Execution Version

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

COUNTY OF MONTGOMERY, PENNSYLVANIA,

ON THE ONE HAND,

AND

PARKHOUSE REALTY, L.P., MID-ATLANTIC HEALTH CARE, LLC,

AND FOR THE LIMITED PURPOSES SET FORTH

HEREIN, GRIFFITH-AMERICAN HEALTHCARE REIT II,

INC. ON THE OTHER

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TABLE OF CONTENTS ARTICLE I. CERTAIN DEFINITIONS ...........................................................................1 ARTICLE II. TRANSFER OF ASSETS AND PROPERTIES .......................................13 ARTICLE III. CONSIDERATION AND TERMS ...........................................................16 ARTICLE IV. ASSUMPTION OF LIABILITIES; EMPLOYEE MATTERS ..................18 ARTICLE V. CLOSING ..................................................................................................22 ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER ....................25 ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER

PARTIES ...................................................................................................36 ARTICLE VIII. COVENANTS OF SELLER PRIOR TO AND AFTER THE CLOSING DATE .......................................................................................38 ARTICLE IX. COVENANTS OF PURCHASER PARTIES PRIOR TO CLOSING DATE .........................................................................................................41 ARTICLE X. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER ............................................................................................45 ARTICLE XI. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER ............48 ARTICLE XII. OBLIGATIONS FROM AND AFTER THE CLOSING DATE ...............50 ARTICLE XIII. TERMINATION ........................................................................................57 ARTICLE XIV. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION ................................................................................58 ARTICLE XV. GENERAL .................................................................................................61

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ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into and is

effective this 9th day of December, 2013, by and among the COUNTY OF MONTGOMERY, a second class county in the Commonwealth of Pennsylvania (“Seller”), on the one hand, and PARKHOUSE REALTY, L.P., a Pennsylvania limited partnership (the “Purchaser”), and MID-ATLANTIC HEALTH CARE, LLC, a Maryland limited liability company (the “Guarantor”), and, for the limited purposes set forth herein, GRIFFITH-AMERICAN HEALTHCARE REIT II, Inc., a Maryland corporation (the “REIT”), on the other.

RECITALS:

WHEREAS, Seller desires to sell substantially all of the assets owned by Seller and used in the operation of Seller’s facilities known as “Parkhouse, Providence Point,” “Riverview Adult Day Health Services,” and “Montgomery Meadows Independent Living Suites,” all located at 1600 Black Rock Road, Royersford, Pennsylvania, to Purchaser, and Purchaser and the REIT desire to purchase the same; and

WHEREAS, this Agreement sets forth the terms and conditions upon which Purchaser

and the REIT, as set forth herein, are purchasing the assets (other than the Excluded Assets (as hereinafter defined)) owned by Seller and used in the operation of the Business (as hereinafter defined); and

WHEREAS, Guarantor is an affiliate of Purchaser, and as such will derive direct and

indirect benefits from the transactions described herein.

AGREEMENT

NOW THEREFORE, in consideration of the mutual agreements, covenants, representations and warranties contained herein, and in reliance thereon, the Parties, each intending to be legally bound, hereby agree as follows:

ARTICLE I. CERTAIN DEFINITIONS As used herein, the following terms shall have the following meanings:

1.1 “Accounts Receivable” shall mean, as of the Closing Date, all accounts receivable of the Facility including, without limitation, rents, payments in connection with any Third Party Payor Programs, co-payments, deductibles, and individual resident accounts receivable through and as of such date.

1.2 “Accrued Benefit Time” shall mean the accrued holiday, administrative,

disability, vested sick, or other similar time of Employees as of the Closing Date, calculated in accordance with the Business’s past practices, and as set forth on Schedule 1.2.

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1.3 “Accrued Expenses” shall mean, as of the Closing Date, accrued rents, insurance premiums, payroll and benefits (including, without limitation, vacation, sick pay, and disability pay) and other accrued expenses as would appear on a financial statement of Seller relating to the Facility as of such date prepared in accordance with GASB.

1.4 “Accrued Vacation” shall mean the accrued vacation time of Employees as of the Closing Date, calculated in accordance with the Business’s past practices, and as set forth on Schedule 1.4.

1.5 “Affiliate” shall mean any company or other entity that controls, is controlled by

or is under common control with the designated Party. For the purpose of the foregoing, ownership, directly or indirectly, of 20% or more of the voting stock or other equity interest, or the power to direct the management, policies or affairs of a Party, directly or indirectly, by law, contract or otherwise, shall be deemed to constitute control.

1.6 “Agreement” shall mean this Asset Purchase Agreement. 1.7 “Ancillary Agreements” shall mean the real property conveyance documents

described in Section 5.2.1, and the bill of sale and assignment and assumption agreement described in Section 5.2.2, the easements described in Section 5.2.14, the Escrow Agreement, the Transition Services Agreement, and any other documents or agreements contemplated by this Agreement.

1.8 “Assumed Benefit Obligation” shall have the meaning given to such term in

Section 4.2. 1.9 “Assumed Contracts” shall have the meaning given to that term in Section 2.1.3. 1.10 “Assumed Liabilities” shall have the meaning given to such term in Section 4.2. 1.11 “Assumed Sick Time Benefit” shall mean the unvested sick time of Employees as

of the Closing Date, calculated in accordance with the Business’s past practices, and as set forth on Schedule 1.11.

1.12 “Basket” shall have the meaning given to such term in Section 14.2.1 1.13 “Benefit Plan” shall mean each employee benefit plan (written and unwritten)

subject to ERISA and any other (written or unwritten) profit sharing, pension, savings, deferred compensation, fringe benefit, insurance, medical, medical reimbursement, life, disability, accident, post retirement, health or welfare benefit, sick pay, vacation, employment, severance, termination or other plan or arrangement maintained by or with respect to Seller related to the Business having any liability or obligation, whether actual or contingent, funded or unfunded, with respect to the Employees or their respective beneficiaries .

1.14 “Books and Records” shall have the meaning given to such term in Section 6.13.

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1.15 “Business” shall mean the operation of the Facility. 1.16 “Business Day” means any day other than a Saturday, Sunday, legal holiday in the

Commonwealth of Pennsylvania or other day of the year on which banks in the Commonwealth of Pennsylvania are authorized or required by Legal Requirement to close.

1.17 “Claim” shall have the meaning given to such term in Section 6.14. 1.18 “Closing” shall have the meaning given to such term in Section 5.1. 1.19 “Closing Date” and “Closing Documents” shall have the meanings given to such

terms in Section 5.1. 1.20 “Closing Payment” shall have the meaning given to such term in Section 3.1.1. 1.21 “CMS” shall mean the Federal Centers for Medicare and Medicaid Services. 1.22 “COBRA” shall have the meaning given to such term in Section 4.3(d). 1.23 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended

from time to time, and any successor thereto. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.

1.24 “Commitment Letter” shall have the meaning given to such term in Section 10.13. 1.25 “Confidential Information” shall have the meaning given to such term in Section

15.18. 1.26 “Contracts” shall mean all written alliance agreements, transfer agreements,

Resident’s Agreements (as defined below), other agreements, arrangements, contracts, contract rights, commitments, customer accounts, orders, leases, guarantees, warranties and representations, and franchises benefiting or relating to the Facility or the ownership, construction, development, maintenance, repair, management, use, occupancy, possession or operation thereof, or the operation of the programs or services offered by the Business (other than Benefit Plans), and all renewals, amendments, replacements and substitutions therefor, whether issued by any Governmental Authority or Third Party Payor or maintained or used by Seller with any third party, including but not limited to all Provider Agreements.

1.27 “Current Liabilities” shall mean all liabilities classified as current liabilities in

accordance with GASB. 1.28 “Defense” shall have the meaning given to such term in Section 14.4(b).

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1.29 “Department of Aging” shall mean the Pennsylvania Department of Aging. 1.30 “Department of Environmental Protection” shall mean the Pennsylvania

Department of Environmental Protection. 1.31 “Department of Health” shall mean the Pennsylvania Department of Health. 1.32 “Department of Public Welfare” shall mean the Pennsylvania Department of

Public Welfare. 1.33 “Deposit Amount” shall mean Three Hundred Forty-Five Thousand Dollars

($345,000.00). 1.34 “Documents” shall have the meaning given to such term in Section 9.1.5. 1.35 “Drop Dead Date” means March 31, 2014.

1.36 “Due Diligence Period” shall have the meaning given to such term in Section

9.1.5.

1.37 “Employee” shall mean any individual employed by Seller in connection with the Business as specifically listed on Schedule 6.16 (such Schedule being subject to change between the date hereof and the Closing Date as a result of employee changes in the Ordinary Course of Business).

1.38 “Employee Liabilities” shall mean all wages, salaries, commissions, earned or

accrued vacation, holiday or sick pay, severance pay (if any), any contributions required or costs associated with any employee welfare benefit plan as defined by Section 3(1) of ERISA, any contributions required or costs associated with any employee pension benefit plan as defined by Section 3(2) of ERISA, any contributions required or costs associated with any non-qualified employee benefit plan, federal, state and/or local payroll taxes, unemployment insurance costs, any contributions required or costs associated with workers’ compensation liabilities, and any claims made by any employee arising out of or connected with his or her employment or the termination thereof, all as related to the Business.

1.39 “Encumbrance” shall mean any right to, or interest in, real or personal (tangible or

intangible) property, which subsists in a third-party and which constitutes, or can reasonably be expected to constitute, directly or indirectly, contingent or otherwise, a claim, lien, charge or liability attached to and binding upon such property, including, but not limited to, a mortgage, judgment lien, mechanic’s lien, lease, security interest, financing statement, title retention, claim, pledge, easement or right-of-way or other encumbrance of any kind.

1.40 “Environmental Laws” means any applicable federal, state, foreign, or local law,

statute, ordinance, rule, regulation, license, permit, authorization, approval, consent, court order, judgment, decree, injunction, code, requirement, or agreement with any Governmental Authority

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(i) relating to pollution (or the cleanup thereof) or the protection of air, water vapor, surface water, groundwater, drinking water supply, land (including, without limitation, land surface or subsurface), plant, aquatic and animal life from injury caused by a Hazardous Materials or (ii) concerning exposure to, or the use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, handling, labeling, production, disposal, or remediation of any Hazardous Materials, as now or hereafter in effect. The term Environmental Law includes, without limitation, the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Solid Waste Disposal Act, the Toxic Substance Control Act, the Hazardous Materials Transportation Act, and the Pennsylvania Hazardous Sites Cleanup Act, and all regulations pertaining to the same, each as amended and hereafter in effect and any similar state or local law.

1.41 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as

amended. 1.42 “Escrow Agent” shall mean Wilmington Trust, N.A. 1.43 “Escrow Agreement” shall have the meaning given to such term in Section 3.1.2. 1.44 “Excluded Assets” shall mean those assets that are not included in the sale

contemplated hereby and as are further defined in Section 2.2. 1.45 “Facility” shall mean, collectively, (i) the 467-bed skilled nursing facility known

as “Parkhouse, Providence Pointe,” (ii) the adult day center licensed for up to 50 participants known as “Riverview Adult Day Health Services,” (iii) the 15-apartment independent living facility known as “Montgomery Meadows Independent Living Suites,” and (iv) all of their associated facilities and real estate comprised of five (5) buildings on an approximately 214 acre campus, all located at 1600 Black Rock Road in Upper Province Township, Royersford, Montgomery County, Pennsylvania.

1.46 “GASB” shall mean the accounting principles and standards (including, without

limitation, all pronouncements, statements, interpretations, and bulletins) applicable to governmental entities, consistently applied, as promulgated by the Governmental Accounting Standards Board.

1.47 “GASB Financial Statements” shall have the meaning given to such term in

Section 6.6. 1.48 “Governmental Authority” and “Governmental Authorities” shall mean all

agencies, authorities, bodies, boards, commissions, courts, instrumentalities, legislatures and offices of any nature whatsoever of any government, quasi-governmental unit or political subdivision, whether a federal, state, county, township, municipality, city or otherwise, including but not limited to CMS, the Department of Health, the Department of Aging, the Department of

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Public Welfare, the Department of Environmental Protection, and the United States Environmental Protection Agency.

1.49 “Government Programs” shall have the meaning given to such term in Section

6.25(a). 1.50 “Hazardous Materials” means any pollutant, toxic substance, solid waste,

hazardous waste, hazardous material, or contaminant as defined or referred to in any Environmental Laws, including petroleum, petroleum products, asbestos, asbestos-containing materials, urea-formaldehyde foam insulation, lead, mold or other microbial contamination, and polychlorinated biphenyls; provided, where an Environmental Law defines any of these terms more broadly than another, the broader definition shall apply.

1.51 “HIPAA” shall mean the Health Insurance Portability and Accountability Act of

1996 and its implementing regulations found at 45 CFR Sections 160, 162 and 164, as amended by the Health Information Technology for Economic and Clinical Health Act.

1.52 “Impermissible Encumbrances” shall have the meaning given to such term in

Section 10.12.1(b). 1.53 “Indemnification Matter” shall have the meaning given to such term in Section

14.4. 1.54 “Indemnification Notice” shall have the meaning given to such term in Section

14.4(a). 1.55 “Indemnified Party” shall have the meaning given to such term in Section 14.4. 1.56 “Indemnifying Party” shall have the meaning given to such term in Section 14.4. 1.57 Information” shall have the meaning given to such term in Section 9.1.5. 1.58 “Insurance Policies” means all insurance policies of Seller maintained in

connection with the Business.

1.59 “Interim Statements” shall have the meaning given to such term in Section 6.5. 1.60 “Inventory” shall mean the aggregate inventory and supplies for the Facility

(except for such items in the inventory which are defective or obsolete) including, without limitation, dry storage goods, janitorial supplies, food and beverage supplies, office supplies, and medical supplies.

1.61 “Knowledge of the Seller,” “Seller’s Knowledge,” or phrases of similar import

shall mean the actual knowledge of a particular fact or other matter possessed by any of Melanie McGarry, Sandra Stiles, Dale Bortz, Uri Monson and Pam Buonamano after due inquiry.

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1.62 “Legal Requirements” shall mean HIPAA, and all other statutes, ordinances,

bylaws, codes, rules, regulations, laws, restrictions, orders, judgments, decrees and injunctions (including, without limitation, all applicable building, health code, occupational safety and health, zoning, subdivision and other land use and health care licensing statutes, ordinances, bylaws, codes, rules, laws and regulations), promulgated or issued by any Governmental Authority; all Permits and Contracts issued or entered by any Governmental Authority pertaining to the Business or Purchased Assets; and all Permitted Encumbrances.

1.63 “License” shall mean the license issued by the Department of Health to operate

the Facility as a skilled nursing facility with 467 beds. 1.64 “Loss” shall have the meaning given to such term in Section 9.1.5.

1.65 “MAC” shall have the meaning given to such term in Section 6.25(a). 1.66 “Managed Care Plans” shall mean all health maintenance organizations, preferred

provider organizations, individual practice associations, competitive medical plans and similar arrangements.

1.67 “Material Adverse Change” means (a) any event that could materially impair or

delay the ability of Seller to consummate the transaction contemplated hereby; or (b) any event that is materially adverse to the financial condition, business, results of operations, properties or assets of the Business taken as a whole, including the Real Property, except for events, circumstances, changes, developments, impairments or conditions resulting from (i) events, changes, developments, conditions or circumstances in worldwide, national or local conditions or circumstances (political, economic, regulatory or otherwise) or in the industry in which the Business operates, (ii) an outbreak or escalation of war, armed hostilities, acts of terrorism, political instability or other national or international calamity, crisis or emergency, or any governmental or other response to any of the foregoing, in each case, whether occurring within or outside the United States, (iii) the announcement of this Agreement and the transactions contemplated hereby, (iv) any change in law or accounting principles, or (v) any action or omission of Seller taken with the prior written consent of Purchaser, in each case which shall not constitute a Material Adverse Change unless (x) with respect to (i) or (iv), brought about by the actions of Seller or (y) with respect to (i), (ii) or (iv), the Business is disproportionately affected by such Material Adverse Change as compared to others in the industry.

1.68 “Material Contracts” means, as they relate to the Business: (a) a Contract under which the Seller has advanced or loaned any other Person

amounts in the aggregate exceeding $50,000 or a Contract under which any Person would be deemed to have indebtedness to the Seller for amounts in the aggregate exceeding $50,000;

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(b) a Contract involving an amount in excess of $50,000 relating to borrowed money or other indebtedness or the mortgaging, pledging or otherwise placing an Encumbrance on the Purchased Assets;

(c) a Contract under which Seller is lessee of or holds or operates any asset, owned by any other Person, except for any lease of assets under which the annual rental payments do not exceed $50,000;

(d) a Contract relating to any Proprietary Rights (other than Contract of unmodified, commercially available “off the shelf” or “click through” software with an aggregate purchase price or annual license fee for each of them of less than $50,000);

(e) a Contract with an Employee, officer or director of Seller, or any individual related by blood, marriage or adoption to any such individual or any entity in which any such Person or individual owns any beneficial interest;

(f) a Contract entered into outside the Ordinary Course of the Business;

(g) Contracts for capital expenditures or the acquisition or construction of fixed assets, in each case in excess of $50,000;

(h) Contracts that provide for any payment of any benefit upon the execution of this Agreement or the consummation of the transactions contemplated hereby, including accelerated vesting or other similar rights;

(i) Contracts providing for the indemnification of holding harmless of any other Person;

(j) Contracts with any Governmental Authority; or

(k) all employment, consulting, termination, severance, change in control or other similar Contracts relating to employment or the payment of compensation to any Employee or former Employee.

1.69 “Medicaid” shall mean the medical assistance program established by Title XIX of the Social Security Act (42 U.S.C. Sections 1396 et seq.) and any statute succeeding thereto.

1.70 “Medicare” shall mean the health insurance program for the aged and disabled

established by Title XVIII of the Social Security Act (42 U.S.C. Sections 1395 et seq.) and any statute succeeding thereto.

1.71 “Motor Vehicles” shall have the meaning given to such term in Section 2.1.16. 1.72 “Notice” shall mean a written communication received by a Party directly related

to a fact or other matter in the context in which this term is referenced in this Agreement.

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1.73 “Ordinary Course of Business” means the ordinary course of business consistent with Seller’s documented past custom and practice (including with respect to quantity and frequency) in conducting the Business.

1.74 “OIG” shall have the meaning given to such term in Section 6.25(a). 1.75 “Party” shall mean either Seller, Purchaser, Guarantor or the REIT, individually,

as the context so requires, and the term “Parties” shall mean Seller, Purchaser, Guarantor and the REIT together.

1.76 “Payables” shall mean any of the trade accounts payable of Seller with respect to

the Business as of such date in accordance with GASB. 1.77 “Permits” shall mean all permits, licenses, approvals, qualifications, rights,

variances, permissive uses, accreditations, certificates, certifications, consents, interim licenses, and other authorizations of every nature whatsoever required by, or issued to or on behalf of Seller under any Legal Requirements benefiting, relating or effecting the Facility or the Real Property or the construction, development, expansion, maintenance, management, use or operation thereof, or the operation of any programs or services in conjunction with the Facility and all renewals, replacements and substitutions therefor, now or hereafter required or issued by any Governmental Authority. The term “Permits” does not include the Provider Agreements with either Medicare and/or Medicaid.

1.78 “Permitted Encumbrances” shall mean (a) with respect to the Real Property, (i)

liens for real property ad valorem taxes, assessments of any Governmental Authority and governmental charges not yet past due and payable or delinquent, (ii) all easements, restrictions, rights-of-way, encroachments, covenants, reservations, agreements, leases, tenancies, licenses, conditions and other matters affecting all or any portion of the Real Property to the extent (x) reflected on Schedule B to the Purchaser’s title commitment and not disapproved by Purchaser pursuant to Section 10.12 or (y) reflected on a survey of the Real Property obtained by Purchaser and not disapproved by Purchaser pursuant to Section 10.12; (iii) the rights of tenants under any Tenant Leases that Purchaser agrees to assume, and the rights of any residents under any Resident Agreements; and (iv) such other title exceptions as Purchaser or Purchaser’s financing source(s) may approve in their reasonable discretion based upon the title commitment provided for in Section 10.12.1, and (b) with respect to the Personal Property (i) Encumbrances for current Taxes on the Purchased Assets that are not yet due and payable (if any), or (ii) carriers', warehousemen's, mechanics', materialmen's, or repairmen's liens.

1.79 “Person” shall mean any individual, corporation, company, limited or general

partnership, trust or estate, joint venture, association or other entity. 1.80 “Personal Property” shall have the meaning given to such term in Section 2.1.13. 1.81 “Personal Property Leases” shall have the meaning given to such term in Section

6.9.

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1.82 “Post-Closing Escrow Amount” shall have the meaning given to such term in

Section 3.1.2. 1.83 “Prepaid Expenses” as of any date shall mean payments made by Seller with

respect to the Business, which constitute prepaid expenses in accordance with GASB. 1.84 “Private Programs” shall have the meaning given to such term in Section 6.25(b).

1.85 “Proprietary Rights” shall mean all patent, trademark, trade secret, copyright,

domain name, and similar proprietary rights as set forth in Schedule 2.1.7. 1.86 “Provider Agreements” shall mean all participation, provider and reimbursement

agreements for the benefit of Seller in connection with the operation of the Facility relating to any right to payment or other claim arising out of or in connection with Seller’s participation in any Governmental or Third Party Payor Program currently in effect at the Facility.

1.87 “Purchase Price” shall have the meaning given to such term in Section 3.1. 1.88 “Purchased Assets” shall have the meaning given to such term in Section 2.1. 1.89 “Purchaser” shall have the meaning given to such term in the preamble of this

Agreement. 1.90 “Purchaser Damages” shall have the meaning given to such term in Section 14.2. 1.91 “Purchaser Indemnitees” shall have the meaning given to such term in

Section 14.2. 1.92 “Purchaser Material Adverse Change” means (a) Purchaser’s or Guarantor’s loss

of any material permit, license, accreditation or other authorization necessary to such party’s performance of its obligations hereunder, including without limitation, any necessary and appropriate certificates from state and federal authorities to enable it to act as a provider of health care services eligible for reimbursement; or (b) Purchaser or Guarantor or any of their respective officers or employees engages in any activities which are prohibited, or are cause for civil penalties or result in mandatory or permissive exclusion from Medicare or Medicaid, under Sections 1320a-7, 1320a-7a, 1320a-7b or 1395nn or Title 42 of the United States Code, the federal CHAMPUS statute, or the regulations promulgated pursuant to such statutes or regulations or related state or local statutes; or (c) Purchaser or Guarantor or any of their respective officers or employees, (i) is excluded from participation under the Medicare program or a federal or state health care program as defined in SSA Section 1128(h) or any regulations promulgated thereunder (“Federal or State Health Care Program”), (ii) is convicted (as that term is defined in 42 C.F.R.§ 1001.2) of any of the following categories of offenses as described in SSA Section 1128(a) and (b)(1), (2), (3) or any regulations promulgated thereunder: (A) criminal offenses relating to the delivery of any service under Medicare or any Federal or State Health

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Care Program, (B) criminal offenses under federal or state law relating to patient neglect or abuse in connection with the delivery of health care services, (C) criminal offenses under federal or state law relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care service, (D) criminal offenses under federal or state laws relating to the interference with or obstruction of any investigation into any criminal offense described in (A) through (C) above, (E) criminal offenses under federal or state law relating to the unlawful manufacture, distribution, prescription or dispensing of an controlled substance.

1.93 “Purchaser Party” shall have the meaning given to such term in Article VII. 1.94 “QAP” shall have the meaning given to such term in Section 12.15(b). 1.95 “Real Property” shall have the meaning given to such term in Section 2.1.1. 1.96 “Related Party” means (i) any Affiliate of a designated Party, and (ii) any officer,

director, shareholder, member or partner of the designated Party and/or any Person identified in clause (i).

1.97 “Residents’ Agreements” shall mean all contracts, agreements, powers of

attorney, waivers, and consents executed by or on behalf of any resident of the Facility, including, without limitation, assignments of benefits and guarantees as listed on Schedule 2.1.3, and all resident records related to the residents at the Facility on the Closing Date.

1.98 “Retained Employees” shall have the meaning given to such term in

Section 4.3(b). 1.99 “Retained Land” shall mean that real property currently owned by Seller which

will be retained by Seller following subdivision of Seller’s lands and transfer of the Real Property.

1.100 “Retained Liabilities” shall have the meaning given to such term in Section 4.2(b).

1.101 “Seller” shall have the meaning given to such term in the preamble of this

Agreement. 1.102 “Seller Cost Reports” shall have the meaning given to such term in Section 12.14. 1.103 “Seller Damages” shall have the meaning given to such term in Section 14.3. 1.104 “Seller Indemnitees” shall have the meaning given to such term in Section 14.3. 1.105 “Shared Assets” shall have the meaning given to such term in Section 2.2.12. 1.106 “Studies” shall have the meaning given to such term in Section 9.1.5.

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1.107 “Subdivision Plan” shall mean a subdivision plan in form mutually acceptable to

Seller and Purchaser depicting the Real Property and the Retained Land, to be recorded in the land records of Montgomery County such that the Real Property and the Retained Land shall each constitute separately conveyable parcels under applicable Legal Requirements.

1.108 “Taxes” shall mean all taxes, duties, charges, fees, levies or other assessments imposed by any Governmental Authority, including, without limitation, income, gross receipts, value-added, excise, withholding, personal property, real estate, sales, use, ad valorem, license, lease, service, severance, stamp, transfer, payroll, employment, customs, duties, alternative, add-on minimum, estimated and franchise taxes (including any interest, penalties or additions attributable to or imposed on or with respect thereto).

1.109 “Tax Return” means any return, declaration, report, claim for refund, or

information return or statement relating to any Tax, including any schedule or attachment thereto, and including any amendment thereof.

1.110 “Tenant Leases” means those leases, licenses, and rental agreements and

occupancy agreements listed in Schedule 1.111, and any replacements, extensions, or modifications of the same entered into prior to the Closing Date in the Ordinary Course of Business.

1.111 “Termination Cost Reports” shall have the meaning given to such term in Section

12.14. 1.112 “Termination Notice” shall have the meaning given to such term in Section 9.1.5. 1.113 “Third Party Payor Programs” shall mean all third party payment programs in

which Seller participates with regard to the Facility, including, without limitation, Medicare, Medicaid, Tricare, Blue Cross and/or Blue Shield, Managed Care Plans, other private insurance plans and employee assistance programs.

1.114 “Third Party Payors” shall mean Medicare, Medicaid, Tricare, Blue Cross and/or

Blue Shield, Managed Care Plans, private insurers and any other Person that maintains Third Party Payor Programs.

1.115 “Title Company” shall have the meaning given to such term in Section 10.12.1(a). 1.116 “Transition Services Agreement” shall mean that certain agreement for the

provision of transitional services in such form as may be agreed between Purchaser and Seller prior to the Closing Date.

1.117 “Update Notice” shall have the meaning given to such term in Section 8.1.11.

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1.118 “WARN Act” shall mean The Worker Adjustment and Retraining Notification Act of 1988, as may be amended.

ARTICLE II. TRANSFER OF ASSETS AND PROPERTIES

2.1 Purchased Assets. Subject to the terms and conditions of this Agreement, Seller

shall sell and convey to Purchaser or the REIT, as the case may be, free and clear of all Encumbrances whatsoever other than Permitted Encumbrances, and Purchaser and the REIT shall purchase from Seller, all of its right, title and interest in and to the following assets of the Business owned by Seller and used or useful in connection with the Business (the “Purchased Assets”) as the same shall exist on the Closing Date:

2.1.1 Real Property. The land located at 1600 Black Rock Road, Royersford,

Pennsylvania, encompassing approximately 214 acres, as more specifically described on Schedule 2.1.1 hereto, together with the buildings, structures, improvements and fixtures located thereon, and all rights of way, privileges, easements, licenses, hereditaments, development rights and other benefits, parking facilities and rights under any warranties with respect to thereto or to the improvements thereon, and all other appurtenances relating thereto (the “Real Property”); the Real Property shall be depicted on the Subdivision Plan, a proposed final draft of which shall be provided to Purchaser within seven (7) days of the date of this Agreement and attached hereto as Exhibit 2.1.1; the Real Property shall be sold by the Seller directly to the REIT, and the Purchaser shall in no way be deemed to own of record or beneficially any interest in the Real Property;

2.1.2 Equipment, Machinery and Other Tangible Personal Property. All

machinery, equipment, leasehold improvements, office furniture and office equipment, artwork, computing and telecommunications equipment and other items of personal property located at the Facility, or used exclusively in the Business (“Personal Property”), which shall be sold by the Seller to the REIT;

2.1.3 Contracts Relating to the Facility. The Contracts relating to the

acquisition or ownership of the Purchased Assets or the operation of the Facility which Purchaser has expressly agreed to assume and which are listed on Schedule 2.1.3 (together with the Residents’ Agreements, the “Assumed Contracts”);

2.1.4 Permits. To the extent assignable or transferable, all of Seller’s rights under the Permits (excluding the License) and Provider Agreements (excluding the Medicare and Medicaid Provider Agreements) relating to the Purchased Assets or the Business, as listed on Schedule 2.1.4, and Seller’s Medicare Provider Number;

2.1.5 Inventory. All Inventory used in connection with the operation of the Business and located at the Facility;

2.1.6 Marketing Materials and Manuals. All marketing materials and policy and procedure manuals related to the Purchased Assets or the Business;

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2.1.7 Proprietary Rights. All Proprietary Rights used by the Seller in connection

with the Business and as set forth in Schedule 2.1.7;

2.1.8 Goodwill. All goodwill incident to the Business and the value of good customer/resident relations, the telephone and facsimile numbers of the Facility (provided that such telephone and facsimile numbers are transferred into Purchaser’s name), including any of Seller’s rights in the names “Parkhouse, Providence Point,” “Riverview Adult Day Health Services,” and “Montgomery Meadows Independent Living Suites,” and any and all variations of such names;

2.1.9 Third Party Claims. Unless otherwise stated in Section 2.2 hereof, any

claims and rights against third parties (including without limitation, Third Party Payors) to the extent that they relate to the Purchased Assets or liabilities or obligations that are assumed by Purchaser hereunder (except the amount of costs and expenses Seller shall have incurred with respect to such claims and rights);

2.1.10 Computer Hardware and Software. The Purchased Assets shall include

computer hardware and software located at the Facility or used exclusively in the operation of the Facility except as otherwise noted on Schedule 2.1.10; Seller shall provide Purchaser Schedule 2.1.10, which will include an inventory of all hardware and software, to include any software that will not be transferred, within the Due Diligence Period;

2.1.11 Other Intangible Assets. All other intangible assets (including all causes

of action, rights of action, contract rights and warranty and product liability claims against third parties) relating to the Purchased Assets or used in the operation of the Facility;

2.1.12 Prepaid Expenses and Utility Deposits. All Prepaid Expenses, including

but not limited to utility deposits; 2.1.13 Personal Property Leases. All leases for tangible personal property listed

on Schedule 6.9 that the Purchaser has agreed to assume, as provided in Section 4.2 below; 2.1.14 Rights to Resident Funds and Deposits. Control of all resident funds

currently held or managed by the Seller related to the Facility shall be surrendered to Purchaser at Closing through a separate account. All resident deposits, including without limitation those specifically listed on Schedule 2.1.14, shall be paid to Purchaser at Closing;

2.1.15 Records. All employee records related to the Retained Employees, and all

resident records related to the residents at the Facility on the Closing Date; and 2.1.16 Motor Vehicles. All motor vehicles owned by Seller and used principally

in connection with the operation of the Facility as set forth on Schedule 2.1.16 (the “Motor Vehicles”).

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2.2 Excluded Assets. Notwithstanding Section 2.1, the following assets (collectively, the “Excluded Assets”) shall be excluded from this Agreement, and shall not be assigned or transferred by Seller to Purchaser at the Closing:

2.2.1 Consideration. The consideration paid to Seller pursuant to this Agreement;

2.2.2 Pensions. Except as expressly set forth herein, all Benefit Plans of Seller

or by which Seller is bound, whether or not related to the Facility;

2.2.3 Taxes. Claims for refunds or refunds of Taxes and other charges imposed by any Governmental Authority;

2.2.4 Cash and Securities. All securities and cash and cash equivalents on hand

or in bank or other accounts; 2.2.5 Accounts Receivable. All Accounts Receivable for the Facility, including

all transition Medicare payments as provided in Section 12.4 below 2.2.6 Records. All employee records of Seller except for the employee records

of the Retained Employees. All resident records of Seller except for the records of the residents at the Facility on the Closing Date;

2.2.7 Rights Against Persons. All rights and claims of Seller against any Person

(including without limitation all refunds or monies from settlements resulting from appeals of Medicare or Medicaid cost reports, and all refunds or reimbursements payable by Third Party Payors with respect to any period prior to the Closing Date);

2.2.8 Insurance Policies. All insurance policies of Seller and any unearned

premiums or refunds thereunder; 2.2.9 Supplemental Payments. Supplemental payments due to Seller based on

numbered Medical Assistance days during Seller’s ownership as more specifically described in Section 12.14 below;

2.2.10 Additional Items. All personal property identified on Schedule 2.2.10; 2.2.11 Equipment, Machinery and Other Tangible Personal Property. Purchaser

agrees that any machinery, equipment, leasehold improvements, office furniture and office equipment, computing and telecommunications equipment and other items of personal property listed on Schedule 2.2.11 pertain to non-Facility operations and shall not be included as a Purchased Asset. Seller shall provide Purchaser an inventory of all equipment, machinery and other tangible personal property, to include any personal property that will not be transferred, within the Due Diligence Period all of which will be set forth on Schedule 2.2.11; and

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2.2.12 Retained Land. The Retained Land. 2.2.13 Shared Assets. Those certain assets set forth on Schedule 2.2.13.

ARTICLE III. CONSIDERATION AND TERMS

3.1 Payment for Purchased Assets. As consideration for the Purchased Assets,

Purchaser shall pay or cause to be paid the sum of Thirty-Nine Million Dollars ($39,000,000) (the “Purchase Price”), subject to adjustment as set forth in Section 3.2, payable as follows:

3.1.1 to Seller, subject to the adjustments provided in Sections 3.2 and 3.4 at the Closing, the Purchase Price, less the Deposit Amount, less the Post Closing Escrow Amount (the “Closing Payment”); and

3.1.2 to Escrow Agent, an amount equal to Three Million Four Hundred Fifty

Thousand Dollars ($3,450,000) (the “Post-Closing Escrow Amount”) to be held by the Escrow Agent for disbursement pursuant to the Post-Closing Escrow Agreement in the form and substance set forth in Exhibit 3.1.2 (the “Escrow Agreement”). Subject to any claims for Purchaser Damages or other Indemnification Matters set forth herein, one-third (1/3rd) the then existing Post-Closing Escrow Amount, if any, shall be released to the Seller on the date that is twelve (12) months after the Closing Date, and the remaining Post-Closing Escrow Amount, if any, shall be released to the Seller on the date that is eighteen (18) months after the Closing Date.

3.2 Proration and Adjustments to Purchase Price. At the Closing Seller and Purchaser shall prorate as of the Closing Date unless noted otherwise herein, any amounts which were paid by Seller prior to the Closing Date, or which become due and payable by Purchaser on or after the Closing Date, with respect to (i) the Assumed Contracts; (ii) all utilities servicing the Facility, including without limitation, water, sewer, telephone, cable (including television), internet, electricity and gas service; and (iii) all other normal and customarily pro-rated items; provided however, that, notwithstanding anything to the contrary contained herein, (A) all deposits on any Contracts assumed by Purchaser pursuant to Section 2.1.3 hereinabove shall be assigned to Purchaser; and (B) Purchaser and Seller shall split equally (50/50) all realty transfer taxes and recording fees related to the purchase and sale of the Real Property; provided, however, that Purchaser shall be solely responsible for any realty transfer taxes that may arise as a result of any assignment or transfer of this Agreement by Purchaser or the REIT in compliance with the terms and conditions hereof, and Purchaser shall indemnify Seller from and against any and all such realty transfer taxes described herein and any related costs and expenses, including reasonable legal fees, if any, actually incurred by Seller in connection therewith.

3.3 Allocation of Purchase Price. The Purchase Price and the current amount owed

on any Assumed Liabilities shall be allocated among the Purchased Assets as of the Closing Date in accordance with the allocation mutually prepared by Purchaser and Seller as attached hereto as Schedule 3.3 on or before the Closing Date and which will specifically set forth the value of each motor vehicle being transferred. Purchaser and Seller shall file all Tax Returns consistent with

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such Schedule 3.3 (including Federal Tax form 8594, if required) subject to the permitted difference based on the Parties’ transaction costs.

3.4 Assumed Benefit Obligation. The Purchase Price will be reduced by the amount

of the Assumed Benefit Obligation. 3.5 Collections. On the Closing Date, Seller shall pay to Purchaser the sum of One

Million Dollars ($1,000,000) for certain collection and related services to be provided by Purchaser after the Closing pursuant to the terms of the Transition Services Agreement

3.6 Building Improvements. On the Closing Date, Seller shall pay to Purchaser the

sum of Two Million Three Hundred Thousand Dollars ($2,300,000) with respect to deficiencies in the Facility identified by the Purchaser.

3.7 Deposit. Upon expiration of the Due Diligence Period, Purchaser shall deposit an

amount equal to the Deposit Amount with the Escrow Agent, which will either be released to Seller and credited toward the Purchase Price at Closing, or if Closing does not occur released to the Seller or the Purchaser as provided herein.

3.8 Additional Deposit. Not later than December 27, 2013, Purchaser shall deposit or

cause to be deposited with Seller the amount of Five Million Dollars ($5,000,000), which amount (i) will be held in a segregated account of Seller at a banking institution currently used by Seller and acceptable to Purchaser, (ii) will be held at the bank in such investments as mutually agreed by Purchaser and Seller, (iii) will not be collateral for or subject to claims related to any of Seller’s liabilities or obligations, (iv) may not be withdrawn from such account by Seller or any other party without Purchaser’s prior written consent, (v) will be fully refundable to Purchaser within two (2) Business Days after written demand by Purchaser following a termination of this Agreement pursuant to Section 13.1, (vi) will be subject to the additional terms and conditions as to be agreed among Purchaser, Seller, and the bank in a deposit control and release or other agreement, and (vii) will not be considered, and will not subject to any provisions herein relating to, the Deposit Amount.

3.9 Guarantee. Guarantor hereby unconditionally and irrevocably guaranties, as a co-

obligor with the Purchaser and not as a surety only, all obligations of the Purchaser hereunder, including without limitation all obligations of payment or performance. Guarantor agrees that the manner in which the Seller may now or subsequently deal with the Purchaser and Guarantor hereunder shall have no effect on Guarantor’s continuing liability under this Section and Guarantor irrevocably waives any rights it may have in respect of any of the above. Guarantor and Purchaser’s liability shall be joint and several hereunder, and the Seller shall not be obliged to demand the execution of Purchaser’s obligations hereunder from or exhaust its recourse against the Purchaser before being entitled to performance from Guarantor under this Section.

ARTICLE IV. ASSUMPTION OF LIABILITIES; EMPLOYEE MATTERS

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4.1 General Limitation of Assumption of Liabilities. Except for Permitted Encumbrances and the Assumed Liabilities, Seller shall transfer the Purchased Assets to Purchaser free and clear of all Encumbrances, and without any assumption of liabilities and obligations, and Purchaser shall not, by virtue of its purchase of the Purchased Assets, assume or become responsible for any liabilities or obligations of Seller or any other Person. For purposes of this Section 4.1 the phrase “liabilities and obligations” shall include, without limitation, any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted or unasserted, choate or inchoate, liquidated or unliquidated, secured or unsecured.

4.2 Assumed Liabilities and Obligations of Seller. (a) On the Closing Date, Purchaser shall undertake, assume, perform and otherwise pay, satisfy and discharge, and hold Seller harmless from, the following liabilities and obligations (collectively, the “Assumed Liabilities”): (i) all obligations of Seller accruing subsequent to the Closing under: (A) the Assumed Contracts, other than obligations or liabilities related to any breach or violation of, or default under, any Assumed Contract occurring prior to the date of this Agreement or relating to Seller’s operation of the Business, (B) Personal Property Leases that are assumed by Purchaser as contemplated by Section 2.1.13 and identified on Schedule 6.9, (C) the Permits, Licenses, and Provider Agreements described in Section 2.1.4; provided that in each case the rights thereunder have effectively been duly and effectively assigned to Purchaser, and (ii) all obligations to residents of the Facility with respect to resident funds and deposits that are duly and effectively surrendered and transferred to Purchaser at Closing described on Schedule 2.1.14; and (iii) subject to Employee elections as provided in Section 4.3(g)(iii)(B), the Accrued Vacation, and the Assumed Sick Time Benefit (collectively, the “Assumed Benefit Obligation”).

(b) Except for the Assumed Liabilities, Purchaser does not and shall not assume or in

any way undertake to pay, perform, satisfy or discharge any other liabilities or obligations of Seller existing on the Closing Date or arising out of any transactions entered into, or any state of facts existing, prior to the Closing Date (the “Retained Liabilities”), and Seller shall pay and satisfy when due all of Seller’s Retained Liabilities. Except for the obligations and liabilities included in the Assumed Liabilities, the term “Retained Liabilities” shall include, without limitation, liabilities or obligations to, for or in connection with or arising out of:

(i) obligations incurred by Seller on or after the Closing Date; (ii) Seller’s expenses or fees incident to or arising out of the negotiation, preparation,

approval or authorization of this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, all legal and accounting fees and all brokers or finders fees or commissions incurred by Seller;

(iii) this Agreement, except as otherwise provided herein; (iv) any Related Party of Seller;

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(v) unless otherwise stated in Section 3.3 above or Section 4.3 below, liabilities or obligations of Seller for Taxes in respect to periods prior to the Closing Date, and the transactions contemplated hereunder, including, without limitation, income taxes payable by Seller under the Code, any income tax, any franchise tax, any tax recapture, any FICA, workers’ compensation, vacation liability (except with respect to the Assumed Benefit Obligation), and other employee benefits, any insurance premiums, rents, payroll withholding Taxes, or other accruals, any liability or obligation to the Purchaser under Section 4.3(b) and any and all other Taxes or amounts due or payable by Seller for a period prior to the Closing Date;

(vi) long term indebtedness and other obligations or guarantees of Seller; (vii) Current Liabilities of Seller as of the Closing Date; (viii) Accrued Expenses and Payables of Seller at the Closing Date; (ix) Medicare, Medicaid or other federal or state governmental overpayments or any

other financial obligations arising from any adjustments or reductions in reimbursement, penalty assessment, civil monetary penalty, false claim, or any charge whatsoever with respect to any period of time ending prior to the Closing Date;

(x) any amounts due or that may be claimed or become due to Medicare, a Medicare

Administrative Contractor, Medicaid, or any other Third Party Payor attributable to audit adjustments (including but not limited to adjustments made as a result of RAC audits or similar audit programs), disallowances, reclassifications of expenses due to health care reimbursement cost report adjustments, other payment adjustments, or amounts due to non-compliance with governmental survey and certification requirements, including civil monetary penalties, with respect to any period of time ending prior to the Closing Date;

(xi) any liability or obligation relating to any Third Party Payors arising from services provided by Seller prior to the Closing Date;

(xii) any Employee Liabilities (other than the Assumed Benefit Obligation) or liability

of the Seller to any Benefit Plan (including, without limitation, all pension liabilities and obligations);

(xiii) any liability for any retroactive premium adjustment made after the Closing Date

for any insurance policy of Seller; (xiv) any liability, loss, costs and expenses, including, but not limited to, reasonable

attorneys fees, which Seller may incur under the WARN Act or any equivalent State law, other than by virtue of a breach of Purchaser of its obligations under this Agreement; and

(xv) any civil monetary penalties or other fines or penalties relating to the period prior

to the Closing Date imposed by any Governmental Authority;

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(xvi) any and all liabilities arising under Environmental Laws in connection with ownership, operation or leasing of the Real Property or operation of the Business prior to the Closing, or that relate to the manufacture, processing, generation, distribution, use, treatment, storage, release, discharge, disposal, cleanup, transport, migration, or handling of a Hazardous Material in connection with ownership, operation or leasing of the Real Property or operation of the Business, prior to the Closing; and

(xvii) the amount remaining to be paid under that certain Utility Services Agreement,

dated December 18, 2003, between Seller and Vestar, Inc. For purposes of this Section 4.2, the phrase “liabilities and obligations” shall include,

without limitation, any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted or unasserted, choate or inchoate, liquidated or unliquidated, secured or unsecured.

4.3 Employees. (a) Immediately prior to the Closing Date, Seller shall terminate the employment of

all Employees to allow for the transition to Purchaser, and the Employees shall thereupon cease to be employees of Seller and shall be removed from Seller’s payrolls.

(b) Purchaser shall offer employment to substantially all of the Employees, with

initial titles and initial salaries substantially similar to such Employees’ title and salary with Seller as of the Closing Date, and shall credit such Employees with service with Seller to reflect seniority. Notwithstanding the foregoing, Purchaser shall not be obligated to offer employment to any particular Employee. Upon request, Seller shall assist Purchaser in its efforts to employ any of the Employees. Purchaser agrees to cooperate with Seller to provide information concerning which Employees are being offered employment by Purchaser (collectively, the “Retained Employees”). Purchaser and Guarantor shall jointly and severally defend, hold harmless and indemnify Seller from and against any and all claims, causes of action and liability for or relating to, actions of Purchaser in offering employment to any Seller employees. Seller shall defend, hold harmless and indemnify Purchaser and Guarantor from and against any and all claims, causes of action, and liability for or relating to, actions of Seller in terminating employment of the Employees. Nothing in this Section 4.3(b) is intended to, and this Section does not, confer any rights or remedies upon any Person with respect to his or her employment with Purchaser.

(c) Except as provided in this Section 4.3, and, specifically, other than the Assumed

Benefit Obligation, Seller shall remain liable for all Employee Liabilities relating to all Employees for the period prior to the Closing Date (whether or not the same arise or accrue prior to or after the Closing Date), including without limitation (i) payroll through the day immediately preceding the Closing Date, and (ii) any Employee Liabilities relating to the termination of any Employees on the Closing Date. Schedule 4.3, which shall include all Accrued Benefit Time through the Closing Date for all Employees, shall be delivered to Purchaser at Closing.

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Purchaser shall be responsible for all Employee Liabilities relating to the Retained Employees that relate to the period from and after the Closing Date.

(d) Seller shall offer and provide, as appropriate, group health plan continuation

coverage pursuant to the requirements of Section 601, et seq. of ERISA and Section 4980B of the Internal Revenue Code (“COBRA”) to all of the Employees to whom it is required to offer the same under all Legal Requirements up through and including the day immediately preceding the Closing Date (including coverage to dependents and spouses, as applicable). Purchaser shall cooperate with Seller in providing information concerning the Retained Employees, if any, from and after the Closing Date, and the nature of the benefits offered to each such employee. As of the Closing Date, Retained Employees shall be eligible for participation in a group health plan (as defined for purposes of Internal Revenue Code Section 4980B) established and maintained by Purchaser for the general benefit of its employees and their dependents in accordance with the terms and conditions of Purchaser’s employment and benefit policies.

(e) Prior to the Closing Date, Seller shall be solely responsible for giving notice to the

Facility’s employees, if required to do so under the WARN Act, and Seller shall be solely responsible for any liability or damages associated with the WARN Act associated with the termination of the Facility employees under Section 4.3.

(f) Seller shall allow Purchaser to retain Seller’s employee files, including without

limitation originally executed employee applications and original Form I-9s of Retained Employees, for a period of ninety (90) days from the Closing Date, or until Purchaser has obtained new employee applications and I-9s; immediately thereafter Purchaser shall deliver the original documents to Seller, but may retain copies of such records in Purchaser’s files. Seller shall obtain any applicable releases from employees prior to the transfer of personnel records to purchaser. To the extent Seller maintains electronic personnel files, Seller shall transmit records via electronic submission or shared drive to Purchaser.

(g) (i) Seller shall pay, at the Closing, to each Employee, an amount equal to each

such Employee’s Accrued Benefit Time. (ii) Purchaser shall pay, within two (2) weeks following the Closing Date, to each Employee, an amount equal to each such Employee’s Assumed Sick Time Benefit. (iii) Each Employee’s Accrued Vacation, at the election of the individual Employee (which such election must be made prior to Closing), may be either (A) paid by Seller to each such Employee at Closing or (B) carried over for the benefit of the Employee in such Employee’s employment with Purchaser (in which case the Purchase Price shall be reduced by the aggregate amount of the value of the Accrued Vacation being carried over by all Retained Employees).

(h) Purchaser hereby covenants and agrees that in the event that (i) Purchaser

terminates any Retained Employee within two (2) years following the Closing, and (ii) such Retained Employee has carried over Accrued Vacation for the benefit of the Retained Employee pursuant to Section 4.3(g)(iii)(B) above, and (iii) such Retained Employee has not, at the time of termination, used all such Accrued Vacation, Purchaser shall pay to such Retained Employee the value of the Accrued Vacation not used by the Retained Employee.

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ARTICLE V. CLOSING

5.1 Time; Location. The consummation of the purchase and sale of the Purchased Assets shall be effective on January 31, 2014 (the “Closing Date”), unless extended by mutual written agreement of the Parties hereto. TIME SHALL BE OF THE ESSENCE. The closing shall take place on the Closing Date, at 10:00 a.m. at a place as may be mutually agreed upon by the Parties (the “Closing”). The documents to be delivered by the Parties at Closing are referred to collectively as the “Closing Documents.”

5.2 Actions of Seller at Closing. At the Closing and unless otherwise waived in writing by Purchaser, Seller shall deliver to Purchaser or the REIT, as the case may be, the following:

5.2.1 Deed. A duly executed special warranty deed containing a covenant of

further assurances, from the Seller to the REIT, in recordable form, transferring good and marketable fee simple title to the Real Property and the improvements thereon, both of record and in fact and insurable at regular rates, subject only to Permitted Encumbrances;

5.2.2 Bill of Sale and Assignment; Assignment and Assumption. A general bill

of sale transferring to the REIT good and marketable title to all of the tangible personal property included in the Purchased Assets, subject only to Permitted Encumbrances and the Assumed Liabilities and an assignment and assumption agreement from Seller, and executed by Purchaser, assigning to Purchaser Seller’s right, title and interest in each of the Assumed Contracts, to the extent transferable, and the Permits, and other agreements included in the Purchased Assets, free of Encumbrances (other than Permitted Encumbrances);

5.2.3 Transition Services Agreement. The Transition Services Agreement

executed by Seller.

5.2.4 Property Tax Statements. To the extent not delivered prior to the Closing, all real estate and personal property tax statements or bills for or relating to the Real Property or any of the other Purchased Assets for the applicable current tax year, and all tax assessments or Notices thereof upon which such taxes are based;

5.2.5 Plans and Specifications. To the extent not delivered prior to the Closing, all plans, specifications and other drawings actually in Seller’s possession and used in the construction of the Facility or any renovations thereof (including, without limitation, any as-built plans and architectural specifications) and all guarantees and warranties made by third parties with respect to the Purchased Assets;

5.2.6 Permits; Surveys; Studies. To the extent not delivered prior to the Closing, all material building permits, zoning permits, occupancy permits, subdivision plans,

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surveys, engineering reports, geotechnical reports, soil studies and hazardous waste or other environmental studies prepared within two (2) years before the date of this Agreement, for or relating to the Facility, to the extent actually in Seller’s possession;

5.2.7 Contracts and Permits. To the extent not delivered prior to the Closing, all Contracts and Permits;

5.2.8 Certificates. The documents referred to in Section 10.3 and Section 10.4;

5.2.9 Accrued Benefit Time. A schedule of all earned or Accrued Benefit Time through the day immediately preceding the Closing Date.

5.2.10 Resident List. Updated Schedule 6.22 as of the day before the Closing

Date and all Residents’ Agreements not previously disclosed to Purchaser;

5.2.11 Resident Trust Accounts. A schedule through the day before the Closing Date setting forth each resident’s name and the balance of each resident’s account as referenced in Section 2.1.14;

5.2.12 Motor Vehicle Title. Executed and notarized motor vehicle title(s), bills

of sale (indicating the value of each applicable motor vehicle), and such other documents or instruments as may be necessary to transfer title to all motor vehicles;

5.2.13 Opinion Letter. An opinion of Seller’s counsel, in form and substance reasonably satisfactory to Purchaser’s counsel, that the sale described herein has been validly authorized and has been approved by, all necessary Governmental Authorities, that this Agreement and all Ancillary Agreements are valid, binding, and enforceable against the Seller, and that the deed has been validly authorized, executed and delivered.

5.2.14 Easements. A Declaration, in form and substance mutually agreeable to

Seller and Purchaser, which grants (i) the owner of the Real Property, its successors and assigns, such access, utility easement and other rights over the Retained Land as are required for the use and operation of the Facility in the manner in which it is currently being operated, and (ii) the Seller, its successor and assigns, such access, utility easement and other rights over the Real Property (including an easement for presence, operation and maintenance of the Seller’s communication tower on the Real Property), as are reasonably required by Seller for its use and enjoyment of the Retained Land, which Declaration shall be recorded (x) after or in connection with the Subdivision Plan, if any, and (y) before the Deed and any financings or other encumbrances imposed upon the Real Property by the Purchaser.

5.2.15 Insurance Coverage. Evidence that Seller has obtained “tail” insurance

policies for all “claims made” policies, if any, for a period of at least four (4) years after the Closing;

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5.2.16 Post-Closing Escrow. Executed and delivered Post-Closing Escrow Agreement and the deposit of the Post-Closing Escrow Amount with the Escrow Agent;

5.2.17 Owner’s Affidavits. Such affidavits or other instruments as Purchaser’s

title insurance company may reasonably request to insure title as set forth herein, including, but not limited to: (i) affidavits or indemnities sufficient to induce the Title Company to remove or insure over (A) judgments, bankruptcies, taxes and municipal claims, (B) parties in possession other than current occupants pursuant to agreements with Seller that constitute Permitted Encumbrances or are otherwise specifically approved by Purchaser, (C) filed or unfiled mechanics’ or materialmens’ liens, (D) matters not shown in the public records, other than Permitted Encumbrances, and (E) other standard “pre-printed” exceptions (including the “gap” exception); and (ii) payoff letters, if applicable;

5.2.18 Warranties. To the extent actually in Seller’s possession, originals of all warranties in effect as of the Closing Date with respect to the Purchased Assets or any repairs or renovations thereof; and

5.2.19 Other Documents. Such additional instruments of conveyance and transfer as Purchaser may reasonably require in order to vest in Purchaser, and put Purchaser in possession of, the Purchased Assets, including without limitation those additional documents referenced in this Agreement that are to be executed and delivered by Seller at Closing.

5.3 Actions of Purchaser at Closing. At the Closing and unless otherwise waived in

writing by Seller, Purchaser shall deliver to Seller the following

5.3.1 Closing Payment. Payment in immediately available funds via wire transfer in an amount equal to the Closing Payment;

5.3.2 Certificates. To the extent not delivered prior to Closing, the documents referred to in Section 11.3 and Section 11.4;

5.3.3 Resident Accounts. Purchaser shall sign and deliver a Receipt and Acknowledgement of Closing deliverable described in Section 5.2.10;

5.3.4 Post-Closing Escrow Agreement. Executed and delivered Post-Closing Escrow Agreement; and

5.3.5 Transition Services Agreement. The Transition Services Agreement executed by Seller; and

5.3.6 Other Documents. Such additional documents as Seller may reasonably require in order to consummate the transaction described by this Agreement, including without limitation those additional documents referenced in this Agreement that are to be executed and delivered by Purchaser at Closing.

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5.4 Payment of Retained Liabilities. Seller shall pay in the Ordinary Course of Business all Retained Liabilities and Payables whether or not accrued prior to the Closing Date.

ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER

As an inducement to Purchaser to enter into this Agreement and to consummate the transactions contemplated hereby, Seller represents and warrants to Purchaser, that each of the following representations and warranties is true and correct as of the date hereof and as of the Closing Date:

6.1 Organization; Good Standing. Seller is a county of the second class of the Commonwealth of Pennsylvania and is authorized to do business and in good standing in the Commonwealth of Pennsylvania.

6.2 Authority; Authorization of Agreement. Seller has full power and authority to own the Facility, the Real Property, and operate the Business as it is currently conducted, enter into and perform this Agreement and the Ancillary Agreements entered into or to be entered into by it pursuant to this Agreement and to carry out the transactions contemplated hereby. This Agreement is, and all Ancillary Agreements to be executed by Seller and delivered to Purchaser at Closing will be as of the Closing Date, duly authorized, executed and delivered by Seller and all consents and approvals of third parties shall have been obtained.

6.3 Enforceability. This Agreement constitutes, and the Ancillary Agreements to which Seller is party, upon such Seller’s execution and delivery thereof, will constitute, the legal, valid and binding obligations of the Seller, enforceable in accordance with their terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization, or other similar laws presently or hereafter in effect relating to or affecting the enforcement of creditors’ rights generally and by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

6.4 No Violations; Consents. Except as set forth on Schedule 6.4, and except with respect to Notice required to be given, or consents required to be obtained by the Seller to or from any Governmental Authority in connection with the sale and change of ownership of the Purchased Assets and the Facility and the approval by the Board of Commissioners of Montgomery County, Pennsylvania, the execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements to which the Seller is a party, and the consummation of the transactions contemplated hereby and thereby, will not (with or without the giving of Notice or the lapse of time, or both) (i) violate any Contract, Permit, or License, to which the Seller is a party or to or by which Seller or the Purchased Assets are subject or bound; (ii) violate or require any consent, authorization or approval of, or exemption by, or filing under any provision of any law, statute, rule or regulation to which the Seller, the Facility or the Purchased Assets are subject; (iii) violate any judgment, order, writ or decree of any court applicable to the Seller, the Facility or the Purchased Assets set forth in any Notice of which a Seller is in receipt, or require any consent under the same; (iv) conflict with, result in a breach of, constitute a default under (or a default that might, with the passage of time or the giving of Notice or both, constitute a

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default), or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under, any organizational or governing document of the Seller or any contract or other instrument, document or undertaking to which the Seller is a party or any of the Purchased Assets is bound or (v) result in the creation or imposition of any Encumbrances upon the Purchased Assets.

6.5 Financial Statements. Seller has delivered to Purchaser true and complete copies of the financial statements of the Seller, including the Business, for the 2011 and 2012 fiscal years, and the related statements of income of the Seller, including the Facility, for said year (the “GASB Financial Statements”). In addition, the Seller shall provide Purchaser, as promptly as the same become available through the Closing, monthly unaudited financial statements for the Facility (the “Internal Statements”). The GASB Financial Statements and the Internal Statements have been prepared from the Books and Records of the Seller, and the GASB Financial Statements have been prepared in accordance with GASB consistently applied in all material respects throughout the periods involved except as may be noted therein. The GASB Financial Statements are true and correct and fairly present, in all material respects, the financial position of the Seller, including the Business, at the dates indicated and the results of operations and cash flows of the Seller, including the Business, for the periods then ended in accordance with GASB. The Internal Statements have been prepared consistent with the preparation of the Business’s historic financial statements.

6.6 Inventory. The Inventory for the Facility was or will be acquired and maintained in accordance with the regular business practices of the Business, and consists or will consist of items of a quality or quantity usable or salable in the Ordinary Course of Business. None of the Inventory is defective or obsolete and all Inventory will be transferred to the Purchaser at Closing, free and clear of any Encumbrances. All Inventory is located at the Facility. On the Closing Date the amount of Inventory at the Facility will be sufficient to operate the Facility in the Ordinary Course of Business for at least a five (5) day period.

6.7 Absence of Certain Changes or Events. Except as set forth in Schedule 6.7 hereto, since December 31, 2012, in connection with the Business, the Seller has not:

(a) amended or terminated any Material Contracts, Licenses, or Permits other than in the Ordinary Course of Business;

(b) suffered any damage or destruction by fire, storm or similar casualty, in

excess of $50,000, whether or not covered by insurance;

(c) sold or transferred any of the Purchased Assets except for transactions in the Ordinary Course of Business;

(d) waived or released any material rights with respect to the Purchased Assets

or the Facility;

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(e) entered into any transaction or made any commitments (for capital expenditures or otherwise) other than in the Ordinary Course of Business;

(f) increased the compensation of any of the Employees or amended any

Benefit Plan, except following normal review procedures or as reasonably deemed necessary in the Ordinary Course of Business;

(g) transferred or granted any rights to any Proprietary Rights; (h) changed its methods of accounting; (i) suffered any major or key personnel changes; or (j) materially altered its conduct in its relations with suppliers/or residents.

6.8 Title and Condition of Real Property.

(a) A legal description of the Real Property is set forth on Schedule 2.1.1 Except as set forth on Schedule 6.8(a), Seller is the sole and exclusive legal and equitable owner of all right, title and interest in the Real Property, subject only to Permitted Encumbrances, and has and may convey to Purchaser good and marketable title in fee simple to the Real Property, free and clear of any and all liens, encumbrances, restrictions or easements of any kind whatsoever (other than Permitted Encumbrances). As of the Closing Date, the Real Property will be a separately conveyable parcel of land (separated from the Retained Land) and will satisfy all Legal Requirements for the transfer thereof (and not the Retained Land) to the REIT. Except as set forth on Schedule 6.8(a), to the Knowledge of Seller, the Facility (including, without limitation, the roof, structural elements and heating, ventilating, air conditioning, mechanical, plumbing and electrical systems) are in good condition and repair (reasonable wear and tear excepted), are structurally sound, free from defects and weather tight.

(b) Except as set forth on Schedule 6.8(b), neither the sale of the Real

Property pursuant to this Agreement nor, to the Knowledge of Seller, either the Real Property or the current operation of the Facility thereon, violates in any material manner any applicable law, statute, ordinance, rule, regulation, order or determination of any Governmental Authority or any restrictive covenant or deed restriction (recorded or otherwise) governing the Real Property, including, without limitation, any applicable zoning or subdivision ordinance or building code, flood disaster law or health and Environmental Laws or regulation, and Seller has received no Notice of a violation of any of the foregoing which has not been cured.

(c) To the Knowledge of Seller, with regard to the Real Property and except as set forth on Schedule 6.8(c), there are no (i) encroachments onto or from adjacent properties; (ii) violations of set-back, building or side lines; (iii) encroachments onto any easements or servitudes located on such Real Property; (iv) pending or threatened boundary line disputes; (v) portions of such Real Property located in a flood plain or in an area defined as a wetland under applicable state or federal law; (vi) cemeteries or gravesites located on, within or under the Real

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Property; or (vii) mine shafts under the Real Property or any other latent defects, such as sinkholes, regarding or affecting the Real Property; nor has Seller received any Notice of any of the foregoing.

(d) To Knowledge of Seller, all utilities required for the operation of the Facility enter the Real Property through adjoining public streets or through adjoining private land in accordance with valid public or private easements that will inure to the benefit of the Purchaser. To the Knowledge of Seller, no fact or condition exists or is pending which would result in the termination of the current access from the Real Property to any presently existing public highways or roads adjoining or situated on the Real Property or to sewer or other utility services needed to serve the Real Property and the Facility.

(e) No action to condemn, requisition, or for public taking (collectively, a “Public Taking”) is pending or, to the Knowledge of Seller, threatened with respect to all or any portion of Real Property, and no notice of any Public Taking has been received by the Seller with regard to any portion of the Real Property. There are no public improvements pertaining to the Facility which have been ordered to be made and/or which have not heretofore been assessed, and, to the Knowledge of the Seller, there are no special, general or other assessments pending or threatened against or affecting any of the Real Property (except those expressly identified in the title commitment obtained by Purchaser under this Agreement).

(f) There are no claims, actions, suits, proceedings or investigations pending or, to the Knowledge of the Seller, threatened, against or affecting all or any portion of the Real Property.

(g) The Licenses, Permits, and other authorizations and approvals specifically set forth on Schedule 6.8(g) have been issued for the Real Property, and, except as set forth on Schedule 6.8(g), as of the Closing Date, all of the same will be in full force and effect. Except as set forth on Schedule 6.8(g), to the Knowledge of Seller, the improvements on the Real Property, as designed and constructed, comply in all material respects with all material Legal Requirements. Except as set forth on Schedule 6.8(g), Seller neither has in its possession nor has Knowledge of any studies or reports which specify or suggest the presence of any material defects in the design or construction of the improvements on the Real Property.

(h) Intentionally deleted.

(i) Except as set forth in Schedule 6.8(i), there are no unrecorded leases (including Tenant Leases), subleases, binding commitment letters, binding letters of intent, licenses, concession arrangements, and other rental agreements, whether written or oral, now or hereafter in effect, that grant or will grant a possessory interest in and to any space in the Real Property or that otherwise assign or convey rights with regard to the Real Property. There are no unrecorded purchase contracts, leases of space, options, rights of first refusal or other written or oral agreements of any kind whereby any person or entity will have acquired or will have any basis to assert any right, title or interest in, or right to the possession, use, enjoyment or proceeds of, any part or all of the Real Property.

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(j) The Real Property constitutes all the land and improvements used by

Seller in connection with the operations of the Facility.

(k) Except as set forth on Schedule 6.8(k), there are no proceedings currently pending or instituted, or to the Knowledge of the Seller, planned or contemplated to be instituted under Environmental Laws or any other zoning or land use law or regulation that would detrimentally affect the use, occupancy or operation of the Facility as currently operated or the value of the Real Property or adversely affect the ability of the Purchaser to operate the Facility on the Real Property.

(l) The Real Property is not subject to any rollback or recapture tax or assessment or any similar tax or assessment related to the discontinuance of any use to which the Real Property has been put.

(m) There is no currently pending or, to the Knowledge of Seller, threatened: (i) annexation or moratorium proceeding of or related to any part of the Real Property, (ii) widening, change of grade or limitation on use of streets abutting the Real Property, (iii) special tax or assessment to be levied against the Real Property, (iv) change in the zoning classification of the Real Property or (v) change in the tax assessment of the Real Property.

6.9 Title to Personal Property. Seller has, or will have as of Closing, good, clear and

indefeasible title to and ownership of all the Personal Property, free and clear of all Encumbrances. Except as set forth on Schedule 6.9, the Personal Property is in good condition (relative to its age) and working order, reasonable wear and tear excepted. Schedule 6.9 sets forth an accurate and complete list of all leases of Personal Property used in the operation of the Facility to which Seller is currently a party (the "Personal Property Leases"). The Seller has made available to the Purchaser complete, correct and current copies of all of any Personal Property Leases, including modifications, amendments or assignments. Except as set forth on Schedule 6.9, all Personal Property Leases (a) are legally valid, binding and enforceable against the Seller (and, to the Seller’s Knowledge, against the other parties to such Personal Property Leases) in accordance with their respective terms and are in full force and effect; (b) there are no monetary defaults and no material nonmonetary defaults by the Seller, or, to the Seller’s Knowledge, any other party to the Personal Property Leases; (c) the Seller has not received Notice of any default, offset, counterclaim or defense under any Personal Property Lease; and (d) no condition or event has occurred which with the passage of time or the giving of Notice or both could reasonably be expected to constitute a default or breach by the Seller or any other party thereto of the terms of any Personal Property Lease.

6.10 Permits and Licenses.

(a) Seller has all material Permits and Licenses that are required to operate the Facility (including without limitation those required under any Environmental Laws) and, except as set forth on Schedule 6.10(a), Seller is not in receipt of Notice that it will not be in material compliance with the terms and conditions of the Permits and Licenses. Schedule 2.1.4 hereto

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sets forth a correct and complete list of all Permits and Licenses for the Business, each one of which is in full force and effect. Seller has not received any Notice that a suspension, provisional status or cancellation/revocation of any of the Permits and Licenses is threatened, and, to the Knowledge of Seller, no cause exists for such suspension or cancellation.

(b) Except as set forth on Schedule 6.10(b), and in addition to those matters

specified in Section 6.8 hereof, neither the sale of the Real Property pursuant to this Agreement, nor the current operation of the Facility thereon, violates any Legal Requirement or any restrictive covenant or deed restriction (recorded or otherwise) governing the Real Property, including, without limitation, any applicable zoning or subdivision ordinance or building code, flood disaster law or health and environmental law or regulation nor has Seller received any Notice of a violation of any of the foregoing.

(c) The execution, delivery and performance of this Agreement and the

Ancillary Documents to which it is a party by Seller do not and will not require with respect to Seller any consent, approval, authorization or other action by, or filing with or notification to, any Governmental Authority or any other Person, except for (i) approval by the Board of Commissioners of the County of Montgomery, Pennsylvania, (ii) any Notices and/or consents required to be given by Seller to any Governmental Authority in connection with the sale and change of ownership of the Purchased Assets and the Facility, and (iii) such Permits and Licenses which are not transferable and which Purchaser acknowledges and agrees that Purchaser is required to obtain.

6.11 Compliance with Laws. Except as set forth on Schedule 6.11, Seller (a) has not received any Notice that it is not in material compliance with applicable laws, rules, regulations, ordinances, licenses, permits and other governmental actions and authorities and orders, writs, and decrees of every Governmental Authority in connection with the ownership, conduct, operation and maintenance of the Facility and its ownership and use of its assets, and no event has occurred or circumstance exist which (without Notice or lapse of time) could reasonably be expected to result (i) in any material noncompliance with any such law, rule, regulation, ordinance, license permit, order, writ or decree, or (ii) an investigation or audit of Seller in connection with a potential violation of any such law, rule, regulation, ordinance, license permit, order, writ or decree; and (b) has timely made or given all material filings and Notices required to be made by Seller with the regulatory agencies of any Governmental Authority.

6.12 Material Contracts and Commitments. Seller has made available to Purchaser complete and correct copies of all of the Material Contracts Each of the Material Contracts is valid and binding on the Seller (and to Seller’s Knowledge against the other parties to such Material Contracts) in accordance with their respective terms and are in full force and effect. Except as would not reasonably be expected to result in a Material Adverse Change, (i) there are no defaults of the terms of any Material Contract in any material respect by Seller or, to Seller’s Knowledge, any other party to the Material Contracts; (ii) Seller has not received Notice of any default, counterclaim or defense under any Material Contract; and (iii) no condition or event has occurred which solely with the passage of time or the giving of Notice or both could reasonably be expected to constitute a default or breach by Seller of the terms of the Material Contracts.

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6.13 Books and Records. Seller has furnished to Purchaser the books of account and

other financial records of the Seller relating to the preceding six (6) months, the preceding year and the preceding two (2) years directly relating to the Facility (the “Books and Records”) as Purchaser requested. All of the Books and Records are materially complete and correct, and have been prepared and maintained in accordance with good business practices and, where applicable, in conformity with GASB (except as otherwise stated therein) and in compliance in all material respects with all Legal Requirements.

6.14 Litigation. Except as set forth on Schedule 6.14, Seller has received no Notice of suit, action, proceeding, inquiry or investigation (a "Claim") regarding the Business (including, without limitation any suit, action, proceeding or investigation pursuant to Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Fair Labor Standards Act, and the Family and Medical Leave Act of 1993). Except as set forth on Schedule 6.14, Seller has received no Notice of a judgment, decree, injunction, rule or order of any Governmental Authority or any other Person (including, without limitation, any arbitral tribunal) outstanding against the Seller regarding the Purchased Assets and Seller is not in material violation of any term of any judgment, decree, injunction or order outstanding against the Seller regarding the Purchased Assets. Furthermore, except as set forth on Schedule 6.14, there is no Claim by or before any Governmental Authority or other Person pending or, to the Knowledge of Seller, threatened which questions or challenges the validity of this Agreement or any action taken or to be taken by the Seller pursuant to this Agreement or in connection with the transactions contemplated hereby, and, to the Knowledge of Seller, there is no substantial basis for any such Claim.

6.15 Absence of Undisclosed Liabilities. Except as set forth in Schedule 6.15, Seller has no material liabilities or obligations (as defined in Section 4.1) relating to the Facility except (a) those liabilities and obligations reflected on the financial statements for the Facility previously provided to Purchaser in the amounts shown therein and not heretofore paid or discharged and (b) those liabilities and obligations arising in the Ordinary Course of Business under any Contract or commitment specifically disclosed on Schedule 2.1.3 hereto and not required to be disclosed on the financial statements because of the term or amount involved.

6.16 Employees. Schedule 6.16 sets forth, as of date of such Schedule, a true and

correct list of the following for the Business: (i) all individuals employed by Seller in the conduct of Business; (ii) total wage costs; (iii) wage/salary grade structure; and (iv) each Employee’s (A) present position and department, (B) rate of compensation, (C) service credited for purposes of vesting and eligibility under each Benefit Plan, and (D) classification as an employee or independent contractor. The classification of each employee is correct and in accordance with all Legal Requirements. No Employee is a party to, or is otherwise bound by, any agreement or arrangement with any third party, including any confidentiality or non-compete agreement. Except as set forth on Schedule 6.16, the employment of all Employees is “at will” and can be terminated at any time, with or without notice, with or without cause, or for any or no cause, at either party’s option.

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6.17 Employee Benefits. (a) Schedule 6.17 lists all Benefit Plans in effect as of the date hereof, in

which any current or former Employee participates.

(b) With respect to each Benefit Plan, Seller has provided or made available to Purchaser complete copies of the following documents, as applicable; (i) all plan documents, (ii) all funding and administrative arrangement documents, including, but not limited to, trust agreements, insurance contracts, custodial agreements, investment manager agreements and service agreements, (iii) the latest favorable determination letter received from the Internal Revenue Service regarding the qualification of each plan covered by Section 401(a) of the Code, (iv) the two most recently filed Forms 5500 for each plan that is an employee pension benefit plan (as defined in Section 3(2) of ERISA) and for each plan that is an employee welfare benefit plan (as defined in Section 3(1) of ERISA) (v) each summary plan description and each summary of material modification regarding the terms and provisions thereof subsequent to the date of the summary plan description provided, (vi) the most recent audited financial statements and actuarial report and (vii) any material communication with any Governmental Authority.

(c) Each Benefit Plan is in compliance in all material respects with all

applicable laws (including COBRA) and has been operated in compliance in all material respects with its terms.

(d) Seller is not obligated to contribute to and does not have any liability

(concurrent or contingent) under, any multiemployer plan as defined in Section 3(37) of ERISA with respect to any Employee.

(e) No Benefit Plan provides for medical, life, or other welfare benefit to any

current or former Employees, or any spouse or dependent of any such person, beyond retirement or other termination of employment (other than as required under Code Section 4980B, or similar state law).

(f) Each Benefit Plan intended to qualify under Section 401(a) of the Code is

and at all times has been so qualified, and has received a favorable determination letter from the Internal Revenue Service as to its qualification and to the Knowledge of Seller, nothing has occurred that could reasonably be expected to adversely affect such qualification.

(g) No liability under Title IV of ERISA, Section 302 of ERISA or Section

412 of the Code has been or is reasonably expected to be incurred by Seller, nor has Seller incurred any withdrawal liability with respect to any multiemployer plan or any liability in connection with the termination or reorganization of any multiemployer plan that has not been satisfied in full.

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(h) There are no pending or, to the Knowledge of Seller, threatened claims, actions, proceedings or litigation by or on behalf of any Benefit Plan, any employee or beneficiary covered under any Plan, any Governmental Authority, or otherwise involving any Benefit Plan (other than routine claims for benefits). No Benefit Plan is under audit or investigation by any Governmental Authority or, to the Knowledge of Seller, no such audit or investigation is threatened.

(i) Seller does not have any liability with respect to any misclassification of

any person as an independent contractor, temporary employee, leased employee or any other servant or agent compensated other than through reportable wages (as an employee) paid by Seller and no such person has been improperly excluded from any Benefit Plan.

6.18 Labor Matters. Except as set forth on Schedule 6.18, Seller has received no

Notice of material discrimination complaints nor any other kind of employment or labor related disputes respecting minimum wage or overtime claims or other conditions or terms of employment (including, without limitation any suit, action, proceeding or investigation pursuant to Title VII of the Civil Rights Act of 1964, the Americans with Disability Act, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Family and Medical Leave Act of 1993, or any other Legal Requirement regulating employment) against Seller in connection with the Business pending before or, to the Knowledge of Seller, threatened before any Governmental Authority. The Business has not experienced any material labor disputes or any material work stoppage due to labor disagreements within the past three (3) years. Except as set forth on Schedule 6.18 and with respect to the Business, Seller is not in receipt of Notice that (i) there is an unfair labor practice charge or complaint against Seller pending or threatened before the National Labor Relations Board; or (ii) there is a labor strike, slow down or stoppage pending or, threatened against or affecting Seller. There are no collective bargaining agreements or union contracts for the Employees, no such agreement is currently being requested or is under discussion by Seller with or on behalf of any Employees, and, except as set forth on Schedule 6.18, no organizational effort is being made or threatened by or on behalf of the Employees or any labor union.

6.19 Sufficiency of Assets. Except as set forth on Schedule 6.19, the Purchased Assets are all of the assets necessary for the operation of the Facility after the Closing Date in substantially the same manner as the Business was operated by the Seller prior to the Closing Date.

6.20 Finder. Seller has not taken any action that would give any party a right to a

finder’s fee or some type of brokerage commission in relation to, or in connection with, the transactions contemplated by this Agreement.

6.21 Affiliate Transactions. Except as set forth on Schedule 6.21, no Affiliate of Seller provides any services or products to the Facility.

6.22 Residents. Attached hereto as Schedule 6.22 is a listing, as of the date set forth, of the names of all residents of the Facility, including and whether such residents are private pay

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residents, or payments are made to the Seller by Medicare and Medicaid, Tricare, or any other healthcare reimbursement or Third Party Payor Programs, for or on behalf of such residents. In the case of private pay residents, Schedule 6.22 shall include anticipated date of conversion to Medicaid, if any and if resident’s application for Medicaid has been denied. On the Closing Date, Schedule 6.22 shall be updated through the day before the Closing Date and set forth the balance of each listed resident’s account as of the day before the Closing Date.

6.23 Tax Returns. Except as set forth on Schedule 6.23, Seller has filed or caused to be filed, or will file or cause to be filed, all Tax Returns related to the Business that are required to be filed by it prior to the Closing Date, which comply or will comply with all Legal Requirements of each Governmental Authority with taxing power over Seller. Seller has paid or will pay all Taxes that have or will become due as shown on such Tax Returns. The Seller will withhold and pay all Taxes related to the Business which are required to have been withheld in connection with amounts paid or owing to any Employee, independent contractor, creditor, or other third party.

6.24 Completeness and Accuracy. All Material Contracts, Permits and Licenses and other documents and instruments furnished or made available to Purchaser by Seller are or will be true, complete and accurate originals or copies of originals and include all amendments, supplements, waivers and modifications thereto. None of the representations and warranties set forth in this Agreement or in any of the Ancillary Agreements contains any untrue or misleading statements of material fact or, to the Knowledge of Seller, omits to state a material fact necessary in order to make the statements contained herein or therein not misleading.

6.25 Medicare and Medicaid; Third Party Payor Reimbursement.

(a) The Facility is a “provider” as that term is defined by Medicare and Medicaid with a valid and current Provider Agreement and with one or more provider numbers with the federal Medicare Program and the Medicaid Program of the Commonwealth of Pennsylvania (the “Government Programs”) through Medicare Administrative Contractors (“MAC”) and the Department of Public Welfare. Except as set forth on Schedule 6.25(a), the Facility is not in receipt of Notice that it is not in material compliance with the conditions for participation in the Government Programs and other Third Party Payor Programs, including all approvals or qualifications necessary for capital reimbursement. Except as set forth on Schedule 6.25(a), Seller has not received Notice of any pending or threatened proceeding or investigation nor, to Seller’s Knowledge, is it the subject of any ongoing investigation by the Office of the Inspector General (“OIG”) of the Department of Health and Human Services or other Governmental Authority or under the Government Programs involving the Facility or Real Property. Neither Seller nor the Facility currently operates under a Corporate Integrity Agreement entered by the OIG or other Governmental Authority. Seller has made available to Purchaser true, correct and complete copies of the most recent Medicare and Medicaid certification survey reports of the Facility, including any statement of deficiencies and plans of correction, corrective action plans related thereto and copies of any notice Seller has received related to Facility’s corrective action plans.

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(b) Schedule 6.25(b) contains a correct and complete list of the Provider Agreements of the Facility. In addition, the Facility participates in those private, non-governmental programs (including any private insurance program) listed on Schedule 6.25(b) under which it directly or indirectly is presently receiving payments in excess of $100,000 per annum (such private, non-governmental programs are referred to collectively as “Private Programs”).

(c) Seller has timely filed, caused to be filed, and, as to reports due after the Closing, shall timely file, all cost reports required by Third Party Payors for the Facility, including, but not limited to Government Programs. True and correct copies of all such reports for the three (3) most recent fiscal years of Seller and the Facility have been or will be made available (prior to Closing) to Purchaser. Except as disclosed on Schedule 6.25(c), Seller has not received Notice of a material dispute between the Facility and the applicable government agency, including any MAC, federal, state or local government body or entity, or the Administrator of the CMS, with respect to any Government Program cost reports or claims filed on behalf of Seller with respect to the Facility, on or before the date of this Agreement.

(d) Except as set forth on Schedule 6.25(d), Seller has not received Notice of the commencement of any investigation proceedings or any governmental investigation or action (including any civil investigative demand or subpoena) under the False Claims Act (31 U.S.C. Section 3729 et seq.), the Anti-Kickback Act of 1986 (41 U.S.C. Section 51 et seq.), the Federal Health Care Programs Anti-Kickback statute (42 U.S.C. Section 1320a-7a(b)), the Ethics in Patient Referrals Act of 1989, as amended (Stark Law) (42 U.S.C. 1395nn), the Civil Money Penalties Law (42 U.S.C. Section 1320a-7a), or the Truth in Negotiations (10 U.S.C. Section 2304 et seq.), Health Care Fraud (18 U.S.C. 1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement (18 U.S.C. 669), False Statements (18 U.S.C. 1001), False Statements (18 U.S.C. 1035), and Patient Inducement Statute and equivalent state statutes or any rule or regulation promulgated by a Governmental Authority with respect to any of the foregoing healthcare fraud laws affecting Seller with respect to the Facility.

(e) Except as set forth on Schedule 6.25(e), Seller has received no Notice that with respect to the Facility it has been charged or implicated in any violation of any state or federal statute or regulation involving false, fraudulent or abusive practices relating to its participation in state or federally sponsored reimbursement programs, including but not limited to false or fraudulent billing practices.

(f) Except as set forth on Schedule 6.25(f), Seller has not received Notice that, with respect to the Facility, they (i) are not in material compliance with the Standards for Privacy and Security of Individually Identifiable Health Information and the Transaction and Code Set Standards which were promulgated pursuant to HIPAA, and (ii) have no knowledge of a possible Security Incident or Breach, as those terms as defined by HIPAA.

6.26 Discounted Rates; Rate Limitations; Free Care. Schedule 6.26 sets forth a true

and complete list of the following for the Facility: (i) any services that are customarily provided based on a discount factor from the rates regularly charged at the Facility; (ii) any restrictions or

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limitations on rates which are customarily charged to private pay residents for services provided at the Facility; and (iii) any amount of welfare, free or charity care or discounted government assisted resident care provided at the Facility during 2011 and 2012.

6.27 Compliance with Environmental Laws. Except as set forth in Schedule 6.27:

(a) Seller is and has at all times been in compliance with all Environmental Laws applicable to the Real Property and Facility. Seller has no Knowledge of any violations regarding the storage, use, transportation, disposal, or arrangement for disposal of any Hazardous Materials pertaining to the Real Property and/or Facility. Seller has not received any Notice, report or, to Seller’s Knowledge, other information regarding any actual or alleged violations of, or any corrective, investigatory, remedial, or restorative obligations, arising under any Environmental Laws pertaining to the Real Property, the Facility, and/or the natural resources at, on, beneath, and/or above the Real Property. Seller has no Knowledge of any pending or threatened litigation under Environmental Laws alleging personal injury, property damage, or any remedial or restorative obligation caused by exposure to or discharge of any Hazardous Materials. Prior to the expiration of the Due Diligence Period, Seller will provide Purchaser with all records, documents and environmental reports in its possession or control relating to Seller’s compliance or non-compliance with Environmental Laws.

(b) Except as set forth on Schedule 6.27, there are no underground storage tanks located at, on or under the Real Property and the Real Property does contain asbestos-containing building material.

6.28 Insurance. Schedule 6.28 sets forth a complete list of all insurance policies with

respect to the Business owned and maintained by Seller. Schedule 6.28 sets forth a copy of each current insurance policy related to the Business or a Certificate of Insurance showing such policy coverages. Schedule 6.28 also sets forth a true and correct summary of the loss experiences for the last three (3) years under each such policy, and five (5) years loss experiences for workers’ compensation insurance. Except as disclosed in Schedule 6.28, all of such insurance policies covering products liability and general liability have been “occurrence” policies and not “claims made” policies.

6.29 Condition of Purchased Assets. EXCEPT FOR THE SPECIFIC

REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, (I) SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, CONCERNING THE PURCHASED ASSETS OR THE BUSINESS, AND (II) THE PURCHASED ASSETS AND THE BUSINESS ARE BEING SOLD AS-IS, WHERE-IS, WITH NO WARRANTIES AS TO CONDITION OR SUFFICIENCY, INCLUDING THE WARRANTIES OF MERCHANTABILITY, SUITABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE REPRESENTATIONS, WARRANTIES AND INDEMNITIES BY THE SELLER HEREUNDER ARE FOR THE SOLE BENEFIT OF PURCHASER AND GUARANTOR, WHO ARE THE SOLE PARTIES ENTITLED TO ENFORCE SAME.

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ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER PARTIES

As an inducement to Seller to enter into this Agreement and to consummate the transactions contemplated hereby, Purchaser and Guarantor (collectively, the “Purchaser Parties”), jointly and severally, represent and warrant to the Seller, that each of the following representations and warranties is true and correct as of the date hereof and as of the Closing Date:

7.1 Organization; Good Standing; Power.

7.1.1 Purchaser is a Pennsylvania limited partnership, duly formed, validly existing and in good standing under the laws of its state of formation and has all requisite company power and authority to own the Purchased Assets, to carry on the Facility and to execute and deliver this Agreement and the Ancillary Agreements to which Purchaser is a party, to consummate the transactions contemplated hereby and thereby and to perform all the terms and conditions hereof and thereof to be performed by it.

7.1.2 Guarantor is a Maryland limited liability company, duly formed, validly

existing and in good standing under the laws of its state of formation and has all requisite company power and authority to execute and deliver this Agreement and the Ancillary Agreements to which Guarantor is a party, to consummate the transactions contemplated hereby and thereby and to perform all the terms and conditions hereof and thereof to be performed by it.

7.2 Authorization of Agreement. The Purchaser Parties have taken all necessary company action to authorize the execution and delivery of this Agreement, and will take as of the Closing, all necessary company action to authorize the execution and delivery of the Ancillary Agreements to which such Purchaser Party is a party, the performance by it of all terms and conditions hereof and thereof to be performed by it and the consummation of the transactions contemplated hereby and thereby.

7.3 Enforceability. This Agreement constitutes, and the Ancillary Agreements to which such Purchaser Party is a party, upon such Purchaser Party’s execution and delivery thereof, will constitute, the legal, valid and binding obligations of such Purchaser Party, enforceable in accordance with their terms except to the extent that enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws presently or hereafter in effect relating to or affecting the enforcement of creditors’ rights generally and by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

7.4 No Violations; Consents. The execution, delivery and performance by the Purchaser Parties of this Agreement and the Ancillary Agreements to which such Purchaser Party is a party and the consummation of the transactions contemplated hereby and thereby will not (with or without the giving of Notice or the lapse of time, or both) (a) violate any provision of (i) the Certificate of Limited Partnership or Limited Partnership Agreement of Purchaser, or (ii) the Articles of Organization or Operating Agreement of Guarantor (b) except with respect to Notices and consents required to be given or obtained by Purchaser or Seller from any Governmental

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Authority in connection with the sale and change of ownership of the Purchased Assets and the Facility, violate, or require any consent, authorization or approval of, or exemption by, or filing under any provision of any contract, law, statute, rule or regulation to which Purchaser is subject, (c) violate any judgment, order, writ or decree of any court applicable to a Purchaser Party, (d) conflict with, result in a breach of, constitute a default under (or a default that might, with the passage of time or the giving of Notice or both, constitute a default), or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under any agreement, contract, commitment, lease or other instrument, document or undertaking to which a Purchaser Party is a party or (e) result in the creation or imposition of any Encumbrance upon its assets.

7.5 Legal Proceedings. There is no claim, action, suit, proceeding, investigation or inquiry pending before any Governmental Authority or, to Purchaser’s Knowledge, threatened against a Purchaser Party or any of a Purchaser Parties’ properties, assets, or operations that might prevent or delay the consummation of the transactions contemplated hereby. No Purchaser Party is a party to or subject to the provisions of any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental, regulatory or administrative official, body or authority that might affect the transaction contemplated hereby.

7.6 No Finder. No Purchaser Party has taken any action which would give to any Person a right to a finder’s fee or any type of brokerage commission in relation to, or in connection with, the transactions contemplated by this Agreement.

ARTICLE VIII. COVENANTS OF SELLER PRIOR TO AND AFTER THE CLOSING DATE

8.1 Required Actions. Between the date of this Agreement and the Closing, Seller

covenants that it will:

8.1.1 Disclosure Schedules. Within seven (7) Business Days after the date hereof, deliver to Purchaser drafts of the Schedules referenced herein to be prepared by Seller. If Purchaser objects to any provision in the Schedules, Purchaser shall be entitled to terminate this Agreement without further obligation or liability to Seller; provided, however, that Purchaser shall notify Seller in writing of its intent to terminate the Agreement pursuant to this Section 8.1.1 no later than seven (7) Business Days after its receipt of the Schedules.

8.1.2 Access to Information. Upon at least one Business Day prior Notice, give

to Purchaser and its counsel, accountants, environmental consultants, engineers, architects and other representatives, for the purpose of audit, review and copying, reasonable access, during normal business hours and without disrupting the Seller or the Business, to such of the properties (including the Real Property), books, accounts, records and personnel of the Seller as are relevant to the Purchased Assets and the Facility owned by the Seller, and furnish or otherwise make available to Purchaser all such information concerning the Purchased Assets and the Facility owned by the Seller as Purchaser may reasonably request;

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8.1.3 Maintenance of Properties. Cause the Purchased Assets, whether owned or leased, to be maintained in its current state of repair, order and condition, with reasonable wear and tear excepted;

8.1.4 Maintenance of Books and Records. Cause the Books and Records for the

Facility to be maintained in the usual, regular and ordinary manner, on a basis consistent with past practice;;

8.1.5 Operational Compliance. Use reasonable efforts to cause the Purchased

Assets and the Facility to comply in all material respects with all Legal Requirements, Permits, Provider Agreements and Licenses;

8.1.6 Performance of Obligations. Perform all the material obligations relating to the Purchased Assets and the Business the Ordinary Course of Business;

8.1.7 Approvals; Consents. Use reasonable efforts to obtain in writing as

promptly as possible any approvals and consents as required to be obtained by Seller in order to transfer the Facility and to effectuate the transactions contemplated hereby and deliver to Purchaser copies of such approvals and consents. Purchaser shall be responsible for the costs and expenses necessary to obtain Licenses, approvals and agreements from required Governmental Authorities so that Purchaser may operate the Business. Seller shall submit such documentation regarding the transactions that are provided for in this Agreement as may be requested by CMS, the Department of Health, Department of Aging, and Department of Public Welfare. Upon execution and delivery of this Agreement, Seller shall promptly:

(a) provide Purchaser with copies of all Permits, Licenses, and all

Provider Agreements; (b) notify each Governmental Agency and Third Party Payor as

required by any Legal Requirement of the pending change of ownership of the Facility and provide Purchaser’s counsel with a copy of such Notices; and

(c) provide such other Notices as required by all Legal Requirements.

Prior to sending the Notices, Seller shall provide copies to Purchaser for review and approval, which approval shall not be unreasonably withheld or delayed.

8.1.8 Notice of Material Damage. Give to Purchaser prompt Notice of any fact

that, if known on the date hereof, would have been required to be set forth or disclosed in or pursuant to this Agreement, or which would result in the breach in any material respect by Seller of any of its representations, warranties, covenants or agreements hereunder;

8.1.9 Pay Employees to Closing Date. Pay all wages, salaries and other sums

due Employees through the close of business on the Closing Date in the Ordinary Course of Business and in accordance with Seller’s normal payroll practices

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8.1.10 Employees. Take all actions required to be taken by Seller regarding Employees as provided by Section 4.3, above, as of the Closing Date;

8.1.11 Compliance with Agreement. Not undertake any course of action

inconsistent with satisfaction of the conditions applicable to it set forth in this Agreement, and use all reasonable efforts to do all such acts and take all such measures as may be reasonably necessary to comply with the representations, agreements, conditions and other provisions of this Agreement;

8.1.12 Update of Schedules. Promptly disclose to Purchaser in writing any information contained in the representations and warranties of Seller contained in Article VI or in any of the Schedules to this Agreement which to Seller’s Knowledge is no longer complete or correct and relates to matters existing on or before the Closing Date (an “Update Notice”), whereupon Purchaser shall either (a) proceed with Closing, in which case the non-compliance which is described in the Update Notice shall be deemed waived by Purchaser, or (b) terminate this Agreement, in which case, this (i) Agreement shall become null and void and of no force or effect, except for those obligations expressly stated to survive the termination of this Agreement, and (ii) the Deposit Amount shall be returned to Purchaser;

8.1.13 Closing Without Certain Third-Party Consents. Purchaser acknowledges

and agrees that it will notify Seller, on or before the expiration of the Due Diligence Period, of the Contracts to which Purchaser desires to receive assignment, as set forth on Schedule 2.1.3 Purchaser’s participation in the closing of this transaction signifies Purchaser’s agreement that Seller has reasonably cooperated with Purchaser to obtain such consents as may be necessary to achieve such assignment. With respect to each such unassigned Contract after the Closing Date, Purchaser and Seller shall continue to attempt to obtain the necessary consent to the assignment of such Contract and Purchaser shall be responsible for any costs, including but not limited to transfer or assignment fees, associated with such assignments. This Agreement does not constitute, and shall not be construed to be, an assignment of any Contract which prohibits such Contract’s assignment without the prior consent of any party thereto. All such Contracts will be performed by the Purchaser as agent for and on behalf of the Seller until their assignment and all such Contracts (and all revenue and expenses related thereto) shall inure to the benefit of Purchaser. Seller shall not take any action, or omit to take any action, that would result in a breach, violation or default under such Contract (except for the transactions contemplated by this Agreement).

8.1.14 Parcel Separation. Obtain a new parcel number for the Real Property and

provide Purchaser with evidence of the same, such that the Real Property is a separately conveyable parcel from the Retained Land and good and marketable title to the Real Property can be transferred to the REIT.

8.2 Prohibited Actions. Between the date of this Agreement and prior to the Closing

Date, neither Seller nor any of its Affiliates shall, except as otherwise agreed by Purchaser in writing:

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8.2.1 Sale of Purchased Assets. Sell, transfer, assign, lease, encumber or otherwise dispose of any of the Purchased Assets other than in the Ordinary Course of Business;

8.2.2 Real Property Changes. Change in any material respect the condition,

character, or the title of the Real Property; or, by virtue of any act or omission, cause or permit any change to occur in any matter referenced or specified in Sections 6.8, 8.1.2, and/or 8.1.5 hereof;

8.2.3 Incurrence of Material Obligations. Incur any material fixed or contingent

obligation or enter into any material Contract, agreement, commitment or other transaction or arrangement with respect to the Business, that is not the Ordinary Course of Business;

8.2.4 Incurrence of Encumbrances. Subject to lien, security interest or any other

Encumbrance, other than Permitted Encumbrances, any of the Purchased Assets that cannot be removed by Seller at or before the Closing immediately and without cost or penalty;

8.2.5 Change in Employee Compensation and Benefits. Except in the Ordinary

Course of Business or as contemplated herein, increase the rate of compensation paid, or pay any bonus, to Employee, except in the Ordinary Course of Business, or enter into any employment or consulting agreement that is not terminable at will and without penalty, or establish or adopt any new Benefit Plan or other employee benefit arrangement of any kind whatsoever covering or affecting Employees; or

8.2.6 No Termination or Modification. Terminate or materially modify any

Assumed Contract, Licenses or Permits (Schedule 2.1.3 and Schedule 2.1.4) or other authorization or agreement affecting the Purchased Assets.

8.3 Regulatory Cooperation. Seller shall use reasonable efforts to cooperate with

Purchaser before and after the Closing Date in any application of Purchaser regarding the License and for participation/enrollment of the Facility in the Medicaid and Medicare Programs.

8.4 Non-Compete. Seller shall not open and/or operate a licensed skilled nursing

facility for a period of at least ten (10) years from the Closing Date. ARTICLE IX. COVENANTS OF PURCHASER PARTIES PRIOR TO CLOSING DATE

9.1 Required Actions. Between the date of this Agreement and the Closing, the

Purchaser Parties shall, except as otherwise agreed by Seller in writing:

9.1.1 Advise of Changes. Advise Seller promptly in writing of any fact that, if known on the date hereof, would have been required to be set forth or disclosed by any Purchaser Party in or pursuant to this Agreement, or which would result in the breach by a Purchaser Party of any of its representations, warranties, covenants or agreements hereunder;

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9.1.2 Compliance with Agreement. Not undertake any course of action materially inconsistent with satisfaction of the conditions applicable to it set forth in this Agreement, and the Purchaser Parties shall use their respective reasonable efforts to do all such acts and take all such measures as may be reasonably necessary to comply with the representations, agreements, conditions and other provisions of this Agreement, including without limitation to use Purchaser’s reasonable efforts to apply for and obtain such Permits, Licenses, and approvals of Governmental Authorities as Purchaser is required to obtain to consummate the transactions contemplated by this Agreement and to own and operate the Purchased Assets and the Facility;

9.1.3 License Application. Within twenty-one (21) days of the date hereof,

apply for the License and CMS authorizations, and thereafter use commercially reasonable efforts to pursue the grant thereof;

9.1.4 Commitment Letter. Use commercially reasonable efforts to seek to

obtain the Commitment Letter by the end of the Due Diligence Period. 9.1.5 Examinations. Except as otherwise provided for as the responsibility of

Seller in this Agreement, promptly undertake and complete by January 24, 2014 (“Due Diligence Period”), all examinations, inspections, surveys, and audits, including, without limitation, title searches and surveys of the Real Property, environmental assessments and audits and engineering surveys, as Purchaser deems necessary to evaluate the financial and physical condition of the Purchased Assets or the Facility. Purchaser may give Seller Notice of its written election to rescind this Agreement for any reason whatsoever, or for no reason, on or before the end of the Due Diligence Period, which Purchaser may do in its absolute discretion without recourse (“Termination Notice). Upon the issuance of the Termination Notice, this Agreement shall terminate and neither party shall have any further obligation or liability hereunder to the other at law, in equity, or otherwise.

Commencing on the date of this Agreement and continuing until the Closing or termination of this Agreement, Seller grants Purchaser and its employees, contractors, engineers, agents and representatives, the right to enter the Real Property at any time or times, with at least one Business Day’s notice, to conduct, at Purchaser’s expense, engineering, soil tests, surveys, environmental assessments, appraisals, water and sewer availability tests, and such other tests, examinations or investigations for these and other purposes as Purchaser deems appropriate (collectively, the “Studies”) in order for Purchaser to determine, in its sole and absolute discretion, if the Real Property is acceptable to Purchaser. In the event Closing does not occur or this Agreement is terminated prior to Closing, absent a default by Seller, Purchaser shall restore the Real Property to its condition immediately prior to commencement of the Studies. Purchaser and Guarantor shall jointly and severally indemnify and hold harmless the Seller from any actual damage to the Real Property or the Purchased Assets directly and solely caused by Purchaser’s willful misconduct or negligence under this Section 9.1.5. To assist Purchaser in the conduct of the Studies, Seller shall provide to Purchaser or Purchaser’s designee(s), within five (5) Business Days of the date hereof complete and accurate copies of the

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following (collectively referred to herein as the “Documents”) with respect to the Real Property or any portion thereto, to the extent such Documents are in the possession or control of Seller or Seller’s employees, agents, representatives, engineers or consultants:

(a) The deed by which Seller acquired title to the Real Property;

(b) Seller’s title insurance including copies of all exceptions, title reports, title policies and attorneys’ title certifications;

(c) Permits, licenses, certificates of occupancy, and applications for same;

(d) Recorded subdivision plats, unrecorded or drafts of subdivision plats, surveys,

surveyor’s reports and surveyor’s certifications;

(e) Environmental reports including, but not limited to Phase I and Phase II assessments, as well as incident reports, remediation reports, tank removal reports and closure reports;

(f) Site plans, engineering drawings, as-built drawings for any improvements, and soil studies;

(g) Reports and surveys relating to topography and grading;

(h) Information, reports, and authorizations relating to the availability of utilities, sewer, water, existing storm water management and wetlands;

(i) Information, reports, and authorizations regarding wells, septic systems, and/or private sanitary systems, if any;

(j) Studies or reports regarding the condition of improvements, including, but not limited to roofing reports or structural analyses;

(k) Recorded and unrecorded easements, private restrictions or covenants, and evidence that the Real Property is or is not in compliance therewith;

(l) Any conditions of development imposed upon the Real Property by Governmental Authorities or by Legal Requirements;

(m) Tax bills for the past three (3) years and any notices or letters addressing the assessed value of the Real Property or any actual or potential reassessment or change in the assessed value of the Real Property;

(n) Public or private work agreements currently in effect;

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(o) Evidence of any security or bonding with respect to any public or private work agreements currently in effect;

(p) Any leases, ground leases use or occupancy agreements, licenses, concession arrangements, management and/or service agreements or any similar leases or agreements;

(q) Subdivision approvals and special variances;

(r) Evidence of zoning;

(s) Seller’s insurance policies with respect to the Property; and

(t) Within five (5) days after Purchaser’s specific written request therefor, any such other information, agreements or documents pertaining to the Real Property, or reasonably requested by Purchaser or those recited in (a) to (r) above, which Seller becomes aware of between the Effective Date and Closing.

9.1.6 Seller’s Employees. Take all actions required to be taken by Purchaser

regarding Retained Employees as provided by Section 4.3, above, as of the Closing Date; and 9.1.7 Cooperation. Cooperate with Seller and its agents in connection with the

transfer of all Permits, Provider Agreements, and Licenses necessary to operate the Facility as of the Closing Date.

9.1.8 Investigation. The Purchaser Parties covenant and agree to provide Notice

to Seller of any information discovered during the Due Diligence Period (or otherwise) that would serve to make any representation or warranty contained herein untrue. In no event shall the Seller have any liability under Section 14 hereof to any Purchaser Indemnitee with respect to a breach of representation, warranty or covenant under this Agreement to the extent that the Purchaser Parties (or any of them) knew of such breach, or the facts or circumstances giving rise to such breach, as of the Closing Date and failed to disclose same to Seller prior to the Closing.

ARTICLE X. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER

The obligation of Purchaser to proceed with the Closing is subject to the fulfillment prior to the applicable specified date or at the time of Closing of the following conditions with respect to the Seller, any one or more of which may be waived in whole or in part by Purchaser:

10.1 Accuracy of Representations and Warranties. The representations and warranties

of Seller contained in this Agreement and the Ancillary Agreements to which the Seller is a party shall have been true and correct on the date hereof and shall be true and correct in all material respects on and as of the Closing with the same force and effect as though made on and as of the

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Closing except as the same may be modified pursuant to Section 8.1.9 or to the extent such representation were made as of a specific date.

10.2 Performance of Agreement. The Seller shall have performed in all material respects all obligations and agreements and complied in all material respects with all covenants and conditions contained in this Agreement and the Ancillary Agreements to which the Seller is a party to be performed or complied with by it at or prior to the Closing.

10.3 Seller’s Certificate. Purchaser shall have received a certificate from the Seller, dated as of the Closing, reasonably satisfactory in form and substance to Purchaser and its counsel, certifying as to the matters specified in Section 10.1 and Section 10.2 hereof. The matters set forth in such certificate shall constitute representations and warranties of the Seller hereunder made as of the Closing Date.

10.4 Certificate. Purchaser shall have received a certificate dated as of the Closing, of an authorized representative of the Seller with respect to:

(a) documentation reasonably satisfactory to Purchaser of the Board of Commissioners of the County of Montgomery authorizing the execution and delivery of this Agreement and the Ancillary Agreements to which the Seller is a party and the performance by the Seller of the transactions contemplated hereby and thereby; and

(b) the incumbency and specimen signature of each representative of the

Seller executing this Agreement, the certificate referred to in Section 10.3 and the Ancillary Agreements to which the Seller is a party.\

10.5 Injunction. On Closing, there shall be no injunction, writ, preliminary restraining

order or any order of any nature in effect issued by a court of competent jurisdiction directing that the transactions provided for herein, or any of them, not be consummated as herein provided and no suit, action, investigation, inquiry or other legal or administrative proceeding by any Governmental Authority or other Person shall have been instituted or Notice of threatened which questions the validity or legality of the transactions contemplated hereby or which if successfully asserted could reasonably be expected to have a Material Adverse Change on the conduct of the Business.

10.6 Actions and Proceedings. All company actions, proceedings, instruments and

documents required to carry out the transactions contemplated by this Agreement or incidental hereto and all other related legal matters shall be reasonably satisfactory to counsel for Purchaser, and such counsel shall have been furnished with such certified copies of such company actions and proceedings and such other instruments and documents as it shall have reasonably requested

10.7 Consents. Any third-party consents, approvals, authorizations, License or Permits

(including, without limitation, those required by any Governmental Authorities and the approval of the transactions under this Agreement) necessary for the conveyance of the Purchased Assets or valid consummation of the transactions contemplated hereby and the Purchaser’s operation of

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the Facility shall have been obtained, or Purchaser has received reasonable assurances that they will be able to be obtained after the Closing, including but not limited to the Department of Health, Department of Public Welfare, and Department of Aging

10.8 Supervening Law. No Governmental Authority (or their representatives) which

administers Medicare, any other payor, or any other federal, state or local government or agency has passed, issued or promulgated any law, rules, regulation, standard or interpretation, including standards and interpretations of existing law, or any court of competent jurisdiction rendered any decision or issued any other pronouncement, which could reasonably be expected to result in a Material Adverse Change in the Third Party Payor Programs as applicable to the Facility or which could reasonably be expected to cause a Material Adverse Change in the current operations of the Facility.

10.9 No Material Adverse Change. There has been no Material Adverse Change regarding the Purchased Assets or the Facility after the date of this Agreement.

10.10 Absence of Investigation. As of the Closing, there are no governmental surveys, inspections, audits, reviews, investigations or comparable governmental actions currently being undertaken of the Business or at the Facility (other than routine audits of the cost reports of the Business or routine surveys of the Facility).

10.11 Closing Documents. Purchaser shall have received or waived the right to receive

the Closing Documents, which shall be in form and substance satisfactory to Purchaser in its reasonable discretion.

10.12 Other Deliveries. Purchaser shall have received with respect to the Real Property:

10.12.1 Title Insurance.

(a) As evidence of title, Purchaser shall, at the sole cost and expense of Purchaser, obtain within twenty-five (25) days after the date of this Agreement a commitment from a title insurer (the "Title Company") to issue to Purchaser, at the Closing, its ALTA Owners title insurance policy, without standard exceptions and with such endorsements as Purchaser may reasonably require in the amount of the Purchase Price, insuring fee simple title to the Real Property to be in good and marketable condition (the “Commitment”). At Purchaser’s option, Purchaser may also order a new survey of the Real Property (the “Survey”)

(b) If the Commitment or Survey contains exceptions or other matters

which are not acceptable to Purchaser (“Impermissible Encumbrances”), Purchaser shall provide to Seller written objections thereto within fifteen (15) days after the date of receipt of the Commitment or Survey, together with all underlying pertinent documents. Upon receipt of such notice, Seller shall have fifteen (15) days from the time that it is notified of the particular defect(s) claimed to:

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(i) advise Purchaser in writing that Seller is unwilling or unable to remedy such objection(s); or

(ii) advise Purchaser that Seller will take such steps as may be reasonably necessary on or before ten (10) days prior to Closing to allow Purchaser to obtain a revised title commitment evidencing that such defect(s) had been or will be remedied and/or insured in a manner reasonably satisfactory to Purchaser, in its sole discretion.

If Seller is unwilling or unable to obtain such revised title commitment within said fifteen (15) day period, within ten (10) days after the expiration of such fifteen (15) day period, Purchaser shall have the option:

(a) to proceed with the purchase of the Purchased Assets, in which event the objected-to matters shall be deemed Permitted Encumbrances; or

(b) to terminate this Agreement except those obligations expressly surviving the termination of this Agreement, in which event any Deposit shall be returned to Purchaser.

If Purchaser fails to timely make such election, Purchaser shall be deemed to have elected to proceed with the purchase of the Purchased Assets and all exceptions set out in the Commitment and Survey shall be deemed Permitted Encumbrances. If Purchaser elects or is deemed to have elected to proceed with the purchase of the Purchased Assets, the items on the Commitment or Survey objected to shall be Permitted Encumbrances except to the extent otherwise agreed to in an executed amendment to this Agreement. In addition, all items on the title commitment not objected to by Purchaser shall be Permitted Encumbrances.

10.12.2 Affidavits. ALTA extended coverage statements/affidavits in form

and substance as specified in Section 5.2.17 hereof or as otherwise requested by the REIT or the title insurer.

10.13 Commitment for Financing. Prior to the expiration of the Due Diligence Period,

Purchaser shall have obtained a legally binding commitment from a financial institution or a real estate investment trust (including the REIT) in form and substance reasonably acceptable to Purchaser, and Purchaser shall be able to consummate the Closing on financing terms and conditions consistent with such commitment letter (the “Commitment Letter”).

10.14 Parcel Number. Seller’s compliance with Section 8.1.13 hereof.

ARTICLE XI CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

The obligation of Seller to proceed with the Closing under this Agreement is subject to the fulfillment prior to the specified date or at the time of Closing of the following conditions with respect to Purchaser, any one or more which may be waived in whole or in part by Seller:

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11.1 Accuracy of Representations and Warranties. The representations and warranties of the Purchaser Parties contained in this Agreement shall have been true and correct on the date hereof and shall be true and correct on and as of the Closing with the same force and effect as though made on and as of the Closing.

11.2 Performance of Agreement. The Purchaser Parties shall have performed in all material respects all obligations and agreements and complied in all material respects with all covenants and conditions contained in this Agreement to be performed or complied with by it at or prior to the Closing.

11.3 Purchaser Parties’ Certificate.

11.3.1 Seller shall have received a certificate from Purchaser, dated as of the Closing, reasonably satisfactory in form and substance to Seller and its counsel, certifying as to the fulfillment of all matters specified in Section 11.1 and Section 11.2 hereof. The matters set forth in such certificate shall constitute representations and warranties of Purchaser hereunder.

11.3.2 Seller shall have received a certificate from Guarantor, dated as of the

Closing, reasonably satisfactory in form and substance to Seller and its counsel, certifying as to the fulfillment of all matters specified in Section 11.1 and Section 11.2 hereof. The matters set forth in such certificate shall constitute representations and warranties of Guarantor hereunder.

11.4 Officer’s Certificate. Seller shall have received a certificate, dated as of the Closing, of each of (a) the General Partner of the Purchaser and (b) the Manager of Guarantor, as applicable:

(i) with respect to Purchaser, the resolutions of the general partner (or similar)

of Purchaser authorizing the execution and delivery of this Agreement and the Ancillary Agreements to which Purchaser is a party and the performance by Purchaser of the transactions contemplated hereby and thereby

(ii) with respect to Guarantor, the resolutions of the managers or members of

Guarantor authorizing the execution and delivery of this Agreement and the Ancillary Agreements to which Guarantor is a party and the performance by Purchaser of the transactions contemplated hereby and thereby; and

(iii) the incumbency and specimen signature of each officer or representative of

each of Guarantor and Purchaser executing this Agreement, the certificate referred to in Section 11.3 and the Ancillary Agreements to which Purchaser or Guarantor is a party.

11.5 Commitment for Financing. Purchaser shall have provided to Seller the Commitment Letter.

11.6 Injunction. On the Closing, there shall be no injunction, writ, preliminary

restraining order or any order of any nature in effect issued by a court of competent jurisdiction

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directing that the transactions provided for herein, or any of them, not be consummated as herein provided and no suit, action, investigation, inquiry or other legal or administrative proceeding by any Governmental Authority or other Person shall have been instituted, threatened or anticipated which questions the validity or legality of the transactions contemplated hereby or which if successfully asserted would have a Material Adverse Change on the conduct of the Facility or impose any additional financial obligation on, or require the surrender of any material right of Seller.

11.7 Actions and Proceedings. All company actions, proceedings, instruments and documents required to carry out the transactions contemplated by this Agreement or incidental hereto and all other related legal matters shall be reasonably satisfactory to counsel for Seller, and such counsel shall have been furnished with such certified copies of such company actions and proceedings and such other instruments and documents as it shall have reasonably requested, including, without limitation:

(a) certificates of the appropriate public officials to the effect that the

Purchaser is a validly existing limited partnership and Guarantor is a validly existing limited liability company, respectively, in good standing in its state of formation as of a date not more than ten (10) days prior to the Closing;

(b) incumbency and specimen signature certificates dated as of the

Closing, signed by an officer of each of the Purchaser Parties and certified by its Secretary; and

(c) true and correct copies of (i) the Certificate of Limited Partnership of Purchaser and (ii) the Limited Partnership Agreement of Purchaser as of the Closing, certified by the General Partner of Purchaser, and (i) the Articles of Organization of Guarantor and (ii) the Operating Agreement of Guarantor as of the Closing, certified by the Manager of Guarantor.

11.8 Consents. Any third-party consents, approvals, authorizations, License or Permits

(including, without limitation, those required by any Governmental Authorities) necessary for the conveyance of the Purchased Assets or valid consummation of the transactions contemplated hereby shall have been obtained, or Purchaser has received reasonable assurances that they will be able to be obtained within a reasonable period after the Closing including but not limited to the Department of Health, Department of Public Welfare, and Department of Aging.

11.9 Closing Documents. Seller shall have received or waived the right to receive the Closing Documents required to be delivered by any Purchaser Party, which shall be in form and substance satisfactory to Seller in its reasonable discretion.

11.10 Material Adverse Change. No Purchaser Party shall have suffered a Purchaser

Material Adverse Change.

ARTICLE XII. OBLIGATIONS FROM AND AFTER THE CLOSING DATE

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12.1 Transition of Employees. From and after the Closing Date, Purchaser and Seller shall cooperate to ensure an orderly transition of the Employees who accept employment with Purchaser.

12.2 Certain Transitional Matters.

12.2.1 Transfer of Assets. Seller agrees that Purchaser, from and after the Closing Date, shall have the right and authority to collect for Purchaser’s own account the proceeds generated by the post-Closing operation of the Purchased Assets which shall be transferred to Purchaser as provided herein.

12.2.2 Seller’s Remittance of Funds. From and after the Closing Date, the Seller

shall, within five (5) business days, transfer and deliver to Purchaser any cash or other property, if any, that the Seller may receive related to the operation of the Purchased Assets for the period from and after the Closing Date other than the Excluded Assets.

12.2.3 Purchaser’s Remittance of Funds. From and after the Closing Date, Purchaser shall, within five (5) business days, transfer and deliver to Seller any cash or other property, if any, that Purchaser may receive related to the Excluded Assets, including without limitation payments received that related to the operation of the Facility prior to the Closing Date.

12.2.4 Assumed Liabilities Controlled by Purchaser. From and after the Closing Date, Purchaser shall have complete control over the payment, settlement or other disposition of, or any dispute involving any Assumed Liability, and Purchaser shall have the right to conduct and control all negotiations and proceedings with respect thereto. The Seller shall notify Purchaser promptly of any claim made with respect to any Assumed Liability and shall not, except with the prior written consent of Purchaser, voluntarily make any payment of, or settle or offer to settle, or consent to any compromise with respect to, any such Assumed Liability. The Seller shall reasonably cooperate with Purchaser in connection with any negotiations or proceedings involving any Assumed Liability.

12.3 Excluded Assets and Excluded Liabilities; Misdirected Payments.

(a) Any asset (including payments of Accounts Receivable for the Facility) or any liability, all other remittances, and all mail and other communications that relates to an Excluded Asset and that is or comes into the possession, custody or control of Purchaser (or its successors-in-interest or assigns, or its respective affiliates) shall forthwith be transferred, assigned or conveyed by Purchaser (or its respective successors-in-interest or assigns and its respective affiliates) to Seller. Such communications shall include Notices of Program Reimbursement or similar Notices of payment settlements, payment demands or other documents from the Medicare Program, a Third Party Payor or Governmental Authority. Without limiting the generality of the foregoing, and subject to the terms of this Agreement, to the extent there are any misdirected funds forwarded to Purchaser (or its successors-in-interest or assigns, or its respective affiliates) by any third parties, which misdirected funds are paid in respect of the

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performance of services or sale of goods by or on behalf of the Facility prior to the Closing Date, Purchaser shall remit such misdirected funds, or cause such misdirected funds to be remitted, to Seller within ten (10) business days after receipt thereof, to an account(s) designated by Seller. Until such transfer, assignment and conveyance, Purchaser (and its respective successors-in-interest and assigns and its respective affiliates) shall not have any right, title or interest in or obligation or responsibility with respect to such asset or liability except that Purchaser shall hold such asset in trust for the benefit of Seller.

(b) Any asset or any liability, all other remittances, and all mail and other

communications that are determined by this Agreement, to be or otherwise relate to the assets purchased by Purchaser pursuant to this Agreement, and that is or comes into the possession, custody or control of Seller (or its successors-in-interest or assigns, or its respective affiliates) shall forthwith be transferred, assigned or conveyed by Seller (or its respective successors-in-interest or assigns and its respective affiliates) to Purchaser. Without limiting the generality of the foregoing, and subject to the terms of this Agreement, to the extent there are any misdirected funds forwarded to Seller (or its successors-in-interest or assigns, or its respective affiliates) by any third parties, which misdirected funds are paid in respect of the performance of services by or on behalf of the Facility from and after the Closing Date, Seller shall remit such misdirected funds, or cause such remitted funds to be remitted, to Purchaser within ten (10) business days after receipt thereof, to an account(s) designated by Purchaser. Until such transfer, assignment and conveyance, Seller (and its respective successors-in-interest and assigns and its respective affiliates) shall not have any right, title or interest in or obligation or responsibility with respect to such asset except that Seller shall hold such asset in trust for the benefit of Purchaser. Seller shall have no right to set off such funds against other obligations asserted by Seller to be owed by Purchaser hereunder or otherwise.

(c) For any open accounts, Purchaser shall remit to Seller any collections of

Accounts Receivable received for services rendered by Seller prior to the Closing Date, provided that the collections received matched an invoice pertaining to services provided prior to the Closing Date. Seller shall remit to Purchaser any collections of Accounts Receivable for services rendered by Purchaser after the Closing Date which are inadvertently directed to Seller, provided that the collections received match an invoice pertaining to such services. If there is any account debtor who is indebted to both Seller and Purchaser, the amounts shall be applied in the order of the oldest invoice.

12.4 Transition Medicare Payments and Treatment of Payments Received for Patients.

With respect to reimbursements and charges for items and services rendered by Purchaser after the Closing Date that are subject to reimbursement by the Medicare Program (the “Transitional Period Invoices”), and until such time as Purchaser is certified as holder of the Seller’s current Medicare Provider Number by CMS, Purchaser may bill the Medicare Program using the applicable Medicare Provider Number for the Facility (the “Provider Number”) in full compliance with the conditions for participation in the government programs and other Third Party Payor programs. All such receipts shall continue to be paid into Seller’s account until such time as Purchaser is certified as the holder of Seller’s current Medicare Provider Number by CMS. Absent written consent of Seller, eighteen (18) months after the Closing Date, Purchaser’s

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right to use any Provider Number shall terminate if Purchaser has failed to obtain certification from CMS that it is the holder of that Provider Number; provided, however, that no such termination shall alter the Seller’s or Purchaser’s rights with respect to payment pursuant to this Section 12.4.

12.5 Indemnification by Purchaser for Transition Period.

12.5.1 In addition to its indemnification obligations set forth herein, Purchaser and Guarantor shall promptly and fully keep and hold Seller, and the officers, directors, employees, and agents thereof (“Seller Indemnified Parties”) forever harmless from and shall, jointly and severally, indemnify and defend Seller Indemnified Parties from and against, without regard to materiality, any and all obligations, judgments, fines, civil money penalties, sanctions, liabilities, penalties, claims, losses, costs, demands, damages, expenses, liens, and encumbrances, including reasonable attorneys’ fees, whether civil or criminal, direct or consequential and no matter how arising, in any way related to, connected with or arising or resulting from Purchaser’s actions or inactions with respect to Purchaser’s operation of the Facility after the Closing Date, and the Transitional Period Invoices (including any billings to the Medicare Program after the Closing Date using the Seller’s Medicare Provider Numbers.) Purchaser shall, as of the date of Closing, bear and be responsible for any and all future costs related to the operation of the Facility, including such costs during the Transition Period.

12.5.2 Seller shall promptly notify Purchaser in the event that any claim is made

against Seller for which Purchaser and Guarantor have agreed to indemnify Seller as set forth in this Agreement, and Purchaser shall promptly thereupon undertake to defend such claim and hold Seller free and harmless therefrom. Once the defense thereof is assumed by the Purchaser, Purchaser shall keep Seller advised of all developments in the defense thereof and in any related litigation, and Seller shall be entitled at all times to participate in the defense thereof at its own expense. If Purchaser fails to discharge or undertake to defend against any such liability within ten (10) business days after notice thereof, then Seller may assume the defense and settle the same at Purchaser’s expense and shall provide notice of the terms thereof to Purchaser within ten (10) business days after settlement. Purchaser’s liability shall be conclusively established by such settlement (the amount of such liability shall include, but shall not be limited to, the settlement consideration and the reasonable attorneys’ fees, costs and expenses incurred by Seller in effecting such settlement). Purchaser’s obligations and liabilities hereunder shall be reduced to the extent, if any, that failure or delay of Seller to notify Purchaser of a claim hereunder causes material financial damage to Purchaser. This indemnity shall (i) continue to be fully effective and enforceable until the Purchaser is certified as the holder of the Medicare Provider Numbers for the Facility by CMS and thereafter for the applicable statute of limitations period; provided, however, that if there is an outstanding notice of a claim at the end of the applicable period whether pursuant to a statute of limitations or the terms of this Agreement, such applicable period shall not end in respect of such claim until such claim is resolved, and (ii) not foreclose any other rights or remedies of Seller or its assignees that it may have under law or under this Agreement to enforce the provisions of this Agreement.

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12.6 Access to Parties’ Records. To the extent required by any applicable Legal Requirement, the Parties agree to make available to the Comptroller General of the United States, the Department of Health and Human Services and their duly authorized representatives, the books, documents and records of the Parties and such other information as may be required by the Comptroller General or Secretary of Health and Human Services to verify the nature and extent of the costs of services provided by the Parties under the Contracts in connection with the Facility. If the Parties carry out the duties of any Contract through a subcontract worth $10,000 or more over a twelve (12) month period with a related organization, the subcontract will also contain as access clause to permit access by the Secretary, Comptroller General and their representatives to the related organization’s books and records.

12.7 Preservation and Access to Records After the Closing Date.

(a) From and after the Closing Date, to the extent allowed by Legal

Requirements, Purchaser shall, in the Ordinary Course of Business and as required by law, keep and preserve all medical records and other Books and Records of the Facility existing as of such Closing and which constitute a part of the Purchased Assets delivered to Purchaser at such Closing. Purchaser acknowledges that as a result of entering into this Agreement and operating the Facility it will gain access to resident and other information which is subject to laws, rules and regulations concerning confidentiality. Purchaser agrees to abide by any such laws, rules and regulations relating to the confidential information it acquires. Purchaser agrees to maintain the resident records delivered to Purchaser at the Closing in accordance with applicable law (including, if applicable, Section 1861 (v)(I)(l) of the Social Security Act (42 U.S.C. §1395(v)(1)(1)), and requirements of relevant insurance carriers, all in a manner consistent with the maintenance of resident records generated at the Facility after the Closing. Upon reasonable Notice, during normal business hours, at the sole cost and expense of Seller (unless otherwise agreed upon by the Parties) and upon Purchaser's receipt of required consents and authorizations, Purchaser will afford to the representatives of Seller, including its counsel and accountants, full and complete access to, and copies of, (or, if requested by Seller, Purchaser will make copies at Seller’s expense) the records transferred to Purchaser at such Closing (including, without limitation, access to resident records in respect of residents of the Facility as of or prior to the Closing Date). Upon reasonable Notice, during normal business hours and at the sole cost and expense of Seller (unless otherwise agreed upon by the Parties), Purchaser shall also make its officers and employees available to Seller at reasonable times and places after the Closing. Any access to the Facility, the records or Purchaser’s personnel granted to Seller in this Agreement shall be upon the condition that any such access not materially interfere with the business operations of Purchaser.

(b) In connection with (i) the transition of the Facility pursuant to the

transaction under this Agreement, and (ii) Seller’s rights to the Excluded Assets, including the Accounts Receivable of the Facility prior to the Closing Date, Purchaser shall after the Closing Date give Seller and its representatives access during normal business hours to Purchaser’s books, accounts and records and all other relevant documents and information with respect to the assets, liabilities and business of the Facility as representatives of Seller may from time to time reasonably request, all in such manner as not to unreasonably interfere with Purchaser’s business

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or with the operations of the Facility. Purchaser shall also provide reasonable access to its employees as reasonably required by Seller and its counsel, all in such manner as not to unreasonably interfere with Purchaser’s business or with the operations of the Facility. Seller shall coordinate its activities contemplated by Article XII through such person as is designated by Seller through written notification to Purchaser. Such documents and other materials shall be copied by Purchaser for Seller at Seller’s expense. Such documents and other materials shall be copied by Purchaser for Seller at Seller’s expense (unless originals are required to be disclosed pursuant to legal, court or government action or proceeding).

(c) Purchaser and its representatives shall be given access by Seller during

normal business hours, to the extent reasonably needed by Purchaser for business purposes, to all documents, records, correspondence, work papers, and other documents retained by Seller pertaining to any of the Purchased Assets or with respect to the operation of the Facility on or prior to the Closing Date (including accounts receivable, cost reports, and resident and medical records of persons who are not residents of the Facility at the Closing Date), all in such manner as to not interfere unreasonably with Seller’s business. Such documents and other materials shall be copied by Seller for Purchaser at Purchaser’s expense (unless originals are required to be disclosed pursuant to legal, court or government action or proceeding).

12.8 Reproduction of Transaction Documents. This Agreement and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) the documents delivered at the Closing, and (c) financial statements, certificates and other information previously or hereafter furnished to Seller or to Purchaser, may be reproduced by Seller and by Purchaser by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process and Seller and Purchaser may destroy any original documents so reproduced. Seller and Purchaser agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial, arbitral or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by Seller or Purchaser in the Ordinary Course of Business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

12.9 Capex Commitment. Purchaser covenants and agrees to expend funds in its

reasonable discretion for capital expenditures for the benefit and improvement of the Business over five (5) years following the Closing Date in an amount up to Fifteen Million Dollars ($15,000,000).

12.10 Further Assurances.

(a) From and after the Closing Date, the Seller shall, at the written request of

Purchaser, execute, acknowledge and deliver to Purchaser, without further consideration, all such further assignments, conveyances, endorsements, deeds, special powers of attorney, consents and other documents, and take such other action within the scope of this Agreement, as Purchaser may reasonably request (i) to transfer to and vest in Purchaser, and protect its rights, title and interest in, all the Purchased Assets and (ii) otherwise to consummate the transactions

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contemplated by this Agreement. In addition, from and after the Closing Date, the Seller shall afford Purchaser and its attorneys, accountants and other representatives access, during normal business hours, and following written request, to any Books and Records relating to the Business that the Seller may retain as may reasonably be required in connection with the preparation of financial information or Tax Returns of Purchaser.

(b) From and after the Closing Date, the Purchaser shall, at the request of

Seller, execute, acknowledge and deliver to the Seller, without further consideration, all such further assignments, conveyances, endorsements, special powers of attorney, consents and other documents, and take such other action within the scope of this Agreement, as Seller may reasonably request to consummate the transactions contemplated by this Agreement.

12.11 Cooperation on Tax Matters. Following the Closing, the Parties shall cooperate fully with each other and shall make available to the other, as reasonably requested and at the expense of the requesting Party, and to any taxing authority, all information, records or documents relating to Tax liabilities or potential Tax liabilities of Seller for all periods prior to the Closing Date and any information which may be relevant to determine the amount payable under this Agreement, and shall preserve all such information, records and documents (to the extent a part of the Purchased Assets delivered to Purchaser at the closings) at least until the expiration of any applicable statute of limitations or extensions thereof.

12.12 Litigation Cooperation. After the Closing, upon prior reasonable written request, and subject to any conflict of interest between Seller and Purchaser, each Party shall cooperate with the other, at the requesting Party’s expense, in furnishing information, testimony and other assistance in connection with any actions, tax or cost-report audits, proceedings, arrangements or disputes involving either of the Parties (other than in connection with disputes between the Parties) with respect to the Business or the Purchased Assets, including arranging discussions with, and the calling as witnesses of, officers, directors, employees, agents and representatives of Seller or Purchaser.

12.13 Cost-Report Matters. Seller shall prepare and timely file all cost reports with respect to the Facility relating to the periods ending on or prior to Closing Date, including those relating to Medicare, Medicaid, and other third-party payors that settle on a cost-report basis (the “Seller Cost Reports”). As part of compliance with this provision, Seller shall prepare and timely file all termination cost reports with respect to the Facility relating to the periods ending on or prior to Closing Date (“Termination Cost Reports”). The Termination Cost Reports shall be filed by Seller in a manner consistent with (a) prior cost reports filed by Seller with respect to the Facility, and (b) applicable laws, rules and regulations.

12.14 Nursing Facility Provider Supplemental and Assessment Payments.

(a) Supplemental Payments Received by Facility. The parties acknowledge that a supplemental payment received by the Facility under the Nursing Facility Provider Assessment Program in a given calendar quarter is calculated by utilizing Medical Assistance days of care from the preceding calendar quarter, and as such, is an account receivable that

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accrues as of the calendar quarter in which said Medical Assistance days of care are actually provided. Purchaser and Seller are entitled to the supplemental payments accruing during their respective periods of ownership of the Facility. If Purchaser receives a supplemental payment that accrued in whole or in part during Seller’s period of ownership, then Purchaser shall promptly pay to Seller the portion of the supplemental payment accruing during Seller’s period of ownership. Seller’s share of the supplemental payment shall be calculated by multiplying the applicable assessment rate by the number of Medical Assistance days of care that it provided to Facility’s residents during the period in question.

(b) Assessment Payments Made by Facility. The parties acknowledge that a

Quarterly Assessment Payment (“QAP”) is calculated based on the number of assessment days accruing during a calendar quarter preceding the calendar quarter in which the assessment is paid. It is the obligation of the owner of the Facility at the time the Resident Day Reporting Form and the QAP are due to submit the form and make the payment. Each Party shall be liable for such portion of the QAP based on the number of assessment days occurring during their respective periods of ownership of the Facility. If Purchaser makes a QAP which was calculated by utilizing assessment days during a calendar quarter in which the transfer of ownership occurred, then Purchaser shall be entitled to receive reimbursement from Seller, which shall be calculated by multiplying the applicable assessment rate by the number of assessment days occurring during Seller’s period of ownership. Seller shall promptly reimburse Purchaser upon written request of the Purchaser after such QAP has been made.

ARTICLE XIII. TERMINATION

13.1 Termination of Agreement. This Agreement may be terminated:

(a) by the mutual consent of Seller and Purchaser; (b) by Purchaser upon Notice to Seller if any of the conditions set forth in

Article X hereof have not been satisfied or become impossible to satisfy by the Closing Date; (c) by Seller upon Notice to Purchaser if any of the conditions set forth in

Article XI hereof have not been satisfied or become impossible to satisfy by the Closing Date; (d) by Seller if Purchaser materially breaches or fails to fulfill its material

obligations under this Agreement, which failure continues and remains uncured for thirty (30) consecutive calendar days after Seller gives Notice of such failure to Purchaser;

(e) by Seller, immediately, if Purchaser (i) breaches the covenant set forth in

Section 9.1.3 or (ii) fails to provide Seller with the Commitment Letter as required by Section 10.13 on or prior to the expiration of the Due Diligence Period;

(f) by Purchaser if Seller materially breaches or fails to fulfill its material

obligations under this Agreement, which failure continues and remains uncured for thirty (30) consecutive calendar days after Purchaser gives Notice of such failure to Seller;

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(g) by Purchaser or Seller if the Closing has not taken place on or before the

Closing Date, or has not been extended upon mutual agreement of the Parties; provided that no Party that is then in material breach of any of its obligations hereunder shall have the right to terminate under this subsection;

(h) by Purchaser upon Notice to Seller as set forth in Section 9.1.5; and (i) by either party if the Closing has not occurred by the Drop Dead Date.

13.2 Remedies. If this Agreement is terminated pursuant to Sections 13.1(a), (b), (c),

(g), (h) or (i), such termination shall be without liability of any Party. If Seller terminates this Agreement pursuant to Section 13.1(c) (other than as a result of a termination arising from the failure to satisfy the conditions in Section 11.6), (d) or (e) hereof, then Seller shall be paid the Deposit Amount from the Escrow Agent as liquidated damages; in all other cases, the Deposit Amount shall be returned to the Purchaser. At the Closing, the Deposit Amount shall be credited towards the Closing Payment as set forth in Section 3.1.1.

13.3 Destruction of Assets/Risk of Loss. The risk of loss or damage to any of the

Purchased Assets shall remain with Seller until the Closing Date. Seller shall maintain its insurance policies or self-insurance coverage with respect such assets through the Closing Date. In furtherance thereof, if Real Property or any part thereof is destroyed or damaged prior to the Closing Date and the fair market value of such destruction or damage:

(a) does not exceed One Hundred Thousand Dollars ($100,000), the obligations under this Agreement of the parties hereto shall remain in effect and the Closing shall proceed as scheduled; provided, however, Seller shall assign to Purchaser all of Seller’s right, title and interest in and to any insurance proceeds payable on account of such destruction or damage; or

(b) exceeds One Hundred Thousand Dollars ($100,000), Purchaser may elect to (i) proceed to Closing as scheduled and receive an assignment of Seller’s right, title and interest in and to any insurance proceeds payable on account of such destruction or damage or (ii) terminate this Agreement.

ARTICLE XIV. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

14.1 Survival of Representations and Warranties. All representations and warranties of

the Parties set forth in this Agreement shall survive for a period of eighteen months (18) from the Closing Date; provided that Seller’s obligations for payment of Retained Liabilities and Purchaser’s obligations with respect to Assumed Liabilities shall survive Closing for a period equal to the applicable statute of limitation; provided, further, that all covenants, agreements, undertakings and indemnities shall survive for the periods set forth herein and applicable thereto.

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14.2 Indemnification by Seller. Seller shall indemnify, defend, save and hold Purchaser, Guarantor and their respective members, managers, officers, directors, employees, and agents and Affiliates and their respective successors and assigns, as the case may be (collectively, “Purchaser Indemnitees”) harmless from and against all demands, claims, allegations, assertions, actions or causes of action, assessments, losses, damages, deficiencies, liabilities, costs and expenses (including reasonable legal fees, interest, penalties, and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing; collectively, “Purchaser Damages”) asserted against, imposed upon, resulting to, required to be paid by, or incurred by any Purchaser Indemnitees, directly or indirectly, if and to the extent any such Purchaser Damages arise out of, or result from: (a) a breach of any representation or warranty made by Seller in this Agreement; (b) a breach or nonfulfillment of any covenant or agreement made by Seller in or pursuant to this Agreement and in any Ancillary Agreement to which the Seller is or is to become a party; or (c) any Retained Liability. Purchaser’s Damages shall not include any special or punitive damages.

14.2.1 Certain Qualification. Notwithstanding anything to the contrary contained

herein, the Seller shall have no obligation to indemnify Purchaser Indemnitees under Section 14.2(a): (a) until and unless the obligation of the Seller to indemnify the Purchaser Indemnitees pursuant to Section 14.2(a) exceeds Ten Thousand Dollars ($10,000.00) (the “Basket”); in which case Seller shall indemnify Purchaser Indemnitees for all Purchaser Damages in excess of the Basket, or (b) for any Purchaser Damages pursuant to a breach of Section 14.2(a) in excess of an amount equal to the Post-Closing Escrow Amount in the aggregate.

14.2.2 The qualifications set forth in Section 14.2.1 shall not apply to the Seller’s

indemnification of Purchaser under Sections 14.2(b) or (c) or for actions related to fraud. 14.2.3 Tort Claims Act. The Parties acknowledge that Seller enjoys certain

protections under the Tort Claims Act and nothing in this Agreement modifies or amend such protections.

14.3 Indemnification by Purchaser and Guarantor. Purchaser and Guarantor shall,

jointly and severally, indemnify, defend, save and hold Seller and its respective officers, directors, shareholders, members, employees, agents and Affiliates, and their respective successors and assigns, as the case may be (collectively, “Seller Indemnitees”) harmless from and against any and all demands, claims, actions or causes of action, assessments, losses, damages, deficiencies, liabilities, costs and expenses (including reasonable legal fees, interest, penalties, and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing; collectively, “Seller Damages”) asserted against, imposed upon, resulting to, required to be paid by, or incurred by any Seller Indemnitees, directly or indirectly, if and to the extent any such Purchaser Damages arise out of, or result from: (a) a breach of any representation or warranty made by Purchaser in this Agreement, in any certificate or document furnished pursuant hereto by Purchaser or in any Ancillary Agreement to which Purchaser is a party; (b) a breach or nonfulfillment of any covenant or agreement made by Purchaser in or pursuant to this Agreement or in any Ancillary Agreement to which Purchaser is a party; or (c) any Assumed Liability.

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14.3.1 Certain Qualification. Notwithstanding anything to the contrary contained herein, Purchaser and Guarantor shall have no obligation to indemnify Seller Indemnitees under Section 14.3(a) (a) until and unless the obligation of Purchaser and Guarantor to indemnify the Seller Indemnitees pursuant to Section 14.3(a) exceeds the Basket, in which case Purchaser and Guarantor shall indemnify Seller Indemnitees for all Seller Damages in excess of the Basket or (b) for any Seller Damages in excess of an amount equal to the Post-Closing Escrow Amount in the aggregate.

14.3.2 The qualifications set forth in Section 14.3.1 shall not apply to the

Purchaser’s and Guarantor’s indemnification of Seller under Sections 14.3(b) or (c) or for actions related to fraud.

14.4 Indemnification Procedures. With respect to each event, occurrence or matter (an “Indemnification Matter”) as to which a Party (“Indemnified Party”) is entitled to indemnification from the indemnifying Party under Sections 14.2 or 14.3 (each, an “Indemnifying Party”).

(a) Promptly after the Indemnified Party receives Notice regarding the

Indemnification Matter or, if the Indemnification Matter does not involve a third party action, suit, claim or demand, promptly after the Indemnified Party first has Knowledge or receives Notice of the Indemnification Matter, the Indemnified Party shall give Notice to the Indemnifying Party of the nature of the Indemnification Matter and the amount demanded or claimed in connection therewith (“Indemnification Notice”), together with copies of any such written documents. The failure of an Indemnified Party to give any Notice required by this Section shall not affect any of such party’s rights under this Article XIV or otherwise except and to the extent that the Indemnifying Party’s ability to protect its interests was materially, adversely effected as a result of such failure.

(b) If a third party action, suit, claim or demand is involved, then, upon receipt

of the Indemnification Notice, the Indemnifying Party, shall, at its expense and through counsel of its choice, promptly assume and have sole control over the litigation, defense or settlement (the “Defense”) of the Indemnification Matter, except that (i) the Indemnified Party may, at its option and expense and through counsel of its choice, participate in (but not control) the Defense; (ii) the Indemnifying Party shall not consent to any judgment, or agree to any settlement, without the Indemnified Party’s prior written consent; and (iii) if the Indemnifying Party does not promptly assume control over the Defense or, after doing so, does not continue to prosecute the Defense in good faith, or such Defense could reasonably be expected to be in conflict with Purchaser’s interest, the Indemnified Party may, at its option and through counsel of its choice, but at the Indemnifying Party’s expense, assume control over the Defense. In any event, the Indemnifying Party and the Indemnified Party shall fully cooperate with each other in connection with the Defense, including by furnishing all available documentary or other evidence as is reasonably requested by the other.

(c) All amounts owed by the Indemnifying Party to the Indemnified Party (if

any) shall be paid in full within five (5) business days after a final judgment (without further

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right of appeal) determining the amount owed is rendered, or after a final settlement or agreement as to the amount owed is executed. All payment of Purchaser’s Damages shall be obtained first from the Post-Closing Escrow Amount.

14.5 Miscellaneous Indemnification Provisions.

(a) Claims made pursuant to this Article XIV shall constitute the sole remedy after the Closing Date for Purchaser Damages or Seller Damages, as applicable, under the terms of this Agreement or in connection with the transactions contemplated hereby, irrespective of the possible existence of any other claim under law; provided, however, the preceding sentence shall not apply to Purchaser Damages or Seller Damages, as applicable, related to Claims involving fraud.

(b) The amount of any claim for which indemnification is provided under this

Article XIV shall be net of any amount recovered by the Person seeking indemnification under insurance policies, and any net tax benefits with respect to the subject matter of such claim. If, following the receipt by a Person of any indemnity hereunder, such Person shall receive any insurance recovery or net tax benefits or indemnity payment from a third party in respect of the same underlying claim, such Person shall reimburse the Party from whom such indemnity payment was received to the extent of such insurance recovery or third party indemnity payment.

14.6 Limited Rights of REIT. THE REIT’S SOLE RIGHTS AND REMEDIES

WITH RESPECT TO THE REAL PROPERTY ARE SET FORTH IN A SEPARATE AGREEMENT AMONG PURCHASER, GUARANTOR AND THE REIT, AND THE REIT SHALL HAVE NO RIGHTS OR REMEDIES DIRECTLY OR INDIRECTLY AGAINST THE SELLER WITH RESPECT TO THE REAL PROPERTY, THIS AGREEMENT, OR IN ANY MANNER RELATED TO THE TRANSACTIONS CONTEMPLATED HEREBY. THE REIT IS NOT ENTITLED TO, AND SHALL NOT, BE DEEMED A THIRD PARTY BENEFICIARY OF ANY OF THE REPRESENTATIONS, WARRANTIES, COVENANTS, OR OTHER PROVISIONS OF THIS AGREEMENT AND THE REIT COVENANTS AND AGREES TO NOT SUE OR BRING ANY CLAIM AGAINST THE SELLER PURSUANT TO THIS AGREEMENT.

ARTICLE XV. GENERAL

15.1 Expenses; No Broker Fees. Except as otherwise provided in this Agreement, and whether or not the transactions herein contemplated shall be consummated, Purchaser and Seller shall each pay its own fees, expenses and disbursements, including the fees and expenses of their respective counsel, accountants and other experts in connection with the subject matter of this Agreement and all other costs and expenses incurred in performing and complying with all conditions to be performed under this Agreement. At no time shall Purchaser be liable for any fees or commissions due or payable to any broker, representative, or agent engaged by Seller, including those referred to in Section 6.20 hereof.

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15.2 Publicity. All Notices by Purchaser to third-parties and all other publicity by Purchaser concerning the transactions contemplated by this Agreement shall be jointly planned and coordinated by and between Purchaser and Seller. Except as may be required by law or as necessary or advisable to obtain the approval of Governmental Authorities for the transactions contemplated by this Agreement, no Party shall act unilaterally in this regard without prior written approval of every other Party, such approval not to be unreasonably withheld.

15.3 Waivers. The waiver by any Party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

15.4 Binding Effect; Benefits. This Agreement shall inure to the benefit of the Parties hereto, and shall be binding upon the Parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any Person other than the Parties hereto, or their respective successors, assigns, heirs, executors, administrators and legal representatives, any rights, remedies, obligations or liabilities under or by reason of this Agreement, regardless of whether such Person is specifically identified in this Agreement as receiving a benefit. For the avoidance of doubt, there are no express or implied third party beneficiaries to this Agreement.

15.5 Notices. All Notices, requests, demands, elections and other communications which any Party to this Agreement may be required to give hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, by a reputable courier service which requires a signature upon delivery, or by mailing the same by registered or certified first class mail, postage prepaid, return receipt requested on the date of such receipt, to the Party to whom the same is so given or made. Such Notice, request, demand, waiver, election or other communication will be deemed to have been given as of the date so delivered or refused.

15.5.1 Notice to Seller.

If to the Seller, to: County of Montgomery Montgomery County Commissioners Montgomery County Solicitor One Montgomery Plaza Suite 800 Norristown, PA 19404-0311 Attn: Raymond McGarry, Esquire

With a required copy to: Saul Ewing LLP 1500 Market Street, 38th Floor Centre Square West Philadelphia, PA 19102

Attn: Bruce D. Armon

15.5.2 Notice to Purchaser or Guarantor.

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If to Purchaser or Guarantor, to: Parkhouse Realty, L.P.

c/o Mid-Atlantic Health Care, LLC 1922 Greenspring Drive Suite #3 Timonium, MD 21093 Attn: Michael Mahon and Scott Potter

With a required copy to: Miles & Stockbridge P.C. 100 Light Street Baltimore, MD 21202 Attn: Joseph P. Ward and Paul D. Trinkoff

15.6 Schedules. Any information included in any Schedule to this Agreement in

response to the disclosure required or permitted in such Schedule shall be deemed to be included in any other Schedule to this Agreement if (a) it is reasonably apparent from the face of the disclosure made in the first Schedule that such disclosure is also responsive to the disclosure required in the other Schedule, and (b) the disclosure in the first Schedule contains all information which would be required to be disclosed with respect to such matter in the other Schedule.

15.7 Counterparts. This Agreement may be executed simultaneously in two or more

counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. A facsimile, electronic or similar reproduction of a signature by one or both of the Parties shall be treated as an execution in writing for purposes of this execution of this Agreement.

15.8 Headings. The article, section and other headings contained in this Agreement are for reference purposes only and shall not be deemed to be a part of this Agreement or to affect the meaning or interpretation of this Agreement.

15.9 Construction. Within this Agreement, the singular shall include the plural and the plural shall include the singular, and any gender shall include all other genders, all as the meaning and the context of this Agreement shall require.

15.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES.

15.11 Jurisdiction and Venue. THE PARTIES CONSENT TO PERSONAL JURISDICTION IN PENNSYLVANIA. THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE BROUGHT AND TRIED EXCLUSIVELY IN THE STATE OR FEDERAL COURTS OF PENNSYLVANIA. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY

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WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. THE SELLER EXPRESSLY ACKNOWLEDGES THAT PENNSYLVANIA IS A FAIR, JUST AND REASONABLE FORUM AND AGREES NOT TO SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY PURCHASER IN SAID COURTS. FURTHER, THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY REGISTERED MAIL ADDRESSED TO A PARTY AT THE ADDRESS DESIGNATED PURSUANT TO SECTION 15.5 SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE JURISDICTION ANY OF THE PARTIES IS OR MAY BE SUBJECT.

15.12 Cooperation. The Parties hereto shall reasonably cooperate at their own expense, except as otherwise provided in this Agreement, with each other and their respective counsel and accountants in connection with all steps to be taken as part of their obligations under this Agreement.

15.13 Severability. If any term, covenant, condition or provision of this Agreement or the application thereof to any circumstance shall be invalid or unenforceable to any extent, the remaining terms, covenants, conditions and provisions of this Agreement shall not be affected thereby and each remaining term, covenant, condition and provision of this Agreement shall be valid and shall be enforceable to the fullest extent permitted by law; provided, however, that the parties shall continue to achieve their respective substantial purpose in entering into this Agreement. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only as broad as is enforceable.

15.14 Attorneys’ Fees. If a dispute arises among the Parties as a result of which an action is commenced to interpret or enforce any of the terms of this Agreement, including the collection of any payments due a Party hereunder, the non-prevailing Parties shall pay the prevailing Party’s reasonable out-of-pocket attorney’s fees, costs and expenses incurred in connection with the prosecution or defense of such action.

15.15 Successors and Assigns. The covenants, agreements, and conditions contained

herein or granted hereby shall be binding upon and shall inure to the benefit of Purchaser and Seller, and each of its respective permitted successors, assigns, heirs, executors, administrators and legal representatives. Neither party shall assign, or otherwise transfer any interest in this Agreement to any other Person without the prior written consent of the other, which consent shall not unreasonably be withheld.

15.16 No Third-Party Beneficiary. None of the provisions herein contained are intended by the Parties, nor shall they be deemed, to confer any benefit on any person or entity not a party to this Agreement.

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15.17 Drafting. No provision of this Agreement shall be interpreted for or against either

Party hereto on the basis that such Party was the drafter of such provision, each Party having participated equally in the drafting hereof, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

15.18 Confidentiality. The Parties agree that the information, documents and instruments delivered or made available to Purchaser by Seller or Seller’s agents and the information, documents and instruments delivered to Seller by Purchaser or Purchaser’s agents, including, without limitation, this Agreement and all agreements and documents referenced herein or executed and delivered by the parties at Closing, are of a confidential and proprietary nature (“Confidential Information”). Except as otherwise required under Legal Requirements, each Party agrees that prior and subsequent to Closing it will maintain the confidentiality of all Confidential Information delivered to it by the other Party or its agents in connection with the negotiation of this Agreement or in compliance with the terms, conditions and covenants hereof and only disclose such information, documents and instruments to its duly authorized officers, directors, representatives and agents unless (i) compelled to disclose by judicial, administrative or canonical process (including, without limitation, in connection with obtaining governmental and regulatory approvals necessary to consummate the transactions contemplated hereby) or by other requirements of law, or (ii) disclosed in an action or proceeding brought by a Party hereto in pursuit of its rights or in the exercise of its remedies hereunder. Each of the Parties further agrees that if the transactions contemplated hereby are not consummated, it will return all such Confidential Information and all copies thereof in its possession to the other Party. Each of the Parties recognizes that any breach of this Section 15.18 would result in irreparable harm to the other Party and its Affiliates and that therefore either Seller or Purchaser shall be entitled to an injunction to prohibit any such breach or anticipated breach, without the necessity of proving actual damages or posting a bond, cash or otherwise, in addition to all of the other legal and equitable remedies available to it. Nothing in this Section 15.18 shall prohibit the use of such Confidential Information, documents or information for such governmental filings as in the mutual opinion of Purchaser’s counsel and Seller’s counsel are (i) required by Legal Requirements, or (ii) otherwise appropriate.

15.19 Entire Agreement. This Agreement (including the Schedules hereto) and the Ancillary Agreements and documents delivered at Closing pursuant hereto and thereto constitute the entire agreement and understanding between the Parties hereto as to the matters set forth herein and therein and supersede and revoke all prior agreements and understandings, oral and written, including without limitation any letter of intent or memorandum of understanding, between the Parties hereto and thereto or otherwise with respect to the subject matter hereof or thereof. No change, amendment, termination or attempted waiver of any of the provisions hereof or thereof shall be binding upon any Party unless set forth in an instrument in writing signed by the Party to be bound or their respective successors in interest.

15.20 Specific Performance. The Parties agree and acknowledge that in the event of a

breach of any covenant set forth in this Agreement, the non-breaching Party will be irreparably

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harmed and money damages may be inadequate and such Party may have no adequate remedy at law. Accordingly, the Parties agree that they shall have the right, in addition to any other rights and remedies existing in their favor, to enforce their respective rights and the other Parties’ obligations hereunder not only by an action or actions for damages but also by an action or actions for specific performance, injunctive and/or other equitable relief; provided, however, that this Section will not apply to Purchaser’s and/or Guarantor’s obligation to purchase the Facility, a breach of which will be compensable by money damages as set forth in this Agreement.

[THE REMAINDER THIS PAGE LEFT BLANK INTENTIONALLY; SIGNATURE PAGE FOLLOWS]

[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]

IN WITNESS WHEREOF, intending to be legally bound hereby, the Parties havecaused this Agreement to be signed as of the date first above written.

COUNTY OF MONTGOMERY, PENNSYLVANIA

By:Name: Joshua D. ShapiroTitle: Chairman

PARKHOUSE REALTY, L.P.

By: Parkhouse GP, LLC

By:Name: Scott M. RifkinTitle: Manager

MID-ATLANTIC HEALTH CARE, LLC

By:Name: Scott M. RifkinTitle: Manager

GRIFFITH-AMERICAN HEALTHCARE REIT II, Inc.

By:Name:Title: