Document:

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

 

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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

 

 

 

 

 

 

 

 

    	 	31	 

     

    

SCHEDULE 1 (a)

 

All schedules intentionally omitted

 

    	 	32Exhibit
10.1

 

TERMINATION AND

RELEASE AGREEMENT

 

This
Termination and Release Agreement (the “Agreement”) is made and entered into as of July 12, 2017,
by and among ICTV Brands Inc., a Nevada corporation (“Parent”), ICTV Holdings, Inc., a Nevada
corporation (“Purchaser”), PhotoMedex, Inc., a Nevada corporation (“PHMD”), Radiancy,
Inc., a Delaware corporation (“Radiancy”), PhotoTherapeutics Ltd., a private limited company limited
by shares, incorporated under the laws of England and Wales (“PHMD UK”), and Radiancy (Israel) Limited,
a private corporation incorporated under the laws of the State of Israel (“Radiancy Israel” and, together with
PHMD, Radiancy, and PHMD UK, the “Sellers” and each, a “Seller”). Parent, Purchaser and the
Sellers are each sometimes referred to herein as a “Party” and, collectively, as the “Parties.”

 

Recitals

 

A.         The
Parties have entered into that certain Asset Purchase Agreement, dated October 4, 2016, which was then amended on January 23, 2017
(as so amended, the “Purchase Agreement”). Capitalized terms used herein without definition shall have the meanings
given to them in the Purchase Agreement.

 

B.          On
January 23, 2017, the parties consummated the transactions contemplated by the Purchase Agreement at the Closing, including the
transfer of the Transferred Assets to the Purchaser.

 

C.          Certain
disputes have arisen between the Parties since the Closing regarding the treatment of various matters under the Purchase Agreements.
The Parties desire to finally resolve all disputes among them in the manner set forth in this Agreement, terminate the Purchase
Agreement, and release each other from all obligations under the Purchase Agreement other than those obligations described below
as specifically surviving the termination of the Purchase Agreement.

 

Agreement

 

Now,
Therefore, in consideration of the foregoing recitals and the mutual promises, representations, warranties, and covenants
hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereto agree as follows:

 

1.          Parent
Payment. Within three (3) Business Days from the date hereof, Parent shall pay to PHMD Two Million Dollars ($2,000,000)
in cash and in immediately available funds.

 

2.          Sigmatron
Assignment. Pursuant to PHMD’s existing arrangement with Sigmatron International, Inc. (“Sigmatron”),
PHMD deposited a total of Two Hundred Ten Thousand Dollars ($210,000) (the “Deposit”) with Sigmatron. PHMD has
demanded that Sigmatron return the Deposit, but Sigmatron has failed to do so. PHMD hereby assigns to Parent all of PHMD’s
right, title and interests in and to the Deposit. To further assign the Deposit to Parent, PHMD shall, on the date hereof, execute
and deliver to Parent a bill of sale and assignment in the form of Exhibit A to this Agreement. The Sellers jointly and
severally represent and warrant to Parent and Purchaser that PHMD has good and marketable title to the Deposit free and clear of
all Liens, except for Permitted Liens.

 

     

     

    

 

3.          Termination
of Agreement. Effective as of the date hereof, except for the Surviving Covenants described in Section 4 of this
Agreement, the Purchase Agreement is terminated and of no further force and effect and none of the Parties will have any further
rights or obligations under or pursuant to the Agreement; provided, however, that rights and obligations of the parties under the
Purchase Agreement incurred at the Closing shall survive the termination of the Purchase Agreement, including, but in no way limited
to, the transfer of the Transferred Assets to the Purchaser that occurred at the Closing and the entry into the Transaction Documents,
including specifically and without limitation, the Transfer Documents, which remain in full force and effect. For the avoidance
of doubt, subject to Parent making the payment described in Section 1 of this Agreement, neither Parent nor Purchaser shall have
any further royalty or other payment obligations (or obligations to deliver any other consideration for the Transferred Assets)
under the Purchase Agreement.

 

4.          Covenants
of the Parties. The following covenants contained in the Purchase Agreement (the “Surviving Covenants”)
shall survive the termination of the Purchase Agreement and remain in full force and effect in accordance with their terms: Section
5.2 (Transaction Expenses; Transfer Taxes); Section 5.3 (Further Assurances); Section 5.6 (Non-Compete and Non-Solicitation); Section
5.7 (PhotoMedex and Radiancy Names); Section 5.8 (Notices and Consents); Section 5.14 (Payment of Excluded Liabilities) (provided
that Parent specifically waives and releases its right to make any claim against the Sellers for products that were returned after
the Closing relating to sales occurring prior to the Closing and such claim is released under Section 5 hereof); Article VIII (Tax
Matters); Section 10.1 (Confidentiality); Section 10.5 (Mediation; Arbitration and Governing Law); and Section 10.7 (Notices).

 

5.          Mutual
Release; Disclaimer of Liability. Each of the Parent and the Purchaser on the one hand and each of the Sellers on
the other hand, each on behalf of itself and each of its respective successors and past and present subsidiaries, Affiliates, assignees,
officers, directors, employees, controlling persons, Representatives, agents, attorneys, auditors, stockholders, equity holders
and advisors, and any family member, spouse, heir, trust, trustee, executor, estate, administrator, beneficiary, foundation, fiduciary,
predecessors, successors and assigns of each of them (the “Releasors”), does, to the fullest extent permitted
by law, hereby fully release, forever discharge and covenant not to sue any other Party, any of their respective successors and
past and present subsidiaries, Affiliates, assignees, officers, directors, employees, controlling persons, Representatives, agents,
attorneys, auditors, stockholders, equity holders and advisors, and any family member, spouse, heir, trust, trustee, executor,
estate, administrator, beneficiary, foundation, fiduciary, predecessors, successors and assigns of each of them (collectively the
“Releasees”), from and with respect to any and all past, present, direct, indirect, individual, class, representative
and derivative liability, claims, rights, actions, causes of action, suits, liens, obligations, accounts, debts, losses, demands,
judgments, remedies, agreements, promises, liabilities, covenants, controversies, costs, charges, damages, expenses and fees (including
attorney’s, financial advisor’s or other fees) (“Claims”), howsoever arising, of every kind and
nature, whether based on any law or right of action (including any claims under federal securities laws or state disclosure law
or any claims that could be asserted derivatively on behalf of the Parties), known or unknown, asserted or that could have been
asserted, matured or unmatured, contingent or fixed, liquidated or unliquidated, accrued or unaccrued, foreseen or unforeseen,
apparent or not apparent, which Releasors, or any of them, ever had or now have or can have or shall or may hereafter have against
the Releasees, or any of them, in connection with, arising out of, based upon or related to, directly or indirectly, the Purchase
Agreement (other than the Surviving Covenants) or the transactions contemplated therein or thereby, including any breach, non-performance,
action or failure to act under the Purchase Agreement, the events leading to the termination of the Purchase Agreement, any deliberations
or negotiations in connection with the Purchase Agreement, the consideration to be received under the Purchase Agreement, including
any royalties thereunder, and any SEC filings, public filings, periodic reports, press releases, proxy statements or other statements
issued, made available or filed relating, directly or indirectly, to the Purchase Agreement or the transactions consummated at
the Closing. The release contemplated by this Section 5 is intended to be as broad as permitted by law and is intended to,
and does, extinguish all Claims of any kind whatsoever, whether in law or equity or otherwise, that are based on or relate to facts,
conditions, actions or omissions (known or unknown) that have existed or occurred at any time to and including as of the date hereof.
Each of the Releasors hereby expressly waives to the fullest extent permitted by law any rights it may have under any statute or
common law principle under which a general release does not extend to claims which such Party does not know or suspect to exist
in its favor at the time of executing the release. Nothing in this Section 5 shall (i) apply to any action by any Party
to enforce the rights and obligations imposed pursuant to this Agreement, including under the Surviving Covenants, the Transaction
Documents, including the Transfer Documents, or the Parent and/or the Purchaser’s rights in and to the Transferred Assets
as conveyed to the Parent and/or the Purchaser at the Closing pursuant to the Purchase Agreement, or (ii) constitute a release
by any Party for any Claim arising under this Agreement, the Transaction Documents, including the Transfer Documents, or the Parent
and/or the Purchaser’s rights in and to the Transferred Assets as conveyed to the Parent and/or the Purchaser at the Closing
pursuant to the Purchase Agreement.

 

     

     

    

 

6.          Representations
and Warranties. Each of the Parties represents and warrants that it has the requisite power to enter into this Agreement
and to carry out its obligations hereunder and that the terms of this Agreement have been fully disclosed to its board of directors
and that the requisite approvals have been obtained, prior to its execution. Each of the Parties represents and warrants to the
other Parties that this Agreement has been duly executed and delivered and constitutes a valid and binding obligation enforceable
in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general application.

 

7.          Integration
Clause. This Agreement contains the entire agreement of the Parties and supersedes any and all prior, written or
oral, agreements among them concerning the subject matter of this Agreement. There are no representations, agreements, arrangements
or understandings, oral or written, among the Parties, relating to the subject matter of this Agreement that is not fully expressed
herein.

 

8.          Severability.
If any one or more of the provisions of this Agreement should be ruled wholly or partly invalid or unenforceable by a court or
other government body of competent jurisdiction, then; (i) the validity and enforceability of all provisions of this Agreement
not ruled to be invalid or unenforceable shall be unaffected if the Parties mutually elect in writing to proceed as if such invalid
or unenforceable term(s) had never been included in the Agreement; (ii) the effect of the ruling shall be limited to the jurisdiction
of the court or other government body making the ruling; (iii) the provision(s) held wholly or partly invalid or unenforceable
shall be deemed amended, and the court or other government body is authorized to reform the provision(s), to the minimum extent
necessary to render them valid and enforceable in conformity with the Parties’ intent as manifested herein; and (iv) if the
ruling and/or the controlling principle of law or equity leading to the ruling is subsequently overruled, modified, or amended
by legislature, judicial, or administrative action, then the provision(s) in question as originally set forth in this Agreement
shall be deemed valid and enforceable to the maximum extent permitted by the new controlling principle of law or equity.

 

9.          No
Waiver. The failure of any party to insist upon compliance with any of the provisions of this Agreement or the waiver
thereof, in any instance, shall not be construed as a general waiver or relinquishment by such party of any other provision of
this Agreement.

 

     

     

    

 

10.         Mediation;
Arbitration and Governing Law. In the event of a dispute between any of the Parties arising under or relating in
any way whatsoever to this Agreement, the disputing Parties shall attempt to resolve it through good faith negotiation. If the
dispute is not resolved through such negotiation, then the disputing Parties shall attempt to resolve it through mediation in the
State of Pennsylvania, USA, with a neutral, third-party mediator mutually agreed upon by the disputing Parties. Unless otherwise
agreed by the disputing Parties, the costs of mediation shall be shared equally. If the dispute is not resolved through mediation,
then upon written demand by one of the disputing Parties it shall be referred to a mutually agreeable arbitrator. The arbitration
process shall be conducted in accordance with the laws of the Commonwealth of Pennsylvania, except as modified herein. Venue for
the arbitration hearing shall be the State of Pennsylvania, USA. All remedies, legal and equitable, available in court shall also
be available in arbitration. The arbitrator’s decision shall be final and binding, and judgment may be entered thereon in
a court of competent jurisdiction. This Agreement shall be interpreted and enforced in accordance with the laws of the Commonwealth
of Pennsylvania, without regard to conflict of law principles thereof. In any dispute arising out of or relating in way whatsoever
to this Agreement, including arbitration, the substantially prevailing Party shall be entitled to recover its costs and attorney
fees from the other disputing Parties.

 

11.         Amendment.
This Agreement may not be amended except by an instrument in writing, executed by the Parties, and each of them.

 

12.         No
Reliance. Each of the Parties represents and warrants that, except for the representations and warranties specifically
set forth in this Agreement, in executing this Agreement, it does not rely, and has not relied, on any representation or statement
made by any other party to this Agreement, on any representation or statement made anyone acting on behalf of any party to this
Agreement, or any representation or statement made by any other person.

 

13.         Counterparts.
This Agreement may be executed in multiple counterpart copies, each of which shall be considered an original and all of which constitute
one and the same instrument binding on all the parties, notwithstanding that all parties are not signatories to the same counterpart.

 

14.         Successors.
Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns.

 

[Signature page follows]

 

     

     

    

 

In
Witness Whereof, the parties hereto have executed this Agreement
as of the date first written above.

 

	 	PARENT:
	 	 
	 	ICTV BRANDS INC.
	 	 
	 	By:	/s/ Richard Ransom
	 	Name: Richard Ransom
	 	Title: President
	 	 
	 	PURCHASER:
	 	 
	 	ICTV Holdings, INC.
	 	 
	 	By:	/s/ Richard Ransom
	 	Name: Richard Ransom
	 	Title: President
	 	 
	 	SELLERS:
	 	 
	 	PhotoMedex, Inc.
	 	 
	 	By:	/s/ Suneet Singal
	 	Name: Suneet Singal
	 	Title: Chief Executive Officer
	 	 
	 	RADIANCY, Inc.
	 	 
	 	By:	/s/ Suneet Singal
	 	Name: Suneet Singal
	 	Title: President
	 	 
	 	PHOTOTHERAPEUTICS LTD.
	 	 
	 	By:	/s/ Suneet Singal
	 	Name: Suneet Singal
	 	Title: Director
	 	 
	 	RADIANCY (ISRAEL) LIMITED
	 	 
	 	By:	/s/ Suneet Singal
	 	Name: Suneet Singal
	 	Title: Director

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