Exhibit 10.2

 

PURCHASE AND SALE AGREEMENT
Pennington Gardens

 

THIS PURCHASE AND SALE AGREEMENT (“Agreement”) is made and entered into as of
this 5th day of April, 2017 (the “Effective Date”), by and between FAMILY
HEALTHREACH, INC., an Arizona corporation (“Seller”), and SUMMIT HEALTHCARE
REIT, INC., a Maryland corporation, or its assignee (“Buyer”).

 

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

 

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

 

(b)               All of the real estate on which the Facility is situated,
together with all tenements, easements, appurtenances, privileges, rights of
way, and other rights incident thereto, all building and improvements and any
parking lot to such Facility located thereon situated in the State of Arizona
(the “State”), which is commonly known as Pennington Gardens Assisted Living and
Memory Care located at 977 South Pennington Drive, Chandler, Arizona, and is
more particularly described in Exhibit A attached hereto and made a part hereof
by this reference (collectively, the “Real Property”);

 

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

 

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

 

(e)               All trade names or other names commonly used to identify the
Facility and all goodwill associated therewith. The intent of the parties is to
transfer to Buyer only such names and goodwill associated with the Facility
itself and not with Seller or any affiliate of Seller, so as to avoid any
interference with the unrelated business activities of Seller (items (d) and (e)
are collectively referred to as “Intangibles).

 

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

 

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

 

(a)               The purchase price (the “Purchase Price”) payable by Buyer to
Seller for the Property is Thirteen Million Four Hundred Thousand and 00/100
Dollars ($13,400,000.00).

 

(b)               The Purchase Price as allocated to the Facility by Seller is
set forth on Schedule 3 attached hereto and made a part hereof.

 

(c)               Within two (2) business days after this Agreement is fully
executed by the parties, Buyer shall deposit the sum of One Hundred Thousand and
00/100 Dollars ($100,000.00) as an earnest money deposit (“Initial Deposit”)
with Commonwealth Land Title/Lawyers’ Title, at its office at 4100 Newport Place
Drive, Suite 120, Newport Beach, California 92660, Attention: Debi Calmelat
(“Title Company” or “Escrow Agent”) and Escrow Agent will deposit it into an
interest-bearing account with the interest for the benefit of Buyer. In
addition, if Buyer has not terminated this Agreement on or before the expiration
of the Due Diligence Period (defined below), then Buyer shall deposit with
Escrow Agent an additional One Hundred Thousand and 00/100 Dollars ($100,000.00)
(“Additional Deposit”) within three (3) business days following the expiration
of the Due Diligence Period (the Initial Deposit and the Additional Deposit are
collectively referred to as the “Deposits”). Interest earned on the Deposit
shall be paid to the party entitled to such amount as provided in this
Agreement.

 

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

 

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

 

4.                  Closing. The closing of the purchase and sale transaction
pursuant to this Agreement (“Closing”) shall occur on the date (the “Closing
Date”) that is thirty (30) days after the expiration of the Due Diligence
Period. The Closing shall take place through Seller’s

 

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delivery of a warranty deed (the “Deed”) and Buyer’s delivery of cash or
immediately available funds through an escrow agreement (the “Escrow”) to be
established with the Escrow Agent pursuant to form escrow instructions which
shall be modified to be consistent with the terms and provisions of this
Agreement, and which shall be mutually agreed upon by the parties hereto.

 

5.                  Conveyance. Title to the Facility shall be conveyed to Buyer
by the Deed and a bill of sale in form agreed to by the parties. Fee simple
indefeasible title to the Real Property and marketable title to the Personal
Property, shall be conveyed from Seller to Buyer or Buyer’s nominee in “AS-IS,
WHERE-IS” condition, free and clear of all liens, charges, easements and
encumbrances of any kind, other than:

 

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

 

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

 

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

 

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

 

(e)               Those matters identified as Permitted Exceptions by Buyer
during the Due Diligence Period in accordance with Section 14 below.

 

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

 

6.                  Buyer’s Due Diligence.

 

(a)               Buyer shall have sixty (60) days from the Effective Date to
complete Buyer’s Due Diligence (the “Due Diligence Period”); provided, however,
that if Seller does not deliver the Due Diligence Items in the time frames set
forth in Section 10(a)(v) below, the Due Diligence Period shall be extended on a
day-by-day basis for each day of delay in delivery of the Due Diligence Items
beyond the time periods set forth in Section 10(a)(v) below. During the Due
Diligence Period, Seller shall permit the officers, employees, directors,
agents, consultants, attorneys, accountants, lenders, appraisers, architects,
investors and engineers designated by Buyer and representatives of Buyer
(collectively, the “Buyer’s Consultants”) access to, and entry upon the Real
Property and the Facility to perform its normal and customary due diligence,
including, without limitation, the following (collectively, the “Due Diligence
Items”):

 

(i)                 Review of vendor contracts (“Contracts”) and leases
(“Leases”) to which the Facility (or the Seller, on behalf of the Facility) are
a party, as set forth on Schedule 8(f) attached hereto;

 

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

 

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

 

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

 

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

 

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

 

(vii)          Review of the Due Diligence Items, as described in
Schedule 10(a)(v) attached hereto, to be provided by Seller within five (5)
business days following the Effective Date;

 

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

 

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

 

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

 

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

 

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

 

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

 

Notwithstanding the foregoing provisions of this Subsection, in the event Seller
fails to deliver all Due Diligence Items listed in Schedule 10(a)(v) on or
before the time set forth in Subsection (a)(vii) above, then the Due Diligence
Period shall be deemed extended on a day-to-day basis until Seller completes
such delivery of the Due Diligence Items to Buyer.

 

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

 

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does not make any warranties or representations of any kind or nature regarding
the truth, accuracy or completeness of the information set out in or disclosed
by the Property Information.

 

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

 

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

 

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

 

(f)                During the Due Diligence Period, Buyer shall obtain, at
Buyer’s election, a third party inspection report with respect to the Facility
(the Inspection Report”). If the Inspection Report recommends any critical
repairs (the “Critical Repairs”) be made to the Facility, Buyer shall provide
Seller with written notice of the same prior to the expiration of the Due
Diligence Period, and the Critical Repairs shall be listed on a new Schedule
6(f) to be attached to the Agreement. For the purposes of this Section 6(f), the
term “Critical Repairs” means any observed deficiencies that require action as a
result of the following: (i) existing or potentially unsafe (health & safety)
conditions; (ii) material building code violations; and/or (iii) a condition
that has the potential to result in, or contribute to, the failure of a critical
element or system failure within one (1) year, or a significant escalation if
left uncorrected. Seller shall make all Critical Repairs listed in the
Inspection Report to such Facility at least ten (10) business

 

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days prior to the Closing, at Seller’s sole cost and expense. Seller shall
deliver to Buyer a completion letter or similar notice documenting the
completion of the repairs (the “Repair Completion Notice”) executed by Seller
and Seller’s contractor and/or architect who performed and/or supervised the
construction of the repairs. The Critical Repairs shall be constructed in a
workmanlike manner and in accordance with all applicable laws.

 

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

 

(a)               There will be no prorations at the Closing, and Seller and
Buyer’s operator, its successors or assigns shall address the proration of all
taxes, costs and expenses relating to the Facility pursuant to the OTA (as
defined in Section 12(a)(v) below).

 

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

 

(c)               Seller shall pay the cost of the standard owner’s title
insurance policy, as described in this Agreement. Buyer shall also pay the cost
of any lender’s policy for Buyer’s lender, any title endorsements requested by
Buyer and its lender and the cost of updating or obtaining new Surveys. Seller
shall pay the fees of Escrow Agent. All other costs associated with title and
survey matters shall be paid in accordance with Maricopa County (and local)
custom and practice.

 

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

 

(e)               On the Closing Date, Seller shall transfer possession of the
Facility to Buyer’s operator pursuant to the OTA.

 

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

 

(a)           Legality.

 

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

 

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

 

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contemplated hereby, legal, valid and binding obligations of Seller and
enforceable in accordance with their terms.

 

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

 

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

 

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

 

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

 

(b)           Property.

 

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

 

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

 

(ii)              Seller has no actual knowledge of and has not received any
notice of any claim, requirement or demand of any licensing or certifying agency
supervising or having authority over the Facility to rework or redesign it in
any material respect or to provide

 

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additional furniture, fixtures, equipment or inventory so as to conform to or
comply with any law which has not been fully satisfied;

 

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

 

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

 

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

 

(e)               Brokers. Other than Heavenrich & Company, Inc. (“Seller’s
Broker”), neither Seller nor Buyer has dealt with any broker or finder in
connection with the transactions contemplated hereby. Seller shall be
responsible for payment of any commission and/or fee

 

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owed to Seller’s Broker. Other than the Seller’s Broker, each party represents
and warrants to the other party that it has not dealt with any other broker,
salesman, finder or consultant with respect to this Agreement or the
transactions contemplated hereby. Each party agrees to indemnify, protect,
defend, protect and hold the other party harmless from and against all claims,
losses, damages, liabilities, costs, expenses (including reasonable attorneys’
fees and disbursements) and charges resulting from such indemnifying party’s
breach of the foregoing representation. The provisions of this Section 8(e)
shall survive the Closing or earlier termination of this Agreement.

 

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

 

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

 

(h)               Interests in Competitors, Suppliers and Customers. Except as
set forth on Schedule 8(h), or in Schedule 1(a) as constituting a part of the
Facility, Seller does not have any interest in any property used in the
operation of, or holds an interest in, any competitor, supplier or customer of
Seller or the Facility.

 

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

 

(j)                 Licensure. As of the date hereof, except as set forth on
Schedule 8(j) attached hereto, there is no action pending or, to the actual
knowledge of Seller, recommended

 

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by the appropriate state agency to revoke, withdraw or suspend any license to
operate the Facility, or certification of the Facility, or any material action
of any other type with regard to licensure or certification. The Facility is
operating and functioning as an assisted living and memory care facility without
any waivers from a governmental agency affecting such Facility except as set
forth in Schedule 8(j), and is fully licensed for a skilled nursing facility by
the State for the number of beds and licensure category set forth in
Schedule 1(a) hereto. Schedule 8(j) attached hereto contains a complete and
accurate list of all life safety code waivers or other waivers affecting the
Facility.

 

(k)               Regulatory Compliance.

 

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

 

(ii)              Except as set forth in Schedule 8(k) attached hereto, (A)
Seller is not delinquent in the payment of any amount due under any of the
Reports for the Facility, (B) there are no written or threatened proposals by
any Payors for collection of amounts for which Seller or any Facility could be
liable, (D) there are no current or pending claims, assessments, notice,
proposal to assess or audits of Seller or any Facility with respect to any of
the Reports, and, to Seller’s actual knowledge, no such claims, assessments,
notices, or proposals to assess or audit are threatened, and (D) Seller has not
executed any presently effective waiver or extension of the statute of
limitations for the collection or assessment of any amount due under or in
connection with any of the Reports with respect to any Facility.

 

(iii)            Except as set forth in Schedule 8(k) attached hereto, Seller
has not received notice of failure to comply with all applicable Laws,
settlement agreements, and other agreements with any state or federal
governmental body relating to or regarding any Facility (including all
applicable environmental, health and safety requirements), and Seller has and
maintains all permits, licenses, authorizations, registrations, approvals and
consents of governmental authorities and all health facility licenses,
accreditations and other Payor certifications necessary for its activities and
business including the operation of the Facility as currently conducted. Each
health facility license and other Payor certifications, and other agreements
with any Payors is in full force and effect without any waivers of any kind
(except as disclosed in Schedule 8(k)) and has not been amended or otherwise
modified, rescinded or revoked or assigned nor, to Seller’s actual knowledge,
(A) is there any threatened termination, modification, recession, revocation or
assignment thereof, (B) no condition exists nor has any event occurred which, in
itself or with the giving of notice, lapse of time or both would result in the
suspension, revocation, termination, impairment, forfeiture, or non-renewal of
any governmental consent applicable to Seller or to any Facility or of any
participation or eligibility

 

 10 

 

to participate in any Payor program and (C) there is no claim that any such
governmental consent, participation or contract is not in full force and effect.

 

(l)                 Regulatory Surveys. Seller shall deliver to Buyer, in the
manner required pursuant to the terms of this Agreement, complete and accurate
copies of the survey or inspection reports made by any governmental authority
with respect to the Facility during the calendar years 2015, 2016, and
year-to-date 2017. To the best of Seller’s knowledge, after diligent
investigation, and except as shown on Schedule 8(l), all exceptions,
deficiencies, violations, plans of correction or other indications of lack of
compliance in such reports have been fully corrected and there are no bans or
limitations in effect, pending or threatened with respect to admissions to the
Facility nor any licensure curtailments in effect, pending or threatened with
respect to the Facility. Seller shall continue to deliver all such surveys,
inspection reports as and when same are received and/or filed as the case may be
prior to the Closing.

 

(m)             Licensed Bed/Current Rate Schedule. As of the Effective Date,
Schedule 8(m) sets forth (i) the number of licensed beds and the number of
operating beds in the Facility, (ii) the current standard private rates charged
by the Facility to all of its residents, and (iii) the number of beds or units
presently occupied in, and the occupancy percentage at, the Facility, including
the current rates charged by the Facility for each such occupied bed or unit.
Seller does not have any life care arrangement in effect with any current or
future resident.

 

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

 

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

 

(p)               Supplementation of Schedules; Change in Representations and
Warranties. Seller shall have the continuing right and obligation to supplement
and amend the Schedules herein on a regular basis including, without limitation,
Schedule 8(g), and Seller’s warranties and representations required hereunder,
as necessary or appropriate (i) in order to make any representation or warranty
not misleading due to events, circumstances or the passage of time or (ii) with
respect to any matter hereafter arising or discovered up to and including the
Closing Date, but Buyer shall not be deemed to have approved such supplemental
Schedules unless Buyer expressly acknowledges approval of same in writing. In
the event Seller amends any such Schedules, or Buyer or Seller gains actual
knowledge prior to the Closing that any representation or warranty made by the
other party contained in this Section 8 is otherwise untrue or inaccurate, such
party shall, within five (5) days after gaining such actual knowledge

 

 11 

 

but in any event prior to the Closing, provide the other party with written
notice of such inaccuracy, whereupon the noticed party shall promptly commence,
and use its best efforts to prosecute to completion, the cure of such matter, to
the extent any such matter is curable. If any such matter is not curable within
reason and is material, in Buyer’s reasonable business judgment, Buyer shall
have the right to terminate this Agreement upon written notice to Seller within
five (5) business days of receipt or delivery of such notice, as applicable, on
the same basis as set forth in Section 13(a) if during the Due Diligence Period
and in Section 13(b)(ii) herein if after expiration of the Due Diligence Period.

 

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

 

For purposes of this Agreement, the phrase “to Seller’s actual knowledge” or
words of similar import shall mean the actual knowledge of Family Healthreach,
Inc..

 

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

 

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

 

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

 

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

 

(d)               No Conflicts. Neither the execution and delivery of the
Transaction Documents to which Buyer is a party, compliance with the provisions
thereof, nor the carrying out of the transactions contemplated thereby to be
carried out by such party will result in (i) a breach or violation of (A) any
material law or governmental rule or regulation applicable to

 

 12 

 

Buyer now in effect, (B) any provision of any Buyer’s organizational documents,
(C) any material judgment, settlement agreement, order or decree of any court,
arbitrator, administrative agency or other governmental authority binding upon
Buyer, or (D) any material agreement or instrument to which Buyer is a party or
by which Buyer or its respective properties are bound; (ii) the acceleration of
any obligations of Buyer; or (iii) the creation of any lien, claim or
encumbrance upon any properties or assets of Buyer.

 

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

 

(f)                Survival of Representations and Warranties; Updates. The
representations and warranties of Buyer in this Agreement shall not be merged
with the Deeds at the Closing and shall survive the Closing for the period of
one (1) year.

 

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

 

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

 

(i)                 Seller shall use its best efforts to operate the Facility
diligently.

 

(ii)              Seller shall use its best efforts to prevent making any
material change in the operation of any Facility, and shall not sell or agree to
sell any items of machinery, equipment or other assets of the Facility, or
otherwise entering into any agreement affecting any Facility, except in the
ordinary course of business;

 

(iii)            Seller shall use its best efforts to not enter into any Lease
or Contract or commitment affecting any Facility, except for Leases or Contracts
entered into in the ordinary course of business;

 

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

 

(v)               Within five (5) business days following the execution of this
Agreement by the parties, Seller shall deliver to Buyer the due diligence items
described on the Due Diligence List attached hereto as Schedule 10(a)(v) (the
“Due Diligence Items”); provided, in the event certain Due Diligence Items
(“Unavailable Items”) are not readily accessible to Seller, Seller may identify
the Unavailable Items by written notice to Buyer within such five (5) business
day period and shall use its best efforts to deliver all Unavailable Items to
Buyer as promptly as possible, but in no event more than ten (10) business days
following the execution of this Agreement. If Buyer requests additional items
not included on Schedule 10(a)(v), it will do

 

 13 

 

so by written request delivered by Seller and Seller will use its best efforts
to provide such information within five (5) business days within receipt of the
request; and, provided further, Seller shall continue to deliver to Buyer,
following the expiration of the Due Diligence Period, financial reports.

 

(vi)             Seller shall not move residents from the Facility, except (a)
to any other Facility which is owned by Seller and constitutes part of the
Property as defined herein, (b) for health treatment purposes or otherwise at
the request of the resident, family member or other guardian or (c) upon court
order or the request of any governmental authority having jurisdiction over the
Facility;

 

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

 

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

 

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

 

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

 

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

 

(xii)          Seller shall promptly notify Buyer in writing of any Material
Adverse Change, as defined herein, of which Seller becomes aware in the
condition or prospects of the Facility including, without limitation, sending
Buyer copies of all surveys and inspection reports of all governmental agencies
received after the date hereof and prior to Closing, promptly following receipt
thereof by the Seller. For purposes of this Agreement, a “Material Adverse
Change” shall mean: (i) loss of licensure, or (ii) intentionally deleted, or
(iii) any adverse action by a governmental agency which, with the passage of
time, would reasonably be expected to materially affect in a negative manner
licensure at any Facility, or any adverse action in any Facility which would
reasonably be expected to materially affect in a negative manner such Facility’s
participation or eligibility to participate in any Payor program, unless
appropriate corrective action has been taken by Seller, in the ordinary course
of business, or (iv) failure to settle with the appropriate governmental
authority, or to satisfy on or before the Closing (either directly with such
governmental authority or by funds escrowed by Seller for such purposes) all
claims for reimbursements, recoupments, taxes, fines or penalties which may be
due to any

 

 14 

 

governmental authority having jurisdiction over the Facility, or (v) the
occurrence of a title or survey defect occurring after the date of this
Agreement which would reasonably be expected to adversely affect the ability of
Buyer to operate the memory care facility at the Facility or to obtain financing
for the Facility, or (vi) the commencement of any third party litigation which
interferes with Seller’s ability to close the transactions contemplated by this
Agreement, or (vii) any damage, destruction or condemnation affecting the
Facility in which the estimate of damage exceeds $100,000 per Facility and such
damage or destruction has not been repaired, or Buyer as not otherwise waived
such condition prior to Closing. In the event of any occurrence described in
clause (viii) above, Seller shall deliver a copy of the Plan of Correction or
otherwise notify Buyer in writing of the planned action, and such Plan of
Correction or other corrective action which has been approved by the applicable
regulatory agency or agencies.

 

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

 

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

 

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

 

 15 

 

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

 

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

 

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

 

(ii)              Two (2) original executed counterparts of the bill of sale for
the Personal Property (“Bill of Sale”), and an assignment of Seller’s interest
in the Intangibles (“Assignment of Intangible Property”);

 

(iii)            One (1) original of the executed Repair Completion Notice for
the Facility, as applicable, to the extent not previously delivered to Buyer.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 16 

 

(ii)              Two (2) original executed counterparts of the Assignment of
Intangibles;

 

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

 

(iv)             Two (2) original executed counterparts of each of the Title
Company Documents requiring Buyer’s signature.

 

12.           Conditions to Closing.

 

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

 

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

 

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

 

(iii)            Damage and Condemnation. Prior to the Closing Date, no portion
of the Facility shall have been damaged or destroyed by fire or other casualty
where the estimate of damage to the Facility exceeds 5% of the Purchase Price,
or proceedings be commenced or threatened to take or condemn any material part
of the Real Property or improvements comprising a Facility by any public or
quasi-public authority under the power of eminent domain. A proceeding shall be
deemed to be “material” if such condemnation or taking (i)

 

 17 

 

relates to the material taking or closing of any right of access to any Real
Property or Facility, (ii) cause the Real Property or Facility to become
non-conforming with then current legal requirements governing such Real Property
or Facility, (iii) results in the loss of parking that is material to the
operation of such Facility, or (iv) result in the loss of value in excess of 10%
of the Purchase Price, in Buyer’s reasonable judgment. If such Facility shall
have been so damaged or destroyed, Seller shall deliver prompt written notice of
such condemnation, damage or destruction to Buyer. In the event Buyer waives
this condition, by written notice to Seller within fifteen (15) business days of
receipt of notice of such proceeding, and the Closing occurs, Seller shall
assign to Buyer all its right to any insurance proceeds in connection therewith.
If proceedings shall be so commenced or threatened to take or condemn the Real
Property or the Facility or portion thereof prior to Closing, and if Buyer
waives this condition and the Closing occurs, Seller shall pay or assign to
Buyer all Seller’s right to the proceeds of any condemnation award in connection
thereof.

 

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

 

(v)               Operations Transfer Agreement. Buyer’s operator and Seller
shall have entered into an operations transfer agreement (the “OTA”) in a form
reasonably acceptable to Buyer’s operator.

 

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

 

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

 

(viii)        Licensure. Buyer’s operator shall have had obtained all necessary
licenses and approvals from all required governmental agencies to operate the
Facility.

 

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

 

 18 

 

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

 

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

 

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

 

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

 

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

 

13.              Termination; Defaults.

 

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

 

(b)               Termination For Cause.

 

(i)                 If the Agreement is terminated by Seller because Buyer fails
to consummate the Closing as a result of a default by Buyer under this
Agreement, which Buyer

 

 19 

 

fails to cure within five (5) days after receipt of written notice of such
default by Seller, Seller’s sole and exclusive remedy prior to the Closing Date
shall be to terminate this Agreement by giving written notice of termination to
Buyer and Escrow Agent, whereupon (A) Escrow Agent shall promptly release to
Seller the Deposit, and all interest accrued thereon, (B) Escrow Agent shall
return to Buyer and Seller all documents deposited by them respectively, which
are then held by Escrow Agent, (C) the parties shall be released and relieved of
all obligations to each other under this Agreement, except for provisions that
expressly survive termination as provided herein (including without limitation,
indemnification provisions), (D) Buyer shall return to Seller all documents
received by it during the course of its Due Diligence, and (E) Buyer shall have
no further right to purchase the Property or legal or equitable claims against
Seller (except for any breach by Seller of provisions that survive termination)
and/or the Property. Buyer shall have no liability to Seller under any
circumstances for any speculative, consequential or punitive damages. Without
limiting the other provisions of this Agreement, Buyer acknowledges that the
provisions of this Subsection are a material part of the consideration being
given to Seller for entering into this Agreement and that Seller would be
unwilling to enter into this Agreement in the absence of the provisions of this
Subsection. The provisions of this Subsection shall survive any termination of
this Agreement. With respect to any action by Seller against Buyer or by Buyer
against Seller commenced after the Closing Date, Seller and Buyer expressly
waive any right to any speculative, consequential, or punitive damages. The
parties acknowledge and agree that Seller’s actual damages as a result of
Buyer’s default would be difficult or impossible to ascertain and that the
deliveries and payments provided for in this paragraph constitute reasonable
compensation for its actual damages. Seller and Buyer acknowledge that they have
read and understand the provisions of this Section 13(b)(i) and by their
initials below agree to be bound by its terms. Notwithstanding the foregoing,
this Section 13(b)(i) will not limit Seller’s right to receive reimbursement of
attorney’s fees or costs, nor waive or affect Buyer’s indemnity obligations and
Seller’s rights to those indemnity obligations expressly set forth in this
Agreement.

 

      Sellers’ Initials   Buyer’s Initials

 

(ii)              Buyer shall have the right to terminate this Agreement in the
event Seller defaults in the performance of its obligations under this
Agreement. If this Agreement is terminated by Buyer because Seller has defaulted
in the performance of its obligations under this Agreement, Buyer’s sole and
exclusive remedies prior to the Closing Date shall be either: (A) to terminate
this Agreement by giving written notice of termination to Seller and Escrow
Agent and pursue any and all remedies for Buyer’s out-of-pocket costs (including
attorneys’ fees and court costs), attributable to the termination of this
Agreement, excluding any speculative or punitive damages, whereupon (i) Escrow
Agent shall promptly return to Buyer the Deposit, and all interest accrued
thereon, and (ii) Escrow Agent shall return to Seller and Buyer all documents
deposited by them respectively, which are then held by Escrow Agent, or (B) to
pursue the remedy of specific performance of Seller’s obligation to perform its
obligations under this Agreement. Seller shall have no liability to Buyer under
any circumstances for any speculative, consequential or punitive damages.
Without limiting the other provisions of this Agreement, Seller acknowledges
that the provisions of this Subsection are a material part of the consideration
being given to Buyer for entering into this Agreement and that Buyer would be
unwilling to enter into this Agreement in the absence of the provisions of this
Subsection. The provisions of this

 

 20 

 

Subsection shall survive any termination of this Agreement. With respect to any
action by Buyer against Seller or by Seller against Buyer commenced after the
Closing Date, Buyer and Seller expressly waive any right to any speculative,
consequential, punitive or special damages including, without limitation, lost
profits. Seller and Buyer acknowledge that they have read and understand the
provisions of this Section 13(b)(ii) and by their initials below agree to be
bound by its terms. Notwithstanding the foregoing, this Section 13(b)(ii) will
not limit Buyer’s right to receive reimbursement of attorney’s fees or costs,
nor waive or affect Seller’s indemnity obligations and Buyer’s rights to those
indemnity obligations expressly set forth in this Agreement.

 

      Sellers’ Initials   Buyer’s Initials

 

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

 

14.              Surveys and PTR.

 

(a)               Upon the execution of this Agreement, Buyer shall order a
preliminary title report (the “PTR”) covering the Real Property and the
Facility, together with legible copies of any and all instruments referred to in
the PTR as constituting exceptions to title of the Real Property (the “Title
Documents”).

 

(b)               Seller shall have delivered to Buyer a copy of the existing
surveys, if any, in Seller’s possession for the Facility (“Surveys”) in
accordance with Section 10(a)(v) herein. Buyer shall be responsible for
obtaining an update of the Surveys or new Surveys, at Buyer’s sole cost (“New
Surveys”). On or before five (5) business days prior to the expiration of the
Due Diligence Period, Buyer shall notify Seller and the Title Company (“Buyer’s
Title Notice”) of any objections which Buyer may have to the PTR and/or Surveys.
If Buyer objects to any matters (other than the Permitted Exceptions, as defined
herein) which, in Buyer’s determination, might adversely affect the ability of
Buyer to operate any of the Facility, Seller shall use its reasonable business
efforts to cure same, but shall not be obligated to cure matters other than to
obtain the release (at Closing) of the existing mortgage and other monetary
liens caused by Seller which may be released by payment of the mortgage payoff
or lien amount from Seller’s Closing proceeds (collectively, “Monetary Liens”).
If Seller delivers written notice to Buyer (“Seller’s Title Notice”), on or
before the expiration of the Due Diligence Period that Seller is willing to
remove any exceptions objected to by Buyer, then Seller shall be obligated to
remove such exceptions on or prior to the Closing and such exceptions shall not
be Permitted Exceptions. If Seller does not provide Buyer with Seller’s Title
Notice or Seller’s Title Notice does not provide for Seller’s agreement to
remove all exceptions objected to by Buyer, then Buyer shall have the right to
terminate this Agreement prior to the expiration of the Due Diligence Period or
waive Buyer’s objection to any exceptions Seller has not agreed to remove with
such exceptions becoming Permitted Exceptions upon Buyer waiving its due
diligence contingency. Buyer shall, promptly following the execution of this
Agreement, commence to use commercially reasonable efforts to obtain the New
Surveys as soon as practicable. Notwithstanding the foregoing provisions of this
Section 14(b), Buyer shall have the right to object, promptly upon learning of
any such new matters during the Due Diligence Period, to any matters raised in
the New Surveys

 

 21 

 

which were not addressed in the Surveys, and the parties shall cooperate with
the Title Company, during the Due Diligence Period and as promptly as possible
following the delivery of Buyer’s objections to such new matters in the New
Surveys, to resolve any such matters to Buyer’s satisfaction. The Due Diligence
Period shall not be extended for resolution of any such matters in the New
Surveys.

 

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

 

16.              Indemnification.

 

(a)               Indemnification Provisions.

 

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

 

 22 

 

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

 

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

 

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

 

(v)               So long as the Indemnitor is conducting the defense of the
Indemnification Claim in accordance with Section 16(a)(iv), then (A) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the

 

 23 

 

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

 

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

 

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

 

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

 

(d)                  Indemnification if Negligence of Indemnity; No Waiver of
Rights or Remedies. Each Indemnified Party’s rights and remedies set forth in
this Agreement shall survive the Closing or other termination of this Agreement,
shall not be deemed waived by such

 

 24 

 

Indemnified Party’s consummation of the Closing of the sale transactions (unless
the Indemnified Party has knowledge of the existence of an Indemnification Claim
at Closing and decides to proceed with Closing) and will be effective regardless
of any inspection or investigation conducted by or on behalf of such Indemnified
Party or by its directors, officers, employees, or representatives or at any
time (unless such inspection or investigation reveals the existence of an
Indemnified Claim and such party proceeds with Closing), whether before or after
the Closing Date.

 

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

 

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

 

17.              Notices. Any notice, request for consent or approval, election
or other communication provided for or required by this Agreement shall be in
writing and shall be delivered by hand, by air courier service, postage prepaid
(certified with return receipt requested), fax transmission or electronic
transmission followed by delivery of the hard copy of such communication by air
courier service or mail as aforesaid, addressed to the person to whom such
notice is intended to be given at such address as such person may have
previously furnished in writing to the such party’s last known address.
Notwithstanding the foregoing, Buyer’s Title Notice and Seller’s Title Notice
may be delivered by electronic mail without the need to send a hard copy of such
transmission. Until receipt of written notice to the contrary, the parties’
addresses for notices shall be:

 

To Buyer:

Summit Healthcare REIT, Inc.

2 South Pointe Drive, Suite 100

Lake Forest, CA 92630

Attention: Kent Eikanas

Phone: (949) 535-1923

Email: keikanas@summithealthcarereit.com

    With a Copy to:

Seubert French Frimel & Warner LLP

1075 Curtis Street

Menlo Park, CA 94025

Attention: Rachel Rosati Warner

Phone: (650) 322-2919

Email: rachel@sffwlaw.com

 25 

 

 

To Seller:

Family Healthreach, Inc.

8381 North Via Linda

Scottsdale, Arizona 85258

Phone: (480) 204-3250

Email: jmpremselaar@yahoo.com

    With a Copy to:

David J. Martin, Attorney at Law, P.L.L.C.

P.O. Box 808

Lakeside, Arizona 85929

Phone: (928) 368-8677

E-mail: djmpllc@gmail.com

 

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

 

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

 

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

 

21.              Risk of Loss. Until the Closing Date, Seller shall bear the
risk of loss for the Facility.

 

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

 

 26 

 

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

 

24.              Covenant Not to Compete; Non-Solicitation of Employees. For a
period of three (3) years following the Closing Date, Seller agrees (i) not to
own, manage, lease or operate a long term skilled nursing facility which is
located within a ten (10) mile radius of the Facility and (ii) not to solicit
the transfer of patients or residents of any of the Facility to any long term
skilled nursing facility which is managed, leased or operated by any entity
owned and/or controlled by any of the Seller entities or such individual within
a ten (10) mile radius of the Facility.

 

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

 

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

 

27.              Joint and Several Liability. If Seller or Buyer comprises of
one or more persons or entities, the obligations of Seller or Buyer hereunder
shall be joint and several.

 

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

 

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

 

 

 

[Signatures on Following Pages]

 

 27 

 

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

 

  “SELLER”:         FAMILY HEALTHREACH, INC., an   Arizona corporation          
    By: /s/ Joel Premselasar           Joel Premselaar, Vice President          
    “BUYER”:         SUMMIT HEALTHCARE REIT, INC., a   Maryland Corporation    
          By: /s/ Kent Eikanas           Kent Eikanas, President and COO

 

 28 

 

 

LIST OF EXHIBITS

 

A.Legal Description of Real Property

 

 29 

 

 

LIST OF SCHEDULES

 

Schedule l(a)   List of Facility; Licensed Beds       Schedule 1(c)   Personal
Property       Schedule 1(g)   Capital Improvements       Schedule 2  
Intentionally Omitted       Schedule 3   Allocation of Purchase Price      
Schedule 4   Intentionally Omitted       Schedule 5   Intentionally Omitted    
  Schedule 6(f)   Critical Repairs       Schedule 7   Intentionally Omitted    
  Schedule 8(a)(v)   Claims and Litigation       Schedule 8(b)   Violations    
  Schedule 8(d)   Hazardous Substances       Schedule 8(f)   Leases and
Contracts       Schedule 8(g)   Financial Reports       Schedule 8(h)  
Interests in Suppliers, etc.       Schedule 8(j)   Matters relating to Licensure
      Schedule 8(k)   Matters relating to Reports and Reimbursements      
Schedule 8(l)   Regulatory Surveys and Plans of Correction       Schedule 8(m)  
Licensed and Operating Beds; Rates       Schedule 9   Intentionally Omitted    
  Schedule 10(a)(v)   Due Diligence Items

 

 30 

 

 

EXHIBIT A

 

 

 

LEGAL DESCRIPTION OF REAL PROPERTY

 

 

 

[image_001.gif]

 

 

 

 

 

 31 

 

SCHEDULE 1 (a)

 

All schedules intentionally omitted

 

 32