the date of this Affidavit, Owner shall promptly remove of
      record any matters filed of record during said gap period, but only to the
      extent caused by Owner.

            


    

     

    
      	
              6.

            	
              This
      Affidavit is given with the understanding and intention that Title Company
      and Title Agent shall rely thereon in issuing an endorsement to the
      Policy.

            


    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
              7.

            	
              THE
      UNDERSIGNED EXECUTES THIS AGREEMENT BECAUSE OF THE BENEFITS DIRECTLY AND
      INDIRECTLY ACCRUING TO IT BY REASON OF THE ISSUANCE OF THE ENDORSEMENT TO
      THE POLICY.

            


    

     

    Executed
as of the ____ day of _________, 20___.

     

    AFFIANT:

     

    
      ROYAL SENIOR CARE,
LLC,

    

    
      a Florida
limited liability company

    

     

    
      
        
          
            
              
                
                  	
                          By:

                        	 
      
	 
      	 
      
	
                          Name: 

                        	 
      
	 
      	 
      
	
                          Title:

                        	 
      


                

              

            

          

        

      

    

     

    STATE OF
____________________

    COUNTY OF
__________________

     

    The
foregoing instrument was acknowledged before me on ________________, 200__, by
_________________ as ____________ of ROYAL SENIOR CARE, LLC, a
Florida limited liability company, on behalf of the limited liability company,
who is personally known to me or who has produced ________________________ as
identification.

     

    
      
        
          
            	 
      	
                    Name:

                  
	 
      	 
      
	 
      	
                    NOTARY
      PUBLIC, State of  ________________

                  
	 
      	 
      
	 
      	
                    (SEAL)Serial
      Number (if any) _______________

                  
	 
      	 
      
	 
      	
                    My
      Commission Expires:
___________________

                  


          

        

      

      

        
          
             


          

          
            2

            
              

            

          

          
             


          

        

      

    

     

    Exhibit
I

     

    Form
of Subject Interests Assignment

     

    INTERESTS
ASSIGNMENT AGREEMENT

     

    THIS INTERESTS ASSIGNMENT
AGREEMENT (this “Assignment”) is made
and entered into effective as of __________, 2010, by and between ROYAL SENIOR
CARE, LLC, a Florida Delaware limited liability company (the “Assignor”), having an
address at ______________________________and ________________, a ____________
(“Assignee”),
having an address at c/o _________________.  Capitalized terms used
but not otherwise defined herein have the meanings set forth in the Purchase
Agreement.

     

    RECITALS

     

    WHEREAS,
Assignor and/or its affiliates are the owner of an  one hundred
percent (100%) membership interests in Royal Cornerstone South Carolina
Portfolio, LLC, a Delaware limited liability company (the “LLC”) pursuant to
that certain limited liability company agreement of Royal Cornerstone South
Carolina Portfolio, LLC (the “LLC Agreement”) dated
______________, 2010;

     

    WHEREAS,
an eighty percent (80%) membership interests in the LLC are referred to as the
“Purchased Interests”; and

     

    WHEREAS,
Assignors and Assignee have entered into that certain Membership Interests Sale
and Purchase Agreement dated ______________, 2010 (the “Purchase Agreement”),
wherein Assignor has agreed to convey to Assignee all of Assignor’s right, title
and interest in and to the Purchased Interests.

     

    NOW,
THEREFORE, the undersigned hereby agree as follows:

     

    1.          Assignment and
Assumption.  Assignor hereby sells, assigns and transfers all
of Assignor’s interest in the Purchased Interests to Assignee, free and clear of
any option, commitment, pledge, demand, charge, claim, security interest, lien
or encumbrance whatsoever. Assignee hereby accepts and acquires the Purchased
Interests and with respect to the Purchased Interests assumes all of Assignor’s
obligations under, and will be bound by, and hereby accepts and adopts all the
terms, provisions and conditions of the LLC Agreement from and after the date of
this Assignment.

     

    2.          Indemnification.  This
Agreement does not limit the rights of Assignor and Assignee under Section 26 of
the Purchase Agreement.

     

    3.          Representations and
Warranties.  Except as expressly set forth in Section 7 of the
Purchase Agreement, Assignor makes no representations or warranties and there
shall be no recourse to Assignor in connection with this
Assignment


    
      
         


      

      
        1

        
          

        

      

      
         


      

    


    4.          Admission.  Each
of the parties hereto acknowledges and agrees that contemporaneously with the
assignment described in Paragraph 1 hereof, Assignee shall be admitted to the
LLC as the managing member and Assignor shall have no further right, title, or
interest in or to the Purchased Interests or any income, profits or capital
allocable to the Purchased Interests.

     

    5.          Other Documents and
Acts.  Assignor shall execute and deliver to Assignee, its
successors, assigns, and nominees, any new or confirmatory documents, and do and
perform such other acts which Assignee, its successors, assigns, or nominees,
may reasonably request to fully or better assign and transfer to and vest in
Assignee, its successors, assigns, and nominees, the Purchased Interests,
provided that the same shall be without expense or liability to the
Assignor.

     

    6.          Continuation without
Dissolution.  The parties hereto agree that the assignment of
the Purchased Interests, the admission of Assignee to the LLC will not dissolve
the LLC, and the business of the LLC will continue.

     

    7.          Binding
Effect.  This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their respective permitted successors
and assigns.

     

    8.          Execution in
Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.

     

    9.          Governing
Law.  This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of Delaware.

     

    IN
WITNESS WHEREOF, Assignor and Assignee have respectively executed this
Assignment as of the date first above written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          ASSIGNOR:

                                        
	 
	
                                          ROYAL
      SENIOR CARE, LLC

                                        
	 
	
                                          By:

                                        	 
      
	
                                          Name:

                                        	 
      
	
                                          Title:

                                        	 
      
	 
      	 
      
	
                                          ASSIGNEE:

                                        
	
                                          [__________________]

                                        
	 
      	 
      
	
                                          By:

                                        	 
      
	
                                          Name:

                                        	 
      
	
                                          Title:

                                        	 
      


                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

     

    Exhibit
J

     

    Form
of FIRPTA Affidavit

     

    Transferor’s Certification
of Non-Foreign Status

     

    Section
1445 of the Internal Revenue Code provides that a transferee of a U.S. real
property interest must withhold tax if the transferor is a foreign
person.  For U.S. tax purposes (including Section 1445), the owner of
a disregarded entity (which has legal title to a U.S. real property interest
under local law) will be the transferor of the property and not the disregarded
entity.  To inform the transferee that withholding of tax is not
required upon the disposition of a U.S. real property interest by Royal Senior
Care, LLC, the undersigned hereby certifies the following on behalf of Royal
Senior Care, LLC:

     

    1.           Royal
Senior Care, LLC is the sole member of Royal Cornerstone South Carolina
Portfolio, LLC, a Delaware limited liability company (“Portfolio”), sole member
of RSC Oakleaf Lexington, LLC, a Florida limited liability company (“Lexington
Owner”) and RSC Oakleaf Greenville, LLC, a Florida limited liability company, as
applicable (“Owner”), owner of the property.

     

    2.           Royal
Senior Care, LLC is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);

     

    3.           Portfolio
and Owner are disregarded entities as defined in Section 1.1445-2(b)(2)(iii) of
the Income Tax Regulations;

     

    4.           Royal
Senior Care, LLC’s U.S. employer identification number is ____________;
and

     

    5.           Royal
Senior Care, LLC’s office address is__________________.

     

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

     

    [SIGNATURE
CONTAINED ON THE FOLLOWING PAGE]


    
      
         


      

      
        1

        
          

        

      

      
         


      

    


    Under
penalty of perjury I declare that I have examined this Certification and to the
best of my knowledge and belief it is true, correct and complete, and I further
declare that I have authority to sign this document on behalf of
Transferor.

     

    Dated:  _________________

     

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                ROYAL SENIOR CARE, LLC a
      Florida

                                limited
      liability company

                              
	 	 
	
                                By:

                              	 
      
	 	 
	
                                Name:

                              	 
      
	 	 
	
                                Title:

                              	 
      


                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

     

    Exhibit
K

     

    Form of Representation
Letter to Auditor

     

    LETTERHEAD

     

    [MONTH]
[DAY], 2010

    


    Auditor

    ____________________

    ____________________

     

    We are
providing this letter in connection with your audits of the balance sheets of
[LEXINGTON OWNER, LEXINGTON OPERATOR, GREENVILLE OWNER AND GREENVILLE OPERATOR,
as applicable] (the “Company”) as of December 31, 2009 and 2008 and the related
consolidated statements of operations, stockholders’ equity (deficit) and cash
flows for the years ended December 31, 2007, 2008 and 2009 for the purpose of
expressing an opinion as to whether the financial statements present fairly, in
all material respects, the financial position, results of operations, and cash
flows of the Company in conformity with accounting principles generally accepted
in the United States of America (including any other comprehensive basis of
accounting).  We confirm that we are responsible for the
following:

     

    
      	
              a.

            	
              The
      fair presentation in the consolidated financial statements of financial
      position, results of operations, and cash flows in conformity with
      accounting principles generally accepted in the United States of
      America

            


    

     

    
      	
              b.

            	
              The
      design and implementation of programs and controls to prevent and detect
      fraud

            


    

     

    
      	
              c.

            	
              Establishing
      and maintaining effective internal control over financial
      reporting

            


    

     

    Certain
representations in this letter are described as being limited to matters that
are material.  Items are considered material, regardless of size, if
they involve an omission or misstatement of accounting information that, in
light of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by
the omission or misstatement.

     

    We
confirm, to the best of our knowledge and belief, the following representations
made to you during your audits.

     

    
      
        	
                1.

              	
                The
      financial statements referred to above are fairly presented in conformity
      with accounting principles generally accepted in the United States of
      America.

              


      

    


    
      
         


      

      
        1

        
          

        

      

      
         


      

    

     

    
      
        	
                2.

              	
                The
      Company has made available to you
all:

              


      

    

     

    
      
        	
              	
                a.

              	
                Financial
      records and related data.

              


      

    

     

    
      
        	
              	
                b.

              	
                Minutes
      of the meetings of unitholders, stockholders, partners, directors, and
      committees of directors or summaries of actions of recent meetings for
      which minutes have not yet been
prepared.

              


      

    

     

    
      
        	
                3.

              	
                There
      have been no communications from regulatory agencies concerning
      noncompliance with or deficiencies in financial reporting
      practices.

              


      

    

     

    
      
        	
                4.

              	
                We
      have no knowledge of any fraud or suspected fraud affecting the Company
      involving:

              


      

    

     

    
      
        	
              	
                a.

              	
                Management.

              


      

    

     

    
      
        	
              	
                b.

              	
                Employees
      who have significant roles in the Company’s internal control over
      financial reporting.

              


      

    

     

    
      
        	
              	
                c.

              	
                Others
      if the fraud could have a material effect on the financial
      statements.

              


      

    

     

    
      
        	
                5.

              	
                We
      have no knowledge of any allegations of fraud or suspected fraud affecting
      the Company received in communications from employees, former employees,
      analysts, regulators, short sellers, tenants, property managers, or
      others.

              


      

    

     

    
      
        	
                6.

              	
                There
      are no unasserted claims or assessments that legal counsel has advised us
      are probable of assertion and must be disclosed in accordance with
      Financial Accounting Standards Board (“FASB”) Statement No. 5, Accounting for
      Contingencies.

              


      

    

     

    
      
        	
                7.

              	
                We
      have made available all relevant information about financial interests and
      contractual arrangements with related parties, de facto agents, and other
      entities, including but not limited to, their governing documents, equity
      and debt instruments, contracts, leases, guarantee arrangements, and other
      financial contracts and
arrangements.

              


      

    

     

    
      
        	
                8.

              	
                The
      information we provided about financial interests and contractual
      arrangements with related parties, de facto agents, and other entities
      includes information about all transactions (including sales agreements,
      purchase agreements, loans, transfer agreements, and leasing
      arrangements), unwritten understandings, agreement modifications, and
      written and oral side
agreements

              


      

    

     

    
      
        
          	
                  9.

                	
                  An
      adequate provision for income taxes, if any, has been
  made.

                


        

         

        
          	
                  10.

                	
                  We
      have disclosed to you the accounting conventions used when preparing our
      financial statements.  We believe that the effect of applying
      these accounting conventions and the use of such applications is
      immaterial to the financial
statements.

                


        

      

    

     

    Except
where otherwise stated below, matters less than One Hundred Thousand Dollars
($100,000.00) collectively are not considered to be exceptions that require
disclosure for the purpose of the following representations.  This
amount is not necessarily indicative of amounts that would require adjustment to
or disclosure in the financial statements.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

     

    
      	
              11.

            	
              There
      are no transactions that have not been properly recorded in the accounting
      records underlying the financial
statements.

            


    

     

    
      	
              12.

            	
              The
      following, to the extent applicable, have been appropriately identified,
      properly recorded, and disclosed in the financial
    statements:

            


    

     

    
      
        	
              	
                a.

              	
                Related-party transactions and
      associated amounts receivable or payable, including sales, purchases,
      loans, transfers, leasing arrangements, and guarantees (written or
      oral).

              


      

    

     

    
      
        	
              	
                b.

              	
                Guarantees,
      whether written or oral, under which the Company is contingently
      liable.

              


      

    

     

    
      	
              13.

            	
              In
      preparing the financial statements in conformity with accounting
      principles generally accepted in the United States of America, management
      uses estimates.  All estimates have been disclosed in the
      financial statements for which known information available prior to the
      issuance of the financial statements indicates that both of the following
      criteria are met:

            


    

     

    
      
        	
              	
                a.

              	
                It
      is at least reasonably possible that the estimate of the effect on the
      financial statements of a condition, situation, or set of circumstances
      that existed at the date of the financial statements will change in the
      near term due to one or more future confirming
  events.

              


      

    

     

    
      
        	
              	
                b.

              	
                The
      effect of the change would be material to the financial
      statements.

              


      

    

     

    
      	
              14.

            	
              Risks
      associated with concentrations, based on information known to management,
      that meet all of the following criteria have been disclosed in the
      financial statements:

            


    

     

    
      
        	
              	
                a.

              	
                The
      concentration exists at the date of the financial
    statements.

              


      

    

     

    
      
        	
              	
                b.

              	
                The
      concentration makes the enterprise vulnerable to the risk of a near-term
      severe impact.

              


      

    

     

    
      
        	
              	
                c.

              	
                It
      is at least reasonably possible that the events that could cause the
      severe impact will occur in the near
term.

              


      

    

     

    
      	
              15.

            	
              There
      are no:

            


    

     

    
      
        	
              	
                a.

              	
                Violations
      or possible violations of laws or regulations whose effects should be
      considered for disclosure in the financial statements or as a basis for
      recording a loss contingency.

              


      

    

     

    
      
        	
              	
                b.

              	
                Other
      liabilities or gain or loss contingencies that are required to be accrued
      or disclosed by FASB Statement No. 5, Accounting for
      Contingencies.

              


      

    

     

    
      	
              16.

            	
              Other
      than as disclosed in Note __ [debt disclosure] to the financial
      statements, the Company has satisfactory title to all owned assets, and
      there are no liens or encumbrances on such assets nor has any asset been
      pledged as collateral.

            


    

     

    
      	
              17.

            	
              The
      Company has complied with all aspects of contractual agreements that may
      have an effect on the financial statements in the event of
      noncompliance.

            


    


    
      
         


      

      
        3

        
          

        

      

      
         


      

    

     

    
      	
              18.

            	
              We
      have disclosed to you any change in the Company’s internal control over
      financial reporting that occurred during the Company’s most recent fiscal
      year ended December 31, 2009 that has materially affected, or is
      reasonably likely to materially affect, the Company’s internal control
      over financial reporting.

            


    

     

    
      	
              19.

            	
              With
      regard to the fair value measurements and disclosures of certain assets,
      liabilities, and specific components of equity, such as cash and cash
      equivalents, deferred acquisition costs and deposits, other assets,
      prepaid rent, security deposits, amounts due from/to related parties,
      accounts payable and accrued expenses and notes payable, we believe
      that:

            


    

     

    
      	
               
      

            	
              ·

            	
              The
      measurement methods, including the related assumptions, used in
      determining fair value were appropriate and were consistently
      applied.

            


    

     

    
      	
               
      

            	
              ·

            	
              The
      completeness and adequacy of the disclosures related to fair values are in
      conformity with accounting principles generally accepted in the United
      States of America.

            


    

     

    
      	
               
      

            	
              ·

            	
              No
      events have occurred subsequent to December 31, 2009 that require
      adjustment to the fair value measurements and disclosures included in the
      financial statements, except in connection with the transaction with
      Cornerstone Healthcare Plus REIT,
Inc.

            


    

     

    
      	
              20.

            	
              The
      methods and significant assumptions used to determine fair values of
      financial instruments are as follows: [Describe method] The methods and
      significant assumptions used result in a measure of fair value appropriate
      for financial statement measurement and disclosure purposes in accordance
      with GAAP.

            


    

     

    
      	
              21.

            	
              The
      Company, using its best estimates based on reasonable and supportable
      assumptions and projections, reviews long-lived assets for impairment in
      accordance with FASB Statement No. 144, Accounting for the Impairment
      or Disposal of Long-Lived Assets.  The financial
      statements referred to above reflect all adjustments required by FASB
      Statement 144.

            


    

     

    
      	
              22.

            	
              Financial
      instruments with significant individual or group concentration of credit
      risk have been appropriately identified, properly recorded, and disclosed
      in the financial statements.

            


    

     

    
      	
              23.

            	
              Receivables
      recorded in the financial statements represent valid claims against
      debtors for sales or other charges arising on or before the balance-sheet
      date and have been appropriately reduced to their estimated net realizable
      value.

            


    

     

    
      	
              24.

            	
              Arrangements
      with financial institutions involving compensating balances or other
      arrangements involving restrictions on cash balances, line of credit, or
      similar arrangements have been properly disclosed in the financial
      statements.

            


    

     

    
      	
              25.

            	
              We
      believe that all expenditures that have been deferred to future periods
      are recoverable.

            


    

     

    
      	
              26.

            	
              Provision
      has been made for any loss that is probable from environmental remediation
      liabilities.  We believe that such estimate is reasonable based
      on available information and that the liabilities and related loss
      contingencies and the expected outcome of uncertainties have been
      adequately described in the Company’s financial
  statements.

            


    

     

    
      	
              27.

            	
              We
      are not presently subject to any material litigation nor, to our
      knowledge, is any material litigation threatened against us, which if
      determined unfavorably to us, would have a material adverse effect on our
      consolidated financial position, results of operations or cash
      flows.

            


    


    
      
         


      

      
        4

        
          

        

      

      
         


      

    

     

    
      	
              28.

            	
              We
      have made available to you all communications with tax authorities and/or
      communications with outside tax
advisors.

            


    

    


    
      
        
          
            
              
                	 
      	 
      
	 
      	
                        ,
      Chief Executive Officer

                      
	
                        (Principal
      Executive Officer)

                      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                        ,
      Chief Financial Officer

                      
	
                        (Principal
      Executive Officer)

                      	 
      


              

            

          

        

      

    


    
      
         


      

      
        5

        
          

        

      

      
         


      

    

     

    Schedule
1(b)

    


    INTANGIBLES


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
3(b)

    


    LOAN
DOCUMENTS

    


    1.           Loan
Agreement dated January 10, 2006, by and among RSC Oakleaf Lexington, LLC, a
Florida limited liability company (“Lexington Owner”), RSC Oakleaf Greenville,
LLC, a Florida limited liability company (“Greenville Owner”) and General
Electric Credit Corporation, Agent for itself and one or more lenders
(“Lender”);

     

    2.           Promissory
Note dated January 10, 2006, from Lexington Owner and Greenville Owner to and in
favor of Lender in the original principal amount of $13,500,000;

     

    3.           Mortgage,
Security Agreement, Assignment of Rents, Security Agreement and Fixture Filing
Statement made by Lexington Owner, with joinder by RSC Lexington, LLC, a Florida
limited liability company (“Lexington Operator”), to and in favor of Lender
dated as of January 10, 2006, and recorded in Book 10751, Page 107 of the
Recorder of Deeds of Lexington County, South Carolina;

     

    4.           Mortgage,
Security Agreement, Assignment of Rents, Security Agreement and Fixture Filing
Statement made by Greenville Owner, with joinder by RSC Greenville, LLC, a
Florida limited liability company (“Greenville Operator”), to and in favor of
Lender dated as of January 10, 2006, and recorded in Book 4498, Page 828 of the
Recorder of Deeds of Greenville County, South Carolina;

     

    5.           UCC-1
Financing Statement (Lexington);

     

    6.           UCC-1
Financing (Greenville);

     

    7.           Environmental
Indemnity Agreement dated January 10, 2006, by and among Greenville Owner and
Lexington Owner, Gazit Senior Care, Inc., a Florida corporation (“Gazit
Senior”), and Roico Holdings, L.P., a Delaware limited partnership (“Roico”) in
favor of Lender;

     

    8.           Business
Associate Agreement dated January 10, 2006, by and between Lexington Operator
and Lender;

     

    9.           Business
Associate Agreement dated January 10, 2006, by and between Greenville Operator
and Lender;

     

    10.           Interest
Holder Certificate and Agreement dated January 10, 2006, executed by Royal Senor
Care, LLC, a Florida limited liability company (“Royal Senior”), Gazit Senior,
and Roico;

     

    11.           Agreement
of Principals dated January 10, 2006, by Gazit Senior and Roico in favor of
Lender;

     

    12.           Subordination
Agreement (Master Lease) dated January 10, 2006, by and among RSC Lexington,
LLC, a Florida limited liability company, Lexington Owner and
Lender;

     

    13.           Subordination
of Management Agreement dated January 10, 2006, by RSC-LSC Management, LLC and
Lexington Operator in favor of Lender;

     

    14.           Subordination
of Management Agreement dated January 10, 2006, by RSC-GSC Management, LLC and
Lexington Operator in favor of Lender.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    Schedule
4(a)(iv)

    


    TITLE
POLICY

    


    Lawyers
Title Insurance Policy No. A86-0038132, issued to RSC Oakleaf Lexington, LLC, a
Florida limited liability company and RSC Oakleaf Greenville, LLC, a Florida
limited liability company, in the amount of $13,500,000, and having an effective
date of January 10, 2006.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    Schedule
6(a)

    


    TRANSFERS
AND EASEMENTS

    


    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
7(a)(v)

    


    LEASES


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
7(a)(vi)

    


    MATERIAL
SERVICE CONTRACTS


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
7(a)(viii)

    


    EMPLOYEE
BENEFIT PLANS

    


    Seller
(that is,  Royal Senior Care, LLC), Lexington Operator and Greenville
Operator either currently have employees or have had employees in
the past.  Lexington Operator and Greenville Operator have also had
individuals working at the Lexington Facility or Greenville Facility,
respectively, that were leased to such companies, or their Affiliates.
Royal Senior Care Management, LLC, a Florida limited liability company, an
Affiliate of Seller, became a participating employer in the
Co-Advantage Resources Inc. Retirement Savings Plan plan
effective February 1, 2008, in which the then employees of (or
individuals leased to) Lexington Operator and Greenville Operator were
permitted to participate pursuant to the provisions of such
plan.   A copy of the Co-Advantage Resources, Inc. Retirement
Savings Plan adoption agreement effective February 1, 2008 is attached
hereto and incorporated by reference as Attachment 1 to Schedule
7(a)(viii). 

     

    As of
January 1, 2010, Royal Senior Management Care, LCC and others, including
Lexington Operator and Greenville Operator, contracted with a new
payroll/PEO Company, named AlphaStaff, Inc.  As a result, the
employees could no longer participate in the Co-Advantage Resources, Inc.
Retirement Savings Plan.   It is expected that the the
individuals leased to Lexington Operator and Greenville Operator or
Affiliates and working at the Lexington Facility or Greenville Facility,
respectively, will participate in a 401k plan sponsored by Alphastaff,
Inc.  However, due to the implementation of that new payroll service, the
adoption and implementation of the new plan has been delayed and no monies
have been withheld from the participants since January 1, 2010. 
Deferrals will commence again when all plan documents are in order. The
adoption of the plan and open enrollment are expected to commence on or
about May 1, 2010.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    Schedule
7(a)(x)

    


    ENVIRONMENTAL
REPORTS


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
7(a)(xiii)

    


    LEXINGTON
OWNER FINANCIAL STATEMENTS


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
7(a)(xiv)

    


    GREENVILLE
OWNER FINANCIAL STATEMENTS


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
7(a)(xv)

    


    LEXINGTON
OPERATOR FINANCIAL STATEMENTS


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    Schedule
7(a)(xvi)

    


    GREENVILLE
OPERATOR FINANCIAL STATEMENTS


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    Schedule
7(a)(xvii)

    


    UNCURED
VIOLATIONS

    


    
      	
              1. 

            	
              Lexington

            


    

    


    Inspection
Report, Bureau of Environmental Health and Food Protection, dated
2/4/10

    


    
      	
              2. 

            	
              Greenville

            


    

    


    Licensing
Standards Compliance Report, Division of Health Licensing, dated
9/22/09


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    Schedule
7(a)(xx)

    


    LIABILITY
AND WORKER’S COMPENSATION INSURANCE

    [COURIERS
AND POLICY NUMBERS]


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    Schedule
7(a)(xxii)

    


    CRC
LICENSES

    


    
      	
              1.

            	
              Lexington CRC
      License:

            


    

     

    South
Carolina Department of Health and Environmental Control Healthcare
License

    No. CRC
[Community Residential
Care]-1329 DHEC

    


    
      	
              2. 

            	
              Greenville CRC
      License:

            


    

     

    South
Carolina Department of Health and Environmental Control Healthcare
License

    No. CRC
[Community Residential
Care]-1330 DHEC


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    Schedule
7(a)(xxvii)

    


    RENT
ROLL


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      Schedule
9(b)(i)

    

    


    LIABILITY
INSURANCE POLICY

    


    [Attached]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
10(a)(iv)

    


    ORGANIZATIONAL
DOCUMENTS


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
11(b)

    


    LEASING
COMMISSIONS

    


    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
11(n)

    


    CAPITAL
EXPENDITURES

    


    None.