Exhibit 10.2

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of this ___ day of
__________, 20___ (the "Effective Date"), is made and entered into by and
between GLOBAL MEDICAL REIT, INC., a Maryland corporation ("Purchaser"), and
CHERRY HILLS REAL ESTATE, LLC, a limited liability company [THIS ENTITY IS NOT
REGISTERED IN MICHIGAN – NEED TO CONFIRM NAME] ("Seller").

 

RECITALS:

 

A.            WHEREAS, Seller owns and operates licensed medical facility
located at 33545 Cherry Hill Rd, Westland, Michigan containing 15,018 square
feet of improvements, on 1.3 acres land, as set forth on Exhibit A, together
with the real property, the improvements and all appurtenances thereto (the
"Facility"), which defined term shall include all of the Assets (as defined in
Recital B below) applicable to the Facility). The Facility is located at the
address and has the total number of the number of licensed beds as forth on
Exhibit A.

 

B.            WHEREAS, the parties desire to enter into this Agreement pursuant
to which Purchaser will purchase, accept and assume from Seller, and Seller will
sell, convey, transfer and assign to Purchaser, the following, hereinafter
collectively referred to as the "Assets":

 

(i)          Seller’s good and marketable, valid and insurable fee simple title
and all other rights, title and interest of Seller in and to the parcel(s) of
real property on which the Facility is located, such real property being more
particularly described on Exhibit B, attached hereto (the "Real Property");

 

(ii)         Seller’s fee simple title in and to all buildings, structures,
facilities, amenities, driveways, walkways, parking lots and other improvements
located on the Real Property (collectively, the "Improvements");

 

(iii)        all right, title and interest of Seller in and to any alleys,
strips or gores adjoining the Real Property, any easements, rights of way or
other interests in, on, under or to, any land, highway, street, road or right of
way, open or proposed, in, under, across, abutting or benefiting the Real
Property, and any pending or future action for condemnation, eminent domain or
similar proceeding, or for any damage to the Real Property by reason of a change
of grade thereof, and all other accessions, appurtenant rights, and privileges
of Seller in and to the Real Property and the Improvements;

 

(iv)        all personal property owned by Seller located at the Facility and
used in connection with the Facility (the “Personal Property); and

 

(v)         all licenses, permits and warranties benefiting the Facility.

 

C.           WHEREAS, simultaneously therewith, Purchaser and Seller intend that
Purchaser will Lease the Facility to The Surgical Institute of Michigan, LLC, a
Delaware limited liability company (“Tenant”)] pursuant to a lease in accordance
with the terms set forth herein (the "Facility Lease"), it being understood that
the Facility Lease will be guaranteed by Surgical Management Professionals, LLC,
a South Dakota limited liability company (the “Guarantor”) pursuant to a written
Guaranty (the "Guaranty").

 

 

 

 

NOW, THEREFORE, in consideration of the recitals, and of the mutual agreements,
representations, warranties, conditions and covenants herein contained, the
parties hereto agree as follows:

 

ARTICLE I.
PURCHASE AND SALE

 

1.1          Transfer of Assets. For and in consideration of the foregoing and
other good and valuable consideration, the receipt and sufficiency of which are
herein acknowledged, and subject to the terms and conditions herein provided,
Seller shall convey, transfer and assign the Assets to Purchaser.

 

1.2          Closing.

 

(a)          Unless this Agreement shall have been terminated pursuant to an
express right to terminate as herein provided, the closing hereunder (the
"Closing") shall occur on or before 2:00 p.m. CT on the date fifteen (15) days
after the expiration of the Due Diligence Period (as defined in Section 1.8(b)
below) (the "Closing Date"); provided, however, that if all of the Required
Consents (as defined in Section 5.5(b) below) are not received by Purchaser on
or before the Closing Date, the Closing Date will be automatically extended on a
month-to-month basis to permit Seller and Purchaser to continue pursuing the
Required Consents for which each is responsible, and the Closing will occur on
the latter of (i) the date at least fifteen (15) days after the date on which
the last of the Required Consents is obtained; or (ii) the last day of the
calendar month in which the last of the Required Consents is obtained. If all
Required Consents have not been received within thirty (30) days [Please provide
information on timing] after the end of the Due Diligence Period, either party
may terminate this Agreement upon written notice to the other party given prior
to 6:00 p.m. CT on that date, in which case the refundable portion of the
Deposit (as defined in Section 1.4 below) will be promptly returned to Seller
and neither party will have any further obligation or liability to the other
party. The Closing will be effective for accounting purposes as of 12:01:01 a.m.
on the Closing Date such that the Closing Date will be a day of income and
expense to Purchaser.

 

(b)          On the Closing Date, all documents and other materials required
from Seller under Section 9.1(b) (collectively, the "Seller Documents") and from
Purchaser under Section 9.1(c) (collectively, the "Purchaser Documents") in
order to effectuate the consummation of the Closing shall be delivered to the
offices of the Purchaser, or at such other date, time and place as Purchaser may
reasonably require taking into account the relative location of any lenders.
Notwithstanding the foregoing, (i) Seller may deliver all of the Seller
Documents required hereunder to the Title Company (as defined in Section 4.10(b)
below), as escrow agent ("Escrow Agent") or Purchaser’s counsel on or before the
Closing Date (to hold in escrow in accordance with customary conveyancing
practices subject to the consummation of the Closing) by overnight courier, and
(ii) Purchaser may deliver all of the Purchaser Documents required hereunder to
Escrow Agent on or before the Closing Date (to hold in escrow in accordance with
customary conveyancing practices subject to the consummation of the Closing) by
overnight courier.

 

 2 

 

 

1.3          Purchase Price. The aggregate purchase price (the “Purchase Price”)
for the Assets shall be Four Million Seven Hundred Fifty Thousand and No/100
Dollars ($4,750,000.00), subject to the prorations and further adjustments as
provided for in this Agreement. At the Closing, the Purchase Price shall be paid
as in cash, subject to the prorations and further adjustments as provided for in
this Agreement, by wire transfer of immediately available federal funds to
Escrow Agent (“Cash Proceeds”).

 

1.4          Deposit. Within three (3) business days following the Effective
Date Seller will deposit the amount of Fifteen Thousand and No/100 Dollars
($15,000.00) (the "Deposit") with the Title Company as provided herein to cover
Purchaser’s out of pocket expenses. It is understood that if Purchaser
terminates this Agreement for any reason other than a default by Seller, the
Deposit will be refunded to Seller, less out of pocket expenses incurred by
Purchaser (the “Deposit Balance”). At Closing, the Deposit Balance, if any,
shall be applied to the Purchase Price.

 

1.5          Payment of Purchase Price. At Closing, Purchaser shall pay the
Purchase Price, adjusted for any prorations, credits and additions for the
benefit of Purchaser or Seller as specified in this Agreement, as set forth in
Section 1.3 hereof.

 

1.6          No Assumed Liabilities. At Closing, Purchaser shall NOT assume any
liabilities or obligations of Seller whatsoever, fixed or contingent, and prior
to, on and after the Closing Date, Seller shall retain and discharge in the
ordinary course all liabilities and obligations of Seller. Purchaser shall not
assume any contracts, equipment leases or leases, and Seller shall remain fully
liable for all obligations thereon. There shall be no adjustment between
Purchaser and Seller of taxes, assessments, water charges, utilities,
receivables or rents, if any, premiums on existing insurance policies, if any,
or any other items relating to the Assets, it being understood by the parties
that Tenant, as Tenant under the Facility Lease, shall be obligated to pay the
same under the terms thereof from and after the Closing Date.

 

1.7          Due Diligence Period.

 

(a)          Seller and Purchaser hereby acknowledge that, as of the Effective
Date, Purchaser has not yet had an opportunity to conduct due diligence and
fully review and evaluate all aspects of this transaction and the condition and
suitability of the Assets. In order to enable Purchaser to commence its due
diligence review in a timely and efficient manner, Seller agrees to deliver to
Purchaser all items identified on Purchaser’s preliminary due diligence
checklist attached hereto as Exhibit C (the "Preliminary Due Diligence
Checklist") on or before the date five (5) days after the Effective Date (the
"Diligence Delivery Date"). Purchaser may supplement the Preliminary Due
Diligence Checklist as Purchaser deems appropriate and Seller shall provide the
supplemental items to Purchaser within five (5) days after written request by
Purchaser. To the extent Seller has any of the items on the Preliminary Due
Diligence Checklist in electronic format, Seller shall send true, correct and
complete copies of those items to Purchaser via the internet. To the extent
Seller has items on the Preliminary Due Diligence Checklist in hardcopy, but not
in electronic format, Seller shall make true, complete and correct copies of
those items and deliver them to Purchaser via overnight courier. Seller shall
organize all materials in accordance with the Preliminary Due Diligence
Checklist and shall identify each item with reference to the number assigned to
it on the Preliminary Due Diligence Checklist.

 

 3 

 

 

(b)          For the period (as such period may be extended pursuant to Section
4.10(b) or (c) below, the "Due Diligence Period") commencing on the Effective
Date and continuing until 6:00 p.m. CT on the forty-fifth (45th) days following
the Effective Date, Purchaser shall have the right to terminate this Agreement
by written notice to Seller in the event Purchaser, in Purchaser’s sole
discretion, is not satisfied with the Assets for any reason, which reason need
not be specified in such notice, provided that such notice is delivered (in
accordance with the provisions of this Agreement) to Seller on or before 6:00
p.m. CT on the last day of the Due Diligence Period. If such notice of
termination is so delivered on or before 6:00 p.m. CT on the last day of the Due
Diligence Period, then this Agreement shall terminate and the parties shall
thereafter be released from all further duties and obligations under this
Agreement. If this Agreement is not terminated as set forth in this Section 1.7
or as otherwise provided herein, then this Agreement shall remain in full force
and effect.

 

ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLER

 

As an inducement to Purchaser to enter into this Agreement and to consummate the
transactions contemplated herein, Seller represents and warrants the following,
each of which warranties and representations is material to and is relied upon
by Purchaser:

 

2.1          Organization and Qualification. Seller is a limited liability
company duly organized and validly existing under the laws of the State of
________ with full power and authority to own assets and to carry on its
business as it is now being conducted and to own or lease and operate the Assets
it owns or leases as and in the place now owned, leased or operated, and as will
be leased pursuant to the Facility Lease, respectively.

 

2.2          Authority; Binding Effect.

 

(a)          Seller, Tenant and Guarantor have, and at Closing will have, the
full and unrestricted right, corporate power and authority to execute, deliver
and perform this Agreement and to consummate the transactions and perform all
obligations contemplated hereby and in all agreements, instruments and documents
being or to be executed and delivered by Seller in connection with such
transactions, including, without limitation, the Seller Documents, the Facility
Lease and all agreements, instruments and documents being or to be executed and
delivered by Seller, Tenant and Guarantor in connection with the Facility Lease,
including, without limitation, the Guaranty (collectively, "Related Documents").

 

(b)          This Agreement and each Related Document, upon due execution and
delivery by Seller, Tenant and Guarantor, will constitute the legal, valid, and
binding obligation of Seller, Tenant and Guarantor enforceable in accordance
with its respective terms.

 

(c)          Seller, Tenant and Guarantor have obtained all required corporate
approval required for the execution and consummation of this Agreement, the
Related Documents and all transactions contemplated hereby and thereby.

 

 4 

 

 

2.3          Licenses. The Facility is currently licensed to operate as a
[DESCRIBE] (the “Permitted Use”). Exhibit E sets forth all permits, licenses,
Government Program (as defined below) provider agreements and other
authorizations issued and required by Governmental Authorities in connection
with the ownership, maintenance and operation of the Facility, including,
without limitation, such licenses required for the Permitted Use (collectively,
the "Licenses"). The Licenses are in good standing and Seller has not received
written notice that Seller is in violation of any restriction or other rules,
regulations, statutes, ordinances or requirements or any judgments, decrees,
writs, injunctions or orders of any Governmental Authority in effect as of the
date hereof, or as enacted or amended from time to time after the Effective Date
(collectively, "Applicable Laws") in connection with the Licenses or the
Facility or otherwise affecting possession, operation and use thereof. Seller is
the holder of all the Licenses and there is no other person or entity that
operates, manages or leases the Facility (other than pursuant to Tenant Leases
(as defined herein).

 

2.4          Governmental Authorities. Except as set forth on Exhibit F attached
hereto, Seller is not required to submit any notice, report or other filing with
any federal, state, municipal, foreign or other governmental or regulatory
authority (individually, a "Governmental Authority" and collectively,
"Governmental Authorities") in connection with Seller’s execution or delivery of
this Agreement or any of the Related Documents or the consummation of the
transactions contemplated hereby and no consent, approval or authorization of
any Governmental Authority is required to be obtained by Seller in connection
with the execution, delivery and performance of this Agreement.

 

2.5          Taxes. All real property taxes and assessments, and all personal
property taxes and assessments, in connection with the Assets allocable to the
period prior to Closing have been paid or, by the time of Closing, will be paid
by Seller. In addition: (i) all income, sales and franchise taxes due and
payable by Seller during the period of Seller’s (or any affiliate of Seller’s)
ownership of the Assets, if any, and all interest and penalties thereon, if any,
have been paid in full; (ii) all tax returns required to be filed by Seller, if
any (including, without limitation, all sales, franchise and payroll tax returns
and reports), have been properly and timely filed, and correctly reflect the tax
position of Seller, and all taxes respectively due under such tax returns have
been paid thereby or will be paid in the ordinary course of Seller’s business
and in any event on or before the Closing; (iii) Seller is not subject to a
claim for deficiency or other action in connection with any taxes and is not
paying any taxes for any prior period under any installment agreement,
compromise or settlement agreement or any other arrangement with any
Governmental Authority; (iv) no tax returns of Seller have been or are being
examined by the Internal Revenue Service or any state or local Governmental
Authority; and (v) all tax returns filed by Seller after the Effective Date,
covering periods prior to and including the Closing Date, will be properly and
timely filed (giving consideration for allowable extensions) and all taxes
respectively due under such tax returns will be timely paid.

 

2.6          No Defaults. The execution, delivery and performance of this
Agreement and any of the Related Documents by Seller do not and will not:

 

(a)          Conflict with or result in any breach of the provisions of, or
constitute a default under the articles of incorporation, bylaws, articles of
organization, operating agreement or other governing organizational documents,
as the case may be, of Seller;

 

 5 

 

 

(b)          Violate any restriction to which Seller is subject or, with or
without the giving of notice, the passage of time, or both, violate (or give
rise to any right of termination, cancellation or acceleration under) any
mortgage, deed of trust, license, lease, indenture or other material agreement
or instrument, whether oral or written, to which Seller is a party, or by which
it or the Assets are bound, which will not be fully satisfied, assigned or
terminated on or prior to Closing as a result of the transactions contemplated
in this Agreement, or result in the termination of any such instrument or
termination of any provisions in such instruments, or result in the creation or
imposition of any lien, charge or encumbrance upon the Assets;

 

(c)          Create any liens or other encumbrances on the Assets in favor of
third parties;

 

(d)          Constitute a violation of any Applicable Law of any Governmental
Authority; or

 

(e)          Result in the breach or violation of any of the warranties and
representations herein set forth by Seller.

 

2.7          Title to Property and Related Matters.

 

(a)          There are no violations of any covenants or restrictions
encumbering the Assets, and there are no violations of any Applicable Laws
relating to the Licenses or the operation of the Facility for the Permitted Use
or any other Applicable Laws of any Governmental Authorities applicable to the
Assets or the operations thereof. Seller has no knowledge of any agreements,
documents or instruments which are not recorded among the land records but which
affect the title to the Facility.

 

(b)          Seller is the holder of good and marketable, insurable and valid
fee simple title to the Facility free and clear of all Monetary Encumbrances (as
defined in Section 4.10(b)) other than such Monetary Encumbrances as Seller
shall pay and discharge in full prior to or on or at Closing. Seller has
continuously operated the Facility for a period of not less than five (5) years
and using no names other than (i) the name of Seller and (ii) the name of the
Facility set forth on Exhibit A.

 

(c)          The Facility is supplied with such utilities as are necessary for
the operation of the Facility as currently operated and for its intended
purpose, and Seller has no knowledge of any future plans by any utility provider
to curtail or eliminate any utilities currently serving the Assets. All utility
bills and deposits required by any utility provider have been paid by Seller.

 

(d)          The Facility abuts on and has direct vehicular access to a public
road, or has access to a public road via a permanent irrevocable and insurable
easement benefiting the Real Property upon which the Facility is located, and
Seller has no knowledge of, and has received no notice that alleges any breach
or default under any instrument creating any such easement or attempting to
terminate or revoke such easement.

 

 6 

 

 

(e)          There are no pending rezoning or other pending land use actions
affecting the Assets or any properties in the immediate vicinity of the Assets.
Seller has not received written notice of and has no knowledge of any threatened
or contemplated rezoning or other land use actions affecting or which will
affect the Assets, including, without limitation, on properties in the immediate
vicinity of the Assets. The current use of the Facility is lawfully permitted
either as a currently conforming use or as a fully legally "grandfathered use",
and there is no known violation of any Applicable Laws relating to the zoning,
land use, building codes or other similar requirements of Governmental
Authorities.

 

(f)          At the Closing, Seller shall not be indebted to any contractor,
laborer, mechanic, materialman, architect or engineer for work, labor or
services performed or rendered, or for materials supplied or furnished, in
connection with the Assets for which any such person could lawfully claim a lien
against the Assets.

 

(g)          There are no condemnation or eminent domain proceedings pending,
or, to the knowledge of Seller, threatened or contemplated against the Assets or
any part thereof, or access thereto, and Seller has not received notice, oral or
written, of the desire of any public authority or other entity to take or use
the Assets or any part thereof. Between the Effective Date and the Closing,
Seller will give Purchaser prompt written notice of any actual or any threatened
or contemplated condemnation of any part of the Assets of which Seller receives
written notice or obtains knowledge.

 

(h)          There are no parties other than Seller in possession of the Assets,
or any portion thereof, other than tenants under the Tenant Leases who are in
possession of space to which they are entitled.

 

(i)          There are no outstanding options or rights of first refusal to
purchase the Assets or any portion thereof or interest therein.

 

(j)          The Assets constitute all of the assets necessary and sufficient to
conduct the operation of the Facility in the manner that such operation has been
conducted by Seller and as required by Applicable Laws.

 

2.8          Hazardous Substances.

 

(a)          For purposes of this Agreement, "Environmental Laws" means the
Resource Conservation and Recovery Act (RCRA), 42 U.S.C. Section 6901 et seq.,
the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), 42 U.S.C. Sections 9601 et seq., the Clean Water Act, 33 U.S.C.
Section 1251 et seq., the Toxic Substances Control Act (15 U.S.C. §2601 et.
seq.), the Clean Air Act (42 U.S.C. §7401 et. seq.), the Safe Water Drinking Act
(42 U.S.C. §300(f) et. seq.), the Occupational Safety and Health Act, and all
other applicable state, county, municipal, administrative or other
environmental, hazardous waste or substance, health and safety laws, ordinances,
rules, regulations, judgments, orders and requirements of any Governmental
Authority relating or pertaining to (A) any aspect of the environment, (B) the
preservation or reclamation of natural resources, (C) the management, release
and threatened release of Hazardous Substances (as hereinafter defined), (D)
response actions and corrective actions regarding Hazardous Substances, (E) the
ownership, operation or maintenance of personal and real property that manages
or releases Hazardous Substances or at which Hazardous Substances are managed,
(F) common law torts, including so-called "toxic torts", and (G) environmental
or ecological conditions on, under or about the Assets, all as in effect as of
the Effective Date and on the Closing Date. For purposes of this Agreement,
"Hazardous Substance" shall mean any and all substances, wastes, materials,
pollutants, contaminants, compounds, chemicals or elements which are defined or
classified as a "hazardous substance", "hazardous material", "toxic substance",
"hazardous waste", "pollutant", "contaminant" or words of similar import under
any Environmental Law, including, without limitation, all dibenzodioxins and
dibenzofurans, polychlorinated biphenyls (PCBs), petroleum hydrocarbon,
including crude oil or any derivative thereof, any radioactive material, raw
materials used or stored in the Facility and building components including,
asbestos-containing materials in any form, radon gas and mold of a type or in
amounts that may present a health hazard.

 

 7 

 

 

(b)          The Assets do not contain any Hazardous Substance, except for
Hazardous Substances typically used in, and in quantities necessary for the
day-to-day operation of, the Facility and which are commonly used in other
similar facilities, such as cleaning fluids, insecticides and medicines (the
"Common Products"), which Common Products have been used, transported, stored
and disposed of by Seller in compliance with all applicable Environmental Laws;

 

(c)          There is no pending or threatened litigation or proceeding before
any Governmental Authority in which any person or entity alleges the presence,
release or threat of release of any Hazardous Substance or violation of
Environmental Laws at the Facility;

 

(d)          Seller has not received any notice of, and has no knowledge that,
any Governmental Authority or employee or agent thereof has determined, or
threatens to determine, or is investigating, that there is a presence, release
or threat of release or placement on, in or from the Assets, or the generation,
transportation, storage, treatment, or disposal at the Assets, of any Hazardous
Substance. Seller shall notify Purchaser promptly of its receipt of any such
notice or knowledge after the Effective Date;

 

(e)          (i) Seller has owned and operated the Assets in compliance with all
applicable Environmental Laws, has obtained all necessary permits under the
Environmental Laws for Seller’s operation of the Assets, and has not used any of
the Assets for the generation, storage, manufacture, use, transportation,
disposal or treatment of Hazardous Substances, and (ii) the Assets are currently
in compliance with all applicable Environmental Laws;

 

(f)          There has been no discharge of any Hazardous Substance on or from
any of the Assets during the time of Seller’s ownership or occupancy thereof;
and

 

(g)          Seller has, or will, deliver to Purchaser copies of all reports or
tests in Seller’s possession with respect to (i) the compliance of the Assets
with Environmental Laws and (ii) the presence of Hazardous Substances on, in or
from the Facility or the Real Property.

 

 8 

 

 

2.9        Leases. Exhibit D attached hereto contains a true and correct list of
all leases of space in the Facility by Seller to third party service providers,
such as physical therapists, banks, clinics or beauty shop operators
(collectively, the "Tenant Leases"). Seller has provided or will provide to
Purchaser true and complete copies of all Tenant Leases prior to the Diligence
Delivery Date. Except as disclosed on Exhibit D, each Tenant Lease is in full
force and effect; all rents due on or before the Effective Date under each
Tenant Lease have been timely paid and there has not been and there is no
ongoing issue or dispute as to past rental payments; in each case, neither
Seller, nor, to the knowledge of Seller, any other party to any such Tenant
Lease is in default in any respect thereunder; and no waiver, indulgence or
postponement of Seller’s obligations as the lessor under the Tenant Leases, and
Seller has no knowledge of and has not received written notice that there exists
any occurrence, event, condition or act which, upon the giving of notice or the
lapse of time or both, would become a default by Seller (or, to the knowledge of
Seller, any other party to such lease) under any such Tenant Lease.]

 

2.10      Patriot Act. Seller is in compliance with the requirements of
Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the "Order"),
and other similar requirements contained in the rules and regulations of the
Office of Foreign Assets Control, Department of the Treasury ("OFAC") and in any
enabling legislation or other Executive Orders or regulations in respect thereof
(the Order and such other rules, regulations, legislation or orders are
collectively called the "Orders"). Neither Seller nor any of its affiliates (A)
is listed on the Specially Designated Nationals and Blocked Person List
maintained by OFAC pursuant to the Order and/or on any other list of terrorists
or terrorist organizations maintained pursuant to any of the rules and
regulations of OFAC or pursuant to any other applicable Orders (such lists are
collectively referred to as the "Lists"), (B) is a Person (as defined in the
Order) who has been determined by competent authority to be subject to the
prohibitions contained in the Orders; or (C) is owned or controlled by
(including, without limitation, by virtue of such Person being a director or
owning voting shares or interests), or acts for or on behalf of, any person on
the Lists or any other Person who had been determined by competent authority to
be subject to the prohibitions contained in the Orders.

 

2.11      Survey Reports, Etc.; Compliance with Law. Seller has delivered or,
pursuant to Section 1.8, will deliver to Purchaser true and complete copies of
all survey reports, waivers of deficiencies, plans of correction, and any other
investigation notices, warnings, correspondence or reports issued with respect
to the Facility (collectively, "Licensing Surveys"), and Seller shall also
promptly deliver to Purchaser any Licensing Surveys received, filed, arising or
involving the Facility between the Effective Date and the Closing Date. There
are no material deficiencies or violations noted in any Licensing Surveys and
Seller has remedied, discharged and complied with all applicable plans of
correction, such that there are no current violations or deficiencies with
respect to any of the Licenses. Seller is currently conducting, and has at all
times conducted, its operation of the Facility in compliance with all Applicable
Laws.

 

2.12      Capital Expenditures. Except for routine expenditures for repairs and
replacements in connection with the ongoing maintenance and upkeep of the
Facility, which Seller covenants and agrees to undertake and complete in the
ordinary course consistent with past practices pursuant to Section 4.1 below,
Seller does not have any outstanding contracts for capital expenditures relating
to the Facility, nor does Seller have any agreement, obligations or commitments
for capital expenditures relating to the Facility, including, without
limitation, additions to property, plant, equipment or intangible capital
assets. Seller has not deferred or delayed implementing any capital expenditures
at the Facility and the Facility has been constructed to an institutional (as
opposed to residential) grade, including, without limitation, fire suppression
systems and construction standards related to fire suppression.

 

 9 

 

 

2.13        Absence of Notices. Seller has not received any written notice, and
has no knowledge, that (a) any customer or supplier of Seller intends to
discontinue, substantially alter prices or terms to, or significantly diminish
its relationship with the Facility, either as a result of the transaction
contemplated hereby or otherwise or (b) any federal, state, county, municipal or
other Governmental Authority is alleging any fire, health, safety, building,
pollution, environmental, zoning or other violation of Applicable Law,
including, without limitation, applicable health care licensure laws or
violations under the Licenses, with respect to the Facility or any part thereof.

 

2.14        Third Party Payor Reimbursement. All billing practices of Seller
with respect to the Facility to all third party payors, including Medicare,
Medicaid, CHAMPUS, TRICARE and other federal, state or local governmental
reimbursement programs, or successor programs to any of the foregoing
(collectively referred to herein as the “Government Programs”) and private
insurance companies, have been in compliance with all Applicable Laws and
policies of such third party payors and Government Programs in all respects.
Seller has received no written notice that Seller has billed or received any
payment or reimbursement in excess of amounts permitted by Applicable Law.

 

2.15        Financial Statements. Seller has delivered to Purchaser copies of
the financial statements listed in the Preliminary Due Diligence Checklist
certified by the chief financial officer of Seller (collectively, the "Financial
Statements") as follows: (a) audited income statements of Seller for the fiscal
years ended 2012, 2013 and 2014; (b) income statements, balance sheets, changes
in stockholders equity and cash flow of Seller (the "Most Recent Financial
Statements") as of and for the six (6) month period ended , 2015; and (c) a
schedule of capital improvements to the Facility that were completed in the
fiscal years ended 2012, 2013, and 2014. The Financial Statements (including the
notes thereto) have been prepared in accordance with generally accepted
accounting principles ("GAAP") on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of the Facility as of
such dates and the results of operation of the Facility for such periods.

 

2.16        No Litigation. Except as set forth on Exhibit G attached hereto,
there are no actions, suits, claims, governmental investigations or other legal
or administrative proceedings, or any orders, decrees or judgments in progress,
pending or in effect, or, to the knowledge of Seller, threatened against or
relating to Seller, the Facility, Seller’s operation of the Facility, any of the
Assets or against or relating to the transactions contemplated by this
Agreement, and there are none pending in state courts, or in any federal courts,
or, to the knowledge of Seller, pending in other jurisdictions or threatened in
writing, at law or in equity, by or before any federal, state or municipal court
or other Governmental Authority. If the matters set forth on Exhibit G if any,
are decided adversely, it will not materially or adversely affect the Assets,
Seller or Seller’s operation of the Facility.

 

2.17        Absence of Certain Changes or Events. From [DATE OF LAST INSPECTION
BY PURCHASER] through the Effective Date, neither the Facility nor Seller has:

 

(a)          Suffered any Material Adverse Change;

 

 10 

 

 

(b)          Sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of, any assets related to or connected with the
Facility having a fair market value at the time of sale, transfer or disposition
of $50,000.00 or more in the aggregate, other than with respect to sales of
Inventory in the ordinary course of business, or cancelled, or agreed to cancel,
any debts or claims relating primarily to the Facility in the amount of
$50,000.00 or more in the aggregate; or

 

(c)          Made any change in any method of accounting or accounting practice
relating to the Facility.

 

2.18        Condition of Assets. All of the Assets are in Seller’s possession or
control and are located at or on the Facility and all of the Assets are in good
repair and working order.

 

2.19        Employee and Labor Relations. Seller is in compliance with all
federal, state or other Applicable Laws respecting employment and employment
practices at the Facility (collectively, "Employment Laws"). Seller shall remain
responsible for maintaining all employee benefit plans in compliance with
Applicable Laws and Purchaser shall have no obligation with respect to any of
Seller’s employee benefit plans at any time. Seller has no unfunded or trailing
obligation to fund any employee benefit plans.

 

2.20        Insurance. Attached as Exhibit H is a list of insurance policies
carried and insurance coverages maintained by Seller with respect to the
Facility, and upon request by Purchaser, Seller shall provide copies of any
policies to Purchaser. Seller’s insurance policies and coverages are in full
force and effect and include coverages, policy limits, deductibles and other
terms that are customary for the Permitted Use at similar facilities.

 

2.21        Truth of Warranties, Representations, and Statements. All of the
statements, representations, and warranties made by Seller in this Agreement and
the statements and information set forth in the attached Exhibits are true and
accurate in every material respect.

 

2.22        Materials Provided. All materials provided to Purchaser by Seller
either prior to the Effective Date or during the term hereof, including, without
limitation, all items on the Preliminary Due Diligence Checklist, are true,
accurate and complete in all material respects.

 

Notwithstanding anything else to the contrary herein, any reference in this
Agreement to "knowledge" of Seller shall be deemed to mean the actual knowledge
of _________________ and _________________ after due inquiry. [Provide
appropriate names and titles for corporate and on-site officers/personnel at the
Facility.]

 

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

As an inducement to Seller to enter into this Agreement and to consummate the
transactions contemplated herein, Purchaser represents and warrants the
following, each of which warranties and representations is material to and is
relied upon by Seller:

 

 11 

 

 

3.1          Corporate Organization; Etc. Purchaser is a corporation duly
organized and validly existing under the laws of the State of Maryland with full
power and authority to own assets and to carry on its business as it is now
being conducted.

 

3.2          Authorization, Binding Effect. Purchaser has, and at Closing will
have, the full and unrestricted right, power and authority to execute, deliver
and perform this Agreement and to consummate the transactions and perform all
obligations contemplated hereby and in all agreements, instruments and documents
being or to be executed and delivered by Purchaser in connection with such
transactions. The consummation of the transactions contemplated herein have been
duly authorized and approved by all necessary corporate action of Purchaser.
This Agreement and each such other agreement, instrument and document, upon due
execution and delivery by Purchaser, will constitute the legal, valid, and
binding obligation of Purchaser, enforceable in accordance with its terms.

 

3.3          No Violation. Purchaser is not subject to or obligated under any
certificate of incorporation, bylaw, law, or rule or regulation of any
Governmental Authority, or any agreement or instrument, or any license,
franchise or permit, or subject to any order, writ, injunction or decree which
would be in any material respect breached or violated by the execution, delivery
or performance of this Agreement.

 

3.4          Truth of Warranties, Representations, and Statements. All of the
statements, representations, and warranties made by Purchaser in this Agreement
are true and accurate in every material respect.

 

ARTICLE IV.
COVENANTS OF SELLER

 

Seller covenants and agrees during the period after the Effective Date and
through and including the Closing Date as follows:

 

4.1          Regular Course of Business. Seller shall: (a) operate the Facility
in a manner consistent with all Applicable Laws, Seller’s past practices and
industry standards for operation of a [DESCRIBE USE]; (b) maintain the Assets in
good order and repair and otherwise in sufficient repair, order and condition to
satisfy the representations and warranties as to the condition and quantity of
the Assets set forth in Article II; (c) comply with all Applicable Laws with
respect to the Assets and the operation thereof, including, without limitation,
all required regulatory standards of any Governmental Authorities with
regulatory jurisdiction over the Facility and compliance with all Governmental
Programs; (d) maintain and comply with, all Tenant Leases, each without change
except as expressly provided herein; (e) not make any changes or modifications
in any Tenant Leases unless such changes or modifications are in accordance with
sound business judgment and do not adversely affect the operation of the
Facility; (f) not enter into any agreements or leases that would have had to be
disclosed on any exhibit hereto had such agreements or leases been entered into
prior to the Effective Date without prior written notice to Purchaser and
Purchaser's approval thereof, which approval shall not be unreasonably withheld;
(g) keep in full force and effect present insurance policies through the Closing
Date; (h) maintain and comply with, all Tenant Leases, each without change
except as expressly provided herein; (i) not make any changes or modifications
in any Tenant Leases unless such changes or modifications are in accordance with
sound business judgment and do not adversely affect the operation of the
Facility; and (j) maintain in good standing all Licenses and use commercially
reasonable efforts to maintain all goodwill of tenants under the Tenant Leases.

 

 12 

 

 

4.2       Full Access and Disclosure. The term "Facility Management" means the
following personnel: the principals of Seller, any regional vice presidents (or
other personnel with managerial oversight of the Facility), the director or
executive director, as applicable, of the Facility, the head nurse at the
Facility and the head maintenance person at the Facility. On the Effective Date,
Seller shall notify the Facility Management of the pending sale/leaseback of the
Facility to Purchaser and instruct the Facility Management to fully cooperate
with Purchaser and to treat the pending sale with utmost confidentiality.
Thereafter, Seller shall afford to Purchaser and its counsel, accountants,
environmental consultants, engineers, appraisers, lenders and other authorized
representatives (collectively, "Purchaser’s Representatives") access to the
Facility during business hours, including, but not limited to, the roof, all
FF&E, the heating and cooling systems, and any and all financial data and
records, operating data and other information requested, including the Most
Recent Financial Statements, audits, inspection reports, plans of correction
with respect to Licensing Surveys, payroll information, Government Program
reports, employment agreements, personnel policies, and all contracts,
agreements, correspondence files and other documents relating to the Facility so
that Purchaser may have a full opportunity to make such investigations of the
Assets and the Facility as Purchaser shall desire to make. Seller shall be
entitled to have a representative present during Purchaser’s scheduled visits.
Prior to expiration of the Due Diligence Period, Purchaser’s access to personnel
shall be limited to meeting with the Facility Management, unless otherwise
approved by Seller, which approval may not be unreasonably withheld. At the
request of either Purchaser or Seller, within five (5) Business Days after the
expiration of the Due Diligence Period (and assuming this Agreement is not
terminated), Seller and Purchaser shall hold joint meetings at the Facility with
the facility-based Employees to announce that the Facility will be sold to
Purchaser and leased to Tenant. At any time after those meetings, Purchaser will
be entitled to meet with and interview any and all Employees. Seller shall
furnish such additional financial and operating data and other information as
Purchaser and Purchaser’s Representatives shall from time to time request, and
Seller shall supplement or amend any information, written or otherwise,
previously delivered or otherwise disclosed to Purchaser with respect to any
matter hereafter arising which, if existing or occurring at the Effective Date,
would have been required to be set forth or disclosed.

 

4.3       Borrowing. Seller shall not create or permit to become effective any
mortgage, pledge, lien, encumbrance or charge of any kind upon all or any
portion of the Assets.

 

4.4       Consents. Seller shall obtain, at Seller’s cost and expense, on or
prior to Closing, all consents necessary for Seller, Tenant and Guarantor to
fulfill Seller’s, Tenant’s and Guarantor’s obligations to consummate the
transactions contemplated hereby and pursuant to the Facility Lease and the
Guaranty, including, without limitation, any required consents of any
Governmental Authority.

 

4.5       Compliance with Laws. Seller shall comply with all Applicable Laws in
conjunction with the execution, delivery and performance of this Agreement, the
transactions contemplated hereby and the ownership, operation and maintenance of
the Facility prior to Closing.

 

 13 

 

 

4.6         Taxes. Seller shall file all federal, state and local returns, and,
to the extent applicable, estimates and reports and pay all amounts then due,
for all taxes for all periods through and including the Closing Date to the
extent due and payable at any time prior to the Closing Date hereunder and
otherwise to the extent necessary to transfer the Facility to Purchaser in
accordance with the terms of this Agreement.

 

4.7         No Disposition of Assets. Seller shall not sell, lease or otherwise
dispose of or distribute any of the Assets or properties related thereto or
necessary for operation of the Facility and, to the extent depleted or replaced
in the ordinary course, Seller shall restock and replenish any portion of the
Assets consumed or used between the Effective Date and the Closing Date with
Assets of comparable quality.

 

4.8         Further Documentation. Seller agrees that following the Closing,
upon request by Purchaser, Seller will do, execute, acknowledge, and deliver, or
cause to be done, executed, acknowledged, and delivered, all such further acts,
deeds, assignments, transfers, conveyances and assurances as may be reasonably
required, in order to more fully assign, grant, transfer, convey, assure and
confirm to Purchaser, or to its successors and assigns, or for aiding and
assisting in collecting and reducing to possession, any or all of the Assets to
be sold to Purchaser pursuant to this Agreement. This Section shall survive
Closing.

 

4.9         Confidentiality. Seller will use its commercially reasonable efforts
to keep confidential all information relating to the terms of this Agreement and
all information relating to Purchaser (other than information that is a matter
of public knowledge or that has heretofore been or is hereafter published in any
publication for public distribution or filed as public information with any
Governmental Authority) and such information shall not at any time be used for
the advantage of Seller or its representatives or disclosed to third parties
(including Facility-based Employees) by Seller or its representatives, other
than to the extent necessary to consummate the transactions contemplated hereby
or as required by Applicable Law.

 

4.10       Title Insurance and Survey; Environmental Assessments.

 

(a)          Existing Title Documents. As part of its delivery of the items on
the Preliminary Due Diligence Checklist, Seller will provide to Purchaser a copy
of Seller’s currently effective title insurance policy and plats and surveys in
its possession that relate to the Real Property.

 

 14 

 

 

(b)          Title Commitment and Survey. Purchaser, at Purchaser’s option,
shall use commercially reasonable efforts to obtain the following prior to the
expiration of the Due Diligence Period: (i) an updated real property survey for
the Facility (the "Survey"), and (ii)  a title commitment for the Facility (the
"Title Commitment"), issued by a national title company selected by Purchaser
(the "Title Company"), which Title Commitment shall contain a commitment by the
Title Company to issue to Purchaser a title insurance policy on an extended
coverage ALTA Owner’s form, in form and substance reasonably acceptable to
Purchaser (the "Title Policy") insuring the valid fee simple title to the
Facility. In the event that Purchaser is unable to obtain the Survey and Title
Commitment prior to the expiration of this Due Diligence Period, the Due
Diligence Period shall be automatically extended until the date that is five (5)
Business days after Purchaser receives both the Survey and Title Commitment.
Seller will cause all standard exceptions to be deleted from the Title Policy at
the Closing, other than exceptions for (i) such itemized matters shown on the
Survey to which Purchaser does not object pursuant to the provisions hereof and
(ii) taxes for the year in which the Closing occurs which are not yet due and
payable, and Seller will execute and deliver or otherwise obtain such documents
and instruments as the Title Company shall require, including, without
limitation, Seller’s affidavits, gap indemnities and the like. Purchaser shall
have until the expiration of the Due Diligence Period to give written notice to
Seller accepting or objecting to the Title Commitment and Survey, with any such
notice of objection specifying the exceptions or other matters to which
Purchaser objects. The failure of Purchaser to object to any matter reflected in
the Title Commitment or Survey prior to the expiration of the Due Diligence
Period shall cause such matter to become a Permitted Encumbrance; provided,
however, Seller shall be unconditionally obligated to pay any outstanding
indebtedness evidenced by, and cause the release of any lien, mortgage, deed of
trust, deed to secure debt, security agreement, judgment, tax lien or other
encumbrance affecting the Assets and capable of being released through or as a
result of the payment of money (collectively, "Monetary Encumbrances")
irrespective of whether Purchaser objects to same unless and only to the extent
that such obligation is waived in writing by Purchaser. Notwithstanding the
foregoing, Purchaser shall not have the right to object to any matters created
or consented to in separate written consent by Purchaser, all of which shall be
deemed to be "Permitted Encumbrances" hereunder. If Purchaser objects to any
encumbrance or other matter reflected in the Title Commitment or Survey, Seller
shall have ten (10) Business Days from the date of the notice of such objection
within which to cure the same (which cure may be effected by payment and
discharge of the objectionable item or by causing the Title Company to remove
the same as an exception or affirmatively insure over such item provided such
affirmative insurance shall be reasonably satisfactory to Purchaser and any
lender of Purchaser and sufficient, in Purchaser’s reasonable judgment, to
adequately address Purchaser’s and any lender’s concerns with respect to such
matter) and in the event Seller shall fail or refuse to do so within said ten
(10) Business Day period, Purchaser shall have five (5) Business Days thereafter
in which to advise Seller in writing of Purchaser’s election (x) to make such
payments as are necessary to effect releases of such claims Seller is not
prepared to cure and to proceed to Closing or (y) to terminate this Agreement by
notice to Seller, in which case the Deposit Balance shall be refunded to Seller,
and neither party shall have any further rights, duties or obligations hereunder
or (z) to extend the Closing Date for a period not to exceed thirty (30) days to
enable Purchaser or Seller to so cure; provided, however, (i) Purchaser shall
have the right, but shall not be obligated, to cure such matters, (ii) if
neither party cures such matters in said thirty (30) day period, Purchaser shall
again have the right to terminate this Agreement, in which case the Deposit
Balance shall be refunded to Seller, and neither party shall have any further
rights, duties or obligations hereunder and (iii) any such extension shall not
limit or affect Seller’s absolute obligation hereunder to cure all Monetary
Encumbrances. In the event that any update to the Title Commitment prior to or
on the Closing Date reveals any new matter not previously shown or disclosed on
the prior Title Commitment, then Purchaser will have the same rights of
objection, termination and extension of the Closing Date, and Seller will have
the same obligations of cure, as set forth above. In the event Seller undertakes
or commits to cure any item to which Purchaser objects and does not cure the
same on or before Closing, completion of such cure to Purchaser’s satisfaction
shall be a condition to Purchaser’s obligation to close the transaction
contemplated herein.

 

 15 

 

 

(c)          Environmental Reports. Seller will provide copies of any previously
prepared Phase I environmental assessments or other environmental assessments in
Seller’s possession conducted for the Facility pursuant to the Preliminary Due
Diligence Checklist and Seller will permit Purchaser and its agents to conduct
an environmental assessment for the Facility (the "Phase I"). Purchaser will
have until the expiration of the Due Diligence Period to approve or disapprove
the Phase I in writing delivered to Seller. If the Phase I recommends that a
Phase II Environmental Assessment (a "Phase II") be ordered for the Facility,
then Purchaser will use commercially reasonable efforts to obtain such Phase II
prior to the expiration of the Due Diligence Period. If the Phase II is not
completed prior to the expiration of the Due Diligence Period, the Due Diligence
Period shall automatically be extended until the date that is five (5) Business
Days after the date that Purchaser receives the Phase II. Should Purchaser
disapprove of any matter set forth in the Phase I or Phase II, Purchaser shall
notify Seller in writing of such disapproval at or prior to the expiration of
the Due Diligence Period (as such period may be extended as contemplated above)
(the "Environmental Notice"). The failure of Purchaser to deliver an
Environmental Notice to Seller on or prior to the expiration of the Due
Diligence Period shall be deemed to be a waiver by Purchaser of any right to
disapprove any matter specifically set forth in the Phase I or Phase II,
respectively. If Purchaser delivers an Environmental Notice to Seller prior to
the expiration of the Due Diligence Period, Seller shall have ten (10) Business
Days from the date of Seller’s receipt of such Environmental Notice in which to
advise Purchaser whether or not Seller will cure the same prior to Closing, and
if Seller fails or refuses to do so within said ten (10) Business Day period,
Purchaser shall have five (5) Business Days thereafter in which to advise Seller
in writing of Purchaser’s election (x) to waive the matters to which Purchaser
objected and to proceed to Closing or (y) to terminate this Agreement by notice
to Seller, in which case the Deposit Balance shall be refunded to Seller, and
neither party shall have any further rights, duties or obligations hereunder or
(z) to extend the Closing Date for a period not to exceed thirty (30) days to
enable Purchaser or Seller to so cure; provided, however, (i) Purchaser shall
have the right, but shall not be obligated, to cure such matters and (ii) if
neither party cures such matters in said thirty (30) day period, Purchaser shall
again have the right to terminate this Agreement, in which case the Deposit
Balance shall be refunded to Seller, and neither party shall have any further
rights, duties or obligations hereunder.

 

(d)          No Solicitation. After the Effective Date and before the Closing
Date, Seller shall not directly or indirectly, through any officer, director,
employee, agent or otherwise, solicit, initiate or encourage submission of
proposals or offers from any person relating to any acquisition of all or any
portion of the Assets, or any assets of or equity interest in Seller or any
business combination involving Seller, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing.

 

(e)          Surveys; Relicensing Surveys and Cooperation. Seller shall provide
to Purchaser any Licensure Surveys, including, without limitation, reports,
waivers of deficiency, plans of correction, and any other investigation reports
issued with respect to the Facility between the Effective Date and the Closing
Date. Seller shall be obligated to deliver to Purchaser upon Purchaser’s request
all information and documentation within Seller’s control to enable Purchaser to
make timely filings with the Governmental Authorities.

 

 16 

 

 

(f)          Capital Expenditures. Seller shall complete all capital projects as
needed on an emergency basis or as otherwise required to maintain the Facility
in good operating condition in a good and workmanlike manner, using materials
and labor, all at Seller’s sole cost and expense.

 

(g)          Changes in Representations and Warranties. Throughout the period
from the Effective Date through and including the Closing Date, Seller shall
give Purchaser prompt written notice of (i) any representation and warranty made
by Seller in this Agreement which Seller hereafter learns was inaccurate or
incorrect when originally made and (ii) any event, change or occurrence which
would make any representation or warranty of Seller inaccurate or incorrect as
of the time of such event, change or occurrence (Seller hereby acknowledging and
agreeing that all representations and warranties of Seller herein are hereby
deemed to re-made and re-affirmed by Seller each and every day while this
Agreement is in effect) and (iii) any event, change or occurrence which will or
reasonably may be anticipated to prevent Seller from making the same
representations and warranties as set forth herein on and as of the Closing
Date. The giving of any such notices shall not limit or modify any rights of
Purchaser hereunder arising in the case of a breach of a representation or
warranty by Seller, and Purchaser shall have the right to terminate this
Agreement at any time prior to Closing following receipt by Purchaser of any
such notice of a materially inaccurate or incorrect representation or warranty,
such determination of materiality to be made by Purchaser in its sole
discretion.

 

ARTICLE V.
COVENANTS OF PURCHASER

 

Purchaser covenants and agrees with Seller that:

 

5.1         Confidentiality. Prior to Closing, Purchaser will use its
commercially reasonable efforts to keep confidential all information relating to
the terms of this Agreement, all information relating to Seller, and all
financial statements, drawings, designs, customer and supplier lists by
Purchaser (other than information which is a matter of public knowledge or which
has heretofore been or is hereafter published in any publication for public
distribution or filed as public information with any governmental authority or
disclosed pursuant to Applicable Law, order, subpoena or demand of any
Governmental Authority (including any disclosure required of Purchaser’s parent
company pursuant to applicable securities laws) or as is necessary to be
disclosed to lessors, lenders, Governmental Authorities, Purchaser and
Purchaser’s employees and third parties in order to consummate this
transaction).

 

5.2         Compliance with Laws. Purchaser shall comply in all material
respects with all Applicable Laws Purchaser is required to comply with in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby.

 

 17 

 

 

5.3         Required Consents; Governmental Approvals.

 

(a)          Subject to Purchaser's performance of its obligation to cooperate
and provide information as contemplated herein, Seller shall make all filings
with Governmental Authorities, and use commercially reasonable efforts to seek
to obtain all permits, approvals, authorizations and consents of all
Governmental Authorities required to consummate the transactions contemplated by
this Agreement, including, without limitation, filing applications to obtain all
necessary or appropriate approvals for all Licenses, agreements, certificates
and other consents from all Governmental Authorities, third parties and
Government Program agencies, including, without limitation, Government Program
provider agreements entered into with each applicable Governmental Authority and
the United States, if any, and any municipality, or other governmental agency or
administrative body that authorizes or regulates the operation of the Facility
and the conduct of the business thereon as presently operated upon terms and
conditions acceptable to Purchaser in its sole discretion (individually and
collectively, "Governmental Approvals"). Each party shall furnish promptly to
each other all information that is not otherwise available to the other party
and that such party may reasonably request in connection with any such filing.

 

(b)          The Governmental Approvals [PLEASE ADVISE OF
deal-specific/state-specific approvals REQUIRED WITH RESPECT TO LICENSURE] shall
be referred to as "Required Consents".

 

(c)          Further Documentation. Purchaser agrees that following the Closing
Date, upon request by Seller, Purchaser will do, execute, acknowledge, and
deliver, or cause to be done, executed, acknowledged, and delivered, all such
further acts, documents and assurances as may be reasonably required, without
enlarging or extending any obligations or liability of Purchaser under this
Agreement in any manner and without requiring the expenditure of funds by
Purchaser, as necessary to fully consummate the transactions contemplated by
this Agreement.

 

(d)          Changes in Representations and Warranties. Throughout the period
from the Effective Date through and including the Closing Date, Purchaser shall
give Seller prompt written notice of any representation and warranty made by
Purchaser in this Agreement which becomes materially inaccurate or incorrect, to
the extent Purchaser obtains knowledge of such inaccuracy or incorrectness.

 

ARTICLE VI.
INDEMNIFICATION

 

6.1         Indemnification by Seller. In addition to, and without limiting any
indemnification obligation of Seller, as lessee under the Facility Lease, Seller
unconditionally and irrevocably indemnifies, protects and agrees to defend and
hold harmless Purchaser from and against any and all loss, cost or expense,
including reasonable attorneys’ fees, arising from (i) the breach or violation
of any representation or warranty of Seller contained herein; (ii) the failure
of Seller to satisfy or perform any covenant or other provision contained
herein; (iii) any violation of any covenant, condition or restriction affecting
any Property; (iv) any encroachment of buildings or other improvements onto
adjoining lands or onto easements or licenses or rights-of-way located on any
Property which is not a Permitted Encumbrances; (v) the presence or existence of
any Hazardous Substance on, in or under any Property; and (vi) any claims made
against Purchaser by any third party arising out of the transactions
contemplated in this Agreement or the Exhibits hereto (collectively, "Purchaser
Indemnified Losses"). Payment shall not be a condition precedent to recovery
under the foregoing indemnification provision.

 

 18 

 

 

6.2         Indemnification by Purchaser. Purchaser hereby unconditionally and
irrevocably indemnifies, protects and agrees to defend and hold harmless Seller
from and against any and all loss, cost or expense, including costs and
reasonable legal fees, incurred by Seller as a result of the breach or violation
of any representation or warranty of Purchaser hereunder. Payment shall not be a
condition precedent to recovery under the foregoing indemnification provision.

 

6.3         Notification of Claims.

 

(a)          A party entitled to be indemnified pursuant to Section 6.1 or 6.2
(the "Indemnified Party") shall notify the party liable for such indemnification
(the "Indemnifying Party") in writing of any claim or demand which the
Indemnified Party has determined gives rise or will likely give rise to a right
of indemnification under this Agreement, as soon as possible after the
Indemnified Party becomes aware of such claim or demand and has made such
determination; provided, however, that the Indemnified Party’s failure to give
such notice to the Indemnifying Party in a timely fashion shall not result in
the loss of the Indemnified Party’s rights with respect thereto except to the
extent the Indemnified Party is prejudiced by the delay. Subject to the
Indemnifying Party’s right to defend in good faith third party claims as
hereinafter provided, the Indemnifying Party shall satisfy its obligations under
this Article VII within thirty (30) days after the receipt of written notice
thereon from the Indemnified Party, it being agreed that the Indemnifying Party
need not satisfy such obligations during any period in which the Indemnifying
Party is defending in good faith the applicable third party claim in the manner
described hereinbelow.

 

(b)          If the Indemnified Party notifies the Indemnifying Party of any
claim or demand pursuant to Section 6.3(a), and if such claim or demand relates
to a claim or demand asserted by a third party against the Indemnified Party
which the Indemnifying Party acknowledges is a claim or demand for which it must
indemnify or hold harmless the Indemnified Party under Sections 6.1 or 6.2, the
Indemnifying Party shall have the right to either (i) pay such claim or demand
or (ii) employ counsel reasonably acceptable to the Indemnified Party to defend
any such claim or demand asserted against the Indemnified Party. The Indemnified
Party shall have the right to participate in the defense of any such claim or
demand. The Indemnifying Party shall notify the Indemnified Party in writing, as
promptly as possible (but in any case reasonably in advance of the due date for
the answer or response to a claim) after the date of the notice of claim given
by the Indemnified Party to the Indemnifying Party under Section 6.3(a) of its
election to defend in good faith any such third party claim or demand. So long
as the Indemnifying Party is defending in good faith any such claim or demand
asserted by a third party against the Indemnified Party and is able to
demonstrate to the Indemnified Party its financial wherewithal to fully perform
its indemnification obligation in the event such contested claim is resolved
adversely to the Indemnified Party, the Indemnified Party shall not settle or
compromise such claim or demand. The Indemnified Party shall make available to
such counsel all records and other materials in the Indemnified Party’s
possession reasonably required by it for its use in contesting any third party
claim or demand. Whether or not the Indemnifying Party elects to defend any such
claim or demand, the Indemnified Party shall have no obligations to do so.

 

 19 

 

 

(c)          The Indemnified Party shall have the right to participate in any
matter through counsel of its own choosing at its own expense (unless the
Indemnified Party determines in good faith that there is a conflict of interest
that prevents counsel for the Indemnifying Party from representing the
Indemnified Party, in which case the Indemnifying Party will have the right to
choose and fund other counsel to represent the Indemnified Party or to reimburse
the Indemnified Party for the expenses of its counsel). After the Indemnifying
Party has notified the Indemnified Party of its intention to undertake to defend
or settle any such Third Party Claim, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such Third Party Claim, except to the extent
such participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for reasonable
legal expenses and out-of-pocket expenses incurred in connection with such
requested participation.

 

(d)          An Indemnifying Party may not, without the prior written consent of
the Indemnified Party, settle or compromise any claim against an Indemnified
Party or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless such settlement, compromise or
consent includes an unconditional release of the Indemnified Party from all
liability arising out of such claim and does not contain any equitable order,
judgment or term which in any manner affects, restrains or interferes with the
business of the Indemnified Party or any of the Indemnified Party’s affiliates.

 

ARTICLE VII.
CONDITIONS TO THE OBLIGATIONS OF PURCHASER

 

Each and every obligation of Purchaser under this Agreement, except for the
obligations of Purchaser to be fulfilled prior to the Closing and obligations
that survive termination of this Agreement, shall be subject to the
satisfaction, on or before the Closing, of each of the following conditions set
forth in this Article, unless waived in writing by Purchaser. The following
constitute material conditions to Purchaser’s performance hereunder, the failure
of any of which shall entitle Purchaser to terminate this Agreement upon written
notice to Seller:

 

7.1          Representations and Warranties; Performance.

 

(a)          The representations and warranties made by Seller herein and in the
Related Documents shall be true and correct in all material respects
(materiality to be determined by Purchaser in its discretion) as of the
Effective Date and at and as of the Closing, with the same effect as though made
on such date.

 

(b)          Seller shall have performed and complied with each of its covenants
pursuant to this Agreement or any Related Documents in all material respects
through the Closing.

 

7.2          Required Consents; Authorization.

 

(a)          Purchaser or its designee shall have received or obtained all
internal approvals and Required Consents.

 

 20 

 

 

(b)          Purchaser shall have received certified copies of resolutions duly
adopted by the board of directors of Seller (or Seller’s general partner,
manager or members, as appropriate) approving the transactions contemplated by
this Agreement.

 

(c)          No Destruction or Condemnation of Property. The Facility shall not
have suffered material damage, destruction or condemnation loss (or received
notice of an impending condemnation loss). If, after the Effective Date, the
Facility incurs damage, destruction or condemnation loss (or received notice of
an impending condemnation loss) which is not material damage, destruction or
loss, Seller shall be required to repair any such damage, destruction or loss
(in all instances to restore the Facility to fully functional status consistent
with prior operation) before Purchaser shall be obligated to proceed to Closing.
For the purposes of this Section, "material damage, destruction or loss," shall
mean damage to, or condemnation loss (or impending condemnation loss) that (a)
is reasonably expected to cost $100,000.00 or more to repair, (b) materially
interferes with the operation of the Facility or (c) renders the Facility less
than a functional structure in which Seller can operate the business currently
conducted thereon.

 

(d)          No Proceeding or Litigation. No injunction, judgment, order,
decree, ruling or charge shall be in effect under any action, suit or proceeding
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator that (i) prevents
consummation of any of the transactions contemplated by this Agreement or the
Facility Lease or (ii) would cause any of the transactions contemplated by this
Agreement or the Facility Lease to be rescinded following consummation, provided
that Purchaser has not solicited or encouraged any such action, suit or
proceeding.

 

(e)          Title Insurance. Title to the Real Property shall be as required by
Section 4.10 above, Purchaser shall have received the Title Policy in the form
therein free and clear of encumbrances other than the Permitted Encumbrances.

 

(f)          Material Adverse Change. There has been no Material Adverse Change.
For purposes hereof, the term "Material Adverse Change" shall mean any change or
event or effect that is materially adverse to the Assets, business, prospects or
financial condition of the Facility or in the adjusted net operating income of
the Facility, each as reasonably determined by Purchaser.

 

(g)          Other Agreements. Seller shall have delivered into the Closing
escrow its countersigned copies of the Seller Documents.

 

(h)          Purchaser Financing. On terms and conditions satisfactory to
Purchaser in its sole discretion, Purchaser shall have obtained financing
secured by the Assets to complete the transaction contemplated by this
Agreement. Seller shall reasonably cooperate with Purchaser to provide
documents, records, financial statements and other such information as may be
requested by Purchaser’s lender in order for Purchaser to secure necessary
financing. Such cooperation shall include, without limitation, execution and
delivery of a subordination agreement for the Facility Lease, if required.

 

 21 

 

 

ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF SELLER

 

Each and every obligation of Seller under this Agreement, except for the
obligations to be fulfilled prior to the Closing and obligations that survive
termination of this Agreement, shall be subject to the satisfaction, on or
before the Closing, of each of the following conditions unless waived in writing
by Seller:

 

8.1          Representations and Warranties; Performance.

 

(a)          The representations and warranties made by Purchaser herein and in
the Related Documents, shall be true and correct in all material respects on and
as of the Effective Date and at and as of the Closing, with the same effect as
though made on such date.

 

(b)          Purchaser shall have performed and complied with all covenants
required by this Agreement to be performed and complied in all material respects
with by Purchaser prior to the Closing.

 

8.2          Other Agreements. Purchaser shall have delivered into the Closing
escrow its countersigned copies of the Purchaser Documents.

 

ARTICLE IX.
CLOSING

 

9.1          Possession and Closing Documents.

 

(a)          Possession. Possession of all Assets sold hereunder shall be
delivered to Purchaser on the Closing Date unless Tenant is entitled possession
thereto pursuant to the terms of the Facility Lease.

 

(b)          Closing Documents. Seller shall deliver to Purchaser on the Closing
Date:

 

(i)          A duly executed special warranty deed conveying the Real Property
and Improvements to Purchaser, free and clear of all encumbrances other than the
Permitted Encumbrances (the "Deed");

 

(ii)         A duly executed Bill of Sale for any personal property that is a
part of the Facility, in the form attached hereto as Exhibit I;

 

(iii)        An assignment of the Tenant Leases to Tenant, in the form attached
as Exhibit J. It is understood that the Tenant Leases will be subleases after
Closing.

 

(iv)        Such additional bills of sale, certificates of title and other
appropriate instruments of assignment and conveyance, in form mutually but
reasonably satisfactory to Purchaser and Seller, dated as of the Closing,
conveying all title to the Assets, free and clear of all liens, liabilities,
security interests or encumbrances except as otherwise permitted herein;

 

 22 

 

 

(v)         Evidence of the authority of Seller to execute and deliver the
Seller Documents in order to effectuate the Closing;

 

(vi)        Duly executed affidavit in form satisfactory to obtain the Title
Policy, without exception for mechanic’s, materialman’s or other statutory
liens;

 

(vii)       A closing statement setting forth in reasonable detail the financial
transactions contemplated by this Agreement, including, without limitation, the
Purchase Price, all prorations, and the allocation of costs specified herein
("Closing Statement"), duly executed by Seller;

 

(viii)      A duly executed bring-down certificate in form acceptable to
Purchaser, reaffirming that the representations and warranties of Seller are
true and correct as of the Closing Date;

 

(ix)         A duly executed certificate and affidavit of non-foreign status;

 

(x)          The duly executed Facility Lease and Guaranty in the form attached
as Exhibit K. In addition, Tenant, as Tenant, shall execute and deliver to
Purchaser, as lessor, such Uniform Commercial Code financing statements and/or
fixture filings evidencing Purchaser’s ownership of the Personal Property. Such
financing statements and/or fixture filings shall describe with particularity
the Personal Property, shall be in form sufficient for recording or filing, as
applicable, with the appropriate Governmental Authority and shall be otherwise
satisfactory to Purchaser; and

 

(xi)         Any other documents reasonably required by the Title Company.

 

(c)          Purchaser shall deliver to Seller or cause to be delivered to
Seller on the Closing Date, in addition to the Deposits set forth in Section 1.4
above, the following:

 

(i)          the duly executed Facility Lease;

 

(ii)         the Closing Statement.

 

9.2          Closing Adjustments. There shall be no adjustment of taxes,
assessments, water charges, utilities, receivables or rents, if any, premiums on
existing insurance policies, if any, or any other items relating to the Assets,
it being understood by the parties that Seller, as lessee under the Facility
Lease, shall be obligated to pay the same under the terms thereof from and after
the Closing Date.

 

9.3          Closing Costs. Seller shall pay all Closing costs up to One Hundred
Thousand and No/100 Dollars ($100,000.00) (the “Cap”), including without
limitation (i) any escrow or closing charges of the Title Company, (ii) the
title exam fees and the premium for the Title Policy and Lender’s title policy
and the cost of all title endorsements required by Purchaser or its lender,
(iii) any recording fees associated the recording of the Deeds, (iv) all
grantor’s tax or other similar transfer taxes, (v) all costs (including
recording costs) to payoff and release any Monetary Encumbrance, (vi) any
brokerage fees associated with this transaction, (vii) the costs of any UCC
searches required by Purchaser or its lender; (viii) costs associated with the
inspections and investigations conducted by Purchaser or its agents or
representatives during the Due Diligence Period to the extent not covered by the
Deposit; (v) all expenses incident to any financing obtained for the purchase of
the Assets; and (vi) attorney’s fees for Seller, Purchaser and any Purchaser’s
lender. The Deposit shall be applied to the Closing costs to be borne by Seller,
with any excess remaining to be refunded to Seller at Closing. Seller shall
either (i) bear the Closing costs up to the Cap; or (ii) the Closing costs up to
the Cap to the Purchase Price at Closing, provided the Minimum Rent payable
under the Facility Lease will be increased accordingly. Purchaser shall pay all
Closing costs in excess of the Cap.

 

 23 

 

 

ARTICLE X.
DEFAULT; REMEDIES

 

10.1        Purchaser’s Default. If at any time Purchaser is in default of any
representation, warranty or covenant of Purchaser under this Agreement in any
material respect, and Seller gives notice of such default to Purchaser
("Seller’s Notice") then Purchaser will have a period expiring on the tenth
(10th) Business Day after the date of Seller’s Notice ("Purchaser’s Cure
Period"), to (i) correct or cure Purchaser’s default or (ii) if the Due
Diligence Period has not expired, to terminate this Agreement by notice to
Seller, whereupon the Deposit Balance shall be returned to Seller and neither
party shall have any further rights, duties or obligations hereunder except as
expressly survive the termination hereof.

 

10.2        Default Cured. If Purchaser does not elect to terminate during the
Due Diligence Period, and Purchaser’s default is corrected or cured within
Purchaser’s Cure Period, the parties shall proceed to Closing as herein
provided, with the Closing Date being extended by not more than fourteen (14)
days to accommodate any delay resulting from such default.

 

10.3        Default Not Cured. If Purchaser does not elect to terminate during
the Due Diligence Period, and Purchaser does not cure its default within the
Purchaser’s Cure Period, then, provided no default by Seller then exists and
provided that Seller has not elected to waive such default, this Agreement shall
terminate and the parties shall be released and discharged of and from all
further obligations and liabilities under this Agreement, and the Deposit
Balance shall be paid to Seller as Seller’s sole and exclusive liquidated
damages and in full and complete settlement and liquidation of all damages
sustained by Seller, it being acknowledged by Seller and Purchaser that the
amount of damages incurred by Seller as a result of Purchaser’s default would be
substantial but difficult, if not impossible, to ascertain and that such
liquidated damages represent the parties’ best estimate of the damages Seller
will incur as a result of such default. Seller shall not be entitled to exercise
any other rights, powers or remedies at law or in equity, other than its right
to receive the Deposit Balance pursuant hereto, and Seller hereby expressly and
irrevocably waives all such other rights, powers and remedies and hereby
covenants not to sue.

 

10.4        Seller’s Default. If Seller is in default of any representation,
warranty or covenant of Seller under this Agreement in any material respect and
Purchaser gives notice of such default to Seller ("Purchaser’s Notice"), then
Seller will have a period expiring on the tenth (10th) Business Day after the
date of Purchaser’s Notice ("Seller’s Cure Period"), to correct or cure Seller’s
default.

 

 24 

 

 

10.5        Default Cured. If Seller’s default is corrected or cured within
Seller’s Cure Period, the parties shall proceed to Closing as herein provided,
with the Closing Date being extended by not more than fourteen (14) days to
accommodate any delay resulting from such default.

 

10.6        Default Not Cured. If Seller does not cure its default within the
Seller’s Cure Period then, upon notice to Seller, Purchaser may elect to either
(i) proceed to Closing, in which case, in addition to the right to monetary
damages resulting from such default, Purchaser will have the right to maintain
an equitable action against Seller for specific performance of its obligation to
sell the Assets and to perform hereunder; or (ii) terminate this Agreement. If
Purchaser elects to terminate this Agreement under subsection (ii) above, then
(A) the Deposit shall be retained by Purchaser; and (B) Purchaser shall be
entitled to pursue an action for damages against Seller.

 

ARTICLE XI.
MISCELLANEOUS PROVISIONS

 

11.1        Amendment and Modification. This Agreement may be amended, modified
and supplemented only by written agreement of all the parties with respect to
any of the terms contained herein.

 

11.2        Waiver of Compliance; Consent. Any failure of Seller on the one
hand, or Purchaser, on the other hand, to comply with any obligation, covenant,
agreement or condition may be waived in writing by the other party, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section.

 

11.3        Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be personally
delivered, or sent by facsimile transmission (provided a copy is thereafter
promptly mailed as hereinafter provided), or sent by overnight commercial
delivery service (provided a receipt is available with respect to such
delivery), or mailed by first-class registered or certified mail, return receipt
requested, postage prepaid (and shall be effective when received, if sent by
personal delivery or by facsimile transmission or by overnight delivery service,
or on the third (3rd) day after mailing, if mailed):

 

If to Seller, to:           [Cherry Hills Real Estate, LLC]                    
Attention:       Fax No.:       E-mail:    

 

 25 

 

 

with copies to (which shall not constitute notice):                            
        Attention:       Fax No.:       E-mail:    

 

If to Purchaser, to:

        Global Medical REIT, Inc.     4800 Montgomery Lane, Suite 450    
Bethesda, Maryland 20814     Fax: 202 380 0891     Email:
AlfonsoL@GlobalMedicalREIT.com           with a copy to:           Bradley Arant
Boult Cummings LLP     1600 Division Street, Suite 700     Nashville, TN 37203  
  Attn: Ann Peldo Cargile     Fax: 615-252-2373     Email:  acargile@babc.com  

 

or to such other person or address as any party shall furnish to the other
parties in writing pursuant to this Section. Notwithstanding the foregoing,
Purchaser shall be permitted in connection with the exercise of its rights to
terminate this Agreement or to give title, survey or environmental objections on
or before the expiration of the Due Diligence Period to send any such
termination or objection notice via electronic mail which shall constitute
effective delivery for purposes hereof.

 

11.4        Brokers and Finders; Expenses. Except for Seller’s retention of
_________________, whose compensation shall be the sole obligation and
responsibility of Seller, the parties hereto represent and warrant to each other
that none of them has retained any broker or finder in connection with this
transaction. Seller on the one hand, and Purchaser, on the other, each agrees to
indemnify the other for any losses incurred with respect to a breach of this
Section. Except as otherwise provided herein, each party hereto shall bear its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.

 

11.5        Attorney’s Fees. In the event any proceeding or suit is brought to
enforce this Agreement, the prevailing party shall be entitled to all reasonable
costs and expenses (including reasonable attorneys’ fees) incurred by such party
in connection with any action, suit or proceeding to enforce the other’s
obligations under this Agreement.

 

 26 

 

 

11.6        Assignment. This Agreement and all the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective heirs,
successors and permitted assigns. Purchaser may assign its rights under the
Agreement to an affiliate that controls Purchaser or is controlled by Purchaser
or is under common control with Purchaser, including joint venture entities in
which Purchaser or its affiliates share control with third parties, without the
prior written consent of Seller (each such assignee a "Purchaser’s Permitted
Assignee"). Other than the foregoing, neither Purchaser nor Seller may assign
this Agreement without first obtaining the other party’s written consent, which
may be withheld in such other party’s sole discretion. Upon an assignment by
Purchaser of its rights under the Agreement in accordance with this Section,
Purchaser’s Permitted Assignee(s) shall be deemed to be the Purchaser hereunder
and shall be the beneficiary of all of Seller’s warranties, representations and
covenants in favor of Purchaser under this Agreement. If there is more than one
Seller hereunder, the obligations of Sellers hereunder shall be joint and
several.

 

11.7        Governing Law. This Agreement shall be governed by the laws of the
State where the Facility is located as to, including, but not limited to,
matters of validity, construction, effect and performance but exclusive of its
conflicts of laws provisions.

 

11.8        Business Day. If the date for the giving of notice or performance of
any duty or obligation hereunder falls on a day that is not a Business Day, such
date shall be automatically extended to the next Business Day. As used herein, a
"Business Day" means any day other than a Saturday, Sunday or any other day on
which banks are authorized to be closed in the State of Tennessee.

 

11.9        Counterparts; Facsimile Signature. This Agreement may be executed in
two (2) or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. Executed
counterparts of this Agreement or any amendment hereto may be delivered by
electronic or facsimile transmission.

 

11.10      Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

11.11      Entire Agreement. This Agreement, which term as used throughout
includes the Exhibits hereto, embodies the entire agreement and understanding of
the parties in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to such subject matters contained herein.

 

11.12      Warranty of Authority. Each of the parties warrants that the persons
signing on their behalf have the right and power to enter into this Agreement
and to bind them to the terms of this Agreement.

 

11.13      Exhibits. Nothing in any Exhibit shall be deemed adequate to disclose
an exception to a representation or warranty made herein unless the applicable
Exhibit identifies the exception and the specific representation to which it
relates with reasonable particularity and describes the relevant facts in
reasonable detail. Any fact or item disclosed on any Exhibit hereto shall not be
deemed by reason only of such inclusion, to be material and shall not be
employed as a point of reference in determining any standard of materiality
under this Agreement.

 

 27 

 

 

11.14      Reliance. In executing and in carrying out the provisions of this
Agreement, the parties are relying solely on the representations, warranties and
agreements contained in this Agreement and on any writing delivered pursuant to
provisions of this Agreement or at the Closing of the transactions herein
provided for and not upon any representation, warranty, agreement, promise or
information, written or oral, made by any person other than as specifically set
forth herein or therein.

 

11.15      Publicity. No party shall issue any press release or public
announcement relating to the subject matter of this Agreement without the prior
written approval of the other parties, which approval shall not be unreasonably
withheld or delayed; provided, however, that any party may make the following
public disclosure (without the consent of the other party): (a) if prior to
Closing, such disclosure it believes in good faith is required by Applicable Law
or stock market rule; or (b) if post-Closing, disclosure of such of the
principal terms of the transaction contemplated by this Agreement that such
party elects to make.

 

11.16      Waiver of Jury Trial. EACH OF THE PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION BROUGHT ON OR WITH RESPECT TO
THIS AGREEMENT, INCLUDING TO ENFORCE OR DEFEND ANY RIGHTS HEREUNDER, AND AGREES
THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

[SIGNATURE PAGES FOLLOW]

 

 28 

 

 

IN WITNESS WHEREOF, the parties hereto have executed or have caused their duly
authorized officers to execute this Agreement as of the date first written
above.

 

  GLOBAL MEDICAL REIT, INC., a Maryland corporation         By:       Chief
Executive Officer         Date: ____________, 20__

 

[SELLER’S SIGNATURE PAGES TO FOLLOW]

 

 29 

 

 

IN WITNESS WHEREOF, the parties hereto have executed or have caused their duly
authorized officers to execute this Agreement as of the date first written
above.

 

  [CHERRY HILLS REAL ESTATE, LLC, a  limited liability company]         By:    
Name:     Title:           Date: _____________, 20__

 

 30 

 

 

EXHIBIT A

 

The Facility

 

Name   Address   Type Surgical Institute of Michigan   33545 Cherry Hill Rd,
Westland, Michigan   Surgery Center

 

 

 

 

EXHIBIT B

 

Legal Description of the Real Property

 

 

 

 

EXHIBIT C

 

Preliminary Due Diligence Checklist

 

1. Company Information   a. Bios for key management team   b. Organizational
structure and ownership charts   c. Description of entity ownership, ownership
record book, and equity holder list   d. List of medical staff by specialty
(age, board certification)   e. Description of physician recruitment efforts and
plans   f. List/description of key contracts (physicians, managed care,
suppliers, software vendors, service agreements, facilities, etc.)   g.
Insurance certificate and loss run reports for the Operator/Tenant   h.
Description of current loans and material covenants   i. Description of any
pending, threatened, or past litigations 2. Certification, Compliance, and
Regulator   a. Accreditation certificates (JCAHO, AAAHC, etc.) and any
accreditation survey reports and the responses to any noted deficiencies or to
conditional accreditation   b. Any governmental approvals, permits,
certificates, registrations, licenses and the like required in order for the
facility to conduct its business   c. Quality reports or summary quality data
for the facility   d. Copies of Medicare Cost Report (if applicable)   e.
Summary of any notices from governmental entities regarding any possible
violations 3. Real Estate Physical Assessment Due Diligence   a. Environmental
Phase I and physical assessment condition reports   b. Surveys, title insurance
policy, and title commitments   c. Copies of any document affecting use of
property (easements, HOAs, CCRCs, etc)   d. Building floor plans and space
measurement reports   e. Any certificate or license needed to occupy and use the
building   f. List of major capital expenditures in the past three years   g.
Fixed asset roll-forward report and depreciation schedules 4. Financial
Information   a. Operator/Tenant and Guarantor Financial Statements   b. Cash
flow statement, income statement, and balance sheet   c. Year-end and
year-to-date for past three years   d. Monthly for trailing twelve months
(preferably in excel or text)   e. Current and next year detailed budget with
supporting assumptions   f. Entity that owns real estate being sold (if
applicable)   g. Cash flow statement, income statement, and balance sheet   h.
Year-end and year-to-date for past three years 5. Information on real estate
being sold   a. Copies of appraisals done to obtain bank financing   b. Copies
of utility bills for past two years   c. Copies of any leases or subleases   d.
Property tax bills for the past two years (assessment notice & tax bills)   e.
Summary/list of any building service contract (HVAC, elevators, etc)

 

 

 

 

6. Revenue Due Diligence   a. Revenue break downs, collection rate, A/R
schedule, and bad debt allowance by payor for past two years, including
out-of-network and co-pays percentages   b. Description of billing and
collections systems and practices   c. Utilization stats, case volumes and
revenue by specialty and by physician   d. List/decryption of contracts with
insurance companies

 

 2 

 

 

EXHIBIT D

 

Tenant Leases

 

Affiliates in Urology, P.C., a Michigan professional corporation.

 

 

 

 

EXHIBIT E

 

Licenses

 

 

 

 

EXHIBIT F

 

Required Notices to Governmental Authorities

 

 

 

 

EXHIBIT G

 

Litigation

 

 

 

 

EXHIBIT H

 

Insurance

 

 

 

 

EXHIBIT I

 

THIS BILL OF SALE AND ASSIGNMENT (this "Bill of Sale and Assignment")’ is made
this ____ day of __________, 2011, by and between __________________, a
______________ ("Transferor"), and __________________, a ______________
("Transferee"). All capitalized terms used herein, but not specifically defined
herein, shall have the meanings given to such terms in that certain Asset
Purchase Agreement dated of even date herewith (the "Agreement") by and between
Transferor and Transferee.

 

RECITALS

 

A.           Transferor is the owner of that certain real property located in
________________ County, -----------------, consisting of approximately
__________ acres as more particularly described in Exhibit A attached hereto and
incorporated herein by this reference (the "Land"). Transferor is also the owner
of all buildings, structures and other improvements situated on the Land
comprising the approximately ________ square foot, ________ unit ____________
facility (collectively, the "Improvements"), together with the Personal Property
(as defined herein) used in connection therewith. The Land and the Improvements
shall be referred to herein, collectively, as the "Facility."

 

B.           Pursuant to the Agreement, Transferor is required to transfer and
assign to Transferee as of the Closing Date (as defined in the Agreement) all of
Transferor’s right, title and interest in and to the Facility, including the
Personal Property.

 

C.           In order to perfect the transfer and vesting of the Personal
Property to and in Transferee and in order that Transferee shall be in
possession of an instrument evidencing the same, as set forth more fully herein
and in the Agreement, Transferor and Transferee have made and entered into this
Bill of Sale and Assignment.

 

NOW, THEREFORE, in consideration of the premises, the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby covenant and agree as
follows:

 

1.            Transfer and Assignment of Personal Property. Effective as of the
date hereof, Transferor hereby grants, assigns, transfers, conveys and delivers
to Transferee, absolutely and unconditionally, and free from all encumbrances
and other claims of any kind, all of Transferor’s right, title and interest in
and to the Personal Property (as defined in the Agreement). Transferor hereby
warrants and defends unto Transferee, its successors and assigns, all right,
title and interest in the Personal Property against every person whomsoever
claiming all or any part thereof or interest therein.

 

2.            Acceptance. Except as otherwise provided in the Agreement,
Transferee hereby accepts the foregoing transfer and assignment of Personal
Property.

 

 

 

 

3.          Further Assurances. Transferor transfers the Personal Property to
Transferee, its successor and assigns, to have and hold to and for its and their
own use and benefit forever. Transferor, for itself and its successors and
assigns, hereby covenants that, from time to time after the Closing Date, at
Transferee’s request and without further consideration, Transferor shall execute
and deliver such other instruments of conveyance and transfer and take such
other actions as Transferee reasonably may require to vest more effectively the
Personal Property in Transferee, its successors and assigns, and to place
Transferee in possession of the Personal Property, and to do all other things
and execute and deliver all other instruments and documents as may be required
to effect the same.

 

4.          Enforcement. In the event of any action or suit by either party
hereto against the other arising from or interpreting this Bill of Sale and
Assignment, the prevailing party in such action or suit shall, in addition to
such other relief as may be granted, be entitled to recover its costs of suit
and actual attorneys’ fees, whether or not the same proceeds to final judgment.

 

5.          Successors and Assigns. This Bill of Sale and Assignment shall be
binding upon and inure to the benefit of Transferor and Transferee and their
respective successors and assigns.

 

6.          Counterparts. This Bill of Sale and Assignment may be executed in
multiple counterparts, all of which shall be but one and the same instrument,
binding on all parties when all separately executed copies have been fully
delivered.

 

7.          Governing Law. This Bill of Sale and Assignment shall be construed
and enforced according to and governed by the laws of the State in which the
Land is located.

 

[Remainder of Page Intentionally Left Blank. Signatures on Following Page.]

 

 2 

 

 

IN WITNESS WHEREOF, Transferor and Transferee have executed this Bill of Sale
and Assignment as of the date first written above.

 

  "Transferor"   _________________________________,   a
________________________________

 

  By:     Name:     Title:  

 

  "Transferee"   _________________________________,   a
________________________________

 

  By:     Name:     Title:  

 

 3 

 

 

EXHIBIT J

 

ASSIGNMENT AND ASSUMPTION OF LEASE

 

The Parties to this Assignment are                                (“Assignor”),
whose mailing address is                              and                    
(“Assignee”), whose mailing address is                            . This
Assignment shall be effective as of ________ __, 20__ (the “Effective Date”).
Assignor and Assignee are sometimes referred to herein as the “Parties.”

 

WHEREAS, Assignor is the landlord under that certain Lease dated March, 2001
with                    , a                                (“Tenant”), amended
by that certain                                dated                    
(collectively, the “Lease”), which Lease is guaranteed
by                                  (“Guarantor”) pursuant to which the Tenant
leases the Premises, as described in the Lease; and

 

WHEREAS, Assignee desires to purchase and assume from Assignor, and Assignor
desires to sell and assign to Assignee all of the rights, benefits, and
privileges as “Landlord” under the Lease, as set forth in this Assignment.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein set forth:

 

1.          As of the Effective Date, Assignor does hereby assign, transfer, and
deliver unto Assignee all of the right, benefits and privileges as “Landlord”
under the Lease, subject to all terms, conditions, reservations and limitations
set forth in the Lease.

 

2.          As of the Effective Date, Assignee accepts, on the terms and
conditions herein specified, this Assignment, and assumes the obligations,
liabilities and performance of all the terms and conditions of “Landlord” to be
performed under the Lease from and after the Effective Date.

 

3.          Assignor hereby agrees to indemnify and hold harmless Assignee from
and against any and all loss, cost or expense (including, without limitation,
reasonable attorney’s fees) to the extent resulting by reason of the failure of
Assignor to perform any of the obligations as “Landlord” under the Lease prior
to the Effective Date.

 

4.          Assignee hereby agrees to indemnify and hold harmless Assignor from
and against any and all loss, cost or expense (including, without limitation,
reasonable attorney’s fees) resulting by reason of the failure of Assignee to
perform any of the obligations as “Landlord” under the Lease on and after the
Effective Date.

 

5.          Assignor hereby covenants with Assignee and its heirs, successors or
assigns to warrant and defend Assignee against any person lawfully claiming by,
under or through Assignor in a manner adverse to Assignee’s interest as
“Landlord” in the Lease on and from the Effective Date.

 

 

 

 

6.          No course or dealing between Assignor and Assignee and no delay on
the part of any party in exercising any rights under this Assignment shall
operate as a waiver of the rights of the Assignor or the Assignee. No covenant
or other provision of this Assignment may be waived unless by a written
instrument signed by the Parties so waiving such covenant or other provision.

 

7.          Whenever possible, each provision of this Assignment shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Assignment shall be prohibited or invalid, the
remainder of this Assignment shall continue in full force and effect. This
Assignment has been made and entered into in the State of , and the laws of the
state shall govern the validity and interpretation hereof and the performance
hereunder by the Parties hereto.

 

8.          The signatories to this Assignment represent that they have the
right and power to legally bind to this Assignment the partnerships they
represent. All of the covenants, terms and conditions set forth herein shall be
binding upon and shall inure to the benefit of the Parties hereto and their
respective heirs, legal representatives, successors and assigns.

 

9.          This Assignment may be executed in two (2) or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Executed counterparts of this Assignment
or any amendment hereto may be delivered by electronic or facsimile
transmission.

 

[SIGNATURE PAGES FOLLOW]

 

 2 

 

 

IN WITNESS WHEREOF, the Parties have executed this Assignment as of the
Effective Date.

 

  ASSIGNOR:             By:           Title:  

 

[ASSIGNEE’S SIGNATURE PAGE TO FOLLOW]

 

 3 

 

 

EXIHIBIT K

 

Facility Lease