Item
2.01 Completion of Acquisition or Disposition of Assets
On
October 18, 2021, Assisted 4 Living, Inc., a Nevada corporation (the “Company”), through its indirect wholly-owned
subsidiaries, completed the acquisition from Grace Care Centers and its affiliates (collectively, “Seller”) of three
skilled nursing facilities located in Texas (the “Facilities”), including the real property, buildings, structures,
improvements, fixtures and certain other assets comprising the Facilities (together with the Facilities, the “Assets”)
in exchange for an aggregate purchase price of $7,750,000 (the “Purchase Price”). The Assets were acquired pursuant
to and in accordance with three Purchase and Sale Agreements and three Management Transfer Agreements (collectively, the “Purchase
Agreements”).
The
Facilities, located in Olney, Nocona and Henrietta, Texas, are all 5-star rated by CMS for quality and have a combined 258 beds. The
Facilities will continue to be leased to local hospital districts, who will continue to be the licensed operators of the Facilities.
The Company, through indirect wholly-owned subsidiaries, now owns the Assets and will manage the day-to-day activities of the Facilities
pursuant to management agreements which it assumed in connection with the transaction.
The
Company, through its indirect wholly-owned subsidiary, financed part of the Purchase Price with a loan from Arena Limited SPV, LLC (“Lender”)
in the principal amount of $6,600,000 (the “Loan”). Outstanding principal accrues interest at a rate per annum equal
to the sum of the Prime Rate plus 4.125%, with a minimum interest rate per annum of not less than 7.875%. Monthly interest only payments
commence on December 15, 2021, and continue each month until the maturity date of the Loan on April 18, 2023, at which time any outstanding
principal and accrued and unpaid interest is due and payable. If any principal, interest or any other sums due under the Loan (other
than the payment of principal due on the maturity date), is not paid on or prior to the due date, the Company is required to pay Lender
upon demand an amount equal to 5% of such unpaid sum. In connection with any repayment or prepayment of principal, a non-refundable fee
equal to 0.5% of the principal amount of such repayment or prepayment is due. The Company may prepay the outstanding amount in whole,
but not part, upon prior written notice to Lender.
The
Company has the right to extend the initial maturity date to October 15, 2023 upon prior written notice to Lender and the payment to
Lender of a non-refundable fee equal to 1% of the outstanding principal balance no later than 30 days prior to the maturity date. The
Company may extend the maturity date further, to April 15, 2024, upon prior written notice to Lender and the payment to Lender of a non-refundable
fee equal to 1% of the outstanding principal balance prior to the extended maturity date.
The
Loan is secured by a first priority lien on the Assets, including all amounts received by the Company or any subsidiaries constituting
rent or other payment under any leases or management fees under each of the management agreements, which must be deposited into a segregated
account at a bank and held in trust for Lender. The Loan is subject to customary affirmative and negative covenants, as well as customary
default provisions for late or non-payments or breach of covenants, for loans of this nature. Pursuant to the terms of a guaranty agreement,
the Company and several of its direct and indirect wholly-owned subsidiaries, have each unconditionally guaranteed to Lender the payment
of all indebtedness, liabilities and obligations of every kind and nature under the Loan.
The
foregoing summary of the acquisition of the Assets pursuant to the Purchase Agreements and the Loan Documents, and the transactions contemplated
thereunder and any other agreements to be entered into by the parties are qualified in their entirety by reference to the full text of
the Purchase Agreements, which attached hereto as Exhibits 2.1 through 2.7, and the Loan Documents, which are attached hereto as Exhibits
10.1 through 10.3, all of which are incorporated herein by reference. You are urged to read said exhibits attached hereto in their
entirety.