GBCS Selectis Health Inc (PK)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 30, 2023

 

SELECTIS HEALTH, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Utah		0-15415		87-0340206
(State or other jurisdiction of incorporation)		Commission File Number		(I.R.S. Employer Identification number)

 

8480 E. Orchard Road, Ste. 4900, Greenwood Village, CO 80111

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (720) 680-0808

 

(Former name or former address, if changed since last report)

 

☐	Written communications pursuant to Rule 425 under the Securities Act
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each Class		Trading Symbol		Name of each exchange on which registered
N/A		N/A		N/A

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

ITEM 1.01 ENTRY INTO DEFINITIVE MATERIAL AGREEMENTS

 

Purchase and Sale Agreement

 

Effective on November 30, 2023, Selectis Health, a Utah corporation (the “Company”) caused four of the Company’s wholly-owned subsidiaries Global Abbeville Property, LLC, Dodge NH, LLC, Providence HR, LLC and ATL/WARR, LLC, each a Georgia limited liability company (each a “Seller”), to execute and deliver a definitive Purchase and Sale Agreement (“PSA”) with four newly formed entities: Glen Eagle Propco LLC, Eastman Propco LLC, Providence Propco LLC and Warrenton Propco LLC, each a Delaware limited liability company (each a “Purchaser”), pursuant to which each Seller agreed to sell substantially all of the real and personal property owned by each, namely the skilled nursing facilities located at 206 Main Street East, Abbeville, Georgia, 31001, upon which is located that certain 101-bed skilled nursing facility commonly known as “Glen Eagle Healthcare & Rehab” (the “Glen Eagle Facility”), 556 Chester Highway, Eastman, Georgia, 31023, upon which is located that certain 100-bed skilled nursing facility commonly known as “Eastman Healthcare & Rehab” (the “Eastman Facility”), 60 Providence Street, Sparta, Georgia, 31087, upon which is located that certain 71-bed skilled nursing facility commonly known as “Providence of Sparta Health and Rehabilitation” (the “Sparta Facility”), and 813 Atlanta Highway, Warrenton, Georgia, 30828, upon which is located that certain 110-bed skilled nursing facility commonly known as “Warrenton Health and Rehabilitation” (the “Warrenton Facility” and together with the Eastman Facility, Glen Eagle Facility, and Sparta Facility, the “Facilities”).

 

The purchase price to be paid by Purchasers for the Facilities is $31.0 million, subject to certain prorations, holdbacks and adjustments customary in transactions of this nature.

 

Consummation of the PSA is contingent upon numerous conditions, including, without limitation, satisfactory completion of due diligence during a 45-day Due Diligence Period and other conditions customary in transaction of this nature. There can be no assurance that the PSA will be consummated.

 

Operations Transfer Agreement

 

The Facilities are operated by separate, wholly-owned subsidiaries of the Company, namely Global Abbeville, LLC, a Georgia limited liability company, Global Eastman, LLC, a Georgia limited liability company, Selectis Sparta, LLC, a Georgia limited liability company, and Selectis Warrenton, LLC, a Georgia limited liability company (collectively, the “Existing Operators”). Concurrently with the execution of the PSA, the Company caused the Existing Operators to execute an Operations Transfer Agreement (“OTA”) with four newly formed entities affiliated with the Purchasers, Glen Eagle Nursing and Rehabilitation LLC, Eastman Nursing and Rehabilitation LLC, Providence Nursing and Rehabilitation LLC and Warrenton Nursing and Rehabilitation LLC, each a Nevada limited liability company (each a “New Operator”). If consummated, of which there can be no assurance, the OTA will govern the transfer of the skilled nursing operations from the Existing Operators to the New Operators.

 

Consummation of the OTA is contingent upon the consummation of the PSA as well as other conditions customary in transaction of this nature.

 

ITEM 7.01  REGULATION FD DISCLOSURE

 

On December 5, 2023, the Company issued a press releasing announcing that several wholly owned affiliates (the “Affiliates”)¹ have entered into agreements to sell the Company’s four owned and operated skilled nursing facilities in Georgia. The agreements provide for the sale of the Company’s Warrenton Healthcare & Rehabilitation, Eastman Healthcare & Rehabilitation, Glen Eagle Nursing and Rehabilitation, and Providence of Sparta Healthcare & Rehabilitation facilities, for an aggregate consideration of $31 million. A copy of the press release is filed herewith as Exhibit 99.1.

 

The information in this Current Report on Form 8-K furnished pursuant to Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section, and they shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. By filing this Current Report on Form 8-K and furnishing this information pursuant to Item 7.01, The Company makes no admission as to the materiality of any information in this Current Report on Form 8-K, including Exhibit 99.1, that is required to be disclosed solely by Regulation FD.

 

¹ Comprising Global Abbeville Property, LLC; Dodge NH, LLC; Providence HR, LLC; and Atl/Warr, LLC, as noted in the Purchase and Sale Agreement dated November 30, 2023.

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

	10.1	Purchase and Sale Agreement
	10.2	Operations Transfer Agreement
	99.1	Press Release
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	Selectis Health, Inc.  (Registrant)
Dated: December 5, 2023		/s/ Adam Desmond
		Adam Desmond, Interim CEO

 

 

Exhibit 10.1

 

Execution Counterpart

 

PURCHASE AND SALE AGREEMENT

 

by and between

 

Global Abbeville Property, LLC

 

Dodge NH, LLC

 

Providence HR, LLC

 

Atl/Warr, LLC

 

(collectively, “Seller”),

 

and

 

Glen Eagle Propco LLC

 

Eastman Propco LLC

 

Providence Propco LLC

 

Warrenton Propco LLC

 

(collectively “Purchaser”)

 

November 30, 2023

 

 

PURCHASE AND SALE AGREEMENT

 

This PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of November 30, 2023 (the “Execution Date”), is by and between Global Abbeville Property, LLC, a Georgia limited liability company, Dodge NH, LLC, a Georgia limited liability company, Providence HR, LLC, a Georgia limited liability company, and Atl/Warr, LLC, a Georgia limited liability company (collectively, “Seller”), and Glen Eagle Propco LLC, Eastman Propco LLC, Providence Propco LLC and Warrenton Propco LLC, each a Delaware limited liability company (collectively, “Purchaser”); with Seller and Purchaser referred to herein individually as a “Party” and collectively as the “Parties”.

 

WITNESSETH:

 

WHEREAS, Seller owns those certain parcels of real property located at 206 Main Street East, Abbeville, Georgia, 31001, upon which is located that certain 101-bed skilled nursing facility commonly known as “Glen Eagle Healthcare & Rehab” (the “Glen Eagle Facility”), 556 Chester Highway, Eastman, Georgia, 31023, upon which is located that certain 100-bed skilled nursing facility commonly known as “Eastman Healthcare & Rehab” (the “Eastman Facility”), 60 Providence Street, Sparta, Georgia, 31087, upon which is located that certain 71-bed skilled nursing facility commonly known as “Providence of Sparta Health and Rehabilitation” (the “Sparta Facility”), and 813 Atlanta Highway, Warrenton, Georgia, 30828, upon which is located that certain 110-bed skilled nursing facility commonly known as “Warrenton Health and Rehabilitation” (the “Warrenton Facility” and together with the Eastman Facility, Glen Eagle Facility, and Sparta Facility, the “Facility”), and operated by Global Abbeville, LLC, a Georgia limited liability company, Global Eastman, LLC, a Georgia limited liability company, Selectis Sparta, LLC, a Georgia limited liability company, and Selectis Warrenton, LLC, a Georgia limited liability company (collectively, the “Existing Operator”); and

 

WHEREAS, Seller wishes to sell and Purchaser wishes to purchase the Property (as that term is hereinafter defined) subject to the terms and conditions set forth herein; and

 

WHEREAS, the Existing Operator and Glen Eagle Nursing and Rehabilitation LLC, Eastman Nursing and Rehabilitation LLC, Providence Nursing and Rehabilitation LLC, and Warrenton Nursing and Rehabilitation LLC, each a Nevada limited liability company (collectively, the “New Operator”), are concurrently herewith entering into that certain Operations Transfer Agreement (the “OTA”) in order to provide for an orderly transition of the operations of the Facility thereunder.

 

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereto agree as follows:

 

1. Purchase. Subject to the terms and conditions set forth herein, on the Closing Date (as hereinafter defined), Seller agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller all of Seller’s right, title, and interest in and to all of the following (collectively referred to herein as the “Property”) free and clear of all liens and encumbrances other than Permitted Exceptions (hereinafter defined) owned by Seller to the extent held or used exclusively in the operation of the Property (other than the Excluded Assets):

 

(a) The land described on Exhibit A attached hereto and incorporated herein, including all improvements, structures, buildings, fixtures, heating, plumbing, air-conditioning, ventilation, sprinkler, alarm, security and electrical equipment and all ducts, pipes, cables and wires appurtenant thereto together with any appurtenant rights and easements thereto (collectively, the “Real Property”);

 

 

 

(b) All tangible assets, whether owned or leased, including but not limited to, all hard assets, furniture, fixtures, equipment, instruments, supplies, inventory, vehicles, artwork, leasehold improvements, phone systems, computer hardware, databases, machinery, tools (and related repair and maintenance records), and all other tangible personal property used in the operation of and located at the Facility, but specifically excluding any property of occupants of the Facility (collectively, the “Tangible Property”); and

 

(c) All intangible property now or on the Closing Date owned by Seller and used in connection with the Facility, including (i) all rights under any guaranties or warranties relating to the Real Property or Tangible Property (including those relating to construction or fabrication) to the extent assignable, (ii) all licenses, permits, and certificates of occupancy, if any, issued by any federal, state, municipal or local governmental authority relating to the use, maintenance, occupancy or operation of the Facility, and all variances issued by any municipal, state or federal agency or authority relating to the ownership, use, occupancy, operation or maintenance of the Real Property, to the extent assignable, (iii) certificates of need and/or associated bed operating rights associated with the Facility, if and as assignable, (iv) the goodwill associated with the business and the reputation of the Facility, and (v) all site plans, surveys, plans and specifications, construction bids and floor plans in the possession of Seller which relate to the Real Property (collectively, the “Intangible Property”, and together with the Tangible Property, the “Personal Property”);.

 

Other than the Property, Purchaser expressly understands and agrees that it is not purchasing or acquiring, and Seller is not selling or assigning, any other assets or properties of Seller, and all such other assets and properties shall be excluded from the term “Property” (the “Excluded Assets”):

 

(i) All Seller’s cash and cash equivalents and short-term investments, including investments in marketable securities, certificates of deposit, promissory notes, any bank accounts of Seller, and any tax and insurance refunds or deposits as the same relate to any period prior to the Effective Time, regardless of when the same are paid to Seller;

 

(ii) Seller’s corporate organizational documents, minute books, tax records, tax identification numbers, email accounts, email servers and seals;

 

(iii) All books, files and records related to the operation of the Facility, that belong to the Seller or the Existing Operator and are required by law to be retained and in possession of Seller or Existing Operator;

 

(iv) All of the rights of Seller under this Agreement and all Transaction Documents;

 

(v) Any notes held by Seller;

 

 

(vi) All insurance policies of Seller which are in effect at Closing with respect to any or all of the Property and all rights to applicable claims and proceeds thereunder;

 

(vii) All proprietary and confidential materials, rights and information located at and used in connection with the ownership and/or operation of the Facility;

 

(viii) All prepaid expenses, claims for refunds and rights to offset in respect thereof relating to the Property;

 

(ix) Any claims or rights related to the operation of the Property (including claims or rights against third parties), contractual or otherwise, accruing or arising prior to the Effective Time or relating to periods prior to the Effective Time, including any claims or rights that relate to the Excluded Assets;

 

(x) All items which are owned or leased by residents, employees or other persons furnishing goods or services at the Facility;

 

(xi) Seller’s attorney-client and work-product privileges; and

 

(xii) All claims for any rebate, refund or credit of taxes, whether real, personal, tangible or intangible, to the extent the same relate to any period prior to the Closing Date (whether in whole or in part, and, if in part, as shall be allocated to the period prior to the Closing Date based on the relative number of days applicable thereto).

 

2. Purchase Price; Prorations.

 

(a) Subject to the terms and conditions of this Agreement, and in full consideration for the sale, assignment, transfer, and delivery of the Property by the Seller to the Purchaser, the aggregate purchase price for the Property shall be Thirty-One Million Dollars ($31,000,000) (the “Purchase Price”), paid in accordance with the following:

 

(i) At Closing, Purchaser shall assume the Assumed Liabilities; and

 

(ii) At Closing, Purchaser shall pay or cause to be paid to Seller, via wire transfer of immediately available funds, the amount of Thirty-One Million Dollars ($31,000,000.00) (the “Closing Cash”).

 

(b) The Closing Cash shall be paid by the Purchaser pursuant to the following terms:

 

(i) On the date hereof, Purchaser shall deposit in escrow the sum of Two Hundred Fifty Thousand Dollars ($250,000.00) (the “Initial Deposit”) with Landmark Abstract (the “Title Company”). The Initial Deposit shall be fully refundable to Purchaser until the expiration of the Due Diligence Period and as otherwise set forth herein. Upon the expiration of the Due Diligence Period, Purchaser shall deposit in escrow the additional sum of Two Hundred Fifty Thousand Dollars ($250,000.00) (the “Second Deposit” and together with the Initial Deposit, the “Deposit”) with the Title Company. The Deposit shall be held by the Title Company in accordance with the provisions of an escrow agreement among Seller, Purchaser and the Title Company in form and substance acceptable to the Parties. The Deposit shall be paid to Seller at the Closing, in which case Purchaser shall receive a credit against the Closing Cash. If this Agreement is terminated prior to Closing, the Deposit shall be paid to Seller as liquidated damages, or otherwise refunded to Purchaser or disbursed as provided for in Section 15; and

 

 

(ii) On the Closing Date (hereinafter defined), the balance of the Purchase Price, adjusted in accordance with this Agreement, paid to Seller by federally wired immediately available funds.

 

(c) Purchaser and Seller hereby agree upon the allocation statement included on Exhibit B (the “Allocation Statement”) setting forth the value of each Facility that shall be used in connection with this Agreement and for the allocation of the Purchase Price among the Property in accordance with Treasury Regulation 1.1060-1 (or any comparable provisions of state or local tax law) or any successor provision. Purchaser and Seller shall report and file all tax returns (including any amended tax returns and claims for refund) consistent with such mutually agreed upon Purchase Price allocation included in the Allocation Statement and shall take no position contrary thereto or inconsistent therewith (including in any audits or examinations by any taxing authority or any other proceedings). Purchaser and Seller shall file or cause to be filed any and all forms (including U.S. Internal Revenue Service Form 8594), statements and schedules with respect to such allocation, including any required amendments to such forms. Notwithstanding the foregoing, at least two (2) business days prior to Closing, Purchaser and Seller shall agree upon an allocation of the Purchase Price solely for the purpose of determining realty transfer tax in connection with the recording of the deeds, and such allocation shall not exceed 100% of the current value of the Real Property, as the same is set forth on the most recently available tax bills.

 

(d) Unless otherwise prorated between Existing Operator and New Operator in accordance with the terms of the OTA, the following items shall be apportioned between Purchaser and Seller at the Closing between periods prior to Closing and periods following Closing, as of the Closing Date:

 

(i) Real estate taxes, assessments (other than special assessments), personal property taxes, and water, vault and sewer charges, as well as any other governmental charges or taxes assessed on the Property, based on the rates and assessed valuation applicable in the fiscal year for which assessed; provided that if the Closing shall occur before the real estate tax rate or personal property tax rate is fixed, the apportionment of said taxes shall be based on the most recently ascertainable tax bill for the real estate tax fiscal year and shall be re-prorated following receipt of the actual bill with respect to the applicable period. Allocation of real estate taxes billed with respect to the Property to yearly periods shall be determined in accordance with local custom, as determined by the Title Company.

 

(ii) All charges and payments for utility services; provided that if there is no meter or if the current bill for any of such utilities has not been issued prior to the Closing Date, then such charges shall be adjusted at the Closing on the basis of the charges for the prior period for which bills were issued and shall be further adjusted when the bills for the current period are issued; provided further, to the extent possible, Seller shall terminate its accounts with the utility service providers and Purchaser shall establish its accounts with such utility service providers effective on the Closing Date, in which event, there shall be no proration for such utility services.

 

 

(iii) Except as otherwise set forth herein, any errors in prorations and adjustments pursuant to this Section 2(c) may be corrected by the Parties after the Closing. The obligations of the Parties under this Section 2(c) shall survive the Closing.

 

(e) Except as expressly provided in this Agreement, prorations and adjustments of items of income and expense for the Facility will be made between Existing Operator and New Operator pursuant to the terms of the OTA.

 

3. Due Diligence; Licensure.

 

(a) Contemporaneously with or prior to the execution of this Agreement and throughout the period ending on the Closing Date or earlier termination hereof, Seller shall deliver or make available (or ensure that Existing Operator delivers or makes available) to Purchaser, all plans, maps, surveys, descriptions, permits, certifications, licenses, approvals, environmental audits, existing title materials, financial reports, regulatory surveys, and all other diligence materials reasonably requested by Purchaser and in the possession of Seller or Existing Operator, other than such documents and information that are confidential or proprietary (collectively, the “Diligence Materials”). Seller will either provide Purchaser copies of the Diligence Materials or shall make all Diligence Materials available to Purchaser by uploading such Diligence Materials to a virtual data room. Seller does not make, and shall not be deemed to have made, any representation or warranty as to the contents, accuracy or completeness of the Diligence Materials. All Diligence Materials are provided for informational purposes only, and Purchaser shall not in any way be entitled to rely upon the completeness or accuracy of the Diligence Materials and will instead rely exclusively on its own Inspections (defined below) and consultants with respect to all matters which it deems relevant to its decision to acquire, own and operate the Facility.

 

(b) Seller acknowledges that Purchaser has the right to perform its due diligence on the Property, which due diligence shall include any property condition and/or environmental inspections or evaluations (“Inspections”) of the Property (collectively, “Purchaser’s Inspection Reports”). Purchaser agrees that all Inspections shall be subject to applicable provisions regarding confidentiality of resident information. Purchaser shall give not less than two (2) business days’ advance notice to Seller prior to any entry onto the Real Property and shall permit Seller to have a representative present during all Inspections conducted at the Real Property. Purchaser shall use commercially reasonable efforts to ensure that the Inspections, and equipment, materials and substances used or brought onto the Real Property pose no material threat to the safety of persons, property or the environment. Purchaser shall further maintain the confidentiality of the contents, findings, data, results or other material information included in any such third-party reports except to Purchaser’s professionals, consultants, lenders, advisors, investors, members and shareholders, and provided such information is intended by Seller to remain confidential. Purchaser or its third-party vendors shall maintain and cause its third-party consultants to maintain (A) casualty insurance and commercial general liability insurance with coverages of not less than $1,500,000 for injury or death and $1,500,000 with respect to property damage; and (B) worker’s compensation insurance for all of their respective employees in accordance with the laws of Georgia. Purchaser or its third-party vendors shall deliver proof of the insurance coverage required pursuant to this Section 3(b) to Seller (in the form of a certificate of insurance) prior to entering onto the Real Property. Purchaser shall be responsible to Seller for, and shall indemnify, defend and hold harmless Seller and Existing Operator from and against, any and all losses, claims, damages, mechanics’ liens, materialmen’s liens, liabilities and causes of action for personal injury or property damage or loss to persons or property (including reasonable attorney’s fees) arising from the Inspections; provided that Purchaser shall not be responsible for defects, contamination, existing violations of environmental laws or other information merely discovered as a result of its Inspections. Purchaser shall not permit any liens to attach to the Property by Purchaser’s consultants or third-party Inspections vendors.

 

 

(c) Notwithstanding anything in this Agreement to the contrary, Purchaser shall not be permitted to perform any invasive tests (and without limiting the foregoing, for purposes hereof tests for asbestos-containing materials, lead-based paint, and radon shall be deemed to be invasive) on the Property without Seller’s prior written consent which consent shall not be unreasonably denied. If Purchaser desires to perform any invasive tests, Purchaser shall give at least two (2) business days’ prior written notice thereof to Seller, which notice shall be accompanied by a description of the invasive tests Purchaser desires to perform. Purchaser shall, at Purchaser’s sole cost and expense, and in accordance with all applicable environmental laws, dispose of any hazardous materials which have been specifically removed from or at the Property by Purchaser or its agents, representatives, employees or designees in connection with Purchaser’s environmental studies. Purchaser shall ensure that the activities pursuant to this Section 3(c) shall not cause a disruption to the operations of Seller or Existing Operator. No consent by Seller to any such activity shall be deemed to constitute a waiver by Seller or assumption of liability or risk by Seller. Purchaser shall fully restore the Property to the condition that existed before any such Inspections were undertaken, reasonable wear and tear excepted. The obligations of Purchaser set forth in this paragraph shall survive the Closing or the sooner termination of this Agreement.

 

(d) Purchaser may terminate this Agreement at any time from the date hereof until 5:00PM Eastern Time on the date that is forty-five (45) days from the Execution Date (the “Due Diligence Period”) by giving written notice of such termination (the “Termination Notice”) to Seller and Title Company. Upon the timely delivery of the Termination Notice and return of the Deposit to Purchaser, this Agreement shall terminate and the Parties shall be relieved of any further liability under this Agreement except those obligations that expressly survive termination of this Agreement.

 

(e) Seller shall deliver to Purchaser completed Seller’s Disclosure Schedules within thirty (30) days from the Execution Date.

 

(f) Within fifteen (15) days after the Execution Date, provided that Seller has delivered to Purchaser, in Purchaser’s reasonable discretion, all information and documentation required from Seller in connection with the Approvals (defined herein), Purchaser agrees that it shall, or shall cause New Operator, to use commercially reasonable efforts to submit, at its sole cost and expense, the necessary applications to obtain, the permits, licenses, and governmental approvals necessary to operate the Facility (each, an “Approval” and collectively, the “Approvals”). Seller shall receive final copies of each submission and any subsequent amendments, supplements, or related material correspondence. Purchaser shall use commercially reasonable efforts (and cause New Operator to use commercially reasonable efforts), to obtain the Approvals on or before Closing. Seller agrees to reasonably cooperate with Purchaser and New Operator to enable Purchaser or New Operator (as applicable) to obtain the Approvals, including providing all information and documentation reasonably required for such Approvals with respect to the Facility and its operations.

 

 

4. Excluded Liabilities. Except as expressly and unambiguously set forth in this Agreement, Purchaser shall not and does not assume any claims, lawsuits, liabilities, obligations, contracts, agreements or debts of Seller whatsoever, whether statutory, regulatory, judicially created or constitutional (the “Excluded Liabilities”), including without limitation and to the extent applicable to the transactions set forth in this Agreement: (i) malpractice or other tort claims, statutory or regulatory claims, claims of state or federal agencies whether civil or criminal, fraud-based claims or claims for breach of contract; (ii) any accounts payable, taxes, or other obligation or liability of Seller to pay money incurred by Seller; (iii) any collective bargaining agreements or other agreements or understandings with any labor union or collective bargaining unit or any employment or consulting agreements of any kind; (iv) claims made by any employee which arose or occurred prior to the Closing Date; and (v) any other obligations, liabilities, acts or omissions of Seller or Existing Operator related to the ownership of the Property prior to the Closing.

 

5. Closing. Subject to the satisfaction of the closing conditions set forth in Section 9 and Section 10 below, the closing of the transactions contemplated in this Agreement (the “Closing”) shall occur on the first business day of the first calendar month following the forty-fifth (45th) day after the later of (i) completion of the Due Diligence Period, and (ii) obtaining the Approvals, subject to the satisfaction of the conditions precedent set forth herein and in the OTA. The Closing Date shall be extended by any Cure Period (as such term is defined in the OTA). The date on which the Closing actually occurs is referred to herein as the “Closing Date”. The Closing Date may be a different date as agreed to in writing by the Parties. The Closing shall occur in escrow through the Title Company. Unless otherwise agreed to in writing by the Parties, the Closing shall be 12:01 a.m., Eastern Standard Time on the Closing Date (the “Effective Time”).

 

6. Seller’s Covenants, Representations and Warranties.

 

(a) As a material inducement to Purchaser to enter into this Agreement and to pay the Purchase Price for the Property as set forth herein, and except as otherwise set forth in Schedule 6 delivered to Purchaser concurrently herewith (“Seller’s Disclosure Schedule”), Seller hereby covenants, warrants and represents to Purchaser, as of the date hereof and the Closing Date, as follows (collectively, “Seller’s Representations”):

 

(i) Each Seller is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Georgia. Seller has the power and authority to own the Property.

 

(ii) Seller has the necessary power and authority to make, execute, deliver and perform this Agreement and the other instruments to be executed and delivered by it pursuant hereto (the “Seller’s Transaction Documents”). Such execution, delivery and performance have been duly authorized by all necessary action on the part of Seller and its members and managers, as applicable.

 

(iii) Seller’s Transaction Documents, when executed by all Parties, will constitute the valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other laws now or hereafter in effect affecting creditors’ rights and remedies or by equitable principles.

 

 

(iv) The authorization, execution and delivery of this Agreement and the Seller’s Transaction Documents and the consummation of the transactions contemplated hereby and thereby by the Seller, do not and will not, with or without the giving of notice or passage of time or both (A) violate or result in the breach of any term or provision of or require any notice, filing or consent under (1) the certificate of formation or operating agreement of the Seller or (2) except as set forth on Schedule 6(a)(iv), any statutes, laws, rules, regulations, ordinances, licenses or permits of any governmental body, authority or agency applicable to the Seller (except for such notices to, and consents and approvals of, state governmental and regulatory authorities applicable to the change of ownership of the Facility); (B) except as set forth on Schedule 6(a)(iv), conflict with, result in the material breach of any term or provision of, require any notice or consent under, give rise to a right of termination of, constitute a default under, result in the acceleration of, or give rise to a right to accelerate any obligation under any material loan agreement, mortgage, indenture, financing agreement, lease or any material agreement to which the Seller is a party or by which the Seller may be bound (except as shall be paid in full at Closing); or (C) result in any lien, claim, encumbrance or restriction on any of the Property (except for Permitted Exceptions, as hereafter defined); provided, however, that Seller does not make any representation regarding any requirements of any federal or state antitrust laws in connection with the transactions contemplated hereby.

 

(v) Seller has good and marketable title to the Property, which at Closing will be free and clear of all tenancies, security interests, liens and encumbrances, except Permitted Exceptions.

 

(vi) There are no actions, suits or legal, administrative, arbitration or other proceedings or governmental investigations pending or, to Seller’s actual knowledge, threatened against Seller before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign which affect or relate to the Property. Seller has not received written notice that it is a party to or subject to provisions of any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which affects or relates to the Property. There are no insolvency proceedings of any kind including without limitation, bankruptcy, receivership, reorganization, dissolution or arrangement with creditors, voluntary or involuntary, affecting Seller or the Facility, and Seller has not taken any action in contemplation of, or which would constitute the basis for, the institution of any such proceedings.

 

(vii) Seller has not received written notice that the Real Property is in violation of any federal, state or local laws, ordinances, rules, regulations, orders or directives or under common law relating to the environment (“Environmental Laws”). To Seller’s knowledge, there are no underground or above ground storage tanks located in or about the Real Property. Seller has provided to Purchaser (to the extent in existence and in Seller’s possession) the following: (A) a copy of each permit or pending application for any permit and each order, judgment, decree, consent agreement or similar document imposing obligations on Seller issued pursuant to or in connection with any Environmental Law with respect to the Property; and (B) copies, if any, of all material reports in the custody or control of Seller, including, without limitation, “Phase I,” “Phase II,” “environmental assessment” and similar reports, relating to the environmental condition of the Property or the compliance of Seller with Environmental Laws with respect to the Property, and (C) documentation, if applicable, demonstrating the full compliance of Seller with any applicable Environmental Laws that condition, restrict, or prohibit the transfer, sale, lease or assignment of the Property, including, without limitation, any so-called “environmental property transfer laws”.

 

 

(viii) Except as otherwise set forth on Schedule 6(a)(viii), the Seller is not a party to, nor is the Property subject to, any lease, sublease, agreement, contract, commitment, understanding or arrangement affecting or relating to the Property or the use, occupancy or benefit thereof, which, upon the Closing hereunder, will be binding upon the Facility or the Purchaser, except for the Permitted Exceptions. Concurrent with the Closing hereunder, Seller shall terminate the existing lease(s) with Existing Operator for the Facility (the “Existing Lease”).

 

(ix) Subject to the terms and conditions set forth herein, Seller shall deliver the Property on the Closing Date in substantially the same condition as on the date hereof, normal wear and tear excepted.

 

(x) There is no pending or, to Seller’s knowledge, threatened, request, application or proceeding to alter or restrict the zoning or otherwise restrict the current or any planned use of the Property. Seller has received no written notice of any litigation or governmental proceeding seeking eminent domain or rezoning of all or any portion of the Property or which adversely affects the operations of the Facility.

 

(xi) Seller has granted no rights of first refusal or options to purchase the Property or any portion or portions thereof in effect as of the date of this Agreement.

 

(xii) To Seller’s knowledge, there are no (1) pending or threatened special assessments affecting the Property or (2) contemplated improvements affecting the Property that may result in special assessments affecting the Property.

 

(xiii) All contractors and subcontractors and other persons or entities engaged by Seller who have performed work on or supplied materials to any portion of the Property have been fully paid for all amounts due and owing, or will be paid as such amounts come due, and, to Seller’s actual knowledge, there are no claims against the Property arising from any non-payment by Seller which may give rise to a mechanic’s lien against the Property or any portion thereof.

 

(xiv) Seller has timely filed all tax returns and reports required by law to have been filed by it and has paid all taxes and governmental charges except to the extent any non-payment of taxes or governmental charges would not affect any successor owner of the Property.

 

(xv) To Seller’s knowledge, Seller is not a party or subject to or otherwise in material default under any contract, lease or other agreement, judgment, order or decree of any governmental entity, or any settlement agreement that pertains to the Property.

 

(xvi) All insurance coverage for fire, liability, worker’s compensation, and other forms of insurance applicable to the Property or the Facility or the business conducted at the Facility (i) are in full force and effect, and (ii) have not been subject to any lapse in coverage.

 

(xvii) Seller has not received notice of any material violation of any other law or municipal ordinance, order or requirement noted or issued against the Property by any governmental authority having jurisdiction over the Property, that has not been cured, corrected or waived as of the Closing Date.

 

(xviii) The Personal Property together with the personal property being transferred to New Operator pursuant to the OTA is all of the personal property currently being utilized for the current operation of the Facility. No notice has been received of any written claim, requirement or demand of any licensing or certifying agency to rework or redesign the Property so as to conform to or comply with any existing law, code or standard which has not been fully satisfied prior to the date hereof. Seller has been granted no waivers of physical plant deficiencies or life safety code requirements with respect to the Property by any governmental or regulatory authority.

 

 

(xix) Seller is not a “foreign person” for purposes of § 1455 of the Internal Revenue Code of 1986, as amended.

 

(xx) Seller has provided to Purchaser true and correct copies of the updated year-to-date financial statements of the Facility and annual financial statements for the calendar years ending December 31, 2020, 2021, 2022, and calendar year 2023 through September 2023 (collectively, the “Financial Statements”). The Financial Statements (i) have been prepared from the books and records of Seller or Existing Operator in conformity in all material respects with United States Generally Accepted Accounting Principles, applied on a consistent basis throughout the period involved, except that the unaudited statements are without footnotes and are subject to normal yearend adjustments, (ii) present fairly in all material respects the financial position of the Facility as of the date of the Financial Statements and the results of operations and the cash flows of the Facility for the periods ending on the date of the Financial Statements, and (iii) to Seller’s actual knowledge, are true, complete and correct, in all material respects. Except as set forth in the most recent Financial Statements, there have been no events, transactions or information related to the Facility or the Facility’s operations or the Property which, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(xxi) Seller has not engaged any agent, broker, investment banker, person or firm who is entitled to a commission or fee in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated herein. To the extent any agent, broker, investment banker, person or firm has acted on behalf of Seller or under the authority of Seller, Seller shall be responsible for any such broker’s or finder’s fee or any other commission or similar fee payable directly or indirectly to such agent, broker, investment banker, person or firm in connection with any of the transactions contemplated herein.

 

(xxii) EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE BY SELLER IN THIS AGREEMENT, NONE OF SELLER, NOR ANY OF SELLER’S AFFILIATES OR REPRESENTATIVES (NOR ANY OTHER PERSON), HAS MADE OR IS MAKING ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER WITH RESPECT TO SELLER, THE FACILITY, THE PROPERTY OR SELLER’S BUSINESSES OR OPERATIONS (INCLUDING SELLER’S LIABILITIES, CONDITIONS (FINANCIAL OR OTHERWISE) OR PROSPECTS), ALL OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED. IN PARTICULAR, AND WITHOUT LIMITING THE GENERALITY OF THE FOREGOING DISCLAIMER, NONE OF SELLER, NOR ANY OF SELLER’S AFFILIATES OR REPRESENTATIVES (NOR ANY OTHER PERSON), HAS MADE OR IS MAKING ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER WITH RESPECT TO (A) ANY FINANCIAL PROJECTION, FORECAST, ESTIMATE, BUDGET OR PROSPECT INFORMATION RELATING TO ANY SELLER, THE PROPERTY, OR ANY SELLER’S BUSINESSES OR OPERATIONS OR (B) EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE BY SELLER IN THIS AGREEMENT, ANY ORAL OR WRITTEN INFORMATION, OTHER THAN INFORMATION SET FORTH IN THIS AGREEMENT, PRESENTED TO PURCHASER OR ANY OF ITS AFFILIATES OR REPRESENTATIVES IN THE COURSE OF (I) THEIR DUE DILIGENCE INVESTIGATION OF ANY SELLER, THE FACILITY, THE PROPERTY OR ANY SELLER’S BUSINESSES OR OPERATIONS, (II) THE NEGOTIATION OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS OR (III) THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE TRANSACTION DOCUMENTS.

 

 

As used in this Agreement, the phrase “to Seller’s knowledge”, or any words or phrases of similar import, shall mean the current, actual knowledge of Lance Baller and each Facility administrator, after due inquiry. For the avoidance of doubt, it is expressly understood and agreed that such person will not have any personal liability under this Agreement on account of the representations and warranties set forth herein or otherwise.

 

(b) Subject to the balance of this Section 6(b), all of Seller’s Representations shall be true, correct and complete in all respects, both as of the date hereof and as of the Closing Date, and Seller shall certify in writing at Closing that each and all of said Seller’s Representations are true, correct and complete as of and with respect to that date in all material respects as hereinafter provided. At any time, and from time to time on or prior to the Closing Date, Seller may supplement or amend the schedules and/or information in the virtual data room (collectively, a “Disclosure Update”). The representations, warranties, and schedules will be deemed supplemented and amended by any Disclosure Update in order to cause the representations and warranties of Seller to be true as of the date hereof and the Closing Date and, accordingly, Purchaser and any party seeking indemnity under this Agreement shall be barred from seeking indemnity with respect to any prior and updated versions of the schedules and/or virtual data room, unless: (i) such proposed schedule had or would have, individually or in aggregate with the effect of items disclosed in other supplemental schedules which were first submitted after the Execution Date, a Material Adverse Effect, and (ii) within ten (10) business days after receipt of such proposed supplemental schedule, Purchaser provides written notice to Seller reasonably detailing the objection thereof and changes in such proposed schedule which would make the same acceptable. Should the Parties not be able to resolve written objections within ten (10) business days thereafter, then either Party may withdraw from this Agreement and terminate it subject to the provisions of without any obligation or liability of any sort and this Agreement shall be treated as never having been executed or delivered, subject to Section 15. In the event the Closing occurs, any such newly completed schedules or supplements shall be effective, and they shall represent the final version of the schedule for all purposes.

 

(c) From the date hereof and until the earlier termination of this Agreement or the Closing, Seller shall (except as otherwise consented to or approved by Purchaser in writing):

 

(i) Not create or permit to become effective any lien or encumbrance or charge upon the Property (other than Permitted Exceptions or items to be discharged or released in advance of or at Closing);

 

(ii) Preserve and keep all of its books and records related to or prepared in connection with the Property in accordance with past practice;

 

 

(iii) Use its reasonable best efforts to obtain, on or prior to the Closing, any consents necessary for Seller to fulfill its obligations to consummate the transactions contemplated in this Agreement;

 

(iv) Maintain or cause Existing Operator to maintain the Property in substantially the same condition as they existed on the Execution Date in the ordinary course of business, ordinary wear and tear and damage by casualty excepted;

 

(v) Maintain or cause Existing Operator to maintain all current insurance policies (or equivalent replacement thereof) with respect to the Property and the business conducted at the Facility in full force and effect, except as required by applicable laws;

 

(vi) Comply in all material respects with all applicable laws, and with all applicable rules and regulations of all governmental authorities, in conjunction with the execution, delivery and performance of this Agreement and the transactions contemplated hereby;

 

(vii) File federal, state, and local tax returns, and pay all amounts then due, for all periods through and including the Closing Date;

 

(viii) Afford Purchaser’s employees, auditors, legal counsel, representatives of Purchaser’s lenders, or other authorized representatives reasonable access during normal business hours upon reasonable notice to inspect and investigate the Property, including for review of all accounting records and other business records, all in accordance with the terms and conditions of Section 3 above and subject to the rights of occupants of the Property;

 

(ix) Not sell, lease or otherwise dispose of all or any part of any Property. In addition, Seller shall not sell, lease or otherwise dispose of any personal property in, related to or necessary for operation of any Facility other than in the ordinary course of business, which shall be replaced in a manner consistent with its ordinary course;

 

(x) Not take any actions to close the Facility, decrease the number of licensed beds, or change the Medicare or Medicaid certification statuses of the Facility;

 

(xi) Not solicit, accept or negotiate any offer to purchase any portion of the Property from any person or entity other than Purchaser;

 

(xii) Effect any corporate merger, business combination, reorganization or similar transaction or take any other action, corporate or otherwise, which affects adversely Seller’s ability to perform in accordance with this Agreement; and

 

(xiii) Provide to Purchaser true and correct copies of the updated year-to-date financial statements of the Facility through the Closing Date.

 

(d) AS-IS. Except as otherwise expressly set forth in Seller’s Representations the Property is expressly purchased and sold “AS IS,” “WHERE IS,” and “WITH ALL FAULTS.”

 

 

7. Purchaser’s Covenants, Representations and Warranties.

 

(a) As a material inducement to Seller to enter into this Agreement and to sell the Property to Purchaser as set forth herein, each Purchaser hereby covenants, warrants and represents to Seller, as of the date hereof and as of the Closing Date, as follows:

 

(i) Each Purchaser is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser has the power and authority to purchase the Property and to conduct the business presently being conducted by it.

 

(ii) Purchaser has the necessary power and authority to make, execute, deliver and perform this Agreement including the instruments and documents to be executed and delivered by it pursuant hereto (the “Purchaser’s Transaction Documents,” collectively with the Seller’s Transaction Documents, the “Transaction Documents”). Such execution, delivery, performance and consummation have been duly authorized by all necessary action, corporate or otherwise on the part of Purchaser and its members and managers, as applicable.

 

(iii) Purchaser’s Transaction Documents, when executed by Purchaser, constitute the valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization and other laws now or hereafter in effect affecting creditors’ rights and remedies or by equitable principles.

 

(iv) The authorization, execution and delivery of this Agreement and the Purchaser’s Transaction Documents and the consummation of the transactions contemplated hereby and thereby by the Purchaser, do not and will not, with or without the giving of notice or passage of time or both (A) violate or result in the breach of any term or provision of or require any notice, filing or consent under (i) the [articles of organization] or operating agreement of the Purchaser or (ii) any statutes, laws, rules, regulations, ordinances, licenses or permits of any governmental body, authority or agency applicable to the Purchaser or (iii) any judgment, decree, writ, injunction, order or award of any arbitrator, court or governmental body, authority or agency binding upon the Purchaser; or (B) conflict with, result in the breach of any term or provision of, require any notice or consent under, give rise to a right of termination of, constitute a default under, result in the acceleration of, or give rise to a right to accelerate any obligation under any loan agreement, mortgage, indenture, financing agreement, lease or any agreement to which the Purchaser is a party or by which the Purchaser may be bound.

 

(v) There are no actions, suits or legal, administrative, arbitration or other proceedings or governmental investigations pending or, to Purchaser’s actual knowledge, threatened against Purchaser before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign which affect or relate to the Property, that has had, or would reasonably be expected to have, a Material Adverse Effect. The Purchaser is not a party to or subject to provisions of any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which affects or relates to the Property. There are no insolvency proceedings of any kind including without limitation, bankruptcy, receivership, reorganization, dissolution or arrangement with creditors, voluntary or involuntary, affecting Purchaser, and Purchaser has not taken any action in contemplation of, or which would constitute the basis for, the institution of any such proceedings.

 

 

(vi) Purchaser has the ability to obtain funds in cash in amounts equal to the Closing Cash by means of credit facilities or otherwise and will at the Closing have immediately available funds in cash, which are sufficient to pay the Purchase Price and to pay any other amounts payable pursuant to this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby.

 

(vii) Purchaser and its Affiliates and controlling members are not currently identified on the OFAC List, and each is not an individual or entity with whom a citizen of the United States is prohibited from engaging in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or executive order of the President of the United States. “OFAC List” means the list of specially designated nationals and blocked individuals and entities subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control pursuant to any legal requirements, including, without limitation, trade embargo, economic sanctions, or other prohibitions imposed by Executive Order of the President of the United States. The OFAC List currently is accessible through the internet website https://www.treasury.gov/ofac/downloads/sdnlist.pdf.

 

(viii) Purchaser has not engaged any agent, broker, investment banker, person or firm who is entitled to a commission or fee in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated herein. To the extent any agent, broker, investment banker, person or firm has acted on behalf of Purchaser or under the authority of Purchaser, Purchaser shall be responsible for any such broker’s or finder’s fee or any other commission or similar fee payable directly or indirectly to such agent, broker, investment banker, person or firm in connection with any of the transactions contemplated herein.

 

(b) Between the date of this Agreement and the Closing Date, Seller and Purchaser will use their commercially reasonable efforts to cause the conditions set forth in Sections 10 and 11 over which such Party or its Affiliates has control to be satisfied as soon as reasonably practicable after the date of this Agreement. “Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. “Person” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association or other entity.

 

 

8. Condition of Title and Survey.

 

(a) The Real Property shall be conveyed to Purchaser by special warranty deeds to be delivered to Purchaser at Closing, free and clear of all liens and encumbrances, except (a) liens and encumbrances for taxes not yet due and payable or which are being contested in good faith, (b) any liens or encumbrances of any landlord, carrier, warehouseman, mechanic or materialman and any like liens or encumbrances arising in the ordinary course of business for sums that are not delinquent or that are being contested in good faith, (c) all existing utility, access or other easements or rights of way or other matters of record affecting the Real Property or any part thereof, (d) laws regulating the use or enjoyment of the Real Property, (e) zoning and building laws provided the Property complies with such laws, (e) liens securing obligations which are Assumed Liabilities, (f) those matters set forth in the Title Commitment, (g) the liens and encumbrances identified in Schedule 9(a) as Permitted Exceptions, (h) any matters which would be shown by an inspection, a survey of the Real Property or by inquiry of persons in possession of the Real Property, and (i) all other matters affecting title to the Real Property which are hereafter approved or waived by Purchaser as provided in this Agreement (the foregoing exceptions being herein collectively referred to as the “Permitted Exceptions”). Purchaser shall order a title insurance commitment for a title insurance policy (the “Title Commitment”) from the Title Company no later than five (5) business days after the Execution Date. In addition, Purchaser shall have the right to order a new or updated survey for the Property (the “Survey”) and a new zoning report for the Property (the “Zoning Report”), which order shall be placed within ten (10) business days after Seller delivers an existing survey and zoning report for the Property to Purchaser (to the extent in Seller’s possession). Prior to the expiration of the Due Diligence Period (the “Title Objection Date”), Purchaser shall have the right to notify Seller of any matters shown on the Title Commitment, Survey and/or Zoning Report that are not acceptable to Purchaser other than the Permitted Exceptions (such exceptions referred to herein as the “Title Defects”). Notwithstanding the foregoing, if Purchaser’s lender identifies Title Defects, then the Title Objection Date shall, be extended until twenty (20) days prior to Closing. If any updates to the Title Commitment, Survey and/or Zoning Report after the Title Objection Date shall disclose any additional matters, Purchaser shall have seven (7) business days from the receipt of such updates within which to notify Seller thereof, in which case any such matters for which Purchaser provides notice shall also be treated as “Title Defects” hereunder. Seller shall have no obligation to cure any Title Defect (other than Seller’s Monetary Liens as defined below).

 

(b) If Seller shall receive written notice of any Title Defect in accordance with Section 8(a), Seller may elect in its sole discretion, by written notice to Purchaser, to either (i) undertake at its expense to cure such Title Defects on or before the Closing, or (ii) not cure such Title Defects. In the event Seller does not respond to Purchaser’s written notice of a Title Defect within ten (10) days, Seller shall be deemed to have elected to cure such Title Defect (except for Seller’s Monetary Liens). In the event that Seller does not elect to cure such Title Defects pursuant to this Section 8(b), Purchaser may, by notice to Seller delivered within ten (10) days after such election or deemed election by Seller, terminate this Agreement, in which event the Deposit shall be returned to Purchaser and neither party shall have any further obligations under this Agreement except for obligations that expressly survive termination of this Agreement. Notwithstanding the foregoing, should (i) Purchaser notify Seller of any Title Defects disclosed by any update to the Title Commitment, Survey and/or Zoning Report after the Title Objection Date and the expiration of the Due Diligence Period, and (ii) Seller does not elect to cure such Title Defects, Purchaser may, by notice to Seller delivered within two (2) business days after such election or deemed election by Seller, terminate this Agreement, in which event the Deposit shall be returned to Purchaser and neither party shall have any further obligations under this Agreement except for obligations that expressly survive termination of this Agreement. In the event Purchaser does not elect to terminate this Agreement pursuant to the preceding sentence, Purchaser shall be deemed to have waived such Title Defects and such Title Defects, as well as any matters shown in the Title Commitment, Survey or Zoning Report to which Purchaser does not object as permitted herein, shall be deemed as “Permitted Exceptions” hereunder. Notwithstanding the foregoing, Purchaser shall not be required to object to any financing obtained or assumed by Seller and secured by a mortgage, an assignments of leases and rents, subordination agreements, UCC financing or other liens covering the Property arising out of the actions or at the direction of Seller and Seller shall pay off all such obligations or cause the Title Company to insure or endorse over any mechanic’s or materialmen’s liens for work or materials undertaken or acquired by or on behalf of Seller or Existing Operator, or any tax or judgment lien against Seller (provided, however, Seller shall be entitled to utilize the Purchase Price proceeds to effectuate any or all of the foregoing; all of the foregoing shall be referred to herein as “Seller’s Monetary Liens”).

 

 

(c) To the extent required by the applicable governmental authority in connection with the lawful transfer of the Property to Purchaser or the issuance of the Facility’s operating license to New Operator, or the requirement of Purchaser’s lender, Seller shall obtain prior to Closing a certificate of occupancy as to the Real Property. If there are any municipal violations affecting the Real Property, Seller shall correct or cause Existing Operator to correct and remove such violations prior to Closing, and Seller shall be required to pay any fines or penalties associated therewith.

 

(d) Subject to the terms and conditions of Section 3 above, Seller shall, upon request and reasonable advance notice from Purchaser, permit Purchaser and their agents to conduct an environmental assessment of the Facilities and physical and mechanical inspections of the Facility to prepare reports as necessary (collectively, the “Property Condition Reports”). Seller shall make available to Purchaser for review and copy any previously prepared environmental assessments and Property Condition Reports that are in any Seller’s possession for the Facility or the Real Property.

 

9. Conditions Precedent to Obligations of Purchaser. The obligations of Purchaser under this Agreement are subject to, and shall be conditioned upon, the satisfaction (or the waiver in writing by Purchaser) prior to, or as of, the Closing Date of each of the following conditions:

 

(a) Compliance by Seller and Representations Correct. All of the covenants and obligations of this Agreement to be complied with and performed by Seller at or before the Closing Date shall have been complied with and performed in all material respects. Seller’s Representations shall be true, correct and complete, both as of the date hereof and as of the Closing Date, with the same force and effect as though such representations and warranties had been made on and as of the Closing Date (except to the extent any such representation or warranty speaks as of a specific date, in which case such representation or warranty shall be true and correct as of such date), except to the extent the failure of such representations and warranties to be true and correct as of such applicable date has not had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(b) Seller Transaction Documents. Seller shall have delivered to the Title Company or Purchaser, as applicable, all of the documents, instruments, agreements and deliverables set forth in Section 11(a) below.

 

(c) No Legal Action. No action, suit, investigation, other proceeding or claim shall have been instituted before any court or before or by any government or governmental agency or instrumentality against any of Seller, Existing Operator or the Facility that would materially adversely affect the operation or financial condition of the Property, nor shall there be any actions, suits, claims or other proceedings, pending or threatened, or injunctions or orders entered, pending or threatened against any of Seller, Existing Operator or the Facility, to restrain or prohibit or would make illegal the consummation of the transactions contemplated hereby.

 

 

(d) Closing Under the OTA. All conditions to New Operator’s obligation to consummate the closing under the OTA shall have been satisfied (other than those conditions that by their nature are to be satisfied at the closing of the OTA, each of which is capable of being satisfied at the Closing under this Agreement) such that the closing under the OTA can occur simultaneously with the Closing.

 

(e) Title Policy. Upon payment of the premium therefor, the Title Company shall be prepared to issue a standard American Land Title Association owner’s title insurance, dated as of the Closing Date, insuring fee simple title to the Real Property.

 

(f) Permits, Consents, etc. All actions by (including any authorization, consent or approval) or in respect of (including notice to), or filings with, any governmental authority or other person that are required to consummate the transactions contemplated under this Agreement or the OTA shall have been obtained, provided that no such authorization, consent or approval shall have been revoked.

 

(g) No Material Adverse Effect. There shall have been no event or series of events which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Property. “Material Adverse Effect” shall mean any circumstance, event, effect or change that, in the aggregate, is materially adverse to (1) the business conducted at the Facility, or the results of operations, a material reduction of census at the Facility, including without limitation, any revocation of any licenses required to operate the Facility, the issuance of any moratorium on the acceptance of residents to the Facility, a material reduction in reimbursement rates or the denial of payment by any third-party payor with respect to any residents of the Facility, (2) the physical condition of the Property, or (3) the ability of Seller or Existing Operator to perform their respective obligations under this Agreement or the OTA or to consummate the transactions contemplated herein and therein; provided, however, that Material Adverse Effect shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Facility operates; (iii) any changes in financial, banking or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by any Transaction Document or any action taken (or omitted to be taken) with the written consent of or at the written request of Purchaser; (vi) any matter of which Purchaser is aware on the date hereof; (vii) any changes in applicable laws or accounting rules (including United States generally accepted accounting principles in effect from time to time) or the enforcement, implementation or interpretation thereof; (viii) any natural or man-made disaster or acts of God unless such disasters or acts of God affect the Facility or Real Property directly; or (x) any epidemics, pandemics, disease outbreaks, or other public health emergencies; or (xi) any failure by the Facility to meet any internal or published projections, forecasts or revenue or earnings predictions provided that the underlying causes of such failures shall not be excluded from the definition of Material Adverse Effect.

 

10. Conditions Precedent to Obligations of Seller. The obligations of Seller under this Agreement are subject to, and shall be conditioned upon the satisfaction (or the waiver in writing by Seller) prior to, or as of, the Closing Date of each of the following conditions:

 

(a) Compliance by Purchaser and Representations Correct. All of the covenants and obligations of this Agreement to be complied with and performed by Purchaser at or before the Closing Date shall have been complied with and performed in all material respects, and the representations and warranties made by Purchaser in this Agreement, shall be correct in all material respects on and as of the Closing Date, with the same force and effect as though such representations and warranties had been made on and as of the Closing Date (except to the extent any such representation or warranty speaks as of a specific date, in which case such representation or warranty shall be true and correct as of such date).

 

 

(b) Purchaser Transaction Documents. Purchaser shall have delivered to the Title Company or Seller, as applicable, all of the documents, instruments, agreements and deliverables set forth in Section 12(b) below.

 

(c) Closing Under the OTA. All conditions to Existing Operator’s obligation to consummate the closing under the OTA shall have been satisfied (other than those conditions that by their nature are to be satisfied at the closing of the OTA, each of which is capable of being satisfied at the Closing under this Agreement).

 

11. Deliveries at Closing.

 

(a) Seller shall deliver to Purchaser or, if applicable, to the Title Company to be held in escrow in accordance with the terms of this Agreement, on or before the Closing Date the following, each of which shall be in form and substance required herein or as otherwise reasonably satisfactory to Purchaser:

 

(i) Special Warranty Deeds for the Real Property, duly executed by Seller, in substantially the form of Exhibit C attached hereto and made a part hereof (the “Warranty Deed”);

 

(ii) A Bill of Sale and Assignment, duly executed by Seller, substantially in the form of Exhibit D attached hereto and made a part hereof;

 

(iii) A termination of the Existing Lease duly executed by Seller and Existing Operator;

 

(iv) A FIRPTA Certificate, duly executed by Seller, substantially in the form of Exhibit E attached hereto and made a part hereof;

 

(v) A Closing certificate, duly executed by Seller, substantially in the form of Exhibit F attached hereto and made a part hereof;

 

(vi) A Closing statement setting forth all adjustments to the Purchase Price contemplated herein duly executed by Seller (the “Closing Statement”);

 

(vii) A complete set of keys for the buildings located on the Real Property, appropriately tagged for identification;

 

(viii) A Georgia withholding affidavit, duly executed by Seller;

 

 

(ix) Such title affidavits, transfer tax forms and other documents as are customarily provided by sellers of commercial property comparable to the Property or as may be required by the Title Company in connection with the conveyance of the Property, duly executed by Seller and in form and substance reasonable satisfactory to the Title Company; and

 

(x) Such further customary documents, instruments and agreements as are contemplated herein or as reasonably requested by Purchaser.

 

(b) At Closing, Purchaser shall deliver the Purchase Price to Seller, including the Deposit to be paid over to Seller by the Title Company at Closing, in accordance with the provisions set forth herein, and deliver to Seller the following:

 

(i) The Warranty Deed, duly executed by Seller;

 

(ii) The Closing Statement duly executed by Purchaser;

 

(iii) A Closing certificate substantially in the form and substance of Exhibit G, attached hereto and made a part hereof duly executed by Purchaser;

 

(iv) A duly executed counterpart of the Bill of Sale and Assignment executed by Purchaser;

 

(v) Such title affidavits, transfer tax forms and other documents as are customarily provided by purchasers of commercial property comparable to the Property or as may be required by the Title Company in connection with the conveyance of the Property, duly executed by Purchaser and in form and substance reasonable satisfactory to the Title Company; and

 

(vi) Such further documents, instruments and agreements as are contemplated herein or as reasonably requested by Seller.

 

12. Casualty and Condemnation.

 

(a) Casualty. The risk of loss or damage to the Property by fire or other casualty until the Closing shall be the responsibility of the Seller. If the Property or any part thereof is damaged or destroyed as a result of such casualty, Seller shall immediately notify Purchaser. In the event of loss or damage to the Property or any portion thereof which is not “major” (as hereinafter defined), this Agreement shall remain in full force and effect provided Seller performs (or causes) any necessary repairs or, at Seller’s option, (i) Seller assigns to Purchaser all of Seller’s right, title and interest to any claims and proceeds Seller may have with respect to any casualty and income or rental interruption insurance policies or condemnation awards relating to the Property and (ii) to the extent not yet paid, Purchaser shall receive a credit against the Purchase Price of an amount equal to the deductible on Seller’s applicable casualty insurance policies. In the event that Seller elects to perform (or cause) repairs upon the Property, Seller shall use reasonable efforts to complete (or cause completion of) such repairs promptly and the date of Closing shall be extended a reasonable time (not to exceed thirty (30) days) in order to allow for the completion of such repairs. In the event of a “major” loss or damage, Purchaser may terminate this Agreement within thirty (30) days after receipt of notice thereof. If Purchaser does not so elect to terminate, then Purchaser shall be deemed to have elected to proceed under this Agreement. If the Purchaser elects to proceed with Closing notwithstanding major loss or damage, then Seller shall (i) assign to Purchaser all of Seller’s right, title and interest to any claims and proceeds Seller may have with respect to any casualty insurance policies relating to the premises in question and (ii) to the extent not yet paid, Purchaser shall receive a credit against the Purchase Price of an amount equal to the deductible on Seller’s applicable casualty insurance policies. For purposes of this Section 12(a), “major” loss or damage refers to loss or damage to any individual Property or any portion thereof such that the cost of repairing or restoring the Property to a condition substantially identical to that of the Property prior to the event of damage would be, in the opinion of an architect selected by Seller and approved by Purchaser, equal to or greater than Three Hundred Fifty Thousand Dollars ($350,000.00). Upon Closing, full risk of loss with respect to the Property shall pass to Purchaser.

 

 

(b) Condemnation. The Seller shall give the Purchaser prompt notice of any actual or threatened taking or condemnation of all or any portion of the Property. If, prior to the Closing, there shall occur a taking or condemnation of all or any material portion of the Property, or a deed has been given in lieu thereof, or, if there is pending any proceeding in condemnation or eminent domain for the taking or use of all or any part of the Property, then, in such event, the Purchaser may, at its option, terminate this Agreement by written notice given to the Seller within ten (10) days after the Purchaser has received the notice referred to above or at the Closing, whichever is earlier. In the event the Purchaser terminates this Agreement pursuant to this paragraph, this Agreement shall cease, terminate and come to an end, the Deposit shall immediately be conveyed to Seller and neither Party shall have any rights or liabilities against or to the other except as expressly set forth herein.

 

(c) In the event this Agreement has not been terminated in accordance with the provisions of paragraph (c) above, then the Parties shall proceed to the Closing and, to the extent there shall be any remaining award to be paid, Seller shall execute and deliver such assignment to Purchaser of Seller’s right, title and interest in and to such award as shall be reasonably and mutually acceptable to Purchaser and Seller. This provision shall survive the Closing.

 

(d) This Section is an express provision with respect to destruction and eminent domain and is intended to supersede any applicable statute regarding risk of loss.

 

13. Reserved.

 

14. Termination.

 

(a) In addition to the express provisions contained herein regarding termination of this Agreement, this Agreement may be terminated at any time prior to the Closing Date by:

 

(i) by mutual consent in writing of Purchaser and Seller;

 

(ii) by Seller or Purchaser at any time upon delivery of written notice to the other after January 31, 2024 (the “End Date”), if the Closing shall not have occurred by such date; provided, however, that the right to terminate this Agreement under this Section 14(a)(ii) shall not be available to any Party whose failure to fulfill any obligation under this Agreement or whose failure to use commercially reasonable efforts to cause the satisfaction of the conditions under Section 9 or 10 prior to the date of such intended termination has been the cause of, or resulted in, the failure of the Closing to occur by such date.

 

 

(iii) Seller (so long as Seller is not in breach), in the event of a material breach or default by Purchaser of any of its covenants, representations or warranties set forth in this Agreement or in the event of a material breach or default by New Operator of any of its covenants, representations or warranties set forth in the OTA, in each case, which breach (A) would give rise to the failure of a condition set forth in Section 10 to be satisfied and (B)(1) cannot be cured by the End Date or (2) if capable of being cured, shall not have been cured by the earlier of (I) thirty (30) days following receipt of written notice from Purchaser of such breach or (II) the date that is two (2) days prior to the End Date. If Purchaser timely cures such breach or default, then Seller shall not be entitled to terminate this Agreement pursuant to this subsection;

 

(iv) Purchaser (so long as Purchaser is not in breach), in the event of a material breach or default by Seller of any of its covenants, representations or warranties set forth in this Agreement or in the event of a material breach or default by Existing Operator of any of its covenants, representations or warranties set forth in the OTA, in each case, which breach (A) would give rise to the failure of a condition set forth in Section 9 to be satisfied and (B)(1) cannot be cured by the End Date or (2) if capable of being cured, shall not have been cured by the earlier of (I) thirty (30) days following receipt of written notice from Purchaser of such breach or (II) the date that is two (2) days prior to the End Date. If Seller timely cures such breach or default, then Purchaser shall not be entitled to terminate this Agreement pursuant to this subsection; or

 

(v) Purchaser in accordance with the provisions of Section 6(b).

 

(b) If this Agreement is terminated by Purchaser or Seller pursuant to Section 14(a)(i), or Section 14(a)(ii), or terminated by Purchaser pursuant to Section 14(a)(v), Purchaser shall be entitled to the return of the Deposit, whereupon the parties shall instruct the Title Company to promptly return the Deposit to Purchaser, and upon payment of the Deposit, this Agreement shall terminate and be of no further force or effect, except as otherwise set forth herein. If this Agreement is terminated pursuant to Section 14(a)(iv), Purchaser shall be entitled either to (x) terminate this Agreement whereupon the Parties shall instruct the Title Company to return the Deposit to the Purchaser, and Seller shall reimburse Purchaser for its costs and expenses of the Transaction including but not limited to attorneys’ fees, charges and expenses imposed by Purchaser’s lender, and all third party reports; and upon payment of the Deposit and such costs and expenses, this Agreement shall terminate and be of no further force and effect, except as otherwise set forth herein, or (y) seek specific performance and/or injunctive relief through an action to be instituted within ninety (90) days of the date of the scheduled Closing in which event, if Purchaser is successful, Seller shall pay Purchaser’s attorneys’ fees costs and expenses. If this Agreement is terminated by Seller pursuant to Section 14(a)(iii) above, the Seller shall be entitled to retain the Deposit as liquidated damages which shall be paid to Seller by the Title Company and upon such payment this Agreement shall be terminated and of no further force and effect. Each Party acknowledges and agrees that (i) Seller will suffer substantial damages as a result of a termination of this Agreement, (ii) that Seller’s damages, while substantial, are incapable of being determined with precision and (iii) the Deposit is a reasonable estimate of Seller’s damages resulting.

 

(c) The Parties expressly agree that the OTA shall be cross defaulted with this Agreement, such that (i) any default or breach by New Operator under the OTA shall be a default by Purchaser hereunder and (ii) any default or breach by Existing Operator under the OTA shall be a default by Seller hereunder. In the event of an OTA breach the effect of termination with respect to this Agreement and the OTA shall be as set forth in this Section 14 unless otherwise provided in the OTA. This Agreement shall terminate in the event that the OTA is terminated in accordance with its terms.

 

 

(d) Except as provided in Section 14(b) above, upon termination, all further obligations of the Parties under this Agreement shall terminate without further liability of any Party to another; provided, however, that the obligations of the Parties contained in this Section 14, and any other provision in this Agreement which expressly survives according to its terms, shall survive the termination of this Agreement.

 

15. Indemnification.

 

(a) Seller, shall indemnify, defend and hold harmless Purchaser and any of its members, managers, officers, directors, agents, representatives, employees, heirs, successors and assigns and hold them harmless against and with respect to any and all damage, loss, liability, cost and expense (including, without limitation, reasonable attorney’s fees and expenses) (all of the foregoing hereinafter collectively referred to as “Loss” or “Losses”) resulting from (i) Seller’s failure to pay, discharge or perform any of the Excluded Liabilities, and (ii) the failure of any of Seller’s Representations included in Section 6(a)(i), (ii), (iii), (iv), (vi), (vii), (viii), (x), (xi), (xvii) or (xxi) to be true and correct in all material respects at and as of the Closing Date as though such representations and warranties were made at and as of such date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date), and (iii) the failure of Seller to comply with or breach by Seller of any covenant or obligation under this Agreement. In no event shall “Losses” include punitive, consequential, special or indirect damages, loss of revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple (“Special Damages”), unless such Special Damages are required to be paid by Purchaser in connection with a Third Party Claim, in which event the Seller shall be required to indemnify the Purchaser for any such Losses.

 

(b) Purchaser shall indemnify and defend Seller and any of its officers, agents, representatives, employees, heirs, successors and assigns (“Seller’s Indemnified Parties”) and hold them harmless against and with respect to any and all Losses resulting from (i) any third party, including governmental, claim arising from or relating to the ownership of the Property during the period from and after the Closing Date, (ii) Purchaser’s failure to pay, discharge or perform any of the Assumed Liabilities, (iii) the failure of any representation or warranty of Purchaser set forth in this Agreement to be true and correct in all material respects at and as of the Closing Date as though such representations and warranties were made at and as of such date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date), and (iv) the material failure of Purchaser to comply with any covenant or obligation set forth herein.

 

(c) Indemnity Claims. If any claim (“Claim”) is asserted by a party entitled to indemnification hereunder, such party (an “Indemnified Party”) shall notify (a “Claims Notice”) the party (an “Indemnifying Party”) required by the terms of this Agreement to indemnify the Indemnified Party within ten (10) business days; provided, however, the failure or delay by an Indemnified Party to give prompt notice of any Claim (if given prior to the expiration of any applicable survival periods) shall not release, waive or otherwise affect an Indemnifying Party’s obligations with respect to the Claim, except to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure.

 

 

(i) The Claims Notice shall describe the Claim and the specific facts and circumstances in reasonable detail, shall include copies of any notices received by Indemnified Party relating to such Claim, and shall indicate the amount, if known, or an estimate, if possible, of Losses that have been or may be incurred or suffered.

 

(ii) The Indemnifying Party shall have the right to participate in or assume the defense of, and may compromise (subject to the limitations set forth below), any claim by a third party (“Third Party Claim”), at its own expense and by its own counsel, who shall be reasonably acceptable to the Indemnified Party, and the Indemnified Party shall cooperate in good faith in such defense. The Indemnified Party may participate, at its own expense, in the defense of any Third Party Claim assumed by the Indemnifying Party. Without the approval of the Indemnified Party, which approval shall not be unreasonably withheld or delayed, the Indemnifying Party shall not compromise a Third Party Claim defended by the Indemnifying Party which would require the Indemnified Party to perform or take any action or to refrain from performing or taking any action, pay any amount not paid upon settlement by the Indemnifying Party or admit to any wrongdoing or violation of applicable law.

 

(iii) If, within ten (10) Business Days of the Indemnifying Party’s receipt of a claim notice involving a Third Party Claim, the Indemnifying Party has not notified the Indemnified Party that the Indemnifying Party will assume the defense or, following such notification, Indemnifying Party fails to actively and diligently defend such Third Party Claim, the Indemnified Party may assume control of the defense or compromise of such Claim, and the costs and expenses of such defense, including costs of investigation and reasonable attorneys’ fees, shall be added to the Losses associated with the Claim. The Indemnified Party shall not compromise such Claim without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

 

(iv) The Party assuming the defense of any Claim shall keep the other Party reasonably informed at all times of the progress and development of the Party’s defense of and compromise efforts related to such Claim and shall furnish the other Party with copies of all relevant pleadings, correspondence and other papers. In addition, the Parties shall cooperate with each other, and make available to each other and their representatives all available relevant records or other materials required by them for their use in defending, compromising or contesting any Claim.

 

(d) Survival; Limitations on Indemnity.

 

(i) The indemnification obligations of each of the parties contained in this Agreement shall survive the Closing for a period of nine (9) months, provided that any indemnification claims related to Medicare or Medicaid shall survive for thirty-six (36) months (the “Survival Period”). Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the Indemnified Party to the Indemnifying Party prior to the expiration date of such survival period shall not thereafter be barred by the expiration of the survival period and such claims shall survive until finally resolved. For the avoidance of doubt, no individual officer, director, member, managing member, shareholder, equity holder, partner, employee, agent, or representative of either party shall have any liability for any claims of the other Party related to this Agreement, or any agreements, certificates or instruments delivered in connection herewith, in any way. The survival provisions of this Section 15(d)(i) shall not apply to nor modify, change or amend in any way the survival provisions contained in Article IX of the OTA, which are separate and apart from the survival provisions in this Article 15. In no event shall Purchaser and New Operator be entitled to duplication of recovery under this Agreement and this OTA for Losses arising out of, related to, or in connection with, the same events. In no event shall Seller and Existing Operator be entitled to duplication of recovery under the OTA and this Agreement for Losses arising out of, related to, or in connection with, the same events.

 

 

(ii) The rights of indemnity provided by this Agreement, including this Section 15, shall be the sole and exclusive remedy of the Parties notwithstanding any other rights and claims, whether created by law or otherwise, the Parties may have relating in any way to the subject matter of this Agreement. Nothing in this Section 15(d)(ii) shall limit any right to seek and obtain any equitable relief to which a party shall be entitled or to seek any remedy on account of any party’s fraudulent misconduct.

 

(iii) Each Indemnified Party shall take, and cause its Affiliates to take, all reasonable steps to mitigate any Loss upon becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto; provided, however, that any failure to mitigate shall not affect the obligations of the Indemnifying Party hereunder, except to the extent such failure to mitigate has increased Indemnifying Party’s costs or otherwise prejudiced or harmed Indemnifying Party’s position.

 

(iv) Seller and Existing Operator shall not be liable to the Purchaser or New Operator, as the case may be, for indemnification under Section 15(a)(ii) of this Agreement or under Section 9.3(i) of the OTA until the aggregate amount of all Losses in respect of indemnification under this Agreement and the OTA exceeds fifty thousand dollars ($50,000)(the “Deductible”), in which event the Seller or Existing Operator, as applicable, shall only be required to pay or be liable for Losses in excess of the Deductible. The aggregate amount of all Losses for which Seller and Existing Operator shall be liable pursuant to this Section 15 of this Agreement and Article IX of the OTA shall not exceed three million dollars ($3,000,000) (the “Cap”). The Cap shall not apply to any Losses solely related to a Recapture Claim (as defined in the OTA), under the terms of the OTA. Seller shall jointly and severally guaranty payment of Existing Operator’s indemnification obligations to New Operator under the OTA.

 

(v) Payments by an Indemnifying Party pursuant to Section 16(a) or Section 16(b) in respect of any Loss shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment received or reasonably expected to be received by the Indemnified Party in respect of any such claim. The Indemnified Party shall use its commercially reasonable efforts to recover under insurance policies or indemnity, contribution or other similar agreements for any Losses prior to seeking indemnification under this Agreement.

 

(vi) Payments by an Indemnifying Party pursuant to Section 16(a) or Section 16(b) in respect of any Loss shall be reduced by an amount equal to any Tax benefit realized or reasonably expected to be realized as a result of such Loss by the Indemnified Party.

 

 

(e) All indemnification payments made under this Agreement shall be treated by the Parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by applicable law.

 

16. Confidentiality.

 

(a) Each of the Parties hereto recognizes and acknowledges that, during the course of negotiations in connection with this Agreement and in preparation for the Closing hereunder, each Party has disclosed and will disclose to the other Party and its representatives, confidential and proprietary information, including, without limitation, books and records, documents and information concerning its and its Affiliates’ business activities, owners, finances, plans, and practices (collectively, the “Confidential Information”), all of which constitute and will constitute valuable, special and unique assets of the disclosing Party. Each Party agrees not to disclose any Confidential Information of the other to any third party, except as provided herein or as required by law. In addition, each Party agrees to disclose Confidential Information of the other only to its agents, consultants and representatives who have a legitimate need to know such information and who shall: (i) be advised of the confidentiality provisions of this Agreement; and (ii) agree to be bound by the confidentiality provisions hereof.

 

(b) Each Party hereby acknowledges that if any breach of this section occurs, the other Party would be irreparably and immediately harmed and could not be made whole by monetary damages. Accordingly, in addition to any other remedy to which it may be entitled in law or in equity, each Party shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and/or to compel specific performance of this Section, and the other Party shall not oppose the granting of such relief on the basis that monetary damages are adequate. Each Party also agrees to reimburse the other Party for all reasonable costs and expenses, including reasonable attorney’s fees, incurred by such Party in enforcing obligations under this Section.

 

(c) Confidential Information does not include all or any portion of information which (i) becomes generally available to the public other than as a result of a breach of this Section by the receiving Party or such Party’s representatives, or (ii) was or becomes rightfully available to the receiving Party a non-confidential basis from a source other than the disclosing Party or its representatives; provided, that such source is not prohibited from disclosing such information to the receiving Party by a contractual, legal or fiduciary obligation to the disclosing Party or its representatives, or by subpoena, writ, order or judgment of any governmental or judicial authority.

 

(d) Notwithstanding any other provision of this Agreement, the terms of this Section shall survive the termination of this Agreement.

 

17. Drafting. The Parties hereto have carefully reviewed and negotiated the terms of this Agreement and the Transaction Documents, and Seller and Purchaser hereby acknowledge and agree that they have had a full and fair opportunity to review and negotiate the Agreement and the Transaction Documents with the advice of its sophisticated healthcare counsel. Therefore, there shall be no presumption in favor of the non-drafting party.

 

 

18. Costs and Expenses.

 

(a) Except as expressly otherwise provided in this Agreement, each Party shall bear its own costs and expenses in connection with this Agreement and the transactions contemplated hereby.

 

(b) Seller shall be responsible for and shall pay (i) all applicable conveyance fees, state and county deed and transfer taxes, recordation taxes and all other similar taxes in connection with the conveyance of the Property to Purchaser as contemplated hereby; (ii) the cost to issue the Title Commitment and exam fees and the owner’s title policy premiums; and (iii) any Seller broker fee. Purchaser shall be responsible for and shall pay: (x) any due diligence costs including the cost of any environmental reports, surveys, zoning reports, or any other reports that Purchaser orders, (y) any extended coverage and endorsements to the owner’s policy of title insurance, (z) any lender’s policy of title insurance, including the premium and extended coverage and endorsements thereto, (xx) the Closing escrow fee; (yy) the fees and expenses incurred in connection with the transfer of electronic medical records that constitute Property; and (zz) any Purchaser broker fee. Except as set forth in this Section 18(b), Purchaser and Seller shall each pay its own costs incurred in connection with the transactions contemplated herein, including all attorneys’ fees and due diligence expenses.

 

(c) If less than all of the Purchase Price is allocated to Real Property and if required by the Title Company, Seller agrees to deposit with the Title Company in escrow at the Closing an amount sufficient to cover any additional transfer or conveyance taxes relating to the conveyance of the Property to Purchaser that the applicable governmental authority may require in connection with the recording of the Deed, provided that such escrow shall not exceed the amount of transfer or conveyance taxes due when computed on the entire Purchase Price less the amount paid to the Title Company at the Closing for the payment of such transfer or conveyance taxes. Any remaining escrow fund will be released to Seller upon the recording of the Deed.

 

19. Benefit and Assignment. This Agreement binds and inures to the benefit of each Party and its successors and proper assigns. Neither Party shall be permitted to assign its rights or obligations under this Agreement without the prior consent of the other Party; provided, however, that effective as of Closing, Purchaser may collaterally assign this Agreement and/or Purchaser’s rights hereunder to its lender, and Purchaser may assign all of its rights, obligations and interests hereunder to any of its Affiliates, but in such event, (i) Purchaser shall be required to remain obligated hereunder in the same manner as if such assignment or delegation had not been effected, and (ii) Purchaser provides written notice to Seller of any proposed assignment no later than ten (10) days prior to the Closing Date, together with reasonable evidence confirming that the requirements of this Section 19 have been satisfied.

 

20. Effect and Construction of this Agreement. The captions used herein are for convenience only and shall not control or affect the meaning or construction of the provisions of this Agreement. This Agreement may be executed in one or more counterparts, and all such counterparts shall constitute one and the same instrument. Copies of original signatures sent by electronic transmission shall be deemed to be originals for all purposes of this Agreement. All gender employed in this Agreement shall include all genders, and the singular shall include the plural and the plural shall include the singular whenever and as often as may be appropriate. When used in this Agreement, the term “including” shall mean “including but not limited to.” The terms “date hereof,” “date of this Agreement,” and similar terms shall mean the date set forth in the preamble to this Agreement. The disclosure in any particular Section of the schedules shall also be deemed to be a disclosure in other sections of the Schedules.

 

 

21. Waiver, Discharge, etc. This Agreement shall not be released, discharged, abandoned, changed or modified in any manner, except by an instrument in writing executed by or on behalf of each of the Parties hereto by their duly authorized officer or representative. The delay or failure of any Party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of nor impair any such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach.

 

22. Rights of Persons Not Parties. Nothing contained in this Agreement shall be deemed to create rights in persons not Parties hereto, other than the successors and proper assigns of the Parties hereto.

 

23. Governing Law; Disputes. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia, without regard any contrary rules relating to the choice or conflict of laws. The Parties agree that the state or federal courts in the State of Georgia have exclusive jurisdiction over any dispute related to this Agreement.

 

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

 

25. Legal Fees. The prevailing party in any suit or arbitration brought to enforce any of the terms or provisions of this Agreement shall be entitled to recover reasonable attorneys’ fees and expenses in any such action or proceeding. Notwithstanding anything to the contrary contained herein, the term “attorney’s fees” or any similar term shall mean attorney’s fees which are actually incurred or paid by a party, and not any statutory presumption regarding attorney’s fees found at O.C.G.A. § 13-1-11 or otherwise.

 

26. Severability. Any provision, or distinguishable portion of any provision, of the Agreement which is determined in any judicial or administrative proceeding to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the Parties waive any provision of law which renders a provision hereof prohibited or unenforceable in any respect.

 

27. Entire Agreement. This Agreement including the schedules, exhibits and the other Transaction Documents, constitute the entire agreement between the Parties hereto with respect to the subject matter hereof and thereof, and there are no agreements, understandings, restrictions, warranties, or representations between the Parties with respect to the subject matter hereof other than as set forth herein or therein.

 

 

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

 

29. Post-Closing Assistance. After the Closing, each Party (a “Requesting Party”) shall, from time to time, upon written request therefor, execute and deliver to any other Party, any confirmatory instruments which such Requesting Party may reasonably request in order to consummate the transactions contemplated under this Agreement and/or under the Transaction Documents.

 

30. 1031 Exchange. Purchaser or Seller may consummate the purchase or sale of the Real Property as part of a so-called like kind exchange (the “Exchange”) pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”), provided that: (a) the Closing shall not be delayed or affected by reason of the Exchange nor shall the consummation or accomplishment of the Exchange be a condition precedent or condition subsequent to Purchaser’s or Seller’s obligations under this Agreement; (b) Seller shall not be required to take an assignment of the purchase agreement for the relinquished property or be required to acquire or hold title to any real property for purposes of consummating the Exchange; (c) a party performing an Exchange shall pay any additional costs that would not otherwise have been incurred had such party not consummated an Exchange; and (d) neither party’s acquiescence to an Exchange shall affect or diminish in any manner its rights hereunder nor shall the party not performing an Exchange be responsible for compliance with or be deemed to have warranted to the other party that the Exchange in fact complies with Section 1031 of the Code.

 

31. Specific Performance. The Parties agree that irreparable damage may occur in the event that certain of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached. Accordingly, each Party agrees that, in the event of any breach or threatened breach by any other Party of any covenant or obligation contained in this Agreement, then as provided consistent with Section 14, the non-breaching Party shall be entitled to seek and obtain (a) a decree or other order of specific performance to enforce the observance and performance of such covenant or obligation and (b) an injunction restraining such breach or threatened breach.

 

32. Individual Liability Disclaimed. For the avoidance of doubt, no individual officer, director, member, managing member, shareholder, equity holder, partner, employee, agent, or representative of Seller shall have any liability for any claims of Purchaser related to this Agreement, or any agreements, certificates or instruments delivered in connection herewith, in any way.

 

33. No Setoffs of Recoupments. No party shall have a right of setoff or recoupment against amounts owed to the other party or against assets received that belong to the other party.

 

34. Notice. All notices provided for herein shall be made either by email transmission, by hand delivery, by certified or registered mail and deposited in the U.S. Mail, postage prepaid, or by reputable overnight delivery service making delivery against a signed receipt, to the following addresses:

 

	To Seller:	6800 N. 79th Street, Suite 200
		Niwot, Colorado 80503
		Attn: Clifford L. Neuman, PC
		Email: clneuman@neuman.com

 

 

	with a copy to:
		Polsinelli, PC
		1201 West Peachtree Street NW, Suite 1100
		Atlanta, Georgia 30309
		Attention: David Gordon
		Email: dgordon@polsinelli.com
	To Purchaser:	c/o Care Network
		265 East Merrick Road, Suite 205
		Valley Stream, New York 11580
		Attn: Ari Silberstein
		Email: ari@carenetworkhealth.com
	with a copy to:	NBC Law
		675 Third Avenue, 8th Floor
		New York, New York 10017
		Attn: Edward H. Burnbaum, Esq.
		Email: eburnbaum@nbclaw.com

 

Either Party may upon notice to the other change its address for the receipt of notices. Any notices sent as provided herein shall be deemed delivered when actually received, when delivery is refused by the intended recipient, or when delivery is first attempted but cannot be completed due to the intended recipient’s failure to provide notice of a change in address. Any notices required hereunder may be delivered to each Party or each Party’s respective counsel by email or fax transmission without the need to deliver a hard copy of the same.

 

35. Non-recourse. This Agreement may only be enforced against, and any claim, action, suit or other legal proceeding based upon, arising out of, or related to this Agreement, or the negotiation, execution or performance of this Agreement, may only be brought against the entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect to such party. No past, present or future director, officer, employee, incorporator, manager, member, partner, stockholder, affiliate, agent, attorney or other representative of any party hereto or of any affiliate of any party hereto, or any of their successors or permitted assigns, shall have any liability for any obligations or liabilities of any party hereto under this Agreement or for any claim, action, suit or other legal proceeding based on, in respect of or by reason of the transactions contemplated hereby.

 

[Signatures on Next Page]

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first set forth.

 

	SELLER:
	Global Abbeville Property, LLC
	a Georgia limited liability Company
	By:	Selectis Propco Management, LLC, its manager
			By:	/s/ Clifford L. Neuman
			Name:	Clifford Neuman
			Title:	Manager

 

	Dodge NH, LLC
	a Georgia limited liability Company
	By:	Selectis Health, Inc., its sole member
			By:	/s/ Adam Desmond
			Name:	Adam Desmond
			Title:	CEO

 

	Providence HR, LLC
	a Georgia limited liability Company
	By:	Selectis Propco Management, LLC, its manager
			By:	/s/ Clifford L. Neuman
			Name:	Clifford Neuman
			Title:	Manager

 

	Atl/Warr, LLC
	a Georgia limited liability Company
	By:	Selectis Health, Inc., its sole member
			By:	/s/ Adam Desmond
			Name:	Adam Desmond
			Title:	CEO

 

	PURCHASER:
	Glen Eagle Propco LLC
	Eastman Propco LLC
	Providence Propco LLC
	Warrenton Propco LLC,
	each a Delaware limited liability company
	By:	/s/ Ari Silberstein
	Name:	Ari Silberstein
	Title:	Authorized Signatory

 

 

EXHIBITS AND SCHEDULES

 

Exhibit A	-	Description of Real Property
Exhibit B	-	Allocation Statement
Exhibit C	-	Form of Special Warranty Deed
Exhibit D	-	Form of Bill of Sale and Assignment
Exhibit E	-	Form of FIRPTA Certificate
Exhibit F	-	Form of Seller Closing Certificate
Exhibit G	-	Form of Purchaser Closing Certificate
Schedule 6	-	Seller’s Disclosure Schedule

 

 

EXHIBIT A

 

REAL PROPERTY

 

The land and improvement thereon located at, more particularly described as:

 

 

EXHIBIT B

 

ALLOCATION STATEMENT

 

1.	Glen Eagle Facility: $12.4 million
2.	Eastman Facility: $12.4 million
3.	Sparta Facility: $2.7 million
4.	Warrenton Facility: $3.5 million

 

 

EXHIBIT C

 

WARRANTY DEED

 

Attached.

 

 

AFTER RECORDING PLEASE RETURN TO:
______________________
______________________
______________________
______________________
______________________

 

STATE OF GEORGIA

COUNTY OF __________

 

LIMITED WARRANTY DEED

 

THIS INDENTURE made this ___ day of ____________, 202__, between [_____________________] (“Grantor”), and [_________________] (herein called “Grantee”).

 

WITNESSETH: That Grantor, for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, in hand paid at and before the sealing and delivery of these presents, the receipt and sufficiency of which are hereby acknowledged, has granted, bargained, sold, aliened, conveyed and confirmed and by these presents does grant, bargain, sell, alien, convey and confirm unto Grantee all that tract or parcel of land described as follows (the “Property”):

 

[Legal descriptions to be inserted.]

 

TO HAVE AND TO HOLD the Property, together with all and singular the rights, easements, members and appurtenances thereof, to the same being, belonging or in any wise appertaining, to the only proper use, benefit and behoof of Grantee, forever, IN FEE SIMPLE.

 

This Deed and the warranty of title contained herein is made subject to those matters set forth on Exhibit A attached hereto and made a part hereof (the “Encumbrances”).

 

Grantor will warrant and forever defend the right and title to the Property unto Grantee against the lawful claims of all persons owning, holding or claiming by, through or under Grantor, but not otherwise, and subject to the Encumbrances.

 

(The words “Grantor” and “Grantee” include all genders, plural and singular, and their respective heirs, successors and assigns where the context requires or permits.)

 

[SIGNATURE ON NEXT PAGE]

 

 

IN WITNESS WHEREOF, Grantor has caused this Indenture to be executed and sealed the day and year first above written.

 

Signed, sealed, and delivered	GRANTOR:
in the presence of:
	[_____________________]
____________________________
Unofficial Witness	By:
	Printed Name:
___________________________	Printed Title:
Notary Public	[SEAL]
Commission Expiration Date; ____________
[NOTARIAL SEAL]

 

 

EXHIBIT “A”

 

Permitted Exceptions

 

[To be inserted.]

 

 

EXHIBIT D

 

BILL OF SALE AND ASSIGNMENT

 

KNOW ALL MEN BY THESE PRESENTS THAT, _______________ (the “Seller”), for the sum of $10.00 and other good and valuable consideration to it in hand paid by a (the “Purchaser”), does by these presents, sell, assign, transfer and convey unto the Purchaser, all of Seller’s right, title, and interest, if any, in and to the Personal Property (as such term is defined in that certain Purchase and Sale Agreement dated as of ________, 20___ by and between Purchaser and Seller). Seller hereby covenants that it will, at any time and from time to time upon written request therefor, execute and deliver to Purchaser, its nominees, successors and/or assigns, any new or confirmatory instruments which Purchaser, its nominees, successors and/or assigns, may reasonably request in order to assign and transfer to Purchaser its rights, title and interest in, the Personal Property.

 

IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed and delivered this instrument effective as of _____________, 20___.

 

	SELLER:
	Global Abbeville Property, LLC
	a Georgia limited liability Company
	By:
	Name:
	Title:
	Dodge NH, LLC
	a Georgia limited liability Company
	By:
	Name:
	Title:
	Providence HR, LLC
	a Georgia limited liability Company
	By:
	Name:
	Title:

 

	Atl/Warr, LLC
	a Georgia limited liability Company_______
	By:
	Name:
	Title:

 

	PURCHASER:
	[                        ],
	a           limited liability company
	By:
	Name:	Ari Silberstein
	Title:	Authorized Signatory

 

 

EXHIBIT E

 

FIRPTA NON-FOREIGN STATUS CERTIFICATION

 

PURCHASER:	______________
SELLER:	__________________
PROPERTY:	_________________________________

 

Section 1445 of the Internal Revenue Code provides that a transferee (Purchaser) of a U.S. real property interest must withhold tax if the transferor (Seller) is a foreign person. To inform the Purchaser that withholding of tax is not required upon its disposition of the above-referenced property, the Seller hereby certifies the following:

 

	1.	The Seller is not a foreign person (as such term is defined in Section 1445(f)(3) of the Internal Revenue Code) for purposes of U.S. income taxation.
	2.	The Seller’s U.S. taxpayer identification number is ____________.
	3.	The Seller’s address is _____________________.

 

The Seller understands that this certification may be disclosed to the Internal Revenue Service by the Purchaser and that any false statement made herein could be punished by fine, imprisonment, or both.

 

Under penalties of perjury, the Seller declares that the Seller has examined this certification and to the best of the Seller’s knowledge and belief it is true, correct and complete.

 

Date: _________, 20___

_______________

 

	By:
	Name:
	Title:

 

 

EXHIBIT F

 

SELLER OFFICER’S CERTIFICATE

 

Pursuant to Section 12(a)(v) of the Purchase and Sale Agreement (the “Agreement”), dated as of ____________, 20___ between _______________ (the “Seller”) and _______________________, LLC (the “Purchaser”), the undersigned, being a duly authorized executive officer of the Seller, does hereby certify that the representations and warranties made by the Seller in the Agreement are true and correct in all material respects as of the Closing Date (as defined in the Agreement) and the covenants to be performed by the Seller pursuant to the Agreement have been performed in all material respects as of the Closing Date (as defined in the Agreement).

 

	__________________
	By:
	Name:
	Title:

 

 

EXHIBIT G

 

PURCHASER CLOSING CERTIFICATE

 

Pursuant to Section 12(b)(iii) of the Purchase and Sale Agreement (the “Agreement”), dated as of _____________, 20___ between _______________ (the “Seller”) and , a limited liability company (the “Purchaser”), the undersigned, being a duly authorized executive officer of the Purchaser, does hereby certify that the representations and warranties made by the Purchaser in the Agreement are true and correct in all material respects as of the Closing Date (as defined in the Agreement) and the covenants to be performed by the Purchaser pursuant to the Agreement have been performed in all material respects as of the Closing Date (as defined in the Agreement).

 

	[                          ],
	a _______limited liability company
	By:
	Name:	Ari Silberstein
	Title:	Authorized Signatory

 

SCHEDULE 6

 

SELLER’S DISCLOSURE SCHEDULE

 

 

 

Exhibit 10.2

 

EXECUTION COUNTERPART

 

OPERATIONS TRANSFER AGREEMENT

 

THIS OPERATIONS TRANSFER AGREEMENT (“Agreement”) dated as of November 30, 2023 (the “Effective Date”) is by and Global Abbeville, LLC, a Georgia limited liability company, Global Eastman, LLC, a Georgia limited liability company, Selectis Sparta, LLC, a Georgia limited liability company, and Selectis Warrenton, LLC, a Georgia limited liability company (collectively, the “Existing Operator” or “Operator”) and Glen Eagle Nursing and Rehabilitation LLC, Eastman Nursing and Rehabilitation LLC, Providence Nursing and Rehabilitation LLC and Warrenton Nursing and Rehabilitation LLC, each a Nevada limited liability company (collectively, the “New Operator” and together with the Existing Operator, the “Parties”).

 

RECITALS

 

WHEREAS, Existing Operator operates the skilled nursing facilities located at 556 Chester Highway, Eastman, Georgia, 31023, upon which is located that certain 100-bed skilled nursing facility commonly known as “Eastman Healthcare & Rehab” (the “Eastman Facility”), 206 Main Street East, Abbeville, Georgia, 31001, upon which is located that certain 101-bed skilled nursing facility commonly known as “Glen Eagle Healthcare & Rehab” (the “Glen Eagle Facility”), 60 Providence Street, Sparta, Georgia, 31087, upon which is located that certain 71-bed skilled nursing facility commonly known as “Providence of Sparta Health and Rehabilitation” (the “Sparta Facility”), and 813 Atlanta Highway, Warrenton, Georgia, 30828, upon which is located that certain 110-bed skilled nursing facility commonly known as “Warrenton Health and Rehabilitation” (the “Warrenton Facility” and together with the Eastman Facility, Glen Eagle Facility, and Sparta Facility, the “Facility”).

 

WHEREAS, under the terms of that certain Purchase and Sale Agreement (the “PSA”), dated as of November 30, 2023, by and among the Affiliates of the Parties hereto, the Affiliates of Existing Operator are selling to the Affiliates of New Operator the real estate, buildings, and improvements constituting, and certain personal property used in the operation of, the Facility, as more fully set forth in the PSA.

 

WHEREAS, it is a condition to the closing of the transactions described in the PSA that the Existing Operator and New Operator enter into this Agreement to provide for the orderly transition of the operations of the Facility to the applicable New Operator.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises, the mutual obligations of the parties contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree to incorporate the foregoing recitals as if fully rewritten in this Agreement and further agree as follows:

 

Article I

ASSETS, LIABILITIES, AND OTHER MATTERS

 

1.1 Transferred Assets. Subject to the terms and conditions of this Agreement, at the Closing (as defined in Section 2.1 of this Agreement) Existing Operator will transfer to the New Operator all of Existing Operator’s right, title and interest, if any, in any and all assets it owns, subject to the New Operator’s assumption of the relevant contract pursuant to the terms of Section 1.9 of this Agreement, in the operation of the applicable Facility and not otherwise transferred to the Purchasers pursuant to the PSA (collectively, the “Purchaser”), including but not limited to: (i) all equipment, furniture, fixtures, inventory and supplies, such inventory and supplies shall be in such amounts as customarily maintained by Existing Operator in the ordinary course of business, (ii) all IT equipment including but not limited to computers, tablets, iPads, (iii) all software,(iv) all resident lists, (v) medical records, as the same shall exist at the Closing (as defined in Section 2.1 of this Agreement), (vi) originals or copies of Existing Operator’s books and records related to the Facility as may be requested by New Operator, and (vi) to the extent transferable, all certificates of need, and bed rights (including contingent bed rights), licenses and permits necessary for the current use of the Facility, (vii) vehicles and (viii) all Assumed Contracts (as defined below) (collectively, the “Transferred Assets”). All assets of Existing Operator set forth on Schedule 1.1, attached hereto and made a part hereof, shall not be transferred to New Operator pursuant to this Agreement (collectively, the “Excluded Assets”).

 

 

Existing Operator shall reasonably cooperate with New Operator and leave all resident data, including medical records, on the electronic health record software contained on the computers located at the Facility and allow New Operator to access such data, for a time period to be determined by mutual agreement of the Parties. To the extent any of the foregoing assets are leased assets, or vendor owned assets, then such assets shall be excluded from the Transferred Assets but shall be transferred to New Operator if the relevant lease or vendor contract is assumed in writing by New Operator pursuant to this Agreement. In furtherance of the foregoing, at the Closing, each Existing Operator will execute and deliver to each New Operator a Bill of Sale (“Bill of Sale”) substantially in the form of Exhibit 1.1, attached hereto and made a part hereof.

 

1.2 Medicare and Medicaid Provider Agreements.

 

(a) At New Operator’ election, Existing Operator’s rights and interests in and to their Medicare and Medicaid provider numbers and Medicare and Medicaid provider reimbursement agreements (individually “Provider Agreement” and collectively “Provider Agreements”) shall be assigned to New Operator at the Closing, provided that (i) such assignment and assumption shall be permissible under applicable law, and (ii) if any payments are required to cure or satisfy any Recapture Claim (defined below) or defaults (including but not limited to any refunds, repayments or unpaid civil money penalties due to the Medicare or Medicaid programs) arising under the Provider Agreements for periods prior to Closing, Existing Operator shall at or before Closing pay such sums (if any) as shall be required to cure or satisfy any such defaults or Recapture Claim and shall remain solely liable for any such sums not paid in full by Closing.

 

(b) From the Closing to such date as CMS issues a tie-in notice to New Operator with respect to the operation of the Facility (the “Tie-In Notice”) and New Operator receives approval of the Medicaid Provider Agreement, Existing Operator, to the extent allowed by law, hereby grants New Operator the right to submit claims, reports, documents and other information to the Centers for Medicare and Medicaid Services (“CMS”) using the Facility’s existing Medicare Provider Agreement and to the Georgia Department of Community Health Healthcare Facility Regulation (“HFR”), using the Facility’s existing Medicaid Provider Agreement and corresponding Medicare and Medicaid provider numbers (including any other provider specific or provider identification information required for billing) for services provided to patients in connection with the operation of the Facility during such period, as necessary to receive payment for such services. New Operator agrees that Existing Operator may continue to use the Facility’s Medicare and Medicaid Provider Agreements and corresponding Medicare and Medicaid provider numbers (including any other New Operator provider specific or provider identification information required for billing) for any and all billing that the Existing Operator may be required to complete in order to fully collect its Medicare accounts receivable for periods prior to the Closing. The Parties acknowledge and agree that Existing Operator’s managed care provider plans are not expected to have been updated with New Operator’s provider information as of the Closing Date. From and after the Closing Date until such managed care provider plans are updated with New Operator’s provider information, Existing Operator agrees that New Operator shall be permitted to bill for services provided following the Closing under Existing Operator’s managed care provider plans using Existing Operator’s provider information to the extent permitted by the contracts for participation in such managed care provider plans and by applicable law. Any and all liability or revenue related to New Operator’s post-Closing claims and submissions shall remain the sole and exclusive obligation and entitlement of New Operator.

 

 

1.3 Liabilities, Claims and Assets.

 

(a) Except as expressly and unambiguously provided in this Agreement, New Operator shall not assume nor be responsible for an any claims, lawsuits, liabilities, obligations, penalties, investigations or debts of Existing Operator whatsoever, whether statutory, regulatory, judicially created or constitutional (collectively “Excluded Liabilities”). Excluded Liabilities means, without limitation: (a) malpractice or other tort claims, statutory or regulatory claims, claims of state or federal agencies whether civil or criminal, fraud-based claims or claims for breach of contract to the extent any such claims are based on acts or omissions of Existing Operator occurring on or before the Closing; (b) all accounts payable, taxes, or other monetary obligations or liabilities of Existing Operator or rights to receive any payment based on events arising on or prior to the Closing; and (c) any other obligation or liability whatsoever arising in whole or in part from Existing Operator’s acts or omissions prior to the Closing.

 

(b) New Operator shall assume, perform and discharge only those liabilities of Existing Operator expressly provided for in this Agreement (collectively, the “Assumed Liabilities: (x) operations of the Facility by New Operator on or after the Closing Date and providing for the needs of the Facility residents; (y) to the extent transferred in accordance with Section 1.4 hereto, the custodial and fiduciary responsibilities associated with the Resident Trust Funds on or after the Closing Date; and (z) the Assumed Contracts, including Existing Operator’s rights and interests in and to Medicare provider numbers and Medicare provider reimbursement agreements of Operator for the Facility from and after the Closing Date. For the avoidance of doubt, Existing Operator shall remain responsible for all liabilities arising under its Medicare and Medicaid provider agreements for acts, omissions and dates of service prior to the Closing Date.

 

1.4 Transfer of Resident Trust Funds.

 

(a) At the Closing, Existing Operator shall deliver to New Operator a list that, to the best of its knowledge, will be a true, correct and complete description of any trust funds held by Existing Operator as of the Closing for any resident of the Facility (collectively, “Resident Trust Funds”).

 

(b) At the Closing, Existing Operator shall transfer the Resident Trust Funds to a bank account designated by New Operator and New Operator shall accept the Resident Trust Funds in trust for the residents, in accordance with applicable statutory and regulatory requirements. Within ten (10) business days after the Closing Date, Existing Operator and New Operator will reconcile the Resident Trust Funds transferred from Existing Operator to New Operator.

 

 

(c) On delivery of the Resident Trust Funds to New Operator, New Operator shall acknowledge the receipt and amounts of such Resident Trust Funds and shall expressly assume all Operator’s financial and custodial obligations with respect thereto arising from and after the Closing Date and shall be directly accountable to the residents of the Facility and to any applicable Governmental Authority, for the Resident Trust Funds so transferred to New Operator. New Operator shall not have responsibility to the applicable resident/responsible party and regulatory authorities in the event the Resident Trust Funds delivered by Existing Operator to New Operator pursuant to this Section 1.4 are demonstrated to be less than the full amount of the Resident Trust Funds for such resident as of the Closing, for inaccuracies in the accounting and inventory provided by Existing Operator, or for claims which arise from actions or omissions of Existing Operator with respect to the Resident Trust Funds prior to the Closing. Existing Operator agree to indemnify, defend and hold harmless New Operator from any losses, liabilities, damages, claims, actions, causes of action, costs, expenses, including, without limitation, reasonable attorney’s fees (collectively, “Claims”) which such New Operator may incur as a result of discrepancies between the Resident Trust Funds as delivered by Existing Operator to New Operator and the full amount of the Resident Trust Funds for such resident as of the Closing. Except as otherwise set forth above, from and after Closing, New Operator shall be solely responsible to residents for all Resident Trust Funds and shall defend and hold harmless Existing Operator from any Claims by residents related to Resident Trust Funds.

 

1.5 Employees.

 

(a) Existing Operator covenants to New Operator that within five (5) days of the Effective Date, the Existing Operator will provide to New Operator schedules for the Facility Employees (“Employee Schedule”), certified to be true and correct, which reflects, in all material respects, the following as of the Effective Date: (i) the name of all Facility-based employees and (ii) their positions, rates of pay, original hire dates and full/part time status and whether they are on medical disability or leave of absence. In addition, within five (5) days of the Effective Date, the Existing Operator will deliver to New Operator a schedule, certified to be true and correct, identifying all full and/or part-time positions at the Facility routinely staffed by the same person as an independent contractor or through third party staffing agencies (the “Agency Staffing Schedule”). During the period between the Effective Date and the Closing, Existing Operator shall promptly notify New Operator of any changes in the Employee Schedule and/or the Agency Shifting Schedule. Existing Operator will terminate the employment of each of the Facility Employees (as defined below) as of the Closing.

 

(b) At least five (5) days prior to the Closing Date, New Operator shall offer to hire, on an at-will basis, those Facility employees (“Facility Employees”) selected by New Operator in its sole and absolute sole discretion; provided, however, that the New Operator shall hire a sufficient number of Facility Employees as is necessary to avoid notice or obligation under the Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any other comparable state or local law. No later than ten (10) days after the Effective Date, the Existing Operator will provide New Operator a list of the following individuals not otherwise included as Facility Employees: (i) any individual employed by an Affiliate of Existing Operator who is responsible for the marketing of the Facility and (ii) any individual employed by an Affiliate of the Existing Operator, such as by an affiliated staffing agency, who regularly provides services at the Facility (such individuals are collectively referred to as “Affiliate Employees”). Subject to the last sentence of this paragraph, the Parties agree that New Operator may, on or before the Closing, offer to hire any of such Affiliate Employees. Any offer of employment to a Facility Employee or Affiliate Employee by New Operator shall be to provide comparable services as immediately prior to the Effective Date. Prior to the Effective Date, Existing Operator shall provide New Operator with reasonable access to employee personnel files and governing policies and procedures. After the announcement of the transactions contemplated under this Agreement, which announcement date shall be mutually agreed by the parties hereto but shall be no later than the end of the Due Diligence Period, Existing Operator shall provide New Operator with access to management level and Affiliate Employees to discuss employment and position, and shall discuss and within forty-five days following the end of the Due Diligence Period Existing Operator shall provide New Operator with access to Facility Employees to discuss employment and position.

 

 

(c) Existing Operator may require a representative of Existing Operator to be present in any discussions between Facility Employees and New Operator or their agents occurring prior to Closing, provided, however, that Existing Operator’s representative shall not unreasonably delay, impede or interfere with the scheduling or conduct of such interviews and discussions with employees.

 

(d) New Operator shall hire at the Closing, on an at-will basis, each Facility Employee who elects to accept employment with New Operator in accordance with the terms of Section 1.5(b) (all of such employees who accept employment with New Operator being herein called “Hired Employees”).

 

(e) Existing Operator shall pay to each Facility Employee, on that date which, but for the Closing, would have been the next regularly scheduled payroll date for such employee following the Closing, an amount equal to any and all accrued salary and bonuses earned by such employee as of the Closing, as well as all accrued benefits required to be paid to such employees upon termination pursuant to applicable law or Existing Operator’s policies and procedures; provided, however, that such obligation shall not require Existing Operator to pay any Accrued Employee Vacation and Leave in accordance with Section 1.5(i).

 

(f) Nothing in this Agreement shall create any rights in favor of any person not a Party, including the Facility Employees, or constitute an employment agreement or condition of employment for any employee of Existing Operator or any Affiliate of Existing Operator.

 

(g) Existing Operator shall make available group health plan continuation coverage pursuant to the requirements of Section 601, et seq. of ERISA and Section 4980B of the Internal Revenue Code, as amended (“COBRA”), to all of the Facility Employees to whom it is required to offer the same under applicable law. Existing Operator acknowledges and agrees that New Operator is not assuming any of Existing Operator’s obligations to its employees and/or qualified beneficiaries under COBRA or otherwise, except as specifically provided in this Section 1.5. As of the Closing, all active Facility Employees: (i) who participate as of the Closing in group health insurance coverage sponsored by Existing Operator and (ii) who become Hired Employees, shall be eligible for participation in a group health plan (as defined for purposes of Internal Revenue Code Section 4980B) which shall be established and maintained by New Operator for the general benefit of its employees and their dependents, and all such Hired Employees shall, if permissible under the plan of New Operator, be covered without a waiting period and without regard to any pre-existing condition unless (x) they are under a waiting period with Existing Operator at the Closing, in which case they shall be required to complete their waiting period while under New Operator’ group health plan or in accordance with the terms of New Operator’ benefit plan, or (y) they were subject to a pre-existing condition exclusion while under Existing Operator’s group-health plan, in which case they shall be subject to the same exclusion while in New Operator’ group health plan or in accordance with the terms of New Operator’s benefit plan. Existing Operator and New Operator acknowledge and agree that it is the intent of this provision that Existing Operator shall not be required to provide continued health coverage under ERISA or Section 4980 of the Internal Revenue Code to any Qualified Beneficiaries.

 

 

(h) New Operator acknowledges and agrees that the provisions of subsections (b) and (c) above are designed, in part, to ensure that Existing Operator is not required to give notice to employees of the Facility of the “closure” thereof under the WARN Act or any other comparable state law. Accordingly, New Operator and Existing Operator agrees to indemnify, defend and hold harmless the other party from any Losses liabilities, damages, claims, actions, causes of action, costs, expenses, including, without limitation, reasonable attorney’s fees which such party may incur under the WARN Act or any comparable state law in the event of the violation by the indemnifying party of its obligations and warranties under Sections 1.5(a), (b), (c) and 3.1(c)(vi); provided, however, that nothing herein shall be construed as imposing any obligations on New Operator to indemnify, defend or hold harmless Existing Operator from any Losses that they may incur under the WARN Act as a result of the acts or omissions of Existing Operator prior to the Closing, it being understood and agreed that New Operator shall only be liable for its own acts and omissions after the Closing.

 

(i) Subject to the provisions of Article IX, Existing Operator agrees to indemnify, defend and hold harmless New Operator from any Losses, liabilities, damages, claims, actions, causes of action, costs, and expenses including without limitations reasonable attorneys’ fees which New Operator may incur under COBRA or any comparable state law in the event that Existing Operator violates the obligations under Section 1.5(g).

 

(j) New Operator or their designees shall be entitled to 100% of any and all paid time off, personal leave or vacation time, as accrued under the terms of the Existing Operator’s employee handbooks (collectively, the “Time Off Pay”), sick leave (the “Sick Leave Benefits”), unpaid overtime, salaries, back wages and other benefits, together with any payroll taxes of the Hired Employees together with any FICA, state and federal unemployment taxes and all related payroll taxes (collectively, the “Accrued Employee Vacation and Leave”), which is set forth on Schedule 3.1(b)(xxii) attached hereto, and Purchaser shall receive a credit against the Purchase Price (as defined in the PSA) for the full amount of the Accrued Employee Vacation and Leave. Except as provided in Section 1.5(g), New Operator shall not be liable and Existing Operator shall indemnify and hold the New Operator harmless on account of any and all other liabilities and obligations with regard to any of the Current Employees (other than Hired Employees accruing on and after the Closing Date) and with regard to the Hired Employees, and all other liabilities and obligations that shall have accrued prior to the Closing Date. In the event that New Operator discover after the Closing Date that the Existing Operator’s actual Accrued Employee Vacation and Leave exceeded the aggregate amount set forth in Schedule 3.1(b)(xxii)), upon notice by New Operator, Existing Operator shall pay to New Operator, within five (5) days after New Operator provides notice thereof, an amount equal to any such deficiencies. New Operator’ rights and Existing Operator’s obligations under this Section 1.5(i) shall be continuous.

 

1.6 Accounts Receivable.

 

(a) Existing Operator shall retain its right, title and interest in and to all unpaid accounts receivable with respect to the Facility that relate to all periods prior to the Closing.

 

 

(b) Payments received by Existing Operator or New Operator after the Closing with respect to the Facility from third party payors, such as the Medicare Program, the Medicaid Program, the Veteran’s Administration, or managed care companies or health maintenance organizations, shall be handled as follows:

 

(i) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate solely to services provided prior to the Closing, (A) in the event that such payments are received by New Operator, New Operator shall remit such payments to Existing Operator not later than ten (10) business days following the date on which such payment is received, and until so forwarded, shall be held in trust for the benefit of Existing Operator and (B) in the event that such payments are received by Existing Operator, Existing Operator shall retain the payments;

 

(ii) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate solely to services provided after the Closing, (A) in the event that such payments are received by New Operator, New Operator shall retain the payments and (B) in the event that such payments are received by Existing Operator, Existing Operator shall promptly remit such payments to New Operator not later than ten (10) business days following the date on which such payment is received, and until so forwarded, shall be held in trust for the benefit of New Operator;

 

(iii) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate to services provided both prior to and after the Closing, (A) in the event that such payments are received by New Operator, New Operator shall promptly following receipt of such payment (but in any event, not later than ten (10) business days following the end of the month in which such payment is received) forward to Existing Operator the amount of such payment relating to services provided prior to the Closing, and (B) in the event that such payments are received by Existing Operator, Existing Operator shall promptly following receipt of such payment (but in any event, not later than ten (10) business days following the date on which such payment is received) forward to New Operator the amount of such payment relating to services provided following the Closing; and

 

(iv) if the accompanying remittance advice does not indicate the period to which a payment relates or if there is no accompanying remittance advice and if the parties do not otherwise agree as to how to apply such payment, then, for payments received during the first sixty (60) days after the Closing, the payment shall be deemed first to apply against the oldest outstanding account receivable due from such payor. Thereafter, the payment shall be deemed first to apply against accounts receivable due from such payor related to claims and submissions for post-Closing services.

 

(c) New Operator agrees to reasonably cooperate with and assist Existing Operator, at Existing Operator’s sole cost and expense, in (i) its collection of the private pay and private portion of Medicare and Medicaid receivables (the “Private A/R”) relating to the period before the Closing Date, (ii) its collection of the portion of Medicare, Medicaid, and insurance company receivables, other than Self-Pay Payments (collectively, the “Third Party Payor A/R”) for services provided before the Closing Date, and (iii) with implementation of deviations of income for residents, pending and approved. Any payments received by New Operator after the Closing Date from or on behalf of residents of the Facility (other than from third party payors) (referred to commercially as “Self-Pay Payments”), which Self-Pay Payments do not clearly identify the time period for which payment is made, such Self-Pay Payments shall, for the first ninety (90) day period following the Closing Date, first be applied to the amounts due from such resident of the Facility to Operator for private pay services and goods provided during the period before the Closing Date; provided, any excess thereof shall be paid to New Operator as soon as reasonably practicable thereafter. Following the first sixty (60) days after the Closing Date, Self-Pay Payments which do not clearly identify the time period for which payment is made shall be applied fifty percent (50%) to Operator for services provided prior to the Closing Date, and fifty percent (50%) to New Operator for services provided on or after the Closing Date, until Operator has been paid in full.

 

 

(d) Each Party agrees to prepare and provide to the other Party a “Due To/Due From” Schedule no less than once per month for the period of one-hundred eighty (180) days following the Closing Date with supporting documentation as reasonably requested by the other Party, so that each Party can determine the status of funds owed to it, and thereafter as necessary for one (1) year after the Closing Date. New Operator and Existing Operator shall forward to the other party by email remittance advices, explanation of benefits, denial of payment notices and other material correspondence received by the party that relate to services provided by the other Party. The documents shall be emailed within fifteen (15) business days following the month in which such documents are received. New Operator shall have no obligation to take any affirmative collection efforts on behalf of Existing Operator, other than to supply Existing Operator with any records (subject to all applicable privacy laws), which Existing Operator may reasonably need to collect such amounts; provided, however, in connection with Existing Operator’s attempts to collect Medicaid funds for services rendered to those Residents with pending Medicaid applications (collectively, the “Pending Medicaid Applicants”), (i) New Operator shall advise Existing Operator upon request on the Medicaid application status of each Pending Medicaid Applicant until such time as all Pending Medicaid Applicants have been approved or denied by Medicaid, and (ii) if New Operator receives any material notice or correspondence regarding such applications, New Operator shall provide such notice or correspondence to Existing Operator within ten (10) business days following receipt. New Operator shall, at Existing Operator’s sole cost and expense, cooperate with and provide Existing Operator with such documents and information as Existing Operator shall reasonably request to enable Existing Operator to contest any denial or negative determinations by Medicaid with respect to the Pending Medicaid Applicants.

 

(e) Nothing herein shall be deemed to limit in any way Existing Operator’s rights and remedies to recover accounts receivable due and owing Existing Operator by New Operator, Medicare, Medicaid, or third parties under the terms of this Agreement or applicable law; provided, however, that Existing Operator shall not settle or otherwise compromise its right, title and interest in and to unpaid accounts receivable in a manner that impacts, effects, diminishes or otherwise interferes with New Operator’ right, title and interest in and to unpaid accounts receivable with respect to services provided at the Facility by New Operator after the Closing.

 

(f) If the parties mutually determine that any payment hereunder was misapplied by the parties, the party which erroneously received said payment shall remit the same to the other within ten (10) business days after said determination is made.

 

(g) For a period of one (1) year after the Closing Date, New Operator and Existing Operator shall, upon at least two (2) business days’ prior written notice, during normal business hours and not more than once a quarter, permit an employee or agent of the Party to audit, review and process the accounts receivable of Existing Operator or the similar accounts receivable due to New Operator, and to provide such employee or agent with access to all books and records (including, without limitation, ledgers, financial statements and collection records) necessary to determine accurately the processing, collection and payment of amounts due to one Party received by the other in order to determine whether the calculation of accounts receivable which has been collected is accurate.

 

 

(h) Failure to forward to the other any payment received by such party in accordance with the terms of this Section 1.6, shall entitle the other party (among all other remedies allowed by law and this Agreement) to interest on the amount owed at the rate of twelve percent (12%) per annum, simple interest, until such payment has been paid. The payment of any interest imposed under this Section 1.6(h), if any, shall be made together with the underlying payment, therefore.

 

(k) The obligations of the parties to forward the accounts receivable payments pursuant to this Section 1.6 are absolute and unconditional and irrespective of any circumstances whatsoever which might constitute a legal or equitable discharge, offset, counterclaim or defense of the parties, the right to assert any of which is hereby waived.

 

1.7 Prorations.

 

(a) At the Closing, utility charges for the billing period in which the Closing occurs, personal property taxes attributable to the Facility, and any other items of revenue or expense attributable to the Facility (“Prorated Items”), including, but not limited to Bed Taxes (defined herein)/user fees, shall be prorated between Existing Operator and New Operator as of the Closing Date. In general, such prorations shall be made so as to reimburse Existing Operator for prepaid expense items to the extent such expense items are attributable to periods after the Closing and to charge Existing Operator for expenses accrued but unpaid as of the Closing. The intent of this provision shall be implemented by New Operator remitting to Existing Operator any invoices for Prorated Items that reflect a service date before the Closing and by New Operator assuming responsibility for the payment of any invoices for Prorated Items that reflect a service date after the Closing with any overage or shortage in payments by either party to be adjusted and paid as provided in Sections 1.7(b) and (c). Notwithstanding the foregoing, New Operator acknowledges and agrees that it shall have no right, title or interest in and to any retroactive workers compensation insurance program payments whether or not the same are paid prior to or after the Closing Date if and to the extent they relate to any period prior to the Closing Date. For the avoidance of doubt, any Bed Tax or similar provider taxes or fees shall be prorated between Existing Operator and New Operator based on the period of its operation of the Facility occurring before and after the Closing Date, as the case may be, including, but not limited to, any such assessments made by the State of Georgia and/or paid by Existing Operator prior to the Closing Date that would apply to operation of the Facility after the Closing Date.

 

(b) Any and all deposits paid by Existing Operator with respect to the Facility including, without limitation, any and all equipment lease, security and/or utility deposits paid to and/or cash or other collateral held by any equipment lessor or by any utility, insurance company or surety, shall remain the sole and exclusive property of Existing Operator and New Operator shall have no right or interest therein or thereto, and to the extent that Existing Operator does not receive a return of any such deposit on the Closing Date and such security deposit has been assigned to and assumed by New Operator, New Operator shall reimburse Existing Operator on the Closing Date or at some later date when an assignment takes place, the amount of any such security deposit assumed by New Operator. In furtherance of the foregoing, New Operator and Existing Operator shall cooperatively work to transition the utilities serving the Facility into the name of New Operator effective as of the Closing Date.

 

 

(c) All such prorations shall be made on the basis of actual days elapsed in the relevant accounting, billing or revenue period and shall be based on the most recent information available to Existing Operator. Without limiting the foregoing, water, electricity, sewer, gas, telephone and other utility charges shall be based, to the extent practicable, on final meter readings and invoices covering the period of time through the Closing Date. Utility charges which are not metered and read for the Closing shall be estimated based on prior charges, and shall be re-prorated upon receipt of statements, therefore.

 

(d) To the extent possible and based on reasonable estimates, the parties shall make all prorations at the Closing. All amounts owing from one party hereto to the other party hereto that require adjustment after the Closing shall be settled within thirty (30) days after the Closing Date or, in the event the information necessary for such adjustment is not available within said thirty (30) day period, then as soon thereafter as practicable.

 

(e) Within thirty (30) days after Closing, New Operator shall transfer to Existing Operator an amount equal to any petty cash remaining at the Facility as of the Closing.

 

(f) Reserved.

 

(g) New Operator shall be solely responsible for all costs, fees and expenses incurred by New Operator in connection with the transfer of operations of the Facility including, but not limited to, the cost of any training of the Facility’s employees prior to Closing which it may elect to undertake with the approval of Existing Operator, which approval shall not be unreasonably withheld, conditioned or delayed, provided such training is conducted in a manner which does not disrupt the operation of the Facility prior to the Closing Date, and the cost of any due diligence that it undertakes in furtherance of such transfer of operations including, but not limited to, the costs of any examination or copying by New Operator or its agents of any books, records, patient files or other operational or fiscal information and data of any kind of Existing Operator or the Facility. To the extent feasible, all such books, records, patient files or other operational or fiscal information and data shall be provided to New Operator in electronic format.

 

(h) Existing Operator will pay any sales and use or similar taxes resulting from or payable in connection with the sale of the Transferred Assets pursuant to this Agreement and shall remit the same to the proper taxing authorities unless Existing Operator is required as a matter of law to be the remitting party, in which case New Operator shall remit the payment(s) to Existing Operator and it shall, in turn, remit the same to the proper taxing authorities. Existing Operator shall be responsible for and shall pay any of its own income, capital gains, or similar tax that may be required to be paid as a consequence of the sale of the Transferred Assets.

 

1.8 Access to Records.

 

(a) At the Closing, Existing Operator shall, to the extent permitted by applicable law, maintain all of the patient medical records, financial records and employee records relating to the Facility that are in Existing Operator’s possession or control at the Facility or if requested by New Operator, to the extent such records are in an electronic format, provide such information directly to New Operator for downloading by New Operator on its computer system.

 

(b) Subsequent to the Closing, New Operator shall allow Existing Operator and its agents and representatives to have reasonable access to (upon reasonable prior notice and during normal business hours), and to make copies of, at Existing Operator’s expense, the books and records and supporting material of the Facility relating to any period prior to the Closing, to the extent reasonably necessary to enable Existing Operator to investigate and defend employee or other claims, to file or defend tax returns, cost reports or other governmental inquiries, to verify accounts receivable collections due Existing Operator, and for all other matters that reasonably require Existing Operator access, which access shall not unreasonably disrupt New Operator’ operations. Request for access should be directed to New Operator at the Facility’ addresses or any subsequent addresses provided by the New Operator to the Existing Operator in writing. New Operator agrees to provide Existing Operator with sufficient workspace in the Facility to permit Existing Operator to copy the records contemplated herein and, for purposes of this paragraph, to provide the reasonable cooperation of the employees of the Facility in assisting Existing Operator in locating records for a period of one (1) year after the Closing Date.

 

 

(c) Existing Operator shall be entitled to remove the originals of any records delivered to New Operator, for purposes of litigation involving a resident or employee to whom such record relates, if an officer of a court of competent jurisdiction or agency official certifies that such original must be produced in order to comply with applicable law or the order of a court of competent jurisdiction in connection with such litigation and Existing Operator shall provide New Operator with a complete copy of such records prior to its removal at Existing Operator’s reasonable cost and expense and as a condition precedent to receiving such original record. Any record so removed shall promptly be returned to New Operator following its use.

 

(d) New Operator agrees to maintain such books, records and other material comprising records of the Facility’ operations prior to the Closing that have been received by New Operator from Existing Operator or otherwise, including, but not limited to, resident records and records of resident funds, for the periods required by law, but in no event for less than one (1) year, and thereafter shall allow Existing Operator a reasonable opportunity to remove such documents, at Existing Operator’s expense, in the event that New Operator shall decide to dispose of such documents.

 

1.9 Assumed Operating Contracts. Set forth on Schedule 1.9 are all written contracts and vendor arrangements related to the Facility (the “Operating Contracts”). Existing Operator shall also provide or make available to New Operator true and correct copies of all Operating Contracts, to the extent that such Operating Contracts do not cover any other facility besides the Facility and are not governed by confidentiality provisions that would prevent sharing with New Operator. At least forty-five days in advance of Closing provided that New Operator has been provided with copies of each of the Operating Contracts, New Operator shall inform Existing Operator of any Operating Contract which New Operator elects to assume at Closing, subject to any required consents from the other contracting party which each party hereto shall use commercially reasonable efforts to obtain. For those Operating Contracts New Operator elect to assume, Existing Operator shall provide commercially reasonable cooperation to New Operator in connection with the assignment and assumption of such Operating Contracts by New Operator. From and after the Closing, New Operator shall assume and undertake to perform, and shall indemnify and hold harmless Existing Operator against, any and all obligations to vendors arising after the Closing under the Operating Contracts assumed by New Operator. Subject to the terms of Article IX, Existing Operator shall remain solely responsible for, and shall indemnify and hold harmless New Operator against, any and all obligations under the assigned and assumed Operating Contracts related to periods prior to the Closing and shall be solely responsible for all Operating Contracts not assigned and assumed hereunder, including, but not limited to, any multi-facility contracts.

 

 

1.10 Cost Reports. Existing Operator shall timely prepare and file with the appropriate Medicare and Medicaid agencies any final cost reports with respect to their operation of the Facility which are required to be filed by law under the terms of the Medicare and Medicaid Programs; provided, however, that Existing Operator shall not file its final cost reports until New Operator receives the Tie-In Notices. Existing Operator shall provide New Operator with copies of such cost reports, together with copies of any amendments thereto within three (3) business days of any such filing. If New Operator receives payment as a result of appeals, settlements, and retroactive Medicaid rate increases from a Governmental Authority relating to a period prior to the Closing Date, then New Operator shall promptly forward any such payment and any related reports or correspondence to Existing Operator.

 

1.11 Surveys; Deficiencies. Existing Operator shall be responsible for and shall bear all costs and expenses incurred in connection with any Facility reports, statements of deficiencies, plans of correction, and audits (collectively, “Licensing and Certification Surveys”) conducted or relating to periods of service prior to the Closing, including the costs and expenses of implementing any plans of corrections relating to such Licensing and Certification Surveys. New Operator shall be responsible for and shall bear all costs and expenses incurred in connection with any Licensing and Certification Surveys conducted or related to a period on or after the Closing for periods of service after the Closing. Existing Operator shall be responsible for the payment of all fines and penalties imposed by any governmental or quasi-Governmental Authority which fines and penalties arise in connection with any Licensing and Certification Surveys occurring prior to the Closing Date including implementing any plans of corrections relating to such Licensing and Certification Surveys, with respect to the Facility after Closing. Existing Operator shall assist New Operator in establishing any plans of correction or other responses to be submitted by New Operator after the Closing Date for Licensing and Certification Surveys that relate to events or circumstances occurring prior to the Closing Date within the time allowed for such submissions; provided, however, New Operator’s determination as to such plans of correction or other submissions shall be controlling and, except for fines and penalties that are the responsibility of Existing Operator as set forth in this Section 1.11, Existing Operator shall be responsible for and bear all costs and expenses as a result of implementing such plans of correction or other submissions. New Operator shall not be required to consummate the Closing if a Facility is Out of Compliance as of the Effective Date. As used herein, “Out of Compliance” shall mean any with respect to the Facility: (i) a finding by the applicable Governmental Authority of one or more deficiencies at a Facility at a “level IJ” or above in either (A) its most recent standard or complaint survey finding that the Facility is not in substantial compliance, or (B) any prior survey that includes a finding which requires a resurvey, which resurvey has not taken place, that a Facility was not in substantial compliance; or (ii) a denial of a Facility’s right to admit patients or to receive Medicare or Medicaid payments or reimbursements for existing patients or for new admissions, at a Facility; (iii) the designation by CMS of a facility as a “special focus facility”, or that a facility has been placed on the special focus facility watchlist.

 

1.12 Recapture Claims; Bed Taxes.

 

(A) Each party hereto agrees to notify the other promptly after receipt of any notice of any claim by any governmental or quasi-Governmental Authority with respect to any of the following, relating to periods prior to the Closing: (i) an alleged Medicare or Medicaid overpayment, or any other recoupment or adjustment to reimbursement, (ii) an alleged underpayment of any tax or assessment, (iii) an imposition of civil monetary penalties or other immediate sanctions, or (iv) any other governmental or third-party payor claims (collectively “Recapture Claim”). To the extent ascertainable on or prior to the Closing Date, Existing Operator shall pay or cause to be paid any Recapture Claim which is for the periods prior to the Closing Date.

 

 

(B) In the event of any Recapture Claim, Existing Operator hereby agrees to save, indemnify, defend and hold New Operator harmless from and against any loss, damage, injury or expense incurred by New Operator arising from or related to any such claim. In the event of any Recapture Claim, Existing Operator shall be entitled to contest such Recapture Claim, at its sole cost and expense, provided, however, that New Operator shall be allowed to participate in all meetings, and be provided with copies of all audit adjustments and work papers. New Operator agrees to reasonably cooperate with Existing Operator in connection with any Recapture Claim, and the parties shall reasonably cooperate to resolve any Recapture Claim to their mutual satisfaction.

 

(C) Existing Operator shall be and remain obligated for and shall pay on or before the date due thereof all amounts of any license fees, Bed Taxes (defined herein) or other amounts payable to any other Governmental Authority with jurisdiction over the Facility attributable to Existing Operator’s operation of the Facility prior to the Closing Date. Existing Operator shall provide to New Operator, on or before the Closing Date, evidence reasonably satisfactory to New Operator of payment of all quality care, provider or bed taxes or assessments with respect to the Facility (collectively, “Bed Taxes”) that are due and payable prior to the Closing Date. At the Closing, Existing Operator shall pay or credit to New Operator an amount equal to the Bed Taxes that are accrued and unpaid as of the Closing Date, and New Operator shall assume the obligation to pay such Bed Taxes to the appliable Governmental Authority following the Closing.

 

1.13 Use of Telephone Numbers; Emails. Existing Operator shall provide commercially reasonable cooperation intended to allow New Operator to use the present telephone and facsimile numbers of the Facility and all post office box addresses associated with the Facility provided New Operator assumes responsibility for the costs thereof. Existing Operator shall, to the extent possible with commercially reasonable efforts, as of the Closing Date transfer or cause to be transferred the telephone and facsimile numbers used by the Facility to New Operator. Existing Operator agrees to arrange for current e-mail addresses of the Facility and its on-site staff to be forwarded to New Operator’ new e-mail addresses for a period of ninety (90) days following Closing, and to arrange for an email auto-response with New Operator correct email address for the ninety (90) day period thereafter.

 

ARTICLE II

THE CLOSING

 

2.1 Time and Place of Closing. The actions contemplated to consummate the transactions under this Agreement (“Closing”) shall be conditioned upon the receipt by New Operator of approval of the New Operator License (defined herein) to operate the currently duly licensed number of nursing facility beds at the Facility, as well as the satisfaction of the conditions precedent set forth herein and shall be at the time and place set forth under the PSA (“Closing Date”). Notwithstanding the actual time at which the Closing occurs, the time at which the Closing shall be deemed to be effective and the risk of loss shall pass from Existing Operator to New Operator shall be 12:01 a.m., Eastern Standard Time on the Closing Date.

 

2.2 Management Agreement. The parties recognize that the issuance of the New Operator License (defined here) to New Operator to lawfully operate the Facility may not have occurred as of the Closing Date. As such, to the extent allowed by law, provided that the New Operator has received a positive indication that the New Operator License in a reasonable period will be granted, New Operator and Existing Operator may enter into a mutually acceptable Interim Management Agreement, and/or an interim sublease agreement (collectively, the “Interim Management Agreement”). The Interim Management Agreement will provide that New Operator will assume the operations of the Facility and the economic and other liabilities of the Facility, as well as the right to receive all revenue generated by the Facility, from the Effective Date through the Closing Date (“Interim Period”) and will continue to operate under the Existing Operator’s operating license until such time as New Operator is granted the New Operator License.

 

 

2.3 Due Diligence. New Operator and Existing Operator shall be subject to the provisions and requirements of Section 3 (“Due Diligence; Licensure”) of the PSA including providing all Diligence Materials reasonably requested by New Operator. New Operator may terminate this Agreement at any time from the Effective Date until 5:00PM Eastern Time on the date that is forty-five (45) days from the Effective Date (the “Due Diligence Period”) by giving written notice of such termination to Existing Operator.

 

ARTICLE III
Existing Operator’s REPRESENTATIONS AND WARRANTIES

 

3.1 Existing Operator’s Representations and Warranties.

 

(a) Except as expressly set forth in this Agreement or Existing Operator’s Transaction Documents (as defined herein), Existing Operator makes no representations, warranties, or covenants whatsoever with respect to any matter, thing or event.

 

(b) Existing Operator represents and warrants to New Operator as follows:

 

(i) Organization and Standing of Existing Operator. Existing Operator is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Georgia. Existing Operator has the power and authority to own the Transferred Assets and to conduct the business presently being conducted by such Existing Operator at its Facility and Existing Operator has good title to the Transferred Assets.

 

(ii) Authority. Subject to Existing Operator securing such consents, waiver, approval, authorization, permit or filing which Existing Operator is required to make or secure prior to the Closing Date (including, without limitation, consents to assignment of Assumed Contracts, the “Operator Consents”) unless waived by New Operator if not required as a matter of law and to New Operator securing the Regulatory Approvals (as defined below), Existing Operator has the necessary power and authority to make, execute, deliver and perform this Agreement including the schedules, exhibits, and the other instruments and documents required or contemplated hereby (“Existing Operator’s Transaction Documents”). Subject to Existing Operator securing the Operator Consents and to New Operator securing the Regulatory Approvals, the execution, delivery, performance and consummation of the Existing Operator’s Transaction Documents have been duly authorized by all necessary action, corporate or otherwise, on the part of Existing Operator, its directors and shareholders.

 

(iii) Binding Effect; No Defaults. Subject to Existing Operator securing the Operator Consents and to New Operator securing the Regulatory Approvals, Existing Operator’s Transaction Documents, when executed by all Parties thereto, will constitute the valid and binding obligations of Existing Operator, enforceable against Existing Operator in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other laws now or hereafter in effect affecting creditors’ rights and remedies or by equitable principles. Subject to Existing Operator securing the Operator Consents and to New Operator securing the Regulatory Approvals, the execution and delivery of this Agreement and any documents contemplated hereby by Existing Operator, and the performance of their obligations hereunder, do not and will not:

 

(a) conflict with or result in any material breach of the provisions of, or constitute a default under the certificate of formation, certificate of limited partnership, limited liability company agreement or limited partnership agreement, as applicable, of Existing Operator;

 

 

(b) violate any material restriction to which Existing Operator are subject or, without the giving of notice, passage of time, or both, violate (or give rise to any right of termination, cancellation or acceleration under) any material license, authorization or permit or other material agreement or instrument to which any Existing Operator is a party, which will not be satisfied or terminated with respect to a Facility prior to the Closing Date as a result of the transactions contemplated by this Agreement or result in the termination of any such instrument or termination of any provisions in such instruments that will result in the material impairment of any of such Existing Operator’s rights under such instruments; and

 

(c) constitute a violation of any applicable material rule, regulation, law, statute or ordinance of any administrative agency or Governmental Authority, or any judgment, decree, writ, injunction or order of any court of applicable jurisdiction to which Existing Operator is subject or by which its assets are bound.

 

(iv) Contracts. The schedule of Operating Contracts delivered by Existing Operator pursuant to Section 1.9 is a true and current schedule identifying all Operating Contracts. Except as otherwise set forth in Schedule 3.1(b)(iv), Existing Operator has no collective bargaining agreements, or other labor contracts, employment contracts, pension, profit sharing, insurance, deferred compensation, bonus, retirement or other employee benefit plans with respect to any of the Facility Employees.

 

(v) Health Care Matters. Except as set forth on Schedule 3.1(b)(v), there is no pending material litigation, claim, proceeding or investigation, or to Existing Operator’s knowledge threatened, against Existing Operator or relating to the Facility for any violation or alleged violation of, and the Facility has not received written notice of any threat of any suit, action, claim, dispute, investigation, agency review or other proceeding pursuant to or involving, (i) the False Claims Act, 31 U.S.C. §§3729 et seq., (ii) the Civil Monetary Penalties Law, 42 U.S.C. §1320a-7a, (iii) federal or state anti-kickback statutes, including but not limited to 42 U.S.C. 1320a-7b, (iv) federal or state referral laws, including but not limited to 42 U.S.C. §1395nn; (v) regulations promulgated pursuant to any of the foregoing statutes, or (vi) any other federal or state law or regulation of general applicability to health care fraud, governing or regulating the management of health care providers, or governing or regulating medical billing or reimbursement, including all applicable Medicare and Medicaid statutes and regulations.

 

(vi) Claims. Existing Operator is not subject to any material claims, including Recapture Claims, arising out of the operation of the Facility. Existing Operator has not received notice of violation at a level that under applicable law requires the immediate or accelerated filing of a plan of correction and there have been no violations over the past three (3) years which have threatened Existing Operator’s certificate for participation in Medicaid, Medicare, or any other federal payor program (including but not limited to Medicare, Medicaid and TRICARE). The Facility has not been designated as a Special Focus Facility (as such term is defined by the Centers for Medicare and Medicaid Services Special Focus Facility Program) or put on the Special Focus Facility watchlist. For the purposes of this Agreement, the term “Governmental Authority” shall mean the government of the United States or any foreign country or any state or political subdivision thereof and any entity, body or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and other quasi-governmental entities established to perform such functions. The Facility is not part of any OIG Corporate Integrity Agreements (CIA).

 

 

(viii) Beds. The number of beds licensed for use at the Facility is set forth on Schedule 3.1(b)(viii). Each bed is fully licensed by HFR, and all beds are eligible for Medicaid participation. There are at the Facility a number of beds equal to the maximum bed capacity as permitted under the Facility licenses. All level II beds are certified to participate in the Medicare program and all level III beds are recognized by CMS as participants in the Medicare Program and receive Medicare reimbursement. The Medicare and Medicaid certifications may be transferred to New Operator in accordance with the terms of this Agreement. All of the licensed beds are currently in use at the Facility and no beds at the Facility have been removed from service on a temporary or permanent basis.

 

(ix) Licenses. The Existing Operator currently holds all material licenses required for its use and operation as skilled nursing facilities in compliance with all applicable laws. As of the Effective Date and at all times thereafter, (i) all material licenses are valid and in full force and effect without restriction or condition, and are not subject to any pending or threatened proceeding to revoke, cancel, suspend or declare such license invalid in any respect; (ii) no receiver, trustee, or conservator has been named by any Governmental Authority with regard to the Facility, and (iii) there is no default under the material licenses.

 

(x) Taxes. Except as disclosed in Schedule 3.1(b)(x) attached hereto, (a) all material Tax Returns required to be filed by Existing Operator in connection with the operation of the Facility in the past three (3) years have been accurately prepared and duly and timely filed; (b) all Taxes (whether or not reflected on such returns) have been paid in full or, as set forth on Schedule 3.1(b)(x), appropriate provision for payment has been made through the Effective Date; and (c) Existing Operator is not delinquent in the payment of any Tax, assessment or governmental charge in connection with the Facility and have no Tax deficiency or claim outstanding or assessed against them in connection with the Facility, except in the case of (a)-(c) above, where such failure to accurately prepare, failure to pay or delinquency would not have a Material Adverse Effect. Existing Operator is not currently the beneficiary of any extension of time with which to file any Tax Return or pay any Tax. None of the Transferred Assets constitute tax-exempt bond financed property or tax-exempt use property within the meaning of Section 168 of the Code. None of the Transferred Assets are subject to any liens in respect of Taxes. For the purposes of this Agreement, the following terms shall have the following meanings: (1) “Taxes” shall mean all taxes, charges, fees, duties, levies, or other assessments, including income, gross receipts, net proceeds, ad valorem, turnover, real and personal property (tangible and intangible), sales, use, franchise, excise, value added, stamp, leasing, lease, user, transfer, fuel, excess profits, occupational, interest equalization, windfall profits, severance, employee income withholding, other withholding, unemployment and social security taxes, which are imposed by any Government Authority and such term shall include any interest, penalties or additions to tax attributable thereto; and (2) the term “Tax Return” shall mean any report, claim for refund, return, or other information required to be supplied to a Governmental Authority in connection with any Taxes, including any schedule or attachment thereto and including any amendment thereof.

 

 

(xi) Liens. Except as set forth in Schedule 3.1(b)(xi), no labor has been performed or material furnished for the Facility for or on behalf of Existing Operator, in any material amounts, for which Existing Operator has not heretofore fully paid, or which will not be fully paid prior to Closing or for which any mechanics’ or materialman’s’ lien or liens, or any other lien, can be lawfully claimed by any person, party or entity. At the Closing, Existing Operator shall not be indebted in any material amount to any contractor, laborer, mechanic, materialman, architect or engineer for work, labor or services performed or rendered, or for materials supplied or furnished, in connection with the Facility for which any such person could lawfully claim a lien against the Facility.

 

(xii) Survey Reports, Etc. True and complete copies of all survey reports, waivers of deficiencies, plans of correction and any other investigation reports issued with respect to the Facility since August 1, 2020 (collectively, the “Survey Reports”) have been provided to New Operator, and any Survey Reports filed, arising, or involving the Facility between the execution of this Agreement and the Closing shall be provided to New Operator within three (3) business days of receipt thereof.

 

(xiii) Compliance with Laws. The Facility is duly licensed as a skilled nursing Facility as required under applicable law. Existing Operator and the Facility since August 1, 2020 have been, and are, and shall be at the Closing Date in compliance with all applicable law in all material respects. Schedule 3.1(b)(xiii) sets forth a true and correct copy of each material license held by the Facility, including the owner thereof, and identifies any licenses that are non-transferable. Each material license is valid and in full force and effect and in good standing as of the date hereof.

 

(xiv) Payment Programs. All payment programs in which the Existing Operator participates are listed on Schedule 3.1(b)(xiv) (collectively, the “Payment Programs”). Except as set forth on Schedule 3.1(b)(xiv), Existing Operator is a participating provider, in good standing, in compliance with the conditions of participation of the Payment Programs in which they participate with valid and current provider agreements. Except as identified on Schedule 3.1(b)(xiv), each such provider agreement may not be transferred to New Operator without consent of the counterparty. Except as set forth on Schedule 3.1(b)(xiv), there is no pending or to Existing Operator’s knowledge, threatened investigation, or civil, administrative proceeding relating to participation in any Payment Program nor have any such proceedings been concluded since August 1, 2020 that are material either individually or in the aggregate. Except as set forth on Schedule 3.1(b)(xiv), Existing Operator and the Facility are not subject to, nor has been subjected to at any time since August 1, 2020, any utilization review by any Payment Program. Except as set forth on Schedule 3.1(b)(xiv), since August 1, 2020, no Payment Program has requested or threatened, any recoupment, refund, or set-off from Existing Operator or Facility. Except as set forth on Schedule 3.1(b)(xiv) since August 1, 2020 no Payment Program has imposed a fine, penalty or other sanction on Existing Operator or the Facility. Neither Existing Operator nor any current employee of Existing Operator have been excluded from participation in any Payment Program. Existing Operator has not hired or contracted with any person or entity that is listed as “excluded” on the United States Office of the Inspector General or the HFR website. To Existing Operator’s knowledge, Existing Operator has not submitted to any Payment Program any false or fraudulent claim for payment, nor has Existing Operator at any time violated any condition for participation, or any rule, regulation, policy or standard of, any Payment Program, the violation of which would be materially adverse to Existing Operator or the Facility. All billing practices of Existing Operator with respect to the business and the Facility have been in compliance with all applicable laws and policies of each Payment Programs in all material respects. Existing Operator has not received notice or communication that Existing Operator has billed or received any payment or reimbursement in excess of amounts permitted by applicable Law, except to the extent cured or corrected and all penalties or interest discharged in connection with such cure or correction. Except as set forth on Schedule 3.1(b)(xiv), screening and care at the Facility has been conducted or rendered in accordance with the applicable screening and care criteria of the applicable Payment Program.

 

 

(xv) Schedule 3.1(b)(xv) is a true and complete list of all Facility Employees of Existing Operator as of the Effective Date. Existing Operator is in compliance in all material respects with all laws relating to employment practices or the workplace, including, without limitation, provisions relating to wages, hours, worker classification (including the proper classification of independent contractors and consultants), collective bargaining, safety and health, work authorization, equal employment opportunity, immigration and the withholding of income Taxes, unemployment compensation, worker’s compensation, employee privacy and right to know and social security contributions. To the Existing Operator’s knowledge, there are no material unresolved labor controversies (including unresolved grievances and age or other discrimination claims), if any, between Existing Operator and any person employed by or providing services to such Existing Operator. Except as disclosed on Schedule 3.1(b)(xv), Existing Operator is not a party to (i) any material employment agreement or similar arrangement, other than written agreements or arrangements that may be terminated at any time upon no more than ninety (90) days’ notice without penalty or (ii) any material employment agreement that causes an employee to be other than an “at will” employee. To the Existing Operator’s knowledge, no current employee of Existing Operator has made any threat, or otherwise revealed an intent, to terminate such employee’s relationship with Existing Operator, for any reason, including because of the consummation of the transactions contemplated by this Agreement. Except as described in Schedule 3.1(b)(xv), Existing Operator is not a party to any agreement for the provision of labor from any outside agency. Except as described in Schedule 3.1(b)(xv), in the past three (3) years, there have been no claims against Existing Operator by employees of such outside agencies, if any, with regard to employees assigned to work for Existing Operator, and no claims by any Governmental Authority with regard to such employees.

 

(xvi) Except as described in Schedule 3.1(b)(xvi), Existing Operator is (i) not a party to, involved in, subject to an order by a Governmental Authority arising out of or, threatened in writing by, any labor or employee dispute or unfair labor practice charge or equal employment complaint or (ii) not currently a party to or negotiating any collective bargaining agreement or other labor contract. Existing Operator has not experienced any work stoppage by reason of employee action during the last three (3) years and there are no pending or, to Existing Operator’s knowledge, threatened labor disputes or union organizing activities at the Facility.

 

(xviii) Employee Benefit Plans. Except as set forth on Schedule 3.1(b)(xviii), Existing Operator is not party to, does not participate in nor has any liability or contingent liability with respect to: (a) any material “employee welfare benefit plan” or “employee pension benefit plan” or “multiemployer plan” as those terms are respectively defined in sections 3(1), 3(2) and 3(37) of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder (“ERISA”); or (b) any deferred compensation plan, incentive compensation plan, stock plan, unemployment compensation plan, vacation pay, severance pay, bonus or benefit arrangement, insurance or hospitalization program or any other material fringe benefit arrangements for any current or former employee, director or consultant of the Existing Operator.

 

 

(xix) Litigation. Except as set forth in Schedule 3.1(b)(xix), there are no charges, litigation, civil investigative demands, investigations, arbitrations, regulatory or other proceedings pending or to the knowledge of Existing Operator, threatened against, or relating to, Existing Operator, or the Facility as of the date of the execution of the Agreement by New Operator, subject to Existing Operator’s right to provide an updated Schedule 3.1(b)(xix) within ten (10) days of receipt of such notice. During the period between the Effective Date and the Closing, Existing Operator shall promptly notify New Operator of any changes in Schedule 3.1(b)(xix).

 

(xx) Employment Loss. Except as set forth on Schedule 3.1(b)(xx) hereto, Existing Operator has not affected (i) a “plant closing” as defined in the WARN Act affecting a Facility, or (ii) a “mass layoff” (as defined in the WARN Act) affecting a Facility; nor has Existing Operator been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state or local law.

 

(xxi) Schedule 3.1(b)(xxi) sets forth the number of Medicaid pending patients at each of the Facility as of the Effective Date.

 

(xxii) Schedule 3.1(b)(xxii) sets forth a true and current accounting of all accrued benefits (including amounts accrued as liabilities for sick, Accrued Employee Vacation and Leave, extended illness and radius) earned by any Facility Employee as of the Effective Date.

 

(xxiii) Financial Statements. Attached hereto as Schedule 3.1(b)(xxiii) are the following financial statements of Existing Operator, each of which financial statements has been prepared in all material respects in accordance with generally accepted accounting principles, consistently applied throughout the period involved, except that the unaudited statements are without footnotes and are subject to normal yearend adjustments, and fairly present in all material respects the financial position, assets and liabilities of the Existing Operator and the Facility as of the date thereof: (a) income statement for Existing Operator as of the twelve (12) months ending December 31, 2020, December 31, 2021, and December 31, 2022, (b) income statement for Existing Operator as of September 30, 2023, and (c) accounts receivable report of Existing Operator as of September 30, 2023 (collectively, the “Financial Statements”). To the Existing Operator’s knowledge, the Financial Statements are true, complete and correct, in all material respects. Except as set forth in the most recent Financial Statements delivered to Purchaser, since the date of such Financial Statements, there have been no events, transactions or information relating to the Facility (or the operations thereof) or the Property (as defined in the PSA) which, singly or in the aggregate, have had a Material Adverse Effect (as defined in the PSA)

 

(xxiv) Reserved.

 

(xxv) Supplies. All purchased supplies of the Facility have been purchased by the applicable Existing Operator and are owned by the applicable Existing Operator free and clear of claims of all other parties. Such supplies are sufficient in quantity for the proper conduct and operation of the Facility for at least that number of residents residing at the applicable Facility as of the Closing Date in substantial compliance with all applicable laws, and in an amount sufficient to last not less than seven (7) days.

 

 

(xxvi) Transferred Assets. Except as disclosed in Schedule 3.1(b)(xxvi): (i) Existing Operator owns all of the Transferred Assets used or held by it in connection with the operation of the Facility as presently being conducted, and all of such assets and properties are reflected in the Financial Statements; and (ii) Existing Operator has good title to the Transferred Assets, free and clear of all liens. The Transferred Assets owned by Existing Operator as of the Closing are in good, merchantable, usable, and working condition. The Transferred Assets and Supplies are sufficient for New Operator to operate the Facility as of the Closing consistent with past practice.

 

Each representation and warranty of Existing Operator hereunder is true, complete and correct in all respects as of the Effective Date and shall be true, complete and correct as of the Closing Date as a condition to New Operator’s obligation to close this transaction. Where any representation or warranty contained in this Agreement is expressly qualified by reference to “Existing Operator’s knowledge,” “the knowledge of Existing Operator” or similar qualifications, such knowledge shall be to the actual knowledge of executive officers of Existing Operator and the Facility’s administrators.

 

ARTICLE IV
NEW OPERATOR’S REPRESENTATIONS AND WARRANTIES

 

4.1 New Operator’ Representations and Warranties. New Operator represent and warrant to Existing Operator as follows:

 

(a) New Operator is a Nevada limited liability company, duly formed, validly existing and in good standing under the laws of the State of Georgia. New Operator has the power and authority to own the property and assets now owned by it and to conduct the business presently being conducted by it.

 

(b) New Operator has the necessary corporate power and authority to make, execute, deliver and perform this Agreement including the schedules, exhibits, and other instruments and documents required or contemplated hereby (“New Operator’ Transaction Documents,” collectively with the Existing Operator’s Transaction Documents, “Transaction Documents”). Such execution, delivery, performance and consummation have been duly authorized by all necessary action, corporate or otherwise, on the part of New Operator, its managers and members.

 

(c) New Operator’ Transaction Documents, when executed by New Operator constitute the valid and binding obligations of New Operator, enforceable against New Operator in accordance with their respective terms. The execution and delivery of this Agreement and any documents contemplated hereby by New Operator, and the performance of its obligations hereunder, do not and will not:

 

(i) result in any material breach of the provisions of, or constitute a default under the certificate of formation, certificate of limited partnership, limited liability company agreement or limited partnership agreement, as applicable, of New Operator;

 

(ii) violate any material restriction to which New Operator is subject or, without the giving of notice, passage of time, or both, violate (or give rise to any right of termination, cancellation or acceleration under) any material license, authorization or permit or other material agreement or instrument to which New Operator is a party, which will not be satisfied or terminated with respect to a Facility prior to the Closing Date as a result of the transactions contemplated by this Agreement or result in the termination of any such instrument or termination of any provisions in such instruments that will result in the material impairment of any of such New Operator’s rights under such instruments; and

 

 

(iii) constitute a violation of any applicable material rule, regulation, law, statute or ordinance of any Governmental Authority, or any judgment, decree, writ, injunction or order of any court of applicable jurisdiction to which New Operator is subject or by which its assets are bound.

 

(d) New Operator has no knowledge of any existing event, matter or situation or any pending or threatened litigation or event, happening or occurrence, which would prevent or materially and adversely impair New Operator’s ability to obtain the Regulatory Approvals. New Operator has not been denied licensure of a nursing home in any state.

 

(e) New Operator has not relied upon any representations, warranties or statements made by Existing Operator or Existing Operator’s representatives that are not expressly set forth in Section 3.1 (including the schedules), whether or not any such representations, warranties or statements were made in writing or orally. New Operator acknowledges that it has conducted, to its satisfaction, its own independent investigation of Existing Operator, the Facility and its operations, including the review of materials located in the data room and, in making the determination to proceed with the transactions contemplated hereby, New Operator has relied on the results of its own independent investigation.

 

ARTICLE V

OBLIGATIONS OF THE PARTIES PRIOR TO CLOSING

 

5.1 Licensing; Beds.

 

(a) New Operator Licenses; Federal and State Regulatory Certifications. Prior to the Closing, New Operator shall use its commercially reasonable efforts to (a) obtain the operating license for the lawful operation of the Facility (the “New Operator License”) with HFR and (b) obtain other necessary federal and state regulatory certifications, operational licenses and permits (“Federal and State Regulatory Certifications”). The New Operating License and the Federal and State Regulatory Certifications will be collectively referred to as the “Regulatory Approvals.” Existing Operator shall reasonably cooperate with New Operator in connection with obtaining the New Operator License and Federal and State Regulatory Certifications. Such cooperation shall include, but shall not be limited to, (i) providing New Operator copies of all renewal applications submitted to HFR within the past twelve (12) months and (ii) upon two (2) days’ prior written notice stating the purpose of the requested visit, permitting New Operator and their employees, contractors, agents and representatives to have reasonable access to the Facility, administrators, Facility employees to be interviewed for continuation of employment and the Transferred Assets.

 

5.2 Conduct of Business.

 

(a) From the date of this Agreement and until the Closing, except as otherwise required by this Agreement:

 

(i) Existing Operator shall operate and conduct operations at the Facility in the usual, customary and ordinary course of business. Without limiting the generality of the foregoing, from the date of this Agreement until the Closing, Existing Operator shall:

 

A.

Maintain all material licenses, permits and other consents necessary for the operation of the Facility in full force and effect, and timely file all reports, statements, renewal applications and other filings, and timely pay all fees and charges in connection therewith that are required to keep such licenses, permits and consents in full force and effect;

 

 

B.

Maintain the continued existence of the Facility and its business in substantial compliance with applicable law;

 

C.

Maintain in full force and effect substantially the same public liability and casualty insurance coverage and other insurance policies now in effect with respect to the Facility;

 

D.

Continue to employ substantially all of the employees at the Facility, subject to Existing Operator’s employment practices and applicable law, and terminations and resignations that occur in accordance with the ordinary course of business.

 

E.

Pay all taxes and assessments with respect to the Facility and other liabilities relating to the Transferred Assets as they become due;

 

F.

Maintain insurance with respect to the Facility in accordance with Existing Operator’s past practices and applicable legal requirements;

 

G.

Materially preserve intact the Transferred Assets and file all forms and reports, at their cost and expense, necessary to maintain in effect, and not rendered or permitted to be rendered ineffective, any material licenses and the licenses relating to the Facility;

 

H.

Use its good faith efforts to promptly perform its obligations and covenants under this Agreement that are to be performed prior to the Closing Date and to enable the conditions precedent set forth herein to be satisfied;

 

I.

Maintain, repair and replace where appropriate, consistent with Existing Operator’s past practice, the Facility and all personal property comprising the Transferred Assets, including all equipment, furniture and fixtures, and any leasehold improvements consistent with Existing Operator’s past practice;

 

J.

Use commercially reasonable efforts to maintain occupancy levels of the Facility and the goodwill with all of the suppliers, residents and others having business relations with Existing Operator or the Facility;

 

K.

Use best efforts to maintain the quality of care to the residents;

 

L.

Provide New Operator with true and correct updated accounts receivable aging reports, census reports (in sufficient detail to show the most recent patient mix and occupancy rate), and a report of all agency hours and utilization at the Facility, current to the date provided. Existing Operator shall provide no later than 30 days after the end of each month, true and correct copies of updated monthly Financial Statements to New Operator which shall include a balance sheet, statements of income and expenses and cash flow; and

 

M.

Execute and deliver all documents and perform all other acts that are reasonably necessary or appropriate to consummate the transactions contemplated by this Agreement.

 

 

(ii) Existing Operator shall not, directly or indirectly without the written consent from New Operator:

 

A.

Sell or otherwise dispose of, or agree to sell or dispose of, any of the Transferred Assets, except for inventory in the usual and normal course of business and/or remove any Transferred Assets from the Facility unless the same is replaced by property of substantially equal or greater value;

 

B.

Extend, terminate, modify, amend or waive any term or condition of any resident agreement, or enter into any new residency agreement other than in the ordinary course of business;

 

C.

Enter into any new agreement, obligation or commitment for capital expenditures relating to the Facility, including without limitation, additions to property, plant, equipment or intangible capital assets;

 

D.

Other than in the ordinary course of business or in accordance with applicable law: (A) sponsor or become obligated to contribute to any Employee Benefit Plan or other arrangement (other than those in effect on the date hereof for which Exiting Operator are solely liable) or amend any Employee Benefit Plans to materially increase benefits, or (B) make any commitment or incur any liability to any labor organization;

 

E.

Take any action prior to the Closing Date that would breach any of the representations and warranties contained in this Agreement; or

 

F.

Transfer residents from the Facility to a long term care, assisted living, or skilled nursing facility owned by Existing Operator, or an Affiliate of Existing Operator, nor shall there be any voluntary transfers by Existing Operator of residents from Facility to any other long term care, assisted living, or nursing facility, where such transfer is not in the ordinary course of business and not at the request of the resident or the resident’s family, or for reasons relating to the health and well-being of the resident transferred or otherwise required by law.

 

5.3 Census Information. From the date hereof through the Closing, and from time to time upon request by New Operator, Existing Operator shall deliver to New Operator on a monthly basis, a true, correct and complete schedule (subject to any and all applicable patient privacy laws) which accurately and completely sets forth the occupancy status of the Facility, the average daily rate and other charges payable with respect thereto, the class of payment or reimbursement (i.e., private, third-party payor, Medicare, Medicaid, and Veteran’s Administration (if any)), the number of residents who are Medicaid pending, the average monthly census of the Facility, occupancy rates and any arrearages and payments (the “Residents Census Information”).

 

5.4 Access and Cooperation. From the date hereof through Closing, Existing Operator shall, upon reasonable notice and consistent with Health Insurance Portability and Accountability Act standards, afford to New Operator, and their counsel, accountants and other authorized representatives reasonable access during business hours to the Facility, computer systems, books and records as reasonably necessary to effectively transition the operations of the Facility from Existing Operator to New Operator. In furtherance thereof, Existing Operator shall deliver to New Operator updated monthly financial statements for each calendar month after the date hereof through Closing no later than thirty (30) days following the completion of such calendar month. Such access shall not interfere with Facility residents, employees or the ordinary operation of the Facility and care of residents.

 

 

5.5 Good Faith. Prior to the Closing, Existing Operator covenants that it shall operate the Facility in good faith to comply with the terms of this Agreement. New Operator shall make all reasonable efforts to assure a timely closing of the transaction(s) contemplated hereunder.

 

5.6 Pandemic Funds. Except as set forth in Schedule 5.6 attached hereto, Existing Operator has not received Paycheck Protection Program SBA Loans, as defined below, and CARES Act Provider Relief Fund monies, as defined below (collectively the “Pandemic Funds”), which have been released by the Federal government in response to the COVID-19 pandemic. If Existing Operator receives any Pandemic Funds prior to the Closing Date, it shall utilize these funds in accordance with the laws and guidance applicable to each specific category of Pandemic Funds as set forth below:

 

(a) The Paycheck Protection Program SBA Loans (“SBA Loans”) shall mean those loans designed to provide a direct incentive for small businesses to keep their workers on the payroll. Any and all SBA Loans received by Existing Operator shall remain the sole responsibility, liability, and obligation of Existing Operator.

 

(b) The CARES Act Provider Relief Fund monies shall mean those funds received from the U.S. Department of Human Services pursuant to the Families First Coronavirus Relief Act and the CARES Act (including, without limitation, funds under the Coronavirus Relief Fund), laws intended to address the economic fallout of the COVID-19 pandemic. Any and all CARES Act Provider Relief Fund monies shall remain the property and responsibility of Existing Operator. For the avoidance of doubt, New Operator shall not assume or accept any funds, proceeds, responsibilities, liabilities, and/or obligations related to, or in connection with, the CARES Act Provider Relief Fund monies received by Existing Operator.

 

(c) MAAPP Funds. Existing Operator received no payments pursuant to the Medicare Accelerated & Advance Payment Program.

 

(d) For any Pandemic Funds received by Existing Operator after the Closing Date that apply to a time period prior to the Closing Date, if a statute, regulation, or guidance document governing the Pandemic Funds received provides that such Pandemic Funds may be transferred to New Operator, Existing Operator will transfer such funds to New Operator. If there is any “Phase 5” or other Pandemic Relief Fund funding accompanied by guidance similar to that which accompanied “Phase 4” funding which neither specifically allows nor prohibits transfer of Pandemic Funds to New Operator, Existing Operator will transfer such funds to New Operator. If any “Phase 5” or other Pandemic Relief Fund funding is subsequently followed by a statute, regulation, or guidance document that specifically prohibits transfer of Pandemic Funds to New Operator, Existing Operator will promptly return such funds to the government.

 

(e) In the event of receipt of any additional funds, credits, or supplemental payments from any Governmental Authority whereby New Operator makes application for such additional funds, credits or supplemental payments during the Interim Period or after the Closing Date, the accompanying advice of such additional funds, credits or supplemental payments received by New Operator does not indicate the period to which a payment relates to or if there is no accompanying remittance advice, such funds, credits, or supplemental payments shall belong to New Operator. For the avoidance of doubt, the rights to all payments related to Employee Retention Tax Credits shall not be assigned to New Operator and shall remain an asset of the Existing Operator.

 

 

5.7 Separate Contracts. Prior to the end of the Due Diligence Period the Purchaser and Seller, and Existing Operator and New Operator shall negotiate, conclude and execute two separate Purchase and Sale Agreements and Operations Transfer Agreements for: (i) Providence HR LLC and the Sparta Facility, respectively, and (ii) Atl/Warr, LLC and the Warrenton Facility, which are currently financed with Greystone Finance HUD-insured mortgage loans (“Greystone Loans”). Purchaser intends to assume the existing Greystone Loans which will entail a different process and timeline from contract execution to closing, than the timeline stated in this Agreement. This Agreement will be amended as necessary to change the Purchaser and Seller parties and the closing dates, among other things.

 

ARTICLE VI
CONDITIONS PRECEDENT TO NEW OPERATOR’S OBLIGATIONS

 

Unless waived by New Operator, its obligation to consummate the transactions contemplated by this Agreement is subject to the satisfaction, prior to or at the Closing, of each of the following conditions. Upon failure of any of the following conditions, New Operator may terminate this Agreement pursuant to and in accordance with Article VIII.

 

6.1 Representations and Warranties. The representations and warranties of Existing Operator contained in this Agreement or on any Schedule or Transaction Document shall be true and correct in all material respects at and as of the Closing as though such representations and warranties were made at and as of such time.

 

6.2 Performance of Covenants. Existing Operator shall have performed or complied in all material respects with its agreements and covenants required by this Agreement to be performed or complied with by them prior to or at the Closing.

 

6.3 Delivery of Closing Certificate. Existing Operator shall have executed and delivered to New Operator a certificate in the form and substance of Exhibit 6.3, attached hereto and made a part hereof.

 

6.4 Transferred Assets at Closing. Existing Operator shall have executed and delivered to each New Operator a Bill of Sale.

 

6.5 Assignment and Assumption of Contracts. If any Operating Contracts are to be assigned to any New Operator in accordance with Section 1.9, the applicable Existing Operator shall have executed and delivered an assignment and assumption of the Operating Contracts substantially in the form and substance of Exhibit 6.5 (“Assignment and Assumption of Contracts”), attached hereto and made a part hereof.

 

6.6 Resident Trust Funds. Existing Operator shall have executed and delivered an assignment and assumption of Resident Trust Funds substantially in the form and substance of Exhibit 6.6 (“Assignment of Resident Trust Funds”), attached hereto and made a part hereof.

 

6.7 Related Transactions. The transactions described and contemplated in the PSA shall have closed simultaneously with the transactions set forth in this Agreement.

 

 

6.8 Regulatory Approvals. HFR shall have issued (with or without contingencies or conditions) to the applicable New Operator the New Operator License, or otherwise shall have confirmed its approval for the issuance of such license to such New Operator.

 

6.9 Payment Programs. To the extent that New Operator can demonstrate commercially reasonable efforts to qualify as providers, New Operator shall be satisfied, at their reasonable discretion, that they shall be able to enter into written participation agreements, effective as of the Closing and on terms and conditions consistent with the marketplace, with any of the current commercial third party payors holding an agreement with the Facility and consisting of more than five percent (5%) of the Facility gross revenue.

 

6.10 Insurance Coverage. At Closing, Existing Operator shall provide with respect to its Facility (i) proof of occurrence made professional liability insurance, (ii) a tail coverage endorsement, extending coverage after the cancellation or termination of a claims made policy to a minimum of three (3) years plus one (1) day after the Closing or (iii) a certificate of insurance and an endorsement including the Facility evidencing continued coverage under existing professional liability insurance policy with respect to Existing Operator’s prior operation of the Facility, which coverage shall remain in place for a minimum of three (3) years plus one (1) day after the Closing in an amount of One Million Dollars ($1,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) in the aggregate (“Insurance Coverage”). Existing Operator shall provide evidence of Insurance Coverage to Purchaser on an annual basis and shall remain current in the payment of all premiums on such Insurance Coverage without any lapse in coverage.

 

6.11 Census. As of the Closing Date, the resident census of the Facility shall not be reduced by more than five percent (5%) of the average daily census for each Facility for the thirty (30) day period prior to the Effective Date.

 

6.12 Reserved.

 

6.13 Regulatory Compliance. The Facility shall not be Out of Compliance; provided, however, that if Out of Compliance is the only Closing condition not satisfied by the Closing Date, New Operator may elect to extend the Closing Date for a period of up to sixty (60) days in the aggregate to allow Existing Operator to satisfy the condition.

 

6.14 Material Adverse Effect. No Material Adverse Effect (as defined in the PSA) shall have occurred.

 

6.15 Bed Taxes. Existing Operator shall provide to New Operator satisfactory evidence that all Bed Taxes due and owing for each Facility have been paid.

 

6.16 Other Documents. Existing Operator shall have furnished New Operator with all other documents, certificates and other instruments reasonably required to be furnished to New Operator by Existing Operator pursuant to the terms hereof.

 

 

ARTICLE VII

CONDITIONS PRECEDENT TO Existing Operator’s OBLIGATIONS

 

Unless waived by Existing Operator, its obligations to consummate the transactions contemplated by this Agreement are subject to the satisfaction, prior to or at the Closing, of each of the following conditions. Upon failure of any of the following conditions, Existing Operator may terminate this Agreement pursuant to and in accordance with Article VIII:

 

7.1 Representations and Warranties. The representations and warranties of New Operator contained in this Agreement or any other Transaction Document shall be true and correct in all material respects at and as of the Closing as though such representations and warranties were made at and as of such time.

 

7.2 Performance of Covenants. New Operator shall have performed or complied in all material respects with each of their agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.

 

7.3 Delivery of Closing Certificate. New Operator shall have delivered to Existing Operator a certificate in the form and substance of Exhibit 7.3, attached hereto and made a part hereof.

 

7.4 Assignment and Assumption of Contracts. If any Operating Contracts are to be assigned to New Operator in accordance with Section 1.9, New Operator shall have executed and delivered the Assignment and Assumption of Contracts.

 

7.5 Resident Trust Funds. New Operator shall have executed and delivered the Assignment of Resident Trust Funds.

 

7.6 Regulatory Approvals. HFR shall have confirmed their approval for the issuance of the New Operator License as of the Closing Date. No injunction, temporary restraining order, judgment or other order of any court or Governmental Authority or instrumentality shall have been issued or have been entered which would be violated by the consummation of the transactions contemplated hereby.

 

7.7 Related Transactions. The transactions described in the PSA shall have closed.

 

7.8 Other Documents. New Operator shall have furnished Existing Operator with all other documents, certificates and other instruments required to be furnished to Existing Operator by New Operator pursuant to the terms hereof.

 

ARTICLE VIII

TERMINATION

 

8.1 Termination. This Agreement may be terminated at any time at or prior to the time of Closing by:

 

(a) Existing Operator, if any condition precedent to Existing Operator’s obligations hereunder including, without limitation, those conditions set forth in Article VII have not been satisfied by the Closing, provided, however, that Existing Operator is not in breach of the Agreement; or

 

 

(b) New Operator, if any condition precedent to New Operator’ obligations hereunder including, without limitation, those conditions set forth in Article VI have not been satisfied by the Closing; provided, however, that New Operator is not in breach of the Agreement; or

 

(c) The mutual consent of Existing Operator and New Operator; or

 

(d) Termination of the PSA.

 

8.2 Effect of Termination. If a Party terminates this Agreement because one of the conditions precedent to its obligations hereunder has not been satisfied, or if this Agreement is terminated by mutual consent, this Agreement shall become null and void without any liability of any party to the others; provided, that if such termination is pursuant to Sections 8.1(a) or (b) as a result of a breach by either of the Parties of any of its representations, warranties or covenants in this Agreement, nothing herein shall affect the non-breaching party’s right to damages on account of such other party’s breach. The provisions of this Article VII and Article XI shall survive termination of this Agreement:

 

ARTICLE IX
INDEMNIFICATION; SURVIVAL

 

9.1 Survival of Representations and Warranties. Except as otherwise provided, all representations, warranties and covenants in this Agreement and a party’s right to recover damages resulting from a breach of a representation, warranty or covenant shall survive Closing for a period of twelve (12) months following the Closing Date, other than with respect to claims arising from or related to the Extended Indemnification Categories (defined below), which shall survive for a period of thirty-six (36) months following the Closing Date (collectively the “Survival Period”). The provisions of this Section 9.1 shall survive the Closing but shall be subject to the consummation of the Closing and shall not apply to any damages arising from the termination of this Agreement. Notwithstanding the foregoing no time limit shall apply to claims based on fraud. As used herein, (i) “Extended Indemnification Categories” shall mean any Losses (defined below) arising out of, based on, related to or with respect to: (i) any material inaccuracy, breach or default by Existing Operator in any Fundamental Representation (defined below), (ii) any taxes due or relating to the Property or the Facility that accrued prior to the Closing, (iii) Recapture Claims and any other governmental claims, investigations or proceedings relating to the operation of the Facility prior to Closing, (iv) Pandemic Funds received by Existing Operator, and (v) fraud by Existing Operator. As used herein, “Fundamental Representation” shall mean representations and warranties set forth in Section 3.1(b)(i), Section 3.1(b)(ii), Section 3.1 (b)(iii) and Section 3.1 (b)(v).

 

9.2 Agreement to Defend. In the event of any action, suit, proceeding or investigation of the nature specified in Sections 9.3, 9.4 or 9.5 hereof is commenced, the Parties agree to cooperate and use their commercially reasonable best efforts to defend against and respond thereto.

 

9.3 Indemnification by Existing Operator. Subject to the limitations set forth in this Article IX, Existing Operator shall indemnify, exculpate and hold New Operator and their respective members, partners, directors, officers, employees, agents, successors and assigns (the “New Operator Indemnified Parties”) harmless from and against any and all losses, damages, claims, causes of action, judgments, costs and expenses (including reasonable fees and expenses of attorneys) (collectively, “Losses”) that may be suffered or incurred by or asserted or awarded against New Operator or any New Operator Indemnified Party, in each case arising out of, or in connection with, or by reason of: (i) any material inaccuracy, breach or default by Existing Operator in any representations and warranties of Existing Operator hereunder; (ii) any failure by Existing Operator to perform any covenant, agreement or undertaking hereunder in any material respect; and (iii) any Extended Indemnification Categories. In no event shall “Losses” include punitive, consequential, special or indirect damages, loss of revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple (“Special Damages”), unless such Special Damages are required to be paid by New Operator in connection with a Third Party Claim, in which event the Existing Operator shall be required to indemnify the New Operator for any such Losses.

 

 

9.4 Indemnification by New Operator. Subject to the limitation set forth in this Article IX, New Operator shall indemnify, exculpate and hold Existing Operator and its members, partners, directors, officers, employees, agents, successors and assigns (collectively, “Existing Operator Indemnified Parties”) harmless from and against any and all Losses that may be suffered or incurred by or asserted or awarded against Existing Operator or any Existing Operator Indemnified Party, in each case arising out of, or in connection with, or by reason of: (i) any material inaccuracy, breach or default by New Operator in any representations and warranties of New Operator hereunder; (ii) any failure by New Operator to perform any covenant, agreement or undertaking hereunder in any material respect; (iii) New Operator’s use of Existing Operator’s provider numbers and provider agreements; and (iv) the operation of the Facility by New Operator after the Closing Date or the ownership of the Transferred Assets on and after the Closing Date, whether or not such Losses were known on such date, including, or any activities of the Facility, New Operator, or their affiliates after the Closing Date.

 

9.5 Indemnification Procedures. All claims for indemnification by any New Operator Indemnified Parties or Existing Operator Indemnified Parties (each, an “Indemnified Party”) under this Article IX shall be asserted and resolved as follows:

 

(a) If an Indemnified Party intends to seek indemnification under this Article IX, it shall promptly notify the party from which it is seeking indemnification hereunder (the “Indemnifying Party”) in writing of such claim, which such notice shall include a description of the facts underlying such claim, the provisions hereunder forming the basis for such claim and a reasonable estimate of the amount of such claim. The failure to provide such notice will not affect any rights hereunder except to the extent the Indemnifying Party forfeits rights or defenses by reason of such failure.

 

(b) If such claim involves a claim by a third party (“Third Party Claim”) against the Indemnified Party, the Indemnifying Party may, within ten (10) days after receipt of such notice and upon notice to the Indemnified Party, assume, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, the settlement or defense thereof; provided, that the Indemnified Party may participate in such settlement or defense through counsel chosen by it at its sole expense. If the Indemnified Party determines in good faith that representation by the Indemnifying Party’s counsel of both the Indemnifying Party and the Indemnified Party may present such counsel with a conflict of interest that cannot be waived, then the Indemnifying Party shall pay the reasonable fees and expenses of the Indemnified Party’s counsel.

 

(c) If, within fourteen (14) days of the Indemnifying Party’s receipt of a claim notice involving a Third Party Claim, the Indemnifying Party has not notified the Indemnified Party that the Indemnifying Party will assume the defense or, following such notification, Indemnifying Party fails to actively and diligently defend such Third Party Claim, the Indemnified Party may assume control of the defense or compromise of such claim, and the costs and expenses of such defense, including costs of investigation and reasonable attorneys’ fees, shall be added to the Losses associated with the claim. The Indemnified Party shall not compromise such claim without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

 

 

(d) The Party assuming the defense of any claim shall keep the other Party reasonably informed at all times of the progress and development of the Party’s defense of and compromise efforts related to such claim and shall furnish the other Party with copies of all relevant pleadings, correspondence and other papers. In addition, the Parties shall cooperate with each other, and make available to each other and their representatives all available relevant records or other materials required by them for their use in defending, compromising or contesting any claim.

 

9.6 Certain Limitations. Any indemnification claims pursuant to Section 9.3 or Section 9.4 must be asserted within the Survival Period in writing and with reasonable specificity as to the facts forming the basis for such claim. Any claims timely and properly asserted shall survive the Survival Period until their final resolution. Each Party shall take all reasonable steps to mitigate any loss upon becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto. In no event shall Purchaser or New Operator be entitled to duplication of recovery under the PSA and this Agreement for Losses arising out of, related to, or in connection with, the same events. In no event shall the Seller under the PSA (the “Seller”) or Existing Operator be entitled to duplication of recovery under the PSA and this Agreement for Losses arising out of, related to, or in connection with, the same events.

 

(e) For the avoidance of doubt, no individual officer, director, member, managing member, shareholder, equity holder, partner, employee, agent, or representative of either party shall have any liability for any claims of the other party hereto related to this Agreement, or any agreements, certificates or instruments delivered in connection herewith, in any way.

 

(f) Each Indemnified Party shall take, and cause its Affiliates to take, all reasonable steps to mitigate any Loss upon becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto; provided, however, that any failure to mitigate shall not affect the obligations of the Indemnifying Party hereunder, except to the extent such failure to mitigate has increased Indemnifying Party’s costs or otherwise prejudiced or harmed Indemnifying Party’s position.

 

(g) Seller and Existing Operator shall not be liable to the Purchaser or New Operator, as the case may be, for indemnification under Section 9.3(a) or under Section 15(a)(ii) of the PSA until the aggregate amount of all Losses in respect of indemnification exceeds fifty thousand dollars ($50,000)(the “Deductible”), in which event the Seller or Existing Operator, as appliable, shall only be required to pay or be liable for Losses in excess of the Deductible. The aggregate amount of all Losses for which Seller and Existing Operator shall be liable pursuant to Section 15 of the PSA and Article XI of this Agreement, as the case may be, shall not exceed three million dollars ($3,000,000) (the “Cap”). The Cap shall not apply to any Losses solely related to Recapture Claims.

 

(h) Payments by an Indemnifying Party pursuant to Section 9.3 or Section 9.4 in respect of any Loss shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment received or reasonably expected to be received by the Indemnified Party in respect of any such claim. The Indemnified Party shall use its commercially reasonable efforts to recover under insurance policies or indemnity, contribution or other similar agreements for any Losses prior to seeking indemnification under this Agreement. Payments by an Indemnifying Party pursuant to Section 9.3 or Section 9.4 in respect of any Loss shall be reduced by an amount equal to any Tax benefit realized or reasonably expected to be realized as a result of such Loss by the Indemnified Party.

 

 

9.7 Exclusive Remedy. Except with respect to any Losses arising out of or based on fraud, the rights of indemnification contained in this Agreement shall be the sole and exclusive remedy of the parties with regard to any and all liabilities, obligations, losses, damages, claims, activities and expenses (including, without limitation, attorney’s fees and court costs) that result from or arise out of any breach or inaccuracy of any representations or warranties made by any party contained in, or related to, this Agreement.

 

ARTICLE X

NON-SOLICITATION COVENANT

 

10.1 Non-Solicitation / Non-Hire of Employees. For a period between the Effective Date and the Closing Date and for the twelve (12) month period following the Closing Date, Existing Operator shall not, and shall not permit any of its Affiliates to, directly or indirectly, hire or solicit any Facility Employees, Affiliate Employees, or Hired Employees (from after the Closing), or encourage any such Facility Employees, Affiliate Employees, or Hired Employees (from and after the Closing), to decline an offer of employment with New Operator or to leave such employment or hire any such Facility Employees, Affiliate Employees, or Hired Employees (from and after the closing); provided, that nothing in this Section 10.1 shall prevent Existing Operator from (x) engaging in any general solicitations or recruiting which are not directed specifically to any such Facility Employees, Affiliate Employees, or Hired Employees; or (y) hiring on or after the Closing Date any Facility Employees or Affiliate Employees or any Hired Employees whose employment has been terminated by the New Operator or the applicable employee, in each case other than any such termination which follows a solicitation that is prohibited by this Section 10.1. Existing Operator acknowledges that the scope and duration of the provisions of this Section 10.1 are fair and reasonable. This Section 10.1 shall survive the Closing but not the termination of this Agreement.

 

Existing Operator agrees that the breach or failure to comply with the provisions of this Agreement will cause irreparable harm to New Operator for which monetary damages will not provide an adequate remedy. Existing Operator agrees that in the event of any breach of the terms of this Agreement, New Operator shall be entitled to injunctive relief in addition to such other legal and equitable remedies that may be available, without the necessity of posting any bond or other security.

 

ARTICLE XI
MISCELLANEOUS PROVISIONS

 

11.1 Drafting. The Parties have carefully reviewed and negotiated the terms of this Agreement and the Transaction Documents, and Existing Operator and New Operator hereby acknowledge and agree that they have had a full and fair opportunity to review and negotiate the Agreement and the Transaction Documents with the advice of its counsel. Therefore, there shall be no presumption in favor of the non-drafting party.

 

 

11.2 Costs and Expenses. Except as expressly otherwise provided in this Agreement, each Party shall bear its own costs and expenses in connection with this Agreement and the transactions contemplated hereby.

 

11.3 Performance. In the event of a breach by either Party of its obligations hereunder, the other Party shall have the right, in addition to any other remedies which may be available, to obtain specific performance of the terms of this Agreement, and the breaching party hereby waives the defense that there may be an adequate remedy at law. A Party seeking injunctive relief shall not be required to put up a bond or under surety in order to seek the relief applied for.

 

11.4 Benefit and Assignment. This Agreement binds and inures to the benefit of each Party and its successors and proper assigns.

 

11.5 Effect and Construction of this Agreement. The captions used herein are for convenience only and shall not control or affect the meaning or construction of the provisions of this Agreement. This Agreement may be executed in one or more counterparts, and all such counterparts shall constitute one and the same instrument. Copies of original signatures sent by facsimile transmission shall be deemed to be originals for all purposes of this Agreement. All gender employed in this Agreement shall include all genders, and the singular shall include the plural and the plural shall include the singular whenever and as often as may be appropriate. When used in this Agreement, the term “including” shall mean “including but not limited to.” The terms “date hereof,” “date of this Agreement,” and similar terms shall mean the date set forth in the preamble to this Agreement. The disclosure in any particular Section of the schedules shall also be deemed to be a disclosure in other sections of the Schedules.

 

11.6 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed to be properly given when personally delivered to the party entitled to receive the notice, or the next business day after being sent, overnight service, by nationally recognized overnight courier, or upon receipt after being mailed by certified or registered mail (return receipt requested), in each case, postage prepaid, registered or certified mail, or if sent by facsimile, upon mechanical confirmation of successful transmission thereof (only if such notice is also delivered by hand, overnight delivery or registered or certified mail), properly addressed to the party entitled to receive such notice at the address stated below:

 

If to Existing Operator:

 

6800 N. 79th Street, Suite 200

Niwot, Colorado 80503

Attn: Clifford L. Neuman, PC

Email: clneuman@neuman.com

 

with a copy (which shall constitute notice) to:

 

Polsinelli, PC

1201 West Peachtree Street NW, Suite 1100

Atlanta, Georgia 30309

Attention: David Gordon

Email: dgordon@polsinelli.com

 

 

If to New Operator:

 

c/o Care Network

265 East Merrick Road, Suite 205

Valley Stream, New York 11580

Attn: Ari Silberstein

Email: ari@carenetworkhealth.com

 

With a copy (which shall constitute notice) to:

 

NBC Law

Attn: Edward H. Burnbaum

675 Third Avenue, Floor 8

New York, New York 10017

Email: eburnbaum@nbclaw.com

 

11.7 Waiver, Discharge, etc. This Agreement shall not be released, discharged, abandoned, changed or modified in any manner, except by an instrument in writing executed by or on behalf of each of the parties hereto by their duly authorized officer or representative. The delay or failure of any party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach.

 

11.8 Rights of Persons Not Parties. Nothing contained in this Agreement shall be deemed to create rights in persons not parties hereto, other than the successors and proper assigns of the parties hereto.

 

11.9 Attorneys’ Fees. In the event any proceeding or suit is brought to enforce this Agreement, the prevailing party shall be entitled to all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by such party in connection with any action, suit or proceeding to enforce the other’s obligations under this Agreement (and provided that if Purchaser is the prevailing party, the Existing Operator be responsible for payment of Purchaser’s reasonable costs and expenses, including reasonable attorneys’ fees).

 

11.10 Governing Law. This Agreement, and all claims or causes of action (whether in contract, in tort or by statute) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by, enforced in accordance with, and be subject to the remedies available under the internal Laws of the State of Georgia, without giving effect to the conflicts of law provision or rule (whether of the State of Georgia or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Georgia.

 

11.11 Assignment. This Agreement shall not be assigned by any party without the express written consent of the other parties (which consent shall not be unreasonably withheld, conditioned or delayed) except that (a) any New Operator may assign all or any portion of this Agreement without consent to any one or more of its Affiliates (each such assignee, a “New Operator’s Permitted Assignee”). Upon an assignment by any New Operator of such New Operator’s rights under the Agreement in accordance with this Section 11.11, New Operator’s Permitted Assignee(s) shall be deemed to be such New Operator hereunder and shall be the direct beneficiary of all of Existing Operator’s warranties, representations and covenants in favor of New Operator under this Agreement. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors, and assigns.

 

 

11.12 Jurisdiction. The Parties shall arbitrate any dispute, disagreement or controversy before an arbitrator appointed by the American Arbitration Association, and in accordance with its Commercial Rules, in Atlanta, Georgia. This Section 11.12 shall constitute an agreement to arbitrate between the Parties and is enforceable in accordance with the provisions of the Federal Arbitration Act. If a Party seeks extraordinary relief, including an injunction, then a Party may proceed in court without first arbitrating if warranted by the nature of the dispute. In such event any such action shall be brought in the state or federal courts located in the State of Georgia, City of Atlanta, and all appellate courts thereof.

 

11.13 Counterparts; Facsimile Signatures. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by any party by the delivery of such party by facsimile a copy of the signature page of this Agreement duly executed by such party. Any copy of this Agreement so executed by facsimile shall be deemed to be an originally executed copy of this Agreement.

 

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

 

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

 

11.16 Conflict. Where the terms of this agreement are in conflict with the PSA, the terms of the PSA shall prevail.

 

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

 

11.18 Publicity. All pre-Closing publicity concerning the transactions contemplated by this Agreement and all notices respecting publicity shall be jointly planned, coordinated and released by and between Purchaser and Existing Operator.

 

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

 

11.20 Schedules. Existing Operator shall deliver schedules to this Agreement within four (4) weeks of the Effective Date. At any time, and from time to time on or prior to the Closing Date, Existing Operator may supplement or amend the schedules upon written notice to the New Operator providing the new schedule and any attached information and materials (collectively, a “Disclosure Update”). The representations, warranties, and schedules will be deemed supplemented and amended by any Disclosure Update in order to cause the representations and warranties of Existing Operator to be true as of the Effective Date and the Closing Date and, accordingly, New Operator and any party seeking indemnity under this Agreement shall be barred from seeking indemnity with respect to any prior and updated versions of the schedules, unless: (i) such proposed schedule had, individually or in aggregate with the effect of items disclosed in other supplemental schedules which were first submitted after the Effective Date, a Material Adverse Effect, and (ii) within five (5) business days after receipt of such proposed supplemental schedule, New Operator provides written notice to Operator reasonably detailing the objection thereof and changes in such proposed Schedule which would make the same acceptable. Should the Parties not be able to resolve written objections within ten (10) business days thereafter, then either Party may withdraw from this Agreement and terminate it without any obligation or liability of any sort and this Agreement shall be treated as never having been executed or delivered, subject to Section 8.2. In the event the Closing occurs, any such newly completed Schedules or supplements shall be effective, and they shall represent the final version of the Schedule for all purposes.

 

[Remainder of page intentionally left blank.]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date.

 

	Existing Operator:
	Global Abbeville, LLC,
	a Georgia limited liability company
	By:	Selectis Management, LLC, its manager
			By:	/s/ Adam Desmond
			Name:	Adam Desmond
			Title:	Manager

 

	Global Eastman, LLC,
	a Georgia limited liability company
	By:	Selectis Management, LLC, its manager
			By:	/s/ Adam Desmond
			Name:	Adam Desmond
			Title:	Manager

 

	Selectis Sparta, LLC,
	a Georgia limited liability company
	By:	Selectis Management, LLC, its manager
			By:	/s/ Adam Desmond
			Name:	Adam Desmond
			Title:	Manager

 

	selectis Warrenton, LLC,
	a Georgia limited liability company
	By: Selectis Management, LLC, its manager
			By:	/s/ Adam Desmond
			Name:	Adam Desmond
			Title:	Manager

 

 

NEW OPERATOR:

 

Glen Eagle Nursing and

Rehabilitation LLC

EASTMAN NURSING AND

REHABILITATION LLC

PROVIDENCE NURSING AND

REHABILITATION LLC

WARRENTON NURSING AND

REHABILITATION LLC

 

each a Nevada limited liability company

 

	By:
	Name:	Ari Silberstein
	Title:	Authorized Signatory

 

 

EXECUTION COUNTERPART

 

SCHEDULE 1.1

 

EXCLUDED ASSETS

 

None.

 

 

EXECUTION COUNTERPART

 

SCHEDULE 1.9

 

OPERATING CONTRACTS

 

 

EXECUTION COUNTERPART

 

SCHEDULE 3.1(b)(iv)

 

LABOR CONTRACTS

 

 

EXECUTION COUNTERPART

 

SCHEDULE 3.1(b)(v)

 

HEALTH CARE MATTERS

 

 

SCHEDULE 3.1(b)(viii)

 

BEDS

 

 

EXECUTION COUNTERPART

SCHEDULE 3.1(b)(x)

 

TAXES

 

 

SCHEDULE 3.1(b)(xi)

 

LIENS

 

 

EXECUTION COUNTERPART

 

SCHEDULE 3.1(b)(xii)

 

SURVEY REPORTS

 

 

SCHEDULE 3.1(b)(xiii)

 

FACILITY LICENSES

 

 

EXECUTION COUNTERPART

 

SCHEDULE 3.1(b)(xiv)

 

PAYMENT PROGRAMS

 

 

SCHEDULE 3.1(b)(xv)

 

EMPLOYEES

 

 

SCHEDULE 3.1(b)(xvi)

 

EMPLOYMENT MATTERS

 

 

SCHEDULE 3.1(b)(xvii)

 

DIRECTOR AND OFFICER MATTERS

 

 

EXECUTION COUNTERPART

 

SCHEDULE 3.1(b)(xviii)

 

EMPLOYEE BENEFIT PLAN

 

 

SCHEDULE 3.1(b)(xix)

 

LITIGATION

 

 

EXECUTION COUNTERPART

 

SCHEDULE 3.1(b)(xx)

 

EMPLOYMENT LOSS

 

 

SCHEDULE 3.1(b)(xxi)

 

MEDICAID PENDING

 

 

SCHEDULE 3.1(b)(xxii)

 

PTO

 

 

EXECUTION COUNTERPART

 

SCHEDULE 3.1(b)(xxiii)

 

FINANCIAL STATEMENTS

 

 

SCHEDULE 3.1(b)(xxiv)

 

ENVIRONMENTAL MATTERS

 

 

SCHEDULE 3.1(b)(xxvi)

 

TRANSFERRED ASSETS

 

 

SCHEDULE 5.6

 

PANDEMIC FUNDS

 

 

EXECUTION COUNTERPART

 

EXHIBIT 1.1

 

BILL OF SALE

 

KNOW ALL MEN BY THESE PRESENTS THAT, effective as of 12:01 a.m. of the ____ day of ________________, 20__, among ________________________________, a ______________ _______________ (“Existing Operator”), for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration to it in hand paid by ___________________________, a _______________ _________________ (“New Operator”), does (except as otherwise set forth in this Bill of Sale or the Agreement without recourse, representation, warranty or covenant whatsoever) by these presents, sell, assign, transfer and convey unto the New Operator, all of Existing Operator’s right, title, and interest, if any, in and to the Transferred Assets with respect to the Facility. Existing Operator hereby covenants that it will, at any time and from time to time upon written request therefore, execute and deliver to New Operator, its nominees, successors and/or assigns, any new or confirmatory instruments which New Operator, its nominees, successors and/or assigns, may reasonably request in order to assign and transfer to New Operator its rights, title and interest in, the Transferred Assets. All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Operations Transfer Agreement, dated as of ______ __, 20__ between Existing Operator and New Operator.

 

	Existing Operator:
	[                         ]
	By:
	Name:
	Title:

 

 

EXHIBIT 6.3

 

Existing Operator’s officer’s CERTIFICATE

 

Pursuant to Section 6.3 of the Operations Transfer Agreement (“Agreement”), dated as of ________________, 20___ among ___________________________, a ________________ _______________(“Existing Operator”), for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration to it in hand paid by _____________________________, a _______________ _______________ (“New Operator”), the undersigned, ______________, of the Existing Operator, does hereby certify in his capacity as __________________ of Existing Operator that the representations and warranties made by the Existing Operator in the Agreement are true and correct in all material respects as of 12:01 a.m. on the “Closing Date” (as defined in the Agreement) and the covenants to be performed by the Existing Operator pursuant to the Agreement have been performed in all material respects as of 12:01 a.m. on the “Closing Date” (as defined in the Agreement).

 

	EXISTING OPERATOR:
	[                        ]
	By:
	Name:
	Title:

 

EXECUTION COUNTERPART

 

EXHIBIT 6.5

 

ASSIGNMENT AND ASSUMPTION OF CONTRACTS

 

This Assignment and Assumption Agreement (“Assignment”) is effective as of 12:01 a.m. of the _____ day of ______, 20___, and is between ________________________________, a _____________ ______________ (“Existing Operator”), and ________________________________, a _____________ ______________ (“New Operator”).

 

Background

 

A. Existing Operator and New Operator are parties to an Operations Transfer Agreement (“Agreement”) dated as of _____ ____, 20___, which Agreement is incorporated into this Assignment as if fully rewritten in this Assignment.

 

B. It is a condition to the Closing under the Transfer Agreement that Existing Operator assign to New Operator all of Existing Operator’s right, title and interest in, to, and under the Assumed Contracts (as defined in the Agreement), and that New Operator assume Existing Operator’s obligations with respect to such Assumed Operating Contracts in accordance with Section 1.9 of the Agreement.

 

NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the parties hereto, intending to be bound, hereby agree to incorporate the foregoing recitals as if fully rewritten in this Assignment and further agree as follows:

 

1. Existing Operator hereby assigns, transfers and conveys all of its right, title and interest in, to, and under the Assumed Contracts to New Operator.

 

2. New Operator hereby accepts such assignment and assumes all duties, liabilities and obligations with respect to the Assumed Contracts, accruing prior after the Closing Date (as defined in the Agreement), and agrees to pay, perform and discharge, as and when due, all of the obligations of Seller under the Assumed Contracts accruing on and after the Closing Date.

 

	Existing Operator:
	[                           ]
	By:
	Name:
	Title:
	NEW OPERATOR:
	[                           ]
	By:
	Name:
	Title:

 

 

EXHIBIT 6.6

 

ASSIGNMENT AND ASSUMPTION OF RESIDENT TRUST FUNDS

 

This Assignment and Assumption Agreement (“Agreement”) effective as of 12:01 a.m. of the _____ day of _________________________________, 20___, is between ______________________, (“Existing Operator”) and ______________________ (“New Operator”).

 

Background

 

A. Existing Operator and New Operator are parties to an Operations Transfer Agreement (“Transfer Agreement”) dated as of ________ ___, 20___, which is incorporated into this Assignment as if fully rewritten in this Assignment.

 

B. It is a condition to the Closing under the Transfer Agreement that Existing Operator assign all of its right, title and interest in, to, and under the Resident Trust Funds (as such term is defined in the Agreement) to New Operator, and that New Operator assume Existing Operator’s obligations with respect to such Resident Trust Funds arising after the date hereof.

 

Now, therefore, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the parties hereto, intending to be bound, hereby agree to incorporate the foregoing recitals into this Assignment and further agree as follows:

 

1. Existing Operator hereby assigns, transfers and conveys all of its right, title and interest in, to, and under the Resident Trust Funds to New Operator.

 

2. New Operator hereby accepts such assignment and assumes all duties, liabilities and obligations arising after the Closing Date (as defined in the Agreement) with respect to the Resident Trust Funds, and agrees to pay, perform and discharge, as and when due, all of the obligations of Seller under the Assumed Contracts accruing on and after the Closing Date.

 

	Existing Operator:
	[                        ]
	By:
	Name:
	Title:
	NEW OPERATOR:
	[                       ]
	By:
	Name:
	Title:

 

 

EXECUTION COUNTERPART

 

EXHIBIT 7.3

 

NEW OPERATOR’S CLOSING CERTIFICATE

 

Pursuant to Section 7.3 of the Operations Transfer Agreement (“Agreement”), dated as of __________________ ___. 20___, among ___________________________________, a ______________ ________________ (“Tenant”) and ______________________________, a _____________________ ______________________________ (“New Operator”), the undersigned, the ___________ of New Operator, does hereby certify in his capacity as ___________________ of New Operator that the representations and warranties made by New Operator in the Transfer Agreement are true and correct in all material respects as of 12:01 a.m. on the Closing Date (as defined in the Agreement), and the covenants to be performed by New Operator pursuant to the Transfer Agreement have been performed in all material respects as of 12:01 a.m. on the Closing Date.

 

	NEW OPERATOR:
	[                         ]
	By:
	Name:
	Title:

 

 

Exhibit 99.1

 

 

Selectis Health Enters Agreements to Sell Four Skilled Nursing Facilities in Georgia

 

- The Company’s Warrenton, Eastman, Glen Eagle, and Sparta Facilities to be Acquired for an Aggregate Consideration of $31 Million -

 

Greenwood Village, Colorado, December 5, 2023 – Selectis Health, Inc. (OTC: GBCS) (“Selectis” or the “Company”) announced that several wholly owned affiliates (the “Affiliates”)¹ have entered into agreements to sell the Company’s four owned and operated skilled nursing facilities in Georgia. The agreements provide for the sale of the Company’s Warrenton Healthcare & Rehabilitation, Eastman Healthcare & Rehabilitation, Glen Eagle Nursing and Rehabilitation, and Providence of Sparta Healthcare & Rehabilitation facilities, for an aggregate consideration of $31 million.

 

Transaction Summary

 

On November 30, 2023 (the “Effective Date”), the Affiliates concurrently entered into Purchase and Sale (“PSA”) and Operations Transfer (“OTA”) agreements with Glen Eagle Propco LLC, Eastman Propco LLC, Providence Propco LLC, and Warrenton Propco LLC (collectively “the Purchaser”). Under the agreements’ terms, the Purchaser will acquire the four Georgia facilities’ real estate, buildings, and improvements, along with certain personal property used in their respective operations.

 

At the Purchaser’s election, the Affiliates’ rights and interests associated with their Medicare and Medicaid provider numbers—along with their Medicare and Medicaid provider reimbursement

Agreements—shall also be assigned to the Purchaser at the close of the transaction, subject to legal permissibility and related conditions noted in the OTA .

 

Georgia Facilities Included in the Transaction

 

Facility		Beds
Warrenton Healthcare & Rehabilitation		110
Glen Eagle Nursing & Rehabilitation		101
Eastman Healthcare & Rehabilitation		100
Providence of Sparta Healthcare & Rehabilitation		71

 

Following completion of the transaction, the Company’s remaining owned facility in Georgia will be the Archway Transitional Care skilled nursing facility (formerly known as Goodwill Nursing Home). The Company’s total remaining footprint is summarized below:

 

¹ Comprising Global Abbeville Property, LLC; Dodge NH, LLC; Providence HR, LLC; and Atl/Warr, LLC, as noted in the Purchase and Sale Agreement dated November 30, 2023.

 

 

 

Remaining Facilities Post-Transaction

 

Facility		Beds		Facility Type		State
Grand Prairie Nursing Home2		141		Skilled Nursing		AR
Archway Transitional Care2		172		Skilled Nursing		GA
Meadowview Healthcare & Rehabilitation		99		Skilled Nursing		OH
Higher Call Healthcare & Rehabilitation		86		Skilled Nursing		OK
Maple Street Healthcare & Rehabilitation		29		Skilled Nursing		OK
Park Place Healthcare & Rehabilitation		106		Skilled Nursing		OK
Southern Hills Assisted Living Facility3		24		Assisted Living		OK
Southern Hills Healthcare & Rehabilitation3		106		Skilled Nursing		OK
Southern Hills Retirement Facility3		90		Independent Living		OK

 

Closing Terms and Proceeds

 

To close the transaction, the Purchaser must obtain the facilities’ required operating licenses from the Georgia Department of Community Health, along with other necessary federal and state regulatory certifications, operational licenses, and permits. The Affiliates and Purchaser must also satisfy all due diligence provisions and requirements set forth in the PSA. Subject to these and other closing requirements, the transaction is expected to close at least 45 days after (i) the completion of the due diligence period and (ii) obtaining the necessary regulatory approvals, on the first business day of the first calendar month after the last of these processes is complete.

 

Pursuant to the agreements, the facilities will be sold for an aggregate consideration of $31 million. On the Effective Date, the Purchaser placed an initial deposit of $250,000 in escrow, which shall be fully refundable until the expiration of the due diligence period. Once the due diligence period expires, the Purchaser shall deposit an additional $250,000 into escrow. Both deposits, and the remaining balance of the purchase price, will be paid to the Affiliates at closing.

 

Adam Desmond, interim CEO of Selectis Health, commented: “The attractive valuation of our Georgia facilities is a testament to the success of our facility-level financing and operational improvement initiatives. We expect the significant additional capital from this sale to enhance the flexibility of our balance sheet as we optimize our remaining footprint and progress towards portfolio-wide profitability. While our work is not yet finished, we will continue to work towards closing this transaction and seek additional opportunities to create and maximize shareholder value.”

 

For more information on the transaction, please see the Company’s associated Form 8-K disclosure.

 

² Leased facilities operated by third parties.

³ All located on the same campus in Tulsa, OK.

 

 

 

About Selectis Health

 

Selectis Health owns and/or operates healthcare facilities in Arkansas, Georgia, Ohio, and Oklahoma, providing a wide array of living services, speech, occupational, physical therapies, social services, and other rehabilitation and healthcare services. Selectis focuses on building strategic relationships with local communities in which its partnership can improve the quality of care for facility residents. With its focused growth strategy, Selectis intends to deepen its American Southcentral and Southeastern market presence to better serve the aging population along a full continuum of care.

 

For more information, please visit www.selectis.com.

 

Forward Looking Statements

 

This press release contains statements that plan for or anticipate the future. In this press release, forward-looking statements are generally identified by the words “anticipate,” “plan,” “believe,” “expect,” “estimate,” and the like. These forward-looking statements include, but are not limited to, statements regarding the following:

 

	*	strategic business relationships;
	*	statements about our future business plans and strategies;
	*	anticipated operating results and sources of future revenue;
	*	our organization’s growth;
	*	adequacy of our financial resources;
	*	development of markets;
	*	competitive pressures;
	*	changing economic conditions; and,
	*	expectations regarding competition from other companies.
	*	the duration and scope of the COVID-19 pandemic
	*	the impact of the COVID-19 pandemic on occupancy rates and on the operations of the Company’s facilities.
	*	Actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affecting our properties and our operations.
	*	The effects of health and safety measures adopted by us in response to the COVID-19 pandemic.
	*	Increased operational costs because of health and safety measures related to COVID-19.
	*	Disruptions to our property acquisition and disposition activities due to economic uncertainty caused by COVID-19.
	*	General economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth.

 

Although we believe that any forward-looking statements, we make in this press release are reasonable, because forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results to differ materially from those expressed or implied. For example, a few of the uncertainties that could affect the accuracy of forward-looking statements, besides the specific factors identified above in the Risk Factors section of this press release, include:

 

	*	changes in general economic and business conditions affecting the healthcare industry;
	*	developments that make our facilities less competitive;
	*	changes in our business strategies;
	*	the level of demand for our facilities; and
	*	regulatory changes affecting the healthcare industry and third-party payor practices.

 

Investor Relations Contact

 

Scott Liolios or Jackie Keshner

Gateway Group, Inc.

(949) 574-3860

selectis@gateway-grp.com

 

 

 

v3.23.3

Cover	Nov. 30, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 30, 2023
Entity File Number	0-15415
Entity Registrant Name	SELECTIS HEALTH, INC.
Entity Central Index Key	0000727346
Entity Tax Identification Number	87-0340206
Entity Incorporation, State or Country Code	UT
Entity Address, Address Line One	8480 E. Orchard Road
Entity Address, Address Line Two	Ste. 4900
Entity Address, City or Town	Greenwood Village
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80111
City Area Code	(720)
Local Phone Number	680-0808
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false

---