Document:

mm10-1110_8ke1002.htm

 

EXHIBIT 10.2

 

 

This VOTING AND SUPPORT AGREEMENT, dated as of October 12, 2010 (this “Agreement”), is made and entered into by and among Utah Intermediate Holding Corporation, a Delaware corporation (“Parent”), Utah Merger Corporation, a New Jersey corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Comverse Technology, Inc., a shareholder of Ulticom, Inc., a New Jersey corporation (the “Company”) (“Shareholder”).

 

PRELIMINARY STATEMENT

Capitalized terms used but not defined herein shall have the meanings given such terms in that certain Agreement and Plan of Merger, dated as of the date hereof, by and among Parent, Merger Sub and the Company (including any exhibits, schedules or supplements thereto, the “Merger Agreement”).

 

Shareholder is the record and beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which meaning will apply for all uses of the term “beneficial owner” in this Agreement) of 7,386,669 shares of common stock, no par value, of the Company (“Company Common Stock”) (all such shares of Company Common Stock being hereinafter referred to as the “Covered Shares”).

 

Concurrently with the execution and delivery hereof, (i) Parent, Merger Sub and the Company are entering into the Merger Agreement, which provides, among other things, for Merger Sub to merge (the “Merger”) with and into the Company, with the Company being the surviving corporation in accordance with the New Jersey Business Corporation Act, and (ii) Parent, Merger Sub and Shareholder are entering into the Share Purchase Agreement, which provides, among other things, for Shareholder to sell and transfer to Parent, and for Parent to purchase and acquire from Shareholder, all of the Covered Shares immediately prior to the consummation of the Merger for the consideration set forth therein (the “Share Purchase Agreement”).

 

As a condition of and material inducement to the willingness of Parent and Merger Sub to enter into the Merger Agreement, Parent and Merger Sub have required that Shareholder enter into this Agreement, and Shareholder has agreed to enter into this Agreement.

 

AGREEMENT

NOW, THEREFORE, in consideration of these premises, the respective representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to the terms and conditions set forth herein, the parties hereto hereby agree as follows:

 

ARTICLE 1.

VOTING OF SHARES; IRREVOCABLE PROXY

 

1.01 Granting of Proxy and Voting of Covered Shares.  Shareholder, by this Agreement, does hereby constitute and appoint Parent and Merger Sub, or any nominee thereof, with full power of substitution and resubstitution, during and for the term of this Agreement, as

 

  

  

  

Shareholder’s true and lawful attorney-in-fact and proxy for and in Shareholder’s name, place and stead, to vote (or to instruct nominees or record holders to vote) the Covered Shares at any annual, special or adjourned or postponed meeting of the shareholders of the Company (and this appointment will include the right to sign on behalf of Shareholder, as Shareholder’s attorney-in-fact, any consent, certificate or other document, in lieu of a meeting or otherwise, relating to the Company that the Laws of the State of New Jersey may require or permit):

 

(a) in favor of the approval and adoption of the Merger Agreement, the Merger, each of the other actions contemplated by the Merger Agreement and any other matters necessary to the consummation of the transactions contemplated by the Merger Agreement, including the Merger (including for any adjournment or postponement of the Company Shareholders Meeting proposed pursuant to Section 5.15(b) of the Merger Agreement); and

 

(b) against the approval or adoption of:

 

(i) any Takeover Proposal or any other transaction, proposal, agreement or action made in opposition to, or in competition with, the consummation of the Merger or any other transactions contemplated by the Merger Agreement, and

 

(ii) any action, proposal, transaction or agreement that is intended or could reasonably be expected to prevent, impede, interfere with or discourage the consummation of the Merger or adversely affect the Merger or the other transactions contemplated by this Agreement and the Merger Agreement.

 

The proxy and power of attorney set forth above in this Section 1.01 is hereinafter referred to as the “Proxy”.

 

1.02 Irrevocable Proxy.  Shareholder hereby affirms that this Proxy is irrevocable and coupled with an interest sufficient to support an irrevocable proxy under applicable Law; provided, however, that the Proxy is subject to the automatic termination of the Proxy upon a termination of this Agreement in accordance with Section 6.01.  Shareholder hereby further affirms that the Proxy is given in connection with, and granted in consideration of and as an inducement to, Parent and Merger Sub entering into the Merger Agreement and the Share Purchase Agreement, and the Proxy is given to secure the performance of the duties of Shareholder under this Agreement.  Shareholder has not entered into, and hereby covenants and agrees not to enter into at any time while this Agreement remains in effect, any agreement or understanding with any Person to vote or give instructions in any manner inconsistent with the terms of this Article I.  Shareholder represents and warrants that Shareholder has revoked or terminated all and any other proxies and powers of attorney with respect to the Covered Shares that Shareholder may have heretofore made or granted and agrees not to grant any such other proxies or powers of attorney at any time while this Agreement remains in effect.  If for any reason a court of competent jurisdiction finds that the Proxy is not irrevocable, then Shareholder agrees (subject to the proviso to the first sentence of this Section 1.02) to vote the Covered Shares in accordance with the terms set forth in the Proxy as instructed by Parent or Merger Sub in writing.  The parties agree that the foregoing is a voting agreement.  For Covered Shares as to which Shareholder is the beneficial but not the record owner, Shareholder shall take all

 

  

2

  

necessary actions to cause any record owner of such Covered Shares to grant to Parent or Merger Sub a proxy to the same effect as that contained in the Proxy.

 

1.03 No Duty or Liability.  The parties hereto acknowledge and agree that neither Parent, Merger Sub, nor their respective successors, assigns, Subsidiaries, divisions, employees, officers, directors, shareholders, agents or Affiliates shall owe any duty to, whether in Law or otherwise, or incur any liability of any kind whatsoever, including without limitation, with respect to any and all claims, losses, demands, causes of action, costs, expenses (including attorney’s fees) and compensation of any kind or nature whatsoever to Shareholder in connection with or as a result of any voting by Parent or Merger Sub of the Covered Shares as contemplated hereby.  The parties hereto acknowledge that, pursuant to the authority hereby granted under the Proxy, Parent or Merger Sub may vote the Covered Shares in furtherance of its own interests, and neither Parent nor Merger Sub is acting as a fiduciary of Shareholder or the Company.

 

ARTICLE 2.

TRANSFER RESTRICTIONS

 

2.01 Restrictions on Transfer.  During the term of this Agreement, except as otherwise provided herein, Shareholder will not (a) tender into any tender or exchange offer, (b) directly or indirectly, in whole or in part, sell, transfer, assign, gift, place in trust, pledge, hypothecate, tender, grant an option, right of first refusal or offer with respect to, encumber or otherwise dispose of, any of the Covered Shares, (c) commit any act that could restrict or affect Shareholder’s legal power, authority or right to vote any or all of the Covered Shares then owned of record or beneficially by Shareholder (whether by proxy, voting trust or otherwise) or otherwise prevent or disable Shareholder from performing any of Shareholder’s obligations under this Agreement, (d) enter into a swap or any other agreement or any transaction that transfers in whole or in part, the economic consequence of ownership of any Covered Shares or (e) otherwise agree to do any of the foregoing.

 

2.02 Acquisition of Additional Shares.  In the event (a) of any stock dividend, stock split, recapitalization, reclassification, subdivision, combination or exchange of shares of capital stock or other securities of the Company on, of or affecting the Covered Shares or any other action that would have the effect of changing Shareholder’s ownership of the Covered Shares or other Company securities or (b) Shareholder becomes the beneficial owner of any additional shares of Company Common Stock or other securities of the Company during the period commencing with the execution and delivery of this Agreement through the termination of this Agreement pursuant to Section 6.01, then the terms of this Agreement will apply to all shares of Company Common Stock or other securities of the Company held by the Shareholder immediately following the effectiveness of the events described in clause (a) or Shareholder becoming the beneficial owner thereof as described in clause (b), as though such shares or other securities of the Company were Covered Shares hereunder.  Shareholder hereby agrees, while this Agreement is in effect, to promptly notify Parent and Merger Sub in writing of the number of any new shares of Company Common Stock or other shares of capital stock or securities of the Company acquired by Shareholder or of which Shareholder becomes the beneficial owner, if any, after the date hereof.

 

  

3

  

 

ARTICLE 3.

NO SOLICITATION; NOTIFICATION

 

3.01 No Solicitation.  Prior to the termination of this Agreement, Shareholder in its capacity as a shareholder of the Company shall, and shall instruct and cause Shareholder’s directors, officers and employees and its investment bankers, financial advisors, attorneys and other advisors or representatives (“Representatives”) to, cease any solicitations, discussions, and negotiations that may be ongoing as of the date of this Agreement with any Person with respect to a Takeover Proposal.  Shareholder shall not, and shall not authorize or (to the extent within the control of Shareholder) permit its Representatives to, directly or indirectly, (a) solicit, facilitate, initiate or encourage any inquiries regarding any proposal or offer that constitutes, or would reasonably be expected to lead to, a Takeover Proposal, (b) furnish to any Person any Company information or data (or provide any Person with access to its properties, books, assets or personnel) in furtherance of any Takeover Proposal, (c) have any discussions or participate in any negotiations with any third party regarding any Takeover Proposal, (d) approve or recommend any Takeover Proposal, enter into any agreement-in-principle, letter of intent, acquisition or similar agreement with respect to a Takeover Proposal (or resolve to or publicly propose any of the foregoing) or (e) make any public statement or proposal inconsistent with the Company Recommendation.

 

3.02 Notification.  Prior to the termination of this Agreement, Shareholder shall promptly (and in any case within 24 hours following the relevant event) notify Parent upon receipt, in Shareholder’s capacity as a shareholder of the Company, of any inquiries, proposals, or offers received by, any requests for information from, or any discussions or negotiations sought to be initiated or continued with, Shareholder or its Representatives concerning any Takeover Proposal or that could reasonably be expected to lead to a Takeover Proposal and disclose the identity of the other party and the material terms of such inquiry, offer, proposal or request and, in the case of written materials, provide copies of such materials.

 

ARTICLE 4.

ADDITIONAL AGREEMENTS OF SHAREHOLDER

 

4.01 Additional Agreements of Shareholder.  Shareholder hereby:

 

(a) agrees, prior to the termination of this Agreement pursuant to Section 6.01, not to take any action that would make any representation or warranty of Shareholder contained herein untrue or incorrect in any and all respects or would reasonably be expected to have the effect of preventing, impeding or interfering with or adversely affecting the performance by the Shareholder of its obligations under or contemplated by this Agreement;

 

(b) irrevocably waives, and agrees not to exercise, any rights of appraisal or rights of dissent with respect to the Merger that Shareholder may have now or at any time with respect to the Covered Shares;

 

(c) agrees not to commence or join in, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Parent, Merger Sub, the Company or any of their respective successors (i) challenging

 

  

4

  

the validity of, or seeking to enjoin the operation of, any provision of this Agreement, or (ii) alleging a breach of any fiduciary duty of any Person in connection with the negotiation and entry into the Merger Agreement; and

 

(d) agrees that, upon request of Parent or Merger Sub, Shareholder shall execute and deliver any additional documents and take such further actions as may reasonably be deemed by Parent or Merger Sub to be necessary or desirable to carry out the provisions of this Agreement.

 

ARTICLE 5.

REPRESENTATIONS AND WARRANTIES

 

5.01 Representations and Warranties of Shareholder.  Shareholder represents and warrants to Parent and Merger Sub, as of the date hereof and for so long as this Agreement remains in effect (unless otherwise expressly limited), as follows:

 

(a) Title.  Shareholder is the record and beneficial owner of, and has good and valid title to, the Covered Shares, free and clear of any Liens (including any restriction on the right to vote or transfer any of the Covered Shares), except as may be provided for in this Agreement.  The Covered Shares represent all of the shares of capital stock of the Company beneficially owned, directly or indirectly, by Shareholder.  Shareholder does not own any securities convertible into or exchangeable for any shares of Company Common Stock or other voting securities of the Company other than the Covered Shares.  Shareholder holds exclusive power to vote and dispose of the Covered Shares and (other than as set forth in Section 1.01) has not granted a proxy to any other Person to vote the Covered Shares.  Except for the Covered Shares, Shareholder does not, directly or indirectly, own or have any option, warrant or other right to acquire any securities of the Company that is or may by its terms become entitled to vote or any securities that are convertible or exchangeable into or exercisable for any securities of the Company that are or may by their terms become entitled to vote, nor is Shareholder subject to any Contract, other than this Agreement, that allows or obligates Shareholder to vote, acquire or dispose of any securities of the Company.

 

(b) Organization and Qualification.  Shareholder is a corporation duly organized, validly existing and in good standing under the laws of the State of New York.

 

(c) Authority.  Shareholder has all requisite corporate power and authority and full legal capacity to enter into, execute and deliver, and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

 

(d) Due Execution and Delivery.  The execution, delivery and performance by Shareholder of this Agreement, and the consummation by Shareholder of the transactions contemplated hereby, have been duly and validly authorized and approved by its board of directors and no other action on the part of Shareholder is necessary to authorize the execution, delivery and performance by Shareholder of this Agreement and the consummation by Shareholder of the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by Shareholder and, assuming due authorization, execution and delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of

 

  

5

  

Shareholder, enforceable against Shareholder in accordance with its terms, except that such enforceability may be limited by the Bankruptcy and Equity Exception.

 

(e) No Filings, Consents, Conflict or Default; No Shareholder Vote.

 

(i) Neither the execution and delivery of this Agreement nor compliance by Shareholder with any of the terms or provisions hereof or thereof, does or will:

 

(1) conflict with or violate any provision of the certificate of incorporation, bylaws or other organizational documents of Shareholder;

 

(2) contravene, conflict with or violate in any material respect any Law, judgment, writ or injunction of any Governmental Authority applicable to Shareholder or any of Shareholder’s properties or assets;

 

(3) other than as contemplated in this Agreement, violate, conflict with, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default), or give rise to a right of termination, cancellation or redemption, an acceleration of performance required, a loss of benefits, or the creation of any Lien upon the Covered Shares, under, any of the terms, conditions or provisions of any Contract, including, any voting agreement, shareholders agreement, irrevocable proxy or voting trust, to which Shareholder is a party or by which Shareholder or any of its properties or assets may be bound;

 

(4) require Shareholder to make any filing with or give any notice to, or obtain any approval, consent, ratification, waiver or other authorization from, any Person or any Governmental Authority in connection with the execution and delivery of this Agreement or the consummation or performance of the transactions contemplated hereby, except for filings with the Securities and Exchange Commission (including the filing of any Schedules 13D or 13G or amendments to Schedules 13D or 13G (as applicable)) or stock exchange required disclosures as may be required in connection with this Agreement and the transactions contemplated hereby;

 

(5) constitute a violation of any Law applicable to Shareholder; or

 

(6) render any state takeover statute or similar statute or regulation applicable to the Merger, or any of the other Transactions.

 

(ii) No shareholder vote is required to approve (x) Shareholder’s execution and delivery of this Agreement or (y) the performance by Shareholder of any of its obligations hereunder.

 

(f) No Litigation.  On the date hereof, there is no suit, claim, action, investigation or proceeding pending that has been commenced by or against Shareholder or any order, judgment, ruling, subpoena or decree entered, issued, made or rendered by any Governmental Authority that could reasonably be expected to have the effect of preventing,

 

  

6

  

delaying, making illegal or otherwise interfering with, any of the transactions contemplated hereby.

 

(g) Receipt; Reliance.  Shareholder has received and reviewed a copy of the Merger Agreement and understands and acknowledges that Parent and Merger Sub are entering into the Merger Agreement in reliance upon Shareholder’s execution, delivery and performance of this Agreement and the representations, warranties and covenants contained herein.

 

5.02 Representations and Warranties of Parent and Merger Sub.  Parent and Merger Sub, jointly and severally, represent and warrant to Shareholder, as of the date hereof and for so long as this Agreement remains in effect, as follows:

 

(a) Organization and Qualification.  Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and Merger Sub is a corporation duly organized, validly existing and in good standing under the Laws of the State of New Jersey.

 

(b) Authority.  Each of Parent and Merger Sub has all requisite corporate power and authority and full legal capacity to enter into, execute and deliver, and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

 

(c) Due Execution and Delivery.  This Agreement has been duly and validly executed and delivered by each of Parent and Merger Sub and, assuming due authorization, execution and delivery hereof by Shareholder, constitutes a legal, valid and binding obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

ARTICLE 6.

MISCELLANEOUS

 

6.01 Termination.  This Agreement will terminate (a) on the earliest to occur of (i) the Effective Time, (ii) the date the Merger Agreement is validly terminated in accordance with its terms. (iii) the date the Share Purchase Agreement is validly terminated in accordance with its terms, and (iv) the date that is thirty (30) days after a Company Adverse Recommendation Change if such Company Adverse Recommendation Change continues to exist and has not been superseded by a Company Recommendation with respect to any amended or modified Takeover Proposal from Parent, or (b) by the mutual consent of Shareholder, on the one hand, and Parent and Merger Sub, on the other hand.  Notwithstanding the preceding sentence, this Article 6 shall survive any termination of this Agreement.  Nothing in this Article 6 shall relieve or otherwise limit the Liability of any party for any breach of this Agreement.

 

6.02 Action in Shareholder Capacity Only.  The parties acknowledge that this Agreement is entered into by Shareholder in its capacity as owner of the Covered Shares and that nothing in this Agreement shall in any way restrict or limit any director, officer or other Representative of the Company from taking any action in his or her capacity as a director, officer or other Representative of the Company that is necessary for him or her to comply with his or her duties as a director or officer of the Company, including, without limitation, participating in his

 

  

7

  

or her capacity as a director, officer or other Representative of the Company in any discussions or negotiations in accordance and compliance with Section 5.2 of the Merger Agreement.

 

6.03 Expenses.  Except as otherwise expressly provided herein or in the Merger Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses, whether or not the Merger is consummated.

 

6.04 Further Assurances.  Each party hereto will execute and deliver all such further documents and instruments and take all such further action as may be necessary or appropriate in order to consummate the transactions contemplated hereby.

 

6.05 Publicity.  Shareholder shall consult with Parent and Merger Sub before issuing any press release or otherwise making any public statements with respect to this Agreement or the Merger Agreement or the other transactions contemplated hereby or thereby and shall not issue any such press release or make any such public statement before such consultation, except as may be required by Law or applicable stock exchange rules.

 

6.06 Governing Law; Jurisdiction; Waiver of Jury Trial.

 

(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, applicable to contracts executed in and to be performed entirely within that State.

 

(b) All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in any federal or state court located within the Borough of Manhattan of the City, County and State of New York, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of such courts (and, in the case of appeals, appropriate appellate courts therefrom) in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding.  The consents to jurisdiction set forth in this paragraph shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto.  The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.

 

(c) Each of the parties hereto hereby irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or related to this Agreement.

 

6.07 Injunction; Specific Performance.  The parties hereto agree that money damages would not be a sufficient remedy for any breach of this Agreement by Shareholder. It is accordingly agreed that Parent and Merger Sub shall be entitled, in addition to any other remedy to which they are entitled at Law or in equity, to specific performance and, without the securing or posting of any bond, guarantee or other undertaking, injunctive or other equitable relief as a remedy for any such breach, and to enforce compliance with those covenants of Shareholder contained in this Agreement.  In any action for specific performance, Shareholder shall waive the defense of adequacy of a remedy at Law.

 

  

8

  

6.08 Amendments and Waivers.  Any provision of this Agreement may be (a) waived by the party hereto benefited by the provision, but only in writing, or (b) amended or modified at any time, but only by a written agreement by the parties hereto.

 

6.09 Entire Agreement.  This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements among the parties hereto with respect to such matters.

 

6.10 Notices.  All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered personally or sent by facsimile (which is confirmed) or by overnight courier (providing proof of delivery) to the parties at the following addresses:

 

If to Parent or Merger Sub, to:

 

c/o Platinum Equity LLC

360 North Crescent Drive, South Building

Beverly Hills, CA 90210

Attention:  Eva Kalawski, General Counsel

Facsimile:  (310) 712-1863

 

with a copy (which shall not constitute notice) to:

 

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, NY 10022

Attention:  Luke P. Iovine, III, Esq.

Facsimile:  (212) 230-7649

 

If to Shareholder, to:

 

Comverse Technology, Inc.

810 Seventh Avenue

New York, NY 10019

Attention:  Shefali Shah

Facsimile:  (212) 739-1094

 

with a copy (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention:  David E. Zeltner

Facsimile:  (212) 310-8007

 

or such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto.  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. in the

 

  

9

  

place of receipt and such day is a business day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding business day in the place of receipt.

 

6.11 Counterparts.  This Agreement may be executed in counterparts (each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement) and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto. Any facsimile or portable document format copies hereof or signature hereon shall, for all purposes, be deemed originals.

 

6.12 Assignment.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties hereto.  Any assignment in violation of the foregoing shall be null and void.  Subject to the preceding two sentences, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

 

6.13 Severability.  If any term or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

 

6.14 Third Party Beneficiaries.  This Agreement is not intended to and shall not confer upon any Person other than the parties hereto any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

6.15 Cumulative.  All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at Law or in equity will be cumulative and not alternative, and the exercise of any thereof by Parent or Merger Sub will not preclude the simultaneous or later exercise of any other such right, power or remedy by Parent or Merger Sub.

 

6.16 Interpretation; Rules of Construction.

 

(a) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  When a reference is made in this Agreement to an Article, Section, Exhibit or Annex, such reference is to an Article or Section of, or an Exhibit or Annex to, this Agreement unless otherwise indicated.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All terms defined in this Agreement shall have the defined meanings when used in any document made or delivered pursuant hereto unless otherwise defined therein.  The definitions contained in this

 

  

10

  

Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.  Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  References to a Person are also to its permitted assigns and successors.

 

(b) The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

[Signatures on following page]

 

 

 

 

 

 

 

 

 

 

 

  

11

  

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first above written.

 

 

	 	
UTAH INTERMEDIATE HOLDING

CORPORATION

	  	  	  	  
	  	
By:

	  /s/  Eva M. Kalawski
	  	  	
Name:

	Eva M. Kalawski
	  	  	
Title:

	Vice President and Secretary

 

 

	 	
UTAH MERGER CORPORATION

	  	  	  	  
	  	
By:

	  /s/  Eva M. Kalawski
	  	  	
Name:

	Eva M. Kalawski  
	  	  	
Title:

	Vice President and Secretary  

 

 

	 	
COMVERSE TECHNOLOGY, INC.

	 	 	 	 
	  	  	  	  
	  	
By:

	  /s/  Shefali Shah
	  	  	
Name:

	Shefali Shah
	  	  	
Title:

	SVP, General Counsel  

 

 

[Signature page to Voting and Support Agreement]Exhibit 10.1

Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

AND

JOINT ESCROW INSTRUCTIONS

By and Between

HCP, INC.,

a Maryland corporation

and

TEXAS HCP HOLDING, L.P.,

a Delaware limited partnership

and

TEXAS HCP SEVEN HOLDING, L.P.,

a Delaware limited partnership

each, a “Seller,” and collectively, as “Sellers”

and

ASSISTED LIVING CONCEPTS, INC.,

a Nevada corporation

and

ALF PARTNERS, L.P.,

a Texas limited partnership

each, a “Buyer,” and collectively and jointly and severally, as “Buyers”

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	1. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	2. SALE OF THE PROPERTIES
	 	 	5	 
	 
	 	 	 	 
	3. ESCROW
	 	 	5	 
	 
	 	 	 	 
	4. PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE
	 	 	6	 
	 
	 	 	 	 
	5. CONDITIONS TO CLOSING; AS IS PURCHASE
	 	 	6	 
	 
	 	 	 	 
	6. CLOSING OF ESCROW
	 	 	9	 
	 
	 	 	 	 
	7. TERMINATION
	 	 	15	 
	 
	 	 	 	 
	8. REPRESENTATIONS AND WARRANTIES
	 	 	18	 
	 
	 	 	 	 
	9. CERTAIN EVENTS PRIOR TO CLOSING
	 	 	21	 
	 
	 	 	 	 
	10. POST-CLOSING MATTERS
	 	 	21	 
	 
	 	 	 	 
	11. BROKERS
	 	 	22	 
	 
	 	 		 
	12. MISCELLANEOUS PROVISIONS
	 	 	22	 

EXHIBITS

	 	 	 
	A

	 	List of Sellers, Buyers, Properties and Leases
	 
	 	 
	B

	 	Form of Lease Termination Agreement
	 
	 	 
	C

	 	Escrow General Provisions
	 
	 	 
	D

	 	Purchase Price Allocation
	 
	 	 
	E-1

	 	Form of New Jersey Deed
	 
	 	 
	E-2

	 	Form of Texas Deed
	 
	 	 
	F

	 	Form of Bill of Sale
	 
	 	 
	G

	 	Form of Release of Claims
	 
	 	 
	H

	 	Environmental Reports
	 
	 	 
	I

	 	Permitted Exceptions

 

-i-

 

PURCHASE AND SALE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS

THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this “Agreement”) is made and
entered into as of October 11, 2010 (the “Effective Date”), by and between HCP, Inc., a Maryland
corporation (formerly known as Health Care Property Investors, Inc.) (“HCP”), TEXAS HCP HOLDING,
L.P., a Delaware limited partnership (“Texas HCP”), and TEXAS HCP SEVEN HOLDING, L.P.,a Delaware
limited partnership (“Texas Seven”; and together with Texas HCP and HCP, collectively, the
“Sellers,” and each, a “Seller”), on the one hand, and ASSISTED LIVING CONCEPTS, INC., a Nevada
corporation (“ALC”) and ALF PARTNERS, L.P., a Texas limited partnership (“ALF,” and together with
ALC, collectively and jointly and severally, “Buyers,” and each, a “Buyer”), on the other hand, as
follows:

RECITALS

A. Each Seller is the owner of one or more of the Properties (as defined below) as indicated
opposite the name of such Property on Exhibit A attached hereto.

B. Each Property is currently leased by the applicable Seller to the applicable Buyer pursuant
to the applicable lease indicated opposite the name of such Property on Exhibit A attached
hereto (each a “Lease,” and collectively, the “Leases”).

C. Buyers desire to purchase the Properties from Sellers and Sellers desire to sell the
Properties to Buyers on the terms and subject to the conditions set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyers and Sellers agree as follows:

1. DEFINITIONS

For all purposes of this Agreement, except as otherwise expressly provided herein or unless
the context otherwise requires, (i) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; (ii) all references in this
Agreement to designated “Articles,” “Sections” and other subdivisions are to the designated
Articles, Sections and other subdivisions of this Agreement; (iii) the word “including” shall have
the same meaning as the phrase “including, without limitation,” and other phrases of similar
import; and (iv) the words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

1.1 1031 Exchange: As defined in Section 6.8.

1.2 Additional Charges: With respect to each applicable Property, “Additional
Charges,” as defined in the applicable Lease with respect to such Property.

 

 

 

1.3 Additional Rent: With respect to each applicable Property, “Additional Rent,” as
defined in the applicable Lease with respect to such Property.

1.4 Affiliate: “Affiliate,” for all purposes of this Agreement shall have the meaning
given to such term in the Lease with respect to the Property located in Gun Barrel, Texas,
notwithstanding that such term may have a different definition in any other Lease.

1.5 Allocated Purchase Price: As defined in Section 4.1

1.6 Base Gross Revenues: With respect to each applicable Property, “Base Gross
Revenues,” as defined in the applicable Lease with respect to such Property.

1.7 Bill(s) of Sale: As defined in Section 6.2.2.

1.8 Close of Escrow, Closing Date and/or Closing: As defined in Section 6.1.

1.9 Closing Breakpoint: As defined in Section 6.5.2 below.

1.10 Closing Funds: As defined in Section 4.3.

1.11 Commitments and Commitment: As defined in Section 5.1.3(a).

1.12 Condemnation: With respect to each applicable Property, “Condemnation,” as
defined in the applicable Lease with respect to such Property.

1.13 Cost of Living Index: With respect to each applicable Property, “Cost of Living
Index,” as defined in the applicable Lease with respect to such Property.

1.14 Deed(s): As defined in Section 6.2.1.

1.15 Earnest Money Deposit: As defined in Section 4.2.

1.16 Effective Date: As defined in the preface to this Agreement.

1.17 Environmental Reports: As defined in Section 5.1.4.

1.18 Environmental Studies: As defined in Section 5.1.4.

1.19 Escrow Holder: As defined in Section 3.1.

1.20 Event of Default: With respect to each Property, “Event of Default,” as defined
in the applicable Lease with respect to such Property.

1.21 Extendicare: Extendicare Health Services, Inc., a Delaware corporation.

1.22 Funds: Immediately available funds in the form of cash, wire transfer of funds,
or a certified or bank cashier’s check drawn on a reputable financial institution acceptable to
Escrow Holder.

 

-2-

 

1.23 Gross Revenues: With respect to each applicable Property, “Gross Revenues,” as
defined in the applicable Lease with respect to such Property.

1.24 Hazardous Substance: With respect to each applicable Property, “Hazardous
Substance,” as defined in the applicable Lease with respect to such Property.

1.25 Impositions: With respect to each applicable Property, “Impositions,” as defined
in the applicable Lease with respect to such Property.

1.26 Laws: All applicable governmental laws, codes, ordinances, regulations,
judgments, permits, approvals or other requirements.

1.27 Lease and Leases: Each, as defined in the recitals to this Agreement.

1.28 Lease Termination: With respect to each Lease, a Lease Termination Agreement
between the applicable Seller, as Lessor, the applicable Buyer, as Lessee, and Extendicare and/or
ALC, as applicable, as Guarantor, in the form attached hereto as Exhibit B, to be executed
and delivered by such Seller, as Lessor, such Buyer, as Lessee, and Extendicare and/or ALC, as
applicable, as Guarantor, on the Closing Date.

1.29 Lease Year: With respect to each applicable Property, “Lease Year,” as defined
in the applicable Lease with respect to such Property.

1.30 Letter of Credit: As defined in each Lease.

1.31 Liabilities: Any claim, liability, loss, cost, action, damage, expense or fees,
including but not limited to reasonable attorney’s fees and costs of defense (each, a “Liability”).

1.32 Mansion Taxes: The fee imposed upon recordation of certain deeds pursuant to
N.J.A.C. 46:15-7.2

1.33 Minimum Rent: With respect to each applicable Property, “Minimum Rent,” as
defined in the applicable Lease with respect to such Property.

1.34 OFAC: As defined in Section 8.2.4(a).

1.35 Opening of Escrow: As defined in Section 3.3.

1.36 Organizational Documents: Collectively, as applicable, the articles or
certificate of incorporation, certificate of limited partnership or certificate of limited
liability company, bylaws, partnership agreement, operating company agreement, trust agreement,
statements of partnership, fictitious business name filings and all other organizational documents
relating to the creation, formation and/or existence of a business entity, together with
resolutions of the board of directors, partner or member consents, trustee certificates, incumbency
certificates and all other documents or instruments approving or authorizing the transactions
contemplated by this Agreement.

 

-3-

 

1.37 Outside Closing Date: Subject to extension as provided in Sections 5.1.3(b) and
6.8 below, November 30, 2010.

1.38 Patriot Act: As defined in Section 8.2.4(a).

1.39 Person: Any individual, corporation, partnership, joint venture, limited
liability partnership, limited liability company, association, joint stock company, trust,
unincorporated organization, whether or not a legal entity, or other business or governmental
entity or authority (or any department, agency, or political subdivision thereof).

1.40 Properties: Collectively, the “Leased Property” (as defined in the applicable
Lease) of each “Facility” (as defined in the applicable Lease) listed on Exhibit A attached
hereto, less any portion of which has been taken by reason of any Condemnation or other exercise of
the power of eminent domain (each, a “Property”).

1.41 Purchase Price: As defined in Section 4.1.

1.42 Qualified Title Concern: Shall mean any lien, encumbrance or other exception to
title set forth on any supplement to a Commitment prepared and issued after the date hereof that
(A) is not reasonably acceptable to Buyers, (B) is not capable of cure by Sellers by the payment of
money at the Closing, (C) will not be insured over by the Title Company in a manner reasonably
acceptable to Buyers, (D) does not arise out of the actions of Buyers or any of their affiliates,
and (E) is not a matter for which Buyers, or any affiliate of Buyers, are responsible pursuant to
the terms of the applicable Lease of such Property.

1.43 Release of Claims: As defined in Section 6.3.2.

1.44 Rent and Charges: All accrued and unpaid Minimum Rent, Additional Rent and any
Additional Charges (whether or not billed) payable by Buyers under the Leases, through and
including the day prior to the Closing Date (prorated to the extent applicable for the month during
which the Closing occurs).

1.45 Response Notice: As defined in Section 5.1.3(b).

1.46 State: With respect to each Property, “State,” as defined in the applicable Lease
with respect to such Property.

1.47 Title Company: Title America and Closing Services, LLC, Attn: Joyce Gagliano,
Fax No.: (262) 785-9101.

1.48 Title Objection Notice: As defined in Section 5.1.3(b).

1.49 Title Policies: As defined in Section 6.4.

1.50 Title Endorsements: As defined in Section 6.4.

1.51 Transaction Documents: Collectively, this Agreement, each Deed, each Bill of
Sale, each Lease Termination, and all other agreements, documents and/or instruments to be
executed and/or delivered pursuant to and in connection with this Agreement, and/or the
Exhibits hereto.

 

-4-

 

1.52 Transaction Taxes: Any and all federal, state, municipal or other local Law
documentary transfer, stamp, sales, use, excise, privilege, grantor, grantee or similar tax, fee or
charge payable in connection with the delivery of any instrument or document provided in or
contemplated by this Agreement or the Exhibits hereto together with interest and penalties, if any,
thereon. Transaction Taxes include Mansion Taxes and any Realty Transfer Fee assessed under New
Jersey Law.

2. SALE OF THE PROPERTIES

Buyers agree to purchase from Sellers, and Sellers agree to sell or cause to be sold to
Buyers, all of the Properties on the terms and subject to the conditions set forth herein.

3. ESCROW

3.1 General Instructions. Title Company is also hereby designated as escrow holder
(sometimes herein referred to as “Escrow Holder”). Escrow Holder’s Escrow number, Escrow Officer
for the transactions contemplated hereby and Escrow Officer’s, address for notices and wiring
information are set forth below Title Company’s acceptance of this Escrow. Escrow Holder’s general
conditions or provisions, which are attached hereto as Exhibit C are incorporated by
reference herein; provided, however, that in the event of any inconsistency between Exhibit
C and any of the provisions of this Agreement, the provisions of this Agreement shall control.
Buyers and Sellers shall each execute, deliver and be bound by such further escrow instructions or
other instruments as may be reasonably requested by the other party or by Escrow Holder from time
to time, so long as the same are consistent with this Agreement. Escrow Holder shall not comply
with the unilateral instructions of only one party without the consent of the other parties hereto
unless otherwise expressly required to do so in this Agreement.

3.2 Tax Reporting Person. For purposes of complying with Internal Revenue Code §
6045(e), as amended effective January 1, 1991, Escrow Holder is hereby designated as the “person
responsible for closing the transaction,” and also as the “reporting person” for purposes of filing
any information returns with the Internal Revenue Service concerning this transaction, as required
by law.

3.3 Opening of Escrow. Escrow shall be deemed open when not less than four (4)
originals of this Agreement, fully signed by all parties either together or in counterparts, are
delivered to Escrow Holder (the “Opening of Escrow”), which shall occur within two (2) business
days after execution of this Agreement by Buyers and Sellers. Escrow Holder shall immediately
notify Buyers, Sellers and their respective attorneys in writing of the official date of the
Opening of Escrow.

 

-5-

 

4. PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE

4.1 Purchase Price. The purchase price for the Properties shall be Twenty-Seven
Million Five Hundred Thousand Dollars and 00/100ths ($27,500,000.00) (the “Purchase Price”).
The Purchase Price shall be allocated among the Properties and the various components thereof
as set forth on Exhibit D attached hereto and incorporated herein by this reference (with
respect each Property, the “Allocated Purchase Price”). Such allocation is final and conclusive
for all purposes and neither Sellers nor Buyers shall use a different allocation, including in any
state or federal tax returns filed by such party. The provisions of this Section 4.1 regarding the
allocation of the Purchase Price shall survive the Closing.

4.2 Earnest Money Deposit. On or prior to the first business day immediately
following Buyers’ execution hereof, Buyers shall deposit with Escrow Holder the sum of One Million
Dollars and 00/100ths ($1,000,000.00) (the “Earnest Money Deposit”). Escrow Holder shall hold the
Earnest Money Deposit in such number of interest-bearing accounts as shall be fully insured by the
Federal Deposit Insurance Corporation, and selected by Buyers on a funds investment form provided
by Escrow Holder. All interest earned upon the Earnest Money Deposit shall become part of the
Earnest Money Deposit and shall be applied with the Earnest Money Deposit in accordance with the
terms and provisions of this Agreement. If the Closing occurs pursuant to the provisions of this
Agreement, the Earnest Money Deposit plus all accrued interest thereon shall be applied against the
Purchase Price. If the Closing fails to occur under the provisions of this Agreement, the Earnest
Money Deposit plus all accrued interest thereon shall be disbursed by Escrow Holder in accordance
with the applicable provisions of this Agreement.

4.3 Closing Funds. No later than 2:00 p.m., Los Angeles Time, on the date that is not
less than one (1) business day before the Close of Escrow, Escrow Holder shall calculate and Buyers
shall wire Funds into Escrow (using wiring instructions reasonably satisfactory to Escrow Holder)
in an amount which, when added to the Earnest Money Deposit, shall equal the Purchase Price, as
adjusted as provided in this Agreement (the “Closing Funds”).

5. CONDITIONS TO CLOSING; AS IS PURCHASE

5.1 Buyers’ Conditions. The obligation of Buyers to purchase the Properties shall be
subject to satisfaction of each of the conditions set forth in this Section 5.1 on and as of the
Closing Date. Sellers and Buyers expressly acknowledge and agree that each of the conditions set
forth in this Section 5.1 is for the benefit of and may be waived only by Buyers as herein
provided.

5.1.1 Sellers’ Representations and Warranties. The representations and warranties of
each Seller set forth in Section 8 below shall be true and correct in all material respects on the
Closing Date as if made again on the Closing Date.

5.1.2 Sellers’ Performance. Each Seller shall have performed all of its obligations
under this Agreement which by the terms of this Agreement are required to be performed by such
Seller as of or prior to the Closing Date.

 

-6-

 

5.1.3 Approval of Title.

(a) Buyers have obtained from Title Company a title commitment for each Property
(collectively, the “Commitments” and each a “Commitment”). Buyers have approved the condition of
title to each of the Properties and Buyers agree to take title to the
Properties subject to all Permitted Exceptions. “Permitted Exceptions” means (i) all
Impositions, whether past due or delinquent, (ii) all matters reflected on Exhibit I hereto and all
matters, other than Qualified Title Concerns to which Buyers have objected in accordance with
Subsection (b) below which are subsequently disclosed in any supplement to Commitment prepared and
issued after the date hereof (iii) all matters that could be ascertained by a reasonably inspection
or survey of that portion of the Properties, and all laws, rules and regulations governing the use
and development of the Properties.

(b) In the event that any Qualified Title Concern shall be disclosed in any supplement to a
Commitment prepared and issued after the date hereof, Buyers may, within two (2) business days
following their receipt of such supplement, provide written notice of objection (“Title Objection
Notice”) to Sellers. Sellers shall have two (2) business days following their receipt of such
Title Objection Notice to deliver written notice (“Response Notice”) stating whether Sellers agree
to cause such Qualified Title Concern to be cured at or prior to Closing. If Sellers do not timely
deliver such Response Notice or if such Response Notice fails to state that Sellers will cure such
Qualified Title Concern, Buyers may provide written notice to Sellers within two (2) business days
after their receipt of the Response Notice (or, in the event that a Response Notice is not
delivered, two (2) business days after the date by which a Response Notice was required to have
been pursuant to the foregoing sentence) that the condition set forth in this Section has not been
waived or satisfied. If Sellers agree to cure a Qualified Title Concern, but fail to cure such
exception in substantially the same manner as set forth in the applicable Response Notice on or
prior to Closing, Buyers may notify Sellers in writing at Closing that the conditions set forth in
this Section have not been waived or satisfied. The Closing Date (including the Outside Closing
Date) shall be extended as necessary to permit the exchange of Title Objection Notices and Response
Notices within the time periods above-prescribed and Sellers shall have the right, in their sole
discretion, to extend the Closing Date (including the Outside Closing Date) for up to ten (10) days
if necessary to allow Sellers to cure any Qualified Title Concern which they have elected to cure,
by providing written notice to Buyers of such extension not less than two (2) days prior to the
Closing Date.

5.1.4 Approval of Environmental Conditions. Buyers acknowledge receipt of copies of
each of the environmental reports identified on Exhibit H hereto (“Environmental Reports”). Buyers,
at their sole cost, shall obtain such additional environmental studies and tests of the Properties
as Buyers shall reasonably determine appropriate (“Environmental Studies”); provided, however,
Buyers shall not, without prior notice to Sellers, and if required under any Lease, prior consent
of Sellers engage in or cause or permit to be conducted any physically intrusive testing in, on or
about the Properties. Buyers shall be deemed to have approved the environmental condition of the
Properties unless, on or prior to October 4, 2010, Buyers shall have delivered written notice to
Sellers of any Environmental Concerns (as defined below) which Buyers have disapproved, together
with copies of the Environmental Studies evidencing such Environmental Concern As used herein, an
“Environmental Concern” shall mean any environmental condition which is expressly disclosed by an
Environmental Study as affecting a Property and which will materially adversely impact such
Property’s continued operation as an assisted living facility and for which neither Buyers nor any
of their affiliates shall have any responsibility under the Lease for such Property.

 

-7-

 

5.2 Buyers’ Approval, Disapproval, or Waiver of Conditions. Prior to Closing (or with
respect to the conditions set forth in Sections 5.1.3 and 5.1.4, on or prior to dates set forth
therein) Buyers shall notify Sellers and Escrow Holder in writing in the event that as of the date
of Closing (or with respect to the conditions set forth in Sections 5.1.3 and 5.1.4, on or prior to
dates set forth therein), any of the conditions set forth in Section 5.1 have not been satisfied or
waived by Buyers. In the event that Buyers fail to approve, disapprove, or waive such condition,
if applicable, within the time and in the manner herein specified, then such condition shall be
deemed conclusively satisfied or waived by Buyers and thereafter shall not be a condition precedent
to the performance by Buyers of their respective obligations hereunder.

5.3 “AS IS” SALE. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT BUYERS ARE ACQUIRING
EACH OF THE PROPERTIES “AS IS,” IN ITS PRESENT STATE AND CONDITION, PHYSICAL AND OTHERWISE, AND
“WITH ALL FAULTS”, WITHOUT ANY REPRESENTATIONS OR WARRANTIES FROM SELLERS, OR EITHER OF THEM, OR
ON BEHALF OF THEM OR EITHER OF THEM, OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, ORAL OR
WRITTEN, PAST OR PRESENT, EXCEPT AS EXPRESSLY SET FORTH IN SECTION 8 BELOW. IN PARTICULAR, EXCEPT
AS EXPRESSLY SET FORTH IN SECTION 8 BELOW, SELLERS MAKE NO REPRESENTATION OR WARRANTY RESPECTING
THE USE, CONDITION, TITLE, OPERATION OR MANAGEMENT OF ANY OF THE PROPERTIES, OR COMPLIANCE WITH ANY
APPLICABLE LAWS RELATING TO ZONING, SUBDIVISION, PLANNING, BUILDINGS, FIRE, SAFETY, EARTHQUAKE,
HEALTH OR ENVIRONMENTAL MATTERS, THE PRESENCE OR ABSENCE OF HAZARDOUS SUBSTANCES, OR COMPLIANCE
WITH ANY OTHER COVENANTS, CONDITIONS AND RESTRICTIONS (WHETHER OR NOT OF RECORD). WITHOUT LIMITING
ANY OTHER PROVISION OF THIS AGREEMENT, SELLERS EXPRESSLY DISCLAIM, AND BUYER ACKNOWLEDGES THAT
SELLERS HAVE NOT MADE AND DO NOT MAKE ANY REPRESENTATIONS OR WARRANTIES REGARDING THE VERACITY,
ACCURACY, OR COMPLETENESS OF ANY OF THE ENVIRONMENTAL REPORTS. Buyers represent that they are
knowledgeable in real estate matters and are relying upon Buyers’ own investigation and analysis in
purchasing each of the Properties and not on any representations, warranties or statements made by
Seller or on Seller’s behalf (except for the express representations and warranties made by Seller
in this Agreement or in any other documents executed and delivered by Seller at Closing). Buyers
further represent that they or their affiliates have occupied, operated and controlled the
Properties pursuant to the Leases, are familiar with the condition of each Property and have had
ample opportunity to inspect and have, in fact, made all of the investigations Buyers deem
necessary in purchasing each of the Properties. As a result, Buyers hereby expressly waive any
notice requirements which may be imposed upon any Seller pursuant to § 25359.7 of the California
Health & Safety Code, or any other similar and applicable Laws in the State of New Jersey, Texas
and/or California, as applicable. If this Agreement is not terminated and Buyers acquire the
Properties as provided herein, Buyers shall have thereby approved all aspects of each of the
Properties and this transaction and thereby waive any claim or Liability against Sellers, and each
of them. In furtherance of the foregoing, at the Closing, Buyers shall execute and deliver to
Sellers the Release of Claims. The provisions of this Section 5.3 shall survive the Closing.

 

-8-

 

5.4 Sellers’ Conditions. The obligation of Sellers to sell the Properties (and each
of them) shall be subject to satisfaction of each of the conditions set forth in this Section 5.4.
Sellers and Buyers expressly acknowledge and agree that each of the conditions set forth in this
Section 5.4 is for the benefit of and may be waived only by Sellers in writing.

5.4.1 Rent and Charges. Subject to Section 6.8, all Rent and Charges shall be paid as
and when due under each Lease, through the date prior to the Closing Date.

5.4.2 Purchase of All Properties. The Closing hereunder shall occur simultaneously
with respect to all of the Properties.

5.4.3 Occurrence of Closing by the Outside Closing Date. The Closing shall occur on
or before the Outside Closing Date.

5.4.4 Buyers’ Representations and Warranties. Buyers’ representations and warranties
set forth in Section 8 below shall be true and correct in all material respects on the Closing Date
as if made again on the Closing Date.

5.4.5 Buyers’ Performance. Buyers shall have performed all of their obligations under
this Agreement which by the terms of this Agreement are required to be performed by Buyers as of or
prior to the Closing Date.

5.5 Sellers’ Approval, Disapproval, or Waiver of Conditions. Prior to the Closing,
Sellers shall notify Buyers and Escrow Holder in writing in the event that as of the date of
Closing, any of the conditions set forth in Section 5.4 have not been satisfied or waived by
Sellers; to the extent such condition can be satisfied and the failure thereof cured by the payment
of money, Buyers may cure such failure by the payment of the required amounts within two (2)
business days following Buyers’ receipt of notice from Sellers and upon Buyers’ payment thereof,
Sellers’ disapproval of such condition as set forth in its notice shall be deemed withdrawn. In
the event that Sellers fail to approve, disapprove or waive such condition, if applicable, prior to
the Closing, then such condition shall be deemed conclusively satisfied or waived by Sellers and
thereafter shall not be a condition precedent to the performance by Sellers of their respective
obligations hereunder.

6. CLOSING OF ESCROW

6.1 Closing Date. Unless this Agreement has been earlier terminated in accordance
with the applicable provisions of Section 7 below, Escrow shall close on the Outside Closing Date;
provided, however, that subject to satisfaction or waiver of each of the conditions set forth in
Sections 5.1 and 5.4, Buyers shall be entitled to close Escrow at any time after October 31, 2010
and prior to the Outside Closing Date upon not less than ten (10) days’ written notice to Sellers
and Escrow Holder. The terms “Close of Escrow” and/or “Closing” are used in this Agreement to mean
the time and date the transactions contemplated hereby are closed and the Deeds have been delivered
to Buyers through Escrow, regardless whether the applicable Deed is actually recorded in the land
records in which the applicable Property is situated. The term “Closing Date” as used in this
Agreement means the date that the Closing occurs.

 

-9-

 

6.2 Deposits by Seller. At or before 2:00 p.m., Los Angeles Time, on that date which
is not less than one (1) business day before the Close of Escrow, Sellers shall deliver or cause to
be delivered to Escrow Holder the following items for handling as described below; provided,
however, that Escrow need not be concerned with the form or content but only with manual delivery
of all of the following other than the items described in Section 6.2.1:

6.2.1 Deeds. With respect to each Property, a duly executed and acknowledged special
or limited warranty deed in the form attached hereto as Exhibit E-1 (with respect to each
Property located in the State of New Jersey) or Exhibit E-2 (with respect to each Property
located in the State of Texas) (each, a “Deed” and collectively, the “Deeds”) conveying the real
property comprising such Property to the applicable Buyer, in each case subject to all Permitted
Exceptions. On or before the date that is ten (10) days prior to the Closing, Buyers shall
designate in writing to Sellers which Buyer entity will take title to each Property at Closing;

6.2.2 Bill of Sale. A duly executed and acknowledged quit claim bill of sale
conveying any right, title and interest of the applicable Seller in and to any tangible personal
property located on or within each Property to the applicable Buyer, without warranty except as
expressly set forth therein, in the form of attached Exhibit F (the “Bill of Sale”);

6.2.3 Lease Terminations. With respect to each Lease, a Lease Termination duly
executed by the applicable Seller, as Lessor thereunder;

6.2.4 Sellers’ Certificate. If any express representation or warranty of either
Seller set forth in Section 8 hereof needs to be modified due to changes since the Effective Date,
a certificate of such Seller, dated as of the Closing Date and executed on behalf of such Seller by
a duly authorized representative thereof, identifying any such representation or warranty which is
not, or no longer is, true and correct and explaining the state of facts giving rise to the change.
In no event shall either Seller have any Liability to either Buyer for, or be deemed to be in
default hereunder by reason of any breach of a representation or warranty set forth in Section 8
hereof which results from any change that (i) occurs between the Effective Date and the Closing
Date, and (ii) is either expressly permitted under the terms of this Agreement or beyond the
reasonable control of such Seller to prevent. The occurrence of a change in a representation or
warranty which is permitted hereunder or is beyond the reasonable control of Sellers to prevent
shall, if materially adverse to either Buyer, constitute the non-fulfillment of the conditions set
forth in Section 5.1.1 hereof. If, despite changes or other matters described in such certificate,
the Closing occurs, any applicable Seller’s representations and warranties set forth in this
Agreement shall be deemed to have been modified by all statements made in any certificate of such
Seller delivered pursuant to this Section 6.2.4;

6.2.5 Evidence of Authority. Such certificates or documents as may be reasonably
required by Escrow Holder in order to cause any Title Policy requested by Buyers as provided in
Section 6.4 below to be issued and the Close of Escrow to occur; provided, however, that in no
event shall either Seller be required to execute a so-called gap indemnity or a mechanics’ lien
indemnity; provided, further, that Sellers will agree to execute an owner’s affidavit/indemnity,
with respect to any Property so long as such owner’s affidavit/indemnity properly reflects the
signing Seller’s status as a landlord without possession and is otherwise in form and substance
reasonably acceptable to Sellers;

 

-10-

 

6.2.6 Closing Statement. A duly executed and acknowledged counterpart of a joint
buyer/seller estimated closing statement to be prepared by Escrow Holder and delivered to Sellers
and Buyers (the “Closing Statement”); and

6.2.7 Additional Items. Any additional funds and/or instruments, signed and properly
acknowledged by Sellers, if appropriate, as may be necessary to comply with Sellers’ obligations
under this Agreement.

6.3 Deposits by Buyers. At or before 2:00 p.m., Los Angeles Time, on that date which
is not less than one (1) business day before the Close of Escrow, Buyers shall deliver or cause to
be delivered to Escrow Holder:

6.3.1 Closing Funds. The Closing Funds as provided in Section 4.3 above;

6.3.2 Release of Claims. A Release of Claims duly executed by Buyers and any
Affiliate(s) of Buyers to which Buyers assign their rights and obligations pursuant to Section
12.1, if applicable, in the form attached hereto as Exhibit G (the “Release of Claims”);

6.3.3 Lease Terminations. With respect to each Lease, a Lease Termination duly
executed by the applicable Buyer, as Lessee thereunder;

6.3.4 Buyers’ Certificates. If any representation or warranty of either Buyer set
forth in Section 8 hereof needs to be modified due to changes since the Effective Date, a
certificate of such Buyer addressed to Sellers, dated as of the Closing Date and executed on behalf
of such Buyer by a duly authorized representative thereof, identifying any such representation or
warranty which is not, or no longer is, true and correct and explaining the state of facts giving
rise to the change. In no event shall either Buyer have any Liability to either Seller for, or be
deemed to be in default hereunder by reason of any breach of a representation or warranty set forth
in Section 8 hereof which results from any change that (i) occurs between the Effective Date and
the Closing Date and (ii) is either expressly permitted under the terms of this Agreement or is
beyond the reasonable control of such Buyer to prevent. The occurrence of a change in a
representation or warranty which is permitted hereunder or is beyond the reasonable control of
Buyers to prevent shall, if materially adverse to either Seller, constitute the non-fulfillment of
the conditions set forth in Section 5.4.4 hereof. If, despite changes or other matters described
in such certificate, the Closing occurs, any applicable Buyer’s representations and warranties set
forth in this Agreement shall be deemed to have been modified by all statements made in such
certificate;

6.3.5 Evidence of Authority. Such certificates or documents as may be reasonably
required by Escrow Holder in order to cause each Title Policy to be issued and the Close of Escrow
to occur;

6.3.6 Closing Statement. A duly executed and acknowledged counterpart of the Closing
Statement; and

6.3.7 Additional Items. Any additional Funds and/or instruments, signed and properly
acknowledged by Buyers, if appropriate, as may be necessary to comply with Buyers’ obligations
under this Agreement.

 

-11-

 

6.4 Title Policies. At the Close of Escrow, but not as a condition thereto, Buyers
shall be entitled to request and obtain from Title Company, with a copy to be delivered to each
Seller if so requested by Sellers, a policy of title insurance with respect to each Property,
insuring good and marketable title to such Property (or such title insurance as may be available in
the state where such Property is located) vested in the applicable Buyer as of the Closing Date in
an amount equal to the Allocated Purchase Price for such Property, subject to Permitted Exceptions
(each, a “Title Policy”) and including such endorsements thereto as Buyers may request and Title
Company agrees to issue (the “Title Endorsements”). The cost of each Title Policy and all Title
Endorsements thereto shall be borne by Buyers and Sellers as provided in Section 6.6 below.

6.5 Prorations.

6.5.1 Impositions and Other Expenses. Buyers and Sellers acknowledge and agree that
each Lease is absolutely net to the applicable Seller, and that each applicable Buyer is solely
responsible for any and all Impositions, insurance premiums, utility charges and other expenses
incurred in connection with the operation, maintenance, and use of the respective Property.
Accordingly, each Buyer shall be solely responsible for all such amounts whether accruing prior to
or after the Closing and there shall be no prorations on account thereof between Buyers and Sellers
hereunder. All amounts payable by Buyers or their Affiliates under the Leases and held by or on
behalf of Sellers in any escrow, impound or similar accounts as security for the performance of the
obligations of the lessee under each Lease shall be paid or credited to Sellers at Closing to the
extent of any obligations of lessees outstanding under the Leases as of Closing and otherwise shall
be paid to or credited to Buyers at Closing. For the avoidance of doubt, Buyers acknowledge and
agree that they are responsible for all ad valorem taxes assessed against the Properties and each
of them, including any subsequent assessments for prior years due to change in use or ownership or
otherwise.

6.5.2 Rents. Notwithstanding anything to the contrary herein, all Rents and Charges
shall belong to and be paid over to Sellers (or to such Persons as Sellers may direct) by Buyers on
the Closing Date. Minimum Rent shall be prorated based upon the actual number of days in the month
in which the Closing occurs and Buyers shall be entitled to a credit for the amount of any Minimum
Rent paid that relates to any period after the Closing Date. For purposes of prorating any
Additional Rent payable under any Lease with respect to any applicable Property, the following
shall apply:

(a) To the extent Additional Rent payable for the then-current Lease Year for any Property is
calculated and determined on the basis of a percentage of Gross Revenues in excess of the
applicable Base Gross Revenues, such Additional Rent with respect to such Property shall be equal
to the applicable percentage of Gross Revenues for such Property for such Lease Year in excess of
the applicable Closing Breakpoint. For purposes of the foregoing, the “Closing Breakpoint” shall
mean the applicable Base Gross Revenues multiplied by a fraction the numerator of which is the
number of days in the current Lease Year for such applicable Property through and including the day
prior to the Closing Date, and the denominator of which is three hundred sixty-five (365).

(b) To the extent Additional Rent payable for the then-current Lease Year for any Property is
calculated and determined on the basis of an increase in the Cost
of Living Index, such Additional Rent shall be determined and paid in accordance with the
applicable provisions of the applicable Lease for the number of days in such Lease Year through and
including the day prior to the Closing Date.

 

-12-

 

(c) In the event that the amount of Additional Rent payable for such Lease Year is subject to
either a floor or a ceiling, the amount of such floor or ceiling, as the case may be, shall also be
prorated based upon a three hundred sixty-five (365) day year.

(d) Buyers and Sellers shall cooperate to estimate the proration amount for Additional Rent as
of the Closing in good faith, and shall submit such amount to Escrow Holder at least one (1)
business day prior to the Close of Escrow. In determining such proration amount, Buyers shall be
credited with any payments on account of Additional Rent previously paid to either Seller for the
applicable current Lease Year. Within thirty (30) days after the Closing Date, Buyers shall make a
final calculation of Additional Rent up to the Closing for each applicable Property, and deliver to
Sellers an Officer’s Certificate (as defined in the applicable Lease) setting forth the calculation
thereof. Buyers shall promptly pay to Sellers any deficiency in the payment of Additional Rent for
each applicable Property, and Sellers shall promptly pay to Buyers, the amount of any overpayment
of Additional Rent for any applicable Property.

(e) The obligation to prorate and pay Additional Rent for each applicable Property shall
survive the Closing.

6.6 Closing and Transaction Costs.

6.6.1 Sellers and Buyers shall execute such returns, questionnaires and other documents as
shall be required with regard to all applicable Transaction Taxes imposed by applicable federal,
state or local Law.

6.6.2 Upon the Closing, Buyers shall be responsible for:

(a) except as is expressly provided in Section 6.6.3 below, all Transaction Taxes and all fees
and charges of Escrow Holder hereunder;

(b) except as is expressly provided in Section 6.6.3 below, all expenses of or related to the
issuance of any Title Policies (including the costs of any survey required by Buyers and/or the
Title Company), any title warranties, any Title Endorsements and any chain of title reports or tax
certificates;

(c) the charges for or in connection with the recording and/or filing of any instrument or
document provided herein;

(d) all costs of financing all or any portion of the Purchase Price (including, without
limitation, all costs of title insurance incurred in connection with any lenders’ policies of title
insurance and any mortgage recording taxes);

 

-13-

 

(e) all reports or studies obtained by or at the direction of Buyers, including all appraisal,
environmental, engineering or other third party reports and the fees or costs incurred in
connection therewith;

(f) Buyers’ legal, accounting and other professional fees and expenses incurred in connection
with the transactions contemplated hereby and the Exhibits hereto;

(g) all other costs and expenses incurred in connection with the transactions contemplated
hereunder and the Exhibits hereto that are not the responsibility of Sellers as provided in Section
6.6.3 below.

6.6.3 Upon the Closing, Sellers shall be responsible for:

(a) one-half (1/2) of all Transaction Taxes (other than any Mansion Taxes or New Jersey bulk
sales taxes, both of which shall be the sole responsibility of Buyers) and one-half (1/2) of all
fees and charges of Escrow Holder hereunder;

(b) to the extent a Title Policy is issued by Title Company for an applicable Property located
in the State of Texas at Closing, the premium owing for such Title Policy for such Property
(excluding any premiums or costs for the Title Endorsements); and

(c) except as is expressly provided in Section 6.6.2 above, Sellers’ legal, accounting and
other professional fees and expenses incurred in connection with the transactions contemplated
hereby and the Exhibits hereto.

6.6.4 Any personal property conveyed to Buyers as part of any Property is included in this
sale without charge; provided, however, that Buyers shall be obligated to pay the amount of any and
all sales or similar taxes payable in connection with the transfer of such personal property.

6.6.5 If the Closing does not occur for any reason other than Sellers’ default hereunder,
Buyers shall pay all title and Escrow cancellation charges and expenses. If the Closing does not
occur by reason of Sellers’ default hereunder, then in such event Sellers shall be responsible for
any title and Escrow cancellation charges and expenses.

6.6.6 The provisions of this Section 6.6 shall survive the Closing and the provisions of
Section 6.6.5 shall survive any early termination of this Agreement prior to Closing.

6.7 Completion and Distribution of Documents. Escrow Holder shall also undertake the
following at or promptly after the Close of Escrow:

6.7.1 If necessary, Escrow Holder is authorized and instructed to insert the Closing Date as
the date of any documents conveying or terminating interests herein or to become operative as of
the Closing Date.

 

-14-

 

6.7.2 Cause each Deed and any other recordable instrument which the parties so direct to be
recorded in the appropriate land records office where the respective Property is
located. If permitted by applicable Law, Escrow Holder is hereby instructed not to affix the
amount of any Transaction Tax on the face of any Deed but to pay on the basis of a separate
affidavit signed by either the applicable Seller or the applicable Buyer, as applicable, and not
made a part of the public record; and

6.7.3 Cause each non-recorded document to be delivered to the party acquiring rights
thereunder, or for whose benefit such document was obtained.

6.8 Sellers’ Election of 1031 Exchange. Sellers, or either of them, may elect to sell
one or more of the Properties to Buyers in the form of a tax-deferred exchange pursuant to Section
1031 of the Internal Revenue Code of 1986, as amended (“1031 Exchange”); provided, however, such
1031 Exchange shall not be a condition to either Seller’s obligation to close the transactions
contemplated by this Agreement; provided further, however, that Sellers shall be entitled, in their
sole discretion, to extend the Closing Date (including the Outside Closing Date) for up to ten (10)
days by written notice delivered to Buyers and Escrow Holder no less than three (3) days prior to
the scheduled Closing Date in order to accommodate such a 1031 Exchange. If the Closing Date is so
extended, Rent and Charges shall be prorated and paid as of the date prior to the originally
scheduled Closing Date without regard to such extension. In the event that Sellers, or either of
them, shall so elect a 1031 Exchange, Sellers shall give written notice to Buyers and Escrow Holder
of such election. Buyers shall fully cooperate with any such 1031 Exchange, including with respect
to the following as may be requested or approved by Sellers, or either of them:

6.8.1 executing and delivering amendments to this Agreement and/or amendments and restatements
of this Agreement so that the transactions contemplated hereby are incorporated into one or more
cross-contingent agreements;

6.8.2 executing and delivering one or more assignments of this Agreement or any of the
agreements described in Section 6.8.1 above from either Buyer to any Affiliate of Buyers or by
either Seller to any Affiliate of Sellers or to a qualified exchange accommodator of Sellers or
such Affiliate; and

6.8.3 such other additional documents as Sellers may reasonably request; provided, that
Sellers agree to pay or reimburse Buyers upon demand for any out of pocket expenses (including
reasonable legal expenses) and Buyers shall not be required to incur any additional Liabilities or
financial obligations as a consequence of any of the foregoing exchange transactions.

7. TERMINATION

7.1 Early Termination for Failure of Conditions.

7.1.1 Termination by Buyers. If Buyers are entitled to and in fact disapprove any of
the conditions set forth in Section 5.1, then subject to Seller’s rights of cure to the extent
provided in Section 5.1, Escrow and this Agreement shall automatically terminate upon receipt by
Sellers and Escrow Holder of Buyers’ written notice of disapproval of such condition within the
time and in the manner provided in Section 5.2; provided, however, that if the failure of (i) the
condition set forth in Section 5.1.2 results from a breach or default by either Seller of its
obligations under this Agreement or (ii) the condition set forth in Section 5.1.1 results from
a breach of an express representation or warranty of either Seller pursuant to Section 8 when made,
then in lieu of terminating this Agreement and Escrow pursuant to this Section 7.1, Buyers shall be
entitled to exercise their rights pursuant to Section 7.2 below. Upon any termination pursuant to
this Section 7.1.1, Buyers shall pay Sellers $100.00 as consideration for such termination rights.

 

-15-

 

7.1.2 Termination by Sellers. If Sellers are entitled to and in fact disapprove any
of the conditions set forth in Section 5.4 above (and such disapproval is not deemed withdrawn in
accordance with Section 5.5 above), Escrow and this Agreement shall automatically terminate upon
receipt by Buyers and Escrow Holder of Sellers’ written notice of disapproval thereof at any time
prior to the Closing; provided, however, that if the failure of any of the conditions set forth in
Section 5.4 results from (i) a breach or a default by any Buyer of its obligations under this
Agreement, or (ii) a breach of any express representation or warranty of any Buyer pursuant to
Section 8, then in lieu of terminating this Agreement and Escrow pursuant to this Section 7.1.2,
Sellers shall be entitled to exercise its remedies pursuant to Section 7.2 below.

7.1.3 Rights and Obligations Upon Termination for Failure of Conditions. If Escrow
and this Agreement are terminated in the manner and within the applicable time period(s) provided
pursuant to either Section 7.1.1 or Section 7.1.2 above, (a) all instruments in Escrow shall be
returned to the party depositing the same, (b) Buyers shall return all items (including, without
limitation, the Environmental Reports) previously delivered by Sellers to Buyers and shall deliver
to Sellers true, correct and complete copies of all Commitments, all Environmental Studies and any
other reports or studies prepared by or on behalf of Buyers in connection with their review and
inspection of the Properties, (c) if this Agreement is terminated pursuant to (x) Section 7.1.1 or
Section 7.1.2 other than clauses (i) or (ii) thereof, then Escrow Holder shall return the Earnest
Money Deposit to Buyers or (y) clauses (i) or (ii) of Section 7.1.2, then Sellers shall retain the
Earnest Money Deposit, (d) the provisions of Section 6.6.5 above shall apply, and (e) neither party
shall have any further rights, obligations or Liabilities whatsoever to the other party concerning
the purchase and sale of the Properties pursuant to this Agreement, except for those Liabilities
which are expressly stated in this Agreement to survive termination.

7.2 Termination by Reason of Default. If the Closing fails to occur when and as
provided in Section 6 above by reason of a breach or default of either party of any of its duties,
obligations, representations or warranties under this Agreement, (or by reason of the failure of a
condition due to any event described in clauses (i) or (ii) of Sections 7.1.1 or 7.1.2 as
applicable), then the non-defaulting party may elect, by written notice to the defaulting party and
to Escrow Holder, to terminate Escrow and this Agreement. Such termination shall be effective five
(5) days after delivery of such notice (the “Effective Termination Date”); provided, that
(i) the non-defaulting party has performed or is in a position to perform all obligations on its
part to be performed as of the Effective Termination Date other than those obligations which the
non-defaulting party is prevented from having performed by reason of the defaulting party’s breach
or default; and (ii) the defaulting party has not cured the default and the non-defaulting party
has not waived such default by the Effective Termination Date. Except as otherwise provided below
in this Section 7.2 and Section 6.6.5 above, Escrow Holder and the parties shall, upon such
termination, return all of the other party’s funds and documents then held by them (including,
without limitation, the Environmental Reports) to the party depositing or delivering the same.
Thereafter, each of the parties shall be discharged and released from all obligations and
Liabilities except as otherwise provided in this Section 7.2 and Section 6.6.5 above and except for
those obligations and Liabilities which are expressly intended to survive the termination of this
Agreement, including, without limitation, those Liabilities set forth in Section 12.2 below.
Provided that Sellers shall not be the defaulting party, in connection with any termination and
promptly upon such termination, Buyers shall deliver to Sellers true, correct and complete copies
of all Commitments, all Environmental Studies and any other reports or studies prepared by or on
behalf of Buyers in connection with their review and inspection of the Properties,

 

-16-

 

7.2.1 Sellers’ Damages. If the Closing fails to occur by reason of a breach or
default by Buyers (or by reason of the failure of a condition due to any event described in clauses
(i) or (ii) of Section 7.1.2), then Sellers may terminate this Agreement as of the Effective
Termination Date as provided in Section 7.2 above, in which case Buyers shall be liable for the
cancellation and other charges and expenses as provided for in Section 6.6.5 and the Earnest Money
Deposit (plus all accrued interest thereon) shall be retained by Sellers as liquidated damages.
BUYERS RECOGNIZE THAT IF THE CLOSING FAILS TO OCCUR BY REASON OF A BREACH OR DEFAULT OF THIS
AGREEMENT BY BUYERS, SELLERS SHOULD BE ENTITLED TO COMPENSATION FOR THE DETRIMENT CAUSED THEREBY.
HOWEVER, BOTH PARTIES AGREE THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE EXTENT
OF THE DETRIMENT AND TO AVOID SUCH DIFFICULTIES, THE PARTIES AGREE THAT, IF BUYERS FAIL TO PURCHASE
THE PROPERTIES FOR ANY REASON OTHER THAN (X) A BREACH OF SELLERS’ OBLIGATIONS HEREUNDER, OR (Y) A
FAILURE OF THE CONDITIONS SET FORTH IN SECTION 5.1, SELLERS SHALL BE ENTITLED TO RECOVER FROM
BUYERS A SUM EQUAL TO THE EARNEST MONEY DEPOSIT AND ANY INTEREST ACCRUED THEREON AS LIQUIDATED
DAMAGES. SELLERS SHALL BE ENTITLED TO OBTAIN SUCH AMOUNT OUT OF ANY DEPOSIT MADE BY BUYERS TO
SELLERS OR INTO ESCROW AND OUT OF ANY OTHER MONEY BUYERS HAVE DEPOSITED INTO ESCROW OR PAID TO OR
FOR SELLERS’ ACCOUNT. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, AND EXCEPT AS PROVIDED IN
SECTION 12.2 BELOW, BOTH PARTIES AGREE THAT SUCH AMOUNT STATED AS LIQUIDATED DAMAGES SHALL BE IN
LIEU OF ANY OTHER RELIEF TO WHICH SELLERS MIGHT OTHERWISE BE ENTITLED BY VIRTUE OF BUYERS’ FAILURE
TO PURCHASE THE PROPERTIES FOR ANY REASON OTHER THAN AS STATED IN CLAUSES (X) AND (Y) OF THIS
SECTION 7.2.1.

Please Initial:                       Sellers                       Buyers

7.2.2 Buyers’ Remedies. If the Closing fails to occur by reason of a breach or default
of this Agreement by Sellers, then Buyers shall as their sole and exclusive remedy either (a)
terminate this Agreement as of the Effective Termination Date as provided in Section 7.2 above, in
which case Sellers shall be liable for the cancellation and other charges and expenses provided for
in Section 6.6.5 and Escrow Holder shall return the Earnest Money Deposit to Buyers, or (b) enforce
specific performance of the obligations of Sellers hereunder; provided, however, that any action by
Buyers to seek such specific performance must be commenced
within ninety (90) calendar days of the occurrence of the alleged default by Sellers; provided
further, however, that, in no event whatsoever shall either Seller ever have any Liability (whether
in law or equity) for damages as a result of a default by Sellers, or either of them, under this
Agreement.

 

-17-

 

7.3 Relationship to Leases. Notwithstanding anything to the contrary in this
Agreement, no termination of this Agreement and Escrow by Sellers or Buyers regardless of the
reason therefor shall affect the rights or obligations of either Seller or either Buyer under any
applicable Lease, each such Lease shall remain in full force and effect (and unmodified by the
applicable Lease Termination), following any such termination of this Agreement prior to the
Closing. Further notwithstanding anything to the contrary in this Agreement or any Lease, or at
law or in equity, between the Effective Date and the Closing Date, the following shall pertain:

7.3.1 This Agreement shall not under any circumstances cause the termination of any Lease and
each Lease shall remain in full force and effect to and until the consummation of the Closing in
accordance with the terms hereof;

7.3.2 Buyers hereby acknowledge and agree that Buyers shall not under any circumstances be
entitled to possession of the Properties under the terms of this Agreement until the Closing, and
that, prior to Closing, each Buyers’ possession of the Properties shall be solely by way of the
applicable Lease with respect to each Property;

7.3.3 In no event shall either Buyer be deemed a vendee in possession; and

7.3.4 In the event that an Event of Default (as defined under any Lease) shall occur under any
Lease at anytime prior to Closing, the applicable Seller shall be entitled to exercise any and all
rights or remedies available to Sellers as landlord set forth in Article XVI of the applicable
Lease. Without limiting the terms of each Lease, but for the avoidance of doubt, in no event shall
the delay or failure on the part of the applicable Seller to give any notice or to exercise any
right or remedy under the applicable Lease prior to the Outside Closing Date be deemed a waiver by
the applicable Seller of any breach, default, Event of Default (as defined under such Lease) and/or
any right or remedy available to the applicable Seller under the terms of such Lease.

8. REPRESENTATIONS AND WARRANTIES

8.1 In General. In addition to any express agreements of either party contained
herein, the following constitute representations and warranties by each Seller to each Buyer, and
by each Buyer to each Seller, which shall be true and correct as of the date hereof.

8.2 By Each Party. Each Seller represents and warrants to each Buyer, and each Buyer
hereby represents and warrants to each Seller, as follows:

8.2.1 Authority. Such party has full power and authority to enter into and comply
with the terms of this Agreement, and the individuals executing this Agreement on behalf of such
party have actual right and authority to bind that party to the terms of this Agreement.

 

-18-

 

8.2.2 Binding Effect. No action or consent which has not been obtained is necessary
to make this Agreement, and this Agreement and all documents to be executed hereunder are or will
be when executed the valid and legally binding obligations of such party, enforceable in accordance
with their respective terms, except as such enforceability may be limited by creditors’ rights laws
and general principles of equity.

8.2.3 No Conflict. The execution and delivery of this Agreement and all other
documents to be executed by such party hereunder, compliance with the provisions thereof and hereof
and the consummation of the transactions contemplated hereunder and thereunder will not result in
(a) a breach or violation of (i) any Laws applicable to such party now in effect, (ii) the
Organizational Documents of such party, (iii) any judgment, order or decree of any governmental
authority with jurisdiction binding on such party or (iv) any material agreement or instrument to
which such party is a party or by which it is bound.

8.2.4 Patriot Act.

(a) To the extent applicable to Sellers, to Sellers’ actual knowledge, Sellers have complied
in all material respects with the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001, which comprises Title III of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as
reauthorized by the USA Patriot Improvement and Reauthorization Act of 2005 (the “Patriot Act”),
and the regulations promulgated thereunder, and the rules and regulations administered by the U.S.
Treasury Department’s Office of Foreign Assets Control (“OFAC”), to the extent such laws are
applicable to Sellers. Sellers are not included on the List of Specially Designated Nationals and
Blocked Persons maintained by OFAC, or residents in, or organized or chartered under the laws of,
(A) a jurisdiction that has been designated by the U.S. Secretary of the Treasury under Section 311
or 312 of the Patriot Act as warranting special measures due to money laundering concerns or (B)
any foreign country that has been designated as non-cooperative with international anti-money
laundering principles or procedures by an intergovernmental group or organization, such as the
Financial Action Task Force on Money Laundering, of which the United States is a member and with
which designation the United States representative to the group or organization continues to
concur. As used herein, the term “actual knowledge” as it relates to each Seller shall mean the
actual knowledge (without investigation or the duty to conduct investigation) of Paul Brown.

(b) To the extent applicable to Buyers, to Buyers’ actual knowledge, Buyers have complied in
all material respects with the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001, which comprises Title III of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as
reauthorized by the Patriot Act, and the regulations promulgated thereunder, and the rules and
regulations administered by OFAC, to the extent such laws are applicable to Buyers. Buyers are not
included on the List of Specially Designated Nationals and Blocked Persons maintained by OFAC, or
residents in, or organized or chartered under the laws of, (A) a jurisdiction that has been
designated by the U.S. Secretary of the Treasury under Section 311 or 312 of the Patriot Act as
warranting special measures due to money laundering concerns or (B) any foreign country that has
been designated as non-cooperative with international anti-money laundering principles or
procedures by an intergovernmental group or
organization, such as the Financial Action Task Force on Money Laundering, of which the United
States is a member and with which designation the United States representative to the group or
organization continues to concur. As used herein, the term “actual knowledge” as it relates to
each Buyer shall mean the actual knowledge (without investigation or the duty to conduct
investigation) of John Buono.

 

-19-

 

8.3 By Each Seller Only. Each Seller represents and warrants to each Buyer as
follows:

8.3.1 No Tax Withholding. In accordance with Section 1445 of the Internal Revenue
Code and the applicable provisions of the California Revenue and Taxation Code or other similar
laws, (a) each Seller is not now, and at Closing will not be, a “foreign person,” and (b) Buyers
need not withhold tax at the Closing as a result of the transactions contemplated hereby. Each
Seller shall deliver a separate nonforeign/residency affidavit, executed by such Seller, if
reasonably required to do so by Escrow Holder.

8.3.2 Litigation, Etc. To the actual knowledge of such Seller (without investigation
and without the duty to conduct any investigation), there are no actions, proceedings or
investigations pending or threatened against or affecting such Seller seeking to enjoin, challenge
or collect damages in connection with the transactions contemplated by this Agreement or which
would reasonably be expected to materially and adversely affect the ability of such Seller to carry
out the transactions contemplated by this Agreement. The representation and warranty of Sellers
set forth in this Section 8.3.2 shall survive the Closing for a period of one (1) year.

8.3.3 Condemnation. To their actual knowledge (without investigation and without the
duty to conduct any investigation), neither of the Sellers has received any written notice of any
pending or threatened Condemnation affecting any material portion of the Property.

8.3.4 No Further Encumbrances. From and after the Effective Date, no Seller will take
any action that would result in a further encumbrance on any Property.

The phrase “actual knowledge of Seller” or words of similar import shall mean the current actual
knowledge of Paul Brown or Susan Tate.

8.4 By Each Buyer Only. Each Buyer represents and warrants to each Seller as follows:

8.4.1 Litigation, Etc. To the actual knowledge of each Buyer (without investigation
and without the duty to conduct any investigation), there are no actions, proceedings or
investigations pending or threatened against or affecting such Buyer, seeking to enjoin, challenge
or collect damages in connection with the transactions contemplated by this Agreement or which
would reasonably be expected to materially and adversely affect the ability of such Buyer to carry
out the transactions contemplated by this Agreement. The representation of Buyers set forth in
this Section 8.4.1 shall survive the Closing for a period of one (1) year.

 

-20-

 

9. CERTAIN EVENTS PRIOR TO CLOSING

9.1 Loss. In the event of loss (including a loss due to a Condemnation) or damage to
a Property or any portion thereof and which occurs prior to the Closing, this Agreement shall
remain in full force and effect, Buyers shall nonetheless proceed to purchase the Properties and
consummate this Agreement in accordance with the terms hereof and all insurance proceeds or
Condemnation awards payable by reason thereof shall belong to Buyers, notwithstanding any contrary
provisions in the Leases. The provisions of this Section 9.1 shall survive the Closing and shall
supersede the rights and remedies afforded under Section 5.007 of the Texas Property Code.

9.2 Prompt Notices. Sellers shall give prompt notice to Buyers, and Buyers shall give
prompt notice to Sellers, of (i) the occurrence, or failure to occur, of any event which occurrence
or failure would be likely to cause (A) any representation or warranty of such party contained in
this Agreement to be untrue or inaccurate in any material respect or (B) any covenant, condition or
agreement of such party contained in this Agreement not to be complied with or satisfied in all
material respects and (ii) any failure of Sellers, or either of them, or Buyers, or either of them,
as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied under this Agreement.

9.3 Satisfaction of Conditions. From and after the Effective Date, each party
covenants and agrees with the other to use good faith, commercially reasonable efforts to satisfy
or cause to be satisfied all conditions precedent to such party’s obligations hereunder which are
in such party’s control or over which such party exercises control.

10. POST-CLOSING MATTERS

10.1 Confidentiality and Public Disclosure. Prior to the Closing of the transaction
contemplated hereby, each party shall hold in strict confidence all information received from the
other party concerning this transaction and shall not release any such information to third parties
(other than attorneys, accountants or other professional consultants, or lenders of the parties)
without the prior written consent of the other party unless otherwise required by Law or deemed
prudent (in the disclosing party’s judgment) under Securities and Exchange Commission or other
federal or state securities’ laws or the rules and regulations of the NYSE or NASDAQ. After
Closing, each party will provide the other party with a reasonable opportunity to review any press
release or similar communication intended for publication to the general public announcing the
Closing and the consummation thereof prior to the issuance thereof. The provisions of this Section
10.1 shall survive the Closing or any early termination of this Agreement prior to the Closing.

 

-21-

 

10.2 Indemnification by Buyers. In addition to the other indemnities of Buyers
contained herein or in the other Transaction Documents or any Lease in favor of Sellers, or either
of them, Buyers shall protect, indemnify, save harmless and defend Sellers and each of their
respective partners, predecessors, successors and assigns, and their respective past, present and
future officers, directors, employees, agents, representatives, attorneys and all Persons acting
by, through, under or in concert with any of the foregoing (each an “Indemnified Party”), from and
against all Liabilities, based upon, relating to or arising out of the Properties, or any of them,
whether accruing before or after the Closing Date, including any Liabilities relating to the
presence or existence of Hazardous Substances of any kind, on, under or about the Properties, or
any of them, or on adjoining or neighboring property, or arising from any use of the Properties, or
any of them, except to the extent such Liabilities were caused by the willful misconduct or gross
negligence of any Indemnified Party. Payment shall not be a condition precedent to enforcement of
the foregoing indemnification. THE PRECEDING INDEMNIFICATION SHALL APPLY NOTWITHSTANDING THE
NEGLIGENCE, WHETHER SOLE, CONTRIBUTORY OR CONCURRENT, OF ANY INDEMNIFIED PARTY. The provisions of
this Section 10.2 shall survive the Closing and shall control any limitation on liability set forth
in any other Transaction Document.

11. BROKERS

Sellers, on the one hand, and Buyers, on the other hand, each represent and warrant to the
other(s) that no broker or finder or other real estate agent is entitled to any commission,
finder’s fee or other compensation resulting from any action on its part. Sellers, on the one
hand, and Buyers, on the other hand, agree to indemnify, defend, protect and hold the other
party(ies) and the Properties harmless against any Liabilities for any broker’s commission or
finder’s fee for which it is responsible or which is asserted as a result of its own act or
omission in connection with this transaction. The provisions of this Section 11 shall survive the
Closing or any early termination of this Agreement prior to the Closing.

12. MISCELLANEOUS PROVISIONS

12.1 Assignment; Binding on Successors. This Agreement shall be binding upon and
shall inure to the benefit of Buyers and Sellers and their respective representatives, successors
and assigns; provided, however, that Buyers shall not have the right to assign this Agreement or
any interest or right under this Agreement or under the Escrow or to appoint a nominee to act as
Buyers under this Agreement without obtaining the prior written consent of Sellers, which consent
may be given or withheld in the sole and absolute discretion of each Seller; provided, however,
that without in any way relieving Buyers of any of their duties, covenants or obligations
hereunder, upon written notice to Sellers given not less than ten (10) business days prior to the
scheduled Closing Date, Buyers may, without the consent of Sellers, assign their rights and
obligations hereunder to one or more Affiliates of Buyers. Any attempted assignment in violation
of this provision shall be null and void. Notwithstanding any provision herein to the contrary,
Sellers, or either of them, shall be permitted, prior to Closing and without the consent of Buyers,
or either of them, to transfer one or more Properties to one or more Affiliates of Sellers, or
either of them, provided that in no event shall any such transfers release or discharge Sellers, or
either of them, from any liability or obligation hereunder unless expressly agreed otherwise by
Buyers in writing.

12.2 Attorneys’ Fees. Notwithstanding anything to the contrary contained in Section 7
above, in any dispute or action between the parties arising out of this Agreement or the Escrow, or
in connection with the Properties, or any of them, the prevailing party shall be entitled to have
and recover from the other party its costs and attorneys’ fees related thereto, whether by final
judgment or by out of court settlement. The provisions of this Section 12.2 shall survive Closing
or any early termination of this Agreement prior to Closing.

 

-22-

 

12.3 Notices. Any notice, consent, approval, demand or other communication required or
permitted to be given hereunder (a “notice”) must be in writing and may be served personally or by
U.S. Mail. If served by U.S. Mail, it shall be addressed as follows:

	 	 	 	 	 
	 

	 	If to Seller:
	 	HCP, Inc.
	 

	 	 	 	3760 Kilroy Airport Way, Suite 300
	 

	 	 	 	Long Beach, California 90806
	 

	 	 	 	Attn: Legal Department
	 

	 	 	 	Fax: (562) 733-5200
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Sidley Austin LLP
	 

	 	 	 	555 West Fifth Street, Suite 4000
	 

	 	 	 	Los Angeles, California 90013
	 

	 	 	 	Attn: Sarah V. J. Spyksma, Esq.
	 

	 	 	 	Fax: (213) 896-6600
	 
	 	 	 	 
	 

	 	If to Buyers:
	 	Assisted Living Concepts, Inc.
	 

	 	 	 	Attention: Chief Financial Officer
	 

	 	 	 	W140 N8981 Lilly Road
	 

	 	 	 	Menomonee Falls, Wisconsin 93051
	 

	 	 	 	Fax: (262)257-3714
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Assisted Living Concepts, Inc.
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	W140 N8981 Lilly Road
	 

	 	 	 	Menomonee Falls, Wisconsin 93051
	 

	 	 	 	Fax: (262)257-3714
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Quarles & Brady LLP
	 

	 	 	 	Attention: Michael D. Zeka, Esq.
	 

	 	 	 	411 E. Wisconsin Avenue
	 

	 	 	 	Milwaukee, Wisconsin 53202
	 

	 	 	 	Fax: (414) 978-8630

Any notice which is personally served shall be effective upon the date of service; any notice given
by U.S. Mail shall be deemed effectively given, if deposited in the United States Mail, registered
or certified with return receipt requested, postage prepaid and addressed as provided above, on the
date of receipt, refusal or non-delivery indicated on the return receipt. In addition, either
party may send notices by facsimile or by a nationally recognized overnight courier service which
provides written proof of delivery (such as U.P.S. or Federal Express). Any notice sent by
facsimile shall be effective upon confirmation of receipt in legible form, and any notice sent by a
nationally recognized overnight courier shall be effective on the date of delivery to the party at
its address specified above as set forth in the courier’s delivery receipt. Any party may, by
notice to the other from time to time in the manner herein provided, specify a different address
for notice purposes.

 

-23-

 

12.4 Governing Law; Jurisdiction. EXCEPT WHERE FEDERAL LAW IS APPLICABLE AND UNLESS
OTHERWISE EXPRESSLY PROVIDED HEREIN, THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS (WITHOUT REGARD OF PRINCIPLES OR CONFLICTS OF LAW). THE FOREGOING NOTWITHSTANDING, EACH OF
BUYERS AND SELLERS HEREBY IRREVOCABLY SUBMIT, TO THE MAXIMUM EXTENT ALLOWED BY LAW, TO THE
JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF CALIFORNIA AND CONSENT TO SERVICE OF
PROCESS IN ANY LEGAL PROCEEDING ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT, BY ANY MEANS
AUTHORIZED BY CALIFORNIA LAW.

12.5 Interpretation. All provisions herein shall be construed in all cases as a whole
according to its fair meaning, neither strictly for nor against either Buyers or Sellers and
without regard for the identity of the party initially preparing this Agreement. Titles and
captions are inserted for convenience only and shall not define, limit or construe in any way the
scope or intent of this Agreement. References to Sections are to Sections as numbered in this
Agreement unless expressly stated otherwise.

12.6 Gender; Joint Obligations. As used in this Agreement, the masculine, feminine or
neuter gender and the singular or plural number shall each be deemed to include the others where
and when the context so dictates. The obligations of Buyers hereunder shall be joint and several.

12.7 No Waiver. A waiver by any party of a breach of any of the covenants, conditions
or agreements to be performed by the other parties shall be in writing to be effective and no such
written waiver shall be construed as a waiver of any succeeding breach of the same or other
covenants, conditions or Agreements.

12.8 Modifications. Any alteration, change or modification of or to this Agreement,
in order to become effective, must be made in writing and in each instance signed on behalf of each
party to be charged.

12.9 Severability. If any term, provision, condition or covenant of this Agreement or
its application to any party or circumstances shall be held, to any extent, invalid or
unenforceable, the remainder of this Agreement, or the application of the term, provision,
condition or covenant to persons or circumstances other than those as to whom or which it is held
invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest
extent permitted by law.

12.10 Letters of Credit. Provided that Sellers do not have any claims against Buyers
under this Agreement or any of the Leases and subject to the occurrence of the Closing, Sellers
shall return the original Letters of Credit to Buyers on or prior to December 27, 2010. The terms
of this Section 12.10 shall survive Closing.

 

-24-

 

12.11 Merger of Prior Agreements. This Agreement and the other Transaction Documents
contain the entire understanding between the parties relating to the transaction contemplated by
this Agreement. All prior or contemporaneous agreements (other than the Leases), understandings,
representations and statements, whether direct or indirect, oral or
written, are merged into and superseded by this Agreement and the other Transaction Documents,
and shall be of no further force or effect.

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

12.13 Counterparts. This Agreement may be signed in multiple counterparts which, when
duly delivered and taken together, shall constitute a binding Agreement between all parties.

12.14 Exhibits. All exhibits and schedules attached to this Agreement are
incorporated herein by reference.

12.15 Cooperation of Parties. Each party agrees to sign any other and further
instruments and documents and take such other actions as may be reasonably necessary or proper in
order to accomplish the intent of this Agreement.

12.16 No Third Party Beneficiaries. Except as otherwise expressly provided herein,
the provisions of this Agreement are intended to be solely for the benefit of the parties hereto,
and the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor
obligate any of the parties hereunder, to any person or entity other than the parties to this
Agreement.

12.17 Dates. If, pursuant to this Agreement, any date indicated herein falls on an
official United States holiday, or a Saturday or Sunday, the date so indicated shall mean the next
business day following such date.

 

-25-

 

12.18 Waiver of Trial by Jury. BUYERS AND SELLERS EACH ACKNOWLEDGE THAT THEY HAVE HAD
THE ADVICE OF COUNSEL OF THEIR CHOICE WITH RESPECT TO THEIR RIGHTS TO TRIAL BY JURY UNDER THE
CONSTITUTION OF THE UNITED STATES AND THE STATE OF TEXAS AND THE STATE IN WHICH ANY PROPERTY IS
LOCATED. BUYERS AND SELLERS EACH HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT (OR ANY AGREEMENT FORMED
PURSUANT TO THE TERMS HEREOF) OR (ii) IN ANY MANNER CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF BUYERS AND SELLERS WITH RESPECT TO THIS AGREEMENT (OR ANY AGREEMENT FORMED PURSUANT TO
THE TERMS HEREOF) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREINAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; BUYERS AND
SELLERS EACH HEREBY AGREE AND CONSENT THAT, SUBJECT TO SECTION 12.19, ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND THAT EITHER PARTY
MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS CONCLUSIVE EVIDENCE OF THE CONSENT OF EACH SUCH
PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

BUYERS’ INITIALS:                      

SELLERS’ INITIALS:                      

12.19 Arbitration of Disputes.

(a) EXCEPT AS PROVIDED IN SECTION 12.19(b) BELOW, ANY CONTROVERSY, DISPUTE OR CLAIM OF
WHATSOEVER NATURE ARISING OUT OF, IN CONNECTION WITH, OR IN RELATION TO THE INTERPRETATION,
PERFORMANCE OR BREACH OF THIS AGREEMENT, INCLUDING ANY CLAIM BASED ON CONTRACT, TORT OR STATUTE,
SHALL BE DETERMINED BY FINAL AND BINDING, CONFIDENTIAL ARBITRATION ADMINISTERED BY JAMS, INC.
(“JAMS”) IN ACCORDANCE WITH ITS THEN-EXISTING COMMERCIAL ARBITRATION RULES, AND THE SOLE ARBITRATOR
SHALL BE SELECTED IN ACCORDANCE WITH SUCH JAMS RULES. ANY ARBITRATION HEREUNDER SHALL BE GOVERNED
BY THE UNITED STATES ARBITRATION ACT, 9 U.S.C. 1-16 (OR ANY SUCCESSOR LEGISLATION THERETO), AND
JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED BY ANY STATE OR FEDERAL COURT
HAVING JURISDICTION THEREOF. NEITHER BUYERS, SELLERS NOR THE ARBITRATOR SHALL DISCLOSE THE
EXISTENCE, CONTENT OR RESULTS OF ANY ARBITRATION HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF ALL
PARTIES; PROVIDED, HOWEVER, THAT EITHER PARTY MAY DISCLOSE THE EXISTENCE, CONTENT OR RESULTS OF ANY
SUCH ARBITRATION TO ITS PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS AND ACCOUNTANTS
AND TO ANY OTHER PERSON TO

 

-26-

 

WHOM DISCLOSURE IS REQUIRED BY APPLICABLE GOVERNMENTAL REQUIREMENTS,
INCLUDING PURSUANT TO AN ORDER OF A COURT OF COMPETENT JURISDICTION. UNLESS OTHERWISE AGREED BY THE
PARTIES, ANY ARBITRATION HEREUNDER SHALL BE HELD AT A NEUTRAL LOCATION SELECTED BY THE ARBITRATOR
IN LOS ANGELES, CALIFORNIA. THE COST OF THE ARBITRATOR AND THE EXPENSES RELATING TO THE
ARBITRATION (EXCLUSIVE OF LEGAL FEES) SHALL BE BORNE EQUALLY BY BUYERS AND SELLERS UNLESS OTHERWISE
SPECIFIED IN THE AWARD OF THE ARBITRATOR. SUCH FEES AND COSTS PAID OR PAYABLE TO THE ARBITRATOR
SHALL BE INCLUDED IN “COSTS AND ATTORNEYS’ FEES” FOR PURPOSES OF SECTION 12.2 AND THE ARBITRATOR
SHALL SPECIFICALLY HAVE THE POWER TO AWARD TO THE PREVAILING PARTY PURSUANT TO SUCH SECTION 12.2
SUCH PARTY’S COSTS AND EXPENSES INCURRED IN SUCH ARBITRATION, INCLUDING FEES AND COSTS PAID TO THE
ARBITRATOR.

(b) THE PROVISIONS OF THIS SECTION 12.19 SHALL NOT APPLY TO ANY REQUEST OR APPLICATION FOR AN
ORDER OR DECREE GRANTING ANY PROVISIONAL OR ANCILLARY REMEDY (SUCH AS A TEMPORARY RESTRAINING ORDER
OR INJUNCTION OR ANY ACTION SEEKING A DECREE OF SPECIFIC PERFORMANCE) WITH RESPECT TO ANY RIGHT OR
OBLIGATION OF EITHER PARTY TO THIS AGREEMENT, AND ANY PRELIMINARY DETERMINATION OF THE UNDERLYING
CONTROVERSY, DISPUTE, QUESTION OR ISSUE AS IS REQUIRED TO DETERMINE WHETHER OR NOT TO GRANT SUCH
RELIEF. A FINAL AND BINDING DETERMINATION OF SUCH UNDERLYING CONTROVERSY, DISPUTE, QUESTION OR
ISSUE SHALL BE MADE BY AN ARBITRATION CONDUCTED PURSUANT TO THIS SECTION 12.19 AFTER AN APPROPRIATE
TRANSFER OR REFERENCE TO THE ARBITRATOR SELECTED PURSUANT TO THIS SECTION 12.19 UPON MOTION OR
APPLICATION OF EITHER PARTY HERETO. ANY ANCILLARY OR PROVISIONAL RELIEF WHICH IS GRANTED PURSUANT
TO THIS SECTION 12.19(b) SHALL CONTINUE IN EFFECT PENDING AN ARBITRATION DETERMINATION AND ENTRY OF
JUDGMENT THEREON PURSUANT TO THIS SECTION 12.19.

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF
THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION DECIDED BY NEUTRAL ARBITRATION AS
PROVIDED BY CALIFORNIA LAW, TEXAS LAW, NEW JERSEY LAW OR ANY OTHER APPLICABLE LAW, AND YOU ARE
GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL,
UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION. IF YOU
REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY.

 

-27-

 

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE
MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL ARBITRATION.

BUYERS’ INITIALS:                      

SELLERS’ INITIALS:                      

12.20 Property Disclosures. Buyers hereby waive the right to receive and any
obligation of Sellers to deliver any disclosures applicable to any Property and required by Law;
provided, however, if such waiver is not permitted by applicable Law, then Buyers shall promptly
notify Sellers in writing thereof and Sellers shall provide, at Buyers’ expense, any such required
disclosures as soon as practicable following Sellers’ receipt of Buyers’ notice.

12.21 State-Specific Matters.

12.21.1 Texas. With respect to each of the Properties located within the state of
Texas:

(a) Notice of Additional Tax Liability. IF FOR THE CURRENT AD VALOREM TAX YEAR THE
TAXABLE VALUE OF THE LAND THAT IS THE SUBJECT OF THIS AGREEMENT IS DETERMINED BY A SPECIAL
APPRAISAL METHOD THAT ALLOWS FOR APPRAISAL OF THE LAND AT LESS THAN ITS MARKET VALUE, THE PERSON TO
WHOM THE LAND IS TRANSFERRED MAY NOT BE ALLOWED TO QUALIFY THE LAND FOR THAT SPECIAL APPRAISAL IN A
SUBSEQUENT TAX YEAR AND THE LAND MAY THEN BE APPRAISED AT ITS FULL MARKET VALUE. IN ADDITION, THE
TRANSFER OF THE LAND OR A SUBSEQUENT CHANGE IN THE USE OF THE LAND MAY RESULT IN THE IMPOSITION OF
AN ADDITIONAL TAX PLUS INTEREST AS A PENALTY FOR THE TRANSFER OR THE CHANGE IN THE USE OF THE LAND.
THE TAXABLE VALUE OF THE LAND AND THE APPLICABLE METHOD OF APPRAISAL FOR THE CURRENT TAX YEAR IS
PUBLIC INFORMATION AND MAY BE OBTAINED FROM THE TAX APPRAISAL DISTRICT ESTABLISHED FOR THE COUNTY
IN WHICH THE LAND IS LOCATED.

(b) Sellers’ Disclosure Regarding Potential Annexation. IF ANY PROPERTY THAT IS THE
SUBJECT OF THIS AGREEMENT IS LOCATED IN THE STATE OF TEXAS AND OUTSIDE THE LIMITS OF A
MUNICIPALITY, SUCH PROPERTY MAY NOW OR LATER BE INCLUDED IN THE EXTRATERRITORIAL JURISDICTION OF A
MUNICIPALITY AND MAY NOW OR LATER BE SUBJECT TO ANNEXATION BY THE MUNICIPALITY. EACH MUNICIPALITY
MAINTAINS A MAP THAT DEPICTS ITS BOUNDARIES AND EXTRATERRITORIAL JURISDICTION. TO DETERMINE IF
SUCH PROPERTY IS LOCATED WITHIN A MUNICIPALITY’S EXTRATERRITORIAL JURISDICTION OR IS LIKELY TO BE
LOCATED WITHIN A MUNICIPALITY’S EXTRATERRITORIAL JURISDICTION, CONTACT ALL MUNICIPALITIES LOCATE
DIN THE GENERAL PROXIMITY OF SUCH PROPERTY FOR FURTHER INFORMATION.

 

-28-

 

12.21.2 New Jersey. With respect to each of the Properties located in New Jersey,
Buyers acknowledges that the sale of the Properties located in the state of New Jersey may be
subject to the Bulk Sale and Transfer Provisions of the New Jersey Tax Statutes. Buyers shall be
responsible for any taxes, liabilities and obligations determined to be owing by the New Jersey
Division of Taxation and shall pay all such amounts as and when due. Buyers’ obligation to pay
such taxes and liabilities shall survive the Closing and Buyers shall indemnify, protect and hold
Sellers harmless from and against any such tax or liability or any claim for non-payment thereof.

[Signature Pages Follow]

 

-29-

 

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

	 	 	 	 	 	 	 	 	 
	SELLERS:	 	HCP, INC., a Maryland corporation [SELLER TO OBTAIN INVESTMENT COMMITTEE/BOARD
APPROVAL PRIOR TO EXECUTION]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By: 	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 		Its: 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	TEXAS HCP HOLDING, L.P.,

a Delaware limited partnership
	 
	 	 	 	 	 	 	 	 
	 	 	By:	Texas HCP G.P., Inc., a Delaware corporation,

its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By: 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	Its: 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	TEXAS HCP SEVEN HOLDING, L.P.,
	 	 	a Delaware limited partnership
	 
	 	 	 	 	 	 	 	 
	 	 	By:	Texas HCP G.P., Inc.,	 	 
	 	 	 	a Delaware corporation, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By: 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	Its: 	 	 	 
	 

	 	 	 	 	 	 	 	 

[Signatures Continue on Following Page]

 

I-1

 

	 	 	 	 	 	 	 	 	 
	BUYERS:	 	ASSISTED LIVING CONCEPTS, INC.,
	 	 	a Nevada corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ALF PARTNERS, L.P.,
	 	 	a Texas limited partnership
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Texas ALF, Inc., a Nevada	 	 
	 	 	 	 	corporation, its Sole General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

 

I-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}]]