PURCHASE AND SALE AGREEMENT

EXHIBITS TO THIS AGREEMENT

SCHEDULES

EXHIBITS

THIS PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is dated the [___] day of February, 2009, by and among: THE OAKS BRADENTON, LLC , a Delaware limited liability company, or its successors or assigns (collectively, the “ Buyer ”); OAKS HOLDINGS, LLC , a Florida limited liability company   (the “ Seller ” ”);   and FIRST AMERICAN TITLE INSURANCE COMPANY , a California corporation (“ Escrow Agent ”).

A.            Seller is the lessee of an assisted living facility known as Windsor Oaks (the “ Facility ”), located at 2614 43rd Street West Bradenton, Florida 34209, pursuant to a lease dated November 1, 2003 (the “ Lease ”) by and between the Seller and HEALTH CARE REIT, INC., a Delaware corporation (the “ Landlord ”).  The Lease relates to said assisted living facility, including all furniture, fixtures, inventory, equipment and other personalty items owned by the Landlord located therein.

B.             The Lease and the option letter given by Landlord to Seller dated October 16, 2008 related thereto provides the Seller with an Option (the “ Option ”) to purchase said assisted living facility and the real and personal property associated therewith.

C.             Buyer desires to acquire, and Seller is willing to convey to Buyer pursuant to the terms described herein (i) the above referenced real property and personal property associated therewith owned by Landlord through the exercise of its Option and (ii) other personal property associated therewith owned by the Seller.

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

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

 Adjustment Amount :  The amount computed under Section 2.5 hereof.

 Affiliate :  With respect to any specified person or entity, any other person or entity which, directly or indirectly controls, is controlled by, or is under common control with, the specified person or entity.

 Applicable Law : Any federal, state, municipal, county, local, foreign or other statute, law, ordinance, rule or regulation or any order, writ, injunction, judgment, plan or decree of any court, arbitrator, department, commission, board, bureau, agency, authority, instrumentality or other body, whether federal, state, municipal, county, local, foreign or other.

 Closing : The consummation of the purchase and sale of the Property in accordance with the terms of this Agreement on the Closing Date or at such earlier or later date and time as may be agreed upon by the parties.

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

 Documents :  This Agreement, all Exhibits hereto, and all Exhibits and Schedules contained in the Seller Disclosure Letter, and each other agreement, certificate or instrument to be delivered pursuant to this Agreement.

 Due Diligence Period :  The period commencing on the Effective Date and ending on March 31, 2009, during which time Buyer may, at reasonable times with prior notice to Seller, (i) investigate the financial, legal, operational, environmental and all other aspects of the Property as Buyer may desire, and (ii) seek out sources of financing and/or investors, all in order to determine whether to consummate the transactions contemplated by this Agreement or terminate this Agreement.

 Effective Date :  The date first written above.

 Escrow Agent :  FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation.

 GAAP :  Generally accepted accounting principles as applied in the United States.

 Knowledge :  As used in this Agreement, the term “knowledge” when used to refer to the knowledge of Seller shall mean the actual knowledge of any member, manager, or officer of Seller, or any matter which any such person should have knowledge of following inquiry to the Executive Director of the Facility or the Chief Financial Officer of the Manager.

 Landlord : HEALTH CARE REIT, INC., a Delaware corporation.

 Licenses :  All certificates, licenses, and permits issued by governmental authorities which are required to be held by an owner or tenant in connection with the ownership, use, occupancy, operation, and maintenance of the Property as an assisted living facility.

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

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

 Manager : LEGEND SENIOR LIVING, LLC, a Kansas limited liability company.

 Permitted Lien :  Any (i) statutory liens that secure a governmentally required payment, including without limitation Taxes, not yet due, (ii) zoning regulations and restrictive covenants and easements of record that do not detract in any material respect from the present use of the Property and do not materially and adversely affect, impair or interfere with the use of any property affected thereby, (iii) public utility easements of record, in customary form, to serve the Property, and (iv) any other condition of title as may be approved by Buyer in writing prior to the end of the Due Diligence Period.

 Post-Closing Licensee :  The Buyer, Tenant or their designee to whom all Licenses will be transferred or otherwise obtained in accordance with Applicable Law for the operation of the Property as an assisted living facility.

 Seller Disclosure Letter : The letter dated the same date as this Agreement given by the Seller to the Buyer and containing the Exhibits and Schedules referenced herein.

 Taxes :  All federal, state, local and foreign taxes including, without limitation, income, gains, transfer, unemployment, withholding, payroll, social security, real property, personal property, excise, sales, use and franchise taxes, levies, assessments, imposts, duties, licenses and registration fees and charges of any nature whatsoever, whether or not recorded, including interest, penalties and additions with respect thereto and any interest in respect of such additions or penalties, but excluding all transfer, conveyance, intangibles, mortgage transfer, and documentary stamp taxes payable in connection with the transactions contemplated by this Agreement.

 Tenant :  That entity chosen by Buyer to lease the Property upon purchase by the Buyer.

 Title Insurer :  The Title Insurer is as follows:

First American Title Insurance Company

111 North Orange Avenue, Suite 1285

Orlando, Florida 32801

Phone: (407) 843-8674

Fax:  (888) 216-9921

Attn.:  Scott Brown

E-mail: scobrown@firstam.com

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

2.1             Property .  Upon and subject to the terms and conditions provided herein, at Closing, Seller will sell, transfer, assign and convey to Buyer, and Buyer will purchase from Seller the following (collectively, the “ Property ”):

(a)             Real Property .  All of Seller’s right, title, and interest in and to that certain parcel of real property consisting of land (“ Land ”) and all buildings, structures, fixtures and other improvements (“ Improvements ”) located thereon pursuant to the Option.  The Land is more particularly described on Exhibit A of the Seller Disclosure Letter.  The Land and Improvements (collectively, the “ Real Property ”) shall be deemed to include all licenses, and all rights-of-way, beneficial easements and appurtenances related to the Real Property.  

(b)             Personal Property .  All furnishings, machinery, equipment, vehicles, supplies, inventory, linens, medicine, foodstuffs, consumable and other personal property of any type or description, including, without limitation, all beds, chairs, sofas, wheelchairs, tables, kitchen and laundry equipment associated with and present at the Property (collectively, the “ Personal Property ”), with the exception of any personal property described in Schedule 2.1(b) of the Seller Disclosure Letter. 

(c)             Property Agreements .  Unless specifically excluded and listed on Schedule 2.1(c) of the Seller Disclosure Letter, all rights of Seller in, to and under all contracts, leases, agreements, commitments and other arrangements, and any amendments, modifications, supplements, renewals and extensions thereof, used or useful in the operation of the Property made or entered into by Seller as of the Effective Date, or between the Effective Date and the Closing in compliance with this Agreement (the “ Property Agreements ”).  Notwithstanding the foregoing, Property Agreements expressly excludes any contracts, leases, agreements, commitments and other arrangements, and any amendments, modifications, supplements, renewals and extensions entered into by Seller after the Effective Date and prior to the Closing in breach of Section 6.1 , and any Property Agreements for which consents to the assignment thereof to the Buyer have not been obtained as of the Closing, unless waived by Buyer.  Buyer shall have no obligation under the Property Agreements unless such Property Agreements are listed on Schedule 2.2(b) of the Seller Disclosure Letter.

(d)             Resident Agreements .  All rights of Seller in, to and under all occupancy, residency, leases, tenancy and similar written agreements entered into in the ordinary course of business with residents of the Property, including any amendments, modifications, supplements, renewals and extensions thereof (“ Resident Agreements ”), and all deposits, initial service fees and advances of any kind or nature from any resident of the Property (“ Resident Deposits ”).

(e)             Records .  True and complete copies of all the books, records, accounts, files, logs, ledgers, journals and architectural, mechanical and electrical plans and specifications pertaining to or used in the operation of the Property, however such data is stored.

(f)              Licenses .  Any and all Licenses now held in the name of the Seller, or any Affiliate(s) of the Seller, and any renewals, extensions, amendments or modifications thereof.

(g)             Claims and Causes of Action .  Rights in and to any claims or causes of action to the extent they are in the nature of enforcing a guaranty, warranty, or a contract obligation to complete improvements, make repairs, or deliver services to the Property.

(h)            Any and all rights of Seller or its Affiliates with respect to the use of (a) all trade names, trademarks, service marks, copyrights, patents, jingles, slogans, symbols, logos, inventions, computer software, operating manuals, designs, drawings, plans and specifications, marketing brochures, the “Oaks” name, logo, symbol, trademark and web site, or other proprietary material, process, trade secret or trade right used by Seller or its Affiliates in the operation of the Property and (b) all registrations, applications and licenses for any of the foregoing.  Buyer shall not acquire any rights from Seller to the name “Windsor.” Notwithstanding the foregoing, Buyer and Post-Closing Licensee are hereby granted a royalty-free, non-exclusive license to use the “Windsor” name after the Closing for so long as the Manager remains the manager of the Facility and for a reasonable transition period thereafter.  The last sentence of this Section 2.1(h) shall survive the Closing.

2.2             Assumption of Liabilities .

(a)            Buyer is assuming no liabilities attributable to the operation or ownership of the Property which accrued or occurred on or prior to the Closing, all of which Seller shall pay, discharge and perform when due. Specifically, without limiting the foregoing, Buyer shall not assume (a) any claim, action, suit, or proceeding pending as of the Closing or any subsequent claim, action, suit, or proceeding arising out of or relating to any event occurring prior to Closing, with respect to the manner in which Seller conducted its businesses on or prior to the Closing (b) any liability for Taxes other than real property taxes from and after Closing, or (c) any liability under any Property Agreements, except for the Assumed Obligations listed in Schedule 2.2(b) of the Seller Disclosure Letter.

(b)            Buyer acknowledges that, effective as of the Closing, Buyer shall assume and undertake to pay, discharge, and perform only the liabilities and obligations of Seller under the Property Agreements listed in Schedule 2.2(b) of the Seller Disclosure Letter (but not the Property Agreements which are entered into after the Effective Date hereof not in compliance with this Agreement or Property Agreements for which consents to the assignment thereof to the Buyer hereunder have not been obtained as of the Closing), to the extent such liabilities and obligations arise during and relate to any period from and after the Closing (collectively, the “ Assumed Obligations ”).

(c)            Assumed Obligations shall not include, and Buyer does not assume any liability related to, any accrued vacation or other accrued paid time off or benefits for the employees of the Property, including without limitation those Employees who will continue to be employed at the Property after the Closing (the “ Accrued Employee Benefits ”), which shall be the responsibility of the Seller and/or Manager and the remuneration of any party for, or payment of, any such Accrued Employee Benefits shall not constitute an expense of the Facility under the Management Agreement (as herein defined).

2.3             Purchase Price .  The purchase price for the Property shall be an amount equal to FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 U.S. DOLLARS ($4,500,000.00),   (the “ Purchase Price ”), plus or minus (whichever is applicable) the Adjustment Amount, of which: (a) ONE MILLION NINE-HUNDRED SEVENTEEN THOUSAND FIVE HUNDRED AND NO/100 U.S. DOLLARS ($1,917,500.00) shall be paid to Landlord for the purchase of the Real Property pursuant to the terms of the Option and the Option Instruction, and (b) the balance of TWO MILLION FIVE-HUNDRED EIGHTY TWO THOUSAND FIVE HUNDRED AND NO/100 U.S. DOLLARS ($2,582,500.00) shall be paid to Seller as consideration for assignment of the Option and for the Purchased Property other than the Real Property, all of which shall be paid by Buyer at Closing via wire transfer of immediately available funds.

2.4             Earnest Money Deposit . Upon expiration of the Due Diligence Period and provided Buyer has not terminated this Agreement, Buyer shall deposit ONE HUNDRED THOUSAND AND NO/100 U.S. DOLLARS ($100,000.00) (the “ Earnest Money Deposit ”) with Escrow Agent.

(a)            The Earnest Money Deposit shall be refunded to Buyer in the event of a termination of this Agreement pursuant to Sections 11.1(b) , 11.1(c) , 11.1(e) , or 11.2(a)(i) below.

(b)            The Earnest Money Deposit shall be nonrefundable to the Buyer in the event there is a termination of this Agreement pursuant to Sections 11.1(d) or 11.2(b) below.

(c)            Upon Closing, the Earnest Money Deposit shall be applied to the Purchase Price.

2.5             Adjustment of Purchase Price .

(a)            All income and expenses (including prepaid expenses) of the Property shall be prorated on a daily basis between Seller and Buyer as of 11:59 p.m., on the date (the “ Proration Date ”) immediately preceding the Closing.  Such items to be prorated shall include, without limitation:

Buyer and Seller shall prepare a proposed schedule (the “ Proration Schedule ”) prior to Closing, that shall include the items listed above and any other applicable income and expenses with regard to the Property.  Seller and Buyer will use all reasonable efforts to finalize and agree upon the Proration Schedule at least two (2) business days prior to Closing.

(b)            Any escrow accounts held by any utility companies, and any cash deposits made by Seller or Seller’s Affiliates prior to Closing to secure obligations under Assumed Obligations shall be either paid to Seller or, if assigned to Buyer, Seller shall receive a credit at Closing for any such deposits.

(c)            With respect to any amounts held by Seller in a resident escrow or trust account under any Property Agreement, at or promptly following Closing, Seller shall return the same to the depositor thereof (to the extent the amounts held in any such accounts have not been applied against amounts owing by the depositor thereof in accordance with the terms of the applicable Property Agreement).

(d)            Seller shall receive all income from and shall be responsible for all expenses of the Property attributable to the period prior to the Proration Date, unless otherwise provided for in this Agreement.  In the event Buyer receives any payment from a tenant for rent due for any period prior to the Proration Date or payment of any other receivable of Seller, Buyer shall forward such payment to Seller.

(e)            Buyer shall receive all income from and shall be responsible for all expenses of the Property attributable to the period from and after the Proration Date, unless otherwise provided for in this Agreement.  In the event Seller or Seller’s Affiliates receive any payment from a tenant for rent due for any period from and after the Proration Date, Seller shall forward such payment to Buyer.

(f)             The parties agree that any amounts that may become due under this Section 2.5 shall be paid at Closing as can best be determined.  A post-Closing reconciliation of pro-rated items shall be made by the Buyer and Seller within ninety (90) days after Closing and any amounts due at that time shall be promptly forwarded to the respective party in a lump sum payment.  Any additional amounts which may become due after such determination shall be forwarded at the time they are received.  Any amounts due under this Section 2.5 which cannot be determined within ninety (90) days after Closing shall be reconciled as soon thereafter as such amounts can be determined.  Buyer and Seller agree that each shall have the right to audit the records of the other for up to one (1) year following Closing in connection with any such post-Closing reconciliation.

(g)            Buyer shall receive a credit towards the Purchase Price for any obligations as otherwise expressly agreed by the Buyer and Seller.

(h)            This Section 2.5 shall survive the Closing.

2.6             Escrow Agent .

(a)            By its execution and delivery of this Agreement, Escrow Agent agrees to be bound by the terms and conditions in Section 2.4 of this Agreement to the extent applicable to its duties, liabilities and obligations as “Escrow Agent.”  Escrow Agent shall hold and dispose of the funds deposited with the Escrow Agent pursuant to this Agreement (“ Escrowed Funds ”) in accordance with the terms of this Agreement.  Escrow Agent shall incur no liability in connection with the safekeeping or disposition of the Escrowed Funds for any reason other than Escrow Agent’s breach of contract, willful misconduct or gross negligence.  Escrow Agent shall be reimbursed by Buyer and Seller, jointly and severally, for all out-of-pocket costs and expenses incurred in connection with its obligations hereunder.  If Escrow Agent is in doubt as to its duties or obligations with regard to the Escrowed Funds, or if the Escrow Agent receives conflicting instructions from Buyer and Seller with respect to the Escrowed Funds, the Escrow Agent shall not be required to disburse the Escrowed Funds and may, at its option, continue to hold the Escrowed Funds until both Buyer and Seller agree as to their disposition, or until a final judgment is entered by a court of competent jurisdiction directing their disposition, or the Escrow Agent may interplead the Escrowed Funds in accordance with the laws of the State of Florida.  Escrow Agent shall not be responsible for the preservation of principal or any interest on the Escrowed Funds except as is actually earned, or for the loss of any interest or principal resulting from the withdrawal of the Escrowed Funds prior to the date interest is posted thereon.

(b)            The Escrow Agent may resign upon written notice to the Seller and Buyer.  If a successor escrow agent is not appointed by the Seller and Buyer within this thirty (30) day period, the Escrow Agent may, but shall have no duty to, petition a court of competent jurisdiction to name a successor.  If no successor escrow agent is appointed within thirty (30) days after such written notice, the Escrow Agent may withhold performance by it pursuant to Section 2.6(a) until such time as a successor escrow agent is appointed and, at such time, the Escrow Agent shall deliver the Escrowed Funds or other documents, instruments or items, if any, delivered to the Escrow Agent hereunder to any such successor escrow agent; provided , however , the Escrow Agent shall act in accordance with any joint written instructions from the Seller and Buyer.

(c)            The Escrow Agent may be removed, with or without cause, by the Buyer and Seller acting jointly at any time by providing written notice to the Escrow Agent.

(d)            This Section 2.6 shall survive the Closing or the expiration or any termination of this Agreement.

3.1             Due Diligence Period .  During the Due Diligence Period, Buyer shall have the right to a complete physical inspection of the Property as the Buyer deems appropriate to review and evaluate the Property, the nature and extent of the Property, and operations of the Property, and all rights and liabilities related thereto.  In consideration of the execution of this Agreement, Seller has provided certain requested items to facilitate such review and evaluation.  Buyer may request that other items be provided by Seller in addition to those already provided, which items shall be mutually agreed upon by the Buyer and Seller in their reasonable discretion.  During the Due Diligence Period, Buyer shall have reasonable access to the Property at all reasonable times during normal business hours for the purpose of conducting reasonably necessary tests, including surveys and architectural, engineering, geotechnical and environmental inspections and tests, provided that, when practicable, (a) Buyer will give Seller prior notice of any such inspection or test and (b) all such tests shall be conducted by Buyer in compliance with Buyer’s responsibilities set forth in Section 3.2 below.  If Closing occurs, the parties have agreed to share certain expenses as provided in Section 9.4 below.  Otherwise, except as otherwise expressly set forth herein, Buyer shall bear its own cost of all such inspections or tests.

3.2             Buyer’s Responsibilities .  In conducting any inspections, investigations or tests of the Property, Buyer shall (i) not unreasonably disturb the tenants or interfere with their use of the Property; (ii) not materially or unreasonably interfere with the operation and maintenance of the Property; (iii) not materially damage any part of the Property or any personal property owned or held by any tenant or any third party; (iv) not injure or otherwise cause bodily harm to Seller or its agents, guests, invitees, contractors and employees or any tenants or their guests or invitees; (v) comply in all material respects with all Applicable Laws; and (vi) not permit any Liens to attach to the Property by reason of the exercise of its rights hereunder.

3.3             Continuing Diligence and Inspection Rights .  Following the expiration of the Due Diligence Period, and prior to the Closing or any earlier termination of this Agreement, at reasonable times and upon reasonable notice, Buyer or Buyer’s agent(s), consultants, or other retained professionals shall have the right, at Buyer’s expense, to perform or complete such further inspections and assessments of the Property as Buyer deems necessary or desirable to comply with Buyer’s internal requirements or the requirements of Buyer’s lenders, investors or members, including, without limitation, further inspection of environmental and structural aspects, assessments of the compliance of the Property with all Applicable Laws, and customary pre-closing walk-throughs; provided , however , that nothing in this Section 3.3 shall extend the Due Diligence Period.

The Seller hereby represents and warrants to the Buyer as of the Effective Date and as of the Closing as follows:

4.1             Organization; Good Standing of Seller .  Seller is a limited liability company, validly existing and in good standing under the laws of the State of Florida, and is duly qualified to do business in the State of Florida, with all requisite company power and authority to carry on its business in the manner and in the location in which such business has been and is now being conducted, to execute and deliver this Agreement, and to perform its obligations hereunder.

4.2             Organization; Good Standing of Landlord .  To Sellers’ knowledge, Landlord is a corporation, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to do business in the State of Florida, with all requisite company power and authority to carry on its business in the manner and in the location in which such business has been and is now being conducted, to execute and deliver the Deed.

4.3             Consent of Third Parties .  Except as otherwise set forth on Schedule 4.3 of the Seller Disclosure Letter, no consent or approval of any third party is required as a condition to the entering into, performance or delivery of this Agreement by Seller other than such consent as has been previously obtained.

4.4             Authority; Enforceability .  The execution and delivery of this Agreement has been duly authorized by Seller, and this Agreement constitutes the valid and binding obligation and agreement of Seller, enforceable against Seller in accordance with its terms.

4.5             Absence of Conflicts .  Subject to obtaining the consents and approvals described on Schedule 4.3 of the Seller Disclosure Letter, neither the execution, delivery or performance of this Agreement will (i) conflict with or result in any breach of any of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in a violation of, or (iv) give any third party the right to modify, terminate, or accelerate any obligation under, the provisions of the articles of organization or operating agreement of Seller and/or its Affiliates, any indenture, mortgage, lease, loan agreement or other agreement or instrument to which Seller and/or its Affiliates is bound or affected, the Property Agreements or any Applicable Law.

4.6             No Judgments .  Except as set forth on Schedule 4.6 of the Seller Disclosure Letter, there are no judgments (i) presently outstanding and unsatisfied against the Property, the Seller or any of Seller’s assets or, (ii) to Seller’s knowledge, presently outstanding and unsatisfied against Landlord or any of its assets other than the Property.

4.7             No Governmental Approvals .  Except as contemplated under Section 7.8(a) below, no order, permission, consent, approval, license, authorization, registration or validation of, or filing with, or exemption by, any governmental agency, commission, board or public authority is required to authorize, or is required in connection with the execution, delivery and performance by Seller of this Agreement or the taking of any action contemplated by this Agreement, which has not been obtained.

4.8             Insurance .   Schedule 4.8 of the Seller Disclosure Letter sets forth an accurate summary of all general liability, fire, theft, professional liability and other insurance currently maintained with respect to the Property.  Neither Seller, Manager nor, to Seller’s knowledge Landlord, has taken any action or failed to act in a manner, including the failure of Seller, Manager or Landlord, to give any notice or information, which would limit or impair the rights of Seller, Landlord or Manger under such insurance policies.  Prior to Closing Seller will promptly notify Buyer of any potential losses or claims that may be covered by the insurance.

4.9             Litigation .  Except as set forth on Schedule 4.9 of the Seller Disclosure Letter, there is no pending or, to Seller’s knowledge, considered or threatened judgment, litigation, proceeding, investigation or inquiry (by any person, governmental or quasi-governmental agency or authority or otherwise): (i) to which Seller or the Property is a party, including without limitation, litigation brought by Seller against any third party, (ii) to which Landlord is a party, including without limitation, litigation brought by Landlord against any third party, relating to or which may otherwise materially adversely affect the Property, or (iii) to which the Manager is a party, including without limitation, litigation brought by Manager against any third party.

4.10           Compliance with Laws .  Except as provided on Schedule 4.10 of the Seller Disclosure Letter, the Property has been and is presently used and operated by Seller, and to Seller’s knowledge was constructed, in compliance in all respects with, and in no way in violation of, any Applicable Law affecting the Property or any part thereof.  Neither the Seller nor the Manager has received notice of any such violation.

4.11           Environmental Matters .  Except as identified on Schedule 4.11 of the Seller Disclosure Letter, neither Seller, Manager nor, to the Seller’s knowledge, the Landlord has generated, stored or disposed of any hazardous substance at or on the Property except in accordance with Applicable Law, and neither Seller, Manager nor, to Seller’s knowledge, Landlord has knowledge of any previous or present generation, storage, disposal or existence of any hazardous substance at or on the Property other than in accordance with all Applicable Laws.  The term “hazardous substance” shall mean “hazardous waste,” “toxic substances,” “petroleum products,” “pollutants,” or other similar or related terms as defined or used from time to time in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“ CERCLA ”) (42 U.S.C. §§ 1801, et seq .), the Resource Conservation and Recovery Act, as amended (42 U.S.C. § 6921, et seq .), similar state laws, including Chapters 376 and 403, Florida Statutes, and regulations (the “ Environmental Laws ”) adopted thereunder.  Neither Seller, Manager nor, to Seller’s knowledge, the Landlord has filed or been required to file any notice reporting a release of any hazardous substance into the environment, and no notice pursuant to Section 103(a) or (c) of the CERCLA, 42 U.S.C. § 9601, et seq. or any other Environmental Law has been or was required to be filed.  Neither Seller, Manager nor, to Seller’s knowledge, Landlord has received any notice letter under any Environmental Law or any notice or claim, and there is no investigation pending, contemplated, or to Seller’s or knowledge threatened, to the effect that Seller, Landlord or Manager is or may be liable for or as a result of the release or threatened release of hazardous substance into the environment or for the suspected unlawful presence of any hazardous waste on the Property.  Seller agrees to indemnify and hold Buyer, Tenant, and their Affiliates harmless from any Loss resulting from a breach of this Section 4.11 .  Notwithstanding the provisions of ARTICLE X , the agreement to indemnify in this Section 4.11 shall survive the Closing without limitation.

4.12           Assessments .  There are no special or other assessments for public improvements or otherwise now affecting the Property, no pending or, to Seller’s knowledge, threatened special assessments affecting the Property, and no contemplated improvements affecting the Property that may result in special assessments affecting the Property.

4.13           Property Agreements .  The Property Agreements listed on Exhibit B of the Seller Disclosure Letter are in full force and effect and are all of the agreements relating to or affecting the Property.  Seller is not in default of any of its obligations under any of the Property Agreements, and Seller has no knowledge of any default on the part of any other party thereto.

4.14           Licenses .   Exhibit C   of the Seller Disclosure Letter is a true and complete list of all Licenses held by the Seller.  The Licenses listed on Exhibit C are valid and no material violations exist with respect to such Licenses.  No other Licenses are required to be held by the Seller for the lawful ownership, use, occupancy, operation and maintenance of the Property as an assisted living facility.  No applications, complaints or proceedings are pending or, to the knowledge of Seller, contemplated or threatened which may (i) result in the revocation, modification, non-renewal or suspension of any License or of the denial of any pending applications, (ii) the issuance of any cease and desist order, or (iii) the imposition of any fines, forfeitures, or other administrative actions with respect to the Property or its operation.  A list of all unsatisfied or otherwise outstanding citations with respect to the Property or its operation is shown on Exhibit G   of the Seller Disclosure Letter.

4.15           Resident Agreements .  Except as otherwise noted on Schedule 4.15 of the Seller Disclosure Letter, the rent roll attached hereto as Exhibit E of the Seller Disclosure Letter (the “ Rent Roll ”) is true and complete, and no Resident Agreement currently in effect with respect to the Property contains any material financial concession from the standard form of Resident Agreement for the Property attached to the Seller Disclosure Letter as Exhibit F .  Seller is not in default under any of its material obligations under any Resident Agreement or any lease, and, except as set forth on Schedule 4.15 of the Seller Disclosure Letter, Seller has no knowledge of any material default on the part of any other party thereto.  All of the Resident Agreements identified on the Rent Roll are currently in full force and effect as of the date of the Rent Roll.

4.16           Medicare; Medicaid .   Except for the Seller’s participation in the Florida Nursing Home Diversion program (the “ Florida Diversion Program ”),   Seller has not in the past and currently is not receiving any payments under and has not in the past and currently is not certified for participation in any governmental payor programs relating to the Property, including but not limited to the Medicare and Medicaid programs (“ Governmental Payor Programs ”).  The Seller is currently and has previously at all times been in compliance with the requirements, terms, rules, and regulations relating to the Florida Diversion Program and the Network Provider Agreement with Independent Living Systems, LLC related thereto dated May 1, 2008 and any modifications, amendments, or supplements thereof.

4.17           Condemnation .  Neither Seller, Manager nor, to Seller’s knowledge, Landlord has received any written notice of any pending or contemplated condemnation, eminent domain or similar proceeding, with respect to all or any portion of the Property.

4.18           Condition of Property .

(a)             Real Property .  Except as described on Schedule 4.18 of the Seller Disclosure Letter, with regard to the Real Property  to Seller’s Knowledge (i) there are no material structural defects, (ii) there is no insect or rodent infestation, (iii) the roof is free of leaks, (iv) there are no leaks in the foundation, (v) there are no toxic mold or mold-related problems, and (vi) all mechanical and utility systems servicing the Real Property are in good condition and proper working order, free of material defects and in substantial compliance with all Applicable Laws.

(b)             Personal Property .  Except as described on Schedule 4.18 of the Seller Disclosure Letter: (i) the Personal Property comprises all material assets, rights or property used in the operation of the assisted living facility located on the Real Property and constitutes all of the personal property used or required for the operation of the Property as an assisted living facility, and (ii) to Seller’s Knowledge, all of the Personal Property is in good condition, working order and repair (ordinary wear and tear excepted).

4.19           Independent Property .  Except as described on Schedule 4.19 of the Seller Disclosure Letter, the Property is an independent unit which does not rely on facilities (other than facilities of public utility, sewer and water companies) located on any property not included in the Property (i) to fulfill any zoning, building code, or other municipal or governmental requirement, or (ii) for structural support or the furnishing of any essential building systems or utilities, including, but not limited to, electric, plumbing, mechanical, heating, ventilating and air conditioning systems.  To Seller’s Knowledge no building or other improvements not included in the Property relies on any part of the Property to fulfill any zoning, building code, or other municipal or governmental requirement or for structural support or the furnishing of any essential building systems or utilities.

4.20           Utilities Access .  Except as described on Schedule 4.20 of the Seller Disclosure Letter, the Real Property has water supply, storm and sanitary sewer facilities, access to telephone, gas and electricity connections, fire protection, drainage, means of ingress and egress to and from public highways and, without limitation, other public utilities, all sufficient for normal operations.  To Seller’s Knowledge, the parking facilities located on the Property comply with all Applicable Laws or meet requisite exceptions or variances to such laws.  All public utilities are installed and operating, and all installation and connection charges have been paid in full.  To Seller’s Knowledge, all streets and roads necessary for access to and full utilization of the Property, and every part thereof, have been built, completed, dedicated, and accepted for maintenance and public use by the appropriate governmental authorities or are otherwise owned and maintained by local governments for public use.  Seller does not have knowledge of any fact or condition existing that would result or could result in the termination or reduction of the current access from the Property to the existing roads and highways or to sewer or other utility services presently serving the Property.

4.21           Zoning .  Except as provided on Schedule 4.10 of the Seller Disclosure Letter, to Seller’s Knowledge the current use of the Property is permitted under the applicable municipal zoning ordinances, or special exceptions, variances, or conditions thereto, and the Property complies, to the extent required (including any waiver or grandfathering), with all conditions, restrictions and requirements of such zoning ordinances and all amendments thereto.

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

4.23           Interests; Title .

(a)             Title to Real Property . To Seller’s Knowledge, Landlord owns one hundred percent (100%) of the ownership interest in the Real Property, free and clear of all Liens except Permitted Exceptions and Permitted Liens.  Except for the Option, to Seller’s Knowledge, there are no outstanding options or other rights to purchase or otherwise acquire any ownership interest in the Property.  

(b)             Title to Personal Property .  Except as described on Schedule 4.23 of the Seller Disclosure Letter, Seller owns one hundred percent (100%) of the ownership interest in the Personal Property, free and clear of all Liens except Permitted Exceptions and Permitted Liens. Except as described on Schedule 4.23 of the Seller Disclosure Letter, all Personal Property is owned free and clear of any Lien, except for Personal Property that is leased as disclosed on Schedule 4.23 of the Seller Disclosure Letter. There are no outstanding options or other rights to purchase or otherwise acquire any ownership interest in the Personal Property.  

4.24           Title Encumbrances .  Except as described on Schedule 4.24 of the Seller Disclosure Letter, Seller is not in default under any of its material obligations under any recorded agreement, easement or instrument encumbering title to the Property, and Seller has no knowledge of any material default on the part of any other party thereto.

4.25           Affordable Housing Units .  No bedroom or unit in the Property is leased or reserved for lease as an affordable housing unit or for low- or moderate-income residents.  The Property is not required to lease or reserve any unit or bedroom as an affordable housing unit or bedroom or for low-income or moderate-income residents pursuant to a presently existing agreement or Applicable Law.

4.26           No New Survey Matters .  To Seller’s Knowledge, since the dates of the most recent surveys for the Real Property obtained by Buyer pursuant to Section 7.5(e) ) no new survey matters have arisen in connection with the Real Property which would otherwise be required under the applicable ALTA/ACSM standards to be shown thereon.

4.27           Loans .  Except as described on Schedule 4.27 of the Seller Disclosure Letter, there are no loans on the Property.

4.28           Patriot Act Compliance .   Patriot Act Compliance of Seller .  To the extent applicable to Seller, to Seller’s knowledge Seller has 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 (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 Seller.  To Seller’s Knowledge Seller is not included on the List of Specially Designated Nationals and Blocked Persons maintained by the OFAC, nor is it a resident 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.

4.29           Broker’s or Finder’s Fees .  CLW Health Care Services Group (“ CLW ”) is the sole agent, broker, investment banker or other person or firm acting on behalf of or under the authority of Seller, Landlord or any Affiliate of Seller or Landlord, and to Seller’s Knowledge is the only person that will be entitled to any broker’s or finder’s fee or any other commission or similar fee, directly or indirectly, in connection with the transactions contemplated by this Agreement.  The Seller shall pay all fees and commissions owed to CLW in connection with the transactions contemplated by this Agreement.  This Section 4.29 shall survive the Closing or the expiration or any termination of this Agreement.

4.30           Insolvency .

(a)             Insolvency of Landlord .  To Seller’s knowledge, Landlord and its Affiliates have not (i) commenced a voluntary case or had entered against them a petition for relief under any Applicable Law relative to bankruptcy, insolvency, or other relief for debtors, (ii) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator, or similar official in any federal, state or foreign judicial or nonjudicial proceeding to hold, administer, and/or liquidate all or substantially all of their respective assets, (iii) had filed against them any involuntary petition seeking relief under any Applicable Law relative to bankruptcy, insolvency, or other relief to debtors which involuntary petition is not dismissed within sixty (60) days, or (iv) made a general assignment for the benefit of creditors.

(b)             Insolvency of Seller .  Seller and its Affiliates have not (i) commenced a voluntary case or had entered against them a petition for relief under any Applicable Law relative to bankruptcy, insolvency, or other relief for debtors, (ii) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator, or similar official in any federal, state or foreign judicial or nonjudicial proceeding to hold, administer, and/or liquidate all or substantially all of their respective assets, (iii) had filed against them any involuntary petition seeking relief under any Applicable Law relative to bankruptcy, insolvency, or other relief to debtors which involuntary petition is not dismissed within sixty (60) days, or (iv) made a general assignment for the benefit of creditors.

4.31           Landlord’s Consent to Option Instruction .  As of Closing (but not as of the Effective Date) the Landlord has consented to the Seller’s instruction (the “ Option Instruction ”) pursuant to the terms of the Option, directing the Landlord to convey the Property directly to Buyer, and no consent or approval of any third party is required as a condition to Seller’s exercise of the Option or the conveyance of the Property from Landlord to Buyer other than Landlord’s consent.  The Seller and the Landlord are full compliance with all of the terms, conditions, and requirements related to the exercise of the Option under the Lease and all other related documents related to the Option.

4.32           Compliance with Lease .  The Lease is in full force and effect and has not been amended or modified by any oral or written agreement.  To Seller’s Knowledge Landlord and Seller are each currently in full compliance with all of the terms of the Lease and no default or event of default has occurred, and no circumstances exist which could result in a default or event of default thereunder.

Buyer represents and warrants to Seller as of the Effective Date and as of the Closing as follows:

5.1             Organization and Good Standing .  Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.  Buyer has all requisite corporate power to own, operate, and lease the Property and carry on business as it is now being conducted and as the same will be conducted following the Closing.  As of the Closing, Buyer will be registered to do business under the laws of the State of Florida.

5.2             Authorization and Binding Effect of Documents .  The execution and delivery of this Agreement has been duly authorized by Buyer, and this Agreement constitutes the valid and binding obligation and agreement of Buyer, enforceable in accordance with its terms (subject to the effect of bankruptcy, insolvency fraudulent conveyance, reorganization, moratorium and similar laws affecting creditor’s rights and remedies generally, and to limitations imposed by general principles of equity, whether applied by a court of law or of equity).

5.3             Absence of Conflicts .  Neither the execution and delivery of this Agreement, nor compliance with the terms and provisions hereof, will (i) conflict with or result in any breach of any of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in a violation of, or (iv) give any third party the right to modify, terminate, or accelerate any obligation under, the provisions of the articles of organization and any applicable limited liability company agreement or operating agreement of Buyer and/or its Affiliates, any indenture, mortgage, lease, loan agreement or other agreement or instrument to which Buyer and/or its Affiliates is bound or affected, or any Applicable Law to which Buyer and/or its Affiliates is subject.

5.4             Consents .  The execution, delivery and performance by Buyer and/or its Affiliates of this Agreement and the other Documents, and consummation by Buyer and/or its Affiliates of the transactions contemplated hereby and thereby, do not and will not require the authorization, consent, approval, exemption, clearance or other action by or notice or declaration to, or filing with, any court or administrative or other governmental body, or the consent, waiver or approval of any other person or entity, excluding consents that Seller is obligated to obtain under Section 7.12 below.

5.5             Patriot Act Compliance .  To the extent applicable to Buyer, to Buyer’s actual knowledge upon reasonable inquiry, Buyer has complied in all material respects with the Patriot Act and the regulations promulgated thereunder, and the rules and regulations administered by OFAC, to the extent such laws are applicable to Buyer.  Buyer is not included on the List of Specially Designated Nationals and Blocked Persons maintained by the OFAC, nor is it a resident 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.

5.6             Broker’s or Finder’s Fees .  No agent, broker, investment banker, or other person or firm acting on behalf of Buyer or any of its Affiliates or under its authority, is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee, directly or indirectly, from Buyer or any of its Affiliates in connection with the transactions contemplated by this Agreement.  This Section 5.6 shall survive the Closing or the expiration or any termination of this Agreement.

6.1             Conduct of Business Prior to the Closing .  Seller covenants and agrees that from the Effective Date through the Closing, unless Buyer otherwise consents in writing, Seller and its Affiliates shall:

(a)            Operate the Property in the ordinary course of business, including (i) incurring expenses consistent with the past practices, (ii) using commercially reasonable efforts to preserve the Property’s present business operations, organization and goodwill and its relationships with residents, customers, employees, advertisers, suppliers and other contractors, and (iii) maintaining the Licenses listed on Exhibit C of the Seller Disclosure Letter.

(b)            Operate the Property and otherwise conduct business in accordance with the terms or conditions of the Licenses listed on Exhibit C of the Seller Disclosure Letter, all Applicable Laws having jurisdiction over any aspect of the operation of the Property and all applicable insurance requirements.

(c)            Maintain the books and records for the Property.

(d)            Timely comply in all material respects with the Property Agreements.

(e)            Not sell, lease, grant any rights in or to or otherwise dispose of, or agree to sell, lease or oth