UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): June 17, 2021 (
(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction | (Commission | (I.R.S. Employer | ||
of Incorporation) | File Number) | Identification No.) |
(Address of Principal Executive Office) | (Zip Code) |
(Registrant’s telephone number, including area code)
n/a
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
None | None | None |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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.
Explanatory Note
On June 16, 2021, Assisted 4 Living, Inc., a Nevada corporation (the “Company”) filed a Current Report on Form 8-K (the “Original Form 8-K”) to report that on June 10, 2021, the Company entered into an Amended and Restated Membership Interest Purchase Agreement (the “Restated Purchase Agreement”), by and among the Company, Richard T. Mason, G. Shayne Bench and Trillium Healthcare Group, LLC, a Florida limited liability company to acquire all of the issued and outstanding ownership interests of Fairway Healthcare Properties, LLC and Trillium Healthcare Consulting, LLC from Trillium Healthcare Group, LLC, and that the transaction closed and was effective June 10, 2021.
This Amendment No. 1 to the Original Form 8-K is being filed for the sole purpose of adding conforming signatures for the Seller in Exhibit 2.1 and the Tenant in Exhibit 10.4 (the “Conforming Signatures”). Except for adding the Conforming Signatures to the two exhibits filed with the Original Form 8-K, no other changes are being made to the Original Form 8-K or any exhibits filed therewith.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
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SIGNATURES
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, hereunto duly authorized.
Date: June 17, 2021 | ASSISTED 4 LIVING, INC. | |
By: | /s/ Janet Huffman | |
Janet Huffman, CFO |
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Exhibit 2.1
EXECUTION VERSION
AMENDED AND RESTATED MEMBERSHIP INTEREST Purchase Agreement
by and among
assisted 4 living, inc.,
Richard T. Mason,
G. Shayne Bench
AND
Trillium Healthcare Group, LLC
Dated as of June 10, 2021
Table of Contents
ii |
Annexes: | |
Annex 1 Purchase Price Bank Account | |
Exhibits: | |
Exhibit A - Definitions |
|
Exhibit B - Form of Assignment |
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Amended and restated MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Amended and Restated Membership Interest Purchase Agreement (as amended or otherwise modified, this “Agreement”), dated as of June 10, 2021 (the “Signing Date”), is entered into by and among (a) Assisted 4 Living, Inc., a Nevada corporation (“Buyer”), (b) Trillium Healthcare Group, LLC, a Florida limited liability company (the “Seller”), (c) Richard T. Mason (“Mason”), the principal owner of Balmoral Castle Investments, LLC and G. Shayne Bench (“Bench” and, together with Mason, each an “Owner” and, collectively, the “Owners”), the principal owner of Bucuti Investments, LLC. Seller and the Owners may be individually referred to herein each as a “Seller Party” or, collectively, as the “Seller Parties”.
RECITALS
A. | The Parties previously entered into a Membership Interest Purchase Agreement, dated as of January 29, 2021 (the “Effective Date”), as subsequently amended by that certain First Amendment to Membership Interest Purchase Agreement, dated as of March 4, 2021, a certain Second Amendment to Membership Interest Purchase Agreement, dated as of April 5, 2021, a certain Third Amendment to Membership Interest Purchase Agreement, dated as of April 29, 2021, and a certain Fourth Amendment to Membership Interest Purchase Agreement, dated as of May 27, 2021 (collectively, the “Prior Agreement”). | |
B. | The Parties desire to amend and restate the Prior Agreement as set forth in this Agreement as of the Effective Date. | |
C. | Owners are collectively the ultimate indirect owners of all of the issued and outstanding Ownership Interests of Seller. | |
D. | Seller is the record owner of all of the issued and outstanding Ownership Interests of Fairway Healthcare Properties, LLC and Trillium Healthcare Consulting, LLC (the “Interests”). Fairway Healthcare Properties, LLC and Trillium Healthcare Consulting, LLC and each of their respective direct and indirect Subsidiaries, as the case may be, are referred to herein each as a “Group Company” and, collectively, the “Group Companies”. | |
E. | The Group Companies own all of the Assets related to, or used or held for use in connection with, the business being conducted by and through the Group Companies, including, without limitation, the business of providing rehabilitation, skilled nursing, memory care, assisted living and independent living services and other services ancillary or otherwise related thereto (the “Business”). | |
F. | Seller Parties desire for Seller to sell, transfer, convey, assign and deliver to Buyer, and Buyer desires to purchase, acquire and accept from Seller, substantially all of the Assets related to, or used or held for use in connection with, the Business, including the Ownership Interests of the Group Companies (other than Seller), for the consideration, including the Stock Consideration, and pursuant to the terms set forth in this Agreement. |
AGREEMENT
The Parties, intending to be legally bound, hereby agree as follows:
Article
I.
DEFINITIONS; CERTAIN RULES OF CONSTRUCTION
1.1 Definitions. Capitalized terms used in this Agreement are defined or otherwise indexed in Exhibit A of this Agreement.
1.2 Certain Rules of Construction. Except as otherwise explicitly specified in this Agreement to the contrary, (a) references to an Article, Section, Annex, Exhibit or Schedule means an Article or Section of, or Annex, Exhibit or Schedule to, this Agreement, unless another agreement is specified, (b) the word “including” is to be construed as “including, without limitation,” (c) references to a particular statute or regulation include all rules and regulations thereunder and any predecessor or successor statutes, rules or regulations, in each case as amended or otherwise modified from time to time, (d) words in the singular or plural form include the plural and singular form, respectively, (e) references to a particular Person include such Person’s successors and assigns to the extent not prohibited by this Agreement, and (f) the words “writing” and “written” and terms of like import shall refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. Whenever this Agreement indicates that Seller has “made available,” “delivered” or otherwise disclosed or provided any document or information to Buyer, such statement is to be deemed to be a statement that such document or information was (i) delivered to Buyer with acknowledged written receipt of such document or information or (ii) made available (with separate written notice to Buyer, as applicable) for viewing online on the electronic data site hosted by Box.com under the name “Project Hawkeye” at least two (2) Business Days prior to the applicable date of disclosure, delivery, or otherwise as specified in this Agreement. Any action required hereunder to be taken within a certain number of days shall, except as may otherwise be expressly provided herein, be taken within that number of calendar days excluding the day on which the counting is initiated and including the final day of the period; provided, however, that if the last day for taking such action falls on a Saturday, a Sunday, or a legal holiday, the period during which such action may be taken shall automatically be extended to the next Business Day.
Article
II.
SALE AND TRANSFER OF INTERESTS; CLOSING
2.1 Purchase and Sale of Interests. Upon the terms set forth in this Agreement, at the Closing, Seller shall sell, transfer, convey, assign, and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller, free and clear of all Encumbrances, except for any Permitted Encumbrance, all right, title and interest of Seller in and to the Interests.
(a) The aggregate purchase price (the “Purchase Price”) for the Interests is (i) the Base Cash Purchase Price, plus (ii) the Stock Consideration (which shall be payable, issuable and subject to adjustment as set forth in Section 2.2(b) of this Agreement, as applicable).
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(b) Buyer shall pay the Purchase Price for the Interests as follows:
(i) following the Closing, upon the later of the Omega Determination Date and the PPP Loan Forgiveness Determination Date, (A) Buyer shall pay or cause the Group Companies to pay to Seller, a net amount equal to (1) the Base Cash Purchase Price minus the Closing Transaction Expenses Amount, if any (such aggregate net amount being, the “Closing Cash Amount”), minus (2) the Consideration Offset Amount, if any, which net amount shall be paid by wire transfer of immediately available funds to the Purchase Price Bank Account in accordance with the wiring instructions set forth on Annex 1 to this Agreement within thirty (30) days following the satisfaction of such conditions, and (B) Buyer shall issue and deliver (1) the portion of the Stock Consideration consisting of Series A Preferred Stock to Seller within thirty (30) days following the satisfaction of such conditions, and (2) the portion of the Stock Consideration consisting of Common Stock to Seller on or before the earlier of (i) thirty (30) days following the closing of an IPO, or (ii) ten (10) days following the one (1) year anniversary of the Closing; provided, however, if the Consideration Offset Amount exceeds the Closing Cash Amount, the Stock Consideration shall be reduced by the amount of such excess (and the allocation of such offset shall be allocated first to Common Stock, and then to Series A Preferred Stock, only if necessary), which shall, in the case of any offset against Stock Consideration consisting of Series A Preferred Stock, be determined based on the Offset Value of such shares of Series A Preferred Stock and, in the case of any offset against Stock Consideration consisting of Common Stock, the average of the VWAP of Common Stock during each Trading Day during the twenty (20) Trading Day period ending one (1) Trading Day prior to the date of issuance;
(ii) at the Closing, Sellers shall cause the Group Companies to pay to and deposit with CTR Partnership, L.P., a Delaware limited partnership, the Security Deposit, as such term is defined in the CareTrust LOI, by wire transfer of immediately available funds to an account designated by CTR Partnership, L.P. in accordance with the CareTrust LOI;
(iii) at the Closing, Sellers shall cause the Group Companies to pay to and deposit with the Lessor (as defined in the Omega Consent and Amendment), or its designee, the amount of $3,000,000, by wire transfer of immediately available funds to an account designated by the Lessor pursuant to the Omega Consent and Amendment; and
(iv) immediately following the Closing, Buyer shall cause the Group Companies to pay, on behalf of each applicable Group Company, as the case may be, to the Persons identified in the Expense Payoff Letters, such portion of the Closing Transaction Expenses Amount as specified in and in accordance with the payment instructions set forth in the Expense Payoff Letters.
Notwithstanding any provision herein to the contrary, no portion of the Closing Cash Amount will be paid or become payable prior to satisfaction of both the Omega Contingency and the PPP Loan Contingency, and further that if the Omega Contingency is not satisfied, and the Omega Facilities Sale is not closed and consummated in full, including, without limitation, the conveyance of the real property interests contemplated by the Omega Purchase Agreement, on or prior to the Omega Outside Date (except as set forth below), then any rights that the Seller or Owners have to $3,000,000 of the Base Cash Purchase Price contemplated by the Omega Offset Amount shall be deemed to be forfeited and of no further force or effect; provided, however, that the Sellers or Owner shall not forfeit any amount of the Base Cash Purchase Price to the extent relating to the Omega Offset Amount if the Omega Outside Date is extended by mutual agreement of the applicable parties (in accordance with the definition of Omega Outside Date) and the Omega Contingency is satisfied prior to the conclusion of such extended Omega Outside Date. Additionally, any forfeiture of the Base Cash Purchase Price shall be reduced to the extent that the deposit described in Section 2.2(b)(iii) is waived by the applicable party and returned to Buyer.
2.3 Closing Statement. Seller shall prepare in good faith and, not less than three (3) and not more than seven (7) Business Days prior to the Closing Date, deliver to Buyer, an estimated balance sheet of the Business as of 12:01 a.m. (Eastern Time) on the Closing Date (the “Closing Balance Sheet”) which will be accompanied by a statement (the “Closing Statement”) setting forth the (i) the outstanding Debt of each Group Company as of the Closing, and (ii) the Transaction Expenses as of the Closing, which shall be in form and substance satisfactory to Buyer. Seller shall prepare the Closing Balance Sheet in accordance with GAAP. Upon delivery of the Closing Balance Sheet and Closing Statement, Seller Parties shall provide (and shall cause the Group Companies to provide) Buyer and its Representatives with reasonable access to the relevant employees, accountants and books and records of the Group Companies to verify the accuracy of such amounts. In the event that Buyer does not agree with the Closing Balance Sheet or any other items set forth in the Closing Statement, Seller and Buyer shall negotiate in good faith to mutually agree upon acceptable estimates and Seller shall consider in good faith any proposed comments or changes that Buyer may reasonably suggest; provided, however, neither the Closing, nor any waiver of or acceptance (whether actual, deemed or otherwise) by Buyer of the Closing Balance Sheet and Closing Statement (including, in the event the Parties fail to mutually agree on such Closing Balance Sheet and Closing Statement and Buyer proceeds with Closing notwithstanding such failure), shall limit or otherwise affect Buyer’s remedies under this Agreement.
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2.4 The Closing. The closing of the Transactions (the “Closing”) is to take place on the date following the satisfaction of the conditions set forth in Article VI, which must be satisfied (or waived by the applicable Party in accordance with Article VI) prior to Closing, at such place as agreed upon by the Parties (including remotely by means of facsimile, electronic mail or other electronic means), or at such other time and place as agreed upon in writing by the Parties. The Closing is to be deemed to occur at 12:01 a.m. (Eastern Time) on the Closing Date or at such other time as agreed upon in writing by the Parties.
2.5 Closing Obligations. In addition to any other documents to be delivered under other provisions of this Agreement or the other Transaction Documents, at the Closing:
(a) Seller Parties shall deliver (or cause to be delivered) to Buyer (collectively, the “Seller Closing Documents”):
(i) assignments of membership interests from Seller to Buyer in respect of all the Interests substantially in the form attached hereto as Exhibit B of this Agreement (the “Assignment”);
(ii) an affidavit, duly executed by Seller stating, under penalty of perjury, Seller’s United States taxpayer identification number and that Seller is not a foreign person within the meaning of Section 1445 of the Code (and any similar affidavits that may be required under state law), in form and substance satisfactory to Buyer;
(iii) payoff letters, invoices or such other documentation (the “Expense Payoff Letters”), duly executed by the Persons identified in the Expense Payoff Letters, providing for, upon the payment of the Closing Transaction Expenses Amount to such Persons at the Closing as set forth in the Expense Payoff Letters, the satisfaction of all Liabilities with respect to Transaction Expenses of each Group Company, as applicable, each in form and substance satisfactory to Buyer;
(iv) copies of all authorizations, consents, approvals, notices, filings or documentary evidence of the taking of any actions required to be disclosed on Schedules 3.3 and 3.4 of this Agreement or as otherwise required in order to permit the consummation of the Transactions or to prevent a breach or violation of any Legal Requirement, Permit or Contract to which a Group Company is a party (or the creation of a right to terminate any such Permit or Contract), each in form and substance satisfactory to Buyer, including the consents contemplated by the Omega Consent and Amendment and the CareTrust LOI, duly executed by the applicable parties thereto;
(v) a certificate of good standing or equivalent certificate for each Group Company from the jurisdiction in which each such Group Company is organized, formed or is required to be qualified to do business, all issued by the Secretary of State or other Governmental Authority of such jurisdiction, each of which is to be dated no earlier than ten (10) Business Days prior to the Closing Date or as otherwise accepted by Buyer;
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(vi) a certificate duly executed by an authorized officer of each Group Company (A) certifying as true, complete and accurate as of the Closing, an attached copy of the Organizational Documents of such Group Company, and (B) in the case of Seller, (1) certifying and attaching all requisite resolutions or actions of the manager (or other equivalent governing body of Seller) and resolutions or actions of the Owners approving the execution and delivery of the Transaction Documents and the consummation of the Transactions, and (2) attesting to the incumbency and signature of each officer of Seller, who executed this Agreement and who executed or is authorized to execute each of the Transaction Documents;
(vii) current Account statements or other documentation reasonably satisfactory to Buyer evidencing (A) a net Cash on Hand balance in the Accounts equal to or in excess of Minimum Cash on Hand, and (B) that the outstanding Debt obligations owed to Gemino Healthcare Finance, LLC or any of its Affiliates (including pursuant to that certain Credit Agreement, dated as of May 9, 2019, between Gemino Healthcare Finance, LLC, the Group Company borrowers named on Annex A thereto, and the parties set forth on the signature pages thereto) does not exceed two million dollars ($2,000,000);
(viii) a business development agreement, in form and substance as hereafter mutually agreed to among the Parties (the “Business Development Agreement”) and duly executed by the applicable Seller Parties, which shall, among other things, set forth the terms upon which the Seller Parties will be entitled to earn up to two million five hundred thousand (2,500,000) shares, in the aggregate, of additional Series A Preferred Stock in accordance with, and subject to, the terms and conditions set forth therein; and
(ix) the agreements, documents, instruments and certificates required to be delivered by each Group Company or Owner at or prior to the Closing pursuant to Article VI of this Agreement.
(b) Buyer shall deliver (collectively, the “Buyer Closing Documents”):
(i) [INTENTIONALLY DELETED];
(ii) to Seller, a certificate duly executed by an authorized officer of Buyer certifying and attaching all requisite resolutions or actions of the board of directors or other governing body of Buyer approving the execution and delivery of the Transaction Documents and the consummation of the Transactions to which Buyer is a party;
(iii) to Seller, the Business Development Agreement, duly executed by Buyer; and
(iv) such other agreements, documents, instruments or certificates required to be delivered by Buyer at or prior to the Closing pursuant to Article VI of this Agreement.
(a) Nothing in this Agreement will be construed as an attempt to agree to assign any Contract, Permit or other Asset that as a matter of law, by agreement or otherwise by its terms (i) is not assignable or (ii) is not assignable without the approval or consent of the other party or parties thereto, or of any Governmental Authority, without first obtaining either such approval or consent or a waiver or a modification with respect thereto, in each case in form and substance acceptable to Buyer.
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(b) If at the Closing there are any authorizations, consents, approvals, notices, filings, waivers or other matters set forth on Schedules 3.3 or 3.4 in regards to any Contracts in respect of which the necessary authorizations, consents, approvals or waivers have not been obtained, then Buyer may waive the Closing deliverables under Section 2.5(a)(iv) and the Closing condition under Section 6.1(h) with respect to the delivery of all or some of such authorizations, consents, approvals or waivers, in which case Seller Parties shall, at their sole cost and expense, use reasonable best efforts to continue to apply for and obtain all authorizations, consents, approvals or waivers in form and substance satisfactory to Buyer.
2.7 Withholding. Buyer is entitled to deduct and withhold, from any amounts payable pursuant to this Agreement or any other Transaction Document any withholding Taxes or other amounts required under the Code or any applicable Legal Requirement to be deducted and withheld. To the extent that any such amounts are so deducted or withheld, such amounts are to be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.
2.8 Bank Accounts of the Group Companies. If requested by Buyer, at the Closing, Seller shall (and shall cause each other Group Company to) grant Buyer or its designees sole signatory power and the sole power to issue instructions relating to those certain bank accounts identified on Schedule 2.8 of this Agreement (the “Accounts”) into which deposits for accounts receivable and other rights of payment for goods and services provided by the Business are made, which shall have a current cash balance sufficient to cover Minimum Cash on Hand.
2.9 Allocation of Purchase Price. The Purchase Price will be allocated among the Assets of each of the Group Companies pursuant to Section 1060 of the Code and the applicable Treasury Regulations promulgated thereunder (and any similar provisions of other applicable Legal Requirements) in the manner reasonably and mutually agreed to among Buyer, on the one hand, and Seller, on the other hand. After the Closing, the Parties shall make consistent use of such Purchase Price allocation for all applicable Tax purposes and in any Tax Returns filed in respect thereof.
Article
III.
REPRESENTATIONS AND WARRANTIES REGARDING THE GROUP COMPANIES
In order to induce Buyer to enter into and perform this Agreement and to consummate the Transactions, Seller Parties represent and warrant to Buyer (it being agreed that all representations and warranties regarding the Group Companies apply to all Predecessors of any Group Company) that the following representations and warranties are true, accurate and complete as of the Effective Date and as of the Closing:
(a) Seller is a limited liability company (i) duly organized, validly existing and in good standing under the Legal Requirements of the State of Florida and (ii) duly qualified to do business and in good standing (or local equivalent) under the Legal Requirements of the jurisdiction of its organization and (iii) duly qualified to do business and in good standing in each jurisdiction where such qualification is required by applicable Legal Requirements. Schedule 3.1(a) of this Agreement sets forth, with respect to each Group Company other than Seller, its jurisdiction of organization and each of the jurisdictions in which such Group Company is qualified to do business or in which the ownership of any Assets or operations of the Business as currently conducted makes such qualification necessary.
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(b) Seller has delivered or caused to be delivered to Buyer true, complete, and correct copies of the Organizational Documents, as currently in effect, of each Group Company, and the minute books of each Group Company that contain records of all meetings of, and other actions taken by, the directors, managers, members or other governing body, including any committees, of each Group Company and the shareholders, members or other equity holders of each Group Company.
3.2 Power and Authorization. The execution, delivery and performance by Seller of this Agreement and the other Transaction Documents to which Seller is a party and the consummation of the Transactions are within the power and authority of Seller and have been duly authorized by all necessary action on the part of Seller and its equity holders. This Agreement has been duly executed and delivered by Seller Parties and is the legal, valid and binding obligation of Seller Parties, enforceable against Seller Parties in accordance with the terms hereof, except as enforceability may be limited by bankruptcy laws, other similar laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies (the “Enforceability Exceptions”). The other Transaction Documents to which any Seller Party is a party will be at or prior to the Closing (a) duly executed and delivered by such Seller Party and (b) the legal, valid and binding obligation of such Seller Party, enforceable against such Seller Party in accordance with the terms of such Transaction Documents, except as enforceability may be limited by the Enforceability Exceptions. The Group Companies have full and exclusive power, authority and capacity to operate the Business, and hold all Permits required therefor, all of which are valid and in full force and effect and, in the case of Seller, to sell transfer and deliver the Interests to Buyer pursuant to this Agreement.
3.3 Authorizations of Governmental Authorities. Except as disclosed on Schedule 3.3 of this Agreement, no action by (including any authorization, consent or approval), or in respect of, or filing with, or notice to, any Governmental Authority is or was required for, or in connection with, the valid and lawful (a) authorization, execution, delivery and performance by any Seller Party of this Agreement and the Transaction Documents to which any Seller Party is a party or (b) the consummation of the Transactions by the Group Companies.
3.4 No Conflict. Except as disclosed on Schedule 3.4 of this Agreement, neither the execution, delivery and performance by any Seller Party of this Agreement or any of the Transaction Documents to which any Seller Party is a party nor the consummation of the Transactions will: (a) assuming the taking of any action by (including any authorization, consent or approval), or in respect of, or any filing with, or notice to, any Governmental Authority, in each case, as disclosed on Schedule 3.3 of this Agreement, violate any Legal Requirement applicable to any Group Company or the Business, (b) result in the modification, acceleration, termination, breach or violation of, or default under, any Contract to which any Group Company is a party or by which any Group Company or the Business is bound or to which any Group Company or any of their respective Assets is subject, (c) require any action by (including any authorization, consent or approval), or in respect of (including notice to), any Person under any Contract to which any Group Company is a party or by which any Group Company or the Business is bound or to which any Group Company or any of their respective Assets is subject, (d) result in the creation or imposition of an Encumbrance upon, or the forfeiture of, any Assets of any Group Company, (e) result in a breach or violation of, or default under, the Organizational Documents of any Group Company, or (f) adversely affect the carrying out of the Transactions contemplated hereby or thereby.
3.5 Capitalization; Title; Subsidiaries.
(a) Schedule 3.5(a) of this Agreement sets forth, for each Group Company, (i) its name, (ii) the number of authorized units or other Ownership Interests of such Group Company, and (iii) the number of all of the issued and outstanding units, shares or otherwise representing the Ownership Interests of such Group Company (or, if not applicable, the percentages thereof) and the record and beneficial owners thereof. All of the issued and outstanding Ownership Interests of each Group Company have been duly authorized, validly issued, are fully paid and non-assessable, and were issued in compliance with all applicable Legal Requirements, including federal and state securities laws, and the Organizational Documents of such Group Company. All of the Ownership Interests of each of the Group Companies are held of record and beneficially owned by such Persons as set forth on Schedule 3.5(a), and none of such Ownership Interests are, or are required to be, certificated.
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(b) Except as disclosed on Schedule 3.5(b) of this Agreement (i) there are no preemptive rights or other similar or investor rights or agreements in respect of any Ownership Interests of any Group Company or any other claims or rights to acquire any Ownership Interests of any Group Company, including any equity or profit sharing interests, (ii) except as imposed by applicable securities laws, there are no Encumbrances on, or other contractual obligations relating to, the ownership, transfer or voting of any Ownership Interests of any Group Company, or otherwise affecting the rights of any holder of the Ownership Interests of any Group Company, including any stock appreciation, stock option plans, stock bonus plans, phantom stock, profit participation, or similar rights with respect to any Ownership Interests of any Group Company, and (iii) there is no Contract, or provision in the Organizational Documents of any Group Company, that obligates any Group Company or any other Person to issue, grant, sell, deliver, purchase, redeem, acquire, or otherwise transfer, or make any payment (including any dividend or distribution) in respect of, any Ownership Interests of any Group Company or make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Without limiting the generality of the foregoing, no holder of Debt of any Group Company has any right to convert or exchange such Debt for any Ownership Interests of a Group Company or to vote for the election of directors or managers (or similar positions) of any Group Company or to vote on any other matter.
(c) No Group Company has, or has ever had, any direct or indirect Subsidiaries and do not own any Ownership Interests in, or control, directly or indirectly, any other Person, except as set forth on Schedule 3.5(a).
(a) Attached to Schedule 3.6(a) of this Agreement are copies of each of the following: (i) the audited consolidated financial statements of the Group Companies as of and for each of the fiscal years ended December 31, 2019 and 2018, accompanied by any notes thereto (collectively, the “Year-End Financials”) and (ii) the unaudited consolidated financial statements of the Group Companies as of and for the twelve (12) month period ended December 31, 2020 (collectively, the “Interim Financials” and, together with the Year-End Financials, the “Financials”).
(b) Except as disclosed on Schedule 3.6(b), the Financials (including any notes thereto) (i) were prepared in accordance and consistent with the books and records of the Group Companies (which books and records are true, complete and accurate in all material respects), (ii) have been prepared in accordance with GAAP, consistently applied (subject to, in the case of the Interim Financials, the absence of notes and normal year-end audit adjustments, the effect of which are not, individually or in the aggregate, materially adverse), and (iii) fairly present, in all material respects, the consolidated financial position of the Group Companies at the respective dates of the Financials and the consolidated results of the operations of the Group Companies and changes in financial position for the respective periods covered by the Financials. No Group Company has any “Off Balance Sheet Arrangements” as such term is defined in 17 CFR § 229.303(a)(4)(ii).
(c) Schedule 3.6(c) sets forth a true and accurate statement of the balance of refunds or amounts owed by the Group Companies to patients, Payors and other Persons resulting from overpayments, and all advanced payments (and a description of any non-cash or outside of the Ordinary Course of Business arrangements) in respect of services to be rendered.
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(d) The Group Companies have maintained a system of internal control over financial reporting sufficient to provide reasonable assurance regarding the reliability of such entity’s financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and to provide reasonable assurance that: (i) records are maintained in reasonable detail that accurately and fairly reflect the transactions and dispositions of material Assets of each Group Company, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of each Group Company are being made only in accordance with authorizations of management and the board of directors (or equivalent governing body) of the Group Companies, as applicable, and (iii) unauthorized acquisition, use or disposition of material Assets of any Group Company that could have a material effect on such entity’s financial statements are timely detected and/or prevented. To the Knowledge of Seller, there have been no instances of fraud, whether or not material, that involve any Group Company’s management or other employees who have a significant role in such entity’s system of internal control over financial reporting.
3.7 Absence of Undisclosed Liabilities; Debt.
(a) No Group Company has any Liabilities of any nature whatsoever, except for (i) Liabilities specifically reflected or reserved against on the face of the Interim Balance Sheet and (ii) current Liabilities incurred in the Ordinary Course of Business since the Interim Balance Sheet Date (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, violation of any Legal Requirement or Government Order, or any Action).
(b) No Group Company has any Debt or Liabilities in respect of Debt, except as disclosed on Schedule 3.7(b)(i) of this Agreement. For each item of Debt, Schedule 3.7(b)(i) of this Agreement correctly sets forth the debtor, the principal amount of the Debt, the creditor, the maturity date, and the collateral, if any, securing the Debt. Except as disclosed on Schedule 3.7(b)(ii), with respect to each item of Debt, (i) no Group Company is in default, no payments are past due and no circumstance exists that, with notice, the passage of time or both, would constitute a default by any Group Company under any item of Debt or Contract relating thereto, and (ii) no Group Company has received any notice of a default, alleged failure to perform or any offset or counterclaim with respect to any item of Debt that has not been fully remedied or withdrawn. The consummation of the Transactions will not cause a default, breach or an acceleration or prepayment, automatic or otherwise, of any conditions, covenants or any other terms of any item of Debt. No Group Company is a guarantor or otherwise liable for any Liability (including indebtedness) of any other Person (other than a Group Company).
3.8 Absence of Certain Developments. Since January 1, 2020, the Business has been conducted in the Ordinary Course of Business and, except as specifically disclosed on Schedule 3.8 of this Agreement:
(a) no Group Company has (i) amended its Organizational Documents, (ii) amended any term of its issued and outstanding Ownership Interests, (iii) issued, sold, pledged, encumbered, granted, transferred or otherwise disposed of any Ownership Interests or securities convertible, exchangeable or exercisable into Ownership Interests, or warrants, options or other rights to acquire Ownership Interests of a Group Company or (iv) reclassified, combined, split, subdivided or redeemed, purchased or otherwise acquired, directly or indirectly, any of its Ownership Interests;
(b) no Group Company has become liable in respect of any guarantee or has incurred, assumed or otherwise become liable in respect of any Debt or material Liability;
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(c) no Group Company has permitted any of its Assets to become subject to an Encumbrance other than a Permitted Encumbrance;
(d) no Group Company has acquired (including by merger, consolidation, license or sublicense) any interest in any Person or a substantial portion of the Assets or business of any Person, or otherwise acquired any material Assets of any Person;
(e) no Group Company has entered into any material amendment, terminated, failed to renew (other than, for the avoidance of doubt, the expiration of any Contract in the Ordinary Course), assigned or transferred any Disclosed Contract, entered into any material amendment or terminated any other material Contract to which it is a party, or received any notice of termination (or, to the Knowledge of Seller, any threat of termination) of or default under any Disclosed Contract or written notice from another Person that any such Contract is unenforceable;
(f) no Group Company has sold, leased, licensed or otherwise disposed of any of its material Assets or purchased any material Assets other than in the Ordinary Course of Business;
(g) no Group Company has waived, released, assigned, settled or compromised any material rights or claims, or any material litigation or arbitration;
(h) no Group Company has (i) made any declaration, set aside or made any distribution or other payment (whether payable in cash, property or a combination thereof) with respect to (or any repurchase, redemption or other acquisition of) any of its Ownership Interests, (ii) purchased, redeemed or otherwise acquired any Ownership Interests, (iii) entered into any agreement with respect to the voting of its Ownership Interests, or (iv) entered into, or performed, any transaction with, or for the benefit of, any equity holder of Seller (including Owners) or any Affiliate of any equity holder of Seller that is not disclosed on Schedule 3.19 (other than Compensation payments made to its managers, directors, officers and employees in the Ordinary Course of Business);
(i) there has been no destruction, damage or other loss or eminent domain taking (completed or pending) (in each case, whether or not insured) affecting the Business, any Group Company or the Assets of any Group Company;
(j) no Group Company has increased the Compensation payable or paid, whether conditionally or otherwise, to (i) any current or former employee, consultant, independent contractor, agent or other service provider of any Group Company other than in the Ordinary Course of Business, (ii) any current or former manager, director or officer of any Group Company other than in the Ordinary Course of Business, or (iii) any equity holder of Seller (including Owners) or any Affiliate of any equity holder of Seller;
(k) no Group Company has made any loan or advance to, guarantee for the benefit of, any Person (other than advances to employees (other than an equity holder of Seller or any Affiliate of any equity holder of Seller) in the Ordinary Course of Business);
(l) no Group Company has made any change in any method of accounting or accounting practices or policies or has written-up or written-down any of its material Assets or Liabilities or revalued its inventory, except for depreciation and amortization in accordance with GAAP consistently applied, or reversed any accruals or reserves (whether or not in the Ordinary Course of Business);
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(m) no Group Company has (i) made any new or rescinded or changed any Tax election, (ii) entered into a settlement or compromise of any claim, notice, audit report or assessment in respect of any Taxes, (iii) changed any annual Tax accounting period, (iv) adopted or changed any method of Tax accounting, (v) filed any amended Tax Return, (vi) entered into any Tax allocation agreement, Tax sharing agreement or settlement or closing agreement relating to any Tax, (vii) surrendered any right to claim a Tax refund or (viii) consented to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment;
(n) no Group Company has engaged in any activity with any patient, Payor or any other Person that has or would reasonably be expected to have the effect of accelerating to pre-Closing periods sales that would otherwise be expected to occur in post-Closing periods;
(o) no Group Company has agreed to any change in the applicable fee schedules or other reimbursement terms with any third party Payors or agreed to any material changes to any Contract with any patient or resident of any Facility;
(p) no Group Company has failed to pay or perform any of its obligations when and to the extent due (other than pursuant to a good faith defense or right of setoff), delayed or postponed the payment of any accounts payable or any other Liability or obligation, agreed or negotiated with any party to extend the payment date of any accounts payable or any other Liability or accelerated the collection of or discounted any accounts or notes receivable;
(q) no Group Company has terminated or closed any Facility, business or operation;
(r) no Group Company has adopted, amended or terminated any Employee Plan or collective bargaining agreement or other labor union Contract or increased any benefits or contributions under any Employee Plan;
(s) no Group Company has deferred any planned or other routine or necessary maintenance or capital expenditures, or has entered into any agreement or commitment relating to or otherwise obligated itself to any capital expenditures other than the Ordinary Course of Business;
(t) no Group Company has commenced or initiated any Action against any Person;
(u) except as related to COVID-19 and COVID-19 Measures, no event or circumstance has occurred or exists that has had, or is reasonably likely to have, a Material Adverse Effect; and
(v) no Group Company has entered into any commitment or agreed to do any of the items referred to elsewhere in this Section 3.8.
3.9 Ownership of Assets; Sufficiency. Except as disclosed on Schedule 3.9(a) of this Agreement, each Group Company has sole and exclusive, good and marketable title to, or, in the case of property held under a lease or other Contract, a sole and exclusive, enforceable leasehold interest in, or contractual right to use, all of the Assets of such Group Company (excluding Leased Real Property, which is addressed in Section 3.11 of this Agreement). Except for the direct and indirect ownership of the Interests, none of the Seller Parties own any Assets necessary or used for or held for use in connection with the business being conducted by and through the Group Companies, all of which are owned, leased or licensed, as the case may be, by the Group Companies. Except as disclosed on Schedule 3.9(a) of this Agreement, none of the Assets of any Group Company (excluding Leased Real Property, which is addressed in Section 3.11 of this Agreement) is subject to any Encumbrance other than Permitted Encumbrances. All of the Assets of the Group Companies have been installed and maintained in all material respects in accordance with all applicable Legal Requirements and in accordance with industry standards and are structurally sound, in good and suitable condition and repair (subject to normal wear and tear and non-delinquent routine scheduled maintenance), are adequate for the uses to which they are being put and are usable in the Ordinary Course of Business. Schedule 3.9(b) of this Agreement sets forth a complete and accurate list of all vehicles utilized in the Business, whether owned or leased, the type of vehicle and vehicle identification number. All such vehicles are properly titled, licensed and registered in accordance with applicable Legal Requirements.
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3.10 Accounts Receivables; Accounts Payable.
(a) All accounts and notes receivable of the Business, including as reflected on the Interim Balance Sheet, are bona fide and arose in the Ordinary Course of Business and (i) there are no disputes, contests, claims, counterclaims, or setoffs with respect to such accounts receivable that have not been specifically reserved for in the Interim Balance Sheet and (ii) all such accounts and notes receivable have been, or will be, collected or are, or will be, collectible in the aggregate recorded amounts of such accounts and notes receivable in accordance with their terms and in the Ordinary Course of Business (subject to any applicable reserves reflected on the Interim Balance Sheet). No Person has any Encumbrance other than Permitted Encumbrances on any of such accounts receivable, and no request or agreement for deduction or discount has been made with respect to any such accounts receivable.
(b) All accounts payable and notes payable of the Business arose in the Ordinary Course of Business and, except for payables accruing since the Interim Balance Sheet Date, are reflected on the Interim Balance Sheet, and there is no such account payable or note payable delinquent in its payment, except those contested in good faith and for which adequate reserves have been established and are reflected on the Interim Balance Sheet.
(a) Schedule 3.11(a) of this Agreement sets forth (i) a true, complete and accurate list, including addresses, of each leasehold interest in real property leased, subleased, or licensed by, or for which a right to use or occupy has been granted to, or by, any Group Company (the “Leased Real Property”), and (ii) a true, complete and accurate list, including addresses and property description, of each interest in real property owned by any Group Company (together with all buildings, fixtures, structures and improvements situated thereon and all easements, rights-of-way and other rights and privileges appurtenant thereto, collectively, the “Owned Real Property” and, together with the Leased Real Property, the “Real Property”). Schedule 3.11(a) of this Agreement also identifies, with respect to each Leased Real Property, each lease, sublease, license or other Contract under which any Group Company occupies or uses such Leased Real Property, including the date of and legal name of each of the parties to such lease, sublease, license or other Contract (the “Real Property Leases”). Except for the Real Property Leases, there are no written or oral subleases, licenses, concessions, occupancy agreements, services agreements or other Contracts granting to any other Person the right of use or occupancy of the Real Property, there is no Person (other than the Group Companies) in possession or control of the Real Property, and the Real Property is the only real property used by the Group Companies in the operation of the Business. The Group Companies have a valid and exclusive leasehold interest in and to each of the Leased Real Properties and a valid and exclusive fee simple interest in and to each of the Owned Real Properties, in each case, free and clear of all Encumbrances, other than Permitted Encumbrances. The Group Companies have made available to Buyer true, complete and accurate copies of the Real Property Leases, in each case as amended or otherwise modified and in effect, together with extension notices and other material correspondence, lease summaries, notices or memoranda of lease, estoppel certificates and subordination, non-disturbance and attornment agreements related to the Real Property Leases. With respect to each Real Property Lease that is a sublease, the representations and warranties in this Section 3.11(a) are true and correct with respect to the underlying lease. Seller has delivered to Buyer copies of the deeds and other instruments (as recorded) by which each applicable Group Company acquired such parcel of Owned Real Property, and copies of all title insurance policies, opinions, abstracts and surveys in the possession of any Group Company with respect to such parcel.
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(b) No Group Company is a party to any agreement or option to purchase any real property (including Leased Real Property) or interest therein, and, except for the Leased Real Property pursuant to the Real Property Leases and Owned Real Property, no Group Company owns any interest (fee, leasehold or otherwise) in any real property. The Leased Real Property and Owned Real Property constitutes all of the real property used, managed or occupied by any Group Company or used in connection with the operation of the Business.
(c) The current use of the Real Property is, in all material respects, in accordance with the certificates of occupancy relating to the Real Property and the terms of any Permits relating to the Real Property. The Real Property and its current use, occupancy and operation by the respective Group Companies and the Facilities do not (i) constitute a nonconforming use or structure under, and are not in breach or violation of, or default under, any applicable building, zoning, subdivision or other land use or similar Legal Requirements, or (ii) otherwise violate or conflict with any covenants, conditions, restrictions or other Contracts, including the requirements of any applicable Encumbrances.
(d) There is no pending or, to the Knowledge of Seller, threatened appropriation, condemnation or similar Action affecting the Real Property. There has been no material destruction, damage or casualty with respect to the Real Property.
(e) To the Knowledge of Seller, none of the Facilities currently existing on the Leased Real Property encroaches upon any real property of, or easement held by, any other Person, and no Facility of any other Person encroaches on the Leased Real Property. None of the Facilities currently existing on the Owned Real Property encroaches upon any real property of, or easement held by, any other Person and no Facility of any other Person encroaches on the Owned Real Property. Each Facility on the Real Property is supplied with utilities and other services necessary for the operation of such Facility as the same is currently operated or currently proposed to be operated, all of which utilities and other services are provided via public roads or via an easement benefiting the Real Property. Each parcel of Real Property abuts on, and has direct vehicular access to, a public road, or has access to a public road via an easement benefiting the parcel of Real Property, in each case, to the extent necessary for the conduct of the Business.
(f) The Facilities, including all buildings, structures, equipment and improvements that are located on or constitute part of the Real Property, are in good operating condition and repair (subject to normal wear and tear, and subject to non-delinquent routine scheduled maintenance), and are suitable, adequate and sufficient in all material respects for the purposes for which such Facilities are used. There are no material defects in the roof, footings, foundation, sprinkler mains, structural, mechanical and HVAC systems and masonry walls in any of the improvements upon the Real Property other than (i) defects resulting from normal wear and tear, (ii) defects that have not had and would not be reasonably likely to have an adverse effect on the operation of the business operated on such parcel of Real Property, or (iii) defects that would be reasonably expected to be repaired through the ordinary course maintenance or capital improvement program of the Group Companies prior to having an adverse effect on the operation of the business operated on such parcel of Real Property. All Permits necessary in connection with any construction upon, and present use and operation of, the Real Property and the lawful occupancy of the Real Property have been issued by the appropriate Governmental Authorities. Except as set forth on Schedule 3.11(f) of this Agreement, no Group Company has deferred maintenance of the Facilities or Assets in contemplation of the Transactions or otherwise.
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(a) Schedule 3.12(a) sets forth a complete and accurate list of (i) all Company Intellectual Property Rights that are subject to any issuance, registration, or application by or with any Governmental Authority or private registrar in any jurisdiction as of the Effective Date, in each case listing the title and current owner, the jurisdiction in which each has been issued or registered and the application, serial, or registration number, and (ii) all material unregistered Intellectual Property Rights included in the Company Intellectual Property Rights. The Group Companies exclusively own legally, beneficially, and of record (where applicable), all rights, title and interests in and to or have a valid and enforceable right to use, transfer, license and encumber pursuant to a valid and enforceable agreement, all Company Intellectual Property Rights, in each case free and clear of all Encumbrances. The Company Intellectual Property Rights are (i) valid, enforceable and subsisting, in full force and effect and have not lapsed, expired or been abandoned or withdrawn, and (ii) not subject to any outstanding Government Order, Contract or Action adversely affecting or that could adversely affect any Group Company’s or Buyer’s use thereof or rights thereto. To the extent that any Company Intellectual Property Rights has been developed or created by a current or former employee or any consultant, contractor, or other Person for or on behalf of any Group Company, such Person has executed a valid, written and enforceable invention assignment agreement assigning to the applicable Group Companies all of such Person’s rights in and to such Company Intellectual Property Rights and such Group Companies thereby have obtained exclusive ownership of all Intellectual Property Rights in all Company Intellectual Property Rights by operation of law or valid assignment.
(b) Except as disclosed on Schedule 3.12(b) of this Agreement, no Group Company nor any Predecessor or the operation of the Business (i) has interfered with, infringed upon, diluted, misappropriated, or violated any Intellectual Property Rights of any Person or is interfering with, infringing upon, diluting, misappropriating or violating any Intellectual Property Rights of any Person, or (ii) has received or asserted against a third party any charge, complaint, claim, demand, or notice alleging interference, infringement, dilution, misappropriation, or violation of Intellectual Property Rights (including any invitation to license or request or demand to refrain from using any Intellectual Property Rights of any Person in connection with the conduct of the Business). Except as disclosed on Schedule 3.12(b) of this Agreement, to the Knowledge of Seller, no Person has interfered with, infringed upon, diluted, misappropriated, or violated any Company Intellectual Property Rights or is interfering with, infringing upon, diluting, misappropriating or violating any Company Intellectual Property Rights.
(c) Schedule 3.12(c) of this Agreement identifies each agreement (i) under which any Group Company uses, licenses, or acquired rights to an item of Company Intellectual Property Rights that any Person other than the Group Companies owns (the “Inbound IP Contracts”) excluding Off-the-Shelf Software, and (ii) under which any Group Company has granted, assigned, or licensed to any Person any right or interest in Company Intellectual Property Rights (the “Outbound IP Contracts” and, together with the Inbound IP Contracts, the “IP Contracts”). Each IP Contract is in full force and effect, and no Group Company has taken or failed to take any action and no other event has occurred that could subject any IP Contract to terminate or otherwise cause any such IP Contract not to be in effect in the foreseeable future. The IP Contracts constitute all of the agreements relating to any grant or receipt of rights in and to any Company Intellectual Property Rights. Except for the Technology and Intellectual Property Rights licensed to the Group Companies under the Inbound IP Contracts identified on Schedule 3.12(c) of this Agreement and to the extent provided in such Inbound IP Contracts, none of the Company Intellectual Property Rights is in the possession, custody, or control of any third party.
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(d) The Group Companies have maintained commercially reasonable safeguards to protect, preserve and maintain the Company Intellectual Property Rights and to maintain the confidentiality, secrecy and value of the confidential information of each Group Company. Except as disclosed on Schedule 3.12(d) of this Agreement, the Group Companies have required any employee or third party with access to confidential information and/or trade secrets of any Group Company to execute valid and enforceable Contracts requiring them to maintain the confidentiality of such information and use such information only for the benefit of the Group Companies and there has been no breach of such agreements by a party thereto. No information that at any time constituted confidential information or a material trade secret of any Group Company has been disclosed or made available by any Group Company or any third party to any Person who is not legally bound by a duty of confidentiality with respect thereto and, to the Knowledge of Seller, no such third party is in breach of such duty.
(e) All of the Software used by the Group Companies (i) is in satisfactory working order, is adequate to meet the current capacity of each Group Company and operates as necessary for the conduct of the Business of the Group Companies, (ii) has appropriate security, backups, disaster recovery arrangements, and hardware and Software support and maintenance to minimize the risk of material error, breakdown, failure, data loss or Security Breach occurring and to ensure if such event does occur that it does not cause a material disruption, (iii) is configured and maintained to minimize the effects of viruses and does not contain Trojan horses, spyware, adware, malware, or other malicious code, and (iv) has not suffered any material error, breakdown, failure, loss of data, or Security Breach.
(f) The consummation of the Transactions contemplated by this Agreement will not result in the loss of, or otherwise adversely affect, any ownership rights of any Group Company (or Buyer after the Closing Date) in any Company Intellectual Property Rights or result in the breach or termination of any Contract to which any Group Company is a party with respect to any Company Intellectual Property Rights. Each Intellectual Property Right owned or used by any Group Company immediately prior to the Closing Date, will be owned or available for use by Buyer immediately subsequent to the Closing Date on materially the same terms and conditions as owned or used by each of the Group Companies immediately prior to the Closing Date.
(a) The Group Companies (including their respective employees and contractors) have complied, and are in compliance, with all Legal Requirements relating to, or affecting, any of the Group Companies and/or the Business. Except as disclosed on Schedule 3.13(a), no oral or written notices or inquiries have been received by and no claims can be filed against any Group Company alleging a violation of any Legal Requirement, and no Group Company has been subject to any adverse inspection, inquiry, finding, investigation, penalty assessment, judgment, audit or other compliance or enforcement action. Each of the services and items provided by any Group Company (including its respective employees and contractors) have at all times been provided in compliance with Legal Requirements.
(b) No Group Company or any of their respective directors, managers, owners, officers, employees or, to the Knowledge of Seller, contractors or other agents, has (i) directly or indirectly, given, or agreed to give, any illegal gift, contribution, payment or similar benefit to, or entered into any Contract or informal arrangement with, any supplier, patient, governmental official or employee or other Person who was, is or may be in a position to help or hinder any Group Company, or assist in connection with any actual or proposed transaction or made, or agreed to make, any illegal contribution or bribe, or reimbursed any illegal political gift or contribution made by any other Person, to any candidate for federal, state, local or foreign public office or (ii) established or maintained any unrecorded fund or Asset or made any false entries on any books or records for any purpose.
(c) The Group Companies have disclosed to Buyer all d/b/a names and fictitious names of each Group Company and their respective Affiliates.
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(d) Except as set forth on Schedule 3.13(d), each Group Company, the Business and each individual who holds or is required to hold a license from any board, agency or other Governmental Authority relating to the provision of professional or other services employed or engaged by any Group Company, including, without limitation, any physician, nurse practitioner, physician assistant or nurse (each, a “Healthcare Provider”) is, and at all times during the six (6)-year period preceding the date hereof or the time during which such individual served in such capacity on behalf of any Group Company, if shorter, has been, in compliance with, all applicable Healthcare Laws and no violation exists under any applicable Healthcare Law. All Healthcare Providers required to be licensed, certified or registered to perform services on behalf of any Group Company are and have been (with respect to any period of time during which such Healthcare Provider performed services on behalf of any Group Company) so licensed, certified or registered without restriction. No Action or investigation has been filed, commenced or, to the Knowledge of Seller, threatened against any Group Company or any Healthcare Provider alleging any failure so to comply in any material respect, and no Group Company or Healthcare Provider has received any notice from any Governmental Authority of any alleged material violation of, material default under or any citation for material noncompliance with any applicable Healthcare Law. There are no facts, events, circumstances or conditions that would reasonably be expected to form the basis for any Action against any Group Company or any Healthcare Provider relating to or arising under any Healthcare Law. No Healthcare Provider employed or engaged by any Group Company has been the subject of any disciplinary proceeding by any Governmental Authority, including any state board of medical examiners or similar Governmental Authority, during the six (6) year period preceding the date hereof. Except as set forth on Schedule 3.13(d), no Group Company has received any notice of and is not the subject of any Action with respect to, any violation of, or any obligation to take remedial action under, applicable Healthcare Laws. Except as set forth on Schedule 3.13(d), no Group Company or Healthcare Provider has received any notice from any Governmental Authority of any pending, active or threatened Actions involving any Group Company or to the Knowledge of Seller, any Healthcare Provider with respect to any applicable Healthcare Laws prohibiting, governing, regulating or relating to fee-splitting, self-referrals or payment or receipt of kickbacks in return for or to induce referrals.
(e) Except as set forth on Schedule 3.13(e), at all times since January 1, 2015:
(i) each Group Company and each Healthcare Provider (with respect to any period of time during which such Healthcare Provider performed services on behalf of any Group Company during the above referenced time period), as applicable: (A) has held all requisite provider or supplier number(s) and other certifications for participation and reimbursement under the Medicare, Medicaid, and TRICARE programs and any other federal, state or local reimbursement program involving payment of governmental funds (including “Federal health care programs” as defined in 42 U.S.C. § 1320a 7b(f)) in the state or states in which such Person operates or provides services (such programs are referred to collectively as the “Governmental Programs”) and all other third party Payor programs that such Person bills as a participating or in-network provider, (B) where required to bill any third party Payor programs, has held a National Provider Identification number issued by the National Plan & Provider Enumeration System, and (C) each Group Company has contracted with insurance companies, commercial payers, patients, employers or other payers in private reimbursement programs not involving payment of governmental funds (including any private or workers’ compensation insurance program) under which any Group Company directly or indirectly has received payments (such private programs and health plans not involving direct contracting or payment of governmental funds are referred to collectively as “Private Programs”), and has no outstanding overpayments, adjustment liability or refunds due to Governmental Programs or Private Program, other than overpayments, adjustment liability, or refunds occurring in the Ordinary Course of Business;
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(ii) all claims and reports submitted by or on behalf of the Group Companies and each Healthcare Provider in connection with such Person’s activities for the Group Companies under any Governmental Programs or Private Programs are, and at all times have been, complete and accurate and are, and at all times have been, prepared in compliance with all applicable Healthcare Laws, the Health Care Common Procedure Coding System (HCPCS) code set and the claims submission standards made applicable by the Governmental Program or Private Program to which the claim or report is submitted in each case;
(iii) no Group Company has any refund, overpayment or adjustment Liability under any Governmental Program or Private Program, other than any resolved refund, overpayment, discount or adjustment that occurred as a result of any audits or reviews occurring in the Ordinary Course of Business;
(iv) there are no pending appeals, adjustments, challenges, or actions with respect to prior claims or reports, and no Group Company has received any notice of intent to audit by a Governmental Authority or a Private Program with respect to such prior claims or reports; and
(v) no Group Company has been audited, surveyed or otherwise examined in connection with any Governmental Program or any Private Program, other than audits, surveys or reviews that occur in the Ordinary Course of Business, no owner, officer, manager, director, employee or agent of any Group Company has received notice that they are subject to any audit or investigation by any Governmental Authority or Private Program, and no Group Company has received any notice indicating that its qualification as a participating provider in any Governmental Program or Private Program has been or may be suspended, limited, adversely modified, terminated or withdrawn.
(f) Each Group Company maintains a compliance program that materially complies with applicable Healthcare Laws and that reflects the material elements of an effective compliance programs to monitor compliance with applicable Healthcare Laws.
(g) No Group Company or, to the Knowledge of Seller, any of their respective equity holders, managers, directors, officers, employees, contractors, agents or Healthcare Providers has received any notice from any Payor of any pending or threatened investigations or surveys. To the Knowledge of Seller, no Private Program intends to cancel, suspend, materially alter, limit or terminate its relationship with any Group Company or any Healthcare Provider employed or engaged by any Group Company, and there are no facts, circumstances events or conditions that would reasonably be expected to result in any such cancellation, suspension, material alternation, limitation or termination.
(h) No Group Company or any of their respective equity holders, directors, managers, officers, employees, contractors, agents or Healthcare Providers: (A) has been convicted of or charged with any violation of any Legal Requirements related to any Governmental Program; (B) has been convicted of, charged with, or, to the Knowledge of Seller, investigated for, any violation of Legal Requirements related to fraud, theft, embezzlement, breach of fiduciary responsibility, financial misconduct, obstruction of an investigation, or controlled substances; (C) has been excluded, suspended or debarred from participation, or is otherwise ineligible to participate, in any Governmental Program, nor is any such exclusion or debarment threatened or pending; (D) has had a civil monetary penalty assessed against such Person under Section 1128A of the Social Security Act (42 U.S.C. ch. 7); (E) is currently listed on the General Services Administration published list of parties excluded from federal procurement programs and non-procurement programs; or (F) to the Knowledge of Seller, is the target or subject of any current or potential investigation relating to any Medicare, Medicaid or any other Governmental Program-related offense. The Group Companies conduct and have conducted background checks as required by applicable Legal Requirements and have screened all equity holders, directors, managers, officers, employees, contractors, agents or Healthcare Providers of each Group Company against the List of Excluded Individuals and Entities maintained by the Office of Inspector General of the Department of Health and Human Services and the System for Award Management excluded parties data maintained by the General Services Administration. There are no facts, circumstances, events or conditions that would reasonably be expected to result in the exclusion, debarment or suspension of any Group Company or any of their respective equity holders, directors, managers, officers, employees, agents or Healthcare Providers from participation in any Governmental Program.
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(i) The Group Companies have implemented and maintain privacy and security policies and procedures, including physical, administrative and technical safeguards, to protect all Personal Information and other Sensitive Information received, created, accessed, stored or transmitted by any Group Company or otherwise in their possession or control, which comply with all contractual obligations, Group Company policies and applicable Legal Requirements, including any Privacy and Security Laws. Each Group Company is, and at all times has been, in compliance with all (i) Legal Requirements regarding the privacy and protection of Personal Information and other Sensitive Information, including Privacy and Security Laws; (ii) Contracts and other arrangements in effect to which any Group Company is a party or bound, including Contracts with patients and business associates of any Group Company that apply to or restrict the use, disclosure or security of Personal Information; and (iii) each Group Company’s published and internal privacy and security policies. Each of the Group Companies has obtained agreements and assurances from any third parties used in connection with the Business or the operations of the Business to the extent required by Privacy and Security Laws, including any business associate Contracts required by the HIPAA Regulations, that such third parties are in compliance with all Privacy and Security Laws, to the extent applicable to such third parties’ relationship with the Group Companies. The Group Companies have the right pursuant to Privacy and Security Laws to collect, use, process and disclose Personal Information and Sensitive Information for the purpose such information is and has been collected, used, processed and disclosed. Neither the execution, delivery or performance of this Agreement nor the consummation of the Transactions contemplated by this Agreement, including any direct or indirect transfer of Personal Information or Sensitive Information resulting from such transactions, will violate any Privacy and Security Laws as such currently exist or as existed at any time during which any of the Personal Information or Sensitive Information was collected or obtained. The Group Companies have obtained all consents or approvals, if any, required to be obtained by any Group Company under any Privacy and Security Laws for the transfer of the Personal Information or Sensitive Information to be transferred at the Closing. There have not been any Security Breaches with respect to Personal Information or Sensitive Information held by or on behalf of any Group Company or with respect to Business IT Assets. No claims have been asserted or, to the Knowledge of Seller, threatened against any Group Company (and there is no basis for any such claims to be asserted or threatened against any Group Company) by any third party or entity alleging (A) a violation of such third party’s or entity’s privacy, personal or confidentiality rights under any such rules, policies or procedures, or (B) the failure of any Group Company with respect to any security audit as contemplated by certain of the Contracts. None of the Group Companies has notified, either voluntarily or as required by any Privacy and Security Law, any affected individual, patient, Governmental Authority or the media of any Security Breach, and no Group Company is currently planning, considering or required to conduct any such notification or investigation.
(j) No Group Company nor, to the Knowledge of Seller, any Healthcare Provider employed or engaged by any Group Company has ever been a party to or bound by any Government Order, individual integrity agreement, corporate integrity agreement, monitoring agreement, deferred prosecution agreement, consent decree, settlement or similar agreement with any Governmental Authority.
(k) No Person has filed or has threatened to file against any Group Company or, to the Knowledge of Seller, any Healthcare Provider employed or engaged by any Group Company, an action under any federal or state whistleblower statute, including the False Claims Act, 31 U.S.C. §§ 3729-3733.
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3.14 Permits. The Group Companies have collectively been duly granted and possess all Permits under all Legal Requirements necessary for the conduct of the Business or the ownership or use of their respective Assets and each of their respective businesses. Schedule 3.14(a) of this Agreement sets forth a description of each Permit affecting, or relating to, any Assets of the Group Companies or the Business, together with the Governmental Authority or other Person responsible for issuing such Permit. Other than the Permits set forth on Schedule 3.14(a), no other Permits are required to be obtained to carry on the Business, as currently conducted, in compliance with applicable Legal Requirements. Except as expressly set forth on Schedule 3.14(b) of this Agreement, (i) all Permits are valid and in full force and effect, (ii) no Group Company is or has been in breach or violation of, or default under, any Permit, and no basis exists that, with notice or lapse of time or both, would constitute any such breach, violation or default, and (iii) the Permits set forth on Schedule 3.14(a) of this Agreement constitute all Permits necessary for the conduct of the Business or the ownership or use of the Assets, and all such Permits will continue to be valid and in full force and effect for the benefit of Buyer with respect to the operation of the Business, on identical terms following the consummation of the Transactions. Neither any Group Company nor any equity owner thereof has engaged in any activity that would cause a future loss, limitation, restriction, revocation or suspension of any Permit.
(a) Each Group Company has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it in accordance with all Legal Requirements. All such Tax Returns were true, complete and accurate in all respects. All Taxes owed by each Group Company (whether or not shown on any Tax Return) have been timely paid in full. No claim has been made by any Governmental Authority in a jurisdiction where any Group Company does not file Tax Returns that such Group Company is or may be subject to taxation by, or required to file Tax Returns in, that jurisdiction, and there is no basis for any such claim to be made. There are no Encumbrances with respect to Taxes upon any Asset of any of the Group Companies other than liens for current Taxes not yet due and payable. No Tax Return of any Group Company is currently on extension.
(b) Each Group Company has deducted, withheld and timely paid to the appropriate Governmental Authority all Taxes required to be deducted, withheld or paid in connection with amounts paid or owing to any employee, independent contractor, creditor, equity holder or other Person, and such Group Company has complied with all reporting and recordkeeping requirements relating to such Taxes. Each Group Company has correctly classified (in accordance with all Legal Requirements) all individuals performing services for such Group Company as common law employees, leased employees, independent contractors or agents of such Group Company, as the case may be, and have satisfied all Legal Requirements to be so classified or treated, and each Group Company has fully and accurately reported their compensation of any kind on IRS Forms W-2 or 1099 or as otherwise required by any Legal Requirements.
(c) There is no Action concerning any Tax Liability of any Group Company pending, being conducted, claimed, raised, or threatened in writing by a Governmental Authority. The Group Companies have made available to Buyer true, complete and accurate copies of all Tax Returns, examination reports and statements of deficiencies filed, assessed against or agreed to by any Group Company since January 1, 2015. No private letter rulings, technical advice memoranda or similar agreements or rulings relating to Taxes have been requested, entered into or issued by any Governmental Authority with or in respect of any Group Company.
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(d) No Group Company is a party to any Contract relating to Tax sharing or Tax allocation. No Group Company (A) is or has ever been a member of an affiliated, consolidated, combined or unitary group with respect to any state, local or non-U.S. Taxes, or (B) has any Liability for the Taxes of any Person under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or non-U.S. Legal Requirements), as a transferee or successor, by Contract, or otherwise.
(e) No Group Company has participated in nor is currently participating in any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4 or any “tax shelter” within the meaning of Section 6662 of the Code.
(f) The unpaid Taxes of the Group Companies (i) did not, as of the Interim Balance Sheet Date, exceed the reserve for Tax Liability set forth on the face of the Interim Balance Sheet, and (ii) do not exceed such reserve as adjusted for the passage of time through the Closing Date. Since the Interim Balance Sheet Date, no Group Company has incurred any Liability for Taxes outside the Ordinary Course of Business of such Group Company.
(g) Seller has been at all times during its existence treated as a partnership for federal (and applicable state, local and non-U.S.) income Tax purposes and has not made any election to be treated as a corporation for federal (and applicable state, local and non-U.S.) income Tax purposes.
(h) Each Group Company, other than Seller, has been at all times classified as a disregarded entity within the meaning of Treasury Regulations Section 301.7701-3(b)(1)(ii), and no such Group Company has made any election to be treated as a corporation for federal (or applicable state, local and non-U.S.) income Tax purposes.
(i) None of the Assets of any Group Company are “tax-exempt use property” within the meaning of Section 168(h) of the Code.
(j) All fees, charges, costs or expenses pursuant to Affiliate services agreements or otherwise which are paid by any Group Company or any of their Affiliates are made on an arms’ length basis within the meaning of Section 482 of the Code and the regulations and rulings promulgated thereunder. No claim has been asserted by any Governmental Authority that any Group Company is liable for any Taxes based on Section 482 of the Code or comparable provisions of other applicable Legal Requirements.
(k) No Group Company has waived any statute of limitations in respect of Taxes.
(l) None of the Assets of any Group Company is an equity interest in another Person other than a Group Company.
(m) No Group Company has any general or special powers of attorney outstanding (whether as grantor or grantee thereof), including with respect to unresolved Tax matters.
(n) Except for certain representations related to Taxes in Sections 3.8, 3.16, and 3.20, the representations and warranties set forth in this Section 3.15 are the Seller Parties’ sole and exclusive representations and warranties regarding Tax matters.
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(a) Schedule 3.16(a) of this Agreement lists all Employee Plans that any Group Company, or their ERISA Affiliates, sponsors, maintains, contributes to or is obligated to contribute to, or under which any Group Company, or their ERISA Affiliates, has or may have any Liability, or which benefit any current or former manager, director, employee, consultant or independent contractor of any Group Company, or their ERISA Affiliates, or the beneficiaries or dependents of any such Person (each, a “Company Plan”). With respect to each Company Plan, Seller has made available to Buyer true, complete and accurate copies of each of the following: (i) if the Company Plan has been reduced to writing, the current Company Plan document together with all amendments to such document, (ii) if the Company Plan has not been reduced to writing, a written summary of all material terms of such Company Plan, (iii) if applicable, copies of any trust agreements, custodial agreements, insurance policies, administrative agreements and similar agreements, and investment management or investment advisory agreements currently in effect, (iv) copies of any summary plan descriptions (or summaries of material modifications), employee handbooks or similar employee communications, (v) in the case of any Company Plan that is intended to be qualified under Section 401(a) of the Code, if applicable, a copy of the most recent determination letter or opinion letter from the IRS upon which any Group Company is entitled to rely and any related correspondence, and a copy of any pending request for such determination, (vi) in the case of any funding arrangement intended to qualify as a VEBA under Section 501(c)(9) of the Code, a copy of the IRS letter determining that such Company Plan so qualifies, (vii) nondiscrimination testing results for the last three (3) years for all applicable Company Plans, (viii) in the case of any Company Plan for which Forms 5500 are required to be filed, a copy of the three most recently filed Forms 5500, with schedules attached, (ix) all correspondence with the IRS, Department of Labor and the PBGC regarding any Company Plan, and (x) any other related material or documents regarding the Company Plans.
(b) Each Company Plan that is intended to meet the requirements of a “qualified plan” under Section 401(a) of the Code has received a determination letter from the IRS to the effect that it meets the requirements of Section 401(a) of the Code, or with respect to a prototype Company Plan, the prototype sponsor has received a favorable IRS opinion or advisory letter, or such Company Plan or prototype sponsor has remaining a period of time under applicable Code regulations or pronouncements of the IRS in which to apply for such a letter and make any amendments necessary to obtain a favorable determination or opinion as to the qualified status of each such Company Plan. No events have occurred with respect to any such Company Plan that would reasonably be expected to adversely affect such qualified status. Each Company Plan, including any associated trust or fund, has been administered in accordance with its terms and with applicable Legal Requirements, and nothing has occurred and/or no action has been taken with respect to any Company Plan that has subjected or could subject any Group Company to a penalty under Section 502 of ERISA or to an excise Tax under the Code, or that has subjected or could subject any participant in, or beneficiary of, a Company Plan to a Tax under Section 4973 or 4975 of the Code. Each Company Plan that is a qualified defined contribution plan is an “ERISA Section 404(c) Plan” within the meaning of the Code, ERISA and applicable regulations. All required contributions to, and premium payments on account of, each Company Plan has been made on a timely basis and in accordance with all applicable Legal Requirements. Except as disclosed on Schedule 3.16(b) of this Agreement, there is no pending or, to the Knowledge of Seller, threatened Action relating to a Company Plan, other than routine claims in the Ordinary Course of Business for benefits provided for by the Company Plans. No Company Plan is or, within the last six (6) years, has been the subject of an examination or audit by a Governmental Authority, is the subject of an application or filing under, or is a participant in, a government-sponsored amnesty, voluntary compliance, self-correction or similar program.
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(c) No Company Plan is (i) a “multiemployer plan” as such term is defined in Section 3(37) of ERISA, (ii) a plan that is subject to Title IV of ERISA, Section 302 or 303 of ERISA or Section 412 or 436 of the Code, (iii) is a multiple employer plan as defined in Section 413(c) of the Code, or (iv) is a “multiple employer welfare arrangement” as such term is defined in Section 3(40) of ERISA and no Group Company nor any ERISA Affiliate has maintained, contributed to, or been required to contribute to any Company Plan described in clauses (i), (ii), (iii) or (iv) of this Section 3.16(c). No Group Company is subject to any Liability in respect of any Company Plan (except for Liabilities specifically reflected or reserved against on the face of the Interim Balance Sheet or Liabilities incurred after the Interim Balance Sheet Date, none of which are material in nature or amount and none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, violation of any Legal Requirement or Government Order, or any Action), and no Group Company or any of their ERISA Affiliates have incurred or will incur any withdrawal Liability (including any contingent or secondary withdrawal Liability) within the meaning of Sections 4201 or 4204 of ERISA to any multiemployer plan and nothing has occurred that presents a risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any such multiemployer plan which could result in any Liability of any Group Company or their ERISA Affiliates to any such multiemployer plan. There is no lien pursuant to ERISA Sections 303(k) or 4068 or Code Section 430(k) in favor of, or enforceable by the Pension Benefit Guaranty Corporation or any other entity with respect to any of the Assets of any Group Company. Except as required under Section 601 et seq. of ERISA, no Company Plan provides benefits or coverage in the nature of health, life or disability insurance following retirement or other termination of employment. Each Company Plan that is a “nonqualified deferred compensation plan” (within the meaning of Section 409A(d)(1) of the Code) has been operated in compliance with Section 409A of the Code, IRS Notice 2005-1, Treasury Regulations issued under Section 409A of the Code, and any subsequent guidance relating thereto, and no additional Tax under Section 409A(a)(1)(B) of the Code has been or is reasonably expected to be incurred by a participant in any such Company Plan, and no employee of any Group Company or any ERISA Affiliate is entitled to any gross-up or otherwise entitled to indemnification by any Group Company or any ERISA Affiliate for any violation of Section 409A of the Code.
(d) The Group Companies and the relevant Company Plan administrator (if other than a Group Company), have at all relevant times, properly classified each provider of services to any Group Company as an employee or independent contractor, as the case may be, for all purposes relating to each Company Plan for which such classification could be relevant. No Group Company has incurred, and no circumstances exist under which any Group Company would reasonably be expected to incur, any Liability arising from the misclassification of employees as consultants or independent contractors, from the misclassification of consultants or independent contractors as employees, and/or from the misclassification of employees for wage and hour purposes.
(e) Schedule 3.16(e) of this Agreement sets forth the following information (to the extent applicable) (i) with respect to each employee of a Group Company (including all employees who are on an approved leave of absence) as of the date hereof and any independent contractor who has performed services for any Group Company in the last twelve (12) months: (A) name, title or position (including whether full or part time), (B) employer (or contracting party in the case of any independent contractor) and the employer identification number of such employer, (C) location where employed (city and state) or, with respect to any independent contractor, service location, (D) service dates, including hire date, (E) leave status, if any (including a designation, if applicable, of the type of leave and whether the leave is paid or unpaid) of each such employee, (F) exempt or non-exempt status under the Fair Labor Standards Act or other applicable Legal Requirement, (G) whether such Person is party to any written Contract with a Group Company, (H) the then-current annual Compensation, and a description of any fringe benefits (other than those generally available to employees of the Group Companies) provided to any such Person, and (I) any increase, effective after January 1, 2020, in the rate of Compensation of any such employee or independent contractor, and (ii) a list of all former employees of each Group Company who have been involuntarily terminated in the last twelve (12) months. No employees of any Group Company are, or at the Closing will be, employed by Seller.
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(f) Neither the execution and delivery of this Agreement nor the consummation of the Transactions contemplated hereby will (i) result in, cause the accelerated vesting, funding or delivery of, or increase the amount or value of, any of the benefits under any Company Plan, (ii) otherwise entitle any current or former director or employee of any Group Company to severance pay or any other payment from any Group Company. No Group Company has announced any type of plan or binding commitment to create any additional Company Plan, or amend or modify any existing Company Plan with any current or former employee, independent contractor or director.
(a) Each Group Company and the operations of the Business, including the use and ownership of the Assets and Real Property, are, and have been, in compliance with all Environmental Laws, which compliance includes but is not limited to acquiring and possessing all Environmental Permits required for the operations of the Business and compliance with the terms and conditions of such Environmental Permits.
(b) Each Group Company has obtained and is in compliance with all Environmental Permits required under Environmental Law for the operation of the Business or the ownership, lease, operation or use of Assets of such Group Company. All such Environmental Permits are in full force and effect and will be maintained in full force and effect through the Closing Date in accordance with Environmental Law, and applications for renewal of such Environmental Permits have been or will be timely filed when due.
(c) There has been no Release or threatened Release of Hazardous Substance on, upon, under, into or from any Assets or any other real property currently or previously owned, operated, leased or otherwise used by any Group Company, and there has been no Release of Hazardous Substance at any location that has resulted in or, to the Knowledge of the Seller Parties, could reasonably be expected to result in any Liability to any Group Company under any Environmental Law.
(d) There have been no Hazardous Substances generated by any Group Company or any of their Predecessors that have been disposed of or come to rest at any site or location that has been designated or included in any U.S. federal, state or local “superfund” site list, including the National Priorities List (or CERCLIS) under CERCLA, or any other similar list of hazardous or toxic waste sites or location by any Governmental Authority. No Group Company has been notified that it is a potentially responsible party at any such location under any Environmental Law. No real property currently or formerly owned, operated or leased by any Group Company is listed on, or has been proposed for listing on, any U.S. federal, state or local “superfund” site list, including the National Priorities List (or CERCLIS) under CERCLA, or any other similar list.
(e) No Group Company has received at any time: (i) any Environmental Notice or Environmental Claim, or (ii) any written request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date, and no circumstances exist that could lead to the assertion of any Environmental Notice or Environmental Claim.
(f) There are no active and abandoned aboveground or any underground storage tanks owned or operated by any Group Company, or located at or on, and no Hazardous Substance used or stored on, any real property owned, operated, leased or otherwise used by any Group Company or any of their Predecessors.
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(g) There is no condition or event concerning the Release or regulation of Hazardous Substance by any Group Company or at any real property currently owned, operated, leased or used by any Group Company that, after the Closing Date, is reasonably expected to prevent, impede, or increase the costs of operations as currently conducted on such property.
(h) Seller has made available to Buyer true, correct and complete copies of all material environmental records, reports, notifications, certificates of need, Permits, pending Permit applications, correspondence, engineering studies, and environmental studies or assessments, in each case as amended and in effect.
(a) Schedule 3.18(a) of this Agreement sets forth a complete and accurate list of the following Contracts to which any Group Company is a party or by which any Group Company or any Group Company’s Assets or the Business are bound, except for Contracts disclosed on Schedules 3.7(b), 3.11(a), 3.12(c), 3.16(a), 3.18(a), 3.19 or 3.22 of this Agreement:
(i) any Contract with any referral source;
(ii) any collective bargaining agreement, labor union Contract or contractual obligation (including oral and “at will” arrangements) providing for the employment or consultancy with an individual on a full-time, part-time, consulting, independent contractor or other basis or otherwise providing Compensation or other benefits, including severance or change of control benefits, to any director, officer, employee, independent contractor, consultant or other services providers of any Group Company (other than a Company Plan);
(iii) any contractual obligation pursuant to which any Group Company is, or may become, obligated to pay severance or other Compensation obligations that would become payable, directly or indirectly, by reason of this Agreement or the Transactions;
(iv) any contractual obligation relating to confidentiality, non-competition or non-solicitation restrictions or that otherwise materially restricts the conduct of the business by or that limits the freedom of any Group Company to sell any product or provide any service, to engage in any line of business or to compete with any other Person in any geographic area or to hire, solicit or retain any Person (whether any Group Company is subject to or the beneficiary of such obligation);
(v) any Contract prohibiting any Group Company from using, transferring, distributing or enforcing any Intellectual Property Rights (including exclusive license grants thereof to third parties) in any territory;
(vi) any lease or similar Contract under which (A) any Group Company is lessee of, or holds or uses, any equipment, vehicle or other tangible personal property owned by a third party or (B) any Group Company is a lessor or sublessor of, or makes available for use by any third party, any tangible personal property owned or leased by such Group Company;
(vii) any Contract relating to or consisting of a joint venture, partnership or similar arrangement;
(viii) any Contract relating to any acquisition or disposition of any Ownership Interests of any Person, line of business by any Person or material Asset of any Person or any Asset of any Group Company other than in the Ordinary Course of Business (whether by merger, consolidation or other business combination, sale or securities, sale of a material amount of assets of such Person or other similar transaction);
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(ix) any contractual obligation for capital expenditures or the acquisition or construction of fixed Assets by any Group Company;
(x) any contractual obligation that grants, or agrees to grant, any Person a right to “most favored nation” or similar protective pricing terms;
(xi) any Contract related to Debt of any Group Company, including any capital lease;
(xii) any indemnification or other similar Contract, including pursuant to which any Group Company is obligated to indemnify or advance expenses on behalf of any current or former director, manager, officer or employee of such Group Company in connection with any Liability based on the fact that such Person is or was a director, manager, officer or employee of such Group Company;
(xiii) any Contract between a Group Company, on the one hand, and any Seller Party or any other Group Company or current or former equity holder of any Group Company or Affiliate thereof, on the other hand;
(xiv) any Contract between a Group Company, on the one hand, and a Governmental Authority (including any Governmental Program), on the other hand;
(xv) any Contract with a Private Program;
(xvi) all Contracts providing for the settlement of any Action or Government Orders;
(xvii) any contractual obligation for the cleanup, abatement or other actions in connection with any Hazardous Substances, the remediation of any existing environmental condition or relating to the performance of any environmental audit or study;
(xviii) any residency agreement, admission agreement or similar agreement with any patient or resident of any Facility; or
(xix) any other contractual obligation (or group of related contractual obligations) the performance of which involves consideration in excess of fifty thousand dollars ($50,000.00) over the life of such contractual obligation or that is otherwise material to the Business or any Group Company.
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(b) Each Contract required to be disclosed on Schedules 3.7(b), 3.11(a), 3.12(c), 3.16(a), 3.18(a), 3.20(c), 3.19 or 3.22 of this Agreement or with a Person listed on Schedule 3.24 of this Agreement (each, a “Disclosed Contract”) is enforceable against each party to such Disclosed Contract, except as enforceability may be limited by the Enforceability Exceptions, and is in full force and effect, and, subject to obtaining any necessary authorizations, consents or approvals disclosed on Schedules 3.3 or 3.4 of this Agreement, will continue to be so enforceable by Buyer and in full force and effect on identical terms following the consummation of the Transactions. Except as set forth on Schedule 3.18(b) of this Agreement, all of the Disclosed Contracts are terminable by the applicable Group Company on less than ninety-one (91) days’ notice with no liquidated damages, termination fees or other similar payment obligations. No Group Company or, to Knowledge of Seller, any other party to any Disclosed Contract, has been or is currently in breach or violation of, or default under, or has repudiated any provision of, any Disclosed Contract nor has any event occurred that with the lapse of time, or the giving of notice, or both, would constitute a default under any Disclosed Contract. No other party to any Disclosed Contract has notified any Group Company that it does not intend to perform its obligations under any such Disclosed Contract as a result of COVID-19 or COVID-19 Measures, or has made a claim to any Group Company of force majeure pursuant to any such Disclosed Contract. The Group Companies have made available to Buyer true, complete and accurate copies of each written Disclosed Contract, in each case, as amended or otherwise modified and in effect. The Group Companies have made available to Buyer a written summary setting forth the terms and conditions of each oral Disclosed Contract. A true, correct and complete copy of the standard form of residency agreement and/or admission agreement used by the Group Companies has been made available to Buyer and, except for agreements whose material terms are consistent with such standard residency agreement and/or admission agreement, there are no agreements or other Contracts between any Group Company and any patient or resident of any Facility.
3.19 Affiliate Transactions. Except as set forth on Schedule 3.19, (a) no security holder, manager, director, officer, employee, contractor or Affiliate of any Group Company or any individual in such security holder’s, manager’s, director’s, officer’s, employee’s or contractor’s or Affiliate’s immediate family (any such individual, a “Related Person”), or, to the Knowledge of Seller, any Affiliate of any Related Person, (a) is a party to any Affiliate Agreement, (b) has any interest in any property (real, personal or mixed and whether tangible or intangible), used in or pertaining to any Group Company or the Business, (c) owns of record or as a beneficial owner, any interest or any other financial or profit interest in a Person that is a patient, Payor or other customer of any Group Company or the Business, or has ongoing material business dealings or a material financial interest in any transaction with any Group Company (other than employment arrangements with such Group Company entered into in the Ordinary Course of Business), or (d) is or has been in the last five (5) years the direct or indirect owner of an interest in any Person which is a present or potential competitor, supplier or Payor of any Group Company. Except as set forth on Schedule 3.19, no Group Company is a guarantor or otherwise directly or indirectly liable for any actual or potential Liability of its Affiliates or any Related Person.
(a) There are no labor troubles or disputes (including any arbitration, grievance, work slowdown, lockout, stoppage, picketing or strike or any charge, administrative complaint or other formal legal claim relating to an alleged violation of any Legal Requirement pertaining to labor relations or employment matters) pending, or to the Knowledge of Seller, threatened between any Group Company on the one hand, and any employee or union, on the other hand, and there have been no such troubles or disputes, including any arbitration, grievance, work slowdown, lockout, stoppage, picketing or strike, at any time during the past three (3) years. Except as disclosed on Schedule 3.20(a) of this Agreement, (i) no employee of any Group Company is represented by a labor union, (ii) no Group Company is a party to, or otherwise subject to, any collective bargaining agreement or other labor union Contract, (iii) no petition has been filed or proceedings instituted by or on behalf of an employee or group of employees of any Group Company with any labor relations board seeking recognition of a bargaining representative and there are no pending or threatened charges or complaints before the National Labor Relations Board or any analogous state or foreign Governmental Authority, (iv) no Group Company has, or is currently, engaged in any unfair labor practice, and (v) there is no organizational effort currently being made or threatened by, or on behalf of, any labor union to organize employees of any Group Company and no demand for recognition of employees of any Group Company has been made by, or on behalf of, any labor union.
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(b) Each Group Company is, and has been, in compliance with all Legal Requirements regarding employment and employment related practices, terms and conditions of employment, wages and hours, pay equity, discrimination, harassment, retaliation, human rights, immigration, work authorization (including any Legal Requirements governing the use of background checks), termination, fair labor standards, wage payment, occupational safety and health, employee record keeping, employment practices, workers’ compensation, plant closings, withholding of Taxes, disability rights or benefits, equal employment opportunity, reasonable accommodations, labor relations and collective bargaining, employee leave issues, unemployment insurance, or any other labor and employment-related matter. The Group Companies are in compliance with all written employee and human resources personnel policies, handbooks and manuals (to the extent they contain enforceable obligations), and severance and separation agreements. No Group Company is liable for any arrears of wages or any Taxes or penalties for failure to comply with the foregoing. Except as disclosed on Schedule 3.20(b), there are no pending or threatened charges or complaints against any Group Company before any Governmental Authority regarding any such labor and employment-related matters (including administrative charges, complaints, wage and hour claims, unemployment compensation claims, workers’ compensation claims or employment-related multi-claimant or class action claims) or any other claims arising from or relating to the employment of any of the employees of any Group Company or relationship of any Group Company with any independent contractor. No Group Company is a party to or otherwise bound by any consent decree with or citation from any governmental agency relating to employees or employee practices.
(c) Except as disclosed on Schedule 3.20(c), each Person employed by a Group Company is employed at will and may terminate his or her employment or be terminated from such employment at any time for any or no reason with or without prior notice. Each employee of a Group Company is employed in the United States and is a United States citizen or alien authorized to work in the United States for such Group Company. No executive officer’s or other key employee’s employment with any Group Company has been terminated for any reason nor has any such officer or employee notified any Group Company of his or her intention to resign or retire at any time during the past three (3) years. To the Knowledge of Seller, no employee of any Group Company (i) has any physical or mental impairment or condition that would prevent him or her from performing his or her employment responsibilities and obligations in all material respects, with or without a reasonable accommodation, or (ii) retire or resign from or otherwise cease providing services with respect to the Business in the five (5) years following the Closing Date, including as a result of the Transactions contemplated hereby or otherwise not fully perform his or her responsibilities and obligations under or as contemplated by his or her employment agreement or unwritten employment arrangement, as applicable, through the full term thereof. No employee or former employee has any right to be rehired by any Group Company prior to such Group Company’s hiring a Person not previously employed by any of the Group Companies.
(d) The Group Companies are and have been in full compliance with the WARN Act and any other state or local plant closing laws, and, the Group Companies have taken no action that would at any time require notification of any of the current or former employees of any Group Company pursuant to the provisions of the WARN Act and any other state or local plant closing laws or that would cause any Group Company to have Liability thereunder.
(e) No Group Company is subject to any affirmative action obligations under any Legal Requirement, including Executive Order 11246, and it is not a government contractor for purposes of any Legal Requirements.
(f) Each employee of a Group Company classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws is properly classified.
(g) The Group Companies have delivered to Buyer all (i) severance, accrued vacation or other leave Contracts, policies or retiree benefits of any officer or employee, (ii) employee trade secret, non-compete, non-disclosure and invention assignment Contracts, and (iii) manuals and handbooks applicable to any current director, manager, officer, employee or contractor of each Group Company.
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3.21 Litigation; Government Orders. Except as disclosed on Schedule 3.21 of this Agreement, during the past three (3) years there have been no Actions (a) pending or, to the Knowledge of Seller, threatened against or affecting any Group Company, the Business or the Assets of any Group Company, or pending or threatened by, any Group Company or (b) pending, or, to the Knowledge of Seller, threatened against or affecting, the directors, managers, members, officers or employees of any Group Company with respect to the Business or other activities of any Group Company, and there are no facts, events or circumstances that could reasonably be expected to give rise to any Action described in the foregoing clauses (a) or (b). No Group Company, the Business or any Assets of any Group Company (i) is the subject of any judgment, decree, injunction or other Government Order nor (ii) plans to initiate any Action. The Group Companies are fully insured with respect to each of the matters set forth on Schedule 3.21, subject to applicable deductibles and self-insured retentions. Schedule 3.21 sets forth a list of all audits, reviews, examinations and investigations by any Payor or Governmental Authority since January 1, 2018 that resulted in, or could reasonably be expected to result in, a material overpayment Liability, material corrective action, material penalty or material assessment, and includes a brief description of the results or conclusions reached by such Payor or Governmental Authority. Except as described on Schedule 3.21, all such audits, reviews, examinations and investigations have been closed and there are no further outstanding obligations or other Liabilities with respect thereto.
3.22 Insurance. Schedule 3.22 of this Agreement sets forth a true, complete and accurate list of all insurance policies in force with respect to any Group Company, including, for each policy, the name of the policy, the policy number, the name(s) of each Group Company insured under such policy, deductibles and retention amounts, per claim or occurrence and aggregate policy limits (and the remaining policy limits after reduction for prior claims, losses or otherwise (and reserves held with respect to pending claims) applicable to such policy limits). All such policies are in full force and effect and will remain in full force and effect following the consummation of the Transactions contemplated by this Agreement, all premiums with respect to such policies covering all periods up to and including the Closing Date will have been paid, no Group Company is in default under such policies, and no notice of cancellation or termination has been received by any Group Company or Affiliate thereof with respect to any such insurance policy. Schedule 3.22 of this Agreement also describes any self-insurance or co-insurance arrangements by or affecting any Group Company, including any reserves established thereunder. In addition, Schedule 3.22 of this Agreement contains a list of all pending claims and all claims submitted during the previous three (3) years under any insurance policy maintained by any Group Company. No insurer has questioned, denied or disputed (or otherwise reserved its rights with respect to) the coverage of any claim pending under any insurance policy or threatened to cancel any such insurance policy. None of such insurance policies provide for any retrospective premium adjustment or other experience-based Liability on the part of any Group Company. The insurance policies set forth on Schedule 3.22 are of the type and in the amounts customarily carried by Persons conducting a business similar to the Group Companies, are issued by an insurer that is financially sound and reputable and are sufficient for compliance with all applicable Legal Requirements and Contracts to which any Group Company is a party or by which any Group Company, the Business or the Assets of any Group Company is bound.
3.23 No Brokers. Except as disclosed on Schedule 3.23 of this Agreement, no Group Company has any Liability of any kind (contingent or otherwise) to, or is subject to any claim of, any broker, finder or agent in connection with the Transactions other than those that will be borne entirely by Seller Parties at or prior to Closing.
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(a) Each Group Company is and has been in compliance with the Families First Coronavirus Response Act, including the provision of paid leave benefits required thereunder and any applicable recordkeeping requirements.
(b) Each Group Company is in compliance with all applicable Legal Requirements related to COVID-19 in the workplace, including occupational health and safety Legal Requirements, Legal Requirements pertaining to confidentiality of employee medical information and Legal Requirements pertaining to sick leave or family and medical leave.
(c) Except as set forth on Schedule 3.24(c), no Group Company is subject to any COVID-19 Measures that could prevent any Group Company or the Business from operating in the Ordinary Course of Business.
(d) Schedule 3.24(d) sets forth a list of each loan, exclusion, forgiveness, advance, grant, subsidy, or other payment or application for assistance or stimulus that any Group Company has received or for which any Group Company has applied pursuant to any COVID-19 Measures, including any Paycheck Protection Program loan, Economic Stabilization Fund loan or other United States Small Business Administration loan, as well as any funds received in connection with any Accelerated Payment Program or Advance Payment Program administered by the Centers for Medicare & Medicaid Services (CMS) or from the Public Health and Social Services Emergency Fund established under the CARES Act (the “Provider Relief Fund”), as well as the aggregate amount of repayments and outstanding Liabilities with respect to each such loan, application or other payment. Each Group Company (i) has used and administered all funds received from the Provider Relief Fund in accordance with the CARES Act and all applicable terms and conditions, (ii) uses its own TIN to bill and collect for the services it furnishes; and (iii) has not transferred or distributed any funds received from the Provider Relief Fund to any equity holder of any Group Company or any Affiliate of any such Person. Without limiting the foregoing, the Group Companies have incurred and contemporaneously documented in reasonable detail (which such documentation will be in the possession of Seller and readily available to Buyer immediately following the Closing) COVID-19 attributable expenses and/or COVID-19 attributable losses for which the funds received from the Provider Relief Fund may be used in accordance with the CARES Act and all applicable terms and conditions.
(e) No Group Company has had any actual or anticipated changes to any Company Plan resulting from disruptions caused by COVID-19 or COVID-19 Measures, nor are any such changes currently contemplated.
3.25 Investment Representations.
(a) Purchase Entirely for Own Account. Seller Parties understand and acknowledge that Buyer is entering into this Agreement and Buyer is agreeing to issue the Stock Consideration to Seller at the Closing, in reliance upon Seller’s representations to Buyer that the Stock Consideration to be acquired by Seller will be acquired for investment for Seller’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof by Seller, and that Seller has no present intention of selling, granting any participation in, or otherwise distributing or transferring the same. Seller does not presently have any contract, undertaking, agreement or arrangement with, or obligation to, any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Stock Consideration.
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(b) Sophisticated Investor. Seller is an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act and is able to fend for itself and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Stock Consideration. Seller can afford a complete loss of the value of the Stock Consideration and is able to bear the economic risk of holding the Stock Consideration for an indefinite period. Seller also represents it has not been organized for the purpose of acquiring the Stock Consideration.
(c) Disclosure of Information. Seller Parties have (i) been directed to and has had an opportunity to review the Buyer SEC Documents, including the Buyer SEC Financial Statements; and (ii) have had an opportunity to obtain such other information as they deem appropriate regarding business, management, financial affairs and the terms and conditions of the issuance of the Stock Consideration (the materials described in the foregoing clauses (i) and (ii) being collectively, the “Buyer Disclosure Materials”). Seller Parties further represent that they have had an opportunity to ask questions and receive answers from Buyer regarding the terms and conditions of Buyer and the business, properties, prospects and financial condition of Buyer. Seller Parties understand and acknowledge that, except as expressly set forth in this Agreement, Buyer makes no representations or warranties to Seller Parties as to any of Buyer Disclosure Materials, including as to their completeness, correctness, or currency and that Buyer has not undertaken any obligation, and shall have no obligation under this Agreement, to update or supplement any of Buyer Disclosure Materials.
(d) Restricted Securities. Seller understands that neither the Stock Consideration or Common Stock issuable upon conversion of the Stock Consideration has been, and neither will be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Seller’s representations as expressed herein. Seller understands that the Stock Consideration, and Common Stock issuable upon conversion of the Stock Consideration, is “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, Seller must hold the Stock Consideration, and Common Stock issuable upon conversion of the Stock Consideration, indefinitely unless it is registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available, including by way of example only, the exemption set forth in Rule 144 under the Exchange Act. Seller acknowledges that Buyer has no obligation to register or qualify the Stock Consideration, or Common Stock issuable upon conversion of the Stock Consideration, for resale. Seller further acknowledges that if an exemption from registration or qualification is available, it may be conditioned upon various requirements including, but not limited to, the time and manner of sale, the holding period for the Stock Consideration and Common Stock issuable upon conversion of the Stock Consideration, and upon requirements relating to Buyer which are outside of Seller’s control, and which Buyer is under no obligation and may not be able to satisfy. Seller understands and will comply with the transfer restrictions applicable to the Stock Consideration, as set forth in the Certificate of Designation of the Series A Preferred Stock Certificate to be filed with the Nevada Secretary of State in connection with the Closing.
(e) Securities not Listed; Public Market. Seller understands that Buyer’s Stock is not currently listed for trading on a securities exchange, and that only a limited public market presently exists for Common Stock, and that Buyer has made no assurances that Buyer’s Stock will ever be listed for trading on a securities exchange or that a public market will ever exist for the Stock Consideration.
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(f) Legends. Seller understands that the Stock Consideration may be notated with one or all of the following legends:
“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”
and any other legend set forth in, or required by securities laws applicable to the Stock Consideration represented by the certificate, instrument, or book entry so legended.
3.26 No Other Representations or Warranties.
(a) SELLER PARTIES ACKNOWLEDGE THAT NONE OF BUYER OR ANY AFFILIATE, EMPLOYEE, AGENT OR OTHER REPRESENTATIVE OF BUYER OR ITS AFFILIATES HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND THAT NO SELLER PARTY HAS RELIED ON, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO BUYER, ITS BUSINESS, THE SERIES A PREFERRED STOCK OR THE TRANSACTIONS CONTEMPLATED HEREUNDER, OTHER THAN THE REPRESENTATIONS AND WARRANTIES THAT ARE EXPRESSLY FORTH IN ARTICLE IV OF THIS AGREEMENT.
(b) EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE III OF THIS AGREEMENT, EACH SELLER PARTY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT MADE OR INFORMATION COMMUNICATED (WHETHER ORALLY OR IN WRITING) TO BUYER AND ITS AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION OR ADVICE WHICH MAY HAVE BEEN PROVIDED TO BUYER AND ITS AFFILIATES OR REPRESENTATIVES BY THE BROKER, ANY DIRECTOR, OFFICER, EMPLOYEE, ACCOUNTING FIRM, LEGAL COUNSEL, OR OTHER AGENT, CONSULTANT, OR REPRESENTATIVE OF ANY OF THE SELLER PARTIES). NONE OF THE SELLER PARTIES MAKES ANY REPRESENTATIONS OR WARRANTIES TO BUYER EXCEPT AS EXPRESSLY CONTAINED IN ARTICLE III OF THIS AGREEMENT, AND ANY AND ALL STATEMENTS MADE OR INFORMATION COMMUNICATED BY SUCH SELLER PARTY OR ANY OF THEIR REPRESENTATIVES OUTSIDE OF THIS AGREEMENT (INCLUDING BY WAY OF THE DOCUMENTS PROVIDED IN RESPONSE TO BUYER’S WRITTEN DILIGENCE REQUESTS AND ANY MANAGEMENT PRESENTATIONS PROVIDED), WHETHER VERBALLY OR IN WRITING, ARE DEEMED TO HAVE BEEN SUPERSEDED BY THIS AGREEMENT, IT BEING AGREED THAT NO SUCH PRIOR OR CONTEMPORANEOUS STATEMENTS OR COMMUNICATIONS OUTSIDE OF THIS AGREEMENT SHALL SURVIVE THE EXECUTION AND DELIVERY OF THIS AGREEMENT.
(c) NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY, NOTHING IN THIS SECTION 3.26 SHALL OR IS INTENDED TO PRECLUDE OR OTHERWISE LIMIT ANY CLAIM OF FRAUD.
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REPRESENTATIONS AND WARRANTIES REGARDING BUYER
In order to induce Seller Parties to enter into and perform this Agreement and to consummate the Transactions, Buyer hereby represents and warrants to the Seller Parties that the following representations and warranties are true, accurate and complete as of the Closing:
4.1 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada.
4.2 Power and Authorization. The execution, delivery and performance by Buyer of the Transaction Documents to which Buyer is a party and the consummation of the Transactions are within the power and authority of Buyer and have been duly authorized by all necessary corporate action on the part of Buyer. The Transaction Documents to which Buyer is a party (a) have been duly executed and delivered by Buyer and (b) are the legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with the terms of such Transaction Documents, except as enforceability may be limited by the Enforceability Exceptions.
4.3 Authorization of Governmental Authorities. Except as disclosed on Schedules 3.3, 3.4, or 4.3 of this Agreement, no action by (including any authorization, consent or approval), or in respect of, or filing with, or notice to, any Governmental Authority is or was required for, or in connection with, the valid and lawful (a) authorization, execution, delivery and performance by Buyer of the Transaction Documents to which Buyer is a party or (b) the consummation of the Transactions by Buyer.
4.4 No Conflict. Neither the execution, delivery and performance by Buyer of Transaction Documents to which it is a party nor the consummation of the Transactions will: (a) assuming the taking of any action by (including any authorization, consent or approval) or in respect of, or any filing with, or notice to, any Governmental Authority, in each case, as disclosed on Schedules 3.3, 3.4, or 4.3 of this Agreement, violate any provision of any Legal Requirement applicable to Buyer, (b) result in a breach or violation of, or default under, any Contract of Buyer, (c) require any action by (including any authorization, consent or approval) or in respect of (including notice to), any Person under any Contract of Buyer, or (d) result in a breach or violation of, or default under, the Organizational Documents of Buyer.
4.5 No Brokers. Buyer does not have any Liability of any kind to, nor is subject to any claim of, any broker, finder or agent in connection with the Transactions other than those that will be borne entirely by Buyer.
4.6 SEC Filings; Financial Statements.
(a) Buyer has filed or furnished (as applicable) all reports, schedules, forms, statements and other documents required to be filed or furnished (as applicable) by Buyer with the SEC pursuant to the Exchange Act and the Securities Act since January 1, 2016 (collectively, the “Buyer SEC Documents”). As of their respective dates or, if amended prior to the Effective Date, as of the date of the last such amendment, the Buyer SEC Documents (i) were prepared in all material respects in accordance with the requirements of the Exchange Act or the Securities Act, as the case may be, applicable to such Buyer SEC Documents and (ii) did not, at the time they were filed, or, if amended prior to the Effective Date, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
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(b) The consolidated financial statements (including all related notes thereto) of Buyer included in the Buyer SEC Documents (if amended, as of the date of the last such amendment filed prior to the Effective Date) (the “Buyer SEC Financial Statements”) comply in all material respects as to form with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. The Buyer SEC Financial Statements fairly present, in all material respects, the consolidated financial position of Buyer and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to the absence of information or notes not required by GAAP to be included in interim financial statements), all in conformity with GAAP (except as permitted by Regulation S-X or, with respect to pro forma information, subject to the qualifications stated therein) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto).
4.7 No Additional Representations or Warranties.
(a) BUYER ACKNOWLEDGES THAT NO SELLER PARTY OR ANY AFFILIATE, EMPLOYEE, AGENT OR OTHER REPRESENTATIVE OF THE SELLER PARTIES HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND THAT BUYER HAS NOT RELIED ON, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE SELLER PARTIES, THE INTERESTS, THE BUSINESS OR THE TRANSACTIONS CONTEMPLATED HEREUNDER, OTHER THAN THE REPRESENTATIONS AND WARRANTIES THAT ARE EXPRESSLY FORTH IN ARTICLE III OF THIS AGREEMENT.
(b) EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE IV OF THIS AGREEMENT, BUYER DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT MADE OR INFORMATION COMMUNICATED (WHETHER ORALLY OR IN WRITING) TO ANY SELLER PARTY OR ITS AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION OR ADVICE WHICH MAY HAVE BEEN PROVIDED TO ANY SELLER PARTY OR ITS AFFILIATES OR REPRESENTATIVES BY ANY PERSON, INCLUDING ANY DIRECTOR, OFFICER, EMPLOYEE, ACCOUNTING FIRM, LEGAL COUNSEL, OR OTHER AGENT, CONSULTANT, OR REPRESENTATIVE OF BUYER OR ITS AFFILIATES). BUYER MAKES NO REPRESENTATIONS OR WARRANTIES TO ANY SELLER PARTY EXCEPT AS EXPRESSLY CONTAINED IN ARTICLE IV OF THIS AGREEMENT, AND ANY AND ALL STATEMENTS MADE OR INFORMATION COMMUNICATED BY BUYER OR ITS AFFILIATES OR ANY OF THEIR REPRESENTATIVES OUTSIDE OF THIS AGREEMENT (INCLUDING BY WAY OF THE DOCUMENTS PROVIDED IN RESPONSE TO ANY SELLER PARTY’S WRITTEN DILIGENCE REQUESTS), WHETHER VERBALLY OR IN WRITING, ARE DEEMED TO HAVE BEEN SUPERSEDED BY THIS AGREEMENT, IT BEING AGREED THAT NO SUCH PRIOR OR CONTEMPORANEOUS STATEMENTS OR COMMUNICATIONS OUTSIDE OF THIS AGREEMENT SHALL SURVIVE THE EXECUTION AND DELIVERY OF THIS AGREEMENT.
(c) NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY, NOTHING IN THIS SECTION 4.7 IS INTENDED TO OR IS INTENDED TO PRECLUDE OR OTHERWISE LIMIT ANY CLAIM OF FRAUD.
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5.1 Closing Conditions. From the Effective Date until the Closing, each Party hereto shall use reasonable best efforts to take such actions as are necessary to expeditiously satisfy the Closing conditions set forth in Article VI hereof (unless waived in accordance with Section 10.3).
5.2 Operation of the Business. From the Effective Date until the Closing, Seller Parties, except as otherwise agreed to by the Parties in writing, will (and shall cause each other Group Company to): (a) conduct the Business only in the Ordinary Course of Business, (b) use commercially reasonable efforts to preserve intact each Group Company’s business organization and relationships (contractual or otherwise) with third parties (including lessors, licensors, suppliers, distributors, and patients) and employees, (c) use commercially reasonable efforts to keep available the services of its current officers, directors, employees and consultants, (d) preserve in all material respects its present Assets, (e) comply with all applicable Legal Requirements, including pursuant to the Disclosed Contracts, (f) pay all applicable Taxes as such Taxes become due and payable, (g) maintain all existing licenses and Permits material to its operations and businesses, (h) make all capital expenditures in the Ordinary Course of Business, and (i) consult with Buyer prior to taking any action or entering into any transaction that may be of strategic importance to any Group Company or Buyer or that could otherwise prevent, enjoin, or materially alter or delay the Transactions, or that could reasonably be expected to have a Material Adverse Effect, and Seller Parties shall refrain from (and cause the Group Companies to refrain from) taking any action that would result in the change in the capitalization structure of the Group Companies as set forth on Schedule 3.5(a). Without limiting the generality of this Section 5.2, Seller shall not (and Seller Parties will cause the Group Companies not to), from the Effective Date until the Closing, directly or indirectly, do, or agree to do, any of the following without the prior written consent of the Buyer:
(a) sell, lease, license (as licensor), assign, dispose of or transfer (including transfers to any of a Group Company’s respective employees or Affiliates) any of its Assets (whether tangible or intangible), except for sales of inventory in the Ordinary Course of Business;
(b) mortgage, pledge or subject to any Encumbrance any portion of its Assets, other than Permitted Encumbrances;
(c) make, commit to make or authorize any capital expenditures, except in the Ordinary Course of Business;
(d) acquire (including by merger, consolidation, license or sublicense) any interest in any Person or substantial portion of the Assets or business of any Person;
(e) incur any Debt, including any refinancing of existing Debt or increasing the outstanding obligations on any letter of credit, or assume, guarantee or endorse the obligations or enter into any agreements to maintain the fiscal condition of any Person;
(f) enter into, amend, modify, terminate or assign any Disclosed Contract;
(g) issue, sell, pledge, dispose of, encumber or transfer the Interests, any Ownership Interests, securities convertible, exchangeable or exercisable into Ownership Interests, or warrants, or any options or other rights to acquire Ownership Interests, of any Group Company;
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(h) declare, set aside, or distribute any dividend or other distribution (whether payable in cash, stock, property or a combination thereof), or enter into any agreement with respect to the voting of the Ownership Interests of any Group Company;
(i) waive, release, assign, settle or compromise any material rights or claims, or any material litigation or arbitration;
(j) (i) hire or terminate any employee, manager, director or independent contractor except in the Ordinary Course of Business, (ii) increase any form of Compensation payable or to become payable to any equity holder of any Group Company or any Affiliate of any such equity holder, any current or former director, manager, or officer, employee, consultant or other service provider of a Group Company, including without limitation, any increase or change pursuant to any Company Plan, (iii) grant or increase any rights to change in control, severance, retention or termination payments or benefits to, or enter into any employment, consulting, change in control, retention or severance agreement with, any director, manager, officer, employee, consultant or other service provider of a Group Company, (iv) accelerate the vesting or payment of any compensation or benefits under any Company Plan (other than any such acceleration, vesting or payments required pursuant to the terms of such Company Plan in connection with the Transaction contemplated herein, all of which have been provided to Buyer prior to the Effective Date, if any) or (v) establish, adopt, enter into, amend, modify or terminate any Company Plan;
(k) make loans or advances to, guarantees for the benefit of, or any investments in, any Person;
(l) forgive any loans to managers, directors, officers, employees or any of their respective Affiliates;
(m) make any material change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP or changes in Law;
(n) (i) accelerate or delay collection of receivables in advance of or beyond their regular due dates or the dates when the same would have been collected in the Ordinary Course of Business, (ii) delay or accelerate payment of any Liability in advance of its due date or the date such Liability would have been paid in the Ordinary Course of Business, (iii) make any material changes to cash management policies, (iv) delay or postpone the ordinary course repair or maintenance of properties or Assets or (v) vary any inventory purchase practices in any material respect from past practices;
(o) (i) make any Tax election, settle or compromise any Action, including any claim, notice, audit report or assessment, in respect of Taxes, (ii) change any annual Tax accounting period, (iii) adopt or change any method of Tax accounting, (iv) file any amended Tax Return, (v) enter into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement relating to any Tax, (vi) surrender any right to claim a Tax refund, or (vii) consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment;
(p) take any action for the winding up, liquidation, dissolution or reorganization of any Group Company or for the appointment of a receiver, administrator or administrative receiver, trustee or similar officer of its Assets or revenues;
(q) amend the Organizational Documents of any Group Company;
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(r) lay off or terminate employees that could result in Liability under the WARN Act;
(s) fail to keep in force insurance policies or replacement or revised provisions providing insurance coverage with respect to the Assets, operations, activities and Business of the Group Companies as are currently in effect;
(t) take or omit to take any action that which, individually or in the aggregate, could reasonably be expected to (i) result in any representation or warranty of any Seller Party to be untrue in any material respect, result in a material breach of any covenant made by any Seller Party in this Agreement, (ii) if taken or omitted to be taken between January 1, 2020 and the Effective Date would have been required to be disclosed on Schedule 3.8 of this Agreement, or (iii) could reasonably be expected to result in any condition set forth in Article VI not being satisfied;
(u) cancel any Debt owed to any Group Company or waive any claims or rights of value;
(v) request or accept any advance payments or funding from Medicare or any Governmental Authority pursuant to any CARES Act stimulus fund programs or other COVID-19 Measures, or participate in any other governmental stimulus subsidy or similar programs, without the prior written consent of Buyer;
(w) utilize, transfer, pay or otherwise administer (and maintain accounting records associated with) cash paid, distributed or funded to any Group Company from the CARES Act Relief Fund except in strict compliance with all of the terms and conditions of the CARES Act Relief Fund program and all Legal Requirements applicable thereto, including all applicable Provider Relief Fund payment terms and conditions; or
(x) agree or commit to do any of the foregoing.
Seller Parties, on the one hand, and the Buyer, on the other hand, acknowledge and agree that: (a) nothing contained in this Agreement shall give the Buyer, directly or indirectly, the right to control or direct any Group Company’s operations prior to the Closing Date, (b) prior to the Closing Date, each of the Group Companies and the Buyer shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its respective operations, and (c) none of the restrictions in this Section 5.2 shall restrict the ability of the any Group Company to take any action or fail to take any action at the written request or with the prior written consent of the Buyer.
5.3 Access to Information. From the Effective Date until the Closing or the earlier termination of this Agreement in accordance with Article VIII, Seller Parties will (and will cause each Group Company to) (a) give the Buyer and its Affiliates and their respective counsel, financial advisors, auditors, employees, agents and other Representatives reasonable access during normal business hours, to (i) all Facilities, Assets, personnel, agents and accountants of each Group Company, (ii) true, correct and complete copies of books, records, Tax Returns, commitments and Contracts (including customer and supplier Contracts) and other financial and operating data of each Group Company, and (iii) other information with respect to any Group Company as such Persons may reasonably request, including interim financial information (which Seller Parties shall cause to be prepared upon request from time to time), (b) instruct their respective counsel, accountants, financial advisors and other Representatives to reasonably cooperate with the Buyer in its investigation of any Group Company, and (c) make reasonable inquiries of Persons having business relationships with the Business or the Group Companies as Buyer shall request in writing and communicate the results of such inquiries to Buyer; provided, that (w) such access will be given in a manner that does not unreasonably interfere with the operations, activities and employees of the Group Companies, (x) such access and disclosure would not violate any applicable Legal Requirement, (y) such access and disclosure would not result in the loss of any attorney-client privilege, work product protections or other similar privileges or protections (but, if applicable, copies of redacted information shall be provided to the extent possible), (z) no Group Company shall be required to provide any individually identifiable health related information except in compliance with applicable Legal Requirement. No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by any Seller Party in this Agreement. All information provided to or obtained by Buyer pursuant to this Section 5.3 will be subject to the Non-Disclosure Agreement, dated September 28, 2020, executed by [Buyer] (“Confidentiality Agreement”) in accordance with and be subject to the terms of the Confidentiality Agreement for the term specified therein.
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(a) Seller Parties shall (and shall cause the other Group Companies to) give all notices to, make all filings with and use their reasonable best efforts to obtain all authorizations, consents or approvals from any Governmental Authority or other Person that are disclosed or are required to be disclosed on Schedules 3.3 and 3.4 of this Agreement, or as otherwise reasonably requested by Buyer. Buyer will give all notices to, make all filings with and use its reasonable best efforts to obtain all authorizations, consents or approvals from any Governmental Authority or other Person that are required to be set forth on Schedule 4.3 of this Agreement.
(b) Without limiting the generality of Section 5.4(a): the Parties agree to comply at the earliest practicable date with any formal or informal request for additional information or documentation received from any Governmental Authority in connection with the Transactions contemplated by this Agreement. Each party further agrees to reasonably cooperate with the other parties in order to resolve any investigation or other inquiry concerning the Transactions contemplated hereby initiated by any Governmental Authority; provided, that nothing in this Agreement shall require or be construed to require (i) Buyer or its Affiliates (including, after Closing, the Group Companies other than Seller) to propose, negotiate, commit to or effect, by consent decree, hold separate order or otherwise, the sale, divestiture, licensing or disposition of any Assets or businesses (except pursuant to the Transactions), or (ii) Buyer or its respective Affiliates to take or commit to take actions that after the Closing Date would limit the freedom of Buyer, the Group Companies or their respective Affiliates with respect to, or their ability to retain, one or more of their respective businesses or Assets (including the Business), in each case, as may be required in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any Action which would otherwise have the effect of preventing or materially delaying the Closing. Without limited the foregoing, none of the Parties or any of their respective Affiliates shall enter into any agreement with any Governmental Authority not to consummate the Transactions, except with the prior written consent of the other parties hereto.
5.5 Notice of Developments. From the Effective Date until the Closing, each Party shall promptly notify the other Parties in writing of (a) all events, circumstances, facts and occurrences arising subsequent to the Effective Date which could result in a material breach of a representation, warranty or covenant of such Party in this Agreement or which could have the effect of making any representation or warranty of such Party in this Agreement untrue in any material respect and (b) all other material developments that may have a Material Adverse Effect on the Business; provided that no disclosure by any Seller Party pursuant to this Section 5.5 shall be deemed to amend or supplement the Schedules of this Agreement, to prevent or cure any misrepresentation, breach of warranty or breach of covenant, or to affect the rights of the Buyer under this Agreement, including under Section 7.1.
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5.6 Exclusivity. From the Effective Date until the Closing or the earlier termination of this Agreement in accordance with Article VIII, Seller Parties shall not (and shall cause the Group Companies and its and their respective managers, officers, directors, stockholders, Representatives, agents, investment bankers and Affiliates not to), directly or indirectly, discuss, pursue, solicit, initiate, participate in, facilitate, encourage or otherwise enter into any discussions, negotiations, agreements or other arrangements regarding or which could lead to, a possible sale or other disposition (whether by merger, reorganization, recapitalization or otherwise) of all or any part of the Ownership Interests, the Business or the Assets of any Group Company with any other Person other than the Buyer or its Affiliates (an “Acquisition Proposal”) or provide any information to any Person other than the Buyer and its Affiliates, and their Representatives other than information which is traditionally provided in the Ordinary Course of Business of the Group Companies to third parties where the Group Companies and their officers, directors and Affiliates have no reason to believe that such information may be utilized to evaluate any Acquisition Proposal. None of the Ownership Interests of any Group Company or otherwise shall be voted in favor of any Acquisition Proposal. Seller Parties shall (and shall cause the Group Companies and its and their respective managers, officers, directors, Representatives, agents, investment bankers and Affiliates to), (a) immediately cease and cause to be terminated any and all Contracts, discussions and negotiations with any Person other than the Buyer and its Affiliates and Representatives regarding the foregoing, (b) promptly notify the Buyer if any Acquisition Proposal, or any inquiry or contact with any Person with respect thereto which has been made as of the Effective Date or is subsequently made, and (c) keep the Buyer fully informed with respect to the status of the foregoing. Seller Parties agree not to (and to cause the Group Companies not to), without the prior consent of the Buyer, release any Person from, or waive any provision of, any standstill agreement or confidentiality agreement to which any Group Company is a party or is otherwise bound.
5.7 D&O Tail Coverage; Indemnification for Professional Liability Claims.
(a) Prior to or simultaneously with the Closing, the Group Companies shall purchase extended reporting “tail insurance” policies providing coverage for directors’ and officers’ liability insurance, employment practices liability insurance and fiduciary liability insurance covering acts or omissions occurring on or prior to the Closing Date with respect to those Persons who are currently covered by the Group Companies’ comparable insurance policies for six years after the Closing Date on terms with respect to such coverage and amount no less favorable to the insured than those of such current insurance coverages (collectively, the “Tail Policies”). Prior to the Closing Date, the Company shall deliver to the other Parties reasonable evidence of such Tail Policies.
(b) Buyer agrees that all obligations of the Group Companies for indemnification and advancement of expenses in favor of each past and present officer, manager and director of the Group Companies (each, a “Company Indemnitee”) under any indemnification agreement disclosed on Schedule 5.7 and pursuant to the Organizational Documents of the Group Companies, in each case, in effect as of both the Effective Date and October 29, 2020, shall survive the Closing Date and shall, subject to the terms of this Agreement (including Section 7.6), continue in full force and effect in accordance with their respective terms, which provisions will not be amended, repealed or otherwise modified for a period of six years from the Closing Date in any manner that would materially and adversely affect the rights thereunder of the Company Indemnitees, unless such modification is required by applicable Law, and all rights to indemnification thereunder in respect of any Action asserted or made within such period shall continue until the final disposition or resolution of such Action or the expiration of the statute of limitations with respect to any such claim, together with any appeal thereof.
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5.8 Executive Recruitment; Customers and Other Business Relationships. From and after the Closing, each Seller Party will (and will cause its employees, agents and Affiliates, as applicable, to) reasonably cooperate with Buyer in its efforts to identify, recruit and engage a qualified Chief Executive Officer for the Group Companies and to use commercially reasonable efforts to cooperate with Buyer to maintain for the benefit of Buyer and its Affiliates the material business relationships of each Group Company and otherwise of the Business, including relationships with patients, customers, advertisers, vendors, licensors, landlords, lessors and employees, and each Seller Party agrees not to cause or take any action intended to discourage, or that might reasonably be anticipated to have the effect of discouraging, such Persons from entering or maintaining the same, as applicable, business relationships with the Group Companies and their Affiliates after the Effective Date. From and after the Closing, each Seller Party will refer all customer, vendor and other material business inquiries relating to the Business to the Buyer.
(a) In consideration of the Purchase Price to be received under this Agreement and in connection with the sale of all of the Interests, which includes the Group Companies’ goodwill (which the Owners agree and acknowledge will inure to their direct and indirect benefit), each Seller Party, individually and on behalf of its Affiliates, agrees that, for a period beginning on the Closing Date and continuing for the Restrictive Covenant Period, such Persons shall not (and shall cause its Affiliates not to), directly or indirectly (including through Affiliates), or by action in concert with others, do any of the following:
(i) engage in, or invest in, own, manage, operate, finance, control, be associated with or in any manner connected with, conduct or assist any business, or have an interest in any Person, whether as a principal, owner, agent, contractor, employee, shareholder, member, officer, manager, officer, director, lessor, joint venturer, partner, security holder (except for the passive ownership of publicly-traded securities constituting not more than two percent (2%) of the outstanding securities of the issuer thereof), creditor (except for trade credit extended in the Ordinary Course of Business), consultant or render services or advice or other aid to, any Person engaged or planning to become engaged in, any Competing Business within the Restricted Area;
(ii) solicit, canvas, approach, entice or induce any employee, director, manager, officer, or independent contractor of the Business, any Group Company, the Buyer or any of their respective Affiliates (who was an employee, director, manager, officer, or independent contractor at any time during the twelve (12) month period ending on Closing or at any time during the Restrictive Covenant Period) to alter, lessen or terminate his, her or its employment, engagement or other relationship with the Business, any Group Company, the Buyer or any of their respective Affiliates, or in any way intentionally interfere with the relationship between the Business, any Group Company, the Buyer or any of their respective Affiliates and any such employee, director, manager, officer or independent contractor, or solicit, offer employment to, otherwise attempt to hire, employ, or otherwise engage as an employee, director, manager, officer, or independent contractor, or otherwise, any such employee, director, manager, officer, or independent contractor of the Business, any Group Company, the Buyer or any of their respective Affiliates;
(iii) solicit, canvas, approach, entice or induce any Person that is (or was at any time during the Restrictive Covenant Period) an actual or prospective patient, referral source, Payor, supplier or business relation of the Business, any Group Company (other than Seller), the Buyer or any of their respective Affiliates or to cease doing business, fail to establish or lessen, or adversely modify its existing or proposed business or other relationship with, or referral of business to, the Business, any Group Company (other than Seller), the Buyer or any of their respective Affiliates, in any way interfere with the relationship between the Business, any Group Company (other than Seller), the Buyer or any of their respective Affiliates and any such actual or prospective patient, referral source, supplier, Payor or business relation, or solicit the business of any such actual or prospective patient, supplier, Payor or business relation for any competitive purposes;
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(iv) make any disparaging remarks or communications about the Business, any Group Company (other than Seller), the Buyer or any of their respective Affiliates; or
(v) assist, induce, help or join in any other Person in doing any of the above activities.
(b) For purposes hereof, (i) “Competing Business” shall mean the Business conducted by the Group Companies immediately prior to Closing or any business substantially similar to or competitive with any Group Company or the Business or any material aspect thereof, (ii) “Restricted Area” shall mean the area within a 25 mile radius of each office of any Group Company and each other location at which the Business, or any portion thereof, is conducted as of the Effective Date or Closing, and (iii) “Restrictive Covenant Period” means the two (2) year period beginning on the Closing Date.
(c) Each Seller, on behalf of itself and its Affiliates, acknowledges that all of the foregoing provisions, including restrictions on time and geographical scope set forth in Sections 5.9(a) and Section 5.9(b) above, are reasonable and necessary to protect Buyer from unfair competition, solicitation, and disclosure of confidential information and to protect the value of the Interests, including the goodwill of the Business to Buyer. If any of the covenants set forth in this Section 5.9 are held to be invalid or unenforceable, the remainder of such covenants shall not thereby be affected and shall be given full effect, without regard to the invalid portions. If it is determined that any of the restrictive covenants, or any part thereof, are unenforceable because of the duration of such provision, the geographical area covered thereby, or any other determination of unreasonableness of the provision, the court making such determination shall have the power, and shall be directed by the Parties, to reduce the duration, area or scope of such provision to the least amount so as to be enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced. If the provision cannot be modified by such court, then the unenforceable portion of that provision may be severed and the other parts of this Agreement will remain enforceable, and the Parties will negotiate in good faith to adopt a modified version of the severed provision that is enforceable to the maximum extent giving effect to the intent of the Parties expressed in such severed provision.
(d) The Parties acknowledge and agree that, concurrently with and as a direct result of the consummation of the Transactions, each Seller Party and its Affiliates (including its equity holders) will, directly or indirectly, benefit from Buyer’s payment of the Purchase Price, and Buyer would not enter into this Agreement without concurrently receiving the benefit of the covenants and agreements of Seller Parties (on behalf of itself and its Affiliates) set forth in this Section 5.9.
(e) In the event of a breach by any Seller Party or any of its Affiliates of any covenant set forth in Section 5.9(a) of this Agreement, the Restrictive Covenant Period will be extended by the period of the duration of such breach.
(f) Each Seller Party, on behalf of itself and its Affiliates, acknowledges that a breach by any Seller Party or any of its Affiliates of any of the covenants set forth in Section 5.9(a) of this Agreement cannot be reasonably or adequately compensated in damages in an Action at law, and that Buyer will be entitled to, among other remedies, and without posting any bond or other undertaking, injunctive relief, which shall include, but will not be limited to: (i) restraining such Seller Party or any of its Affiliates from engaging in any action that would constitute or cause a breach or violation of Section 5.9(a), (ii) obtaining specific performance to compel such Seller Party or any of its Affiliates to perform its obligations and covenants hereunder, and (iii) obtaining damages available either at law or in equity.
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5.10 Public Announcements. No public announcement or disclosure shall be made by any Party with respect to the subject matter of this Agreement or the Transactions without the prior written consent of Buyer and Seller; provided, that the provisions of this Section 5.10 shall not prohibit (a) any private disclosure to any prospective provider of debt or equity financing to Buyer or its Affiliates or to any such Person’s Representatives, potential investors or participants, (b) any disclosure required by any applicable Legal Requirement (in which case the disclosing Party shall provide the other Parties with the reasonable opportunity to review in advance the disclosure) or stock exchange requirements (based on the reasonable advice of counsel), (c) any disclosure necessary to obtain a consent or approval from a Governmental Authority or other third party, (d) any disclosure made in connection with the enforcement of any right or remedy relating to this Agreement or the Transactions, or (e) the disclosure by Buyer or its Affiliates to report and disclose the status of this Agreement and the Transactions in the Ordinary Course of Business to their owners and Affiliates; provided, further, that after the Closing, Buyer and its Affiliates are freely permitted to issue any press release or make public announcements regarding the consummation of this Agreement without the consent of any other Person, including, without limitation, in such form as it deems necessary in its sole discretion to comply with United States securities laws provided that no such public announcement shall provide the financial or economic terms related to the subject matter of this Agreement except as required by Law, including to comply with the United States securities laws.
5.11 Confidentiality. Each Seller Party agrees that none of such Seller Party or any of its Affiliates will, at any time on or after the Closing Date, directly or indirectly, without the prior written consent of Buyer, disclose or use any confidential or proprietary information involving or relating to the Business; provided, however, that the information subject to the foregoing provisions of this sentence will not include any information generally available to, or known by, the public (other than as a result of disclosure in violation hereof). Each Seller Party further agrees not to disclose the terms of this Agreement or any other agreements or instruments to be executed and/or delivered pursuant to this Agreement (including the Transaction Documents), except in confidence to its legal and Tax advisors. Each Seller Party agrees that it will be responsible for any breach or violation of the provisions of this Section 5.11 by any of its Affiliates or Representatives. In the event that any Seller Party is required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any confidential information, such Seller Party shall promptly notify Buyer of the request or requirement so that Buyer may seek an appropriate protective order or waive compliance with the provisions of this Section 5.11. If, following such notice and in the absence of a protective order or the receipt of a waiver hereunder, such Seller Party is, on the advice of counsel, compelled to disclose any confidential information to any tribunal or else stand liable for contempt, such Seller Party may disclose the confidential information to the tribunal; provided, that such Seller Party shall use its commercially reasonable efforts to obtain, at the request and expense of Buyer, an order or other assurance that confidential treatment shall be accorded to such portion of the confidential information required to be disclosed as Buyer shall designate, and such Seller Party shall give reasonable advance notice to Buyer and shall give Buyer an opportunity to take such reasonable actions to minimize the required disclosure.
5.12 Misdirected Payments. From and after the Closing, each Seller Party, on behalf of itself and its Affiliates, covenants and agrees to remit, with reasonable promptness, to Buyer any payments received constituting or in respect of any Group Companies that come into its possession, including payments on or in respect of accounts or notes receivable owned by (or are otherwise payable to) any Group Company. Pending any such transfer, such Seller Party will segregate any such Assets from its other Assets and will clearly mark or designate such Assets as the property of Buyer.
5.13 Release of Corporate Names; Continued Existence. From and after the Closing Date, no Seller Party shall directly or indirectly use the name “Trillium”, any names currently or historically used by any Group Company or any similar names, or any service marks, trademarks, trade names, d/b/a names or fictitious names, identifying symbols, logos, emblems, indicia or signs containing or comprising the foregoing. Immediately following Closing, Seller shall change its corporate name to remove any reference to the foregoing names or any names or marks derived from or confusingly similar to any such names or marks. As promptly as practicable following the Closing Date, Seller shall file in all jurisdictions in which it is qualified to do business any documents necessary to reflect such change of name or to terminate its qualification therein.
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5.14 Access to Books and Records. For a period of five (5) years following the Closing, Seller shall (and Owners shall cause Seller to) (i) retain the books, records and other data of the Group Companies and the Business (including personnel files) relating to periods prior to the Closing in a manner consistent with reasonable business practices, but no less protective than the prior practices of the Group Companies, and (ii) upon reasonable notice, afford the Buyer and its Affiliates reasonable access (including the right to make, at Buyer’s expense, photocopies or electronic backups), during normal business hours, to such books, records or other data. Nothing in this Section 5.14 shall be construed to limit the Parties’ obligations under Section 9.2.
5.15 Tax Clearance Certificates. Seller shall (and Owners shall cause Seller to) notify each of the taxing authorities in the jurisdictions that impose Taxes on any Group Company or where any Group Company has a duty to file Tax Returns of the Transactions contemplated by this Agreement in the form and manner required by such taxing authorities, if the failure to make such notifications or receive any available Tax clearance certificate could subject the Buyer to any Taxes of any such Group Company. If any taxing authority asserts that any Group Company is liable for any Tax, Seller shall promptly pay any and all such amounts and shall provide evidence to the Buyer that such Liabilities have been paid in full or otherwise satisfied.
5.16 Release. Effective as of the Closing, each Seller Party, on behalf of itself and its Affiliates, successors and assigns (“Seller Party Releasors”), (i) irrevocably and unconditionally waives, releases and forever discharges each of the Group Companies, and each of their respective current, former and future managers, directors, members, principals, parents, agents, Subsidiaries, joint ventures, Predecessors, successors, and assigns (collectively, the “Company Released Parties”) from any and all rights, commitments, Actions, debts, claims, counterclaims, suits, causes of action, damages, demands, Liabilities, obligations, costs, expenses and compensation of every kind and nature whatsoever, whether known or unknown, matured or contingent and whether arising in law, in equity or otherwise, in each case based upon facts, circumstances or occurrences existing at or prior to the Closing (collectively, the “Released Claims”) and (ii) irrevocably covenants to refrain from, directly or indirectly, asserting any claim or commencing, instituting or causing to be commenced, any such Action of any kind based upon facts, circumstances or occurrences existing at or prior to the Closing against any Company Released Party. Each Seller Party, on behalf of itself and each other Seller Party Releasor, represents to Buyer that no Seller Party Releasor has assigned or transferred, or purported to assign or transfer, to any Person all or any part of, or any interest in, any Action against any Company Released Party and, notwithstanding anything to the contrary in this Agreement, no such assignment or transfer shall be permitted, and any purported assignment or transfer shall be legally ineffective. Notwithstanding the generality of the foregoing, nothing herein constitutes a waiver or release by any Seller Party Releasor of: (i) any Company Released Party’s obligations under this Agreement or any other Transaction Document, (ii) Actions or rights arising under this Agreement or any other Transaction Document of any Seller Party Releasor, (iii) any Actions or rights pursuant to the Tail Policies, (iv) any rights or claims that may arise as a result of an action or event occurring after the Closing, and (v) any rights as an employee, director and officer of Buyer to indemnification and exculpation as a result of an action or event occurring after the Closing. Each Seller Party Releasor also hereby waives the benefits of, and any rights that such Person may have under, any Legal Requirement or similar effect in any jurisdiction relating to the released matters against the Company Released Parties.
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5.17 Omega Transaction. Owners agree that until the closing and consummation in full of the Omega Facilities Sale, including, without limitation, the conveyance of the real property interests contemplated by the Omega Purchase Agreement, Owners will remain guarantors pursuant to that certain Unconditional Guarantee of Lease, dated as of May 13, 2015.
5.18 Updates to Disclosure Schedules.
(a) Seller Parties shall, within thirty (30) days from the Effective Date, finalize and deliver to Buyer, Schedules 2.8, 3.1(a), 3.3, 3.4, 3.5(a), 3.5(b), 3.6(a), 3.6(b), 3.6(c), 3.7(b)(i), 3.7(b)(ii), 3.8, 3.9(a), 3.9(b), 3.11(a), 3.11(f), 3.12(a), 3.12(b), 3.12(c), 3.12(d), 3.13(a), 3.13(d), 3.13(e), 3.14(a), 3.14(b), 3.16(a), 3.16(b), 3.16(e), 3.18(a), 3.18(b), 3.19, 3.20(a), 3.20(b), 3.20(c), 3.21, 3.22, 3.23, 3.24(c), 3.24(d) and 5.7 (the “Initial Schedule Update”) in form and substance reasonably satisfactory to Buyer. From and after the Effective Date until the Closing, Buyer may, in its sole discretion, update, amend or modify Schedules 2.8, 4.3 and 7.1(a) to reflect any facts, circumstances or events arising or becoming known to Buyer during the period subsequent to the Effective Date in connection with the Initial Schedule Update.
(b) Buyer shall, during the period following Buyer’s receipt of the Initial Schedule Update until June 15, 2021, have the option to notify Seller in writing of Buyer’s intention to terminate this Agreement by reason of any matter disclosed in the Initial Schedule Update unless an acceptable amendment, adjustment or other modification to this Agreement is made by written agreement of the Seller Parties and Buyer. If the Seller Parties and Buyer are unable to agree on such modification or adjustment within three (3) Business Days of such notice from Buyer, Buyer shall have the right, by written notice delivered to Seller at any time thereafter but prior to the Closing, either to (i) accept the Initial Schedule Update and proceed with the Closing notwithstanding the information disclosed in the Initial Schedule Update, or (ii) terminate this Agreement by delivery of written notice to Seller.
5.19 Gemino Credit Facility. Buyer shall cause the Group Companies to use commercially reasonable efforts to obtain the release of Owners as guarantors of the outstanding Debt obligations owed to Gemino Healthcare Finance, LLC or any of its Affiliates (including pursuant to that certain Credit Agreement, dated as of May 9, 2019, between Gemino Healthcare Finance, LLC, the Group Company borrowers named on Annex A thereto, and the parties set forth on the signature pages thereto) as soon as reasonably practicable following the Closing.
5.20 Further Assurances. Unless a different or higher standard is expressly required by this Agreement, the Parties hereto agree to use their commercially reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable Legal Requirements, and to execute and deliver such documents and other papers, as may be required to carry out the provisions of the Transaction Documents to which it is a party and consummate and make effective the Transactions contemplated hereby and thereby, including such actions as may be reasonably requested by Buyer to vest in Buyer good title to the Interests or to comply with United States securities laws. Each Party hereto also agrees to use commercially reasonable efforts to cooperate with such other Parties hereto and their employees, attorneys, accountants and other agents and, generally, do such other acts and things in good faith as may be reasonable to timely effectuate the purposes of this Agreement and the consummation of the Transactions contemplated hereby and by the other Transaction Documents.
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Article
VI.
CLOSING CONDITIONS
6.1 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the Closing are subject to the fulfillment of each of the following conditions (unless waived by Buyer in accordance with Section 10.3):
(a) Representations and Warranties. Other than the Seller Fundamental Representations, the representations and warranties of Seller Parties contained in this Agreement and in any document, instrument or certificate delivered hereunder (i) that are not qualified by materiality, Material Adverse Effect or similar phrases will be true and correct in all material respects on and as of the Effective Date and at and as of the Closing with the same force and effect as if made as of the Closing, and (ii) that are qualified by materiality, Material Adverse Effect, or similar phrases will be true and correct in all respects on and as of the Effective Date and at and as of the Closing with the same force and effect as if made as of the Closing, in each case, other than representations and warranties that expressly speak only as of a specific date or time, which will be true and correct as of such specified date or time. The Seller Fundamental Representations (notwithstanding clauses (i) and (ii) above) shall be true and correct in all respects on and as of the Effective Date and at and as of the Closing.
(b) Performance. Seller Parties will have performed and complied in all material respects with all agreements, obligations and covenants contained in this Agreement that are required to be performed or complied with by them at or prior to the Closing.
(c) Compliance with Legal Requirements. No provision of any applicable Legal Requirement and no Government Order will prohibit the consummation of any of the Transactions or subject the Buyer, its Affiliates or any Group Company to any penalty or Liability (other than obligations of Seller specifically set forth in this Agreement) or other onerous condition arising under any Legal Requirement or imposed by any Governmental Authority or otherwise adversely affect Buyer’s right to directly or indirectly own the Interests and to own and conduct the Business.
(d) Absence of Litigation. Other than for any Action instigated by Buyer, no Action will be pending or threatened which may result in a Government Order (nor will there be any Government Order in effect) which could (i) prevent consummation of any of the Transactions, (ii) result in any of the Transactions being rescinded following consummation, (iii) limit or otherwise adversely affect the right of Buyer to own the Interests or to operate all or any portion of the Business, (iv) compel Buyer or any of its Affiliates to dispose of all or any portion of the Business or the business or Assets of Buyer or any of its Affiliates or (v) result in any material damages being assessed against the Business, any Group Company or Buyer as a result of the consummation of the Transactions.
(e) Closing Certificate. Buyer shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of each Group Company, dated as of the Closing, certifying that each of the conditions specified in Section 6.1(a) and Section 6.1(b) have been fully satisfied.
(f) Permits. Buyer shall have received all Permits that are necessary for it to conduct the Business as conducted by the Group Companies as of the Effective Date or, if any such Permits are not capable of being obtained prior to the Closing, it shall have received such evidence as it deems satisfactory that it shall be able to obtain such Permits post-Closing and will be permitted to operate the Business post-Closing until such Permits are obtained.
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(g) COVID Measures. No Group Company shall be subject to any COVID-19 Measures that could prevent any Group Company or the Business from operating in the Ordinary Course of Business.
(h) Closing Deliveries. Seller Parties shall have caused the Seller Closing Documents required by Section 2.5(a), and such other documents or instruments as the Buyer may reasonably request or may be required to effect the Transactions contemplated by the Transaction Documents, to be delivered (or tendered subject only to Closing) to Buyer.
(i) No Material Adverse Effect. Since the Effective Date, there will have occurred no event nor will there exist any circumstance which, individually or in the aggregate, with all other events and circumstances, has resulted or would reasonably be expected to result in a Material Adverse Effect.
6.2 Conditions to Obligations of the Seller. The obligations of the Seller to consummate the Closing are subject to the fulfillment or waiver of each of the following conditions:
(a) Representations and Warranties. Each of the representations and warranties of the Buyer contained herein (i) that are not qualified by materiality, Material Adverse Effect or similar phrases shall be true and correct in all material respects on and as of the Effective Date and at and as of the Closing and (ii) that are qualified by materiality, Material Adverse Effect, or similar phrases shall be true and correct in all respects on and as of the Effective Date and at and as of the Closing, in each case, (x) other than representations and warranties that expressly speak only as of a specific date or time, which will be true and correct as of such specified date or time and (y) except where the failure of such representations and warranties be true and correct does not materially impair the ability of Buyer to perform its obligations hereunder or prevent or materially delay the consummation of the Transactions contemplated hereby.
(b) Performance. Buyer will have performed and complied in all material respects with all agreements, obligations and covenants contained in this Agreement that are required to be performed or complied with by Buyer at or prior to the Closing.
(c) Closing Certificate. Seller shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of the Buyer, dated as of the Closing, certifying that each of the conditions specified in Section 6.2(a) and Section 6.2(b) have been fully satisfied.
(d) Closing Deliveries. Buyer must have caused the Buyer Closing Documents required by Section 2.5(b) to be delivered (or tendered subject only to Closing) to Seller.
7.1 Indemnification by Seller Parties.
(a) Indemnification. Subject to the limitations set forth in this Article VII, the Seller Parties shall, jointly and severally, indemnify, reimburse, compensate, defend and hold harmless Buyer and its Affiliates, successors and permitted assigns and their respective equity holders, partners, Representatives and Affiliates (for the avoidance of doubt, including, after Closing, the Group Companies but expressly excluding Seller Parties) (each, a “Buyer Indemnified Person”), from, against and in respect of any and all Actions, Liabilities, Government Orders, Encumbrances, losses, damages, bonds, dues, assessments, fines, penalties, Taxes, fees, costs (including costs of investigation, defense and enforcement of this Agreement), expenses or amounts paid in settlement (in each case, including reasonable attorneys’ and experts fees and expenses), whether or not involving a Third Party Claim or a claim or alleged claim existing as of the Effective Date (collectively, “Losses”), that any such Buyer Indemnified Person may suffer, sustain or become subject to as a result of, arising out of or directly or indirectly relating to:
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(i) any breach of, or inaccuracy in, any representation or warranty made by any Seller Party in Article III of this Agreement, or in any document, schedule, instrument or certificate delivered in connection with this Agreement;
(ii) any fraud of any Seller Party or any breach, violation or nonfulfillment of any covenant, agreement or obligation of any Seller Party in connection with or pursuant to this Agreement (including under this Article VII and Article IX of this Agreement) or in any document, schedule, instrument or certificate delivered in connection with this Agreement;
(iii) any Cash Deficit or Transaction Expenses of any Group Company (in each case, to the extent not satisfied at Closing and, in the case of a Cash Deficit, to the extent not taken into account in as a reduction in the amount of the Base Cash Purchase Price);
(iv) any Liability for Taxes (i) of any Seller Party (including any Liability for Taxes that becomes a Liability of Buyer under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or non-U.S. Legal Requirements), any common law doctrine of de facto merger or transferee of successor liability, bulk sales statutes or otherwise by operation of Contract or Legal Requirements), (ii) that arise out of the consummation of the Transactions contemplated hereby or that are the responsibility of Seller Parties pursuant to this Agreement (including the Transfer Taxes), or (iii) relating to the Business for any Pre-Closing Tax Period, in each case including any penalties or interest thereon;
(v) any claim by any Person (A) asserting, directly or indirectly, that such Person (1) is the holder or the beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, the Interests or the Ownership Interests of any Group Company, or (2) is entitled to all or any portion of the Purchase Price (except as otherwise contemplated herein), or (B) alleging a breach of fiduciary duty by any Group Company or a Group Company’s Related Persons in connection with the Transactions contemplated by this Agreement;
(vi) the expenditure, allocation or use by any Group Company, prior to Closing, of any funds received under the CARES Act in violation, breach or contravention of the CARES Act (including, with respect to any amount of the Provider Relief Fund received by any Group Company, the Provider Relief Fund distribution terms and conditions) or reporting or other obligations that may arise post-Closing in connection with funds received under the CARES Act and, for the avoidance of doubt, any Liability with respect to the PPP Loans, whether arising or accruing before or after the Closing; or
(vii) any of the matters set forth on Schedule 7.1(a) of this Agreement.
(b) Monetary Limitations.
(i) Seller Parties will have no obligation to indemnify the Buyer Indemnified Persons pursuant to Section 7.1(a)(i) of this Agreement (except with respect to the Seller Fundamental Representations and the representations and warranties set forth in Section 3.15 (Tax Matters)) unless the aggregate amount of all such Losses incurred or suffered by the Buyer Indemnified Persons exceeds the Deductible (at which point, Seller Parties shall, jointly and severally, indemnify and hold harmless the Buyer Indemnified Persons for all such Losses to the extent in excess of such Deductible).
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(ii) The aggregate Liability of Seller Parties in respect of claims for indemnification pursuant to Section 7.1(a)(i) of this Agreement (except with respect to the Seller Fundamental Representations and the representations and warranties set forth in Section 3.15 (Tax Matters)) is not to exceed the General Indemnification Cap.
(iii) For the avoidance of doubt, the limitations set forth in Section 7.1(b)(i), Section 7.1(b)(ii) and Section 7.3 of this Agreement are not to apply to claims for indemnification pursuant to Sections 7.1(a)(ii), (iii), (iv), (v), (vi) or (vii) of this Agreement.
(a) Indemnification. Subject to the limitations set forth in this Article VII, Buyer shall indemnify, reimburse, compensate, defend and hold harmless Seller and its Affiliates (excluding, for the avoidance of doubt, any Group Company other than Seller), Owners and their respective successors and permitted assigns (each, a “Seller Indemnified Person”), from, against and in respect of any and all Losses that any such Seller Indemnified Person may suffer, sustain or become subject to as a result of, arising out of or directly or indirectly relating to:
(i) any breach of, or inaccuracy in, any representation or warranty made by Buyer in Article IV of this Agreement or in any document, schedule, instrument or certificate delivered in connection with this Agreement; or
(ii) any fraud or intentional misstatement or breach of Buyer or any breach, violation or nonfulfillment of any covenant, agreement or obligation of Buyer in or pursuant to this Agreement (including under this Article VII) or in any document, instrument or certificate delivered in connection with this Agreement.
(b) Monetary Limitations.
(i) Buyer is to have no obligation to indemnify the Seller Indemnified Persons pursuant to Section 7.2(a)(i) of this Agreement (except with respect to the Buyer Fundamental Representations) unless the aggregate amount of all such Losses incurred or suffered by the Seller Indemnified Persons exceeds the Deductible (at which point Buyer shall indemnify and hold harmless the Seller Indemnified Persons for all such Losses to the extent in excess of the Deductible).
(ii) For the avoidance of doubt, the limitations set forth in Section 7.2(b)(i) and Section 7.3 of this Agreement are not to apply to claims for indemnification pursuant to Section 7.2(a)(ii) of this Agreement.
(a) No claim is to be made or suit instituted seeking indemnification pursuant to Section 7.1(a)(i) or Section 7.2(a)(i) for any breach of, or inaccuracy in, any representation or warranty unless a written notice is given to the Indemnifying Party:
(i) at any time on or prior to the eighteen (18) month anniversary of the Closing Date, in the case of any breach of, or inaccuracy in, any representation and warranty (other than the representations and warranties set forth in Sections 3.15 (Tax Matters), 3.16 (Employee Benefit Plans), 3.17 (Environmental Matters), the Seller Fundamental Representations and the Buyer Fundamental Representations, each of which shall survive the Closing as set forth below) in this Agreement;
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(ii) at any time prior to the expiration of the applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus ninety (90) days, in the case of any breach of, or inaccuracy in, any representation and warranty set forth in Sections 3.15 (Tax Matters), 3.16 (Employee Benefit Plans) or 3.17 (Environmental Matters);
(iii) at any time, in the case of any breach of, or inaccuracy in, the representations and warranties set forth in Sections 3.1 (Organization), 3.2 (Power and Authorization), 3.3 (Authorizations of Governmental Authorities), 3.4 (No Conflict), 3.5 (Capitalization; Title; Subsidiaries), 3.9 (Ownership of Assets; Sufficiency), 3.13(d)-(k) (Compliance with Healthcare Laws), 3.19 (Affiliate Transactions) or 3.23 (No Brokers)) (collectively, the “Seller Fundamental Representations”); or
(iv) at any time, in the case of any breach of, or inaccuracy in, the representations and warranties set forth in Sections 4.1 (Organization), 4.2 (Power and Authorization), and 4.3 (Authorization of Governmental Authorities) (collectively, the “Buyer Fundamental Representations”).
(b) The representations and warranties contained herein shall survive the Closing and shall remain in full force and effect in accordance with, and subject to the limitations and other provisions of, this Agreement, including the limitations on survival set forth in Section 7.3(a) above. Notwithstanding anything in this Section 7.3 to the contrary, an Indemnified Party is permitted to make a claim or institute a suit seeking indemnification pursuant to Sections 7.1(a)(ii), (iii), (iv), (v), (vi), or (vii) of this Agreement or Sections 7.2(a)(ii) of this Agreement at any time, regardless of the prior expiration of the applicable statute of limitations. Delivery of a notice of a claim or potential claim or matter for which indemnification may be required pursuant to any provision of Section 7.1 or Section 7.2, as applicable, and prior to the expiration of applicable survival period (if any) will be sufficient to cause any such matter or claim specified therein to continue to survive for purposes of resolving the matter or claim specified therein, it being the agreement of the Parties that an Indemnified Party will not be required to file a lawsuit, commence an arbitration or commence another formal or informal Action or other proceeding in order to cause such matter or claim to survive.
(a) Notice of Claim. If any third party notifies an Indemnified Party with respect to any matter that may give rise to an Indemnity Claim against an Indemnifying Party under this Article VII (a “Third Party Claim”), then the Indemnified Party shall promptly give written notice to the Indemnifying Party of such Third Party Claim, except that no delay on the part of the Indemnified Party in notifying the Indemnifying Party is to relieve the Indemnifying Party from any obligation under this Article VII of this Agreement, except and solely to the extent such delay actually and materially prejudices the Indemnifying Party.
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(b) Assumption of Defense, etc. The Indemnifying Party, at its sole cost and expense, is to be entitled to control the defense of any Third Party Claim and is to have the right to defend the Indemnified Party against the Third Party Claim by appointing reputable counsel reasonably acceptable to the Indemnified Party if (i) the Indemnifying Party gives written notice to the Indemnified Party within fifteen (15) days that the Indemnifying Party elects to control the defense of and defend such Third Party Claim, (ii) the Third Party Claim involves only claims for monetary damages and does not seek an injunction or other equitable relief against the Indemnified Party, (iii) the Indemnified Party reasonably concludes, based upon advice of counsel that a conflict does not exist between the Indemnified Party and the Indemnifying Party in connection with the defense of the Third Party Claim, (iv) the Third Party Claim does not relate to or otherwise arise in connection with Taxes or any criminal or regulatory enforcement Action, (v) settlement of, an adverse judgment with respect to or the Indemnifying Party’s conduct of the defense of the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to be adverse to the Indemnified Party’s reputation or continuing business interests (including the Indemnified Party’s relationships with current or potential patients, Payors, customers, suppliers or other parties material to the conduct of the business of the Indemnified Party), and (vi) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently and in good faith. The Indemnified Party is permitted to retain separate co-counsel at the sole cost and expense of the Indemnified Party and participate in the defense of the Third Party Claim. The Indemnified Party shall give the Indemnifying Party reasonable access, subject to customary confidentiality and non-reliance agreements, to the books and records of the Indemnified Party with respect to the facts of, and to the extent necessary to defend, such Third Party Claim or act, omission or occurrence giving rise to such Third Party Claim. For the avoidance of doubt, the fees and expenses of counsel retained by the Indemnified Party that are incurred prior to the Indemnifying Party’s assumption of control of the defense of such Third Party Claim constitute Losses indemnifiable pursuant to, and subject to the limitations of, this Article VII.
(c) Indemnified Party’s Control. If the Indemnifying Party does not deliver the notice contemplated by Section 7.4(b)(i) of this Agreement within fifteen (15) days after the Indemnified Party has given notice of the Third Party Claim, at any time fails to conduct the defense of the Third Party Claim actively and diligently and in good faith or otherwise is or becomes unable to conduct the defense of the Third Party Claim due to any of the other conditions in Section 7.4(b) of this Agreement being unsatisfied, the Indemnified Party is permitted to defend, and is permitted to consent to the entry of any judgment or enter into any compromise or settlement with respect to, the Third Party Claim in any manner the Indemnified Party deems appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith). In the event that the Indemnified Party conducts the defense of the Third Party Claim pursuant to this Section 7.4(c), the Indemnifying Party is to remain responsible for any and all other Losses that the Indemnified Party incurs or suffers resulting from, arising out of, relating to, in the nature of or caused by the Third Party Claim to the fullest extent provided in this Article VII.
(d) Limitations on Indemnifying Party. The Indemnifying Party shall not consent to the entry of any judgment or enter into any compromise or settlement with respect to a Third Party Claim without the prior written consent of the Indemnified Party, unless such judgment, compromise or settlement does not relate to Taxes and (i) provides for the payment by the Indemnifying Party of money as the sole relief for the claimant, (ii) results in the full and general release of the Indemnified Party and its Affiliates from all Liabilities arising or relating to, or in connection with, the Third Party Claim, and (iii) involves no finding or admission of any violation of Legal Requirements or the rights of any Person and no effect on any other claims that may be made against the Indemnified Party.
7.5 Other Claims. A claim for indemnification for any matter not involving a Third Party Claim may be asserted by notice to the Indemnifying Party. If within twenty (20) days after receipt of notice of a claim for indemnification, the Indemnifying Party has not given written notice of any good faith objection in reasonable detail to the Indemnified Party in connection with such claim, then it will be presumed that the Indemnifying Party acknowledges and agrees to indemnify the applicable Indemnified Party, and the Losses claimed shall be immediately payable.
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7.6 No Circular Recovery; Double Recovery. Notwithstanding anything to the contrary in this Agreement, each Seller Party, on behalf of itself and all Seller Indemnified Persons, hereby agrees that no Seller Indemnified Person shall make any claim for indemnification against Buyer or any other Buyer Indemnified Person by reason of the fact that such Seller Indemnified Person was a controlling Person, equity holder or Representative of any Group Company or the Business with respect to any claim brought by a Buyer Indemnified Person against any Seller Party relating to this Agreement, the other Transaction Documents or any of the Transactions or that is based on any facts or circumstances that form the basis for an Indemnity Claim by a Buyer Indemnified Person under this Agreement. For avoidance of doubt, Seller Parties are not Buyer Indemnified Persons hereunder. No Party is to be entitled to recover any Losses pursuant to this Article VII to the extent such Party has previously actually recovered the full cash amount of such Losses pursuant to another provision of this Agreement.
7.7 Knowledge and Investigation. The right of any Indemnified Party to indemnification pursuant to this Article VII is not to be affected by the Closing or any waiver of any Closing condition hereunder or any investigation conducted for or on behalf of any Party, or knowledge acquired (or capable of being acquired) at any time by any Party or any Representatives of any Party, whether before or after the Closing, with respect to the accuracy of any representation or warranty, or performance of or compliance with any covenant or agreement; provided, however, that if Buyer’s Key Personnel shall have received written notice expressly identifying any material inaccuracy of any representation and warranty on the face of such notice (and not in the attachments, schedules or otherwise), which is likely to result in a Material Adverse Effect, then Buyer’s rights as an Indemnified Party to indemnification pursuant to this Article VII shall be waived solely to the extent of any claims arising from such inaccuracy for which Buyer’s Key Personnel had actual knowledge.
7.8 Materiality. Notwithstanding anything to the contrary in this Agreement, for purposes of calculating the amount of Losses to which an Indemnified Party is entitled under this Article VII (but not for purposes of determining whether there has been a breach of any representation, warranty, covenant or other agreement set forth in this Agreement), the terms “material,” “materiality,” and “Material Adverse Effect” and similar phrases are to be disregarded.
7.9 Manner of Payment. Any indemnification payment required to be made by an Indemnifying Party pursuant to this Article VII is to be paid by wire transfer of immediately available funds to an account designated by the Indemnified Party within five (5) Business Days after the date of the determination of the indemnification payment. Notwithstanding the foregoing sentence, in the event any Seller Party is the Indemnifying Party and the indemnification claim relates to fraud or any breach of, or inaccuracy in, any Seller Fundamental Representations, then to the extent any indemnification amounts are not promptly paid in full, Buyer is to have the option, in its sole discretion, to recover any remaining unpaid amounts due from any Seller Party by requiring Seller or any of Seller’s assignees to forfeit that number of shares of Series A Preferred Stock or Common Stock of Buyer with an aggregate Offset Value equal to the amount of such remaining unpaid amount, which offset shall be shall be allocated first to Common Stock, and then to Series A Preferred Stock, only if necessary. Neither the exercise of nor the failure to exercise any right of holdback and/or set-off under this Agreement will constitute an election of remedies by Buyer or limit Buyer in any manner in the enforcement of any other remedies that may be available to it.
7.10 Tax Treatment. All indemnification payments under this Agreement are to be, to the extent permitted by applicable Legal Requirements, treated as adjustments to the Purchase Price. The Parties shall not take any position on any Tax Return, or before any Governmental Authority, that is inconsistent with such treatment unless otherwise required by any applicable Legal Requirement.
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8.1 Termination. Without prejudice to other remedies which may be available to the Parties pursuant to this Agreement, this Agreement may be terminated and the Transactions contemplated hereby may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the Buyer and Seller;
(b) by the Buyer upon delivery of written notice to Seller, if: there has been a material breach of any representation, warranty, covenant or agreement made by any Seller Party in this Agreement, which material breach (i) would give rise to the failure of a condition set forth in Section 6.1 and (ii)(A) cannot be cured by the End Date or (B) if capable of being cured, shall not have been cured by the earlier of (1) twenty (20) days following receipt of written notice from the Buyer of such breach or (2) the date that is three (3) days prior to the End Date;
(c) by Seller upon delivery of written notice to the Buyer, if there has been a material breach of any representation, warranty, covenant or agreement made by the Buyer in this Agreement, which material breach (i) would give rise to the failure of a condition set forth in Section 6.2 and (ii)(A) cannot be cured prior to the End Date or (B) if capable of being cured, shall not have been cured by the earlier of (1) twenty (20) days following receipt of written notice from Seller of such breach or (2) the date that is three (3) days prior to the End Date;
(d) by either the Buyer or Seller upon delivery of written notice to the other if the Closing has not occurred on or before 5:00 p.m. (Eastern Time), on the date that is June 15, 2021 (the “End Date”); provided that neither the Buyer nor Seller will be entitled to terminate this Agreement pursuant to this Section 8.1(d) if such Person’s material breach of, or material failure to fulfill any obligation under, this Agreement has been the proximate cause of the failure of the Closing to occur on or prior to such time on the End Date;
(e) by either the Buyer or Seller upon delivery of written notice to the other if any Governmental Authority shall have issued or entered any Government Order, enacted any Legal Requirement or taken any other action which, in any such case, (i) permanently restrains, enjoins or otherwise prohibits the consummation of the Transactions contemplated by this Agreement, or (ii) would prevent the Closing from occurring as contemplated by this Agreement on or prior to the applicable time on the End Date; provided, that neither the Buyer nor Seller will be entitled to terminate this Agreement pursuant to this Section 8.1(e) if (A) the issuance or entry of such Government Order is the proximate result of such Person’s material breach of, or material failure to fulfill any obligation under, this Agreement or (B) such Person shall have materially breached its obligations under (and subject to the limitations in) Article V of this Agreement to resist, resolve or lift such Government Order or Legal Requirement;
(f) by the Buyer upon delivery of written notice to Seller if there shall have occurred a Material Adverse Effect and either (i) if such Material Adverse Effect is (and continues at all times to be) capable of cure or remediation to an extent that would permit the satisfaction of the condition set forth in Section 6.1(i) (the “MAE Condition”) prior to the End Date, any Seller Party shall fail to use its best efforts to so cure or remediate such changes, events and/or developments or (ii) such changes, events or developments are not (or at any time cease to be) capable of cure or remediation to an extent that would permit the satisfaction of the MAE Condition prior to the End Date; or
(g) by the Buyer in accordance with Section 5.18, if applicable.
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8.2 Effect of Termination. Subject to the provisions of this Section 8.2, the rights of termination set forth above are in addition to any other rights a terminating Party may have under this Agreement, and the exercise of a right of termination will not be an election of remedies. Notwithstanding the foregoing sentence, in the event of any termination of this Agreement by either the Buyer or Seller as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no Liability on the part of any Party or any of its or their Affiliates to any other Person by virtue of, arising out of or otherwise in connection with this Agreement except that (i) nothing in this Agreement will relieve any Party from Liability arising in respect of any willful, knowing, and intentional breach or material breach of this Agreement prior to such termination or for fraud, and (ii) Section 5.11 (Confidentiality) and Article X and any pre-termination breaches of such provisions shall survive any termination of this Agreement and each Party shall be entitled to all remedies available at law or in equity in connection with any past or future breach of any such provisions.
9.1 Certain Taxes and Fees. Seller Parties, jointly and severally, pay all transfer, real estate, recording, documentary, sales, use, stamp, registration and other such Taxes, and any conveyance fees or recording charges incurred in connection with the Transactions (collectively, the “Transfer Taxes”) when due. Seller shall (and the Owners shall cause Seller to), at its own expense, file all necessary Tax Returns and other documentation with respect to the Transfer Taxes and, if required by applicable Legal Requirements, Buyer shall (and shall cause its Affiliates to) join in the execution of any such Tax Returns and other documentation.
9.2 Cooperation on Tax Matters.
(a) After the Closing, the Parties shall cooperate with each other by furnishing any additional information and executing and delivering any additional documents as may be reasonably requested by such Parties (i) in their preparation of any Tax Returns required to be filed by or with respect to the Business or the Interests and (ii) in connection with any proceedings in respect of or that relate to Taxes of or with respect to the Business or the Interests. Such cooperation shall include access during normal business hours afforded to the Parties and their respective agents and Representatives to, and reasonable retention by such Parties of, Tax records related to the Business of the Interests, and making employees and agents (including auditors) of the Group Companies available on a reasonably convenient basis to provide additional information and explanation of any material provided hereunder.
(b) Buyer and Seller Parties further agree, upon request, to use their reasonable best efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed in connection with the Transactions contemplated hereby.
9.3 Property Taxes. Buyer and Seller shall prorate (as of the Closing), if applicable, real and personal property Taxes of the Group Companies. If the amount of such Taxes for the year in which the Closing occurs cannot reasonably be determined, the apportionment will be based at Closing upon the amount of such Taxes for the preceding Tax year but will be readjusted when the amount of such Taxes is finally determined.
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10.1 Notices. All notices, requests, demands, claims and other communications required or permitted to be delivered, given or otherwise provided under this Agreement are to be in writing and are to be delivered, given or otherwise provided: (a) by hand (in which case, it will be effective upon delivery), (b) by electronic mail during regular business hours (in which case, it will be effective when sent), or by electronic mail after regular business hours (in which case, it will be effective on the following Business Day), or (c) by overnight delivery by a nationally recognized courier service (in which case, it will be effective on the Business Day after being deposited with such courier service), in each case, to the address listed below:
If to Seller (or any Seller Party):
Shayne Bench
309 Ringling Point Drive
Sarasota, Florida 34234
Electronic Mail: shaynebench@trilliumhcg.com
with a copy to (which is not to constitute notice):
Blalock Walters, P.A.
2 N. Tamiami Trail, Suite 400
Sarasota, Florida 34236
Attn: Robert Stroud
Electronic Mail: rstroud@blalockwalters.com
If to Buyer:
Assisted 4 Living, Inc.
5115 FL-64
Bradenton, Florida 34208
Attn: Louis Collier
Electronic Mail: loucoljr@outlook.com
with a copy to (which is not to constitute notice):
Bass, Berry & Sims PLC
150 Third Avenue South, Suite 2800,
Nashville, Tennessee 37201
Attention: Angela Humphreys and Price Wilson
Electronic Mail: ahumphreys@bassberry.com; pwilson@bassberry.com
Each of the Parties may specify a different address by giving notice in accordance with this Section 10.1 to each of the other Parties.
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10.2 Succession and Assignment; No Third-Party Beneficiary. Subject to the immediately following sentence, this Agreement is to be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, each of which such successors and permitted assigns are to be deemed to be a Party. No Party is permitted to assign, delegate or otherwise transfer either this Agreement or any of such Party’s rights, interests, or obligations under this Agreement without the prior written approval of the other Parties, except that Buyer is permitted to (a) assign any or all of its rights and interests under this Agreement to one or more of its Affiliates or to any provider of financing, (b) designate one or more of its Affiliates to perform their obligations under this Agreement, and (c) assign any or all of its rights or obligations under this Agreement to any purchaser of all or substantially all of its Assets. Except as expressly provided in this Section 10.2, this Agreement is for the sole benefit of the Parties and their successors and permitted assignees, including the Indemnified Parties, and nothing expressed or implied in this Agreement is to give or be construed to give any Person, other than the Parties, the Indemnified Parties and such successors and assignees, any legal or equitable rights under this Agreement, including any right to employment or continued employment for any period of time by reason of this Agreement, or any right to a particular term or condition of employment.
10.3 Amendments; Waivers; Remedies Cumulative. No amendment or waiver of any provision of this Agreement is to be valid and binding unless it is in writing and signed, in the case of an amendment, by the Parties or in the case of a waiver, by the Party against whom the waiver is to be effective. No waiver by any Party of any breach or violation of, default under or inaccuracy in any representation, warranty or covenant in this Agreement, whether intentional or not, is to be deemed to extend to any prior or subsequent breach, violation, default of, or inaccuracy in, any such representation, warranty or covenant in this Agreement or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No delay or omission on the part of any Party in exercising any right, power or remedy under this Agreement will operate as a waiver of such right, power or remedy. Except as may be expressly provided herein to the contrary, the rights and remedies of the parties to this Agreement are cumulative and not alternative.
10.4 Entire Agreement. This Agreement, together with the other Transaction Documents and any documents, instruments and certificates explicitly referred to herein or therein, constitutes the entire agreement among the Parties with respect to the subject matter hereof and thereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, with respect thereto (including, that certain Term Sheet, dated as of October 29, 2020 by and between Seller and Bruce Cassidy), none of which are to be used as evidence of the Parties’ intent. In addition, each Party acknowledges and agrees that all prior drafts of this Agreement contain attorney work product and are in all respects subject to the foregoing sentence.
10.5 Schedules. Nothing in any Schedule attached to this Agreement is to be adequate to modify, qualify or disclose an exception to any representation or warranty made in this Agreement unless such Schedule identifies the modification, qualification or exception with particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the foregoing sentence, the mere listing (or inclusion of a copy) of a document or other item is not to be adequate to disclose an exception to a representation or warranty made in this Agreement, unless the representation or warranty has to do with the existence of the document or other item itself, which is reasonably apparent on the face of such disclosure.
10.6 Execution of Agreement; Counterparts. The Parties are permitted to execute this Agreement in one or more counterparts, each of such counterparts is to be deemed to be an original copy of this Agreement and all of which, when taken together, are to be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile or other electronic transmission is to constitute effective execution and delivery of this Agreement as to the Parties. Signatures of the Parties transmitted by facsimile or other electronic transmission are to be deemed to be the Parties’ original signatures for any purpose whatsoever.
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10.7 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction is not to affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. In the event that any provision of this Agreement would, under applicable Legal Requirements, be invalid or unenforceable in any respect, each Party intends that such provision is to be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable Legal Requirements and to otherwise give effect to the intent of the Parties.
10.8 Headings. The headings contained in this Agreement are for convenience purposes only and are not in any way to affect the meaning or interpretation of this Agreement.
10.9 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement is to be construed as if drafted jointly by the Parties and no presumption or burden of proof is to arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. The Parties intend that each representation, warranty, covenant and agreement contained in this Agreement is to have independent significance. If any Party has breached or violated, or if there is an inaccuracy in, any representation, warranty, covenant or agreement contained in this Agreement in any respect, the fact that there exists another representation, warranty, covenant or agreement relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached or violated, or in respect of which there is not an inaccuracy, is not to detract from or mitigate the fact that the Party has breached or violated, or there is an inaccuracy in, the first representation, warranty, covenant or agreement.
10.10 Governing Law; Prevailing Party. This Agreement, the negotiation, terms and performance of this Agreement, the rights of the Parties under this Agreement, and all Actions arising in whole or in part under or in connection with this Agreement, are to be governed by and construed in accordance with the domestic substantive laws of the State of Florida, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. If any Action relating to this Agreement or the Transactions is brought by a Party against any other Party, the prevailing Party in such Action is to be entitled to recover all reasonable expenses relating thereto (including attorneys’ fees and expenses) from the non-prevailing Party (in addition to any other relief to which such prevailing Party is entitled).
10.11 Jurisdiction; Venue; Service of Process.
(a) Each Party, by such Party’s execution of this Agreement, (i) hereby irrevocably submits to the exclusive jurisdiction and venue of the state courts of the State of Florida or the United States District Court located in the State of Florida for the purpose of any Action between any of the Parties arising in whole or in part under or in connection with this Agreement, any other Transaction Document, the Transactions or the negotiation, terms or performance hereof or thereof, (ii) hereby waives to the extent not prohibited by applicable Legal Requirements, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that such Party is not subject personally to the jurisdiction of the above-named courts, that venue in any such court is improper, that such Party’s property is exempt or immune from attachment or execution, that any such Action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens or improper venue, that such Action should be transferred or removed to any court other than one of the above-named courts, that such Action should be stayed by reason of the pendency of some other Action in any other court other than one of the above-named courts or that this Agreement or the subject matter of this Agreement may not be enforced in or by such court, and (iii) hereby agrees not to commence or prosecute any such Action other than before one of the above-named courts. Notwithstanding the previous sentence, a Party is permitted to commence any Action in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.
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(b) Each Party hereby (i) consents to service of process in any Action between any of the Parties arising in whole or in part under or in connection with this Agreement, any other Transaction Document, the Transactions or the negotiation, terms or performance hereof or thereof, in any manner permitted by Florida law, (ii) agrees that service of process made in accordance with Section 10.11(a) of this Agreement or made by overnight delivery by a nationally recognized courier service at such Party’s address specified pursuant to Section 10.1 of this Agreement is to constitute good and valid service of process in any such Action, and (iii) waives and agrees not to assert (by way of motion, as a defense or otherwise) in any such Action any claim that service of process made in accordance with Sections 10.11(b)(i) and (ii) of this Agreement does not constitute good and valid service of process.
10.12 Specific Performance. Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached or violated. Accordingly, each of the Parties agrees that, without posting bond or other undertaking, the other Parties are entitled to an injunction or injunctions to prevent breaches or violations of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions of this Agreement in any Action instituted in any court specified in Section 10.11(a) of this Agreement in addition to any other remedy to which such Party is entitled, at law or in equity. Each Party further agrees that, in the event of any action for an injunction or specific performance in respect of any such threatened or actual breach or violation, such Party shall not assert that a remedy at law would be adequate.
10.13 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LEGAL REQUIREMENTS THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER TRANSACTION DOCUMENTS, THE TRANSACTIONS OR THE NEGOTIATION, TERMS OR PERFORMANCE HEREOF OR THEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM ARE PERMITTED TO FILE A COPY OF THIS SECTION 10.13 WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES. THE PARTIES FURTHER AGREE TO IRREVOCABLY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN ANY ACTION AND ANY SUCH ACTION IS INSTEAD TO BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
10.14 Independent Legal Counsel; Continuing Representation. Each Party has had the benefit of independent legal counsel with respect to the preparation of this Agreement. This Agreement expresses the mutual intent of the Parties, and each Party has participated equally in its preparation. The Parties acknowledge and agree that at all times relevant hereto up to the Closing, Blalock Walters, P.A. (“Blalock”) has represented only the Seller. If, subsequent to the Closing, any dispute were to arise relating in any manner to this Agreement or any other agreement between the Seller or any former holder of any Owner, on the one hand, and Buyer or its Affiliates (including the Group Companies), on the other hand, relating in any manner to this Agreement or any of the transactions contemplated herein (a “Dispute”), Buyer hereby consents to Blalock’s representation of Seller (and/or any Owner) in such Dispute. Buyer acknowledges and agrees that Blalock has been and will be providing legal advice to the Seller and the Group Companies in connection with the transactions contemplated by this Agreement and in such capacity will have obtained confidential information consisting of privileged communications, whether written or electronic, between Blalock and the managers, officers, holders of Equity Interests, accounting firm, and/or employees of the Group Companies (the “Privileged Communications”), and all files, attorney notes, drafts or other documents prepared by Blalock directly relating to this Agreement which predate the Closing (collectively, the “Blalock Work Product”). In any Dispute, the Parties waive the right to present any Blalock Work Product as evidence in any Action arising out of or related to any Dispute. The Parties waive their right to access any Blalock Work Product in connection with any Dispute. Buyer further agrees that, as to all Privileged Communications, the attorney-client privilege and the expectation of client confidence belongs to Seller (and/or any Owner as applicable) and may be controlled by the Seller (and/or any Owner in the Company) and shall not pass to or be claimed by Buyer or its Affiliates (including the Group Company) in any Dispute; provided that, Buyer and its Affiliates (including the Group Companies) shall be entitled to assert and enforce any attorney-client or other privilege in connection with the Privileged Communications in any Action that is not a Dispute.
[Signature Page Follows]
56 |
The Parties, intending to be legally bound, hereby execute this Agreement as of the Signing Date to be effective as of the Effective Date.
BUYER: | ||
ASSISTED 4 LIVING, INC. | ||
By: | /s/ Louis Collier | |
Name: | Louis Collier | |
Title: | Chief Executive Officer |
[Signature Page to Amended and Restated Membership Interest Purchase Agreement]
SELLER: | ||
TRILLIUM HEALTHCARE GROUP, LLC | ||
By: | /s/ Richard T. Mason | |
Name: | Richard T. Mason | |
Title: | President | |
OWNERS: | ||
/s/ Richard T. Mason | ||
RICHARD T. MASON | ||
/s/ G. Shayne Bench | ||
G. SHAYNE BENCH |
[Signature Page to Amended and Restated Membership Interest Purchase Agreement (Continued)]
Purchase Price Bank Account
Purchase Price Bank Account
Account Name: Trillium Healthcare Group, LLC
Account Number: **********
Bank Name: Regions Bank, NA
Bank City, State: Birmingham, AL
Bank ABA/Routing: 062005690
Definitions
As used in this Agreement, the following terms have the following meanings:
“Accounts” is defined in Section 2.8 of this Agreement.
“Acquisition Proposal” is defined in Section 5.6 of this Agreement.
“Action” means any claim, action, cause of action, suit (whether in contract or tort or otherwise) or audit, litigation (whether at law or in equity, whether civil or criminal), controversy, assessment, grievance, arbitration, investigation, opposition, interference, hearing, mediation, charge, complaint, demand, notice or proceeding to, from, by or before any Governmental Authority.
“Affiliate” means, with respect to any specified Person at any time, (a) each Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person at such time, (b) each Person who is at such time a director, manager or officer of, or direct or indirect beneficial holder of at least 10% of any class of the Ownership Interests of, such specified Person, (c) each Person that is managed by a common group of directors, managers and/or officers as such specified Person, (d) if such specified Person is a trust, each grantor, settlor, trustee, fiduciary, or beneficiary of such trust, (e) the members of the immediate family (including any child (whether adopted or natural born), stepchild, spouse, parent, stepparent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law) (i) of each director, manager, officer or holder described in clause (b) in this definition, (ii) of each grantor, settlor, trustee, fiduciary, or beneficiary described in clause (d) of this definition, and (iii) if such specified Person is an individual, of such specified Person, and (f) each Person of which such specified Person or an Affiliate (as defined in the foregoing clauses (a) through (e)) of such specified Person will, directly or indirectly, beneficially own at least 10% of any class of Ownership Interests at such time.
“Affiliate Agreement” means any Contract, other than this Agreement or any other Transaction Document, between or among (i) any Seller Party or any director or indirect equity holder or Affiliate of any Group Company, or any director, officer or manager of any Group Company or any of their respective Affiliates, on the one hand and (ii) any Group Company, on the other hand.
“Agreement” is defined in the Preamble of this Agreement.
“Assets” means, with respect any specified Person, such Person’s properties, rights, interests and assets, whether real or personal and whether tangible or intangible.
“Base Cash Purchase Price” means four million dollars ($4,000,000) minus the amount of any Cash Deficit at Closing.
“Blalock Work Product” is defined in Section 10.14 of this Agreement.
“Business” is defined in the Recitals of this Agreement.
“Business Day” means any weekday other than a weekday on which banks in the City of New York, New York are authorized or required to be closed.
Exhibit A to Amended and Restated Membership Interest Purchase Agreement
“Business Development Agreement” is defined in Section 2.5(a)(viii) of this Agreement.
“Business IT Assets” means computer Software, systems, servers, computers, hardware, firmware, middleware, networks, data communications lines, routers, hubs, switches and all other information technology equipment, and all associated documentation, in each case, used or held for use in connection with, the Business.
“Buyer” is defined in the Preamble of this Agreement.
“Buyer Closing Documents” is defined in Section 2.5(b) of this Agreement.
“Buyer Disclosure Materials” is defined in Section 3.25(c) of this Agreement.
“Buyer Fundamental Representations” is defined in Section 7.3(a)(iv) of this Agreement.
“Buyer Indemnified Person” is defined in Section 7.1(a) of this Agreement.
“Buyer SEC Documents” is defined in Section 4.6(a) of this Agreement.
“Buyer SEC Financial Statements” is defined in Section 4.6(b) of this Agreement.
“Buyer’s Key Personnel” means Roger Tichenor and Bruce Cassidy.
“Buyer’s Stock” means Common Stock and Series A Preferred Stock.
“CareTrust LOI” means that certain letter agreement, dated May 24, 2021, by and between CTR Partnership, L.P., a Delaware limited partnership, and Trillium Healthcare Group, LLC, a Florida limited liability company.
“Cash Deficit” means the amount, if any, by which Cash on Hand is less than Minimum Cash on Hand.
“Cash on Hand” means, as of 12:01 a.m. (Eastern Time) on the Closing Date, the sum of all unrestricted cash, cash equivalents and marketable securities owned by any Group Company and held in the Accounts acquired by Buyer pursuant to this Agreement, as computed in accordance with GAAP, including checks and other wire transfers, ACH transactions and drafts deposited or available for the account of any Group Company and deposits in transit, minus, the sum of, with respect to such Accounts (a) issued but uncleared checks and drafts of each Group Company, and (b) any originated but undrawn ACH transactions or other wire transfers of any Group Company.
“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.
“CERCLIS” means the Comprehensive Environmental Response, Compensation, and Liability Information System.
“Closing” is defined in Section 2.4 of this Agreement.
“Closing Balance Sheet” is defined in Section 2.3 of this Agreement.
“Closing Cash Amount” is defined in Section 2.2(b)(i) of this Agreement.
“Closing Date” means the date on which the Closing actually occurs.
“Closing Statement” is defined in Section 2.3 of this Agreement.
“Closing Transaction Expenses Amount” means the outstanding Transaction Expenses as of the Closing.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means shares of Common Stock, par value $0.0001 per share, of Buyer.
“Company Confidential Information” is defined in Section 10.14 of this Agreement.
“Company Indemnitee” is defined in Section 5.7(b) of this Agreement.
“Company Intellectual Property Rights” means all Intellectual Property Rights owned by each Group Company, or used by any Group Company in connection with the Business.
“Company Plan” is defined in Section 3.16(a) of this Agreement.
“Company Released Parties” is defined in Section 5.16 of this Agreement.
“Compensation” means, with respect to any Person, all wages, salaries, commissions, compensation, payments, remuneration, bonuses or benefits of any kind or character whatever (including issuances or grants of Ownership Interests), required to be made or that have been made directly or indirectly to such Person or Affiliates of such Person.
“Competing Business” is defined in Section 5.9(b) of this Agreement.
“Confidentiality Agreement” is defined in Section 5.3 of this Agreement.
“Consideration” means the Base Cash Purchase Price and Stock Consideration.
“Consideration Offset Amount” equals the aggregate amount of the Omega Offset Amount and the PPP Loan Offset Amount.
“Contract” means any contract, agreement, lease, instrument, understanding or other legally binding arrangement (written or oral).
“COVID-19” means (a) the SARS-CoV-2 virus (severe acute respiratory syndrome coronavirus 2) or similar virus or any strain thereof and (b) any disease resulting from any such virus (including the disease known as COVID-19).
“COVID-19 Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, shut down, closure, or any other Legal Requirement, Government Order or directive having the force of law by any Governmental Authority in response to COVID-19, including the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), Families First Coronavirus Response Act (H.R. 6201) (together with all amendments thereto and the statutes, rules and regulations promulgated thereunder and any successor to such statutes, rules or regulations, as in effect on the Effective Date), and the Paycheck Protection Program and Health Care Enhancement Act.
“Debt” means the aggregate amount (including the current portion thereto), without duplication, of: (a) all indebtedness, contingent or otherwise, for money borrowed, purchase money indebtedness and reimbursement obligations with respect to letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) all of the indebtedness and obligations of the type described in clauses (a) and (b) of this definition guaranteed in any manner through an agreement, contingent or otherwise, to supply funds to, or in any other manner invest in, the debtor, or to purchase indebtedness, or to purchase and pay for property if not delivered or pay for services if not performed, primarily or exclusively, for the purpose of enabling the debtor to make payment of the indebtedness or obligation or to insure the owners of the indebtedness or obligation against loss, but excluding the endorsements of checks and other instruments in the Ordinary Course of Business, (d) all of the indebtedness or obligations of the type described in clauses (a), (b) and (c) of this definition secured by any Encumbrance upon property, even though no Liability currently exists for the payment of such indebtedness, (e) all obligations to pay rent or other amounts under any lease of (or other arrangement covering the right to use) real or personal property that are required to be classified and accounted for as capital leases on a balance sheet as of such date computed in accordance with GAAP, (f) the deferred purchase price of Assets, property or services incurred outside the Ordinary Course of Business or to the extent more than thirty (30) days past due, (g) all indebtedness of others guaranteed or in effect guaranteed directly or indirectly in any manner, (h) all obligations for any earn-out or contingent payment or bonus or similar payment, (i) all deferred compensation, (j) all obligations with respect to the Payment Plans and Arrangements, (k) all obligations for Medicare advance payments or other amounts received in connection with any Accelerated Payment Program or Advance Payment Program administered by the Centers for Medicare & Medicaid Services (CMS) (for the avoidance of doubt, to the extent not recouped (by offset or otherwise) prior to Closing) and (l) all accrued but unpaid interest expense and all penalties, fees, charges and prepayment premiums that are payable, in each case with respect to any of the indebtedness or obligations described in this definition, including as a result of the entry into this Agreement and the consummation of the Transactions (including any repayment of Debt at or prior to the Closing).
“Deductible” means seventy thousand dollars ($70,000).
“Disclosed Contract” is defined in Section 3.18(b) of this Agreement.
“Employee Plan” means any plan, program, agreement, policy or arrangement, whether or not reduced to writing, and whether covering a single individual or a group of individuals, that is (a) a welfare plan within the meaning of Section 3(1) of ERISA, (b) a pension benefit plan within the meaning of Section 3(2) of ERISA, (c) a stock bonus, stock purchase, stock option, restricted stock, phantom stock, stock appreciation right or other equity-based plan, or (d) any other deferred-compensation, retirement, welfare-benefit, bonus, incentive, change in control, severance or termination pay, or fringe-benefit plan, program or arrangement, including any employee benefit plan as defined in Section 3(3) of ERISA.
“Encumbrance” means any charge, claim, equitable interest, lien, license, option, pledge, security interest, mortgage, encroachment, easement or restriction of any kind.
“End Date” is defined in Section 8.1(d) of this Agreement.
“Enforceability Exceptions” is defined in Section 3.2 of this Agreement.
“Environmental Claim” means any Action, Government Order, Encumbrance, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging Liability of whatever kind or nature (including Liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence of, Release or threat of Release of, or exposure to, any Hazardous Substance, or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.
“Environmental Law” means any Legal Requirement, including any Contract with any Governmental Authority, relating to (a) pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, sediment, surface water, groundwater, or subsurface strata), (b) the presence of, exposure to, or management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, handling, transportation, processing, production, disposal or remediation of any Hazardous Substance, or (c) Releases or threatened Releases of Hazardous Substances. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984,42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, 29 U.S.C. §§ 651 et seq.
“Environmental Notice” means any written directive, notice of violation or infraction, notice of responsibility, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit or the Release of any Hazardous Substance.
“Environmental Permit” means any Permit required under or issued, granted, given, authorized by or made pursuant to Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means, with respect to any Person, any entity that is considered a single employer with such Person under Section 414 of the Code.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Expense Payoff Letters” is defined in Section 2.5(a)(iii) of this Agreement.
“Facilities” means any buildings, plants, parking lots, parking structures, improvements or structures located on the Real Property.
“Financials” is defined in Section 3.6(a) of this Agreement.
“GAAP” means generally accepted accounting principles in the United States as in effect from time to time.
“General Indemnification Cap” means two million eight hundred thousand dollars ($2,800,000).
“Government Order” means any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority.
“Governmental Authority” means any federal, state or local or any foreign government, or political subdivision or agent thereof, or any multinational organization or authority or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power (or any agent thereof), any court or tribunal (or any department, bureau, division, or agent thereof), or any arbitrator or arbitral body (or any agent thereof).
“Governmental Programs” is defined in Section 3.13(e)(i) of this Agreement.
“Group Company” and “Group Companies” are defined in the Recitals of this Agreement.
“Hazardous Substance” means (a) any material, substance, or waste, in each case, whether solid, liquid, or gas and whether naturally occurring or manmade, that is defined or regulated as a pollutant or contaminant or as hazardous, acutely hazardous, toxic, or words of similar import, under any Environmental Law, and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.
“Healthcare Laws” means all Legal Requirements applying to Persons involved in the provision or administration of, or the submission of claims for or the receipt of payment for, products or services related to healthcare, in-home care, personal care, or assisted living by reason of the nature of their businesses, including: (a) the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code, the Physician Self-Referral Law, commonly known as the “Stark Law” (42 U.S.C. §§ 1395nn and 1396b), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the Federal Criminal False Claims Act (18 U.S.C. § 287), the False Statements Relating to Health Care Matters Law (18 U.S.C. § 1035), Health Care Fraud (18 U.S.C. § 1347) and any regulations promulgated pursuant to such statutes, or similar state or local statutes or regulations, (b) Medicare (Title XVIII of the Social Security Act), the regulations promulgated thereunder, (c) Medicaid (Title XIX of the Social Security Act) including the regulations promulgated thereunder as well as comparable state Medicaid statutes and regulations, (d) TRICARE (10 U.S.C. § 1071 et seq.) and the regulations promulgated thereunder, (e) quality and safety Legal Requirements relating to the regulation, storage, provision or administration of, or payment or rebates for, healthcare products or services, including prescription products, durable medical equipment, prosthetics and controlled substances, or the conducting of clinical research (e.g., Federal Food, Drug & Cosmetics Act (21 U.S.C. §§ 301 et seq.), the Controlled Substances Act (21 U.S.C. §§ 801 et seq.) and the Public Health Service Act, (42 U.S.C. §§ 201 et seq.)), (f) Legal Requirements governing the provision of healthcare services to employees with workers compensation coverage, (g) licensure Legal Requirements relating to the regulation, provision or administration of, or payment for items, services or goods related to healthcare, in-home care, personal care, or assisted living and the ownership or operation of medical or surgical equipment, or other supplies or accessories, including Legal Requirements relating to the so-called “corporate practice of medicine”, “corporate practice of nursing” or fee splitting, (h) Legal Requirements relating to certificate of need or similar Legal Requirements governing the establishment of providers, practices or services related to healthcare, in-home care, personal care, or assisted living, the acquisition of equipment or the making of healthcare capital expenditures, and (i) any and all other applicable regulatory manual provisions, policies and administrative guidance related to healthcare, in-home care, personal care, or assisted living having the force of Legal Requirements, each of (a) through (i) as may be amended from time to time.
“Healthcare Provider” is defined in Section 3.13(d) of this Agreement.
“Inbound IP Contracts” is defined in Section 3.12(c) of this Agreement.
“Indemnified Party” means, with respect to any Indemnity Claim, the party asserting such claim under Sections 7.1 or 7.2, as the case may be.
“Indemnifying Party” means, with respect to any Indemnity Claim, the party against whom such claim is asserted under Sections 7.1 or 7.2, as the case may be.
“Indemnity Claim” means a claim for indemnity under Sections 7.1 or 7.2, as the case may be.
“Initial Schedule Update” is defined in Section 5.18(a) of this Agreement.
“Intellectual Property Rights” means all domestic and foreign (a) patents and patent applications, and all patents issuing thereon, including without limitation utility, model and design patents and certificates of invention, together with all reissue patents, patents of addition, divisionals, provisional applications, renewals, continuations, continuations-in-part, substitutions, additions, extensions, confirmations, re-examinations, and all foreign counterparts of the forgoing which are in the process of being prepared, and all inventions and improvements disclosed therein, (b) trademarks, service marks, trade dress, trade names, brand names, designs, logos, commercial symbols and corporate names, and all registrations, applications and goodwill associated therewith, and the right to recover for past, present and future infringement thereof, (c) copyrights and all works of authorship, whether or not registered or copyrightable, and all applications, registrations, and renewals in connection therewith, (d) Software, including without limitation computer programs, operating systems, applications, software, firmware, tools, data files, databases, graphics, schematics, interfaces, architecture, file formats, routines, algorithms, video players, transcoding systems, content management systems, data collection tools and any and all specifications and documentation related thereto and all copyrights therein, (e) domain names, Internet addresses and other computer identifiers, web sites, URLs, web pages, unique phone numbers, registrations for any of the foregoing and similar rights and items, (f) confidential and proprietary information, including without limitation, trade secrets, know-how, business rules, data warehouse management techniques, formulae, ideas, concepts, discoveries, innovations, improvements, results, reports, information and data, research, laboratory and programmer notebooks, methods, procedures, proprietary technology, operating and maintenance manuals, engineering and other drawings and sketches, customer lists, supplier lists, pricing information, cost information, business manufacturing and production processes and techniques, designs, specifications, and blueprints, (g) all other intellectual property and proprietary rights in any form or medium known or later devised, and (h) all copies and tangible embodiments of any of the foregoing, all goodwill associated with any of the foregoing and rights to recover for past, present and future infringement associated with any of the foregoing.
“Interests” is defined in the Recitals of this Agreement.
“Interim Balance Sheet” means the consolidated balance sheet of the Group Companies within the Interim Financials.
“Interim Balance Sheet Date” means the date of the Interim Balance Sheet.
“Interim Financials” is defined in Section 3.6(a) of this Agreement.
“IP Contracts” is defined in Section 3.12(c) of this Agreement.
“IPO” means a public offering of Common Stock after the Closing pursuant to an effective registration statement filed under the Securities Act (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of Buyer pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan).
“IRS” means the United States Internal Revenue Service.
“Knowledge of Seller” or similar knowledge qualifiers means the knowledge, including such knowledge that should have been obtained after reasonably diligent investigation, of Richard T. Mason, G. Shayne Bench, Shari Bench, Ken Hawkins, Sandra Bowers, Toni Vicars, Ricardo Penagos, Sam Salam, and Larry Reed.
“Leased Real Property” is defined in Section 3.11(a)(i) of this Agreement.
“Legal Requirement” means any federal, state or local or foreign law, statute, standard, ordinance, code, rule, regulation, directive, policy, resolution or promulgation, or any Government Order, or any license, franchise, Permit or similar right granted under any of the foregoing, or any similar provision having the force or effect of law.
“Liability” means, with respect to any Person, any liability or obligation (including as related to Taxes) of such Person whether known or unknown, whether asserted or unasserted, whether determined, determinable or otherwise, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether incurred or consequential, whether due or to become due and whether or not required under GAAP to be accrued on the financial statements of such Person.
“Losses” is defined in Section 7.1(a) of this Agreement.
“MAE Condition” is defined in Section 8.1(f) of this Agreement.
“Mason” is defined in the Preamble of this Agreement.
“Material Adverse Effect” means any event, occurrence, fact, condition or change that, when considered either individually or in the aggregate together with all other adverse changes or effects with respect to which such phrase is used in this Agreement, is, or is reasonably likely to be, materially adverse to the business, operations, Assets, condition (financial or otherwise), customer relations, employee relations, value, earnings or business prospects of the Group Companies, any Group Company or the Business, as applicable, taken as a whole, the value of the Business, the ability of any Group Company to consummate the Transactions on a timely basis or to the ability of Buyer to operate the Business immediately after the Closing in the manner operated before the Closing or own the Interests free and clear of all Encumbrances; provided, however, that none of the following shall be a “Material Adverse Effect,” nor shall any of the following be taken into account in determining whether a “Material Adverse Effect” has occurred: (a) changes in general economic conditions in the United States or any other country or region in the world, or changes in conditions in the global economy generally; (b) general changes in conditions in the financial markets, credit markets or capital markets in the United States or any other country or region in the world, including changes in interest rates in the United States or any other country; (c) general changes in conditions in the industries in which the Group Companies conduct business; (d) changes in political conditions in the United States or any other country or region in the world; (e) acts of war, sabotage or terrorism (including any escalation or general worsening of any such acts of war, sabotage or terrorism) in the United States or any other country or region in the world; (f) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions and other force majeure events in the United States or any other country or region in the world; (g) any epidemic, pandemic or disease outbreak (including the COVID-19 pandemic), or any Law, pronouncement or guidance issued by a Governmental Authority, the Centers for Disease Control and Prevention, or the World Health Organization generally applicable to the industry in which the Group Companies operate providing for business closures, “sheltering-in-place” or other related restrictions; (h) the announcement of this Agreement or the pendency or consummation of the transactions contemplated hereby, in each case, in accordance with the terms hereof; (i) the taking of any action required or expressly contemplated by, this Agreement, or the failure to take any action expressly prohibited by this Agreement; (j) any actions taken, or failure to take action, in each case, to which Buyer has in writing expressly approved, consented to or requested following the Effective Date; (k) changes in Law; and (l) any failure by the Group Companies to meet any internal projections or forecasts or estimates of revenues or earnings for any period (it being understood and agreed that the facts and circumstances giving rise to such failure that are not otherwise excluded from the definition of a Material Adverse Effect may be taken into account in determining whether there has been a Material Adverse Effect); except, in the case of clauses (a) through (g) and clause (k) above, to the extent such events, changes, circumstances or effects have a disproportionate affect the Group Companies, individually or in the aggregate, relative to the other participants in industries in which the Group Companies operate.
“Minimum Cash on Hand” means six million five hundred thousand dollars ($6,500,000).
“Off-the-Shelf Software” means Software, other than Open Source Software, obtained from a third party (a) on general commercial terms and that continues to be widely available on such commercial terms, (b) that is not distributed with or incorporated in any product or services of the Group Companies or any Group Company, and (c) that is licensed to the Group Companies or any Group Company for a one-time fee or an annual fee of less than five hundred dollars ($500).
“Offset Value” means an amount per share equal to one dollar ($1).
“Omega Contingency” means the entry into a definitive asset purchase agreement or other similar agreement (the “Omega Purchase Agreement”) and other definitive documents, as applicable, between one or more of the Buyer or a direct or indirect Subsidiary of the Buyer and the applicable seller parties thereto with respect to and setting forth the terms and conditions of the Omega Facilities Sale (which, for the avoidance of doubt, will not include an aggregate purchase price in excess of $59,000,000 inclusive of the deposit described in Section 2.2(b)(iii)) and, on or prior to the Omega Outside Date, the closing and consummation in full of the transactions contemplated thereby, including, without limitation, the conveyance of the real property interests of the Facilities (as such term is defined in the set forth in the Omega Lease) pursuant to the terms of the Omega Purchase Agreement.
“Omega Determination Date” the earlier of (a) the satisfaction, in full, of the Omega Contingency, and (b) the Omega Outside Date.
“Omega Facilities Sale” means the acquisition of the Facilities (as such term is defined in the Omega Lease).
“Omega Lease” means that certain Master Lease dated as of May 13, 2015, as amended by a First Amendment to Master Lease dated September 6, 2019, a Second Amendment to Master Lease dated October 7, 2019, a Third Amendment to Master Lease dated January 31, 2020, a Fourth Amendment to Master Lease dated July 22, 2020 and the Omega Consent and Amendment, in each case, by and among Crete Plus Five Property, L.L.C., a Delaware limited liability company, Iowa Lincoln County Property, L.L.C., a Delaware limited liability company, Muscatine Toledo Properties, L.L.C., a Delaware limited liability company, Avery Street Property, L.L.C., a Delaware limited liability company, Iane Properties I, LLC, a Florida limited liability company, and Iane Properties II, LLC, a Florida limited liability company.
“Omega Consent and Amendment” means that certain Consent Agreement and Fifth Amendment to Master Lease (OHI – Trillium), dated [as of even date herewith], by and among Crete Plus Five Property, L.L.C., a Delaware limited liability company, Iowa Lincoln County Property, L.L.C., a Delaware limited liability company, Muscatine Toledo Properties, L.L.C., a Delaware limited liability company, Avery Street Property, L.L.C., a Delaware limited liability company, Iane Properties I, LLC, a Florida limited liability company, and Iane Properties II, LLC, a Florida limited liability company.
“Omega Purchase Agreement” has the meaning set forth in the definition of Omega Contingency.
“Omega Offset Amount” means (a) if the Omega Contingency is not fully satisfied on or prior to the Omega Outside Date, $3,000,000, and (b) if the Omega Contingency is fully satisfied on or prior to the Omega Outside Date, $0.
“Omega Outside Date” means December 30, 2021 (or any later date agreed to as an extended outside date by mutual agreement of the applicable parties on or prior to December 30, 2021 or, in the event of any subsequent extension, such later date as extended).
“Open Source Software” means any Software, product or technology that contains, or is derived in any manner (in whole or in part) from, any Software that is distributed as free Software, open source Software or similar licensing or distribution models, including Software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models similar to any of the following: (a) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL), (b) the Artistic License (e.g., PERL), (c) the Mozilla Public License, (d) the Netscape Public License, (e) the Sun Community Source License (SCSL), (f) the Sun Industry Standards License (SISL), (g) the BSD License, (h) Affero GPL and (i) the Apache License.
“Ordinary Course of Business” means an action taken by any Person in the ordinary course of such Person’s business that is consistent with the past customs and practices of such Person (including past practice with respect to quantity, amount, magnitude and frequency, standard employment and payroll policies and past practice with respect to management of working capital) in the normal day-to-day operations of such Person; provided, however, that in no event shall “Ordinary Course of Business” include any breach or violation of any Legal Requirement, Government Order or Contract or violation of any Permit.
“Organizational Documents” means, with respect to any entity, (a) the certificate or articles of incorporation and the by-laws, the certificate of formation and partnership agreement or operating agreement (as applicable), and (b) any organizational or governing documents comparable to those described in clause (a) as may be applicable to such entity pursuant to any applicable Legal Requirements.
“Outbound IP Contracts” is defined in Section 3.12(c) of this Agreement.
“Owned Real Property” is defined in Section 3.11(a)(ii) of this Agreement.
“Owner” and “Owners” is defined in the Preamble of this Agreement.
“Ownership Interests” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation and any and all ownership interests in a Person (other than a corporation), including membership/limited liability company interests, partnership interests, joint venture interests and beneficial interests, and any and all warrants, options or rights to purchase any of the foregoing.
“Parent” is defined in the definition of Subsidiaries.
“Party” or “Parties” means the signatories to this Agreement.
“Payment Plans and Arrangements” means, collectively, (a) the Repayment Plan Agreement, dated October 8, 2019, by and among Encore Rehabilitation Services, LLC, Premier Estates 523 LLC D/B/A Premier Estates of Oxford, Premier Estates 526 LLC D/B/A Premier Estates of Cincinnati-Riverview, Premier Estates 521, LLC D/B/A Premier Estates of Three Rivers, Premier Estates 524, LLC D/B/A Premier Estates of Norwood Towers, Premier Estates 525, LLC D/B/A Premier Estates of Highlands, Premier Estates 522, LLC D/B/A Premier Estates of Cincinnati-Riverside, and Premier Estates 520, LLC D/B/A Premier Estates of Middletown, (b) the Agreement for Acknowledgement of Debt and Debt Payment Plan, dated October 9, 2019, by and among PharmScript of OH, LLC and Premier Estates 524, LLC, Premier Estates 521, LLC, Premier Estates 526, LLC, Premier Estates 523, LLC, Premier Estates 520, LLC, Premier Estates 525, LLC and Premier Estates 522, LLC, and (c) any other payment agreements, plans, schedules or similar Contracts or arrangements arising from or relating to Liability of any Group Company to any vendor, supplier, creditor or other third party that is, or at the time of such arrangement was, past due or that is otherwise relating to a breach or violation of, or default under, any Contract or other payment obligation to any vendor, supplier, creditor or other third party.
“Payor” shall mean any insurer, third party administrator, employer, union trust, federal or state governmental program or any agent thereof (including but not limited to any Governmental Program, Private Program or other similar consumer of healthcare services that has authorized any Group Company to serve as a provider of healthcare services to any Payor’s members, beneficiaries, participants or the like).
“Permits” means, with respect to any Person, any license, accreditation, bond, franchise, permit, consent, waiver, approval, right, privilege, certificate or other similar authorization issued by, or otherwise granted by, any Governmental Authority or any other Person to which or by which such Person is subject or bound or to which or by which any property, business, operation or right of such Person is subject or bound.
“Permitted Encumbrance” means (a) statutory liens for current Taxes, special assessments or other governmental charges not yet due and payable and for which adequate reserves have been established and are reflected on the Interim Balance Sheet, (b) mechanics’, landlords’, materialmen’s, carriers’, workers’, repairers’ and similar statutory liens arising or incurred in the Ordinary Course of Business that are not yet due and payable (excluding mechanic’s liens that would be in violation of tenant lease obligations of any Group Company), and (c) zoning, entitlement, building and other land use regulations imposed by Governmental Authorities having jurisdiction over any Real Property that are not violated in any material respect by the current use and operation of the Real Property and which do not materially impair the conduct of the business of the Group Companies.
“Person” means any individual or corporation, association, partnership, limited liability company, joint venture, joint stock or other company, business trust, trust, organization, Governmental Authority or other entity of any kind.
“Personal Information” means any data or other information (including protected health information as defined at 45 CFR §160.103) about or from an individual, including any personally identifiable data (e.g., name, address, phone number, email address, financial account number, payment card data, government issued identifier, and health or medical information), or that is otherwise protected by or subject to any Privacy and Security Law.
“PPP Lender” means Regions Bank.
“PPP Loan Forgiveness Determination Date” the date upon which the Group Companies have received written notice from the U.S. Small Business Administration or the PPP Lender, in form reasonably acceptable to Buyer, that final determinations have been made with respect to both Paycheck Protection Program PPP Loan Forgiveness Applications (Form 3508EZ) submitted in connection with the PPP Loans, which applications were submitted on September 22, 2020 and October 22, 2020, respectively, regarding the request for forgiveness of all Liabilities for principal and interest pursuant to the PPP Loans, whether the determination is approval of forgiveness in the full amount for which forgiveness was requested, approval of partial forgiveness of the amount for which forgiveness was requested or a denial of forgiveness of all amounts for which forgiveness was requested.
“PPP Loan Contingency” means (a) the PPP Loans have been forgiven and are discharged and satisfied in full prior to the Closing, or (b) if the PPP Loans have not been forgiven and are not discharged and satisfied in full prior to the Closing, upon the SBA or PPP Lender notifying any Group Company in writing that the PPP Loans have been forgiven, discharged and satisfied in full (and receipt of documentary evidence thereof reasonably satisfactory to Buyer).
“PPP Loan Offset Amount” means (a) if as of the PPP Loan Forgiveness Determination Date the PPP Loan Contingency has not been satisfied in full, the amount as required to discharge and satisfy in full the PPP Loans, including all principal and interest and any penalties thereon and other Liabilities relating thereto, or (b) if as of the PPP Loan Forgiveness Determination Date the PPP Loan Contingency has been satisfied in full and the Group Companies have no further Liability with respect to the PPP Loans, $0.
“PPP Loans” means, individually and collectively as the context so requires, (a) that certain loan in the original principal amount of three million four hundred ten thousand dollars ($3,410,000.00) obtained by Greenside Healthcare Properties, LLC from PPP Lender pursuant to the SBA’s Payment Protection Program, as evidenced by that certain U.S. Small Business Administration Note, dated as of April 15, 2020, by and between Greenside Healthcare Properties, LLC and PPP Lender, and (b) that certain loan in the original principal amount of three million five hundred fifty thousand dollars ($3,550,000.00) obtained by IANE Properties I, LLC from PPP Lender pursuant to the SBA’s Payment Protection Program, as evidenced by that certain U.S. Small Business Administration Note, dated as of April 22, 2020, by and between IANE Properties I, LLC and PPP Lender.
“Pre-Closing Tax Period” means all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any taxable period that includes (but does not end on) the Closing Date.
“Predecessor” means (a) any Person that has ever merged with or into any current or former Group Company, (b) any Person, a majority of whose Ownership Interest has ever been acquired by a current or former Group Company, (c) any Person, all or substantially all of whose Assets has ever been acquired by any current or former Group Company, and (d) any prior names of any current or former Group Company or any Person described in the foregoing clauses (a) through (c).
“Privacy and Security Laws” means all applicable Legal Requirements concerning data protection, privacy, security, or other similar Legal Requirements (including any security breach notification requirements), including the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, as amended by the American Recovery and Reimbursement Act of 2009 and the regulations promulgated thereunder (the “HIPAA Regulations”), HITECH, the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act, the Fair and Accurate Credit Transaction Act, the Privacy Act of 1974, the CAN-SPAM Act, the Telephone Consumer Protection Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, Children’s Online Privacy Protection Act, state Social Security number protection Legal Requirements, state data breach notification Legal Requirements, state consumer protection Legal Requirements, the European Union Directive 95/46/EC, the Dutch Personal Data Protection Act (WBP), the United Kingdom’s Data Protection Act 1998 (DPA) and Alberta’s Personal Information Protection Act.
“Private Programs” is defined in Section 3.13(e)(i) of this Agreement.
“Privileged Communications” is defined in Section 10.14 of this Agreement.
“Provider Relief Fund” is defined in Section 3.24(d) of this Agreement.
“Purchase Price” is defined in Section 2.2(a) of this Agreement.
“Purchase Price Bank Account” means the bank account set forth in Annex 1 to this Agreement.
“Real Property” is defined in Section 3.11(a) of this Agreement.
“Real Property Leases” is defined in Section 3.11(a) of this Agreement.
“Related Person” is defined in Section 3.19 of this Agreement.
“Release” means any release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration in the indoor or outdoor environment, including without limitation the movement of Hazardous Substances through the air, soil, surface water, groundwater or property.
“Released Claims” is defined in Section 5.16 of this Agreement.
“Representative” means, with respect to any Person, any director, manager, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.
“Restricted Area” is defined in Section 5.9(b) of this Agreement.
“Restrictive Covenant Period” is defined in Section 5.9(b) of this Agreement.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Security Breach” means (a) any material unauthorized access, acquisition, use, disclosure, modification, deletion, or destruction of Personal Information or Sensitive Information, or any other event that qualifies as a “security breach” or similar terms under applicable Privacy and Security Laws; (b) any unauthorized interference with or other breach of security measures of Business IT Assets; or (c) phishing incident or ransomware attack.
“Seller” is defined in the Preamble of this Agreement.
“Seller Closing Documents” is defined in Section 2.5(a) of this Agreement.
“Seller Fundamental Representations” is defined in Section 7.3(a)(iii) of this Agreement.
“Seller Indemnified Person” is defined in Section 7.2(a) of this Agreement.
“Seller Party” and “Seller Parties” is defined in the Preamble of this Agreement.
“Seller Party Releasors” is defined in Section 5.16 of this Agreement.
“Sensitive Information” means privileged or proprietary information which, if compromised through any theft, interruption, modification, corruption, loss, misuse, or unauthorized access or disclosure, could cause serious harm to the organization owning it. Sensitive Information shall include information covered by Legal Requirement, including the Privacy and Security Laws, and Personal Information.
“Series A Preferred Stock” means shares of Series A Preferred Stock, par value $0.0001 per share, of Buyer.
“Software” means computer programs, operating systems, applications, firmware, and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof
“Stock Consideration” means (a) two million five hundred thousand (2,500,000) shares of Series A Preferred Stock, and (b) shares of Common Stock valued at five million dollars ($5,000,000), which shall be determined based on a price per share of Common Stock as determined based on the average of the VWAP of Common Stock during each Trading Day during the twenty (20) Trading Day period ending one (1) Trading Day prior to the date of issuance, which, in each case, shall be subject to such reasonable restrictions, including underwriting restrictions, as determined by Buyer.
“Subsidiaries” means with respect to any Person (the “Parent”), any corporation or other Person of which Ownership Interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than Ownership Interests having such power only upon the happening of a contingency that has not occurred), are held by the Parent or one or more of its Subsidiaries.
“Tail Policies” is defined in Section 5.7(a) of this Agreement.
“Tax” or “Taxes” means (a) any and all federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar, including FICA), unemployment, disability, real property, personal property, escheat, unclaimed property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind or any charge of any kind in the nature of (or similar to) taxes whatsoever, including any interest, penalty, or addition thereto, in each case whether disputed or not, and (b) any Liability for the payment of any amounts of the type described in clause (a) of this definition as a result of being a member of an affiliated, consolidated, combined or unitary group for any period, as a result of any tax sharing or tax allocation agreement, arrangement or understanding, or as a result of being liable for another Person’s taxes as a transferee or successor, by Contract or otherwise.
“Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Technology” means all inventions, works, discoveries, innovations, know-how, information (including ideas, research and development, formulas, algorithms, compositions, processes and techniques, data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, business and marketing plans and proposals, graphics, illustrations, artwork, documentation, and manuals), servers, Software, computer hardware, integrated circuits and integrated circuit masks, electronic, electrical, and mechanical equipment, and all other forms of technology, including improvements, modifications, works in process, derivatives, or changes, whether tangible or intangible, embodied in any form, whether or not protectable or protected by patent, copyright, mask work right, trade secret law, or otherwise, and all documents and other materials recording any of the foregoing.
“Third Party Claim” is defined in Section 7.4(a) of this Agreement.
“Trading Day” means a day on which the Pink Open Market or other market operated by OTC Markets Group, Inc. (or any successors thereof) is open for trading.
“Transaction Documents” means this Agreement and all other agreements, documents, instruments and certificates contemplated by this Agreement, including the Seller Closing Documents and Buyer Closing Documents.
“Transaction Expenses” means (a) the costs, fees and expenses (including legal, accounting, investment banking, advisory and other costs, fees and expenses) of any Group Company incurred or committed to in connection with the negotiation, execution and consummation of this Agreement, the other Transaction Documents and the Transactions, including 50% of the cost of the Tail Policies, (b) any bonus, severance, change of control, retention or similar payment by any Group Company, or any officer, director or employee of a Group Company and any employment or other withholding Taxes related to the foregoing or to the payment of the Purchase Price, in each case, incurred or arising in connection with the consummation of the Transactions, (c) compensation, salary and bonus plan amounts and related Taxes for pre-Closing periods, and (d) any consent or similar fee required to be paid in connection with obtaining those authorizations, consents or approvals that are disclosed or are required to be disclosed on Schedules 3.3 or 3.4 of this Agreement.
“Transactions” means the sale, transfer, conveyance, assignment and delivery and purchase, acquisition and acceptance of the Interests free and clear of any Encumbrance, other than Permitted Encumbrances, and the other transactions contemplated by this Agreement and the other Transaction Documents.
“Transfer Taxes” is defined in Section 9.1 of this Agreement.
“Treasury Regulations” means the regulations promulgated under the Code.
“VWAP” means the daily dollar volume-weighted average sale price for Common Stock on the Pink Open Market or other market operated by OTC Markets Group, Inc. on any particular Trading Day (during the period beginning at such time as such market publicly announces is the official open of trading, and ending at such time as such market publicly announces is the official close of trading), as reported by Bloomberg Financial Markets (or if the Company is unable to gain access to Bloomberg Financial Markets information or if such market is not reported by Bloomberg Financial Markets, as reasonably determined by Buyer, using share price information and volume reported on the OTC Markets website, taking the average price of the high, low and closing prices per share for a given day and multiplying by the daily trading volume for such day, for each day during the VWAP period and dividing the sum of all VWAP calculations for each day by the total trading volume for the entire VWAP period). All such determinations of VWAP shall be appropriately and equitably adjusted in accordance with the provisions set forth herein.
“Year-End Financials” is defined in Section 3.6(a) of this Agreement.
Form of Assignment
[See Attached]
ASSIGNMENT
AND ASSUMPTION
OF MEMBERSHIP INTERESTS
THIS ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTERESTS (this “Assignment”) is made as of June 9, 2021, by and between TRILLIUM HEALTHCARE GROUP, LLC, a Florida limited liability company (“Assignor”), and ASSISTED 4 LIVING, INC., a Nevada corporation (“Assignee”).
WITNESSETH:
WHEREAS, Assignor is the sole member and owner of all of the membership, financial, governance and other interests in Fairway Healthcare Properties, LLC and Trillium Healthcare Consulting, LLC (each individually, a “Company” and together collectively, the “Companies”);
WHEREAS, capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Purchase Agreement, as defined below;
WHEREAS, pursuant to that certain Amended and Restated Membership Interest Purchase Agreement, dated as of June 9, 2021, by and among Assignor, Assignee, Richard T. Mason and G. Shayne Bench (the “Purchase Agreement”), Assignor desires to assign to Assignee, and Assignee desires to accept from Assignor, an assignment of the Interests in each Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor and Assignee hereby agree as follows:
1. Recitals. The foregoing recitals are acknowledged to be accurate and are incorporated herein by reference.
2. Assignment. Effective as of the Closing, Assignor hereby assigns, transfers, and sets over to Assignee the Interests, which includes all rights in each Company, including all economic interest, membership interest, any right to vote or participate in management, and any right to information concerning the business and affairs of the Companies.
3. Acceptance and Assumption. Effective as of the Closing, Assignee hereby acquires, takes and accepts from Assignor all rights, titles and interest in and to the Interests.
4. Substitution and Withdrawal. Effective as of the Closing, Assignee shall be the sole member of each Company with respect to the Interests and Assignor consents to such assignment and substitution in accordance with applicable law and the operating agreement and other governing documents of each Company. Effective as of the Closing, Assignor shall and does hereby withdraw from each Company as a member, cease to be a member of each Company and cease to have or exercise any right or power as a member of each Company or with respect to the Interests. The parties agree that the assignment of the Interests, the admission of Assignee as the sole member of each Company and the cessation of Assignor as the sole member of each Company shall not dissolve the Company and that the business of the Company shall continue without dissolution.
5. Terms of the Purchase Agreement. This Assignment is executed and delivered pursuant to the Purchase Agreement and is effective as of the Closing. The terms of the Purchase Agreement, including, without limitation, the representations, warranties, covenants, agreements and indemnities relating to the Interests, are incorporated into this Assignment by this reference. The parties hereto acknowledge and agree that the representations, warranties, covenants, agreements and indemnities contained in the Purchase Agreement are not superseded by this Assignment, but are to remain in full force and effect to the full extent provided in the Purchase Agreement. In the event of any conflict or inconsistency between the terms of the Purchase Agreement and the terms of this Assignment, the terms of the Purchase Agreement are to govern.
6. Binding Effect. The provisions of this Assignment shall be binding upon Assignor, its successors and assigns, and all persons claiming by, under or through Assignor, and shall inure to the benefit of and be enforceable by Assignee and its successors and assigns.
7. Counterparts; Electronic Signatures. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument. In order to expedite the execution and delivery of this Assignment by the parties hereto, signatures transmitted via facsimile or other electronic means may be used in place of original signatures on this Assignment. Each of the parties hereto intend to be bound by any signatures delivered via facsimile or other electronically transmitted means, and are aware that the other parties will rely on any such facsimile or electronically transmitted signatures, and hereby waive any defenses to the enforcement of the terms of this Assignment based on the form of signature.
[Signature Page to Follow]
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of the day and year first written above.
ASSIGNOR: | TRILLIUM HEALTHCARE GROUP, LLC | |
By: | /s/ Richard T. Mason | |
Name: | Richard T. Mason | |
Title: | President | |
ASSIGNEE: | ASSISTED 4 LIVING, INC. | |
By: | /s/ Louis Collier | |
Name: | Louis Collier | |
Title: | Chief Executive Officer |
Exhibit 10.4
MASTER LEASE
THIS MASTER LEASE (this “Lease”) made and entered into this 13th day of May, 2015, by and between CRETE PLUS FIVE PROPERTY, L.L.C., a Delaware limited liability company, IOWA LINCOLN COUNTY PROPERTY, L.L.C., a Delaware limited liability company, MUSCATINE TOLEDO PROPERTIES, L.L.C., a Delaware limited liability company, and AVERY STREET PROPERTY, L.L.C., a Delaware limited liability company (hereinafter along with any other lessors as may be added to this Lease from time to time collectively referred to as “Lessor”), and IANE PROPERTIES I, LLC, a Florida limited liability company, and IANE PROPERTIES II, LLC, a Florida limited liability company (hereinafter along with any other lessees as may be added to this Lease from time to time collectively referred to as “Lessee”).
W I T N E S S E T H:
WHEREAS, CRETE PLUS FIVE PROPERTY, L.L.C., a Delaware limited liability company (the “Purchaser”) currently has entered into a Purchase and Sale Agreement dated May 13, 2015 (the “Purchase Agreement”) with SMV Fremont LLC, a Delaware limited liability company, SMV Crete LLC, a Delaware limited liability company, SMV Kenesaw LLC, a Delaware limited liability company, SMV Pawnee City LLC, a Delaware limited liability company”, SMV Pierce LLC, a Delaware limited liability company , and SMV West Point LLC, a Delaware limited liability company (collectively, as Seller thereunder), to purchase the Crete Plus Five Land and the Crete Plus Five Facilities, both as defined in Schedule A attached hereto and made a part hereof;
WHEREAS, concurrently with the acquisition of the Crete Plus Five Land and the Create Plus Five Facilities, Purchase will also acquire the Personal Property (as hereinafter defined) to be used in or about the Crete Plus Five Facilities (the “Crete Plus Five Personal Property” and, together with the Create Plus Five Land and the Crete Plus Five Facilities, the “Crete Plus Five Leased Property”) from SSC Crete Operating Company LLC, SSC Pawnee City Operating Company LLC, SSC Fremont Operating Company LLC, SSC West Point Operating Company LLC, SSC Pierce Operating Company LLC, and SSC Kenesaw Operating Company LLC, the existing operators of the Crete Facilities;
WHEREAS, contemporaneously with the purchase and sale of the Crete Plus Five Facilities and the Crete Plus Five Personal Property, Lessor desires to lease the Crete Plus Five Leased Property to Lessee and Lessee desires to lease the Leased Property from Lessor;
WHEREAS, pursuant to Lease 1, Lease 2 and Lease 3 (all as defined on Exhibit D attached hereto and made a part hereof), certain of the Lessors lease to certain of the Lessees and certain of the Lessees lease from certain of the Lessors certain of the Leased Property, as more fully described in such Lease 1, Lease 2 and Lease 3, respectively; and
WHEREAS, Trillium Healthcare Group, LLC, a Florida limited liability company, Fairway Healthcare Properties, LLC, a Florida limited liability company, Trillium Healthcare Consulting, LLC, a Florida limited liability company, Rich Mason, Christine Mason, Shayne Bench, Shari Bench, and Sublessees (collectively, “Guarantors” and, individually, a “Guarantor”) will execute and deliver to Lessor that certain Unconditional Guaranty of Lease (the “Lease Guaranty”) dated of even date herewith, guarantying the performance of all of the obligations of Lessee under this Lease, such Lease Guaranty to amend, restate and consolidate any existing guarantees of Lease 1, Lease 2 and Lease 3; and
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WHEREAS, Lessee hereby acknowledges and agrees that Lessor, as consideration and inducement for Lessor agreeing to enter into the Purchase Agreement and to leasing the Crete Plus Five Leased Property to Lessee upon the acquisition thereof, requires that Lease 1, Lease 2 and Lease 3 (all as defined on Exhibit D attached hereto and made a part hereof) be amended, restated and consolidated together into this Lease.
WHEREAS, the parties hereto have agreed to the terms and conditions of this Lease.
NOW THEREFORE, it is agreed that the use and occupancy of the Demised Premises, and the use of the Personal Property shall be subject to and in accordance with the terms, conditions and provisions of this Lease.
ARTICLE 1 - DEFINITIONS
1.1 The terms defined in this Article shall, for all purposes of this Lease and all agreements supplemental hereto, have the meaning herein specified.
(1) “Additional Rent” shall have the meaning ascribed to such term in Section 4.4 of this Lease.
(2) “Base Rent” shall have the meaning ascribed to such term in Section 4.1 of this Lease.
(3) “Closing Costs” shall mean any and all costs incurred by any Lessor and/or any Lessee, in connection with any Lessor’s investigation and acquisition of any Leased Property pursuant to any agreement to acquire Leased Property that is subject to this Lease upon acquisition, including, without limitation, costs, fees and expenses relating to or incurred for broker fees, surveys, appraisals, reimbursement review, market studies, compliance reviews, environmental studies and investigations, engineering reports, title insurance, UCC searches, regulatory approval, CHOW and attorneys’ fees.
(4) “Default Rate” shall have the meaning ascribed to such term in Section 10.1 of this Lease.
(5) “Demised Premises” shall mean (i) collectively, the Land, the Facilities, any other improvements now or hereafter located on the Land, and all easements, tenements, hereditaments and appurtenances thereto and (ii) individually as to any one Facility, the Land, the Facility, any other improvements now or hereafter located on the Land, and all easements, tenements, hereditaments and appurtenances to such Facility.
(6) “Facilities” shall mean, collectively, the Creston Facility, the North Platte SNF Facility, the North Platte ALF Facility, the Onawa SNF Facility, the Onawa ALF Facility, the Rock Rapids SNF Facility, the Rock Rapids Facility, the Rockwell City Facility, the Shenandoah Facility, the New Hampton Facility, the Muscatine Facility, the Toledo Facility, the Pensacola Facility and any other facilities as may be added to this Lease from time to time, including, without limitation, the Arbor Facility, the Haven Facility, the Pierce Facility, the Pawnee Facility, the Crete Facility, the West Point Facility immediately upon the acquisition thereof pursuant to the Purchase Agreement, all such Facilities noted in this definition having the meaning ascribed to such terms in Schedule A attached to this Lease.
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(7) “Facility Property” shall mean any one Facility and the Land on which such Facility is located.
(8) “Land” shall mean, collectively, the Creston Land, the North Platte SNF Land, the North Platte ALF Land, the Onawa SNF Land, the Onawa ALF Land, the Rock Rapids SNF Land, the Rock Rapids Land, the Rockwell City Land, the Shenandoah Land, the New Hampton Land, the Muscatine Land, the Toledo Land, the Pensacola Land and any other land as may be added to this Lease from time to time, including, without limitation, the Arbor Land, the Haven Land, the Pierce Land, the Pawnee Land, the Crete Land, the West Point Land immediately upon the acquisition thereof pursuant to the Purchase Agreement, all such Land noted in this definition having the meaning ascribed to such terms in Schedule A attached to this Lease.
(9) “Lease Year” shall mean a twelve (12) month period commencing on the Commencement Date as hereafter defined, and on each anniversary of the Commencement Date thereafter, except that if the Commencement Date is other than the first day of a calendar month, then the first Lease Year shall be the period from the Commencement Date through the date twelve (12) months after the last day of the calendar month in which the Commencement Date occurs, and each subsequent Lease Year shall be the period of twelve (12) months following the last day of the prior Lease Year.
(10) “Leased Property” shall mean, collectively, the Demised Premises and the Personal Property.
(11) “Lessor Party” and “Lessor Parties” shall have the meaning ascribed to such terms in Section 25.1 of this Lease.
(12) “Purchase Agreement” shall have the meaning ascribed to such term in the Recitals hereto.
(13) “Personal Property” shall have the meaning ascribed to such term in Exhibit B of this Lease.
(14) “Mortgage/Underlying Lease” shall have the meaning ascribed to such term in Section 26.1 of this Lease.
(15) “Mortgagee/Underlying Lessor” shall have the meaning ascribed to such term in Section 26.1 of this Lease.
(16) “Rent” shall have the meaning ascribed to such term in Section 4.1 of this Lease.
(17) “Sublessees” shall mean the following entities, each being an affiliate of Lessee: Premier Estates of Fremont, LLC, a Florida limited liability company, and Premier Estates of Crete, LLC, a Florida limited liability company, Premier Estates of Kenesaw, LLC, a Florida limited liability company, Premier Estates of Pawnee, LLC, a Florida limited liability company, Premier Estates of Pierce, LLC, a Florida limited liability company, Premier Estates of West Point, LLC, a Florida limited liability company, North Platte Care Center, LLC, a Florida limited liability company, North Platte PE, LLC, a Florida limited liability company, Sunny Knoll Care Center, LLC, a Florida limited liability company, Elmwood Care Center, LLC, a Florida limited liability company, Elmwood PE, LLC, a Florida limited liability company, Crest Haven Care Center, LLC, a Florida limited liability company, Rock Rapids Care Center, LLC, a Florida limited liability company, Rock Rapids PE, LLC, a Florida limited liability company, Fair Oaks RCF, LLC, a Florida limited liability company, and New Hampton Care Center, LLC, a Florida limited liability company, Premier Estates of Muscatine, LLC a Florida limited liability company, Premier Estates of Toledo, LLC, a Florida limited liability company, Rehabilitation Center at Park Place, LLC, a Florida limited liability company, and any other sublessees as may be added to this Lease from time to time .
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(18) “Term” shall have the meaning ascribed to such term in Article 3 of this Lease.
(19) All other terms shall be as defined in the other sections of this Lease.
ARTICLE 2 - DEMISED PREMISES AND PERSONAL PROPERTY
2.1 Lessor, for and in consideration of the Rent to be paid and the other covenants and agreements hereinafter reserved, mentioned and contained to be kept and performed by Lessee and its successors and assigns, does hereby lease unto Lessee the Leased Property for the Term, for use and operation therein and thereon of Medicaid and Medicare certified skilled and intermediate care nursing home facilities, in full compliance with all the rules and regulations and minimum standards applicable thereto, as prescribed by the State of Nebraska and such other governmental authorities having jurisdiction thereof, each Facility Property having no less than the number of licensed Medicare and Medicaid certified beds as set forth in the first recital of this Lease for such Facilities, and for any other purpose authorized by Lessor in writing and for no other purpose.
2.2 This Lease constitutes one indivisible lease of the entire Leased Property. The Leased Property constitutes one economic unit and the Base Rent and all other provisions have been negotiated and agreed to based on a lease of all of the Leased Property as a single, composite, inseparable transaction. This Lease would not have been made on these terms if it was not a single indivisible lease. Except as expressly provided herein for specific, isolated purposes (and then only to the extent expressly otherwise stated), all provisions of this Lease shall apply equally and uniformly to all the Leased Property as one unit and any Event of Default under this Lease is an Event of Default as to the entire Leased Property. The parties intend that the provisions of this Lease shall at all times be construed, interpreted and applied so as to carry out their mutual objective to create a single indivisible lease of all the Leased Property, and in particular but without limitation, that for purposes of any assumption, rejection or assignment of this Lease under the Bankruptcy Code, this is one indivisible and nonseverable lease and executory contract dealing with one legal and economic unit which must be assumed, rejected or assigned as a whole with respect to all (and only all) the Leased Property covered hereby. The parties agree that the existence of more than one Lessor under this Lease does not affect the indivisible, nonseverable nature of this Lease. The parties may amend this Lease from time to time to include one or more additional Facilities as part of the Leased Property and such future addition to the Leased Property shall not in any way change the indivisible and nonseverable nature of this Lease and all of the foregoing provisions shall continue to apply in full force.
ARTICLE 3 - TERM OF LEASE
3.1 Except as expressly provided below, the term of this Lease shall be for a period of twelve (12) years and nineteen (19) days commencing on the date hereof (the “Commencement Date”), and shall expire on May 31, 2027 (the “Initial Term”), unless terminated earlier as provided for herein.
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3.2 Lessee shall have and is hereby granted the right and option to extend the Initial Term of this Lease for an extended term (the “First Extended Term”) of ten (10) Lease Years upon and subject to all the terms, provisions and conditions hereof, except that Base Rent, as hereinafter defined, payable with respect to each Lease Year of the First Extended Term shall be the amount set forth in Section 4.1. The first Lease Year of the First Extended Term shall commence upon the day next following the expiration of the Initial Term.
The option granted pursuant to this Section 3.2 may be exercised only if Lessee is not in default under this Lease at the time of exercise and at the time of expiration of the Initial Term, and, further, only if there is not at either time an event or occurrence which with the passage of time or giving of notice, or both, would constitute a default hereunder, and said option shall be exercised by Lessee giving to Lessor written notice of Lessee’s election so to do not less than twenty-four (24) full calendar months prior to the date of expiration of the Initial Term.
3.3 Lessee shall have and is hereby granted the right and option to extend the First Extended Term of this Lease for an extended term (the “Second Extended Term”) of ten (10) Lease Years upon and subject to all the terms, provisions and conditions hereof, except that Base Rent, as hereinafter defined, payable with respect to each Lease Year of the Second Extended Term shall be the amount set forth in Section 4.1. The first Lease Year of the Second Extended Term shall commence upon the day next following the expiration of the First Extended Term.
The options granted pursuant to Sections 3.2 and 3.3 may be exercised only if Lessee is not in default under this Lease at the time of exercise and at the time of expiration of the First Extended Term, and, further, only if there is not at either time an event or occurrence which with the passage of time or giving of notice, or both, would constitute a default hereunder, and said option shall be exercised by Lessee giving to Lessor written notice of Lessee’s election so to do not less than twenty-four (24) full calendar months prior to the date of expiration of the First Extended Term.
The Initial Term, as it may be extended by the First Extended Term and, as it may be extended by the Second Extended Term, is hereinafter collectively known as the “Term”.
3.4 It is anticipated that the closing of the purchase of the Crete Plus Five Leased Property by Lessor from Seller will occur on or before July 1, 2015. Lessee hereby agrees that the obligations of this Lease with respect to the Crete Plus Five Leased Property, the obligations of Lessor and the rights of Lessee to lease the Crete Plus Five Leased Property pursuant to this Lease shall commence concurrently with the applicable Lessor’s acquisition of the Crete Plus Five Leased Property, but each of Lessor and Lessee acknowledge and agree that, except as otherwise expressly provided in this Section 3.4, such obligations are subject to and conditioned upon the purchase of the Crete Plus Five Leased Property by the applicable Lessor. In no event shall the provisions of this Lease be effective as to the Crete Plus Five Leased Property prior to the time the applicable Lessor closes on the purchase of the Crete Plus Five Leased Property; provided, however, in the event that the applicable Lessor terminates the Purchase Agreement based on the condition of the Crete Plus Five Leased Property or the results of its due diligence investigations or otherwise, Lessee shall pay any Closing Costs incurred by Lessor not recovered by Lessor from the seller under the Purchase Agreement.
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ARTICLE 4 - BASE RENT
4.1 Lessee shall pay to Lessor a monthly rental (“Base Rent”) for the Demised Premises and the Personal Property over and above all other and additional payments to be made by Lessee as provided in this Lease, in the amount set forth on Exhibit C attached hereto and made a part hereof. The payment of monthly Base Rent and Additional Rent (together with all tax and insurance deposits required pursuant to Section 7.1) shall be due and payable in advance on the first day of each calendar month during the Term. Unless otherwise notified in writing, all payments of Rent shall be sent by wire directly to such account as Lessor has previously or may in the future designate in writing from time to time. Base Rent and Additional Rent shall be referred to herein as “Rent.” The parties hereto acknowledge and agree that the Rent payable for May 2015 and prior periods are subject to payment as provided under the terms of Lease 1, Lease 2 and Lease 3, as applicable, and that the Base Rent schedule attached hereto as Exhibit C will commence on June 1, 2016.
4.2 The parties agree that the Base Rent that will be attributable collectively to the Crete Plus Five Leased Property is based on the parties’ assumption that Lessor shall purchase same pursuant to the Purchase Agreement for an aggregate purchase price of Fifteen Million and 00/100 Dollars ($15,000,000.00) plus any Closing Costs incurred by the applicable Lessor in connection therewith (collectively, the “Purchase Price”). The parties agree that the Base Rent due and payable under this Lease shall be increased immediately upon the closing of the acquisition of the Crete Plus Five Leased Property in an initial annualized amount equal to Nine Percent (9.0%) of the Purchase Price, such amount to increase at the commencement of each Lease Year by an amount equal to the same percentage that Base Rent payable hereunder would have increased had the Crete Plus Five Lease Property not been acquired. Immediately prior to the closing of the Crete Plus Five Leased Property purchase and sale, Lessor shall deliver to Lessee a written statement setting forth the amount of the Purchase Price, including the amount of Closing Costs, and the amount of the adjusted Base Rent for the duration of the first Lease Year, which statement shall, without further action by Lessee, establish the Base Rent until the first adjustment date. In the event that the final total amount of the Purchase Price cannot be determined as of the date the Crete Plus Five Leased Property is acquired and subject to this Lease, the Base Rent shall be adjusted as of the date such final total Purchase Price is finally determined by Lessor, and Lessee shall immediately pay Lessor an amount equal to the difference between the Base Rent as of the date the Crete Plus Five Leased Property is acquired and subject to this Lease and the adjusted Base Rent for all periods preceding the date in which the final total Purchase Price is finally determined. In the event the date the Crete Plus Five Leased Property is acquired and subject to this Lease shall be other than the first day of the month, Lessee shall pay to Lessor a pro rata portion of the Base Rent and Additional Rent for the month and a pro rata portion of all tax, insurance and other deposits provided for in this Lease.
4.3 Base Rent during the first Lease Year of the First Extended Term, if exercised, and the first Lease Year of the Second Extended Term, if exercised, shall be equal to nine percent (9%) of the Appraised FMV (as hereinafter defined), which shall be determined after Lessee exercises each of its respective options. As used herein, the term “Appraised FMV” means the appraised fair market value of the Leased Property, as determined by a Qualified Appraiser (as defined below), based on the assumption that the Leased Property will continue to be operated as a skilled nursing facility, assisted living facility or independent living facility, as applicable. The term “Qualified Appraiser” means an appraiser certified as an MAI appraiser or with equivalent certification, and mutually acceptable to Lessor and Lessee. In the event that Lessor and Lessee cannot reach agreement as to the Qualified Appraiser, Lessor and Lessee shall each choose a Qualified Appraiser who shall, within ten (10) business days of such selection meet and select a third Qualified Appraiser to determine the Apprised FMV; provided, however, Base Rent during the first Lease Year of the First Extended Term and the first Lease Year of the Second Extended Term shall not: (a) be less than the one hundred two percent (102%) of the Base Rent payable in the immediately preceding Lease Year; nor (b) increase by more than fifteen percent (15%) of the Base Rent payable during the immediately preceding Lease Year. The cost and expenses for each Qualified Appraiser shall be paid by Lessee. On the first anniversary of the First Extended Term, and on each anniversary thereafter during the First Extended Term, the Base Rent shall increase by two percent (2.0%) over the Base Rent in effect for the prior Lease Year. On the first anniversary of the Second Extended Term, and on each anniversary thereafter during the Second Extended Term, the Base Rent shall increase by two percent (2.0%) over the Base Rent in effect for the prior Lease Year.
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4.4 This Lease is and shall be deemed and construed to be a “pure net” or “triple- net” lease and the Rent specified herein shall be net to Lessor in each year during the Term of this Lease. Lessee shall pay all costs, expenses and obligations of every kind whatsoever relating to the Demised Premises which may arise or become due during the Term, except for Lessor’s income taxes, franchise taxes and any principal and interest payments relating to any Mortgage/Underlying Lease (collectively, “Additional Rent”). Lessee does hereby indemnify Lessor against any and all such costs, expenses and obligations. Lessor shall not be required to provide any service or do any act or thing with respect to the Leased Property or any part thereof, including the buildings and improvements thereon and the appurtenances thereto.
4.5 Lessee recognizes and acknowledges that Lessor and/or certain beneficial owners of Lessor may from time to time qualify as real estate investment trusts pursuant to Sections 856 et seq. of the Internal Revenue Code of 1986, as amended, and that avoiding (a) the loss of such status, (b) the receipt of any income derived under any provision of this Lease that does not constitute “rents from real property” (in the case of real estate investment trusts), and (c) the imposition of income, penalty or similar taxes (each an “Adverse Event”) is of material concern to Lessor and such beneficial owners. In the event that this Lease or any document contemplated hereby could, in the opinion of counsel to Lessor, result in or cause an Adverse Event, Lessee agrees to cooperate with Lessor in negotiating an amendment or modification thereof and shall at the request of Lessor execute and deliver such documents reasonably required to effect such amendment or modification. Any amendment or modification shall be structured so that the economic results to Lessor and Lessee shall be substantially similar to those set forth in this Lease without regard to such amendment or modification. Without limiting any of Lessor’s other rights pursuant to this provision, Lessor may waive the receipt of any amount payable to Lessor hereunder and such waiver shall constitute an amendment or modification of this Lease with respect to such payment.
ARTICLE 5 - LATE CHARGES
5.1 If payment of any sums required to be paid or deposited by Lessee to Lessor under this Lease, and payments made by Lessor under any provision hereof for which Lessor is entitled to reimbursement by Lessee, shall become overdue beyond three (3) days after the date on which they are due and payable as in this Lease provided, a late charge of five percent (5%) per month on the sums so overdue shall become immediately due and payable to Lessor and said late charges shall be payable on the first day of the month next succeeding the month during which such late charges become payable. If non-payment of any late charges shall occur, Lessor shall have, in addition to all other rights and remedies, all the rights and remedies provided for herein and by law in the case of non-payment of Rent. No failure by Lessor to insist upon the strict performance by Lessee of Lessee’s obligations to pay late charges shall constitute a waiver by Lessor of its rights to enforce the provisions of this Article in any instance thereafter occurring.
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ARTICLE 6 - PAYMENT OF TAXES AND ASSESSMENTS
6.1 Lessee will pay or cause to be paid, as provided herein, as Additional Rent, before any fine, penalty, interest or cost may be added thereto for the non-payment thereof, all taxes (including but not limited to real estate taxes, ad valorem taxes, school taxes, assessments and personal property, intangible and use taxes, if any) , assessments, licenses and permit fees, bed taxes, charges for public utilities, and all governmental charges, general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever which during the Term may be assessed, levied, confirmed, imposed upon or become due and payable out of or in respect of, or become a lien on the Demised Premises and/or Personal Property or any part thereof (hereinafter collectively referred to as “Taxes and Assessments”).
6.2 Any Taxes and Assessments relating to a fiscal period of any authority, a part of which is included within the Term and a part of which is included in a period of time before or after the Term, shall be adjusted pro rata between Lessor and Lessee and each party shall be responsible for its pro rata share of any such Taxes and Assessments.
6.3 Nothing herein contained shall require Lessee to pay income taxes assessed against Lessor, or capital levy, franchise, estate, succession or inheritance taxes of Lessor.
6.4 If any income, profits or revenue tax shall be levied, assessed or imposed upon the income, profits or revenue arising from Rent payable hereunder, partially or totally in lieu of or as a substitute for real estate or personal property taxes imposed upon the Demised Premises or Personal Property, or otherwise, then Lessee shall be responsible for the payment of such tax.
ARTICLE 7 - DEPOSITS FOR TAXES AND ASSESSMENTS AND INSURANCE
7.1 Lessee shall be required to make deposits for Taxes and Assessments and, upon notice to Lessee, insurance premiums, and will make monthly deposits with Lessor, of an amount equal to one-twelfth (1/12) of the Taxes and Assessments or such greater amount as may be required by any Mortgage/Underlying Lease, and if Lessor exercises its option to require deposits for insurance premiums, an amount equal to one-twelfth (1/12) of the annual premiums for insurance on the Leased Property. Said deposits shall be due and payable on the first day of each month as Additional Rent, shall not bear interest and shall be held, at Lessor’s option, by Lessor and/or Mortgagee/Underlying Lessor to pay the Taxes and Assessments and insurance premiums as they become due and payable. If the total of the monthly payments as made under this Article shall be insufficient to pay the Taxes and Assessments and insurance premiums when due, then Lessee shall on demand pay Lessor the amount necessary to make up the deficiency.
ARTICLE 8 - OCCUPANCY
8.1 During the Term, the Facilities demised hereunder shall be used and occupied by Lessee for and as Medicaid and Medicare certified skilled and intermediate care nursing home facilities, each having no less than the number of licensed Medicare and Medicaid certified beds as set forth in the first recital of this Lease for each such Facility and for no other use or purpose. Lessee shall at all times maintain in good standing and in full force and effect all the licenses, certifications and provider agreements issued by the State of Nebraska, and any other applicable state or federal governmental agencies, permitting the operation of the Medicaid and Medicare certified skilled and intermediate care nursing home facilities on the Demised Premises with each such Facility having no less than the number of licensed Medicare and Medicaid certified beds as set forth in the first recital of this Lease for each such Facility. Lessee shall at all times use its best efforts to maximize the number of occupied beds at the Demised Premises. Without Lessor’s prior written consent, which Lessor may withhold in its sole and absolute discretion, Lessee shall not apply for, or consent to, any reduction in the number of state licensed beds or Medicaid and Medicare certified beds at the Demised Premises.
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8.2 Lessee will not suffer any act to be done or any condition to exist on the Demised Premises or any portion thereof which is unlawful, known to be dangerous or which may void or make voidable any insurance then in force on the Demised Premises or any portion thereof.
8.3 Upon expiration or termination of this Lease for any reason, Lessee will return to Lessor the Demised Premises, qualified and sufficient for licensing and certification by all governmental agencies having jurisdiction over the Demised Premises as a Medicaid and Medicare certified skilled and intermediate care nursing home facilities with each Facility having no less than the number of licensed Medicare and Medicaid certified beds as set forth in the first recital of this Lease for such Facility, with licenses, certifications and provider agreements in full force and good standing. The Demised Premises, with the improvements located therein and all the Personal Property shall be surrendered in good order, condition and repair.
ARTICLE 9 - INSURANCE
9.1 Lessee shall, at its sole cost and expense, during the term of this Lease, maintain property and casualty insurance with extended coverage endorsement on the Leased Property. Such insurance shall be obtained from an insurance company reasonably acceptable to Lessor and any Mortgagee/Underlying Lessor.
9.2 Lessee shall, at Lessee’s sole cost and expense, cause to be issued and shall maintain during the entire Term of this Lease:
(A) Property insurance provided by a Causes of Loss-Special Form. Such insurance shall include an endorsement for building ordinance/demolition/increased cost of construction. Such insurance shall, at all times, be maintained in an amount equal to the full replacement cost of the Demised Premises as determined by Lessor annually. Such insurance shall, at all times, also be maintained in the full replacement cost of the Personal Property. As used herein, the term “full replacement cost” shall mean coverage for the actual replacement cost of the Demised Premises and shall be determined by an appraiser, engineer, architect or contractor on behalf of Lessor. The term “full replacement cost” shall also mean coverage for the actual replacement cost of the Personal Property. Upon written request by Lessee, Lessor will provide Lessee with information in its possession which is reasonably necessary to establish the value of the Leased Property or any portion thereof. Such insurance shall at all times be payable to Lessor and Lessee as their interest may appear and shall contain a loss payable clause to the holder of any mortgage/deed of trust or lessor under any leasehold estate superior to Lessor to which this Lease shall be subject and subordinate, as said mortgagee’s/beneficiary’s/senior lessor’s interest may appear.
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(B) Boiler & Machinery insurance for the Demised Premises, in the amount of full replacement of the Demised Premises and the Personal Property, under the terms of which Lessor and Lessee will be indemnified, as their interests may appear, against any loss or damage of the Leased Property which may result from any accident as covered under a standard Boiler & Machinery policy;
(C) If either required by any Mortgagee/Underlying Lessor or if the Demised Premises are located in a flood zone or earthquake zone, as applicable, Flood and Earthquake insurance for the Demised Premises in an amount not less than the replacement cost of the Leased Property, as determined by Lessor.
(D) Commercial general liability insurance naming Lessor and Lessee as insured, and such other parties as Lessor shall request as additional insureds, and insuring against claims for bodily injury or property damage occurring upon, in or about the Demised Premises, or in or upon the streets, sidewalks, passageways and areas adjoining the Demised Premises, such insurance to afford protection for the Demised Premises with limits of not less than One Million and 00/100 Dollars ($1,000,000) per each occurrence and Three Million and 00/100 Dollars ($3,000,000) aggregate per location;
(E) Nursing Home or Long-Term Care Professional Liability insurance with limits of not less than One Hundred Thousand and 00/100 Dollars ($100,000) per each occurrence and Three Hundred Thousand and 00/100 Dollars ($300,000.00) aggregate per location. Coverage should be on an occurrence basis. If coverage is on a Claims Made basis, Lessee is responsible for purchasing extended reporting-period (tail) coverage providing protection for Lessor for an unlimited time period; and
(F) Worker’s compensation insurance or other similar insurance which may be required by governmental authorities or applicable legal requirements in an amount not less than the minimum required by law.
9.3 All policies of insurance shall provide that:
(A) They are carried in favor of Lessor, Lessee and any mortgagee/beneficiary/senior lessor as their respective interests may appear, and any loss shall be payable as therein provided:
(B) They shall not be canceled, terminated, reduced or materially modified without at least thirty (30) days prior written notice to Lessor;
(C) A standard mortgagee clause in favor of any mortgagee/beneficiary/senior lessor and shall contain, if obtainable, a waiver of the insurer’s right of subrogation against funds paid under the standard mortgagee endorsement which are to be used to pay the cost of any repairing, rebuilding, restoring or replacing; and
(D) They are being issued on a primary, non-contributory basis, and with respect to any umbrella or “excess coverage” policy, such shall specifically provide that it is primary vis-a-vis any insurance policies carried by Lessor or any of Lessor’s affiliates.
9.4 An original Certificate of Insurance and Evidence of Property Coverage for all insurance policies required by this Article shall be delivered to Lessor at least five (5) days prior to the Commencement Date and replacement Certificates of Insurance and Evidence of Property Coverage at least thirty (30) days prior to the date of expiration. From time-to-time immediately after Lessor’s request thereof, Lessee shall deliver to Lessor copies of all insurance policies then being carried by Lessee pursuant to these insurance requirements.
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9.5 Lessee shall at all times keep in effect business interruption insurance with a loss of rents endorsement naming Lessor as an insured in an amount at least sufficient to cover each of the following for the period of the next succeeding twelve (12) months following the occurrence of the business interruption:
(A) The aggregate of the cost of all Taxes and Assessments due for such twelve (12) month period;
(B) The cost of all insurance premiums for insurance required to be carried by Lessee for such twelve (12) month period; and
(C) The aggregate of the amount of the monthly Base Rent for such twelve (12) month period.
All proceeds of any business interruption insurance shall be applied, first, to the payment of any and all Base Rent payments for such twelve (12) month period; second, to the payment of any taxes and assessments and insurance deposits required for such twelve (12) month period; and, thereafter, after all necessary repairing, rebuilding, restoring or replacing has been completed as required by the pertinent provisions of this Lease and the pertinent sections of any mortgage/deed of trust/senior lease, any remaining balance of such proceeds shall be paid over to Lessee.
9.6 From time to time, Lessor or any mortgagee/beneficiary/senior lessor may reasonably require Lessee to change the amount or type of insurance, or to add or substitute additional coverages, required to be maintained by Lessee hereunder.
9.7 In the event the amount of any casualty insurance proceeds exceed Ten Thousand and No/100 Dollars ($10,000.00), such insurance proceeds as may be paid to Lessee and Lessor shall be deposited with Lessor to be held and disbursed for the repairing, rebuilding, restoring or replacing of the Demised Premises or any portion thereof, or any improvements from time to time situated thereon or therein subject to the pertinent provisions of any Mortgage/Underlying Lease and in accordance with the provisions of this Lease.
No sums shall be paid by Lessor toward such repairing, rebuilding, restoring or replacing unless it shall be first made to appear to the reasonable satisfaction of Lessor that the amount of money necessary to provide for any such repairing, rebuilding, restoring or replacing (according to any plans or specifications which may be adopted therefor) in excess of the amount received from any such insurance policies has been expended or provided by Lessee for such repairing, rebuilding, restoring or replacing, and that the amount received from such insurance policies is sufficient to complete such work. In the event there is any amount required in excess of the amount received from such insurance policies, Lessee shall deposit such excess funds with Lessor so that the total amount available will be sufficient to complete such repairing, rebuilding, restoring or replacing in accordance with the provisions of any Mortgage/Underlying Lease and any plans and specifications submitted in connection therewith, free from any liens or encumbrances of any kind whatsoever and the funds held by Lessor shall be disbursed only upon presentment of architect’s or general contractor’s certificates, waivers of lien, contractor’s sworn statements, and other evidence of cost and payments as may be reasonably required by Lessor or any Mortgagee/Underlying Lessor.
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ARTICLE 10 - LESSOR’S OR MORTGAGEE/UNDERLYING LESSOR’S RIGHT TO PERFORM
10.1 Should Lessee fail to perform any of its covenants herein agreed to be performed, Lessor may, but shall not be required to, make such payment or perform such covenants, and all sums so expended by Lessor thereon shall immediately be payable by Lessee to Lessor, with interest thereon, at a rate equal to the lesser of: (a) eighteen percent (18%) per annum; and (b) the maximum rate permitted by law (the “Default Rate”), from date thereof until paid, and in addition, Lessee shall reimburse Lessor for Lessor’s reasonable expenses in enforcing or performing such covenants, including reasonable attorney’s fees. Any such costs or expenses incurred or payments made by Lessor shall be deemed to be Additional Rent payable by Lessee and collectible as such by Lessor.
10.2 Performance of, and/or payment made, to discharge said Lessee’s obligations shall be optional with Lessor and such performance and payment shall in no way constitute a waiver of, or a limitation upon, Lessor’s other rights hereunder.
10.3 Lessee hereby acknowledges and agrees that any Mortgagee/Underlying Lessor shall have the right but not the obligation to perform any covenants and pay any amounts which Lessee has failed to so perform or pay as required under the terms of this Lease but only to the extent such Mortgagee/Underlying Lessor is entitled under the terms of its Mortgage/Underlying Lease.
ARTICLE 11 - REPAIRS AND MAINTENANCE; CASUALTY
11.1 Throughout the Term, Lessee, at its sole cost and expense, will keep and maintain, or cause to be kept and maintained, the Leased Property (including without limitation the sidewalks, alleyways, passageways, vacant land, parking spaces, curb cuts, and curbs adjoining the Demised Premises) in good order and condition (ordinary wear and tear excepted subject to Lessee’s obligation to repair and replace the same in accordance with the terms of this Lease) without waste, and Lessee will make or cause to be made, as and when the same shall become necessary, all structural and nonstructural, exterior and interior, replacing, repairing and restoring necessary to comply with the above requirements. All replacing, repairing and restoring required of Lessee shall be new and (in the reasonable opinion of Lessor) of first-class quality and shall be in compliance with all standards and requirements of law, licenses and municipal ordinances necessary to operate the Demised Premises as Medicaid and Medicare certified skilled and intermediate care nursing home facilities with each Facility having no less than the number of licensed Medicare and Medicaid certified beds as set forth in the first recital of this Lease. Any items of Personal Property that are uneconomical to repair shall be replaced by new items of first- class quality and all replacement items shall become part of the Personal Property. No items of Personal Property shall be removed from the Demised Premises except in connection with repair or replacement of such items. In performing such repairs, Lessee shall comply in all respects with Section 14.1 of this Lease, and shall deliver to Lessor with evidence satisfactory to Lessor of such compliance, including, without limitation, copies of lien waivers and/or paid invoices for all such repairs.
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11.2 In the event that any part of the improvements located on the Demised Premises or the Personal Property shall be damaged or destroyed by fire or other casualty (any such event being called a “Casualty”), Lessee shall promptly and with all due diligence, but in any event on or before one year after the date of such Casualty, replace, repair and restore the same as nearly as possible to the condition it was in immediately prior to such Casualty, in accordance with all of the terms, covenants and conditions and other applicable requirements of this Lease and any Mortgage/Underlying Lease in the event of such Casualty, whether or not the insurance proceeds or other compensation are sufficient to pay the cost of such restoration and repair. The Demised Premises and the Personal Property shall be so replaced, repaired and restored as to be of at least equal value and substantially the same character as prior to such Casualty. Lessee shall submit to Lessor for Lessor’s prior written approval plans and specifications for any such restoring, replacing or repairing, and Lessee shall immediately select an independent architect approved by Lessor and any Mortgagee/Underlying Lessor, who shall be in charge of such repairing, restoring and replacing. Without limitation of Lessor’s rights hereunder, there shall be the following additional conditions precedent to any disbursement of insurance proceeds: (i) at the time of each and every disbursement there shall exist no Event of Default under this Lease nor any event which with the passage of time or the giving of notice or both would constitute an Event of Default hereunder and (ii) Lessor and Mortgagee/Underlying Lessor, if applicable, shall have approved all plans and specifications for any proposed repair or restoration. Lessee covenants that it will give to Lessor prompt written notice of any Casualty affecting the Leased Property. Provided that Lessee is not in default under this Lease, Lessee shall have the right, at any time and from time to time, to remove and dispose of any Personal Property which may have become obsolete or unfit for use, or which is no longer useful in the operation of the Demised Premises, provided further that Lessee promptly replaces any such Personal Property so removed or disposed of with other personal property free of any security interest, lien or encumbrance. Said replacement Personal Property shall be of the same character and at least equal usefulness and quality to such Personal Property so removed or disposed of and such replacement Personal Property shall automatically become the property of and shall belong to Lessor, and Lessee shall execute such bills of sale or other documents reasonably requested by Lessor to vest the ownership of such Personal Property in Lessor. Notwithstanding anything to the contrary in this Lease, there shall be no abatement or other adjustment of Rent as a result of such Casualty.
ARTICLE 12 - ALTERATIONS AND DEMOLITION
12.1 Lessee will not remove or demolish any improvement or building which is part of the Demised Premises or any portion thereof or allow it to be removed or demolished, without the prior written consent of Lessor. Lessee further agrees that it will not make, authorize or permit to be made any changes or alterations in or to the Demised Premises without first obtaining Lessor’s written consent thereto. All alterations, improvements and additions to the Demised Premises shall be of first-class quality, in the reasonable opinion of Lessor, and shall become the property of Lessor and shall meet all building and fire codes, and all other applicable codes, rules, regulations, laws and ordinances.
ARTICLE 13 - COMPLIANCE WITH LAWS AND ORDINANCES
13.1 Throughout the Term, Lessee, at its sole cost and expense, will obey, observe and promptly comply with all present and future laws, ordinances, orders, rules, regulations and requirements of any federal, state and municipal governmental agency or authority having jurisdiction over all or any portion of the Leased Property and the use and operation thereof as Medicaid and Medicare certified skilled and intermediate care nursing home facilities, which may be applicable to the Leased Property and including, but not limited to, the sidewalks, alleyways, passageways, vacant land, parking spaces, curb cuts, curbs adjoining the Demised Premises, whether or not such laws, ordinances, orders, rules, regulations or requirements shall necessitate structural changes or improvements.
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13.2 Lessee shall likewise observe and comply with the requirements of all policies of public liability and fire insurance and all other policies of insurance at any time in force with respect to the Leased Property or any portion thereof.
13.3 Lessee shall promptly apply for and procure and keep in good standing and in full force and effect all necessary licenses, permits, provider agreements and certifications required by any governmental authority for the purpose of maintaining and operating Medicaid and Medicare certified skilled and intermediate care nursing home facilities on the Demised Premises with each Facility having no less than the number of licensed Medicare and Medicaid certified beds set forth in the first recital of this Lease, and each Facility shall at all times be qualified to participate in the Medicare and Medicaid reimbursement programs.
13.4 Lessee will deliver or mail to Lessor wherever Rent hereunder is then paid in form required for notices within ten (10) days of receipt thereof copies of all inspection reports, annual license renewals, deficiency reports and surveys and administrative hearings and/or court actions from all state, federal and local governmental bodies regarding all or a portion of the Leased Property or any nursing home facility operated thereon. Lessee shall notify Lessor within twenty-four (24) hours after receipt thereof of any notice from any governmental agency terminating or suspending or threatening termination or suspension, of any license, permit, provider agreement or certification relating to the Leased Property and shall provide a copy of the same to Lessor.
ARTICLE 14 - DISCHARGE OF LIENS
14.1 Lessee will not create or permit to be created or to remain, and Lessee will discharge, any lien, encumbrance or charge levied on account of any mechanic’s, laborer’s or materialman’s lien or any conditional sale, security agreement or chattel mortgage, or otherwise, which might be or become a lien, encumbrance or charge upon the Leased Property or any part thereof or the income therefrom, for work or materials or personal property furnished or supplied to, or claimed to have been supplied to or at the request of Lessee.
14.2 If any such lien, encumbrance or charge is created upon the Demised Premises or any part thereof, then in addition to any other right or remedy, Lessor may, upon ten (10) days notice, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by processing the discharge of such lien by deposit or by bonding proceedings. Any amount so paid by Lessor and all costs and expenses incurred by Lessor in connection therewith, together with interest thereon at the Default Rate, shall constitute Additional Rent payable by Lessee under this Lease and shall be paid by Lessee to Lessor on demand. Except as herein provided, nothing contained herein shall in any way empower Lessee to do or suffer any act which can, may or shall cloud or encumber Lessor’s or any Mortgagee/Underlying Lessor’s interest in the Demised Premises.
ARTICLE 15 - INSPECTION OF PREMISES BY LESSOR
15.1 At any time during reasonable business hours, Lessor and/or its authorized representative shall have the right to enter the Demised Premises and inspect the Leased Property; provided that Lessee shall be entitled to reasonable prior notice of any such entry or inspection (which notice may be oral) except in the event of an emergency or in the event Lessee is then in default under this Lease in which case no notice shall be necessary.
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15.2 Lessor agrees that the person or persons entering the Demised Premises and inspecting the Leased Property pursuant to Section 15.1 above will cause as little inconvenience to Lessee as may reasonably be possible under the circumstances.
15.3 Lessee hereby acknowledges and agrees that any Mortgagee/Underlying Lessor shall have the right but not the obligation to enter the Demised Premises and inspect the Leased Property to the extent such Mortgagee/Underlying Lessor is entitled to do so under the terms of its Mortgage/Underlying Lease.
ARTICLE 16 - CONDEMNATION
16.1 In the event any entire Facility Property shall be taken or sold under the threat of such taking for any public use by act of any public authority (hereinafter referred to as a “Taking”), then this Lease shall terminate with respect to such Facility Property as of the date of such Taking. Upon such termination, the Base Rent shall be reduced by an amount equal to ratio of the actual net award for such Taking received by Lessor to the amount paid by Lessor to acquire the Demised Premises, unless there is only one Facility Property subject to this Lease in which case this Lease will terminate. The termination of this Lease as to any Facility Property due to a Taking is the result of circumstances beyond the control of Lessor and Lessee and the parties hereto affirm that, except for such specific isolated situation, this Lease is intended to be a single indivisible lease. All damages awarded for such Taking under the power of eminent domain shall be the property of Lessor, whether such damages shall be awarded as compensation for diminution in value of the leasehold or the fee of the Facility Property. Lessee shall be entitled, if provided by law, to pursue and receive a separate award from the condemning authority for loss of Lessee’s interest in the Facility Property, but only if the award to which Lessor would have otherwise been entitled had Lessee not received or participated in such award, is not diminished thereby, directly or indirectly, and, further, in no event shall Lessee be entitled to an apportionment of any condemnation award or settlement which Lessor would have been entitled to receive with respect to such Taking but for the above provision and Lessee hereby assigns to Lessor any and all right, title and interest Lessee may have in any and all such awards or settlements.
16.2 In the event of a partial Taking of a Facility Property the result of which shall be a reduction in the number of licensed beds at the Facility Property by fifty percent (50%) or more of the Facility Property licensed capacity existing prior to such Taking, Lessor shall have the option (i) to terminate this Lease with respect to such Facility Property as of the date of such Taking in which case the Base Rent shall be adjusted as provided in Section 16.1 of this Lease or (ii) Lessor shall hold in trust that portion, if any, of such award, settlement or compromise which shall be allocable to consequential damage to buildings and improvements not taken, and Lessor shall pay out such portion to Lessee to reimburse Lessee for the cost of restoring the Facility Property as a complete structural unit, as such restoration work progresses in accordance with the procedure for making insurance proceeds available for restoration, repair or rebuilding as set forth in Articles 9 and 11. Lessor shall be entitled to retain any excess portion of such award, settlement or compromise, Lessee shall be entitled, if provided by law, to pursue and receive a separate award from the condemning authority for loss of Lessee’s interest in the Facility Property, but only if the award to which Lessor would have otherwise been entitled had Lessee not received or participated in such award, is not diminished thereby, directly or indirectly, and, further, in no event shall Lessee be entitled to an apportionment of any condemnation award or settlement which Lessor would have been entitled to receive with respect to such Taking but for the above provision and Lessee hereby assigns to Lessor any and all right, title and interest Lessee may have in any and all such awards or settlements. In the event of a partial condemnation, the monthly Base Rent payable under Section 4.1 hereof shall not be reduced.
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ARTICLE 17 - RENT ABSOLUTE
17.1 The Leased Property is let and leased to Lessee in an “AS IS, WHERE IS” condition, subject to the rights of any parties in possession thereof and the state of the title thereof as of the date Lessor acquired title from it seller, to any state of facts which an accurate survey or physical inspection thereof might show, and to all zoning regulations, restrictions, rules and ordinances, building restrictions and other laws and regulations now in effect or hereafter adopted by any governmental authority having jurisdiction thereover. Lessee has examined the Leased Property and has found the same satisfactory. Lessee acknowledges that the Leased Property is the property of Lessor and that Lessee has the leasehold rights as set forth in the terms and conditions of this Lease.
17.2 As a material inducement to Lessor in the making of and entry into this Lease, Lessee hereby expressly agrees as follows:
(1) It is the responsibility of Lessee to be fully acquainted with the nature, in all respects, of the Leased Property, including (but not by way of limitation); the soil and geology thereof, the waters thereof and thereunder; the drainage thereof; the manner of construction and the condition and state of repair and lack of repair of all improvements of every nature; the nature, provisions and effect of all health, fire, zoning, building, subdivision and all other use and occupancy laws, ordinances, and regulations applicable thereto; and the nature and extent of the rights of others with respect thereto, whether by way of reversion, easement, right of way, prescription, adverse possession, profit, servitude, lease, tenancy, lien, encumbrance, license, contract, reservation, condition, right of re-entry, possibility of reverter, sufferance or otherwise. Lessor makes no representation as to, and has no duty to be informed with respect to, any of the matters set forth in the preceding sentence. Lessee hereby accepts the Leased Property as suitable and adequate in all respects for the conduct of the business and the uses of the Leased Property as contemplated under the provisions of this Lease.
(2) Lessee expressly covenants and agrees that it hereby takes this Lease and the leasehold estate hereby established upon and subject to Lessor’s title as it was acquired from its seller, including all rights, rights of way, easements, profits, servitudes, reservations, restrictions, conditions, exceptions, reversions, possibilities of reverter, liens, encumbrances, occupancies, tenancies, licenses, clouds, claims and defects, known and unknown and whether of record or not.
(3) Lessee hereby expressly waives any and all rights which it might have against Lessor by reason of any of the foregoing, including (but not limited to) the requirements of any inspection or examination by Lessee of the Leased Property.
17.3 Except as otherwise specifically provided in this Lease, this Lease shall continue in full force and effect, and the obligations of Lessee hereunder shall not be released, discharged or otherwise affected, by reason of: (i) any damage to or destruction of the Leased Property or any part thereof or the taking of the Leased Property or any part thereof by condemnation, requisition or otherwise for any reason, (ii) any restriction or prevention of or interference with any use of the Leased Property or any part thereof, including any restriction or interference with or circumstance which prevents the use of the Leased Property as contemplated by Section 8.1, (iii) any frustration of Lessee’s purposes hereunder, (iv) any claim which Lessee has or might have against Lessor, or (v) any other occurrence whatsoever, whether similar or dissimilar to the foregoing.
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17.4 Without limiting the generality of Subsection 17.3 above, Lessee’s obligation to pay Base Rent and Additional Rent to Lessor under this Lease is a covenant independent of all other covenants made by Lessor and Lessee hereunder and Lessee shall pay all Base Rent and Additional Rent to Lessor without any setoff or deduction.
ARTICLE 18 - ASSIGNMENT AND SUBLETTING
18.1 During the Term, Lessee shall not, without the prior written consent of Lessor, which may be withheld in the sole discretion of Lessor, assign this Lease or in any manner whatsoever sublet, assign, sell, pledge, encumber or transfer all or any part of the Leased Property or any interest in the Leased Property or enter into any management or other similar agreement pursuant to which a party shall undertake responsibility for the management and operation of the Leased Property or any portion thereof. Further, Lessee shall not cause or permit any sale, transfer, pledge, assignment or encumbrance of any direct or indirect ownership interest or voting rights in Lessee whether voluntarily, involuntarily, by operation of law or otherwise, and any such act or occurrence shall be deemed to be an assignment of this Lease, and shall require Lessor’s prior written consent which may be withheld in Lessor’s sole discretion. Any violation or breach or attempted violation or breach of the provisions of this Article by Lessee, or any acts inconsistent herewith shall vest no right, title or interest herein or hereunder or in the Leased Property, in any such transferee or assignee, and any such violation, breach or attempted violation or breach shall constitute an Event of Default hereunder permitting Lessor to terminate this Lease or to exercise any of its other remedies in accordance with the provisions of Article 21 herein without any right of Lessee to cure the same. Lessor’s consent to any of the foregoing shall not release Lessee from, or otherwise affect, Lessee’s obligations and liabilities under this Lease. Notwithstanding the foregoing, Lessor hereby consents to a sublease the Facilities to Sublessees pursuant to the subleases listed on Schedule 18.1 attached hereto and made a part hereof; provided however, Lessee shall not amend, modify, terminate or assign any such subleases nor cause or permit any sale, transfer, pledge, assignment or encumbrance of any direct or indirect ownership interest or voting rights in any such Sublessee without the prior written consent of Lessor, which may be withheld in Lessor’s sole and absolute discretion. The approval by Lessor of such sublease shall not relieve Lessee’s compliance with the terms and provisions of this Lease nor shall said approval be considered a waiver of Lessee’s obligation to obtain Lessor’s prior written consent to any further assignment or sublease of the Leased Property as required by this Article. Notwithstanding the foregoing, Lessor’s consent shall not be unreasonably withheld to any transfer of the ownership interests in Lessee to employees of Lessee, provided, however, that the majority of ownership interests in Lessee shall be retained by Rich Mason and Shayne Bench such that the Lessee is under the sole and exclusive control of Rich Mason and Shayne Bench.
ARTICLE 19 - ACTS OF DEFAULT
19.1 The following acts or events shall be deemed to be an Event of Default on the part of Lessee:
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(1) The failure of Lessee to pay when due any payment of Rent, or any part thereof, or any other sum or sums of money due or payable to Lessor under the provisions of this Lease within three (3) days after the date when due;
(2) The failure of Lessee to perform, or the violation by Lessee of, any of the covenants, terms, conditions or provisions of this Lease not otherwise specifically addressed in Subsection 19.1(1) of this Lease or elsewhere in this Lease, including without limitation, Article 18 herein and Section 33.2 herein, if such failure or violation shall not be cured within fifteen (15) days after notice thereof by Lessor to Lessee;
(3) The removal by any local, state or federal agency having jurisdiction over the operation of any Facility of ten percent (10%) or more of the patients located in any such Facility;
(4) The failure of Lessee to comply with, or the violation by Lessee of, any of the terms, conditions or provisions of any Mortgage/Underlying Lease, after notice thereof by Lessor to Lessee if such failure or violation shall not be cured within ten (10) days prior to the expiration of any or all applicable cure periods set forth in any such Mortgage/Underlying Lease;
(5) The voluntary transfer by Lessee of ten percent (10%) or more patients located in any Facility and such transfer is not for reasons relating to the health and well being of the patients that were transferred;
(6) The making by Lessee or any Guarantor of an assignment for the benefit of creditors;
(7) The levying of a writ of execution or attachment on or against the property of Lessee or any Guarantor which is not discharged or stayed by action of Lessee or such Guarantor contesting same, within thirty (30) days after such levy or attachment (provided if the stay is vacated or ended, this paragraph shall again apply);
(8) If proceedings are instituted in a court of competent jurisdiction for the reorganization, liquidation or involuntary dissolution of Lessee or any Guarantor for its adjudication as a bankrupt or insolvent, or for the appointment of a receiver of the property of Lessee or any Guarantor, and said proceedings are not dismissed and any receiver, trustee or liquidator appointed therein is not discharged within thirty (30) days after the institution of said proceedings;
(9) The sale of any interest of Lessee in the Demised Premises or portion thereof under a writ of execution or other legal process;
(10) The failure of Lessee to give notice to Lessor not later than ten (10) days after receipt by Lessee of any notice, claim or demand from any governmental authority, or any officer acting on behalf thereof, of any violation of any law, order, ordinance, rule or regulation with respect to the operation of the nursing home located on the Demised Premises;
(11) The failure of Lessee to give notices pursuant to Section 13.4 of this Lease;
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(12) The failure on the part of Lessee during the Term to cure or abate or receive a waiver for any violation claimed by any governmental authority, or any officer acting on behalf thereof, of any law, order, ordinance, rule or regulation pertaining to the operation of any Facility, including without limitation, any proceedings to revoke any license granted to Lessee for the operation of a Medicaid and Medicare certified skilled and intermediate care nursing home facility, at any Facility Property or to decertify any Facility Property from participation in the Medicare or Medicaid reimbursement programs, within thirty (30) days prior to the expiration of any time period permitted by such authority for such cure or abatement, subject to Lessee’s right to contest the same in accordance with Article 20 herein;
(13) The abandonment of the Demised Premises, or any portion thereof, by Lessee;
(14) The suspension or loss of the right to receive Medicaid or Medicare reimbursements based upon any actual or alleged fraud or other misfeasance or malfeasance;
(15) The failure to immediately pay when due any Medicaid or Medicare recoupments or any other impositions, including, but not limited to bed taxes, in connection with the provider agreements, certifications or licenses for the Demised Premises;
(16) The failure of the Guarantors to perform, or the violation by the any Guarantor of any of the covenants of the Lease Guaranty or the untruth of any representations or warranties thereunder; or
(17) The occurrence of a default or an event of default under any other lease between Lessee or any affiliate of Lessee and Lessor or any affiliate of Lessor, including, without limitation, the Other Leases.
ARTICLE 20 - RIGHT TO CONTEST
20.1 Lessee shall have the right upon written notice thereof to Lessor, to contest by appropriate legal proceedings, diligently conducted in good faith, the validity or application of any law, regulation or rule mentioned herein, and to delay compliance therewith pending the prosecution of such proceedings; provided, however, that (a) no civil or criminal liability would thereby be incurred by Lessor or any successor operator of all or any portion of the Demised Premises and no lien or charge would thereby be imposed upon or satisfied out of the Leased Property or any portion thereof, (b) the effectiveness and good standing of any licenses, certificates, permits or provider agreements affecting the Demised Premises or any portion thereof would continue in full force and effect during the period of such contest and is cured not less than thirty (30) days prior to the date set forth revocation, withdrawal or cancellation of any such licenses, certificates, permits or provider agreements, and (c) Lessee satisfies any and all applicable requirements of any Mortgage/Underlying Lease.
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ARTICLE 21 - LESSOR’S REMEDIES UPON DEFAULT
21.1 In the event of any Event of Default on the part of Lessee, Lessor may, if it so elects, with or without any demand whatsoever upon Lessee, forthwith either to (i) terminate this Lease and Lessee’s right to possession of the Demised Premises; or (ii) terminate Lessee’s right to possession of the Demised Premises without terminating this Lease. Upon any such termination of this Lease, or upon any such termination of Lessee’s right to possession without termination of this Lease, Lessee shall vacate the Demised Premises immediately, and shall quietly and peaceably deliver possession thereof to Lessor, and Lessee hereby grants to Lessor full and free license to enter into and upon the Demised Premises in such event with or without process of law and to repossess the Demised Premises and the related Personal Property as Lessor’s former estate. In the event of any such termination of this Lease, Lessor shall again have possession and enjoyment of the Demised Premises subject to such termination and the related Personal Property to the extent and as if this Lease had not been made, and thereupon the lease of the Demised Premises and everything herein contained on the part of Lessee to be done and performed in connection therewith shall cease and terminate, all, however, without prejudice to and without relinquishing the rights of Lessor to Rent (which, upon such termination of this Lease and entry of Lessor upon the Demised Premises or any portion thereof, shall, in any event, be the right to receive Rent due up to the time of such entry) or any other right given to Lessor hereunder or by operation of law.
21.2 In the event Lessor elects either to terminate this Lease or to terminate Lessee’s right to possession of the Demised Premises upon the occurrence of an Event of Default, then all licenses, certifications, permits and authorizations issued by any governmental agency, body or authority in connection with or relating to the Facilities shall be deemed as being assigned to Lessor. Lessor shall also have the right to continue to utilize the telephone numbers and names used by Lessee in connection with the operation of the nursing homes located on the Facilities. This Lease shall be deemed and construed as an assignment for purposes of vesting in Lessor all right, title and interest in and to (i) all licenses, certifications, permits and authorizations obtained in connection with the Facilities and (ii) the names and telephone numbers used in connection with the Facilities. Lessee hereby agrees to take such other action and execute such other documents as may be necessary in order to vest in Lessor all right, title and interest to the items specified herein.
21.3 If Lessee abandons the Demised Premises or otherwise entitles Lessor so to elect, and Lessor elects, to terminate Lessee’s right to possession only of the Demised Premises without terminating this Lease, Lessor may, at its option, enter into the Demised Premises, remove Lessee’s signs and other evidence of tenancy and take and hold possession thereof as provided in the foregoing Section 21.1 of this Article, without such entry and possession terminating this Lease or releasing Lessee, in whole or in part, from Lessee’s obligation to pay the Rent hereunder for the full remaining Term, and in any such case, Lessee shall pay to Lessor a sum equal to the entire amount of the Rent reserved hereunder and required to be paid by Lessee up to the time of such termination of the right of possession plus any other sums then due hereunder. Upon and after entry into possession without termination of this Lease, Lessor may attempt to relet the Demised Premises for the account of Lessee for such Rent, or shall operate the Facilities for such time and upon such terms as Lessor in its sole discretion shall determine. In any such case, Lessor may make repairs, alterations and additions in or to the Demised Premises, and redecorate the same to the extent deemed by Lessor desirable, and Lessee shall, upon demand, pay the cost thereof, together with Lessor’s expenses of reletting. If the consideration collected by Lessor upon any such reletting is not sufficient to pay monthly the full amount of Rent reserved in this Lease, together with the reasonable costs of repairs, alterations, additions, redecorating and Lessor’s expenses, Lessee shall pay to Lessor the amount of each monthly deficiency upon demand.
21.4 Upon any such termination of this Lease or at any time after such termination of Lessee’s right to possession, Lessor may recover from Lessee and Lessee shall pay to Lessor as liquidated and final damages, whether or not Lessor shall have collected any current monthly deficiencies under the foregoing paragraph, and in lieu of such current deficiencies after the date of demand for such final damages, the amount thereof found to be due by a court of competent jurisdiction, which amount thus found may be equal to:
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(1) the remainder, if any, of Rent charges due from Lessee for the period up to and including the date of the termination of this Lease or Lessee’s right to possession; and
(2) the amount of any current monthly deficiencies accruing and unpaid by Lessee up to and including the date of Lessor’s demand for final damages hereunder; and
(3) the Rent reserved for what would have been the remainder of the Term with respect to the Demised Premises together with charges to be paid by Lessee under this Lease.
If any statute or rule governing a proceeding in which such liquidated final damages are to be proved shall validly limit the amount thereof to an amount less than the amount above agreed upon, Lessor shall be entitled to the maximum amount allowable under such statute or rule of law.
ARTICLE 22 - LIABILITY OF LESSOR
22.1 It is expressly agreed by the parties that in no case shall Lessor, any partners, officers, directors, managers, members, agents or employees of Lessor be liable, under any express or implied covenant, agreement or provisions of this Lease, for any damages whatsoever to Lessee beyond the loss of Rent reserved in this Lease, accruing after or upon any act or breach hereunder on the part of Lessor and for which damages may be sought to be recovered against Lessor. Anything to the contrary notwithstanding, under no circumstances shall any personal liability attach to or be imposed upon Lessor or any partners, officers, directors, managers, members, agents or employees of Lessor. Lessee’s liability to Lessor for damages for default in payment of Rent or otherwise hereunder shall in all events survive the termination by Lessor of this Lease or the termination by Lessor of Lessee’s right to possession only of the Demised Premises as hereinabove provided.
ARTICLE 23 - CUMULATIVE REMEDIES OF LESSOR
23.1 The specific remedies to which Lessor may resort under the terms of this Lease are cumulative and are not intended to be exclusive of any other remedies or means of redress to which Lessor may be lawfully entitled in case of any breach or threatened breach by Lessee of any provision or provisions of this Lease. The failure of Lessor to insist, in any one or more cases, upon the strict performance of any of the terms, covenants, conditions, provisions or agreements of this Lease, or to exercise any option herein contained, shall not be construed as a waiver or relinquishment for the future of any such term, covenant, condition, provisions, agreement or option.
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ARTICLE 24 - SECURITY FOR RENT
24.1 Lessor shall have a first lien paramount to all others (except any Mortgage/Underlying Lease made by Lessor) on every right and interest of Lessee in and to this Lease, and on any furnishings, equipment, fixtures, accounts receivable, certificates of need, licenses, provider agreements, certifications, books, records and other property of any kind belonging to Lessee and used in connection with this Lease or located at the Demised Premises. Such lien is granted for the purpose of securing the payments of Rent, charges, penalties, and damages herein covenanted to be paid by Lessee, and for the purpose of securing the performance of all of Lessee’s obligations under this Lease. Such lien shall be in addition to all rights to Lessor given and provided by law. This Lease shall constitute a security agreement under the Uniform Commercial Code granting Lessor a security interest in any furnishings, equipment, fixtures, accounts receivable certificates of need, licenses, provider agreements, certifications, books, records and other personal property of any kind belonging to Lessee, and Lessee shall execute such other instruments and financing statements as Lessor may request to evidence or perfect said security interest.
24.2 Notwithstanding the foregoing provisions of Section 24.1 of this Lease to the contrary, Lessor hereby agrees that it will subordinate its security interest in the accounts receivable, licenses (only to the extent necessary to collect the accounts receivable and excluding all other underlying bed operating rights), and provider agreements of Lessee to lenders of Lessee which are providing working capital to Lessee in connection with Lessee’s operation of the Facilities (“Lessee’s Accounts Receivable Financing”). Lessor’s consent and subordination to Lessee’s Accounts Receivable Financing shall be further subject to the following conditions precedent: (a) there shall exist no Event of Default under this Lease nor any event or circumstance which with the passage of time or the giving of notice or both shall constitute an Event of Default hereunder; and (b) Lessee’s Accounts Receivable Financing shall be from a bona fide third party lender; and (c) Lessee’s Accounts Receivable lender shall execute and deliver to Lessor subordination documents in form and substance reasonably satisfactory to Lessor.
ARTICLE 25 - INDEMNIFICATION
25.1 To the extent insurance proceeds do not cover same, Lessee agrees to protect, indemnify, save harmless and defend Lessor and its members, managers, officers, agents, employees and any affiliates of the foregoing (each of the foregoing being, collectively, the “Lessor Parties” and, individually, a “Lessor Party”) from and against any and all claims, demands and causes of action of any nature whatsoever for injury to or death of persons or loss of or damage to property, occurring at the Demised Premises or any sidewalks, alleyways, passageways, vacant land, streets or parking areas adjoining the Demised Premises, or in any manner growing out of or connected with the use and occupation of the Demised Premises or the condition thereof, or the operation of Lessee’s business on the Demised Premises, or the use of any existing or future sewer system, or the use of any such adjoining sidewalks, alleyways, passageways, vacant land, streets or parking areas during the Term, and Lessee further agrees to pay any reasonable attorneys’ fees and expenses incident to the defense by Lessor of any such claims, demands or causes of action.
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ARTICLE 26 - SUBORDINATION PROVISIONS
26.1 This Lease (and Lessee’s interest in the Leased Property) shall be subject and subordinate to any and all mortgages, deeds of trust, ground leases or leases now or hereafter in force and affecting the Demised Premises (or any portion thereof) and/or Personal Property, and to all renewals, modifications, consolidations, replacements and extensions thereof (any such mortgage, deed of trust, ground lease or lease as it may be renewed, modified, consolidated, replaced and extended is hereinafter referred to as “a Mortgage/Underlying Lease” or “any such Mortgage/Underlying Lease”, and the holder or beneficiary of a Mortgage/Underlying Lease is hereinafter referred to as a “Mortgagee/Underlying Lessor”). Lessee agrees to execute and deliver upon demand such further instruments subordinating this Lease to any such Mortgage/Underlying Lease, or other liens or encumbrances as shall be desired by Lessor; provided, that Lessor shall use reasonable efforts to deliver to Lessee a nondisturbance agreement from any such Mortgagee/Underlying Lessor, in form reasonably satisfactory to such Mortgagee/Underlying Lessor. Lessee further agrees that promptly after receipt of a request from any Mortgagee/Underlying Lessor made at any time prior to foreclosure of its Mortgage/Underlying Lease, Lessee shall execute, acknowledge and deliver to such Mortgagee/Underlying Lessor any instrument as such Mortgagee/Underlying Lessor may reasonably request whereby Lessee agrees to subordinate and attorn to such Mortgagee/Underlying Lessor, at such Mortgagee/Underlying Lessor’s election, after the foreclosure (or deed in lieu of foreclosure) of its Mortgage/Underlying Lease. Lessee agrees further that any Mortgagee/Underlying Lessor shall have the right to subordinate its Mortgage/Underlying Lease and its rights thereunder to this Lease, except that such Mortgagee/Underlying Lessor shall be entitled to expressly exclude from such subordination the Mortgagee/Underlying Lessor’s rights, if any, to insurance proceeds and eminent domain awards in the event of a loss or casualty or eminent domain taking of the Leased Property, or any portion thereof. If such Mortgagee/Underlying Lessor executes and records an instrument which purports to effect a partial or complete subordination of its Mortgage/Underlying Lease to this Lease, this Lease shall not be terminated by a foreclosure of such Mortgage/Underlying Lease, but any rights of such Mortgagee/Underlying Lessor to insurance proceeds or eminent domain awards which are expressly excluded from such subordination shall remain superior to the rights of Lessee.
ARTICLE 27 - LESSEE’S FAITHFUL
COMPLIANCE WITH MORTGAGE/UNDERLYING LEASE
27.1 Anything in this Lease contained to the contrary notwithstanding, Lessee shall at all times and in all respects fully, timely and faithfully comply with and observe each and all of the conditions, covenants, and provisions required on the part of Lessor under any Mortgage/Underlying Lease to which this Lease is subordinate or to which it later may become subordinate, including, without limitation, such conditions, covenants and provisions of such Mortgage/Underlying Lease which relate to the care, maintenance, repair, insurance, restoration, preservation and condemnation of the Demised Premises notwithstanding that such conditions, covenants and provisions may require compliance and observance to a standard or degree in excess of that required by the provisions of this Lease, or may require performance not required by the provisions of this Lease, and shall not do or permit to be done anything which would constitute a breach of or default under any obligation of Lessor under any Mortgage/Underlying Lease, it being the intention hereof that Lessee shall so comply with and observe each and all of such covenants, conditions and provisions of any Mortgage/Underlying Lease so that they will at all times be in good standing and there will not be any default on the part of Lessor under such Mortgage/Underlying Lease. However, nothing in this Article contained shall be construed to obligate Lessee, except as may otherwise be provided in this Lease, to pay any Rent due or part of the principal or interest secured by any Mortgage/Underlying Lease. Lessee further covenants and agrees as follows: (a) if requested by Lessor in writing, Lessee shall give any Mortgagee/Underlying Lessor notice of any Lessor default which occurs under this Lease, (b) Lessee shall not terminate this Lease as a result of Lessor’s default, without giving such Mortgagee/Underlying Lessor written notice of Lessor’s default under this Lease at the same time that Lessor is given notice of such default, and (c) if Lessor fails to cure such default within the applicable grace period, if any, contained in this Lease, such Mortgagee/Underlying Lessor shall have an additional period of time to cure any such default.
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ARTICLE 28 - MORTGAGE/UNDERLYING LEASE RESERVES
28.1 Any tax, insurance, or other reserve required during the Term by any Mortgagee/Underlying Lessor shall be paid by Lessee to Lessor.
ARTICLE 29 - LESSEE’S ATTORNMENT
29.1 Lessee covenants and agrees that, if by reason of a default upon the part of Lessor herein in the performance of any of the terms and conditions of any Mortgage/Underlying Lease, and the estate of Lessor thereunder is terminated by summary dispossession proceedings or otherwise, Lessee will attorn to the then Mortgagee/Underlying Lessor or the purchaser in such foreclosure proceedings, as the case may be, and will recognize such Mortgagee/Underlying Lessor or such purchaser as the lessor under this Lease. Lessee covenants and agrees to execute and deliver, at any time and from time to time, upon the request of Lessor or of any Mortgagee/Underlying Lessor or the purchaser in foreclosure proceedings, any instrument which may be necessary or appropriate to evidence such attornment. Lessee further waives the provisions of any statute or rule of law now or hereafter in effect which may terminate this Lease or give or purport to give Lessee any right of election to terminate this Lease or to surrender possession of the Demised Premises in the event any such proceedings are brought against Lessor under such Mortgage/Underlying Lease or by any Mortgagee/Underlying Lessor, and agrees that this Lease shall not be affected in any way whatsoever by any such proceedings.
ARTICLE 30 - REPRESENTATIONS AND WARRANTIES
30.1 Lessee represents, warrants and covenants to Lessor as follows:
(a) | Lessee is a limited liability company duly organized and validly existing and in good standing and qualified to do business in the State of Florida and Nebraska. |
(b) | Lessee has full right and power to enter into and perform Lessee’s obligations under this Lease, and has taken all requisite limited liability company action to authorize the execution, delivery and performance of this Lease. |
ARTICLE 31 - SECURITY DEPOSIT
31.1 On the Commencement Date, Lessee shall deliver to Lessor a security deposit in the amount of Nine Hundred Forty Thousand Five Hundred and no/100 ($940,500 .00) (the “Security Deposit”), in the form of one or more absolute, unconditional site draft letters of credit in form in substance acceptable to Lessor, including, without limitation (i) issuance by an “A” rated financial institution, (ii) an initial term of no less than one (1) year, (iii) automatic renewal for additional terms of no less than one (1) year unless the issuing bank sends written notice to Lessor via certified mail of issuing bank’s intent elect not to renew such Letter of Credit, and (iv) transferability by Lessor in connection with any transfer by Lessor of its interest in this Lease (individually and collectively, as the context may require, the “Letter of Credit”), which Letter of Credit Lessor shall hold as security for the full and faithful performance by Lessee of each and every term, provision, covenant and condition of this Lease. The Security Deposit may be applied by Lessor for the purpose of curing any default or defaults of Lessee hereunder or as otherwise permitted hereunder, in which event Lessee shall promptly replenish the Security Deposit in full by delivering an additional Letter of Credit in the amount so applied or, if acceptable to Lessor in its sole discretion, by promptly paying to Lessor a cash Security Deposit in the amount so applied.
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31.2 If Lessor reasonably determines that the credit rating of the issuer of any Letter of Credit (or its holding company) has been reduced by one or more nationally recognized credit rating agencies to a level lower than such agency’s or agencies’ “A” rating, then at any time thereafter Lessor may give notice of such event to Lessee. Within thirty (30) days of the delivery of such notice by Lessor, Lessee shall deliver or cause to be delivered to Lessor (a) a replacement Letter of Credit in form and substance consistent with the requirements set forth in Section 31.1 in the amount of any Letter of Credit issued by the affected issuer or (b) if acceptable to Lessor in its sole discretion, a cash Security Deposit in the amount of any Letter of Credit issued by the affected issuer.
31.3 Lessor shall have the right to draw upon any Letter of Credit provided by Lessee to Lessor at any time from and after (i) a failure by Lessee to deliver to Lessor a cash Security Deposit and/or a replacement Letter of Credit when and if and in the amounts required by Section 31.1 or Section 31.2 of this Lease; or (ii) Lessor’s receipt of a notice of non-renewal from the issuer of the Letter of Credit; or (iii) the expiration or termination of the Term of this Lease if any amount remains owing from Lessee under this Lease or any other agreement between Lessor and Lessee; or (iv) the occurrence of an Event of Default under this Lease or any other agreement between Lessor and Lessee.
31.4 None of (a) the dissolution, insolvency or business failure of Lessee, (b) an assignment for the benefit of creditors of Lessee, (c) the commencement of any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding by or against Lessee, (d) the appointment of a receiver for any property of Lessee or (e) the issuance of a writ of attachment or the enforcement of any order of any court of legal process affecting any property of Lessee shall in any manner affect or impair any Letter of Credit or Lessor’s rights thereunder, or under this Lease. Lessee acknowledges and agrees that (i) each Letter of Credit is a distinct and separate contract between Lessor and the issuer thereof, (ii) each Letter of Credit is not and shall not be deemed or construed to be an asset, property, possession or contract of any kind whatsoever owned or held by Lessee, (iii) any payments received by Lessor pursuant to any Letter of Credit shall not constitute a preferential payment, and (iv) all funds paid by the issuer thereof pursuant to any Letter of Credit are the separate funds of such issuer.
31.5 Lessee shall bear all costs and expenses related to maintaining the Letter of Credit, including the fees of the financial institution that issues any Letter of Credit. If at any time the Security Deposit is in the form of cash, Lessee shall not be entitled to any interest on the Security Deposit and Lessor may commingle the Security Deposit with its other funds. The Security Deposit shall not be considered an advance payment of Rent (or of any other sum payable by Tenant under this Lease) or a measure of Lessor’s damages in case of a default by Lessee. The Security Deposit shall not be considered a trust fund, and Lessee expressly acknowledges and agrees that Lessor is not acting as a trustee or in any fiduciary capacity in controlling or using the Security Deposit. Lessor shall have no obligation to maintain the Security Deposit separate and apart from Lessor’s general and/or other funds. The Security Deposit, less any portion thereof applied for the purposes of curing any default or defaults of Lessee hereunder, shall be returned to Lessee within one hundred eighty (180) days following the expiration of the Term.
ARTICLE 32 – INTENTIONALLY OMITTED
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ARTICLE 33 - FINANCIAL STATEMENTS
33.1 Within ninety (90) days after the end of each of its fiscal years, Lessee shall furnish to Lessor full and complete financial statements of Lessee and the operations of the Facilities for such annual fiscal period which financial statements shall be prepared by an independent Certified Public Accountant approved by Lessor and any Mortgagee/Underlying Lessor, if applicable, and certified to Lessor and any Mortgagee/Underlying Lessor by such Certified Public Accountant as having been prepared in accordance with generally accepted accounting principles consistently applied and which statements shall contain a statement of capital changes, together with a balance sheet and detailed income and expense statement (collectively called “Financial Statements”) as of the end of the fiscal year. In addition, within ninety (90) days after the expiration or earlier termination of the Term, Lessee shall deliver to Lessor Financial Statements covering the period of time from the last day of the immediately preceding fiscal year to the date on which the Term expires or terminates, and any such obligation shall survive the expiration or earlier termination of this Lease. In addition, Lessee shall furnish Lessor, within ten (10) days following filing, with a copy of its federal income tax return for the preceding year. Each such statement shall be certified as being true and correct by an officer of Lessee.
33.2 Within thirty (30) days after each calendar month during the Term, Lessee shall furnish to Lessor Financial Statements and a detailed census report for the Demised Premises for the preceding calendar month.
33.3 At all times, Lessee shall keep and maintain full and correct records and books of account of the operations of Lessee at the Demised Premises and records and books of account of the entire business operations of Lessee in accordance with sound accounting practices. Upon request by Lessor, Lessee shall make available for inspection by Lessor or its designee, during reasonable business hours, said records and books of account covering the entire business operations of Lessee at the Demised Premises. In the event Lessor determines in its reasonable opinion that the Financial Statements may contain a material discrepancy, error or misrepresentation, Lessor shall have the right from time to time to cause a Certified Public Accountant to audit, at Lessee’s expense, any Financial Statements and said records and books of account.
ARTICLE 34 – INTENTIONALLY OMITTED
ARTICLE 35 - MISCELLANEOUS
35.1 Lessee, upon paying the Base Rent, Additional Rent and all other charges herein provided, and for observing and keeping the covenants, agreements, terms and conditions of this Lease on its part to be performed, shall lawfully and quietly hold, occupy and enjoy the Demised Premises during the Term, and subject to its terms, without hindrance by Lessor or by any other person or persons claiming under Lessor.
35.2 All payments to be made by Lessee hereunder, whether or not designated as Additional Rent, shall be deemed Additional Rent, so that upon a default in payment when due, Lessor shall be entitled to all of the remedies available at law or equity, or under this Lease, for the nonpayment of Rent.
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35.3 It is understood and agreed that the granting of any consent by Lessor to Lessee to perform any act of Lessee requiring Lessor’s consent under the terms of this Lease, or the failure on the part of Lessor to object to any such action taken by Lessee without Lessor’s consent, shall not be deemed a waiver by Lessor of its rights to require such consent for any further similar act by Lessee, and Lessee hereby expressly covenants and warrants that as to all matters requiring Lessor’s consent under the terms of this Lease, Lessee shall secure such consent for each and every happening of the event requiring such consent, and shall not claim any waiver on the part of Lessor of the requirement to secure such consent.
35.4 Lessee represents to Lessor that it did not deal with any broker in connection with this Lease, and hereby indemnifies Lessor against the claims or demands of any broker claimed through a relationship with Lessee. Lessor hereby represents to Lessee that it did not deal with any broker in connection with this Lease, and hereby indemnifies Lessee against the claims or demands of any broker claimed through a relationship with Lessor.
35.5 If an action shall be brought by Lessor to recover any Rent under this Lease, or for or on account of any breach of or to enforce or interpret any of the terms, covenants or conditions of this Lease, or for the recovery of possession of the Demised Premises, or otherwise, Lessor shall be entitled to recover from Lessee, as part of its costs, reasonable attorney’s fees.
35.6 Should Lessee hold possession hereunder after the expiration of the Term without the consent of Lessor, Lessee shall become a tenant on a month-to-month basis upon all the terms, covenants and conditions herein specified, excepting however that Lessee shall pay Lessor a monthly Rent, for the period of such month-to-month tenancy, in an amount equal to twice the last Rent specified.
35.7 Except as otherwise specifically permitted herein, all notices, or demands required to be given by either party to the other shall be in writing and shall be sent by (a) personal delivery, (b) expedited delivery service with proof of delivery, (c) United States registered/certified mail, return receipt requested, (d) nationwide courier guaranteeing overnight delivery, such as Federal Express or United Parcel Service, or (e) prepaid telecopy, telegram, telex or fax, addressed to the other party hereto at the address set forth below:
If to Lessor: | Omega Healthcare Investors, Inc. |
200 International Circle, Suite 3500
Hunt Valley, Maryland 21030
Attention: Mr. Dan Booth
Telephone: 410-427-1700
Fax No.: 410-427-8836
E-mail: dbooth@omegahealthcare.com
with copy to: |
c/o Omega Healthcare Investors, Inc.
303 West Madison Street, Suite 2400
Chicago, Illinois 60606
Attention: Legal
Telephone: (312) 855-0930
Fax No.: (312) 855-1684
E-mail: skovitz@avivreit.com
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If to Lessee: | Trillium Healthcare Group, LLC |
11523 Palm Brush Trail, Suite 331
Lakewood Ranch,Florida 34202
Attention:Mr. Richard Mason
Phone: (888) 391-2373
or if written notification of a change of address has been sent, to such other party and/or to such other address as may be designated in that written notification. Any such notice or demand shall be deemed to have been given either at the time of personal delivery or in the case of service by mail, as of the date of first attempted delivery at the address and in the manner provided herein, or in the case of telecopy, telegram or telex, upon receipt. Notwithstanding the forgoing, notice shall be deemed given and effective when sent if and only if a PDF copy of any such notice is emailed immediately to the intended recipient at the e-mail addresses noted above or to such other e-mail addresses as may be designated in a written notification of a change of address.
35.8 Upon demand by either party, Lessor and Lessee agree to execute and deliver a short form lease in recordable form so that the same may be recorded by either party.
35.9 Each party agrees at any time and from time to time, upon not less than ten (10) days prior written request from the other party, to execute, acknowledge and deliver to the other party a statement in writing, certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified, and stating the modifications), the dates to which the Rent has been paid (including Additional Rent), the amount of the Base Rent, Additional Rent and security deposit held by Lessor, and whether this Lease is then in default or whether any events have occurred which, with the giving of notice or the passage of time, or both, could constitute a default hereunder and any and all other information reasonably required by Lessor or its Mortgagee/Underlying Lessor; it being intended that any such statement delivered pursuant to this paragraph may be relied upon by any prospective assignee, Mortgagee/Underlying Lessor or purchaser of the fee interest in the Demised Premises or of this Lease.
35.10 All of the provisions of this Lease shall be deemed and construed to be “conditions” and “covenants” as though the words specifically expressing or importing covenants and conditions were used in each separate provision hereof.
35.11 Any reference herein to the termination of this Lease shall be deemed to include any termination hereof by expiration or pursuant to the provisions hereof referring to early termination.
35.12 The headings and titles in this Lease are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope or intent of this Lease, nor in any way affect this Lease.
35.13 This Lease contains the entire agreement between the parties and any executory agreement hereafter made shall be ineffective to change, modify or discharge it in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification or discharge is sought. This Lease cannot be changed orally or terminated orally.
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35.14 Except as otherwise herein expressly provided, the covenants, conditions and agreements in this lease shall bind and inure to the benefit of Lessor and Lessee and their respective successors and assigns.
35.15 All nouns and pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons, firm or firms, corporation or corporations, entity or entities or any other thing or things may require.
35.16 If any term or provision of this Lease shall be held invalid or unenforceable to any extent, the remaining terms and provisions of this Lease shall not be affected thereby, and each term and provision shall be valid and enforceable to the fullest extent permitted by law.
35.17 This Lease may be executed in counterparts, each of which shall be deemed to be an original, and all of which taken together shall constitute one and the same instrument. Counterparts may be executed in either original or electronically transmitted form (e.g., faxed or emailed portable document format (PDF) form), and the parties hereby adopt as original any signatures received via electronically transmitted form.
ARTICLE 36 - TRANSFER OF OPERATIONS UPON TERMINATION OF LEASE
36.1 The date on which (i) this Lease either terminates or expires pursuant to its terms or is terminated by either party whether pursuant to a right granted to it hereunder or otherwise, (ii) the date on which Lessee’s right to possession of the Demised Premises is terminated pursuant to a right granted to it hereunder or otherwise, or (iii) the date on which Lessee otherwise abandons the Demised Premises shall be referred to as the “Closing Date” in this Article. On the Closing Date, this Lease shall be deemed and construed as an absolute assignment for purposes of vesting in Lessor (or Lessor’s designee – for purposes of this Article 36 the term Lessor shall be deemed to mean Lessor’s designee, if applicable)) all of Lessee’s right, title and interest in and to the following intangible property which is now or hereafter used in connection with the operation of the Demised Premises (the “Intangibles”) and an assumption by Lessor of Lessee’s obligations under the Intangibles from and after the Closing Date; provided that, from and after the Closing Date, Lessee shall indemnify, defend and hold harmless Lessor and the other Lessor Parties from and against any claims, losses, costs or damages, including reasonable attorneys’ fees incurred or arising by reason of Lessee’s obligations under the Intangibles prior to the Closing Date:
(1) service contracts and equipment leases for the benefit of the Demised Premises to which Lessee is a party, and which can be terminated without penalty by Lessee within sixty (60) or fewer days’ notice or which Lessor requests be assigned to Lessor pursuant to this Article 36;
(2) any provider agreements with Medicare, Medicaid or any other third-party payor programs (excluding the right to any reimbursement for periods prior to the Closing Date, as defined above) entered in connection with the Demised Premises to the extent assignable by Lessee;
(3) all existing agreements with residents of the Facilities and any guarantors thereof, to the extent assignable by Lessee (excluding the right to any payments for periods prior to the Closing Date) and any and all patient trust fund accounts; and
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(4) at Lessor’s option, the business of Lessee as conducted at the Demised Premises as a going concern, including but not limited to the name of the business conducted thereon and all telephone numbers presently in use therein.
36.2 Lessor shall be responsible for and shall pay all expenses with respect to the Demised Premises accruing on or after 12:01 a.m. on the day of the Closing Date and shall be entitled to receive and retain all revenues from the Demised Premises accruing on or after the Closing Date. Within fifteen (15) business days after the Closing Date, the following adjustments and prorations shall be determined as of the Closing Date:
(1) Taxes and Assessments, if any. If the information as to the actual amount of any of the foregoing taxes and assessments are not available for the tax year in which the Closing Date occurs, the proration of such taxes shall be estimated based upon reasonable information available to the parties, including information disclosed by the local tax office or other public information, and an adjustment shall be made when actual figures are published or otherwise become available.
(2) Lessee will terminate the employment of all employees on the Closing Date and shall be and remain liable for any and all wages, accrued vacation and sick leave pay for employees of the Demised Premises with respect to the period prior to and including the Closing Date.
(3) Lessor shall receive a credit equal to any advance payments by patients of the Facilities to the extent attributable to periods on and after the Closing Date.
(4) The present insurance coverage on the Demised Premises shall be terminated as of the Closing Date and there shall be no proration of insurance premiums.
(5) All other income from, and expenses of, the Demised Premises (other than mortgage interest and principal), including but not limited to public utility charges and deposits, maintenance charges and service charges shall be prorated between Lessee and Lessor as of the Closing Date. Lessee shall, if possible, obtain final utility meter readings as of the Closing Date. To the extent that information for any such proration is not available, Lessee and Lessor shall effect such proration within ninety (90) days after the Closing Date.
(6) Lessee shall be and remain responsible for any employee severance pay and accrued benefits which may be payable as the result of any termination of an employee’s employment on or prior to the Closing Date.
36.3 All necessary arrangements shall be made to provide possession of the Demised Premises to Lessor on the Closing Date, at which time of possession Lessee shall deliver to Lessor all medical records, patient records and other personal information concerning all patients residing at the Facilities as of the Closing Date and other relevant records used or developed in connection with the business conducted at the Demised Premises. Such transfer and delivery shall be in accordance with all applicable laws, rules and regulations concerning the transfer of medical records and other types of patient records.
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36.4 For the period commencing on the Closing Date and ending on the date Lessor, or its designee, obtains any and all appropriate state or other governmental licenses and certifications required to operate the Facilities, Lessee hereby agrees that Lessor, or Lessor’s designee, shall have the right, but not the obligation, to manage and operate the Demised Premises, on a triple net basis, and shall be entitled to all revenues of the Demised Premises during such period, and to use any and all licenses, certifications and provider agreements issued to Lessee by any federal, state or other governmental authority for such operation of the Demised Premises, if permitted by any such governmental authorities. If Lessor or its designee exercises the right described above in this Section 36.4, the provisions of this Section 36.4 shall be self-operative and shall constitute a management agreement between Lessee, on the one hand, and Lessor or its designee, on the other hand, on the terms set forth above in this Section 36.4 provided, however, that upon the request of Lessor or its designee, Lessee shall enter into a separate management agreement on the terms set forth in this Section 36.4 and on such other terms and provisions as may be specified by Lessor or its designee.
36.5 Lessee shall provide Lessor with an accounting within fifteen (15) days after the Closing Date of all funds belonging to patients at the Facilities which are held by Lessee in a custodial capacity. Such accounting shall set forth the names of the patients for whom such funds are held, the amounts held on behalf of each such patient and Lessee’s warranty that the accounting is true, correct and complete. Additionally, Lessee, in accordance with all applicable rules and regulations, shall make all necessary arrangements to transfer such funds to a bank account designated by Lessor, and Lessor shall in writing acknowledge receipt of and expressly assume all Lessee’s financial and custodial obligations with respect thereto. Notwithstanding the foregoing, Lessee will indemnify, defend and hold Lessor and any other Lessor Party harmless from and against all liabilities, claims and demands, including reasonable attorney’s fees, in the event the amount of funds, if any, transferred to Lessor’s bank account as provided above, did not represent the full amount of the funds then or thereafter shown to have been delivered to Lessee as custodian that remain undisbursed for the benefit of the patient for whom such funds were deposited, or with respect to any matters relating to patient funds which accrued during the Term.
36.6 All cash, checks and cash equivalent at the Demised Premises and deposits in bank accounts (other than patient trust accounts) relating to the Demised Premises on the Closing Date shall remain Lessee’s property after the Closing Date. Subject to the provisions of Article 24 hereof, all accounts receivable, loans receivable and other receivables of Lessee, whether derived from operation of the Demised Premises or otherwise, shall remain the property of Lessee after the Closing Date. Lessee shall retain full responsibility for the collection thereof. Lessor shall assume responsibility for the billing and collection of payments on account of services rendered by it on and after the Closing Date. In order to facilitate Lessee’s collection efforts, Lessee agrees to deliver to Lessor, within a reasonable time after the Closing Date, a schedule identifying all of those private pay balances owing for the month prior to the Closing Date and Lessor agrees to apply any payments received which are specifically designated as being applicable to services rendered prior to the Closing Date to reduce the pre-Closing Date balances of said patients by promptly remitting said payments to Lessee. All other payments received shall be retained by Lessor as being applicable to services rendered after the Closing Date. Lessor shall cooperate with Lessee in Lessee’s collection of its preclosing accounts receivable. Lessor shall have no liability for uncollec- tible receivables and shall not be obligated to bear any expense as a result of such activities on behalf of Lessee. Subject to the provisions of Article 24 hereof, Lessor shall remit to Lessee or its assignee those portions of any payments received by Lessor which are specifically designated as repayment or reimbursement arising out of cost reports filed for the cost reporting periods ending on or prior to the Closing Date.
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36.7 With respect to residents at the Facilities on the Closing Date, Lessor and Lessee agree as follows:
(1) With respect to Medicare and Medicaid residents, Lessor and Lessee agree that subject to the provisions of Article 24 hereof, payment for in-house residents covered by Medicare or Medicaid on the Closing Date will be made (on a per diem basis) by Medicare or Medicaid under current regulations directly to Lessee for services rendered at the Demised Premises prior to the Closing Date. Said payments shall be the sole responsibility of Lessee and Lessor shall in no way be liable therefor. After the Closing Date, Lessor and Lessee shall each have the right to review supporting books, records and documentation that are in the possession of the other relating to Medicaid or Medicare payments.
(2) If, following the Closing Date, Lessor receives payment from any state or federal agency or third-party provider which represents reimbursement with respect to services provided at the Demised Premises prior to the Closing Date, Lessor agrees that, subject to the provisions of Article 24 hereof, it shall remit such payments to Lessee. Payments by Lessor to Lessee shall be accompanied by a copy of the appropriate remittance.
(3) If, following the Closing Date, Lessee receives payment from any state or federal agency or third-party provider which represents reimbursement with respect to services provided at the Facilities on or after the Closing Date, Lessee agrees that, it shall remit such payments to Lessor. Payments by Lessee to Lessor shall be accompanied by a copy of the appropriate remittance.
36.8 In addition to the obligations required to be performed hereunder by Lessee and Lessor on and after the Closing Date, Lessee and Lessor agree to perform such other acts, and to execute, acknowledge, and/or deliver subsequent to the Closing Date such other instruments, documents and materials, as the other may reasonably request in order to effectuate the consummation of the transaction contemplated herein, including but not limited to any documents or filings which may be required to be delivered by Lessee to Lessor or be filed in order for the transaction contemplated hereunder to be in compliance with all local, state and federal laws, statutes, rules and regulations.
36.9 Lessee for itself, its successors and assigns hereby indemnifies and agrees to defend and hold Lessor and the other Lessor Parties and their respective successors and assigns harmless from and against any and all claims, demands, obligations, losses, liabilities, damages, recoveries and deficiencies (including interest, penalties and reasonable attorney’s fees, costs and expenses) which any of them may suffer as a result of the breach by Lessee in the performance of any of its commitments, covenants or obligations under this Article 36, or with respect to any suits, arbitration proceedings, administrative actions or investigations which relate to the use by Lessee of the Demised Premises during the Term or for any liability which may arise from operation of the Demised Premises as nursing homes during the Term, including without limitation, any amounts due or to be reimbursed to any governmental authority based upon any audit or review of Lessee or of the Facilities or the operation thereof and pertaining to the period prior to the Closing Date or any amounts recaptured under Titles XVIII or XIX based upon applicable Medicaid/Medicare recapture regulations. The rights of Lessor under this paragraph are without prejudice to any other remedies not inconsistent herewith which Lessor may have against Lessee pursuant to the terms of this Lease. The foregoing indemnity shall survive the expiration or termination of this Lease, whether due to lapse of time or otherwise.
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36.10 So long as the termination of this Lease is not due to a default by Lessee hereunder and provided further that Lessee has performed in accordance with Article 36 herein, Lessor for itself, its successors and assigns hereby indemnifies and agrees to defend and hold Lessee and its successors and assigns harmless from any and all claims, demands, obligations, losses, liabilities, damages, recoveries and deficiencies (including interest, penalties and reasonable attorney’s fees, costs and expenses) which any of them may suffer as a result of the breach by Lessor in the performance of any of its commitments, covenants or obligations under this Article 36, or with respect to any suits, arbitration proceedings, administrative actions or investigations which relate to the use of the Demised Premises after the Term or for any liability which may arise from operation of the Demised Premises as nursing homes after the Term. The rights of Lessee under this paragraph are without prejudice to any other remedies not inconsistent herewith which Lessee may have against Lessor pursuant to the terms of this Lease or otherwise.
36.11 Lessor shall have the right to offset against any monies due Lessee pursuant to the terms of this Article 36, any amounts due by Lessee to Lessor pursuant to this Lease or due by Lessee to any third party, including without limitation any amounts due for taxes, utilities, unemployment insurance premiums, payroll obligations or any other obligation arising from the operation of the Demised Premises.
36.12 Anything to the contrary contained in this Article 36 notwithstanding, in the event the termination of this Lease is due to a default by Lessee hereunder, none of the provisions of this Article 36 shall in any way limit, reduce, restrict or modify the rights granted to Lessor pursuant to Articles 21, 23 and 24 of this Lease, and to the extent any monies are due to Lessee pursuant to this Article 36, such sums shall be applied by Lessor to any damages suffered by Lessor as a result of Lessee’s default hereunder.
36.13 Lessor and Lessee agree to cooperate with each other in order to effectuate the terms and provisions of this Article 36.
ARTICLE 37 – INTENTIONALLY OMITTED
ARTICLE 38 - HAZARDOUS SUBSTANCES
38.1 Lessee shall not install or permit to be installed in the Leased Property, any asbestos or asbestos-containing materials, nor install, permit to be installed, generate, transport, store, treat or dispose of, at the Leased Property any asbestos or any substance containing asbestos or hazardous substance (as hereinafter defined). With respect to any hazardous substance or condition, Lessee shall promptly either: (a) remove or remediate any such hazardous substance or condition; or (b) otherwise comply with such federal, state or local laws, rules, regulations or orders, in all such events at Lessee’s sole expense, and provide evidence thereof which is satisfactory to Lessor. If Lessee shall fail to so remove or otherwise comply, Lessor may, after notice to Lessee and the expiration of the earlier of (i) the applicable cure period hereunder or (ii) the cure period permitted under the applicable law, rule, regulation or order, either declare this Lease to be in default or do whatever is necessary to remove or remediate said hazardous substance(s) or condition(s) from the Leased Property or otherwise comply with the applicable law, rule, regulation or order, and Lessor’s costs and expenses in respect thereof shall be due and payable upon demand. Lessee shall give to Lessor and its agents and employees access to the Leased Property for purposes of removing or remediating said asbestos or other hazardous substance(s) or condition(s) and conducting appropriate tests for the purpose of ascertaining compliance with the terms hereof. Lessee shall promptly provide Lessor copies of all communications, permits or agreements with any governmental authority or agency (federal, state or local) or any private entity relating in any way to any hazardous substance or condition.
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38.2 For purposes of this Article 38 “hazardous substance” means any material, chemical, compound or other substance defined or regulated as a hazardous toxic or dangerous substance, waste, pollutant or material, or otherwise giving rise to liability, under the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. Section 6901 et seq., the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 52 U.S.C. Section 9601 et seq. or any other federal, state or local law, ordinance or regulation relating to the protection of public health or safety, the environment or natural resources, including without limitation any common law theory based on nuisance or strict liability (collectively, the “environmental laws”).
38.3 Lessee shall not conduct or authorize the generation, transportation, storage, treatment or disposal at the Leased Property of any hazardous substance, without prior written authorization by Lessor, and Lessee’s failure to comply with the foregoing prohibition shall constitute a default under this Lease.
38.4 If the presence, release, threat of release or placement on or in the Leased Property, or the generation, transportation, storage, treatment or disposal at the Leased Property of any hazardous substance: (i) gives rise to liability (including, but not limited to, a response action, remedial action or removal action) under any of the environmental laws, (ii) poses a significant threat to public health or safety, or (iii) pollutes or threatens to pollute the environment, then Lessee shall promptly take any and all remedial and removal action necessary to eliminate such liability, threat to public health or safety or pollution, as the case may be, and take all actions to mitigate to the maximum extent possible, liability arising from the hazardous substance, whether or not required by law.
38.5 Lessee shall defend (with counsel reasonably satisfactory to Lessor), indemnify the Lessor Parties and hold the Lessor Parties harmless from and against all loss, cost, damage and expense (including, without limitation, attorneys’ fees and costs incurred in the investigation, defense and settlement of claims) that any Lessor Party may incur as a result of or in connection with (a) the assertion against any Lessor Party of any claim relating to the presence or removal of any asbestos or other hazardous substance at the Leased Premises, or (b) failure of the Leased Premises on any portion of the Leased Premises to comply with any and all environmental laws, or (c) the breach by Lessee of any of its covenants contained in this Article 38. The foregoing indemnity shall survive the expiration or termination of this Lease whether due to the lapse of time or otherwise.
ARTICLE 39 - LIMITATION OF LESSOR’S LIABILITY
39.1 In the event of any conveyance or other divestiture of title to the Leased Property the grantor or the person who is divested of title shall be entirely freed and relieved of all covenants and obligations thereafter accruing hereunder, and the grantee or the person who otherwise succeeds to title shall be deemed to have assumed the covenants and obligations of Lessor thereafter accruing hereunder and shall then be Lessor under this Lease. Notwithstanding anything to the contrary provided in this Lease, if Lessor or any successor in interest of Lessor shall be an individual, partnership, limited liability company, corporation, trust, tenant in common or mortgagee, there shall be absolutely no personal, corporate or entity liability on the part of such Lessor or any individual or member of Lessor or any manager, stockholder, director, officer, employee, partner or trustee of Lessor with respect to the terms, covenants or conditions of this Lease, and Lessee shall look solely to the interest of Lessor in the Leased Property for the satisfaction of each and every remedy which Lessee may have for the breach of this Lease; such exculpation from personal, corporate or entity liability to be absolute and without any exception, whatsoever.
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ARTICLE 40 – AMENDMENT AND RESTATEMENT
40.1 From and after the date of this Lease, Lease 1, Lease 2 and Lease 3 are hereby amended, restated and consolidated into this Lease, such that the terms and conditions of this Lease shall govern.
[SIGNATURE PAGE FOLLOWS THIS PAGE]
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SCHEDULE A
CRETE PLUS FIVE
(i) | a certain tract of land located in the State of Nebraska and more particularly described in Exhibit A-1 attached hereto and made a part hereof (the “Arbor Land”) and a 147-bed nursing home facility commonly known as Arbor Manor having a street address of 2550 North Nye Avenue, Fremont, Nebraska (the “Arbor Facility”); | |
(ii) | a certain tract of land located in the State of Nebraska and more particularly described in Exhibit A-2 attached hereto and made a part hereof (the “Haven Land”) and a 76-bed nursing home facility commonly known as Haven Home having a street address of 100 West Elm Street, Kenesaw, Nebraska (the “Haven Facility”); | |
(iii) | a certain tract of land located in the State of Nebraska and more particularly described in Exhibit A-3 attached hereto and made a part hereof (the “Pierce Land”) and a 75-bed nursing home facility commonly known as Pierce Manor having a street address of 515 East Main Street, Pierce, Nebraska (the “Pierce Facility”); | |
(iv) | a certain tract of land located in the State of Nebraska and more particularly described in Exhibit A-4 attached hereto and made a part hereof (the “Pawnee Land”) and a 64-bed nursing home facility commonly known as Pawnee Manor having a street address of 438 12th Street, Pawnee City, Nebraska (the “Pawnee Facility”); | |
(v) | a certain tract of land located in the State of Nebraska and more particularly described in Exhibit A-5 attached hereto and made a part hereof (the “Crete Land”) and a 104-bed nursing home facility commonly known as Crete Manor having a street address of 830 East 1st Street, Crete, Nebraska (the “Crete Facility”); and | |
(vi) | a certain tract of land located in the State of Nebraska and more particularly described in Exhibit A-6 attached hereto and made a part hereof (the “West Point Land”) and a 64 -bed nursing home facility commonly known as West Point Living Center having a street address of 960 Prospect Road, West Point, Nebraska (the “West Point Facility”). |
Collectively, the Arbor Land, the Haven Land, the Pierce Land, the Pawnee Land, the Crete Land, and the West Point Land, referred to herein as the “Crete Plus Five Land”.
Collectively, the Arbor Facility, the Haven Facility, the Pierce Facility, the Pawnee Facility, the Crete Facility, and the West Point Facility, referred to herein as the “Crete Plus Five Facilities”.
IOWA LINCOLN COUNTY
(vii) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-7 attached hereto and made a part hereof (the “Creston Land”) and a 40 bed skilled nursing facility commonly known as Crest Haven Care Centre, having a street address of 1000 East Howard Street, Creston, Iowa (the “Creston Facility”); | |
(viii) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-8 attached hereto and made a part hereof (the “North Platte SNF Land”) and a 71 bed skilled nursing facility commonly known as North Platte Care Centre, having a street address of 2900 West E Street, North Platte, Nebraska (the “North Platte SNF Facility”); |
Shedule
(ix) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-9 attached hereto and made a part hereof (the “North Platte ALF Land”) and a 49 bed assisted living facility commonly known as Premier Estates of North Platte, having a street address of 2895 West E Street, North Platte, Nebraska (the “North Platte ALF Facility”); | |
(x) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-10 attached hereto and made a part hereof (the “Onawa SNF Land”) and a 100 bed skilled nursing facility commonly known as Elmwood Care Centre, having a street address of 222 North 15th Street, Onawa, Iowa (the “Onawa SNF Facility”); | |
(xi) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-11 attached hereto and made a part hereof (the “Onawa ALF Land”) and a 29 bed assisted living facility commonly known as Premier Estates of Elmwood, having a street address of 190 North 15th Street, Onawa, Iowa (the “Onawa ALF Facility”); | |
(xii) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-12 attached hereto and made a part hereof (the “Rock Rapids SNF Land”) and a 44 bed skilled nursing facility commonly known as Rock Rapids Care Centre, having a street address of 703 South Union Street, Rock Rapids, Iowa (the “Rock Rapids SNF Facility”); | |
(xiii) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-13 attached hereto and made a part hereof (the “Rock Rapids Land”) and a 29 bed assisted living facility commonly known as Premier Estates Rock Rapids, having a street address of 1510 South Carroll Avenue, Rock Rapids, Iowa (the “Rock Rapids Facility”); | |
(xiv) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-14 attached hereto and made a part hereof (the “Rockwell City Land”) and a 38 bed skilled nursing facility commonly known as Sunny Knoll Care Centre, having a street address of 135 Warner Street, Rockwell City, Iowa (the “Rockwell City Facility”); | |
(xv) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-15 attached hereto and made a part hereof (the “Shenandoah Land”) and a 20 bed residential care facility commonly known as Fair Oaks Care Centre, having a street address of 1201 South Walnut Street, Shenandoah, Iowa (the “Shenandoah Facility”), and | |
(xvi) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-16 attached hereto and made a part hereof (the “New Hampton Land”) and a 70-bed skilled nursing facility commonly known as New Hampton Care Center, with a street address of 530 South Linn Avenue, New Hampton, Iowa (the “New Hampton Facility”). |
Collectively, the Creston Land, the North Platte SNF Land, the North Platte ALF Land, the Onawa SNF Land, the Onawa ALF Land, the Rock Rapids Land, the Rock Rapids SNF Land, the Rockwell City Land, the Shenandoah Land and the New Hampton Land, referred to herein as the “Iowa Lincoln County Land”.
Collectively, the Creston Facility, the North Platte SNF Facility, the North Platte ALF Facility, the Onawa SNF Facility, the Onawa ALF Facility, the Rock Rapids Facility, the Rock Rapids SNF Facility, the Rockwell City Facility, the Shenandoah Facility and the New Hampton Facility, referred to herein as the “Iowa Lincoln County Facilities”.
Schedule
MUSCATINE TOLEDO
(xvii) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-17 attached hereto and made a part hereof (the “Muscatine Land”) and a 18-unit independent living facility commonly known as Carrington Place of Muscatine having a street address of 3440 Mulberry Ave., Muscatine, IA 52761 (the “Muscatine Facility”), and | |
(xviii) | a certain tract of land located in the State of Iowa and more particularly described in Exhibit A-18 attached hereto and made a part hereof (the “Toledo Land”) and a 75- bed nursing home facility and 18-unit independent living facility commonly known as Carrington Place of Toledo having a street address of 403 Grandview Drive, Toledo, IA 52342 (the “Toledo Facility”). |
Collectively, the Muscatine Land and the Toledo SLasnd, referred to herein as the “Muscatine Toledo Land”.
Collectively, the Muscatine Facility and the Toledo Facility, referred to herein as the “Muscatine Toledo Facilities”.
PENSACOLA
(xix) | a certain tract of land located in the State of Florida and more particularly described in Exhibit A-19 attached hereto and made a part hereof (the “Pensacola Land”) and a 118-bed nursing facility located at 1717 W. Avery St., Pensacola, Florida (the “Pensacola Facility”). |
Schedule
SCHEDULE 18.1
LIST OF ALL SUBLEASES
Schedule
EXHIBIT “A”
LEGAL DESCRIPTION OF LAND
SEE ATTACHED EXHIBIT “A-1” THROUGH EXHIBIT “A-19”
Exhibit A to Master Lease
EXHIBIT “A-1”
LEGAL DESCRIPTION OF ARBOR LAND
Beginning on the West line of the Southwest Quarter of Section 11, Township 17, Range 8 East of the 6th P.M., 990 feet North of the Southwest corner of said Section, thence North to the South line of the Chicago and Northwestern Railroad right of way, thence Northeasterly along the Southern margin of said right of way, 389.8 feet; thence South parallel with the West margin of said Section, to a point 990 feet North of the South line of said Section, thence due West parallel with the South line of said Section to the place of beginning, in Dodge County, Nebraska. Said tract sometimes referred to as Colonial Home, Inc. Subdivision, as shown on Replat of Golf Club Manor Subdivision in the Southwest Quarter of Section 11, Township 17, Range 8, and the Southeast Quarter of Section 10, Township 17 North, Range 8 East of the 6th P.M., Dodge County, Nebraska.
Exhibit A to Master Lease
EXHIBIT “A-2”
LEGAL DESCRIPTION OF HAVEN LAND
Lot 11, 12, 13 and 14, Original Town, now Village of Kenesaw, Adams County, Nebraska.
Exhibit A to Master Lease
EXHIBIT “A-3”
LEGAL DESCRIPTION OF PIERCE LAND
A tract of land lying wholly within the Southwest Quarter (SW 1/4) of the Northwest Quarter (NW 1/4) of Section 26, Township 26 North, Range 2, West of the 6th P.M., Pierce County, Nebraska, more particularly described as follows:
Beginning at a point which is 49.90 feet North and 628.00 feet East of the Southwest corner of the NW 1/4 of Section 26, Township 26 North, Range 2 West; thence North a distance of 311 feet to a point; thence East a distance of 296.00 feet to a point; thence South 311 feet to a point; thence West a distance of 296.00 feet to the point of beginning.
And
A tract of land lying wholly within the Southwest Quarter (SW 1/4) of the Northwest Quarter (NW 1/4) of Section 26, Township 26 North, Range 2, West of the 6th P.M., Pierce County, Nebraska, more particularly described as follows:
Beginning at a point which is 49.90 feet North and 924.00 feet East of the Southwest corner of the NW 1/4 of Section 26, Township 26 North, Range 2 West; thence North a distance of 311 feet to a point; thence East a distance of 15.00 feet to a point; thence South 311 feet to a point; thence West a distance of 15.0 feet to the point of beginning.
Exhibit A to Master Lease
EXHIBIT “A-4”
LEGAL DESCRIPTION OF PAWNEE LAND
All of Block 13 and Lots 6 and 7, Block 14, all in North Pawnee City Addition, together with the East- West alley through the center of Block 13, from Chestnut to Sheridan Street and vacated Sheridan Street lying between Blocks 13 and 14 from 5th to 6th Streets, all in North Pawnee City Addition, an Addition to the City of Pawnee City, Pawnee County, Nebraska.
Exhibit A to Master Lease
EXHIBIT “A-5”
LEGAL DESCRIPTION OF CRETE LAND
PARCEL 1:
That part of Lots One (1), Two (2), Three (3), Four (4), Five (5), Six (6), in Block Two Hundred and Fifty-Two (252), lying East of the Missouri Pacific Railroad Right of Way, also known as the Crete Branch of Union Pacific Railroad, all in the City of Crete, Saline County, Nebraska;
PARCEL 2:
All of Lots One (1), Two (2), Three (3), Four (4), Five (5), Six (6), Seven (7), Eight (8), Nine (9), Ten (10), Eleven (11), and Twelve (12), in Block Two Hundred and Fifty-Three (253), all in the City of Crete, Saline County, Nebraska.
PARCEL 3:
ALL right, title and interest in and to right of way of the abandoned Crete Branch of the Union Pacific Railroad Company, situate in Lots One (1), Two (2), Three (3), Four (4), Five (5), and Six (6), in Block Two Hundred and Fifty-two (252), together with the adjoining portion of vacated Forest Street and vacated alley, all in the City of Crete, Saline County, Nebraska.
Exhibit A to Master Lease
EXHIBIT “A-6”
LEGAL DESCRIPTION OF WEST POINT LAND
That part of Lot 1 in the Northeast Quarter of the Northwest Quarter of Section 35, Township 22 North, Range 6 East of the 6th P.M., Cuming County, Nebraska, lying South and East of the County Road across said Lot as described in Deed Record 45, Page 487, described as follows: Beginning at the Northeast corner of said Lot 1 thence S 500°; thence due West to the East line of the road above described, thence Northeasterly along the East line of said road to the North line of said Lot 1; thence East to the point of beginning, also known as Lot “B”, Trinity Addition to West Point, Cuming County, Nebraska.
Exhibit A to Master Lease
EXHIBIT “A-7”
LEGAL DESCRIPTION OF CRESTON LAND
Lots Numbered Two Hundred Twenty-nine (229), Two Hundred Thirty (230), Two Hundred Thirty- one (231), Two Hundred Fifty-nine (259), Two Hundred Sixty (260), Two Hundred Sixty-one (261 ), Two Hundred Sixty-two (262), Two Hundred Sixty-three (263), Two Hundred Sixty-four (264), Two Hundred Eighty-seven (287), Two Hundred Eighty-eight (288), Two Hundred Eighty-nine (289), Two Hundred Ninety (290) and Two Hundred Ninety-one (291) AND the alley lying between Howard Street and Mills Street and extending East from the East line of Grand Avenue to Palm Street, between the South side of Lots 261, 260, 259, 290 and 291 and the North side of Lots 262 and 289 in McDonald’s North Addition, Section “B”, Creston, Union County, Iowa, and the alley lying between Grand Avenue and Palm Street, and extending North from Mills Street between Lots 264, 263 and 262 on the West side of the alley and Lots 287, 288 and 289 on the East side of the alley in McDonald’s North Addition, Section “B “,Creston, Union County, Iowa.
AND
The East 20 feet of Grand Avenue from its terminus with Howard Street on the North and ending with the terminus with Mills Street on the South, all located in Creston, Union County, Iowa.
Exhibit A to Master Lease
EXHIBIT “A-8”
LEGAL DESCRIPTION OF NORTH PLATTE SNF LAND AND NORTH PLATTE ALF LAND
Lot 1, Valley View Replat filed April 8, 1997 in Cabinet F, Slide 65A, being a Part of Government Lots 1 and 2 in the Northwest Quarter of Section 6, Township 13 North, Range 30 West of the 6th P.M., in Lincoln County, Nebraska and that part of the vacated alley adjacent thereto on the East 8 feet.
Exhibit A to Master Lease
EXHIBIT “A-9”
LEGAL DESCRIPTION OF NORTH PLATTE ALF LAND
SEE EXHIBIT “A-8”
Exhibit A to Master Lease
EXHIBIT “A-10”
LEGAL DESCRIPTION OF ONAWA SNF LAND
AND ONAWA ALF LAND
Parcel 1:
All that part of the Northeast Quarter of Section 5, Township 83 North, Range 45 West of the 5th PM, Monona County, Iowa, described as commencing at the North Quarter Corner of said Section 5-83- 45, thence East 955.30 feet along the North line of said Section 5-83-45, thence South 02 degrees 16 minutes 26.7 seconds East 962.64 feet to the Point of Beginning, thence continuing South 02 degrees 16 minutes 26.7 seconds East 350.0 feet, thence South 87 degrees 43 minutes 33.3 seconds West 600.00 feet, thence North 02 degrees 16 minutes 26.7 seconds West 350.0 feet, thence North 87 degrees 43 minutes 33.3 seconds East 600.0 feet to the Point of Beginning.
AND
Parcel 2:
All that part of the Northeast Quarter of Section 5, Township 83 North, Range 45 West of the 5th PM, Monona County, Iowa, described as commencing at the North Quarter Corner of said Section 5-83- 45, thence due East along the North line of the Northeast Quarter of Section 5-83-45, 955.3 feet, thence South 02 degrees 16 minutes 26.7 seconds East 527.04 feet to the Point of Beginning, thence continuing South 02 degrees 16 minutes 26.7 seconds East 435.60 feet to the NE Corner of Elmwood Care Center Tract, thence South 87 degrees 43 minutes 33.3 seconds West 600.00 feet along the North line of Elmwood Care Center Tract to the NW Corner of said tract, thence North 02 degrees 16 minutes 26.7 seconds West 435.60 feet, thence North 87 degrees 43 minutes 33.3 seconds East 600.00 feet to the Point of Beginning
NOTE: THE NORTH LINE OF THE NE¼ OF SECTION 5-83-45 IS ASSUMED TO BEAR DUE EAST.
Parcel 3:
All that part of the Northeast Quarter (NE¼) of Section Five (5), Township Eighty-three (83) North, Range Forty-five (45) West of the 5th P.M., Monona County, Iowa, described as commencing at the North Quarter (N¼) comer of Section 5-83-45; thence due East along the North line of the NE¼ of Section 5-83-45, 998.60 feet; thence South 01° 21’ 40” East 525.40 feet to the point of beginning; thence continuing South 01° 21’ 40” East 785.70 feet to the Easterly extension of the South line of Elmwood Care Centre property; thence South 87° 43’ 33.3” West along said South line 22.45 feet to the Southeast (SE) corner of Elmwood Care Centre property; thence North 02° 16’ 26.7” West 785.60 feet to the Northeast (NE) corner of the Assisted Living property; thence North 87° 43’ 33.3” East 34.90 feet to the point of beginning.
Exhibit A to Master Lease
EXHIBIT “A-11”
LEGAL DESCRIPTION OF ONAWA ALF LAND
SEE EXHIBIT “A-10”
Exhibit A to Master Lease
EXHIBIT “A-12”
LEGAL DESCRIPTION OF ROCK RAPIDS SNF LAND
Lot 1 of Wubbena’s Second Addition to the City of Rock Rapids, as shown by the Plat recorded in Plat Book 8, Page 84, in the Office of the Recorder of Lyon County, Iowa.
Exhibit A to Master Lease
EXHIBIT “A-13”
LEGAL DESCRIPTION OF ROCK RAPIDS LAND
Blocks 1 and 2 of South Ridge Second Addition to the City of Rock Rapids, as shown by the Plat recorded in Plat Book 10, Page 30, in the Office of the Recorder of Lyon County, Iowa.
And that portion of the 33 foot wide easement in Easement “D” which is described as being for all utilities and road access, which extends through Blocks 1 and 2 of South Ridge Second Addition to Rock Rapids, Iowa, to that point where said Easement “D” intersects the South boundary of Block 2, of South Ridge Second Addition to Rock Rapids, Iowa.
Also known as the portion of the 33 foot wide easement described as Easement “D” in the Plat of Moret’s Addition to Rock Rapids, Iowa, which Plat was filed August 16, 1979 in Book 5 at Page 147, which 33 foot easement now extends along the East boundary line of Blocks 1 and 2 of South Ridge Second Addition to the City of Rock Rapids, Iowa, to that point where said Easement “D” intersects the South boundary of Block 2, of South Ridge Second Addition to Rock Rapids, Iowa.
Exhibit A to Master Lease
EXHIBIT “A-14”
LEGAL DESCRIPTION OF ROCKWELL CITY LAND
Lot 1 of Warner Subdivision to Rockwell City, recorded in Book N, Page 603, in Calhoun County, Iowa.
Exhibit A to Master Lease
EXHIBIT “A-15”
LEGAL DESCRIPTION OF SHENANDOAH LAND
Parcel B of Northeast Quarter of Northwest Quarter of Section 30, Township 69 North, Range 39 West of 5th P.M., in the City of Shenandoah, Page County, Iowa, shown by Survey recorded in Book 584 at Page 847, except that portion deeded to the City of Shenandoah, Iowa, for street purposes, in Warranty Deed recorded as Document No. 20060807.
Exhibit A to Master Lease
EXHIBIT “A-16”
LEGAL DESCRIPTION OF NEW HAMPTON LAND
That part of the N.W. fractional ¼ of Section 18, Township 95, Range 12 West of the 5th Principal Meridian in Chickasaw County, Iowa, described as follows:
Commencing at the W¼ corner of Section 18, Township 95 North, Range 12; thence running North along the West line of the NW fractional ¼ of said Section a distance of 1332.58 feet to a point on the centerline of U.S. Highway No. 63; thence running East at an angle of 90 degrees from the last described line a distance of 70.0 feet to a point on the East right of way line of Highway No. 63 that is the point of beginning; thence running North along the East right of way line 70.0 feet from and parallel with the centerline of U.S. Highway No. 63 a distance of 400.00 feet; thence running East at an angle of 90 degrees from the last described line a distance of 350.00 feet; thence running South on a line that is 350.00 feet from and parallel with the East right of way line of Highway No. 63 a distance of 400.00 feet; thence running West a distance of 350.00 feet to the point of beginning.
Exhibit A to Master Lease
EXHIBIT “A-17”
LEGAL DESCRIPTION OF MUSCATINE LAND
A part of the Northeast Quarter of Section 28, Township 77 North, Range 2 West of the 5th Principal Meridian, in Muscatine County, Iowa, more particularly described as follows:
Commencing at the east quarter corner of said Section 28, and running thence North 90° West on the south line of the northeast quarter of said Section 28, a distance of 876.9 feet; thence North 0° 29’ West, a distance of 964.7 feet to the center line of County Road “W”; thence North 70° 05’ West on the center line of said road a distance of 412.9 feet; thence North 27° 57’ 20” West on the center line of said road, a distance of 580.8 feet; thence South 62° 02’ 40” West, a distance of 46 feet to the southwesterly right-of-way line of said County Road “W” and the point of beginning; thence South 27° 57’ 20” East on said southwesterly line, a distance of 598.52 feet; thence South 70° 05’ East on said southwesterly line, a distance of 82.9 feet; thence South 62° 02’ 40” West, a distance of 380.6 feet; thence North 27° 57’ 20” West, a distance of 660 feet; thence North 62° 02’ 40” East, a distance of 325 feet to the point of beginning.
Exhibit A to Master Lease
EXHIBIT “A-18”
LEGAL DESCRIPTION OF TOLEDO LAND
Lots 22, 23, 24, 31 and 32, Indian Head Addition to Toledo, Tama County, Iowa;
Together with an easement for sanitary sewer line dated June 6, 1987, recorded July 7, 1987 in Book 434 at Page 110.
Exhibit A to Master Lease
EXHIBIT “A-19”
LEGAL DESCRIPTION OF PENSACOLA LAND
Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12, Block 46, KUPFRIAN PARK SUBDIVISION, as recorded in Deed Book 62, page 245, of the public records of Escambia County, Florida, and also all of the alleyway running through Block 46 of KUPFRIAN PARK SUBDIVISION, Section 30, Township 2 South, Range 30 West, Escambia County, Florida, according to the plat of said subdivision recorded in Book 62, at page 245 of the public records of Escambia County, Florida, which alley runs in an Easterly direction from “N” Street on the West to “M” Street on the East and together with a portion of Mallory Street running between Block 46 and Block 38 of KUPFRIAN PARK SUBDIVISION, Section 30, Township 2 South, Range 30 West, Escambia county, Florida, according to the plat of said subdivision recorded in Deed Book 62, page 245 of the public records of said County, which street runs in an Easterly direction from “N” Street on the West to “M” Street on the East, the portion of said street being more particularly described as follows:
All of the above described street which lies between the Southerly lot line of Lots 6 to 1, inclusive of Block 46 and the Northerly lot line of Lots 3 to 1, inclusive, Block 38, said street being a strip 300 feet in length lying Easterly of the Northerly extension of the Westerly block line of Block 38 and being more fully described as: Begin at the Northwesterly corner of said Block 38 and thence run Northerly along an extension of the Westerly block line of said Block 38 across said street to the Southwesterly corner of Lot 6, Block 46; thence run Easterly along the Northerly line of said street and the Southerly lot line of Lots 6 to 1, inclusive, a distance of 300 feet, more or less, to the Southeasterly corner of Lot 1, Block 46; thence run Southerly along an extension of the East line of said Block 46 to a point on the Northerly line of Osceola Boulevard extended from the Southwest corner of Block 45 in said KUPFRIAN PARK SUBDIVISION to the Northeast corner of said Block 38; thence run Southwesterly along said Northerly line of Osceola Boulevard to Northeast corner of said Block 38; thence run West along the South line of said Mallory Street a distance of 245 feet, more or less, to the Northwest corner of said Block 38 and the Point of Beginning.
Exhibit A to Master Lease
EXHIBIT “B”
PERSONAL PROPERTY
Furnishings, furniture, equipment and fixtures owned by Lessor and located at the Demised Premises.
Exhibit A to Master Lease
EXHIBIT “C”
BASE RENT AS OF JUNE 1, 2015
Lease Year | Annual Base Rent | Monthly Base Rent | ||||||
6/1/15 - 3/31/16 | $ | 3,347,354.80 *10 month period | $ | 334,735.48 | ||||
4/1/16 - 3/31/17 | $ | 4,097,162.28 | $ | 341,430.19 | ||||
4/1/17 - 3/31/18 | $ | 4,179,105.52 | $ | 348,258.79 | ||||
4/1/18 - 3/31/19 | $ | 4,262,687.63 | $ | 355,223.97 | ||||
4/1/19 - 3/31/20 | $ | 4,347,941.38 | $ | 362,328.45 | ||||
4/1/20 - 3/31/21 | $ | 4,434,900.21 | $ | 369,575.02 | ||||
4/1/21 - 3/31/22 | $ | 4,523,598.22 | $ | 376,966.52 | ||||
4/1/22 - 3/31/23 | $ | 4,614,070.18 | $ | 384,505.85 | ||||
4/1/23 - 3/31/24 | $ | 4,706,351.58 | $ | 392,195.97 | ||||
4/1/24 - 3/31/25 | $ | 4,800,478.62 | $ | 400,039.88 | ||||
4/1/25 - 3/31/26 | $ | 4,896,488.19 | $ | 408,040.68 | ||||
4/1/26 - 3/31/27 | $ | 4,994,417.95 | $ | 416,201.50 | ||||
4/1/27 - 5/31/27 | $ | 849,051.05 *2 month period | $ | 424,525.53 |
Exhibit A to Master Lease
EXHIBIT “D”
Lease 1:
Master Lease dated January 31, 2012 by and between Lease 1 Lessor and Lease 1 Lessee, as amended by that certain First Amendment to Lease dated May 1, 2012, that certain Second Amendment to Lease dated September 6, 2012, that certain Third Amendment to Lease dated June 19th, 2013 and that certain Fourth Amendment to Lease dated February 27, 2014 (collectively, “Lease 1”).
Lease 1 Lessor: IOWA LINCOLN COUNTY PROPERTY, L.L.C., a Delaware limited liability company
Lease 1 Lessee: IANE PROPERTIES I, LLC, a Florida limited liability company
Lease 2:
Master Lease dated January 28, 2014 by and between Lease 2 Lessor and Lease 2 Lessee, as amended by that certain First Amendment to Lease dated March 19, 2014 (collectively, “Lease 2”).
Lease 2 Lessor: MUSCATINE TOLEDO PROPERTIES, L.L.C., a Delaware limited liability company
Lease 2 Lessee: IANE PROPERTIES I, LLC, a Florida limited liability company
Lease 3:
Master Lease dated January 14, 2014 by and between Lease 3 Lessor and Lease 3 Lessee, as amended by that certain First Amendment to Lease dated April 30, 2014 (collectively, “Lease 3”).
Lease 3 Lessor: AVERY STREET PROPERTY, L.L.C., a Delaware limited liability company
Lease 3 Lessee: IANE PROPERTIES II, LLC, a Florida limited liability company
Exhibit A to Master Lease
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