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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

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

 

Date of Report (Date of earliest event reported): June 24, 2021 (June 21, 2021)

 

 

 

Assisted 4 Living, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Nevada   333-226979   82-1884480
(State or Other Jurisdiction   (Commission   (I.R.S. Employer
of Incorporation)   File Number)   Identification No.)

 

6801 Energy Court, Suite 201 Sarasota, Florida   34240
(Address of Principal Executive Office)   (Zip Code)

 

(855) 668-3331

(Registrant’s telephone number, including area code)

 

n/a

(Former name or former address, 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: 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.

 

 

 

 
 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On June 21, 2021, Assisted 4 Living, Inc., a Nevada corporation (the “Company”), through wholly-owned subsidiaries, entered into three Purchase and Sale Agreements and three Management Transfer Agreements (collectively, the “Purchase Agreements”) with Grace Care Centers and its affiliates (collectively, the “Sellers”) to acquire three skilled nursing facilities located in Texas (the “Facilities”), including the real property, buildings, structures, improvements, fixtures and certain other assets comprising the Facilities (together with the Facilities, the “Assets”) in exchange for an aggregate purchase price of $7,750,000 (the “Purchase Price”). The Facilities are located in Olney, Nocona and Henrietta, Texas.

 

The Company made an escrow deposit with the title company of $100,000 in connection with the execution of each of the three Purchase and Sale Agreements (the “Deposit”), which was split evenly amongst the Facilities. The Deposit will be applied towards the Purchase Price for that specific Facility, and is refundable if the Company terminates a particular Purchase and Sale Agreement. The closing of the transaction is to occur on or before August 2, 2021. Each Purchase and Sale Agreement allows the Company to extend the closing date for a particular Facility up to two additional 30-day periods by notifying the Sellers and delivering to the title company an additional $16,666.67 for the first thirty 30-day closing date extension and an additional $33,333.33 for the second thirty 30-day closing date extension. The additional deposits are treated the same as the Deposit.

 

The Sellers currently lease the Facilities to local hospital districts, who are currently the licensed operators of the Facilities. The Sellers also manage the day-to-day activities of the Facilities pursuant to management agreements. The transaction is conditioned upon these management agreements being assigned to and assumed by the Company. After the transaction closes, the Company will own the Assets and manage the day-to-day activities of the Facilities.

The transaction has been unanimously approved by the board of directors of the Company and the managers and members of the Sellers.

 

The foregoing summary of the Purchase Agreements and the transactions contemplated thereunder and any other agreements to be entered into by the parties are qualified in their entirety by reference to the full text of the Purchase Agreements, which are attached hereto as Exhibits 2.1 through 2.6 and are incorporated herein by reference. You are urged to read said exhibits attached hereto in their entirety.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit

Number

 

 

Description

2.1

  Purchase and Sale Agreement dated as of June 21, 2021 by and between Grace Properties Olney, LLC, and Real Living Property Holdings – Texas, LLC
2.2   Management Transfer Agreement dated as of June 21, 2021 by and between GCC Olney, LLC and Olney Health and Rehab Center, LLC
2.3   Purchase and Sale Agreement dated as of June 21, 2021 by and between Grace Properties Nocona, LLC, and Real Living Property Holdings – Texas, LLC
2.4   Management Transfer Agreement dated as of June 21, 2021 by and between GCC Nocona, LLC and Nocona Health and Rehab Center, LLC
2.5   Purchase and Sale Agreement dated as of June 21, 2021 by and between Grace Properties Henrietta, LLC, and Real Living Property Holdings – Texas, LLC
2.6   Management Transfer Agreement dated as of June 21, 2021 by and between GCC Henrietta, LLC and Henrietta Health and Rehab Center, LLC
2.7   Guarantee of Indemnification Obligations made as of June 21, 2021, by Jake Hallsted for the benefit of Nocona Health and Rehab Center, LLC, Henrietta Health and Rehab Center, LLC, Olney Health and Rehab Center, LLC and Real Living Property Holdings – Texas, LLC

 

 
 

 

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 24, 2021 ASSISTED 4 LIVING, INC.
     
  By: /s/ Janet Huffman
    Janet Huffman, CFO

 

 

 

 

Exhibit 2.1

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) dated as of June 21, 2021 is by and between GRACE PROPERTIES OLNEY, LLC, a Texas limited liability company (“Seller”), and REAL LIVING PROPERTY HOLDINGS – TEXAS, LLC, a Texas limited liability company (“Purchaser”). Seller and Purchaser are sometimes collectively referred to as the “Parties” or individually as a “Party”.

 

W I T N E S S E T H:

 

Section 1. Definitions.

 

As used herein, the following terms shall have the following meanings:

 

“Closing” shall mean the consummation of the purchase and sale transaction contemplated by this Agreement.

 

Closing Date” shall mean on or before 1:00 p.m. Central Time on August 2, 2021.

 

Commitment Documents” shall mean all title exception documents including all of the documents referred to in Schedule B of the Title Commitment.

 

Deed” shall mean a special warranty deed conveying good and indefeasible fee simple title in and to the Property to Purchaser, executed and acknowledged by Seller and to be executed by Purchaser, in recordable form and in substantially the form set forth on Exhibit “B” attached hereto and made a part hereof for all intents and purposes.

 

Earnest Money” shall mean the amount deposited pursuant to Section 4(b) hereof.

 

Effective Date” shall mean the date on which the Title Company acknowledges receipt of a copy of this Agreement executed by Purchaser and Seller.

 

Feasibility Period” shall mean the time period from the Effective Date through 5:00 p.m. Central Time on the thirtieth (30th) day thereafter.

 

Independent Contract Consideration” shall mean the sum of One Hundred and No/100 Dollars ($100.00).

 

Land” shall mean those certain tracts or parcels of land containing approximately 2.066 acres of land located at 1402 West Elm, Olney, Young County, Texas, being described on Exhibit “A” attached hereto and made a part hereof for all intents and purposes.

 

Land Document Review Period” shall mean the time period from the Effective Date through the expiration of the Feasibility Period.

 

Land Documents” shall mean the Title Commitment, the Commitment Documents, and the Survey collectively.

 

MTA” shall mean that certain Management Transfer Agreement dated as of the Effective Date by and between GCC Olney, LLC, a Texas limited liability company (“Transferor”), and Olney Health and Rehab Center, LLC, a Texas limited liability company, (“New Manager”), regarding the transition of the operations of the Property from Transferor to New Manager.

 

Notice” shall mean any notice required or given pursuant to or related to this Agreement.

 

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Other Agreements” shall mean (i) that certain Purchase and Sale Agreement dated as of the Effective Date by and between Grace Properties Henrietta, LLC, as seller, and Purchaser, as purchaser, for the real property located at 807 West Dois D’Arc, Henrietta, Texas and (ii) that certain Purchase and Sale Agreement dated as of the Effective Date by and between Grace Properties Nocona, LLC, as seller, and Purchaser, as purchaser, for the real property located at 307 Carolyn Road, Nocona, Texas.

 

Permitted Exceptions” shall mean (i) the lien for ad valorem real estate taxes on the Property for the year in which the Closing occurs to the extent not yet due and payable and subsequent years, and (ii) any other matters which are waived by, or acceptable to, Purchaser pursuant to Section 5; provided, however, that Permitted Exceptions shall not include (a) matters that Seller has either agreed to cure or remove as provided in Section 5 or that Seller is obligated to cure or remove as provided herein, (b) matters that are removed by the Title Company from the Title Commitment prior to the expiration of the Feasibility Period or from any pro forma policy provided by the Title Company to Purchaser or its counsel, or which the Title Company has otherwise agreed in writing prior to the expiration of the Feasibility Period to remove from the Title Policy to be issued at the Closing, or (c) all liens against all or part of the Property not caused by Purchaser, including any deed of trust, mortgage, mechanics’, or similar lien or encumbrance that can be satisfied and discharged with the payment of a specified amount of money (“Liens”).

 

Property” shall mean the Land, together with (i) all buildings, structures, improvements, and fixtures located thereon (the “Improvements”), (ii) all licenses, permits and approvals related to the said real property, all third party warranties or guaranties relating to said real property and all other items of intangible personal property owned by Seller and used in connection with the ownership, use, leasing, maintenance, service or operation of such real property (the “Intangible Personal Property”), (iii) all and singular the rights pertaining to such real property, including, without limitation, any and all rights, titles, interests, and estates of Seller (if any) in and to any and all adjacent streets, roads, alleys or rights-of-way and ingress and egress easements benefiting or relating to such real property, all plants, shrubs and trees located thereon, any land lying in or under any body of water or the bed of any street or road, open or proposed, adjacent to such Land, all easements, hereditaments and privileges appurtenant to the foregoing Land, all oil, gas, hydrocarbon and other minerals (whether similar or dissimilar) in, on or under, or that may be produced from, such Land, all strips or gores, if any, between such Land and adjoining properties, all zoning rights, entitlements, air rights, development rights and water rights relating to the Land or Improvements, and all other rights, privileges and appurtenances in any way related to or for the benefit of the foregoing Land, (iv) all licenses, permits, or similar documents in any way relating to such real property, (v) all water and wastewater rights, capacities, and reservations, utility rights, tap fees, impact fees and the like owned by Seller (if any) relating to or attributable to such real property, (vi) all of Seller’s right, title and interest, in and to all goods, machinery, furniture, equipment and other tangible personal property owned by Seller and used or useful in the operation of such real property, excluding all items of personal property owned by Tenant, if any (the “Personal Property”), and (vii) all of Seller’s interest, as landlord, in the Lease and any unapplied tenant security deposit under the Lease, if any.

 

Purchase Price” shall be One Million Seven Hundred Twenty-Five Thousand and 00/100 Dollars ($1,725,000.00).

 

Survey” shall mean an ALTA survey of the Land from a reputable registered local surveyor selected by Purchaser dated after the Effective Date showing the boundaries of the Land, the location of all Improvements on the Land, and all recorded easements and building setback lines, accompanied by a metes and bounds description of the Land.

 

Title Commitment” shall mean a commitment for Title Insurance in the amount of the Purchase Price issued through the Title Company covering the Land setting forth the matters which affect the Land.

 

Title Company” shall mean Fidelity National Title Agency, Inc. located at 1900 West Loop South, Suite 200, Houston, Texas 77027 (attention: H. David Templeton); telephone (713) 630-0001; facsimile (713) 630-0017.

 

Title Objections” shall mean any matters referred to in or discoverable from any of the Land Documents to which Purchaser objects.

 

Title Policy” shall mean an Owner Policy of Title Insurance in the amount of the Purchase Price insuring that Purchaser is the owner of fee simple title to the Property subject only to the Permitted Exceptions.

 

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Section 2. Contract.

 

Pursuant to the provisions of this Agreement, in consideration of the representations, warranties, covenants, agreements, waivers, and releases set forth herein, Seller agrees to sell and convey the Property to Purchaser, and Purchaser agrees to purchase the Property from Seller.

 

Section 3. Title Company; Delivery Date; Effective Date.

 

This Agreement shall not be effective with respect to either Party until it has been duly executed by both Parties and delivered to Title Company. If Purchaser does not timely deliver to the Title Company an original or electronic counterpart of this Agreement executed by both Parties within three (3) business days after Purchaser’s and Seller’s execution of this Agreement, Seller may terminate this Agreement by written notice to Purchaser.

 

Section 4. Purchase Price; Earnest Money; Independent Contract Consideration.

 

(a) Purchaser agrees to pay the Purchase Price, plus or minus applicable prorations, to Seller at the Closing in cash. For the purpose of this Agreement, the term “cash” means only lawful currency of the United States of America or immediately available funds actually received and unconditionally available for distribution by the Title Company prior to 1:00 p.m. Central Time on the Closing Date.

 

(b) Within three (3) business days after the Effective Date, Purchaser shall deliver Thirty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars ($33,333.33) as Earnest Money to the Title Company. All Earnest Money shall be held in an interest bearing trust account at the Title Company. The Earnest Money shall be applied towards the payment of the Purchase Price in the event the transaction contemplated hereby closes and funds. If Purchaser does not timely deliver the Earnest Money, Seller may terminate this Agreement by written notice to Purchaser.

 

(c) If Purchaser terminates this Agreement, the Earnest Money will be immediately refunded to Purchaser, less the Independent Contract Consideration that Seller will retain as independent consideration for Purchaser’s right to terminate. The Independent Contract Consideration is to be credited to the Purchase Price only upon the Closing.

 

Section 5. Title Commitment; Commitment Documents; Survey; Land Document Review Period.

 

(a) Within three (3) business days after the Effective Date, Seller shall request the Title Company to prepare and furnish to Purchaser the following:

 

(i) A Title Commitment; and

 

(ii) A true, complete and legible copy of each of the Commitment Documents.

 

(b) Within three (3) business days after the Effective Date, Seller shall deliver to Purchaser a copy of Seller’s existing survey(s) of the Property (the “Existing Survey”). If the Existing Survey is not acceptable to the Title Company or Purchaser, Purchaser may, at Purchaser’s sole cost and expense, obtain either an update of the Existing Survey or a new Survey and deliver same to Seller, the Title Company, and Seller’s Counsel on or before the expiration of the Feasibility Period. In the event of any discrepancy between the description of the Land set forth on Exhibit “A” attached hereto and that accompanying the Survey, the description accompanying the Survey shall govern and control and shall be the description of the Land used in the Deed if so elected by Purchaser. The legal description of the Land shall be subject to the reasonable approval of Seller. If this Agreement shall be terminated by Seller or Purchaser pursuant to the right of either party to do so as expressly set forth herein, then the Survey shall become the property of Seller without the payment of any consideration therefor other than Seller’s having entered into this Agreement.

 

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(c) Purchaser shall have the Land Document Review Period to examine the Land Documents, and to notify Seller of any Title Objections. Seller shall not have any duty or obligation whatsoever to, but Seller may, cure or attempt to cure any of such Title Objections; provided, however, Seller agrees to pay all sums owing to discharge any and all Liens against the Land on or prior to the Closing Date. Seller shall notify Purchaser of its intention to cure or not to cure any Title Objections on or prior to the Closing Date within ten (10) days after Purchaser notifies Seller of such Title Objections; and in the event Seller fails to so notify Purchaser within such ten (10) day period, it shall be presumed that no cure will be made. Purchaser shall conclusively be deemed to have reviewed, accepted, and approved all matters which are referred to in or disclosed by any of the Land Documents which Purchaser does not timely notify Seller constitute Title Objections. For avoidance of doubt, Purchaser shall have no obligation to object to any Liens, it being understood that no Lien shall be deemed a Permitted Exception.

 

(d) If, for any reason whatsoever, Seller does not cure, or elects not to cure or is deemed to have elected not to cure, any Title Objections within such ten (10) day period set forth in Section 5(c) above, at any time prior to the Closing Date, Purchaser shall elect to either:

 

(i) terminate this Agreement in accordance with the provisions of Section 13(c) hereof; or

 

(ii) waive all uncured Title Objections, purchase the Property, and accept the Title Policy and the Deed subject to all uncured Title Objections (in addition to all matters to which Purchaser did not timely object), without any reduction in the Purchase Price.

 

Purchaser’s failure to give Seller timely notice prior to the Closing Date shall be deemed to be an election by Purchaser under clause (ii) above.

 

Section 6. The Feasibility Period; Purchaser’s Evaluation of the Property.

 

(a) Seller shall deliver to Purchaser within three (3) business days after the Effective Date copies of all documents relating to the Property (to the extent the same are in existence and in the possession or control of Seller), including, but not limited to, environmental reports, development rights, permits, roadway agreements, topographical maps, utility information, survey, engineering reports, flood plain information, soil reports, development plans for adjoining property, site development permits, etc. (the “Property Information”) for Purchaser to review. In the event that the Seller fails to deliver a material Property Information document, as reasonably determined by Purchaser, to Purchaser within such three (3) business day period, the Feasibility Period shall be extended by one (1) day for each day thereafter until all material Property Information is delivered to Purchaser. PURCHASER ACKNOWLEDGES THAT ANY REPORTS SUPPLIED OR MADE AVAILABLE BY SELLER, WHETHER WRITTEN OR ORAL, OR IN THE FORM OF MAPS, SURVEYS, PLATS, SOIL REPORTS, ENGINEERING STUDIES, ENVIRONMENTAL ASSESSMENTS, STUDIES, ANALYSES, OR OTHER INSPECTION REPORTS PERTAINING TO THE PROPERTY (“REPORTS”) ARE BEING DELIVERED TO PURCHASER ON AN “AS-IS, WHERE-IS, WITH ALL FAULTS” BASIS SOLELY AS A COURTESY AND THAT SELLER HAS VERIFIED NEITHER THE ACCURACY OF ANY STATEMENTS OR OTHER INFORMATION CONTAINED IN THOSE MATERIALS, THE COMPLETENESS OF THE REPORTS, ANY METHOD USED TO COMPILE THE REPORTS, OR THE QUALIFICATIONS OF THE PERSON(S) PREPARING THE REPORTS. SELLER MAKES NO REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, AS TO THE ACCURACY, COMPLETENESS, OR ANY OTHER ASPECT OF THE REPORTS.

 

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(b) During the Feasibility Period, with reasonable prior notice to Seller, Purchaser and Purchaser’s designated agents, employees, and independent contractors shall have the right, at Purchaser’s sole risk, cost, and expense, to enter upon the Property; to conduct engineering, environmental, operational, market, economic feasibility, and other inspections, studies, and tests of the Property; to review and analyze the Property and the condition of the Property and otherwise to evaluate and assess the Property as Purchaser deems appropriate or necessary in its sole discretion. Purchaser hereby agrees to indemnify Seller against all liability attributable to such entry, inspections, studies, and tests performed by or on behalf of Purchaser; provided, however, that excluded from the foregoing indemnity are any losses, costs, damages, claims, or liabilities (a) relating to pre-existing conditions upon the Property or (b) arising from the gross negligence or willful misconduct of Seller or its contractors, employees, agents, representatives or other parties under Seller’s control. PURCHASER SHALL NOT CONDUCT OR ALLOW ANY PHYSICALLY INTRUSIVE TESTING OF, ON OR UNDER THE PROPERTY WITHOUT FIRST OBTAINING SELLER’S WRITTEN CONSENT AS TO THE TIMING AND SCOPE OF WORK TO BE PREFORMED, WHICH CONSENT MAY BE WITHHELD IN SELLER’S SOLE AND ABSOLUTE DISCRETION. Purchaser agrees that, in making any inspections of, or conducting any testing of, on or under, the Property, Purchaser or the representatives of Purchaser entering onto the Property shall carry not less than $2,000,000.00 commercial general liability insurance with Seller as an additional insured party insuring all activity and conduct of Purchaser and such representatives exercising such right of access. Purchaser represents and warrants that it carries not less than the coverage set forth in the previous sentence with contractual liability endorsement which insures Purchaser’s indemnity obligations hereunder, and upon written request of Seller, will provide Seller with written evidence of same. After receipt from Purchaser of at least twenty-four hours advance written or telephonic notice, Seller shall allow Purchaser to conduct any inspections or tests, so that Seller shall have a reasonable opportunity to have a representative present during any entry onto the Property by Purchaser or its representatives, agents or consultants. Purchaser agrees to use commercially reasonable efforts to cooperate with any reasonable request by Seller in connection with the timing of any such inspection or test report or summary upon Seller’s written request therefor.

 

(c) Purchaser shall have until the end of the Feasibility Period to inspect the Property and any other matters whatsoever with respect to the Property. At any time prior to the expiration of the Feasibility Period, Purchaser may, by written notice to Seller, elect to terminate this Agreement (i) if Purchaser is denied financing by its lender for its purchase of the Property or (ii) pursuant to Section 5(d)(i) herein or (iii) due to any issue or matter disclosed or discovered by any environmental inspection or environmental report, including any environmental Phase I, of the Property, in accordance with Section 13(c) hereof.

 

(d) In the event Purchaser terminates this Agreement or elects not to close the transaction contemplated in this Agreement, at Purchaser’s sole cost and expense, Purchaser shall promptly restore the Property to substantially its condition prior to Purchaser’s entry thereon, such obligation to survive the termination of this Agreement for four (4) months.

 

(e) If this Agreement terminates for any reason, then Purchaser shall deliver to Seller copies of all reports, assessments, studies, and the like that have been prepared by or for Purchaser in connection with Purchaser’s review of the Property and/or have been delivered or provided to Purchaser by Seller. It is understood and agreed that any such reports, assessments, studies, and the like shall be provided to Seller without any representation or warranty by Purchaser as to the completeness or accuracy thereof, or the right of Seller to rely on same. Furthermore, Purchaser shall have no obligation to provide to Seller any information provided to Purchaser by any prospective tenant of Purchaser for the Property or any proprietary information of Purchaser.

 

(f) Purchaser covenants and agrees to not make any filings or requests or make any communication with the US Army Corps of Engineers with respect to the Property without the prior written consent of Seller, such consent not to be unreasonably withheld, conditioned or delayed.

 

Section 7. Representations and Warranties.

 

(a) As a material inducement to Purchaser to execute this Agreement and to consummate the transactions contemplated by this Agreement, Seller represents and warrants to Purchaser, as of the date hereof and as of the Closing Date (except to the extent any such representations and warranties shall have been expressly made as of a particular date, in which case such representations and warranties shall be made only as of such date), as follows:

 

(i) Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its formation and qualified to do business and is in good standing under the laws of the state in which the Property is located.

 

(ii) Seller has the full right and authority, and has obtained any and all consents required, to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby. This Agreement has been, and all of the documents to be delivered by Seller at the Closing will be, authorized and properly executed by or on behalf of Seller and constitutes, or will constitute, as appropriate, the valid and binding obligation of Seller, enforceable in accordance with their terms.

 

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(iii) Seller has not entered into any agreement to dispose of its interest in the Property or any part thereof, except for this Agreement. There is no agreement to which Seller is a party or is otherwise binding on Seller that is in conflict with this Agreement. The execution and delivery of this Agreement and the performance by Seller of its obligations hereunder does not conflict with or violate any law of any governmental authority or quasi-governmental authority with jurisdiction over Seller or the Property. No person, firm or entity has any rights in, or rights to acquire all or any part of, the Property, and there is no outstanding agreement, other than this Agreement, to sell all or any part of the Property, to any other person, firm or entity.

 

(iv) There are and there will be no parties in possession of any portion of the Property as lessees, and no other party has been granted an oral or written license, lease, option, purchase agreement or other right pertaining to the use, purchase or possession of any portion of the Property, other than tenants in possession under the Lease. The copy of such Lease to be provided or made available to Purchaser is true, correct and complete as presently in full force and effect, has not been modified, supplemented or amended, and constitutes the entire agreement between Seller and Tenant. Tenant has no option or right of first refusal to purchase the Property or any part thereof. Seller has given no written notice of default to Tenant under the Lease and to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) is not aware of any default by Tenant under the Lease. Seller has fully and completely performed all of its duties and obligations of the “lessor” or “landlord” under the Lease arising on or before the date hereof. Seller has not received any written notice of default from Tenant under the Lease. All construction allowances or other sums required by the Lease to be paid to Tenant have been paid. Except as expressly set forth in the Lease, there are no rent concessions or offsets with respect to the Lease. As of the Closing, Seller shall have paid all leasing, rental, brokerage and other commissions, charges or fees payable with respect to the current term of the Lease, and there will be no such leasing, rental, brokerage or other commissions, charges or fees payable thereafter with respect thereto or with respect to any renewal or extension of the term of the Lease that was agreed to prior to Closing. Purchaser shall have no liability for (and Seller hereby indemnifies Purchaser against any claim for) any such leasing commissions, construction allowances, charges or fees with respect to the Lease that arise prior to Closing and Seller shall have no liability for any such leasing commissions, construction allowances, charges or fees with respect to the Lease that arise after the Closing due to acts or agreements that occur after the Closing.

 

(v) There are no supplier, vendor, service provider, maintenance, management or similar contracts relating to the operation of or affecting the Property, or any other unrecorded agreements or contracts that will be binding upon Purchaser and/or the Property after the Closing.

 

(vi) There is not any pending or, to Seller’s knowledge, threatened, litigation against Seller or the Property.

 

(vii) The Property is free of violation of applicable laws, and Seller has received no written notice that the Property is in violation of any applicable laws. All building permits, certificates of occupancy, business licenses and, without limitation, all other notices, licenses, permits, certificates and authority, required in connection with the construction, use or occupancy of the Property have been obtained and are in effect and in good standing, the leasing, operation and use of the Property is in compliance with such notices, licenses, permits, certificates and authority, and Seller, the Property and the operation of the Property comply with all applicable laws. Seller has no written notice of any violations of any restrictive covenants or other requirements affecting the Property.

 

(viii) There is no pending, or to Seller’s knowledge, threatened, judicial, administrative, condemnation or eminent domain proceedings or investigations relating to the Property. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), there are no claims against the Property or Purchaser for or on account of work done, materials furnished, and utilities supplied to the Property prior to the Closing Date. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) there are no public plans or proposals for changes in road grade, access, or other municipal improvements which would materially adversely affect the Property or result in any assessment; and to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) no ordinance authorizing improvements, the cost of which might be assessed against Purchaser or the Property, is pending.

 

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(ix) Seller is not a “foreign person,” “foreign partnership,” “foreign trust” or “foreign estate” as those terms are defined in Section 1445 of the Internal Revenue Code of 1986, as amended. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) the Property is not located within the boundaries of any historical or archaeological district or similar district or area, and none of the Improvements are designated as landmarks or as having historical or archaeological significance and none of the Improvements are qualified or eligible for any such designation. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) there exists no impediment to or restrictions on the demolition or use of the buildings based on any historical or archaeological significance of the Property.

 

(x) Seller has not received any written notice of any pending, threatened, general or special real property, personal property or other ad valorem taxes and/or assessments affecting the Property other than the taxes and assessments set forth in the Title Commitment or as shown on a regular tax bill for the Property. Seller shall be required to pay in full all certified special assessments and private assessments against the Property to the Closing Date that are due and payable at such time. Seller has not protested or appealed any general or special real property, personal property or other ad valorem taxes and/or assessments affecting the Property.

 

(xi) No labor has been performed or materials fabricated or furnished with respect to the Property that could result in a materialman’s or mechanic’s lien filed against the Property, except as shall have been fully paid or released to the satisfaction of the Title Company at Closing. Except for routine expenditures for repairs and replacements in connection with the ongoing maintenance and upkeep of the Property, which Seller covenants and agrees to undertake and complete in the ordinary course consistent with past practices, Seller does not have any outstanding contracts for capital expenditures relating to the Property, nor does Seller have any agreement, obligations or commitments for capital expenditures relating to the Property, including, without limitation, additions to property, plant, equipment or intangible capital assets. Seller has not deferred or delayed implementing any capital expenditures at the Property.

 

(xii) Seller is not, and will not become a person identified on U.S. Treasury’s Office of Foreign Asset Control listing of Specially Designated Nationals and Blocked Persons (a “Prohibited Person”). Seller (i) is not and will not become owned or controlled by a Prohibited Person, (ii) is not acting hereunder and will not act hereunder for or on behalf of a Prohibited Person, and (iii) is not providing and will not provide material, financial or technological support or other services to or in support of acts of terrorism of a Prohibited Person. Seller will not enter into or undertake any activities related to this Agreement in violation of Anti-Money Laundering Laws.

 

(xiii) Seller is not a party to any effective contract, agreement, option or commitment to sell, convey, assign, transfer or otherwise dispose of the Property or any material portion thereof, except the Lease.

 

(xiv) Seller has not received any written notice from any municipal department, insurance carrier, board of fire underwriters (or organization exercising functions similar thereto) or mortgagee of the existence of defects or inadequacies in the Property or requesting the performance of any work or alterations with respect to the Property.

 

(xv) The environmental reports to be provided to Purchaser as a part of the Property Information comprise all environmental reports with respect to the Property in Seller’s possession or control. Neither the Seller nor, to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), any other party has ever caused or permitted any “hazardous material” (as hereinafter defined) to be placed, held, located, or disposed of on, under, or at the Property or any part thereof in forms or concentrations which violate applicable laws and regulations, and to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) neither the Property nor any part thereof has ever been used as a dump or storage site (whether permanent or temporary) for any hazardous material. As used herein, “hazardous material” means and includes any hazardous, toxic, or dangerous waste, substance, or material defined as such in, or for purposes of, the Comprehensive Environmental Response, Compensation Liability Act (42 U.S.C. Section 9601, et seq., as amended) or any other “super fund” or “super lien” law or any other federal, state, or local statute, or law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability for standards of conduct concerning any substance or material, as presently in effect. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) the Property does not currently contain and has not in the past contained any underground storage tanks.

 

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(xvi) There are no attachments, executions, assignments for the benefit of creditors or voluntary or involuntary proceedings in bankruptcy pending against or contemplated by Seller or any one of them, and, to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), no such actions have been threatened.

 

Seller hereby indemnifies and holds harmless Purchaser from and against any and all loss, expense (including without limitation reasonable attorney fees), liability, cost, claim, demand, action, cause of action and suit arising out of or in any way related to any breach of any representation, warranty, covenant or agreement of Seller in this Agreement. If, to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), any of the foregoing representations and warranties is not, or ceases to be, true, Seller shall give prompt written notice to Purchaser (which notice shall include copies of any document upon which Seller’s notice is based). The representations and warranties of Seller hereunder shall survive for only one (1) year from the Closing Date.

 

Seller hereby notifies Purchaser that Seller is not the developer of the Property, and that, except as expressly set forth in this Agreement, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith, Seller makes no representations or warranties whatsoever, express, implied, or arising by operation of law, with respect to the Property or the condition of the Property. Purchaser hereby represents and warrants to Seller that, except as expressly set forth in this Agreement, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith, Purchaser has not entered into this Agreement based upon any representation, warranty, agreement, statement, or expression of opinion by Seller or any other person or entity acting or allegedly acting for or on behalf of Seller with respect to Seller, the Property, or the condition of the Property. Purchaser agrees that the Property will be sold and conveyed to (and accepted by) Purchaser at the Closing in the then condition of the Property, AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT ANY WRITTEN OR ORAL REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS, IMPLIED, OR ARISING BY OPERATION OF LAW, other than the special warranty of title in the Deed and except as expressly set forth in this Agreement, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith. Without limiting the generality of the foregoing, except for the special warranty of title in the Deed and except as expressly set forth in this Agreement, the transaction contemplated by this Agreement is without any express or implied warranty, representation, agreement, statement, or expression of opinion of or with respect to: (i) the condition of the Property or any aspect thereof, including, without limitation, any and all express or implied representations or warranties related to suitability for habitation, merchantability, or fitness for a particular use or purpose; (ii) the soil conditions, drainage, topographical features, flora, fauna, or other conditions of or which affect the Property; (iii) any conditions at or which affect the Property with respect to any particular use, purpose, development potential, or otherwise; (iv) area, size, shape, configuration, location, access, cash flow, expenses, value, or condition; (v) any express or implied representations or warranties created by any affirmation of fact or promise, by any description of the Property, or by operation of law; (vi) any environmental, botanical, zoological, hydrological, geological, meteorological, or other condition or hazard or the absence thereof heretofore, now, or hereafter affecting in any manner any of the Property; and (vii) all other express or implied representations and warranties by Seller whatsoever. Except as specifically set forth herein, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith, Purchaser hereby releases and discharges Seller from all liability and waives all claims against Seller for, and Purchaser hereby assumes the risk with respect to, all matters in any way or manner whatsoever arising out of, related to, connected with, or emanating from the condition of the Property, including, without limitation, all patent and latent defects, hazards, and dangerous conditions on or about the Property, whether or not discoverable prior to the Closing Date.

 

 

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(b) As a material inducement to Seller to execute this Agreement and to consummate the transactions contemplated by this Agreement, Purchaser represents and warrants to Seller, as of the date hereof and as of the Closing Date (except to the extent any such representations and warranties shall have been expressly made as of a particular date, in which case such representations and warranties shall be made only as of such date), as follows:

 

(i) Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its formation and qualified to do business and is in good standing under the laws of the state in which the Property is located.

 

(ii) Purchaser has the full right and authority, and has obtained any and all consents required, to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby. This Agreement has been, and all of the documents to be delivered by Purchaser at the Closing will be, authorized and properly executed by or on behalf of Purchaser and constitutes, or will constitute, as appropriate, the valid and binding obligation of Purchaser, enforceable in accordance with their terms.

 

(iii) Purchaser is not, and will not become a Prohibited Person. Purchaser (i) is not and will not become owned or controlled by a Prohibited Person, (ii) is not acting hereunder and will not act hereunder for or on behalf of a Prohibited Person, and (iii) is not providing and will not provide material, financial or technological support or other services to or in support of acts of terrorism of a Prohibited Person. Purchaser will not enter into or undertake any activities related to this Agreement in violation of Anti-Money Laundering Laws.

 

(iv) The execution and delivery of this Agreement by Purchaser and the consummation by Purchaser of the transactions contemplated hereby will not violate any judgment, order, injunction, decree, regulation or ruling of any court or governmental entity or conflict with, result in a breach of, or constitute a default under the organizational documents of Purchaser, any note or other evidence of indebtedness, any mortgage, deed of trust or indenture, or any lease or other material agreement or instrument to which Purchaser is a party or by which it is bound.

 

(v) No consent, waiver, approval or authorization is required from any person or entity (that has not already been obtained or will be obtained prior to the Closing) in connection with the execution and delivery of this Agreement by Purchaser or the performance by Purchaser of the transactions contemplated hereby.

 

(vi) Purchaser has not (i) commenced a voluntary case, or, to Purchaser’s knowledge, had entered against it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree under any federal or state law or statute relative to bankruptcy, insolvency or other relief for debtors, (ii) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceeding, to hold, administer and/or liquidate all or substantially all of its property, or (iii) made an assignment for the benefit of creditors.

 

Purchaser hereby indemnifies and holds harmless Seller from and against any and all loss, expense (including without limitation reasonable attorney fees), liability, cost, claim, demand, action, cause of action and suit arising out of or in any way related to any breach of any representation, warranty, covenant or agreement of Purchaser in this Agreement. If, to the current actual knowledge of Purchaser (without any independent investigation or inquiry whatsoever), any of the foregoing representations and warranties is not, or ceases to be, true in any material manner, Purchaser shall give prompt written notice to Seller (which notice shall include copies of any document upon which Purchaser’s notice is based). The representations and warranties of Purchaser hereunder shall survive for only one (1) year from the Closing Date.

 

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Section 8. Closing.

 

(a) The Closing shall occur on or before the Closing Date in escrow at the offices of the Title Company. Notwithstanding anything contained herein to the contrary, Purchaser may extend the Closing Date for up to two (2) additional thirty (30) day periods by notifying Seller and delivering to the Title Company an additional $16,666.67 for the first thirty (30) day Closing Date extension and an additional $33,333.33 for the second thirty (30) day Closing Date extension (each an “Additional Deposit”, and, collectively, the “Additional Deposits”). The Additional Deposits shall be applicable toward the Purchase Price and shall treated the same as the Earnest Money as set forth herein.

 

(b) Provided Purchaser contemporaneously performs all of Purchaser’s obligations set forth in Sections 8(c) and 8(d) hereof, at the Closing, Seller shall execute, acknowledge and deliver or cause to be delivered to the Title Company the following:

 

(i) the Deed in form and substance reasonably acceptable to Purchaser and Seller;

 

(ii) closing instructions, addressed to the Title Company, which (A) authorize the Title Company to deliver the Deed, and any other documents required by Section 8(b) hereof, to Purchaser, only after the Title Company has received the Purchase Price (less Seller’s Closing costs and plus or minus applicable prorations) in cash and the documents required by Sections 8(c)(ii) and 8(c)(iii) hereof; and (B) request that the Title Company issue (as soon as reasonably practicable after the Closing) to Purchaser the Title Policy; provided, however, Seller shall request that (1) the exception with respect to restrictive covenants refer only to those restrictions, if any, set forth in the Title Commitment; and (2) that the exception with respect to taxes shall refer to the year in which the Closing Date occurs; (3) the “survey exception” be modified to read “Any shortages in area”; and (4) the Title Policy exclude the exception as to “rights of parties in possession”; provided Seller provides all such information and documentation necessary to allow the Title Company to make such modifications or changes. If, at or prior to the Closing, the Title Company notifies Purchaser that the Title Company refuses to deliver the Title Policy as herein described, within two (2) days after Purchaser’s receipt of such notice from the Title Company, but not thereafter, Purchaser shall elect to either (a) terminate this Agreement in accordance with the provisions of Section 13(c) hereof, or (b) waive such refusal, purchase the Property, and accept whatever policy of title insurance, if any, which the Title Company is willing to issue to Purchaser, without any reduction in the Purchase Price;

 

(iii) An Assignment and Assumption (the “Assignment”) of that certain Lease and Operating Agreement by and between Seller, as landlord, and Olney-Hamilton Hospital District, as tenant (“Tenant”), dated effective as October 1, 2014 (the “Lease”) or, if requested by Purchaser, an Amended and Restated Lease (the “A&R Lease”), in form and substance reasonably acceptable to Purchaser and Seller;

 

(iv) a blanket conveyance bill of sale and assignment (the “Bill of Sale”), conveying and assigning to Purchaser all the Personal Property and the Intangible Personal Property in form and substance reasonably acceptable to Purchaser and Seller;

 

(v) any and all other documents reasonably required by Purchaser or the Title Company to consummate the Closing, duly executed, sworn to, and/or acknowledged (when the form of the document so provides), by Seller;

 

(vi) an affidavit in form and substance satisfactory to Purchaser stating Seller’s taxpayer identification number and that Seller is not a “foreign person” within the meaning of Section 1445, et seq., of the Internal Revenue Code of 1986, as amended;

 

(vii) The Title Company’s standard form Owner’s Affidavit in order to cause all standard exceptions (except for the standard survey exception, which shall not be removed unless Purchaser obtains a Survey in a form sufficient to remove such exception) to be deleted from the Title Policy;

 

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(viii) (a) a tenant estoppel certificate in form and substance satisfactory to Purchaser executed by Tenant and dated not more than thirty (30) days prior to the Closing Date, disclosing no default by either landlord or tenant and no other negative or adverse fact or circumstance, and (b) if required by Purchaser’s lender, a subordination, non-disturbance and attornment agreements in form reasonably acceptable to such lender executed by Tenant;

 

(ix) an executed closing statement consistent with this Agreement in the form required by the Title Company; and

 

(x) evidence satisfactory to the Title Company of authority of Seller to sell the Property in accordance with the terms of this Agreement and evidence satisfactory to the Title Company of the persons authorized to execute and deliver all necessary documents on behalf of Seller at Closing.

 

(c) Contemporaneously with the performance by Seller of Seller’s obligations under Section 8(b) hereof provided Seller contemporaneously performs all of Seller’s obligations set forth in Section 8(b) hereof, Purchaser shall execute, swear to, acknowledge (when the form of the document so provides), and/or deliver to the Title Company the Deed and the following:

 

(i) cash in the amount of the Purchase Price (plus or minus applicable prorations), together with such additional cash, if any, as may be necessary to pay Purchaser’s Closing costs as set forth in Section 8(d) hereof;

 

(ii) the Assignment or the A&R Lease, as applicable;

 

(iii) the Bill of Sale;

 

(iv) evidence reasonably satisfactory to the Title Company that the person(s) executing this Agreement, the Deed, and any other documents with respect to the transaction contemplated by this Agreement as or on behalf of Purchaser has full right, power, and authority to do so;

 

(v) an executed closing statement consistent with this Agreement in the form required by the Title Company; and

 

(vi) any and all other documents reasonably required by the Title Company to consummate the Closing.

 

(d) Purchaser hereby agrees to pay in cash at the Closing each and all of the following Closing costs:

 

(i) Purchaser’s attorney’s fees incurred in drafting and negotiating this Agreement and in Closing the transaction contemplated in this Agreement;

 

(ii) all costs incurred by Purchaser in performing Purchaser’s review and inspections of the Land Documents, the Property, and the condition of the Property;

 

(iii) filing and recording fees for the Deed and all other documents (other than documents, if any, curing Title Objections) required by law or the Title Company or requested by Purchaser to be filed or recorded;

 

(iv) one-half of the escrow fee of the Title Company;

 

(v) all premiums for any and all mortgagee policies of title insurance;

 

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(vi) Purchaser’s proportionate share of the items prorated pursuant to Section 9 hereof; and

 

(vii) all other fees, costs, and expenses customarily paid by a purchaser of real property in the County where the Closing occurs.

 

(e) Seller hereby agrees to pay each and all of the following Closing costs:

 

(i) Seller’s attorney’s fees incurred in drafting and negotiating this Agreement, the Deed, and other Closing documents to be provided by Seller, and in Closing the transaction contemplated in this Agreement;

 

(ii) the Commission, if any, agreed to be paid in Section 11 hereof;

 

(iii) charges for the preparation and delivery to Purchaser of the Land Documents; filing and recording fees for documents, if any, curing Title Objections; the Basic Rate Premium for the issuance of the Title Policy (Seller shall not pay any charge or additional premium charged for any title policy endorsements);

 

(iv) the premium charged by the Title Company to amend the “survey exception” in the Title Policy;

 

(v) the charge, if any, by the Title Company to exclude from the Title Policy the exception as to “rights of parties in possession”

 

(vi) one-half of the escrow fee of the Title Company;

 

(vii) Seller’s proportionate share of the items prorated pursuant to Section 9 hereof; and

 

(viii) all other fees, costs, and expenses customarily paid by a seller of real property in the County where the Closing occurs.

 

Seller may comply with Seller’s obligations under this Section 8(e) by (i) delivering a check at Closing payable to the Title Company for sums payable by Seller, or (ii) paying at Closing, or agreeing to pay outside of Closing so long as the Title Company shall agree such agreement is sufficient to issue the Title Policy in form and substance satisfactory to Purchaser, sums payable by Seller, directly to the person or entity to receive such payment, or (iii) signing a Closing statement showing deductions from the Purchase Price for sums payable by Seller; or (iv) any combination of the methods set forth in (i), (ii), and (iii).

 

(f) The provisions of Sections 8(d) and 8(e) hereof shall not be deemed to be in conflict with the provisions of Section 17 hereof.

 

(g) Upon completion of the Closing and Seller’s receipt of the Purchase Price (less Seller’s Closing costs and plus or minus applicable prorations) in cash, subject to the rights of Tenant, Purchaser shall have the right to possession of the Property. At the Closing, Seller shall deliver to Purchaser the following items, if in Seller’s possession or control: the original Lease; copies or originals of all contracts; and all keys used in the operation of the Property.

 

(h) Notwithstanding anything in this Agreement to the contrary, Purchaser’s obligation to effect the Closing shall be subject to and contingent upon the satisfaction or waiver of the following conditions precedent as of the Closing Date:

 

(i) The willingness of the Title Company to issue, upon the sole condition of the payment of its regularly scheduled premium, the Title Policy in the form and substance described herein on the Closing Date, with such endorsements as Purchaser and the Title Company shall have reasonably agreed prior to the end of the Feasibility Period, subject only to the Permitted Exceptions.

 

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(ii) Seller shall have performed and complied with the covenants and agreements contained in this Agreement required to be performed and complied with by it on or prior to the Closing Date.

 

(iii) Each of the representations and warranties made by Seller in this Agreement shall be accurate, true and correct when made and shall be accurate, true and correct on and as of the Closing Date as if such representations and warranties were made at and as of the Closing, except those made as of a specified date, in which case such representations and warranties of Seller shall have been accurate, true and correct as of such date.

 

(iv) There shall not be in effect any statute, regulation, order, decree, judgment or injunction (whether temporary, permanent or preliminary) of any governmental authority that challenges, prohibits, makes illegal, enjoins or prevents the consummation of the transactions contemplated by this Agreement.

 

(v) There shall not be any action taken by any court of competent jurisdiction or other governmental authority that makes it illegal or enjoins, restrains or otherwise prohibits the consummation of the transactions contemplated by this Agreement. There shall not be instituted any action or proceeding by any governmental authority that would reasonably be expected to result in any of the consequences referred to in the previous sentence.

 

(vi) No government-imposed moratorium affecting Purchaser’s intended use or operation of the Property will be in effect.

 

(vii) There shall not have been any change or event since the expiration of the Feasibility Period that materially or adversely affects the physical condition of the Property.

 

(viii) All of the conditions to the closing of the transactions contemplated in the MTA shall be satisfied and the transactions contemplated by the MTA shall close contemporaneously with the transactions contemplated by this Agreement.

 

(ix) All of the conditions to the closing of the transactions contemplated in the Other Agreements shall be satisfied and the transactions contemplated by the Other Agreements shall close contemporaneously with the transactions contemplated by this Agreement.

 

In the event that any of the conditions set forth in this Section 8(h) are not satisfied or waived, Purchaser may, by written notice to Seller, (i) terminate this Agreement in accordance with the provisions of Section 13(c) hereof; (ii) by written notice to Seller, elect to extend the Closing Date by ten (10) days to allow Seller to cure such failed condition to Purchaser’s satisfaction; or (iii) waive the failed condition and proceed to Closing; provided, however, that if such conditions have not been satisfied due to a default by Seller, Purchaser may instead pursue its remedies under Section 13.

 

Section 9. Prorations.

 

(a) Except for insurance premiums, at the Closing, all customarily prorated items including, without limitation, maintenance fees and assessments, standby fees and ad valorem taxes for the current year (based on the most recent tax statement[s] for the Property, adjusted for the most current tax rates and appraised value), and utility services being continued to the Property, shall be prorated as of 11:59 p.m. on the Closing Date (the “Cut-Off Time”). Seller shall be charged for and credited with all prorated items up to and including the Closing Date and Purchaser shall be charged for and credited with all of same after the Closing Date. In the event any amount to be prorated is unknown at the Closing, the Title Company’s best estimate of the amount therefor shall be used at the Closing, and thereafter, the Parties agree to adjust such prorations within ten (10) days after receipt of written notice, accompanied by copies of the statement(s) or invoice(s) therefor, from the Party receiving same. The Parties agree to undertake a final accounting for all prorated items (except ad valorem taxes, the proration of which shall occur within ten (10) days after receipt of tax statements for the year in which the Closing occurs) within forty-five (45) days after the Closing Date.

 

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(b) Standby fees, ad valorem taxes, maintenance fees, and assessments with respect to the Property for the year in which the Closing occurs shall, if not paid at Closing, be assumed by Purchaser and Purchaser hereby agrees to pay the same provided an applicable charge has been made against Seller on the closing statement at Closing.

 

(c) All base rent and additional rent actually received and other income actually received under the Lease in effect on the Closing Date shall be prorated as of the Cut-Off Time. Purchaser shall receive a credit (but without duplication) at Closing for any prepaid rents to the extent the same are applicable to the period following the Cut-Off Time. Non-delinquent rent collected by Seller after Closing attributable to periods from and after the Cut-Off Time shall be promptly remitted to Purchaser. Delinquent rent collected by Seller or Purchaser after the Cut-Off time shall be delivered by the recipient as follows: within fifteen (15) days after the receipt thereof, Seller and Purchaser agree that all rent received by Seller or Purchaser shall be applied first to then current rents, and then to delinquent rents for periods after the Cut-Off Time and then to delinquent rents for periods prior to the Cut-Off Time. Notwithstanding anything herein to the contrary, in no event shall Seller, after the Cut-Off Time, institute or commence collection actions or activities or any legal action against any tenant occupying space at the Property.

 

(d) All real estate taxes due and owing as of the Cut-Off Time, and all installments of assessments for public improvements or other matters or facilities which constitute a lien against the Property and are due and owing as of the Cut-Off Time, and all penalties and interest thereon, shall be paid by Seller on or before the Closing Date. Real estate taxes and assessments shall be prorated as of the Cut-Off Time. Purchaser shall receive a credit for any accrued but unpaid (and not yet due and payable) real estate taxes and assessments applicable to any period before the Cut-Off Time. If the amount of any such taxes and assessments has not been determined as of Closing, such credit shall be based on one hundred percent (100%) of the most recent ascertainable tax bills. Such taxes shall be re-prorated upon issuance of the final tax bill.

 

(e) Except for those utility charges payable by Tenant in accordance with the Lease, Seller shall pay all utility charges attributable to the Property until the Cut-Off Time and Purchaser shall pay all utility charges attributable to the Property from and after the Cut-Off Time. If final readings have not been taken, estimated charges shall be prorated between the parties and appropriate credits given. In the event such proration at Closing is based on estimated charges, after Closing, at such time as final bills for such water, sewer, and utility charges, common area maintenance charges, and other operating expenditures are available, the parties shall adjust the amounts apportioned at Closing based on the charges shown on the final bills, and Seller or Purchaser, as the case may be, shall pay to the other whatever amount shall be necessary to compensate for the difference within fifteen (15) days after receipt of such final bills.

 

(f) Premiums for hazard, liability, and any other insurance will not be prorated and Seller will terminate Seller’s insurance coverage with respect to the Property immediately after the Closing Date. Purchaser is solely responsible for obtaining Purchaser’s own insurance coverage from and after the Closing Date.

 

(g) Any security deposit described by the Lease (and interest thereon if required by law or contract to be earned thereon) shall be transferred or credited to Purchaser at Closing. As of Closing, Purchaser shall assume Seller’s obligations related to Security Deposits which are actually transferred from Seller to Purchaser or for which Purchaser receives a credit.

 

Section 10. Notices.

 

Any Notice must be in writing and enclosed in a sealed wrapper, properly addressed, and either (i) delivered by Federal Express or a messenger service, with instructions for delivery on the same day or the next day which is not a Saturday, Sunday, or legal holiday, or (ii) deposited with the domestic mail service of the United States Postal Service at a post office or official depository under the care and custody of the United States Postal Service with sufficient postage prepaid, sent by United States registered or certified mail, return receipt requested. The addresses to which any Notice is to be sent are as follows:

 

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  to Seller: Grace Properties Olney, LLC
    Attention: Jake Hallsted
    24616 Kingsland Boulevard
    Katy, Texas 77494
    Email: j.hallsted@pearlandvinetx.com
     
  with a copy to  
  Seller’s Counsel: Cordray & Schneller
    Attention: Howard F. Cordray, Jr.
    3306 Sul Ross Street
    Houston, Texas 77098
    Email: hcordray@celgal.com
     
  to Purchaser: Assisted 4 Living, Inc.
    5115 FL-64
     
    Bradenton, Florida 34208
    Attn: Louis Collier
    Electronic Mail: loucoljr@outlook.com
  with a copy to  
  Purchaser’s Counsel: Bass, Berry & Sims PLC
    Attention: Angela Humphreys
    150 Third Avenue South, Suite 2800
    Nashville, Tennessee 37201
    Email: ahumphreys@bassberry.com

 

or to such other address within the continental United States as any addressee(s) shall specify in writing, which change of address, in order to be effective, must actually have been received not fewer than five (5) days prior to the giving of any such Notice. Any Notice sent by Federal Express or a messenger service shall be timely given if receipted for by such messenger service on or before 11:59 p.m. on the date the Notice is to be given; and any Notice sent by mail shall be timely given if deposited with the domestic mail service of the United States Postal Service on or before 11:59 p.m. of the date the Notice is to be given. Any Notice sent in accordance with the preceding sentence shall be deemed to have been received on the next day after the receipt for the Notice by a messenger service; or on the date of the first attempted delivery of the mailed Notice, as shown on the United States Postal Service’ return receipt. Notwithstanding any other provision of this Section 10 to the contrary, any Notice shall be effective from and after the date actually received by an addressee, however addressed or delivered.

 

Section 11. Broker; Commission.

 

At and conditioned upon the Closing, Seller agrees to pay a commission (the “Commission”) to Senior Living Investment Brokerage (“Broker”) pursuant to the terms of a separate agreement. Seller hereby represents and warrants to Purchaser that Seller has not contacted, contracted, or entered into any agreement with any real estate broker, agent, finder, or any other party (except Broker) in connection with this transaction and that Seller has not taken any action which would result in any real estate broker’s, finder’s or other fees, or commissions being due or payable to any other party with respect to the transaction contemplated hereby. Purchaser hereby represents and warrants to Seller that Purchaser has not contacted, contracted, or entered into any agreement with any real estate broker, agent, finder or any other party (except Broker) in connection with this transaction and that Purchaser has not taken any action which would result in any real estate broker’s, finder’s or other fees, or commissions being due or payable to any other party with respect to the transaction contemplated hereby. Each party hereby indemnifies and agrees to hold the other party harmless from any loss, liability, damage, cost, or expense (including reasonable attorneys’ fees) resulting to the other party by reason of a breach of the representation and warranty made by such party herein. Notwithstanding anything to the contrary contained herein, the indemnities set forth in this Section 11 shall survive the Closing for the maximum period of time permitted by law.

 

Section 12. Assignment; Binding Effect; No Third Party Beneficiary; Limited Liability of Seller.

 

(a) Purchaser may assign this Agreement to an entity owned and controlled by Purchaser, controlling Purchaser or under common control with Purchaser without Seller’s prior written consent; provided that Purchaser and Purchaser’s assignee execute an Assignment and Assumption Agreement and provide a copy thereof to Seller on the Closing Date; and further provided that Purchaser shall remain liable for the agreements, obligations, and duties of Purchaser under this Agreement irrespective of such assignment. Any other proposed assignment shall require the prior written consent of Seller, such consent not to be unreasonably withheld, conditioned or delayed.

 

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(b) Except for the Parties and their respective heirs, successors, legal representatives, and assigns, no person or entity has any rights or benefits under this Agreement, and no person or entity is a third party beneficiary of this Agreement.

 

Section 13. Remedies.

 

(a) If Purchaser does not purchase the Property at the Closing for any reason other than a right to terminate provided in this Agreement; or in the event of any default by Purchaser hereunder after a ten (10) day written notice and cure period; then, at such time or at any time thereafter, Seller, as its sole and exclusive remedy, shall be entitled (but not required) to terminate this Agreement by notifying Purchaser thereof, in which event neither Party shall have any further rights, duties, or obligations hereunder, except as provided in Sections 13(e) and 26(b) hereof; and Seller shall be entitled to demand and receive from the Title Company cash in the amount of the Earnest Money, as agreed, reasonable liquidated damages for such default or occurrence, which amount the Parties agree is not intended as a penalty. Seller and Purchaser agree that the Earnest Money is a reasonable sum of agreed liquidated damages under the circumstances, because of the difficulty, inconvenience, and uncertainty of ascertaining Seller’s actual damages in such circumstances.

 

(b) If Seller fails to perform any of Seller’s obligations hereunder after a ten (10) day written notice and cure period for any reason other than (i) Purchaser’s failure to tender performance of Purchaser’s obligations hereunder, (ii) the prior termination of this Agreement, or (iii) an uncured default by Purchaser hereunder, then, Purchaser may elect to either (i) terminate this Agreement in accordance with the provisions of Section 13(c) hereof whereupon neither party hereto shall have any further rights or obligations hereunder except for those provisions that survive the termination of this Agreement; (ii) waive such failure and purchase the Property as if such failure had not occurred, without any reduction in the Purchase Price or (iii) enforce specific performance of this Agreement; provided that if specific performance is not available due to Seller transferring or conveying the Property to a third party other than Purchaser, Purchaser shall immediately be refunded the Earnest Money and Seller shall reimburse all of Purchaser’s out-of-pocket costs and expenses incurred in connection with this Agreement and the transaction contemplated hereunder, including, without limitation, Purchaser’s contract negotiations, due diligence investigations, closing preparations and other activities incident to the performance of Purchaser’s obligations hereunder up to a maximum of Fifty Thousand and No/100 Dollars ($50,000.00).

 

(c) Provided Purchaser timely notifies Seller of Purchaser’s election to terminate this Agreement, this Agreement shall be terminated effective on the date Seller receives such notice from Purchaser, and thereafter neither Party shall have any further rights, duties, or obligations hereunder, except as provided in Sections 6(d), 7, 11, 13(e), 15, and 17 hereof or otherwise expressly set forth herein, and, Purchaser shall be entitled to demand and receive the Earnest Money (less the Independent Contract Consideration which shall be paid to Seller) from the Title Company. If Purchaser fails to timely notify Seller of Purchaser’s election to terminate this Agreement, Purchaser shall irrevocably be deemed to have waived Purchaser’s remedy of terminating this Agreement and to have elected the alternative to termination of this Agreement set forth in such particular Sections of this Agreement.

 

(d) The remedy of terminating this Agreement provided to Seller in Sections 3 and 13(a) hereof, and to Purchaser in Sections 5(d)(i), 6(c), 8(b)(ii), and 14 hereof, is the sole and exclusive remedy available to such Parties for the circumstances, events, and conditions set forth in such Sections, in lieu of all other remedies, at law or in equity.

 

(e) In the event either Party terminates this Agreement in accordance with the provisions hereof, each party covenants and agrees to immediately execute, acknowledge, and deliver to the other party a recordable release of this Agreement.

 

(f) Except as specifically provided herein, Purchaser shall not be able to pursue any action to recover damages against Seller for a default by Seller. Upon a Seller default, Purchaser shall be able to pursue an action for specific performance or terminate the Agreement by written notice to Seller at which time the Earnest Money will be refunded to Purchaser.

 

16
 

 

Section 14. Damage or Condemnation Prior to Closing; Seller Covenants.

 

(a) Risk of loss resulting from any condemnation or eminent domain proceeding that is completed before the Closing, and risk of loss to the Property due to fire, flood or any other cause before such Closing, shall remain with Seller. Should Seller receive notice of any condemnation or eminent domain proceedings against the Property or any damage due to any casualty event with respect to the Property prior to the Closing Date, Seller shall immediately inform Purchaser of such notice in writing. In the event any such proceedings or events are commenced or occurred or notice is given that such shall commence or occur, Purchaser may, at any time thereafter within thirty (30) days of such notice (a) terminate this Agreement, all Earnest Money being paid to Purchaser and thereupon, Seller and Purchaser shall be released of further obligation to each other except as otherwise provided herein, or (b) waive objection thereto and proceed to Closing, in which event the proceeds of any such award shall be received by Purchaser, Purchaser shall receive a credit in the amount of any applicable insurance deductible (in the case of a casualty), Seller shall assign, transfer and set over to Purchaser all of the right, title and interest of Seller in and to any awards that have been or that may thereafter be made for such taking, and Seller shall assign, transfer and set over to Purchaser any insurance proceeds that may thereafter be made for such damage or destruction, and the Purchase Price shall not be adjusted. If the Closing Date is within the aforesaid thirty (30) day period, then the Closing shall be extended to the next business day following the end of said thirty (30) day period. The Parties shall have the rights and duties set forth in this Section 14 rather than as prescribed by the Uniform Vendor and Purchaser Risk Act, Texas Property Code Section 5.007.

 

(b) Between the Effective Date and the earlier of the Closing Date or termination of this Agreement, Seller shall, at Seller’s sole cost and expense:

 

(i) operate, maintain, insure and repair the Property substantially in the same manner consistent with Seller’s operation, maintenance, insuring and repair of the Property prior to the Effective Date.

 

(ii) pay all utility and other service charges accrued through the date of Closing.

 

(iii) perform all obligations of Seller under all applicable laws, statutes, codes, acts, ordinances, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of all governmental authorities having jurisdiction over the Property.

 

(iv) subject to Section 14(a) above, repair all damage to the Property.

 

(v) promptly deliver to Purchaser copies of all written notices of violations of laws and promptly notify Purchaser of all judgments, claims and litigation affecting Seller or any part of the Property.

 

(vi) promptly after the delivery or receipt thereof, deliver to Purchaser copies of all written notices concerning Seller or the Property, which relate to the Lease, releases of hazardous materials affecting the Property or any actual or threatened condemnation of the Property or any portion thereof given by or on behalf of any federal, state or local agency, and copies of all other written correspondence sent, filed, served on or received by Seller from any federal, state or local agency affecting the Property from and after the Effective Date.

 

(vii) perform all of Seller’s obligations under the Leases.

 

(c) Between the Effective Date and the earlier of the Closing Date or termination of this Agreement, Seller shall not do, suffer or permit, or agree to do, any of the following, except to the extent permitted under this Agreement:

 

(i) sell, assign or otherwise convey, or create any right, title or interest whatsoever in or to the Property or any portion thereof or create or permit to exist any lien, assessment, encumbrance or charge thereon.

 

(ii) cancel, amend or modify any certificate, approval, license or permit held by Seller with respect to the Property or any part thereof which would be binding upon Purchaser after the Closing.

 

17
 

 

(iii) approve any assignment or sublease or modify, extend or otherwise change any of the terms, covenants or conditions of the Lease or enter into any new lease or enter into any other obligations or agreements affecting the Property.

 

(iv) transfer, sell or otherwise dispose of the Property.

 

(v) change or attempt to change the current zoning of the Property.

 

(vi) incur any liability or obligation or enter into any agreement, written or otherwise, with respect to the Property, or any part thereof, the term of which extends beyond the Closing Date, or which would obligate Purchaser to assume and pay the same.

 

(vii) enter into any easement, servitude, covenant, restriction, or right of way for or burdening the Property, or any part thereof.

 

Section 15. Indemnity by a Party.

 

When one Party agrees to indemnify the other Party in this Agreement, at the sole cost and expense of the indemnifying Party, the indemnifying Party shall indemnify, keep indemnified, defend, and hold the indemnified Party harmless from and against any and all claims, demands, actions, causes of action, damages, losses, liabilities, fees (including reasonable attorney’s fees), costs (including costs of court), and expenses in any way or manner whatsoever attributable to any action, conduct, omission, or failure to act by the indemnifying Party, or any employee, agent, attorney, officer, director, independent contractor, licensee, invitee, or any other person or entity whatsoever acting or allegedly acting for or on behalf of the indemnifying Party, with respect to the matter(s) being indemnified against, including, without limitation, those due to personal injury or death. The indemnification provisions contained in this Section 15 shall survive the Closing Date for twelve (12) months.

 

Section 16. Entire Agreement.

 

This Agreement contains the entire agreement between the Parties concerning the Property. This Agreement supersedes all prior and contemporaneous oral and written representations, warranties, covenants, and agreements by or between the Parties with respect to the Property.

 

Section 17. Attorneys’ Fees.

 

If either Party employs an attorney to enforce or protect such Party’s interests arising under this Agreement or any other document executed by such Party in connection herewith, the non-prevailing Party in any such action, the finality of which is not legally contestable, agrees to pay to the prevailing Party all reasonable attorneys’ fees expended or incurred by the prevailing Party in connection therewith.

 

Section 18. Time is of the Essence.

 

TIME IS OF THE ESSENCE IN THE PERFORMANCE OF EACH PARTY’S RESPECTIVE OBLIGATIONS HEREUNDER.

 

Section 19. Saturday, Sunday, and Legal Holidays; Times.

 

If any date for the performance of any matter under this Agreement (including the date for the giving of Notice and the date on which any Notice is deemed to have been received, pursuant to Section 10 hereof) falls on a Saturday, Sunday, or legal holiday observed by national banks in Harris County, Texas, then such date shall be extended to the next calendar day that is not a Saturday, Sunday, or such legal holiday. All references herein to a particular time on a particular date shall refer to Central Time.

 

18
 

 

Section 20. Presumption Concerning Interpretation and Construction.

 

Although the first draft of this Agreement was prepared by counsel for Seller, both Parties and their respective counsel have reviewed and participated in the drafting of the final form of this Agreement. Accordingly, in the event of any conflict or ambiguity in the provisions of this Agreement, there shall be no presumption in favor of either Party with respect to the interpretation or construction hereof.

 

Section 21. Section Headings.

 

The headings of the various Sections in this Agreement are for the convenience of the Parties and do not alter, modify, or limit the provisions thereof and shall not be used in construing or interpreting the provisions thereof.

 

Section 22. No Recordation.

 

Neither Party shall file or record this Agreement or any evidence or memorandum of this Agreement in any public records. A violation of this provision shall constitute a default by such applicable Party hereunder.

 

Section 23. Severability.

 

This Agreement is intended to comply with and be performed in accordance with (and only to the extent permitted by) all applicable laws, statutes, ordinances, rules, and regulations. If any provision of this Agreement is held to be invalid or unenforceable for any reason or to any extent, the remainder of this Agreement shall not be affected thereby, and each provision of this Agreement shall be valid and enforced to the fullest extent not prohibited by law.

 

Section 24. Waivers and Modifications.

 

No delay on the part of a Party in exercising any rights or remedies hereunder shall operate as a waiver thereof, nor shall any specific waiver by a Party of any right or remedy hereunder operate or be construed as a waiver of any other right or remedy hereunder nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof, or the exercise of any other right or remedy hereunder (unless the provisions of this Agreement which establish any such right or remedy provide otherwise). No waiver of any right or remedy hereunder shall be valid or enforceable unless in writing and signed by the Party against whom such waiver is sought to be enforced. No modification of this Agreement shall be effective unless it is in writing and signed by both Parties.

 

Section 25. Governing Law; Venue.

 

The Parties acknowledge that this Agreement has been negotiated, executed, and delivered in the State of Texas, is intended to be performed wholly in the State of Texas, and the substantive laws of the State of Texas (without reference to choice of law principles) shall govern the interpretation and enforcement of this Agreement. The Parties agree that any court action brought to interpret or enforce any provision(s) of this Agreement, or otherwise relating to or arising from this Agreement, shall be commenced and maintained only in the District or County Court of Harris County, Texas (whichever court has amount-in-controversy jurisdiction), and each of the Parties irrevocably consents to exclusive jurisdiction and venue in such court for such purposes.

 

Section 26. Materiality, Survival.

 

(a) The representations, warranties, covenants, and agreements expressly set forth herein are material and have been relied on by the Parties in entering into this Agreement. Except as provided in Section 26(b) hereof, all such representations, warranties, covenants, and agreements shall not survive the Closing or a termination of this Agreement.

 

(b) Notwithstanding the Closing of the transaction contemplated in this Agreement or a termination of this Agreement, the provisions of Sections 6(d), 7, 9, 11, 13(e), 15, and 17 hereof and all other provisions of this Agreement which are described as surviving the Closing or a termination of this Agreement shall survive the Closing or a termination of this Agreement.

 

19
 

 

Section 27. Relationship of Parties.

 

Nothing contained in this Agreement shall be deemed or construed by any Party, person, or entity as creating any relationship of principal and agent, of partnership, of joint venture, or of any association whatsoever between the Parties. No provision of this Agreement and no act or failure to act of the Parties shall be deemed to create any relationship between the Parties other than the relationship of a buyer and a seller.

 

Section 28. Number and Gender of Words.

 

Whenever any number (singular or plural) is used herein, the same shall include and apply to any one or more thereof, and to each thereof, jointly and severally, and words of any gender shall include each other gender.

 

Section 29. Counterparts.

 

This Agreement may be executed in multiple counterparts, each of which is an original, but all of which shall constitute but one and the same document. The signatures of the Parties and the Title Company may appear on multiple separate signature pages.

 

Section 30. WAIVER OF CONSUMER RIGHTS.

 

AS A MATERIAL INDUCEMENT TO SELLER TO ENTER INTO THIS AGREEMENT, WITHOUT WHICH INDUCEMENT PURCHASER ACKNOWLEDGES THAT SELLER WOULD NOT ENTER INTO THIS AGREEMENT, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, WITHOUT RESERVATION, PURCHASER HEREBY EXPRESSLY WAIVES ALL OF PURCHASER’S RIGHTS UNDER THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. PURCHASER HEREBY EXPRESSLY WARRANTS, REPRESENTS, AND CERTIFIES TO SELLER THAT (A) PURCHASER IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION AS TO ANY PROVISION OF THIS AGREEMENT OR AS TO ANY MATTER CONTAINED HEREIN; (B) PURCHASER IS EXPERIENCED IN THE PURCHASE OF REAL PROPERTY AND THE ANALYSIS OF REAL PROPERTY; AND (C) PURCHASER IS REPRESENTED BY LEGAL COUNSEL OF PURCHASER’S OWN CHOOSING IN SEEKING, ACQUIRING, AND PURCHASING THE PROPERTY AND IN NEGOTIATING THE TERMS OF THIS AGREEMENT. AFTER CONSULTATION WITH AN ATTORNEY OF PURCHASER’S OWN SELECTION, PURCHASER VOLUNTARILY CONSENTS TO THIS WAIVER.

 

Section 31. NOTICE REGARDING POSSIBLE LIABILITY FOR ADDITIONAL TAXES.

 

If for the current ad valorem tax year the taxable value of the Property that is the subject of this Agreement is determined by a special appraisal method that allows for appraisal of the Property at less than market value, the person to whom the Property is transferred may not be allowed to qualify the Property for that special appraisal in a subsequent tax year and the Property may then be appraised at its full market value. In addition, the transfer of the Property or a subsequent change in the use of the Property may result in the imposition of an additional tax plus interest as a penalty for the transfer or the change in the use of the Property. The taxable value of the Property and the applicable method of appraisal for the current tax year is public information and may be obtained from the tax appraisal district established for the County in which the Property is located.

 

Section 32. NOTICE REGARDING POSSIBLE ANNEXATION.

 

If the Property that is the subject of this Agreement is located outside the limits of a municipality, the Property may now or later be included in the extraterritorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and extraterritorial jurisdiction. To determine if the Property is located within a municipality’s extraterritorial jurisdiction or is likely to be located within a municipality’s extraterritorial jurisdiction, contact all municipalities located in the general proximity of the Property for further information.

 

20
 

 

Section 33. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

EXECUTED in multiple original counterparts on the date written below the respective signatures of the Parties.

 

SELLER:   PURCHASER:
         
GRACE PROPERTIES OLNEY, LLC, a Texas limited liability company   REAL LIVING PROPERTY HOLDINGS – TEXAS, LLC, a Texas limited liability company
         
By: /s/ Jake Hallsted    By: /s/ Louis Collier 
  Jake Hallsted, President    

Louis Collier, Chief Executive Officer

         
Date: June 21, 2021   Date:

June 21, 2021

 

21
 

 

As of the date shown below defined as the Effective Date, the Title Company hereby acknowledges receipt of this Agreement executed by Seller and Purchaser. The Title Company agrees to immediately deliver to Seller, Seller’s counsel, Purchaser, and Purchaser’s counsel (if any, named in Section 10 hereof) a copy of this Agreement executed by both Parties and the Title Company. The Title Company has assigned this Agreement GF No. _________________________.

 

  FIDELITY NATIONAL TITLE AGENCY, INC.
     
  By:  
  Name:  
  Title:  
     
  Date:   , 2021
    (the “Effective Date”)

 

On _________________, 2021, the Title Company received $_______________, representing the Earnest Money required hereunder. The Title Company hereby agrees to hold and disburse the Earnest Money and all other funds received by the Title Company in accordance with the provisions of this Agreement.

 

  FIDELITY NATIONAL TITLE AGENCY, INC.
     
  By:  
  Name:  
  Title:

 

22
 

 

EXHIBIT “A”

 

TRACT ONE:

 

BEING ALL OP LOTS NO. ONE (1), TWO (2), NINE (9) AND TEN (10), ALL IN BLOCK NO. FOUR (4), WESTERN HEIGHTS ADDITION, an addition to the City of Olney, Young County, Texas, as shown by map or plat in Volume 2, Pages 115 and 220, Plat Records of Young County, Texas.

 

TRACT TWO:

 

A strip of land being 20’ by 300’ between Lots One (1) and Two (2) and Nine (9) and Ten (10) in Block No. Four (4), of the Western-Heights Addition, an addition to thenCity of Olney, Young County, Texas, being an abandoned alleyway, as shown by plat in Volume 1, Pages 115 and 220, Plat Records of Young County, Texas, Tracts ONE and TWO being more particularly described by metes and bounds as follows:

 

BEGINNING at a spike found at the Southeast corner of Lot 1, Block 4, Western Heights Addition to the City of Olney, Texas according to the plat recorded in Volume 1, Pages 115 and 220, Young County Plat Records, said spike being the intersection of the West line of Western Avenue and the North line of Elm Street;

 

THENCE with the North line of Elm Street, North 72.degrees 35 minutes West 300.05 feet to an iron rod set at the Southwest corner of Lot 2, of said Block 4, for the Southwest corner of this tract; THENCE with the West line of Lot, 2, North 17 degrees 25 minutes East at 140.0 feet pass its Northwest corner and the South line of an abandoned alley, at 160.0 feet pass the North line of abandoned alley and the Southwest corner of Lot 10 of said Block 4, continuing North 17 degrees 25 minutes East, in all a distance of 300.00 feet to an iron rod found at the Northwest corner of Lot 10, said iron rod being on the South line of Oak Street, for the Northwest corner of this tract;

 

THENCE with the North line of said Block 4, and the South line of Oak Street, South 72 degrees 25 minutes East 299.92 feet to an iron rod found at the Northeast corner of said Block 4, said iron rod being the intersection of the South line of Oak Street and the West line of Western Avenue, for the Northeast corner of this tract;

 

THENCE with the East line of said Block 4, and the West line of Western Avenue, South 17 degrees 23 minutes 30 seconds West 300.00 feet to the PLACE OF BEGINNING and containing 2.066 acres of land.

 

A-1
 

 

EXHIBIT “B” 1

 

SPECIAL WARRANTY DEED

 

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

 

THE STATE OF TEXAS §      
         
    §   KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF [YOUNG]   §    

 

THAT [GRACE PROPERTIES OLNEY, LLC, a Texas limited liability company] (“Grantor”), for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) and other good and valuable consideration to Grantor in hand paid by ____________________________________________ (“Grantee”), whose mailing address is ______________________________________________________________________________ the receipt and sufficiency of which consideration is hereby acknowledged and confessed, subject to all of the matters set forth or referred to herein, has GRANTED, SOLD, AND CONVEYED, and by these presents does GRANT, SELL, AND CONVEY, unto Grantee all that certain tract or parcel of land containing approximately 2.066 acres, (the “Land”) lying and being situated in the State of Texas and County of Young, more particularly described on Exhibit “A” attached hereto and made a part hereof for all purposes together with all rights and appurtenances thereto in anywise belonging to Grantor (the “Property”).

 

THIS CONVEYANCE is made and accepted subject to all matters of record listed on Exhibit “B” (the “Permitted Exceptions”) attached hereto and made part hereof for all purposes.

 

TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereto in any wise belonging unto Grantee, its successors and assigns, forever; and, subject to all of the matters set forth or referred to herein, Grantor does hereby bind itself and its successors to WARRANT and FOREVER DEFEND all and singular the Property unto Grantee, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same, or any part thereof, by, through, or under Grantor, but not otherwise.

 

AD VALOREM TAXES with respect to the Property for the current year have been prorated as of the date hereof and Grantee assumes and agrees to pay the same.

 

GRANTOR HAS EXECUTED and delivered this Special Warranty Deed and has granted, bargained, sold, and conveyed the Property, and Grantee has received and accepted this Special Warranty Deed and has purchased _______________the Property, AS IS, WHERE IS, AND WITH ALL FAULTS, AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER EXCEPT FOR THE SPECIAL WARRANTY OF TITLE AS HEREIN PROVIDED OR AS EXPRESSLY SET FORTH IN THAT CERTAIN PURCHASE AND SALE AGREEMENT DATED __________, 2021 BY AND BETWEEN GRANTOR AND GRANTEE FOR THE PURCHASE AND SALE OF THE PROPERTY, EXPRESS OR IMPLIED, WRITTEN OR ORAL.

 

B-1
 

 

EXECUTED effective as of the _______ day of _____________, 202___.

 

  [GRACE PROPERTIES OLNEY, LLC, a Texas
  limited liability company]
   
  By:  
  Name:  
  Title:  

 

STATE OF TEXAS   §  
       
    §  
       
COUNTY OF HARRIS §    

 

BEFORE ME, the undersigned authority, on this day personally appeared _________________, known to me to be the person whose name is subscribed to the foregoing instrument, and he acknowledged to me that he is the _________________ of Grace Properties Olney, LLC, a Texas limited liability company, and that he executed the same for the purposes and consideration therein expressed in the capacity therein stated and as the act and deed of said limited liability companies, limited partnerships, and joint venture.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the _______ day of _____________, 202__.

 

STAMP NAME AND DATE OF    
EXPIRATION OF COMMISSION   NOTARY PUBLIC, STATE OF TEXAS
BELOW:    

 

B-2
 

 

RECEIVED, ACCEPTED, AND AGREED

 

TO BY GRANTEE:

 ____________________________________

 

By:    
Name:    
Title:    

 

THE STATE OF ________ §  
     
  §  
     
COUNTY OF ___________ §  

 

BEFORE ME, the undersigned authority, on this day personally appeared ____________________________________________, __________________________ of _____________________________________________, a ____________________________, known to me to be the person whose name is subscribed to the foregoing instrument, and he acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated and as the act and deed of said ____________________________.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the _______ day of _____________, 202__.

 

STAMP NAME AND DATE OF    
EXPIRATION OF COMMISSION   NOTARY PUBLIC, STATE OF ____________
BELOW:    
     
AFTER RECORDING RETURN TO:    

 

B-3

 

 

Exhibit 2.2

 

MANAGEMENT TRANSFER AGREEMENT

 

BY AND BETWEEN

 

GCC OLNEY, LLC, a Texas limited liability company

 

and

 

Olney Health and Rehab Center, LLC, a Texas limited liability company

 

 

Dated: June 21, 2021

 

 
 

 

Term     Page Number
       
ARTICLE I ASSETS, LIABILITIES, AND OTHER MATTERS 2
  1.1 Transferred Assets 2
  1.2 Excluded Liabilities 3
  1.3 Transfer of Resident Trust Funds 3
  1.4 Employees 3
  1.5 Management Fees and Accounts Receivable 5
  1.6 Prorations 8
  1.7 Access to Records 8
  1.8 Assumed Operating Contracts 9
  1.9 Operating Procedures Manuals 10
  1.10 Limitation 10
  1.11 Cost Report 10
  1.12 Provider Contracts 11
       
ARTICLE II THE CLOSING 11
       
  2.1 Time and Place of Closing 11
       
ARTICLE III TRANSFEROR’S REPRESENTATIONS AND WARRANTIES 12
       
  3.1 Organization and Standing of Transferor 12
  3.2 Authority 12
  3.3 Binding Effect 12
  3.4 Assets 12
  3.5 Licenses and Permits 12
  3.6 Surveys, etc 12
  3.7 Claims 13
  3.8 Collective Bargaining Agreements 13
  3.9 Compliance 13
  3.10 Cost Reports 16
  3.11 Real Estate Taxes 16
  3.12 Loan Defaults 16
  3.13 Provider Agreements 17
  3.14 Financial Statements 17
  3.15 Material Adverse Effect 17
  3.16 QIPP Documents 17

 

-ii-
 

 

ARTICLE IV NEW MANAGER’S REPRESENTATIONS AND WARRANTIES 18
       
  4.1 Organization and Standing of New Manager 18
  4.2 Authority 19
  4.3 Binding Effect 19
       
ARTICLE V OBLIGATIONS OF THE PARTIES 19
       
  5.1 Applications and Filings 19
  5.2 Management of Facility 20
       
ARTICLE VI CONDITIONS PRECEDENT TO NEW MANAGER’S OBLIGATIONS 22
       
  6.1 Representations and Warranties 22
  6.2 Performance of Covenants 22
  6.3 Delivery of Closing Certificate 22
  6.4 Transferred Assets at Closing 22
  6.5 Assignment and Assumption of Contracts 22
  6.6 Assignment and Assumption of Management Agreement 22
  6.7 Termination of Existing Lease 22
  6.8 PSA Closing 22
  6.9 Resident Trust Funds 23
  6.10 Other Documents 23
  6.11 Tenant’s Consent 23
  6.12 Compliance 23
  6.13 License 23
  6.14 Exhibits and Schedules 23
       
ARTICLE VII CONDITIONS PRECEDENT TO TRANSFEROR’S OBLIGATIONS 24
       
  7.1 Representations and Warranties 24
  7.2 Performance of Covenants 24
  7.3 Delivery of Closing Certificate 24
  7.4 Assignment and Assumption of Contracts 24
  7.5 Assignment and Assumption of Management Agreement 24
  7.6 Termination of Existing Lease 24
  7.7 PSA Closing 24
  7.8 Resident Trust Funds 24
  7.9 Tenant’s Consent 24
  7.10 Other Documents 24

 

-iii-
 

 

ARTICLE VIII SURVIVAL AND INDEMNIFICATION 24
       
  8.1 Indemnification by Transferor 24
  8.2 Indemnification by New Manager 25
  8.3 Procedure 25
  8.4 Limitations 26
  8.5 Exclusive Remedy 26
  8.6 Insurance Recoveries 26
  8.7 Survival 26
       
ARTICLE IX TERMINATION 27
       
  9.1 Termination 27
  9.2 Effect of Termination 28
       
ARTICLE X MISCELLANEOUS PROVISIONS 28
       
  10.1 Drafting 28
  10.2 Public Announcements 28
  10.3 Costs and Expenses 28
  10.4 Performance 28
  10.5 Benefit and Assignment 29
  10.6 Effect and Construction of this Agreement 29
  10.7 Notices 29
  10.8 Waiver, Discharge, etc 30
  10.9 Governing Law; Disputes 30
  10.10 Further Assurances 30
  10.11 Third-Party Beneficiaries 30
  10.12 Counterparts 30
  10.13 Costs and Attorneys’ Fees 30
  10.14 Severability 30
  10.15 Entire Agreement 30

 

-iv-
 

 

MANAGEMENT TRANSFER AGREEMENT

 

This Management Transfer Agreement (“Agreement”), dated as of June 21, 2021 (the “Execution Date”), is by and between GCC OLNEY, LLC, a Texas limited liability company (the “Transferor”), Olney Health and Rehab Center, LLC, a Texas limited liability company (the “New Manager”).

 

WHEREAS, pursuant to a Lease, dated effective as of October 1, 2014 (as amended, the “Existing Lease”), between Olney-Hamilton Hospital District, a body politic and corporate and a political subdivision of the State of Texas, as tenant (the “Tenant”) and Grace Properties Olney, LLC, a Texas limited liability company (“Landlord”), Tenant currently leases from Landlord the skilled nursing facility known as Grace Care Center of Olney, located at 306 Carolyn Road, Olney, TX 76255 (the “Facility”);

 

WHEREAS, Tenant is the current licensed operator of the Facility;

 

WHEREAS, Transferor entered into a Management Agreement with Tenant, dated effective as of September 1, 2017 (the “Management Agreement”), pursuant to which Tenant engaged Transferor to manage the day-to-day activities of the Facility;

 

WHEREAS, pursuant to that certain Purchase and Sale Agreement, dated the date hereof (the “PSA”), between Landlord and Real Living Property Holdings-Texas, LLC, a Texas limited liability company (“Buyer”), Landlord has agreed to sell the real property, improvements, and certain other assets comprising the Facility (the “PSA Assets”) to Buyer, and Buyer has agreed to purchase the PSA Assets from Landlord;

 

WHEREAS, effective as of the closing under the PSA, Buyer shall lease the PSA Assets to New Manager and New Manager shall manage the PSA Assets for Tenant; and

 

WHEREAS, the parties wish to provide for an orderly transition of the operations of the Facility from the Transferor to the New Manager simultaneously with the transfer of the PSA Assets to Buyer pursuant to the PSA.

 

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

 

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ARTICLE I
ASSETS, LIABILITIES, AND OTHER MATTERS

 

1.1 Transferred Assets. Subject to the terms and conditions of this Agreement, at the Effective Time (as defined below), Transferor will transfer, free and clear of any charge, claim, equitable interest, license, lien, option, pledge, security interest, mortgage, encroachment, easement or restriction of any kind (“Encumbrance”), to New Manager all of Transferor’s right, title and interest in and to all assets, properties and rights used or held for use in the management and operation by Transferor of the Facility (the “Business”), other than Excluded MTA Assets, including, but not limited to, the following: (a) all furniture, fixtures, furnishings, equipment, computers, machinery, mechanical systems, security and alarm systems, nurse call systems, automobiles, vans, buses or other vehicles or equipment used in connection with the Facility and the Business and all other tangible personal property located at or used in connection with the operation of the Facility, including, without limitation, all supplies, inventory, consumables, perishable and non-perishable food products, and other similar property used in the operation of the Facility (“Inventory”); (b) all contracts used or held for use in the Business, other than the Excluded Contracts (collectively, the “Assumed Contracts”); (c) subject to Section 1.7, all books, data and records (including Word files, Excel files, PowerPoint files and other electronic versions thereof) related exclusively to the operation of the Facility, including emails, financial and accounting records, contacts, calendars, customer lists, referral source lists, regulatory surveys and reports, incident tracking reports, advertising and marketing materials and competitive analyses, all policy and procedure manuals, all records and reports (except for such records and reports where transfer is prohibited by applicable laws) relating to any or all residents residing at the Facility from time to time on or after the Execution Date, but only to the extent such residents remain residents on the Closing Date, or relating to residents residing at the Facility prior to the Execution Date but who are the subject of any claim, inquiry, audit, order, or proceeding by any governmental authority or otherwise, made or occurring on or after the Execution Date, all employee records, but only to the extent such employee records are for Hired Employees, all leads regarding prospective residents, all blueprints, construction and architects’ plans and drawings, and all engineering data and reports; and copies of all such books, data and records that relate not only to the operation of the Facility but also to operations retained by Transferor or its affiliates; (d) all security deposits, prepaid rent, move-in fees, utility deposits, other prepaid items and deposits related to the Facility and residents’ personal funds accounts, subject to the terms and conditions of the applicable residency agreements, tenant leases and any other written agreements provided to New Manager under which personal funds are held (collectively, “Trust Funds”); (e) (i) the trademarks, trade names, service marks, domain names and all variations thereof used exclusively in connection with the Business; (ii) all telephone and facsimile numbers relating solely to the Facility (including all “800” numbers) and all post office box addresses associated solely with the Facility; and (iii) all other intellectual property used exclusively in connection with the Business; and (f) all right, title and interest of Transferor in any and all other items of tangible and intangible personal property used or useful in connection with the leasing, use, operation, management or maintenance of the Facility, and all goodwill of Transferor associated with the Business (collectively, “Transferred Assets”); provided, however, that to the extent any of the foregoing assets are leased assets, or vendor owned assets, then such assets shall be excluded from the Transferred Assets, unless New Manager agrees to assume the underlying leases or vendor contracts, as applicable, related to such leased assets or vendor owned assets. Notwithstanding anything to the contrary contained in this Agreement, the following assets of Transferor shall not be transferred to New Manager and shall not constitute Transferred Assets: cash, cash equivalents, accounts receivable, notes receivable, employee benefit plans, capital stock, tax refunds, equipment or other items that are leased pursuant to leases that are not assigned to New Manager, and other items and contracts specifically designated as an excluded asset on Schedule 1.1 (collectively, the “Excluded MTA Assets), which such schedule may be updated by New Manager prior to Closing, including to add contracts that New Manager elects to not assume. In furtherance of the foregoing, at the Closing, Transferor will execute and deliver to New Manager a Bill of Sale and Assignment and Assumption Agreement (“Bill of Sale”) substantially in the form of Exhibit 1.1.

 

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1.2 Excluded Liabilities. Except as expressly provided in this Agreement, New Manager shall not assume any claims, lawsuits, liabilities, obligations or debts of Transferor (“Excluded Liabilities”), including without limitation: (a) malpractice or other tort claims to the extent based on acts or omissions of Transferor or its employees or contractors occurring before the Effective Time, or claims for breach of contract or for indemnification to the extent based on acts or omissions of Transferor or its employees or contractors occurring before the Effective Time; (b) any accounts payable, taxes, or other obligation or liability of Transferor to pay money incurred by Transferor prior to the Effective Time; and (c) any other obligations or liabilities incurred by Transferor prior to the Effective Time. Transferor agrees to timely perform and discharge all Excluded Liabilities.

 

1.3 Transfer of Trust Funds.

 

(a) At the Closing, Transferor shall deliver to New Manager a list that, to the best of its knowledge, will be a true, correct and complete description of any Trust Funds held by Transferor as of the Effective Time.

 

(b) Effective as of the Effective Time, Transferor shall transfer all of Transferor’s right, title and interest in the Trust Funds and New Manager shall assume all of Transferor’s right, title and interest in and to the Trust Funds in trust for the residents or tenants, as applicable, in accordance with applicable statutory and regulatory requirements. Within ten (10) business days after the Closing Date, Transferor will reconcile and pay over the Trust Funds to New Manager, in trust for the residents or tenants, as applicable, along with a true, correct and complete accounting of the Trust Funds.

 

1.4 Employees.

 

(a) Attached hereto as Schedule 1.4 is a schedule (“Employee Schedule”) which reflects, as of the Execution Date, a listing of all Facility-based employment positions, rates of pay, earned but unused paid time off (“PTO”) and original hire dates, as well as which, if any, employees are then on medical disability or leaves of absence and their status as exempt or non-exempt. Transferor will terminate the employment of each of the Facility Employees (as defined below) as of the Effective Time. Transferor represents and warrants the Employee Schedule is true, accurate and complete as of the Execution Date and will be true, accurate and complete as of the Effective Time (provided, that Transferor shall update such Employee Schedule no later than three business days prior to Closing to reflect changes thereto between the Execution Date and the Closing Date).

 

(b) On or before the Effective Time, New Manager or its affiliate or a third-party contractor designated by New Manager (“New Employer”) shall offer to hire, on a probationary basis, each of Transferor’s employees who is employed at the Facility as of the Effective Time (“Facility Employees”), including any such employees who are on medical disability or leaves of absence and who worked at the Facility immediately prior to such disability or leave. Any such offer of employment to a Facility Employee by New Employer shall be to perform comparable services, in such position as is comparable to the position such Facility Employee held with Transferor as of the Effective Time, provided that New Employer may offer compensation to such Facility Employees at levels commensurate with compensation levels paid to other employees of New Employer or its affiliates holding comparable positions so long as any change in compensation levels does not result in any constructive discharge of any such Facility Employee or the breach of any employment contract assumed by New Employer hereunder. Transferor shall have the right (but not the obligation) to employ or offer to employ any Facility Employee who declines New Employer’s offer of employment.

 

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(c) New Employer shall hire at the Effective Time, on a probationary basis, each Facility Employee who elects to accept employment with New Employer in accordance with the terms of Section 1.4(b) (all of such employees who accept employment with New Employer being herein called “Hired Employees”) and shall indemnify and hold Transferor harmless from and against any losses arising from or relating to any subsequent termination of any such employee by New Employer.

 

(d) Transferor will be responsible at Transferor’s own cost and expense for (i) the payment of any termination or severance payment for any current or former employee of Transferor who is not a Hired Employee and for all amounts owing or accruing with respect to any employee prior to the Effective Time and (ii) the provision of health plan continuation coverage (including administrative and notice obligations) under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), or any other law, under any benefit plan with respect to any M&A qualified beneficiaries as such term is defined in Section 54.4980 B-9 (Q&A 4) of U.S. Treasury regulations. Except as set forth in Section 1.4(f), Transferor will be liable for any claims made or incurred by its employees and their beneficiaries under any benefit plan maintained by or for the benefit of Transferor, and neither New Employer nor its affiliates will have any responsibility, liability or obligation, to such employees, their beneficiaries or any other person with respect to any benefit plan maintained by or for Transferor.

 

(e) Transferor shall pay to each Facility Employee, on that date which, but for the Closing, would have been the next regularly scheduled payroll date for such employee following the Closing, an amount equal to any and all accrued salary earned by such employee as of the Effective Time.

 

(f) New Employer shall assume liability for all earned but unused PTO of each Hired Employee as of the Closing Date. At the Closing, Transferor shall pay to New Employer an amount equal to the cash value of all earned but unused PTO for the Hired Employees (as determined in accordance with Transferor’s policies and procedures and subject to any applicable collective bargaining agreement) as of such date and is assumed by New Employer. Transferor shall pay to each Facility Employee who is not a Hired Employee, the cash value of all earned but unused PTO for such employee.

 

(g) Nothing in this Agreement shall create any rights in favor of any person not a party hereto, including the Facility Employees, or constitute an employment agreement or condition of employment for any employee of Transferor.

 

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(h) As of the Effective Time, all Hired Employees who, immediately prior to the Effective Time, participated in group health insurance coverage sponsored by Transferor, shall be eligible for participation in a group health plan (as defined for purposes of Internal Revenue Code Section 4980B) established and maintained by New Employer. To the extent permissible under the plan of New Employer, all such Hired Employees shall be covered pursuant to New Employer’s group health and/or benefit plan, unless they are under a waiting period with Transferor at the Effective Time, in which case they shall be required to complete their waiting period while under New Employer’s plan or in accordance with the terms of New Employer’s benefit plan.

 

(i) New Manager acknowledges and agrees that the provisions of Sections 1.4(b) and (c) are designed, in part, to ensure that Transferor is not required to give notice to employees of the Facility at the “closure” thereof under the Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any comparable state law.

 

(j) Subsequent to the Effective Time, New Manager shall allow Transferor and its agents and representatives to have reasonable access (upon reasonable prior notice and during normal business hours) to all Hired Employees, to the extent reasonably necessary to enable Transferor to investigate and defend employee or other claims, or for any other reasonable purpose.

 

1.5 Management Fees and Accounts Receivable.

 

(a) Notwithstanding anything to the contrary herein or in the Assignment and Assumption of Management Agreement, Transferor owns and shall retain its right, title and interest in and to all unpaid fees under the Management Agreement that relate to services provided prior to the Effective Time, including, but not limited to, any fees arising from rate adjustments which relate to the period prior to the Effective Time even if such adjustments occur on or after the Effective Time.

 

(b) Payments received by Transferor or New Manager after the Effective Time with respect to the Facility from the Tenant or from third-party payors, such as the Medicare Program, the Medicaid Program, the Veteran’s Administration, or managed care companies or health maintenance organizations or on behalf of private pay patients, shall be handled as follows:

 

(i) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate solely to periods prior to the Effective Time, then (A) in the event that such payments are received by New Manager, New Manager shall promptly deposit such payments directly into Transferor’s operating account for the Facility (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment, and until so deposited, shall be held in trust for the benefit of Transferor and will be paid to Transferor) and (B) in the event that such payments are received by Transferor, Transferor shall retain the payments;

 

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(ii) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate solely to periods after the Effective Time, then (A) in the event that such payments are received by New Manager, New Manager shall retain the payments and (B) in the event that such payments are received by Transferor, Transferor shall promptly forward such payments to New Manager (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment, and until so deposited, shall be held in trust for the benefit of New Manager and will be paid to New Manager without setoff or withholding of any kind);

 

(iii) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate to periods both prior to and after the Effective Time, then, (A) if such payment is received by New Manager, New Manager shall promptly deposit the same in its depository institution for negotiation and collection and promptly following receipt by New Manager of collected funds of such payment (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment) New Manager shall deposit into Transferor’s operating account for the Facility the amount of such payment relating to periods prior to the Effective Time, and (B) if such payment is received by Transferor, Transferor shall promptly deposit the same in its depository institution for negotiation and collection and promptly following receipt by Transferor of collected funds of such payment (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment) Transferor shall forward to New Manager the amount of such payment relating to periods following the Effective Time.

 

(iv) With respect to a payment received within sixty (60) days after the Closing Date, if the accompanying remittance advice does not indicate the period to which a payment relates or if there is no accompanying remittance advice and if the parties do not otherwise agree as to how to apply such payment, then, for the purposes of subparagraph (iii), above, the parties will be deemed to have agreed that such payment shall be applied first to the payor’s pre-Effective Time balances and that any remaining portion shall be applied to such payor’s post-Effective Time balances. With respect to non-designated payments received more than sixty (60) days after the Closing Date, such payments will first be applied 100% to any balances relating to post-Effective Time, with the excess, if any, applied to the extent of any balances due for services rendered pre-Effective Time.

 

(v) Notwithstanding anything contained herein to the contrary, any payments received with respect to the Quality Incentive Payment Program (a “QIPP Payment”) within two (2) years after the Closing Date, if the accompanying remittance advice does not indicate the period to which such QIPP Payment relates or if there is no accompanying remittance advice and if the parties do not otherwise agree as to how to apply such QIPP Payment, then, for the purposes of subparagraph (iii), above, the parties will be deemed to have agreed that such QIPP Payment shall be applied first to the payor’s pre-Effective Time balances and that any remaining portion shall be applied to such payor’s post-Effective Time balances. With respect to non-designated QIPP Payments received more than two (2) years after the Closing Date, such QIPP Payments will first be applied 100% to any balances relating to post-Effective Time, with the excess, if any, applied to the extent of any balances due for services rendered pre-Effective Time.

 

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(c) If the parties mutually determine that any payment hereunder was misapplied by the parties, the party which erroneously received said payment shall promptly remit the same to the other after said determination is made.

 

(d) For a period of two (2) years after the Effective Time, New Manager and Transferor shall, upon reasonable notice and during normal business hours, have the right to inspect all cash receipts and other books and records (including, without limitation, bank statements) of the other respective party in order to confirm the other party’s compliance with the obligations imposed on it under this Section.

 

(e) Failure to forward to the other any payment received by such party in accordance with the terms of this Section 1.5, shall entitle the other party (among all other remedies allowed by law and this Agreement) to interest on the amount owed at the rate of 12% per annum, simple interest, until such payment has been paid. The payment of any interest imposed under this Section 1.5(e), if any, shall be made together with the underlying payment therefor.

 

(f) New Manager and Transferor shall cause the Facility staff to cooperate and assist Transferor, consistent with past practice, in the preparation of Transferor’s final month-end closing processing and billing after Closing at no cost to Transferor. New Manager and Transferor agree to prepare and provide to each other a “Due To/Due From” Schedule no less than once per month for the period of one hundred eighty (180) days following the Effective Time with supporting documentation, so that each party hereto can determine the status of funds owed to it pursuant to this Section 1.5, and thereafter as necessary (but no less than once per month) until Transferor has collected all amounts due to it.

 

(g) In connection with services rendered to residents with pending Medicaid applications (collectively, the “Pending Medicaid Applicants”), New Manager shall (i) provide Transferor with a written monthly progress report on the Medicaid application status of each Pending Medicaid Applicant until such time as all Pending Medicaid Applicants have been approved or denied by Medicaid, and (ii) if New Manager receives any notice or correspondence regarding such applications, New Manager shall provide such notice or correspondence to Transferor within five (5) business days following receipt. New Manager shall cooperate with and provide Transferor with such documents and information as Transferor shall reasonably request to enable Transferor to contest any denial or negative determinations by Medicaid with respect to the Pending Medicaid Applicants.

 

(h) Notwithstanding anything herein to the contrary, New Manager acknowledges and agrees that, for a period of thirty (30) says following the Closing Date, all revenue collected into the Depository Account (as defined in the Management Agreement) shall continue to be transferred over to the Facility Operating Account (as defined in the Management Agreement) controlled by Transferor, and that Transferor shall remit and reconcile such collections in accordance with the terms of this Section 1.5.

 

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1.6 Prorations.

 

(a) Following the Closing, utility charges for the billing period in which the Effective Time occurs, real and personal property taxes attributable to the Facility, and any other items of revenue or expense attributable to the Facility (“Prorated Items”) shall be prorated between Transferor and New Manager as of the Effective Time and when such charges become payable consistent with Transferor’s past practice. In general, such prorations shall be made so as to reimburse Transferor for prepaid expenses to the extent such expense is attributable to periods after the Effective Time and to charge Transferor for expenses accrued but unpaid as of the Effective Time.

 

(b) All such prorations shall be made on the basis of actual days elapsed in the relevant accounting, billing or revenue period and shall be based on the most recent information available to Transferor.

 

(c) Immediately after the Effective Time, New Manager will transfer all petty cash from the Facility or its operating accounts to a deposit account designated by Transferor. New Manager shall be responsible to provide any petty cash requirements of the Facility from and after the Effective Time.

 

1.7 Access to Records.

 

(a) All patient medical records, financial records and employee records relating to the Facility that are in Transferor’s possession or control shall remain at the Facility as of the Effective Time. Nothing herein shall be construed as precluding Transferor from removing from the Facility as of the Effective Time (i) the originals of financial records that relate to its management at the Facility (provided that copies thereof will be remain at the Facility and be accessible to New Manager) and/or to its overall corporate operations, and (ii) the records of former employees of the Facility who will not be hired by New Manager. Notwithstanding the foregoing, in the case of the records described in clause (ii), Transferor shall give New Manager reasonable access to any information in any such removed records as New Manager may reasonably demonstrate is necessary for the efficient operation, maintenance and defense of the Facility by New Manager.

 

(b) To the extent permitted by applicable law, subsequent to the Effective Time, New Manager shall allow Transferor and its agents and representatives to have reasonable access to (upon reasonable prior notice and during normal business hours), and to make copies of, at Transferor’s expense, the books and records and supporting material of the Facility relating to any period prior to the Effective Time, to the extent reasonably necessary to enable Transferor to investigate and defend employee or other claims, to file or defend tax returns and to verify accounts receivable collections due Transferor, or for any other reasonable purpose.

 

(c) To the extent permitted by applicable law, Transferor shall be entitled to remove the originals of any records delivered to New Manager, for purposes of litigation involving a resident or employee to whom such record relates, if an officer of a court of competent jurisdiction, agency official or counsel for Transferor certifies that such original must be produced in order to comply with applicable law or the order of a court of competent jurisdiction in connection with such litigation. Any record so removed shall promptly be returned to New Manager following its use.

 

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(d) New Manager agrees to maintain at its own expense all such books, records and other material comprising records of the Facility’s management prior to the Effective Time that have been received by New Manager from Transferor or otherwise, including, but not limited to, resident records and records of resident funds, to the extent required by law, but in no event for less than three (3) years.

 

(e) Notwithstanding anything herein to the contrary, for a period of sixty (60) days after the Closing Date, Transferor shall, upon request and at New Manager’s expense, (i) use reasonable efforts to permit the transfer of the Facility’s current electronic resident medical records data (including MDS history), in readily available form for use in New Manager’s computer applications, and (ii) provide New Manager with view-and-print access to Transferor’s electronic medical records system, to enable New Manager, at its expense, to print and take physical delivery of such resident medical records.

 

(f) Notwithstanding anything in this Agreement to the contrary, the right to inspect and obtain any records from Transferor or New Manager shall be subject to all provisions of law regarding confidentiality and privacy. Transferor and New Manager acknowledge and agree that the definition of “health care operations” set forth in 45 CFR 164.501, pursuant to HIPAA, as that term is defined in Section 3.9(d) of this Agreement, permits the parties to use and disclose individually identifiable resident and employee health information in order to assure a smooth transition of facility operations. Transferor and New Manager agree to comply with, and to cause their respective employees, subcontractors and agents to comply with, applicable state and federal laws and regulations relating to the security, protection and privacy of individually identifiable health care information, including, without limitation, the regulations promulgated pursuant to HIPAA, and any amendments to those regulations that may occur from time to time. Transferor agrees that their employees, subcontractors, and agents shall maintain the confidentiality of resident and employee records and medical information, in accordance with applicable state and federal laws, rules and regulations. New Manager and their employees, subcontractors, or agents agree not to disclose protected health information to any third-party except where permitted or required by law or where the resident or employee expressly approves such disclosure in writing.

 

1.8 Unassigned Contracts. Nothing in this Agreement will be construed as an attempt to agree to assign any contract, certificate, license or other asset that is in law or by agreement non-assignable without the consent of the other party or parties thereto, or of any governmental authority, as the case may be, unless such consent will be given. Transferor will use commercially reasonable efforts to obtain all such necessary consents. In order, however, that the full value of every such contract, certificate, license or other asset and all claims and demands under such contracts may be realized, Transferor hereby covenants and agrees with New Manager that Transferor will, at the request and under the direction of New Manager, in the name of Transferor or otherwise, as New Manager will specify and as will be permitted by law, take all such reasonable actions and do or cause to be done all such reasonable things as shall be necessary or proper (i) to preserve the rights and obligations of Transferor under such contracts, certificates, licenses and other assets, and (ii) for, and to facilitate, the collection of the moneys due and payable for the period after the Closing Date, and to become due and payable, to Transferor in and under every such contract and in respect of every such claim and demand for the period after the Closing Date, and Transferor will hold the same for the benefit of, and will pay the same over to, New Manager.

 

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1.9 Reserved.

 

1.10 Limitation. New Manager acknowledges that, except as expressly set forth in this Agreement or the Transferor’s Transaction Documents, Transferor makes no representation, warranty, or covenant whatsoever with respect to any matter, thing or event. Without limiting the generality of the foregoing, but subject to any express representations and warranties set forth herein or in the Transferor’s Transaction Documents, New Manager shall accept the Transferred Assets and the Facility in their “AS IS” “WHERE IS” condition as of the Execution Date, subject to normal wear and tear. New Manager acknowledges, on behalf of itself and its affiliates, that neither Transferor nor any of Transferor’s representatives has made any representation or warranty to New Manager or to any of New Manager’s affiliates, except as specifically set forth in this Agreement. No representation or warranty to New Manager is made with respect to any estimates, financial projections, or forecasts relating to Transferor, the Transferred Assets or the Facility that may have been delivered or mentioned to New Manager including the reasonableness of the assumptions underlying such estimates, projections and forecasts. With respect to any such estimate, projection or forecast that may have been mentioned delivered by or on behalf of Transferor, New Manager acknowledges that (i) there are uncertainties inherent in attempting to make such estimates, projections and forecasts, (ii) New Manager is familiar with such uncertainties, (iii) New Manager is taking full responsibility for making its own evaluation of the adequacy and accuracy of all such estimates, projections and forecasts so furnished to it, and (iv) New Manager shall have no claim against Transferor or any other person with respect thereto. New Manager agrees that, in entering into this Agreement and all of the documents contemplated by this Agreement, it has conducted due diligence with respect to the financial condition of the Facility, the Facility’s provider numbers and provider and reimbursement agreements, the Transferred Assets, the Operating Contracts and the Facility Employees and that New Manager has not relied on any express or implied representation or warranty by Transferor not expressly contained in this Agreement. Notwithstanding the foregoing, nothing herein shall preclude, prohibit or otherwise affect any claim by New Manager for fraud.

 

1.11 Cost Report.

 

(a) Following the Closing, to the extent any Medicare and/or Medicaid cost reports are due that cover periods occurring prior to the Effective Time and after the Effective Time, New Manager shall be required to timely file any such cost reports on behalf of Tenant. Transferor agrees to timely provide to New Manager all information necessary for any such cost reports related to periods occurring prior to the Effective Time and to reasonably cooperate with New Manager in preparation of cost reports with respect to the periods after the Effective Time.

 

(b) Following the Closing, New Manager agrees to cooperate with Transferor on a commercially reasonable basis to (i) include in Tenant’s Medicare cost reports for the initial two (2) full cost report years for the Facility such amounts for pre-Effective Time Medicare bad debt as may be certified in writing by an officer of Fundamental Administrative Services, LLC (“FAS”), to New Manager not later than thirty (30) days prior to the respective due dates of such cost reports, and (ii) promptly pay over to Transferor any and all amounts as may be paid to New Manager as Medicare bad debt reimbursement for the pre-Effective Time bad debt amounts included on such cost reports. In addition, Transferor will promptly pay over to New Manager any and all amounts that are recouped within the New Manager’s effective period forward from the Transferor’s pre-Effective Time period. In order for FAS to timely provide the Medicare bad debt information for such purpose, New Manager agrees to notify Transferor of Tenant’s cost report year for the Facility promptly upon the determination of the same. FAS may participate in any audit or review of pre-Effective Time cost reports related to bad debt at its own expense.

 

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1.12 Provider Contracts. Effective as of the Closing Date, Transferor’s rights and interests in and to its provider numbers and provider and reimbursement agreements with any third-party payor programs shall be assigned to New Manager, but only to the extent such provider numbers and agreements are in the name of Transferor and are assignable.

 

ARTICLE II
THE CLOSING; Purchase Price

 

2.1 Time and Place of Closing. Subject to the satisfaction of the conditions set forth herein, the actions contemplated to consummate the transactions under this Agreement (“Closing”) shall take place by email exchange of documents (or such other mutually acceptable remote methodology) simultaneously with the closing under the PSA. The date on which the Closing takes place is referred to herein as the “Closing Date.” Notwithstanding the actual time at which the Closing occurs, the time (the “Effective Time”) as of which the Closing shall be deemed to be effective and the risk of loss shall pass from Transferor to New Manager shall be 12:00:01 a.m. (local time where the Facility is located) on the Closing Date.

 

2.2 Purchase Price. The purchase price for the Transferred Assets shall be an amount equal to $275,000 (the “Purchase Price”). New Manager shall pay the Purchase Price (as adjusted pursuant to the terms of hereof for certain credits and debits contemplated hereby), less $25,000 which will be deposited with the Escrow Agent pursuant to Section 5.8 to Transferor by wire transfer of immediately available funds to an account designated by Transferor at least three business days prior to Closing.

 

2.3 Allocation. The Purchase Price will be allocated in the manner proposed by New Manager as soon as practicable following the Closing and reasonably agreed to by Transferor. After the Closing, the parties shall make consistent use of such Purchase Price allocation for all Tax purposes and in any Tax Returns filed with the Internal Revenue Service in respect thereof, including IRS Form 8594.

 

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ARTICLE III
TRANSFEROR’S REPRESENTATIONS AND WARRANTIES

 

Transferor represents and warrants to New Manager as of the date hereof and as of the Closing as follows:

 

3.1 Organization and Standing of Transferor. Transferor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas. Transferor has the power and authority to own the Transferred Assets and to conduct the business presently being conducted by Transferor at the Facility.

 

3.2 Authority. Transferor has the full limited liability company power and authority to make, execute, deliver and perform this Agreement, including the schedules, exhibits, and other instruments and documents required or contemplated hereby (the “Transferor’s Transaction Documents”). Such execution, delivery, performance and consummation have been duly authorized by all necessary action, limited liability company or otherwise, on the part of Transferor and its members.

 

3.3 Binding Effect. The Transferor’s Transaction Documents, when executed by Transferor constitute the valid and binding obligations of Transferor, enforceable against Transferor in accordance with their respective terms.

 

3.4 Assets. The Transferred Assets, together with the Excluded MTA Assets, the Excluded Assets (as defined in PSA) and the Personal Property (as defined in the PSA), includes all assets, furniture, fixtures, machinery, supplies, inventory, equipment and other personal property used in the Business in the ordinary course as the Business has been operated by Transferor. Transferor has sole and exclusive, good and marketable title to, or, in the case of property held under a lease or other contractual obligation, a sole and exclusive, enforceable leasehold interest in, or contractual right to use, all of the Transferred Assets. Other than as set forth on Schedule 3.4, Transferor owns the Transferred Assets, free and clear of all Encumbrances. The Inventory is of a sufficient quantity and condition for the normal operation of the Business in the ordinary course of business and all requirements of governmental authorities.

 

3.5 Licenses and Permits. Transferor and Tenant possess, and have possessed, all licenses, permits, accreditations, government program provider agreements and other government authorizations issued or required by governmental authorities or accreditation agencies in connection with the ownership, maintenance and operation of the Facility or that are otherwise necessary to conduct Transferor and Tenant’s respective businesses with respect to the Facility (collectively, “Licenses”). Without limiting the foregoing, Transferor or Tenant (i) possesses, if and where required, any and all Licenses and all similar approvals necessary to maintain and operate the Facility, and (ii) is licensed by the State of Texas to operate, the Facility as a 99-bed skilled nursing facility, and all material Licenses necessary for the operation of the Facility as it is currently operated have been received and are now currently effective. Transferor is not in breach or violation of any License.

 

3.6 Surveys, etc. Other than as specifically identified in Schedule 3.6, all exceptions, deficiencies, violations, plans of correction or other indications of lack of compliance in any State survey or inspection reports have been fully corrected and there are no bans or limitations in effect, pending or, to Transferor’s knowledge, threatened with respect to admissions to the Facility. Transferor shall continue to deliver all such surveys, inspection reports and cost reports as and when same are received and/or filed as the case may be prior to the Closing Date.

 

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3.7 Claims. Other than as specifically identified in Schedule 3.7, for the two (2) year period immediately preceding the Closing Date, there have been no written notices of claims, suits, actions, judgments, demands, or casualty losses of any kind filed or claimed relating to the Facility, Tenant, Transferor or claims or losses affecting any insurance rating of the Facility, Tenant or Transferor, nor has there been any Chapter 74, Texas Civil Practices & Remedies Code, demand from an attorney representing a current or past resident of the Facility within the past two (2) years.

 

3.8 Collective Bargaining Agreements. There are no collective bargaining agreements between Transferor or Tenant and/or the Facility and any labor organization or employee group applicable to the operation and/or management of the Facility and, to Transferor’s knowledge, no election or other effort to unionize the Facility or any portion of its staff is underway, has been petitioned for by any Facility staff, or has been granted by the National Labor Relations Board or any similar body. For purposes of this Agreement, “to Transferor’s knowledge” and similar phrases, means the actual knowledge of Jake Hallsted.

 

3.9 Compliance.

 

(a) The Transferor, the Facility and Tenant are and have been in compliance with all applicable laws and orders, including all laws relating to employment practices and benefit plans (e.g., ERISA, classification as exempt versus non-exempt and misclassification as of employees versus independent contractors), all environmental laws, including those with respect to the disposal of hazardous materials, and all applicable Healthcare Laws. The Facility is currently in material compliance with (i) all Licenses issued by any agency having jurisdiction over the Facility, (ii) all plans of correction and allegations of compliance filed by or in behalf of the Facility, and (iii) all Conditions and Standards of Participation for the Medicare and Medicaid programs. There are no outstanding Life Safety Code deficiencies for the Facility and there are no outstanding waivers for any Life Safety Code deficiencies. There are no pending government program audits by any governmental authority. Transferor has not received written, or to Transferor’s knowledge, oral, notice of any action or proceeding initiated or proposed by State or federal agencies having jurisdiction thereof, to either revoke, withdraw or suspend any License or to decertify, terminate, ban or limit the participation of Tenant or the Facility in the Medicare, Medicaid, VA or any other third-party payor programs.

 

(b) Neither Transferor, the Business, or to Transferor’s knowledge, Tenant or any of their respective directors, managers, owners, officers, employees, healthcare professionals, contractors or agents, has with respect to or related to the Facility or the Business (i) given, agreed to give, received, or agreed to receive any illegal gift, contribution, payment or similar benefit to, or entered into any contract or informal arrangement with, any supplier, patient, client, customer, governmental official or employee or other person who was, is or may be, in a position to help or hinder the Facility, Transferor or Tenant, 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) Neither Transferor, or to Transferor’s knowledge, Tenant nor any of their respective directors, managers, officers, employees, independent contractors, owners, members, shareholders or agents, have been convicted of, charged with or investigated for a violation of any law related to fraud, theft, embezzlement, breach of fiduciary responsibility, financial misconduct, obstruction of an investigation of controlled substances, or has been debarred, excluded, suspended, or otherwise prohibited from participation in Medicare, Medicaid or other government program, or been subject to any order or consent decree of, or criminal or civil fine or penalty relating to any government program imposed by, any governmental authority. Transferor has not arranged or contracted with (by employment or otherwise) any individual or entity that is excluded, debarred, or otherwise prohibited from participation in a government program that is related to the Business. Transferor has not received any written notice of any exclusion, suspension, or debarment actions relating to the Facility pending or threatened against Transferor or any of their directors, managers, officers, employees, independent contractors, owners, members, shareholders or agents. Transferor conducts (and have conducted) background checks in compliance with applicable law and regularly screen (and have screened) all of their healthcare professionals, directors, managers, officers, employees, independent contractors, owners, members, shareholders or agents 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.

 

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(d) Transferor 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 Transferor or the Business, including, without limitation, any physician, nurse practitioner, physician assistant or nurse (each, a “Healthcare Provider”) and, to Transferor’s knowledge, Tenant, is, and at all times during the three (3)-year period preceding the date hereof or the time during which such individual served in such capacity on behalf of Transferor, 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 Transferor or otherwise with respect to the Facility or the Business are and have been (with respect to any period of time during which such Healthcare Provider performed services on behalf of Transferor) so licensed, certified or registered without restriction. No action or investigation has been filed, commenced or, to Transferor’s knowledge, threatened against Transferor or any Healthcare Provider or Tenant alleging any failure so to comply in any material respect, and neither Transferor, the Business, any Healthcare Provider, or to Transferor’s knowledge, Tenant has received any written, or to Transferor’s knowledge, oral, 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 Transferor, the Business, any Healthcare Provider, or, to Transferor’s knowledge, Tenant relating to or arising under any Healthcare Law. To Transferor’s knowledge, no Healthcare Provider 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 three (3) year period preceding the date hereof. Neither Transferor, the Business nor, to Transferor’s knowledge, Tenant received any written, or to Transferor’s knowledge, oral, 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. Neither Transferor, the Business, any Healthcare Provider, or to Transferor’s knowledge, Tenant has received any written, or to Transferor’s knowledge, oral, notice from any governmental authority of any pending, active or threatened actions involving Transferor, Tenant, the Business, the Facility or 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. Transferor and, to Transferor’s knowledge, Tenant maintain 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. “Healthcare Laws” means all laws 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 and any other state or federal laws related to the relationships among providers, payors, vendors and consumers in the healthcare industry and the delivery, purchase, sale or support of healthcare services, (d) TRICARE (10 U.S.C. § 1071 et seq.) and the regulations promulgated thereunder, (e) quality and safety laws 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) laws governing the provision of healthcare services to employees with workers compensation coverage, (g) licensure laws 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 laws relating to the so-called “corporate practice of medicine”, “corporate practice of nursing” or fee splitting, (h) laws relating to certificate of need or similar laws 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, (i) any laws applicable to the billing, coding or submission of claims or collection of accounts receivable or refund of overpayments for medical or healthcare services, (j) HIPAA, and (k) any and all other implementing regulations, rules, ordinances, order, and applicable regulatory manual provisions, policies and administrative guidance related to healthcare, in-home care, personal care, or assisted living having the force of law, each of (a) through (j) as may be amended from time to time. “HIPAA” means the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. §1320d et seq.), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and any implementing regulations promulgated thereunder (including the Standards for Privacy of Individually Identifiable Health Information, the Security Standards for the Protection of Electronic Protected Health Information and the Standards for Electronic Transactions and Code Sets promulgated thereunder) and applicable state laws regarding patient privacy and the security, use or disclosure of patient health care records.

 

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(e) Seller is, and at all times has been, in compliance with all applicable Information Privacy and Security Laws, as defined herein. Seller is, and at all times has been, in compliance with (i) all contracts or other arrangements in effect between Seller and any third party that apply to or restrict the use, disclosure or security of Personal Information, as defined herein, by Seller or by any other party to such contracts or other arrangements (collectively, “Privacy Agreements”); and (ii) the terms of any consents, authorizations, waiver of authorization or other permission pursuant to which Seller accesses, uses, discloses, or has accessed, used or disclosed, Personal Information (collectively, “Privacy Consents”). Seller has in place, and Seller complies and has complied with, written policies to protect the security and privacy of Personal Information. Seller has the right pursuant to the Privacy Agreements, the Privacy Consents and its privacy and security policies to use and disclose Personal Information for the purpose such information is and has been used and disclosed. Neither the execution, delivery or performance of this Agreement, nor the consummation of any of the transactions contemplated by this Agreement, including any direct or indirect transfer of Personal Information resulting from such transactions, will violate any Seller policies, any Privacy Agreements, or any Privacy Consents as such currently exist or as existed at any time during which any of such Personal Information or customer information was collected or obtained. Seller has, and has at all times maintained, commercially reasonable physical, technical, organizational and administrative security safeguards to protect all Personal Information and customer information collected by Seller or on behalf of Seller from and against unauthorized access, use and/or disclosure and that comply with all Privacy Agreements, all Privacy Consents and applicable Information Privacy and Security Laws in every jurisdiction in which Seller operates. Seller has to the extent applicable, implemented all security management processes required by HIPAA, including a risk analysis, risk management activities, a sanction policy and information system activity review, as described at 45 C.F.R. § 164.308(a)(1)(ii). No person has withdrawn his or her consent to any use or processing of his or her Personal Information or requested erasure of their Personal Information by Seller in the six (6) years prior to the date of this Agreement where Seller has not complied with such request. Seller has not received any complaint from any person or Governmental Authority regarding Seller’s or any of its agents, employees or contractors’ uses or disclosures of, or security practices or security incidents regarding, Personal Information. There have not been any non-permitted uses or disclosures, security incidents, or breaches involving Personal Information held or collected by or on behalf of Seller. Seller is subject to any pending claim, or, to the Knowledge of Seller, is any claim threatened against (and to the Knowledge of Seller, no such claims are likely to be asserted or threatened against Seller) by any third party or entity, including any Governmental Authority, alleging (i) a violation of any Seller policies, Privacy Consents or any Privacy Agreements; (ii) a violation of any third party or entity’s privacy, personal or confidentiality rights under any Information Privacy and Security Laws, or (iii) the failure of Seller with respect to any security audit. Seller has not notified, either voluntarily or as required by any Information Privacy and Security Law, any affected individual, any customer, any Governmental Authority, or the media of any breach or non-permitted use or disclosure of Personal Information, and Seller is not currently planning to conduct any such notification or investigating whether any such notification is required. “Information Privacy and Security Laws” means all Applicable Laws concerning the privacy, protection, storage, access, use, exchange, disclosure and/or security of Personal Information or other data including, HIPAA, state data breach notification Applicable Laws, state health information protection Applicable Laws, state social security number protection laws, the Federal Trade Commission Act, 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, and state consumer protection Applicable Laws. “Personal Information” means: (A) any information that identifies, or in combination with other information may identify, is linked to, or relates to an individual, or is capable of being associated with an individual; (B) any information that is governed, regulated or protected by one or more Applicable Laws concerning information relating to an identified or identifiable natural person or PCI DSS, including, without limitation, any “protected health information” (as defined by HIPAA), social security number or tax identification number, credit card number, bank account information or financial customer or account numbers; (C) information that can be used to authenticate an individual (including, without limitation, passwords or PINs, biometric data, unique identification numbers, answer to security questions, or other personal identifiers) in any format whether written, electronic or otherwise; and (D) any information that is derived from or linked to other Personal Information

 

(f) There are no outstanding bed Taxes or other fees owing to state licensing authorities or any of the Government Programs.

 

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3.10 Cost Reports. Transferor has filed all Medicare and Medicaid cost reports and related reports for the Facility in compliance with applicable laws and such cost reports are accurate in all material respects.

 

3.11 Taxes. There are no real estate taxes or assessments and/or impositions which are due and unpaid or that will not be prorated at the Closing. Transferor 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 applicable law. All such tax returns were true, complete and accurate in all material respects. All taxes owed by Transferor shown on any such tax return have been timely paid in full.

 

3.12 Loan Defaults. To Transferor’s knowledge, there is no default under the terms and conditions of any agreement, loan, mortgage, deed of trust, or any other loan document in favor of any mortgagee with a security interest in the Facility. Schedule 3.12 sets forth a list of all Debt of Transferor, and, to Transferor’s knowledge, all Debt otherwise affecting the Facility. “Debt” means (a) all indebtedness, contingent or otherwise, for money borrowed, purchase money indebtedness (other than accounts payable in the ordinary course of business to the extent such accounts payable are not more than sixty (60) days past due) 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; (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 the 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 or finance 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; (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 or any indemnification obligations under any acquisition agreement; and (i) all accrued but unpaid interest expense and all penalties, fees, breakage costs, 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 contemplated hereby.

 

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3.13 Provider Agreements. The Facility has current provider agreements under Titles XVIII and XIX of the Social Security Act.

 

3.14 Financial Statements. Transferor has provided New Manager the balance sheet of Transferor as of December 31, 2019 and December 31, 2020, and related statement of income for the 12-month periods then ended and the balance sheet of Transferor as of April 30, 2021 and related statement of income for the 4-month period then ended (collectively, the “Financial Statements”). The Financial Statements fairly present, in all material respects, the financial condition and the results of operations of Transferor as of the dates of and for the periods referred to in such Financial Statements. Except as set forth on Schedule 3.14, the Financial Statements have been prepared in accordance with GAAP. Transferor has no liabilities of any nature whatsoever, 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, except for (i) liabilities reflected or reserved against in the most recent Financial Statements and (ii) current liabilities incurred in the ordinary course of business since the date of the most recent Financial Statements (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 law or order or any action). Transferor has no knowledge of any fact or circumstance with respect to Tenant that would reasonably be expected to adversely affect in any material respect the financial condition of the Business.

 

3.15 Material Adverse Effect. Since December 31, 2020, there have been no events, transactions or information relating to the Facility or the Transferred Assets which, singly or in the aggregate, would reasonably be expected to have a material adverse effect on the operations of the Facility or the Business, and Transferor has managed the Facility and Business in the ordinary course of business throughout such period.

 

3.16 QIPP Documents. Transferor is in material compliance with all lease agreements, management agreements and other agreements with the Tenant and related to the Facility’s participation in the Quality Incentive Payment Program (“QIPP”) sponsored by the Texas Health and Human Services Commission (“collectively, “QIPP Related Agreements”).

 

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3.17 Contracts. Schedule 3.17 sets forth each contract to which Transferor is a party or by which it is otherwise bound. With respect to each such contract: (i) such contract is in full force and effect and enforceable against the counter-party thereto; (ii) neither Transferor nor, to Transferor’s knowledge, the other party thereto is in breach or default under such contract; and (iii) neither Transferor nor the other party thereto has requested to terminate, modify or otherwise renegotiate the terms thereof. Transferor has delivered to New Manager a true, correct and complete copy of each such contract. To Transferor’s knowledge, neither Tenant nor any other party to a contract with Tenant is in material breach of such contract. To Transferor’s knowledge, neither Tenant nor any other party to a contract relating to a third party payment program has given notice to terminate or modify such contract or to otherwise renegotiate the terms of such contract.

 

3.18 No Conflict. Except as disclosed on Schedule 3.18, none of the execution, delivery or performance by Transferor of any of the Transferor’s Transaction Documents nor the consummation of the transactions contemplated hereby will: (a) violate any law; (b) result in the modification, acceleration, termination, breach or violation of, or default under, any contractual obligation of Transferor; (c) require any action by (including any authorization, consent or approval), or in respect of (including notice to), any person under any contractual obligation of Transferor; (d) result in the creation or imposition of an Encumbrance upon, or the forfeiture of, any assets of Transferor; or (e) result in a material breach or violation of, or default under, the organizational documents of Transferor. Except as set forth on Schedule 3.18, no affiliate of Transferor is a party to any such contract and there are no and, during the immediately preceding two (2) years, there have been no other transactions or arrangements between Transferor and any affiliate of Transferor.

 

3.19 Solvency. Transferor is not insolvent and Transferor has the ability to pay all of its debts as they come due, and further is not involved in, and is not contemplating, any bankruptcy, reorganization or insolvency proceeding of any kind. Immediately after giving effect to the consummation of the transactions contemplated by this Agreement: (i) Transferor will be able to pay its liabilities as they become due in the ordinary course of business and (ii) Transferor will have assets (calculated at fair market value) that exceed its liabilities. The cash available to Transferor, after taking into account all other anticipated uses of the cash, will be sufficient to pay all debts promptly in accordance with their terms.

 

3.20 Brokers or Finders. Except for Senior Living Investment Brokerage, Inc. (representing Transferor only), no agent, broker, investment banker or other firm or person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with the Closing based on arrangements made by or on behalf of Transferor.

 

ARTICLE IV
NEW MANAGER’S REPRESENTATIONS AND WARRANTIES

 

New Manager represents and warrants to Transferor on the date hereof and as of the Closing Date as follows:

 

4.1 Organization and Standing of New Manager. New Manager is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas. New Manager has the power and authority to own the property and assets now owned by it and to conduct the business presently being conducted by it.

 

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4.2 Authority. New Manager has the full limited liability company power and authority to make, execute, deliver and perform this Agreement and the other instruments and documents required or contemplated hereby (the “New Manager’s Transaction Documents”, collectively with the Transferor’s Transaction Documents, the “Transaction Documents”). Such execution, delivery, performance and consummation have been duly authorized by all necessary action, limited liability company or otherwise, on the part of New Manager and its members.

 

4.3 Binding Effect. New Manager’s Transaction Documents, when executed by New Manager, constitute the valid and binding obligations of New Manager, enforceable against New Manager in accordance with their respective terms.

 

4.4 Solvency. New Manager is not insolvent and New Manager has the ability to pay all of its debts as they come due, and further is not involved in, and is not contemplating, any bankruptcy, reorganization or insolvency proceeding of any kind. Immediately after giving effect to the consummation of the transactions contemplated by this Agreement: (i) New Manager will be able to pay its liabilities as they become due in the ordinary course of business and (ii) New Manager will have assets (calculated at fair market value) that exceed its liabilities. The cash available to New Manager, after taking into account all other anticipated uses of the cash, will be sufficient to pay all debts promptly in accordance with their terms.

 

4.5 No Conflict. None of the execution, delivery or performance by New Manager of any of the New Manager’s Transaction Documents nor the consummation of the transactions contemplated hereby will: (a) violate any law; (b) result in the modification, acceleration, termination, breach or violation of, or default under, any contractual obligation of New Manager; (c) require any action by (including any authorization, consent or approval), or in respect of (including notice to), any person under any contractual obligation of New Manager; (d) result in the creation or imposition of an Encumbrance upon, or the forfeiture of, any assets of New Manager; or (e) result in a material breach or violation of, or default under, the organizational documents of New Manager.

 

4.6 Brokers or Finders. No agent, broker, investment banker or other firm or person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with the Closing based on arrangements made by or on behalf of New Manager.

 

ARTICLE V
OBLIGATIONS OF THE PARTIES

 

5.1 Applications and Filings; Efforts. No later than thirty (30) days after the Closing or such earlier time as may be required by applicable law, Transferor and New Manager shall make all filings and complete all applications required by the State of Texas, Medicare and Medicaid to permit New Manager to manage the Facility. Transferor shall cooperate with New Manager in connection with all such filings and applications. In addition, Transferor shall use commercially reasonable efforts to obtain all consents and provide all notices to any third parties in connection with the transfer of the Transferred Assets. Each of the parties shall use commercially reasonable efforts to cause the conditions precedent set forth herein to be satisfied; provided, that the foregoing shall not require a waiver of any condition precedent.

 

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5.2 Management of Facility. Between the Execution Date and the Closing, Transferor shall:

 

(a) manage the Facility in the ordinary course and in substantially the same manner as currently managed, including with respect to the maintaining Inventory at normal operating levels;

 

(b) (i) maintain, keep and preserve its assets and properties (taken as a whole) in all material respects in good condition and repair (ordinary wear and tear excepted); (ii) preserve in all material respects its business intact; (iii) preserve in all material respects the goodwill of and relations with employees, Healthcare Providers, suppliers, distributors, vendors, referral sources, patients, residents, tenants, customers, and others having business dealings or relations with the Transferor or the Facility; and (iv) maintain its books and records consistent with past practices and applicable law;

 

(c) maintain or cause to be maintained all insurance policies presently being maintained by Transferor with respect to the Facility and/or Transferred Assets;

 

(d) preserve in force (or cause to be preserved in force) all existing Licenses, of the Facility, including Medicare and Medicaid and any other government payment program enrollments, and if any such License or enrollment shall expire or be suspended or revoked prior to the Closing, Transferor shall promptly notify New Manager and shall, at Transferor’s expense, take all commercially reasonable measures to cause the extension, renewal or reinstatement of such License without any additional limitation or condition;

 

(e) maintain, restore or replace all drugs, medicines, foods and other supplies used in connection with the operation of the Facility; and

 

(f) not take any actions which are inconsistent with its obligations under this Agreement or which could hinder or delay the consummation of the transactions contemplated by this Agreement.

 

5.3 Further Assurances. From and after the Closing Date, upon the request of the Transferor or New Manager, the parties shall do, execute, acknowledge and deliver all such further acts, assurances, deeds, assignments, transfers, conveyances and other instruments and papers as reasonably required or appropriate to carry out and/or evidence the transactions contemplated hereby.

 

5.4 Exclusivity. During the period between the Execution Date and the Closing Date or the earlier termination of this Agreement as provided herein, Transferor shall not and shall cause its representatives not to, directly or indirectly, (a) solicit, initiate or encourage the submission of any proposal or offer from any person relating to the acquisition of the Transferred Assets (including any acquisition structured as a merger, consolidation, share exchange, tender offer or otherwise), or any other merger, reorganization, recapitalization or similar transaction involving the Transferor, or (b) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate or encourage in any other manner any effort or attempt by any person to do or seek any of the foregoing.

 

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5.5 Access and Investigation. During the period commencing on the Execution Date and ending on the Closing Date or the earlier termination of this Agreement as provided herein, Transferor to: (a) afford New Manager and its representatives reasonable access, during regular business hours, to Transferor’s properties, personnel, agents and accountants; (b) afford reasonable access to and the right to inspect all of the properties, assets, premises, books and records, contracts, agreements and other documents and data related to the Facility; (c) furnish New Manager and its representatives with such financial, operating and other data and information related to the Facility as New Manager and its representatives may reasonably request; and (d) afford New Manager and its representatives access to the Transferor’s third party payors, vendors and referral sources and Tenant.

 

5.6 Notifications. Following the Execution Date until the Closing or the earlier termination of this Agreement as provided herein, Transferor will give New Manager prompt written notice upon becoming aware of any development, event or circumstance that does or would reasonably be expected to result in (a) a material breach of or inaccuracy in any of the representations or warranties Transferor hereunder, or (b) any material breach or failure of Transferor to perform or satisfy any covenant, condition, or agreement to be performed or satisfied under this Agreement or any Transferor’s Transaction Document; provided, however, that no such disclosure will be deemed to prevent or cure any such breach or failure to perform any such covenant, condition or agreement, or such breach of or inaccuracy in, amend or supplement any Schedule to, or otherwise disclose any exception to, any of the representations and warranties set forth in this Agreement, including for purposes of indemnification or with respect to the satisfaction of any condition precedent.

 

5.7 Tail Coverage; Insurance. On or before the Closing Date, Transferor will, at Transferor’s cost and expense, obtain “tail insurance” coverage, in form and substance reasonably satisfactory to New Manager, naming New Manager as an additional insured extending for two (2) years for Transferor’s insurance coverage in connection with liabilities arising out of or related to the Business on or before the Closing Date, including but not limited to general liability, professional liability, employee practices liability and executive liability, in each case, which tail insurance shall contain terms and conditions no less advantageous than are contained in such current insurance policies and, with respect to professional liability insurance, shall cover Transferor and each other employee or independent contractor of the Transferor providing medical services. Transferor shall provide evidence of such coverage to New Manager.

 

5.8 Escrow Agreement. At Closing, Transferor and New Manager shall enter into an Escrow Agreement (the “Escrow Agreement”) to be entered by and among Transferor, Landlord, GCC Olney, LLC, Grace Properties Olney, LLC, GCC Henrietta, LLC, Grace Properties Henrietta, LLC (collectively, the “Seller Parties”), New Manager, Buyer, Henrietta Health and Rehab Center, LLC, Olney Health and Rehab Center, LLC (collectively, the “Buyer Parties”), and Fidelity National Title Agency, Inc. (“Escrow Agent”) to be dated as of the Closing Date, pursuant to which the Seller Parties will deposit with Escrow Agent the aggregate amount of Seventy-Five Thousand and No/100 Dollars ($75,000.00) to cover any indemnification obligations of the Seller Parties to the Buyer Parties for a period of twelve (12) months pursuant to those certain agreements by and between the Seller Parties and Buyer Parties (the “Other Transaction Documents”).

 

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ARTICLE VI
CONDITIONS PRECEDENT TO NEW MANAGER’S OBLIGATIONS

 

Unless waived by New Manager, its obligation to consummate the transactions contemplated by this Agreement is subject to the satisfaction, prior to or at the Closing, of each of the following conditions:

 

6.1 Representations and Warranties. The representations and warranties of Transferor contained in this Agreement or on any Schedule or Transaction Document that are not qualified by materiality shall be true and correct in all material respects at and as of the Effective Time as though such representations and warranties were made at and as of such time and the representations and warranties of Transferor contained in this Agreement or on any Schedule or Transaction Document that are qualified by materiality shall be true and correct in all material respects at and as of the Effective Time as though such representations and warranties were made at and as of such time.

 

6.2 Performance of Covenants. Transferor shall have performed or complied in all material respects with each of its agreements and covenants required by this Agreement to be performed or complied with by it prior to or at the Effective Time.

 

6.3 Delivery of Closing Certificate. Transferor shall have executed and delivered to New Manager a certificate in the form and substance of Exhibit 6.3.

 

6.4 Transferred Assets at Closing. Transferor shall have executed and delivered the Bill of Sale and shall have delivered appropriate certificates of title and transfer instruments with respect to any vehicles included in the Transferred Assets.

 

6.5 Personal Guaranty. The personal guaranty of Jake Hallsted, dated as of the date hereof, shall be in full force and effect (the “Guaranty”).

 

6.6 Assignment and Assumption of Management Agreement. Transferor and Tenant shall have executed and delivered an assignment and assumption of the Management Agreement substantially in the form and substance of Exhibit 6.6 (“Assignment and Assumption of Management Agreement”).

 

6.7 Financing. The Buyer Parties shall have received financing sufficient for the payment of the Purchase Price and for the purchase price contemplated to be paid in the Other Transaction Documents.

 

6.8 Other Transaction Documents Closing. The closing under the Other Transaction Documents shall have occurred.

 

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6.9 Trust Funds. Transferor shall have executed and delivered an assignment and assumption of Trust Funds substantially in the form and substance of Exhibit 6.9 (“Assignment of \ Trust Funds”).

 

6.10 Other Documents. Transferor shall have furnished New Manager with all other documents, certificates and other instruments required to be furnished to New Manager by Transferor pursuant to the terms hereof.

 

6.11 Reserved.

 

6.12 Compliance. All actual deficiencies and violations of the severity level of “G” or worse noted in any pre-Closing Date survey for the Facility shall have been corrected, and such corrections accepted by the Texas Health and Human Services Commission.

 

6.13 License. The Facility’s license to operate a nursing home issued by the Texas Health and Human Services Commission shall be in good standing and in full force and effect. Transferor shall have provided notice to the Texas Health and Human Services commission of the change in management.

 

6.14 Reserved. If any exhibits or schedules are not attached hereto, the parties hereto agree to attach such exhibits and schedules as soon as reasonably practicable but in any event prior to the Closing Date.

 

6.15 Consents and Approvals. The consents and approvals set forth on Exhibit 6.15 shall have been obtained.

 

6.16 Restrictive Covenant Agreements. New Manager shall have received restrictive covenant agreements in the form set forth on Exhibit 6.16 duly executed by the persons set forth therein.

 

6.17 No Proceeding. No action or order restraining, enjoining or otherwise preventing or delaying the consummation of this Agreement or the transactions contemplated hereby shall be outstanding, and no action, before or by any governmental authority, whether at law or in equity, shall be pending, wherein an unfavorable outcome would (i) prevent the performance of this Agreement or the consummation of the transactions contemplated hereby, or (ii) affect adversely the right of New Manager to own the Transferred Assets, or operate and/or manage the Business and the Facility.

 

6.18 PPP Loans. New Manager shall have received evidence reasonably satisfactory to New Manager of the escrow of the principal amount plus interest due or payable with the applicable PPP lender under the terms of the PPP Loans set forth on Schedule 3.12.

 

6.19 Certain Other Matters. New Manager shall have received evidence satisfactory to New Manager of the completion of the matters set forth on Schedule 6.19.

 

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ARTICLE VII
CONDITIONS PRECEDENT TO TRANSFEROR’S OBLIGATIONS

 

Unless waived by Transferor, its obligation to consummate the transactions contemplated by this Agreement is subject to the satisfaction, prior to or at the Closing, of each of the following conditions:

 

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

 

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

 

7.3 Delivery of Closing Certificate. New Manager shall have delivered to Transferor a certificate in the form and substance of Exhibit 7.3.

 

7.4 Bill of Sale. New Manager shall have executed and delivered the Bill of Sale.

 

7.5 Assignment and Assumption of Management Agreement. New Manager shall have executed and delivered the Assignment and Assumption of Management Agreement.

 

7.6 Reserved.

 

7.7 Other Transaction Documents Closing. The closing under the Other Transaction Documents shall have occurred.

 

7.8 Resident Trust Funds. New Manager shall have executed and delivered the Assignment of Resident Trust Funds.

 

7.9 Other Documents. New Manager shall have furnished Transferor with all other documents, certificates and other instruments required to be furnished to Transferor by New Manager pursuant to the terms hereof.

 

ARTICLE VIII

SURVIVAL AND INDEMNIFICATION

 

8.1 Indemnification by Transferor. Transferor shall defend, indemnify and hold New Manager and New Manager’s shareholders, members, officers, directors, employees, representatives and agents and their respective representatives, heirs and assigns (the “New Manager Indemnified Parties”) harmless from and against any claim, action, suit, proceeding, investigation, liability, damage, loss, cost or expense (including reasonable attorneys’ fee and reasonable disbursements of counsel and actual costs and whether or not involving a third party claim) (collectively, a “Loss”) resulting from (i) any inaccuracy or breach of any representation, warranty, covenant, agreement or obligation on the part of Transferor contained in this Agreement or in any of the agreements, certificates or other instruments attached hereto; (ii) the occupancy, management or operation of the Facility prior to the Effective Time; and (iii) any Excluded Liabilities.

 

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8.2 Indemnification by New Manager. New Manager shall defend, indemnify and hold Transferor and Transferor’s members, managers, officers, directors, employees, representatives and agents, and their respective representatives, heirs and assigns (the “Transferor Indemnified Parties”), harmless from and against, any Loss incurred by the foregoing parties as a result of (i) any inaccuracy or breach of any representation, warranty, covenant, agreement or obligation on the part of New Manager contained in this Agreement or in any agreement, certificate or other instrument attached hereto; (ii) the occupancy, management or operation of the Facility by New Manager from and after the Effective Time; and (iii) any failure by New Manager to pay or perform any obligations or liabilities assumed by New Manager pursuant to this Agreement including, but not limited to, obligations or liabilities under the Assumed Contracts (to the extent assumed in accordance with the Assignment and Assumption of Contracts); provided, however, in no event shall New Manager be required to indemnify the Transferor Indemnified Parties for any matter for which a New Manager Indemnified Party is entitled to indemnification pursuant to Section 8.1.

 

8.3 Procedure. A party claiming indemnification under this Article VIII (the “Asserting Party”) must promptly notify in writing the party from which indemnification is sought (the “Defending Party”) of the nature and basis of such claim for indemnification. If such claim relates to a claim, litigation or other action by a third-party against Asserting Party, (“Third-Party Claim”), Defending Party may elect to assume the defense of the Third-Party Claim promptly after receipt of the notice referred to above at its own expense with counsel selected by Defending Party and reasonably satisfactory to Asserting Party; provided, however, that the Defending Party may not assume the defense of such Third Party Claim unless (i) the Defending Party gives written notice to the Asserting Party within fifteen (15) days of receipt of the claim notice that the Defending Party will indemnify the Asserting Party from and against the entirety of any and all Losses the Asserting Party ultimately suffers resulting from, arising out of, relating to, in the nature of, or caused by the 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 Asserting Party, (iii) the Asserting Party reasonably concludes, based upon advice of counsel that a conflict does not exist between the Asserting Party and the Defending 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, any criminal or regulatory enforcement action or otherwise involve a claim by a governmental authority, (v) settlement of, an adverse judgment with respect to or the Defending Party’s conduct of the defense of the Third Party Claim is not, in the good faith judgment of the Asserting Party, likely to be adverse to the Asserting Party’s reputation or continuing business interests (including the Asserting Party’s relationships with current or potential customers, suppliers, payors, Tenant or other parties material to the conduct of the business of the Asserting Party) and (vi) the Defending Party conducts the defense of the Third Party Claim actively and diligently and in good faith. If Defending Party assumes the defense of the Third-Party Claim and diligently defends such Third-Party Claim, Defending Party shall not be liable for any fees and expenses of counsel for Asserting Party incurred thereafter in connection with the Third-Party Claim. To the extent required by applicable law, the Asserting Party shall act reasonably and in good faith in an effort to mitigate any Loss for which it is entitled to indemnification. Failure of the Asserting Party to promptly notify the Defending Party of a claim hereunder shall not waive the rights of the Asserting Party to indemnification hereunder, except to the extent that the Defending Party can demonstrate actual material loss or prejudice as a result of such failure or delay. Defending Party shall not settle any Third Party Claim without the written consent of the Asserting Party, which consent shall not be unreasonably withheld, conditioned, or delayed.

 

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8.4 Limitations.

 

(a) EXCEPT AS SUCH MAY BE PART OF ANY CLAIM OF ANY THIRD-PARTY, UNDER NO CIRCUMSTANCES SHALL TRANSFEROR, NEW MANAGER OR ANY AFFILIATE THEREOF BE RESPONSIBLE OR LIABLE IN ANY WAY FOR PUNITIVE DAMAGES (UNLESS PUNITIVE DAMAGES ARE ACTUALLY AWARDED TO A THIRD-PARTY), OR ANY EXEMPLARY DAMAGES, REGARDLESS OF WHETHER THE ACTION IS FOUNDED IN CONTRACT, TORT, STATUTORY OR OTHERWISE, AND BOTH PARTIES AGREE THAT IN NO EVENT SHALL EITHER ASSERT, CLAIM, DEMAND OR OTHERWISE REQUEST SUCH DAMAGES.

 

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

 

(c) Except with respect to a claim for indemnification arising as a result of a breach of a Fundamental Representation, in no event shall a New Member Indemnified Party be entitled to Losses in excess of the amounts deposited with the Escrow Agent and the amounts guaranteed under the Guaranty (i.e., together with the amounts in escrow, $150,000 in the aggregate) with respect to a claim for indemnification arising as a result of a breach of a representation or warranty.

 

8.5 Exclusive Remedy. Except in the case of fraud, the remedies provided in this Article VIII and in the Other Transaction Documents shall be the sole and exclusive remedies that may be available to a party or an Asserting Party with respect to any matters arising under or relating to this Agreement, any document executed and delivered pursuant to the provisions hereof and the transactions contemplated herein.

 

8.6 Insurance Recoveries . No party shall be required to indemnify the other with respect to any Losses for which third-party recoveries or insurance proceeds are paid to Asserting Party, regardless of the identity of the holder of such insurance policy or benefit; provided, however, that if the insurance proceeds or third-party recoveries do not satisfy the entire amount of the Losses, then the provisions of this Section shall be applicable to such unsatisfied portion.

 

8.7 Survival. The representations and warranties contained in this Agreement, and in any agreements, certificates or other instruments delivered pursuant hereto, shall survive Closing for a period of twelve months following the Closing provided, however, that the representations and warranties set forth in Sections 3.1, 3.2, 3.3, and 3.4 shall survive indefinitely and the representations and warranties set forth in Section 3.9 shall survive until the expiration of the applicable statute of limitations (such representations, the “Fundamental Representations”). The covenants and other obligations set forth herein shall survive until fully performed. Delivery of a claim notice meeting the requirements pursuant to Section 8.3 with respect to a claim or potential claim or matter for which indemnification may be required pursuant to this Article VIII, 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, begin an arbitration or commence another formal or informal action or other proceeding in order to cause such matter or claim to survive.

 

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8.8 Knowledge and Investigation. The right of any party to indemnification pursuant to this Article VIII 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.

 

8.9 Materiality; Strict Liability. 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 VIII, the terms “material,” “materiality,” and “material adverse effect” and similar phrases are to be disregarded.

 

8.10 Right of Set-Off. Subject to the limitations set forth in Section 8.4(c), the New Manager Indemnified Parties may set-off any amount to which they may be entitled under this Article VIII against amounts otherwise payable by New Manager Indemnified Parties to Transferor or its affiliates. The exercise of such right of set-off by such New Manager Indemnified Parties in good faith, whether or not ultimately determined to be justified, will not constitute an event of default under any contract or agreement between any New Manager Indemnified Party and Transferor or its affiliates. Neither the exercise of nor the failure to exercise such right of set-off will constitute an election of remedies or limit the New Manager Indemnified Parties in any manner in the enforcement of any other remedies that may be available to it. For the avoidance of doubt, the exercise of such right to set-off shall not preclude Transferor from challenging and disputing the indemnity claim or the exercise of the right to set-off hereunder and to the extent successful in such challenge or dispute, such set-off amount (or portion thereof) will be immediately returned to Transferor or its applicable affiliate.

 

ARTICLE IX
TERMINATION

 

9.1 Termination. This Agreement is irrevocable and may only be terminated at or prior to the time of Closing by:

 

(a) by either New Manager or Transferor if (i) a material breach of any provision of this Agreement has been committed by the other party such that the closing conditions set forth in Section 6.1 (with respect to a breach by Transferor) or Section 6.2 (with respect to a breach by New Manager) would not be satisfied (provided, that the party seeking to terminate this Agreement is not also in material breach of any provision of this Agreement), (ii) such breach has not been waived, and (iii) the other party fails to cure such breach within ten (10) business days after written notice of such breach by the non-breaching party.

 

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(b) any party hereto, if the closing has not occurred by August 2, 2021 (provided, however, in the event the closing date under the PSA is extended in accordance with the terms thereof, then such date shall be extended for a commensurate period of time) or in the event any of the Other Transaction Documents has been terminated in accordance with the terms thereof; or

 

(c) the mutual consent of Transferor and New Manager.

 

9.2 Effect of Termination. If a party terminates this Agreement because one of the conditions precedent to its obligations hereunder has not been satisfied, or if this Agreement is terminated by mutual consent, this Agreement shall become null and void without any liability of any party to the others; provided, that if such termination is pursuant to Section 9.1(a) as a result of a breach by any of the parties hereto of any of its representations, warranties or covenants in this Agreement, nothing herein shall affect the non-breaching party’s right to damages on account of such other party’s breach.

 

ARTICLE X
MISCELLANEOUS PROVISIONS

 

10.1 Drafting. Transferor’s counsel has drafted this Agreement and the other Transaction Documents as a matter of convenience for the parties hereto; and the parties hereto have carefully reviewed and negotiated the terms of this Agreement and the Transaction Documents, and New Manager hereby acknowledges and agrees that it has had a full and fair opportunity to review and negotiate the Agreement and the Transaction Documents with the advice of its counsel; and accordingly any drafting errors, ambiguities or inconsistencies shall not be interpreted against Transferor.

 

10.2 Public Announcements. Any general public announcements or similar media publicity with respect to this Agreement or the transactions contemplated herein shall be at such time and in such manner as New Manager and Transferor shall mutually determine; provided that nothing herein shall prevent either party, upon notice to the other, from making such written notices as such party’s counsel may consider advisable in order to satisfy the party’s legal and contractual obligations in such regard; and provided further, that New Manager may make such public announcements as may be required by applicable law, including any applicable securities laws or regulations, without the consent of Transferor.

 

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

 

10.4 Performance. In the event of a breach by either party of its obligations hereunder, the other party shall have the right, in addition to any other remedies which may be available, to obtain specific performance of the terms of this Agreement, and the breaching party hereby waives the defense that there may be an adequate remedy at law.

 

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10.5 Benefit and Assignment. This Agreement binds and inures to the benefit of each party hereto and its successors and permitted assigns. Neither party shall be permitted to assign its rights or obligations under this Agreement without the prior written consent of the other party.

 

10.6 Effect and Construction of this Agreement. The captions used herein are for convenience only and shall not control or affect the meaning or construction of the provisions of this Agreement. All gender employed in this Agreement shall include all genders, and the singular shall include the plural and the plural shall include the singular whenever and as often as may be appropriate. When used in this Agreement, the term “including” shall mean “including but not limited to.”

 

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

 

  If to New Manager: Assisted 4 Living, Inc.
    5115 FL-64
    Bradenton, Florida 34208
    Attn: Louis Collier
    Electronic Mail: loucoljr@outlook.com
     
  with a copy to: Bass, Berry & Sims PLC
    150 Third Avenue South, Suite 2800
    Nashville, Tennessee 37201
    Attention: Angela Humphreys
    Email: ahumphreys@bassberry.com
     
  If to Transferor: GCC Olney, LLC
    Attention: Jake Hallsted
    24616 Kingsland Blvd.
    Katy, Texas 77494
    Email: j.hallsted@pearlandvinetx.com
     
  with a copy to: Cordray & Schneller
    Attention: Howard F. Cordray, Jr.
    3306 Sul Ross Street
    Houston, Texas 77098
    Email: hcordray@clegal.com

 

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

 

10.9 Governing Law; Disputes. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

 

10.10 Further Assurances. Each of the parties hereto agrees to execute and deliver any and all further agreements, documents or instruments reasonably necessary to effectuate this Agreement and the transactions referred to herein or contemplated hereby or reasonably requested by the other party to perfect or evidence their rights hereunder.

 

10.11 Third-Party Beneficiaries. The parties hereto do not intend that any third-party shall have any rights under this Agreement except as expressly provided herein, including with respect to the New Manager Indemnified Parties and the Transferor Indemnified Parties.

 

10.12 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one and the same agreement. Copies of original signatures sent by facsimile, portable document format (PDF), or other electronic imaging means shall be deemed to be originals for all purposes of this Agreement.

 

10.13 Costs and Attorneys’ Fees. In the event of a dispute between the parties hereto with respect to the interpretation or enforcement of the terms hereof, the prevailing party shall be entitled to collect from the other its reasonable costs and attorneys’ fees, including its costs and fees on appeal.

 

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

 

10.15 Entire Agreement. This Agreement, including the schedules, exhibits and the Other Transaction Documents and the other documents executed in connection herewith or therewith in connection with the Closing, constitute the entire agreement between the parties hereto with respect to the subject matter hereof, and there are no agreements, understandings, restrictions, warranties, or representations between the parties with respect to the subject matter hereof other than as set forth herein or as provided in such documents.

 

[Signatures on following page]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

 

TRANSFEROR:

 

GCC OLNEY, LLC

 

By: /s/ Jake Hallsted  
  Jake Hallsted, President  

 

NEW MANAGER:

 

Olney Health and Rehab Center, LLC

 

By: /s/ Louis Collier  
  Louis Collier, Chief Executive Officer  

 

 
 

 

EXHIBIT 1.1

BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This Bill of Sale, Assignment and Assumption Agreement (the “Agreement”) is made and entered into as of the [●] day of [●], 2021 (the “Effective Date”), by and between GCC OLNEY, LLC, a Texas limited liability company (“Assignor”) and OLNEY HEALTH AND REHAB CENTER, LLC, a Texas limited liability company (“Assignee”). All capitalized terms used in this Agreement without definition have the meanings given to them in the MTA (as defined below).

 

RECITALS

 

WHEREAS, Assignor and Assignee are parties to that certain Management Transfer Agreement, dated as of June [●], 2021 (the “MTA”), pursuant to which (i) Assignee is acquiring the Transferred Assets from Assignor, and (ii) Assignee is assuming the Assumed Contracts, on the terms and conditions set forth therein; and

 

WHEREAS, it is contemplated that this Agreement will be entered into at Closing by Assignor and Assignee pursuant to Sections 1.1 and 6.6 of the MTA.

 

AGREEMENT

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

Transfer of Transferred Assets. For the consideration set forth in the MTA and other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, Assignor hereby sells, transfers, assigns, conveys, grants and delivers to Assignee, free and clear of any Encumbrances, effective as of the date hereof, all of Assignor’s right, title and interest in and to the Transferred Assets other than the Management Agreement, which is being transferred on the date hereof by separate instrument TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns forever.

 

Assignment and Assumption. Effective as of the date hereof, Assignor hereby conveys, delivers and assigns to Assignee, its successors and assigns, and Assignee hereby accepts, assumes and agrees to pay, perform and discharge when due, the obligations or liabilities under the Assumed Contracts set forth on Exhibit A solely to the extent arising after the Closing and excluding any liability arising out of a breach thereof or a violation of law prior to Closing or any other matter subject to indemnification by Assignee under the MTA.

 

Terms of the MTA. The terms of the MTA, including but not limited to Assignor’s and Assignee’s representations, warranties, covenants, agreements and indemnities relating to the Transferred Assets and Assumed Contracts, are incorporated herein by this reference. Assignor and Assignee acknowledge and agree that the representations, warranties, covenants, agreements and indemnities contained in the MTA will not be superseded hereby but will remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the MTA and the terms hereof, the terms of the MTA shall govern.

 

Further Actions. Each of the parties covenants and agrees, at its own expense, to execute and deliver, at the request of the other party hereto, such further instruments of transfer and assignment and to take such other action as such other party may reasonably request to more effectively consummate the transactions contemplated by this Agreement.

 

[Signature Page to Bill of Sale, Assignment and Assumption Agreement]

 

 
 

 

Governing Law. This Agreement will be governed by and construed under the laws of the State of Texas without regard to conflicts of laws principles that would require the application of any other law.

 

Successors and Assigns. This Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right under or with respect to this Agreement or any provision of this Agreement, except such rights as will inure to a successor or permitted assignee pursuant to this Section 6.

 

Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile, or by .pdf or similar imaging transmission, will constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile, or by .pdf or similar imaging transmission, will be deemed to be their original signatures for any purpose whatsoever.

 

IN WITNESS WHEREOF, the parties have executed this Bill of Sale, Assignment and Assumption Agreement effective as of the date first above written.

 

  ASSIGNEE:
   
  OLNEY HEALTH AND REHAB CENTER, LLC, a Texas limited liability company
              
  By:  
  Name:  
  Title:  
     
  ASSIGNOR:
   
  GCC OLNEY, LLC, a Texas limited liability company
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Bill of Sale, Assignment and Assumption Agreement]

 

 
 

 

EXHIBIT 6.6

ASSIGNMENT OF MANAGEMENT AGREEMENT

 

This ASSIGNMENT OF MANAGEMENT AGREEMENT (this “Agreement”) is made and entered into as of __________ ___, 2021 by and among GCC Olney, LLC, a Texas limited liability company (collectively, the “Manager”), Olney-Hamilton Hospital District, as licensed operator (“Licensed Operator”) and Olney Health and Rehab Center, LLC, a Texas limited liability company (“Buyer”).

 

RECITALS:

 

A. Manager is the manager under that certain Management Agreement (the “Original Management Agreement”) by and between Manager and Licensed Operator, dated September 1, 2017, and as amended by that Amendment to Management Agreement, dated September 1, 2019 (the Original Management Agreement, as amended, the “Management Agreement”), for services provided at the licensed skilled nursing facility known as Grace Center of Olney located at 1402 West Elm, Olney, Texas 76374; and

 

B. Pursuant to that certain Management Transfer Agreement, dated June ___, 2021, by and between Manager and Buyer, (the “MTA”), Buyer intends to acquire all of the Transferred Assets (as defined in the MTA), including the Management Agreement (as defined in the MTA).

 

NOW, THEREFORE, the parties agree as follows:

 

Transfer of Management Agreement. For the consideration set forth in the MTA and other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, Manager hereby sells, transfers, assigns, conveys, grants and delivers to Buyer, free and clear of any Encumbrances (as defined in the MTA), effective as of the date hereof, all of Manager’s right, title and interest in and to the Management Agreement TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns forever (such transfer of the Management Agreement, the “Transfer”).

 

Assignment and Assumption. Effective as of the date hereof, Manager hereby conveys, delivers and assigns to Buyer, its successors and assigns, and Buyer hereby accepts, assumes agrees to pay, perform and discharge when due, the obligations or liabilities under the Management Agreement solely to the extent arising after the Closing (as defined in the MTA) and excluding any liability arising out of a breach thereof or a violation of laws prior to Closing or any other matter subject to indemnification by Buyer under the MTA (such assignment and assumption of the Management Agreement, the “Assignment”).

 

Consent and Affirmation. To the extent that, pursuant to the Management Agreement, the Transfer and the Assignment constitutes an assignment or transfer or otherwise would not be permitted without Licensed Operator’s consent, Licensed Operator hereby consents to the Transfer and the Assignment. As between Manager and Licensed Operator, no documents that have not already been provided shall be required in connection with the Transfer and the Assignment.

 

1
 

 

Estoppel Statements. With the understanding that Buyer, in assuming the Management Agreement, will rely on the statements contained in the numbered paragraphs below, Manager and Licensed Operator hereby certify in favor of Buyer as follows:

 

1. The Management Agreement, as amended, is unmodified and in full force and effect and there are no amendments, supplements or modifications of any kind (except as identified in the Recitals above).

 

2. To each of Manager’s and Licensed Operator’s best knowledge, (i) there is no continuing Default (as defined in the Management Agreement) by Manager or Licensed Operator in the performance or observance of any covenant, agreement or condition contained in the Management Agreement, and (ii) there has not occurred any event which, with the giving of notice or passage of time or both, would become such a Default.

 

Manager and Licensed Operator acknowledge and agree that Buyer and its direct and indirect lenders, investors, participants, partners, members, owners and their respective affiliates, successors and assigns shall be entitled to rely on each of Manager’s and Licensed Operator’s certifications, representations and warranties set forth herein.

 

Each of the undersigned representatives of Buyer, Manager and Licensed Operator that has executed this Agreement states that he or she is duly authorized to execute this instrument on behalf of Buyer, Manager or Licensed Operator, as applicable.

 

This Agreement may be executed in multiple counterparts.

 

[SIGNATURE PAGE FOLLOWS]

 

2
 

 

IN WITNESS WHEREOF, the parties have executed this Consent, Affirmation and Estoppel Agreement as of the date first written above.

 

MANAGER:  
   
GCC OLNEY, LLC  
a Texas limited liability company  
                         
By:    
Name:    
Title:    
     
LICENSED OPERATOR:  
   
OLNEY-HAMILTON HOSPITAL DISTRICT,  
as licensed operator  
     
By:    
Name:    
Title:    
     
BUYER:  
     
OLNEY HEALTH AND REHAB CENTER, LLC,  
a Texas limited liability company  
     
By:    
Name:    
Title:    
     
Address for notices by Manager to Buyer:  
   
   
   

 

[Signature Page to Assignment of Management Agreement]

 

 
 

 

EXHIBIT 6.9

 

ASSIGNMENT AND ASSUMPTION OF RESIDENT TRUST FUNDS

 

This Assignment and Assumption Agreement (“Agreement”) is made as of [●], 2021, by and between GCC Olney, LLC, a Texas limited liability company (“Transferor”) and Olney Health and Rehab Center, LLC, a Texas limited liability company (“New Manager”).

 

Recitals:

 

A. Pursuant to that certain Management Transfer Agreement, dated as of [●], 2021 (“MTA”) between Transferor and New Manager, Transferor agreed to transfer and convey to the New Manager certain assets relating to the skilled nursing facility located at 1402 West Elm, Olney, TX 76374 and commonly known as Grace Care Center of Olney (the “Facility”).

 

B. Pursuant to the MTA, Transferor agreed to assign to New Manager, and New Manager agreed to assume any and all Resident Trust Funds.

 

Agreement:

 

Now, Therefore, the parties hereby agree as follows:

 

1. Assignment. Transferor hereby grants, conveys, transfers and assigns to New Manager, its successors and assigns, all of Transferor’s right, title and interest to all Resident Trust Funds held by Transferor in trust for the residents or tenants at the Facility, as applicable, on the terms and conditions set forth in the MTA.

 

2. Assumption of the Resident Trust Funds. In reliance upon Transferor’s covenants and representation contained in the MTA, New Manager hereby accepts the grant, conveyance, transfer and assignment by Transferor to New Manager, its successors and assigns, of all of Transferor’s right, title and interest to all Resident Trust Funds held by Transferor in trust for the residents or tenants at the Facility, as applicable, on the terms and conditions set forth in the MTA.

 

3. Miscellaneous Provisions.

 

(a) Transferor and New Manager agree, at the other party’s request, whether on or after the date hereof, and without further consideration, that each shall execute and deliver any and all further instruments and documents, and take such further actions, as the other party may reasonably request or as may reasonably be required in order more effectively to vest in New Manager all rights, titles and interests, in and to all Resident Trust Funds, and to evidence New Manager’s assumption of such rights, titles and interests, or to otherwise carry out the provisions of this Agreement.

 

(b) All of the terms, provisions and conditions of this Agreement shall be binding on, and shall inure to and be enforceable by, the parties hereto and their respective successors and assigns.

 

[Signature Page to Assignment and Assumption of Resident Trust Funds]

 

 
 

 

(c) Any word whose initial letter is capitalized is a defined term. Unless such term is defined herein, it shall have the same meaning as that attributed to such term in the MTA.

 

(d) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

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

 

  Transferor:
   
  GCC OLNEY, LLC
     
  By:  
  Print Name:  
  Title:  
     
  New Manager:
   
  OLNEY HEALTH AND REHAB CENTER, LLC
     
  By:  
  Print Name  
  Title:  

 

[Signature Page to Assignment and Assumption of Resident Trust Funds]

 

 
 

 

EXHIBIT 6.16

 

RESTRICTIVE COVENANT AGREEMENT

 

This RESTRICTIVE COVENANT AGREEMENT (this “Agreement”) is entered into as of [●], 2021 by and among Real Living Property Holdings – Texas, LLC, a Texas limited liability company (“PSA Buyer”), Nocona Health and Rehab Center, LLC, a Texas limited liability company (“Nocona MTA Buyer”), Henrietta Health and Rehab Center, LLC, a Texas limited liability company (“Henrietta MTA Buyer”), Olney Health and Rehab Center, LLC, a Texas limited liability company (“Olney MTA Buyer” and collectively with the Nocona MTA Buyer, the Henrietta MTA Buyer and PSA Buyer, each a “Buyer” and collectively, “Buyers”), GCC Nocona, LLC, a Texas limited liability corporation (“Nocona MTA Seller”), Grace Properties Nocona, LLC, a Texas limited liability company (“Nocona PSA Seller”), GCC Henrietta, LLC, a Texas limited liability company (“Henrietta MTA Seller”), Grace Properties Henrietta, LLC, a Texas limited liability company (“Henrietta PSA Seller”), GCC Olney, LLC, a Texas limited liability company (“Olney MTA Seller”), Grace Properties Olney, LLC, a Texas limited liability company (“Olney PSA Seller”), and Heatlhlink Holdings Group LLC, d/b/a HMS Healthcare (“HMS” and collectively with Nocona MTA Seller, Nocona PSA Seller, Henrietta MTA Seller, Henrietta PSA Seller, Olney MTA Seller, and Olney PSA Seller, each a “Restricted Party” and collectively, the “Restricted Parties”).

 

WHEREAS, pursuant to (a) that certain Management Transfer Agreement, dated as of the date hereof (the “Nocona MTA”), by and between Nocona MTA Seller and Nocona MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Nocona PSA”) by and between Nocona PSA Seller and PSA Buyer; (b) that certain Management Transfer Agreement, dated as of the date hereof (the “Henrietta MTA”), by and between Henrietta MTA Seller and Henrietta MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Henrietta PSA”) by and between Henrietta PSA Seller and PSA Buyer; and (c) that certain Management Transfer Agreement, dated as of the date hereof (the “Olney MTA” and collectively with the Nocona MTA and the Henrietta MTA, the “MTA”), by and between the Olney MTA Seller and Olney MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Olney PSA” and collectively with the Nocona PSA and the Henrietta PSA, the “PSA”), Buyers acquired all of the Transferred Assets (as defined in the MTA) and the Land (as defined in the PSA, and collectively with the Transferred Assets, the “Purchased Assets”);

 

WHEREAS, in executing the MTA and PSA, as applicable, and agreeing to pay the Purchase Price, Buyers considered the substantial goodwill of the Purchased Assets and the retention of the Protected Information to be valuable assets and an essential inducement to the execution of the MTA and PSA, as applicable, and the consummation of the transactions contemplated thereby;

 

WHEREAS, the parties hereto acknowledge and agree that the Restricted Parties could substantially dilute the value of such goodwill and Protected Information by competing with any Buyer or by soliciting or hiring their employees and/or customers or otherwise breaching or violating the provisions of this Agreement;

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

WHEREAS, each Restricted Party has agreed to accept certain restrictions as set forth in this Agreement in order to induce Buyers to enter into and consummate the MTA and PSA, as applicable, and the transactions contemplated thereby; and

 

WHEREAS, none of the Buyers would obtain the benefit of the bargain set forth in the MTA and PSA, as applicable, as specifically negotiated by the parties thereto unless this Agreement was executed and delivered and specifically performed and enforced.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, the consideration to be received by the Restricted Parties on the Closing Date under the MTA and PSA, as applicable, or as a result of the consummation of the transactions effected by the MTA and PSA, as applicable, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Defined Terms. Capitalized terms used in this Agreement but not defined in this Agreement shall have the meanings ascribed to such terms in the MTA or PSA, as applicable.

 

Non-Competition Covenants.

 

Restrictive Covenants. As a material inducement to Buyers to enter into the MTA and PSA, as applicable, and to consummate the transactions contemplated thereby, each Restricted Party hereby covenants and agrees that for a period commencing on the Closing Date and ending on the fifth (5th) anniversary thereof (the “Restrictive Period”), such Restricted Party shall not, and shall cause its respective affiliates not to, directly or indirectly:

 

own any interest in, manage, control, participate in, consult with, render services for (as a director, officer, employee, agent, broker, partner, contractor, consultant or otherwise) or be or become engaged or involved in any Restricted Business, including by being or becoming an organizer, owner, co-owner, trustee, promoter, affiliate, investor, lender, partner, joint venturer, principal, stockholder, officer, director, employee, independent contractor, manager, salesperson, representative, associate, consultant, agent, broker, supplier, licensor, analyst or advisor of, to or with any Restricted Business;

 

make any investment (whether equity, debt or otherwise) in, lend or otherwise provide any money or assets to, or provide any guaranty or other financial assistance to any Restricted Business; or

 

provide any information, assistance, support, analysis, product, technology or intellectual property to any Person engaged or involved in (or anticipated to be engaged or involved in) any Restricted Business;

 

in each case, anywhere within the Restricted Territory; provided that nothing herein shall prohibit any Restricted Party from being a passive owner of not more than 2% of any class of the outstanding equity of an entity that is publicly traded so long as such Restricted Party has no active participation in the business of such entity.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Definitions. As used in this Agreement:

 

Business” means the business of owning, operating or managing a skilled nursing facility or assisted living facility.

 

Facility” has the meaning ascribed in the applicable MTA.

 

Protected Information” means the information concerning the Business and the Facilities, not already generally available to the public that is designated confidential or treated in that manner (including all tangible or intangible embodiments thereof).

 

Restricted Business” means any business which competes with or is substantially similar to the Business in the Restricted Territory.

 

Restricted Territory” means the area within a seventy-five (75) mile radius of each of the Facilities.

 

Non-Solicitation/Non-Hire of Employees. As material inducement to Buyers to enter into the MTA and PSA, as applicable, and to consummate the transactions contemplated thereby, each Restricted Party hereby covenants and agrees for the duration of the Restrictive Period to not, and to cause its affiliates not to, directly or indirectly on its own behalf or on behalf of any third party or Person, (a) induce or attempt to induce any employee of any Buyer to leave the employ of such Buyer or in any way interfere with the relationship between any Buyer and any such employee thereof or (b) hire any person who was an employee of any Buyer during the 365-day period immediately following the date on which such Person ceased to be an employee of such Buyer. Notwithstanding the foregoing, the placement of general advertisements that may be targeted to a particular geographic or technical area, but are not targeted specifically towards employees of any Buyer, shall not be deemed to be a solicitation for purposes of this Section 0.

 

Non-Solicitation of Business Relationships. As material inducement to Buyers to enter into the MTA and PSA, as applicable, and to consummate the transactions contemplated thereby, each Restricted Party hereby covenants and agrees for the duration of the Restrictive Period to not, and to cause its affiliates not to, directly or indirectly, (a) call on, solicit or service any patient, sales representative, referral source, partner, supplier or other Person that has a business relationship with any Buyer in order to induce or attempt to induce such Person to cease doing business with such Buyer, or in any way interfere with the relationship between any such patient, sales representative, referral source, partner, supplier or other Person, on the one hand, and any such Buyer, on the other hand or (b) divert or attempt to divert from any Buyer any business or business opportunity whatsoever.

 

Representations and Warranties of the Restricted Parties. Each Restricted Party hereby makes the representations and warranties set forth in this Section 5 to Buyers:

 

Authority; Enforceability. Each Restricted Party has all necessary legal capacity, power and authority to execute and deliver this Agreement and to perform such Restricted Party’s obligations hereunder. This Agreement has been duly and validly executed and delivered by each Restricted Party and constitutes a legal, valid and binding obligation of the Restricted Parties, enforceable against any Restricted Party in accordance with its terms.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

No Conflict. The execution and delivery by each Restricted Party of this Agreement do not, and the performance of such Restricted Party’s obligations hereunder and the consummation of the transactions contemplated hereby shall not, conflict with or violate any law or order, as applicable, or agreement by which any Restricted Party’s properties, rights or assets are bound or affected.

 

Consultation with Counsel. Each Restricted Party has consulted with legal counsel regarding the Non-Competition and Related Covenants and, based on such consultation, has determined and hereby acknowledges and agrees that the Non-Competition and Related Covenants are reasonable in terms of duration, scope and area restrictions and are necessary to protect the substantial goodwill acquired by Buyers, the Protected Information and the substantial consideration paid to the Restricted Parties pursuant to the MTA and PSA and in connection with the consummation of the transactions contemplated thereby.

 

No Restriction on Earning a Living. Each Restricted Party hereby acknowledges that the provisions of Section 0, Section 0 and Section 0 do not preclude any Restricted Party from earning a livelihood, nor do they unreasonably impose limitations on any Restricted Party’s ability to earn a living. In addition, each Restricted Party hereby acknowledges that the potential harm to the Buyers of non-enforcement of this Agreement outweighs any harm to the Restricted Parties or any of their respective affiliates of enforcement (by injunction or otherwise) of this Agreement.

 

Confidentiality and Non-Disparagement.

 

Each Restricted Party hereby covenants and agrees to not, and to cause its respective affiliates not to, (i) retain or use any Protected Information for the benefit, purposes or account of any Restricted Party or any other Person or (ii) disclose any Protected Information, other than necessary disclosures to his or its legal and financial advisors who agree to maintain the confidentiality of such Protected Information.

 

In the event that any Restricted Party is legally required, based on the written opinion of outside legal counsel, to disclose any Protected Information, the Restricted Parties shall give Buyers prompt written notice of such requirement so that Buyers may seek an appropriate protective order or other remedy and the Restricted Parties shall cooperate with Buyers to obtain such protective order. In the event that such protective order or other remedy is not obtained, the Restricted Parties shall furnish only that portion of the Protected Information that is legally required to be disclosed, based on the written opinion of outside legal counsel, and use his, her, or its best efforts to obtain assurances that confidential treatment will be accorded to such Protected Information.

 

Except as required by law, each Restricted Party hereby covenants and agrees not to disclose to any Person, other than any Restricted Party’s legal and financial advisors, the existence or contents of this Agreement.

 

Each Restricted Party hereby covenants and agrees to not, and to cause its respective affiliates not to, make any negative or disparaging statements or communications regarding any Buyer or any of their respective businesses, services, directors, officers, employees, contractors or consultants.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Miscellaneous.

 

Reasonableness. Each Restricted Party expressly acknowledges that this Agreement is reasonable and valid in all respects and irrevocably waive (and irrevocably agree not to raise) as a defense any issue of reasonableness (including the reasonableness of the Restricted Business or the duration and scope of this Agreement) in any proceeding to enforce any provision of this Agreement, the express intention of the parties being to provide for the legitimate and reasonable protection of the interests of Buyers by enforcement of this Agreement as written.

 

Indemnification. Each Restricted Party shall indemnify and save each Buyer and its respective affiliates, members, equityholders, directors, officers, employees, agents and representatives (each, an “Indemnified Party”) harmless of and from any claim, demand, action, cause of action, judgment, loss (including loss of profits), liability, damage or expense suffered by or imposed upon the Indemnified Party as a result of, in connection with or arising out of any violation or breach of this Agreement by the Restricted Parties.

 

Acknowledgement of Reliance and Equitable Remedies. Each Restricted Party acknowledges and agrees that: (i) the covenants and agreements contained in Section 0, Section 0 and Section 0 (collectively, the “Non-Competition and Related Covenants”) are necessary, fundamental and required for the protection of the goodwill of Buyers and the Purchased Assets acquired by Buyers pursuant to the MTA and PSA; (ii) the Non-Competition and Related Covenants relate to matters that are of a special, unique and extraordinary value; (iii) a breach or violation by any Restricted Party of any of the Non-Competition and Related Covenants will result in irreparable harm and damages that cannot be adequately compensated by a monetary award and, accordingly, Buyers or one or more of their subsidiaries or affiliates shall, in addition to all other available remedies (including seeking such monetary damages as it can show it has sustained by reason of such breach), be entitled to injunctive or other equitable relief to prevent or redress any such breach or violation (without posting a bond or other security and without having to prove the inadequacy of the available remedies at law); (iv) pursuant to the MTA and PSA, as applicable, the Restricted Parties received substantial cash payments and other valuable consideration; (v) as a condition of Buyers’ willingness to consummate the transactions contemplated by the Purchase Agreements, the Restricted Parties are entering into this Agreement and agreeing to the Non-Competition and Related Covenants; (vi) this Agreement is being executed in connection with the consummation of the transactions contemplated by the MTA and PSA, as applicable, pursuant to which Buyers acquired the Purchased Assets and substantial goodwill associated therewith; and (vii) this Agreement is intended to comply with the laws of the State of Texas and all other jurisdictions that might be deemed to be applicable hereto and which restrict or otherwise limit the enforceability of a contract that restrains a Person from engaging in a profession, trade or business. In the event of any breach or violation by any Restricted Party of any of the covenants contained in this Agreement, the time period of such covenant with respect to such Restricted Party shall be tolled and extended until such breach or violation is resolved.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Texas without giving effect to any choice or conflict of Law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of Texas. Each party hereto hereby irrevocably and unconditionally consents to submit to the sole and exclusive jurisdiction of any state or federal court located within the State of Texas (collectively, the “Chosen Courts”) for any litigation arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in the Chosen Courts and agrees not to plead or claim in any Chosen Court that such litigation brought therein has been brought in any inconvenient forum; provided, for the avoidance of doubt, that nothing in this Agreement shall prohibit Buyers from enforcing a judgment in any other jurisdiction. Each party hereto agrees, (i) to the extent such party is not otherwise subject to service of process in the State of Texas, to appoint and maintain an agent in the State of Texas as such party’s agent for acceptance of legal process and (ii) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service. Service made pursuant to clause (i) or (ii) above shall have the same legal force and effect as if served upon such party personally within the State of Texas

 

Non-Merger. Except as otherwise expressly provided in this Agreement, the covenants, representations and warranties set forth herein shall not merge upon and shall survive the Closing of the transactions contemplated under the MTA and PSA, as applicable, and, notwithstanding such Closing or any investigation made by or on behalf of any party, shall continue in full force and effect. Such Closing shall not prejudice any right of one party against any other party in respect of anything done or omitted under this Agreement or in respect of any right to damages or other remedies.

 

Severability. Subject to Section 7(g), in the event any provision of this Agreement is found to be void and unenforceable by a court or other tribunal of competent jurisdiction, the remaining provisions of this Agreement shall nevertheless be binding upon the parties hereto with the same effect as though the void or unenforceable part had been severed and deleted or reformed to be enforceable.

 

Judicial Limitation. It is expressly understood and agreed that, although each of the parties hereto consider the restrictions contained herein to be reasonable, if at any time a court or other tribunal of competent jurisdiction finally determines or adjudicates that any portion of the Non-Competition and Related Covenants is unenforceable by reason of it extending for too great of a period of time or over too great of a geographical area or by reason of it being too extensive in any other respect, then such Non-Competition and Related Covenant and this Agreement shall not be rendered void but such Non-Competition and Related Covenant shall be deemed amended to apply as to such maximum period of time, maximum geographical area, or maximum extent in all other respects, as the case may be, as such court may judicially determine or adjudicate to be enforceable. Alternatively, if any court or other tribunal of competent jurisdiction finally determines or adjudicates that any portion of the Non-Competition and Related Covenants is unenforceable, and such restriction cannot be amended pursuant to the preceding sentence so as to make such Non-Competition and Related Covenant enforceable, such judicial determination or adjudication shall not affect the enforceability of any other Non-Competition and Related Covenant.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Notice. All notices, requests, demands, claims, and other communications hereunder shall be in writing (including by email) and sufficient if delivered personally, sent by nationally recognized overnight courier or by registered or certified mail (postage prepaid, return receipt requested) or by email, with delivery or read receipt or confirmation requested and received (if applicable) as follows:

 

If to the Buyers, to:

 

__________________________

__________________________

__________________________

__________________________

Attn: _____________________

Email: ____________________

 

with a copy to (which shall not constitute notice to the Buyers):

 

Bass, Berry & Sims PLC

150 3rd Avenue S., Suite 2800

Nashville, TN 37201

Attn:    Angela Humphreys and Price W. Wilson

E-Mail: ahumphreys@bassberry.com; pwilson@bassberry.com

 

If to the Restricted Parties, to:

 

__________________________

__________________________

__________________________

__________________________

Attn: _____________________

Email: ____________________

 

with a copy to (which shall not constitute notice to the Restricted Parties):

 

__________________________

__________________________

__________________________

__________________________

Attn: _____________________

Email: ____________________

 

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

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Entire Agreement; Amendments and Waivers. This Agreement (i) represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof, (ii) supersedes all prior understandings, both written and oral, among the parties with respect to the subject matter hereof, and (iii) can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement, signed by Buyers and the Restricted Parties. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All rights, remedies and benefits expressly provided for in this Agreement are cumulative and are not exclusive of any rights, remedies or benefits provided for by law or in this Agreement, and the exercise of any remedy by a party hereto shall not be deemed an election to the exclusion of any other remedy (any such claim by the other party being hereby waived).

 

Interpretative Matters. Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

 

Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

Words denoting any gender shall include all genders. Where a word is defined herein, references to the singular shall include references to the plural and vice versa.

 

A reference to any party to this Agreement or any other agreement or document shall include such party’s successors and permitted assigns.

 

All references to a day or days shall be deemed to refer to a calendar day or calendar days, as applicable, unless otherwise specifically provided.

 

Negotiation and Drafting. The parties have participated jointly in the negotiation and drafting of this Agreement and the other agreements and documents contemplated herein. In the event of an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement and such other agreements and documents will be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of authoring any of the provisions of this Agreement or any other agreements or documents contemplated herein.

 

Counterparts. This Agreement may be executed in one or more counterparts, any one of which may be by facsimile, electronic signature (including via DocuSign), digital imaging device (i.e., pdf format) or similar electronic format, all of which taken together shall constitute one and the same instrument.

 

Assignment. This Agreement is personal to the Restricted Parties, and none of the Restricted Parties’ rights and duties hereunder shall be assignable or delegable by the Restricted Parties, as applicable. Any purported assignment or delegation by the Restricted Parties in violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement may be assigned by any Buyer to (i) any of its affiliates, (ii) a Person that becomes, directly or indirectly, a successor in interest (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business, operations, rights, properties or assets of such Buyer or (iii) any of its lenders as collateral security. Each Restricted Party acknowledges and agrees that upon such assignment, the rights and obligations of such Buyer hereunder shall be the rights and obligations of such affiliate or successor.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

  Real Living Property Holdings – Texas, LLC
              
  By:  
  Name:  
  Title:  
     
  NOCONA HEALTH AND REHAB CENTER, LLC
     
  By:  
  Name:  
  Title:  
     
  HENRIETTA HEALTH AND REHAB CENTER, LLC
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

  OLNEY HEALTH AND REHAB CENTER, LLC
                
  By:  
  Name:  
  Title:  
     
  GCC Nocona, LLC
     
  By:  
  Name:  
  Title:  
     
  GRACE PROPERTIES NOCONA, LLC
     
  By:  
  Name:  
  Title:  
     
  GCC HENRIETTA, LLC
     
  By:  
  Name:  
  Title:  
     
  GRACE PROPERTIES HENRIETTA, LLC
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

  GCC OLNEY, LLC
                 
  By:  
  Name:  
  Title:  
     
  GRACE PROPERTIES OLNEY, LLC
     
  By:  
  Name:  
  Title:  
     
  Heatlhlink Holdings Group LLC
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Restrictive Covenant Agreement]

 

 

 

Exhibit 2.3

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) dated as of June 21, 2021 is by and between GRACE PROPERTIES NOCONA, LLC, a Te

xas limited liability company (“Seller”), and REAL LIVING PROPERTY HOLDINGS – TEXAS, LLC, a Texas limited liability company (“Purchaser”). Seller and Purchaser are sometimes collectively referred to as the “Parties” or individually as a “Party”.

 

W I T N E S S E T H:

 

Section 1. Definitions.

 

As used herein, the following terms shall have the following meanings:

 

“Closing” shall mean the consummation of the purchase and sale transaction contemplated by this Agreement.

 

Closing Date” shall mean on or before 1:00 p.m. Central Time on August 2, 2021.

 

Commitment Documents” shall mean all title exception documents including all of the documents referred to in Schedule B of the Title Commitment.

 

Deed” shall mean a special warranty deed conveying good and indefeasible fee simple title in and to the Property to Purchaser, executed and acknowledged by Seller and to be executed by Purchaser, in recordable form and in substantially the form set forth on Exhibit “B” attached hereto and made a part hereof for all intents and purposes.

 

Earnest Money” shall mean the amount deposited pursuant to Section 4(b) hereof.

 

Effective Date” shall mean the date on which the Title Company acknowledges receipt of a copy of this Agreement executed by Purchaser and Seller.

 

Feasibility Period” shall mean the time period from the Effective Date through 5:00 p.m. Central Time on the thirtieth (30th) day thereafter.

 

Independent Contract Consideration” shall mean the sum of One Hundred and No/100 Dollars ($100.00).

 

Land” shall mean those certain tracts or parcels of land containing approximately 3.11 acres of land located at 306 Carolyn Road, Nocona, Montague County, Texas, being described on Exhibit “A” attached hereto and made a part hereof for all intents and purposes.

 

Land Document Review Period” shall mean the time period from the Effective Date through the expiration of the Feasibility Period.

 

Land Documents” shall mean the Title Commitment, the Commitment Documents, and the Survey collectively.

 

MTA” shall mean that certain Management Transfer Agreement dated as of the Effective Date by and between GCC Nocona, LLC, a Texas limited liability company (“Transferor”), and Nocona Health and Rehab Center, LLC, a Texas limited liability company, (“New Manager”), regarding the transition of the operations of the Property from Transferor to New Manager.

 

Notice” shall mean any notice required or given pursuant to or related to this Agreement.

 

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Other Agreements” shall mean (i) that certain Purchase and Sale Agreement dated as of the Effective Date by and between Grace Properties Henrietta, LLC, as seller, and Purchaser, as purchaser, for the real property located at 807 West Dois D’ Arc, Henrietta, Texas and (ii) that certain Purchase and Sale Agreement dated as of the Effective Date by and between Grace Properties Olney, LLC, as seller, and Purchaser, as purchaser, for the real property located at 1402 West Elm, Olney, Texas.

 

Permitted Exceptions” shall mean (i) the lien for ad valorem real estate taxes on the Property for the year in which the Closing occurs to the extent not yet due and payable and subsequent years, and (ii) any other matters which are waived by, or acceptable to, Purchaser pursuant to Section 5; provided, however, that Permitted Exceptions shall not include (a) matters that Seller has either agreed to cure or remove as provided in Section 5 or that Seller is obligated to cure or remove as provided herein, (b) matters that are removed by the Title Company from the Title Commitment prior to the expiration of the Feasibility Period or from any pro forma policy provided by the Title Company to Purchaser or its counsel, or which the Title Company has otherwise agreed in writing prior to the expiration of the Feasibility Period to remove from the Title Policy to be issued at the Closing, or (c) all liens against all or part of the Property not caused by Purchaser, including any deed of trust, mortgage, mechanics’, or similar lien or encumbrance that can be satisfied and discharged with the payment of a specified amount of money (“Liens”).

 

Property” shall mean the Land, together with (i) all buildings, structures, improvements, and fixtures located thereon (the “Improvements”), (ii) all licenses, permits and approvals related to the said real property, all third party warranties or guaranties relating to said real property and all other items of intangible personal property owned by Seller and used in connection with the ownership, use, leasing, maintenance, service or operation of such real property (the “Intangible Personal Property”), (iii) all and singular the rights pertaining to such real property, including, without limitation, any and all rights, titles, interests, and estates of Seller (if any) in and to any and all adjacent streets, roads, alleys or rights-of-way and ingress and egress easements benefiting or relating to such real property, all plants, shrubs and trees located thereon, any land lying in or under any body of water or the bed of any street or road, open or proposed, adjacent to such Land, all easements, hereditaments and privileges appurtenant to the foregoing Land, all oil, gas, hydrocarbon and other minerals (whether similar or dissimilar) in, on or under, or that may be produced from, such Land, all strips or gores, if any, between such Land and adjoining properties, all zoning rights, entitlements, air rights, development rights and water rights relating to the Land or Improvements, and all other rights, privileges and appurtenances in any way related to or for the benefit of the foregoing Land, (iv) all licenses, permits, or similar documents in any way relating to such real property, (v) all water and wastewater rights, capacities, and reservations, utility rights, tap fees, impact fees and the like owned by Seller (if any) relating to or attributable to such real property, (vi) all of Seller’s right, title and interest, in and to all goods, machinery, furniture, equipment and other tangible personal property owned by Seller and used or useful in the operation of such real property, excluding all items of personal property owned by Tenant, if any (the “Personal Property”), and (vii) all of Seller’s interest, as landlord, in the Lease and any unapplied tenant security deposit under the Lease, if any.

 

Purchase Price” shall be One Million Seven Hundred Thousand and 00/100 Dollars ($1,700,000.00).

 

Survey” shall mean an ALTA survey of the Land from a reputable registered local surveyor selected by Purchaser dated after the Effective Date showing the boundaries of the Land, the location of all Improvements on the Land, and all recorded easements and building setback lines, accompanied by a metes and bounds description of the Land.

 

Title Commitment” shall mean a commitment for Title Insurance in the amount of the Purchase Price issued through the Title Company covering the Land setting forth the matters which affect the Land.

 

Title Company” shall mean Fidelity National Title Agency, Inc. located at 1900 West Loop South, Suite 200, Houston, Texas 77027 (attention: H. David Templeton); telephone (713) 630-0001; facsimile (713) 630-0017.

 

Title Objections” shall mean any matters referred to in or discoverable from any of the Land Documents to which Purchaser objects.

 

Title Policy” shall mean an Owner Policy of Title Insurance in the amount of the Purchase Price insuring that Purchaser is the owner of fee simple title to the Property subject only to the Permitted Exceptions.

 

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Section 2. Contract.

 

Pursuant to the provisions of this Agreement, in consideration of the representations, warranties, covenants, agreements, waivers, and releases set forth herein, Seller agrees to sell and convey the Property to Purchaser, and Purchaser agrees to purchase the Property from Seller.

 

Section 3. Title Company; Delivery Date; Effective Date.

 

This Agreement shall not be effective with respect to either Party until it has been duly executed by both Parties and delivered to Title Company. If Purchaser does not timely deliver to the Title Company an original or electronic counterpart of this Agreement executed by both Parties within three (3) business days after Purchaser’s and Seller’s execution of this Agreement, Seller may terminate this Agreement by written notice to Purchaser.

 

Section 4. Purchase Price; Earnest Money; Independent Contract Consideration.

 

(a) Purchaser agrees to pay the Purchase Price, plus or minus applicable prorations, to Seller at the Closing in cash. For the purpose of this Agreement, the term “cash” means only lawful currency of the United States of America or immediately available funds actually received and unconditionally available for distribution by the Title Company prior to 1:00 p.m. Central Time on the Closing Date.

 

(b) Within three (3) business days after the Effective Date, Purchaser shall deliver Thirty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars ($33,333.33) as Earnest Money to the Title Company. All Earnest Money shall be held in an interest bearing trust account at the Title Company. The Earnest Money shall be applied towards the payment of the Purchase Price in the event the transaction contemplated hereby closes and funds. If Purchaser does not timely deliver the Earnest Money, Seller may terminate this Agreement by written notice to Purchaser.

 

(c) If Purchaser terminates this Agreement, the Earnest Money will be immediately refunded to Purchaser, less the Independent Contract Consideration that Seller will retain as independent consideration for Purchaser’s right to terminate. The Independent Contract Consideration is to be credited to the Purchase Price only upon the Closing.

 

Section 5. Title Commitment; Commitment Documents; Survey; Land Document Review Period.

 

(a) Within three (3) business days after the Effective Date, Seller shall request the Title Company to prepare and furnish to Purchaser the following:

 

(i) A Title Commitment; and

 

(ii) A true, complete and legible copy of each of the Commitment Documents.

 

(b) Within three (3) business days after the Effective Date, Seller shall deliver to Purchaser a copy of Seller’s existing survey(s) of the Property (the “Existing Survey”). If the Existing Survey is not acceptable to the Title Company or Purchaser, Purchaser may, at Purchaser’s sole cost and expense, obtain either an update of the Existing Survey or a new Survey and deliver same to Seller, the Title Company, and Seller’s Counsel on or before the expiration of the Feasibility Period. In the event of any discrepancy between the description of the Land set forth on Exhibit “A” attached hereto and that accompanying the Survey, the description accompanying the Survey shall govern and control and shall be the description of the Land used in the Deed if so elected by Purchaser. The legal description of the Land shall be subject to the reasonable approval of Seller. If this Agreement shall be terminated by Seller or Purchaser pursuant to the right of either party to do so as expressly set forth herein, then the Survey shall become the property of Seller without the payment of any consideration therefor other than Seller’s having entered into this Agreement.

 

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(c) Purchaser shall have the Land Document Review Period to examine the Land Documents, and to notify Seller of any Title Objections. Seller shall not have any duty or obligation whatsoever to, but Seller may, cure or attempt to cure any of such Title Objections; provided, however, Seller agrees to pay all sums owing to discharge any and all Liens against the Land on or prior to the Closing Date. Seller shall notify Purchaser of its intention to cure or not to cure any Title Objections on or prior to the Closing Date within ten (10) days after Purchaser notifies Seller of such Title Objections; and in the event Seller fails to so notify Purchaser within such ten (10) day period, it shall be presumed that no cure will be made. Purchaser shall conclusively be deemed to have reviewed, accepted, and approved all matters which are referred to in or disclosed by any of the Land Documents which Purchaser does not timely notify Seller constitute Title Objections. For avoidance of doubt, Purchaser shall have no obligation to object to any Liens, it being understood that no Lien shall be deemed a Permitted Exception.

 

(d) If, for any reason whatsoever, Seller does not cure, or elects not to cure or is deemed to have elected not to cure, any Title Objections within such ten (10) day period set forth in Section 5(c) above, at any time prior to the Closing Date, Purchaser shall elect to either:

 

(i) terminate this Agreement in accordance with the provisions of Section 13(c) hereof; or

 

(ii) waive all uncured Title Objections, purchase the Property, and accept the Title Policy and the Deed subject to all uncured Title Objections (in addition to all matters to which Purchaser did not timely object), without any reduction in the Purchase Price.

 

Purchaser’s failure to give Seller timely notice prior to the Closing Date shall be deemed to be an election by Purchaser under clause (ii) above.

 

Section 6. The Feasibility Period; Purchaser’s Evaluation of the Property.

 

(a) Seller shall deliver to Purchaser within three (3) business days after the Effective Date copies of all documents relating to the Property (to the extent the same are in existence and in the possession or control of Seller), including, but not limited to, environmental reports, development rights, permits, roadway agreements, topographical maps, utility information, survey, engineering reports, flood plain information, soil reports, development plans for adjoining property, site development permits, etc. (the “Property Information”) for Purchaser to review. In the event that the Seller fails to deliver a material Property Information document, as reasonably determined by Purchaser, to Purchaser within such three (3) business day period, the Feasibility Period shall be extended by one (1) day for each day thereafter until all material Property Information is delivered to Purchaser. PURCHASER ACKNOWLEDGES THAT ANY REPORTS SUPPLIED OR MADE AVAILABLE BY SELLER, WHETHER WRITTEN OR ORAL, OR IN THE FORM OF MAPS, SURVEYS, PLATS, SOIL REPORTS, ENGINEERING STUDIES, ENVIRONMENTAL ASSESSMENTS, STUDIES, ANALYSES, OR OTHER INSPECTION REPORTS PERTAINING TO THE PROPERTY (“REPORTS”) ARE BEING DELIVERED TO PURCHASER ON AN “AS-IS, WHERE-IS, WITH ALL FAULTS” BASIS SOLELY AS A COURTESY AND THAT SELLER HAS VERIFIED NEITHER THE ACCURACY OF ANY STATEMENTS OR OTHER INFORMATION CONTAINED IN THOSE MATERIALS, THE COMPLETENESS OF THE REPORTS, ANY METHOD USED TO COMPILE THE REPORTS, OR THE QUALIFICATIONS OF THE PERSON(S) PREPARING THE REPORTS. SELLER MAKES NO REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, AS TO THE ACCURACY, COMPLETENESS, OR ANY OTHER ASPECT OF THE REPORTS.

 

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(b) During the Feasibility Period, with reasonable prior notice to Seller, Purchaser and Purchaser’s designated agents, employees, and independent contractors shall have the right, at Purchaser’s sole risk, cost, and expense, to enter upon the Property; to conduct engineering, environmental, operational, market, economic feasibility, and other inspections, studies, and tests of the Property; to review and analyze the Property and the condition of the Property and otherwise to evaluate and assess the Property as Purchaser deems appropriate or necessary in its sole discretion. Purchaser hereby agrees to indemnify Seller against all liability attributable to such entry, inspections, studies, and tests performed by or on behalf of Purchaser; provided, however, that excluded from the foregoing indemnity are any losses, costs, damages, claims, or liabilities (a) relating to pre-existing conditions upon the Property or (b) arising from the gross negligence or willful misconduct of Seller or its contractors, employees, agents, representatives or other parties under Seller’s control. PURCHASER SHALL NOT CONDUCT OR ALLOW ANY PHYSICALLY INTRUSIVE TESTING OF, ON OR UNDER THE PROPERTY WITHOUT FIRST OBTAINING SELLER’S WRITTEN CONSENT AS TO THE TIMING AND SCOPE OF WORK TO BE PREFORMED, WHICH CONSENT MAY BE WITHHELD IN SELLER’S SOLE AND ABSOLUTE DISCRETION. Purchaser agrees that, in making any inspections of, or conducting any testing of, on or under, the Property, Purchaser or the representatives of Purchaser entering onto the Property shall carry not less than $2,000,000.00 commercial general liability insurance with Seller as an additional insured party insuring all activity and conduct of Purchaser and such representatives exercising such right of access. Purchaser represents and warrants that it carries not less than the coverage set forth in the previous sentence with contractual liability endorsement which insures Purchaser’s indemnity obligations hereunder, and upon written request of Seller, will provide Seller with written evidence of same. After receipt from Purchaser of at least twenty-four hours advance written or telephonic notice, Seller shall allow Purchaser to conduct any inspections or tests, so that Seller shall have a reasonable opportunity to have a representative present during any entry onto the Property by Purchaser or its representatives, agents or consultants. Purchaser agrees to use commercially reasonable efforts to cooperate with any reasonable request by Seller in connection with the timing of any such inspection or test report or summary upon Seller’s written request therefor.

 

(c) Purchaser shall have until the end of the Feasibility Period to inspect the Property and any other matters whatsoever with respect to the Property. At any time prior to the expiration of the Feasibility Period, Purchaser may, by written notice to Seller, elect to terminate this Agreement (i) if Purchaser is denied financing by its lender for its purchase of the Property or (ii) pursuant to Section 5(d)(i) herein or (iii) due to any issue or matter disclosed or discovered by any environmental inspection or environmental report, including any environmental Phase I, of the Property, in accordance with Section 13(c) hereof.

 

(d) In the event Purchaser terminates this Agreement or elects not to close the transaction contemplated in this Agreement, at Purchaser’s sole cost and expense, Purchaser shall promptly restore the Property to substantially its condition prior to Purchaser’s entry thereon, such obligation to survive the termination of this Agreement for four (4) months.

 

(e) If this Agreement terminates for any reason, then Purchaser shall deliver to Seller copies of all reports, assessments, studies, and the like that have been prepared by or for Purchaser in connection with Purchaser’s review of the Property and/or have been delivered or provided to Purchaser by Seller. It is understood and agreed that any such reports, assessments, studies, and the like shall be provided to Seller without any representation or warranty by Purchaser as to the completeness or accuracy thereof, or the right of Seller to rely on same. Furthermore, Purchaser shall have no obligation to provide to Seller any information provided to Purchaser by any prospective tenant of Purchaser for the Property or any proprietary information of Purchaser.

 

(f) Purchaser covenants and agrees to not make any filings or requests or make any communication with the US Army Corps of Engineers with respect to the Property without the prior written consent of Seller, such consent not to be unreasonably withheld, conditioned or delayed.

 

Section 7. Representations and Warranties.

 

(a) As a material inducement to Purchaser to execute this Agreement and to consummate the transactions contemplated by this Agreement, Seller represents and warrants to Purchaser, as of the date hereof and as of the Closing Date (except to the extent any such representations and warranties shall have been expressly made as of a particular date, in which case such representations and warranties shall be made only as of such date), as follows:

 

(i) Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its formation and qualified to do business and is in good standing under the laws of the state in which the Property is located.

 

(ii) Seller has the full right and authority, and has obtained any and all consents required, to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby. This Agreement has been, and all of the documents to be delivered by Seller at the Closing will be, authorized and properly executed by or on behalf of Seller and constitutes, or will constitute, as appropriate, the valid and binding obligation of Seller, enforceable in accordance with their terms.

 

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(iii) Seller has not entered into any agreement to dispose of its interest in the Property or any part thereof, except for this Agreement. There is no agreement to which Seller is a party or is otherwise binding on Seller that is in conflict with this Agreement. The execution and delivery of this Agreement and the performance by Seller of its obligations hereunder does not conflict with or violate any law of any governmental authority or quasi-governmental authority with jurisdiction over Seller or the Property. No person, firm or entity has any rights in, or rights to acquire all or any part of, the Property, and there is no outstanding agreement, other than this Agreement, to sell all or any part of the Property, to any other person, firm or entity.

 

(iv) There are and there will be no parties in possession of any portion of the Property as lessees, and no other party has been granted an oral or written license, lease, option, purchase agreement or other right pertaining to the use, purchase or possession of any portion of the Property, other than tenants in possession under the Lease. The copy of such Lease to be provided or made available to Purchaser is true, correct and complete as presently in full force and effect, has not been modified, supplemented or amended, and constitutes the entire agreement between Seller and Tenant. Tenant has no option or right of first refusal to purchase the Property or any part thereof. Seller has given no written notice of default to Tenant under the Lease and to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) is not aware of any default by Tenant under the Lease. Seller has fully and completely performed all of its duties and obligations of the “lessor” or “landlord” under the Lease arising on or before the date hereof. Seller has not received any written notice of default from Tenant under the Lease. All construction allowances or other sums required by the Lease to be paid to Tenant have been paid. Except as expressly set forth in the Lease, there are no rent concessions or offsets with respect to the Lease. As of the Closing, Seller shall have paid all leasing, rental, brokerage and other commissions, charges or fees payable with respect to the current term of the Lease, and there will be no such leasing, rental, brokerage or other commissions, charges or fees payable thereafter with respect thereto or with respect to any renewal or extension of the term of the Lease that was agreed to prior to Closing. Purchaser shall have no liability for (and Seller hereby indemnifies Purchaser against any claim for) any such leasing commissions, construction allowances, charges or fees with respect to the Lease that arise prior to Closing and Seller shall have no liability for any such leasing commissions, construction allowances, charges or fees with respect to the Lease that arise after the Closing due to acts or agreements that occur after the Closing.

 

(v) There are no supplier, vendor, service provider, maintenance, management or similar contracts relating to the operation of or affecting the Property, or any other unrecorded agreements or contracts that will be binding upon Purchaser and/or the Property after the Closing.

 

(vi) There is not any pending or, to Seller’s knowledge, threatened, litigation against Seller or the Property.

 

(vii) The Property is free of violation of applicable laws, and Seller has received no written notice that the Property is in violation of any applicable laws. All building permits, certificates of occupancy, business licenses and, without limitation, all other notices, licenses, permits, certificates and authority, required in connection with the construction, use or occupancy of the Property have been obtained and are in effect and in good standing, the leasing, operation and use of the Property is in compliance with such notices, licenses, permits, certificates and authority, and Seller, the Property and the operation of the Property comply with all applicable laws. Seller has no written notice of any violations of any restrictive covenants or other requirements affecting the Property.

 

(viii) There is no pending, or to Seller’s knowledge, threatened, judicial, administrative, condemnation or eminent domain proceedings or investigations relating to the Property. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), there are no claims against the Property or Purchaser for or on account of work done, materials furnished, and utilities supplied to the Property prior to the Closing Date. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) there are no public plans or proposals for changes in road grade, access, or other municipal improvements which would materially adversely affect the Property or result in any assessment; and to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) no ordinance authorizing improvements, the cost of which might be assessed against Purchaser or the Property, is pending.

 

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(ix) Seller is not a “foreign person,” “foreign partnership,” “foreign trust” or “foreign estate” as those terms are defined in Section 1445 of the Internal Revenue Code of 1986, as amended. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) the Property is not located within the boundaries of any historical or archaeological district or similar district or area, and none of the Improvements are designated as landmarks or as having historical or archaeological significance and none of the Improvements are qualified or eligible for any such designation. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) there exists no impediment to or restrictions on the demolition or use of the buildings based on any historical or archaeological significance of the Property.

 

(x) Seller has not received any written notice of any pending, threatened, general or special real property, personal property or other ad valorem taxes and/or assessments affecting the Property other than the taxes and assessments set forth in the Title Commitment or as shown on a regular tax bill for the Property. Seller shall be required to pay in full all certified special assessments and private assessments against the Property to the Closing Date that are due and payable at such time. Seller has not protested or appealed any general or special real property, personal property or other ad valorem taxes and/or assessments affecting the Property.

 

(xi) No labor has been performed or materials fabricated or furnished with respect to the Property that could result in a materialman’s or mechanic’s lien filed against the Property, except as shall have been fully paid or released to the satisfaction of the Title Company at Closing. Except for routine expenditures for repairs and replacements in connection with the ongoing maintenance and upkeep of the Property, which Seller covenants and agrees to undertake and complete in the ordinary course consistent with past practices, Seller does not have any outstanding contracts for capital expenditures relating to the Property, nor does Seller have any agreement, obligations or commitments for capital expenditures relating to the Property, including, without limitation, additions to property, plant, equipment or intangible capital assets. Seller has not deferred or delayed implementing any capital expenditures at the Property.

 

(xii) Seller is not, and will not become a person identified on U.S. Treasury’s Office of Foreign Asset Control listing of Specially Designated Nationals and Blocked Persons (a “Prohibited Person”). Seller (i) is not and will not become owned or controlled by a Prohibited Person, (ii) is not acting hereunder and will not act hereunder for or on behalf of a Prohibited Person, and (iii) is not providing and will not provide material, financial or technological support or other services to or in support of acts of terrorism of a Prohibited Person. Seller will not enter into or undertake any activities related to this Agreement in violation of Anti-Money Laundering Laws.

 

(xiii) Seller is not a party to any effective contract, agreement, option or commitment to sell, convey, assign, transfer or otherwise dispose of the Property or any material portion thereof, except the Lease.

 

(xiv) Seller has not received any written notice from any municipal department, insurance carrier, board of fire underwriters (or organization exercising functions similar thereto) or mortgagee of the existence of defects or inadequacies in the Property or requesting the performance of any work or alterations with respect to the Property.

 

(xv) The environmental reports to be provided to Purchaser as a part of the Property Information comprise all environmental reports with respect to the Property in Seller’s possession or control. Neither the Seller nor, to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), any other party has ever caused or permitted any “hazardous material” (as hereinafter defined) to be placed, held, located, or disposed of on, under, or at the Property or any part thereof in forms or concentrations which violate applicable laws and regulations, and to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) neither the Property nor any part thereof has ever been used as a dump or storage site (whether permanent or temporary) for any hazardous material. As used herein, “hazardous material” means and includes any hazardous, toxic, or dangerous waste, substance, or material defined as such in, or for purposes of, the Comprehensive Environmental Response, Compensation Liability Act (42 U.S.C. Section 9601, et seq., as amended) or any other “super fund” or “super lien” law or any other federal, state, or local statute, or law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability for standards of conduct concerning any substance or material, as presently in effect. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) the Property does not currently contain and has not in the past contained any underground storage tanks.

 

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(xvi) There are no attachments, executions, assignments for the benefit of creditors or voluntary or involuntary proceedings in bankruptcy pending against or contemplated by Seller or any one of them, and, to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), no such actions have been threatened.

 

Seller hereby indemnifies and holds harmless Purchaser from and against any and all loss, expense (including without limitation reasonable attorney fees), liability, cost, claim, demand, action, cause of action and suit arising out of or in any way related to any breach of any representation, warranty, covenant or agreement of Seller in this Agreement. If, to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), any of the foregoing representations and warranties is not, or ceases to be, true, Seller shall give prompt written notice to Purchaser (which notice shall include copies of any document upon which Seller’s notice is based). The representations and warranties of Seller hereunder shall survive for only one (1) year from the Closing Date.

 

Seller hereby notifies Purchaser that Seller is not the developer of the Property, and that, except as expressly set forth in this Agreement, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith, Seller makes no representations or warranties whatsoever, express, implied, or arising by operation of law, with respect to the Property or the condition of the Property. Purchaser hereby represents and warrants to Seller that, except as expressly set forth in this Agreement, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith, Purchaser has not entered into this Agreement based upon any representation, warranty, agreement, statement, or expression of opinion by Seller or any other person or entity acting or allegedly acting for or on behalf of Seller with respect to Seller, the Property, or the condition of the Property. Purchaser agrees that the Property will be sold and conveyed to (and accepted by) Purchaser at the Closing in the then condition of the Property, AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT ANY WRITTEN OR ORAL REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS, IMPLIED, OR ARISING BY OPERATION OF LAW, other than the special warranty of title in the Deed and except as expressly set forth in this Agreement, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith. Without limiting the generality of the foregoing, except for the special warranty of title in the Deed and except as expressly set forth in this Agreement, the transaction contemplated by this Agreement is without any express or implied warranty, representation, agreement, statement, or expression of opinion of or with respect to: (i) the condition of the Property or any aspect thereof, including, without limitation, any and all express or implied representations or warranties related to suitability for habitation, merchantability, or fitness for a particular use or purpose; (ii) the soil conditions, drainage, topographical features, flora, fauna, or other conditions of or which affect the Property; (iii) any conditions at or which affect the Property with respect to any particular use, purpose, development potential, or otherwise; (iv) area, size, shape, configuration, location, access, cash flow, expenses, value, or condition; (v) any express or implied representations or warranties created by any affirmation of fact or promise, by any description of the Property, or by operation of law; (vi) any environmental, botanical, zoological, hydrological, geological, meteorological, or other condition or hazard or the absence thereof heretofore, now, or hereafter affecting in any manner any of the Property; and (vii) all other express or implied representations and warranties by Seller whatsoever. Except as specifically set forth herein, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith, Purchaser hereby releases and discharges Seller from all liability and waives all claims against Seller for, and Purchaser hereby assumes the risk with respect to, all matters in any way or manner whatsoever arising out of, related to, connected with, or emanating from the condition of the Property, including, without limitation, all patent and latent defects, hazards, and dangerous conditions on or about the Property, whether or not discoverable prior to the Closing Date.

 

 

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(b) As a material inducement to Seller to execute this Agreement and to consummate the transactions contemplated by this Agreement, Purchaser represents and warrants to Seller, as of the date hereof and as of the Closing Date (except to the extent any such representations and warranties shall have been expressly made as of a particular date, in which case such representations and warranties shall be made only as of such date), as follows:

 

(i) Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its formation and qualified to do business and is in good standing under the laws of the state in which the Property is located.

 

(ii) Purchaser has the full right and authority, and has obtained any and all consents required, to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby. This Agreement has been, and all of the documents to be delivered by Purchaser at the Closing will be, authorized and properly executed by or on behalf of Purchaser and constitutes, or will constitute, as appropriate, the valid and binding obligation of Purchaser, enforceable in accordance with their terms.

 

(iii) Purchaser is not, and will not become a Prohibited Person. Purchaser (i) is not and will not become owned or controlled by a Prohibited Person, (ii) is not acting hereunder and will not act hereunder for or on behalf of a Prohibited Person, and (iii) is not providing and will not provide material, financial or technological support or other services to or in support of acts of terrorism of a Prohibited Person. Purchaser will not enter into or undertake any activities related to this Agreement in violation of Anti-Money Laundering Laws.

 

(iv) The execution and delivery of this Agreement by Purchaser and the consummation by Purchaser of the transactions contemplated hereby will not violate any judgment, order, injunction, decree, regulation or ruling of any court or governmental entity or conflict with, result in a breach of, or constitute a default under the organizational documents of Purchaser, any note or other evidence of indebtedness, any mortgage, deed of trust or indenture, or any lease or other material agreement or instrument to which Purchaser is a party or by which it is bound.

 

(v) No consent, waiver, approval or authorization is required from any person or entity (that has not already been obtained or will be obtained prior to the Closing) in connection with the execution and delivery of this Agreement by Purchaser or the performance by Purchaser of the transactions contemplated hereby.

 

(vi) Purchaser has not (i) commenced a voluntary case, or, to Purchaser’s knowledge, had entered against it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree under any federal or state law or statute relative to bankruptcy, insolvency or other relief for debtors, (ii) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceeding, to hold, administer and/or liquidate all or substantially all of its property, or (iii) made an assignment for the benefit of creditors.

 

Purchaser hereby indemnifies and holds harmless Seller from and against any and all loss, expense (including without limitation reasonable attorney fees), liability, cost, claim, demand, action, cause of action and suit arising out of or in any way related to any breach of any representation, warranty, covenant or agreement of Purchaser in this Agreement. If, to the current actual knowledge of Purchaser (without any independent investigation or inquiry whatsoever), any of the foregoing representations and warranties is not, or ceases to be, true in any material manner, Purchaser shall give prompt written notice to Seller (which notice shall include copies of any document upon which Purchaser’s notice is based). The representations and warranties of Purchaser hereunder shall survive for only one (1) year from the Closing Date.

 

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Section 8. Closing.

 

(a) The Closing shall occur on or before the Closing Date in escrow at the offices of the Title Company. Notwithstanding anything contained herein to the contrary, Purchaser may extend the Closing Date for up to two (2) additional thirty (30) day periods by notifying Seller and delivering to the Title Company an additional $16,666.67 for the first thirty (30) day Closing Date extension and an additional $33,333.33 for the second thirty (30) day Closing Date extension (each an “Additional Deposit”, and, collectively, the “Additional Deposits”). The Additional Deposits shall be applicable toward the Purchase Price and shall treated the same as the Earnest Money as set forth herein.

 

(b) Provided Purchaser contemporaneously performs all of Purchaser’s obligations set forth in Sections 8(c) and 8(d) hereof, at the Closing, Seller shall execute, acknowledge and deliver or cause to be delivered to the Title Company the following:

 

(i) the Deed in form and substance reasonably acceptable to Purchaser and Seller;

 

(ii) closing instructions, addressed to the Title Company, which (A) authorize the Title Company to deliver the Deed, and any other documents required by Section 8(b) hereof, to Purchaser, only after the Title Company has received the Purchase Price (less Seller’s Closing costs and plus or minus applicable prorations) in cash and the documents required by Sections 8(c)(ii) and 8(c)(iii) hereof; and (B) request that the Title Company issue (as soon as reasonably practicable after the Closing) to Purchaser the Title Policy; provided, however, Seller shall request that (1) the exception with respect to restrictive covenants refer only to those restrictions, if any, set forth in the Title Commitment; and (2) that the exception with respect to taxes shall refer to the year in which the Closing Date occurs; (3) the “survey exception” be modified to read “Any shortages in area”; and (4) the Title Policy exclude the exception as to “rights of parties in possession”; provided Seller provides all such information and documentation necessary to allow the Title Company to make such modifications or changes. If, at or prior to the Closing, the Title Company notifies Purchaser that the Title Company refuses to deliver the Title Policy as herein described, within two (2) days after Purchaser’s receipt of such notice from the Title Company, but not thereafter, Purchaser shall elect to either (a) terminate this Agreement in accordance with the provisions of Section 13(c) hereof, or (b) waive such refusal, purchase the Property, and accept whatever policy of title insurance, if any, which the Title Company is willing to issue to Purchaser, without any reduction in the Purchase Price;

 

(iii) An Assignment and Assumption (the “Assignment”) of that certain Lease and Operating Agreement by and between Seller, as landlord, and Nocona Hospital District, as tenant (“Tenant”), dated effective as September 1, 2014 (the “Lease”) or, if requested by Purchaser, an Amended and Restated Lease (the “A&R Lease”), in form and substance reasonably acceptable to Purchaser and Seller;

 

(iv) a blanket conveyance bill of sale and assignment (the “Bill of Sale”), conveying and assigning to Purchaser all the Personal Property and the Intangible Personal Property in form and substance reasonably acceptable to Purchaser and Seller;

 

(v) any and all other documents reasonably required by Purchaser or the Title Company to consummate the Closing, duly executed, sworn to, and/or acknowledged (when the form of the document so provides), by Seller;

 

(vi) an affidavit in form and substance satisfactory to Purchaser stating Seller’s taxpayer identification number and that Seller is not a “foreign person” within the meaning of Section 1445, et seq., of the Internal Revenue Code of 1986, as amended;

 

(vii) The Title Company’s standard form Owner’s Affidavit in order to cause all standard exceptions (except for the standard survey exception, which shall not be removed unless Purchaser obtains a Survey in a form sufficient to remove such exception) to be deleted from the Title Policy;

 

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(viii) (a) a tenant estoppel certificate in form and substance satisfactory to Purchaser executed by Tenant and dated not more than thirty (30) days prior to the Closing Date, disclosing no default by either landlord or tenant and no other negative or adverse fact or circumstance, and (b) if required by Purchaser’s lender, a subordination, non-disturbance and attornment agreements in form reasonably acceptable to such lender executed by Tenant;

 

(ix) an executed closing statement consistent with this Agreement in the form required by the Title Company; and

 

(x) evidence satisfactory to the Title Company of authority of Seller to sell the Property in accordance with the terms of this Agreement and evidence satisfactory to the Title Company of the persons authorized to execute and deliver all necessary documents on behalf of Seller at Closing.

 

(c) Contemporaneously with the performance by Seller of Seller’s obligations under Section 8(b) hereof provided Seller contemporaneously performs all of Seller’s obligations set forth in Section 8(b) hereof, Purchaser shall execute, swear to, acknowledge (when the form of the document so provides), and/or deliver to the Title Company the Deed and the following:

 

(i) cash in the amount of the Purchase Price (plus or minus applicable prorations), together with such additional cash, if any, as may be necessary to pay Purchaser’s Closing costs as set forth in Section 8(d) hereof;

 

(ii) the Assignment or the A&R Lease, as applicable;

 

(iii) the Bill of Sale;

 

(iv) evidence reasonably satisfactory to the Title Company that the person(s) executing this Agreement, the Deed, and any other documents with respect to the transaction contemplated by this Agreement as or on behalf of Purchaser has full right, power, and authority to do so;

 

(v) an executed closing statement consistent with this Agreement in the form required by the Title Company; and

 

(vi) any and all other documents reasonably required by the Title Company to consummate the Closing.

 

(d) Purchaser hereby agrees to pay in cash at the Closing each and all of the following Closing costs:

 

(i) Purchaser’s attorney’s fees incurred in drafting and negotiating this Agreement and in Closing the transaction contemplated in this Agreement;

 

(ii) all costs incurred by Purchaser in performing Purchaser’s review and inspections of the Land Documents, the Property, and the condition of the Property;

 

(iii) filing and recording fees for the Deed and all other documents (other than documents, if any, curing Title Objections) required by law or the Title Company or requested by Purchaser to be filed or recorded;

 

(iv) one-half of the escrow fee of the Title Company;

 

(v) all premiums for any and all mortgagee policies of title insurance;

 

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(vi) Purchaser’s proportionate share of the items prorated pursuant to Section 9 hereof; and

 

(vii) all other fees, costs, and expenses customarily paid by a purchaser of real property in the County where the Closing occurs.

 

(e) Seller hereby agrees to pay each and all of the following Closing costs:

 

(i) Seller’s attorney’s fees incurred in drafting and negotiating this Agreement, the Deed, and other Closing documents to be provided by Seller, and in Closing the transaction contemplated in this Agreement;

 

(ii) the Commission, if any, agreed to be paid in Section 11 hereof;

 

(iii) charges for the preparation and delivery to Purchaser of the Land Documents; filing and recording fees for documents, if any, curing Title Objections; the Basic Rate Premium for the issuance of the Title Policy (Seller shall not pay any charge or additional premium charged for any title policy endorsements);

 

(iv) the premium charged by the Title Company to amend the “survey exception” in the Title Policy;

 

(v) the charge, if any, by the Title Company to exclude from the Title Policy the exception as to “rights of parties in possession”

 

(vi) one-half of the escrow fee of the Title Company;

 

(vii) Seller’s proportionate share of the items prorated pursuant to Section 9 hereof; and

 

(viii) all other fees, costs, and expenses customarily paid by a seller of real property in the County where the Closing occurs.

 

Seller may comply with Seller’s obligations under this Section 8(e) by (i) delivering a check at Closing payable to the Title Company for sums payable by Seller, or (ii) paying at Closing, or agreeing to pay outside of Closing so long as the Title Company shall agree such agreement is sufficient to issue the Title Policy in form and substance satisfactory to Purchaser, sums payable by Seller, directly to the person or entity to receive such payment, or (iii) signing a Closing statement showing deductions from the Purchase Price for sums payable by Seller; or (iv) any combination of the methods set forth in (i), (ii), and (iii).

 

(f) The provisions of Sections 8(d) and 8(e) hereof shall not be deemed to be in conflict with the provisions of Section 17 hereof.

 

(g) Upon completion of the Closing and Seller’s receipt of the Purchase Price (less Seller’s Closing costs and plus or minus applicable prorations) in cash, subject to the rights of Tenant, Purchaser shall have the right to possession of the Property. At the Closing, Seller shall deliver to Purchaser the following items, if in Seller’s possession or control: the original Lease; copies or originals of all contracts; and all keys used in the operation of the Property.

 

(h) Notwithstanding anything in this Agreement to the contrary, Purchaser’s obligation to effect the Closing shall be subject to and contingent upon the satisfaction or waiver of the following conditions precedent as of the Closing Date:

 

(i) The willingness of the Title Company to issue, upon the sole condition of the payment of its regularly scheduled premium, the Title Policy in the form and substance described herein on the Closing Date, with such endorsements as Purchaser and the Title Company shall have reasonably agreed prior to the end of the Feasibility Period, subject only to the Permitted Exceptions.

 

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(ii) Seller shall have performed and complied with the covenants and agreements contained in this Agreement required to be performed and complied with by it on or prior to the Closing Date.

 

(iii) Each of the representations and warranties made by Seller in this Agreement shall be accurate, true and correct when made and shall be accurate, true and correct on and as of the Closing Date as if such representations and warranties were made at and as of the Closing, except those made as of a specified date, in which case such representations and warranties of Seller shall have been accurate, true and correct as of such date.

 

(iv) There shall not be in effect any statute, regulation, order, decree, judgment or injunction (whether temporary, permanent or preliminary) of any governmental authority that challenges, prohibits, makes illegal, enjoins or prevents the consummation of the transactions contemplated by this Agreement.

 

(v) There shall not be any action taken by any court of competent jurisdiction or other governmental authority that makes it illegal or enjoins, restrains or otherwise prohibits the consummation of the transactions contemplated by this Agreement. There shall not be instituted any action or proceeding by any governmental authority that would reasonably be expected to result in any of the consequences referred to in the previous sentence.

 

(vi) No government-imposed moratorium affecting Purchaser’s intended use or operation of the Property will be in effect.

 

(vii) There shall not have been any change or event since the expiration of the Feasibility Period that materially or adversely affects the physical condition of the Property.

 

(viii) All of the conditions to the closing of the transactions contemplated in the MTA shall be satisfied and the transactions contemplated by the MTA shall close contemporaneously with the transactions contemplated by this Agreement.

 

(ix) All of the conditions to the closing of the transactions contemplated in the Other Agreements shall be satisfied and the transactions contemplated by the Other Agreements shall close contemporaneously with the transactions contemplated by this Agreement.

 

In the event that any of the conditions set forth in this Section 8(h) are not satisfied or waived, Purchaser may, by written notice to Seller, (i) terminate this Agreement in accordance with the provisions of Section 13(c) hereof; (ii) by written notice to Seller, elect to extend the Closing Date by ten (10) days to allow Seller to cure such failed condition to Purchaser’s satisfaction; or (iii) waive the failed condition and proceed to Closing; provided, however, that if such conditions have not been satisfied due to a default by Seller, Purchaser may instead pursue its remedies under Section 13.

 

Section 9. Prorations.

 

(a) Except for insurance premiums, at the Closing, all customarily prorated items including, without limitation, maintenance fees and assessments, standby fees and ad valorem taxes for the current year (based on the most recent tax statement[s] for the Property, adjusted for the most current tax rates and appraised value), and utility services being continued to the Property, shall be prorated as of 11:59 p.m. on the Closing Date (the “Cut-Off Time”). Seller shall be charged for and credited with all prorated items up to and including the Closing Date and Purchaser shall be charged for and credited with all of same after the Closing Date. In the event any amount to be prorated is unknown at the Closing, the Title Company’s best estimate of the amount therefor shall be used at the Closing, and thereafter, the Parties agree to adjust such prorations within ten (10) days after receipt of written notice, accompanied by copies of the statement(s) or invoice(s) therefor, from the Party receiving same. The Parties agree to undertake a final accounting for all prorated items (except ad valorem taxes, the proration of which shall occur within ten (10) days after receipt of tax statements for the year in which the Closing occurs) within forty-five (45) days after the Closing Date.

 

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(b) Standby fees, ad valorem taxes, maintenance fees, and assessments with respect to the Property for the year in which the Closing occurs shall, if not paid at Closing, be assumed by Purchaser and Purchaser hereby agrees to pay the same provided an applicable charge has been made against Seller on the closing statement at Closing.

 

(c) All base rent and additional rent actually received and other income actually received under the Lease in effect on the Closing Date shall be prorated as of the Cut-Off Time. Purchaser shall receive a credit (but without duplication) at Closing for any prepaid rents to the extent the same are applicable to the period following the Cut-Off Time. Non-delinquent rent collected by Seller after Closing attributable to periods from and after the Cut-Off Time shall be promptly remitted to Purchaser. Delinquent rent collected by Seller or Purchaser after the Cut-Off time shall be delivered by the recipient as follows: within fifteen (15) days after the receipt thereof, Seller and Purchaser agree that all rent received by Seller or Purchaser shall be applied first to then current rents, and then to delinquent rents for periods after the Cut-Off Time and then to delinquent rents for periods prior to the Cut-Off Time. Notwithstanding anything herein to the contrary, in no event shall Seller, after the Cut-Off Time, institute or commence collection actions or activities or any legal action against any tenant occupying space at the Property.

 

(d) All real estate taxes due and owing as of the Cut-Off Time, and all installments of assessments for public improvements or other matters or facilities which constitute a lien against the Property and are due and owing as of the Cut-Off Time, and all penalties and interest thereon, shall be paid by Seller on or before the Closing Date. Real estate taxes and assessments shall be prorated as of the Cut-Off Time. Purchaser shall receive a credit for any accrued but unpaid (and not yet due and payable) real estate taxes and assessments applicable to any period before the Cut-Off Time. If the amount of any such taxes and assessments has not been determined as of Closing, such credit shall be based on one hundred percent (100%) of the most recent ascertainable tax bills. Such taxes shall be re-prorated upon issuance of the final tax bill.

 

(e) Except for those utility charges payable by Tenant in accordance with the Lease, Seller shall pay all utility charges attributable to the Property until the Cut-Off Time and Purchaser shall pay all utility charges attributable to the Property from and after the Cut-Off Time. If final readings have not been taken, estimated charges shall be prorated between the parties and appropriate credits given. In the event such proration at Closing is based on estimated charges, after Closing, at such time as final bills for such water, sewer, and utility charges, common area maintenance charges, and other operating expenditures are available, the parties shall adjust the amounts apportioned at Closing based on the charges shown on the final bills, and Seller or Purchaser, as the case may be, shall pay to the other whatever amount shall be necessary to compensate for the difference within fifteen (15) days after receipt of such final bills.

 

(f) Premiums for hazard, liability, and any other insurance will not be prorated and Seller will terminate Seller’s insurance coverage with respect to the Property immediately after the Closing Date. Purchaser is solely responsible for obtaining Purchaser’s own insurance coverage from and after the Closing Date.

 

(g) Any security deposit described by the Lease (and interest thereon if required by law or contract to be earned thereon) shall be transferred or credited to Purchaser at Closing. As of Closing, Purchaser shall assume Seller’s obligations related to Security Deposits which are actually transferred from Seller to Purchaser or for which Purchaser receives a credit.

 

Section 10. Notices.

 

Any Notice must be in writing and enclosed in a sealed wrapper, properly addressed, and either (i) delivered by Federal Express or a messenger service, with instructions for delivery on the same day or the next day which is not a Saturday, Sunday, or legal holiday, or (ii) deposited with the domestic mail service of the United States Postal Service at a post office or official depository under the care and custody of the United States Postal Service with sufficient postage prepaid, sent by United States registered or certified mail, return receipt requested. The addresses to which any Notice is to be sent are as follows:

 

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  to Seller: Grace Properties Nocona, LLC
    Attention: Jake Hallsted
    24616 Kingsland Boulevard
    Katy, Texas 77494
    Email: j.hallsted@pearlandvinetx.com
     
  with a copy to  
  Seller’s Counsel: Cordray & Schneller
    Attention: Howard F. Cordray, Jr.
    3306 Sul Ross Street
    Houston, Texas 77098
    Email: hcordray@celgal.com
     
  to Purchaser: Assisted 4 Living, Inc.
    5115 FL-64
     
    Bradenton, Florida 34208
    Attn: Louis Collier
    Electronic Mail: loucoljr@outlook.com
  with a copy to  
  Purchaser’s Counsel: Bass, Berry & Sims PLC
    Attention: Angela Humphreys
    150 Third Avenue South, Suite 2800
    Nashville, Tennessee 37201
    Email: ahumphreys@bassberry.com

 

or to such other address within the continental United States as any addressee(s) shall specify in writing, which change of address, in order to be effective, must actually have been received not fewer than five (5) days prior to the giving of any such Notice. Any Notice sent by Federal Express or a messenger service shall be timely given if receipted for by such messenger service on or before 11:59 p.m. on the date the Notice is to be given; and any Notice sent by mail shall be timely given if deposited with the domestic mail service of the United States Postal Service on or before 11:59 p.m. of the date the Notice is to be given. Any Notice sent in accordance with the preceding sentence shall be deemed to have been received on the next day after the receipt for the Notice by a messenger service; or on the date of the first attempted delivery of the mailed Notice, as shown on the United States Postal Service’ return receipt. Notwithstanding any other provision of this Section 10 to the contrary, any Notice shall be effective from and after the date actually received by an addressee, however addressed or delivered.

 

Section 11. Broker; Commission.

 

At and conditioned upon the Closing, Seller agrees to pay a commission (the “Commission”) to Senior Living Investment Brokerage (“Broker”) pursuant to the terms of a separate agreement. Seller hereby represents and warrants to Purchaser that Seller has not contacted, contracted, or entered into any agreement with any real estate broker, agent, finder, or any other party (except Broker) in connection with this transaction and that Seller has not taken any action which would result in any real estate broker’s, finder’s or other fees, or commissions being due or payable to any other party with respect to the transaction contemplated hereby. Purchaser hereby represents and warrants to Seller that Purchaser has not contacted, contracted, or entered into any agreement with any real estate broker, agent, finder or any other party (except Broker) in connection with this transaction and that Purchaser has not taken any action which would result in any real estate broker’s, finder’s or other fees, or commissions being due or payable to any other party with respect to the transaction contemplated hereby. Each party hereby indemnifies and agrees to hold the other party harmless from any loss, liability, damage, cost, or expense (including reasonable attorneys’ fees) resulting to the other party by reason of a breach of the representation and warranty made by such party herein. Notwithstanding anything to the contrary contained herein, the indemnities set forth in this Section 11 shall survive the Closing for the maximum period of time permitted by law.

 

Section 12. Assignment; Binding Effect; No Third Party Beneficiary; Limited Liability of Seller.

 

(a) Purchaser may assign this Agreement to an entity owned and controlled by Purchaser, controlling Purchaser or under common control with Purchaser without Seller’s prior written consent; provided that Purchaser and Purchaser’s assignee execute an Assignment and Assumption Agreement and provide a copy thereof to Seller on the Closing Date; and further provided that Purchaser shall remain liable for the agreements, obligations, and duties of Purchaser under this Agreement irrespective of such assignment. Any other proposed assignment shall require the prior written consent of Seller, such consent not to be unreasonably withheld, conditioned or delayed.

 

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(b) Except for the Parties and their respective heirs, successors, legal representatives, and assigns, no person or entity has any rights or benefits under this Agreement, and no person or entity is a third party beneficiary of this Agreement.

 

Section 13. Remedies.

 

(a) If Purchaser does not purchase the Property at the Closing for any reason other than a right to terminate provided in this Agreement; or in the event of any default by Purchaser hereunder after a ten (10) day written notice and cure period; then, at such time or at any time thereafter, Seller, as its sole and exclusive remedy, shall be entitled (but not required) to terminate this Agreement by notifying Purchaser thereof, in which event neither Party shall have any further rights, duties, or obligations hereunder, except as provided in Sections 13(e) and 26(b) hereof; and Seller shall be entitled to demand and receive from the Title Company cash in the amount of the Earnest Money, as agreed, reasonable liquidated damages for such default or occurrence, which amount the Parties agree is not intended as a penalty. Seller and Purchaser agree that the Earnest Money is a reasonable sum of agreed liquidated damages under the circumstances, because of the difficulty, inconvenience, and uncertainty of ascertaining Seller’s actual damages in such circumstances.

 

(b) If Seller fails to perform any of Seller’s obligations hereunder after a ten (10) day written notice and cure period for any reason other than (i) Purchaser’s failure to tender performance of Purchaser’s obligations hereunder, (ii) the prior termination of this Agreement, or (iii) an uncured default by Purchaser hereunder, then, Purchaser may elect to either (i) terminate this Agreement in accordance with the provisions of Section 13(c) hereof whereupon neither party hereto shall have any further rights or obligations hereunder except for those provisions that survive the termination of this Agreement; (ii) waive such failure and purchase the Property as if such failure had not occurred, without any reduction in the Purchase Price or (iii) enforce specific performance of this Agreement; provided that if specific performance is not available due to Seller transferring or conveying the Property to a third party other than Purchaser, Purchaser shall immediately be refunded the Earnest Money and Seller shall reimburse all of Purchaser’s out-of-pocket costs and expenses incurred in connection with this Agreement and the transaction contemplated hereunder, including, without limitation, Purchaser’s contract negotiations, due diligence investigations, closing preparations and other activities incident to the performance of Purchaser’s obligations hereunder up to a maximum of Fifty Thousand and No/100 Dollars ($50,000.00).

 

(c) Provided Purchaser timely notifies Seller of Purchaser’s election to terminate this Agreement, this Agreement shall be terminated effective on the date Seller receives such notice from Purchaser, and thereafter neither Party shall have any further rights, duties, or obligations hereunder, except as provided in Sections 6(d), 7, 11, 13(e), 15, and 17 hereof or otherwise expressly set forth herein, and, Purchaser shall be entitled to demand and receive the Earnest Money (less the Independent Contract Consideration which shall be paid to Seller) from the Title Company. If Purchaser fails to timely notify Seller of Purchaser’s election to terminate this Agreement, Purchaser shall irrevocably be deemed to have waived Purchaser’s remedy of terminating this Agreement and to have elected the alternative to termination of this Agreement set forth in such particular Sections of this Agreement.

 

(d) The remedy of terminating this Agreement provided to Seller in Sections 3 and 13(a) hereof, and to Purchaser in Sections 5(d)(i), 6(c), 8(b)(ii), and 14 hereof, is the sole and exclusive remedy available to such Parties for the circumstances, events, and conditions set forth in such Sections, in lieu of all other remedies, at law or in equity.

 

(e) In the event either Party terminates this Agreement in accordance with the provisions hereof, each party covenants and agrees to immediately execute, acknowledge, and deliver to the other party a recordable release of this Agreement.

 

(f) Except as specifically provided herein, Purchaser shall not be able to pursue any action to recover damages against Seller for a default by Seller. Upon a Seller default, Purchaser shall be able to pursue an action for specific performance or terminate the Agreement by written notice to Seller at which time the Earnest Money will be refunded to Purchaser.

 

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Section 14. Damage or Condemnation Prior to Closing; Seller Covenants.

 

(a) Risk of loss resulting from any condemnation or eminent domain proceeding that is completed before the Closing, and risk of loss to the Property due to fire, flood or any other cause before such Closing, shall remain with Seller. Should Seller receive notice of any condemnation or eminent domain proceedings against the Property or any damage due to any casualty event with respect to the Property prior to the Closing Date, Seller shall immediately inform Purchaser of such notice in writing. In the event any such proceedings or events are commenced or occurred or notice is given that such shall commence or occur, Purchaser may, at any time thereafter within thirty (30) days of such notice (a) terminate this Agreement, all Earnest Money being paid to Purchaser and thereupon, Seller and Purchaser shall be released of further obligation to each other except as otherwise provided herein, or (b) waive objection thereto and proceed to Closing, in which event the proceeds of any such award shall be received by Purchaser, Purchaser shall receive a credit in the amount of any applicable insurance deductible (in the case of a casualty), Seller shall assign, transfer and set over to Purchaser all of the right, title and interest of Seller in and to any awards that have been or that may thereafter be made for such taking, and Seller shall assign, transfer and set over to Purchaser any insurance proceeds that may thereafter be made for such damage or destruction, and the Purchase Price shall not be adjusted. If the Closing Date is within the aforesaid thirty (30) day period, then the Closing shall be extended to the next business day following the end of said thirty (30) day period. The Parties shall have the rights and duties set forth in this Section 14 rather than as prescribed by the Uniform Vendor and Purchaser Risk Act, Texas Property Code Section 5.007.

 

(b) Between the Effective Date and the earlier of the Closing Date or termination of this Agreement, Seller shall, at Seller’s sole cost and expense:

 

(i) operate, maintain, insure and repair the Property substantially in the same manner consistent with Seller’s operation, maintenance, insuring and repair of the Property prior to the Effective Date.

 

(ii) pay all utility and other service charges accrued through the date of Closing.

 

(iii) perform all obligations of Seller under all applicable laws, statutes, codes, acts, ordinances, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of all governmental authorities having jurisdiction over the Property.

 

(iv) subject to Section 14(a) above, repair all damage to the Property.

 

(v) promptly deliver to Purchaser copies of all written notices of violations of laws and promptly notify Purchaser of all judgments, claims and litigation affecting Seller or any part of the Property.

 

(vi) promptly after the delivery or receipt thereof, deliver to Purchaser copies of all written notices concerning Seller or the Property, which relate to the Lease, releases of hazardous materials affecting the Property or any actual or threatened condemnation of the Property or any portion thereof given by or on behalf of any federal, state or local agency, and copies of all other written correspondence sent, filed, served on or received by Seller from any federal, state or local agency affecting the Property from and after the Effective Date.

 

(vii) perform all of Seller’s obligations under the Leases.

 

(c) Between the Effective Date and the earlier of the Closing Date or termination of this Agreement, Seller shall not do, suffer or permit, or agree to do, any of the following, except to the extent permitted under this Agreement:

 

(i) sell, assign or otherwise convey, or create any right, title or interest whatsoever in or to the Property or any portion thereof or create or permit to exist any lien, assessment, encumbrance or charge thereon.

 

(ii) cancel, amend or modify any certificate, approval, license or permit held by Seller with respect to the Property or any part thereof which would be binding upon Purchaser after the Closing.

 

17
 

 

(iii) approve any assignment or sublease or modify, extend or otherwise change any of the terms, covenants or conditions of the Lease or enter into any new lease or enter into any other obligations or agreements affecting the Property.

 

(iv) transfer, sell or otherwise dispose of the Property.

 

(v) change or attempt to change the current zoning of the Property.

 

(vi) incur any liability or obligation or enter into any agreement, written or otherwise, with respect to the Property, or any part thereof, the term of which extends beyond the Closing Date, or which would obligate Purchaser to assume and pay the same.

 

(vii) enter into any easement, servitude, covenant, restriction, or right of way for or burdening the Property, or any part thereof.

 

Section 15. Indemnity by a Party.

 

When one Party agrees to indemnify the other Party in this Agreement, at the sole cost and expense of the indemnifying Party, the indemnifying Party shall indemnify, keep indemnified, defend, and hold the indemnified Party harmless from and against any and all claims, demands, actions, causes of action, damages, losses, liabilities, fees (including reasonable attorney’s fees), costs (including costs of court), and expenses in any way or manner whatsoever attributable to any action, conduct, omission, or failure to act by the indemnifying Party, or any employee, agent, attorney, officer, director, independent contractor, licensee, invitee, or any other person or entity whatsoever acting or allegedly acting for or on behalf of the indemnifying Party, with respect to the matter(s) being indemnified against, including, without limitation, those due to personal injury or death. The indemnification provisions contained in this Section 15 shall survive the Closing Date for twelve (12) months.

 

Section 16. Entire Agreement.

 

This Agreement contains the entire agreement between the Parties concerning the Property. This Agreement supersedes all prior and contemporaneous oral and written representations, warranties, covenants, and agreements by or between the Parties with respect to the Property.

 

Section 17. Attorneys’ Fees.

 

If either Party employs an attorney to enforce or protect such Party’s interests arising under this Agreement or any other document executed by such Party in connection herewith, the non-prevailing Party in any such action, the finality of which is not legally contestable, agrees to pay to the prevailing Party all reasonable attorneys’ fees expended or incurred by the prevailing Party in connection therewith.

 

Section 18. Time is of the Essence.

 

TIME IS OF THE ESSENCE IN THE PERFORMANCE OF EACH PARTY’S RESPECTIVE OBLIGATIONS HEREUNDER.

 

Section 19. Saturday, Sunday, and Legal Holidays; Times.

 

If any date for the performance of any matter under this Agreement (including the date for the giving of Notice and the date on which any Notice is deemed to have been received, pursuant to Section 10 hereof) falls on a Saturday, Sunday, or legal holiday observed by national banks in Harris County, Texas, then such date shall be extended to the next calendar day that is not a Saturday, Sunday, or such legal holiday. All references herein to a particular time on a particular date shall refer to Central Time.

 

18
 

 

Section 20. Presumption Concerning Interpretation and Construction.

 

Although the first draft of this Agreement was prepared by counsel for Seller, both Parties and their respective counsel have reviewed and participated in the drafting of the final form of this Agreement. Accordingly, in the event of any conflict or ambiguity in the provisions of this Agreement, there shall be no presumption in favor of either Party with respect to the interpretation or construction hereof.

 

Section 21. Section Headings.

 

The headings of the various Sections in this Agreement are for the convenience of the Parties and do not alter, modify, or limit the provisions thereof and shall not be used in construing or interpreting the provisions thereof.

 

Section 22. No Recordation.

 

Neither Party shall file or record this Agreement or any evidence or memorandum of this Agreement in any public records. A violation of this provision shall constitute a default by such applicable Party hereunder.

 

Section 23. Severability.

 

This Agreement is intended to comply with and be performed in accordance with (and only to the extent permitted by) all applicable laws, statutes, ordinances, rules, and regulations. If any provision of this Agreement is held to be invalid or unenforceable for any reason or to any extent, the remainder of this Agreement shall not be affected thereby, and each provision of this Agreement shall be valid and enforced to the fullest extent not prohibited by law.

 

Section 24. Waivers and Modifications.

 

No delay on the part of a Party in exercising any rights or remedies hereunder shall operate as a waiver thereof, nor shall any specific waiver by a Party of any right or remedy hereunder operate or be construed as a waiver of any other right or remedy hereunder nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof, or the exercise of any other right or remedy hereunder (unless the provisions of this Agreement which establish any such right or remedy provide otherwise). No waiver of any right or remedy hereunder shall be valid or enforceable unless in writing and signed by the Party against whom such waiver is sought to be enforced. No modification of this Agreement shall be effective unless it is in writing and signed by both Parties.

 

Section 25. Governing Law; Venue.

 

The Parties acknowledge that this Agreement has been negotiated, executed, and delivered in the State of Texas, is intended to be performed wholly in the State of Texas, and the substantive laws of the State of Texas (without reference to choice of law principles) shall govern the interpretation and enforcement of this Agreement. The Parties agree that any court action brought to interpret or enforce any provision(s) of this Agreement, or otherwise relating to or arising from this Agreement, shall be commenced and maintained only in the District or County Court of Harris County, Texas (whichever court has amount-in-controversy jurisdiction), and each of the Parties irrevocably consents to exclusive jurisdiction and venue in such court for such purposes.

 

Section 26. Materiality, Survival.

 

(a) The representations, warranties, covenants, and agreements expressly set forth herein are material and have been relied on by the Parties in entering into this Agreement. Except as provided in Section 26(b) hereof, all such representations, warranties, covenants, and agreements shall not survive the Closing or a termination of this Agreement.

 

(b) Notwithstanding the Closing of the transaction contemplated in this Agreement or a termination of this Agreement, the provisions of Sections 6(d), 7, 9, 11, 13(e), 15, and 17 hereof and all other provisions of this Agreement which are described as surviving the Closing or a termination of this Agreement shall survive the Closing or a termination of this Agreement.

 

19
 

 

Section 27. Relationship of Parties.

 

Nothing contained in this Agreement shall be deemed or construed by any Party, person, or entity as creating any relationship of principal and agent, of partnership, of joint venture, or of any association whatsoever between the Parties. No provision of this Agreement and no act or failure to act of the Parties shall be deemed to create any relationship between the Parties other than the relationship of a buyer and a seller.

 

Section 28. Number and Gender of Words.

 

Whenever any number (singular or plural) is used herein, the same shall include and apply to any one or more thereof, and to each thereof, jointly and severally, and words of any gender shall include each other gender.

 

Section 29. Counterparts.

 

This Agreement may be executed in multiple counterparts, each of which is an original, but all of which shall constitute but one and the same document. The signatures of the Parties and the Title Company may appear on multiple separate signature pages.

 

Section 30. WAIVER OF CONSUMER RIGHTS.

 

AS A MATERIAL INDUCEMENT TO SELLER TO ENTER INTO THIS AGREEMENT, WITHOUT WHICH INDUCEMENT PURCHASER ACKNOWLEDGES THAT SELLER WOULD NOT ENTER INTO THIS AGREEMENT, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, WITHOUT RESERVATION, PURCHASER HEREBY EXPRESSLY WAIVES ALL OF PURCHASER’S RIGHTS UNDER THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. PURCHASER HEREBY EXPRESSLY WARRANTS, REPRESENTS, AND CERTIFIES TO SELLER THAT (A) PURCHASER IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION AS TO ANY PROVISION OF THIS AGREEMENT OR AS TO ANY MATTER CONTAINED HEREIN; (B) PURCHASER IS EXPERIENCED IN THE PURCHASE OF REAL PROPERTY AND THE ANALYSIS OF REAL PROPERTY; AND (C) PURCHASER IS REPRESENTED BY LEGAL COUNSEL OF PURCHASER’S OWN CHOOSING IN SEEKING, ACQUIRING, AND PURCHASING THE PROPERTY AND IN NEGOTIATING THE TERMS OF THIS AGREEMENT. AFTER CONSULTATION WITH AN ATTORNEY OF PURCHASER’S OWN SELECTION, PURCHASER VOLUNTARILY CONSENTS TO THIS WAIVER.

 

Section 31. NOTICE REGARDING POSSIBLE LIABILITY FOR ADDITIONAL TAXES.

 

If for the current ad valorem tax year the taxable value of the Property that is the subject of this Agreement is determined by a special appraisal method that allows for appraisal of the Property at less than market value, the person to whom the Property is transferred may not be allowed to qualify the Property for that special appraisal in a subsequent tax year and the Property may then be appraised at its full market value. In addition, the transfer of the Property or a subsequent change in the use of the Property may result in the imposition of an additional tax plus interest as a penalty for the transfer or the change in the use of the Property. The taxable value of the Property and the applicable method of appraisal for the current tax year is public information and may be obtained from the tax appraisal district established for the County in which the Property is located.

 

Section 32. NOTICE REGARDING POSSIBLE ANNEXATION.

 

If the Property that is the subject of this Agreement is located outside the limits of a municipality, the Property may now or later be included in the extraterritorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and extraterritorial jurisdiction. To determine if the Property is located within a municipality’s extraterritorial jurisdiction or is likely to be located within a municipality’s extraterritorial jurisdiction, contact all municipalities located in the general proximity of the Property for further information.

 

20
 

 

Section 33. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

EXECUTED in multiple original counterparts on the date written below the respective signatures of the Parties.

 

SELLER:   PURCHASER:
         
GRACE PROPERTIES NOCONA, LLC, a Texas limited liability company   REAL LIVING PROPERTY HOLDINGS – TEXAS, LLC, a Texas limited liability company
         
By: /s/ Jake Hallsted    By: /s/ Louis Collier  
  Jake Hallsted, President    

Louis Collier, Chief Executive Officer

         
Date: June 21, 2021   Date:

June 21, 2021

 

21
 

 

As of the date shown below defined as the Effective Date, the Title Company hereby acknowledges receipt of this Agreement executed by Seller and Purchaser. The Title Company agrees to immediately deliver to Seller, Seller’s counsel, Purchaser, and Purchaser’s counsel (if any, named in Section 10 hereof) a copy of this Agreement executed by both Parties and the Title Company. The Title Company has assigned this Agreement GF No. _________________________.

 

  FIDELITY NATIONAL TITLE AGENCY, INC.
     
  By:  
  Name:  
  Title:  
     
  Date:   , 2021
    (the “Effective Date”)

 

On _________________, 2021, the Title Company received $_______________, representing the Earnest Money required hereunder. The Title Company hereby agrees to hold and disburse the Earnest Money and all other funds received by the Title Company in accordance with the provisions of this Agreement.

 

  FIDELITY NATIONAL TITLE AGENCY, INC.
     
  By:  
  Name:  
  Title:

 

22
 

 

EXHIBIT “A”

 

FIRST TRACT:

 

BEING 3.11 acres of land, more or less, a part of the J.D. Jennings Survey, Abstract No. 389, situated in the south part of the City of Nocona, Montague County, Texas. This is the tract of land described in the Warranty Deed from L.R. 22 Equities, Inc., to Birchcliff Management, Inc., dated April 22, 1993, as recorded in Volume 25, Page 62, Real Records of Montague County, Texas, and being more particularly described as:

 

BEGINNING at a found 3/4 inch iron rod, set in concrete, marking the Southwest corner of a 3.88 acre tract owned by the Nocona Housing Authority, said rod is 1433.3 feet west and 3253 feet north of the southeast corner of the J.D. Jennings Survey, Abstract No. 389, and marks the west end of a 20 foot alley between the Nocona Housing Authority property and the Roy Lee Addition to the City of Nocona;

 

THENCE South 20 deg.13’11” West 14.3 feet to an iron post marking the northwest corner of Lot 5 of the Roy Lee Addition;

 

THENCE South 00 deg. 06’ 20” West 36 feet with the east line of Lot 4 and west line of Lot 5 of said Addition to an iron rod set for comer;

 

THENCE South 89 deg. 32 00” West 60.0 feet to a set iron rod for corner;

 

THENCE North 00 deg. 06’ 20” East 36 feet to the north line of said Addition, continuing 13.3 feet, in a 1149.3 feet to an iron rod for corner;

 

THENCE South 89 deg. 32’ 00” West 227.3 feet to a found 5/8 inch iron rod in paved street for corner, THENCE North 00 deg. 09’ 00” East 457.0 feet to an iron rod for corner THENCE North 89 deg. 32’ 00” East 286.7 feet to an iron rod for corner,

 

THENCE South 00 deg. 32’ 23” East 457.0 feet along a chain link fence and the West line of the Nocona Housing Authority property to the PLACE OF BEGINNING.

 

SECOND TRACT:

 

BEING 0.201 acre of land, more or less, in the J.D. Jennings Survey, Abstract No. 389, Nocona, Montague County, Texas. This tract consists of the north forty (N/40) feet of the tract of land sold by Bill J. Crabtree and wife, Ellen Crabtree to Russell Wayne Fenoglio and wife, Carolyn Fay Fenoglio by Warranty Deed dated May 9, 1991, and is recorded in Volume 938, Page 546, Deed Records of Montague County, Texas. Said deed conveying all of Lots 1, 2, 3 and 4 of the Roy Lee Addition to the City of Nocona (Cabinet “B” Slide No. 121, Plat Records) with the First Exception being the northeast rectangle (36 by 60 feet) of Lot 4 and the Second Exception being a wedge shaped portion off of the west side of Lot 1, 10 feet wide at the north end and 30 feet wide at the south end, 193 feet in length, north and south. This tract is more particularly described as:

 

BEGINNING at a set iron rod 10 feet east of the found iron rod marking the northwest corner of the Roy Lee Addition to the City of Nocona, said rod being north 3,240.5 feet and west 1, 705.5 feet from the southeast corner of the J.D. Jennings Survey, A-389;

 

THENCE South 89 deg. 36’ 31” East 207.3 feet to an iron rod for corner

 

THENCE South 00 deg. 06’ 20” West 36 feet to an iron rod for corner;

 

THENCE North 89 deg. 32’ 00” East 60 feet to an iron rod for corner in the East line of Lot 4, Roy Lee Addition;

 

THENCE South 00 deg. 06’ 20” West 4 feet to an iron rod for corner;

 

THENCE South 89 deg. 32’ 00” West 262.9 feet, parallel to the south line of the Nocona Nursing Home property to an iron rod for corner;

 

THENCE North 05 deg. 49’ 39” West 43.3 feet to the PLACE OF BEGINNING.

 

A-1
 

 

EXHIBIT “B”1

 

SPECIAL WARRANTY DEED

 

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

 

THE STATE OF TEXAS §      
         
    §   KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF [MONTAGUE]   §    

 

THAT [GRACE PROPERTIES NOCONA, LLC, a Texas limited liability company] (“Grantor”), for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) and other good and valuable consideration to Grantor in hand paid by ____________________________________________ (“Grantee”), whose mailing address is ______________________________________________________________________________ the receipt and sufficiency of which consideration is hereby acknowledged and confessed, subject to all of the matters set forth or referred to herein, has GRANTED, SOLD, AND CONVEYED, and by these presents does GRANT, SELL, AND CONVEY, unto Grantee all that certain tract or parcel of land containing approximately 3.11 acres, (the “Land”) lying and being situated in the State of Texas and County of Montague, more particularly described on Exhibit “A” attached hereto and made a part hereof for all purposes together with all rights and appurtenances thereto in anywise belonging to Grantor (the “Property”).

 

THIS CONVEYANCE is made and accepted subject to all matters of record listed on Exhibit “B” (the “Permitted Exceptions”) attached hereto and made part hereof for all purposes.

 

TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereto in any wise belonging unto Grantee, its successors and assigns, forever; and, subject to all of the matters set forth or referred to herein, Grantor does hereby bind itself and its successors to WARRANT and FOREVER DEFEND all and singular the Property unto Grantee, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same, or any part thereof, by, through, or under Grantor, but not otherwise.

 

AD VALOREM TAXES with respect to the Property for the current year have been prorated as of the date hereof and Grantee assumes and agrees to pay the same.

 

GRANTOR HAS EXECUTED and delivered this Special Warranty Deed and has granted, bargained, sold, and conveyed the Property, and Grantee has received and accepted this Special Warranty Deed and has purchased the Property, AS IS, WHERE IS, AND WITH ALL FAULTS, AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER EXCEPT FOR THE SPECIAL WARRANTY OF TITLE AS HEREIN PROVIDED OR AS EXPRESSLY SET FORTH IN THAT CERTAIN PURCHASE AND SALE AGREEMENT DATED __________, 2021 BY AND BETWEEN GRANTOR AND GRANTEE FOR THE PURCHASE AND SALE OF THE PROPERTY, EXPRESS OR IMPLIED, WRITTEN OR ORAL.

 

B-1
 

 

EXECUTED effective as of the _______ day of _____________, 202___.

 

  [GRACE PROPERTIES NOCONA, LLC, a Texas
  limited liability company]
   
  By:                 
  Name:  
  Title:  

 

STATE OF TEXAS   §  
       
    §  
       
COUNTY OF HARRIS §    

 

BEFORE ME, the undersigned authority, on this day personally appeared _________________, known to me to be the person whose name is subscribed to the foregoing instrument, and he acknowledged to me that he is the _________________ of Grace Properties Nocona, LLC, a Texas limited liability company, and that he executed the same for the purposes and consideration therein expressed in the capacity therein stated and as the act and deed of said limited liability companies, limited partnerships, and joint venture.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the _______ day of _____________, 202__.

 

STAMP NAME AND DATE OF    
EXPIRATION OF COMMISSION   NOTARY PUBLIC, STATE OF TEXAS
BELOW:    

 

B-2
 

 

RECEIVED, ACCEPTED, AND AGREED

 

TO BY GRANTEE:

 ____________________________________

 

By:    
Name:    
Title:    

 

THE STATE OF ________ §  
     
  §  
     
COUNTY OF ___________ §  

 

BEFORE ME, the undersigned authority, on this day personally appeared ____________________________________________, __________________________ of _____________________________________________, a ____________________________, known to me to be the person whose name is subscribed to the foregoing instrument, and he acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated and as the act and deed of said ____________________________.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the _______ day of _____________, 202__.

 

STAMP NAME AND DATE OF    
EXPIRATION OF COMMISSION   NOTARY PUBLIC, STATE OF ____________
BELOW:    
     
AFTER RECORDING RETURN TO:    

 

B-3

 

 

Exhibit 2.4

 

MANAGEMENT TRANSFER AGREEMENT

 

BY AND BETWEEN

 

GCC NOCONA, LLC, a Texas limited liability company

 

and

 

Nocona Health and Rehab Center, LLC, a Texas limited liability company

 

 

Dated: June 21, 2021

 

 
 

 

Term     Page Number
       
ARTICLE I ASSETS, LIABILITIES, AND OTHER MATTERS 2
  1.1 Transferred Assets 2
  1.2 Excluded Liabilities 3
  1.3 Transfer of Resident Trust Funds 3
  1.4 Employees 3
  1.5 Management Fees and Accounts Receivable 5
  1.6 Prorations 8
  1.7 Access to Records 8
  1.8 Assumed Operating Contracts 9
  1.9 Operating Procedures Manuals 10
  1.10 Limitation 10
  1.11 Cost Report 10
  1.12 Provider Contracts 11
       
ARTICLE II THE CLOSING 11
       
  2.1 Time and Place of Closing 11
       
ARTICLE III TRANSFEROR’S REPRESENTATIONS AND WARRANTIES 12
       
  3.1 Organization and Standing of Transferor 12
  3.2 Authority 12
  3.3 Binding Effect 12
  3.4 Assets 12
  3.5 Licenses and Permits 12
  3.6 Surveys, etc 12
  3.7 Claims 13
  3.8 Collective Bargaining Agreements 13
  3.9 Compliance 13
  3.10 Cost Reports 16
  3.11 Real Estate Taxes 16
  3.12 Loan Defaults 16
  3.13 Provider Agreements 17
  3.14 Financial Statements 17
  3.15 Material Adverse Effect 17
  3.16 QIPP Documents 17

 

-ii-
 

 

ARTICLE IV NEW MANAGER’S REPRESENTATIONS AND WARRANTIES 18
       
  4.1 Organization and Standing of New Manager 18
  4.2 Authority 19
  4.3 Binding Effect 19
       
ARTICLE V OBLIGATIONS OF THE PARTIES 19
       
  5.1 Applications and Filings 19
  5.2 Management of Facility 20
       
ARTICLE VI CONDITIONS PRECEDENT TO NEW MANAGER’S OBLIGATIONS 22
       
  6.1 Representations and Warranties 22
  6.2 Performance of Covenants 22
  6.3 Delivery of Closing Certificate 22
  6.4 Transferred Assets at Closing 22
  6.5 Assignment and Assumption of Contracts 22
  6.6 Assignment and Assumption of Management Agreement 22
  6.7 Termination of Existing Lease 22
  6.8 PSA Closing 22
  6.9 Resident Trust Funds 23
  6.10 Other Documents 23
  6.11 Tenant’s Consent 23
  6.12 Compliance 23
  6.13 License 23
  6.14 Exhibits and Schedules 23
       
ARTICLE VII CONDITIONS PRECEDENT TO TRANSFEROR’S OBLIGATIONS 24
       
  7.1 Representations and Warranties 24
  7.2 Performance of Covenants 24
  7.3 Delivery of Closing Certificate 24
  7.4 Assignment and Assumption of Contracts 24
  7.5 Assignment and Assumption of Management Agreement 24
  7.6 Termination of Existing Lease 24
  7.7 PSA Closing 24
  7.8 Resident Trust Funds 24
  7.9 Tenant’s Consent 24
  7.10 Other Documents 24

 

-iii-
 

 

ARTICLE VIII SURVIVAL AND INDEMNIFICATION 24
       
  8.1 Indemnification by Transferor 24
  8.2 Indemnification by New Manager 25
  8.3 Procedure 25
  8.4 Limitations 26
  8.5 Exclusive Remedy 26
  8.6 Insurance Recoveries 26
  8.7 Survival 26
       
ARTICLE IX TERMINATION 27
       
  9.1 Termination 27
  9.2 Effect of Termination 28
       
ARTICLE X MISCELLANEOUS PROVISIONS 28
       
  10.1 Drafting 28
  10.2 Public Announcements 28
  10.3 Costs and Expenses 28
  10.4 Performance 28
  10.5 Benefit and Assignment 29
  10.6 Effect and Construction of this Agreement 29
  10.7 Notices 29
  10.8 Waiver, Discharge, etc 30
  10.9 Governing Law; Disputes 30
  10.10 Further Assurances 30
  10.11 Third-Party Beneficiaries 30
  10.12 Counterparts 30
  10.13 Costs and Attorneys’ Fees 30
  10.14 Severability 30
  10.15 Entire Agreement 30

 

-iv-
 

 

MANAGEMENT TRANSFER AGREEMENT

 

This Management Transfer Agreement (“Agreement”), dated as of June 21, 2021 (the “Execution Date”), is by and between GCC NOCONA, LLC, a Texas limited liability company (the “Transferor”), Nocona Health and Rehab Center, LLC, a Texas limited liability company (the “New Manager”).

 

WHEREAS, pursuant to a Lease, dated effective as of September 1, 2014 (as amended, the “Existing Lease”), between Nocona Hospital District, a body politic and corporate and a political subdivision of the State of Texas, as tenant (the “Tenant”) and Grace Properties Nocona, LLC, a Texas limited liability company (“Landlord”), Tenant currently leases from Landlord the skilled nursing facility known as Grace Care Center of Nocona, located at 306 Carolyn Road, Nocona, TX 76255 (the “Facility”);

 

WHEREAS, Tenant is the current licensed operator of the Facility;

 

WHEREAS, Transferor entered into a Management Agreement with Tenant, dated effective as of September 1, 2017 (the “Management Agreement”), pursuant to which Tenant engaged Transferor to manage the day-to-day activities of the Facility;

 

WHEREAS, pursuant to that certain Purchase and Sale Agreement, dated the date hereof (the “PSA”), between Landlord and Real Living Property Holdings-Texas, LLC, a Texas limited liability company (“Buyer”), Landlord has agreed to sell the real property, improvements, and certain other assets comprising the Facility (the “PSA Assets”) to Buyer, and Buyer has agreed to purchase the PSA Assets from Landlord;

 

WHEREAS, effective as of the closing under the PSA, Buyer shall lease the PSA Assets to New Manager and New Manager shall manage the PSA Assets for Tenant; and

 

WHEREAS, the parties wish to provide for an orderly transition of the operations of the Facility from the Transferor to the New Manager simultaneously with the transfer of the PSA Assets to Buyer pursuant to the PSA.

 

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

 

1
 

 

ARTICLE I
ASSETS, LIABILITIES, AND OTHER MATTERS

 

1.1 Transferred Assets. Subject to the terms and conditions of this Agreement, at the Effective Time (as defined below), Transferor will transfer, free and clear of any charge, claim, equitable interest, license, lien, option, pledge, security interest, mortgage, encroachment, easement or restriction of any kind (“Encumbrance”), to New Manager all of Transferor’s right, title and interest in and to all assets, properties and rights used or held for use in the management and operation by Transferor of the Facility (the “Business”), other than Excluded MTA Assets, including, but not limited to, the following: (a) all furniture, fixtures, furnishings, equipment, computers, machinery, mechanical systems, security and alarm systems, nurse call systems, automobiles, vans, buses or other vehicles or equipment used in connection with the Facility and the Business and all other tangible personal property located at or used in connection with the operation of the Facility, including, without limitation, all supplies, inventory, consumables, perishable and non-perishable food products, and other similar property used in the operation of the Facility (“Inventory”); (b) all contracts used or held for use in the Business, other than the Excluded Contracts (collectively, the “Assumed Contracts”); (c) subject to Section 1.7, all books, data and records (including Word files, Excel files, PowerPoint files and other electronic versions thereof) related exclusively to the operation of the Facility, including emails, financial and accounting records, contacts, calendars, customer lists, referral source lists, regulatory surveys and reports, incident tracking reports, advertising and marketing materials and competitive analyses, all policy and procedure manuals, all records and reports (except for such records and reports where transfer is prohibited by applicable laws) relating to any or all residents residing at the Facility from time to time on or after the Execution Date, but only to the extent such residents remain residents on the Closing Date, or relating to residents residing at the Facility prior to the Execution Date but who are the subject of any claim, inquiry, audit, order, or proceeding by any governmental authority or otherwise, made or occurring on or after the Execution Date, all employee records, but only to the extent such employee records are for Hired Employees, all leads regarding prospective residents, all blueprints, construction and architects’ plans and drawings, and all engineering data and reports; and copies of all such books, data and records that relate not only to the operation of the Facility but also to operations retained by Transferor or its affiliates; (d) all security deposits, prepaid rent, move-in fees, utility deposits, other prepaid items and deposits related to the Facility and residents’ personal funds accounts, subject to the terms and conditions of the applicable residency agreements, tenant leases and any other written agreements provided to New Manager under which personal funds are held (collectively, “Trust Funds”); (e) (i) the trademarks, trade names, service marks, domain names and all variations thereof used exclusively in connection with the Business; (ii) all telephone and facsimile numbers relating solely to the Facility (including all “800” numbers) and all post office box addresses associated solely with the Facility; and (iii) all other intellectual property used exclusively in connection with the Business; and (f) all right, title and interest of Transferor in any and all other items of tangible and intangible personal property used or useful in connection with the leasing, use, operation, management or maintenance of the Facility, and all goodwill of Transferor associated with the Business (collectively, “Transferred Assets”); provided, however, that to the extent any of the foregoing assets are leased assets, or vendor owned assets, then such assets shall be excluded from the Transferred Assets, unless New Manager agrees to assume the underlying leases or vendor contracts, as applicable, related to such leased assets or vendor owned assets. Notwithstanding anything to the contrary contained in this Agreement, the following assets of Transferor shall not be transferred to New Manager and shall not constitute Transferred Assets: cash, cash equivalents, accounts receivable, notes receivable, employee benefit plans, capital stock, tax refunds, equipment or other items that are leased pursuant to leases that are not assigned to New Manager, and other items and contracts specifically designated as an excluded asset on Schedule 1.1 (collectively, the “Excluded MTA Assets), which such schedule may be updated by New Manager prior to Closing, including to add contracts that New Manager elects to not assume. In furtherance of the foregoing, at the Closing, Transferor will execute and deliver to New Manager a Bill of Sale and Assignment and Assumption Agreement (“Bill of Sale”) substantially in the form of Exhibit 1.1.

 

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1.2 Excluded Liabilities. Except as expressly provided in this Agreement, New Manager shall not assume any claims, lawsuits, liabilities, obligations or debts of Transferor (“Excluded Liabilities”), including without limitation: (a) malpractice or other tort claims to the extent based on acts or omissions of Transferor or its employees or contractors occurring before the Effective Time, or claims for breach of contract or for indemnification to the extent based on acts or omissions of Transferor or its employees or contractors occurring before the Effective Time; (b) any accounts payable, taxes, or other obligation or liability of Transferor to pay money incurred by Transferor prior to the Effective Time; and (c) any other obligations or liabilities incurred by Transferor prior to the Effective Time. Transferor agrees to timely perform and discharge all Excluded Liabilities.

 

1.3 Transfer of Trust Funds.

 

(a) At the Closing, Transferor shall deliver to New Manager a list that, to the best of its knowledge, will be a true, correct and complete description of any Trust Funds held by Transferor as of the Effective Time.

 

(b) Effective as of the Effective Time, Transferor shall transfer all of Transferor’s right, title and interest in the Trust Funds and New Manager shall assume all of Transferor’s right, title and interest in and to the Trust Funds in trust for the residents or tenants, as applicable, in accordance with applicable statutory and regulatory requirements. Within ten (10) business days after the Closing Date, Transferor will reconcile and pay over the Trust Funds to New Manager, in trust for the residents or tenants, as applicable, along with a true, correct and complete accounting of the Trust Funds.

 

1.4 Employees.

 

(a) Attached hereto as Schedule 1.4 is a schedule (“Employee Schedule”) which reflects, as of the Execution Date, a listing of all Facility-based employment positions, rates of pay, earned but unused paid time off (“PTO”) and original hire dates, as well as which, if any, employees are then on medical disability or leaves of absence and their status as exempt or non-exempt. Transferor will terminate the employment of each of the Facility Employees (as defined below) as of the Effective Time. Transferor represents and warrants the Employee Schedule is true, accurate and complete as of the Execution Date and will be true, accurate and complete as of the Effective Time (provided, that Transferor shall update such Employee Schedule no later than three business days prior to Closing to reflect changes thereto between the Execution Date and the Closing Date).

 

(b) On or before the Effective Time, New Manager or its affiliate or a third-party contractor designated by New Manager (“New Employer”) shall offer to hire, on a probationary basis, each of Transferor’s employees who is employed at the Facility as of the Effective Time (“Facility Employees”), including any such employees who are on medical disability or leaves of absence and who worked at the Facility immediately prior to such disability or leave. Any such offer of employment to a Facility Employee by New Employer shall be to perform comparable services, in such position as is comparable to the position such Facility Employee held with Transferor as of the Effective Time, provided that New Employer may offer compensation to such Facility Employees at levels commensurate with compensation levels paid to other employees of New Employer or its affiliates holding comparable positions so long as any change in compensation levels does not result in any constructive discharge of any such Facility Employee or the breach of any employment contract assumed by New Employer hereunder. Transferor shall have the right (but not the obligation) to employ or offer to employ any Facility Employee who declines New Employer’s offer of employment.

 

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(c) New Employer shall hire at the Effective Time, on a probationary basis, each Facility Employee who elects to accept employment with New Employer in accordance with the terms of Section 1.4(b) (all of such employees who accept employment with New Employer being herein called “Hired Employees”) and shall indemnify and hold Transferor harmless from and against any losses arising from or relating to any subsequent termination of any such employee by New Employer.

 

(d) Transferor will be responsible at Transferor’s own cost and expense for (i) the payment of any termination or severance payment for any current or former employee of Transferor who is not a Hired Employee and for all amounts owing or accruing with respect to any employee prior to the Effective Time and (ii) the provision of health plan continuation coverage (including administrative and notice obligations) under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), or any other law, under any benefit plan with respect to any M&A qualified beneficiaries as such term is defined in Section 54.4980 B-9 (Q&A 4) of U.S. Treasury regulations. Except as set forth in Section 1.4(f), Transferor will be liable for any claims made or incurred by its employees and their beneficiaries under any benefit plan maintained by or for the benefit of Transferor, and neither New Employer nor its affiliates will have any responsibility, liability or obligation, to such employees, their beneficiaries or any other person with respect to any benefit plan maintained by or for Transferor.

 

(e) Transferor shall pay to each Facility Employee, on that date which, but for the Closing, would have been the next regularly scheduled payroll date for such employee following the Closing, an amount equal to any and all accrued salary earned by such employee as of the Effective Time.

 

(f) New Employer shall assume liability for all earned but unused PTO of each Hired Employee as of the Closing Date. At the Closing, Transferor shall pay to New Employer an amount equal to the cash value of all earned but unused PTO for the Hired Employees (as determined in accordance with Transferor’s policies and procedures and subject to any applicable collective bargaining agreement) as of such date and is assumed by New Employer. Transferor shall pay to each Facility Employee who is not a Hired Employee, the cash value of all earned but unused PTO for such employee.

 

(g) Nothing in this Agreement shall create any rights in favor of any person not a party hereto, including the Facility Employees, or constitute an employment agreement or condition of employment for any employee of Transferor.

 

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(h) As of the Effective Time, all Hired Employees who, immediately prior to the Effective Time, participated in group health insurance coverage sponsored by Transferor, shall be eligible for participation in a group health plan (as defined for purposes of Internal Revenue Code Section 4980B) established and maintained by New Employer. To the extent permissible under the plan of New Employer, all such Hired Employees shall be covered pursuant to New Employer’s group health and/or benefit plan, unless they are under a waiting period with Transferor at the Effective Time, in which case they shall be required to complete their waiting period while under New Employer’s plan or in accordance with the terms of New Employer’s benefit plan.

 

(i) New Manager acknowledges and agrees that the provisions of Sections 1.4(b) and (c) are designed, in part, to ensure that Transferor is not required to give notice to employees of the Facility at the “closure” thereof under the Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any comparable state law.

 

(j) Subsequent to the Effective Time, New Manager shall allow Transferor and its agents and representatives to have reasonable access (upon reasonable prior notice and during normal business hours) to all Hired Employees, to the extent reasonably necessary to enable Transferor to investigate and defend employee or other claims, or for any other reasonable purpose.

 

1.5 Management Fees and Accounts Receivable.

 

(a) Notwithstanding anything to the contrary herein or in the Assignment and Assumption of Management Agreement, Transferor owns and shall retain its right, title and interest in and to all unpaid fees under the Management Agreement that relate to services provided prior to the Effective Time, including, but not limited to, any fees arising from rate adjustments which relate to the period prior to the Effective Time even if such adjustments occur on or after the Effective Time.

 

(b) Payments received by Transferor or New Manager after the Effective Time with respect to the Facility from the Tenant or from third-party payors, such as the Medicare Program, the Medicaid Program, the Veteran’s Administration, or managed care companies or health maintenance organizations or on behalf of private pay patients, shall be handled as follows:

 

(i) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate solely to periods prior to the Effective Time, then (A) in the event that such payments are received by New Manager, New Manager shall promptly deposit such payments directly into Transferor’s operating account for the Facility (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment, and until so deposited, shall be held in trust for the benefit of Transferor and will be paid to Transferor) and (B) in the event that such payments are received by Transferor, Transferor shall retain the payments;

 

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(ii) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate solely to periods after the Effective Time, then (A) in the event that such payments are received by New Manager, New Manager shall retain the payments and (B) in the event that such payments are received by Transferor, Transferor shall promptly forward such payments to New Manager (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment, and until so deposited, shall be held in trust for the benefit of New Manager and will be paid to New Manager without setoff or withholding of any kind);

 

(iii) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate to periods both prior to and after the Effective Time, then, (A) if such payment is received by New Manager, New Manager shall promptly deposit the same in its depository institution for negotiation and collection and promptly following receipt by New Manager of collected funds of such payment (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment) New Manager shall deposit into Transferor’s operating account for the Facility the amount of such payment relating to periods prior to the Effective Time, and (B) if such payment is received by Transferor, Transferor shall promptly deposit the same in its depository institution for negotiation and collection and promptly following receipt by Transferor of collected funds of such payment (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment) Transferor shall forward to New Manager the amount of such payment relating to periods following the Effective Time.

 

(iv) With respect to a payment received within sixty (60) days after the Closing Date, if the accompanying remittance advice does not indicate the period to which a payment relates or if there is no accompanying remittance advice and if the parties do not otherwise agree as to how to apply such payment, then, for the purposes of subparagraph (iii), above, the parties will be deemed to have agreed that such payment shall be applied first to the payor’s pre-Effective Time balances and that any remaining portion shall be applied to such payor’s post-Effective Time balances. With respect to non-designated payments received more than sixty (60) days after the Closing Date, such payments will first be applied 100% to any balances relating to post-Effective Time, with the excess, if any, applied to the extent of any balances due for services rendered pre-Effective Time.

 

(v) Notwithstanding anything contained herein to the contrary, any payments received with respect to the Quality Incentive Payment Program (a “QIPP Payment”) within two (2) years after the Closing Date, if the accompanying remittance advice does not indicate the period to which such QIPP Payment relates or if there is no accompanying remittance advice and if the parties do not otherwise agree as to how to apply such QIPP Payment, then, for the purposes of subparagraph (iii), above, the parties will be deemed to have agreed that such QIPP Payment shall be applied first to the payor’s pre-Effective Time balances and that any remaining portion shall be applied to such payor’s post-Effective Time balances. With respect to non-designated QIPP Payments received more than two (2) years after the Closing Date, such QIPP Payments will first be applied 100% to any balances relating to post-Effective Time, with the excess, if any, applied to the extent of any balances due for services rendered pre-Effective Time.

 

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(c) If the parties mutually determine that any payment hereunder was misapplied by the parties, the party which erroneously received said payment shall promptly remit the same to the other after said determination is made.

 

(d) For a period of two (2) years after the Effective Time, New Manager and Transferor shall, upon reasonable notice and during normal business hours, have the right to inspect all cash receipts and other books and records (including, without limitation, bank statements) of the other respective party in order to confirm the other party’s compliance with the obligations imposed on it under this Section.

 

(e) Failure to forward to the other any payment received by such party in accordance with the terms of this Section 1.5, shall entitle the other party (among all other remedies allowed by law and this Agreement) to interest on the amount owed at the rate of 12% per annum, simple interest, until such payment has been paid. The payment of any interest imposed under this Section 1.5(e), if any, shall be made together with the underlying payment therefor.

 

(f) New Manager and Transferor shall cause the Facility staff to cooperate and assist Transferor, consistent with past practice, in the preparation of Transferor’s final month-end closing processing and billing after Closing at no cost to Transferor. New Manager and Transferor agree to prepare and provide to each other a “Due To/Due From” Schedule no less than once per month for the period of one hundred eighty (180) days following the Effective Time with supporting documentation, so that each party hereto can determine the status of funds owed to it pursuant to this Section 1.5, and thereafter as necessary (but no less than once per month) until Transferor has collected all amounts due to it.

 

(g) In connection with services rendered to residents with pending Medicaid applications (collectively, the “Pending Medicaid Applicants”), New Manager shall (i) provide Transferor with a written monthly progress report on the Medicaid application status of each Pending Medicaid Applicant until such time as all Pending Medicaid Applicants have been approved or denied by Medicaid, and (ii) if New Manager receives any notice or correspondence regarding such applications, New Manager shall provide such notice or correspondence to Transferor within five (5) business days following receipt. New Manager shall cooperate with and provide Transferor with such documents and information as Transferor shall reasonably request to enable Transferor to contest any denial or negative determinations by Medicaid with respect to the Pending Medicaid Applicants.

 

(h) Notwithstanding anything herein to the contrary, New Manager acknowledges and agrees that, for a period of thirty (30) says following the Closing Date, all revenue collected into the Depository Account (as defined in the Management Agreement) shall continue to be transferred over to the Facility Operating Account (as defined in the Management Agreement) controlled by Transferor, and that Transferor shall remit and reconcile such collections in accordance with the terms of this Section 1.5.

 

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1.6 Prorations.

 

(a) Following the Closing, utility charges for the billing period in which the Effective Time occurs, real and personal property taxes attributable to the Facility, and any other items of revenue or expense attributable to the Facility (“Prorated Items”) shall be prorated between Transferor and New Manager as of the Effective Time and when such charges become payable consistent with Transferor’s past practice. In general, such prorations shall be made so as to reimburse Transferor for prepaid expenses to the extent such expense is attributable to periods after the Effective Time and to charge Transferor for expenses accrued but unpaid as of the Effective Time.

 

(b) All such prorations shall be made on the basis of actual days elapsed in the relevant accounting, billing or revenue period and shall be based on the most recent information available to Transferor.

 

(c) Immediately after the Effective Time, New Manager will transfer all petty cash from the Facility or its operating accounts to a deposit account designated by Transferor. New Manager shall be responsible to provide any petty cash requirements of the Facility from and after the Effective Time.

 

1.7 Access to Records.

 

(a) All patient medical records, financial records and employee records relating to the Facility that are in Transferor’s possession or control shall remain at the Facility as of the Effective Time. Nothing herein shall be construed as precluding Transferor from removing from the Facility as of the Effective Time (i) the originals of financial records that relate to its management at the Facility (provided that copies thereof will be remain at the Facility and be accessible to New Manager) and/or to its overall corporate operations, and (ii) the records of former employees of the Facility who will not be hired by New Manager. Notwithstanding the foregoing, in the case of the records described in clause (ii), Transferor shall give New Manager reasonable access to any information in any such removed records as New Manager may reasonably demonstrate is necessary for the efficient operation, maintenance and defense of the Facility by New Manager.

 

(b) To the extent permitted by applicable law, subsequent to the Effective Time, New Manager shall allow Transferor and its agents and representatives to have reasonable access to (upon reasonable prior notice and during normal business hours), and to make copies of, at Transferor’s expense, the books and records and supporting material of the Facility relating to any period prior to the Effective Time, to the extent reasonably necessary to enable Transferor to investigate and defend employee or other claims, to file or defend tax returns and to verify accounts receivable collections due Transferor, or for any other reasonable purpose.

 

(c) To the extent permitted by applicable law, Transferor shall be entitled to remove the originals of any records delivered to New Manager, for purposes of litigation involving a resident or employee to whom such record relates, if an officer of a court of competent jurisdiction, agency official or counsel for Transferor certifies that such original must be produced in order to comply with applicable law or the order of a court of competent jurisdiction in connection with such litigation. Any record so removed shall promptly be returned to New Manager following its use.

 

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(d) New Manager agrees to maintain at its own expense all such books, records and other material comprising records of the Facility’s management prior to the Effective Time that have been received by New Manager from Transferor or otherwise, including, but not limited to, resident records and records of resident funds, to the extent required by law, but in no event for less than three (3) years.

 

(e) Notwithstanding anything herein to the contrary, for a period of sixty (60) days after the Closing Date, Transferor shall, upon request and at New Manager’s expense, (i) use reasonable efforts to permit the transfer of the Facility’s current electronic resident medical records data (including MDS history), in readily available form for use in New Manager’s computer applications, and (ii) provide New Manager with view-and-print access to Transferor’s electronic medical records system, to enable New Manager, at its expense, to print and take physical delivery of such resident medical records.

 

(f) Notwithstanding anything in this Agreement to the contrary, the right to inspect and obtain any records from Transferor or New Manager shall be subject to all provisions of law regarding confidentiality and privacy. Transferor and New Manager acknowledge and agree that the definition of “health care operations” set forth in 45 CFR 164.501, pursuant to HIPAA, as that term is defined in Section 3.9(d) of this Agreement, permits the parties to use and disclose individually identifiable resident and employee health information in order to assure a smooth transition of facility operations. Transferor and New Manager agree to comply with, and to cause their respective employees, subcontractors and agents to comply with, applicable state and federal laws and regulations relating to the security, protection and privacy of individually identifiable health care information, including, without limitation, the regulations promulgated pursuant to HIPAA, and any amendments to those regulations that may occur from time to time. Transferor agrees that their employees, subcontractors, and agents shall maintain the confidentiality of resident and employee records and medical information, in accordance with applicable state and federal laws, rules and regulations. New Manager and their employees, subcontractors, or agents agree not to disclose protected health information to any third-party except where permitted or required by law or where the resident or employee expressly approves such disclosure in writing.

 

1.8 Unassigned Contracts. Nothing in this Agreement will be construed as an attempt to agree to assign any contract, certificate, license or other asset that is in law or by agreement non-assignable without the consent of the other party or parties thereto, or of any governmental authority, as the case may be, unless such consent will be given. Transferor will use commercially reasonable efforts to obtain all such necessary consents. In order, however, that the full value of every such contract, certificate, license or other asset and all claims and demands under such contracts may be realized, Transferor hereby covenants and agrees with New Manager that Transferor will, at the request and under the direction of New Manager, in the name of Transferor or otherwise, as New Manager will specify and as will be permitted by law, take all such reasonable actions and do or cause to be done all such reasonable things as shall be necessary or proper (i) to preserve the rights and obligations of Transferor under such contracts, certificates, licenses and other assets, and (ii) for, and to facilitate, the collection of the moneys due and payable for the period after the Closing Date, and to become due and payable, to Transferor in and under every such contract and in respect of every such claim and demand for the period after the Closing Date, and Transferor will hold the same for the benefit of, and will pay the same over to, New Manager.

 

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1.9 Reserved.

 

1.10 Limitation. New Manager acknowledges that, except as expressly set forth in this Agreement or the Transferor’s Transaction Documents, Transferor makes no representation, warranty, or covenant whatsoever with respect to any matter, thing or event. Without limiting the generality of the foregoing, but subject to any express representations and warranties set forth herein or in the Transferor’s Transaction Documents, New Manager shall accept the Transferred Assets and the Facility in their “AS IS” “WHERE IS” condition as of the Execution Date, subject to normal wear and tear. New Manager acknowledges, on behalf of itself and its affiliates, that neither Transferor nor any of Transferor’s representatives has made any representation or warranty to New Manager or to any of New Manager’s affiliates, except as specifically set forth in this Agreement. No representation or warranty to New Manager is made with respect to any estimates, financial projections, or forecasts relating to Transferor, the Transferred Assets or the Facility that may have been delivered or mentioned to New Manager including the reasonableness of the assumptions underlying such estimates, projections and forecasts. With respect to any such estimate, projection or forecast that may have been mentioned delivered by or on behalf of Transferor, New Manager acknowledges that (i) there are uncertainties inherent in attempting to make such estimates, projections and forecasts, (ii) New Manager is familiar with such uncertainties, (iii) New Manager is taking full responsibility for making its own evaluation of the adequacy and accuracy of all such estimates, projections and forecasts so furnished to it, and (iv) New Manager shall have no claim against Transferor or any other person with respect thereto. New Manager agrees that, in entering into this Agreement and all of the documents contemplated by this Agreement, it has conducted due diligence with respect to the financial condition of the Facility, the Facility’s provider numbers and provider and reimbursement agreements, the Transferred Assets, the Operating Contracts and the Facility Employees and that New Manager has not relied on any express or implied representation or warranty by Transferor not expressly contained in this Agreement. Notwithstanding the foregoing, nothing herein shall preclude, prohibit or otherwise affect any claim by New Manager for fraud.

 

1.11 Cost Report.

 

(a) Following the Closing, to the extent any Medicare and/or Medicaid cost reports are due that cover periods occurring prior to the Effective Time and after the Effective Time, New Manager shall be required to timely file any such cost reports on behalf of Tenant. Transferor agrees to timely provide to New Manager all information necessary for any such cost reports related to periods occurring prior to the Effective Time and to reasonably cooperate with New Manager in preparation of cost reports with respect to the periods after the Effective Time.

 

(b) Following the Closing, New Manager agrees to cooperate with Transferor on a commercially reasonable basis to (i) include in Tenant’s Medicare cost reports for the initial two (2) full cost report years for the Facility such amounts for pre-Effective Time Medicare bad debt as may be certified in writing by an officer of Fundamental Administrative Services, LLC (“FAS”), to New Manager not later than thirty (30) days prior to the respective due dates of such cost reports, and (ii) promptly pay over to Transferor any and all amounts as may be paid to New Manager as Medicare bad debt reimbursement for the pre-Effective Time bad debt amounts included on such cost reports. In addition, Transferor will promptly pay over to New Manager any and all amounts that are recouped within the New Manager’s effective period forward from the Transferor’s pre-Effective Time period. In order for FAS to timely provide the Medicare bad debt information for such purpose, New Manager agrees to notify Transferor of Tenant’s cost report year for the Facility promptly upon the determination of the same. FAS may participate in any audit or review of pre-Effective Time cost reports related to bad debt at its own expense.

 

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1.12 Provider Contracts. Effective as of the Closing Date, Transferor’s rights and interests in and to its provider numbers and provider and reimbursement agreements with any third-party payor programs shall be assigned to New Manager, but only to the extent such provider numbers and agreements are in the name of Transferor and are assignable.

 

ARTICLE II
THE CLOSING; Purchase Price

 

2.1 Time and Place of Closing. Subject to the satisfaction of the conditions set forth herein, the actions contemplated to consummate the transactions under this Agreement (“Closing”) shall take place by email exchange of documents (or such other mutually acceptable remote methodology) simultaneously with the closing under the PSA. The date on which the Closing takes place is referred to herein as the “Closing Date.” Notwithstanding the actual time at which the Closing occurs, the time (the “Effective Time”) as of which the Closing shall be deemed to be effective and the risk of loss shall pass from Transferor to New Manager shall be 12:00:01 a.m. (local time where the Facility is located) on the Closing Date.

 

2.2 Purchase Price. The purchase price for the Transferred Assets shall be an amount equal to $275,000 (the “Purchase Price”). New Manager shall pay the Purchase Price (as adjusted pursuant to the terms of hereof for certain credits and debits contemplated hereby), less $25,000 which will be deposited with the Escrow Agent pursuant to Section 5.8 to Transferor by wire transfer of immediately available funds to an account designated by Transferor at least three business days prior to Closing.

 

2.3 Allocation. The Purchase Price will be allocated in the manner proposed by New Manager as soon as practicable following the Closing and reasonably agreed to by Transferor. After the Closing, the parties shall make consistent use of such Purchase Price allocation for all Tax purposes and in any Tax Returns filed with the Internal Revenue Service in respect thereof, including IRS Form 8594.

 

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ARTICLE III
TRANSFEROR’S REPRESENTATIONS AND WARRANTIES

 

Transferor represents and warrants to New Manager as of the date hereof and as of the Closing as follows:

 

3.1 Organization and Standing of Transferor. Transferor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas. Transferor has the power and authority to own the Transferred Assets and to conduct the business presently being conducted by Transferor at the Facility.

 

3.2 Authority. Transferor has the full limited liability company power and authority to make, execute, deliver and perform this Agreement, including the schedules, exhibits, and other instruments and documents required or contemplated hereby (the “Transferor’s Transaction Documents”). Such execution, delivery, performance and consummation have been duly authorized by all necessary action, limited liability company or otherwise, on the part of Transferor and its members.

 

3.3 Binding Effect. The Transferor’s Transaction Documents, when executed by Transferor constitute the valid and binding obligations of Transferor, enforceable against Transferor in accordance with their respective terms.

 

3.4 Assets. The Transferred Assets, together with the Excluded MTA Assets, the Excluded Assets (as defined in PSA) and the Personal Property (as defined in the PSA), includes all assets, furniture, fixtures, machinery, supplies, inventory, equipment and other personal property used in the Business in the ordinary course as the Business has been operated by Transferor. Transferor has sole and exclusive, good and marketable title to, or, in the case of property held under a lease or other contractual obligation, a sole and exclusive, enforceable leasehold interest in, or contractual right to use, all of the Transferred Assets. Other than as set forth on Schedule 3.4, Transferor owns the Transferred Assets, free and clear of all Encumbrances. The Inventory is of a sufficient quantity and condition for the normal operation of the Business in the ordinary course of business and all requirements of governmental authorities.

 

3.5 Licenses and Permits. Transferor and Tenant possess, and have possessed, all licenses, permits, accreditations, government program provider agreements and other government authorizations issued or required by governmental authorities or accreditation agencies in connection with the ownership, maintenance and operation of the Facility or that are otherwise necessary to conduct Transferor and Tenant’s respective businesses with respect to the Facility (collectively, “Licenses”). Without limiting the foregoing, Transferor or Tenant (i) possesses, if and where required, any and all Licenses and all similar approvals necessary to maintain and operate the Facility, and (ii) is licensed by the State of Texas to operate, the Facility as a 91-bed skilled nursing facility, and all material Licenses necessary for the operation of the Facility as it is currently operated have been received and are now currently effective. Transferor is not in breach or violation of any License.

 

3.6 Surveys, etc. Other than as specifically identified in Schedule 3.6, all exceptions, deficiencies, violations, plans of correction or other indications of lack of compliance in any State survey or inspection reports have been fully corrected and there are no bans or limitations in effect, pending or, to Transferor’s knowledge, threatened with respect to admissions to the Facility. Transferor shall continue to deliver all such surveys, inspection reports and cost reports as and when same are received and/or filed as the case may be prior to the Closing Date.

 

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3.7 Claims. Other than as specifically identified in Schedule 3.7, for the two (2) year period immediately preceding the Closing Date, there have been no written notices of claims, suits, actions, judgments, demands, or casualty losses of any kind filed or claimed relating to the Facility, Tenant, Transferor or claims or losses affecting any insurance rating of the Facility, Tenant or Transferor, nor has there been any Chapter 74, Texas Civil Practices & Remedies Code, demand from an attorney representing a current or past resident of the Facility within the past two (2) years.

 

3.8 Collective Bargaining Agreements. There are no collective bargaining agreements between Transferor or Tenant and/or the Facility and any labor organization or employee group applicable to the operation and/or management of the Facility and, to Transferor’s knowledge, no election or other effort to unionize the Facility or any portion of its staff is underway, has been petitioned for by any Facility staff, or has been granted by the National Labor Relations Board or any similar body. For purposes of this Agreement, “to Transferor’s knowledge” and similar phrases, means the actual knowledge of Jake Hallsted.

 

3.9 Compliance.

 

(a) The Transferor, the Facility and Tenant are and have been in compliance with all applicable laws and orders, including all laws relating to employment practices and benefit plans (e.g., ERISA, classification as exempt versus non-exempt and misclassification as of employees versus independent contractors), all environmental laws, including those with respect to the disposal of hazardous materials, and all applicable Healthcare Laws. The Facility is currently in material compliance with (i) all Licenses issued by any agency having jurisdiction over the Facility, (ii) all plans of correction and allegations of compliance filed by or in behalf of the Facility, and (iii) all Conditions and Standards of Participation for the Medicare and Medicaid programs. There are no outstanding Life Safety Code deficiencies for the Facility and there are no outstanding waivers for any Life Safety Code deficiencies. There are no pending government program audits by any governmental authority. Transferor has not received written, or to Transferor’s knowledge, oral, notice of any action or proceeding initiated or proposed by State or federal agencies having jurisdiction thereof, to either revoke, withdraw or suspend any License or to decertify, terminate, ban or limit the participation of Tenant or the Facility in the Medicare, Medicaid, VA or any other third-party payor programs.

 

(b) Neither Transferor, the Business, or to Transferor’s knowledge, Tenant or any of their respective directors, managers, owners, officers, employees, healthcare professionals, contractors or agents, has with respect to or related to the Facility or the Business (i) given, agreed to give, received, or agreed to receive any illegal gift, contribution, payment or similar benefit to, or entered into any contract or informal arrangement with, any supplier, patient, client, customer, governmental official or employee or other person who was, is or may be, in a position to help or hinder the Facility, Transferor or Tenant, 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) Neither Transferor, or to Transferor’s knowledge, Tenant nor any of their respective directors, managers, officers, employees, independent contractors, owners, members, shareholders or agents, have been convicted of, charged with or investigated for a violation of any law related to fraud, theft, embezzlement, breach of fiduciary responsibility, financial misconduct, obstruction of an investigation of controlled substances, or has been debarred, excluded, suspended, or otherwise prohibited from participation in Medicare, Medicaid or other government program, or been subject to any order or consent decree of, or criminal or civil fine or penalty relating to any government program imposed by, any governmental authority. Transferor has not arranged or contracted with (by employment or otherwise) any individual or entity that is excluded, debarred, or otherwise prohibited from participation in a government program that is related to the Business. Transferor has not received any written notice of any exclusion, suspension, or debarment actions relating to the Facility pending or threatened against Transferor or any of their directors, managers, officers, employees, independent contractors, owners, members, shareholders or agents. Transferor conducts (and have conducted) background checks in compliance with applicable law and regularly screen (and have screened) all of their healthcare professionals, directors, managers, officers, employees, independent contractors, owners, members, shareholders or agents 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.

 

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(d) Transferor 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 Transferor or the Business, including, without limitation, any physician, nurse practitioner, physician assistant or nurse (each, a “Healthcare Provider”) and, to Transferor’s knowledge, Tenant, is, and at all times during the three (3)-year period preceding the date hereof or the time during which such individual served in such capacity on behalf of Transferor, 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 Transferor or otherwise with respect to the Facility or the Business are and have been (with respect to any period of time during which such Healthcare Provider performed services on behalf of Transferor) so licensed, certified or registered without restriction. No action or investigation has been filed, commenced or, to Transferor’s knowledge, threatened against Transferor or any Healthcare Provider or Tenant alleging any failure so to comply in any material respect, and neither Transferor, the Business, any Healthcare Provider, or to Transferor’s knowledge, Tenant has received any written, or to Transferor’s knowledge, oral, 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 Transferor, the Business, any Healthcare Provider, or, to Transferor’s knowledge, Tenant relating to or arising under any Healthcare Law. To Transferor’s knowledge, no Healthcare Provider 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 three (3) year period preceding the date hereof. Neither Transferor, the Business nor, to Transferor’s knowledge, Tenant received any written, or to Transferor’s knowledge, oral, 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. Neither Transferor, the Business, any Healthcare Provider, or to Transferor’s knowledge, Tenant has received any written, or to Transferor’s knowledge, oral, notice from any governmental authority of any pending, active or threatened actions involving Transferor, Tenant, the Business, the Facility or 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. Transferor and, to Transferor’s knowledge, Tenant maintain 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. “Healthcare Laws” means all laws 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 and any other state or federal laws related to the relationships among providers, payors, vendors and consumers in the healthcare industry and the delivery, purchase, sale or support of healthcare services, (d) TRICARE (10 U.S.C. § 1071 et seq.) and the regulations promulgated thereunder, (e) quality and safety laws 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) laws governing the provision of healthcare services to employees with workers compensation coverage, (g) licensure laws 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 laws relating to the so-called “corporate practice of medicine”, “corporate practice of nursing” or fee splitting, (h) laws relating to certificate of need or similar laws 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, (i) any laws applicable to the billing, coding or submission of claims or collection of accounts receivable or refund of overpayments for medical or healthcare services, (j) HIPAA, and (k) any and all other implementing regulations, rules, ordinances, order, and applicable regulatory manual provisions, policies and administrative guidance related to healthcare, in-home care, personal care, or assisted living having the force of law, each of (a) through (j) as may be amended from time to time. “HIPAA” means the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. §1320d et seq.), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and any implementing regulations promulgated thereunder (including the Standards for Privacy of Individually Identifiable Health Information, the Security Standards for the Protection of Electronic Protected Health Information and the Standards for Electronic Transactions and Code Sets promulgated thereunder) and applicable state laws regarding patient privacy and the security, use or disclosure of patient health care records.

 

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(e) Seller is, and at all times has been, in compliance with all applicable Information Privacy and Security Laws, as defined herein. Seller is, and at all times has been, in compliance with (i) all contracts or other arrangements in effect between Seller and any third party that apply to or restrict the use, disclosure or security of Personal Information, as defined herein, by Seller or by any other party to such contracts or other arrangements (collectively, “Privacy Agreements”); and (ii) the terms of any consents, authorizations, waiver of authorization or other permission pursuant to which Seller accesses, uses, discloses, or has accessed, used or disclosed, Personal Information (collectively, “Privacy Consents”). Seller has in place, and Seller complies and has complied with, written policies to protect the security and privacy of Personal Information. Seller has the right pursuant to the Privacy Agreements, the Privacy Consents and its privacy and security policies to use and disclose Personal Information for the purpose such information is and has been used and disclosed. Neither the execution, delivery or performance of this Agreement, nor the consummation of any of the transactions contemplated by this Agreement, including any direct or indirect transfer of Personal Information resulting from such transactions, will violate any Seller policies, any Privacy Agreements, or any Privacy Consents as such currently exist or as existed at any time during which any of such Personal Information or customer information was collected or obtained. Seller has, and has at all times maintained, commercially reasonable physical, technical, organizational and administrative security safeguards to protect all Personal Information and customer information collected by Seller or on behalf of Seller from and against unauthorized access, use and/or disclosure and that comply with all Privacy Agreements, all Privacy Consents and applicable Information Privacy and Security Laws in every jurisdiction in which Seller operates. Seller has to the extent applicable, implemented all security management processes required by HIPAA, including a risk analysis, risk management activities, a sanction policy and information system activity review, as described at 45 C.F.R. § 164.308(a)(1)(ii). No person has withdrawn his or her consent to any use or processing of his or her Personal Information or requested erasure of their Personal Information by Seller in the six (6) years prior to the date of this Agreement where Seller has not complied with such request. Seller has not received any complaint from any person or Governmental Authority regarding Seller’s or any of its agents, employees or contractors’ uses or disclosures of, or security practices or security incidents regarding, Personal Information. There have not been any non-permitted uses or disclosures, security incidents, or breaches involving Personal Information held or collected by or on behalf of Seller. Seller is subject to any pending claim, or, to the Knowledge of Seller, is any claim threatened against (and to the Knowledge of Seller, no such claims are likely to be asserted or threatened against Seller) by any third party or entity, including any Governmental Authority, alleging (i) a violation of any Seller policies, Privacy Consents or any Privacy Agreements; (ii) a violation of any third party or entity’s privacy, personal or confidentiality rights under any Information Privacy and Security Laws, or (iii) the failure of Seller with respect to any security audit. Seller has not notified, either voluntarily or as required by any Information Privacy and Security Law, any affected individual, any customer, any Governmental Authority, or the media of any breach or non-permitted use or disclosure of Personal Information, and Seller is not currently planning to conduct any such notification or investigating whether any such notification is required. “Information Privacy and Security Laws” means all Applicable Laws concerning the privacy, protection, storage, access, use, exchange, disclosure and/or security of Personal Information or other data including, HIPAA, state data breach notification Applicable Laws, state health information protection Applicable Laws, state social security number protection laws, the Federal Trade Commission Act, 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, and state consumer protection Applicable Laws. “Personal Information” means: (A) any information that identifies, or in combination with other information may identify, is linked to, or relates to an individual, or is capable of being associated with an individual; (B) any information that is governed, regulated or protected by one or more Applicable Laws concerning information relating to an identified or identifiable natural person or PCI DSS, including, without limitation, any “protected health information” (as defined by HIPAA), social security number or tax identification number, credit card number, bank account information or financial customer or account numbers; (C) information that can be used to authenticate an individual (including, without limitation, passwords or PINs, biometric data, unique identification numbers, answer to security questions, or other personal identifiers) in any format whether written, electronic or otherwise; and (D) any information that is derived from or linked to other Personal Information

 

(f) There are no outstanding bed Taxes or other fees owing to state licensing authorities or any of the Government Programs.

 

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3.10 Cost Reports. Transferor has filed all Medicare and Medicaid cost reports and related reports for the Facility in compliance with applicable laws and such cost reports are accurate in all material respects.

 

3.11 Taxes. There are no real estate taxes or assessments and/or impositions which are due and unpaid or that will not be prorated at the Closing. Transferor 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 applicable law. All such tax returns were true, complete and accurate in all material respects. All taxes owed by Transferor shown on any such tax return have been timely paid in full.

 

3.12 Loan Defaults. To Transferor’s knowledge, there is no default under the terms and conditions of any agreement, loan, mortgage, deed of trust, or any other loan document in favor of any mortgagee with a security interest in the Facility. Schedule 3.12 sets forth a list of all Debt of Transferor, and, to Transferor’s knowledge, all Debt otherwise affecting the Facility. “Debt” means (a) all indebtedness, contingent or otherwise, for money borrowed, purchase money indebtedness (other than accounts payable in the ordinary course of business to the extent such accounts payable are not more than sixty (60) days past due) 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; (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 the 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 or finance 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; (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 or any indemnification obligations under any acquisition agreement; and (i) all accrued but unpaid interest expense and all penalties, fees, breakage costs, 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 contemplated hereby.

 

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3.13 Provider Agreements. The Facility has current provider agreements under Titles XVIII and XIX of the Social Security Act.

 

3.14 Financial Statements. Transferor has provided New Manager the balance sheet of Transferor as of December 31, 2019 and December 31, 2020, and related statement of income for the 12-month periods then ended and the balance sheet of Transferor as of April 30, 2021 and related statement of income for the 4-month period then ended (collectively, the “Financial Statements”). The Financial Statements fairly present, in all material respects, the financial condition and the results of operations of Transferor as of the dates of and for the periods referred to in such Financial Statements. Except as set forth on Schedule 3.14, the Financial Statements have been prepared in accordance with GAAP. Transferor has no liabilities of any nature whatsoever, 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, except for (i) liabilities reflected or reserved against in the most recent Financial Statements and (ii) current liabilities incurred in the ordinary course of business since the date of the most recent Financial Statements (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 law or order or any action). Transferor has no knowledge of any fact or circumstance with respect to Tenant that would reasonably be expected to adversely affect in any material respect the financial condition of the Business.

 

3.15 Material Adverse Effect. Since December 31, 2020, there have been no events, transactions or information relating to the Facility or the Transferred Assets which, singly or in the aggregate, would reasonably be expected to have a material adverse effect on the operations of the Facility or the Business, and Transferor has managed the Facility and Business in the ordinary course of business throughout such period.

 

3.16 QIPP Documents. Transferor is in material compliance with all lease agreements, management agreements and other agreements with the Tenant and related to the Facility’s participation in the Quality Incentive Payment Program (“QIPP”) sponsored by the Texas Health and Human Services Commission (“collectively, “QIPP Related Agreements”).

 

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3.17 Contracts. Schedule 3.17 sets forth each contract to which Transferor is a party or by which it is otherwise bound. With respect to each such contract: (i) such contract is in full force and effect and enforceable against the counter-party thereto; (ii) neither Transferor nor, to Transferor’s knowledge, the other party thereto is in breach or default under such contract; and (iii) neither Transferor nor the other party thereto has requested to terminate, modify or otherwise renegotiate the terms thereof. Transferor has delivered to New Manager a true, correct and complete copy of each such contract. To Transferor’s knowledge, neither Tenant nor any other party to a contract with Tenant is in material breach of such contract. To Transferor’s knowledge, neither Tenant nor any other party to a contract relating to a third party payment program has given notice to terminate or modify such contract or to otherwise renegotiate the terms of such contract.

 

3.18 No Conflict. Except as disclosed on Schedule 3.18, none of the execution, delivery or performance by Transferor of any of the Transferor’s Transaction Documents nor the consummation of the transactions contemplated hereby will: (a) violate any law; (b) result in the modification, acceleration, termination, breach or violation of, or default under, any contractual obligation of Transferor; (c) require any action by (including any authorization, consent or approval), or in respect of (including notice to), any person under any contractual obligation of Transferor; (d) result in the creation or imposition of an Encumbrance upon, or the forfeiture of, any assets of Transferor; or (e) result in a material breach or violation of, or default under, the organizational documents of Transferor. Except as set forth on Schedule 3.18, no affiliate of Transferor is a party to any such contract and there are no and, during the immediately preceding two (2) years, there have been no other transactions or arrangements between Transferor and any affiliate of Transferor.

 

3.19 Solvency. Transferor is not insolvent and Transferor has the ability to pay all of its debts as they come due, and further is not involved in, and is not contemplating, any bankruptcy, reorganization or insolvency proceeding of any kind. Immediately after giving effect to the consummation of the transactions contemplated by this Agreement: (i) Transferor will be able to pay its liabilities as they become due in the ordinary course of business and (ii) Transferor will have assets (calculated at fair market value) that exceed its liabilities. The cash available to Transferor, after taking into account all other anticipated uses of the cash, will be sufficient to pay all debts promptly in accordance with their terms.

 

3.20 Brokers or Finders. Except for Senior Living Investment Brokerage, Inc. (representing Transferor only), no agent, broker, investment banker or other firm or person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with the Closing based on arrangements made by or on behalf of Transferor.

 

ARTICLE IV
NEW MANAGER’S REPRESENTATIONS AND WARRANTIES

 

New Manager represents and warrants to Transferor on the date hereof and as of the Closing Date as follows:

 

4.1 Organization and Standing of New Manager. New Manager is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas. New Manager has the power and authority to own the property and assets now owned by it and to conduct the business presently being conducted by it.

 

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4.2 Authority. New Manager has the full limited liability company power and authority to make, execute, deliver and perform this Agreement and the other instruments and documents required or contemplated hereby (the “New Manager’s Transaction Documents”, collectively with the Transferor’s Transaction Documents, the “Transaction Documents”). Such execution, delivery, performance and consummation have been duly authorized by all necessary action, limited liability company or otherwise, on the part of New Manager and its members.

 

4.3 Binding Effect. New Manager’s Transaction Documents, when executed by New Manager, constitute the valid and binding obligations of New Manager, enforceable against New Manager in accordance with their respective terms.

 

4.4 Solvency. New Manager is not insolvent and New Manager has the ability to pay all of its debts as they come due, and further is not involved in, and is not contemplating, any bankruptcy, reorganization or insolvency proceeding of any kind. Immediately after giving effect to the consummation of the transactions contemplated by this Agreement: (i) New Manager will be able to pay its liabilities as they become due in the ordinary course of business and (ii) New Manager will have assets (calculated at fair market value) that exceed its liabilities. The cash available to New Manager, after taking into account all other anticipated uses of the cash, will be sufficient to pay all debts promptly in accordance with their terms.

 

4.5 No Conflict. None of the execution, delivery or performance by New Manager of any of the New Manager’s Transaction Documents nor the consummation of the transactions contemplated hereby will: (a) violate any law; (b) result in the modification, acceleration, termination, breach or violation of, or default under, any contractual obligation of New Manager; (c) require any action by (including any authorization, consent or approval), or in respect of (including notice to), any person under any contractual obligation of New Manager; (d) result in the creation or imposition of an Encumbrance upon, or the forfeiture of, any assets of New Manager; or (e) result in a material breach or violation of, or default under, the organizational documents of New Manager.

 

4.6 Brokers or Finders. No agent, broker, investment banker or other firm or person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with the Closing based on arrangements made by or on behalf of New Manager.

 

ARTICLE V
OBLIGATIONS OF THE PARTIES

 

5.1 Applications and Filings; Efforts. No later than thirty (30) days after the Closing or such earlier time as may be required by applicable law, Transferor and New Manager shall make all filings and complete all applications required by the State of Texas, Medicare and Medicaid to permit New Manager to manage the Facility. Transferor shall cooperate with New Manager in connection with all such filings and applications. In addition, Transferor shall use commercially reasonable efforts to obtain all consents and provide all notices to any third parties in connection with the transfer of the Transferred Assets. Each of the parties shall use commercially reasonable efforts to cause the conditions precedent set forth herein to be satisfied; provided, that the foregoing shall not require a waiver of any condition precedent.

 

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5.2 Management of Facility. Between the Execution Date and the Closing, Transferor shall:

 

(a) manage the Facility in the ordinary course and in substantially the same manner as currently managed, including with respect to the maintaining Inventory at normal operating levels;

 

(b) (i) maintain, keep and preserve its assets and properties (taken as a whole) in all material respects in good condition and repair (ordinary wear and tear excepted); (ii) preserve in all material respects its business intact; (iii) preserve in all material respects the goodwill of and relations with employees, Healthcare Providers, suppliers, distributors, vendors, referral sources, patients, residents, tenants, customers, and others having business dealings or relations with the Transferor or the Facility; and (iv) maintain its books and records consistent with past practices and applicable law;

 

(c) maintain or cause to be maintained all insurance policies presently being maintained by Transferor with respect to the Facility and/or Transferred Assets;

 

(d) preserve in force (or cause to be preserved in force) all existing Licenses, of the Facility, including Medicare and Medicaid and any other government payment program enrollments, and if any such License or enrollment shall expire or be suspended or revoked prior to the Closing, Transferor shall promptly notify New Manager and shall, at Transferor’s expense, take all commercially reasonable measures to cause the extension, renewal or reinstatement of such License without any additional limitation or condition;

 

(e) maintain, restore or replace all drugs, medicines, foods and other supplies used in connection with the operation of the Facility; and

 

(f) not take any actions which are inconsistent with its obligations under this Agreement or which could hinder or delay the consummation of the transactions contemplated by this Agreement.

 

5.3 Further Assurances. From and after the Closing Date, upon the request of the Transferor or New Manager, the parties shall do, execute, acknowledge and deliver all such further acts, assurances, deeds, assignments, transfers, conveyances and other instruments and papers as reasonably required or appropriate to carry out and/or evidence the transactions contemplated hereby.

 

5.4 Exclusivity. During the period between the Execution Date and the Closing Date or the earlier termination of this Agreement as provided herein, Transferor shall not and shall cause its representatives not to, directly or indirectly, (a) solicit, initiate or encourage the submission of any proposal or offer from any person relating to the acquisition of the Transferred Assets (including any acquisition structured as a merger, consolidation, share exchange, tender offer or otherwise), or any other merger, reorganization, recapitalization or similar transaction involving the Transferor, or (b) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate or encourage in any other manner any effort or attempt by any person to do or seek any of the foregoing.

 

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5.5 Access and Investigation. During the period commencing on the Execution Date and ending on the Closing Date or the earlier termination of this Agreement as provided herein, Transferor to: (a) afford New Manager and its representatives reasonable access, during regular business hours, to Transferor’s properties, personnel, agents and accountants; (b) afford reasonable access to and the right to inspect all of the properties, assets, premises, books and records, contracts, agreements and other documents and data related to the Facility; (c) furnish New Manager and its representatives with such financial, operating and other data and information related to the Facility as New Manager and its representatives may reasonably request; and (d) afford New Manager and its representatives access to the Transferor’s third party payors, vendors and referral sources and Tenant.

 

5.6 Notifications. Following the Execution Date until the Closing or the earlier termination of this Agreement as provided herein, Transferor will give New Manager prompt written notice upon becoming aware of any development, event or circumstance that does or would reasonably be expected to result in (a) a material breach of or inaccuracy in any of the representations or warranties Transferor hereunder, or (b) any material breach or failure of Transferor to perform or satisfy any covenant, condition, or agreement to be performed or satisfied under this Agreement or any Transferor’s Transaction Document; provided, however, that no such disclosure will be deemed to prevent or cure any such breach or failure to perform any such covenant, condition or agreement, or such breach of or inaccuracy in, amend or supplement any Schedule to, or otherwise disclose any exception to, any of the representations and warranties set forth in this Agreement, including for purposes of indemnification or with respect to the satisfaction of any condition precedent.

 

5.7 Tail Coverage; Insurance. On or before the Closing Date, Transferor will, at Transferor’s cost and expense, obtain “tail insurance” coverage, in form and substance reasonably satisfactory to New Manager, naming New Manager as an additional insured extending for two (2) years for Transferor’s insurance coverage in connection with liabilities arising out of or related to the Business on or before the Closing Date, including but not limited to general liability, professional liability, employee practices liability and executive liability, in each case, which tail insurance shall contain terms and conditions no less advantageous than are contained in such current insurance policies and, with respect to professional liability insurance, shall cover Transferor and each other employee or independent contractor of the Transferor providing medical services. Transferor shall provide evidence of such coverage to New Manager.

 

5.8 Escrow Agreement. At Closing, Transferor and New Manager shall enter into an Escrow Agreement (the “Escrow Agreement”) to be entered by and among Transferor, Landlord, GCC Olney, LLC, Grace Properties Olney, LLC, GCC Henrietta, LLC, Grace Properties Henrietta, LLC (collectively, the “Seller Parties”), New Manager, Buyer, Henrietta Health and Rehab Center, LLC, Olney Health and Rehab Center, LLC (collectively, the “Buyer Parties”), and Fidelity National Title Agency, Inc. (“Escrow Agent”) to be dated as of the Closing Date, pursuant to which the Seller Parties will deposit with Escrow Agent the aggregate amount of Seventy-Five Thousand and No/100 Dollars ($75,000.00) to cover any indemnification obligations of the Seller Parties to the Buyer Parties for a period of twelve (12) months pursuant to those certain agreements by and between the Seller Parties and Buyer Parties (the “Other Transaction Documents”).

 

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ARTICLE VI
CONDITIONS PRECEDENT TO NEW MANAGER’S OBLIGATIONS

 

Unless waived by New Manager, its obligation to consummate the transactions contemplated by this Agreement is subject to the satisfaction, prior to or at the Closing, of each of the following conditions:

 

6.1 Representations and Warranties. The representations and warranties of Transferor contained in this Agreement or on any Schedule or Transaction Document that are not qualified by materiality shall be true and correct in all material respects at and as of the Effective Time as though such representations and warranties were made at and as of such time and the representations and warranties of Transferor contained in this Agreement or on any Schedule or Transaction Document that are qualified by materiality shall be true and correct in all material respects at and as of the Effective Time as though such representations and warranties were made at and as of such time.

 

6.2 Performance of Covenants. Transferor shall have performed or complied in all material respects with each of its agreements and covenants required by this Agreement to be performed or complied with by it prior to or at the Effective Time.

 

6.3 Delivery of Closing Certificate. Transferor shall have executed and delivered to New Manager a certificate in the form and substance of Exhibit 6.3.

 

6.4 Transferred Assets at Closing. Transferor shall have executed and delivered the Bill of Sale and shall have delivered appropriate certificates of title and transfer instruments with respect to any vehicles included in the Transferred Assets.

 

6.5 Personal Guaranty. The personal guaranty of Jake Hallsted, dated as of the date hereof, shall be in full force and effect (the “Guaranty”).

 

6.6 Assignment and Assumption of Management Agreement. Transferor and Tenant shall have executed and delivered an assignment and assumption of the Management Agreement substantially in the form and substance of Exhibit 6.6 (“Assignment and Assumption of Management Agreement”).

 

6.7 Financing. The Buyer Parties shall have received financing sufficient for the payment of the Purchase Price and for the purchase price contemplated to be paid in the Other Transaction Documents.

 

6.8 Other Transaction Documents Closing. The closing under the Other Transaction Documents shall have occurred.

 

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6.9 Trust Funds. Transferor shall have executed and delivered an assignment and assumption of Trust Funds substantially in the form and substance of Exhibit 6.9 (“Assignment of \ Trust Funds”).

 

6.10 Other Documents. Transferor shall have furnished New Manager with all other documents, certificates and other instruments required to be furnished to New Manager by Transferor pursuant to the terms hereof.

 

6.11 Reserved.

 

6.12 Compliance. All actual deficiencies and violations of the severity level of “G” or worse noted in any pre-Closing Date survey for the Facility shall have been corrected, and such corrections accepted by the Texas Health and Human Services Commission.

 

6.13 License. The Facility’s license to operate a nursing home issued by the Texas Health and Human Services Commission shall be in good standing and in full force and effect. Transferor shall have provided notice to the Texas Health and Human Services commission of the change in management.

 

6.14 Reserved. If any exhibits or schedules are not attached hereto, the parties hereto agree to attach such exhibits and schedules as soon as reasonably practicable but in any event prior to the Closing Date.

 

6.15 Consents and Approvals. The consents and approvals set forth on Exhibit 6.15 shall have been obtained.

 

6.16 Restrictive Covenant Agreements. New Manager shall have received restrictive covenant agreements in the form set forth on Exhibit 6.16 duly executed by the persons set forth therein.

 

6.17 No Proceeding. No action or order restraining, enjoining or otherwise preventing or delaying the consummation of this Agreement or the transactions contemplated hereby shall be outstanding, and no action, before or by any governmental authority, whether at law or in equity, shall be pending, wherein an unfavorable outcome would (i) prevent the performance of this Agreement or the consummation of the transactions contemplated hereby, or (ii) affect adversely the right of New Manager to own the Transferred Assets, or operate and/or manage the Business and the Facility.

 

6.18 PPP Loans. New Manager shall have received evidence reasonably satisfactory to New Manager of the escrow of the principal amount plus interest due or payable with the applicable PPP lender under the terms of the PPP Loans set forth on Schedule 3.12.

 

6.19 Certain Other Matters. New Manager shall have received evidence satisfactory to New Manager of the completion of the matters set forth on Schedule 6.19.

 

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ARTICLE VII
CONDITIONS PRECEDENT TO TRANSFEROR’S OBLIGATIONS

 

Unless waived by Transferor, its obligation to consummate the transactions contemplated by this Agreement is subject to the satisfaction, prior to or at the Closing, of each of the following conditions:

 

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

 

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

 

7.3 Delivery of Closing Certificate. New Manager shall have delivered to Transferor a certificate in the form and substance of Exhibit 7.3.

 

7.4 Bill of Sale. New Manager shall have executed and delivered the Bill of Sale.

 

7.5 Assignment and Assumption of Management Agreement. New Manager shall have executed and delivered the Assignment and Assumption of Management Agreement.

 

7.6 Reserved.

 

7.7 Other Transaction Documents Closing. The closing under the Other Transaction Documents shall have occurred.

 

7.8 Resident Trust Funds. New Manager shall have executed and delivered the Assignment of Resident Trust Funds.

 

7.9 Other Documents. New Manager shall have furnished Transferor with all other documents, certificates and other instruments required to be furnished to Transferor by New Manager pursuant to the terms hereof.

 

ARTICLE VIII

SURVIVAL AND INDEMNIFICATION

 

8.1 Indemnification by Transferor. Transferor shall defend, indemnify and hold New Manager and New Manager’s shareholders, members, officers, directors, employees, representatives and agents and their respective representatives, heirs and assigns (the “New Manager Indemnified Parties”) harmless from and against any claim, action, suit, proceeding, investigation, liability, damage, loss, cost or expense (including reasonable attorneys’ fee and reasonable disbursements of counsel and actual costs and whether or not involving a third party claim) (collectively, a “Loss”) resulting from (i) any inaccuracy or breach of any representation, warranty, covenant, agreement or obligation on the part of Transferor contained in this Agreement or in any of the agreements, certificates or other instruments attached hereto; (ii) the occupancy, management or operation of the Facility prior to the Effective Time; and (iii) any Excluded Liabilities.

 

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8.2 Indemnification by New Manager. New Manager shall defend, indemnify and hold Transferor and Transferor’s members, managers, officers, directors, employees, representatives and agents, and their respective representatives, heirs and assigns (the “Transferor Indemnified Parties”), harmless from and against, any Loss incurred by the foregoing parties as a result of (i) any inaccuracy or breach of any representation, warranty, covenant, agreement or obligation on the part of New Manager contained in this Agreement or in any agreement, certificate or other instrument attached hereto; (ii) the occupancy, management or operation of the Facility by New Manager from and after the Effective Time; and (iii) any failure by New Manager to pay or perform any obligations or liabilities assumed by New Manager pursuant to this Agreement including, but not limited to, obligations or liabilities under the Assumed Contracts (to the extent assumed in accordance with the Assignment and Assumption of Contracts); provided, however, in no event shall New Manager be required to indemnify the Transferor Indemnified Parties for any matter for which a New Manager Indemnified Party is entitled to indemnification pursuant to Section 8.1.

 

8.3 Procedure. A party claiming indemnification under this Article VIII (the “Asserting Party”) must promptly notify in writing the party from which indemnification is sought (the “Defending Party”) of the nature and basis of such claim for indemnification. If such claim relates to a claim, litigation or other action by a third-party against Asserting Party, (“Third-Party Claim”), Defending Party may elect to assume the defense of the Third-Party Claim promptly after receipt of the notice referred to above at its own expense with counsel selected by Defending Party and reasonably satisfactory to Asserting Party; provided, however, that the Defending Party may not assume the defense of such Third Party Claim unless (i) the Defending Party gives written notice to the Asserting Party within fifteen (15) days of receipt of the claim notice that the Defending Party will indemnify the Asserting Party from and against the entirety of any and all Losses the Asserting Party ultimately suffers resulting from, arising out of, relating to, in the nature of, or caused by the 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 Asserting Party, (iii) the Asserting Party reasonably concludes, based upon advice of counsel that a conflict does not exist between the Asserting Party and the Defending 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, any criminal or regulatory enforcement action or otherwise involve a claim by a governmental authority, (v) settlement of, an adverse judgment with respect to or the Defending Party’s conduct of the defense of the Third Party Claim is not, in the good faith judgment of the Asserting Party, likely to be adverse to the Asserting Party’s reputation or continuing business interests (including the Asserting Party’s relationships with current or potential customers, suppliers, payors, Tenant or other parties material to the conduct of the business of the Asserting Party) and (vi) the Defending Party conducts the defense of the Third Party Claim actively and diligently and in good faith. If Defending Party assumes the defense of the Third-Party Claim and diligently defends such Third-Party Claim, Defending Party shall not be liable for any fees and expenses of counsel for Asserting Party incurred thereafter in connection with the Third-Party Claim. To the extent required by applicable law, the Asserting Party shall act reasonably and in good faith in an effort to mitigate any Loss for which it is entitled to indemnification. Failure of the Asserting Party to promptly notify the Defending Party of a claim hereunder shall not waive the rights of the Asserting Party to indemnification hereunder, except to the extent that the Defending Party can demonstrate actual material loss or prejudice as a result of such failure or delay. Defending Party shall not settle any Third Party Claim without the written consent of the Asserting Party, which consent shall not be unreasonably withheld, conditioned, or delayed.

 

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8.4 Limitations.

 

(a) EXCEPT AS SUCH MAY BE PART OF ANY CLAIM OF ANY THIRD-PARTY, UNDER NO CIRCUMSTANCES SHALL TRANSFEROR, NEW MANAGER OR ANY AFFILIATE THEREOF BE RESPONSIBLE OR LIABLE IN ANY WAY FOR PUNITIVE DAMAGES (UNLESS PUNITIVE DAMAGES ARE ACTUALLY AWARDED TO A THIRD-PARTY), OR ANY EXEMPLARY DAMAGES, REGARDLESS OF WHETHER THE ACTION IS FOUNDED IN CONTRACT, TORT, STATUTORY OR OTHERWISE, AND BOTH PARTIES AGREE THAT IN NO EVENT SHALL EITHER ASSERT, CLAIM, DEMAND OR OTHERWISE REQUEST SUCH DAMAGES.

 

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

 

(c) Except with respect to a claim for indemnification arising as a result of a breach of a Fundamental Representation, in no event shall a New Member Indemnified Party be entitled to Losses in excess of the amounts deposited with the Escrow Agent and the amounts guaranteed under the Guaranty (i.e., together with the amounts in escrow, $150,000 in the aggregate) with respect to a claim for indemnification arising as a result of a breach of a representation or warranty.

 

8.5 Exclusive Remedy. Except in the case of fraud, the remedies provided in this Article VIII and in the Other Transaction Documents shall be the sole and exclusive remedies that may be available to a party or an Asserting Party with respect to any matters arising under or relating to this Agreement, any document executed and delivered pursuant to the provisions hereof and the transactions contemplated herein.

 

8.6 Insurance Recoveries . No party shall be required to indemnify the other with respect to any Losses for which third-party recoveries or insurance proceeds are paid to Asserting Party, regardless of the identity of the holder of such insurance policy or benefit; provided, however, that if the insurance proceeds or third-party recoveries do not satisfy the entire amount of the Losses, then the provisions of this Section shall be applicable to such unsatisfied portion.

 

8.7 Survival. The representations and warranties contained in this Agreement, and in any agreements, certificates or other instruments delivered pursuant hereto, shall survive Closing for a period of twelve months following the Closing provided, however, that the representations and warranties set forth in Sections 3.1, 3.2, 3.3, and 3.4 shall survive indefinitely and the representations and warranties set forth in Section 3.9 shall survive until the expiration of the applicable statute of limitations (such representations, the “Fundamental Representations”). The covenants and other obligations set forth herein shall survive until fully performed. Delivery of a claim notice meeting the requirements pursuant to Section 8.3 with respect to a claim or potential claim or matter for which indemnification may be required pursuant to this Article VIII, 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, begin an arbitration or commence another formal or informal action or other proceeding in order to cause such matter or claim to survive.

 

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8.8 Knowledge and Investigation. The right of any party to indemnification pursuant to this Article VIII 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.

 

8.9 Materiality; Strict Liability. 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 VIII, the terms “material,” “materiality,” and “material adverse effect” and similar phrases are to be disregarded.

 

8.10 Right of Set-Off. Subject to the limitations set forth in Section 8.4(c), the New Manager Indemnified Parties may set-off any amount to which they may be entitled under this Article VIII against amounts otherwise payable by New Manager Indemnified Parties to Transferor or its affiliates. The exercise of such right of set-off by such New Manager Indemnified Parties in good faith, whether or not ultimately determined to be justified, will not constitute an event of default under any contract or agreement between any New Manager Indemnified Party and Transferor or its affiliates. Neither the exercise of nor the failure to exercise such right of set-off will constitute an election of remedies or limit the New Manager Indemnified Parties in any manner in the enforcement of any other remedies that may be available to it. For the avoidance of doubt, the exercise of such right to set-off shall not preclude Transferor from challenging and disputing the indemnity claim or the exercise of the right to set-off hereunder and to the extent successful in such challenge or dispute, such set-off amount (or portion thereof) will be immediately returned to Transferor or its applicable affiliate.

 

ARTICLE IX
TERMINATION

 

9.1 Termination. This Agreement is irrevocable and may only be terminated at or prior to the time of Closing by:

 

(a) by either New Manager or Transferor if (i) a material breach of any provision of this Agreement has been committed by the other party such that the closing conditions set forth in Section 6.1 (with respect to a breach by Transferor) or Section 6.2 (with respect to a breach by New Manager) would not be satisfied (provided, that the party seeking to terminate this Agreement is not also in material breach of any provision of this Agreement), (ii) such breach has not been waived, and (iii) the other party fails to cure such breach within ten (10) business days after written notice of such breach by the non-breaching party.

 

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(b) any party hereto, if the closing has not occurred by August 2, 2021 (provided, however, in the event the closing date under the PSA is extended in accordance with the terms thereof, then such date shall be extended for a commensurate period of time) or in the event any of the Other Transaction Documents has been terminated in accordance with the terms thereof; or

 

(c) the mutual consent of Transferor and New Manager.

 

9.2 Effect of Termination. If a party terminates this Agreement because one of the conditions precedent to its obligations hereunder has not been satisfied, or if this Agreement is terminated by mutual consent, this Agreement shall become null and void without any liability of any party to the others; provided, that if such termination is pursuant to Section 9.1(a) as a result of a breach by any of the parties hereto of any of its representations, warranties or covenants in this Agreement, nothing herein shall affect the non-breaching party’s right to damages on account of such other party’s breach.

 

ARTICLE X
MISCELLANEOUS PROVISIONS

 

10.1 Drafting. Transferor’s counsel has drafted this Agreement and the other Transaction Documents as a matter of convenience for the parties hereto; and the parties hereto have carefully reviewed and negotiated the terms of this Agreement and the Transaction Documents, and New Manager hereby acknowledges and agrees that it has had a full and fair opportunity to review and negotiate the Agreement and the Transaction Documents with the advice of its counsel; and accordingly any drafting errors, ambiguities or inconsistencies shall not be interpreted against Transferor.

 

10.2 Public Announcements. Any general public announcements or similar media publicity with respect to this Agreement or the transactions contemplated herein shall be at such time and in such manner as New Manager and Transferor shall mutually determine; provided that nothing herein shall prevent either party, upon notice to the other, from making such written notices as such party’s counsel may consider advisable in order to satisfy the party’s legal and contractual obligations in such regard; and provided further, that New Manager may make such public announcements as may be required by applicable law, including any applicable securities laws or regulations, without the consent of Transferor.

 

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

 

10.4 Performance. In the event of a breach by either party of its obligations hereunder, the other party shall have the right, in addition to any other remedies which may be available, to obtain specific performance of the terms of this Agreement, and the breaching party hereby waives the defense that there may be an adequate remedy at law.

 

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10.5 Benefit and Assignment. This Agreement binds and inures to the benefit of each party hereto and its successors and permitted assigns. Neither party shall be permitted to assign its rights or obligations under this Agreement without the prior written consent of the other party.

 

10.6 Effect and Construction of this Agreement. The captions used herein are for convenience only and shall not control or affect the meaning or construction of the provisions of this Agreement. All gender employed in this Agreement shall include all genders, and the singular shall include the plural and the plural shall include the singular whenever and as often as may be appropriate. When used in this Agreement, the term “including” shall mean “including but not limited to.”

 

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

 

  If to New Manager: Assisted 4 Living, Inc.
    5115 FL-64
    Bradenton, Florida 34208
    Attn: Louis Collier
    Electronic Mail: loucoljr@outlook.com
     
  with a copy to: Bass, Berry & Sims PLC
    150 Third Avenue South, Suite 2800
    Nashville, Tennessee 37201
    Attention: Angela Humphreys
    Email: ahumphreys@bassberry.com
     
  If to Transferor: GCC Nocona, LLC
    Attention: Jake Hallsted
    24616 Kingsland Blvd.
    Katy, Texas 77494
    Email: j.hallsted@pearlandvinetx.com
     
  with a copy to: Cordray & Schneller
    Attention: Howard F. Cordray, Jr.
    3306 Sul Ross Street
    Houston, Texas 77098
    Email: hcordray@clegal.com

 

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

 

10.9 Governing Law; Disputes. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

 

10.10 Further Assurances. Each of the parties hereto agrees to execute and deliver any and all further agreements, documents or instruments reasonably necessary to effectuate this Agreement and the transactions referred to herein or contemplated hereby or reasonably requested by the other party to perfect or evidence their rights hereunder.

 

10.11 Third-Party Beneficiaries. The parties hereto do not intend that any third-party shall have any rights under this Agreement except as expressly provided herein, including with respect to the New Manager Indemnified Parties and the Transferor Indemnified Parties.

 

10.12 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one and the same agreement. Copies of original signatures sent by facsimile, portable document format (PDF), or other electronic imaging means shall be deemed to be originals for all purposes of this Agreement.

 

10.13 Costs and Attorneys’ Fees. In the event of a dispute between the parties hereto with respect to the interpretation or enforcement of the terms hereof, the prevailing party shall be entitled to collect from the other its reasonable costs and attorneys’ fees, including its costs and fees on appeal.

 

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

 

10.15 Entire Agreement. This Agreement, including the schedules, exhibits and the Other Transaction Documents and the other documents executed in connection herewith or therewith in connection with the Closing, constitute the entire agreement between the parties hereto with respect to the subject matter hereof, and there are no agreements, understandings, restrictions, warranties, or representations between the parties with respect to the subject matter hereof other than as set forth herein or as provided in such documents.

 

[Signatures on following page]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

 

TRANSFEROR:

 

GCC NOCONA, LLC

 

By: /s/ Jake Hallsted  
  Jake Hallsted, President  

 

NEW MANAGER:

 

Nocona Health and Rehab Center, LLC

 

By: /s/ Louis Collier  
  Louis Collier, Chief Executive Officer  

 

 
 

 

EXHIBIT 1.1

BILL OF SALE, ASSIGNMENT AND ASSUMPTION

 

This Bill of Sale, Assignment and Assumption Agreement (the “Agreement”) is made and entered into as of the [●] day of [●], 2021 (the “Effective Date”), by and between GCC NOCONA, LLC, a Texas limited liability company (“Assignor”) and NOCONA HEALTH AND REHAB CENTER, LLC, a Texas limited liability company (“Assignee”). All capitalized terms used in this Agreement without definition have the meanings given to them in the MTA (as defined below).

 

RECITALS

 

WHEREAS, Assignor and Assignee are parties to that certain Management Transfer Agreement, dated as of June [●], 2021 (the “MTA”), pursuant to which (i) Assignee is acquiring the Transferred Assets from Assignor, and (ii) Assignee is assuming the Assumed Contracts, on the terms and conditions set forth therein; and

 

WHEREAS, it is contemplated that this Agreement will be entered into at Closing by Assignor and Assignee pursuant to Sections 1.1 and 6.6 of the MTA.

 

AGREEMENT

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

Transfer of Transferred Assets. For the consideration set forth in the MTA and other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, Assignor hereby sells, transfers, assigns, conveys, grants and delivers to Assignee, free and clear of any Encumbrances, effective as of the date hereof, all of Assignor’s right, title and interest in and to the Transferred Assets other than the Management Agreement, which is being transferred on the date hereof by separate instrument TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns forever.

 

Assignment and Assumption. Effective as of the date hereof, Assignor hereby conveys, delivers and assigns to Assignee, its successors and assigns, and Assignee hereby accepts, assumes and agrees to pay, perform and discharge when due, the obligations or liabilities under the Assumed Contracts set forth on Exhibit A solely to the extent arising after the Closing and excluding any liability arising out of a breach thereof or a violation of law prior to Closing or any other matter subject to indemnification by Assignee under the MTA.

 

Terms of the MTA. The terms of the MTA, including but not limited to Assignor’s and Assignee’s representations, warranties, covenants, agreements and indemnities relating to the Transferred Assets and Assumed Contracts, are incorporated herein by this reference. Assignor and Assignee acknowledge and agree that the representations, warranties, covenants, agreements and indemnities contained in the MTA will not be superseded hereby but will remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the MTA and the terms hereof, the terms of the MTA shall govern.

 

Further Actions. Each of the parties covenants and agrees, at its own expense, to execute and deliver, at the request of the other party hereto, such further instruments of transfer and assignment and to take such other action as such other party may reasonably request to more effectively consummate the transactions contemplated by this Agreement.

 

[Signature Page to Bill of Sale, Assignment and Assumption Agreement]

 

 
 

 

Governing Law. This Agreement will be governed by and construed under the laws of the State of Texas without regard to conflicts of laws principles that would require the application of any other law.

 

Successors and Assigns. This Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right under or with respect to this Agreement or any provision of this Agreement, except such rights as will inure to a successor or permitted assignee pursuant to this Section 6.

 

Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile, or by .pdf or similar imaging transmission, will constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile, or by .pdf or similar imaging transmission, will be deemed to be their original signatures for any purpose whatsoever.

 

IN WITNESS WHEREOF, the parties have executed this Bill of Sale, Assignment and Assumption Agreement effective as of the date first above written.

 

  ASSIGNEE:
   
  NOCONA HEALTH AND REHAB CENTER, LLC, a Texas limited liability company
              
  By:  
  Name:  
  Title:  
     
  ASSIGNOR:
   
  GCC NOCONA, LLC, a Texas limited liability company
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Bill of Sale, Assignment and Assumption Agreement]

 

 
 

 

EXHIBIT 6.6

ASSIGNMENT OF MANAGEMENT AGREEMENT

 

This ASSIGNMENT OF MANAGEMENT AGREEMENT (this “Agreement”) is made and entered into as of __________ ___, 2021 by and among GCC Nocona, LLC, a Texas limited liability company (collectively, the “Manager”), Nocona Hospital District, as licensed operator (“Licensed Operator”) and Nocona Health and Rehab Center, LLC, a Texas limited liability company (“Buyer”).

 

RECITALS:

 

A. Manager is the manager under that certain Management Agreement (the “Original Management Agreement”) by and between Manager and Licensed Operator, dated September 1, 2017, and as amended by that Amendment to Management Agreement, dated September 1, 2019 (the Original Management Agreement, as amended, the “Management Agreement”), for services provided at the licensed skilled nursing facility known as Nocona Nursing and Rehabilitation Center/ Grace Center of Nocona located at 306 Carolyn Road, Nocona, Texas 76255; and

 

B. Pursuant to that certain Management Transfer Agreement, dated June ___, 2021, by and between Manager and Buyer, (the “MTA”), Buyer intends to acquire all of the Transferred Assets (as defined in the MTA), including the Management Agreement (as defined in the MTA).

 

NOW, THEREFORE, the parties agree as follows:

 

Transfer of Management Agreement. For the consideration set forth in the MTA and other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, Manager hereby sells, transfers, assigns, conveys, grants and delivers to Buyer, free and clear of any Encumbrances (as defined in the MTA), effective as of the date hereof, all of Manager’s right, title and interest in and to the Management Agreement TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns forever (such transfer of the Management Agreement, the “Transfer”).

 

Assignment and Assumption. Effective as of the date hereof, Manager hereby conveys, delivers and assigns to Buyer, its successors and assigns, and Buyer hereby accepts, assumes agrees to pay, perform and discharge when due, the obligations or liabilities under the Management Agreement solely to the extent arising after the Closing (as defined in the MTA) and excluding any liability arising out of a breach thereof or a violation of laws prior to Closing or any other matter subject to indemnification by Buyer under the MTA (such assignment and assumption of the Management Agreement, the “Assignment”).

 

Consent and Affirmation. To the extent that, pursuant to the Management Agreement, the Transfer and the Assignment constitutes an assignment or transfer or otherwise would not be permitted without Licensed Operator’s consent, Licensed Operator hereby consents to the Transfer and the Assignment. As between Manager and Licensed Operator, no documents that have not already been provided shall be required in connection with the Transfer and the Assignment.

 

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Estoppel Statements. With the understanding that Buyer, in assuming the Management Agreement, will rely on the statements contained in the numbered paragraphs below, Manager and Licensed Operator hereby certify in favor of Buyer as follows:

 

1. The Management Agreement, as amended, is unmodified and in full force and effect and there are no amendments, supplements or modifications of any kind (except as identified in the Recitals above).

 

2. To each of Manager’s and Licensed Operator’s best knowledge, (i) there is no continuing Default (as defined in the Management Agreement) by Manager or Licensed Operator in the performance or observance of any covenant, agreement or condition contained in the Management Agreement, and (ii) there has not occurred any event which, with the giving of notice or passage of time or both, would become such a Default.

 

Manager and Licensed Operator acknowledge and agree that Buyer and its direct and indirect lenders, investors, participants, partners, members, owners and their respective affiliates, successors and assigns shall be entitled to rely on each of Manager’s and Licensed Operator’s certifications, representations and warranties set forth herein.

 

Each of the undersigned representatives of Buyer, Manager and Licensed Operator that has executed this Agreement states that he or she is duly authorized to execute this instrument on behalf of Buyer, Manager or Licensed Operator, as applicable.

 

This Agreement may be executed in multiple counterparts.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have executed this Consent, Affirmation and Estoppel Agreement as of the date first written above.

 

MANAGER:  
   
GCC NOCONA, LLC  
a Texas limited liability company  
                         
By:    
Name:    
Title:    
     
LICENSED OPERATOR:  
   
NOCONA HOSPITAL DISTRICT,  
as licensed operator  
     
By:    
Name:    
Title:    
     
BUYER:  
     
NOCONA HEALTH AND REHAB CENTER, LLC,  
a Texas limited liability company  
     
By:    
Name:    
Title:    
     
Address for notices by Manager to Buyer:  
   
   
   

 

[Signature Page to Assignment of Management Agreement]

 

 
 

 

EXHIBIT 6.9

 

ASSIGNMENT AND ASSUMPTION OF RESIDENT TRUST FUNDS

 

This Assignment and Assumption Agreement (“Agreement”) is made as of [●], 2021, by and between GCC Nocona, LLC, a Texas limited liability company (“Transferor”) and Nocona Health and Rehab Center, LLC, a Texas limited liability company (“New Manager”).

 

Recitals:

 

A. Pursuant to that certain Management Transfer Agreement, dated as of [●], 2021 (“MTA”) between Transferor and New Manager, Transferor agreed to transfer and convey to the New Manager certain assets relating to the skilled nursing facility located at 306 Carolyn Road, Nocona, TX 76255 and commonly known as Grace Care Center of Nocona (the “Facility”).

 

B. Pursuant to the MTA, Transferor agreed to assign to New Manager, and New Manager agreed to assume any and all Resident Trust Funds.

 

Agreement:

 

Now, Therefore, the parties hereby agree as follows:

 

1. Assignment. Transferor hereby grants, conveys, transfers and assigns to New Manager, its successors and assigns, all of Transferor’s right, title and interest to all Resident Trust Funds held by Transferor in trust for the residents or tenants at the Facility, as applicable, on the terms and conditions set forth in the MTA.

 

2. Assumption of the Resident Trust Funds. In reliance upon Transferor’s covenants and representation contained in the MTA, New Manager hereby accepts the grant, conveyance, transfer and assignment by Transferor to New Manager, its successors and assigns, of all of Transferor’s right, title and interest to all Resident Trust Funds held by Transferor in trust for the residents or tenants at the Facility, as applicable, on the terms and conditions set forth in the MTA.

 

3. Miscellaneous Provisions.

 

(a) Transferor and New Manager agree, at the other party’s request, whether on or after the date hereof, and without further consideration, that each shall execute and deliver any and all further instruments and documents, and take such further actions, as the other party may reasonably request or as may reasonably be required in order more effectively to vest in New Manager all rights, titles and interests, in and to all Resident Trust Funds, and to evidence New Manager’s assumption of such rights, titles and interests, or to otherwise carry out the provisions of this Agreement.

 

(b) All of the terms, provisions and conditions of this Agreement shall be binding on, and shall inure to and be enforceable by, the parties hereto and their respective successors and assigns.

 

[Signature Page to Assignment and Assumption of Resident Trust Funds]

 

 
 

 

(c) Any word whose initial letter is capitalized is a defined term. Unless such term is defined herein, it shall have the same meaning as that attributed to such term in the MTA.

 

(d) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

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

 

  Transferor:
   
  GCC NOCONA, LLC
     
  By:       
  Print Name:  
  Title:  
     
  New Manager:
   
  NOCONA HEALTH AND REHAB CENTER, LLC
     
  By:  
  Print Name:  
  Title:  

 

[Signature Page to Assignment and Assumption of Resident Trust Funds]

 

 
 

 

EXHIBIT 6.16

 

RESTRICTIVE COVENANT AGREEMENT

 

This RESTRICTIVE COVENANT AGREEMENT (this “Agreement”) is entered into as of [●], 2021 by and among Real Living Property Holdings – Texas, LLC, a Texas limited liability company (“PSA Buyer”), Nocona Health and Rehab Center, LLC, a Texas limited liability company (“Nocona MTA Buyer”), Henrietta Health and Rehab Center, LLC, a Texas limited liability company (“Henrietta MTA Buyer”), Olney Health and Rehab Center, LLC, a Texas limited liability company (“Olney MTA Buyer” and collectively with the Nocona MTA Buyer, the Henrietta MTA Buyer and PSA Buyer, each a “Buyer” and collectively, “Buyers”), GCC Nocona, LLC, a Texas limited liability corporation (“Nocona MTA Seller”), Grace Properties Nocona, LLC, a Texas limited liability company (“Nocona PSA Seller”), GCC Henrietta, LLC, a Texas limited liability company (“Henrietta MTA Seller”), Grace Properties Henrietta, LLC, a Texas limited liability company (“Henrietta PSA Seller”), GCC Olney, LLC, a Texas limited liability company (“Olney MTA Seller”), Grace Properties Olney, LLC, a Texas limited liability company (“Olney PSA Seller”), and Heatlhlink Holdings Group LLC, d/b/a HMS Healthcare (“HMS” and collectively with Nocona MTA Seller, Nocona PSA Seller, Henrietta MTA Seller, Henrietta PSA Seller, Olney MTA Seller, and Olney PSA Seller, each a “Restricted Party” and collectively, the “Restricted Parties”).

 

WHEREAS, pursuant to (a) that certain Management Transfer Agreement, dated as of the date hereof (the “Nocona MTA”), by and between Nocona MTA Seller and Nocona MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Nocona PSA”) by and between Nocona PSA Seller and PSA Buyer; (b) that certain Management Transfer Agreement, dated as of the date hereof (the “Henrietta MTA”), by and between Henrietta MTA Seller and Henrietta MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Henrietta PSA”) by and between Henrietta PSA Seller and PSA Buyer; and (c) that certain Management Transfer Agreement, dated as of the date hereof (the “Olney MTA” and collectively with the Nocona MTA and the Henrietta MTA, the “MTA”), by and between the Olney MTA Seller and Olney MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Olney PSA” and collectively with the Nocona PSA and the Henrietta PSA, the “PSA”), Buyers acquired all of the Transferred Assets (as defined in the MTA) and the Land (as defined in the PSA, and collectively with the Transferred Assets, the “Purchased Assets”);

 

WHEREAS, in executing the MTA and PSA, as applicable, and agreeing to pay the Purchase Price, Buyers considered the substantial goodwill of the Purchased Assets and the retention of the Protected Information to be valuable assets and an essential inducement to the execution of the MTA and PSA, as applicable, and the consummation of the transactions contemplated thereby;

 

WHEREAS, the parties hereto acknowledge and agree that the Restricted Parties could substantially dilute the value of such goodwill and Protected Information by competing with any Buyer or by soliciting or hiring their employees and/or customers or otherwise breaching or violating the provisions of this Agreement;

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

WHEREAS, each Restricted Party has agreed to accept certain restrictions as set forth in this Agreement in order to induce Buyers to enter into and consummate the MTA and PSA, as applicable, and the transactions contemplated thereby; and

 

WHEREAS, none of the Buyers would obtain the benefit of the bargain set forth in the MTA and PSA, as applicable, as specifically negotiated by the parties thereto unless this Agreement was executed and delivered and specifically performed and enforced.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, the consideration to be received by the Restricted Parties on the Closing Date under the MTA and PSA, as applicable, or as a result of the consummation of the transactions effected by the MTA and PSA, as applicable, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Defined Terms. Capitalized terms used in this Agreement but not defined in this Agreement shall have the meanings ascribed to such terms in the MTA or PSA, as applicable.

 

Non-Competition Covenants.

 

Restrictive Covenants. As a material inducement to Buyers to enter into the MTA and PSA, as applicable, and to consummate the transactions contemplated thereby, each Restricted Party hereby covenants and agrees that for a period commencing on the Closing Date and ending on the fifth (5th) anniversary thereof (the “Restrictive Period”), such Restricted Party shall not, and shall cause its respective affiliates not to, directly or indirectly:

 

own any interest in, manage, control, participate in, consult with, render services for (as a director, officer, employee, agent, broker, partner, contractor, consultant or otherwise) or be or become engaged or involved in any Restricted Business, including by being or becoming an organizer, owner, co-owner, trustee, promoter, affiliate, investor, lender, partner, joint venturer, principal, stockholder, officer, director, employee, independent contractor, manager, salesperson, representative, associate, consultant, agent, broker, supplier, licensor, analyst or advisor of, to or with any Restricted Business;

 

make any investment (whether equity, debt or otherwise) in, lend or otherwise provide any money or assets to, or provide any guaranty or other financial assistance to any Restricted Business; or

 

provide any information, assistance, support, analysis, product, technology or intellectual property to any Person engaged or involved in (or anticipated to be engaged or involved in) any Restricted Business;

 

in each case, anywhere within the Restricted Territory; provided that nothing herein shall prohibit any Restricted Party from being a passive owner of not more than 2% of any class of the outstanding equity of an entity that is publicly traded so long as such Restricted Party has no active participation in the business of such entity.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Definitions. As used in this Agreement:

 

Business” means the business of owning, operating or managing a skilled nursing facility or assisted living facility.

 

Facility” has the meaning ascribed in the applicable MTA.

 

Protected Information” means the information concerning the Business and the Facilities, not already generally available to the public that is designated confidential or treated in that manner (including all tangible or intangible embodiments thereof).

 

Restricted Business” means any business which competes with or is substantially similar to the Business in the Restricted Territory.

 

Restricted Territory” means the area within a seventy-five (75) mile radius of each of the Facilities.

 

Non-Solicitation/Non-Hire of Employees. As material inducement to Buyers to enter into the MTA and PSA, as applicable, and to consummate the transactions contemplated thereby, each Restricted Party hereby covenants and agrees for the duration of the Restrictive Period to not, and to cause its affiliates not to, directly or indirectly on its own behalf or on behalf of any third party or Person, (a) induce or attempt to induce any employee of any Buyer to leave the employ of such Buyer or in any way interfere with the relationship between any Buyer and any such employee thereof or (b) hire any person who was an employee of any Buyer during the 365-day period immediately following the date on which such Person ceased to be an employee of such Buyer. Notwithstanding the foregoing, the placement of general advertisements that may be targeted to a particular geographic or technical area, but are not targeted specifically towards employees of any Buyer, shall not be deemed to be a solicitation for purposes of this Section 0.

 

Non-Solicitation of Business Relationships. As material inducement to Buyers to enter into the MTA and PSA, as applicable, and to consummate the transactions contemplated thereby, each Restricted Party hereby covenants and agrees for the duration of the Restrictive Period to not, and to cause its affiliates not to, directly or indirectly, (a) call on, solicit or service any patient, sales representative, referral source, partner, supplier or other Person that has a business relationship with any Buyer in order to induce or attempt to induce such Person to cease doing business with such Buyer, or in any way interfere with the relationship between any such patient, sales representative, referral source, partner, supplier or other Person, on the one hand, and any such Buyer, on the other hand or (b) divert or attempt to divert from any Buyer any business or business opportunity whatsoever.

 

Representations and Warranties of the Restricted Parties. Each Restricted Party hereby makes the representations and warranties set forth in this Section 5 to Buyers:

 

Authority; Enforceability. Each Restricted Party has all necessary legal capacity, power and authority to execute and deliver this Agreement and to perform such Restricted Party’s obligations hereunder. This Agreement has been duly and validly executed and delivered by each Restricted Party and constitutes a legal, valid and binding obligation of the Restricted Parties, enforceable against any Restricted Party in accordance with its terms.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

No Conflict. The execution and delivery by each Restricted Party of this Agreement do not, and the performance of such Restricted Party’s obligations hereunder and the consummation of the transactions contemplated hereby shall not, conflict with or violate any law or order, as applicable, or agreement by which any Restricted Party’s properties, rights or assets are bound or affected.

 

Consultation with Counsel. Each Restricted Party has consulted with legal counsel regarding the Non-Competition and Related Covenants and, based on such consultation, has determined and hereby acknowledges and agrees that the Non-Competition and Related Covenants are reasonable in terms of duration, scope and area restrictions and are necessary to protect the substantial goodwill acquired by Buyers, the Protected Information and the substantial consideration paid to the Restricted Parties pursuant to the MTA and PSA and in connection with the consummation of the transactions contemplated thereby.

 

No Restriction on Earning a Living. Each Restricted Party hereby acknowledges that the provisions of Section 0, Section 0 and Section 0 do not preclude any Restricted Party from earning a livelihood, nor do they unreasonably impose limitations on any Restricted Party’s ability to earn a living. In addition, each Restricted Party hereby acknowledges that the potential harm to the Buyers of non-enforcement of this Agreement outweighs any harm to the Restricted Parties or any of their respective affiliates of enforcement (by injunction or otherwise) of this Agreement.

 

Confidentiality and Non-Disparagement.

 

Each Restricted Party hereby covenants and agrees to not, and to cause its respective affiliates not to, (i) retain or use any Protected Information for the benefit, purposes or account of any Restricted Party or any other Person or (ii) disclose any Protected Information, other than necessary disclosures to his or its legal and financial advisors who agree to maintain the confidentiality of such Protected Information.

 

In the event that any Restricted Party is legally required, based on the written opinion of outside legal counsel, to disclose any Protected Information, the Restricted Parties shall give Buyers prompt written notice of such requirement so that Buyers may seek an appropriate protective order or other remedy and the Restricted Parties shall cooperate with Buyers to obtain such protective order. In the event that such protective order or other remedy is not obtained, the Restricted Parties shall furnish only that portion of the Protected Information that is legally required to be disclosed, based on the written opinion of outside legal counsel, and use his, her, or its best efforts to obtain assurances that confidential treatment will be accorded to such Protected Information.

 

Except as required by law, each Restricted Party hereby covenants and agrees not to disclose to any Person, other than any Restricted Party’s legal and financial advisors, the existence or contents of this Agreement.

 

Each Restricted Party hereby covenants and agrees to not, and to cause its respective affiliates not to, make any negative or disparaging statements or communications regarding any Buyer or any of their respective businesses, services, directors, officers, employees, contractors or consultants.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Miscellaneous.

 

Reasonableness. Each Restricted Party expressly acknowledges that this Agreement is reasonable and valid in all respects and irrevocably waive (and irrevocably agree not to raise) as a defense any issue of reasonableness (including the reasonableness of the Restricted Business or the duration and scope of this Agreement) in any proceeding to enforce any provision of this Agreement, the express intention of the parties being to provide for the legitimate and reasonable protection of the interests of Buyers by enforcement of this Agreement as written.

 

Indemnification. Each Restricted Party shall indemnify and save each Buyer and its respective affiliates, members, equityholders, directors, officers, employees, agents and representatives (each, an “Indemnified Party”) harmless of and from any claim, demand, action, cause of action, judgment, loss (including loss of profits), liability, damage or expense suffered by or imposed upon the Indemnified Party as a result of, in connection with or arising out of any violation or breach of this Agreement by the Restricted Parties.

 

Acknowledgement of Reliance and Equitable Remedies. Each Restricted Party acknowledges and agrees that: (i) the covenants and agreements contained in Section 0, Section 0 and Section 0 (collectively, the “Non-Competition and Related Covenants”) are necessary, fundamental and required for the protection of the goodwill of Buyers and the Purchased Assets acquired by Buyers pursuant to the MTA and PSA; (ii) the Non-Competition and Related Covenants relate to matters that are of a special, unique and extraordinary value; (iii) a breach or violation by any Restricted Party of any of the Non-Competition and Related Covenants will result in irreparable harm and damages that cannot be adequately compensated by a monetary award and, accordingly, Buyers or one or more of their subsidiaries or affiliates shall, in addition to all other available remedies (including seeking such monetary damages as it can show it has sustained by reason of such breach), be entitled to injunctive or other equitable relief to prevent or redress any such breach or violation (without posting a bond or other security and without having to prove the inadequacy of the available remedies at law); (iv) pursuant to the MTA and PSA, as applicable, the Restricted Parties received substantial cash payments and other valuable consideration; (v) as a condition of Buyers’ willingness to consummate the transactions contemplated by the Purchase Agreements, the Restricted Parties are entering into this Agreement and agreeing to the Non-Competition and Related Covenants; (vi) this Agreement is being executed in connection with the consummation of the transactions contemplated by the MTA and PSA, as applicable, pursuant to which Buyers acquired the Purchased Assets and substantial goodwill associated therewith; and (vii) this Agreement is intended to comply with the laws of the State of Texas and all other jurisdictions that might be deemed to be applicable hereto and which restrict or otherwise limit the enforceability of a contract that restrains a Person from engaging in a profession, trade or business. In the event of any breach or violation by any Restricted Party of any of the covenants contained in this Agreement, the time period of such covenant with respect to such Restricted Party shall be tolled and extended until such breach or violation is resolved.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Texas without giving effect to any choice or conflict of Law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of Texas. Each party hereto hereby irrevocably and unconditionally consents to submit to the sole and exclusive jurisdiction of any state or federal court located within the State of Texas (collectively, the “Chosen Courts”) for any litigation arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in the Chosen Courts and agrees not to plead or claim in any Chosen Court that such litigation brought therein has been brought in any inconvenient forum; provided, for the avoidance of doubt, that nothing in this Agreement shall prohibit Buyers from enforcing a judgment in any other jurisdiction. Each party hereto agrees, (i) to the extent such party is not otherwise subject to service of process in the State of Texas, to appoint and maintain an agent in the State of Texas as such party’s agent for acceptance of legal process and (ii) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service. Service made pursuant to clause (i) or (ii) above shall have the same legal force and effect as if served upon such party personally within the State of Texas

 

Non-Merger. Except as otherwise expressly provided in this Agreement, the covenants, representations and warranties set forth herein shall not merge upon and shall survive the Closing of the transactions contemplated under the MTA and PSA, as applicable, and, notwithstanding such Closing or any investigation made by or on behalf of any party, shall continue in full force and effect. Such Closing shall not prejudice any right of one party against any other party in respect of anything done or omitted under this Agreement or in respect of any right to damages or other remedies.

 

Severability. Subject to Section 7(g), in the event any provision of this Agreement is found to be void and unenforceable by a court or other tribunal of competent jurisdiction, the remaining provisions of this Agreement shall nevertheless be binding upon the parties hereto with the same effect as though the void or unenforceable part had been severed and deleted or reformed to be enforceable.

 

Judicial Limitation. It is expressly understood and agreed that, although each of the parties hereto consider the restrictions contained herein to be reasonable, if at any time a court or other tribunal of competent jurisdiction finally determines or adjudicates that any portion of the Non-Competition and Related Covenants is unenforceable by reason of it extending for too great of a period of time or over too great of a geographical area or by reason of it being too extensive in any other respect, then such Non-Competition and Related Covenant and this Agreement shall not be rendered void but such Non-Competition and Related Covenant shall be deemed amended to apply as to such maximum period of time, maximum geographical area, or maximum extent in all other respects, as the case may be, as such court may judicially determine or adjudicate to be enforceable. Alternatively, if any court or other tribunal of competent jurisdiction finally determines or adjudicates that any portion of the Non-Competition and Related Covenants is unenforceable, and such restriction cannot be amended pursuant to the preceding sentence so as to make such Non-Competition and Related Covenant enforceable, such judicial determination or adjudication shall not affect the enforceability of any other Non-Competition and Related Covenant.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Notice. All notices, requests, demands, claims, and other communications hereunder shall be in writing (including by email) and sufficient if delivered personally, sent by nationally recognized overnight courier or by registered or certified mail (postage prepaid, return receipt requested) or by email, with delivery or read receipt or confirmation requested and received (if applicable) as follows:

 

If to the Buyers, to:

 

__________________________

__________________________

__________________________

__________________________

Attn: _____________________

Email: ____________________

 

with a copy to (which shall not constitute notice to the Buyers):

 

Bass, Berry & Sims PLC

150 3rd Avenue S., Suite 2800

Nashville, TN 37201

Attn:    Angela Humphreys and Price W. Wilson

E-Mail: ahumphreys@bassberry.com; pwilson@bassberry.com

 

If to the Restricted Parties, to:

 

__________________________

__________________________

__________________________

__________________________

Attn: _____________________

Email: ____________________

 

with a copy to (which shall not constitute notice to the Restricted Parties):

 

__________________________

__________________________

__________________________

__________________________

Attn: _____________________

Email: ____________________

 

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

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Entire Agreement; Amendments and Waivers. This Agreement (i) represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof, (ii) supersedes all prior understandings, both written and oral, among the parties with respect to the subject matter hereof, and (iii) can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement, signed by Buyers and the Restricted Parties. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All rights, remedies and benefits expressly provided for in this Agreement are cumulative and are not exclusive of any rights, remedies or benefits provided for by law or in this Agreement, and the exercise of any remedy by a party hereto shall not be deemed an election to the exclusion of any other remedy (any such claim by the other party being hereby waived).

 

Interpretative Matters. Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

 

Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

Words denoting any gender shall include all genders. Where a word is defined herein, references to the singular shall include references to the plural and vice versa.

 

A reference to any party to this Agreement or any other agreement or document shall include such party’s successors and permitted assigns.

 

All references to a day or days shall be deemed to refer to a calendar day or calendar days, as applicable, unless otherwise specifically provided.

 

Negotiation and Drafting. The parties have participated jointly in the negotiation and drafting of this Agreement and the other agreements and documents contemplated herein. In the event of an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement and such other agreements and documents will be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of authoring any of the provisions of this Agreement or any other agreements or documents contemplated herein.

 

Counterparts. This Agreement may be executed in one or more counterparts, any one of which may be by facsimile, electronic signature (including via DocuSign), digital imaging device (i.e., pdf format) or similar electronic format, all of which taken together shall constitute one and the same instrument.

 

Assignment. This Agreement is personal to the Restricted Parties, and none of the Restricted Parties’ rights and duties hereunder shall be assignable or delegable by the Restricted Parties, as applicable. Any purported assignment or delegation by the Restricted Parties in violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement may be assigned by any Buyer to (i) any of its affiliates, (ii) a Person that becomes, directly or indirectly, a successor in interest (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business, operations, rights, properties or assets of such Buyer or (iii) any of its lenders as collateral security. Each Restricted Party acknowledges and agrees that upon such assignment, the rights and obligations of such Buyer hereunder shall be the rights and obligations of such affiliate or successor.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Restrictive Covenant Agreement as of the date first above written.

 

  Real Living Property Holdings – Texas, LLC
              
  By:  
  Name:  
  Title:  
     
  NOCONA HEALTH AND REHAB CENTER, LLC
     
  By:  
  Name:  
  Title:  
     
  HENRIETTA HEALTH AND REHAB CENTER, LLC
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

  OLNEY HEALTH AND REHAB CENTER, LLC
                
  By:  
  Name:  
  Title:  
     
  GCC Nocona, LLC
     
  By:  
  Name:  
  Title:  
     
  GRACE PROPERTIES NOCONA, LLC
     
  By:  
  Name:  
  Title:  
     
  GCC HENRIETTA, LLC
     
  By:  
  Name:  
  Title:  
     
  GRACE PROPERTIES HENRIETTA, LLC
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

  GCC OLNEY, LLC
                 
  By:  
  Name:  
  Title:  
     
  GRACE PROPERTIES OLNEY, LLC
     
  By:  
  Name:  
  Title:  
     
  Heatlhlink Holdings Group LLC
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Restrictive Covenant Agreement]

 

 

 

Exhibit 2.5

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) dated as of June 21, 2021 is by and between GRACE PROPERTIES HENRIETTA, LLC, a Texas limited liability company (“Seller”), and REAL LIVING PROPERTY HOLDINGS – TEXAS, LLC, a Texas limited liability company (“Purchaser”). Seller and Purchaser are sometimes collectively referred to as the “Parties” or individually as a “Party”.

 

W I T N E S S E T H:

 

Section 1. Definitions.

 

As used herein, the following terms shall have the following meanings:

 

“Closing” shall mean the consummation of the purchase and sale transaction contemplated by this Agreement.

 

Closing Date” shall mean on or before 1:00 p.m. Central Time on August 2, 2021.

 

Commitment Documents” shall mean all title exception documents including all of the documents referred to in Schedule B of the Title Commitment.

 

Deed” shall mean a special warranty deed conveying good and indefeasible fee simple title in and to the Property to Purchaser, executed and acknowledged by Seller and to be executed by Purchaser, in recordable form and in substantially the form set forth on Exhibit “B” attached hereto and made a part hereof for all intents and purposes.

 

Earnest Money” shall mean the amount deposited pursuant to Section 4(b) hereof.

 

Effective Date” shall mean the date on which the Title Company acknowledges receipt of a copy of this Agreement executed by Purchaser and Seller.

 

Feasibility Period” shall mean the time period from the Effective Date through 5:00 p.m. Central Time on the thirtieth (30th) day thereafter.

 

Independent Contract Consideration” shall mean the sum of One Hundred and No/100 Dollars ($100.00).

 

Land” shall mean those certain tracts or parcels of land containing approximately 0.778 acres of land located at 807 W Bois D’Arc Street, Henrietta, Clay County, Texas, being described on Exhibit “A” attached hereto and made a part hereof for all intents and purposes.

 

Land Document Review Period” shall mean the time period from the Effective Date through the expiration of the Feasibility Period.

 

Land Documents” shall mean the Title Commitment, the Commitment Documents, and the Survey collectively.

 

MTA” shall mean that certain Management Transfer Agreement dated as of the Effective Date by and between GCC Henrietta, LLC, a Texas limited liability company (“Transferor”), and Henrietta Health and Rehab Center, LLC, a Texas limited liability company, (“New Manager”), regarding the transition of the operations of the Property from Transferor to New Manager.

 

Notice” shall mean any notice required or given pursuant to or related to this Agreement.

 

1
 

 

Other Agreements” shall mean (i) that certain Purchase and Sale Agreement dated as of the Effective Date by and between Grace Properties Nocona, LLC, as seller, and Purchaser, as purchaser, for the real property located at 306 Carolyn Road, Nocona, Texas and (ii) that certain Purchase and Sale Agreement dated as of the Effective Date by and between Grace Properties Olney, LLC, as seller, and Purchaser, as purchaser, for the real property located at 1402 West Elm, Olney, Texas.

 

Permitted Exceptions” shall mean (i) the lien for ad valorem real estate taxes on the Property for the year in which the Closing occurs to the extent not yet due and payable and subsequent years, and (ii) any other matters which are waived by, or acceptable to, Purchaser pursuant to Section 5; provided, however, that Permitted Exceptions shall not include (a) matters that Seller has either agreed to cure or remove as provided in Section 5 or that Seller is obligated to cure or remove as provided herein, (b) matters that are removed by the Title Company from the Title Commitment prior to the expiration of the Feasibility Period or from any pro forma policy provided by the Title Company to Purchaser or its counsel, or which the Title Company has otherwise agreed in writing prior to the expiration of the Feasibility Period to remove from the Title Policy to be issued at the Closing, or (c) all liens against all or part of the Property not caused by Purchaser, including any deed of trust, mortgage, mechanics’, or similar lien or encumbrance that can be satisfied and discharged with the payment of a specified amount of money (“Liens”).

 

Property” shall mean the Land, together with (i) all buildings, structures, improvements, and fixtures located thereon (the “Improvements”), (ii) all licenses, permits and approvals related to the said real property, all third party warranties or guaranties relating to said real property and all other items of intangible personal property owned by Seller and used in connection with the ownership, use, leasing, maintenance, service or operation of such real property (the “Intangible Personal Property”), (iii) all and singular the rights pertaining to such real property, including, without limitation, any and all rights, titles, interests, and estates of Seller (if any) in and to any and all adjacent streets, roads, alleys or rights-of-way and ingress and egress easements benefiting or relating to such real property, all plants, shrubs and trees located thereon, any land lying in or under any body of water or the bed of any street or road, open or proposed, adjacent to such Land, all easements, hereditaments and privileges appurtenant to the foregoing Land, all oil, gas, hydrocarbon and other minerals (whether similar or dissimilar) in, on or under, or that may be produced from, such Land, all strips or gores, if any, between such Land and adjoining properties, all zoning rights, entitlements, air rights, development rights and water rights relating to the Land or Improvements, and all other rights, privileges and appurtenances in any way related to or for the benefit of the foregoing Land, (iv) all licenses, permits, or similar documents in any way relating to such real property, (v) all water and wastewater rights, capacities, and reservations, utility rights, tap fees, impact fees and the like owned by Seller (if any) relating to or attributable to such real property, (vi) all of Seller’s right, title and interest, in and to all goods, machinery, furniture, equipment and other tangible personal property owned by Seller and used or useful in the operation of such real property, excluding all items of personal property owned by Tenant, if any (the “Personal Property”), and (vii) all of Seller’s interest, as landlord, in the Lease and any unapplied tenant security deposit under the Lease, if any.

 

Purchase Price” shall be Three Million Five Hundred Thousand and 00/100 Dollars ($3,500,000.00).

 

Survey” shall mean an ALTA survey of the Land from a reputable registered local surveyor selected by Purchaser dated after the Effective Date showing the boundaries of the Land, the location of all Improvements on the Land, and all recorded easements and building setback lines, accompanied by a metes and bounds description of the Land.

 

Title Commitment” shall mean a commitment for Title Insurance in the amount of the Purchase Price issued through the Title Company covering the Land setting forth the matters which affect the Land.

 

Title Company” shall mean Fidelity National Title Agency, Inc. located at 1900 West Loop South, Suite 200, Houston, Texas 77027 (attention: H. David Templeton); telephone (713) 630-0001; facsimile (713) 630-0017.

 

Title Objections” shall mean any matters referred to in or discoverable from any of the Land Documents to which Purchaser objects.

 

Title Policy” shall mean an Owner Policy of Title Insurance in the amount of the Purchase Price insuring that Purchaser is the owner of fee simple title to the Property subject only to the Permitted Exceptions.

 

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Section 2. Contract.

 

Pursuant to the provisions of this Agreement, in consideration of the representations, warranties, covenants, agreements, waivers, and releases set forth herein, Seller agrees to sell and convey the Property to Purchaser, and Purchaser agrees to purchase the Property from Seller.

 

Section 3. Title Company; Delivery Date; Effective Date.

 

This Agreement shall not be effective with respect to either Party until it has been duly executed by both Parties and delivered to Title Company. If Purchaser does not timely deliver to the Title Company an original or electronic counterpart of this Agreement executed by both Parties within three (3) business days after Purchaser’s and Seller’s execution of this Agreement, Seller may terminate this Agreement by written notice to Purchaser.

 

Section 4. Purchase Price; Earnest Money; Independent Contract Consideration.

 

(a) Purchaser agrees to pay the Purchase Price, plus or minus applicable prorations, to Seller at the Closing in cash. For the purpose of this Agreement, the term “cash” means only lawful currency of the United States of America or immediately available funds actually received and unconditionally available for distribution by the Title Company prior to 1:00 p.m. Central Time on the Closing Date.

 

(b) Within three (3) business days after the Effective Date, Purchaser shall deliver Thirty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars ($33,333.33) as Earnest Money to the Title Company. All Earnest Money shall be held in an interest bearing trust account at the Title Company. The Earnest Money shall be applied towards the payment of the Purchase Price in the event the transaction contemplated hereby closes and funds. If Purchaser does not timely deliver the Earnest Money, Seller may terminate this Agreement by written notice to Purchaser.

 

(c) If Purchaser terminates this Agreement, the Earnest Money will be immediately refunded to Purchaser, less the Independent Contract Consideration that Seller will retain as independent consideration for Purchaser’s right to terminate. The Independent Contract Consideration is to be credited to the Purchase Price only upon the Closing.

 

Section 5. Title Commitment; Commitment Documents; Survey; Land Document Review Period.

 

(a) Within three (3) business days after the Effective Date, Seller shall request the Title Company to prepare and furnish to Purchaser the following:

 

(i) A Title Commitment; and

 

(ii) A true, complete and legible copy of each of the Commitment Documents.

 

(b) Within three (3) business days after the Effective Date, Seller shall deliver to Purchaser a copy of Seller’s existing survey(s) of the Property (the “Existing Survey”). If the Existing Survey is not acceptable to the Title Company or Purchaser, Purchaser may, at Purchaser’s sole cost and expense, obtain either an update of the Existing Survey or a new Survey and deliver same to Seller, the Title Company, and Seller’s Counsel on or before the expiration of the Feasibility Period. In the event of any discrepancy between the description of the Land set forth on Exhibit “A” attached hereto and that accompanying the Survey, the description accompanying the Survey shall govern and control and shall be the description of the Land used in the Deed if so elected by Purchaser. The legal description of the Land shall be subject to the reasonable approval of Seller. If this Agreement shall be terminated by Seller or Purchaser pursuant to the right of either party to do so as expressly set forth herein, then the Survey shall become the property of Seller without the payment of any consideration therefor other than Seller’s having entered into this Agreement.

 

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(c) Purchaser shall have the Land Document Review Period to examine the Land Documents, and to notify Seller of any Title Objections. Seller shall not have any duty or obligation whatsoever to, but Seller may, cure or attempt to cure any of such Title Objections; provided, however, Seller agrees to pay all sums owing to discharge any and all Liens against the Land on or prior to the Closing Date. Seller shall notify Purchaser of its intention to cure or not to cure any Title Objections on or prior to the Closing Date within ten (10) days after Purchaser notifies Seller of such Title Objections; and in the event Seller fails to so notify Purchaser within such ten (10) day period, it shall be presumed that no cure will be made. Purchaser shall conclusively be deemed to have reviewed, accepted, and approved all matters which are referred to in or disclosed by any of the Land Documents which Purchaser does not timely notify Seller constitute Title Objections. For avoidance of doubt, Purchaser shall have no obligation to object to any Liens, it being understood that no Lien shall be deemed a Permitted Exception.

 

(d) If, for any reason whatsoever, Seller does not cure, or elects not to cure or is deemed to have elected not to cure, any Title Objections within such ten (10) day period set forth in Section 5(c) above, at any time prior to the Closing Date, Purchaser shall elect to either:

 

(i) terminate this Agreement in accordance with the provisions of Section 13(c) hereof; or

 

(ii) waive all uncured Title Objections, purchase the Property, and accept the Title Policy and the Deed subject to all uncured Title Objections (in addition to all matters to which Purchaser did not timely object), without any reduction in the Purchase Price.

 

Purchaser’s failure to give Seller timely notice prior to the Closing Date shall be deemed to be an election by Purchaser under clause (ii) above.

 

Section 6. The Feasibility Period; Purchaser’s Evaluation of the Property.

 

(a) Seller shall deliver to Purchaser within three (3) business days after the Effective Date copies of all documents relating to the Property (to the extent the same are in existence and in the possession or control of Seller), including, but not limited to, environmental reports, development rights, permits, roadway agreements, topographical maps, utility information, survey, engineering reports, flood plain information, soil reports, development plans for adjoining property, site development permits, etc. (the “Property Information”) for Purchaser to review. In the event that the Seller fails to deliver a material Property Information document, as reasonably determined by Purchaser, to Purchaser within such three (3) business day period, the Feasibility Period shall be extended by one (1) day for each day thereafter until all material Property Information is delivered to Purchaser. PURCHASER ACKNOWLEDGES THAT ANY REPORTS SUPPLIED OR MADE AVAILABLE BY SELLER, WHETHER WRITTEN OR ORAL, OR IN THE FORM OF MAPS, SURVEYS, PLATS, SOIL REPORTS, ENGINEERING STUDIES, ENVIRONMENTAL ASSESSMENTS, STUDIES, ANALYSES, OR OTHER INSPECTION REPORTS PERTAINING TO THE PROPERTY (“REPORTS”) ARE BEING DELIVERED TO PURCHASER ON AN “AS-IS, WHERE-IS, WITH ALL FAULTS” BASIS SOLELY AS A COURTESY AND THAT SELLER HAS VERIFIED NEITHER THE ACCURACY OF ANY STATEMENTS OR OTHER INFORMATION CONTAINED IN THOSE MATERIALS, THE COMPLETENESS OF THE REPORTS, ANY METHOD USED TO COMPILE THE REPORTS, OR THE QUALIFICATIONS OF THE PERSON(S) PREPARING THE REPORTS. SELLER MAKES NO REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, AS TO THE ACCURACY, COMPLETENESS, OR ANY OTHER ASPECT OF THE REPORTS.

 

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(b) During the Feasibility Period, with reasonable prior notice to Seller, Purchaser and Purchaser’s designated agents, employees, and independent contractors shall have the right, at Purchaser’s sole risk, cost, and expense, to enter upon the Property; to conduct engineering, environmental, operational, market, economic feasibility, and other inspections, studies, and tests of the Property; to review and analyze the Property and the condition of the Property and otherwise to evaluate and assess the Property as Purchaser deems appropriate or necessary in its sole discretion. Purchaser hereby agrees to indemnify Seller against all liability attributable to such entry, inspections, studies, and tests performed by or on behalf of Purchaser; provided, however, that excluded from the foregoing indemnity are any losses, costs, damages, claims, or liabilities (a) relating to pre-existing conditions upon the Property or (b) arising from the gross negligence or willful misconduct of Seller or its contractors, employees, agents, representatives or other parties under Seller’s control. PURCHASER SHALL NOT CONDUCT OR ALLOW ANY PHYSICALLY INTRUSIVE TESTING OF, ON OR UNDER THE PROPERTY WITHOUT FIRST OBTAINING SELLER’S WRITTEN CONSENT AS TO THE TIMING AND SCOPE OF WORK TO BE PREFORMED, WHICH CONSENT MAY BE WITHHELD IN SELLER’S SOLE AND ABSOLUTE DISCRETION. Purchaser agrees that, in making any inspections of, or conducting any testing of, on or under, the Property, Purchaser or the representatives of Purchaser entering onto the Property shall carry not less than $2,000,000.00 commercial general liability insurance with Seller as an additional insured party insuring all activity and conduct of Purchaser and such representatives exercising such right of access. Purchaser represents and warrants that it carries not less than the coverage set forth in the previous sentence with contractual liability endorsement which insures Purchaser’s indemnity obligations hereunder, and upon written request of Seller, will provide Seller with written evidence of same. After receipt from Purchaser of at least twenty-four hours advance written or telephonic notice, Seller shall allow Purchaser to conduct any inspections or tests, so that Seller shall have a reasonable opportunity to have a representative present during any entry onto the Property by Purchaser or its representatives, agents or consultants. Purchaser agrees to use commercially reasonable efforts to cooperate with any reasonable request by Seller in connection with the timing of any such inspection or test report or summary upon Seller’s written request therefor.

 

(c) Purchaser shall have until the end of the Feasibility Period to inspect the Property and any other matters whatsoever with respect to the Property. At any time prior to the expiration of the Feasibility Period, Purchaser may, by written notice to Seller, elect to terminate this Agreement (i) if Purchaser is denied financing by its lender for its purchase of the Property or (ii) pursuant to Section 5(d)(i) herein or (iii) due to any issue or matter disclosed or discovered by any environmental inspection or environmental report, including any environmental Phase I, of the Property, in accordance with Section 13(c) hereof.

 

(d) In the event Purchaser terminates this Agreement or elects not to close the transaction contemplated in this Agreement, at Purchaser’s sole cost and expense, Purchaser shall promptly restore the Property to substantially its condition prior to Purchaser’s entry thereon, such obligation to survive the termination of this Agreement for four (4) months.

 

(e) If this Agreement terminates for any reason, then Purchaser shall deliver to Seller copies of all reports, assessments, studies, and the like that have been prepared by or for Purchaser in connection with Purchaser’s review of the Property and/or have been delivered or provided to Purchaser by Seller. It is understood and agreed that any such reports, assessments, studies, and the like shall be provided to Seller without any representation or warranty by Purchaser as to the completeness or accuracy thereof, or the right of Seller to rely on same. Furthermore, Purchaser shall have no obligation to provide to Seller any information provided to Purchaser by any prospective tenant of Purchaser for the Property or any proprietary information of Purchaser.

 

(f) Purchaser covenants and agrees to not make any filings or requests or make any communication with the US Army Corps of Engineers with respect to the Property without the prior written consent of Seller, such consent not to be unreasonably withheld, conditioned or delayed.

 

Section 7. Representations and Warranties.

 

(a) As a material inducement to Purchaser to execute this Agreement and to consummate the transactions contemplated by this Agreement, Seller represents and warrants to Purchaser, as of the date hereof and as of the Closing Date (except to the extent any such representations and warranties shall have been expressly made as of a particular date, in which case such representations and warranties shall be made only as of such date), as follows:

 

(i) Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its formation and qualified to do business and is in good standing under the laws of the state in which the Property is located.

 

(ii) Seller has the full right and authority, and has obtained any and all consents required, to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby. This Agreement has been, and all of the documents to be delivered by Seller at the Closing will be, authorized and properly executed by or on behalf of Seller and constitutes, or will constitute, as appropriate, the valid and binding obligation of Seller, enforceable in accordance with their terms.

 

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(iii) Seller has not entered into any agreement to dispose of its interest in the Property or any part thereof, except for this Agreement. There is no agreement to which Seller is a party or is otherwise binding on Seller that is in conflict with this Agreement. The execution and delivery of this Agreement and the performance by Seller of its obligations hereunder does not conflict with or violate any law of any governmental authority or quasi-governmental authority with jurisdiction over Seller or the Property. No person, firm or entity has any rights in, or rights to acquire all or any part of, the Property, and there is no outstanding agreement, other than this Agreement, to sell all or any part of the Property, to any other person, firm or entity.

 

(iv) There are and there will be no parties in possession of any portion of the Property as lessees, and no other party has been granted an oral or written license, lease, option, purchase agreement or other right pertaining to the use, purchase or possession of any portion of the Property, other than tenants in possession under the Lease. The copy of such Lease to be provided or made available to Purchaser is true, correct and complete as presently in full force and effect, has not been modified, supplemented or amended, and constitutes the entire agreement between Seller and Tenant. Tenant has no option or right of first refusal to purchase the Property or any part thereof. Seller has given no written notice of default to Tenant under the Lease and to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) is not aware of any default by Tenant under the Lease. Seller has fully and completely performed all of its duties and obligations of the “lessor” or “landlord” under the Lease arising on or before the date hereof. Seller has not received any written notice of default from Tenant under the Lease. All construction allowances or other sums required by the Lease to be paid to Tenant have been paid. Except as expressly set forth in the Lease, there are no rent concessions or offsets with respect to the Lease. As of the Closing, Seller shall have paid all leasing, rental, brokerage and other commissions, charges or fees payable with respect to the current term of the Lease, and there will be no such leasing, rental, brokerage or other commissions, charges or fees payable thereafter with respect thereto or with respect to any renewal or extension of the term of the Lease that was agreed to prior to Closing. Purchaser shall have no liability for (and Seller hereby indemnifies Purchaser against any claim for) any such leasing commissions, construction allowances, charges or fees with respect to the Lease that arise prior to Closing and Seller shall have no liability for any such leasing commissions, construction allowances, charges or fees with respect to the Lease that arise after the Closing due to acts or agreements that occur after the Closing.

 

(v) There are no supplier, vendor, service provider, maintenance, management or similar contracts relating to the operation of or affecting the Property, or any other unrecorded agreements or contracts that will be binding upon Purchaser and/or the Property after the Closing.

 

(vi) There is not any pending or, to Seller’s knowledge, threatened, litigation against Seller or the Property.

 

(vii) The Property is free of violation of applicable laws, and Seller has received no written notice that the Property is in violation of any applicable laws. All building permits, certificates of occupancy, business licenses and, without limitation, all other notices, licenses, permits, certificates and authority, required in connection with the construction, use or occupancy of the Property have been obtained and are in effect and in good standing, the leasing, operation and use of the Property is in compliance with such notices, licenses, permits, certificates and authority, and Seller, the Property and the operation of the Property comply with all applicable laws. Seller has no written notice of any violations of any restrictive covenants or other requirements affecting the Property.

 

(viii) There is no pending, or to Seller’s knowledge, threatened, judicial, administrative, condemnation or eminent domain proceedings or investigations relating to the Property. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), there are no claims against the Property or Purchaser for or on account of work done, materials furnished, and utilities supplied to the Property prior to the Closing Date. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) there are no public plans or proposals for changes in road grade, access, or other municipal improvements which would materially adversely affect the Property or result in any assessment; and to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) no ordinance authorizing improvements, the cost of which might be assessed against Purchaser or the Property, is pending.

 

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(ix) Seller is not a “foreign person,” “foreign partnership,” “foreign trust” or “foreign estate” as those terms are defined in Section 1445 of the Internal Revenue Code of 1986, as amended. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) the Property is not located within the boundaries of any historical or archaeological district or similar district or area, and none of the Improvements are designated as landmarks or as having historical or archaeological significance and none of the Improvements are qualified or eligible for any such designation. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) there exists no impediment to or restrictions on the demolition or use of the buildings based on any historical or archaeological significance of the Property.

 

(x) Seller has not received any written notice of any pending, threatened, general or special real property, personal property or other ad valorem taxes and/or assessments affecting the Property other than the taxes and assessments set forth in the Title Commitment or as shown on a regular tax bill for the Property. Seller shall be required to pay in full all certified special assessments and private assessments against the Property to the Closing Date that are due and payable at such time. Seller has not protested or appealed any general or special real property, personal property or other ad valorem taxes and/or assessments affecting the Property.

 

(xi) No labor has been performed or materials fabricated or furnished with respect to the Property that could result in a materialman’s or mechanic’s lien filed against the Property, except as shall have been fully paid or released to the satisfaction of the Title Company at Closing. Except for routine expenditures for repairs and replacements in connection with the ongoing maintenance and upkeep of the Property, which Seller covenants and agrees to undertake and complete in the ordinary course consistent with past practices, Seller does not have any outstanding contracts for capital expenditures relating to the Property, nor does Seller have any agreement, obligations or commitments for capital expenditures relating to the Property, including, without limitation, additions to property, plant, equipment or intangible capital assets. Seller has not deferred or delayed implementing any capital expenditures at the Property.

 

(xii) Seller is not, and will not become a person identified on U.S. Treasury’s Office of Foreign Asset Control listing of Specially Designated Nationals and Blocked Persons (a “Prohibited Person”). Seller (i) is not and will not become owned or controlled by a Prohibited Person, (ii) is not acting hereunder and will not act hereunder for or on behalf of a Prohibited Person, and (iii) is not providing and will not provide material, financial or technological support or other services to or in support of acts of terrorism of a Prohibited Person. Seller will not enter into or undertake any activities related to this Agreement in violation of Anti-Money Laundering Laws.

 

(xiii) Seller is not a party to any effective contract, agreement, option or commitment to sell, convey, assign, transfer or otherwise dispose of the Property or any material portion thereof, except the Lease.

 

(xiv) Seller has not received any written notice from any municipal department, insurance carrier, board of fire underwriters (or organization exercising functions similar thereto) or mortgagee of the existence of defects or inadequacies in the Property or requesting the performance of any work or alterations with respect to the Property.

 

(xv) The environmental reports to be provided to Purchaser as a part of the Property Information comprise all environmental reports with respect to the Property in Seller’s possession or control. Neither the Seller nor, to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), any other party has ever caused or permitted any “hazardous material” (as hereinafter defined) to be placed, held, located, or disposed of on, under, or at the Property or any part thereof in forms or concentrations which violate applicable laws and regulations, and to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) neither the Property nor any part thereof has ever been used as a dump or storage site (whether permanent or temporary) for any hazardous material. As used herein, “hazardous material” means and includes any hazardous, toxic, or dangerous waste, substance, or material defined as such in, or for purposes of, the Comprehensive Environmental Response, Compensation Liability Act (42 U.S.C. Section 9601, et seq., as amended) or any other “super fund” or “super lien” law or any other federal, state, or local statute, or law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability for standards of conduct concerning any substance or material, as presently in effect. To the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever) the Property does not currently contain and has not in the past contained any underground storage tanks.

 

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(xvi) There are no attachments, executions, assignments for the benefit of creditors or voluntary or involuntary proceedings in bankruptcy pending against or contemplated by Seller or any one of them, and, to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), no such actions have been threatened.

 

Seller hereby indemnifies and holds harmless Purchaser from and against any and all loss, expense (including without limitation reasonable attorney fees), liability, cost, claim, demand, action, cause of action and suit arising out of or in any way related to any breach of any representation, warranty, covenant or agreement of Seller in this Agreement. If, to the current actual knowledge of Seller (without any independent investigation or inquiry whatsoever), any of the foregoing representations and warranties is not, or ceases to be, true, Seller shall give prompt written notice to Purchaser (which notice shall include copies of any document upon which Seller’s notice is based). The representations and warranties of Seller hereunder shall survive for only one (1) year from the Closing Date.

 

Seller hereby notifies Purchaser that Seller is not the developer of the Property, and that, except as expressly set forth in this Agreement, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith, Seller makes no representations or warranties whatsoever, express, implied, or arising by operation of law, with respect to the Property or the condition of the Property. Purchaser hereby represents and warrants to Seller that, except as expressly set forth in this Agreement, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith, Purchaser has not entered into this Agreement based upon any representation, warranty, agreement, statement, or expression of opinion by Seller or any other person or entity acting or allegedly acting for or on behalf of Seller with respect to Seller, the Property, or the condition of the Property. Purchaser agrees that the Property will be sold and conveyed to (and accepted by) Purchaser at the Closing in the then condition of the Property, AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT ANY WRITTEN OR ORAL REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS, IMPLIED, OR ARISING BY OPERATION OF LAW, other than the special warranty of title in the Deed and except as expressly set forth in this Agreement, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith. Without limiting the generality of the foregoing, except for the special warranty of title in the Deed and except as expressly set forth in this Agreement, the transaction contemplated by this Agreement is without any express or implied warranty, representation, agreement, statement, or expression of opinion of or with respect to: (i) the condition of the Property or any aspect thereof, including, without limitation, any and all express or implied representations or warranties related to suitability for habitation, merchantability, or fitness for a particular use or purpose; (ii) the soil conditions, drainage, topographical features, flora, fauna, or other conditions of or which affect the Property; (iii) any conditions at or which affect the Property with respect to any particular use, purpose, development potential, or otherwise; (iv) area, size, shape, configuration, location, access, cash flow, expenses, value, or condition; (v) any express or implied representations or warranties created by any affirmation of fact or promise, by any description of the Property, or by operation of law; (vi) any environmental, botanical, zoological, hydrological, geological, meteorological, or other condition or hazard or the absence thereof heretofore, now, or hereafter affecting in any manner any of the Property; and (vii) all other express or implied representations and warranties by Seller whatsoever. Except as specifically set forth herein, in the Deed or in any other document delivered by Seller to Purchaser in connection herewith, Purchaser hereby releases and discharges Seller from all liability and waives all claims against Seller for, and Purchaser hereby assumes the risk with respect to, all matters in any way or manner whatsoever arising out of, related to, connected with, or emanating from the condition of the Property, including, without limitation, all patent and latent defects, hazards, and dangerous conditions on or about the Property, whether or not discoverable prior to the Closing Date.

 

 

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(b) As a material inducement to Seller to execute this Agreement and to consummate the transactions contemplated by this Agreement, Purchaser represents and warrants to Seller, as of the date hereof and as of the Closing Date (except to the extent any such representations and warranties shall have been expressly made as of a particular date, in which case such representations and warranties shall be made only as of such date), as follows:

 

(i) Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its formation and qualified to do business and is in good standing under the laws of the state in which the Property is located.

 

(ii) Purchaser has the full right and authority, and has obtained any and all consents required, to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby. This Agreement has been, and all of the documents to be delivered by Purchaser at the Closing will be, authorized and properly executed by or on behalf of Purchaser and constitutes, or will constitute, as appropriate, the valid and binding obligation of Purchaser, enforceable in accordance with their terms.

 

(iii) Purchaser is not, and will not become a Prohibited Person. Purchaser (i) is not and will not become owned or controlled by a Prohibited Person, (ii) is not acting hereunder and will not act hereunder for or on behalf of a Prohibited Person, and (iii) is not providing and will not provide material, financial or technological support or other services to or in support of acts of terrorism of a Prohibited Person. Purchaser will not enter into or undertake any activities related to this Agreement in violation of Anti-Money Laundering Laws.

 

(iv) The execution and delivery of this Agreement by Purchaser and the consummation by Purchaser of the transactions contemplated hereby will not violate any judgment, order, injunction, decree, regulation or ruling of any court or governmental entity or conflict with, result in a breach of, or constitute a default under the organizational documents of Purchaser, any note or other evidence of indebtedness, any mortgage, deed of trust or indenture, or any lease or other material agreement or instrument to which Purchaser is a party or by which it is bound.

 

(v) No consent, waiver, approval or authorization is required from any person or entity (that has not already been obtained or will be obtained prior to the Closing) in connection with the execution and delivery of this Agreement by Purchaser or the performance by Purchaser of the transactions contemplated hereby.

 

(vi) Purchaser has not (i) commenced a voluntary case, or, to Purchaser’s knowledge, had entered against it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree under any federal or state law or statute relative to bankruptcy, insolvency or other relief for debtors, (ii) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceeding, to hold, administer and/or liquidate all or substantially all of its property, or (iii) made an assignment for the benefit of creditors.

 

Purchaser hereby indemnifies and holds harmless Seller from and against any and all loss, expense (including without limitation reasonable attorney fees), liability, cost, claim, demand, action, cause of action and suit arising out of or in any way related to any breach of any representation, warranty, covenant or agreement of Purchaser in this Agreement. If, to the current actual knowledge of Purchaser (without any independent investigation or inquiry whatsoever), any of the foregoing representations and warranties is not, or ceases to be, true in any material manner, Purchaser shall give prompt written notice to Seller (which notice shall include copies of any document upon which Purchaser’s notice is based). The representations and warranties of Purchaser hereunder shall survive for only one (1) year from the Closing Date.

 

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Section 8. Closing.

 

(a) The Closing shall occur on or before the Closing Date in escrow at the offices of the Title Company. Notwithstanding anything contained herein to the contrary, Purchaser may extend the Closing Date for up to two (2) additional thirty (30) day periods by notifying Seller and delivering to the Title Company an additional $16,666.67 for the first thirty (30) day Closing Date extension and an additional $33,333.33 for the second thirty (30) day Closing Date extension (each an “Additional Deposit”, and, collectively, the “Additional Deposits”). The Additional Deposits shall be applicable toward the Purchase Price and shall treated the same as the Earnest Money as set forth herein.

 

(b) Provided Purchaser contemporaneously performs all of Purchaser’s obligations set forth in Sections 8(c) and 8(d) hereof, at the Closing, Seller shall execute, acknowledge and deliver or cause to be delivered to the Title Company the following:

 

(i) the Deed in form and substance reasonably acceptable to Purchaser and Seller;

 

(ii) closing instructions, addressed to the Title Company, which (A) authorize the Title Company to deliver the Deed, and any other documents required by Section 8(b) hereof, to Purchaser, only after the Title Company has received the Purchase Price (less Seller’s Closing costs and plus or minus applicable prorations) in cash and the documents required by Sections 8(c)(ii) and 8(c)(iii) hereof; and (B) request that the Title Company issue (as soon as reasonably practicable after the Closing) to Purchaser the Title Policy; provided, however, Seller shall request that (1) the exception with respect to restrictive covenants refer only to those restrictions, if any, set forth in the Title Commitment; and (2) that the exception with respect to taxes shall refer to the year in which the Closing Date occurs; (3) the “survey exception” be modified to read “Any shortages in area”; and (4) the Title Policy exclude the exception as to “rights of parties in possession”; provided Seller provides all such information and documentation necessary to allow the Title Company to make such modifications or changes. If, at or prior to the Closing, the Title Company notifies Purchaser that the Title Company refuses to deliver the Title Policy as herein described, within two (2) days after Purchaser’s receipt of such notice from the Title Company, but not thereafter, Purchaser shall elect to either (a) terminate this Agreement in accordance with the provisions of Section 13(c) hereof, or (b) waive such refusal, purchase the Property, and accept whatever policy of title insurance, if any, which the Title Company is willing to issue to Purchaser, without any reduction in the Purchase Price;

 

(iii) An Assignment and Assumption (the “Assignment”) of that certain Lease and Operating Agreement by and between Seller, as landlord, and Nocona Hospital District, as tenant (“Tenant”), dated effective as September 1, 2014 (the “Lease”) or, if requested by Purchaser, an Amended and Restated Lease (the “A&R Lease”), in form and substance reasonably acceptable to Purchaser and Seller;

 

(iv) a blanket conveyance bill of sale and assignment (the “Bill of Sale”), conveying and assigning to Purchaser all the Personal Property and the Intangible Personal Property in form and substance reasonably acceptable to Purchaser and Seller;

 

(v) any and all other documents reasonably required by Purchaser or the Title Company to consummate the Closing, duly executed, sworn to, and/or acknowledged (when the form of the document so provides), by Seller;

 

(vi) an affidavit in form and substance satisfactory to Purchaser stating Seller’s taxpayer identification number and that Seller is not a “foreign person” within the meaning of Section 1445, et seq., of the Internal Revenue Code of 1986, as amended;

 

(vii) The Title Company’s standard form Owner’s Affidavit in order to cause all standard exceptions (except for the standard survey exception, which shall not be removed unless Purchaser obtains a Survey in a form sufficient to remove such exception) to be deleted from the Title Policy;

 

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(viii) (a) a tenant estoppel certificate in form and substance satisfactory to Purchaser executed by Tenant and dated not more than thirty (30) days prior to the Closing Date, disclosing no default by either landlord or tenant and no other negative or adverse fact or circumstance, and (b) if required by Purchaser’s lender, a subordination, non-disturbance and attornment agreements in form reasonably acceptable to such lender executed by Tenant;

 

(ix) an executed closing statement consistent with this Agreement in the form required by the Title Company; and

 

(x) evidence satisfactory to the Title Company of authority of Seller to sell the Property in accordance with the terms of this Agreement and evidence satisfactory to the Title Company of the persons authorized to execute and deliver all necessary documents on behalf of Seller at Closing.

 

(c) Contemporaneously with the performance by Seller of Seller’s obligations under Section 8(b) hereof provided Seller contemporaneously performs all of Seller’s obligations set forth in Section 8(b) hereof, Purchaser shall execute, swear to, acknowledge (when the form of the document so provides), and/or deliver to the Title Company the Deed and the following:

 

(i) cash in the amount of the Purchase Price (plus or minus applicable prorations), together with such additional cash, if any, as may be necessary to pay Purchaser’s Closing costs as set forth in Section 8(d) hereof;

 

(ii) the Assignment or the A&R Lease, as applicable;

 

(iii) the Bill of Sale;

 

(iv) evidence reasonably satisfactory to the Title Company that the person(s) executing this Agreement, the Deed, and any other documents with respect to the transaction contemplated by this Agreement as or on behalf of Purchaser has full right, power, and authority to do so;

 

(v) an executed closing statement consistent with this Agreement in the form required by the Title Company; and

 

(vi) any and all other documents reasonably required by the Title Company to consummate the Closing.

 

(d) Purchaser hereby agrees to pay in cash at the Closing each and all of the following Closing costs:

 

(i) Purchaser’s attorney’s fees incurred in drafting and negotiating this Agreement and in Closing the transaction contemplated in this Agreement;

 

(ii) all costs incurred by Purchaser in performing Purchaser’s review and inspections of the Land Documents, the Property, and the condition of the Property;

 

(iii) filing and recording fees for the Deed and all other documents (other than documents, if any, curing Title Objections) required by law or the Title Company or requested by Purchaser to be filed or recorded;

 

(iv) one-half of the escrow fee of the Title Company;

 

(v) all premiums for any and all mortgagee policies of title insurance;

 

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(vi) Purchaser’s proportionate share of the items prorated pursuant to Section 9 hereof; and

 

(vii) all other fees, costs, and expenses customarily paid by a purchaser of real property in the County where the Closing occurs.

 

(e) Seller hereby agrees to pay each and all of the following Closing costs:

 

(i) Seller’s attorney’s fees incurred in drafting and negotiating this Agreement, the Deed, and other Closing documents to be provided by Seller, and in Closing the transaction contemplated in this Agreement;

 

(ii) the Commission, if any, agreed to be paid in Section 11 hereof;

 

(iii) charges for the preparation and delivery to Purchaser of the Land Documents; filing and recording fees for documents, if any, curing Title Objections; the Basic Rate Premium for the issuance of the Title Policy (Seller shall not pay any charge or additional premium charged for any title policy endorsements);

 

(iv) the premium charged by the Title Company to amend the “survey exception” in the Title Policy;

 

(v) the charge, if any, by the Title Company to exclude from the Title Policy the exception as to “rights of parties in possession”

 

(vi) one-half of the escrow fee of the Title Company;

 

(vii) Seller’s proportionate share of the items prorated pursuant to Section 9 hereof; and

 

(viii) all other fees, costs, and expenses customarily paid by a seller of real property in the County where the Closing occurs.

 

Seller may comply with Seller’s obligations under this Section 8(e) by (i) delivering a check at Closing payable to the Title Company for sums payable by Seller, or (ii) paying at Closing, or agreeing to pay outside of Closing so long as the Title Company shall agree such agreement is sufficient to issue the Title Policy in form and substance satisfactory to Purchaser, sums payable by Seller, directly to the person or entity to receive such payment, or (iii) signing a Closing statement showing deductions from the Purchase Price for sums payable by Seller; or (iv) any combination of the methods set forth in (i), (ii), and (iii).

 

(f) The provisions of Sections 8(d) and 8(e) hereof shall not be deemed to be in conflict with the provisions of Section 17 hereof.

 

(g) Upon completion of the Closing and Seller’s receipt of the Purchase Price (less Seller’s Closing costs and plus or minus applicable prorations) in cash, subject to the rights of Tenant, Purchaser shall have the right to possession of the Property. At the Closing, Seller shall deliver to Purchaser the following items, if in Seller’s possession or control: the original Lease; copies or originals of all contracts; and all keys used in the operation of the Property.

 

(h) Notwithstanding anything in this Agreement to the contrary, Purchaser’s obligation to effect the Closing shall be subject to and contingent upon the satisfaction or waiver of the following conditions precedent as of the Closing Date:

 

(i) The willingness of the Title Company to issue, upon the sole condition of the payment of its regularly scheduled premium, the Title Policy in the form and substance described herein on the Closing Date, with such endorsements as Purchaser and the Title Company shall have reasonably agreed prior to the end of the Feasibility Period, subject only to the Permitted Exceptions.

 

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(ii) Seller shall have performed and complied with the covenants and agreements contained in this Agreement required to be performed and complied with by it on or prior to the Closing Date.

 

(iii) Each of the representations and warranties made by Seller in this Agreement shall be accurate, true and correct when made and shall be accurate, true and correct on and as of the Closing Date as if such representations and warranties were made at and as of the Closing, except those made as of a specified date, in which case such representations and warranties of Seller shall have been accurate, true and correct as of such date.

 

(iv) There shall not be in effect any statute, regulation, order, decree, judgment or injunction (whether temporary, permanent or preliminary) of any governmental authority that challenges, prohibits, makes illegal, enjoins or prevents the consummation of the transactions contemplated by this Agreement.

 

(v) There shall not be any action taken by any court of competent jurisdiction or other governmental authority that makes it illegal or enjoins, restrains or otherwise prohibits the consummation of the transactions contemplated by this Agreement. There shall not be instituted any action or proceeding by any governmental authority that would reasonably be expected to result in any of the consequences referred to in the previous sentence.

 

(vi) No government-imposed moratorium affecting Purchaser’s intended use or operation of the Property will be in effect.

 

(vii) There shall not have been any change or event since the expiration of the Feasibility Period that materially or adversely affects the physical condition of the Property.

 

(viii) All of the conditions to the closing of the transactions contemplated in the MTA shall be satisfied and the transactions contemplated by the MTA shall close contemporaneously with the transactions contemplated by this Agreement.

 

(ix) All of the conditions to the closing of the transactions contemplated in the Other Agreements shall be satisfied and the transactions contemplated by the Other Agreements shall close contemporaneously with the transactions contemplated by this Agreement.

 

In the event that any of the conditions set forth in this Section 8(h) are not satisfied or waived, Purchaser may, by written notice to Seller, (i) terminate this Agreement in accordance with the provisions of Section 13(c) hereof; (ii) by written notice to Seller, elect to extend the Closing Date by ten (10) days to allow Seller to cure such failed condition to Purchaser’s satisfaction; or (iii) waive the failed condition and proceed to Closing; provided, however, that if such conditions have not been satisfied due to a default by Seller, Purchaser may instead pursue its remedies under Section 13.

 

Section 9. Prorations.

 

(a) Except for insurance premiums, at the Closing, all customarily prorated items including, without limitation, maintenance fees and assessments, standby fees and ad valorem taxes for the current year (based on the most recent tax statement[s] for the Property, adjusted for the most current tax rates and appraised value), and utility services being continued to the Property, shall be prorated as of 11:59 p.m. on the Closing Date (the “Cut-Off Time”). Seller shall be charged for and credited with all prorated items up to and including the Closing Date and Purchaser shall be charged for and credited with all of same after the Closing Date. In the event any amount to be prorated is unknown at the Closing, the Title Company’s best estimate of the amount therefor shall be used at the Closing, and thereafter, the Parties agree to adjust such prorations within ten (10) days after receipt of written notice, accompanied by copies of the statement(s) or invoice(s) therefor, from the Party receiving same. The Parties agree to undertake a final accounting for all prorated items (except ad valorem taxes, the proration of which shall occur within ten (10) days after receipt of tax statements for the year in which the Closing occurs) within forty-five (45) days after the Closing Date.

 

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(b) Standby fees, ad valorem taxes, maintenance fees, and assessments with respect to the Property for the year in which the Closing occurs shall, if not paid at Closing, be assumed by Purchaser and Purchaser hereby agrees to pay the same provided an applicable charge has been made against Seller on the closing statement at Closing.

 

(c) All base rent and additional rent actually received and other income actually received under the Lease in effect on the Closing Date shall be prorated as of the Cut-Off Time. Purchaser shall receive a credit (but without duplication) at Closing for any prepaid rents to the extent the same are applicable to the period following the Cut-Off Time. Non-delinquent rent collected by Seller after Closing attributable to periods from and after the Cut-Off Time shall be promptly remitted to Purchaser. Delinquent rent collected by Seller or Purchaser after the Cut-Off time shall be delivered by the recipient as follows: within fifteen (15) days after the receipt thereof, Seller and Purchaser agree that all rent received by Seller or Purchaser shall be applied first to then current rents, and then to delinquent rents for periods after the Cut-Off Time and then to delinquent rents for periods prior to the Cut-Off Time. Notwithstanding anything herein to the contrary, in no event shall Seller, after the Cut-Off Time, institute or commence collection actions or activities or any legal action against any tenant occupying space at the Property.

 

(d) All real estate taxes due and owing as of the Cut-Off Time, and all installments of assessments for public improvements or other matters or facilities which constitute a lien against the Property and are due and owing as of the Cut-Off Time, and all penalties and interest thereon, shall be paid by Seller on or before the Closing Date. Real estate taxes and assessments shall be prorated as of the Cut-Off Time. Purchaser shall receive a credit for any accrued but unpaid (and not yet due and payable) real estate taxes and assessments applicable to any period before the Cut-Off Time. If the amount of any such taxes and assessments has not been determined as of Closing, such credit shall be based on one hundred percent (100%) of the most recent ascertainable tax bills. Such taxes shall be re-prorated upon issuance of the final tax bill.

 

(e) Except for those utility charges payable by Tenant in accordance with the Lease, Seller shall pay all utility charges attributable to the Property until the Cut-Off Time and Purchaser shall pay all utility charges attributable to the Property from and after the Cut-Off Time. If final readings have not been taken, estimated charges shall be prorated between the parties and appropriate credits given. In the event such proration at Closing is based on estimated charges, after Closing, at such time as final bills for such water, sewer, and utility charges, common area maintenance charges, and other operating expenditures are available, the parties shall adjust the amounts apportioned at Closing based on the charges shown on the final bills, and Seller or Purchaser, as the case may be, shall pay to the other whatever amount shall be necessary to compensate for the difference within fifteen (15) days after receipt of such final bills.

 

(f) Premiums for hazard, liability, and any other insurance will not be prorated and Seller will terminate Seller’s insurance coverage with respect to the Property immediately after the Closing Date. Purchaser is solely responsible for obtaining Purchaser’s own insurance coverage from and after the Closing Date.

 

(g) Any security deposit described by the Lease (and interest thereon if required by law or contract to be earned thereon) shall be transferred or credited to Purchaser at Closing. As of Closing, Purchaser shall assume Seller’s obligations related to Security Deposits which are actually transferred from Seller to Purchaser or for which Purchaser receives a credit.

 

Section 10. Notices.

 

Any Notice must be in writing and enclosed in a sealed wrapper, properly addressed, and either (i) delivered by Federal Express or a messenger service, with instructions for delivery on the same day or the next day which is not a Saturday, Sunday, or legal holiday, or (ii) deposited with the domestic mail service of the United States Postal Service at a post office or official depository under the care and custody of the United States Postal Service with sufficient postage prepaid, sent by United States registered or certified mail, return receipt requested. The addresses to which any Notice is to be sent are as follows:

 

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  to Seller: Grace Properties Henrietta, LLC
    Attention: Jake Hallsted
    24616 Kingsland Boulevard
    Katy, Texas 77494
    Email: j.hallsted@pearlandvinetx.com
     
  with a copy to  
  Seller’s Counsel: Cordray & Schneller
    Attention: Howard F. Cordray, Jr.
    3306 Sul Ross Street
    Houston, Texas 77098
    Email: hcordray@celgal.com
     
  to Purchaser: Assisted 4 Living, Inc.
    5115 FL-64
     
    Bradenton, Florida 34208
    Attn: Louis Collier
    Electronic Mail: loucoljr@outlook.com
  with a copy to  
  Purchaser’s Counsel: Bass, Berry & Sims PLC
    Attention: Angela Humphreys
    150 Third Avenue South, Suite 2800
    Nashville, Tennessee 37201
    Email: ahumphreys@bassberry.com

 

or to such other address within the continental United States as any addressee(s) shall specify in writing, which change of address, in order to be effective, must actually have been received not fewer than five (5) days prior to the giving of any such Notice. Any Notice sent by Federal Express or a messenger service shall be timely given if receipted for by such messenger service on or before 11:59 p.m. on the date the Notice is to be given; and any Notice sent by mail shall be timely given if deposited with the domestic mail service of the United States Postal Service on or before 11:59 p.m. of the date the Notice is to be given. Any Notice sent in accordance with the preceding sentence shall be deemed to have been received on the next day after the receipt for the Notice by a messenger service; or on the date of the first attempted delivery of the mailed Notice, as shown on the United States Postal Service’ return receipt. Notwithstanding any other provision of this Section 10 to the contrary, any Notice shall be effective from and after the date actually received by an addressee, however addressed or delivered.

 

Section 11. Broker; Commission.

 

At and conditioned upon the Closing, Seller agrees to pay a commission (the “Commission”) to Senior Living Investment Brokerage (“Broker”) pursuant to the terms of a separate agreement. Seller hereby represents and warrants to Purchaser that Seller has not contacted, contracted, or entered into any agreement with any real estate broker, agent, finder, or any other party (except Broker) in connection with this transaction and that Seller has not taken any action which would result in any real estate broker’s, finder’s or other fees, or commissions being due or payable to any other party with respect to the transaction contemplated hereby. Purchaser hereby represents and warrants to Seller that Purchaser has not contacted, contracted, or entered into any agreement with any real estate broker, agent, finder or any other party (except Broker) in connection with this transaction and that Purchaser has not taken any action which would result in any real estate broker’s, finder’s or other fees, or commissions being due or payable to any other party with respect to the transaction contemplated hereby. Each party hereby indemnifies and agrees to hold the other party harmless from any loss, liability, damage, cost, or expense (including reasonable attorneys’ fees) resulting to the other party by reason of a breach of the representation and warranty made by such party herein. Notwithstanding anything to the contrary contained herein, the indemnities set forth in this Section 11 shall survive the Closing for the maximum period of time permitted by law.

 

Section 12. Assignment; Binding Effect; No Third Party Beneficiary; Limited Liability of Seller.

 

(a) Purchaser may assign this Agreement to an entity owned and controlled by Purchaser, controlling Purchaser or under common control with Purchaser without Seller’s prior written consent; provided that Purchaser and Purchaser’s assignee execute an Assignment and Assumption Agreement and provide a copy thereof to Seller on the Closing Date; and further provided that Purchaser shall remain liable for the agreements, obligations, and duties of Purchaser under this Agreement irrespective of such assignment. Any other proposed assignment shall require the prior written consent of Seller, such consent not to be unreasonably withheld, conditioned or delayed.

 

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(b) Except for the Parties and their respective heirs, successors, legal representatives, and assigns, no person or entity has any rights or benefits under this Agreement, and no person or entity is a third party beneficiary of this Agreement.

 

Section 13. Remedies.

 

(a) If Purchaser does not purchase the Property at the Closing for any reason other than a right to terminate provided in this Agreement; or in the event of any default by Purchaser hereunder after a ten (10) day written notice and cure period; then, at such time or at any time thereafter, Seller, as its sole and exclusive remedy, shall be entitled (but not required) to terminate this Agreement by notifying Purchaser thereof, in which event neither Party shall have any further rights, duties, or obligations hereunder, except as provided in Sections 13(e) and 26(b) hereof; and Seller shall be entitled to demand and receive from the Title Company cash in the amount of the Earnest Money, as agreed, reasonable liquidated damages for such default or occurrence, which amount the Parties agree is not intended as a penalty. Seller and Purchaser agree that the Earnest Money is a reasonable sum of agreed liquidated damages under the circumstances, because of the difficulty, inconvenience, and uncertainty of ascertaining Seller’s actual damages in such circumstances.

 

(b) If Seller fails to perform any of Seller’s obligations hereunder after a ten (10) day written notice and cure period for any reason other than (i) Purchaser’s failure to tender performance of Purchaser’s obligations hereunder, (ii) the prior termination of this Agreement, or (iii) an uncured default by Purchaser hereunder, then, Purchaser may elect to either (i) terminate this Agreement in accordance with the provisions of Section 13(c) hereof whereupon neither party hereto shall have any further rights or obligations hereunder except for those provisions that survive the termination of this Agreement; (ii) waive such failure and purchase the Property as if such failure had not occurred, without any reduction in the Purchase Price or (iii) enforce specific performance of this Agreement; provided that if specific performance is not available due to Seller transferring or conveying the Property to a third party other than Purchaser, Purchaser shall immediately be refunded the Earnest Money and Seller shall reimburse all of Purchaser’s out-of-pocket costs and expenses incurred in connection with this Agreement and the transaction contemplated hereunder, including, without limitation, Purchaser’s contract negotiations, due diligence investigations, closing preparations and other activities incident to the performance of Purchaser’s obligations hereunder up to a maximum of Fifty Thousand and No/100 Dollars ($50,000.00).

 

(c) Provided Purchaser timely notifies Seller of Purchaser’s election to terminate this Agreement, this Agreement shall be terminated effective on the date Seller receives such notice from Purchaser, and thereafter neither Party shall have any further rights, duties, or obligations hereunder, except as provided in Sections 6(d), 7, 11, 13(e), 15, and 17 hereof or otherwise expressly set forth herein, and, Purchaser shall be entitled to demand and receive the Earnest Money (less the Independent Contract Consideration which shall be paid to Seller) from the Title Company. If Purchaser fails to timely notify Seller of Purchaser’s election to terminate this Agreement, Purchaser shall irrevocably be deemed to have waived Purchaser’s remedy of terminating this Agreement and to have elected the alternative to termination of this Agreement set forth in such particular Sections of this Agreement.

 

(d) The remedy of terminating this Agreement provided to Seller in Sections 3 and 13(a) hereof, and to Purchaser in Sections 5(d)(i), 6(c), 8(b)(ii), and 14 hereof, is the sole and exclusive remedy available to such Parties for the circumstances, events, and conditions set forth in such Sections, in lieu of all other remedies, at law or in equity.

 

(e) In the event either Party terminates this Agreement in accordance with the provisions hereof, each party covenants and agrees to immediately execute, acknowledge, and deliver to the other party a recordable release of this Agreement.

 

(f) Except as specifically provided herein, Purchaser shall not be able to pursue any action to recover damages against Seller for a default by Seller. Upon a Seller default, Purchaser shall be able to pursue an action for specific performance or terminate the Agreement by written notice to Seller at which time the Earnest Money will be refunded to Purchaser.

 

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Section 14. Damage or Condemnation Prior to Closing; Seller Covenants.

 

(a) Risk of loss resulting from any condemnation or eminent domain proceeding that is completed before the Closing, and risk of loss to the Property due to fire, flood or any other cause before such Closing, shall remain with Seller. Should Seller receive notice of any condemnation or eminent domain proceedings against the Property or any damage due to any casualty event with respect to the Property prior to the Closing Date, Seller shall immediately inform Purchaser of such notice in writing. In the event any such proceedings or events are commenced or occurred or notice is given that such shall commence or occur, Purchaser may, at any time thereafter within thirty (30) days of such notice (a) terminate this Agreement, all Earnest Money being paid to Purchaser and thereupon, Seller and Purchaser shall be released of further obligation to each other except as otherwise provided herein, or (b) waive objection thereto and proceed to Closing, in which event the proceeds of any such award shall be received by Purchaser, Purchaser shall receive a credit in the amount of any applicable insurance deductible (in the case of a casualty), Seller shall assign, transfer and set over to Purchaser all of the right, title and interest of Seller in and to any awards that have been or that may thereafter be made for such taking, and Seller shall assign, transfer and set over to Purchaser any insurance proceeds that may thereafter be made for such damage or destruction, and the Purchase Price shall not be adjusted. If the Closing Date is within the aforesaid thirty (30) day period, then the Closing shall be extended to the next business day following the end of said thirty (30) day period. The Parties shall have the rights and duties set forth in this Section 14 rather than as prescribed by the Uniform Vendor and Purchaser Risk Act, Texas Property Code Section 5.007.

 

(b) Between the Effective Date and the earlier of the Closing Date or termination of this Agreement, Seller shall, at Seller’s sole cost and expense:

 

(i) operate, maintain, insure and repair the Property substantially in the same manner consistent with Seller’s operation, maintenance, insuring and repair of the Property prior to the Effective Date.

 

(ii) pay all utility and other service charges accrued through the date of Closing.

 

(iii) perform all obligations of Seller under all applicable laws, statutes, codes, acts, ordinances, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of all governmental authorities having jurisdiction over the Property.

 

(iv) subject to Section 14(a) above, repair all damage to the Property.

 

(v) promptly deliver to Purchaser copies of all written notices of violations of laws and promptly notify Purchaser of all judgments, claims and litigation affecting Seller or any part of the Property.

 

(vi) promptly after the delivery or receipt thereof, deliver to Purchaser copies of all written notices concerning Seller or the Property, which relate to the Lease, releases of hazardous materials affecting the Property or any actual or threatened condemnation of the Property or any portion thereof given by or on behalf of any federal, state or local agency, and copies of all other written correspondence sent, filed, served on or received by Seller from any federal, state or local agency affecting the Property from and after the Effective Date.

 

(vii) perform all of Seller’s obligations under the Leases.

 

(c) Between the Effective Date and the earlier of the Closing Date or termination of this Agreement, Seller shall not do, suffer or permit, or agree to do, any of the following, except to the extent permitted under this Agreement:

 

(i) sell, assign or otherwise convey, or create any right, title or interest whatsoever in or to the Property or any portion thereof or create or permit to exist any lien, assessment, encumbrance or charge thereon.

 

(ii) cancel, amend or modify any certificate, approval, license or permit held by Seller with respect to the Property or any part thereof which would be binding upon Purchaser after the Closing.

 

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(iii) approve any assignment or sublease or modify, extend or otherwise change any of the terms, covenants or conditions of the Lease or enter into any new lease or enter into any other obligations or agreements affecting the Property.

 

(iv) transfer, sell or otherwise dispose of the Property.

 

(v) change or attempt to change the current zoning of the Property.

 

(vi) incur any liability or obligation or enter into any agreement, written or otherwise, with respect to the Property, or any part thereof, the term of which extends beyond the Closing Date, or which would obligate Purchaser to assume and pay the same.

 

(vii) enter into any easement, servitude, covenant, restriction, or right of way for or burdening the Property, or any part thereof.

 

Section 15. Indemnity by a Party.

 

When one Party agrees to indemnify the other Party in this Agreement, at the sole cost and expense of the indemnifying Party, the indemnifying Party shall indemnify, keep indemnified, defend, and hold the indemnified Party harmless from and against any and all claims, demands, actions, causes of action, damages, losses, liabilities, fees (including reasonable attorney’s fees), costs (including costs of court), and expenses in any way or manner whatsoever attributable to any action, conduct, omission, or failure to act by the indemnifying Party, or any employee, agent, attorney, officer, director, independent contractor, licensee, invitee, or any other person or entity whatsoever acting or allegedly acting for or on behalf of the indemnifying Party, with respect to the matter(s) being indemnified against, including, without limitation, those due to personal injury or death. The indemnification provisions contained in this Section 15 shall survive the Closing Date for twelve (12) months.

 

Section 16. Entire Agreement.

 

This Agreement contains the entire agreement between the Parties concerning the Property. This Agreement supersedes all prior and contemporaneous oral and written representations, warranties, covenants, and agreements by or between the Parties with respect to the Property.

 

Section 17. Attorneys’ Fees.

 

If either Party employs an attorney to enforce or protect such Party’s interests arising under this Agreement or any other document executed by such Party in connection herewith, the non-prevailing Party in any such action, the finality of which is not legally contestable, agrees to pay to the prevailing Party all reasonable attorneys’ fees expended or incurred by the prevailing Party in connection therewith.

 

Section 18. Time is of the Essence.

 

TIME IS OF THE ESSENCE IN THE PERFORMANCE OF EACH PARTY’S RESPECTIVE OBLIGATIONS HEREUNDER.

 

Section 19. Saturday, Sunday, and Legal Holidays; Times.

 

If any date for the performance of any matter under this Agreement (including the date for the giving of Notice and the date on which any Notice is deemed to have been received, pursuant to Section 10 hereof) falls on a Saturday, Sunday, or legal holiday observed by national banks in Harris County, Texas, then such date shall be extended to the next calendar day that is not a Saturday, Sunday, or such legal holiday. All references herein to a particular time on a particular date shall refer to Central Time.

 

18
 

 

Section 20. Presumption Concerning Interpretation and Construction.

 

Although the first draft of this Agreement was prepared by counsel for Seller, both Parties and their respective counsel have reviewed and participated in the drafting of the final form of this Agreement. Accordingly, in the event of any conflict or ambiguity in the provisions of this Agreement, there shall be no presumption in favor of either Party with respect to the interpretation or construction hereof.

 

Section 21. Section Headings.

 

The headings of the various Sections in this Agreement are for the convenience of the Parties and do not alter, modify, or limit the provisions thereof and shall not be used in construing or interpreting the provisions thereof.

 

Section 22. No Recordation.

 

Neither Party shall file or record this Agreement or any evidence or memorandum of this Agreement in any public records. A violation of this provision shall constitute a default by such applicable Party hereunder.

 

Section 23. Severability.

 

This Agreement is intended to comply with and be performed in accordance with (and only to the extent permitted by) all applicable laws, statutes, ordinances, rules, and regulations. If any provision of this Agreement is held to be invalid or unenforceable for any reason or to any extent, the remainder of this Agreement shall not be affected thereby, and each provision of this Agreement shall be valid and enforced to the fullest extent not prohibited by law.

 

Section 24. Waivers and Modifications.

 

No delay on the part of a Party in exercising any rights or remedies hereunder shall operate as a waiver thereof, nor shall any specific waiver by a Party of any right or remedy hereunder operate or be construed as a waiver of any other right or remedy hereunder nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof, or the exercise of any other right or remedy hereunder (unless the provisions of this Agreement which establish any such right or remedy provide otherwise). No waiver of any right or remedy hereunder shall be valid or enforceable unless in writing and signed by the Party against whom such waiver is sought to be enforced. No modification of this Agreement shall be effective unless it is in writing and signed by both Parties.

 

Section 25. Governing Law; Venue.

 

The Parties acknowledge that this Agreement has been negotiated, executed, and delivered in the State of Texas, is intended to be performed wholly in the State of Texas, and the substantive laws of the State of Texas (without reference to choice of law principles) shall govern the interpretation and enforcement of this Agreement. The Parties agree that any court action brought to interpret or enforce any provision(s) of this Agreement, or otherwise relating to or arising from this Agreement, shall be commenced and maintained only in the District or County Court of Harris County, Texas (whichever court has amount-in-controversy jurisdiction), and each of the Parties irrevocably consents to exclusive jurisdiction and venue in such court for such purposes.

 

Section 26. Materiality, Survival.

 

(a) The representations, warranties, covenants, and agreements expressly set forth herein are material and have been relied on by the Parties in entering into this Agreement. Except as provided in Section 26(b) hereof, all such representations, warranties, covenants, and agreements shall not survive the Closing or a termination of this Agreement.

 

(b) Notwithstanding the Closing of the transaction contemplated in this Agreement or a termination of this Agreement, the provisions of Sections 6(d), 7, 9, 11, 13(e), 15, and 17 hereof and all other provisions of this Agreement which are described as surviving the Closing or a termination of this Agreement shall survive the Closing or a termination of this Agreement.

 

19
 

 

Section 27. Relationship of Parties.

 

Nothing contained in this Agreement shall be deemed or construed by any Party, person, or entity as creating any relationship of principal and agent, of partnership, of joint venture, or of any association whatsoever between the Parties. No provision of this Agreement and no act or failure to act of the Parties shall be deemed to create any relationship between the Parties other than the relationship of a buyer and a seller.

 

Section 28. Number and Gender of Words.

 

Whenever any number (singular or plural) is used herein, the same shall include and apply to any one or more thereof, and to each thereof, jointly and severally, and words of any gender shall include each other gender.

 

Section 29. Counterparts.

 

This Agreement may be executed in multiple counterparts, each of which is an original, but all of which shall constitute but one and the same document. The signatures of the Parties and the Title Company may appear on multiple separate signature pages.

 

Section 30. WAIVER OF CONSUMER RIGHTS.

 

AS A MATERIAL INDUCEMENT TO SELLER TO ENTER INTO THIS AGREEMENT, WITHOUT WHICH INDUCEMENT PURCHASER ACKNOWLEDGES THAT SELLER WOULD NOT ENTER INTO THIS AGREEMENT, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, WITHOUT RESERVATION, PURCHASER HEREBY EXPRESSLY WAIVES ALL OF PURCHASER’S RIGHTS UNDER THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. PURCHASER HEREBY EXPRESSLY WARRANTS, REPRESENTS, AND CERTIFIES TO SELLER THAT (A) PURCHASER IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION AS TO ANY PROVISION OF THIS AGREEMENT OR AS TO ANY MATTER CONTAINED HEREIN; (B) PURCHASER IS EXPERIENCED IN THE PURCHASE OF REAL PROPERTY AND THE ANALYSIS OF REAL PROPERTY; AND (C) PURCHASER IS REPRESENTED BY LEGAL COUNSEL OF PURCHASER’S OWN CHOOSING IN SEEKING, ACQUIRING, AND PURCHASING THE PROPERTY AND IN NEGOTIATING THE TERMS OF THIS AGREEMENT. AFTER CONSULTATION WITH AN ATTORNEY OF PURCHASER’S OWN SELECTION, PURCHASER VOLUNTARILY CONSENTS TO THIS WAIVER.

 

Section 31. NOTICE REGARDING POSSIBLE LIABILITY FOR ADDITIONAL TAXES.

 

If for the current ad valorem tax year the taxable value of the Property that is the subject of this Agreement is determined by a special appraisal method that allows for appraisal of the Property at less than market value, the person to whom the Property is transferred may not be allowed to qualify the Property for that special appraisal in a subsequent tax year and the Property may then be appraised at its full market value. In addition, the transfer of the Property or a subsequent change in the use of the Property may result in the imposition of an additional tax plus interest as a penalty for the transfer or the change in the use of the Property. The taxable value of the Property and the applicable method of appraisal for the current tax year is public information and may be obtained from the tax appraisal district established for the County in which the Property is located.

 

Section 32. NOTICE REGARDING POSSIBLE ANNEXATION.

 

If the Property that is the subject of this Agreement is located outside the limits of a municipality, the Property may now or later be included in the extraterritorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and extraterritorial jurisdiction. To determine if the Property is located within a municipality’s extraterritorial jurisdiction or is likely to be located within a municipality’s extraterritorial jurisdiction, contact all municipalities located in the general proximity of the Property for further information.

 

20
 

 

Section 33. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

EXECUTED in multiple original counterparts on the date written below the respective signatures of the Parties.

 

SELLER:   PURCHASER:
         
GRACE PROPERTIES HENRIETTA, LLC, a Texas limited liability company   REAL LIVING PROPERTY HOLDINGS – TEXAS, LLC, a Texas limited liability company
         
By: /s/ Jake Hallsted    By: /s/ Louis Collier
  Jake Hallsted, President    

Louis Collier, Chief Executive Officer

         
Date: June 21, 2021   Date:

June 21, 2021

 

21
 

 

As of the date shown below defined as the Effective Date, the Title Company hereby acknowledges receipt of this Agreement executed by Seller and Purchaser. The Title Company agrees to immediately deliver to Seller, Seller’s counsel, Purchaser, and Purchaser’s counsel (if any, named in Section 10 hereof) a copy of this Agreement executed by both Parties and the Title Company. The Title Company has assigned this Agreement GF No. _________________________.

 

  FIDELITY NATIONAL TITLE AGENCY, INC.
     
  By:  
  Name:  
  Title:  
     
  Date:   , 2021
    (the “Effective Date”)

 

On _________________, 2021, the Title Company received $_______________, representing the Earnest Money required hereunder. The Title Company hereby agrees to hold and disburse the Earnest Money and all other funds received by the Title Company in accordance with the provisions of this Agreement.

 

  FIDELITY NATIONAL TITLE AGENCY, INC.
     
  By:  
  Name:  
  Title:

 

22
 

 

EXHIBIT “A”

 

A 0.778 acre tract of land out of Block 22, Railroad Addition, Henrietta, Clay County, Texas, described as follows:

 

BEGINNING at an iron pipe found at the Northeast corner of Block 22, Railroad Addition to the City of Henrietta, Texas, according to the plat recorded in Volume D, Page 334, Clay County Deed Records, said iron rod being at the intersection of the West line of Red River Street and the South line of Bois d’ Arc Street;

 

THENCE with the East line of said Block 22 and the West line of Red River Street, South 00 degrees 49 minutes West 141.09 feet to a spike found for the Southeast corner of this tract;

 

THENCE North 89 degrees 08 minutes West 240.21 feet to an iron pine found in the West line of said Block 22, for the Southeast corner of this tract;

 

THENCE with the West line of said Block 22, North 00 degrees 44 minutes East 141.08 feet to an iron strap, the Northwest corner of Block 22, said iron strap being on the South line of Bois D’Arc Street, for the Northwest corner of this tract;

 

THENCE with the North line of said Block 22 and the South line of Bois d’ Arc Street, South 89 degrees OS minutes East 240.39 feet to the PLACE OF BEGINNING and containing 0.778 acres of land.

 

A-1
 

 

EXHIBIT “B” 1

 

SPECIAL WARRANTY DEED

 

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

 

THE STATE OF TEXAS §      
         
    §   KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF [CLAY]   §    

 

THAT [GRACE PROPERTIES HENRIETTA, LLC, a Texas limited liability company] (“Grantor”), for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) and other good and valuable consideration to Grantor in hand paid by ____________________________________________ (“Grantee”), whose mailing address is ______________________________________________________________________________ the receipt and sufficiency of which consideration is hereby acknowledged and confessed, subject to all of the matters set forth or referred to herein, has GRANTED, SOLD, AND CONVEYED, and by these presents does GRANT, SELL, AND CONVEY, unto Grantee all that certain tract or parcel of land containing approximately 0.778 acres, (the “Land”) lying and being situated in the State of Texas and County of Clay, more particularly described on Exhibit “A” attached hereto and made a part hereof for all purposes together with all rights and appurtenances thereto in anywise belonging to Grantor (the “Property”).

 

THIS CONVEYANCE is made and accepted subject to all matters of record listed on Exhibit “B” (the “Permitted Exceptions”) attached hereto and made part hereof for all purposes.

 

TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereto in any wise belonging unto Grantee, its successors and assigns, forever; and, subject to all of the matters set forth or referred to herein, Grantor does hereby bind itself and its successors to WARRANT and FOREVER DEFEND all and singular the Property unto Grantee, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same, or any part thereof, by, through, or under Grantor, but not otherwise.

 

AD VALOREM TAXES with respect to the Property for the current year have been prorated as of the date hereof and Grantee assumes and agrees to pay the same.

 

GRANTOR HAS EXECUTED and delivered this Special Warranty Deed and has granted, bargained, sold, and conveyed the Property, and Grantee has received and accepted this Special Warranty Deed and has purchased the Property, AS IS, WHERE IS, AND WITH ALL FAULTS, AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER EXCEPT FOR THE SPECIAL WARRANTY OF TITLE AS HEREIN PROVIDED OR AS EXPRESSLY SET FORTH IN THAT CERTAIN PURCHASE AND SALE AGREEMENT DATED __________, 2021 BY AND BETWEEN GRANTOR AND GRANTEE FOR THE PURCHASE AND SALE OF THE PROPERTY, EXPRESS OR IMPLIED, WRITTEN OR ORAL.

 

B-1
 

 

EXECUTED effective as of the _______ day of _____________, 202___.

 

  [GRACE PROPERTIES HENRIETTA, LLC, a Texas
  limited liability company]
   
  By:  
  Name:  
  Title:  

 

STATE OF TEXAS   §  
       
    §  
       
COUNTY OF HARRIS §    

 

BEFORE ME, the undersigned authority, on this day personally appeared _________________, known to me to be the person whose name is subscribed to the foregoing instrument, and he acknowledged to me that he is the _________________ of Grace Properties Henrietta, LLC, a Texas limited liability company, and that he executed the same for the purposes and consideration therein expressed in the capacity therein stated and as the act and deed of said limited liability companies, limited partnerships, and joint venture.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the _______ day of _____________, 202__.

 

STAMP NAME AND DATE OF    
EXPIRATION OF COMMISSION   NOTARY PUBLIC, STATE OF TEXAS
BELOW:    

 

B-2
 

 

RECEIVED, ACCEPTED, AND AGREED

 

TO BY GRANTEE:

 ____________________________________

 

By:    
Name:    
Title:    

 

THE STATE OF ________ §  
     
  §  
     
COUNTY OF ___________ §  

 

BEFORE ME, the undersigned authority, on this day personally appeared ____________________________________________, __________________________ of _____________________________________________, a ____________________________, known to me to be the person whose name is subscribed to the foregoing instrument, and he acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated and as the act and deed of said ____________________________.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the _______ day of _____________, 202__.

 

STAMP NAME AND DATE OF    
EXPIRATION OF COMMISSION   NOTARY PUBLIC, STATE OF ____________
BELOW:    
     
AFTER RECORDING RETURN TO:    

 

B-3

 

 

Exhibit 2.6

 

MANAGEMENT TRANSFER AGREEMENT

 

BY AND BETWEEN

 

GCC HENRIETTA, LLC, a Texas limited liability company

 

and

 

HENRIETTA Health and Rehab Center, LLC, a Texas limited liability company

 

 

Dated: June 21, 2021

 

 
 

 

Term     Page Number
       
ARTICLE I ASSETS, LIABILITIES, AND OTHER MATTERS 2
  1.1 Transferred Assets 2
  1.2 Excluded Liabilities 3
  1.3 Transfer of Resident Trust Funds 3
  1.4 Employees 3
  1.5 Management Fees and Accounts Receivable 5
  1.6 Prorations 8
  1.7 Access to Records 8
  1.8 Assumed Operating Contracts 9
  1.9 Operating Procedures Manuals 10
  1.10 Limitation 10
  1.11 Cost Report 10
  1.12 Provider Contracts 11
       
ARTICLE II THE CLOSING 11
       
  2.1 Time and Place of Closing 11
       
ARTICLE III TRANSFEROR’S REPRESENTATIONS AND WARRANTIES 12
       
  3.1 Organization and Standing of Transferor 12
  3.2 Authority 12
  3.3 Binding Effect 12
  3.4 Assets 12
  3.5 Licenses and Permits 12
  3.6 Surveys, etc 12
  3.7 Claims 13
  3.8 Collective Bargaining Agreements 13
  3.9 Compliance 13
  3.10 Cost Reports 16
  3.11 Real Estate Taxes 16
  3.12 Loan Defaults 16
  3.13 Provider Agreements 17
  3.14 Financial Statements 17
  3.15 Material Adverse Effect 17
  3.16 QIPP Documents 17

 

-ii-
 

 

ARTICLE IV NEW MANAGER’S REPRESENTATIONS AND WARRANTIES 18
       
  4.1 Organization and Standing of New Manager 18
  4.2 Authority 19
  4.3 Binding Effect 19
       
ARTICLE V OBLIGATIONS OF THE PARTIES 19
       
  5.1 Applications and Filings 19
  5.2 Management of Facility 20
       
ARTICLE VI CONDITIONS PRECEDENT TO NEW MANAGER’S OBLIGATIONS 22
       
  6.1 Representations and Warranties 22
  6.2 Performance of Covenants 22
  6.3 Delivery of Closing Certificate 22
  6.4 Transferred Assets at Closing 22
  6.5 Assignment and Assumption of Contracts 22
  6.6 Assignment and Assumption of Management Agreement 22
  6.7 Termination of Existing Lease 22
  6.8 PSA Closing 22
  6.9 Resident Trust Funds 23
  6.10 Other Documents 23
  6.11 Tenant’s Consent 23
  6.12 Compliance 23
  6.13 License 23
  6.14 Exhibits and Schedules 23
       
ARTICLE VII CONDITIONS PRECEDENT TO TRANSFEROR’S OBLIGATIONS 24
       
  7.1 Representations and Warranties 24
  7.2 Performance of Covenants 24
  7.3 Delivery of Closing Certificate 24
  7.4 Assignment and Assumption of Contracts 24
  7.5 Assignment and Assumption of Management Agreement 24
  7.6 Termination of Existing Lease 24
  7.7 PSA Closing 24
  7.8 Resident Trust Funds 24
  7.9 Tenant’s Consent 24
  7.10 Other Documents 24

 

-iii-
 

 

ARTICLE VIII SURVIVAL AND INDEMNIFICATION 24
       
  8.1 Indemnification by Transferor 24
  8.2 Indemnification by New Manager 25
  8.3 Procedure 25
  8.4 Limitations 26
  8.5 Exclusive Remedy 26
  8.6 Insurance Recoveries 26
  8.7 Survival 26
       
ARTICLE IX TERMINATION 27
       
  9.1 Termination 27
  9.2 Effect of Termination 28
       
ARTICLE X MISCELLANEOUS PROVISIONS 28
       
  10.1 Drafting 28
  10.2 Public Announcements 28
  10.3 Costs and Expenses 28
  10.4 Performance 28
  10.5 Benefit and Assignment 29
  10.6 Effect and Construction of this Agreement 29
  10.7 Notices 29
  10.8 Waiver, Discharge, etc 30
  10.9 Governing Law; Disputes 30
  10.10 Further Assurances 30
  10.11 Third-Party Beneficiaries 30
  10.12 Counterparts 30
  10.13 Costs and Attorneys’ Fees 30
  10.14 Severability 30
  10.15 Entire Agreement 30

 

-iv-
 

 

MANAGEMENT TRANSFER AGREEMENT

 

This Management Transfer Agreement (“Agreement”), dated as of June 21, 2021 (the “Execution Date”), is by and between GCC HENRIETTA, LLC, a Texas limited liability company (the “Transferor”), Henrietta Health and Rehab Center, LLC, a Texas limited liability company (the “New Manager”).

 

WHEREAS, pursuant to a Lease, dated effective as of September 1, 2014 (as amended, the “Existing Lease”), between Nocona Hospital District, a body politic and corporate and a political subdivision of the State of Texas, as tenant (the “Tenant”) and Grace Properties Henrietta, LLC, a Texas limited liability company (“Landlord”), Tenant currently leases from Landlord the skilled nursing facility known as Grace Care Center of Henrietta, located at 807 W Bois D’Arc Street, Henrietta, TX 76365 (the “Facility”);

 

WHEREAS, Tenant is the current licensed operator of the Facility;

 

WHEREAS, Transferor entered into a Management Agreement with Tenant, dated effective as of September 1, 2017 (the “Management Agreement”), pursuant to which Tenant engaged Transferor to manage the day-to-day activities of the Facility;

 

WHEREAS, pursuant to that certain Purchase and Sale Agreement, dated the date hereof (the “PSA”), between Landlord and Real Living Property Holdings-Texas, LLC, a Texas limited liability company (“Buyer”), Landlord has agreed to sell the real property, improvements, and certain other assets comprising the Facility (the “PSA Assets”) to Buyer, and Buyer has agreed to purchase the PSA Assets from Landlord;

 

WHEREAS, effective as of the closing under the PSA, Buyer shall lease the PSA Assets to New Manager and New Manager shall manage the PSA Assets for Tenant; and

 

WHEREAS, the parties wish to provide for an orderly transition of the operations of the Facility from the Transferor to the New Manager simultaneously with the transfer of the PSA Assets to Buyer pursuant to the PSA.

 

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

 

1
 

 

ARTICLE I
ASSETS, LIABILITIES, AND OTHER MATTERS

 

1.1 Transferred Assets. Subject to the terms and conditions of this Agreement, at the Effective Time (as defined below), Transferor will transfer, free and clear of any charge, claim, equitable interest, license, lien, option, pledge, security interest, mortgage, encroachment, easement or restriction of any kind (“Encumbrance”), to New Manager all of Transferor’s right, title and interest in and to all assets, properties and rights used or held for use in the management and operation by Transferor of the Facility (the “Business”), other than Excluded MTA Assets, including, but not limited to, the following: (a) all furniture, fixtures, furnishings, equipment, computers, machinery, mechanical systems, security and alarm systems, nurse call systems, automobiles, vans, buses or other vehicles or equipment used in connection with the Facility and the Business and all other tangible personal property located at or used in connection with the operation of the Facility, including, without limitation, all supplies, inventory, consumables, perishable and non-perishable food products, and other similar property used in the operation of the Facility (“Inventory”); (b) all contracts used or held for use in the Business, other than the Excluded Contracts (collectively, the “Assumed Contracts”); (c) subject to Section 1.7, all books, data and records (including Word files, Excel files, PowerPoint files and other electronic versions thereof) related exclusively to the operation of the Facility, including emails, financial and accounting records, contacts, calendars, customer lists, referral source lists, regulatory surveys and reports, incident tracking reports, advertising and marketing materials and competitive analyses, all policy and procedure manuals, all records and reports (except for such records and reports where transfer is prohibited by applicable laws) relating to any or all residents residing at the Facility from time to time on or after the Execution Date, but only to the extent such residents remain residents on the Closing Date, or relating to residents residing at the Facility prior to the Execution Date but who are the subject of any claim, inquiry, audit, order, or proceeding by any governmental authority or otherwise, made or occurring on or after the Execution Date, all employee records, but only to the extent such employee records are for Hired Employees, all leads regarding prospective residents, all blueprints, construction and architects’ plans and drawings, and all engineering data and reports; and copies of all such books, data and records that relate not only to the operation of the Facility but also to operations retained by Transferor or its affiliates; (d) all security deposits, prepaid rent, move-in fees, utility deposits, other prepaid items and deposits related to the Facility and residents’ personal funds accounts, subject to the terms and conditions of the applicable residency agreements, tenant leases and any other written agreements provided to New Manager under which personal funds are held (collectively, “Trust Funds”); (e) (i) the trademarks, trade names, service marks, domain names and all variations thereof used exclusively in connection with the Business; (ii) all telephone and facsimile numbers relating solely to the Facility (including all “800” numbers) and all post office box addresses associated solely with the Facility; and (iii) all other intellectual property used exclusively in connection with the Business; and (f) all right, title and interest of Transferor in any and all other items of tangible and intangible personal property used or useful in connection with the leasing, use, operation, management or maintenance of the Facility, and all goodwill of Transferor associated with the Business (collectively, “Transferred Assets”); provided, however, that to the extent any of the foregoing assets are leased assets, or vendor owned assets, then such assets shall be excluded from the Transferred Assets, unless New Manager agrees to assume the underlying leases or vendor contracts, as applicable, related to such leased assets or vendor owned assets. Notwithstanding anything to the contrary contained in this Agreement, the following assets of Transferor shall not be transferred to New Manager and shall not constitute Transferred Assets: cash, cash equivalents, accounts receivable, notes receivable, employee benefit plans, capital stock, tax refunds, equipment or other items that are leased pursuant to leases that are not assigned to New Manager, and other items and contracts specifically designated as an excluded asset on Schedule 1.1 (collectively, the “Excluded MTA Assets), which such schedule may be updated by New Manager prior to Closing, including to add contracts that New Manager elects to not assume. In furtherance of the foregoing, at the Closing, Transferor will execute and deliver to New Manager a Bill of Sale and Assignment and Assumption Agreement (“Bill of Sale”) substantially in the form of Exhibit 1.1.

 

2
 

 

1.2 Excluded Liabilities. Except as expressly provided in this Agreement, New Manager shall not assume any claims, lawsuits, liabilities, obligations or debts of Transferor (“Excluded Liabilities”), including without limitation: (a) malpractice or other tort claims to the extent based on acts or omissions of Transferor or its employees or contractors occurring before the Effective Time, or claims for breach of contract or for indemnification to the extent based on acts or omissions of Transferor or its employees or contractors occurring before the Effective Time; (b) any accounts payable, taxes, or other obligation or liability of Transferor to pay money incurred by Transferor prior to the Effective Time; and (c) any other obligations or liabilities incurred by Transferor prior to the Effective Time. Transferor agrees to timely perform and discharge all Excluded Liabilities.

 

1.3 Transfer of Trust Funds.

 

(a) At the Closing, Transferor shall deliver to New Manager a list that, to the best of its knowledge, will be a true, correct and complete description of any Trust Funds held by Transferor as of the Effective Time.

 

(b) Effective as of the Effective Time, Transferor shall transfer all of Transferor’s right, title and interest in the Trust Funds and New Manager shall assume all of Transferor’s right, title and interest in and to the Trust Funds in trust for the residents or tenants, as applicable, in accordance with applicable statutory and regulatory requirements. Within ten (10) business days after the Closing Date, Transferor will reconcile and pay over the Trust Funds to New Manager, in trust for the residents or tenants, as applicable, along with a true, correct and complete accounting of the Trust Funds.

 

1.4 Employees.

 

(a) Attached hereto as Schedule 1.4 is a schedule (“Employee Schedule”) which reflects, as of the Execution Date, a listing of all Facility-based employment positions, rates of pay, earned but unused paid time off (“PTO”) and original hire dates, as well as which, if any, employees are then on medical disability or leaves of absence and their status as exempt or non-exempt. Transferor will terminate the employment of each of the Facility Employees (as defined below) as of the Effective Time. Transferor represents and warrants the Employee Schedule is true, accurate and complete as of the Execution Date and will be true, accurate and complete as of the Effective Time (provided, that Transferor shall update such Employee Schedule no later than three business days prior to Closing to reflect changes thereto between the Execution Date and the Closing Date).

 

(b) On or before the Effective Time, New Manager or its affiliate or a third-party contractor designated by New Manager (“New Employer”) shall offer to hire, on a probationary basis, each of Transferor’s employees who is employed at the Facility as of the Effective Time (“Facility Employees”), including any such employees who are on medical disability or leaves of absence and who worked at the Facility immediately prior to such disability or leave. Any such offer of employment to a Facility Employee by New Employer shall be to perform comparable services, in such position as is comparable to the position such Facility Employee held with Transferor as of the Effective Time, provided that New Employer may offer compensation to such Facility Employees at levels commensurate with compensation levels paid to other employees of New Employer or its affiliates holding comparable positions so long as any change in compensation levels does not result in any constructive discharge of any such Facility Employee or the breach of any employment contract assumed by New Employer hereunder. Transferor shall have the right (but not the obligation) to employ or offer to employ any Facility Employee who declines New Employer’s offer of employment.

 

3
 

 

(c) New Employer shall hire at the Effective Time, on a probationary basis, each Facility Employee who elects to accept employment with New Employer in accordance with the terms of Section 1.4(b) (all of such employees who accept employment with New Employer being herein called “Hired Employees”) and shall indemnify and hold Transferor harmless from and against any losses arising from or relating to any subsequent termination of any such employee by New Employer.

 

(d) Transferor will be responsible at Transferor’s own cost and expense for (i) the payment of any termination or severance payment for any current or former employee of Transferor who is not a Hired Employee and for all amounts owing or accruing with respect to any employee prior to the Effective Time and (ii) the provision of health plan continuation coverage (including administrative and notice obligations) under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), or any other law, under any benefit plan with respect to any M&A qualified beneficiaries as such term is defined in Section 54.4980 B-9 (Q&A 4) of U.S. Treasury regulations. Except as set forth in Section 1.4(f), Transferor will be liable for any claims made or incurred by its employees and their beneficiaries under any benefit plan maintained by or for the benefit of Transferor, and neither New Employer nor its affiliates will have any responsibility, liability or obligation, to such employees, their beneficiaries or any other person with respect to any benefit plan maintained by or for Transferor.

 

(e) Transferor shall pay to each Facility Employee, on that date which, but for the Closing, would have been the next regularly scheduled payroll date for such employee following the Closing, an amount equal to any and all accrued salary earned by such employee as of the Effective Time.

 

(f) New Employer shall assume liability for all earned but unused PTO of each Hired Employee as of the Closing Date. At the Closing, Transferor shall pay to New Employer an amount equal to the cash value of all earned but unused PTO for the Hired Employees (as determined in accordance with Transferor’s policies and procedures and subject to any applicable collective bargaining agreement) as of such date and is assumed by New Employer. Transferor shall pay to each Facility Employee who is not a Hired Employee, the cash value of all earned but unused PTO for such employee.

 

(g) Nothing in this Agreement shall create any rights in favor of any person not a party hereto, including the Facility Employees, or constitute an employment agreement or condition of employment for any employee of Transferor.

 

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(h) As of the Effective Time, all Hired Employees who, immediately prior to the Effective Time, participated in group health insurance coverage sponsored by Transferor, shall be eligible for participation in a group health plan (as defined for purposes of Internal Revenue Code Section 4980B) established and maintained by New Employer. To the extent permissible under the plan of New Employer, all such Hired Employees shall be covered pursuant to New Employer’s group health and/or benefit plan, unless they are under a waiting period with Transferor at the Effective Time, in which case they shall be required to complete their waiting period while under New Employer’s plan or in accordance with the terms of New Employer’s benefit plan.

 

(i) New Manager acknowledges and agrees that the provisions of Sections 1.4(b) and (c) are designed, in part, to ensure that Transferor is not required to give notice to employees of the Facility at the “closure” thereof under the Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any comparable state law.

 

(j) Subsequent to the Effective Time, New Manager shall allow Transferor and its agents and representatives to have reasonable access (upon reasonable prior notice and during normal business hours) to all Hired Employees, to the extent reasonably necessary to enable Transferor to investigate and defend employee or other claims, or for any other reasonable purpose.

 

1.5 Management Fees and Accounts Receivable.

 

(a) Notwithstanding anything to the contrary herein or in the Assignment and Assumption of Management Agreement, Transferor owns and shall retain its right, title and interest in and to all unpaid fees under the Management Agreement that relate to services provided prior to the Effective Time, including, but not limited to, any fees arising from rate adjustments which relate to the period prior to the Effective Time even if such adjustments occur on or after the Effective Time.

 

(b) Payments received by Transferor or New Manager after the Effective Time with respect to the Facility from the Tenant or from third-party payors, such as the Medicare Program, the Medicaid Program, the Veteran’s Administration, or managed care companies or health maintenance organizations or on behalf of private pay patients, shall be handled as follows:

 

(i) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate solely to periods prior to the Effective Time, then (A) in the event that such payments are received by New Manager, New Manager shall promptly deposit such payments directly into Transferor’s operating account for the Facility (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment, and until so deposited, shall be held in trust for the benefit of Transferor and will be paid to Transferor) and (B) in the event that such payments are received by Transferor, Transferor shall retain the payments;

 

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(ii) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate solely to periods after the Effective Time, then (A) in the event that such payments are received by New Manager, New Manager shall retain the payments and (B) in the event that such payments are received by Transferor, Transferor shall promptly forward such payments to New Manager (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment, and until so deposited, shall be held in trust for the benefit of New Manager and will be paid to New Manager without setoff or withholding of any kind);

 

(iii) if the accompanying remittance advice indicates, or if the parties agree, that the payments relate to periods both prior to and after the Effective Time, then, (A) if such payment is received by New Manager, New Manager shall promptly deposit the same in its depository institution for negotiation and collection and promptly following receipt by New Manager of collected funds of such payment (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment) New Manager shall deposit into Transferor’s operating account for the Facility the amount of such payment relating to periods prior to the Effective Time, and (B) if such payment is received by Transferor, Transferor shall promptly deposit the same in its depository institution for negotiation and collection and promptly following receipt by Transferor of collected funds of such payment (but in any event, not later than ten (10) business days following the finalization of the “Due To/Due From” Schedule referenced in Section 1.5(f), or if after 180 days, thirty (30) days following receipt of such payment) Transferor shall forward to New Manager the amount of such payment relating to periods following the Effective Time.

 

(iv) With respect to a payment received within sixty (60) days after the Closing Date, if the accompanying remittance advice does not indicate the period to which a payment relates or if there is no accompanying remittance advice and if the parties do not otherwise agree as to how to apply such payment, then, for the purposes of subparagraph (iii), above, the parties will be deemed to have agreed that such payment shall be applied first to the payor’s pre-Effective Time balances and that any remaining portion shall be applied to such payor’s post-Effective Time balances. With respect to non-designated payments received more than sixty (60) days after the Closing Date, such payments will first be applied 100% to any balances relating to post-Effective Time, with the excess, if any, applied to the extent of any balances due for services rendered pre-Effective Time.

 

(v) Notwithstanding anything contained herein to the contrary, any payments received with respect to the Quality Incentive Payment Program (a “QIPP Payment”) within two (2) years after the Closing Date, if the accompanying remittance advice does not indicate the period to which such QIPP Payment relates or if there is no accompanying remittance advice and if the parties do not otherwise agree as to how to apply such QIPP Payment, then, for the purposes of subparagraph (iii), above, the parties will be deemed to have agreed that such QIPP Payment shall be applied first to the payor’s pre-Effective Time balances and that any remaining portion shall be applied to such payor’s post-Effective Time balances. With respect to non-designated QIPP Payments received more than two (2) years after the Closing Date, such QIPP Payments will first be applied 100% to any balances relating to post-Effective Time, with the excess, if any, applied to the extent of any balances due for services rendered pre-Effective Time.

 

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(c) If the parties mutually determine that any payment hereunder was misapplied by the parties, the party which erroneously received said payment shall promptly remit the same to the other after said determination is made.

 

(d) For a period of two (2) years after the Effective Time, New Manager and Transferor shall, upon reasonable notice and during normal business hours, have the right to inspect all cash receipts and other books and records (including, without limitation, bank statements) of the other respective party in order to confirm the other party’s compliance with the obligations imposed on it under this Section.

 

(e) Failure to forward to the other any payment received by such party in accordance with the terms of this Section 1.5, shall entitle the other party (among all other remedies allowed by law and this Agreement) to interest on the amount owed at the rate of 12% per annum, simple interest, until such payment has been paid. The payment of any interest imposed under this Section 1.5(e), if any, shall be made together with the underlying payment therefor.

 

(f) New Manager and Transferor shall cause the Facility staff to cooperate and assist Transferor, consistent with past practice, in the preparation of Transferor’s final month-end closing processing and billing after Closing at no cost to Transferor. New Manager and Transferor agree to prepare and provide to each other a “Due To/Due From” Schedule no less than once per month for the period of one hundred eighty (180) days following the Effective Time with supporting documentation, so that each party hereto can determine the status of funds owed to it pursuant to this Section 1.5, and thereafter as necessary (but no less than once per month) until Transferor has collected all amounts due to it.

 

(g) In connection with services rendered to residents with pending Medicaid applications (collectively, the “Pending Medicaid Applicants”), New Manager shall (i) provide Transferor with a written monthly progress report on the Medicaid application status of each Pending Medicaid Applicant until such time as all Pending Medicaid Applicants have been approved or denied by Medicaid, and (ii) if New Manager receives any notice or correspondence regarding such applications, New Manager shall provide such notice or correspondence to Transferor within five (5) business days following receipt. New Manager shall cooperate with and provide Transferor with such documents and information as Transferor shall reasonably request to enable Transferor to contest any denial or negative determinations by Medicaid with respect to the Pending Medicaid Applicants.

 

(h) Notwithstanding anything herein to the contrary, New Manager acknowledges and agrees that, for a period of thirty (30) says following the Closing Date, all revenue collected into the Depository Account (as defined in the Management Agreement) shall continue to be transferred over to the Facility Operating Account (as defined in the Management Agreement) controlled by Transferor, and that Transferor shall remit and reconcile such collections in accordance with the terms of this Section 1.5.

 

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1.6 Prorations.

 

(a) Following the Closing, utility charges for the billing period in which the Effective Time occurs, real and personal property taxes attributable to the Facility, and any other items of revenue or expense attributable to the Facility (“Prorated Items”) shall be prorated between Transferor and New Manager as of the Effective Time and when such charges become payable consistent with Transferor’s past practice. In general, such prorations shall be made so as to reimburse Transferor for prepaid expenses to the extent such expense is attributable to periods after the Effective Time and to charge Transferor for expenses accrued but unpaid as of the Effective Time.

 

(b) All such prorations shall be made on the basis of actual days elapsed in the relevant accounting, billing or revenue period and shall be based on the most recent information available to Transferor.

 

(c) Immediately after the Effective Time, New Manager will transfer all petty cash from the Facility or its operating accounts to a deposit account designated by Transferor. New Manager shall be responsible to provide any petty cash requirements of the Facility from and after the Effective Time.

 

1.7 Access to Records.

 

(a) All patient medical records, financial records and employee records relating to the Facility that are in Transferor’s possession or control shall remain at the Facility as of the Effective Time. Nothing herein shall be construed as precluding Transferor from removing from the Facility as of the Effective Time (i) the originals of financial records that relate to its management at the Facility (provided that copies thereof will be remain at the Facility and be accessible to New Manager) and/or to its overall corporate operations, and (ii) the records of former employees of the Facility who will not be hired by New Manager. Notwithstanding the foregoing, in the case of the records described in clause (ii), Transferor shall give New Manager reasonable access to any information in any such removed records as New Manager may reasonably demonstrate is necessary for the efficient operation, maintenance and defense of the Facility by New Manager.

 

(b) To the extent permitted by applicable law, subsequent to the Effective Time, New Manager shall allow Transferor and its agents and representatives to have reasonable access to (upon reasonable prior notice and during normal business hours), and to make copies of, at Transferor’s expense, the books and records and supporting material of the Facility relating to any period prior to the Effective Time, to the extent reasonably necessary to enable Transferor to investigate and defend employee or other claims, to file or defend tax returns and to verify accounts receivable collections due Transferor, or for any other reasonable purpose.

 

(c) To the extent permitted by applicable law, Transferor shall be entitled to remove the originals of any records delivered to New Manager, for purposes of litigation involving a resident or employee to whom such record relates, if an officer of a court of competent jurisdiction, agency official or counsel for Transferor certifies that such original must be produced in order to comply with applicable law or the order of a court of competent jurisdiction in connection with such litigation. Any record so removed shall promptly be returned to New Manager following its use.

 

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(d) New Manager agrees to maintain at its own expense all such books, records and other material comprising records of the Facility’s management prior to the Effective Time that have been received by New Manager from Transferor or otherwise, including, but not limited to, resident records and records of resident funds, to the extent required by law, but in no event for less than three (3) years.

 

(e) Notwithstanding anything herein to the contrary, for a period of sixty (60) days after the Closing Date, Transferor shall, upon request and at New Manager’s expense, (i) use reasonable efforts to permit the transfer of the Facility’s current electronic resident medical records data (including MDS history), in readily available form for use in New Manager’s computer applications, and (ii) provide New Manager with view-and-print access to Transferor’s electronic medical records system, to enable New Manager, at its expense, to print and take physical delivery of such resident medical records.

 

(f) Notwithstanding anything in this Agreement to the contrary, the right to inspect and obtain any records from Transferor or New Manager shall be subject to all provisions of law regarding confidentiality and privacy. Transferor and New Manager acknowledge and agree that the definition of “health care operations” set forth in 45 CFR 164.501, pursuant to HIPAA, as that term is defined in Section 3.9(d) of this Agreement, permits the parties to use and disclose individually identifiable resident and employee health information in order to assure a smooth transition of facility operations. Transferor and New Manager agree to comply with, and to cause their respective employees, subcontractors and agents to comply with, applicable state and federal laws and regulations relating to the security, protection and privacy of individually identifiable health care information, including, without limitation, the regulations promulgated pursuant to HIPAA, and any amendments to those regulations that may occur from time to time. Transferor agrees that their employees, subcontractors, and agents shall maintain the confidentiality of resident and employee records and medical information, in accordance with applicable state and federal laws, rules and regulations. New Manager and their employees, subcontractors, or agents agree not to disclose protected health information to any third-party except where permitted or required by law or where the resident or employee expressly approves such disclosure in writing.

 

1.8 Unassigned Contracts. Nothing in this Agreement will be construed as an attempt to agree to assign any contract, certificate, license or other asset that is in law or by agreement non-assignable without the consent of the other party or parties thereto, or of any governmental authority, as the case may be, unless such consent will be given. Transferor will use commercially reasonable efforts to obtain all such necessary consents. In order, however, that the full value of every such contract, certificate, license or other asset and all claims and demands under such contracts may be realized, Transferor hereby covenants and agrees with New Manager that Transferor will, at the request and under the direction of New Manager, in the name of Transferor or otherwise, as New Manager will specify and as will be permitted by law, take all such reasonable actions and do or cause to be done all such reasonable things as shall be necessary or proper (i) to preserve the rights and obligations of Transferor under such contracts, certificates, licenses and other assets, and (ii) for, and to facilitate, the collection of the moneys due and payable for the period after the Closing Date, and to become due and payable, to Transferor in and under every such contract and in respect of every such claim and demand for the period after the Closing Date, and Transferor will hold the same for the benefit of, and will pay the same over to, New Manager.

 

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1.9 Reserved.

 

1.10 Limitation. New Manager acknowledges that, except as expressly set forth in this Agreement or the Transferor’s Transaction Documents, Transferor makes no representation, warranty, or covenant whatsoever with respect to any matter, thing or event. Without limiting the generality of the foregoing, but subject to any express representations and warranties set forth herein or in the Transferor’s Transaction Documents, New Manager shall accept the Transferred Assets and the Facility in their “AS IS” “WHERE IS” condition as of the Execution Date, subject to normal wear and tear. New Manager acknowledges, on behalf of itself and its affiliates, that neither Transferor nor any of Transferor’s representatives has made any representation or warranty to New Manager or to any of New Manager’s affiliates, except as specifically set forth in this Agreement. No representation or warranty to New Manager is made with respect to any estimates, financial projections, or forecasts relating to Transferor, the Transferred Assets or the Facility that may have been delivered or mentioned to New Manager including the reasonableness of the assumptions underlying such estimates, projections and forecasts. With respect to any such estimate, projection or forecast that may have been mentioned delivered by or on behalf of Transferor, New Manager acknowledges that (i) there are uncertainties inherent in attempting to make such estimates, projections and forecasts, (ii) New Manager is familiar with such uncertainties, (iii) New Manager is taking full responsibility for making its own evaluation of the adequacy and accuracy of all such estimates, projections and forecasts so furnished to it, and (iv) New Manager shall have no claim against Transferor or any other person with respect thereto. New Manager agrees that, in entering into this Agreement and all of the documents contemplated by this Agreement, it has conducted due diligence with respect to the financial condition of the Facility, the Facility’s provider numbers and provider and reimbursement agreements, the Transferred Assets, the Operating Contracts and the Facility Employees and that New Manager has not relied on any express or implied representation or warranty by Transferor not expressly contained in this Agreement. Notwithstanding the foregoing, nothing herein shall preclude, prohibit or otherwise affect any claim by New Manager for fraud.

 

1.11 Cost Report.

 

(a) Following the Closing, to the extent any Medicare and/or Medicaid cost reports are due that cover periods occurring prior to the Effective Time and after the Effective Time, New Manager shall be required to timely file any such cost reports on behalf of Tenant. Transferor agrees to timely provide to New Manager all information necessary for any such cost reports related to periods occurring prior to the Effective Time and to reasonably cooperate with New Manager in preparation of cost reports with respect to the periods after the Effective Time.

 

(b) Following the Closing, New Manager agrees to cooperate with Transferor on a commercially reasonable basis to (i) include in Tenant’s Medicare cost reports for the initial two (2) full cost report years for the Facility such amounts for pre-Effective Time Medicare bad debt as may be certified in writing by an officer of Fundamental Administrative Services, LLC (“FAS”), to New Manager not later than thirty (30) days prior to the respective due dates of such cost reports, and (ii) promptly pay over to Transferor any and all amounts as may be paid to New Manager as Medicare bad debt reimbursement for the pre-Effective Time bad debt amounts included on such cost reports. In addition, Transferor will promptly pay over to New Manager any and all amounts that are recouped within the New Manager’s effective period forward from the Transferor’s pre-Effective Time period. In order for FAS to timely provide the Medicare bad debt information for such purpose, New Manager agrees to notify Transferor of Tenant’s cost report year for the Facility promptly upon the determination of the same. FAS may participate in any audit or review of pre-Effective Time cost reports related to bad debt at its own expense.

 

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1.12 Provider Contracts. Effective as of the Closing Date, Transferor’s rights and interests in and to its provider numbers and provider and reimbursement agreements with any third-party payor programs shall be assigned to New Manager, but only to the extent such provider numbers and agreements are in the name of Transferor and are assignable.

 

ARTICLE II
THE CLOSING; Purchase Price

 

2.1 Time and Place of Closing. Subject to the satisfaction of the conditions set forth herein, the actions contemplated to consummate the transactions under this Agreement (“Closing”) shall take place by email exchange of documents (or such other mutually acceptable remote methodology) simultaneously with the closing under the PSA. The date on which the Closing takes place is referred to herein as the “Closing Date.” Notwithstanding the actual time at which the Closing occurs, the time (the “Effective Time”) as of which the Closing shall be deemed to be effective and the risk of loss shall pass from Transferor to New Manager shall be 12:00:01 a.m. (local time where the Facility is located) on the Closing Date.

 

2.2 Purchase Price. The purchase price for the Transferred Assets shall be an amount equal to $275,000 (the “Purchase Price”). New Manager shall pay the Purchase Price (as adjusted pursuant to the terms of hereof for certain credits and debits contemplated hereby), less $25,000 which will be deposited with the Escrow Agent pursuant to Section 5.8 to Transferor by wire transfer of immediately available funds to an account designated by Transferor at least three business days prior to Closing.

 

2.3 Allocation. The Purchase Price will be allocated in the manner proposed by New Manager as soon as practicable following the Closing and reasonably agreed to by Transferor. After the Closing, the parties shall make consistent use of such Purchase Price allocation for all Tax purposes and in any Tax Returns filed with the Internal Revenue Service in respect thereof, including IRS Form 8594.

 

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ARTICLE III
TRANSFEROR’S REPRESENTATIONS AND WARRANTIES

 

Transferor represents and warrants to New Manager as of the date hereof and as of the Closing as follows:

 

3.1 Organization and Standing of Transferor. Transferor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas. Transferor has the power and authority to own the Transferred Assets and to conduct the business presently being conducted by Transferor at the Facility.

 

3.2 Authority. Transferor has the full limited liability company power and authority to make, execute, deliver and perform this Agreement, including the schedules, exhibits, and other instruments and documents required or contemplated hereby (the “Transferor’s Transaction Documents”). Such execution, delivery, performance and consummation have been duly authorized by all necessary action, limited liability company or otherwise, on the part of Transferor and its members.

 

3.3 Binding Effect. The Transferor’s Transaction Documents, when executed by Transferor constitute the valid and binding obligations of Transferor, enforceable against Transferor in accordance with their respective terms.

 

3.4 Assets. The Transferred Assets, together with the Excluded MTA Assets, the Excluded Assets (as defined in PSA) and the Personal Property (as defined in the PSA), includes all assets, furniture, fixtures, machinery, supplies, inventory, equipment and other personal property used in the Business in the ordinary course as the Business has been operated by Transferor. Transferor has sole and exclusive, good and marketable title to, or, in the case of property held under a lease or other contractual obligation, a sole and exclusive, enforceable leasehold interest in, or contractual right to use, all of the Transferred Assets. Other than as set forth on Schedule 3.4, Transferor owns the Transferred Assets, free and clear of all Encumbrances. The Inventory is of a sufficient quantity and condition for the normal operation of the Business in the ordinary course of business and all requirements of governmental authorities.

 

3.5 Licenses and Permits. Transferor and Tenant possess, and have possessed, all licenses, permits, accreditations, government program provider agreements and other government authorizations issued or required by governmental authorities or accreditation agencies in connection with the ownership, maintenance and operation of the Facility or that are otherwise necessary to conduct Transferor and Tenant’s respective businesses with respect to the Facility (collectively, “Licenses”). Without limiting the foregoing, Transferor or Tenant (i) possesses, if and where required, any and all Licenses and all similar approvals necessary to maintain and operate the Facility, and (ii) is licensed by the State of Texas to operate, the Facility as a 60-bed skilled nursing facility, and all material Licenses necessary for the operation of the Facility as it is currently operated have been received and are now currently effective. Transferor is not in breach or violation of any License.

 

3.6 Surveys, etc. Other than as specifically identified in Schedule 3.6, all exceptions, deficiencies, violations, plans of correction or other indications of lack of compliance in any State survey or inspection reports have been fully corrected and there are no bans or limitations in effect, pending or, to Transferor’s knowledge, threatened with respect to admissions to the Facility. Transferor shall continue to deliver all such surveys, inspection reports and cost reports as and when same are received and/or filed as the case may be prior to the Closing Date.

 

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3.7 Claims. Other than as specifically identified in Schedule 3.7, for the two (2) year period immediately preceding the Closing Date, there have been no written notices of claims, suits, actions, judgments, demands, or casualty losses of any kind filed or claimed relating to the Facility, Tenant, Transferor or claims or losses affecting any insurance rating of the Facility, Tenant or Transferor, nor has there been any Chapter 74, Texas Civil Practices & Remedies Code, demand from an attorney representing a current or past resident of the Facility within the past two (2) years.

 

3.8 Collective Bargaining Agreements. There are no collective bargaining agreements between Transferor or Tenant and/or the Facility and any labor organization or employee group applicable to the operation and/or management of the Facility and, to Transferor’s knowledge, no election or other effort to unionize the Facility or any portion of its staff is underway, has been petitioned for by any Facility staff, or has been granted by the National Labor Relations Board or any similar body. For purposes of this Agreement, “to Transferor’s knowledge” and similar phrases, means the actual knowledge of Jake Hallsted.

 

3.9 Compliance.

 

(a) The Transferor, the Facility and Tenant are and have been in compliance with all applicable laws and orders, including all laws relating to employment practices and benefit plans (e.g., ERISA, classification as exempt versus non-exempt and misclassification as of employees versus independent contractors), all environmental laws, including those with respect to the disposal of hazardous materials, and all applicable Healthcare Laws. The Facility is currently in material compliance with (i) all Licenses issued by any agency having jurisdiction over the Facility, (ii) all plans of correction and allegations of compliance filed by or in behalf of the Facility, and (iii) all Conditions and Standards of Participation for the Medicare and Medicaid programs. There are no outstanding Life Safety Code deficiencies for the Facility and there are no outstanding waivers for any Life Safety Code deficiencies. There are no pending government program audits by any governmental authority. Transferor has not received written, or to Transferor’s knowledge, oral, notice of any action or proceeding initiated or proposed by State or federal agencies having jurisdiction thereof, to either revoke, withdraw or suspend any License or to decertify, terminate, ban or limit the participation of Tenant or the Facility in the Medicare, Medicaid, VA or any other third-party payor programs.

 

(b) Neither Transferor, the Business, or to Transferor’s knowledge, Tenant or any of their respective directors, managers, owners, officers, employees, healthcare professionals, contractors or agents, has with respect to or related to the Facility or the Business (i) given, agreed to give, received, or agreed to receive any illegal gift, contribution, payment or similar benefit to, or entered into any contract or informal arrangement with, any supplier, patient, client, customer, governmental official or employee or other person who was, is or may be, in a position to help or hinder the Facility, Transferor or Tenant, 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) Neither Transferor, or to Transferor’s knowledge, Tenant nor any of their respective directors, managers, officers, employees, independent contractors, owners, members, shareholders or agents, have been convicted of, charged with or investigated for a violation of any law related to fraud, theft, embezzlement, breach of fiduciary responsibility, financial misconduct, obstruction of an investigation of controlled substances, or has been debarred, excluded, suspended, or otherwise prohibited from participation in Medicare, Medicaid or other government program, or been subject to any order or consent decree of, or criminal or civil fine or penalty relating to any government program imposed by, any governmental authority. Transferor has not arranged or contracted with (by employment or otherwise) any individual or entity that is excluded, debarred, or otherwise prohibited from participation in a government program that is related to the Business. Transferor has not received any written notice of any exclusion, suspension, or debarment actions relating to the Facility pending or threatened against Transferor or any of their directors, managers, officers, employees, independent contractors, owners, members, shareholders or agents. Transferor conducts (and have conducted) background checks in compliance with applicable law and regularly screen (and have screened) all of their healthcare professionals, directors, managers, officers, employees, independent contractors, owners, members, shareholders or agents 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.

 

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(d) Transferor 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 Transferor or the Business, including, without limitation, any physician, nurse practitioner, physician assistant or nurse (each, a “Healthcare Provider”) and, to Transferor’s knowledge, Tenant, is, and at all times during the three (3)-year period preceding the date hereof or the time during which such individual served in such capacity on behalf of Transferor, 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 Transferor or otherwise with respect to the Facility or the Business are and have been (with respect to any period of time during which such Healthcare Provider performed services on behalf of Transferor) so licensed, certified or registered without restriction. No action or investigation has been filed, commenced or, to Transferor’s knowledge, threatened against Transferor or any Healthcare Provider or Tenant alleging any failure so to comply in any material respect, and neither Transferor, the Business, any Healthcare Provider, or to Transferor’s knowledge, Tenant has received any written, or to Transferor’s knowledge, oral, 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 Transferor, the Business, any Healthcare Provider, or, to Transferor’s knowledge, Tenant relating to or arising under any Healthcare Law. To Transferor’s knowledge, no Healthcare Provider 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 three (3) year period preceding the date hereof. Neither Transferor, the Business nor, to Transferor’s knowledge, Tenant received any written, or to Transferor’s knowledge, oral, 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. Neither Transferor, the Business, any Healthcare Provider, or to Transferor’s knowledge, Tenant has received any written, or to Transferor’s knowledge, oral, notice from any governmental authority of any pending, active or threatened actions involving Transferor, Tenant, the Business, the Facility or 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. Transferor and, to Transferor’s knowledge, Tenant maintain 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. “Healthcare Laws” means all laws 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 and any other state or federal laws related to the relationships among providers, payors, vendors and consumers in the healthcare industry and the delivery, purchase, sale or support of healthcare services, (d) TRICARE (10 U.S.C. § 1071 et seq.) and the regulations promulgated thereunder, (e) quality and safety laws 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) laws governing the provision of healthcare services to employees with workers compensation coverage, (g) licensure laws 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 laws relating to the so-called “corporate practice of medicine”, “corporate practice of nursing” or fee splitting, (h) laws relating to certificate of need or similar laws 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, (i) any laws applicable to the billing, coding or submission of claims or collection of accounts receivable or refund of overpayments for medical or healthcare services, (j) HIPAA, and (k) any and all other implementing regulations, rules, ordinances, order, and applicable regulatory manual provisions, policies and administrative guidance related to healthcare, in-home care, personal care, or assisted living having the force of law, each of (a) through (j) as may be amended from time to time. “HIPAA” means the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. §1320d et seq.), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and any implementing regulations promulgated thereunder (including the Standards for Privacy of Individually Identifiable Health Information, the Security Standards for the Protection of Electronic Protected Health Information and the Standards for Electronic Transactions and Code Sets promulgated thereunder) and applicable state laws regarding patient privacy and the security, use or disclosure of patient health care records.

 

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(e) Seller is, and at all times has been, in compliance with all applicable Information Privacy and Security Laws, as defined herein. Seller is, and at all times has been, in compliance with (i) all contracts or other arrangements in effect between Seller and any third party that apply to or restrict the use, disclosure or security of Personal Information, as defined herein, by Seller or by any other party to such contracts or other arrangements (collectively, “Privacy Agreements”); and (ii) the terms of any consents, authorizations, waiver of authorization or other permission pursuant to which Seller accesses, uses, discloses, or has accessed, used or disclosed, Personal Information (collectively, “Privacy Consents”). Seller has in place, and Seller complies and has complied with, written policies to protect the security and privacy of Personal Information. Seller has the right pursuant to the Privacy Agreements, the Privacy Consents and its privacy and security policies to use and disclose Personal Information for the purpose such information is and has been used and disclosed. Neither the execution, delivery or performance of this Agreement, nor the consummation of any of the transactions contemplated by this Agreement, including any direct or indirect transfer of Personal Information resulting from such transactions, will violate any Seller policies, any Privacy Agreements, or any Privacy Consents as such currently exist or as existed at any time during which any of such Personal Information or customer information was collected or obtained. Seller has, and has at all times maintained, commercially reasonable physical, technical, organizational and administrative security safeguards to protect all Personal Information and customer information collected by Seller or on behalf of Seller from and against unauthorized access, use and/or disclosure and that comply with all Privacy Agreements, all Privacy Consents and applicable Information Privacy and Security Laws in every jurisdiction in which Seller operates. Seller has to the extent applicable, implemented all security management processes required by HIPAA, including a risk analysis, risk management activities, a sanction policy and information system activity review, as described at 45 C.F.R. § 164.308(a)(1)(ii). No person has withdrawn his or her consent to any use or processing of his or her Personal Information or requested erasure of their Personal Information by Seller in the six (6) years prior to the date of this Agreement where Seller has not complied with such request. Seller has not received any complaint from any person or Governmental Authority regarding Seller’s or any of its agents, employees or contractors’ uses or disclosures of, or security practices or security incidents regarding, Personal Information. There have not been any non-permitted uses or disclosures, security incidents, or breaches involving Personal Information held or collected by or on behalf of Seller. Seller is subject to any pending claim, or, to the Knowledge of Seller, is any claim threatened against (and to the Knowledge of Seller, no such claims are likely to be asserted or threatened against Seller) by any third party or entity, including any Governmental Authority, alleging (i) a violation of any Seller policies, Privacy Consents or any Privacy Agreements; (ii) a violation of any third party or entity’s privacy, personal or confidentiality rights under any Information Privacy and Security Laws, or (iii) the failure of Seller with respect to any security audit. Seller has not notified, either voluntarily or as required by any Information Privacy and Security Law, any affected individual, any customer, any Governmental Authority, or the media of any breach or non-permitted use or disclosure of Personal Information, and Seller is not currently planning to conduct any such notification or investigating whether any such notification is required. “Information Privacy and Security Laws” means all Applicable Laws concerning the privacy, protection, storage, access, use, exchange, disclosure and/or security of Personal Information or other data including, HIPAA, state data breach notification Applicable Laws, state health information protection Applicable Laws, state social security number protection laws, the Federal Trade Commission Act, 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, and state consumer protection Applicable Laws. “Personal Information” means: (A) any information that identifies, or in combination with other information may identify, is linked to, or relates to an individual, or is capable of being associated with an individual; (B) any information that is governed, regulated or protected by one or more Applicable Laws concerning information relating to an identified or identifiable natural person or PCI DSS, including, without limitation, any “protected health information” (as defined by HIPAA), social security number or tax identification number, credit card number, bank account information or financial customer or account numbers; (C) information that can be used to authenticate an individual (including, without limitation, passwords or PINs, biometric data, unique identification numbers, answer to security questions, or other personal identifiers) in any format whether written, electronic or otherwise; and (D) any information that is derived from or linked to other Personal Information

 

(f) There are no outstanding bed Taxes or other fees owing to state licensing authorities or any of the Government Programs.

 

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3.10 Cost Reports. Transferor has filed all Medicare and Medicaid cost reports and related reports for the Facility in compliance with applicable laws and such cost reports are accurate in all material respects.

 

3.11 Taxes. There are no real estate taxes or assessments and/or impositions which are due and unpaid or that will not be prorated at the Closing. Transferor 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 applicable law. All such tax returns were true, complete and accurate in all material respects. All taxes owed by Transferor shown on any such tax return have been timely paid in full.

 

3.12 Loan Defaults. To Transferor’s knowledge, there is no default under the terms and conditions of any agreement, loan, mortgage, deed of trust, or any other loan document in favor of any mortgagee with a security interest in the Facility. Schedule 3.12 sets forth a list of all Debt of Transferor, and, to Transferor’s knowledge, all Debt otherwise affecting the Facility. “Debt” means (a) all indebtedness, contingent or otherwise, for money borrowed, purchase money indebtedness (other than accounts payable in the ordinary course of business to the extent such accounts payable are not more than sixty (60) days past due) 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; (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 the 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 or finance 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; (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 or any indemnification obligations under any acquisition agreement; and (i) all accrued but unpaid interest expense and all penalties, fees, breakage costs, 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 contemplated hereby.

 

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3.13 Provider Agreements. The Facility has current provider agreements under Titles XVIII and XIX of the Social Security Act.

 

3.14 Financial Statements. Transferor has provided New Manager the balance sheet of Transferor as of December 31, 2019 and December 31, 2020, and related statement of income for the 12-month periods then ended and the balance sheet of Transferor as of April 30, 2021 and related statement of income for the 4-month period then ended (collectively, the “Financial Statements”). The Financial Statements fairly present, in all material respects, the financial condition and the results of operations of Transferor as of the dates of and for the periods referred to in such Financial Statements. Except as set forth on Schedule 3.14, the Financial Statements have been prepared in accordance with GAAP. Transferor has no liabilities of any nature whatsoever, 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, except for (i) liabilities reflected or reserved against in the most recent Financial Statements and (ii) current liabilities incurred in the ordinary course of business since the date of the most recent Financial Statements (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 law or order or any action). Transferor has no knowledge of any fact or circumstance with respect to Tenant that would reasonably be expected to adversely affect in any material respect the financial condition of the Business.

 

3.15 Material Adverse Effect. Since December 31, 2020, there have been no events, transactions or information relating to the Facility or the Transferred Assets which, singly or in the aggregate, would reasonably be expected to have a material adverse effect on the operations of the Facility or the Business, and Transferor has managed the Facility and Business in the ordinary course of business throughout such period.

 

3.16 QIPP Documents. Transferor is in material compliance with all lease agreements, management agreements and other agreements with the Tenant and related to the Facility’s participation in the Quality Incentive Payment Program (“QIPP”) sponsored by the Texas Health and Human Services Commission (“collectively, “QIPP Related Agreements”).

 

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3.17 Contracts. Schedule 3.17 sets forth each contract to which Transferor is a party or by which it is otherwise bound. With respect to each such contract: (i) such contract is in full force and effect and enforceable against the counter-party thereto; (ii) neither Transferor nor, to Transferor’s knowledge, the other party thereto is in breach or default under such contract; and (iii) neither Transferor nor the other party thereto has requested to terminate, modify or otherwise renegotiate the terms thereof. Transferor has delivered to New Manager a true, correct and complete copy of each such contract. To Transferor’s knowledge, neither Tenant nor any other party to a contract with Tenant is in material breach of such contract. To Transferor’s knowledge, neither Tenant nor any other party to a contract relating to a third party payment program has given notice to terminate or modify such contract or to otherwise renegotiate the terms of such contract.

 

3.18 No Conflict. Except as disclosed on Schedule 3.18, none of the execution, delivery or performance by Transferor of any of the Transferor’s Transaction Documents nor the consummation of the transactions contemplated hereby will: (a) violate any law; (b) result in the modification, acceleration, termination, breach or violation of, or default under, any contractual obligation of Transferor; (c) require any action by (including any authorization, consent or approval), or in respect of (including notice to), any person under any contractual obligation of Transferor; (d) result in the creation or imposition of an Encumbrance upon, or the forfeiture of, any assets of Transferor; or (e) result in a material breach or violation of, or default under, the organizational documents of Transferor. Except as set forth on Schedule 3.18, no affiliate of Transferor is a party to any such contract and there are no and, during the immediately preceding two (2) years, there have been no other transactions or arrangements between Transferor and any affiliate of Transferor.

 

3.19 Solvency. Transferor is not insolvent and Transferor has the ability to pay all of its debts as they come due, and further is not involved in, and is not contemplating, any bankruptcy, reorganization or insolvency proceeding of any kind. Immediately after giving effect to the consummation of the transactions contemplated by this Agreement: (i) Transferor will be able to pay its liabilities as they become due in the ordinary course of business and (ii) Transferor will have assets (calculated at fair market value) that exceed its liabilities. The cash available to Transferor, after taking into account all other anticipated uses of the cash, will be sufficient to pay all debts promptly in accordance with their terms.

 

3.20 Brokers or Finders. Except for Senior Living Investment Brokerage, Inc. (representing Transferor only), no agent, broker, investment banker or other firm or person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with the Closing based on arrangements made by or on behalf of Transferor.

 

ARTICLE IV
NEW MANAGER’S REPRESENTATIONS AND WARRANTIES

 

New Manager represents and warrants to Transferor on the date hereof and as of the Closing Date as follows:

 

4.1 Organization and Standing of New Manager. New Manager is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas. New Manager has the power and authority to own the property and assets now owned by it and to conduct the business presently being conducted by it.

 

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4.2 Authority. New Manager has the full limited liability company power and authority to make, execute, deliver and perform this Agreement and the other instruments and documents required or contemplated hereby (the “New Manager’s Transaction Documents”, collectively with the Transferor’s Transaction Documents, the “Transaction Documents”). Such execution, delivery, performance and consummation have been duly authorized by all necessary action, limited liability company or otherwise, on the part of New Manager and its members.

 

4.3 Binding Effect. New Manager’s Transaction Documents, when executed by New Manager, constitute the valid and binding obligations of New Manager, enforceable against New Manager in accordance with their respective terms.

 

4.4 Solvency. New Manager is not insolvent and New Manager has the ability to pay all of its debts as they come due, and further is not involved in, and is not contemplating, any bankruptcy, reorganization or insolvency proceeding of any kind. Immediately after giving effect to the consummation of the transactions contemplated by this Agreement: (i) New Manager will be able to pay its liabilities as they become due in the ordinary course of business and (ii) New Manager will have assets (calculated at fair market value) that exceed its liabilities. The cash available to New Manager, after taking into account all other anticipated uses of the cash, will be sufficient to pay all debts promptly in accordance with their terms.

 

4.5 No Conflict. None of the execution, delivery or performance by New Manager of any of the New Manager’s Transaction Documents nor the consummation of the transactions contemplated hereby will: (a) violate any law; (b) result in the modification, acceleration, termination, breach or violation of, or default under, any contractual obligation of New Manager; (c) require any action by (including any authorization, consent or approval), or in respect of (including notice to), any person under any contractual obligation of New Manager; (d) result in the creation or imposition of an Encumbrance upon, or the forfeiture of, any assets of New Manager; or (e) result in a material breach or violation of, or default under, the organizational documents of New Manager.

 

4.6 Brokers or Finders. No agent, broker, investment banker or other firm or person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with the Closing based on arrangements made by or on behalf of New Manager.

 

ARTICLE V
OBLIGATIONS OF THE PARTIES

 

5.1 Applications and Filings; Efforts. No later than thirty (30) days after the Closing or such earlier time as may be required by applicable law, Transferor and New Manager shall make all filings and complete all applications required by the State of Texas, Medicare and Medicaid to permit New Manager to manage the Facility. Transferor shall cooperate with New Manager in connection with all such filings and applications. In addition, Transferor shall use commercially reasonable efforts to obtain all consents and provide all notices to any third parties in connection with the transfer of the Transferred Assets. Each of the parties shall use commercially reasonable efforts to cause the conditions precedent set forth herein to be satisfied; provided, that the foregoing shall not require a waiver of any condition precedent.

 

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5.2 Management of Facility. Between the Execution Date and the Closing, Transferor shall:

 

(a) manage the Facility in the ordinary course and in substantially the same manner as currently managed, including with respect to the maintaining Inventory at normal operating levels;

 

(b) (i) maintain, keep and preserve its assets and properties (taken as a whole) in all material respects in good condition and repair (ordinary wear and tear excepted); (ii) preserve in all material respects its business intact; (iii) preserve in all material respects the goodwill of and relations with employees, Healthcare Providers, suppliers, distributors, vendors, referral sources, patients, residents, tenants, customers, and others having business dealings or relations with the Transferor or the Facility; and (iv) maintain its books and records consistent with past practices and applicable law;

 

(c) maintain or cause to be maintained all insurance policies presently being maintained by Transferor with respect to the Facility and/or Transferred Assets;

 

(d) preserve in force (or cause to be preserved in force) all existing Licenses, of the Facility, including Medicare and Medicaid and any other government payment program enrollments, and if any such License or enrollment shall expire or be suspended or revoked prior to the Closing, Transferor shall promptly notify New Manager and shall, at Transferor’s expense, take all commercially reasonable measures to cause the extension, renewal or reinstatement of such License without any additional limitation or condition;

 

(e) maintain, restore or replace all drugs, medicines, foods and other supplies used in connection with the operation of the Facility; and

 

(f) not take any actions which are inconsistent with its obligations under this Agreement or which could hinder or delay the consummation of the transactions contemplated by this Agreement.

 

5.3 Further Assurances. From and after the Closing Date, upon the request of the Transferor or New Manager, the parties shall do, execute, acknowledge and deliver all such further acts, assurances, deeds, assignments, transfers, conveyances and other instruments and papers as reasonably required or appropriate to carry out and/or evidence the transactions contemplated hereby.

 

5.4 Exclusivity. During the period between the Execution Date and the Closing Date or the earlier termination of this Agreement as provided herein, Transferor shall not and shall cause its representatives not to, directly or indirectly, (a) solicit, initiate or encourage the submission of any proposal or offer from any person relating to the acquisition of the Transferred Assets (including any acquisition structured as a merger, consolidation, share exchange, tender offer or otherwise), or any other merger, reorganization, recapitalization or similar transaction involving the Transferor, or (b) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate or encourage in any other manner any effort or attempt by any person to do or seek any of the foregoing.

 

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5.5 Access and Investigation. During the period commencing on the Execution Date and ending on the Closing Date or the earlier termination of this Agreement as provided herein, Transferor to: (a) afford New Manager and its representatives reasonable access, during regular business hours, to Transferor’s properties, personnel, agents and accountants; (b) afford reasonable access to and the right to inspect all of the properties, assets, premises, books and records, contracts, agreements and other documents and data related to the Facility; (c) furnish New Manager and its representatives with such financial, operating and other data and information related to the Facility as New Manager and its representatives may reasonably request; and (d) afford New Manager and its representatives access to the Transferor’s third party payors, vendors and referral sources and Tenant.

 

5.6 Notifications. Following the Execution Date until the Closing or the earlier termination of this Agreement as provided herein, Transferor will give New Manager prompt written notice upon becoming aware of any development, event or circumstance that does or would reasonably be expected to result in (a) a material breach of or inaccuracy in any of the representations or warranties Transferor hereunder, or (b) any material breach or failure of Transferor to perform or satisfy any covenant, condition, or agreement to be performed or satisfied under this Agreement or any Transferor’s Transaction Document; provided, however, that no such disclosure will be deemed to prevent or cure any such breach or failure to perform any such covenant, condition or agreement, or such breach of or inaccuracy in, amend or supplement any Schedule to, or otherwise disclose any exception to, any of the representations and warranties set forth in this Agreement, including for purposes of indemnification or with respect to the satisfaction of any condition precedent.

 

5.7 Tail Coverage; Insurance. On or before the Closing Date, Transferor will, at Transferor’s cost and expense, obtain “tail insurance” coverage, in form and substance reasonably satisfactory to New Manager, naming New Manager as an additional insured extending for two (2) years for Transferor’s insurance coverage in connection with liabilities arising out of or related to the Business on or before the Closing Date, including but not limited to general liability, professional liability, employee practices liability and executive liability, in each case, which tail insurance shall contain terms and conditions no less advantageous than are contained in such current insurance policies and, with respect to professional liability insurance, shall cover Transferor and each other employee or independent contractor of the Transferor providing medical services. Transferor shall provide evidence of such coverage to New Manager.

 

5.8 Escrow Agreement. At Closing, Transferor and New Manager shall enter into an Escrow Agreement (the “Escrow Agreement”) to be entered by and among Transferor, Landlord, GCC Olney, LLC, Grace Properties Olney, LLC, GCC Henrietta, LLC, Grace Properties Henrietta, LLC (collectively, the “Seller Parties”), New Manager, Buyer, Henrietta Health and Rehab Center, LLC, Olney Health and Rehab Center, LLC (collectively, the “Buyer Parties”), and Fidelity National Title Agency, Inc. (“Escrow Agent”) to be dated as of the Closing Date, pursuant to which the Seller Parties will deposit with Escrow Agent the aggregate amount of Seventy-Five Thousand and No/100 Dollars ($75,000.00) to cover any indemnification obligations of the Seller Parties to the Buyer Parties for a period of twelve (12) months pursuant to those certain agreements by and between the Seller Parties and Buyer Parties (the “Other Transaction Documents”).

 

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ARTICLE VI
CONDITIONS PRECEDENT TO NEW MANAGER’S OBLIGATIONS

 

Unless waived by New Manager, its obligation to consummate the transactions contemplated by this Agreement is subject to the satisfaction, prior to or at the Closing, of each of the following conditions:

 

6.1 Representations and Warranties. The representations and warranties of Transferor contained in this Agreement or on any Schedule or Transaction Document that are not qualified by materiality shall be true and correct in all material respects at and as of the Effective Time as though such representations and warranties were made at and as of such time and the representations and warranties of Transferor contained in this Agreement or on any Schedule or Transaction Document that are qualified by materiality shall be true and correct in all material respects at and as of the Effective Time as though such representations and warranties were made at and as of such time.

 

6.2 Performance of Covenants. Transferor shall have performed or complied in all material respects with each of its agreements and covenants required by this Agreement to be performed or complied with by it prior to or at the Effective Time.

 

6.3 Delivery of Closing Certificate. Transferor shall have executed and delivered to New Manager a certificate in the form and substance of Exhibit 6.3.

 

6.4 Transferred Assets at Closing. Transferor shall have executed and delivered the Bill of Sale and shall have delivered appropriate certificates of title and transfer instruments with respect to any vehicles included in the Transferred Assets.

 

6.5 Personal Guaranty. The personal guaranty of Jake Hallsted, dated as of the date hereof, shall be in full force and effect (the “Guaranty”).

 

6.6 Assignment and Assumption of Management Agreement. Transferor and Tenant shall have executed and delivered an assignment and assumption of the Management Agreement substantially in the form and substance of Exhibit 6.6 (“Assignment and Assumption of Management Agreement”).

 

6.7 Financing. The Buyer Parties shall have received financing sufficient for the payment of the Purchase Price and for the purchase price contemplated to be paid in the Other Transaction Documents.

 

6.8 Other Transaction Documents Closing. The closing under the Other Transaction Documents shall have occurred.

 

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6.9 Trust Funds. Transferor shall have executed and delivered an assignment and assumption of Trust Funds substantially in the form and substance of Exhibit 6.9 (“Assignment of \ Trust Funds”).

 

6.10 Other Documents. Transferor shall have furnished New Manager with all other documents, certificates and other instruments required to be furnished to New Manager by Transferor pursuant to the terms hereof.

 

6.11 Reserved.

 

6.12 Compliance. All actual deficiencies and violations of the severity level of “G” or worse noted in any pre-Closing Date survey for the Facility shall have been corrected, and such corrections accepted by the Texas Health and Human Services Commission.

 

6.13 License. The Facility’s license to operate a nursing home issued by the Texas Health and Human Services Commission shall be in good standing and in full force and effect. Transferor shall have provided notice to the Texas Health and Human Services commission of the change in management.

 

6.14 Reserved. If any exhibits or schedules are not attached hereto, the parties hereto agree to attach such exhibits and schedules as soon as reasonably practicable but in any event prior to the Closing Date.

 

6.15 Consents and Approvals. The consents and approvals set forth on Exhibit 6.15 shall have been obtained.

 

6.16 Restrictive Covenant Agreements. New Manager shall have received restrictive covenant agreements in the form set forth on Exhibit 6.16 duly executed by the persons set forth therein.

 

6.17 No Proceeding. No action or order restraining, enjoining or otherwise preventing or delaying the consummation of this Agreement or the transactions contemplated hereby shall be outstanding, and no action, before or by any governmental authority, whether at law or in equity, shall be pending, wherein an unfavorable outcome would (i) prevent the performance of this Agreement or the consummation of the transactions contemplated hereby, or (ii) affect adversely the right of New Manager to own the Transferred Assets, or operate and/or manage the Business and the Facility.

 

6.18 PPP Loans. New Manager shall have received evidence reasonably satisfactory to New Manager of the escrow of the principal amount plus interest due or payable with the applicable PPP lender under the terms of the PPP Loans set forth on Schedule 3.12.

 

6.19 Certain Other Matters. New Manager shall have received evidence satisfactory to New Manager of the completion of the matters set forth on Schedule 6.19.

 

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ARTICLE VII
CONDITIONS PRECEDENT TO TRANSFEROR’S OBLIGATIONS

 

Unless waived by Transferor, its obligation to consummate the transactions contemplated by this Agreement is subject to the satisfaction, prior to or at the Closing, of each of the following conditions:

 

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

 

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

 

7.3 Delivery of Closing Certificate. New Manager shall have delivered to Transferor a certificate in the form and substance of Exhibit 7.3.

 

7.4 Bill of Sale. New Manager shall have executed and delivered the Bill of Sale.

 

7.5 Assignment and Assumption of Management Agreement. New Manager shall have executed and delivered the Assignment and Assumption of Management Agreement.

 

7.6 Reserved.

 

7.7 Other Transaction Documents Closing. The closing under the Other Transaction Documents shall have occurred.

 

7.8 Resident Trust Funds. New Manager shall have executed and delivered the Assignment of Resident Trust Funds.

 

7.9 Other Documents. New Manager shall have furnished Transferor with all other documents, certificates and other instruments required to be furnished to Transferor by New Manager pursuant to the terms hereof.

 

ARTICLE VIII

SURVIVAL AND INDEMNIFICATION

 

8.1 Indemnification by Transferor. Transferor shall defend, indemnify and hold New Manager and New Manager’s shareholders, members, officers, directors, employees, representatives and agents and their respective representatives, heirs and assigns (the “New Manager Indemnified Parties”) harmless from and against any claim, action, suit, proceeding, investigation, liability, damage, loss, cost or expense (including reasonable attorneys’ fee and reasonable disbursements of counsel and actual costs and whether or not involving a third party claim) (collectively, a “Loss”) resulting from (i) any inaccuracy or breach of any representation, warranty, covenant, agreement or obligation on the part of Transferor contained in this Agreement or in any of the agreements, certificates or other instruments attached hereto; (ii) the occupancy, management or operation of the Facility prior to the Effective Time; and (iii) any Excluded Liabilities.

 

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8.2 Indemnification by New Manager. New Manager shall defend, indemnify and hold Transferor and Transferor’s members, managers, officers, directors, employees, representatives and agents, and their respective representatives, heirs and assigns (the “Transferor Indemnified Parties”), harmless from and against, any Loss incurred by the foregoing parties as a result of (i) any inaccuracy or breach of any representation, warranty, covenant, agreement or obligation on the part of New Manager contained in this Agreement or in any agreement, certificate or other instrument attached hereto; (ii) the occupancy, management or operation of the Facility by New Manager from and after the Effective Time; and (iii) any failure by New Manager to pay or perform any obligations or liabilities assumed by New Manager pursuant to this Agreement including, but not limited to, obligations or liabilities under the Assumed Contracts (to the extent assumed in accordance with the Assignment and Assumption of Contracts); provided, however, in no event shall New Manager be required to indemnify the Transferor Indemnified Parties for any matter for which a New Manager Indemnified Party is entitled to indemnification pursuant to Section 8.1.

 

8.3 Procedure. A party claiming indemnification under this Article VIII (the “Asserting Party”) must promptly notify in writing the party from which indemnification is sought (the “Defending Party”) of the nature and basis of such claim for indemnification. If such claim relates to a claim, litigation or other action by a third-party against Asserting Party, (“Third-Party Claim”), Defending Party may elect to assume the defense of the Third-Party Claim promptly after receipt of the notice referred to above at its own expense with counsel selected by Defending Party and reasonably satisfactory to Asserting Party; provided, however, that the Defending Party may not assume the defense of such Third Party Claim unless (i) the Defending Party gives written notice to the Asserting Party within fifteen (15) days of receipt of the claim notice that the Defending Party will indemnify the Asserting Party from and against the entirety of any and all Losses the Asserting Party ultimately suffers resulting from, arising out of, relating to, in the nature of, or caused by the 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 Asserting Party, (iii) the Asserting Party reasonably concludes, based upon advice of counsel that a conflict does not exist between the Asserting Party and the Defending 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, any criminal or regulatory enforcement action or otherwise involve a claim by a governmental authority, (v) settlement of, an adverse judgment with respect to or the Defending Party’s conduct of the defense of the Third Party Claim is not, in the good faith judgment of the Asserting Party, likely to be adverse to the Asserting Party’s reputation or continuing business interests (including the Asserting Party’s relationships with current or potential customers, suppliers, payors, Tenant or other parties material to the conduct of the business of the Asserting Party) and (vi) the Defending Party conducts the defense of the Third Party Claim actively and diligently and in good faith. If Defending Party assumes the defense of the Third-Party Claim and diligently defends such Third-Party Claim, Defending Party shall not be liable for any fees and expenses of counsel for Asserting Party incurred thereafter in connection with the Third-Party Claim. To the extent required by applicable law, the Asserting Party shall act reasonably and in good faith in an effort to mitigate any Loss for which it is entitled to indemnification. Failure of the Asserting Party to promptly notify the Defending Party of a claim hereunder shall not waive the rights of the Asserting Party to indemnification hereunder, except to the extent that the Defending Party can demonstrate actual material loss or prejudice as a result of such failure or delay. Defending Party shall not settle any Third Party Claim without the written consent of the Asserting Party, which consent shall not be unreasonably withheld, conditioned, or delayed.

 

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8.4 Limitations.

 

(a) EXCEPT AS SUCH MAY BE PART OF ANY CLAIM OF ANY THIRD-PARTY, UNDER NO CIRCUMSTANCES SHALL TRANSFEROR, NEW MANAGER OR ANY AFFILIATE THEREOF BE RESPONSIBLE OR LIABLE IN ANY WAY FOR PUNITIVE DAMAGES (UNLESS PUNITIVE DAMAGES ARE ACTUALLY AWARDED TO A THIRD-PARTY), OR ANY EXEMPLARY DAMAGES, REGARDLESS OF WHETHER THE ACTION IS FOUNDED IN CONTRACT, TORT, STATUTORY OR OTHERWISE, AND BOTH PARTIES AGREE THAT IN NO EVENT SHALL EITHER ASSERT, CLAIM, DEMAND OR OTHERWISE REQUEST SUCH DAMAGES.

 

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

 

(c) Except with respect to a claim for indemnification arising as a result of a breach of a Fundamental Representation, in no event shall a New Member Indemnified Party be entitled to Losses in excess of the amounts deposited with the Escrow Agent and the amounts guaranteed under the Guaranty (i.e., together with the amounts in escrow, $150,000 in the aggregate) with respect to a claim for indemnification arising as a result of a breach of a representation or warranty.

 

8.5 Exclusive Remedy. Except in the case of fraud, the remedies provided in this Article VIII and in the Other Transaction Documents shall be the sole and exclusive remedies that may be available to a party or an Asserting Party with respect to any matters arising under or relating to this Agreement, any document executed and delivered pursuant to the provisions hereof and the transactions contemplated herein.

 

8.6 Insurance Recoveries . No party shall be required to indemnify the other with respect to any Losses for which third-party recoveries or insurance proceeds are paid to Asserting Party, regardless of the identity of the holder of such insurance policy or benefit; provided, however, that if the insurance proceeds or third-party recoveries do not satisfy the entire amount of the Losses, then the provisions of this Section shall be applicable to such unsatisfied portion.

 

8.7 Survival. The representations and warranties contained in this Agreement, and in any agreements, certificates or other instruments delivered pursuant hereto, shall survive Closing for a period of twelve months following the Closing provided, however, that the representations and warranties set forth in Sections 3.1, 3.2, 3.3, and 3.4 shall survive indefinitely and the representations and warranties set forth in Section 3.9 shall survive until the expiration of the applicable statute of limitations (such representations, the “Fundamental Representations”). The covenants and other obligations set forth herein shall survive until fully performed. Delivery of a claim notice meeting the requirements pursuant to Section 8.3 with respect to a claim or potential claim or matter for which indemnification may be required pursuant to this Article VIII, 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, begin an arbitration or commence another formal or informal action or other proceeding in order to cause such matter or claim to survive.

 

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8.8 Knowledge and Investigation. The right of any party to indemnification pursuant to this Article VIII 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.

 

8.9 Materiality; Strict Liability. 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 VIII, the terms “material,” “materiality,” and “material adverse effect” and similar phrases are to be disregarded.

 

8.10 Right of Set-Off. Subject to the limitations set forth in Section 8.4(c), the New Manager Indemnified Parties may set-off any amount to which they may be entitled under this Article VIII against amounts otherwise payable by New Manager Indemnified Parties to Transferor or its affiliates. The exercise of such right of set-off by such New Manager Indemnified Parties in good faith, whether or not ultimately determined to be justified, will not constitute an event of default under any contract or agreement between any New Manager Indemnified Party and Transferor or its affiliates. Neither the exercise of nor the failure to exercise such right of set-off will constitute an election of remedies or limit the New Manager Indemnified Parties in any manner in the enforcement of any other remedies that may be available to it. For the avoidance of doubt, the exercise of such right to set-off shall not preclude Transferor from challenging and disputing the indemnity claim or the exercise of the right to set-off hereunder and to the extent successful in such challenge or dispute, such set-off amount (or portion thereof) will be immediately returned to Transferor or its applicable affiliate.

 

ARTICLE IX
TERMINATION

 

9.1 Termination. This Agreement is irrevocable and may only be terminated at or prior to the time of Closing by:

 

(a) by either New Manager or Transferor if (i) a material breach of any provision of this Agreement has been committed by the other party such that the closing conditions set forth in Section 6.1 (with respect to a breach by Transferor) or Section 6.2 (with respect to a breach by New Manager) would not be satisfied (provided, that the party seeking to terminate this Agreement is not also in material breach of any provision of this Agreement), (ii) such breach has not been waived, and (iii) the other party fails to cure such breach within ten (10) business days after written notice of such breach by the non-breaching party.

 

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(b) any party hereto, if the closing has not occurred by August 2, 2021 (provided, however, in the event the closing date under the PSA is extended in accordance with the terms thereof, then such date shall be extended for a commensurate period of time) or in the event any of the Other Transaction Documents has been terminated in accordance with the terms thereof; or

 

(c) the mutual consent of Transferor and New Manager.

 

9.2 Effect of Termination. If a party terminates this Agreement because one of the conditions precedent to its obligations hereunder has not been satisfied, or if this Agreement is terminated by mutual consent, this Agreement shall become null and void without any liability of any party to the others; provided, that if such termination is pursuant to Section 9.1(a) as a result of a breach by any of the parties hereto of any of its representations, warranties or covenants in this Agreement, nothing herein shall affect the non-breaching party’s right to damages on account of such other party’s breach.

 

ARTICLE X
MISCELLANEOUS PROVISIONS

 

10.1 Drafting. Transferor’s counsel has drafted this Agreement and the other Transaction Documents as a matter of convenience for the parties hereto; and the parties hereto have carefully reviewed and negotiated the terms of this Agreement and the Transaction Documents, and New Manager hereby acknowledges and agrees that it has had a full and fair opportunity to review and negotiate the Agreement and the Transaction Documents with the advice of its counsel; and accordingly any drafting errors, ambiguities or inconsistencies shall not be interpreted against Transferor.

 

10.2 Public Announcements. Any general public announcements or similar media publicity with respect to this Agreement or the transactions contemplated herein shall be at such time and in such manner as New Manager and Transferor shall mutually determine; provided that nothing herein shall prevent either party, upon notice to the other, from making such written notices as such party’s counsel may consider advisable in order to satisfy the party’s legal and contractual obligations in such regard; and provided further, that New Manager may make such public announcements as may be required by applicable law, including any applicable securities laws or regulations, without the consent of Transferor.

 

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

 

10.4 Performance. In the event of a breach by either party of its obligations hereunder, the other party shall have the right, in addition to any other remedies which may be available, to obtain specific performance of the terms of this Agreement, and the breaching party hereby waives the defense that there may be an adequate remedy at law.

 

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10.5 Benefit and Assignment. This Agreement binds and inures to the benefit of each party hereto and its successors and permitted assigns. Neither party shall be permitted to assign its rights or obligations under this Agreement without the prior written consent of the other party.

 

10.6 Effect and Construction of this Agreement. The captions used herein are for convenience only and shall not control or affect the meaning or construction of the provisions of this Agreement. All gender employed in this Agreement shall include all genders, and the singular shall include the plural and the plural shall include the singular whenever and as often as may be appropriate. When used in this Agreement, the term “including” shall mean “including but not limited to.”

 

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

 

  If to New Manager: Assisted 4 Living, Inc.
    5115 FL-64
    Bradenton, Florida 34208
    Attn: Louis Collier
    Electronic Mail: loucoljr@outlook.com
     
  with a copy to: Bass, Berry & Sims PLC
    150 Third Avenue South, Suite 2800
    Nashville, Tennessee 37201
    Attention: Angela Humphreys
    Email: ahumphreys@bassberry.com
     
  If to Transferor: GCC Henrietta, LLC
    Attention: Jake Hallsted
    24616 Kingsland Blvd.
    Katy, Texas 77494
    Email: j.hallsted@pearlandvinetx.com
     
  with a copy to: Cordray & Schneller
    Attention: Howard F. Cordray, Jr.
    3306 Sul Ross Street
    Houston, Texas 77098
    Email: hcordray@clegal.com

 

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

 

10.9 Governing Law; Disputes. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

 

10.10 Further Assurances. Each of the parties hereto agrees to execute and deliver any and all further agreements, documents or instruments reasonably necessary to effectuate this Agreement and the transactions referred to herein or contemplated hereby or reasonably requested by the other party to perfect or evidence their rights hereunder.

 

10.11 Third-Party Beneficiaries. The parties hereto do not intend that any third-party shall have any rights under this Agreement except as expressly provided herein, including with respect to the New Manager Indemnified Parties and the Transferor Indemnified Parties.

 

10.12 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one and the same agreement. Copies of original signatures sent by facsimile, portable document format (PDF), or other electronic imaging means shall be deemed to be originals for all purposes of this Agreement.

 

10.13 Costs and Attorneys’ Fees. In the event of a dispute between the parties hereto with respect to the interpretation or enforcement of the terms hereof, the prevailing party shall be entitled to collect from the other its reasonable costs and attorneys’ fees, including its costs and fees on appeal.

 

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

 

10.15 Entire Agreement. This Agreement, including the schedules, exhibits and the Other Transaction Documents and the other documents executed in connection herewith or therewith in connection with the Closing, constitute the entire agreement between the parties hereto with respect to the subject matter hereof, and there are no agreements, understandings, restrictions, warranties, or representations between the parties with respect to the subject matter hereof other than as set forth herein or as provided in such documents.

 

[Signatures on following page]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

 

TRANSFEROR:

 

GCC HENRIETTA, LLC

 

By: /s/ Jake Hallsted  
  Jake, Hallsted, President  

 

NEW MANAGER:

 

HENRIETTA Health and Rehab Center, LLC

 

By: /s/ Louis Collier  
  Louis Collier, Chief Executive Officer  

 

 
 

 

EXHIBIT 1.1

BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This Bill of Sale, Assignment and Assumption Agreement (the “Agreement”) is made and entered into as of the [●] day of [●], 2021 (the “Effective Date”), by and between GCC HENRIETTA, LLC, a Texas limited liability company (“Assignor”) and HENRIETTA HEALTH AND REHAB CENTER, LLC, a Texas limited liability company (“Assignee”). All capitalized terms used in this Agreement without definition have the meanings given to them in the MTA (as defined below).

 

RECITALS

 

WHEREAS, Assignor and Assignee are parties to that certain Management Transfer Agreement, dated as of June [●], 2021 (the “MTA”), pursuant to which (i) Assignee is acquiring the Transferred Assets from Assignor, and (ii) Assignee is assuming the Assumed Contracts, on the terms and conditions set forth therein; and

 

WHEREAS, it is contemplated that this Agreement will be entered into at Closing by Assignor and Assignee pursuant to Sections 1.1 and 6.6 of the MTA.

 

AGREEMENT

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

Transfer of Transferred Assets. For the consideration set forth in the MTA and other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, Assignor hereby sells, transfers, assigns, conveys, grants and delivers to Assignee, free and clear of any Encumbrances, effective as of the date hereof, all of Assignor’s right, title and interest in and to the Transferred Assets other than the Management Agreement, which is being transferred on the date hereof by separate instrument TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns forever.

 

Assignment and Assumption. Effective as of the date hereof, Assignor hereby conveys, delivers and assigns to Assignee, its successors and assigns, and Assignee hereby accepts, assumes and agrees to pay, perform and discharge when due, the obligations or liabilities under the Assumed Contracts set forth on Exhibit A solely to the extent arising after the Closing and excluding any liability arising out of a breach thereof or a violation of law prior to Closing or any other matter subject to indemnification by Assignee under the MTA.

 

Terms of the MTA. The terms of the MTA, including but not limited to Assignor’s and Assignee’s representations, warranties, covenants, agreements and indemnities relating to the Transferred Assets and Assumed Contracts, are incorporated herein by this reference. Assignor and Assignee acknowledge and agree that the representations, warranties, covenants, agreements and indemnities contained in the MTA will not be superseded hereby but will remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the MTA and the terms hereof, the terms of the MTA shall govern.

 

Further Actions. Each of the parties covenants and agrees, at its own expense, to execute and deliver, at the request of the other party hereto, such further instruments of transfer and assignment and to take such other action as such other party may reasonably request to more effectively consummate the transactions contemplated by this Agreement.

 

[Signature Page to Bill of Sale, Assignment and Assumption Agreement]

 

 
 

 

Governing Law. This Agreement will be governed by and construed under the laws of the State of Texas without regard to conflicts of laws principles that would require the application of any other law.

 

Successors and Assigns. This Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right under or with respect to this Agreement or any provision of this Agreement, except such rights as will inure to a successor or permitted assignee pursuant to this Section 6.

 

Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile, or by .pdf or similar imaging transmission, will constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile, or by .pdf or similar imaging transmission, will be deemed to be their original signatures for any purpose whatsoever.

 

IN WITNESS WHEREOF, the parties have executed this Bill of Sale, Assignment and Assumption Agreement effective as of the date first above written.

 

  ASSIGNEE:
   
  HENRIETTA HEALTH AND REHAB CENTER, LLC, a Texas limited liability company
                         
  By:  
  Name:  
  Title:  
     
  ASSIGNOR:
   
  GCC HENRIETTA, LLC, a Texas limited liability company
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Bill of Sale, Assignment and Assumption Agreement]

 

 
 

 

EXHIBIT 6.6

ASSIGNMENT OF MANAGEMENT AGREEMENT

 

This ASSIGNMENT OF MANAGEMENT AGREEMENT (this “Agreement”) is made and entered into as of __________ ___, 2021 by and among GCC Henrietta, LLC, a Texas limited liability company (collectively, the “Manager”), Nocona Hospital District, as licensed operator (“Licensed Operator”) and Henrietta Health and Rehab Center, LLC, a Texas limited liability company (“Buyer”).

 

RECITALS:

 

A. Manager is the manager under that certain Management Agreement (the “Original Management Agreement”) by and between Manager and Licensed Operator, dated September 1, 2017, and as amended by that Amendment to Management Agreement, dated September 1, 2019 (the Original Management Agreement, as amended, the “Management Agreement”), for services provided at the licensed skilled nursing facility known as Henrietta Care Center/ Grace Center of Henrietta located at 807 W Bois D’Arc Street, Henrietta, Texas 76365; and

 

B. Pursuant to that certain Management Transfer Agreement, dated June ___, 2021, by and between Manager and Buyer, (the “MTA”), Buyer intends to acquire all of the Transferred Assets (as defined in the MTA), including the Management Agreement (as defined in the MTA).

 

NOW, THEREFORE, the parties agree as follows:

 

Transfer of Management Agreement. For the consideration set forth in the MTA and other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, Manager hereby sells, transfers, assigns, conveys, grants and delivers to Buyer, free and clear of any Encumbrances (as defined in the MTA), effective as of the date hereof, all of Manager’s right, title and interest in and to the Management Agreement TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns forever (such transfer of the Management Agreement, the “Transfer”).

 

Assignment and Assumption. Effective as of the date hereof, Manager hereby conveys, delivers and assigns to Buyer, its successors and assigns, and Buyer hereby accepts, assumes agrees to pay, perform and discharge when due, the obligations or liabilities under the Management Agreement solely to the extent arising after the Closing (as defined in the MTA) and excluding any liability arising out of a breach thereof or a violation of laws prior to Closing or any other matter subject to indemnification by Buyer under the MTA (such assignment and assumption of the Management Agreement, the “Assignment”).

 

Consent and Affirmation. To the extent that, pursuant to the Management Agreement, the Transfer and the Assignment constitutes an assignment or transfer or otherwise would not be permitted without Licensed Operator’s consent, Licensed Operator hereby consents to the Transfer and the Assignment. As between Manager and Licensed Operator, no documents that have not already been provided shall be required in connection with the Transfer and the Assignment.

 

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Estoppel Statements. With the understanding that Buyer, in assuming the Management Agreement, will rely on the statements contained in the numbered paragraphs below, Manager and Licensed Operator hereby certify in favor of Buyer as follows:

 

1. The Management Agreement, as amended, is unmodified and in full force and effect and there are no amendments, supplements or modifications of any kind (except as identified in the Recitals above).

 

2. To each of Manager’s and Licensed Operator’s best knowledge, (i) there is no continuing Default (as defined in the Management Agreement) by Manager or Licensed Operator in the performance or observance of any covenant, agreement or condition contained in the Management Agreement, and (ii) there has not occurred any event which, with the giving of notice or passage of time or both, would become such a Default.

 

Manager and Licensed Operator acknowledge and agree that Buyer and its direct and indirect lenders, investors, participants, partners, members, owners and their respective affiliates, successors and assigns shall be entitled to rely on each of Manager’s and Licensed Operator’s certifications, representations and warranties set forth herein.

 

Each of the undersigned representatives of Buyer, Manager and Licensed Operator that has executed this Agreement states that he or she is duly authorized to execute this instrument on behalf of Buyer, Manager or Licensed Operator, as applicable.

 

This Agreement may be executed in multiple counterparts.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have executed this Consent, Affirmation and Estoppel Agreement as of the date first written above.

 

MANAGER:  
   
GCC HENRIETTA, LLC  
a Texas limited liability company  
                              
By:  
Name:    
Title:    
     
LICENSED OPERATOR:  
   
NOCONA HOSPITAL DISTRICT,  
as licensed operator  
     
By:    
Name:    
Title:    
     
BUYER:  
     
HENRIETTA HEALTH AND REHAB CENTER, LLC,  
a Texas limited liability company  
     
By:    
Name:    
Title:    
     
Address for notices by Manager to Buyer:  
   
   
   

 

[Signature Page to Assignment of Management Agreement]

 

 
 

 

EXHIBIT 6.9

 

ASSIGNMENT AND ASSUMPTION OF RESIDENT TRUST FUNDS

 

This Assignment and Assumption Agreement (“Agreement”) is made as of [●], 2021, by and between GCC Henrietta, LLC, a Texas limited liability company (“Transferor”) and Henrietta Health and Rehab Center, LLC, a Texas limited liability company (“New Manager”).

 

Recitals:

 

A. Pursuant to that certain Management Transfer Agreement, dated as of [●], 2021 (“MTA”) between Transferor and New Manager, Transferor agreed to transfer and convey to the New Manager certain assets relating to the skilled nursing facility located at 807 W Bois D’Arc Street, Henrietta, TX 76365 and commonly known as Grace Care Center of Henrietta (the “Facility”).

 

B. Pursuant to the MTA, Transferor agreed to assign to New Manager, and New Manager agreed to assume any and all Resident Trust Funds.

 

Agreement:

 

Now, Therefore, the parties hereby agree as follows:

 

1. Assignment. Transferor hereby grants, conveys, transfers and assigns to New Manager, its successors and assigns, all of Transferor’s right, title and interest to all Resident Trust Funds held by Transferor in trust for the residents or tenants at the Facility, as applicable, on the terms and conditions set forth in the MTA.

 

2. Assumption of the Resident Trust Funds. In reliance upon Transferor’s covenants and representation contained in the MTA, New Manager hereby accepts the grant, conveyance, transfer and assignment by Transferor to New Manager, its successors and assigns, of all of Transferor’s right, title and interest to all Resident Trust Funds held by Transferor in trust for the residents or tenants at the Facility, as applicable, on the terms and conditions set forth in the MTA.

 

3. Miscellaneous Provisions.

 

(a) Transferor and New Manager agree, at the other party’s request, whether on or after the date hereof, and without further consideration, that each shall execute and deliver any and all further instruments and documents, and take such further actions, as the other party may reasonably request or as may reasonably be required in order more effectively to vest in New Manager all rights, titles and interests, in and to all Resident Trust Funds, and to evidence New Manager’s assumption of such rights, titles and interests, or to otherwise carry out the provisions of this Agreement.

 

(b) All of the terms, provisions and conditions of this Agreement shall be binding on, and shall inure to and be enforceable by, the parties hereto and their respective successors and assigns.

 

[Signature Page to Assignment and Assumption of Resident Trust Funds]

 

 
 

 

(c) Any word whose initial letter is capitalized is a defined term. Unless such term is defined herein, it shall have the same meaning as that attributed to such term in the MTA.

 

(d) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

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

 

  Transferor:
   
  GCC HENRIETTA, LLC
              
  By:  
  Print Name:  
  Title:  
     
  New Manager:
   
  HENRIETTA HEALTH AND REHAB CENTER, LLC
     
  By:  
  Print Name:  
  Title:  

 

[Signature Page to Assignment and Assumption of Resident Trust Funds]

 

 
 

 

EXHIBIT 6.16

 

RESTRICTIVE COVENANT AGREEMENT

 

This RESTRICTIVE COVENANT AGREEMENT (this “Agreement”) is entered into as of [●], 2021 by and among Real Living Property Holdings – Texas, LLC, a Texas limited liability company (“PSA Buyer”), Nocona Health and Rehab Center, LLC, a Texas limited liability company (“Nocona MTA Buyer”), Henrietta Health and Rehab Center, LLC, a Texas limited liability company (“Henrietta MTA Buyer”), Olney Health and Rehab Center, LLC, a Texas limited liability company (“Olney MTA Buyer” and collectively with the Nocona MTA Buyer, the Henrietta MTA Buyer and PSA Buyer, each a “Buyer” and collectively, “Buyers”), GCC Nocona, LLC, a Texas limited liability corporation (“Nocona MTA Seller”), Grace Properties Nocona, LLC, a Texas limited liability company (“Nocona PSA Seller”), GCC Henrietta, LLC, a Texas limited liability company (“Henrietta MTA Seller”), Grace Properties Henrietta, LLC, a Texas limited liability company (“Henrietta PSA Seller”), GCC Olney, LLC, a Texas limited liability company (“Olney MTA Seller”), Grace Properties Olney, LLC, a Texas limited liability company (“Olney PSA Seller”), and Heatlhlink Holdings Group LLC, d/b/a HMS Healthcare (“HMS” and collectively with Nocona MTA Seller, Nocona PSA Seller, Henrietta MTA Seller, Henrietta PSA Seller, Olney MTA Seller, and Olney PSA Seller, each a “Restricted Party” and collectively, the “Restricted Parties”).

 

WHEREAS, pursuant to (a) that certain Management Transfer Agreement, dated as of the date hereof (the “Nocona MTA”), by and between Nocona MTA Seller and Nocona MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Nocona PSA”) by and between Nocona PSA Seller and PSA Buyer; (b) that certain Management Transfer Agreement, dated as of the date hereof (the “Henrietta MTA”), by and between Henrietta MTA Seller and Henrietta MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Henrietta PSA”) by and between Henrietta PSA Seller and PSA Buyer; and (c) that certain Management Transfer Agreement, dated as of the date hereof (the “Olney MTA” and collectively with the Nocona MTA and the Henrietta MTA, the “MTA”), by and between the Olney MTA Seller and Olney MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Olney PSA” and collectively with the Nocona PSA and the Henrietta PSA, the “PSA”), Buyers acquired all of the Transferred Assets (as defined in the MTA) and the Land (as defined in the PSA, and collectively with the Transferred Assets, the “Purchased Assets”);

 

WHEREAS, in executing the MTA and PSA, as applicable, and agreeing to pay the Purchase Price, Buyers considered the substantial goodwill of the Purchased Assets and the retention of the Protected Information to be valuable assets and an essential inducement to the execution of the MTA and PSA, as applicable, and the consummation of the transactions contemplated thereby;

 

WHEREAS, the parties hereto acknowledge and agree that the Restricted Parties could substantially dilute the value of such goodwill and Protected Information by competing with any Buyer or by soliciting or hiring their employees and/or customers or otherwise breaching or violating the provisions of this Agreement;

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

WHEREAS, each Restricted Party has agreed to accept certain restrictions as set forth in this Agreement in order to induce Buyers to enter into and consummate the MTA and PSA, as applicable, and the transactions contemplated thereby; and

 

WHEREAS, none of the Buyers would obtain the benefit of the bargain set forth in the MTA and PSA, as applicable, as specifically negotiated by the parties thereto unless this Agreement was executed and delivered and specifically performed and enforced.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, the consideration to be received by the Restricted Parties on the Closing Date under the MTA and PSA, as applicable, or as a result of the consummation of the transactions effected by the MTA and PSA, as applicable, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Defined Terms. Capitalized terms used in this Agreement but not defined in this Agreement shall have the meanings ascribed to such terms in the MTA or PSA, as applicable.

 

Non-Competition Covenants.

 

Restrictive Covenants. As a material inducement to Buyers to enter into the MTA and PSA, as applicable, and to consummate the transactions contemplated thereby, each Restricted Party hereby covenants and agrees that for a period commencing on the Closing Date and ending on the fifth (5th) anniversary thereof (the “Restrictive Period”), such Restricted Party shall not, and shall cause its respective affiliates not to, directly or indirectly:

 

own any interest in, manage, control, participate in, consult with, render services for (as a director, officer, employee, agent, broker, partner, contractor, consultant or otherwise) or be or become engaged or involved in any Restricted Business, including by being or becoming an organizer, owner, co-owner, trustee, promoter, affiliate, investor, lender, partner, joint venturer, principal, stockholder, officer, director, employee, independent contractor, manager, salesperson, representative, associate, consultant, agent, broker, supplier, licensor, analyst or advisor of, to or with any Restricted Business;

 

make any investment (whether equity, debt or otherwise) in, lend or otherwise provide any money or assets to, or provide any guaranty or other financial assistance to any Restricted Business; or

 

provide any information, assistance, support, analysis, product, technology or intellectual property to any Person engaged or involved in (or anticipated to be engaged or involved in) any Restricted Business;

 

in each case, anywhere within the Restricted Territory; provided that nothing herein shall prohibit any Restricted Party from being a passive owner of not more than 2% of any class of the outstanding equity of an entity that is publicly traded so long as such Restricted Party has no active participation in the business of such entity.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Definitions. As used in this Agreement:

 

Business” means the business of owning, operating or managing a skilled nursing facility or assisted living facility.

 

Facility” has the meaning ascribed in the applicable MTA.

 

Protected Information” means the information concerning the Business and the Facilities, not already generally available to the public that is designated confidential or treated in that manner (including all tangible or intangible embodiments thereof).

 

Restricted Business” means any business which competes with or is substantially similar to the Business in the Restricted Territory.

 

Restricted Territory” means the area within a seventy-five (75) mile radius of each of the Facilities.

 

Non-Solicitation/Non-Hire of Employees. As material inducement to Buyers to enter into the MTA and PSA, as applicable, and to consummate the transactions contemplated thereby, each Restricted Party hereby covenants and agrees for the duration of the Restrictive Period to not, and to cause its affiliates not to, directly or indirectly on its own behalf or on behalf of any third party or Person, (a) induce or attempt to induce any employee of any Buyer to leave the employ of such Buyer or in any way interfere with the relationship between any Buyer and any such employee thereof or (b) hire any person who was an employee of any Buyer during the 365-day period immediately following the date on which such Person ceased to be an employee of such Buyer. Notwithstanding the foregoing, the placement of general advertisements that may be targeted to a particular geographic or technical area, but are not targeted specifically towards employees of any Buyer, shall not be deemed to be a solicitation for purposes of this Section 0.

 

Non-Solicitation of Business Relationships. As material inducement to Buyers to enter into the MTA and PSA, as applicable, and to consummate the transactions contemplated thereby, each Restricted Party hereby covenants and agrees for the duration of the Restrictive Period to not, and to cause its affiliates not to, directly or indirectly, (a) call on, solicit or service any patient, sales representative, referral source, partner, supplier or other Person that has a business relationship with any Buyer in order to induce or attempt to induce such Person to cease doing business with such Buyer, or in any way interfere with the relationship between any such patient, sales representative, referral source, partner, supplier or other Person, on the one hand, and any such Buyer, on the other hand or (b) divert or attempt to divert from any Buyer any business or business opportunity whatsoever.

 

Representations and Warranties of the Restricted Parties. Each Restricted Party hereby makes the representations and warranties set forth in this Section 5 to Buyers:

 

Authority; Enforceability. Each Restricted Party has all necessary legal capacity, power and authority to execute and deliver this Agreement and to perform such Restricted Party’s obligations hereunder. This Agreement has been duly and validly executed and delivered by each Restricted Party and constitutes a legal, valid and binding obligation of the Restricted Parties, enforceable against any Restricted Party in accordance with its terms.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

No Conflict. The execution and delivery by each Restricted Party of this Agreement do not, and the performance of such Restricted Party’s obligations hereunder and the consummation of the transactions contemplated hereby shall not, conflict with or violate any law or order, as applicable, or agreement by which any Restricted Party’s properties, rights or assets are bound or affected.

 

Consultation with Counsel. Each Restricted Party has consulted with legal counsel regarding the Non-Competition and Related Covenants and, based on such consultation, has determined and hereby acknowledges and agrees that the Non-Competition and Related Covenants are reasonable in terms of duration, scope and area restrictions and are necessary to protect the substantial goodwill acquired by Buyers, the Protected Information and the substantial consideration paid to the Restricted Parties pursuant to the MTA and PSA and in connection with the consummation of the transactions contemplated thereby.

 

No Restriction on Earning a Living. Each Restricted Party hereby acknowledges that the provisions of Section 0, Section 0 and Section 0 do not preclude any Restricted Party from earning a livelihood, nor do they unreasonably impose limitations on any Restricted Party’s ability to earn a living. In addition, each Restricted Party hereby acknowledges that the potential harm to the Buyers of non-enforcement of this Agreement outweighs any harm to the Restricted Parties or any of their respective affiliates of enforcement (by injunction or otherwise) of this Agreement.

 

Confidentiality and Non-Disparagement.

 

Each Restricted Party hereby covenants and agrees to not, and to cause its respective affiliates not to, (i) retain or use any Protected Information for the benefit, purposes or account of any Restricted Party or any other Person or (ii) disclose any Protected Information, other than necessary disclosures to his or its legal and financial advisors who agree to maintain the confidentiality of such Protected Information.

 

In the event that any Restricted Party is legally required, based on the written opinion of outside legal counsel, to disclose any Protected Information, the Restricted Parties shall give Buyers prompt written notice of such requirement so that Buyers may seek an appropriate protective order or other remedy and the Restricted Parties shall cooperate with Buyers to obtain such protective order. In the event that such protective order or other remedy is not obtained, the Restricted Parties shall furnish only that portion of the Protected Information that is legally required to be disclosed, based on the written opinion of outside legal counsel, and use his, her, or its best efforts to obtain assurances that confidential treatment will be accorded to such Protected Information.

 

Except as required by law, each Restricted Party hereby covenants and agrees not to disclose to any Person, other than any Restricted Party’s legal and financial advisors, the existence or contents of this Agreement.

 

Each Restricted Party hereby covenants and agrees to not, and to cause its respective affiliates not to, make any negative or disparaging statements or communications regarding any Buyer or any of their respective businesses, services, directors, officers, employees, contractors or consultants.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Miscellaneous.

 

Reasonableness. Each Restricted Party expressly acknowledges that this Agreement is reasonable and valid in all respects and irrevocably waive (and irrevocably agree not to raise) as a defense any issue of reasonableness (including the reasonableness of the Restricted Business or the duration and scope of this Agreement) in any proceeding to enforce any provision of this Agreement, the express intention of the parties being to provide for the legitimate and reasonable protection of the interests of Buyers by enforcement of this Agreement as written.

 

Indemnification. Each Restricted Party shall indemnify and save each Buyer and its respective affiliates, members, equityholders, directors, officers, employees, agents and representatives (each, an “Indemnified Party”) harmless of and from any claim, demand, action, cause of action, judgment, loss (including loss of profits), liability, damage or expense suffered by or imposed upon the Indemnified Party as a result of, in connection with or arising out of any violation or breach of this Agreement by the Restricted Parties.

 

Acknowledgement of Reliance and Equitable Remedies. Each Restricted Party acknowledges and agrees that: (i) the covenants and agreements contained in Section 0, Section 0 and Section 0 (collectively, the “Non-Competition and Related Covenants”) are necessary, fundamental and required for the protection of the goodwill of Buyers and the Purchased Assets acquired by Buyers pursuant to the MTA and PSA; (ii) the Non-Competition and Related Covenants relate to matters that are of a special, unique and extraordinary value; (iii) a breach or violation by any Restricted Party of any of the Non-Competition and Related Covenants will result in irreparable harm and damages that cannot be adequately compensated by a monetary award and, accordingly, Buyers or one or more of their subsidiaries or affiliates shall, in addition to all other available remedies (including seeking such monetary damages as it can show it has sustained by reason of such breach), be entitled to injunctive or other equitable relief to prevent or redress any such breach or violation (without posting a bond or other security and without having to prove the inadequacy of the available remedies at law); (iv) pursuant to the MTA and PSA, as applicable, the Restricted Parties received substantial cash payments and other valuable consideration; (v) as a condition of Buyers’ willingness to consummate the transactions contemplated by the Purchase Agreements, the Restricted Parties are entering into this Agreement and agreeing to the Non-Competition and Related Covenants; (vi) this Agreement is being executed in connection with the consummation of the transactions contemplated by the MTA and PSA, as applicable, pursuant to which Buyers acquired the Purchased Assets and substantial goodwill associated therewith; and (vii) this Agreement is intended to comply with the laws of the State of Texas and all other jurisdictions that might be deemed to be applicable hereto and which restrict or otherwise limit the enforceability of a contract that restrains a Person from engaging in a profession, trade or business. In the event of any breach or violation by any Restricted Party of any of the covenants contained in this Agreement, the time period of such covenant with respect to such Restricted Party shall be tolled and extended until such breach or violation is resolved.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Texas without giving effect to any choice or conflict of Law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of Texas. Each party hereto hereby irrevocably and unconditionally consents to submit to the sole and exclusive jurisdiction of any state or federal court located within the State of Texas (collectively, the “Chosen Courts”) for any litigation arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in the Chosen Courts and agrees not to plead or claim in any Chosen Court that such litigation brought therein has been brought in any inconvenient forum; provided, for the avoidance of doubt, that nothing in this Agreement shall prohibit Buyers from enforcing a judgment in any other jurisdiction. Each party hereto agrees, (i) to the extent such party is not otherwise subject to service of process in the State of Texas, to appoint and maintain an agent in the State of Texas as such party’s agent for acceptance of legal process and (ii) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service. Service made pursuant to clause (i) or (ii) above shall have the same legal force and effect as if served upon such party personally within the State of Texas

 

Non-Merger. Except as otherwise expressly provided in this Agreement, the covenants, representations and warranties set forth herein shall not merge upon and shall survive the Closing of the transactions contemplated under the MTA and PSA, as applicable, and, notwithstanding such Closing or any investigation made by or on behalf of any party, shall continue in full force and effect. Such Closing shall not prejudice any right of one party against any other party in respect of anything done or omitted under this Agreement or in respect of any right to damages or other remedies.

 

Severability. Subject to Section 7(g), in the event any provision of this Agreement is found to be void and unenforceable by a court or other tribunal of competent jurisdiction, the remaining provisions of this Agreement shall nevertheless be binding upon the parties hereto with the same effect as though the void or unenforceable part had been severed and deleted or reformed to be enforceable.

 

Judicial Limitation. It is expressly understood and agreed that, although each of the parties hereto consider the restrictions contained herein to be reasonable, if at any time a court or other tribunal of competent jurisdiction finally determines or adjudicates that any portion of the Non-Competition and Related Covenants is unenforceable by reason of it extending for too great of a period of time or over too great of a geographical area or by reason of it being too extensive in any other respect, then such Non-Competition and Related Covenant and this Agreement shall not be rendered void but such Non-Competition and Related Covenant shall be deemed amended to apply as to such maximum period of time, maximum geographical area, or maximum extent in all other respects, as the case may be, as such court may judicially determine or adjudicate to be enforceable. Alternatively, if any court or other tribunal of competent jurisdiction finally determines or adjudicates that any portion of the Non-Competition and Related Covenants is unenforceable, and such restriction cannot be amended pursuant to the preceding sentence so as to make such Non-Competition and Related Covenant enforceable, such judicial determination or adjudication shall not affect the enforceability of any other Non-Competition and Related Covenant.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Notice. All notices, requests, demands, claims, and other communications hereunder shall be in writing (including by email) and sufficient if delivered personally, sent by nationally recognized overnight courier or by registered or certified mail (postage prepaid, return receipt requested) or by email, with delivery or read receipt or confirmation requested and received (if applicable) as follows:

 

If to the Buyers, to:

 

__________________________

__________________________

__________________________

__________________________

Attn: _____________________

Email: ____________________

 

with a copy to (which shall not constitute notice to the Buyers):

 

Bass, Berry & Sims PLC

150 3rd Avenue S., Suite 2800

Nashville, TN 37201

Attn:    Angela Humphreys and Price W. Wilson

E-Mail: ahumphreys@bassberry.com; pwilson@bassberry.com

 

If to the Restricted Parties, to:

 

__________________________

__________________________

__________________________

__________________________

Attn: _____________________

Email: ____________________

 

with a copy to (which shall not constitute notice to the Restricted Parties):

 

__________________________

__________________________

__________________________

__________________________

Attn: _____________________

Email: ____________________

 

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

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

Entire Agreement; Amendments and Waivers. This Agreement (i) represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof, (ii) supersedes all prior understandings, both written and oral, among the parties with respect to the subject matter hereof, and (iii) can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement, signed by Buyers and the Restricted Parties. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All rights, remedies and benefits expressly provided for in this Agreement are cumulative and are not exclusive of any rights, remedies or benefits provided for by law or in this Agreement, and the exercise of any remedy by a party hereto shall not be deemed an election to the exclusion of any other remedy (any such claim by the other party being hereby waived).

 

Interpretative Matters. Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

 

Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

Words denoting any gender shall include all genders. Where a word is defined herein, references to the singular shall include references to the plural and vice versa.

 

A reference to any party to this Agreement or any other agreement or document shall include such party’s successors and permitted assigns.

 

All references to a day or days shall be deemed to refer to a calendar day or calendar days, as applicable, unless otherwise specifically provided.

 

Negotiation and Drafting. The parties have participated jointly in the negotiation and drafting of this Agreement and the other agreements and documents contemplated herein. In the event of an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement and such other agreements and documents will be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of authoring any of the provisions of this Agreement or any other agreements or documents contemplated herein.

 

Counterparts. This Agreement may be executed in one or more counterparts, any one of which may be by facsimile, electronic signature (including via DocuSign), digital imaging device (i.e., pdf format) or similar electronic format, all of which taken together shall constitute one and the same instrument.

 

Assignment. This Agreement is personal to the Restricted Parties, and none of the Restricted Parties’ rights and duties hereunder shall be assignable or delegable by the Restricted Parties, as applicable. Any purported assignment or delegation by the Restricted Parties in violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement may be assigned by any Buyer to (i) any of its affiliates, (ii) a Person that becomes, directly or indirectly, a successor in interest (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business, operations, rights, properties or assets of such Buyer or (iii) any of its lenders as collateral security. Each Restricted Party acknowledges and agrees that upon such assignment, the rights and obligations of such Buyer hereunder shall be the rights and obligations of such affiliate or successor.

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Restrictive Covenant Agreement as of the date first above written.

 

  Real Living Property Holdings – Texas, LLC
              
  By:  
  Name:  
  Title:  
     
  NOCONA HEALTH AND REHAB CENTER, LLC
     
  By:  
  Name:  
  Title:  
     
  HENRIETTA HEALTH AND REHAB CENTER, LLC
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

  OLNEY HEALTH AND REHAB CENTER, LLC
                
  By:  
  Name:  
  Title:  
     
  GCC Nocona, LLC
     
  By:  
  Name:  
  Title:  
     
  GRACE PROPERTIES NOCONA, LLC
     
  By:  
  Name:  
  Title:  
     
  GCC HENRIETTA, LLC
     
  By:  
  Name:  
  Title:  
     
  GRACE PROPERTIES HENRIETTA, LLC
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Restrictive Covenant Agreement]

 
 

 

  GCC OLNEY, LLC
                 
  By:  
  Name:  
  Title:  
     
  GRACE PROPERTIES OLNEY, LLC
     
  By:  
  Name:  
  Title:  
     
  Heatlhlink Holdings Group LLC
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Restrictive Covenant Agreement]

 

 

 

Exhibit 2.7

 

GUARANTEE OF INDEMNIFICATION OBLIGATIONS

 

This GUARANTEE OF INDEMNIFICATION OBLIGATIONS (this “Guarantee”) is made as of the 21st day of June, 2021, by Jake Hallsted, an individual (“Guarantor”), for the benefit of Nocona Health and Rehab Center, LLC, a Texas limited liability company (“Nocona MTA Buyer”), Henrietta Health and Rehab Center, LLC, a Texas limited liability company (“Henrietta MTA Buyer”), Olney Health and Rehab Center, LLC, a Texas limited liability company (“Olney MTA Buyer” and collectively with the Nocona MTA Buyer and Henrietta MTA Buyer, “MTA Buyers”) and Real Living Property Holdings – Texas, LLC, a Texas limited liability company (“PSA Buyer” and collectively with MTA Buyers, “Buyers”). This Guarantee will become effective as of the closing of the transactions contemplated by the MTAs and the PSAs and in the event such agreements are terminated, this Guarantee will terminate and be of no further force or effect.

 

RECITALS:

 

WHEREAS, reference is hereby made to (a) that certain Management Transfer Agreement, dated as of the date hereof (the “Nocona MTA”), by and between GCC Nocona, LLC, a Texas limited liability corporation (“Nocona MTA Seller”) and Nocona MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Nocona PSA”) by and between Grace Properties Nocona, LLC, a Texas limited liability company (“Nocona PSA Seller”) and PSA Buyer; (b) that certain Management Transfer Agreement, dated as of the date hereof (the “Henrietta MTA”), by and between GCC Henrietta, LLC, a Texas limited liability company (“Henrietta MTA Seller”) and Henrietta MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Henrietta PSA”) by and between Grace Properties Henrietta, LLC, a Texas limited liability company (“Henrietta PSA Seller”) and PSA Buyer; and (c) that certain Management Transfer Agreement, dated as of the date hereof (the “Olney MTA” and collectively with the Nocona MTA and the Henrietta MTA, the “MTAs”), by and between the GCC Olney, LLC, a Texas limited liability company (“Olney MTA Seller” and collectively with the Nocona MTA Seller and Henrietta MTA Seller, the “MTA Sellers”) and Olney MTA Buyer, and the related Purchase and Sale Agreement, dated as of the date hereof (the “Olney PSA” and collectively with the Nocona PSA and the Henrietta PSA, the “PSAs”), by and between Grace Properties Olney, LLC, a Texas limited liability company (“Olney PSA Seller” and collectively with the Nocona PSA Seller, Henrietta PSA Seller, and MTA Sellers, the “Sellers”); and

 

WHEREAS, as a condition to entering into the MTAs and the PSAs, Guarantor is required to deliver this Guarantee for the benefit of Buyers.

 

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Guarantee. Guarantor hereby irrevocably and unconditionally guarantees, as primary obligor and not merely as surety, the payment of any of Sellers’ indemnification obligations pursuant to Section 8.1 of the MTAs and Sections 7 and 11 of the PSAs, in the aggregate up to a maximum of seventy-five thousand dollars ($75,000), subject to the terms, procedures and limitations set forth in Sections 8.3 and 8.4 of the MTA (except Section 8.4(c) which will not be applicable to this Guarantee) and Section 15 of the PSAs (collectively, the “Guaranteed Obligations”).

 

2. Certain Waivers. To the fullest extent permitted by applicable law, Guarantor waives presentment to, demand of payment from and protest to Buyers, and also waives notice of acceptance of this Guarantee and notice of protest for non-payment.

 

[Signature Page to Guarantee of Transferor's Indemnification Obligations]

 

 

 

 

3. Guarantee Absolute. Guarantor agrees that this Guarantee constitutes an absolute, unconditional, present and continuing guarantee of payment and not merely of collection, and waives any right to require that any resort be had by Buyers (a) against Sellers for the Guaranteed Obligations or (b) against any other right or remedy available to Buyers by contract, applicable law or otherwise. It is the intent of this Guarantee that Buyers shall have resort to Guarantor without asserting or resorting to any remedy against Sellers and without demand to it, as though Guarantor was primarily liable for any Guaranteed Obligations.

 

4. Additional Waivers. Without limiting the foregoing, Guarantor hereby waives and relinquishes all rights and remedies now or thereafter accorded by applicable law to sureties and/or guarantors or any other accommodation parties, under the any statutory provision, common law or any other provision of law, custom or practice, and agrees not to assert or take advantage of any such rights or remedies, including, without limitation, (a) any right to require Buyers to proceed against Sellers or to pursue any other remedy in Buyers’ power before proceeding against Guarantor; (b) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of seller, or any defect in the formation of Sellers; (c) any defense that may arise by reason of the incapacity, lack of authority, insolvency, bankruptcy, death or disability of Sellers or the failure of Buyers to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of Sellers; (d) notice of the existence, creation or incurrence of any new or additional indebtedness or obligation of Sellers under the MTAs or PSAs or of any action or non-action on the part of the Sellers under the MTAs or PSAs or in connection with any Guaranteed Obligation; (e) any defense based upon an election of remedies by Buyers which destroys or otherwise impairs any subrogation rights of Guarantor or any right of Guarantor to proceed against Sellers for reimbursement; or both; (f) any defense arising because of Buyers’ election, in any proceeding instituted under the federal bankruptcy code or any state debtor relief laws; (g) any defense based upon the validity or enforceability of the MTAs or PSAs; (h) any defense or rights arising under any appraisal, valuation, stay, extension, marshaling of assets, redemption or similar law or requirement, which may delay, prevent or otherwise affect the performance by Guarantor of any of the Guaranteed Obligations; (i) diligence, presentment and demand; and (j) any defense based on any borrowing or grant of a security interest under Section 364 of the federal bankruptcy code.

 

5. Representations and Warranties by Guarantor. Guarantor makes the following representations and warranties to Buyers:

 

(a) The value of the consideration received, and to be received, by Guarantor in connection with the transactions contemplated under the MTAs and PSAs is worth at least as much as the liabilities and obligations of Guarantor under this Guarantee, and that such liabilities and obligations are expected to benefit Guarantor either directly or indirectly;

 

(b) Guarantor has the requisite power, authority and legal right to execute and to deliver and to perform and observe the obligations and provisions of this Guarantee;

 

(c) This Guarantee has been duly executed and delivered by Guarantor, and the provisions of this Guarantee constitute the valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with the terms hereof; and

 

(d) No consent, approval or other authorization of, or registration, declaration or filing with, any governmental authority or other person is required for the due execution and delivery by Guarantor of this Guarantee, or for the performance by or the validity or enforceability of this Guarantee against Guarantor.

 

[Signature Page to Guarantee of Transferor's Indemnification Obligations]

 

 

 

 

6. Counterparts. This Guarantee may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.

 

7. Successors. This Guarantee shall be binding upon and inure to the benefit of the successors, assignees, personal representatives, heirs and legatees of all the respective parties hereto.

 

8. Governing Law. This Guarantee shall be governed by, interpreted under, and construed and enforceable in accordance with, the laws of the State of Texas.

 

IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed as of the date first written above.

 

  GUARANTOR:
   
  /s/ Jake Hallstead
  Jake Hallstead

 

[Signature Page to Guarantee of Transferor's Indemnification Obligations]

 

 

 

 

ACKNOWLEDGED AND AGREED:

 

BUYERS:

 

Nocona Health and Rehab Center, LLC, a  
Texas limited liability company  
     
By: /s/ Louis Collier                
Louis Collier, Chief Executive Officer  
     
HENRIETTA Health and Rehab Center, LLC, a  
Texas limited liability company  
     
By: /s/ Louis Collier  
Louis Collier, Chief Executive Officer  
     
OLNEY Health and Rehab Center, LLC, a  
Texas limited liability company  
     
By: /s/ Louis Collier  
Louis Collier, Chief Executive Officer  
     
Real Living Property Holdings – Texas,  
LLC, a Texas limited liability company  
     
By: /s/ Louis Collier  
Louis Collier, Chief Executive Officer  

 

[Signature Page to Guarantee of Transferor's Indemnification Obligations]