Document:

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE
AGREEMENT (“Agreement”) is made and entered into as of this 28th day of January, 2013 (the “Effective
Date”), by and among ALEDO SENIOR HOUSING LLC, an Illinois limited liability company (“Seller”) and CORNERSTONE
HEATHCARE REAL ESTATE FUND, INC., a Maryland corporation, or its assignee (“Buyer”).

 

1.                 
Purchase and Sale. On the terms and conditions set forth herein, Seller shall sell, assign, transfer, convey and
deliver to Buyer and Buyer shall purchase from Seller its interest in the following, which are hereinafter referred to collectively
as the “Property”:

 

(a)               
The improvements located on the Real Property, consisting of one (1) skilled nursing facility as described in Schedule 1(a)
attached hereto (“Facility”), owned by Seller, and all right, title and interest of Seller in and to the items
described in (a) through (f) herein;

 

(b)              
All of the real estate on which the Facility is situated, together with all tenements, easements, appurtenances, privileges,
rights of way, and other rights incident thereto, all building and improvements and any parking lot to the Facility located thereon
situated in the State of Illinois (the “State”), which is described in Exhibit A attached hereto
and made a part hereof by this reference (collectively, the “Real Property”);

 

(c)               
All of the tangible personal property, inventory, equipment, machinery, supplies including drugs and other supplies, spare
parts, furniture, furnishings, warranty claims, contracts, including but not limited to supply contracts, contracts rights, intellectual
property, including but not limited to patents, trade secrets, and all rights and title to the names under which the Facility operate,
mailing lists, customer lists, vendor lists, resident files, books and records owned by the Seller, who may retain copies of same,
and shall have reasonable access to such books and records after the Closing as required for paying taxes and responding to legal
inquiry, as such personal property is described in Schedule 1(c) attached hereto (collectively, the “Personal
Property”);

 

(d)              
All transferable licenses, permits, certifications, assignable guaranties and warranties in favor of Seller, approvals or
authorizations and all assignable intangible property not enumerated herein which is used by the Seller in connection with the
Facility, and all other assets whether tangible or intangible; provided, that Seller shall retain all licenses required to be retained
by Seller in order to operate the current business within the Facility;

 

(e)               
Except for the names and marks described on Schedule 1(e), all trade names or other names commonly used to identify the
Facility and all goodwill associated therewith. The intent of the parties is to transfer to Buyer only such names and goodwill
associated with the Facility itself and not with Seller or any affiliate of Seller, so as to avoid any interference with the unrelated
business activities of Seller; and

 

(f)               
All telephone numbers used in connection with the operation of the Facility, and to the extent not described above, all
goodwill of Seller associated with the Facility (the items described in clauses (e) and (f) above are collectively referred to
as “Intangibles”).

 

    	 

    	 

    

 

2.                 
Excluded Assets. Seller’s cash, investment securities, bank account(s) and accounts receivable, restricted
reserves and deposits attributable and relating to the operation of Seller’s Facility, and Seller’s corporate minute
books and corporate tax returns, partnership records, and other corporate and partnership records shall be excluded from the Facility
sold by Seller to Buyer hereunder as well as Seller’s real property not identified in Schedule 1(a) (the “Excluded
Assets”).

 

3.                 
Purchase Price; Deposits. The following shall apply with respect to the Purchase Price of the Property:

 

(a)               
The purchase price (the “Purchase Price”) payable by Buyer to Seller for the Facility is Eight Million
Seven Hundred Seventy-Five Thousand and 00/100 Dollars ($8,775,000.00).

 

(b)              
Prior to the Closing, Seller and Buyer shall work in good faith to determine the allocation of the Purchase Price among
the assets being sold by Seller under this Agreement. If the parties are unable to reach agreement on such allocation prior to
the Closing, then each party shall be allowed to separately decide how the Purchase Price shall be allocated among the assets being
sold by Seller under this Agreement; provided such allocation shall not be binding on the other party.

 

(c)               
Within three (3) business days after this Agreement is fully executed by the parties, Buyer shall deposit the sum of Fifty
Thousand and 00/100 Dollars ($50,000.00) as an earnest money deposit (“Initial Deposit”) with Stewart Title
Company at its office at 2010 Main Street, #250, Irvine, California 92614, Attention: Carol Wright, (“Title Company”
or “Escrow Agent”) and Escrow Agent will deposit it into an interest-bearing account with the interest for the
benefit of Buyer. In addition, if Buyer has not terminated this Agreement on or before the expiration of the Due Diligence Period
(defined below), then Buyer shall deposit with Escrow Agent an additional One Hundred Thousand and 00/100 Dollars ($100,000.00)
(“Additional Deposit”) within three (3) business days following the expiration of the Due Diligence Period (the
Initial Deposit and Additional Deposit are collectively referred to as the “Deposit”). Interest earned on the
Deposit shall be paid to the party entitled to such amount as provided in this Agreement.

 

(d)              
At Closing, the Deposit shall be credited against the Purchase Price and Buyer shall deposit the balance of the Purchase
Price in Cash to the Escrow Agent.

 

(e)               
At Closing, Buyer and Seller agree that the amount of One Hundred Fifty Thousand and 00/100 Dollars ($150,000.000) (the
“Property Tax Holdback Proceeds”) shall be held back in Escrow until the earlier of (i) three (3) days after
Seller provides written notice to Buyer that the property tax bill appeal with respect to the property tax bill for the Property
for the 2011 and 2012 tax years has settled for an amount at or below One Hundred Thousand and 00/100 Dollars ($100,000.00) (the
“Property Tax Threshold Amount”), which notice shall include written evidence from the tax assessor for the
County of Mercer or other governmental agency responsible for the assessment of real property taxes against the Property, or (ii)
November 30, 2013. If the property tax bill appeal is settled at or below the Property Tax Threshold Amount and Seller provides
Buyer with notice that all prior property taxes have been paid and the back-up documentation as provided above, Buyer and Seller
shall direct Escrow Agent to release the Property Tax Holdback Proceeds to Seller. If the property tax bill appeal does not settle
below the Property Tax Threshold Amount by November 30, 2013, Buyer and Seller shall direct Escrow Agent to release the Property
Tax Holdback Proceeds to Buyer. The Property Tax Holdback Proceeds shall be held in an interest bearing account. The provisions
of this Section 3(e) shall survive Closing.

 

    	 

    	 

    

 

(f)               
Buyer shall not assume or pay, and Seller shall continue to be responsible for, any and all debts, obligations and liabilities
of any kind or nature, fixed or contingent, known or unknown, of Seller not expressly assumed by Buyer in this Agreement. Specifically,
without limiting the foregoing, Buyer shall not assume any obligation, liability, cost, expense, claim, action, suit or proceeding
pending as of the Closing, nor shall Buyer assume or be responsible for any subsequent claim, action, suit or proceeding arising
out of or relating to any such other event occurring, with respect to the manner in which Seller conducted its business at the
Facility, on or prior to the date of the Closing Date. In addition, Buyer shall not assume successor liability obligations to Medicare,
Medicaid, HMO or any other third party payer programs or be responsible for recoupment’s, fines, or penalties required to
be paid to such parties as a result of the operation of the Facility prior to the Closing Date by Seller or Seller’s operating
entity (“Operator”)

 

4.                 
Closing. The closing of the purchase and sale transactions pursuant to this Agreement (“Closing”)
shall occur no later than thirty (30) days after the expiration of the Due Diligence Period (“Closing Date”).
The Closing shall take place through Seller’s delivery of a special warranty deed and Buyer’s delivery of cash or immediately
available funds through an escrow agreement (the “Escrow”) to be established with the Escrow Agent pursuant
to form escrow instructions which shall be modified to be consistent with the terms and provisions of this Agreement, and which
shall be mutually agreed upon by the parties hereto.

 

5.                 
Conveyance. Title to the Facility shall be conveyed to Buyer by a special warranty deed in the form attached hereto
as Exhibit E (the “Deed”), and bill of sale in form attached hereto as Exhibit F (“Bill
of Sale”). Fee simple indefeasible title to the Real Property, and marketable title to the Personal Property, shall be
conveyed from Seller to Buyer or Buyer’s nominee in “AS-IS, WHERE-IS” condition, free and clear of all liens,
charges, easements and encumbrances of any kind, other than:

 

(a)               
Liens for real estate taxes or assessments not yet due and payable;

 

(b)              
The standard printed exceptions included in the Title Commitment, as defined in Section 14(a) herein; unless
objected to in writing by Buyer during the Due Diligence Period;

 

(c)               
Such exceptions that appear in the Title Commitment and that are either waived or approved by Buyer in writing pursuant
to Section 14(b) herein;

 

(d)              
Liens or encumbrances caused by the actions of Buyer but not those caused by the actions of Seller; and

 

The items described
in this Section 5 are sometimes collectively referred to as the “Permitted Exceptions.”

 

    	 

    	 

    

 

6.                 
Buyer’s Due Diligence.

 

(a)               
Buyer shall have seventy-five (75) days from the period commencing from the date Buyer notifies Seller that it has received
the requested Due Diligence material required to complete Buyers Due Diligence (the “Due Diligence Period”),
Seller shall permit the officers, employees, directors, agents, consultants, attorneys, accountants, lenders, appraisers, architects,
investors and engineers designated by Buyer and representatives of Buyer (collectively, the “Buyer’s Consultants”)
access to, and entry upon the Real Property and the Facility to perform its normal and customary due diligence, including, without
limitation, the following (collectively, the “Due Diligence Items”):

 

(i)                
Review of vendor contracts (“Contracts”) and leases (“Leases”) to which the Facility
(or the Seller, on behalf of the Facility) are a party, as set forth on Schedule 8.6 attached hereto;

 

(ii)              
Conduct environmental investigations (including a Phase 1 Environmental Audit);

 

(iii)            
Inspection of the physical structure of the Facility;

 

(iv)            
Review of current Title Commitment, as defined in Section 14 herein, and underlying documents referenced therein;

 

(v)              
Review of ALTA Surveys, as defined in Section 14 herein, for the Facility;

 

(vi)            
Inspection of the books and records of the Facility and that portion of the Seller’s books and records which pertain
to the Facility;

 

(vii)          
Review of the Due Diligence Items, as described in Schedule 6(a)(vii) attached hereto, to be provided by Seller
within five (5) business days following the Effective Date;

 

(viii)        
Conduct such other inspections or investigations as Buyer may reasonably require relating to the ownership, operation or
maintenance of the Facility;

 

(ix)            
Review of resident files, agreements, and any other documentation regarding the residents of the Facility, which review
shall in all events be subject to all applicable laws, rules and regulations concerning the review of medical records and other
types of patient records; and

 

(x)              
Review of files maintained by the State relating to the Facility; and

 

(xi)            
Review of all drawings, plans and specifications and all engineering reports for the Facility in the possession of or readily
available to Seller; and

 

    	 

    	 

    

 

(xii)          
Seller will furnish copies of all environmental reports, property condition reports, appraisals, title reports and ALTA
Surveys (or surveys) that it currently has in its possession.

 

(xiii)        
Review copies of currently effective written employment manuals or written employment policies and/or procedures have been
provided to or for employees.

 

Notwithstanding the
foregoing provisions of this Subsection, in the event Seller fails to deliver all Due Diligence Items listed in Schedule 6(a)(vii)
on or before the time set forth in Subsection (a)(vii) above, then the Due Diligence Period shall be deemed extended
on a day-to-day basis until Seller completes such delivery of the Due Diligence Items to Buyer.

 

(b)              
Buyer agrees and acknowledges that: (i) Buyer will not disclose the Due Diligence Items or any other materials received
from Seller pursuant to this Agreement (the “Property Information”) or any of the provisions, terms or conditions
thereof, or any information disclosed therein or thereby, to any party outside of Buyer’s organization, other than Buyer’s
Consultants; (ii) the Property Information is delivered to Buyer solely as an accommodation to Buyer; (iii) Seller has not undertaken
any independent investigation as to the truth, accuracy or completeness of any matters set out in or disclosed by the Property
Information; and(iv) except as expressly contained in this Agreement, Seller has not made and does not make any warranties or representations
of any kind or nature regarding the truth, accuracy or completeness of the information set out in or disclosed by the Property
Information.

 

(c)               
All due diligence activities of Buyer at the Facility shall be scheduled with Seller upon two (2) business days prior notice.
Reviews, inspections and investigations at the Facility shall be conducted by Buyer in such manner so as not to disrupt the operation
of the Facility.

 

(d)              
Buyer may, at its sole cost, obtain third party engineering and physical condition reports and Phase I Environmental Audits
covering the Facility, certified to Buyer, prepared by an engineering and/or environmental consultants acceptable to Buyer; provided,
no inspection by Buyer’s Consultants shall involve the taking of samples or other physically invasive procedures (such as
a Phase II environmental audit) without the prior written consent of Seller, which consent shall not be unreasonably withheld or
delayed. Notwithstanding anything to the contrary contained in this Agreement, Buyer shall indemnify, defend (with counsel acceptable
to Seller) and hold Seller and its employees and agents, and each of them, harmless from and against any and all losses, claims,
damages and liabilities, without limitation, attorneys’ fees incurred in connection therewith) arising out of or resulting
from Buyer’ or Buyer’s Consultant’s exercise of its right of inspection as provided for in this Section 6;
provided, however, such indemnification shall not extend to matters merely discovered by Buyer and/ or the acts or omissions of
Seller or any third party. The indemnification obligation of Buyer under this Section 6 shall survive the termination
of this Agreement for a period of twelve (12) months. Following any audit or inspection as provided for herein, Buyer shall return
the Real Property and Facility to the condition in which they existed immediately prior to such audit or inspection.

 

(e)               
If the results of the foregoing inspections and audits are not acceptable to Buyer in its sole and absolute discretion,
Buyer may, upon notice to Seller given on or before 5:00 p.m. (Pacific Time) on the last day of the Due Diligence Period, terminate
this Agreement and receive a refund of the Deposit, and in such event, neither party shall have any further rights and obligations
under this Agreement, except for obligations which expressly survive the termination of this Agreement. Failure of Buyer to deliver
written notice of approval prior to 5:00 p.m. (Pacific Time) on the last day of the Due Diligence Period shall be deemed to constitute
Buyer’s disapproval of the matters described in this Section 6(a). If this Agreement shall be terminated prior
to Closing, upon Seller’s request, Buyer shall promptly return or destroy all copies of the Due Diligence Items.

 

    	 

    	 

    

 

(f)               
During the Due Diligence Period, Buyer shall obtain, at Buyer’s election, a third party inspection report with respect
to the Facility (the “Inspection Report”). If the Inspection Report recommends any critical repairs (the “Critical
Repairs”) be made to the Facility, Buyer shall provide Seller with written notice of the same prior to the expiration
of the Due Diligence Period, and the Critical Repairs shall be listed on a new Schedule 6(f) to be attached to the Agreement.
Seller shall make all Critical Repairs listed in the Inspection Report to the Facility at least ten (10) business days prior to
the Closing, at Seller’s sole cost and expense. Upon completion of the Critical Repairs, Seller shall deliver to Buyer a
completion letter or similar notice documenting the completion of the Critical Repairs (the “Critical Repair Completion
Notice”) executed by Seller and Seller’s contractor and/or architect who performed and/or supervised the construction
of the Critical Repairs.

 

7.                 
Prorations; Closing Costs; Possession; Post Closing Assistance.

 

(a)               
There will be no prorations at the Closing since Tenant, an affiliate of Seller, shall remain responsible for all taxes,
costs and expenses relating to the Facility following the Closing pursuant to the Post Closing Lease (as defined in Section 12(a)(v)).
Seller and Tenant will make whatever prorations are needed outside of the Escrow and the Closing.

 

(b)              
Seller shall pay any state, county and local transfer taxes arising out of the transfer of the Real Property.

 

(c)               
Seller shall pay the cost of the owner’s title insurance policy (including any premium attributable to extended coverage),
as described in this Agreement (excluding any survey exception or deletion of coverage). Buyer shall pay the cost of any lender’s
policy for Buyer’s lender, any title endorsements requested by Buyer and its lender and the cost of updating or obtaining
new Surveys. Seller and Buyer shall equally share all fees of Escrow Agent. All other costs associated with title and survey matters
shall be paid in accordance with Mercer County (and local) custom and practice.

 

(d)              
Buyer and Seller shall each pay their own attorney’s fees. Buyer shall pay for all costs of review of the Due Diligence
Items and its additional due diligence inspection costs including, without limitation, the cost of any environmental reports.

 

(e)               
On the Closing Date, Tenant shall take possession of the Facility from Seller, subject to the terms and conditions of the
Post Closing Lease.

 

8.                 
Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer that:

 

    	 

    	 

    

 

(a)               
Legality.

 

(i)                
Organization, Corporate Powers, Etc. Seller is duly organized, validly existing and in good standing under the laws
of the State of Illinois. Seller has full power, authority and legal right (A) to execute and deliver, and perform and observe
the provisions of this Agreement and each Transaction Document, as defined herein, to which it is a party, (B) to transfer good,
indefeasible title to the Property to Buyer free and clear of all liens, claims and encumbrances except for Permitted Exceptions
(as defined in Section 5 hereof), and (C) to carry out the transactions contemplated hereby and by such other instruments
to be carried out by such party.

 

(ii)              
Due Authorization, Etc. This Agreement and the Closing Documents (collectively the “Transaction Documents”)
have been, and each instrument provided for herein or therein to which Seller is a party will be, when executed and delivered as
contemplated hereby authorized, executed and delivered by Seller and the Transaction Documents constitute, and each such instrument
will constitute, when executed and delivered as contemplated hereby, legal, valid and binding obligations of Seller and enforceable
in accordance with their terms.

 

(iii)            
Governmental Approvals. To the best of Seller’s knowledge, no consent, approval or other authorization (other
than corporate or other organizational consents which have been obtained), or registration, declaration or filing with, any court
or governmental agency or commission is required for the due execution and delivery of any of the Transaction Documents to which
Seller is a party or for the validity or enforceability thereof against such party other than the recording or filing for recordation
of the Deed, which recording shall be accomplished at Closing.

 

(iv)            
Other Rights. No right of first refusal, option or preferential purchase or other similar rights are held by any
person with respect to any portion of the Property.

 

(v)              
No Litigation. Except as set forth on Schedule 8(a)(v) attached hereto, neither Seller nor its registered
agent for service of process has been served with summons with respect to any actions or proceedings pending or, to Seller’s
actual knowledge, no such actions or proceedings are threatened, against Seller before or by any court, arbitrator, administrative
agency or other governmental authority, which (A) individually or in the aggregate, are expected, in the reasonable judgment of
Seller, to materially and adversely affect Seller’s ability to carry out any of the transactions contemplated by any of the
Transaction Documents or (B) otherwise involve any portion of the Property including, without limitation, the Facility.

 

(vi)            
No Conflicts. Neither the execution and delivery of the Transaction Documents to which Seller is a party, compliance
with the provisions thereof, nor the carrying out of the transactions contemplated thereby to be carried out by such party will
result in (A) a breach or violation of (1) any material law or governmental rule or regulation applicable to Seller now in effect,
(2) any provision of any of Seller’s organizational documents, (3) any material judgment, settlement agreement, order or
decree of any court, arbitrator, administrative agency or other governmental authority binding upon Seller, or (4) any material
agreement or instrument to which Seller is a party or by which Seller or its respective properties are bound; (B) the acceleration
of any obligations of Seller; or (C) the creation of any lien, claim or encumbrance upon any properties or assets of Seller.

 

    	 

    	 

    

 

(b)              
Property.

 

As of the Effective
Date and the Closing Date, except as set forth on Schedule 8(b):

 

(i)                
Seller has no actual knowledge of and has not received any notice of outstanding deficiencies or work orders of any authority
having jurisdiction over any portion of the Property;

 

(ii)              
Seller has no actual knowledge of and has not received any notice of any claim, requirement or demand of any licensing or
certifying agency supervising or having authority over the Facility to rework or redesign it in any material respect or to provide
additional furniture, fixtures, equipment or inventory so as to conform to or comply with any law which has not been fully satisfied;

 

(iii)            
Seller has not received any notice from any governmental authority of any material violation of any law applicable to any
portion of the Real Property or to the Facility;

 

(c)               
Condemnation. There is no pending or, to the actual knowledge of Seller, threatened condemnation or similar proceeding
or assessment affecting the Real Property, nor, to the actual knowledge of Seller, is any such proceeding or assessment contemplated
by any governmental authority.

 

(d)              
Hazardous Substances. Except as disclosed on Schedule 8(d), to Seller’s actual knowledge, there
has been no production, storage, manufacture, voluntary or involuntary transmission, use, generation, treatment, handling, transport,
release, dumping, discharge, spillage, leakage or disposal at, on, in, under or about the Real Property of any Hazardous Substances
by Seller, or any affiliate or agent thereof, except in strict compliance with all applicable Laws. To Seller’s actual knowledge
there are no Hazardous Substances at, on, in, under or about the Real Property in violation of any Law, and to Seller’s actual
knowledge, there is no proceeding or inquiry by any federal, state or local governmental agency with respect thereto. For purposes
of this Agreement, “Hazardous Substances” shall mean any hazardous or toxic substances, materials or wastes,
including, without limitation, those substances, materials and wastes listed in the United States Department of Transportation
Table (49 CFR 172.1 01) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302 and amendments thereto)
or such substances, materials and wastes which are or become regulated under any applicable local, state or federal law (collectively,
“Laws”), including, without limitation, any material, waste or substance which is (i) a hazardous waste
as defined in the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. § 6901 et seq.); (ii) a pollutant
or contaminant or hazardous substance as defined in the Comprehensive Environmental Response. Compensation and Liability Act of
1980, as amended (42 U.S.C. § 9601 et seq.); (iii) a hazardous substance pursuant to § 311 of the Clean Water Act (33
U.S.C. § 1251, et seq., 33 U.S.C. § 1321) or otherwise listed pursuant to § 307 of the Clean Water Act (33 U.S.C.
§ 1317); (iv) a hazardous waste pursuant to § 1004 of the Resource Conservation and Recovery Act (42 U.S.C. § 6901
et seq.); (v) polychlorinated biphenyls (PCBs) as defined in the Federal Toxic Substance Control Act, as amended (15 U.S.C. §
2501 et seq.); (vi) hydrocarbons, petroleum and petroleum products; (vii) asbestos; (viii) formaldehyde or medical or biohazardous
waste; (ix) radioactive substances; (x) flammables and explosives; (xi) any state statutory counterparts to those federal statutes
listed herein; or (vii) any other substance, waste or material which could presently or at any time in the future require remediation
at the behest of any governmental agency. Any reference in this definition to Laws shall include all rules and regulations which
have been promulgated with respect to such Laws.

 

    	 

    	 

    

 

(e)               
Brokers. Other than Heavenrich & Company, Inc. (“Seller’s Broker”), whom represents
Seller, each party represents and warrants to the other party that it has not dealt with any other broker, salesman, finder or
consultant with respect to this Agreement or the transactions contemplated hereby. Seller shall be responsible for any commission
and/or fees payable to Seller’s Broker. Each party agrees to indemnify, protect, defend, protect and hold the other party
harmless from and against all claims, losses, damages, liabilities, costs, expenses (including reasonable attorneys’ fees
and disbursements) and charges resulting from such indemnifying party’s breach of the foregoing representation. The provisions
of this Section 8(e) shall survive the Closing or earlier termination of this Agreement for a period of twelve (12)
months.

 

(f)               
Leases and Contracts. Schedule 8(f) is a list of all Leases and Contracts relating to the Facility to
which Seller is a party or by which Seller may be bound. Seller has made or will promptly make available to Buyer true, complete
and accurate copies of all Leases and Contracts including, without limitation, any modifications thereto. All of the Leases and
Contracts are in full force and effect without claim of material default there under, and, except as may be set forth on Schedule 8(f).

 

(g)              
Financial Statements. Schedule 8(g) contains (i) the balance sheets of the Operator for the last three
(3) fiscal years ending prior to the date of this Agreement (audited if available and unaudited to the extent audited statements
are not available) and the unaudited balance sheets for each of the past three (3) fiscal quarters completed prior to the date
of this Agreement and (ii) the related consolidated statements of income, results of operations, changes in members’ equity
and changes in financial position with respect to each such period as compared with the immediately prior period (collectively,
the “Financial Statements”). The Financial Statements taken as a whole (A) fairly present the financial condition
and results of operation of the Operators for the periods indicated, (B) are true, accurate, correct and complete in all material
respects, and (C) except as stated in Schedule 8(g) (or in the notes to the Financial Statements) have been prepared
in accordance with the Operator’s tax basis reporting, as consistently applied. Except as disclosed in Schedule 8(g),
or otherwise disclosed in writing to Buyer, to Seller’s actual knowledge neither Seller, as to the Facility, nor the Facility
is obligated for or subject to any material liabilities, contingent or absolute, and whether or not such liabilities would be disclosed
in accordance with tax basis reporting, and Schedule 8(g) sets forth all notes payable, other long term indebtedness
and, to Seller’s actual knowledge, all other liabilities to which the Facility and the Real Property are or at Closing (and
following Closing) will be subject, other than new indebtedness obtained by Buyer in connection with its purchase of the Property.
Seller has received no notice of default under any such instrument.

 

    	 

    	 

    

 

(h)              
Interests in Competitors, Suppliers and Customers. Other than the Operator entities and except as set forth on Schedule 8(h),
or in Schedule 1(a) as constituting a part of the Facility, neither Seller nor any of its members has any interest
in any property used in the operation of, or holds an interest in, any competitor, supplier or customer of Seller or the Facility.

 

(i)                
No Foreign Persons. Neither Seller nor its members is a foreign person within the meaning of Sections 897 or 1445
of the Code, nor is Seller a U.S. Real Property Holding Company within the meaning of Section 897 of the Code.

 

(j)                
Licensure. As of the date hereof, except as set forth on Schedule 8(j) attached hereto, there is no action
pending or, to the actual knowledge of Seller, recommended by the appropriate state or federal agency to revoke, withdraw or suspend
any license to operate the Facility, or certification of the Facility, or any material action of any other type with regard to
licensure or certification. The Facility is operating and functioning as a supportive living facility without any waivers from
a governmental agency affecting the Facility except as set forth in Schedule 8(j), and is fully licensed for a supportive
living facility, as applicable, by the State for the number of beds and licensure category set forth in Schedule 1(a)
hereto. Schedule 8(j) attached hereto contains a complete and accurate list of all life safety code waivers or other
waivers affecting the Facility.

 

(k)              
Regulatory Compliance.

 

(i)                
Seller or the Operator has duly and timely filed all reports and other items required to be filed (collectively, the “Reports”)
with respect to any cost based or other form of reimbursement program or any other third party payor (including without limitation,
Medicare, Medicaid, medically indigent assistance, Blue Cross, Blue Shield, any health maintenance, preferred provider, independent
practice or other healthcare related organizations, peer review organizations, or other healthcare providers or payors) (collectively,
“Payors”) and have timely paid all amounts shown to be due thereon. At the time of filing, to Seller’s
actual knowledge, each Report was true, accurate and complete. To Seller’s actual knowledge, all rights and obligations of
the Facility or Seller under such Reports are accurately reflected or provided for in the Financial Statements.

 

(ii)              
Except as set forth in Schedule 8(k) attached hereto and Section 3(e) above, (A) neither Seller nor, to Seller’s
actual knowledge, the Operator is delinquent in the payment of any amount due under any of the Reports for the Facility, (B) there
are no written or threatened proposals by any Payors for collection of amounts for which Seller or the Facility could be liable,
(D) there are no current or pending claims, assessments, notice, proposal to assess or audits of Seller or Operator or the Facility
with respect to any of the Reports, and, to Seller’s actual knowledge, no such claims, assessments, notices, or proposals
to assess or audit are threatened, and (D) neither Seller nor Operator has executed any presently effective waiver or extension
of the statute of limitations for the collection or assessment of any amount due under or in connection with any of the Reports
with respect to the Facility.

 

    	 

    	 

    

 

(iii)            
Except as set forth in Schedule 8(k) attached hereto, neither Seller nor the Operator has received notice of
failure to comply with all applicable Laws, settlement agreements, and other agreements with any state or federal governmental
body relating to or regarding the Facility (including all applicable environmental, health and safety requirements), and Seller
or the Operator has and maintains all permits, licenses, authorizations, registrations, approvals and consents of governmental
authorities and all health facility licenses, accreditations, Medicaid, Medicare and other Payor certifications necessary for its
activities and business including the operation of the Facility as currently conducted. Each health facility license, Medicaid
and Medicare and other Payor certifications, Medicaid provider agreement and other agreements with any Payors is in full force
and effect without any waivers of any kind (except as disclosed in Schedule 8(k)) and has not been amended or otherwise
modified, rescinded or revoked or assigned nor, to Seller’s actual knowledge, (A) is there any threatened termination, modification,
recession, revocation or assignment thereof, (B) no condition exists nor has any event occurred which, in itself or with the giving
of notice, lapse of time or both would result in the suspension, revocation, termination, impairment, forfeiture, or non-renewal
of any governmental consent applicable to Seller or to the Facility or of any participation or eligibility to participate in any
Medicare, Medicaid, or other Payor program and (C) there is no claim that any such governmental consent, participation or contract
is not in full force and effect.

 

(l)                
Regulatory Surveys. Seller shall deliver to Buyer, in the manner required pursuant to the terms of this Agreement,
complete and accurate copies of the survey or inspection reports made by any governmental authority with respect to the Facility
during the calendar years 2009, 2010, 2011 and year-to-date 2012. To the best of Seller’s knowledge, after diligent investigation,
and except as shown on Schedule 8(l), all exceptions, deficiencies, violations, plans of correction or other indications
of lack of compliance in such reports have been fully corrected and there are no bans or limitations in effect, pending or threatened
with respect to admissions to the Facility nor any licensure curtailments in effect, pending or threatened with respect to the
Facility. Seller shall continue to deliver all such surveys, inspection reports as and when same are received and/or filed as the
case may be prior to the Closing.

 

(m)            
Licensed Bed/Current Rate Schedule. As of the Effective Date, Schedule 8(m) sets forth (i) the number
of licensed beds and the number of operating beds in the Facility, (ii) the current standard private rates charged by the
Facility to all of its residents, and (iii) the number of beds or units presently occupied in, and the occupancy percentage
at, the Facility, including the current rates charged by the Facility for each such occupied bed or unit. Neither Seller nor any
Operator has any life care arrangement in effect with any current or future resident.

 

(n)              
Operations. The Facility is reasonably and adequately equipped and the Facility includes sufficient and adequate
numbers of furniture, furnishings, equipment, consumable inventory, and supplies to operate such Facility as each is presently
operated by Seller. Personal Property used to operate Facility and to be conveyed to Buyer is free and clear of liens, security
interests, encumbrances, leases and restrictions of every kind and description, except for Permitted Encumbrances and any liens,
security interests and encumbrances to be released at Closing.

 

    	 

    	 

    

 

(o)              
No Misstatements, Etc. To the best of Seller’s knowledge, neither the representations and warranties of Seller
stated in this Agreement, including the Exhibits and the Schedules attached hereto, nor the Due Diligence Items or any certificate
or instrument furnished or to be furnished to Buyer by Seller in connection with the transactions contemplated hereby, contains
or will contain any untrue or misleading statement of a material fact.

 

(p)              
Supplementation of Schedules; Change in Representations and Warranties. Seller shall have the continuing right and
obligation to supplement and amend the Schedules herein on a regular basis including, without limitation, Schedule 8(g),
and Seller’s warranties and representations required hereunder, as necessary or appropriate (i) in order to make any representation
or warranty not misleading due to events, circumstances or the passage of time or (ii) with respect to any matter hereafter arising
or discovered up to and including the Closing Date, but Buyer shall not be deemed to have approved such supplemental Schedules
unless Buyer expressly acknowledges approval of same in writing. In the event Seller amends any such Schedules, or Buyer or Seller
gains actual knowledge prior to the Closing that any representation or warranty made by the other party contained in this Section 8
is otherwise untrue or inaccurate, such party shall, within five (5) days after gaining such actual knowledge but in any event
prior to the Closing, provide the other party with written notice of such inaccuracy, whereupon the noticed party shall promptly
commence, and use its best efforts to prosecute to completion, the cure of such matter, to the extent any such matter is curable.
If any such matter is not curable within reason and is material, in Buyer’s reasonable business judgment, Buyer shall have
the right to terminate this Agreement upon written notice to Seller within five (5) business days of receipt or delivery of such
notice, as applicable, on the same basis as set forth in Section 13(a) if during the Due Diligence Period and in Section 13(b)(i)(i)
herein if after expiration of the Due Diligence Period.

 

(q)              
Survival of Representations and Warranties; Updates. The representations and warranties of Seller in this Agreement
shall not be merged with the Deeds at the Closing and shall survive the Closing for the period of three (3) years.

 

For purposes of this
Agreement, the phrase “to Seller’s actual knowledge” or words of similar import shall mean the actual knowledge
of the general partner or President, as applicable, of the entity comprising Seller.

 

9.                 
Representations and Warranties of Buyer. Buyer hereby warrants and represents to Seller that:

 

(a)               
Organization, Corporate Powers, Etc. Buyer is a limited liability company, validly existing and in good standing
under the laws of the State of Delaware and is duly qualified and in good standing in each other state or jurisdiction in which
the nature of its business requires the same except where a failure to be so qualified does not have a material adverse effect
on the business, properties, condition (financial or otherwise) or operations of that person. Buyer has full power, authority and
legal right (i) to execute and deliver, and perform and observe the provisions of this Agreement and each Transaction Document
to which it is a party, and (ii) to carry out the transactions contemplated hereby and by such other instruments to be carried
out by Buyer pursuant to the Transaction Documents.

 

    	 

    	 

    

 

(b)              
Due Authorization, Etc. The Transaction Documents have been, and each instrument provided for herein or therein to
which Buyer is a party will be, when executed and delivered as contemplated hereby, duly authorized, executed and delivered by
Buyer and the Transaction Documents constitute, and each such instrument will constitute, when executed and delivered as contemplated
hereby, legal, valid and binding obligations of the Buyer enforceable in accordance with their terms.

 

(c)               
Governmental Approvals. To Buyer’s actual knowledge, no consent, approval or other authorization (other than
corporate or other organizational consents which have been obtained), or registration, declaration or filing with, any court or
governmental agency or commission is required for the due execution and delivery of any of the Transaction Documents to which Buyer
is a party or for the validity or enforceability thereof against such party.

 

(d)              
No Litigation. Except as set forth on Schedule 9(a)(iv) attached hereto, neither Buyer nor its registered
agent for service of process has been served with summons with respect to any actions or proceedings pending or, to Buyer’s
actual knowledge, no such actions or proceedings are threatened, against Buyer before or by any court, arbitrator, administrative
agency or other governmental authority, which individually or in the aggregate, are expected, in the reasonable judgment of Buyer,
to materially and adversely affect Buyer’s ability to carry out any of the transactions contemplated by any of the Transaction
Documents.

 

(e)               
No Conflicts. Neither the execution and delivery of the Transaction Documents to which Buyer is a party, compliance
with the provisions thereof, nor the carrying out of the transactions contemplated thereby to be carried out by such party will
result in (i) a breach or violation of (A) any material law or governmental rule or regulation applicable to Buyer now
in effect, (B) any provision of any Buyer’s organizational documents, (C) any material judgment, settlement agreement,
order or decree of any court, arbitrator, administrative agency or other governmental authority binding upon Buyer, or (D) any
material agreement or instrument to which Buyer is a party or by which Buyer or its respective properties are bound; (ii) the
acceleration of any obligations of Buyer; or (iii) the creation of any lien, claim or encumbrance upon any properties or assets
of Buyer.

 

(f)               
No Misstatements, Etc. To the best of Buyer’s knowledge, neither the representations and warranties of Buyer
stated in this Agreement, including the Exhibits and the Schedules attached hereto, nor any certificate or instrument furnished
or to be furnished to Seller by Buyer in connection with the transactions contemplated hereby, contains or will contain any untrue
or misleading statement of a material fact.

 

(g)              
Survival of Representations and Warranties; Updates. The representations and warranties of Buyer in this Agreement
shall not be merged with the Deeds at the Closing and shall survive the Closing for the period of three (3) years.

 

10.             
Covenants of Seller. Seller covenants with respect to the Facility as follows: 

 

(a)               
Pre-Closing. Except as otherwise set forth below, between the date of this Agreement and the Closing Date, except
as contemplated by this Agreement or with the prior written consent of Buyer, which shall not be unreasonably withheld, conditioned
or delayed:

 

    	 

    	 

    

 

(i)                
Seller shall use its best efforts to cause the Operator to operate the Facility diligently, in accordance with the Operator’s
obligations under its lease or other arrangement with Seller, and only in the ordinary course of business.

 

(ii)              
Seller shall use its best efforts to prevent the Operator from making any material change in the operation of the Facility,
and shall prevent the Operator from selling or agreeing to sell any items of machinery, equipment or other assets of the Facility,
or otherwise entering into any agreement affecting the Facility, except in the ordinary course of business;

 

(iii)            
If Buyer approves the feasibility of the Property on or prior to the expiration of the Due Diligence Period, from and after
the expiration of the Due Diligence Period, Seller shall use its best efforts to prevent the Operator from entering into any Lease
or Contract or commitment affecting the Facility, except for Leases or Contracts entered into in the ordinary course of business;

 

(iv)            
During normal business hours and consistent with Section 6(c) herein, Seller shall provide Buyer or its designated
representative with access to the Facility upon prior notification and coordination with Seller and the Operator; provided, Buyer
shall not materially interfere with the operation of the Facility. At such times Seller and the Operator shall permit Buyer to
inspect the books and records of the Facility;

 

(v)              
Within five (5) business days following the execution of this Agreement by the parties, Seller shall deliver to Buyer the
due diligence items described on the Due Diligence List attached hereto as Schedule 6(a)(vii) (the “Due Diligence
Items”); provided, in the event certain Due Diligence Items (“Unavailable Items”) are not readily
accessible to Seller, Seller may identify the Unavailable Items by written notice to Buyer within such five (5) business day
period and shall use its best efforts to deliver all Unavailable Items to Buyer as promptly as possible, but in no event more than
ten (10) business days following the execution of this Agreement. If Buyer requests additional items not included on Schedule 6(a)(vii),
it will do so by written request delivered by Seller and Seller will use its best efforts to provide such information within five
(5) business days within receipt of the request; and, provided further, Seller shall continue to cause Operator to deliver to Buyer,
following the expiration of the Due Diligence Period, financial reports showing, among other things, the EBITDAR (defined below)
for the Facility for the trailing six (6) month annualized operations for any given period. The term “EBITDAR”
means “earnings before interest, taxes, depreciation, amortization and rent and reserves (reserves meaning additions to capital
reserves).”

 

(vi)            
Seller shall use its best efforts to prevent the Operator from moving residents from the Facility, except (a) to any other
Facility which is owned by Seller and constitutes part of the Property as defined herein, (b) for health treatment purposes or
otherwise at the request of the resident, family member or other guardian or (c) upon court order or the request of any governmental
authority having jurisdiction over the Facility;

 

(vii)          
Seller shall use commercially reasonable efforts to cause the Operator to retain the services and goodwill of the employees
of the Operator until the Closing;

 

(viii)        
Seller shall maintain in force, or shall cause the Operator to maintain in force, the existing hazard and liability insurance
policies, or comparable coverage, for the Facility as are in effect as of the date of this Agreement;

 

    	 

    	 

    

 

(ix)            
Seller shall, and shall cause the Operator, to file all returns, reports and filings of any kind or nature, including but
not limited to, cost reports referred to in this Agreement, required to be filed by Seller or the Operator on a timely basis and
shall timely pay all taxes or other obligations and liabilities or recoupments which are due and payable with respect to the Facility
in the ordinary course of business with respect to the periods Seller or Operator operated the Facility;

 

(x)              
Seller shall cause the Operator (a) to maintain all required operating licenses in good standing, (b) to operate the Facility
in accordance with its current business practices and (c) to promptly notify Buyer in writing of any notices of material violations
or investigations received from any applicable governmental authority;

 

(xi)            
Seller shall use commercially reasonable efforts to cause the Operator to make all customary repairs, maintenance and replacements
required to maintain the Facility in substantially the same condition as on the date of Buyer’s inspection thereof, ordinary
wear and tear excepted;

 

(xii)          
Seller shall promptly notify Buyer in writing of any Material Adverse Change, as defined herein, of which Seller becomes
aware in the condition or prospects of the Facility including, without limitation, sending Buyer copies of all surveys and inspection
reports of all governmental agencies received after the date hereof and prior to Closing, promptly following receipt thereof by
the Operator. For purposes of this Agreement, a “Material Adverse Change” shall mean: (i) a decrease in the
adjusted rolling six (6) month EBITDAR to less than Seven Hundred Sixty-Six Thousand and 00/100 Dollars ($766,000.00), or (ii)
loss of licensure, or (iii) loss of Medicaid or Medicare participation, or (iv) any adverse action by a governmental agency which,
with the passage of time, would reasonably be expected to materially affect in a negative manner licensure at the Facility, or
any adverse action in the Facility which would reasonably be expected to materially affect in a negative manner such Facility’s
participation or eligibility to participate in any Medicaid or other Payor program, unless appropriate corrective action has been
taken by the Operator, in the ordinary course of business, or (v) failure to settle with the appropriate governmental authority,
or to satisfy on or before the Closing (either directly with such governmental authority or by funds escrowed by Seller for such
purposes) all claims for reimbursements, recoupments, taxes, fines or penalties which may be due to any governmental authority
having jurisdiction over the Facility, or (vi) the occurrence of a title or survey defect occurring after the date of this Agreement
which would reasonably be expected to adversely affect the ability of Buyer to operate the skilled nursing home/assisted living
facility at its respective Facility or to obtain financing for such Facility, or (vii) the commencement of any third party litigation
which interferes with Seller’s ability to close the transactions contemplated by this Agreement, or (viii) any damage, destruction
or condemnation affecting the Facility in which the estimate of damage exceeds $100,000 per Facility and such damage or destruction
has not been repaired, or Buyer as not otherwise waived such condition prior to Closing. In the event of any occurrence described
in clause (iv) above, Operator shall deliver a copy of the Plan of Correction or otherwise notify Buyer in writing of the planned
action, and such Plan of Correction or other corrective action which has been approved by the applicable regulatory agency or agencies.

 

    	 

    	 

    

 

(xiii)        
If Buyer approves the feasibility of the Property on or prior to the expiration of the Due Diligence Period, from and after
the expiration of the Due Diligence Period, Seller agrees to cause the Operator to remedy any compliance deficiency cited in any
written notice from, or in any settlement agreement or other Plan of Correction or other agreement with, any state or federal governmental
body, or in the event of state or federal proceedings against Operator or the Facility, or receipt by the Operator of such notice
prior to the Closing Date, of any condition which would affect the truth or accuracy of any representations or warranties set forth
in this Agreement by Seller; provided, however, in the event a physical plant deficiency is cited which Seller has insufficient
time to remedy before the Closing Date, in accordance with the approval of the appropriate state or federal agency, then the same
shall be deemed remedied when the costs of correcting said deficiency (based upon reasonable estimates from established vendors
selected by Seller and Buyer and approved by Seller and by Buyer, in its sole and absolute discretion) shall be held back in the
Escrow at the Closing and not released to Seller until such deficiency is corrected by Seller; and, provided further, a non-physical
plant deficiency which cannot be remedied prior to the Closing, in accordance with the approval of the appropriate state or federal
agency, will be deemed to be remedied for purposes of this Section if Operator develops a Plan of Correction addressing the deficiency(ies)
and such Plan of Correction is approved by the applicable State agency. Seller shall use its best efforts to remedy any such deficiency
subsequent to the Closing which is to be remedied as a result of a Plan of Correction filed by Seller or Operator prior to the
Closing, and Buyer shall cooperate with such efforts by Seller; provided, Seller shall bear all costs associated with such remedy.
In the event any such Plan of Correction agreed to by Seller and Operator prior to the Closing is not approved by the applicable
State agency subsequent to Closing, Seller shall promptly use its best efforts, and shall cause Operator to use its best efforts,
to amend the Plan of Correction in such a manner that is necessary to obtain acceptance by the State of the amended Plan of Correction
as soon as practicable after submittal. Notwithstanding any other provision of this Agreement, the obligation of Seller pursuant
to this Subsection 10(a)(xiii) shall survive the Closing for such period of time as is necessary to remedy such deficiency.

 

(xiv)        
Seller shall, at its cost and on or before Closing, obtain releases of financing statements and tax and judgment liens affecting
or relating to the Facility which have been filed or recorded in the State with the Office of the Secretary of State and the appropriate
County Recorder’s Office.

 

(xv)          
Seller shall promptly comply with any notices of violations received relating to the Facility and shall deliver to Buyer
a copy of any such notice received and evidence of compliance with such notice.

 

(xvi)        
Seller shall complete the Critical Repairs in accordance with Section 6(f) of this Agreement.

 

(b)              
Closing. On or before the Closing Date, Seller shall deliver the following documents to Escrow Agent relating to
the Facility (“Closing Documents”):

 

(i)                
One (1) original executed Deed for the Facility, in recordable form;

 

    	 

    	 

    

 

(ii)              
Two (2) original executed counterparts of the Post Closing Lease executed by Tenant;

 

(iii)            
Two (2) original executed counterparts of the Bill of Sale, an assignment of Seller’s interest in the Contracts and
Leases (“Assignment of Contracts and Leases”), and other instruments of transfer and conveyance in form and
substance to be agreed upon prior to the expiration of the Due Diligence Period transferring and assigning to Buyer the Real Property,
Personal Property and the Intangibles to be transferred as provided herein with respect to the Facility (“Instruments
of Assignment”);

 

(iv)            
One (1) original of the executed Critical Repair Completion Notice, to the extent not previously delivered to Buyer.

 

(v)              
One (1) original executed certificate executed by Seller confirming that Seller’s representations and warranties continue
to be true and correct in all material respects, or stating how such representations and warranties are no longer true and correct
(“Seller’s Confirmation”);

 

(vi)            
All contractor’s and manufacturer’s guaranties and warranties, if any, in Seller’s possession relating
to the Facility (collectively, the “Warranties”), which delivery will be made by leaving such materials at the
Facility; and

 

(vii)          
Two (2) original executed counterparts of each of the FIRPTA Certificate, the Illinois Transfer Tax Declaration (the “TT
Declaration”), escrow agreements and other documents required by the Title Company in connection with the transactions
contemplated by this Agreement (collectively, the “Title Company Documents”).

 

11.             
Covenants of Buyer. Buyer hereby covenants as follows: 

 

(a)               
Pre-Closing. Between the date hereof and the Closing Date, except as contemplated by this Agreement or with the consent
of Seller, Buyer agrees that Buyer shall not take any action inconsistent with its obligations under this Agreement or which could
hinder or delay the consummation of the transaction contemplated by this Agreement. Between the date hereof and the Closing Date,
Buyer agrees that Buyer shall not (i) make any commitments to any governmental authority, (ii) enter into any agreement or contract
with any governmental authority or third parties, or (iii) alter, amend, terminate or purport to terminate in any way any governmental
approval or permit affecting the Real Property, Personal Property or Facility, which would be binding upon Seller, any Real Property
Owner, the Facility or Personal Property after any termination of this Agreement.

 

(b)              
Closing. On or before the Closing Date, Buyer shall deposit the following with Escrow Agent:

 

(i)                
The Purchase Price in accordance with the requirements of this Agreement;

 

    	 

    	 

    

 

(ii)              
Two (2) original executed counterparts of the Post Closing Lease;

 

(iii)            
Two (2) original executed counterparts of each of the Instruments of Assignment requiring Buyer’s signature;

 

(iv)            
One (1) original executed certificate executed by Buyer confirming that Buyer’s representations and warranties continue
to be true and correct in all material respects, or stating how such representations and warranties are no longer true and correct
(“Buyer’s Confirmation”); and

 

(v)              
Two (2) original executed counterparts of the TT Declaration and each of the Title Company Documents requiring Buyer’s
signature.

 

12.             
Conditions to Closing.

 

(a)               
Conditions to Buyer’s Obligations. All obligations of Buyer under this Agreement are subject to the reasonable
satisfaction and fulfillment, prior to the Closing Date, of each of the following conditions. Anyone or more of such conditions
may be waived in writing by Buyer.

 

(i)                
Seller’s Representations, Warranties and Covenants. Seller’s representations, warranties and covenants
contained in this Agreement or in any certificate or document delivered in connection with this Agreement or the transactions contemplated
herein, shall be true at the date hereof and as of the Closing Date as though such representations, warranties and covenants were
then again made, except to the extent that Buyer has discovered, or Seller has provided Buyer with written notice (the “Supplemental
Notice”) prior to Closing that Seller has just become aware, that a representation is untrue or inaccurate, and Buyer
nevertheless elects not to terminate this Agreement at the expiration of the Due Diligence Period, or, if the Supplemental Notice
is delivered after the Due Diligence Period, Buyer elects to proceed with closing the transaction despite such inaccuracy, whereupon
Buyer will be deemed to have waived any right of recourse or damages against Seller resulting from such inaccuracy disclosed in
the Supplemental Notice. Upon receipt of a Supplemental Notice from Seller after the expiration of the Due Diligence Period, Buyer
shall have the right to (a) terminate this Agreement upon written notice to Seller within five (5) days after receipt of the Supplemental
Notice, or (b) elect to proceed with closing the transaction as set forth in this Agreement. If Seller provides Buyer with a Supplemental
Notice within ten (10) business days of Closing, then Buyer shall have the right, at its option and upon written notice to Seller,
to extend the Closing Date for up to ten (10) business days in order to analyze and review the issues disclosed in the Supplemental
Notice.

 

(ii)              
Seller’s Performance. Seller shall have performed all of its obligations and covenants under this Agreement
that are to be performed prior to or at Closing.

 

(iii)            
Damage and Condemnation. Prior to the Closing Date, no portion of the Facility shall have been damaged or destroyed
by fire or other casualty where the estimate of damage to such Facility exceeds 10% of the Purchase Price allocated to such Facility,
or proceedings be commenced or threatened to take or condemn any material part of the Real Property or improvements comprising
a Facility by any public or quasi-public authority under the power of eminent domain. A proceeding shall be deemed to be “material”
if such condemnation or taking (i) relates to the material taking or closing of any right of access to any Real Property or Facility,
(ii) cause the Real Property or Facility to become non-conforming with then current legal requirements governing such Real Property
or Facility, (iii) results in the loss of parking that is material to the operation of such Facility, or (iv) result in the loss
of value in excess of 10% of the Purchase Price allocated to such Facility, in Buyer’s reasonable judgment. If such Facility
shall have been so damaged or destroyed, Seller shall deliver prompt written notice of such condemnation, damage or destruction
to Buyer. In the event Buyer waives this condition, by written notice to Seller within fifteen (15) business days of receipt of
notice of such proceeding, and the Closing occurs, Seller shall assign to Buyer all its right to any insurance proceeds in connection
therewith. If proceedings shall be so commenced or threatened to take or condemn the Real Property or the Facility or portion thereof
prior to Closing, and if Buyer waives this condition and the Closing occurs, Seller shall pay or assign to Buyer all Seller’s
right to the proceeds of any condemnation award in connection thereof.

 

    	 

    	 

    

 

(iv)            
Absence of Litigation. No action or proceeding shall have been instituted, threatened or, in the reasonable opinion
of Buyer, is likely to be instituted before any court or governmental body or authority the result of which could prevent or make
illegal the acquisition by Buyer of the Facility, or the consummation of the transaction contemplated hereby, or which could materially
and adversely affect the Facility or the business or prospects of the Facility.

 

(v)              
Form of Post Closing Lease. Prior to the expiration of the Due Diligence Period, an affiliate of Seller (“Tenant”)
and Buyer shall have agreed upon the form of the post closing lease (the “Post Closing Lease”) between Buyer,
as landlord, and Tenant, as tenant, in which Tenant will lease back the Facility for an initial term of at least fifteen (15) years.

 

(vi)            
No Material Adverse Change. No Material Adverse Change shall have occurred in the Facility.

 

(vii)          
Removal of Personal Property Liens. Seller shall have removed (or shall have sufficient payoff or other documents
to remove such liens at Closing) all personal property liens which are related to the Facility and the Facility at Closing shall
be free and clear of all liens, claims and encumbrances other than Permitted Exceptions.

 

(viii)        
Title Insurance Policies. Title Company shall be prepared to issue the (i) Owners Title Insurance Policy for the
Facility as of the Closing Date, with coverage in the amount of the allocable portion of the Purchase Price for the Facility, insuring
Buyer as owner of the Facility subject only to the Permitted Exceptions, and (ii) ALTA Title Insurance Policy for each of the Facility
as of the Closing Date, with coverage in the amount of the allocable portion of Buyer’s loan from Buyer’s lender (“Lender”),
insuring Lender’s lien against the Facility subject only to such exceptions as may be approved by Lender, and with such endorsements
as may be required by Lender.

 

(b)              
Conditions to Seller’s Obligations. All obligations of Seller under this Agreement are subject to the fulfillment,
prior to the Closing Date, of each of the following conditions. Anyone or more of such conditions may be waived by Seller in writing.

 

    	 

    	 

    

 

(i)                
Buyer’s Representations, Warranties and Covenants. Buyer’s representations, warranties and covenants
contained in this Agreement or in any certificate or document delivered in connection with this Agreement or the transactions contemplated
herein shall be true at the date hereof and as of the Closing Date as though such representations, warranties and covenants were
then again made.

 

(ii)              
Buyer’s Performance. Buyer shall have performed its obligations and covenants under this Agreement that are
to be performed prior to or at Closing.

 

(iii)            
Absence of Litigation. No action or proceeding shall have been instituted, threatened or, in the reasonable opinion
of Seller, is likely to be instituted before any court or governmental body or authority the result of which could prevent or make
illegal the acquisition by Buyer of the Facility, or the consummation of the transaction contemplated hereby, or which could materially
and adversely affect the Facility or the business or prospects of the Facility.

 

(iv)            
No Actions. There shall be no action pending or recommended by the appropriate state or federal agency to revoke,
withdraw or suspend any license to operate the Facility or the certification of the Facility, or any action of any other type with
regard to licensure or certification or with respect to Medicare and Medicaid provider billing agreements necessary to operate
the Facility.

 

(v)              
Form of Post Closing Lease. Prior to the expiration of the Due Diligence Period, Tenant and Buyer shall have agreed
upon the form of the Post Closing Lease.

 

13.             
Termination; Defaults.

 

(a)               
Termination For Failure of Condition. Either party may terminate this Agreement for non-satisfaction or failure of
a condition to the obligation of either party to consummate the transaction contemplated by this Agreement (including, without
limitation, Buyer’s election to disapprove the condition of the title or Surveys pursuant to Section 14 herein),
unless such matter has been satisfied or waived by the date specified in this Agreement or by the Closing Date (as same may be
extended by the parties to allow the parties to satisfy or waive conditions to close in the manner provided in this Agreement).
In the event of such a termination, Escrow Agent shall promptly return (i) to Buyer, all funds of Buyer in its possession, including
the Deposit and all interest accrued thereon, and (ii) to Seller and Buyer, all documents deposited by them respectively, which
are then held by Escrow Agent. Thereafter, neither party shall have any continuing obligation or liability to the other party except
for any such matters that expressly survive the Closing or termination of this Agreement, as provided herein. The provisions of
this Section 13(a) are intended to apply only in the event of a failure of condition, as set forth herein, which is
not the result of a default by either party, but which shall not apply in the event the non-terminating party is in default of
its obligations under this Agreement.

 

    	 

    	 

    

 

(b)              
Termination For Cause.

 

(i)                
If the Agreement is terminated by Seller because Buyer fails to consummate the Closing as a result of a default by Buyer
under this Agreement, Seller’s sole and exclusive remedy prior to the Closing Date shall be to terminate this Agreement by
giving written notice of termination to Buyer and Escrow Agent, whereupon (A) Escrow Agent shall promptly release to Seller the
Deposit, and all interest accrued thereon, (B) Escrow Agent shall return to Buyer and Seller all documents deposited by them respectively,
which are then held by Escrow Agent, (C) the parties shall be released and relieved of all obligations to each other under this
Agreement, except for provisions that expressly survive termination as provided herein, (D) Buyer shall return to Seller all documents
received by it during the course of its Due Diligence and (E) Buyer shall have no further right to purchase the Property or legal
or equitable claims against Seller (except for any breach by Seller of provisions that survive termination) and/or the Property.
Buyer shall have no liability to Seller under any circumstances for any speculative, consequential or punitive damages. Without
limiting the other provisions of this Agreement, Buyer acknowledges that the provisions of this Subsection are a material part
of the consideration being given to Seller for entering into this Agreement and that Seller would be unwilling to enter into this
Agreement in the absence of the provisions of this Subsection. The provisions of this Subsection shall survive any termination
of this Agreement. With respect to any action by Seller against Buyer or by Buyer against Seller commenced after the Closing Date,
Seller and Buyer expressly waive any right to any speculative, consequential, punitive or special damages including, without limitation,
lost profits. The parties acknowledge and agree that Seller’s actual damages as a result of Buyer’s default would be
difficult or impossible to ascertain and that the deliveries and payments provided for in clause (A) herein constitute reasonable
compensation for its actual damages. Seller and Buyer acknowledge that they have read and understand the provisions of this Section 13(b)(i)
and by their initials below agree to be bound by its terms.

 

	/s/ RHS	 	/S/ TGR
	Seller’s Initials	 	Buyer’s Initials
	 	 	 

(ii)              
If this Agreement is terminated by Buyer because Seller has defaulted in the performance of its obligations under this Agreement,
Buyer’s sole and exclusive remedies prior to the Closing Date shall be either: (A) to terminate this Agreement by giving
written notice of termination to Seller and Escrow Agent and pursue any and all remedies for Buyer’s out-of-pocket costs
(including attorneys’ fees and court costs), attributable to the termination of this Agreement, excluding any speculative
or punitive damages, whereupon (i) Escrow Agent shall promptly return to Buyer the Deposit, and all interest accrued thereon,
and (ii) Escrow Agent shall return to Seller and Buyer all documents deposited by them respectively, which are then held by
Escrow Agent, or (B) to pursue the remedy of specific performance of Seller’s obligation to perform its obligations under
this Agreement. Seller shall have no liability to Buyer under any circumstances for any speculative, consequential or punitive
damages. Without limiting the other provisions of this Agreement, Seller acknowledges that the provisions of this Subsection are
a material part of the consideration being given to Buyer for entering into this Agreement and that Buyer would be unwilling to
enter into this Agreement in the absence of the provisions of this Subsection. The provisions of this Subsection shall survive
any termination of this Agreement. With respect to any action by Buyer against Seller or by Seller against Buyer commenced after
the Closing Date, Buyer and Seller expressly waive any right to any speculative, consequential, punitive or special damages including,
without limitation, lost profits. Seller and Buyer acknowledge that they have read and understand the provisions of this Section 13.2(b)
and by their initials below agree to be bound by its terms.

 

    	 

    	 

    

 

	/s/ RHS	 	/s/ TGR
	Seller’s Initials	 	Buyer’s Initials
	 	 	 

(c)               
General. In the event a party elects to terminate this Agreement such party shall deliver a notice of termination
to the other party.

 

14.             
Surveys and Title Commitment.

 

(a)               
Within 30 days following the date of this Agreement, Buyer shall use commercially reasonable efforts to obtain a preliminary
title report (the “Title Commitment”) covering the Real Property and the Facility dated to the date of this
Agreement, together with legible copies of any and all instruments referred to in the Title Commitment as constituting exceptions
to title of the Real Property (the “Title Documents”).

 

(b)              
Seller shall have delivered to Buyer a copy of the existing surveys, if any, in Seller’s possession for the Facility
(“Surveys”) in accordance with Section 10(a)(v) herein. Buyer shall be responsible for obtaining an update
of the Surveys or new Surveys, at Buyer’s sole cost (“New Surveys”). On or before ten (10) business days
prior to the expiration of the Due Diligence Period, Buyer shall notify Seller and the Title Company (“Buyer’s Title
Notice”) of any objections which Buyer may have to the Title Commitment and/or Surveys. If Buyer objects to any matters
(other than the Permitted Exceptions, as defined herein) which, in Buyer’s determination, might adversely affect the ability
of Buyer to operate any of the Facility, Seller shall use its reasonable business efforts to cure same, but shall not be obligated
to cure matters other than to obtain the release (at Closing) of the existing mortgage and other monetary liens caused by Seller
which may be released by payment of the mortgage payoff or lien amount from Seller’s Closing proceeds (collectively, “Monetary
Liens”). If Seller delivers written notice to Buyer (“Seller’s Title Notice”), on or before
the expiration of the Due Diligence Period that Seller is willing to remove any exceptions objected to by Buyer, then Seller shall
be obligated to remove such exceptions on or prior to the Closing and such exceptions shall not be Permitted Exceptions. If Seller
does not provide Buyer with Seller’s Title Notice or Seller’s Title Notice does not provide for Seller’s agreement
to remove all exceptions objected to by Buyer, then Buyer shall have the right to terminate this Agreement prior to the expiration
of the Due Diligence Period or waive Buyer’s objection to any exceptions Seller has not agreed to remove with such exceptions
becoming Permitted Exceptions upon Buyer waiving its due diligence contingency. Buyer shall, promptly following the execution of
this Agreement, commence to use its best efforts to obtain the New Surveys as soon as practicable. Notwithstanding the foregoing
provisions of this Subsection (b), Buyer shall have the right to object, promptly upon learning of any such new matters
during the Due Diligence Period, to any matters raised in the New Surveys which were not addressed in the Surveys, and the parties
shall cooperate with the Title Company, during the Due Diligence Period and as promptly as possible following the delivery of Buyer’s
objections to such new matters in the New Surveys, to resolve any such matters to Buyer’s satisfaction. The Due Diligence
Period shall not be extended for resolution of any such matters in the New Surveys.

 

    	 

    	 

    

 

15.             
Cooperation. Following the execution of this Agreement, Buyer and Seller agree that if any event should occur, either
within or without the knowledge or control of Buyer or Seller, which would prevent fulfillment of the conditions to the obligations
of any party hereto to consummate the transaction contemplated by this Agreement, each such party shall use reasonably commercial
efforts to cure or to cause the cure of the same as expeditiously as possible. In addition, each party shall cooperate fully with
each other in preparing, filing, prosecuting, and taking any other actions with respect to, any applications, requests, or actions
which are or may be reasonable and necessary to obtain the consent of any governmental instrumentality or any third party or to
accomplish the transaction contemplated by this Agreement.

 

16.             
Indemnification.

 

(a)               
Indemnification Provisions.

 

(i)                
Subject to the limitation on damages contained in Section 13(b)(ii) hereof, Seller hereby agrees to indemnify,
protect, defend and hold harmless Buyer and its officers, directors members shareholders tenants, successors and assigns harmless
from and against any and all claims, demands, obligations, losses, liabilities, damages, recoveries and deficiencies (including
interest, penalties and reasonable attorneys’ fees, costs and expenses) which any of them may suffer as a result of: (A)
any breach of or inaccuracy in the representations and warranties, or breach, non-fulfillment or default in the performance of
any of the conditions, covenants and agreements, of Seller contained in this Agreement or in any certificate or document delivered
by Seller pursuant to any of the provisions of this Agreement, unless Seller cures such matter in the manner provided in Section 8(p)
herein or (B) the failure to discharge any federal, state or local tax liability, or to pay any other assessments, recoupments,
claims, fines, penalties or other amounts or liabilities accrued or payable with respect to any activities of Seller prior to the
Closing Date (whether brought before or after the Closing Date), or (C) any obligation which is expressly the responsibility of
Seller under this Agreement, or (D) any amounts required to cure citation violations issued by any state or federal health or human
services authority on the Facility relating to any period prior to the Closing Date (whether brought before or after the Closing
Dates), or (E) any claim by any employee of Seller relating to any period of employment prior to the Closing Date (whether brought
before or after the Closing Date), or (F) the existence against the Real Property of any mechanic’s or materialmen’s
claims resulting from the action or inaction of Seller or anyone acting under authority of Seller, or (G) any other cost,
claim or liability arising out of or relating to events (other than as a result of the actions of Buyer or Buyer’s Consultants)
or Seller’s ownership, operation or use of the Facility prior to the Closing Date. Any amount due under the aforesaid indemnity
shall be due and payable by Seller within 30 days after demand thereof. Seller shall have the right to contest any such claims,
liabilities or obligations as provided herein.

 

(ii)              
Subject to the limitation on damages contained in Section 13(b)(i) hereof, Buyer hereby agrees to indemnify,
protect, defend and hold harmless Seller and its officers, directors, members, shareholders and tenants harmless from and against
any and all claims, demands, obligations, losses, liabilities, damages, recoveries and deficiencies (including interest, penalties
and reasonable attorneys’ fees, costs and expenses) which any of them may suffer as a result of: (A) any breach of or inaccuracy
in the representations and warranties, or breach, non-fulfillment or default in the performance of any of the conditions, covenants
and agreements, of Buyer contained in this Agreement or in any certificate or document delivered by Buyer pursuant to any of the
provisions of this Agreement, unless Buyer cures such matter in the manner provided in Section 8(p) herein, or (B)
the existence against the Real Property of any mechanic’s or materialmen’s claims arising from actions of Buyer or
Buyer’s Consultants prior to the Closing, or (C) any obligation which is expressly the responsibility of Buyer under this
Agreement. Any amount due under the aforesaid indemnity shall be due and payable by Buyer within thirty (30) days after demand
therefor. Buyer shall have the right to contest any such claims, liabilities or obligations as provided herein or any other cost,
claim or liability arising out of or relating to events or Buyer’s ownership, operation or use of the Facility after the
Closing Date.

 

    	 

    	 

    

 

(iii)            
The parties intend that all indemnification claims be made as promptly as practicable by the party seeking indemnification
(the “Indemnified Party”). Whenever any claim shall arise for indemnification hereunder, the Indemnifying Party
shall promptly notify the party from whom indemnification is sought (the “Indemnitor”) of the claim, and the
facts constituting the basis for such claim (the “Indemnification Claim”). Failure to notify the Indemnitor
will not relieve the Indemnitor of any liability that it may have to the Indemnified Party, except to the extent the defense of
such action is materially and irrevocably prejudiced by the Indemnified Party’s failure to give such notice.

 

(iv)            
An Indemnitor shall have the right to defend against an Indemnification Claim, with counsel of its choice reasonably satisfactory
to the Indemnified Party, if (a) within fifteen (15) days following the receipt of notice of the Indemnification Claim the Indemnitor
notifies the Indemnified Party in writing that the Indemnitor will indemnify the Indemnified Party from and against the entirety
of any damages the Indemnified Party may suffer resulting from, relating to, arising out of, or attributable to the Indemnification
Claim, (b) the Indemnitor provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnitor will have the financial resources to defend against the Indemnification Claim and pay, in cash, all damages the Indemnified
Party may suffer resulting from, relating to, arising out of, or attributable to the Indemnification Claim, (c) the Indemnification
Claim involves only money damages and does not seek an injunction or other equitable relief, (d) settlement of, or an adverse judgment
with respect to, the Indemnification Claim is not in the good faith judgment of the Indemnified Party likely to establish a precedential
custom or practice materially adverse to the continuing business interests of the Indemnified Party, and (e) the Indemnitor continuously
conducts the defense of the Indemnification Claim actively and diligently.

 

(v)              
So long as the Indemnitor is conducting the defense of the Indemnification Claim in accordance with Section 16(a)(iv),
then (A) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the
Indemnification Claim, (B) the Indemnified Party shall not consent to the entry of any order or finalization of any tentative settlement,
the only condition of which is the consent of the Indemnified Party thereto, with respect to the Indemnification Claim without
the prior written consent of the Indemnitor (not to be withheld unreasonably), and (C) the Indemnitor will not consent to the entry
of any order or finalization of any tentative settlement, the only condition of which is the consent of the Indemnified Party thereto,
with respect to the Indemnification Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld
or delayed, provided that it will not be deemed to be unreasonable for an Indemnified Party to withhold its consent with respect
to (i) any breach of any law, order or permit, (ii) any violation of the rights of any person, or (iii) any matter which Indemnified
Party believes could have a material adverse effect on any other actions to which the Indemnified Party or its Affiliates are party
or to which Indemnified Party has a good faith belief it may become party. Notwithstanding the foregoing provisions of this Subsection (v),
if Indemnified Party refuses its consent to any of the matters set forth in clauses (i) through (iii) above, the indemnity amount
shall be determined as if such consent had been given and Indemnitor shall pay over to the Indemnified Party such amount and be
absolved from any further obligation as to that particular claim; Indemnified Party may then resolve the claim in the manner it
sees fit without further recourse against Indemnitor.

 

    	 

    	 

    

 

(vi)            
Each party hereby consents to the non-exclusive jurisdiction of any governmental body, arbitrator, or mediator in which
an action is brought against any Indemnified Party for purposes of any Indemnification Claim that an Indemnified Party may have
under this Agreement with respect to such action or the matters alleged therein, and agrees that process may be served on such
party with respect to such claim anywhere in the world, provided however, that any venue relating to any claim or proceeding arising
out of this Agreement or any other agreement between Seller and Buyer shall be the State and the laws of the State shall apply.

 

(b)              
Insurance Proceeds. In determining the amount of damages for which either party is entitled to assert an Indemnification
Claim, the amount of any such claims or damages shall be determined after deducting therefrom the amount of any insurance coverage
or proceeds or other third party recoveries received by such other party in respect of such damages. If an indemnification payment
is received by the Indemnified Party in respect of any damages and the Indemnified Party later receives insurance proceeds or other
third party recoveries in respect of such damages, the Indemnified Party shall immediately pay to the Indemnifying Party a sum
equal to the lesser of the actual amount of net insurance proceeds or other third party recoveries (remaining after recovery costs
and expenses) or the actual amount of the indemnification payment previously paid by or on behalf of the Indemnified Party.

 

(c)               
No Incidental, Consequential and Certain Other Damages. An Indemnitor shall not be liable to an Indemnified Party
for incidental, consequential, enhanced, punitive or special damages unless such damages are included in a third-party claim and
such Indemnified Party is liable to the third party claimant for such damages.

 

(d)              
Indemnification if Negligence of Indemnity; No Waiver of Rights or Remedies.

 

UNLESS OTHERWISE
PROVIDED HEREIN, THE INDEMNIFICATION PROVIDED IN THIS SECTION 16 WILL BE APPLICABLE WHETHER OR NOT THE SOLE, JOINT, OR CONTRIBUTORY
NEGLIGENCE OF THE INDEMNIFIED PARTY IS ALLEGED OR PROVEN. THE PARTIES AGREE THE PRECEDING SENTENCE IS COMMERCIALLY CONSPICUOUS.
Each Indemnified Party’s rights and remedies set forth in this Agreement shall survive the Closing or other termination of
this Agreement, shall not be deemed waived by such Indemnified Party’s consummation of the Closing of the sale transactions
(unless the Indemnified Party has knowledge of the existence of an Indemnification Claim at Closing and decides to proceed with
Closing)and will be effective regardless of any inspection or investigation conducted by or on behalf of such Indemnified Party
or by its directors, officers, employees, or representatives or at any time (unless such inspection or investigation reveals the
existence of an Indemnified Claim and such party proceeds with Closing), whether before or after the Closing Date.

 

    	 

    	 

    

 

(e)               
Other Indemnification Provisions. A claim for any matter not involving a third party may be asserted by notice to
the Party from whom indemnification is sought.

 

(f)               
Dispute Resolution. Any dispute arising out of or relating to claims for indemnification pursuant to this Article
16 or any other dispute hereunder, shall be resolved in accordance with the procedures specified herein, which shall be the sole
and exclusive procedure for the resolution of any such disputes.

 

17.             
Notices. Any notice, request for consent or approval, election or other communication provided for or required by
this Agreement shall be in writing and shall be delivered by hand, by air courier service, postage prepaid (certified with return
receipt requested), fax transmission or electronic transmission followed by delivery of the hard copy of such communication by
air courier service or mail as aforesaid, addressed to the person to whom such notice is intended to be given at such address as
such person may have previously furnished in writing to the such party’s last known address. Until receipt of written notice
to the contrary, the parties’ addresses for notices shall be:

 

	To Buyer:	
        Cornerstone Healthcare Real Estate Fund, Inc.

        c/o Cornerstone Healthcare Properties

        1920 Main Street, Suite 400

        Irvine, CA 92614

        Attention: Kent Eikanas

        Phone: (949) 812-4335

        Email: KEikanas@crefunds.com

	 	 
	With a Copy to:	
        DLA Piper LLP (US)

        2000 University Avenue

        East Palo Alto, CA 94303

        Attention: Rachel Rosati Warner

        Phone: (650) 833-2268

        Email: Rachel.Warner@dlapiper.com

         

	To Seller:	
        Aledo Senior Housing LLC

        c/o Richard H. Stone

        523 Blackhawk Avenue

        Milan, IL 61264

        Phone: (309) 787-5047

        Email: rhstone@mediacombb.net

	 	 
	With a Copy to:	
        John R. Eichelberger

        2206 Lucas Street

        PO Box 1186

        Muscatine, IA 52761

        Phone: (563) 263-6900

        E-mail: john@jrelaw.com

	 	 

 

    	 

    	 

    

 

18.             
Sole Agreement. This Agreement constitutes the entire understanding between the parties with respect to the transactions
contemplated herein, and all prior or contemporaneous oral agreements, understandings representations and statement, and all prior
written agreements, understandings, letters of intent and proposals are merged into this Agreement. Neither this Agreement nor
any provisions hereof may be waived, modified, amended, discharged or terminated except by an instrument in writing signed by the
party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only
to the extent set forth in such instrument.

 

19.             
Assignment; Successors. Neither party shall assign this Agreement without the prior written consent of the other;
provided, however, Buyer may assign all of its rights, title, liability, interest and obligation pursuant to this Agreement to
one or more entities owned, controlled by or under common control with Buyer. Subject to the limitations on assignment set forth
above, all the terms of this Agreement shall be binding upon and inure to the benefit of and be enforceable by and against the
heirs, successors and assigns of the parties hereto.

 

20.             
Severability. Should any one or more of the provisions of this Agreement be determined to be invalid, unlawful or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions hereof shall not in any way
be affected or impaired thereby and each such provision shall be valid and remain in full force and effect.

 

21.             
Risk of Loss. Until the Closing Date, Seller shall bear the risk of loss for the Facility and after the Closing Date,
the risk of loss for the Facility between Buyer and Tenant shall be governed by the Post Closing Lease.

 

22.             
Holidays. If any date herein set forth for the performance of any obligations by Seller or Buyer or for the delivery
of any instrument or notice as herein provided should be on a Saturday, Sunday or legal holiday, the compliance with such obligations
or delivery shall be deemed acceptable on the next business day following such Saturday, Sunday or legal holiday. As used herein,
the term “legal holiday” means any state or federal holiday for which financial institutions or post offices are generally
closed in the State for observance thereof.

 

23.             
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and
all of which together shall be deemed to constitute one and the same instrument. Facsimile signature pages or electronically transmitted
signature pages shall constitute original counterparts for all purposes.

 

24.             
Covenant Not to Compete; Non-Solicitation of Employees. Except with regard to the Aledo Rehabilitation & Health
Care Center located at 304 S.W. 12th Street, Aledo, Illinois (which is currently owned by Tenant), then for a period of three (3)
years following the Closing Date, Seller and Tenant, individually, agree (i) not to own, manage, lease or operate a long term skilled
nursing home facility which is located within a ten (10) mile radius of the Facility and (ii) not to solicit the transfer of patients
or residents of any of the Facility to any long term care skilled nursing home facility or assisted living facility which is managed,
leased or operated by any entity owned and/or controlled by any of Seller or such individual within a ten (10) mile radius of the
Facility.

 

    	 

    	 

    

 

25.             
Confidentiality. The provisions of the Confidentiality Agreement attached hereto as Exhibit C and executed
by the parties either prior to the date of this Agreement are hereby incorporated by this reference and the parties hereto agree
to comply with the terms thereof.

 

26.             
Illinois Tax Withholding. On or before Closing, Seller shall deliver to Buyer a certificate issued by the Illinois
Department of Revenue (and any applicable Mercer County authority) stating that the withholding obligations under Section 902(d)
(“Section 902(d)”) of the Illinois Income Tax Act (“Act”) (and any applicable Mercer County statutes)
do not apply to the transaction contemplated by this Agreement or specifying the holdback of sale proceeds which will satisfy Buyer's
obligations under said Section 902(d) of the Act and any applicable Mercer County statutes. If the certificate is not so delivered
to Buyer, as aforesaid, or if the certificate is so delivered and requires that funds be withheld pursuant to the terms thereof,
then Buyer may, at the Closing, deduct and withhold from the proceeds that are due to Seller the amount necessary to comply with
the withholding requirements imposed by Section 902(d) of the Act and any applicable Mercer County statutes. Buyer shall deposit
the amounts withheld in escrow with the Title Company, as escrowee, pursuant to terms and conditions acceptable to Seller and Buyer,
but in any event complying with Section 902(d) of the Act and any applicable Mercer County statutes. Notwithstanding the foregoing
provisions of this Section 26, Seller may, at its option, in lieu of the foregoing, provide Buyer with an indemnity agreement,
in form and substance reasonably satisfactory to Buyer, pursuant to which Seller indemnifies Buyer with respect to all liabilities
which may be imposed upon Buyer as a result of the Section 902(d) and equivalent obligations; however, if Seller subsequently obtains
a certificate from the Illinois Department of Revenue and any applicable Mercer County agency indicating that Buyer is not required
to hold back any such sales proceeds, then the aforementioned indemnity agreement shall be null and void.

 

27.             
Exhibits and Schedules. To the extent that one or more Exhibits or Schedules are not attached to this Agreement at
the time this Agreement is executed, Seller and Buyer agree that this Agreement is not rendered unenforceable by reason of such
fact. Seller shall provide such exhibits to Buyer during the Due Diligence Period as promptly as possible in order to allow the
parties to agree upon such Exhibits and Schedules and to afford Buyer adequate time in which to complete its due diligence review
prior to the expiration of the Due Diligence Period.

 

28.             
Prevailing Party. Subject to the limitations as otherwise set forth in this Agreement, if an action shall be brought
on account of any breach of or to enforce or interpret any of the terms, covenants or conditions of this Agreement, the prevailing
party shall be entitled to recover from the other party, as part of the prevailing party’s costs, reasonable attorney’s
fees, the amount of which shall be fixed by the court and shall be made a part of any judgment rendered.

 

    	 

    	 

    

 

29.             
Time is of the Essence. Time is of the essence of this Agreement.

 

30.             
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State.

 

[Signatures on Following Pages]

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
the undersigned have duly executed this Agreement by parties legally entitled to do so as of the day and year first set forth above.

 

	 	“SELLER”:  
	 	 	 
	 	ALEDO SENIOR HOUSING LLC,
	 	an Illinois limited liability company
	 	 	 
	 	 	 
	 	By:  	/s/ Richard H. Stone
	 	 	Richard H. Stone, Member-Manager
	 	 	 
	 	 	 
	 	“BUYER”:
	 	 	 
	 	CORNERSTONE HEALTHCARE REAL ESTATE FUND, INC., a Maryland corporation
	 	 	 
	 	 	 
	 	By:	/s/ Terry G. Roussel
	 	Its:	CEO

 

    	 

    	 

    

 

LIST OF EXHIBITS

 

		A.	Legal Descriptions of Real Property

 

		B.	Intentionally Omitted

 

		C.	Confidentiality Agreement

 

		D.	Intentionally Omitted

 

		E.	Warranty Deed

 

		F.	Bill of Sale

 

 

 

    	 

    	 

    

 

LIST OF SCHEDULES

 

	Schedule l(a) 	List of Facility, Operator(s)
	 	 
	Schedule 1(c)	Personal Property
	 	 
	Schedule 1(e)	Trademarks and Names
	 	 
	Schedule 1(g)	Capital Improvements
	 	 
	Schedule 8(a)(v) 	Claims, Litigation
	 	 
	Schedule 8(b)	Violations
	 	 
	Schedule 8(d)	Hazardous Substances
	 	 
	Schedule 8(f) 	Leases and Contracts
	 	 
	Schedule 8(g) 	Financial Reports
	 	 
	Schedule 8(h)	Interests in Suppliers, etc.
	 	 
	Schedule 8(j) 	Matters relating to Licensure
	 	 
	Schedule 8(k) 	Matters relating to Reports and Reimbursements
	 	 
	Schedule 8(l) 	Surveys, Cost Reports, Private Rates, Census and Licensed Beds
	 	 
	Schedule 8(m)	Occupied Beds; Rates
	 	 
	Schedule 10(a)(v) 	Due Diligence Items

 

 

    	 

    	 

    

 

EXHIBIT A

 

LEGAL DESCRIPTION

 

Tract I of MERCER CENTER ADDITION NO. 2,
as shown by the Final Plat recorded on September 12, 2005, as Document No. 349235, in the Mercer County Recorder’s office,
being part of the Northeast Quarter of the Northwest Quarter of Section 21, Township 14 North, Range 3 West of the 4th
P.M., Mercer Township, Mercer County, Illinois, and being more particularly described as follows:

 

Commencing at an iron pipe found at
the North Quarter Corner of said Section 21, thence South 00 degrees – 13 minutes – 42 seconds West along the
East Line of said Northwest Quarter, a distance of 770.00' to an iron pin found at the Southeast Corner of Mercer Center Addition
No. 1, thence North 89 degrees – 21 minutes – 42 seconds West along the South Line of Mercer Center Addition No. 1,
a distance of 580.00' to an iron pin set on the West Right-of-Way Line of a Public Road, thence North 00 degrees – 13 minutes
– 42 seconds East along said West Right-of-Way Line, a distance of 43.62' to an iron pin set, said point being the Point
of Beginning, thence continuing North 00 degrees – 13 minutes – 42 seconds East along said West Line, a distance
of 435.00' to a concrete monument set, thence North 89 degrees – 29 minutes – 51 seconds West, a distance of 335.00'
to an iron pin set, thence South 00 degrees – 13 minutes – 42 seconds West, a distance of 435.00' to a concrete
monument set, thence South 89 degrees – 29 minutes – 51 seconds East, a distance of 335.00' to the Point of Beginning.

 

    	 

    	 

    

 

EXHIBIT B

 

Intentionally
Omitted

 

 

    	 

    	 

    

 

EXHIBIT C

 

 

CONFIDENTIALITY

AGREEMENT

 

 

    	 

    	 

    

 

EXHIBIT D

 

INTENTIONALLY OMITTED

 

    	 

    	 

    

 

EXHIBIT E

 

GRANT DEED

 

	
        AFTER RECORDING RETURN TO AND SEND SUBSEQUENT TAX BILLS TO:

         

         

         

         

         

         

         

         
	 

SPACE ABOVE THIS LINE FOR RECORDER’S
USE

 

 

WARRANTY DEED

 

This Deed, made this
____ day of ______________, 2013, between _____________________________________, a ___________________________ ("Grantor"),
and ____________________________, a ______________________________, whose address is _________________________________________________________________
("Grantee"), WITNESSETH, that Grantor, for and in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration in hand paid, by Grantee, the receipt of which is hereby acknowledged, by these presents
does REMISE, RELEASE, ALIENATE AND CONVEY unto the Grantee, FOREVER, all the following described real estate, situated in the County
of Mercer and State of Illinois, known and described as follows, to wit:

 

See Schedule 1 attached hereto
and made a part hereof.

 

Together with all and
singular hereditaments and appurtenances belonging there, or in any way appertaining, and the reversion or reversions, remainder
or remainders, rents, issues and profits thereof, and all the estate, right, title, interest, claim or demand whatsoever, of the
Grantor, either at law or in equity of, in and to the above-described premises, with the hereditaments and appurtenances:

 

TO HAVE AND TO HOLD
the said premises as described above, with the appurtenances, unto the Grantee, forever.

 

And Grantor, for itself
and its successors, does covenant, promise and agree to and with Grantee and its successors and assigns that it has not done or
suffered to be done, anything whereby the said premises hereby granted are, or may be, in any manner encumbered or charged, except
as herein recited; and that it WILL WARRANT AND DEFEND, said premises against all persons lawfully claiming, or to claim the same,
by, through or under it, subject only to those matters listed on Schedule 2 attached hereto and made a part hereof.

 

[SIGNATURE PAGE FOLLOWS]

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Grantor executed this Deed the day and year first above written.

 

	 	 	
        ______________________________, a

        ______________________________

	 	 	 	 
	 	 	 	                                                       
	 	 	By:	
	 	 	Name:  	 
	 	 	Its:	 

 

 

	STATE OF 	________________	)
	 		) SS

	COUNTY OF 	______________)	 

 

I, _________________________,
a Notary Public in and for said County in the State aforesaid, do hereby certify that ___________________________, the ___________________
of ____________________________________, a __________________________________, personally known to me to be the same person whose
name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he signed and delivered
such instrument as his own free and voluntary act and as the free and voluntary act of said limited partnership and limited liability
company, in the capacity set forth therein.

 

IN WITNESS WHEREOF,
I have hereunto set my hand and official seal this ____ day of ___________________, 2013.

 

___________________________________

Notary Public

 

My commission expires: __________________

 

    	 

    	 

    

 

SCHEDULE 1 to
Warranty DEED

 

DESCRIPTION OF LAND

 

Tract I of MERCER CENTER ADDITION NO. 2,
as shown by the Final Plat recorded on September 12, 2005, as Document No. 349235, in the Mercer County Recorder’s office,
being part of the Northeast Quarter of the Northwest Quarter of Section 21, Township 14 North, Range 3 West of the 4th
P.M., Mercer Township, Mercer County, Illinois, and being more particularly described as follows:

 

Commencing at an iron pipe found at
the North Quarter Corner of said Section 21, thence South 00 degrees – 13 minutes – 42 seconds West along the East
Line of said Northwest Quarter, a distance of 770.00' to an iron pin found at the Southeast Corner of Mercer Center Addition No.
1, thence North 89 degrees – 21 minutes – 42 seconds West along the South Line of Mercer Center Addition No.
1, a distance of 580.00' to an iron pin set on the West Right-of-Way Line of a Public Road, thence North 00 degrees – 13
minutes – 42 seconds East along said West Right-of-Way Line, a distance of 43.62' to an iron pin set, said point being the
Point of Beginning, thence continuing North 00 degrees – 13 minutes – 42 seconds East along said West Line, a
distance of 435.00' to a concrete monument set, thence North 89 degrees – 29 minutes – 51 seconds West, a distance
of 335.00' to an iron pin set, thence South 00 degrees – 13 minutes – 42 seconds West, a distance of 435.00'
to a concrete monument set, thence South 89 degrees – 29 minutes – 51 seconds East, a distance of 335.00' to the Point
of Beginning. 

 

    	 

    	 

    

 

SCHEDULE 2 TO WARRANTY DEED

 

PERMITTED EXCEPTIONS

 

    	 

    	 

    

 

EXHIBIT F

 

BILL OF SALE

 

BILL OF SALE

 

THIS BILL OF SALE
(this “Bill of Sale”) is entered into as of this 2nd day of July, 2013, whereby Aledo Senior Housing, LLC (“Seller”),
does hereby sell and convey to [INSERT CORNERSTONE ENTITY] (“Buyer”), with reference to the following facts:

 

RECITALS:

 

A.WHEREAS, concurrently
herewith Seller is conveying to Buyer certain real property, together with all improvements thereon, lying and being situated in
Mercer County, Illinois, as described on Exhibit A, incorporated herein by reference (said land and improvements
thereon are referred to herein as the (“Property”).

 

B.WHEREAS, it is
the desire of Seller to quitclaim to Buyer, all of Seller’s right, title and interest, free and clear of liens and encumbrances,
to all of the tangible personal property, inventory, equipment, machinery, supplies including drugs and other supplies, spare parts,
furniture, furnishings, warranty claims, contracts, including but not limited to supply contracts, contracts rights, intellectual
property, including but not limited to patents, trade secrets, and all rights and title to the names under which the Property operates,
mailing lists, customer lists, vendor lists, resident files, books and records (collectively, the “Personal Property”).
The Personal Property includes the equipment listed on Schedule 1 attached hereto and made a part hereof.

 

NOW THEREFORE, in consideration
of the foregoing and other good and valuable consideration in hand paid by Buyer to Seller, the receipt and sufficiency of which
are hereby acknowledged:

 

1.Transfer.
Seller hereby transfers, free and clear of all liens and encumbrances, to Buyer all of Seller’s right, title and interest,
if any, in and to the Personal Property.

 

2.Acceptance.
Buyer hereby accepts the foregoing quitclaim of the Personal Property.

 

3.Counterparts.
This Bill of Sale may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have entered into this Bill of Sale as of the day and year first written above.

 

	 	 	 	SELLER:
	 	 	 	 	 
	 	 	 	Aledo Senior
    Housing LLC,
	 	 	 	An Illinois Limited
    Liability Company
	 	 	 	 	 
	 	 	 	 	 
	Dated:  	July 2, 2013	 	By:	/s/ Richard H. Stone
	 	 	 	Name:	Richard H. Stone
	 	 	 	Its:	member-manager
	 	 	 	 	 

 

	 	 	 	BUYER:
	 	 	 	 	 
	 	 	 	HP Aledo LLC,
	 	 	 	a Delaware Limited
    Liability Company 
	 	 	 	 	 
	 	 	 	 	 
	Dated:  	July 2, 2013	 	By:	Cornerstone Core Properties REIT, Inc.
	 	 	 	Name:	/s/ Kent Eikanas
	 	 	 	Its:	President
	 	 	 	 	 

 

 

    	 

    	 

    

 

EXHIBIT A 

to Bill of Sale

 

Legal Description

 

Tract I of MERCER CENTER ADDITION NO. 2,
as shown by the Final Plat recorded on September 12, 2005, as Document No. 349235, in the Mercer County Recorder’s office,
being part of the Northeast Quarter of the Northwest Quarter of Section 21, Township 14 North, Range 3 West of the 4th
P.M., Mercer Township, Mercer County, Illinois, and being more particularly described as follows:

 

Commencing at an iron pipe found at
the North Quarter Corner of said Section 21, thence South 00 degrees – 13 minutes – 42 seconds West along the East
Line of said Northwest Quarter, a distance of 770.00' to an iron pin found at the Southeast Corner of Mercer Center Addition No.
1, thence North 89 degrees – 21 minutes – 42 seconds West along the South Line of Mercer Center Addition No. 1,
a distance of 580.00' to an iron pin set on the West Right-of-Way Line of a Public Road, thence North 00 degrees – 13 minutes
– 42 seconds East along said West Right-of-Way Line, a distance of 43.62' to an iron pin set, said point being the Point
of Beginning, thence continuing North 00 degrees – 13 minutes – 42 seconds East along said West Line, a distance
of 435.00' to a concrete monument set, thence North 89 degrees – 29 minutes – 51 seconds West, a distance of 335.00'
to an iron pin set, thence South 00 degrees – 13 minutes – 42 seconds West, a distance of 435.00' to a concrete
monument set, thence South 89 degrees – 29 minutes – 51 seconds East, a distance of 335.00' to the Point of Beginning.

 

    	 

    	 

    

 

SCHEDULE 1 

to Bill of Sale

 

 

 

 

    	 

    	 

    

 

SCHEDULE 1(a)

 

FACILITY; LICENSED BEDS

 

	
        Facility

         
	 	Licensed Nursing Beds
	The skilled nursing facility located on the Real Property	 	66 units with some of the units over 450 square feet in size having double occupancy

 

    	 

    	 

    

 

SCHEDULE 1(c)

 

PERSONAL
PROPERTY

 

See the attached 21 pages.

 

SCHEDULE 1(e)

 

TRADEMARKS AND NAMES

 

Heritage Woods

 

Heritage Woods of Aledo LLC

 

    	 

    	 

    

 

SCHEDULE 8(a)(v)

 

CLAIMS, LITIGATION

 

 

None

    	 

    	 

    

SCHEDULE 8(b)

 

VIOLATIONS

 

 

None.

    	 

    	 

    

SCHEDULE 8(d)

 

HAZARDOUS SUBSTANCES

 

 

None.

    	 

    	 

    

SCHEDULE 8(f)

 

LEASES AND CONTRACTS

 

 

See the attached 11 pages.

    	 

    	 

    

SCHEDULE 8(g)

 

FINANCIAL REPORTS

 

 

See the attached 45 pages.

    	 

    	 

    

SCHEDULE 8(h)

 

INTEREST IN SUPPLIERS, ETC.

 

 

None.

    	 

    	 

    

SCHEDULE 8(j)

 

MATTERS RELATING TO LICENSURE

 

 

See the attached 6 pages.

    	 

    	 

    

SCHEDULE 8(k)

 

MATTERS RELATING TO REPORTS AND REIMBURSEMENTS

 

 

See Schedule 8(j).

    	 

    	 

    

SCHEDULE 8(l)

 

SURVEYS, COST REPORTS, PRIVATE RATES,
CENSUS AND LICENSED BEDS

 

 

Seller represents that all current information has been provided
to Buyer.

    	 

    	 

    

SCHEDULE 8(m)

 

OCCUPIED BEDS; RATES

 

 

Seller represents that all current information has been provided
to Buyer.

 

    	 

    	 

    

 

SCHEDULE 10(a)(v)

DUE DILIGENCE MATERIALS

 

Seller has made available to Buyer all Due Diligence Materials
through an electronic drop box established for the transaction contemplated by this Agreement, except for the following documents
and information that Buyer has requested and Seller has agreed to provide to Buyer:

 

Personal list, job descriptions, rate of pay, hire date, and
accrued vacation /paid time off.

Description of the employee benefits, insurance, 401k, employee
handbook.

List and copies of wage garnishments, including balances due
and amounts previously paid (non-support) together with copies of the garnishment orders.

List of any employee wage assignments together with supporting
documents.

Description of phone system: number of lines, is there a maintenance
contract, if so with whom.

Resident biographies.

Contact information for family members/POA/emergency contacts.

Copy of resident contract and handbook.

Copy of vehicle titles.

List of association memberships – AALC, ALFA, NCAL, etc.

Contact information for the following:

Chamber members.

Community Business List.

Agency contacts (HFS Surveyors and representatives).

Media contacts (include current advertising plan).

Current beautician arrangement.

Last rate increase and amount.

Admission/discharge reports from last 12-months.

 

    	 

    	 

    

 

 

	
        Summary
        Report: 

        Litéra®
        Change-Pro TDC 7.0.0.242 Document Comparison done on 1/28/2013 12:37:05 PM

	Style Name: DLAPiper
	Original DMS:iw://WESTDMS/WEST/239891064/5
	Modified DMS: iw://WESTDMS/WEST/239891064/6
	Changes: 
	Add 	51
	Table Insert	0
	Embedded Graphics (Visio, ChemDraw, Images etc.)	0
	Embedded Excel 	0
	Format Changes	0
	Total Changes: 	71Exhibit 10.1

 

EMPLOYMENT
AGREEMENT

 

This EMPLOYMENT AGREEMENT by and between
BNC Bancorp, a North Carolina corporation (“BNC Bancorp”), and Bank of North Carolina (“Bank of North Carolina”),
a North Carolina-chartered bank and wholly owned subsidiary of BNC Bancorp. (BNC Bancorp and Bank of North Carolina, collectively,
the “Company”) and Richard D. Callicutt (the “Executive”) is dated as of the 28 day of June 2013 (the “Agreement”).

 

1.          Effective
Date. The “Effective Date” shall be July 1, 2013.

 

2.          Employment
Period. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, subject to
the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary
thereof (the “Employment Period”); provided, however, that, commencing on the date one year after the
Effective Date, and on each annual anniversary of such date (such date and each annual anniversary thereof, the “Renewal
Date”), unless previously terminated, the Employment Period shall automatically be extended so as to terminate three years
from such Renewal Date, unless, at least 90 days prior to the Renewal Date, the Company shall give notice to the Executive that
the Employment Period shall not be so extended. Unless sooner terminated, the Executive’s employment shall terminate when
he reaches age 65.

 

3.          Terms
of Employment. (a) Position and Duties. (i) During the Employment Period , the Executive shall serve as President and
Chief Executive Officer of the Company,  with such duties, authorities and responsibilities as are customarily assigned
to such position. The Executive shall report directly and exclusively to the Board of Directors of each of BNC Bancorp (the
“Board”) and the Bank of North Carolina. The Executive shall serve without compensation on the Board and the Board
of Directors of the Bank of North Carolina during the Employment Period, subject to election by the shareholders of the Company.
During the Employment Period, the Executive shall be provided with an office at the corporate headquarters in High Point, North
Carolina. Notwithstanding any other provision of this Agreement to the contrary, upon the termination of the Executive’s
employment for any reason, the Executive shall immediately resign from all positions that he holds with the Company, the Bank and
any of their respective subsidiaries and affiliates (and with any other entities with respect to which the Company has requested
the Executive to perform services), as applicable, including, without limitation, the Board and all boards of directors of any
affiliates. The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon reasonable request
by the Company, but he shall be treated for all purposes as having so resigned from such positions upon termination of his employment,
regardless of when or whether he executes any such documentation.

 

(ii)         During
the Employment Period, and excluding any periods of vacation, sick leave or other approved leave of absence to which the Executive
is entitled, the Executive shall devote Executive’s reasonable best efforts and his full professional time and attention
to the business and affairs of the Company. During the Employment Period, it shall not be a violation of this Agreement for the
Executive to (A) serve on civic or charitable boards or committees and up to one corporate board or committee, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions, or (C) manage personal investments and investment companies,
without the prior consent of the Company, provided that doing so does not materially interfere with the performance of his duties
and responsibilities as Chief Executive Officer.

 

    	 

    	 

    

 

(b)         Compensation
(i) Base Salary. The Executive shall receive an Annual Base Salary at a rate of not less than $475,000, payable in accordance
with the Company’s normal payroll policies (but no less frequently than monthly). After 2013, the Executive’s Annual
Base Salary shall be reviewed for increase at least annually by the Board pursuant to its normal performance review policies for
senior executives. The Annual Base Salary shall not be reduced after any increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased.

 

(ii)         Annual
Bonus. During the Employment Period, the Executive shall be eligible to receive an annual bonus opportunity (“Annual
Bonus”) with a target of 40% of the Executive’s Annual Base Salary (the “Target Bonus”). The actual Annual
Bonus, which could be higher or lower than the Target Bonus, shall be based on the attainment of performance objectives to be established
by the Board or the Compensation Committee of the Board. The Annual Bonus shall be paid in cash no later than March 15 of the year
following the year to which the Annual Bonus relates.

 

(iii)        Long
Term Incentives. During the Employment Period, the Executive shall be eligible to participate in the Company’s long term
incentive compensation plans as may be in effect from time to time on a basis no less favorable than that generally provided to
other senior executives of the Company.

 

(iv)        Other
Employee Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be,
shall be eligible for participation in all other compensation, benefit, fringe benefit and perquisite plans, practices, policies
and programs provided by the Company on a basis that is no less favorable than those generally made available to other senior executives
of the Company. During the Employment Period, the Company shall pay or cause to be paid the Executive’s membership assessments
and dues in civic clubs. Without limiting the generality of the foregoing, the Executive shall be reimbursed for assessments, dues,
and expenses associated with his membership in and use of the High Point Country Club, the String & Splinter and the Grand
Dunes.

 

(v)         Reimbursement
of Business Expenses. During the Employment Period, the Executive shall be entitled to reimbursement for all reasonable business
expenses incurred in performing his obligations under this Agreement, including but not limited to all reasonable business travel
and entertainment expenses incurred while acting at the request of or in the service of the Company and reasonable expenses for
attendance at annual and other periodic meetings of trade associations.

 

(vi)        Use
of Automobile. During the Employment Period, the Executive shall have the use of an automobile titled in the Company’s
name for use by the Executive in carrying out his duties for the Company, the insurance and maintenance expenses of which shall
be paid by the Company. As additional compensation, the Executive may use such automobile for personal purposes, provided
that the Executive renders an accounting of his business and personal use to the Company in accordance with regulations under the
Internal Revenue Code of 1986, as amended (the “Code”).

 

    	2

    	 

    

 

(vii)       Vacation.
During the Employment Period, the Executive shall be entitled to no less than five weeks of paid annual vacation and sick leave
in accordance with the policies established from time to time by the Company. During the Employment Period, the Executive shall
not be entitled to any additional compensation for failure to use allotted vacation or sick leave, nor shall the Executive be entitled
to accumulate unused sick leave from one year to the next unless authorized by the Board to do so. Vacation days not used in a
given year may not be carried over from one calendar year to the next.

 

4.          Termination
of Employment. (a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s
death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of Disability set forth below), it may provide the Executive with written notice
in accordance with Section 13(c) of this Agreement of its intention to terminate the Executive’s employment. In such event,
the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability”
shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 120 consecutive
days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.

 

(b)         Cause.
The Company may terminate the Executive’s employment during the Employment Period either with or without Cause. For purposes
of this Agreement, “Cause” shall mean:

 

(i)          an
intentional act of fraud, embezzlement, or theft by the Executive in the course of his employment with BNC Bancorp or Bank of North
Carolina,

 

(ii)         intentional
violation of any law or significant policy of BNC Bancorp or Bank of North Carolina committed in connection with the Executive’s
employment, which has an adverse effect on BNC Bancorp or Bank of North Carolina,

 

(iii)        the
Executive’s gross negligence or gross neglect of duties in the performance of his duties to BNC Bancorp or Bank of North
Carolina,

 

(iv)        intentional
wrongful damage by the Executive to the business or property of BNC Bancorp or Bank of North Carolina, including without limitation
the reputation of BNC Bancorp or Bank of North Carolina, which causes material harm to BNC Bancorp or Bank of North Carolina,

 

    	3

    	 

    

 

(v)         a
material breach by the Executive of his fiduciary duties to BNC Bancorp and its stockholders or misconduct involving dishonesty,
in either case whether in his capacity as an officer or as a director of BNC Bancorp or Bank of North Carolina,

 

(vi)        a
material breach by the Executive of this Agreement that is not corrected by the Executive within 30 days after receiving written
notice of the breach,

 

(vii)       removal
of the Executive from office or permanent prohibition of the Executive from participating in Bank of North Carolina’s affairs
by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

 

(viii)      conviction
of the Executive for or plea of nolo contendere to a felony or conviction of or plea of nolo contendere to a misdemeanor
involving moral turpitude, which, in the case of a misdemeanor results in the actual incarceration of the Executive for 45 consecutive
days or more.

 

For purposes of this provision,
no act or failure to act on the part of the Executive shall be deemed to have been intentional if it was due primarily to an error
in judgment or negligence. An act or failure to act on the Executive’s part shall be considered intentional if it is not
in good faith and if it is without a reasonable belief that the action or failure to act is in the best interests of the Company.
The Executive shall not be deemed to have been terminated for Cause under this Agreement unless and until there is delivered to
the Executive a copy of a resolution duly adopted at a meeting of the board of directors called and held for such purpose, which
resolution shall (1) contain findings that, in the good faith opinion of the board, the Executive has committed an act constituting
Cause, and (2) specify the particulars thereof. The resolution of the board of directors shall be deemed to have been duly adopted
if and only if it is adopted by the affirmative vote of at least 75% of the Board then in office or 75% of the directors of Bank
of North Carolina then in office, in either case excluding the Executive, at a meeting duly called and held for that purpose. Notice
of the meeting and the proposed termination for Cause shall be given to the Executive a reasonable amount of time before the board’s
meeting. The Executive and his counsel (if the Executive chooses to have counsel present) shall have a reasonable opportunity to
be heard by the board at the meeting. Nothing in this Agreement limits the Executive’s or his beneficiaries’ right
to contest the validity or propriety of the board’s determination of Cause.

 

(c)         Good
Reason. The Executive’s employment may be terminated by the Executive with or without Good Reason. For purposes of this
Agreement, “Good Reason” shall mean, in the absence of a written consent of the Executive, any of the following:

 

(i)          the
assignment to the Executive of any duties materially inconsistent with the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3(a) of this Agreement, or
any other action by the Company which results in a material diminution in the Executive’s position, authority, duties or
responsibilities including any requirement that the Executive report directly to anyone other than the Board of Directors of BNC
Bancorp and Bank of North Carolina,

 

    	4

    	 

    

 

(ii)         the
failure of the Board to nominate the Executive for membership on the Board,

 

(iii)        any
reduction in the Executive’s Base Salary or Target Bonus other than a reduction of no more than ten percent (10%) in the
aggregate which is applied consistently to all senior executives of the Company,

 

(iv)        any
material breach by the Company of this Agreement,

 

(v)         any
requirement by the Company that the Executive’s services be rendered primarily at a location or locations more than 15 miles
from the location of BNC Bancorp’s principal executive offices on the Effective Date, or

 

(vi)        any
failure by the Company to comply with Section 10(c) of this Agreement.

 

In order to invoke a termination for Good Reason, the Executive
shall provide written notice to the Company of the existence of one or more of the conditions described in clauses (i) through
(vi) within 90 days following the Executive’s knowledge of the initial existence of such condition or conditions and the
Company shall have 30 days following receipt of such written notice (the “Cure Period”) during which it may remedy
the condition if such condition is reasonably subject to cure. In the event that the Company fails to remedy the condition constituting
Good Reason during the applicable Cure Period, the Executive’s “separation from service” (within the meaning
of Section 409A of the Code ) must occur, if at all, within 60 days immediately following the expiration of such Cure Period in
order for such termination as a result of such condition to constitute a termination for Good Reason.

 

(d)          Notice
of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section 13(c) of this Agreement. For purposes of this Agreement,
a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 60 days
after the giving of such notice or the end of the Cure Period, as applicable). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

(e)          Date
of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company
for Cause, or by the Executive with or without Good Reason, the date of receipt of the Notice of Termination or any later date
specified therein within 30 days of such notice (except as set forth above for any termination by the Executive for Good Reason),
as the case may be, (ii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive’s
employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.

 

    	5

    	 

    

 

5.          Obligations
of the Company upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment
Period, the Company shall terminate the Executive’s employment other than for Cause, death or Disability or the Executive
shall terminate employment for Good Reason, subject for purposes of clauses (i)(B) and (C) to the Executive executing and not revoking
a waiver and release in substantially the form attached to this Agreement as Appendix A (the “Waiver and Release”)
within 60 days of the Date of Termination and the Executive’s continued compliance with the covenants set forth in Section
9 of this Agreement:

 

(i)          the
Company shall pay to the Executive the following amounts:

 

A.           in
a lump sum in cash on the 30th day after the Date of Termination, the sum of (1) the Executive’s accrued Annual Base
Salary and any accrued vacation pay through the Date of Termination, (2) the Executive’s business expenses that have
not been reimbursed by the Company as of the Date of Termination that were incurred by the Executive prior to the Date of Termination
in accordance with the applicable Company policy, and (3) the Executive’s Annual Bonus earned for the fiscal year immediately
preceding the fiscal year in which the Date of Termination occurs if such bonus has been determined but not paid as of the Date
of Termination (the sum of the amounts described in clauses (1) through (3), shall be hereinafter referred to as the “Accrued
Obligations”); and

 

B.           in
a lump sum in cash no later than March 15 of the year following the year in which the Date of Termination occurs, subject to the
achievement of any applicable performance goals required in order for the bonus to be deductible by reason of qualifying for the
“performance-based” compensation exception of Section 162(m) of the Code, the product of (1) the Target Bonus and (2)
a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the
Date of Termination, and the denominator of which is 365 (the “Pro Rata Bonus”); and

 

C.           (i)
except as provided in clause (ii) below, in 18 equal monthly installments commencing on the first business day on or after the
60th day following the Date of Termination the amount equal to the product of (A) one and one-half and (B) the sum of (1) the Executive’s
Annual Base Salary and (2) the Target Bonus or (ii) if a termination of the Executive’s employment described in this Section
5(a) occurs within two years immediately following a Change of Control (as defined on Appendix B hereto) that constitutes
a “change in control” event within the meaning of Section 409A of the Code, in a lump sum in cash within 30 days after
the Date of Termination, the amount equal to the product of (A) three and (B) the sum of (1) the Executive’s Annual Base
Salary and (2) the Target Bonus (in the event such Change of Control does not constitute a “change in control” event
within the meaning of Section 409A of the Code, such amounts shall be paid in 18 equal monthly installments in a manner consistent
with clause (i) above); and

 

    	6

    	 

    

 

(ii)         subject
to the achievement of any applicable performance goals required in order for the award to be deductible by reason of qualifying
for the “performance-based” compensation exception of Section 162(m) of the Code, any equity-based awards granted to
the Executive shall vest and become free of restrictions immediately, and any stock options or stock appreciation rights granted
to the Executive shall be exercisable for the remainder of their ten year term, without regard to any provisions relating to earlier
termination of the stock options or SARs based on termination of employment (the “Equity Benefits”); and

 

(iii)        for
either (A) the 18-month period following the Date of Termination or (B) if a termination of the Executive’s employment described
in this Section 5(a) occurs within two years immediately following a Change of Control, the three-year period following the Date
of Termination (the “Benefits Continuation Period”), the Company shall continue to provide medical, dental and life
insurance benefits to the Executive and his eligible dependents who are covered as of the Date of Termination as if the Executive
remained an active employee of the Company; provided, however, that if providing continuation of medical and dental
benefits in accordance with this Section 5(a)(iii) would result in the Bank or any of its affiliates breaching the terms of any
insurance policy with an applicable insurer, or incurring any penalty or additional tax for failing to comply with any applicable
law, instead of providing such continuation of medical and dental benefits, the Executive shall be entitled to continuation coverage
pursuant to Section 4980B(f) of the Code (“COBRA”), and, in lieu of providing such benefits for the Benefits Continuation
Period, the Bank shall pay to Executive a monthly cash amount equal to the monthly premium amount the Bank would have paid for
Executive's medical and dental benefits coverage had he remained actively employed, less any applicable tax withholdings (each
such payment, an “Employer Payment”). Any medical and dental benefits provided by the Bank in accordance with the preceding
sentences during the Benefits Continuation Period shall not count towards the medical and dental plan's obligation to provide continuation
coverage pursuant to COBRA or any applicable provision of the Bank’s health or dental plans that provide for continuing coverage
with respect to the Executive and the last day of the Benefits Continuation Period shall be deemed to be the date of the Executive’s
“qualifying event” for purposes of COBRA, provided that if application of this sentence would result in the Bank or
any of its affiliates incurring any penalty or additional tax for failing to comply with any applicable law, this Section shall
be applied without giving effect to this sentence (collectively “Welfare Benefits”); and

 

(iv)        to
the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract
or agreement of the Company and its affiliated companies through the Date of Termination (such other amounts and benefits shall
be hereinafter referred to as the “Other Benefits”). As used in this Agreement, the term “affiliated companies”
shall include any company controlled by, controlling or under common control with the Company; and

 

    	7

    	 

    

 

(v)         the
Company shall pay or cause to be paid to the Executive reasonable outplacement expenses in an amount up to $25,000, and for the
one year period after the Date of Termination, the Company shall provide the Executive with the use of office space and reasonable
office support facilities, including secretarial assistance.

 

(b)        Death.
If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for
(i) payment of Accrued Obligations, (ii) the timely payment or provision of Other Benefits, (iii) payment of the Pro Rata Bonus,
(iv) the Welfare Benefits and (v) the Equity Benefits. Accrued Obligations shall be paid to the Executive’s estate or beneficiary,
as applicable, in a lump sum in cash within 30 days of the Date of Termination and the Pro Rata Bonus shall be paid to the Executive’s
estate or beneficiary, as applicable, on the date specified in Section 5(a)(i). With respect to the provision of Other Benefits,
the term Other Benefits as utilized in this Section 5(b) shall include death benefits for which the Company pays as in effect on
the date of the Executive’s death and the continued provision of the Welfare Benefits.

 

(c)     
   Disability. If the Executive’s employment is terminated by the Company by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further obligations to the
Executive, other than for (i) payment of Accrued Obligations, (ii) the timely payment or provision of Other Benefits, (iii)
payment of the Pro Rata Bonus, (iv) the Welfare Benefits and (v) the Equity Benefits. Accrued Obligations shall be paid to
the Executive or his estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination
and the Pro Rata Bonus shall be paid to the Executive or his estate or beneficiary, as applicable, on the date specified in
Section 5(a)(i). With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 5(c)
shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and the
continued provision of Welfare Benefits.

 

(d)         Cause;
Other than for Good Reason. If the Executive’s employment shall be terminated by the Company for Cause or the Executive
terminates his employment without Good Reason during the Employment Period, this Agreement shall terminate without further obligations
to the Executive other than the obligation to pay to the Executive (i) the Accrued Obligations through the Date of Termination
and (ii) Other Benefits, in each case to the extent theretofore unpaid. Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.

 

    	8

    	 

    

 

6.          Full
Settlement; Certain Legal Fees. The Company’s obligation to make the payments provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others; provided, however, that if the Executive is
to receive payments or benefits pursuant to Section 5, he will not be eligible to receive any other severance payments or benefits
from the Company. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this Agreement and, such amounts shall not be reduced whether
or not the Executive obtains other employment. If after a Change of Control occurs it appears to the Executive that (a) the Company
or any of its affiliated companies has failed to comply with any of its obligations under this Agreement, or (b) the Company or
any other person has taken any action to declare this Agreement void or unenforceable, or instituted any litigation or other legal
action designed to deny, diminish, or to recover from the Executive the benefits intended to be provided to the Executive hereunder,
the Company irrevocably authorizes the Executive from time to time to retain counsel of his choice, at the Company’s expense
as provided in this Section 6, to represent the Executive in connection with the initiation or defense of any litigation or other
legal action, whether by or against the Company or any of its affiliated companies or any director, officer, stockholder, or other
person affiliated with the Company or any of its affiliated companies in any jurisdiction. Notwithstanding any existing or previous
attorney-client relationship between the Company and any of its affiliated companies and any counsel chosen by the Executive under
this Section 6, the Company irrevocably consents to the Executive entering into an attorney-client relationship with that counsel,
and the Company and the Executive agree that a confidential relationship shall exist between the Executive and that counsel. The
fees and expenses of counsel selected from time to time by the Executive as provided in this Section 6 shall be paid or reimbursed
to the Executive by the Company on a regular, periodic basis (no less frequently than monthly) upon presentation by the Executive
of a statement or statements prepared by such counsel in accordance with such counsel’s customary practices, up to a maximum
aggregate amount of $500,000, whether suit be brought or not, and whether or not incurred in trial, bankruptcy, or appellate proceedings.
The Company’s obligation to pay the Executive’s legal fees provided by this Section 6 operates separately from and
in addition to any legal fee reimbursement obligation BNC Bancorp or Bank of North Carolina may have with the Executive under any
separate severance or other agreement.

 

7.          Supplemental
Retirement Plan. Bank of North Carolina and the Executive have entered into an Amended Salary Continuation Agreement, dated
as of December 18, 2007 (the “Salary Continuation Agreement”). Unless the Salary Continuation Agreement explicitly
provides otherwise, whether benefits are properly payable to the Executive under the Salary Continuation Agreement shall be determined
solely by reference to that Agreement. Notwithstanding the foregoing and anything set forth in the Salary Continuation Agreement
to the contrary, after the date hereof, Section 7.14 of the Salary Continuation Agreement shall be of no force and effect and Section
8 of this Agreement shall govern the treatment of any Payments (as defined below) under Section 4999 and Section 280G of the Code.

 

8.          Section
280G.

 

(a)         Notwithstanding
anything in this Agreement to the contrary, in the event that the Accounting Firm shall determine that receipt of all Payments
would subject the Executive to tax under Section 4999 of the Code, the Accounting Firm shall determine whether some amount of Agreement
Payments meets the definition of “Reduced Amount.” If the Accounting Firm determines that there is a Reduced Amount,
then the aggregate Agreement Payments shall be reduced to such Reduced Amount.

 

    	9

    	 

    

 

(b)        If
the Accounting Firm determines that the aggregate Agreement Payments should be reduced to the Reduced Amount, the Company or one
of its subsidiaries shall promptly give the Executive notice to that effect and a copy of the detailed calculation thereof, and
the Company shall reduce the Agreement Payments in the following order: (A) by reducing benefits payable pursuant to Section 5(a)(i)(B)
of the Agreement, then (B) by reducing amounts payable pursuant to Section 5(a)(i)(C) of the Agreement, and then (C) by reducing
amounts payable pursuant to Section 5(a)(ii), beginning with payments that would be made last in time. All determinations made
by the Accounting Firm under this Section 8 shall be binding upon the Company and the Executive and shall be made within 60 days
of the Executive’s Date of Termination. In connection with making determinations under this Section 8, the Accounting Firm
shall take into account the value of any reasonable compensation for services to be rendered by the Executive before or after the
Change of Control, including without limitation, the Executive’s agreeing to refrain from performing services pursuant to
a covenant not to compete or similar covenant, and the Company shall cooperate in good faith in connection with any such valuations
and reasonable compensation positions. Without limiting the generality of the foregoing, for purposes of this provision, the Company
agrees to allocate as consideration for the covenants set forth in Section 9 the maximum amount of compensation and benefits payable
under Section 5(a) hereof reasonably allocable thereto so as to avoid, to the extent possible, subjecting any Payments to tax under
Section 4999 of the Code.

 

(c)         As
a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of the Executive
pursuant to this Agreement which should not have been so paid or distributed (each, an “Overpayment”) or that additional
amounts which will have not been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement
could have been so paid or distributed (each, an “Underpayment”), in each case, consistent with the calculation of
the Reduced Amount hereunder. In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue
Service against the Company or the Executive which the Accounting Firm believes has a high probability of success determines that
an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Executive shall
be repaid by the Executive to the Company; provided, however, that no such repayment shall be required if and to
the extent such deemed repayment would not either reduce the amount on which the Executive is subject to tax under Section 1
and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling
precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive together with interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code.

 

(d)        All
fees and expenses of the Accounting Firm in implementing the provisions of this Section 8 shall be borne by the Company.

 

(e)         Definitions.
The following terms shall have the following meanings for purposes of this Section 8.

 

(i)          “Accounting
Firm” shall mean a nationally recognized certified public accounting firm that is mutually agreed to by the Company and the
Executive for purposes of making the applicable determinations hereunder, which firm shall not be a firm serving as accountant
or auditor for the individual, entity or group effecting the Change of Control;

 

    	10

    	 

    

 

(ii)         “Agreement
Payment” shall mean a Payment paid or payable pursuant to this Agreement (disregarding this Section 8);

 

(iii)        “Net
After-Tax Receipt” shall mean the Present Value of a Payment net of all taxes imposed on the Executive with respect thereto
under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate
under Section 1 of the Code and under state and local laws which applied to the Executive’s taxable income for the immediately
preceding taxable year, or such other rate(s) as the Executive shall certify, in the Executive’s sole discretion, as likely
to apply to the Executive in the relevant tax year(s);

 

(iv)        A
“Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2)
of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise;

 

(v)         “Present
Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes
of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the
Code; or

 

(vi)        “Reduced
Amount” shall mean the amount of Agreement Payments that (x) has a Present Value that is less than the Present Value of all
Agreement Payments and (y) results in aggregate Net After-Tax Receipts for all Payments that are greater than the Net After-Tax
Receipts for all Payments that would result if the aggregate Present Value of Agreement Payments were any other amount that is
less than the Present Value of all Agreement Payments.

 

9.          Confidential
Information; Non-Compete; Non-Solicit of Employees.

 

(a)         Confidential
Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of
this Agreement). After termination of the Executive’s employment with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it or as may be required by applicable law, court order,
a regulatory body or arbitrator or other mediator. For the purposes of this Section 9, “confidential information” means
all of the Company’s and its affiliates’ confidential and proprietary information and trade secrets, including, but
not limited to:

 

(i)          the
whole or any portion or phase of any business plans, financial information, purchasing data, supplier data, accounting data, or
other financial information,

 

    	11

    	 

    

 

(ii)         the
whole or any portion or phase of any research and development information, design procedures, algorithms, or processes, or other
technical information,

 

(iii)        the
whole or any portion or phase of any marketing or sales information, sales records, customer lists or client lists, prices, sales
projections, or other sales information, and

 

(iv)        trade
secrets, as defined from time to time by the laws of the State of North Carolina.

 

(b)        Non-Compete
and Non-Solicit: In consideration of the Company’s obligations under Section 5 hereof:

 

(i)          During
the 15-month period following the Executive’s termination of employment during the Employment Period for any reason (the
“Restricted Period”), the Executive will not, directly or indirectly, on behalf of the Executive or any other person,
firm, corporation, or other business organization (A) engage as an employee, officer, director, manager, salesperson, consultant,
independent contractor, representative, or other agent in providing Banking Services (as defined below) on behalf of any other
person, firm, corporation, or other business organization that is a competitor of the Company or any of its affiliates in Guilford
County, any counties contiguous thereto, any counties in which BNC Bancorp, Bank of North Carolina or any of their respective affiliates
has an office, or any counties from which BNC Bancorp, Bank of North Carolina or any of their respective affiliates derives revenue
that is significant, (B) provide Banking Services to any Client, or (C) make any statement or take any actions that interfere with
BNC Bancorp, Bank of North Carolina or any of their respective affiliates business relationships with any Client, including, but
not limited to, any statements that are harmful to the reputation of BNC Bancorp, Bank of North Carolina or any of their respective
affiliates or their standing in the communities they serve.  

 

(ii)         During
the Restricted Period, the Executive shall not, directly or indirectly, (A) solicit or encourage any person to leave his or her
employment with the Company or assist in any way with the hiring of any Company employee by any other business or (B) except on
behalf of BNC Bancorp, Bank of North Carolina or any of their respective affiliates, make contact either directly or indirectly
with any Client, nor shall the Executive otherwise induce or encourage any Client to enter into any business relationship with
any person, firm, corporation, or other business organization other than BNC Bancorp, Bank of North Carolina or any of their respective
affiliates relating to Banking Services or banking business of any type.

 

(iii)        For
purposes of this Section 9(b):

 

A.          The
term “Banking Services” means retail or commercial banking business, asset and trust management, wealth management,
investment services, and all other services customarily provided by banks or otherwise provided by the BNC Bancorp, Bank of North
Carolina or any of their respective affiliates.

 

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B.           The
term “Client” means all persons, firms, corporations, entities, or business organizations who are or were customers
or clients of the BNC Bancorp, Bank of North Carolina or any of their respective affiliates at any time during the two-year period
prior to the Date of Termination.

 

(c)        The
Executive acknowledges that the Company would be irreparably injured by a violation of this Section 9 and the Executive or the
Company, as applicable, agrees that the Company or the Executive, as applicable, in addition to any other remedies available to
it for such breach or threatened breach, shall be entitled, without posting a bond, to a preliminary injunction, temporary restraining
order, or other equivalent relief, restraining the Executive or the Company (including its executive officers and directors), as
applicable, from any actual or threatened breach of this Section 9. The Executive agrees not to urge in any action the claim or
defense that an adequate remedy at law exists.

 

10.        Successors.
(a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by
the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives,
heirs or legatees.

 

(b)        This
Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

(c)        The
Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement,
“Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

11.        Indemnification.
BNC Bancorp shall indemnify the Executive or cause the Executive to be indemnified with respect to his activities as a director,
officer, employee, or agent of BNC Bancorp or Bank of North Carolina or as a person who is serving or has served at the request
of BNC Bancorp (a “Representative”) as a director, officer, employee, agent, or trustee of an affiliated corporation,
joint venture trust or other enterprise, domestic or foreign, in which BNC Bancorp has a direct or indirect ownership interest
against expenses (including, without limitation, attorneys’ fees, judgments, fines, and amounts paid in settlement) actually
and reasonably incurred by him (“Expenses”) in connection with any claim against the Executive that is the subject
of any threatened, pending, or completed action, suit, or other type of proceeding, whether civil, criminal, administrative, investigative,
or otherwise and whether formal or informal (a “Proceeding”), to which the Executive was, is, or is threatened to be
made a party by reason of the Executive being or having been such a director, officer, employee, agent, or Representative. The
indemnification provided herein shall not be exclusive of any other indemnification or right to which the Executive may be entitled
and shall continue after the Executive has ceased to occupy a position as an officer, director, employee, agent or Representative
with respect to Proceedings relating to or arising out of the Executive’s acts or omissions during his service in such position.
The benefits provided to the Executive under this Agreement for the Executive’s service as a Representative shall be payable
if and only if and only to the extent that reimbursement to the Executive by the affiliated entity with which the Executive has
served as a Representative, whether pursuant to agreement, applicable law, articles of incorporation or association, by-laws or
regulations of the entity, or insurance maintained by such affiliated entity, is insufficient to compensate the Executive for Expenses
actually incurred and otherwise payable by BNC under this Agreement. Any payments in fact made to or on behalf of the Executive
directly or indirectly by the affiliated entity with which the Executive served as a Representative shall reduce the obligation
of BNC hereunder. Anything herein to the contrary notwithstanding, however, nothing in this Section 11 requires indemnification,
reimbursement, or payment by BNC Bancorp or Bank of North Carolina, and the Executive shall not be entitled to demand indemnification,
reimbursement or payment hereunder –

 

    	13

    	 

    

 

(a)         if
and to the extent indemnification, reimbursement, or payment constitutes a “prohibited indemnification payment” within
the meaning of Federal Deposit Insurance Corporation Rule 359.1(l)(1) [12 CFR 359.1(l)(1)], or

 

(b)        for
any claim or any part thereof as to which the Executive shall have been determined by a court of competent jurisdiction, from which
no appeal is or can be taken, by clear and convincing evidence, to have acted with deliberate intent to cause injury to BNC Bancorp
or Bank of North Carolina or with reckless disregard for the best interests of BNC Bancorp, or

 

(c)         for
any claim or any part thereof arising under Section 16(b) of the Securities Exchange Act of 1934 as a result of which the Executive
is required to pay any penalty, fine, settlement, or judgment, or

 

(d)        for
any obligation of the Executive based upon or attributable to the Executive gaining in fact any personal gain, profit, or advantage
to which he was not entitled, or

 

(e)         any
proceeding initiated by the Executive without the consent or authorization of the Board, but this exclusion shall not apply with
respect to any claims brought by the Executive (i) to enforce his rights under this Agreement, or (ii) in any Proceeding initiated
by another person or entity whether or not such claims were brought by the Executive against a person or entity who was otherwise
a party to such proceeding.

 

12.        Insurance.
BNC Bancorp shall maintain or cause to be maintained liability insurance covering the Executive throughout the Employment Period
and thereafter as is sufficient to provide the indemnification set forth in Section 11 hereof.

 

13.        Miscellaneous.

 

(a)        This
Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina, without reference to principles
of conflict of laws. If, under any such law, any portion of this Agreement is at any time deemed to be in conflict with any applicable
statute, rule, regulation or ordinance, such portion shall be deemed to be modified or altered to conform thereto. The captions
of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

 

    	14

    	 

    

 

(b)        This
Agreement sets forth the entire agreement of the parties concerning the employment of the Executive by the Company, and any oral
or written statements, representations, agreements, or understandings made or entered into prior to or contemporaneously with the
execution of this Agreement, are hereby rescinded, revoked, and rendered null and void by the parties. The Salary Continuation
Agreement and the Split Dollar Agreement and Endorsement and the parties’ rights and obligations thereunder shall remain
in full force and effect according to the terms thereof, as the same may be amended and restated after the date of this Agreement.
Without limiting the generality of the foregoing, the parties hereto acknowledge and agree that this Agreement supersedes in its
entirety the employment agreement dated as of December 31, 2007, entered into by the Executive and Bank of North Carolina and BNC
Bancorp, as amended or supplemented.

 

(c)         All
notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other parties or by registered
or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

	If to the Executive:	At the most recent address

on file at the Company.
	 	 
	If to the Company:	BNC Bancorp, 
	 	3980 Premier Drive, 
	 	High Point, North Carolina  27265 
	 	Attention:  Corporate Secretary 

 

or to such other address as either party shall have furnished
to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

 

(d)        The
invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

 

(e)         The
Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

 

(f)         The
Executive and the Company agree that neither the Company nor any of its affiliates shall make any payments or provide any benefits
otherwise due under this Agreement if such payments or benefits are prohibited by applicable legal and/or regulatory requirements
or guidance or any changes in applicable law, rules or regulations or in the formal and conclusive interpretation thereof by any
regulator or agency of competent jurisdiction, including, but not limited to, with respect to the “golden parachute rules”
pursuant to Part 359 of the Federal Deposit Insurance Corporation [12 CFR 359].

 

    	15

    	 

    

 

(g)         Any
provision of this Agreement that by its terms continues after the expiration of the Employment Period or the termination of the
Executive’s employment shall survive in accordance with its terms.

 

(h)         If
any compensation or benefits provided by this Agreement may result in the application of Section 409A of the Code, the Company
shall, in consultation with the Executive, modify the Agreement in the least restrictive manner necessary in order to exclude such
compensation from the definition of “deferred compensation” within the meaning of such Section 409A of the Code or
in order to comply with the provisions of Section 409A of the Code, other applicable provision(s) of the Code and/or any rules,
regulations or other regulatory guidance issued under such statutory provisions and without any diminution in the value of the
payments to the Executive. Any payments that qualify for the “short-term” deferral exception under Treasury Regulations
Section 1.409A-1(b)(4), the “separation pay” exception under Treasury Regulations Section 1.409A-1(b)(9)(iii) or any
other exception under Section 409A of the Code will be paid under the applicable exceptions to the greatest extent possible. Each
payment under this Agreement shall be treated as a separate payment for purposes of Section 409A of the Code. Anything in this
Agreement to the contrary notwithstanding, if at the time of the Executive’s separation from service within the meaning of
Section 409A of the Code, the Executive is considered a “specified employee” within the meaning of Section 409A(a)(2)(B)(i)
of the Code, and if any payment that the Executive becomes entitled to under this Agreement is considered deferred compensation
subject to interest, penalties and additional tax imposed pursuant to Section 409A of the Code as a result of the application of
Section 409A(a)(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earlier of (i) six months
and one day the Executive’s separation from service or (ii) the Executive’s death. In no event shall the date of termination
of the Executive’s employment be deemed to occur until the Executive experiences a “separation from service”
within the meaning of Section 409A of the Code, and notwithstanding anything contained herein to the contrary, the date on which
such separation from service takes place shall be the Date of Termination. All reimbursements provided under this Agreement shall
be provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that
(A) the amount of expenses eligible for reimbursement during one calendar year will not affect the amount of expenses eligible
for reimbursement in any other calendar year; (B) the reimbursement of an eligible expense will be made no later than the last
day of the calendar year following the calendar year in which the expense is incurred; and (C) the right to any reimbursement will
not be subject to liquidation or exchange for another benefit.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]

 

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s
hand and, pursuant to the authorization from their respective board of directors, the BNC Bancorp and Bank of North Carolina have
caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

 

	 	BNC BANCORP	 
	 	 	 
	 	By	/s/  D. Vann Williford	 
	 	Name:  D. Vann Williford	 
	 	Title:  Compensation Committee Chair	 
	 	 	 
	 	BANK OF NORTH CAROLINA	 
	 	 	 
	 	By	/s/ D. Vann Williford	 
	 	Name:  D. Vann Williford	 
	 	Title:  Compensation Committee Chair	 
	 	 	 
	 	EXECUTIVE	 
	 	 	 
	 	/s/ Richard D. Callicutt	 

 

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Appendix A

 

WAIVER AND RELEASE OF CLAIMS

 

In exchange for the
post-termination payments and benefits described in that certain employment agreement (the “Employment Agreement”)
by and among [NAME] (the “Employee”), BNC Bancorp (“Bancorp”) and
Bank of North Carolina (“BNC” and together with Bancorp, the “Company”) (sometimes collectively referred
to as the “Parties”), the Parties enter into this Waiver and Release of Claims (the “Agreement”) and agree
as follows:

 

1.           The
Parties agree and acknowledge that Employee’s employment with the Company, which was at all times strictly on an “at-will”
basis, is terminated, with such termination effective as of and beginning on [DATE] (the
“Termination Date”).

 

2.           The
Parties acknowledge and agree that as of the Termination Date, other than as explicitly set forth in the Employment Agreement,
no employment compensation, benefits (except as required by law), or other amounts were due and owing to Employee in connection
with Employee’s employment with the Company, including without limitation any vacation pay, sick leave pay, holiday pay,
wages, commissions, bonus, or other form of compensation or benefit, with the exception of any final wage payments or payments
for accrued but unused vacation time which Employee is otherwise eligible to receive, which amounts shall be paid to Employee on
or before the next regularly scheduled pay day after the Termination Date.

 

3.           Employee
specifically acknowledges and agrees that:

 

		(a)	Employee has not suffered any injury within the course
and scope of his employment at the Company, or otherwise in connection with, arising from, or related to his employment at the
Company, for which Employee has not already filed a claim;

 

		(b)	The payments that the Company shall pay pursuant to the
Employment Agreement are in addition to any sum that Employee would otherwise be entitled to receive from the Company by reason
of Employee’s employment with the Company; and

 

		(c)	This Agreement has been individually negotiated between
Employee and the Company.

 

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Appendix A

 

4.           Employee
hereby unconditionally releases and forever discharges Bancorp, BNC and its current and former owners, partners, directors, officers,
shareholders, affiliates, agents, employee benefit plans, insurers, employees, attorneys, subsidiaries, parents, successors, predecessors
and assigns, and each of them (collectively, the “Released Parties”), of and from, and agrees not to sue and not to
assert against any of them, any causes of action, claims or demands whatsoever (whether known or unknown, and whether at law, in
equity, or before any agency or commission of local, state, or federal governments) that Employee is permitted by law to release,
known and unknown, arising, alleged to have arisen, or which might have been alleged to have arisen out of Employee’s employment
with or termination of employment by the Company, and under any law applicable to such employment or termination (including without
limitation the Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Labor Management Relations Act, the
National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement and Income Security Act, the Americans
With Disabilities Act, the Federal Rehabilitation Act of 1973, 42 U.S.C. § 1981, the North Carolina Retaliatory Employment
Discrimination Act, the North Carolina Persons With Disabilities Protection Act, the Age Discrimination in Employment Act of 1967,
the Worker Adjustment and Retraining Notification Act, and any and all other federal, state, and local laws and regulations related
to employment, termination, employment discrimination or retaliation, wages, hours, benefits, or compensation), any and all claims
for attorneys’ fees and costs, and any and all other claims and causes of actions, known and unknown, which Employee may
have or claim to have against any of the Released Parties from the beginning of time to the date hereof which can by applicable
law be released. Employee hereby waives Employee’s right to any monetary recovery should any agency or commission of any
kind of local, state, or federal governments pursue any claims on Employee’s behalf.

 

5.    
      If and to the extent that any claims, demands, or causes of action Employee released or
attempted to release in Paragraph 4 above exist and accrued prior to the execution of this Agreement by Employee, and the
approval of any court, agency, administrative body, commission, or other entity is necessary to fully effectuate any such
release, Employee agrees to participate in and cooperate fully with the Company in obtaining any such approval. Subject to
the foregoing and notwithstanding anything to the contrary herein, any claims, demands, or causes of action that Employee
cannot by law release, or which cannot be released by Employee by the execution of this Agreement under the circumstances
existing at the time of such execution, are excluded from the release set forth in Paragraph 4 above; and Employee does not
waive any rights, claims, demands, or causes of action that may arise after the date Employee executes this Agreement.

 

6.      
    As a further condition for the payment of funds pursuant to the Employment Agreement, Employee agrees
to fully cooperate with the Company in the orderly transition of his duties to Company personnel, and further agrees to fully
cooperate with the Company in providing any requested information related to any function of Employee’s prior
employment with the Company. 

 

7.      
    Employee further acknowledges and agrees that following the execution of this Agreement, Employee
will not make any negative, derogatory, defamatory, slanderous, or disparaging comments, references, or characterizations,
either verbally or in writing, regarding the Company, including without limitation Bancorp or BNC’s services, products
or services provided by Bancorp or BNC, business models, personnel, officers, affiliates, management, and financial status,
to any of the following: former or existing employees of Bancorp or BNC, customers or business partners of Bancorp or BNC,
the media, the general public, on the Internet, or any other entity, for any purpose whatsoever, unless a legal duty to do so
is imposed.

 

    	2 of 7

    	 

    

 

Appendix A

 

8.      
    Employee represents, warrants, promises, and covenants that:

 

		(a)	Employee has returned to the Company any and all materials and property of the Company in Employee’s
possession, custody, or control, including without limitation all documents, files, data, data disks, magnetic and other storage
media, drawings, manuals, reports, samples, presentations, customer lists, supplier lists, price lists, vendor lists, documents
equipment, data, and all other tangible material referencing, concerning, or containing any Confidential Information (as defined
in Subparagraph (b) immediately below) or any part thereof, and all copies thereof;

 

		(b)	From the date of execution of this Agreement, continuously, in perpetuity, and for all times, Employee
will not keep, use (for the benefit of Employee or any third party), disseminate, disclose, divulge, deliver, or otherwise make
available or by inaction allow to be made available to any person or entity other than an officer or director of Bancorp or BNC
any confidential information concerning the business or assets of Bancorp or BNC (all of which are collectively referred to herein
as “Confidential Information”) including without limitation the following: the methods and systems used by Bancorp
or BNC in conducting its business, information relating to, concerning or referencing existing and prospective
expansion plans, existing and potential financing sources and arrangements, existing and prospective marketing plans and activities,
existing and prospective business plans and strategies, existing and prospective pricing plans and strategies, budgets, financial
information, profit and loss information, research, know-how, lists of actual or potential customers, suppliers, dealers,
and distributors of Bancorp or BNC, any information regarding Bancorp or BNC’s marketing, sales, or other business networks,
and any and all other confidential information regarding the Company, its products or services, or any of the above items developed,
acquired or compiled by the Company, whether oral, written, physical, electronic, magnetic, graphic, encoded or in any other tangible
or intangible form; and

 

		(c)	For the purposes of this Agreement, “Confidential
Information” shall not include: (i) information that is generally known or is available to the general public through legitimate
origins (and other than as the result of unauthorized disclosure by or through Employee), as of the date such information becomes
generally known or available to the general public; (ii) information that is rightfully acquired by Employee after the date of
this Agreement from a third party whose disclosure of such information is not in violation of any obligation of confidentiality
to the Company, as of the date such information is actually acquired by Employee; and (iii) knowledge, skills or information which is common to the trade or profession of Employee.

 

    	3 of 7

    	 

    

 

Appendix A

 

9.     
     With respect to any and all Confidential Information, Employee acknowledges and agrees
that:

 

		(a)	The Confidential Information and all copies thereof, as
described above, is sensitive, valuable, and proprietary information that is the sole and lawful property of the Company;

 

		(b)	The Confidential Information represents a material investment
of Bancorp or BNC’s time, money, and other resources;

 

		(c)	Bancorp and BNC has a legitimate need to protect such Confidential
Information (including without limitation a need to protect economic advantages from confidential data and connections); and

 

		(d)	The Confidential Information is the subject of reasonable
efforts on Bancorp or BNC’s behalf to keep it confidential.

 

10.         Employee
agrees that this Agreement and all of its terms are strictly confidential and have not and shall not be disclosed, discussed or
revealed by Employee to any other persons, entities, or organizations. Notwithstanding the foregoing, Employee is permitted to
make any disclosures required by court order or subpoena, and is further permitted to disclose the terms of this Agreement to Employee’s
personal tax and financial advisors, legal counsel, governmental tax agencies, and spouse (if applicable), provided that any such
entity agrees to abide by the confidentiality requirement set forth in this Paragraph.

 

11.         The
Parties agree that should any term, clause, portion, or provision of this Agreement be determined to be invalid or unenforceable
by a court, governmental agency, or arbitrator of competent jurisdiction, such term, clause, portion, or provision shall be deemed
severed from the Agreement, and such determination and severance shall not affect the enforceability of the remainder of the Agreement.
This Agreement shall be interpreted in accordance with the law of the State of North Carolina, without regard to the conflicts
of laws provisions thereof. The Parties agree that any rule of construction of contracts resolving any
ambiguities against the drafting party shall be inapplicable to this Agreement.

 

    	4 of 7

    	 

    

 

Appendix A

 

12.         This
Agreement shall be binding upon Employee and Employee’s executors, heirs, estate, legal representatives, beneficiaries and
other successors in interest, and shall inure to the benefit of the Company and its successors and assigns.

 

13.         This
Agreement supersedes any and all other agreements or understandings, whether oral, implied, or in writing, between the Parties
with respect to the subject matter hereof, and contains all of the covenants and agreements between the Parties with respect to
such matters in their entirety. No representations, inducements, promises or agreements, oral or otherwise, have been made to Employee,
or anyone acting on behalf of Employee, that are not embodied herein. No modification to this Agreement, including without limitation
this provision, will be effective unless it is in writing and signed by Employee and the Company.

 

14.         Employee
further specifically acknowledges the following:

 

		(a)	Employee received a copy of this Agreement on or before
the Termination Date, has been given at least twenty-one (21) days within which to consider this Agreement, and hereby waives
any and all rights and claims to assert that such twenty-one (21) day period has not been afforded to him/her; and if Employee
has elected to sign this Agreement prior to the expiration of said twenty-one (21) day period Employee has done so of Employee’s
own volition and not as the result of any requirement of or coercion by Bancorp, BNC or any of its agents;

 

		(b)	Employee has been and is hereby advised in writing through
this Agreement, which Employee agrees constitutes sufficient notice and which Employee has reviewed prior to signing, that Employee
has the right to consult and could consult with an attorney prior to executing this Agreement, and Employee acknowledges that
Employee has had the opportunity to consult an attorney;

 

		(c)	Employee has seven (7) days following the date of execution
of this Agreement to revoke the Agreement, and the Agreement will not become effective or enforceable until after this seven (7)
day period has expired; and in order to revoke this Agreement Employee must advise the Company in writing of Employee’s
election to revoke it such that the notice is received by the Company within the above seven (7) day period at the following address:
Bank of North Carolina, attn: EVP/Director of Human Resources, 3980 Premier Drive, Suite 120, High Point, NC 27265; and

 

		(d)	Employee recognizes that Employee is specifically releasing,
among other claims, any claims under the Age Discrimination in Employment Act of 1967 and all amendments thereto.

 

    	5 of 7

    	 

    

 

Appendix A

 

15.         Employee
agrees to pay the costs, expenses, and fees, including reasonable attorney fees, incurred by Bancorp or BNC in any successful effort
by Bancorp or BNC to enforce or defend its rights under this Agreement.

 

16.         The
rights and remedies of Bancorp or BNC in this Agreement shall be deemed cumulative, and the exercise of one of such remedies shall
not operate to bar the exercise of any other rights and remedies reserved to Bancorp or BNC or available at law or in equity. The
waiver of a breach or provision hereof shall not be effective unless in writing and signed by Employee and the Company, and shall
not operate or be construed as a waiver of a breach of any other provision hereof or of any subsequent breach.

 

17.         Employee
understands and acknowledges that Employee’s obligations, duties, and liabilities set forth herein are continuing, absolute,
and unconditional, and that any alleged breach by Bancorp or BNC of any duty shall not release Employee from Employee’s obligations
herein, and shall not be a defense to any action or proceeding instituted by or on behalf of Bancorp or BNC to enforce any rights
in connection with any such obligation, duty, or liability. Employee agrees that Employee will at all times safeguard the value
and secrecy of all Confidential Information, and will not disclose, use to the benefit of Employee or any person or entity that
is not Bancorp or BNC, or use to the detriment of Bancorp or BNC, any Confidential Information.

 

18.         Employee
states and acknowledges that Employee has entered into this Agreement knowingly and voluntarily and of Employee’s own free
will free from any duress or coercion, that Employee understands fully all the terms of the Agreement, and that Employee knowingly
and voluntarily intends to be legally bound by this Agreement.

 

In testimony whereof,
the Parties hereto set their hands and seals.

 

	 	 	 	(SEAL)
	Witness	 	 

 

	 	Date:	 	 

 

	 	BANK OF NORTH CAROLINA
	 	 	 
	 	By:	 	 
	 	 	 
	 	Position:	 	 
	 	 	 
	 	Date:	 	 

 

    	6 of 7

    	 

    

 

Appendix A

 

	 	BNC Bancorp	 
	 	 	 
	 	By:	 	 
	 	 	 
	 	Position:	 	 
	 	 	 
	 	Date:	 	 

 

    	7 of 7

    	 

    

 

Appendix B

 

Definition of Change of Control

 

(i)          Any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 51% or more of either (a) the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (b) the combined voting power of the then-outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however,
that, for purposes of this definition, the following acquisitions shall not constitute a Change of Control: (w) any acquisition
directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Affiliated Company or (z) any acquisition pursuant to a transaction that complies
with clauses (iii)(a), (iii)(b) and (iii)(c) below;

 

(ii)         Individuals
who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date
whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;

 

(iii)        Consummation
of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets
or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case
unless, following such Business Combination, (a) all or substantially all of the individuals and entities that were the beneficial
owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, greater than 50% of the then-outstanding shares of common stock (or, for
a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled
to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be,
of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction,
owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be, (b) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 51% or more of, respectively, the then-outstanding shares
of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding
voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and
(c) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of
the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Combination; or

 

    	B-1

    	 

    

 

(iv)        Approval
by the stockholders of the Company of a complete liquidation or dissolution of the Company.

 

    	B-2

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