Clearday, Inc. (Form: 10-Q, Received: 11/19/2021 17:39:29)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 0-21074

CLEARDAY, INC.

(Exact name of registrant as specified in its charter)

Delaware

77-0158076

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

8800 Village Drive, Suite 106, San Antonio, Texas 78217

(Address of principal executive offices & zip code)

(210) 451-0839

(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ or No ☒

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001		CLRD		OTCQB

We had 14,914,458 shares of our common stock outstanding as of the close of business on November 17, 2021.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995 for these forward-looking statements. Our forward-looking statements relate to future events or our future performance and include, but are not limited to, statements concerning our business strategy, future commercial revenues, market growth, capital requirements, new product introductions, expansion plans and the adequacy of our funding. Other statements contained in this Report that are not historical facts are also forward-looking statements. We have tried, wherever possible, to identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and other comparable terminology.

We caution investors that any forward-looking statements presented in this Report, or that we may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information currently available to, us. Such statements are based on assumptions and the actual outcome will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on known results and trends at the time they are made, to anticipate future results or trends.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include the following:

	●	our limited cash and a history of losses;

		Our ability to fund our innovative care products and services, including Clearday at Home;

	●	the impact of any financing activity on the level of our stock price;

	●	the dilutive impact of any issuances of securities to raise capital;

	●	cost and uncertainty from compliance with environmental regulations and the regulations related to operating assisted living or memory care facilities;

	●	local, regional, national and international economic conditions and events, and the impact they may have on us and our customer;

		Increases in our labor costs or in costs we pay for goods and services;

		Increases in tort and insurance liability costs;

		Delays or nonpayment of government payments to us, including payments related to the CARES Act; and

		Circumstances that adversely affect the ability of older adults or their families to pay for our services, such as economic downturns, weakening investment returns, higher levels of unemployment among our residents or potential residents’ family members, lower levels of consumer confidence, stock market volatility and/or changes in demographics.

For further discussion of these and other factors see, “Risk Factors” in our Registration Statement on Form S-4, as amended and supplemented (Registration No. 333-256138) and our disclosures under Part II – Item 1A. Risk Factors in this Report.

This Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Report.

Clearday, Inc.

September 30, 2021

Table of Contents

		Page
PART I	Financial Information	1
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets – September 30, 2021 and December 31, 2020 (unaudited)	1
	Condensed Consolidated Statements of Operations – Three Months ended September 30, 2021 and 2020 and Nine Months Ended September 30, 2021 and 2020 (unaudited)	2
	Condensed Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Deficit – Three Months Ended September 30, 2020 and 2021 and Nine Months Ended September 30, 2021 and 2020 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2021 and 2020 (unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
PART II	Other Information	52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3.	Defaults Upon Senior Securities	67
Item 4.	Mine Safety Disclosures	67
Item 5.	Other Information	67
Item 6.	Exhibits	67

References in this Report to the “Clearday”, “Company”, “we”, “us” include Clearday, Inc. and its consolidated subsidiaries, unless otherwise expressly stated or the context indicates otherwise. References in this report to “STI” or “Superconductor” are to the Company prior to the closing of the merger by the Company with Allied Integral United, Inc. (“AIU”) that was described our registration statement on Form S-4, as amended and supplemented (Registration No. 333-256138), unless otherwise expressly stated or the context indicates otherwise.

The mark “Clearday” is protected under applicable intellectual property laws. Solely for convenience, trademarks of Clearday referred to in this Report may appear without the ^TM symbol, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and related intellectual property rights.

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

Introductory Note. This Report is the first Quarterly Report on Form 10-Q by the Company after the merger (the “merger”) by the Company with Allied Integral United, Inc. (“AIU”) that was described our registration statement on Form S-4, as amended and supplemented (Registration No. 333-256138). In connection with the closing of the merger, and effective upon the closing of the merger, the Company elected to change the date of each fiscal quarter to the last calendar day of such quarter, which is the same quarter ending date as adopted by the accounting principles of AIU, which is the accounting acquiror in the merger under Generally Accepted Accounting Principles, and Regulation S-X. The Company has assessed the change of the fiscal quarter ending dates and believes that the change in quarter ending dates by the Company has not had a material impact on the financial results for the quarter ended provided in this Report and improves the comparability between fiscal periods.

Clearday, Inc.

Condensed Consolidated Balance Sheets

(unaudited)


	September 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash	$	369,866		$	780,262
Restricted cash		194,712			89,804
Accounts receivable, net of allowance of $108,360 and $68,911, respectively		38,146			198,037
Prepaid expenses and other current assets		524,181			179,497
Current assets held for sale (Notes 2 and 5)		150,298			393,307
Total current assets		1,277,203			1,640,907

Goodwill		3,282,392			-
Operating lease right-of-use assets		33,437,991			36,452,438
Property and equipment, net		7,221,501			8,853,284
Other long-term assets		249,255			448,580
Non-current assets held for sale (Notes 2 and 5)		6,180,221			8,396,215
Total assets	$	51,648,563		$	55,791,424
LIABILITIES, MEZZANINE EQUITY AND DEFICIT
Current liabilities:
Accounts payable	$	3,550,129		$	4,688,385
Accrued expenses and other current liabilities		3,700,956			1,097,362
Accrued interest		147,047			103,631
Current portion of long-term debt		10,453,977			1,623,375
Deferred revenue		14,194			367,122
Finance lease liabilities		911,745			790,126
Other current liabilities		1,122,208			1,635,123
Current liabilities related to assets held for sale (Notes 2 and 5)		3,160,719			5,339,003
Total current liabilities		23,060,975			15,644,127

Long-term liabilities:
Finance lease liabilities		36,911,504			37,617,081
Mortgage note payable		907,549			639,883
Long-term debt, less current portion, net		2,616,218			4,810,673
Non-current liabilities related to assets held for sale (Notes 2 and 5)		5,427,837			5,906,804
Total liabilities		68,924,083			64,618,568
Commitments and contingencies		-			-
Mezzanine equity
Series F 6.75% Convertible Preferred Stock, $.001 par value, 5,000,000 share authorized, 4,797,052 and 4,606,853 issued and outstanding at September 30, 2021 and December 31, 2020, respectively. Liquidation value $96,296,493 and $92,137,060 at September 30, 2021 and December 31, 2020, respectively.		15,132,602			10,969,077

Deficit:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized
Series A Convertible Preferred Stock, $0.001 par value, 2,000,000 shares authorized, 328,925 and 328,925 shares issues and outstanding, as of September 30, 2021 and December 31, 2020, respectively. Liquidation value of $329 and $329 at September 30, 2021 and December 31, 2020, respectively		329			329
Common stock, $.001 par value, 80,000,000 shares authorized, 14,914,458 and 13,048,942 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		14,914			13,049
Additional paid-in-capital		25,957,200			17,913,640
Accumulated deficit		(68,647,473	)		(45,522,907	)
Clearday, Inc. shareholders deficit:		(42,675,030	)		(27,595,889	)
Non-controlling interest in subsidiaries		10,266,908			7,799,668
Total deficit		(32,408,122	)		(19,796,221	)
TOTAL LIABLITIES, MEZZANINE EQUITY AND DEFICIT	$	51,648,563		$	55,791,424

See accompanying notes to the unaudited condensed consolidated financial statements.

Clearday, Inc.

Condensed Consolidated Statements of Operations

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
REVENUES
Resident fee revenue, net	$	2,851,577		$	2,636,826		$	9,893,620		$	9,306,013

OPERATING EXPENSES
Operating expenses		5,388,948			4,066,776			14,912,011			12,979,825
Selling, general and administrative expenses		3,540,229			999,112			7,986,175			4,643,417
Research & development		120,000			812,816			534,727			1,112,816
Loss on Impairment		4,396,228			-			4,396,228			-
Depreciation and amortization expenses		129,074			149,541			433,198			461,337
Total operating expenses		13,574,479			6,028,245			28,262,339			19,197,395

Operating loss		(10,722,902	)		(3,391,419	)		(18,368,719	)		(9,891,382	)

Other (income) expenses
Interest and other expense		30,951			95,466			304,350			378,146
Gain on sale of investment		(121,080	)		-			(1,172,151	)		-
Unrealized gain/(loss) on equity investments		(220,000	)		1,040,000			(744,000	)		1,040,000
Other (income)/expenses		(451,184	)		(5,699	)		(589,293	)		(25,986	)
Total other (income)/expenses		761,313			1,129,767			2,201,094			1,392,160

Net Loss from continuing operations		(9,961,589	)		(4,521,187	)		(16,167,625	)		(11,283,542	)
(Loss) Income from discontinued operations, net of tax (Note 5)		(501,832	)		(899,884	)		130,411			3,097,179
Net loss		(10,463,421	)		(5,421,071	)		(16,037,214	)		(8,186,363	)
Net loss attributable to non-controlling interest		283,974			543,006			885,042			1,674,271
Preferred stock dividend		(2,089,878	)		(2,712,400	)		(7,617,716	)		(8,197,740	)
Net loss applicable to Clearday, Inc.	$	(12,269,325	)	$	(7,590,465	)	$	(22,769,888	)	$	(14,709,833	)

Basic and diluted loss per share attributable to Clearday, Inc.
Net loss from continued operations		(0.84	)		(0.53	)		(1.73	)		(1.51	)
Net loss/income from discontinued operations		(0.04	)		(0.07	)		0.01			0.26
Net loss		(0.88	)		(0.60	)		(1.72	)		(1.25	)
Weighted average common shares basic and diluted outstanding		13,819,548			12,723,493			13,242,887			11,721,235

See accompanying notes to the unaudited condensed consolidated financial statements.

Clearday, Inc.

Condensed Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Deficit

Three Months Ended

(unaudited)

	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			(Deficit)			Interest			(Deficit)
	Mezzanine Equity Series F Preferred Stock				Preferred Stock Series A				Common Stock				Additional Paid- in		Accumulated			Clearday, Inc. shareholder			Non-Controlling			Total
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit			Interest			Deficit

Balance at June 31, 2020		4,470,374	$	8,239,508		328,925	$	329		12,723,492	$	12,723	$	14,055,071	$	(29,917,434	)	$	(15,849,311	)	$	5,361,148		$	(10,488,163	)
Stock compensation for services		-		-		-		-		-		-		570,612		-			570,612			60,000			630,612
Stock compensation for services, shares
Issuance of series I Convertible Preferred Stock in subsidiary		-		-		-		-		-		-		-		-			-			400,000			400,000
PIK dividends on Convertible Preferred Stock		67,810		1,356,200		-		-		161,701		162		1,356,038		(2,712,400	)		(1,356,200	)		-			(1,356,200	)
Issuance of common stock to former stockholders of Superconductor upon merger
Issuance of common stock to former stockholders of Superconductor upon merger, shares
Issuance of partnership units in subsidiary
Issuance of partnership units in subsidiary
PIK dividends on Series A Convertible Preferred Stock
PIK dividends on series A convertible preferred Stock, shares
Issuance of common stock in connection with reverse merger
Issuance of common stock in connection with reverse merger, shares
Net Loss		-		-		-		-		-		-		-		(4,878,065	)		(4,878,065	)		(543,006	)		(5,421,071	)
Balance at Sept 30, 2020		4,538,184		9,595,708		328,925		329		12,885,193		12,885		15,981,721		(37,507,899	)		(21,512,964	)		5,278,142			(16,234,822	)

	Mezzanine Equity Series F Preferred Stock				Preferred Stock Series A				Common Stock				Additional Paid- in		Accumulated			Clearday, Inc. Shareholder			Non-Controlling			Total
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit			Interest			Deficit
Balance at June 30, 2021		4,745,049	$	13,732,997		328,925	$	329		13,514,408	$	13,514	$	21,952,883	$	(56,023,470	)	$	(34,056,744	)	$	9,108,766		$	(24,947,978	)
Stock compensation for services		-		-		-		-		-		-		639,258		-			639,258			10,765			650,023
Issuance of common stock in connection with reverse merger		-		-		-		-		1,276,042		1,276		2,320,235		-			2,321,511			-			2,321,511
Issuance of partnership units in subsidiary		-		-		-		-		-		-		-		-			-			1,431,351			1,431,351
PIK dividends on Convertible Preferred Stock		52,004		1,339,605		-		-		124,008		124		1,044,824		(2,444,556	)		(1,399,608	)		-			(1,399,608	)
Net Loss		-		-		-		-		-		-		-		(10,179,447	)		(10,179,447	)		(283,974	)		(10,463,421	)
Balance at September 30, 2021		4,797,052	$	15,132,602		328,925	$	329		14,914,458	$	14,914	$	25,957,200	$	(68,647,473	)	$	(42,675,030	)		10,266,908		$	(32,408,122	)

See accompanying notes to the unaudited condensed consolidated financial statements.

Clearday, Inc.

Condensed Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Deficit

Nine Months Ended

(unaudited)

	Mezzanine Equity Series F Preferred Stock				Preferred Stock Series A				Common Stock				Additional Paid-in		Accumulated			Clearday, Inc. shareholder			Non-Controlling			Total
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit			Interest			Deficit
Balance at December 31, 2019		4,333,241	$	5,496,838		328,925	$	329		11,315,499	$	11,315	$	10,743,198	$	(22,798,067	)	$	(12,043,225	)	$	5,162,413		$	(6,880,812	)
Stock compensation for services		-		-		-		-		1,080,983		1,081		1,140,142		-			1,141,223			110,000			1,251,223
Issuance of series I Convertible Preferred Stock in subsidiary		-		-		-		-		-		-		-		-			-			1,155,000			1,155,000
Issuance of partnership units in subsidiary		-		-		-		-		-		-		-		-			-			200,000			200,000
PIK dividends on Series F Convertible Preferred Stock		-		-		-		-		-		-		-		-			-			325,000			325,000
PIK dividends on Convertible Preferred Stock		204,944		4,098,870		-		-		488,711		489		4,098,381		(8,197,740	)		(4,098,870	)		-			(4,098,870	)
Net Loss		-		-		-		-		-		-		-		(6,512,092	)		(6,512,092	)		(1,674,271	)		(8,186,363	)
Balance at September 30, 2020		4,538,184	$	9,595,708		328,925	$	329		12,885,193	$	12,885	$	15,981,721	$	(37,507,899	)	$	(21,512,964	)		5,278,142		$	(16,234,822	)

	Mezzanine Equity Series F Preferred Stock				Preferred Stock Series A				Common Stock				Additional Paid-in		Accumulated			Clearday, Inc. shareholder			Non-Controlling			Total equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit			Interest			Deficit
Balance at December 31, 2020		4,606,853	$	10,969,078		328,925	$	329		13,048,942	$	13,049	$	17,913,640	$	(45,522,907	)	$	(27,595,889	)	$	7,799,668		$	(19,796,221	)
Stock compensation for services		-		-		-		-		135,923		136		1,914,912		-			1,915,048			10,765			1,925,813
Issuance of common stock in connection with reverse merger		-		-		-		-		1,276,042		1,276		2,320,235		-			2,321,511			-			2,321,511
Issuance of Series I Convertible Preferred Stock in subsidiary		-		-		-		-		-		-		-		-			-			897,000			897,000
Issuance of partnership units in subsidiary		-		-		-		-		-		-		-		-			-			2,444,517			2,444,517
PIK dividends on Convertible Preferred Stock		190,199		4,163,524				-		453,551		453		3,808,414		(7,972,394	)		(4,163,527	)		-			(4,163,527	)
Net Loss		-		-		-		-		-		-		-		(15,152,172	)		(15,152,172	)		(885,042	)		(16,037,214	)
Balance at September 30, 2021		4,797,052	$	15,132,602		328,925	$	329		14,914,458	$	14,914	$	25,957,200	$	(68,647,473	)	$	(42,675,030	)		10,266,908		$	(32,408,122	)

See accompanying notes to the unaudited condensed consolidated financial statements.

Clearday, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)


	For the nine months ended
	September 30, 2021			September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(16,037,214	)	$	(8,186,363	)
Income from discontinued operations, net of tax		(130,411	)		(3,097,179	)
Loss from continuing operations,		(16,167,625	)		(11,283,542	)
Adjustments required to reconcile net loss to cash flows used in operating activities
Depreciation and amortization expense		433,198			461,337
Loss on impairment		4,396,228			-
Allowance for doubtful accounts		103,449			-
Non-cash lease expenses		1,363,647			968,616
Stock based compensation		1,925,813			1,251,225
Amortization of debt issuance costs		253,398			-
Gain on sale of investment		(1,172,151	)		-
Unrealized gain on securities		(744,000	)		(1,040,000	)
Changes in operating assets and liabilities
Accounts receivable		56,442			(198,569	)
Prepaid expenses		(114,252	)		(338,905	)
Accounts payable		(1,307,632	)		1,765,347
Accrued expenses		2,473,258			266,933
Accrued interest		43,416			34,023
Deferred revenue		(352,929	)		136,302
Other non-current asset		(236,492	)		2,102,498
Other current liabilities		(511,555	)		(12,637	)
Change in operating lease liability		(583,958	)		(480,320	)
Net cash used in activities of continuing operations		(10,141,745	)		(6,367,690	)
Net cash provided by (used in) operating activities of discontinued operations		776,102			(1,029,742	)
Net cash used in operating activities		(9,365,643	)		(7,397,432	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property and equipment		-			(218,774	)
Cash acquired from merger transaction		259,005			-
Payment for capitalized software costs		(1,600,000	)		-
Proceeds from sale of an investment		1,456,126			-
Payment for acquisitions		(100,000	)		-
Net cash used (provided by) in investing activities of continuing operations		15,131			(218,774	)
Net cash provided by investing activities of discontinued operations		-			15,134,614
Net cash provided by investing activities		15,131			15,134,840
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt		(5,319,881	)		(179,612	)
Borrowings on long-term debt, net		11,502,256			1,043,955
Proceeds from sale of preferred stock and member units in subsidiary		3,341,517			1,355,000
Net cash provided by continuing operations		9,523,892			2,219,343
Net cash used in financing activities of discontinued operations		(478,868	)		(12,144,481	)
Net cash provided by/(used) in financing activities		9,045,024			(9,925,138	)
Change in cash and restricted cash from continuing operations		(602,722	)		(4,367,121	)
Change in cash and restricted cash from discontinued operations		297,234			2,179,391
Cash and restricted cash at beginning of the year		870,066			3,564,223
Cash and restricted cash at end of year	$	564,578		$	1,376,493
Reconciliation of cash and restricted cash consist of the following:
End of period
Cash and cash equivalents		369,866			588,801
Restricted cash		194,712			787,692
Cash, cash equivalents, restricted cash	$	564,578		$	1,376,493
Beginning of period
Cash and cash equivalents		780,262			2,900,207
Restricted cash		89,804			664,016
Cash, cash equivalents, restricted cash	$	870,066		$	3,564,223
Supplemental cash flow information:
Non-cash financing activities
Debt to equity of non-controlling interest		-			325,000
Preferential interest in real estate for 400,000 shares issued by STI		-			1,600,000
Primrose acquisition deferred payment		200,000			-
Merger consideration		3,381,510			-
Net assets acquired in merger, net of cash acquired		64,041			-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Organization, Description of Business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern

Description of Business

Clearday, Inc., a Delaware corporation (the “Company”), formerly known as Superconductor Technologies Inc., was established in 1987 and closed a merger with Allied Integral United, Inc., a Delaware corporation (“AIU”), on September 9, 2021. This merger was described in our registration statement (“Merger Registration Statement”) on Form S-4, as amended and supplemented (Registration No. 333-256138). Prior to the closing of the merger, the Company was a leading company in developing and commercializing high temperature superconductor (“HTS”) materials and related technologies. As described in the Merger Registration Statement, after the merger, the Company continued the businesses of AIU and continued one of the businesses of the Company related to its Sapphire Cryocooler and its related patents and intellectual property. AIU was incorporated on December 20, 2017 and began its business on December 31, 2018 when it acquired the businesses of certain private funds that operate five (5) memory care residential facilities and other businesses (the “2018 Acquisition”), including commercial real estate and hospitality assets from related parties. The memory care business is conducted through the Memory Care America LLC subsidiary (“MCA”), which has been in the residential care business since November 2010 and has been managed by the Company’s executives for approximately 5 years. Since the 2018 Acquisition, the Company has been developing innovative care and wellness products and services focusing on the longevity market.

All of the Company’s assets that were acquired in the 2018 Acquisition and are not related to the memory care facilities or the non-acute care and wellness industry were designated as non-core businesses and held for disposition. Accordingly, such assets and liabilities are classified as held for sale in the unaudited condensed consolidated balances sheets as of September 30, 2021 and December 31, 2020. Additionally, the results of operations for these non-core businesses are classified as income from discontinued operations within the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19, which spread throughout the U.S. and the world, as a pandemic and has had a significant impact on the global economy, resulting in rapidly changing market and economic conditions. National and local governments around the world instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain non-essential businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. The governmental response includes additional protocols for the health and safety of residents and staff in the Company’s facilities. The outbreak and associated restrictions on travel that have been implemented have had a material adverse impact on the Company’s business and cash flow from operations, similar to many businesses. The Company has begun, and intends to continue, to resume normal operations as soon as practicable. However, the Delta Variant of the COVID-19 has become the predominant COVID-19 strain in the United States and has put a renewed focus on prevention and has caused many governments and other authorities to re-institute preventive measures to mitigate the risk of hyperlocal outbreaks. The total impact of COVID-19 is unknown and may continue as the rates of infection, including of the Delta Variant, have increased in Texas and many other states in the U.S. As a result, management has concluded that there was a long-lived asset impairment triggering event during 2020 and 2021, which required management to perform an impairment evaluation. See Note 5 – Discontinued Operations for additional discussion and results.

As noted above in the Introductory Note, this Report is the first Quarterly Report on Form 10-Q by the Company after the merger. Accordingly, this is the first Quarterly Report on Form 10-Q by the Company that includes the businesses conducted by AIU prior to the merger. Additionally, this Quarterly Report on Form 10-Q by the Company uses a date for the quarter end that is the last day of the calendar quarter or September 30, 2021 which is a change of the quarter ended date that was previously used. The Company has assessed the change of the fiscal quarter ending dates and believes that the change in quarter ending dates by the Company has not had a material impact on the financial results for the quarter ended provided in this Report and improves the comparability between fiscal periods.

Merger between Allied Integral Untiled, Inc and AIU Special merger Company, Inc and Name Change

On September 9, 2021,

	●	The merger that was described in the Merger Registration Statement was completed.
	●	In connection with, and prior to completion of, the Merger, the Company (1) effected a 3.773585 -for-1 share reverse stock split (the “Reverse Stock Split”) of its Common Stock resulting in a decrease of outstanding shares of common stock from 2,751,780 to approximately 729,222; and (2) changed its name to “Clearday, Inc.”
	●	A special distribution for the issuance and delivery of additional shares of its common stock (“True Up Shares”) to the holders of its shares of Clearday Common Stock of record as of 5:00 pm Eastern Time on September 9, 2021 was declared, which provided for the distribution of an aggregate amount of approximately 546,820 shares of such Common Stock (representing a dividend rate of approximately 0.749868); such shares were distributed on or about September 20, 2021.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Under the terms of the merger:

	●	There was an increase in the number of shares of AIU common stock (2:1), 50% of the shares of AIU’s 6.75% Series A Cumulative Convertible Preferred Stock were converted into AIU common stock and then the shares of AIU common stock were exchanged for shares of Clearday, Inc. Common Stock at an exchange ratio of approximately 1.192 shares of Common Stock for each share of AIU common stock;
	●	Each share of AIU’s 6.75% Series A Cumulative Convertible Preferred Stock that was not converted into AIU common stock were exchanged for an equal number of a new series of preferred stock issued by Clearday, par value $0.001 per share that are designated Clearday 6.75% Series F Cumulative Convertible Preferred Stock (“Series F Preferred”), which provide substantially similar terms as the AIU Series A Preferred, except that such preferred stock will convert to that number of shares of the Clearday’s Common Stock after giving effect to the exchange ratio used in the Merger or 2.384675 shares of Common Stock issuable upon the exchange of 1 share of Series F Preferred;
	●	The Company assumed the obligations of the warrants issued by AIU so that such warrants now represent the right to be exercised for shares of the Clearday’s Common Stock equal to approximately 3,781,509 shares;
	●	Clearday assumed the obligation to issue its shares of Common Stock with respect to the (1) 10.25% Series I Cumulative Convertible Preferred Stock issued by AIU Alternative Care, Inc., a subsidiary of AIU, and (2) units of limited partnership interest of Clearday Alternative Care OZ Fund LP, a subsidiary of AIU Alternative Care, Inc., which as of the effective date of the merger was equal to approximately $15,253,740 of investment and accrued dividends.

The merger was accounted for as a reverse asset acquisition in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Under this method of accounting, AIU was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the facts that, immediately following the Merger: (i) AIU’s stockholders owned a substantial majority of the voting rights in the combined company, (ii) AIU designated a majority of the members of the initial board of directors of the combined company, and (iii) AIU’s senior management holds all key positions in the senior management of the combined company. As a result, as of the closing date of the Merger, the net assets of the Company were recorded at their acquisition-date relative fair values in the accompanying condensed consolidated financial statements of the Company and the reported operating results prior to the Merger are those of AIU.

Liquidity and Going Concern

The Company has incurred significant cumulative consolidated operating losses and negative cash flows. As of September 30, 2021, the Company has an accumulated deficit of $68,647,473, continued loss from operations of $16,037,214 and negative cash flows from continued operations in the amount of $10,141,745. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company plans to continue to fund its losses from operations and capital funding needs through public or private equity or debt financings or other sources, including the continued sale of its non-core assets and sale or disposition of other assets. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result should the Company not continue as a going concern. Management does not believe they have sufficient cash for the next twelve months from the date of this report to continue as a going concern without raising additional capital.

On April 29, 2021, the Company executed a secured promissory note with Benworth Capital Partners, LLC in the amount of $4,550,000, which included the grant of a first mortgage regarding the property owned by the Company and used to conduct its operations for its Naples Memory Care facility located at 2626 Goodlette-Frank Road, Naples, Florida 34105 (the “Naples Property”). The original mortgage on this property was paid off in the amount of $2,739,195 and closing costs of $354,357 were paid. The net proceeds to the Company in this mortgage refinancing was $1,456,448. This first mortgage loan has a one-year term as compared to the prior (refinanced) mortgage which had a maturity date of 2041. This first mortgage loan provides for interest only payments at a fixed interest rate of 9.95%. The loan is guaranteed by certain officers.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

For the nine months ended September 30, 2021 the Company entered into certain financing transactions related to the sale or forward sale of approximately $1,623,500 of revenues from the MCA residential fees. These transactions resulted in net proceeds of approximately $1,141,600. The repayment of these financing transactions range from 210 days to one year. (See “Note 6 – Indebtedness”)

Subsequent to September 30, 2021, the Company sold undivided interests, representing 67.36% of the aggregate interests, in the Naples Property for an aggregate cash amount of $3,141,000 which was received by, and is available to, Clearday. The remaining 32.64% of the undivided interests in the Naples Property are retained by the Company.

2. Summary of Significant Accounting Policies

Principles of Consolidation.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, including its wholly owned subsidiaries. In 2019, AIU Alternative Care, Inc., a Delaware corporation (“AIU Alt Care”) and Clearday Alternative Care Oz Fund, L.P, a Delaware limited partnership (“Clearday OZ Fund”), were formed. The Company owns all of the voting interests of AIU Alt Care and the sole general partner of Clearday OZ Fund, and less than 1% of the preferred economic interests in such companies.

In November, 2019, AIU Alt Care filed a certificate of designation that authorized preferred stock designated as the Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share (the “Alt Care Preferred Stock”). The certificate of incorporation of AIU Alt Care authorizes 1,500,000 shares of preferred stock of which 700,000 is designated Alt Care Preferred Stock; and 1,500,000 of common stock. Each share of The Alt Care Preferred Stock has a stated value equal to the $10.00 Alt Care Preferred Stock original issue price. For the nine months ended September 30, 2021, $897,000 was invested in AIU Alt Care in exchange for 89,700 shares of Alt Care Preferred Stock.

In October, 2019, AIU Alt Care formed AIU Impact Management, LLC and Clearday OZ Fund was formed. AIU Impact Management, LLC manages Clearday OZ Fund as its general partner, owns 1% of Clearday OZ Fund and allocates 99% of income gains and losses accordingly to the limited partners. For the nine months ended September 30, 2021, Clearday OZ Fund issued 244,462 units of limited partnership units in the amount $2,444,621.

The exchange rate for each of the Alt Care Preferred Stock and the limited partnership units in Clearday OZ Fund are equal to (i) the aggregate investment amount for such security plus accrued and unpaid dividends at 10.25% per annum, (ii) divided by 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date. Prior to the merger, the exchange rate was 1 share for every $10.00 of aggregate amount of the investment plus such accrued dividends

The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the unaudited condensed consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the unaudited condensed consolidated statement of operations.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the annual financial statements of the Company and of AIU that are contained in the Merger Registration Statement. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated upon consolidation. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

Basis of Presentation.

The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications.

Certain prior period amounts have been reclassified on the accompanying condensed consolidated statements of operations and cash flows to conform to the current period presentation. This reclassification had no effect on previously reported net income (loss), deficit or cash flows from operating activities.

Classification of Convertible Preferred Stock.

In 2021, the Company applied ASC 480, distinguishing liabilities from equity, and revised the consolidated financial statement presentation of its convertible preferred stock whose redemption is outside the control of the issuer. Registrants having such securities outstanding are required to present separately, in balance sheets, amounts applicable to the following three general classes of securities: (i) preferred stocks subject to mandatory redemption requirements or whose redemption is outside the control of the issuer; (ii) preferred stocks which are not redeemable or are redeemable solely at the option of the issuer; and (iii) common stocks. In addition, the rules require disclosure of redemption terms, five-year maturity data, and changes in redeemable preferred stock.

Unaudited Interim Financial Information.

The unaudited condensed consolidated financial statements as of September 30, 2021, and for the three and nine months ended September 30, 2021 and 2020, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC) and GAAP. Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company, these unaudited interim condensed consolidated financial statements contain all adjustments necessary, all of which are of a normal and recurring nature, to present fairly the Company’s financial position, results of operations and cash flows. Interim results are not necessarily indicative of results for a full year or future periods. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020 and the audited consolidated financial statements of AIU that are included in the Merger Registration Statement.

Use of Estimates.

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the disclosure of contingent assets and liabilities and contingencies at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Management believes that these estimates and assumptions are reasonable, however, actual results may differ and could have a material effect on future results of operations and financial position.

The impact of the COVID-19 pandemic could continue to have a material adverse effect on the Company’s business, results of operations, financial condition, liquidity and prospects in the near-term and beyond 2020. While management has used all currently available information in its forecasts, the ultimate impact of the COVID-19 pandemic on its results of operations, financial condition and cash flows is highly uncertain, and cannot currently be accurately predicted. The Company’s results of operations, financial condition and cash flows are dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, such as a lengthy or severe recession or any other negative trend in the U.S. or global economy and any new information that may emerge concerning the COVID-19 outbreak and the actions to contain it or treat its impact, which at the present time are highly uncertain and cannot be predicted with any accuracy.

Significant estimates in our condensed consolidated financial statements relate to revenue recognition, including contractual allowances, the allowance of doubtful accounts, self-insurance reserves, long-lived assets, impairment of long-lived assets and estimates concerning our provisions for income taxes.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Fair Value of Financial Instruments.

The Company’s financial instruments are limited to cash, accounts receivable, debt and equity investments, accounts payable, operating leases and mortgage notes payable. The fair value of these financial instruments was not materially different from their carrying values at September 30, 2021.

Segment Reporting.

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, the Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as one operating segment.

Cash, and Restricted Cash.

Cash, consisting of short-term, highly liquid investments and money market funds with original maturities of three months or less at the date of purchase, are carried at cost plus accrued interest, which approximates market.

Restricted cash as of September 30, 2021 and December 31, 2020 includes cash that the Company deposited as security for obligations arising from property taxes, property insurance and replacement reserve the Company is required to establish escrows as required by its mortgages and certain resident security deposits.

Investments.

The Company follows ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The Company only has one investment in securities as of September 30, 2021 and applies the Fair Value approach to record and revalue the share prices on a mark to market basis at each reporting interim period since the original purchase agreement. All common stock has been marked to market to reflect the current value of the shares.

Goodwill.

Goodwill, which has an indefinite useful life, represents the excess of purchase consideration over fair value of net assets acquired. The Company’s goodwill as of September 30, 2021 is associated with STI’s business prior to the Merger and its other acquisition for Primrose Wellness Group LLC by AIU prior to the merger (See Note 11 – Acquisitions). Goodwill is not subject to amortization and is required to be tested for impairment at least on an annual basis. The Company tests goodwill for impairment as of December 31 of each year. The Company determines whether goodwill may be impaired by comparing the carrying value of the single reporting unit, including goodwill, to the fair value of the reporting unit. If the fair value is less than the carrying amount, a more detailed analysis is performed to determine whether goodwill is impaired. The impairment loss, if any, is measured as the excess of the carrying value of the goodwill over the implied fair value of the goodwill and is recorded in the Company’s consolidated statements of operations.

Software Capitalization.

With regards to developing software, any application costs incurred during the development state, both internal expenses and those paid to third parties are capitalized and amortized per ASC350-40. Once the software has been developed, the costs to maintain and train others for its use will be expensed.

Risks and Uncertainties.

The Company’s financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, investments and trade receivables. At certain times throughout the year, the Company may maintain deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institutions in which those deposits are held. The Company performs ongoing credit evaluations of its customers, and the risk with respect to trade receivables is further mitigated by the diversity, both by geography, of the customer base.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carry back periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to examine the impact that the CARES Act may have on its business. Currently, the Company is unable to determine the impact that the CARES Act will have on its financial condition, results of operations, or liquidity.

The CARES Act also appropriated funds for the U.S. Small Business Administration Paycheck Protection Program (“PPP”) loans that are forgivable in certain situations and employment related tax credits to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19.

Comprehensive Income (Loss).

The Company is required to report all components of comprehensive income (loss), including net income (loss), in the accompanying condensed consolidated financial statements in the period in which they are recognized. Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on investments.

Earnings Per Share.

Basic and diluted earnings per share are computed and disclosed in accordance with FASB ASC Topic 260, Earnings Per Share. The Company utilizes the two-class method to compute earnings available to common shareholders. Under the two-class method, earnings are adjusted by accretion amounts to redeemable noncontrolling interests recorded at redemption value. The adjustments represent dividend distributions, in substance, to the noncontrolling interest holder as the holders have contractual rights to receive an amount upon redemption other than the fair value of the applicable shares. As a result, earnings are adjusted to reflect this in substance distribution that is different from other common shareholders. In addition, the Company allocates net earnings to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company’s participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards.

Accounts Receivable and Allowance for Doubtful Accounts.

The Company records accounts receivable at their estimated net realizable value. Additionally, the Company estimates allowances for uncollectible amounts based upon factors which include, but are not limited to, historical payment trends, write-off experience, and the age of the receivable as well as a review of specific accounts, the terms of the agreements, the residents, the payers’ financial capacity to pay and other factors which may include likelihood and cost of litigation.

The allowance for doubtful accounts reflects estimates that the Company periodically reviews and revises based on new information, to which revisions may be material. The Company’s allowance for doubtful accounts consists of the following:

Allowance for Doubtful Accounts	Balance at Beginning of Period		Provision for Doubtful Accounts		Write-offs			Balance at End of Period
December 31, 2020		63,895		68,911		(63,895	)		68,911
September 30, 2021		68,911		108,360		(68,911	)		108,360

Assets and Liabilities Held for Sale.

The Company designated its real estate and hotels as held for sale when it is probable these non-core business assets will be sold within one year. The Company records these assets on the unaudited condensed consolidated balance sheets at the lesser of the carrying value and fair value less estimated selling costs. If the carrying value is greater than the fair value less the estimated selling costs, the Company records an impairment charge. The Company evaluates the fair value of the assets held for sale each period to determine if it has changed (See Note 5 – Discontinued Operations).

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Property and Equipment.

Property and equipment are recorded at cost and depreciated using the straight-line basis over their estimated useful lives, which are typically as follows:

Schedule of Estimated Useful Lives

Asset Class	Estimated Useful Life (in years)
Buildings		39
Building improvements		39
Equipment		7
Computer equipment and software		5
Furniture and fixtures		7

The Company regularly evaluates whether events or changes in circumstances have occurred that could indicate impairment in the value of the Company’s long-lived assets. If there is an indication that the carrying value of an asset is not recoverable, the Company determines the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value, with any amount in excess of fair value recognized as an expense in the current period. The Company determines estimated fair value through an evaluation of recent financial performance, recent transactions for similar assets, market conditions and projected cash flows using standard industry valuation techniques. Undiscounted cash flow projections and estimates of fair value amounts are based on a number of assumptions such as revenue and expense growth rates, estimated holding periods and estimated capitalization rates (Level 3).

Valuation of Long-Lived Assets.

Long-lived assets to be held and used, including property and equipment, right to use assets and definite life intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. As of September 30, 2021, the Company has recognized certain impairments, See Note 3 - Real Estate, Property and Equipment, Net.

Gain (Loss) on Sale of Assets.

The Company enters into real estate transactions which may include the disposal of certain commercial shopping centers and hotels, including the associated real estate; such transactions are recorded in Note 5 – Discontinued Operations. The Company recognizes gain or loss on these property sales when the transfer of control is complete. The Company recognizes gain or loss from the sale of equity method investments when the transfer of control is complete, and the Company has no continuing involvement with the transferred financial assets.

Legal Proceedings and Claims.

The Company has been, is currently, and expects in the future to be involved in claims, lawsuits, and regulatory and other government audits, investigations and proceedings arising in the ordinary course of the Company’s business, some of which may involve material amounts. The Company establish accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Also, the defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require the Company to incur significant expense. The Company accounts for claims and litigation losses in accordance with FASB, Accounting Standards Codification™, or ASC, Topic 450, Contingencies. Under FASB ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at the Company’s best estimate of a loss or, when a best estimate cannot be made, at the Company’s estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as additional information becomes known. Accordingly, the Company is often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero, is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Lease Accounting.

The Company follows FASB ASC Topic 842, Leases, or ASC Topic 842, utilizing the modified retrospective transition method with no adjustments to comparative periods presented. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized.

Lessee.

The Company regularly evaluates whether a contract meets the definition of a lease whenever a contract grants a party the right to control the use of an identified asset for a period of time in exchange for consideration. To the extent the identified asset is able to be shared among multiple parties, the Company has determined that one party does not have control of the identified asset and the contract is not considered a lease. The Company accounts for contracts that do not meet the definition of a lease under other relevant accounting guidance (such as ASC 606 for revenue from contacts with customers).

The Company’s lease agreements primarily consist of building leases. These leases generally contain an initial term of 15 to 17 years and may contain renewal options. If the Company’s lease agreements include renewal option periods, the Company includes such renewal options in its calculation of the estimated lease term when it determines the options are reasonably certain to be exercised. When such renewal options are deemed to be reasonably certain, the estimated lease term determined under ASC 842 will be greater than the non-cancelable term of the contractual arrangement.

The Company classifies its lessee arrangements at inception as either operating leases or financing leases. A lease is classified as a financing lease if at least one of the following criteria is met: (1) the lease transfers ownership of the underlying asset to the lessee, (2) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (3) the lease term is for a major part of the remaining economic life of the underlying asset, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the underlying asset, or (5) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease is classified as an operating lease if none of the five criteria described above for financing lease classification is met. The Company has no financing leases as of September 30, 2021.

ROU assets associated with operating leases are included in “Right of Use Asset” on the Company’s unaudited condensed balance sheet. Current and long-term portions of lease liabilities related to operating leases are included in “Lease Liabilities, Current” and “Lease Liabilities, Long-Term” on the Company’s balance sheet as of September 30, 2021. ROU assets represent the Company’s right to use an underlying asset for the estimated lease term and lease liabilities represent the Company’s present value of its future lease payments. In assessing its leases and determining its lease liability at lease commencement or upon modification, the Company was not able to readily determine the rate implicit for its lessee arrangements, and thus has used its incremental borrowing rate on a collateralized basis to determine the present value of the lease payments. The Company’s ROU assets are measured as the balance of the lease liability plus or minus any prepaid or accrued lease payments and any unamortized initial direct costs. Operating lease expenses are recognized on a ratable basis, regardless of whether the payment terms require the Company to make payments annually, quarterly, monthly, or for the entire term in advance. If the payment terms include fixed escalator provisions, the effect of such increases is recognized on a straight-line basis. The Company calculates the straight-line expense over the contract’s estimated lease term, including any renewal option periods that the Company deems reasonably certain to be exercised.

The Company reviews the carrying value of its ROU assets for impairment, similar to its other long-lived assets, whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company could record impairments in the future if there are changes in (1) long-term market conditions, (2) expected future operating results or (3) the utility of the assets that negatively impact the fair value of its ROU assets.

Lessor.

The Company’s lessor arrangements primarily included tenant contracts within shopping centers, which is included in discontinued operations. The Company classifies its leases at inception as operating, direct financing, or sales-type leases. A lease is classified as a sales-type lease if at least one of the following criteria is met: (1) the lease transfers ownership of the underlying asset to the lessee, (2) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (3) the lease term is for a major part of the remaining economic life of the underlying asset, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the underlying assets or (5) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. Furthermore, when none of the above criteria is met, a lease is classified as a direct financing lease if both of the following criteria are met: (1) the present value of the of the sum of the lease payments and any residual value guaranteed by the lessee, that is not already reflected in the lease payments, equals or exceeds the fair value of the underlying asset and (2) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. A lease is classified as an operating lease if it does not qualify as a sales-type or direct financing lease. Currently, the Company classifies all of its lessor arrangements as operating leases.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Revenues from the Company’s lessor arrangements are recognized on a straight-line, ratable basis over the fixed, non-cancelable term of the relevant tenant contract, regardless of whether the payments from the tenant are received in equal monthly amounts during the life of a tenant contract. Certain of the Company’s tenant contracts contain fixed escalation clauses (such as fixed-dollar or fixed-percentage increases) or inflation-based escalation clauses (such as those tied to the change in CPI) and is included in discontinued operations. If the payment terms call for fixed escalations, upfront payments, or rent-free periods, the rental revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the agreement. When calculating straight-line site rental revenues, the Company considers all fixed elements of tenant contractual escalation provisions.

Certain of the Company’s arrangements with tenants contain both lease and non-lease components. In such circumstances, the Company has determined (1) the timing and pattern of transfer for the lease and non-lease component are the same and (2) the stand-alone lease component would be classified as an operating lease. As such, the Company has aggregated certain non-lease components with lease components and has determined that the lease components represent the predominant component of the arrangement.

Income Taxes.

The Company’s income tax expense includes U.S. income taxes. Certain items of income and expense are not reported in tax returns and financial statements in the same year. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences to be included in the Company’s unaudited condensed consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, while the effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company can recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized.

Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent, the Company believes that the Company is more likely than not that all or a portion of deferred tax assets will not be realized, the Company establishes a valuation allowance to reduce the deferred tax assets to the appropriate valuation. To the extent the Company establishes a valuation allowance or increase or decrease this allowance in a given period, the

Company includes the related tax expense or tax benefit within the tax provision in the unaudited condensed consolidated statement of operations in that period. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the future, if the Company determines that it would be able to realize its deferred tax assets in excess of their net recorded amount, the Company will make an adjustment to the deferred tax asset valuation allowance and record an income tax benefit within the tax provision in the unaudited condensed consolidated statement of operations in that period.

The Company pays franchise taxes in certain states in which it has operations. The Company has included franchise taxes in general and administrative and operating expenses in its unaudited condensed consolidated statements of operations.

Revenue Recognition.

The Company recognizes revenue from contracts with customers in accordance with ASC Topic 606, Revenue from Contracts with Customers, or ASC Topic 606, using the practical expedient in paragraph 606-10-10-4 that allows for the use of a portfolio approach, because we have determined that the effect of applying the guidance to our portfolios of contracts within the scope of ASC Topic 606 on our unaudited condensed consolidated financial statements would not differ materially from applying the guidance to each individual contract within the respective portfolio or our performance obligations within such portfolio. The five-step model defined by ASC Topic 606 requires the Company to: (i) identify its contracts with customers, (ii) identify its performance obligations under those contracts, (iii) determine the transaction prices of those contracts, (iv) allocate the transaction prices to its performance obligations in those contracts and (v) recognize revenue when each performance obligation under those contracts is satisfied. Revenue is recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services.

A substantial portion of the Company’s revenue at its independent living and assisted living communities relates to contracts with residents for services that are generally under ASC Topic 606. The Company’s contracts with residents and other customers that are within the scope of ASC Topic 606 are generally short-term in nature. The Company has determined that services performed under those contracts are considered one performance obligation in accordance with ASC Topic 606 as such services are regarded as a series of distinct events with the same timing and pattern of transfer to the resident or customer. Revenue is recognized for those contracts when the Company’s performance obligation is satisfied by transferring control of the service provided to the resident or customer, which is generally when the services are provided over time.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Resident fees at our independent living and assisted living communities consist of regular monthly charges for basic housing and support services and fees for additional requested services, such as assisted living services, personalized health services and ancillary services. Fees are specified in our agreements with residents, which are generally short term (30 days to one year), with regular monthly charges billed in advance. Funds received from residents in advance of services provided are not material to our unaudited consolidated financial statements. Some of our senior living communities require payment of an upfront entrance fee in advance of a resident moving into the community; substantially all of these community fees are non-refundable and are initially recorded as deferred revenue and included in accrued expenses and other current liabilities in our unaudited condensed consolidated balance sheets. These deferred amounts are then amortized on a straight-line basis into revenue over the term of the resident’s agreement. When the resident no longer resides within our community, the remaining deferred non-refundable fees are recognized in revenue. Revenue recorded and deferred in connection with community fees is not material to our unaudited condensed consolidated financial statements. Revenue for basic housing and support services and additional requested services is recognized in accordance with ASC Topic 606 and measured based on the consideration specified in the resident agreement and is recorded when the services are provided.

Core Business – Continuing Operations.

Resident Care Contracts. Resident fees at the Company’s senior living communities may consist of regular monthly charges for basic housing and support services and fees for additional requested services and ancillary services. Fees are specified in the Company’s agreements with residents, which are generally short term (30 days to one year), with regular monthly charges billed the first of the month. Funds received from resident in advance of services are not material to the Company’s unaudited condensed consolidated financial statements.

Below is a table that shows the breakdown by percent of revenues related to contracts with residents versus resident fees for support or ancillary services.

	For the three months ended September 30,
	2021		%			2020		%
Revenue from contracts with customers:
Resident rent - over time	$	2,731,655		96	%	$	2,487,496		94	%
Amenities and conveniences - point in time		119,922		4	%		149,330		6	%
Total revenue from contracts with customers	$	2,851,577				$	2,636,826

	For the nine months ended September 30,
	2021		%			2020		%
Revenue from contracts with customers:
Resident rent - over time	$	9,533,855		96	%	$	8,742,241		94	%
Amenities and conveniences - point in time		359,765		4	%		563,772		6	%
Total revenue from contracts with customers	$	9,893,620				$	9,306,013

The following table presents revenue disaggregated by type of contract:

Schedule of Disaggregated Revenue

	For the three Months ended September 30,
	2021		2020
Revenue from contracts with customers:
Resident rent	$	2,526,864	$	2,487,496
Ancillary		256,368		66,504
Assisted living		66,845		70,076
Move-in fees		1,500		12,750
Total revenue from contracts with customers	$	2,851,577	$	2,636,826

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

	For the nine Months ended September 30,
	2021		2020
Revenue from contracts with customers:
Resident rent	$	8,924,490	$	8,742,241
Ancillary		755,596		329,300
Assisted living		200,534		200,463
Move-in fees		13,000		34,009
Total revenue from contracts with customers	$	9,893,620	$	9,306,013

Other Operating Income.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law. Under the CARES Act, the U.S. Department of Health and Human Services, or HHS, established the Provider Relief Fund. The Provider Relief Fund was further supplemented on December 27, 2020 by the Consolidated Appropriations Act, 2021. Retention and use of the funds received under the CARES Act are subject to certain terms and conditions, including certain reporting requirements. Other operating income includes income recognized for funds received pursuant to the Provider Relief Fund of the CARES Act for which the Company has determined that it was in compliance with the terms and conditions of the Provider Relief Fund of the CARES Act. The Company recognized other operating income in its condensed consolidated statements of operations to the extent it had estimated that it had COVID-19 incurred losses or related costs for which provisions of the CARES Act is intended to compensate. The amount of income recognized for these estimated losses and costs is limited to the amount of funds received during the period in which the estimated losses and costs were recognized or incurred or, if funds were received subsequently, the period in which the funds were received.

During the nine months ended September 30, 2021 the Company has received HHS Government grants amounting to $289,487 and total HHS Government grants received by the Company of $675,868. As of September 30, 2021, the Company has recognized the funds as other income on the income statement. (See “Note 1 - Description of Business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern – HHS Government Grants”).

Discontinued Operations.

Hotels. During 2021 the hotel operations were suspended due to the COVID-19 and as of the date of this Report, the Company does not have any hotel properties.

The hotels’ results of operations consist primarily of room rentals, food and beverage sales and other ancillary goods and services from hotel properties. Hotel operating revenues are disaggregated into room revenue, ancillary hotel revenue and other revenue on the unaudited consolidated statements of operations. Revenues are recorded net of any discounts or sales, occupancy or similar taxes collected from customers at the hotels, in the unaudited condensed consolidated statements of operations under discontinued operations.

Room revenue is generated through short-term contracts with customers whereby customers agree to pay a daily rate for the right to occupy hotel rooms for one or more nights. The Company’s performance obligations are fulfilled at the end of each night that the customers have the right to occupy the rooms. Room revenues are recognized daily at the contracted room rate in effect for each room night.

Food and beverage revenues are generated when customers purchase food and beverage at a hotel’s restaurant, bar or other facilities. The Company’s performance obligations are fulfilled at the time that food and beverage is purchased and provided to the customers.

Other revenues such as cancellation fees, telephone services or ancillary services such as laundry are recognized at the point in time or over the time period that the associated good or service is provided.

Payment received for a future stay is recognized as an advance deposit, which is included in Other Current Liabilities in Discontinued Operations on the Company’s consolidated balance sheet (see Note 5 – Discontinued Operations). Advance deposits are recognized as revenue when rooms are occupied, or goods or services have been delivered or rendered to customers. Advance deposits are generally recognized as revenue within a one-year period.

Commercial Shopping Centers and other Rental Properties: Leasing revenue from commercial shopping centers includes minimum rents, percentage rents, tenant recoveries and other leasing income which are accounted for under ASC Topic 842. Minimum rental revenues are recognized on a straight-line basis over the terms of the related leases. The difference between the amount of rent due in a year and the amount recorded as rental income is referred to as the “straight-line rent adjustment.” Percentage rents are recognized and accrued when tenants’ specified sales targets have been met. Estimated recoveries from certain tenants for the pro rata share of real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred. Other tenants pay a fixed rate, and these tenant recoveries are recognized as revenues on a straight-line basis over the term of the related leases.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Cost of Product Revenue.

Cost of product revenue represents direct and indirect costs incurred to bring the product to saleable condition.

Research and Development Expenses.

All research and development costs are charged to expense as incurred. Research and development expenses primarily include (i) payroll and related costs associated with research and development performed, (ii) costs related to clinical and preclinical testing of the Company’s technologies under development, and (iii) other research and development costs including allocations of facility costs.

PPP Loans.

The Company recognizes Paycheck Protection Program loans (PPP loans) under the Small Business Administration as debt instruments in accordance with ASC 470, Debt. When the loan proceeds are received, a long-term liability account (i.e., “PPP Loan Liability”) is set up. The presentation of the loan in the balance sheet is accounted for in accordance with U.S. GAAP regarding the presentation of assets and liabilities, whereas the portion of the loan due within 12 months from year end will be considered a current liability and the remaining portion will be considered a long-term liability. Also, under this guidance, a borrower should not recognize any income from the extinguishment of its debt until the borrower has been legally released as the primary obligor under the loan. In addition, the forgiveness of PPP loans as income will be recorded as other income and not included in income from operations based on the unprecedented nature of COVID-19.

HHS Government Grants.

The Company recognizes income for government grants when grant proceeds are received and the Company determines it is reasonably assured that it will comply with the conditions of the grant, the Company will recognize the distributions received in the income statement on a systematic and rational basis. The Company will estimate the fair value of the grant using the applicable HHS definitions of health care related expenses and lost revenue attributable to COVID-19, considering the Company’s projected and actual results at the end of each reporting period.

Upon conclusion that Clearday, Inc. is reasonably assured that it has met the conditions of the grant, it must measure the amount of unreimbursed health-care related expenses and lost revenue related to COVID-19 at the end of each reporting period and release that amount from Refundable Advance to Other Revenue. During the nine months ended September 30, 2021 the Company has received grant amounting to $289,487 and total grant received so far by the Company amounts to $675,868.

ERTC Funds.

The Company is eligible to claim the employee retention tax credit (“ERTC”) for certain of our employees under the CARES act. The refundable tax credit for 2021 is available to employers that fully or partially suspend operations during any calendar quarter in 2021 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to COVID-19, and is equal to 70% of qualified wages paid after March 12, 2020 through December 31, 2020 to qualified employees, with a maximum credit of $7,000 per employee. We estimate that we will be eligible to claim tax credits of approximately $1.6 million per quarter for 2021. The credit was modified and extended for wages paid from January 1, 2021 through December 31, 2021 by the Consolidated Appropriations Act, 2021. Certain of these credits are obtained by refunds of employer taxes that have been paid and other amounts were obtained by reducing the amount of withholdings remitted to the IRS. The ERTC has recently been terminated as of fourth quarter of 2021.

General and Administrative Expenses.

General and administrative expenses represent personnel costs for employees involved in general corporate functions, including finance, accounting, legal and human resources, among others. Additional costs included in general and administrative expenses consist of professional fees for legal (including patent costs), audit and other consulting services, travel and entertainment, charitable contributions, recruiting, allocated facility and general information technology costs, depreciation and amortization, and other general corporate overhead expenses.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Recently Issued Accounting Pronouncements Not Yet Adopted.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires a financial asset, or a group of financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This ASU eliminates the probable initial recognition threshold and instead requires reflection of an entity’s current estimate of all expected credit losses. In addition, this ASU amends the current available for sale security other-than-temporary impairment model for debt securities. The length of time that the fair value of an available for sale debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists and credit losses will now be limited to the difference between a security’s amortized cost basis and its fair value. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the transition and effective date for nonpublic entities and clarifies that receivables arising from operating leases are not in the scope of this ASU. These ASUs are effective for reporting periods beginning after December 15, 2022. The Company is assessing the potential impact that the adoption of these ASUs will have on its unaudited condensed consolidated financial statements.

In December 2019, the FASB also issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies certain requirements under Topic 740, including eliminating the exception to intra-period tax allocation when there is a loss from continuing operations and income from other sources, such as other comprehensive income or discontinued operations. The amendments in this ASU are effective for the fiscal year beginning after December 15, 2020. The Company has determined that this ASU does not have a material impact on its unaudited condensed consolidated financial statements.

Merger.

On September 9, 2021, the Company completed the merger that is described in Note 1 in this Report “Description of business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern - Merger between Allied Integral Untiled, Inc and AIU Special merger Company, Inc and Name Change.” The merger was accounted for as a reverse asset acquisition pursuant to Topic 805, Clarifying the Definition of a Business, as substantially all of the fair value of the assets acquired were concentrated in a group of similar non-financial assets, and the acquired assets did not have outputs or employees.

The total preliminary purchase price paid in the Merger has been preliminarily allocated to the net assets acquired and liabilities assumed based on their fair values as of the completion of the Merger. The following summarizes the preliminary allocation of the preliminary purchase price paid in the Merger (in thousands, except share and per share amounts):

		2021
Number of shares of the combined organization owned by the Company’s pre-merger stockholders		1,276,042
Multiplied by the fair value per share of Superconductor common stock	$	2.65
Fair value of consideration issued to effect the Merger (preliminary)	$	3,381,510
Transaction costs		-
Purchase price	$	3,381,510

The allocation of the purchase price is as follows


Cash acquired	$	259,005
Net assets acquired:
Prepaid expenses		162,434
Inventory		68,000
Investment in AIU real estate (eliminated in consolidation)		1,600,000
Accounts payable and accrued expenses		(298,353	)
Accrued compensation		(1,000,000	)
Debt assumed		(468,040	)
Total net assets		64,041
Fair value of excess of purchase price over net assets acquired – Preliminary Goodwill		3,058,464
Purchase price	$	3,381,510

The purchase price allocation is preliminary. We continue to obtain and assess information with regard to certain estimates and assumptions. We will record adjustments to the fair value of the assets acquired, liabilities assumed and intangible assets within the twelve month measurement period to the extent necessary.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Real Estate, Property and Equipment, Net

Property and equipment, net, consists of the following:

Memory Care Facilities and Corporate

	Estimated Useful Lives	September 30, 2021			December 31, 2020

Land		$	1,255,477		$	1,940,389
Building and building improvements	39 years		5,339,754			7,277,693
Furniture, fixtures, and equipment	3-7 years		3,955,120			2,588,781
Total			10,550,351			11,806,863
Less accumulated depreciation			(3,328,850	)		(2,953,579	)
Real estate, property and equipment, net		$	7,221,501		$	8,853,284

Non-core businesses classified as assets held for sale:

	Estimated Useful Lives	September 30, 2021			December 31, 2020
Land		$	3,070,537		$	4,288,915
Building and building improvements	39 years		3,648,016			5,898,419
Furniture, fixtures and equipment	5-7 years		1,692,672			2,099,568
Other	3-5 years		75,940			200,969
Total			8,487,165			12,487,871
Less accumulated depreciation			(2,313,268	)		(4,175,035	)
Real estate, property and equipment, net		$	6,173,897		$	8,312,836

The Company recorded depreciation expense relating to real estate, property, and equipment for the Company’s memory care facilities and corporate assets in the amount of $433,198 and $461,337 for the nine months ended September 30, 2021 and 2020, respectively and $129,074 and $149,541 for the three months ended September 30, 2021 and 2020, respectively.

The Company has reviewed the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If there is an indication that the value of an asset is not recoverable, the Company determines the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value. The Company determined estimated fair value based on input from market participants, the Company’s experience selling similar assets, market conditions and internally developed cash flow models that the Company’s assets or asset groups are expected to generate, and the Company considers these estimates to be a Level 3 fair value measurement.

In the third quarter of 2021, the Company recognized an impairment charge of $2,745,427 related to its Naples facility, and an impairment charge of $1,423,328 and $227,473 with respect to the ROU assets related to its New Braunfels facility and its Simpsonville facility, respectively, resulting in a total impairment expense of $4,396,228 for the nine months ended September 30, 2021. See Note 4 - Leases for additional information on the ROU assets.

Based on the Company’s review of carrying value of long-lived assets included in discontinued operations, the Company concluded that a)several of its properties were sold and did not warrant consideration; b) certain properties belonging to their continuing operations segment generate revenue, are cash flow positive and have assets with low carrying values as compared to the recoverable amounts and therefore do not meet impairment requirements; and that c) several properties might be impaired due to extended closures. Both the SeaWorld and Buda hotels have experienced extended closures since March, 2020 due to the COVID-19 pandemic and this has meant significant reductions in cash flows and on the ability to repay the mortgage loans on the properties. The Company transferred the SeaWorld property to the lender in the first Quarter of 2021 and in the fourth quarter of 2021, sold the Buda hotel. The SeaWorld hotel was impaired in the amount of $986,000 in the third Quarter of 2020 and $600,000 in the fourth Quarter of 2020. Additionally, the Buda hotel was impaired in the amount of $811,061 in the fourth Quarter of 2020.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

On March 10, 2021, the Company executed a side agreement with the lender of the SeaWorld Hotel Note (“SeaWorld Settlement Agreement”) that provided for the transfer of the hotel property to the lender and the limitation of the obligations to the Company and the guarantors. See Note 5 – Discontinued Operations.

On May 24, 2021, the Company entered into an agreement to sell its Buda Hotel in the amount of $4,350,000. This property was sold on October 1, 2021 under the terms of this agreement, as described in Note 5 – Discontinued Operations. Considering the above offer for sale and guidance available as per ASC 360, management considered the offer price less cost of transfer as fair market value of group assets of Buda Hotel and reversed the impairment provision of $811,061 on June 30, 2021.

Leases

The Company follows ASC 842, as discussed in Note 1 – Summary of Significant Accounting Policies, the Company has elected the package of practical expedients offered in the transition guidance which allows management not to reassess the lease identification, lease classification, and initial direct costs. The Company has elected the accounting policy practical expedient to exclude recording short term leases for all asset classes, as right-of-use assets, and lease liabilities on the unaudited condensed consolidated balance sheet. Finally, the Company has elected to recognize lease components and non-lease components separately for real estate leases.

Leases for Memory Care Facilities.

The Company leased three memory care facilities from MHI-MC San Antonio, LP, MHI-MC Little Rock, LP, and MHI-MC New Braunfels, LP (collectively “MHI entities”) under three separate lease agreements and originally recorded a right of use asset and a lease liability of $35,782,153. The Amended Leases contain three options to renew, which were not considered reasonably certain of being exercised as of the lease commencement date nor the balance sheet date.

As of September 30, 2021, the Company leased one memory care facility from MC-Simpsonville, SC-1-UT, LLC (the “Simpsonville Landlord”) under a 15-year non-cancelable lease agreement. Provided the Company is not in default, the lease agreement has three successive five-year renewal options and has the right of first refusal to acquire the Simpsonville Landlord’s interest in the property in certain situations. Beginning January 2019, the Company ceased paying the Simpsonville Landlord rent. The Landlord filed a lawsuit against the guarantors of the lease and on October 21, 2020, the trial court issued a final judgment of the damages for the plaintiff in the amount of $2,801,365. The trial court has not made findings of fact related to the Company’s liability under the Lease. Additionally, the Company has appealed the trial court judgement as they believe it has reasonable likelihood of success to reduce certain fees in the amount of $190,043 in past taxes and $248,074 in attorney’ fees. the Company has accrued an amount that it determines is reasonable with respect to this contingency. See Note 7 – Commitments and Contingencies for additional information.

All leases are classified as operating leases. The Company does not have any leases within its non-core business. Therefore, no right-of-use assets or lease liabilities were recorded within non-current assets held for sale or lease liability on the unaudited condensed consolidated balance sheet following the adoption of ASC 842. Weighted-average remaining lease terms and discount rate as of September 30, 2021, are 13.5 years and 8.25%, respectively.

Per ASC 360-10-35-21, the Company performed an impairment test on the ROU assets and the New Braunfels and Simpsonville facilities failed the recoverability test as set out in the accounting standard. As a result, the New Braunfels and Simpsonville facilities incurred an impairment charge in the amount of $1,423,328 and $227,473, respectively in the third Quarter 2021.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Lease Costs.

For the three and nine months ended September 2021 and September 30, 2021, the lease costs recorded in the unaudited condensed consolidated statement of operations are as follows:

Summary of Lease Cost


	For the nine months ended September 30,
	2021		2020
Lease costs:
Operating lease costs	$	3,730,560	$	3,446,277
Short-term lease costs		33,752		77,335
Total lease costs	$	3,764,312	$	3,523,612


	For the three months ended September 30,
	2021		2020
Lease costs:
Operating lease costs	$	1,243,520	$	917,336
Short-term lease costs		7,830		24,843
Total lease costs	$	1,251,350	$	942,179

Operating Lease Payments.

The following table summarizes the maturity of the Company’s operating lease liabilities as of September 30, 2021:

Summary of Operating Lease Liabilities

Year Ending September	Operating Leases
2021 (Remaining of 2021)	$	990,358
2022		4,026,961
2023		4,121,550
2024		4,218,384
2025		4,310,799
2026		4,439,167
2027		4,537,167
Thereafter		39,945,641
Total minimum lease payments	$	66,590,027
Less: amounts representing interest		28,776,778
Present value of future minimum lease payments		37,823,249
Less current portion		911,745
Non-current lease liabilities	$	36,911,504

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Discontinued Operations

The Company held two hotel properties during 2021, each of which were classified as non-core assets and had experienced an extended closure since March 2020 due to the COVID-19 pandemic, resulting in significant reductions in cash flows and ability to repay the separate mortgage loans on these properties.

SeaWorld Hotel.

During the nine months ended September 30, 2021, the Company entered into an agreement with Pender Capital Asset Based Lending Fund I, L.P. regarding the SeaWorld hotel property and transferred the property to this lender. This lender agreed to limit the aggregate obligations under the secured obligations to the amount of the deficiency realized by the lender on the subsequent sale of the SeaWorld hotel property, subject to an aggregate specified limit assuming that the Company complied with the terms of the agreement. In May, 2021, the lender sold the SeaWorld hotel property which created an aggregate deficiency of $216,000 plus the required payment of taxes in the amount of $82,500 which the Company has accrued as of September 30, 2021. Furthermore, the Company is liable to pay the property taxes for 2021, which amount would be due by January 31, 2022 and is approximately $20,000.

Buda Hotel.

As of May 24, 2021, the Company has entered into an agreement for the sale of the Buda hotel property amounting to $4,350,000. The sale closed on October 1, 2021 as described in Note 15 – Subsequent Events.

The Company previously recognized an impairment provision amounting to $811,061 for this property in accordance with ASC360 and ASC820. Considering the sale offer and guidance available as per ASC 360, the Company considered the offer price less cost of transfer as fair market value of the Buda hotel property and reversed the impairment provision of $811,061 on June 30, 2021. The impairment amount was included in the other income portion of the Unaudited condensed statement of operations—discontinued operations and was also included in the income from discontinued operations line item in the unaudited condensed consolidated statement of operations.

The sale of the Buda hotel property completes the sale of all of the Company’s hotel properties and relieves approximately $4,500,000 of financing liabilities and approximately $4,100,000 of long-term assets, net of accumulated depreciation, from the Company’s unaudited condensed consolidated balance sheet resulting in a gain of $177,851.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

During the nine months ended September 30, 2020, the Company sold three non-core assets: A hotel property, commercial real estate property and the remaining portion of a previously sold commercial real estate property. The commercial real estate property and the hotel property, which were owned separately by two of the Company’s subsidiaries in San Antonio, Texas, were sold, with proceeds of $13,300,000 and $2,500,000, respectively. Additionally, the remaining portion of a commercial real estate property located in San Antonio, Texas, was also sold, with proceeds of $700,000. See Note 6 - Indebtedness for more information regarding these and other transactions.

Summary of Non-core Assets

	Commercial Property #1			Hotel Property			Parcel - Commercial Property #2		Total 2020
Contract sales price	$	13,300,000		$	2,500,000		$	700,000	$	16,500,000
Fees		(1,461,312	)		(134,043	)		-		(1,595,355	)
Seller buildout obligation		(856,085	)		-			-		(856,085	)
Net book value of assets		6,425,983			1,981,889			622,466		9,030,338
Gain/(loss) on sale of assets	$	4,556,620		$	384,068		$	77,534	$	5,018,222

The following statements are the unaudited condensed consolidated balance sheets and income statements for the Company’s discontinued operations:

	September 30, 2021		December 31, 2020

ASSETS
Current assets:
Cash and cash equivalents	$	72,993	$	343,044
Restricted cash		-		8,201
Accounts receivable		100		18,421
Prepaid expenses		77,205		23,641
Total current assets		150,298		393,307

Investments in non-consolidated entities		-		77,056
Note Receivables		6,323		6,323
Real estate, property and equipment, net		6,173,897		8,312,836
Total long-term assets held for sale		6,330,518		8,396,215
TOTAL ASSETS	$	6,330,518	$	8,789,522
LIABILITIES
Current liabilities:
Accounts payable	$	699	$	66,650
Accrued expenses		1,168,627		1,031,584
Accrued interest		133,170		133,170
Current portion of long-term debt		1,858,223		4,107,599
Total current liabilities		3,160,719		5,339,003

Long-term liabilities:
Note payable		530,596		784,945
Long-term debt, less current portion		4,897,241		5,121,760
Total long-term liabilities held for sale		5,427,837		5,906,705
TOTAL LIABILITIES	$	8,488,556	$	11,245,708

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)


	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020
REVENUES
Hotel room and other revenue	$	-		$	2,120		$	-		$	352,207
Commercial property rental revenue		21,493			20,867			63,853			236,688
Total revenues, net		21,493			22,987			63,853			588,895

Costs and expenses
Operating expenses		20,935			22,720			93,689			477,954
General and administrative expenses		422,421			467,522			751,105			1,390,212
Total operating expenses		443,356			490,242			844,794			1,868,166

Loss from operations		(421,864	)		(467,255	)		(780,941	)		(1,279,271	)

Other/(income) expenses
Interest expense		27,411			182,115			190,010			592,876
Gain on disposal of assets		-			-			-			(4,634,154	)
Equity income from investees, net of applicable taxes		-			-			15,000			(787,044	)
Impairment expense (recovery)		-			-			(811,061	)		-
Other (income) expenses		52,558			250,514			(305,301	)		451,872
Total (income)/expense		(79,969	)		432,629			(911,352	)		(4,376,450	)

Net (loss) income	$	(501,833	)	$	(899,884	)	$	130,411		$	3,097,179

Indebtedness

As of September 30, 2021, and December 31, 2020, the current portion of long-term debt within the Company’s unaudited condensed financial statements for our core MCA and Corporate facilities is $10,210,849 and $1,623,375 respectively. As of September 30, 2021, and December 31, 2020, the debt associated with our current portion of long-term debt within the Company’s unaudited condensed consolidated financial statements for our assets held for sale as is $1,758,223 and $4,107,599, respectively. This debt is expected to be repaid primarily with the proceeds from the sales of these assets. See Note 2 – Summary of Significant Accounting Policies for more information about the Company’s assets held for sale.

Interest and Future Maturities.

The Company has recorded interest expense in the accompanying unaudited condensed consolidated financial statements of $304,350 and $378,146 for the nine months ended September 30, 2021, and 2020, respectively, and $190,010 and $592,876 for discontinued operations for the same periods.

The Company has recorded interest expense in the accompanying unaudited condensed consolidated financial statements of $30,951 and $95,466 for the three months ended September 30, 2021, and 2020, respectively, and $27,411and $182,115 for discontinued operations for the same periods. The change in the interest expense reflects primarily the impact of the repayment of debt since the beginning of the prior year period and during this period, offset in part by incurrence of indebtedness at the latter part of this period at higher and lower interest rates.

Schedule of Long Term Debt

As of September 30, 2021	Continuing Core		Discontinued Non-Core		Total
Long-term Debt
As of September 30,	Continuing Core		Discontinued Non-Core		Total
2021 (Reminder of 2021)	$	407,462	$	1,758,223	$	2,165,685
2022		10,392,732		284,366		10,677,098
2023		360,000		499,185		859,185
2024		360,000		214,760		574,760
2025		360,000		231,519		591,519
Thereafter		2,245,804		4,275,250		6,521,054
Total obligations	$	14,125,998	$	7,263,303	$	21,389,301

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

The following table summarizes the maturity of the Company’s long-term debt and notes payable as of September 30, 2021:

	Maturity Date	Interest Rate			September 30, 2021		December 31, 2020
Memory Care (Core) Facilities:
Naples Mortgage	December 2041		3.99	%	$	-	$	2,731,100
Naples Equity Loan	May 2022		9.95	%		4,550,000		-
Libertas Financing Agreement	May 2022		33.00	%		488,408		-
New Braunfels Samson Funding 1	April 2022		25.00	%		142,000		-
New Braunfels Samson Group 2	April 2022		39.00	%		142,000		-
Naples Operating Samson Funding	April 2022		31.00	%		150,000		-
Naples LLC CFG Merchant Solutions	September 2022		15.00	%		275,000
Clearday Operating PPP Loans	January 2022		1.00	%		468,040		-
AGP	July 2022		2.00	%		2,630,000		-
MCA Invesque Loan⁽¹⁾	January 2022		8.50	%		178,852		1,610,577
New Braunfels Business Loan	June 2022		6.25	%		105,463		185,359
Gearhart Loan⁽²⁾	December 2021		7.00	%		238,578		238,578
Five C’s Loan	December 2021		9.85	%		325,000		325,000
SBA PPP Loans	February 2022		1.00	%		2,525,108		1,364,962
Equity Secure Fund I, LLC	June 2022		15.00	%		1,000,000		-
Notional amount of debt						13,218,449		6,455,576
Less: current maturities						10,453,977		1,623,375
Unamortized Discount						148,254		-
					$	2,616,218	$	4,832,201
Non-core businesses classified as liabilities held for sale:
Hotels:
Seaworld Hotel Note ⁽³⁾	January 2021		Variable		$	299,000	$	3,395,000
Buda Hotel Note ⁽⁴⁾	January 2037		Variable			4,013,425		4,046,771
SBA PPP Loan	May 2022		1.00	%		604,800		255,300
Buda Tax Loans ⁽⁵⁾	June 2028		8.99	%		466,713		271,365
2K Hospitality Secured Note	October 2022		None			120,000		-
Notional amount of debt						5,503,938		7,968,436
Less: current maturities						1,045,624		3,395,000
					$	4,358,314	$	4,573,436

Real Estate:
Artesia Note ⁽⁶⁾	June 2033		Variable		$	228,769	$	238,168
Tamir Note	March 2022		12.00	%		300,000		300,000
Leander Note	April 2022		12.75	%		700,000		700,000
Notional amount of debt						1,228,769		1,238,168
Less: current maturities						712,599		712,599
					$	516,170	$	525,569

As of September 30, 2021, the current portion of long-term debt on the accompanying unaudited condensed consolidated balance sheet for core business operations includes $148,254 of unamortized debt discounts. As of September 30, 2021, the long-term debt on the accompanying unaudited condensed consolidated balance sheet for non-core business operations includes $21,528 of unamortized debt discount.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Notes:

(1)	Note is issued by MCA and is secured by all of MCA’s assets which consist primarily of its ownership of its residential facilities.

(2)

Note is issued by MCA and is secured by a senior subordinated lien on all of MCA’s assets which consist primarily of its ownership of its residential facilities. This stated maturity of this note has been extended to December 15, 2021. Clearday is negotiating the terms of an additional extension or forbearance with this lender. However, there can be no assurance that any such agreement will be on terms that are acceptable to Clearday, or at all.

(3)	Obligations have been compromised under the terms of a settlement agreement as of March 10, 2021 to approximately $318,500, as described above.

(4)	This note is a senior secured with an interest rate equal to greater of 10.5% or 30-day LIBOR plus 8.175%. This note was repaid in full in connection with sale of the mortgaged property as described in Note 15 - Subsequent Events.

(5)	Interest rate is 8.99%, per annum and is secured by the Buda Hotel property. This note was repaid in full in connection with sale of the mortgaged property as described in Note 15 - Subsequent Events.

(6)	This obligation is secured by a first mortgage on the real property and is personally guaranteed by certain individuals.

	Maturity Date	Interest Rate			September 30, 2021		December 31, 2020
Core Businesses (Continuing Operations) Notes Payable
Cibolo Creek Partners promissory note	December 2025		0.09	%	$	111,206	$	-
Primrose - Miscellaneous	July 2029		7.00	%		13,320		-
Round Rock Development Partners Note	December 2025		0.09	%		500,000		500,000
Notional amount of debt						624,526		500,000
Guarantee Fees						283,023		139,883
					$	907,549	$	639,883

Non-Core Businesses (Discontinued Continuing Operations) Notes Payable
Cibolo Creek Partners promissory note	December 2025		0.09	%	$	530,596	$	641,804
Notional amount of debt						530,596		641,804
Guarantee Fees						-		143,141
					$	530,596	$	784,945

In addition, the Company has an obligation for the payment of the acquisition of the Primrose adult daycare center of $200,000, of which 50% is subject to payment on November 30, 2021 and 50% is subject to payment on May 31, 2022.

Memory Care (Core) Facilities:

Naples Mortgage.

In connection with the Company’s purchase of its memory care facility in Naples, Florida in 2013, it assumed the underlying mortgage with Housing & Healthcare Finance, LLC, dated November 23, 2011. This mortgage is a financing administered by the U.S. Department of Housing and Urban Development or HUD. The original mortgage totaled $3.4 million. The mortgage was collateralized by a security interest in the Naples property and other assets within the Naples property. The mortgage reduced the prepayment penalties through December 31, 2021. The prepayment penalty is 2% during 2020 and 1% during 2021. The mortgage had an interest rate of 3.99%.

Naples Equity Loan.

On April 29, 2021, the Company executed a secured promissory note with Benworth Capital Partners, LLC in the amount of $4,550,000. The original Naples mortgage was paid off in the amount of $2,739,195 and there were closing costs of $354,357 which netted the Company proceeds in the amount of $1,456,448. This secured promissory note is a one-year loan with interest only payments at a fixed interest rate of 9.95%. This loan is guaranteed by certain officers of the Company and is secured by the Memory Care facility located at 2626 Goodlette-Frank Road, Naples, Florida 34105.

Libertas Financing Agreement.

On May 25, 2021, the Company executed a merchant cash advance loan with Libertas Funding LLC in the amount of $737,000 with a purchase price consideration of $550,000 less $11,000 in origination fees for net proceeds of $539,000. The debt discount on the loan is $176,000 and will be amortized over the life of the loan. The weekly payment amount under the agreement is $14,623 and interest rate associated with this agreement is 1.29% per week. Additionally, the Company can terminate the transaction at any time by repurchasing future receipts sold to purchaser but not delivered. This agreement has no stated maturity date. However, based on historical revenue, management has estimated that repayment will 12 months. The obligations under this agreement are guaranteed by James Walesa, the Chairman and CEO of the Company.

New Braunfels Samson Funding 1.

The Company entered into a Futures Receipts Sale and Purchase Agreement dated as of September 28, 2021 (“Factoring Agreement 1”), with Cloudfund LLC d/b/a Samson Group (“NB Financier 1”). Under Factoring Agreement 1, a specified percentage of its future receipts (as defined by Factoring Agreement 1, which include the future resident revenues in the New Braunfels residential care facility owned by MCA) were sold to NB Financier 1, which were equal to $142,000 for a purchase price of $100,000, less origination and other fees of $6,000. The obligations under Factoring Agreement 1 are repaid in 10 equal weekly installments. Factoring Agreement 1 expressly provides that the sale of the future receipts shall be construed and treated for all purposes as a true and complete sale and includes customary provisions granting a security interest under the Uniform Commercial Code in accounts and the proceeds. The obligations under Factoring Agreement 1 are guaranteed by James Walesa, the Company’s Chairman and Chief Executive Officer.

The Company entered into a Revenue Purchase Agreement and Security Agreement and Guaranty of Performance dated as of September 28, 2021 (“Factoring Agreement 2”) Samson MCA LLC (“NB Financier 2”). Under Factoring Agreement 2, a specified percentage of its future receipts (as defined by Factoring Agreement 2, which include the payments to MCA as a result of its sale of goods and/or services such as its future resident revenues in the New Braunfels residential care facility owned by MCA), which were equal to $142,000 for a purchase price of $100,000, less origination and other fees of $5,125. Factoring Agreement 2 expressly provides that the sale of the future receipts shall be construed and treated for all purposes as a true and complete sale and includes customary provisions granting a security interest under the Uniform Commercial Code in accounts and the proceeds. The obligations under Factoring Agreement 2 are guaranteed by James Walesa, the Company’s Chairman and Chief Executive Officer.

PPP Loans.

In May 2020, the Company was granted four separate loans under the Paycheck Protection Program (the “PPP Loans”) administered by the United States Small Business Administration (“SBA”) established under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which has enabled the Company to retain the Company’s employees during the period of disruption created by the Coronavirus pandemic. The PPP Loans, which are evidenced by Notes issued by the Company (the “Note”), mature in May 2022 and bear interest at a fixed rate of 1.0% per annum, accruing from May 2020 (“Loan Date”) and payable monthly. The Note is unsecured and guaranteed by the SBA. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The Note provides for customary defaults, including failure to make payment when due or to fulfill the Company’s obligations under the notes or related documents, reorganizations, mergers, Consolidations or other changes to the Company’s business structure, and certain defaults on other indebtedness, bankruptcy events, adverse changes in financial condition or civil or criminal actions. The PPP Loans may be accelerated upon the occurrence of a default. In the first nine months of September 2021, the Company has received an additional $1,836,014 in PPP loans.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

AGP Loan.

The Company entered into an unsecured promissory note with A.G.P./Alliance Global Partners (“AGP”) which was the financial adviser to AIU in connection with the merger. The $2,630,000 principal amount of this note represents the unpaid fee amount then owed to AGP for its services. Interest under this note accrues at 2% per annum. The Company makes monthly payments of $30,000 and will pay 50% of net proceeds (which shall be deemed gross proceeds minus direct selling costs, expenses and commissions) received, directly or indirectly, by the Company and/or its subsidiaries from the issuance of any equity or equity-linked financing (including convertible debt), less any selling commissions. Accrued and unpaid obligations of this note are due on September 10, 2022.

MCA Invesque Loan.

On November 6, 2017, the Company executed a promissory note for $600,000 with Mainstreet Health Financing, LP. The loan had no prepayment penalties. In January 2018, a principal payment of $300,000 was made on this loan. In November 2018, this loan agreement was amended for the then-current principal balance of $300,000. Effective July 31, 2019, the Company signed an amended and restated promissory note with the landlord parties, as defined for the principal sum of $3.3 million (the “A&R MCA Note”), including the previously outstanding principal balance of $300,000. Proceeds from the loan were used to pay outstanding obligations to certain landlords of three leased memory care facilities related to a settlement agreement between the parties. See Note 7 – Commitments and Contingencies.

In accordance with the A&R MCA Note, three principal payments totaling $1.5 million were made during 2019. Beginning January 2020, the Company is required to make monthly principal and interest payments of $47,812. The loan has a fixed interest rate of 8.5%.The note is guaranteed by certain officers and directors of the Company and is collateralized by a pledge of proceeds from the sale of the Naples facility and another specified property interest (in Westover Town Center) that was sold in 2021.

In April 2021, there were three properties in which the Company had an interest and whose proceeds from any sale were pledged to the lender in collateral to the guarantees. One of those interests, Westover Town Center, was sold and the proceeds in the amount of $1,128,126 was used to pay down $1,000,000 against the Invesque loan balance in September 2021.

New Braunfels Business Loan.

On December 23, 2015, the Company executed a business loan agreement with ServisFirst Bank for $600,000. In October 2019, the loan was extended and now matures in March 2022. The loan has a fixed interest rate of 6.25%. The note is guaranteed by certain officers and directors of the Company and is collateralized by furniture, fixtures and equipment at MCA New Braunfels.

Gearhart Loan.

On April 1, 2012, the Company executed a promissory note with Betty Gearhart for $200,000 (the “Gearhart Note”). Interest accrues at a fixed rate of 7.0% and is payable quarterly in January, April, July and October. In April 2015, the Company executed the First Amended and Restated Promissory Note in the principal amount of $238,578, which extended the maturity date until April 2017. The note is collateralized by the debtor granting a security interest to Betty Gearhart including all assets of MCA, LLC as well as any proceeds (including insurance proceeds) of any and all of the foregoing collateral. The maturity date of the loan was further extended in April 2017, April 2018 and April 2020. The Second Amendment to the Amended and Restated Promissory Note (the “Second Amendment”) was executed on March 5, 2020 in the principal amount of $218,578 and has a maturity date of April 1, 2021. The scheduled maturity date of this note has been further extended to December 15, 2021. Clearday is negotiating the terms of an additional extension or forbearance with this lender. However, there can be no assurance that any such agreement will be on terms that are acceptable to Clearday, or at all.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Five C’s, LLC Loan.

As of April 1, 2019, the Five C’s LLC entered into an agreement issuing capital stock that reduced obligations under an existing promissory note to $325,000 that was payable one year after the initial loan was funded, with a right of AIU to extend the maturity date for an additional six-month period. As of December 31, 2020, this note was in default. Subsequently, in February 2021, an extension agreement was entered which set an interest rate of 9.85% per annum and rescheduled the maturity date to December 31, 2021. This note can be extended by the parties for successive six-month periods unless the noteholder provides a notice to the borrower that the term shall not be extended on or prior to the date that is 30 days prior than the expiration of the note.

Equity Secure Fund I, LLC.

On March 26, 2021, the Company executed a promissory note for $1,000,000 with Equity Secured Fund I, LLC. The loan matures on April 26, 2022 and was subject to one (1) twelve (12)-month extension option. The interest rate of the loan is 11.50% and is guaranteed by certain officers and is collateralized the building located at 8800 Village Drive in San Antonio, Texas. Total proceeds received by the Company was $803,963 after adjusting the interest for the period amounting to approximately $115,000, which is classified as prepaid interest in the unaudited condensed unaudited condensed consolidated balance sheet; $44,891 and $5,575 that was paid for prepaid property tax and prepaid insurance respectively (both of which) are included in “net deferred finance cost” and $31,000 in closing costs.

Debt Related to Assets Held for Sale

SeaWorld Hotel Note.

On July 12, 2019, the Company executed a loan agreement with Pender West Credit 1 REIT, LLC for a principal amount of $3,395,000 (“SeaWorld Hotel Note”) to refinance existing financing for the hotel. The note had an initial maturity date of August 1, 2020 and is collateralized by a security interest in the property and other assets within the property. The note required interest only monthly payments with the full principal balance becoming due upon the maturity date. The note has a variable interest rate equal to the greater of 10.5% or LIBOR plus 8.175%. The Company incurred $308,829 in financing costs related to this loan which were expensed in 2019 due to the short-term nature of the loan.

Effective March 11, 2021, the Company entered into an agreement with the lender to transfer the property to the lender. This lender agreed to limit the aggregate obligations under the secured obligations to the amount of the deficiency realized by the lender on the subsequent sale of the SeaWorld hotel property, subject to an aggregate specified limit assuming that the Company complied with the terms of the agreement. In May 2021, the mortgage lender sold the SeaWorld Property and determined the deficiency of the mortgage loan, subject to a $300,000 maximum amount that was specified in the Settlement Agreement, to be equal to $216,000 plus the required payment of taxes in the amount of $82,500 which the Company has accrued as of June 30, 2021. Additionally, the Company is required to pay their pro rata share of the property taxes for 2021, which amount would be due by January 31, 2021 and be approximately $20,000 resulting in an aggregate obligation of approximately $318,500.

The balance owed as of September 30, 2021 is $121,667. Subsequently, the Company has made additional payments reducing the balance to $58,000 as of November 12, 2021.

Buda Hotel Note.

In November 2011, the Company executed a commercial loan agreement with Members Choice Credit Union totaling $4.8 million (“Buda Hotel Note”) to fund the construction of the Buda Hotel, purchase equipment, establish adequate working capital, and pay closing costs. The note matures on January 25, 2037 and is collateralized by a security interest in the property and other assets within the property. The Company must pay principal and interest payments of $31,486 during the term of the note which are subject to change to amortize the principal payments of the note. The note has a variable interest rate of Prime plus 2.75% and is collateralized by a security interest in the property and other assets within the property. As of December 31, 2020, the Company was in default with Members Choice Credit Union. Subsequently, on February 23, 2021, the Company signed a conditional temporary extension agreement of the note through June 2021 whereby the Company has agreed to pay one installment of $20,000 in March 2021 and three installments of $10,000 in April, May, and June 2021 respectively under the terms of the forbearance of the exercise of any remedies. On October 1, 2021, the Company completed the disposition of the Buda Hotel for a gross sales price of approximately $4,350,000, subject to customary adjustments and the transfer of certain insurance proceeds related to water damage to the property, for net proceeds to the Company after the payment of the mortgage loan of approximately $186,150. In connection with this sale, this obligation was repaid in full

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Buda Tax Loans.

In February 2020, the Company executed a Promissory Note with TaxCORE Lending, LLC (“Buda 2020 Tax Loan”) for a principal amount of $274,940 to finance property taxes associated with the Buda Hotel and to fully repay the Buda Tax Loan. The note matures on March 5, 2030 and is collateralized by a tax lien secured by the Buda Hotel located in Buda, Texas. The note has a fixed interest rate of 8.99%. With adequate notice, the Company may prepay the note without penalty.

During the period June 30, 2021, the Company refinanced the original note with TaxCORE lending on March 30, 2021 for a principal amount of $466,713 at a fixed rate of 8.99% and a maturity date of May 31, 2031. The note is collateralized by a tax lien contract secured by the Buda Hotel located in Buda, Texas. The Original promissory note was executed in the year 2018 with Home Tax Solutions totaling $98,070 (“Buda Tax Loan”) to fund the tax obligation of the Buda Hotel. The note matures on June 2, 2028 and is collateralized by a tax lien secured by the Buda Hotel located in Buda, Texas. The note has a fixed interest rate of 8.99%. In February 2020, this note was fully repaid with proceeds from the Buda 2020 Tax Loan. In connection with the sale of the Buda hotel property on October 1, 2021, this loan was repaid in full.

On August 18, 2021, the Company entered into a settlement regarding the Buda Texas property taxes to approximately $141,000, which were paid by a cash payment by the Company including net proceeds from a loan of the principal amount of $120,000, payable monthly over 12 months at no interest beginning in November 2021. This loan is guaranteed by Cibolo Rodeo (a subsidiary of the Company) collateralized by the 2 acre parcel of land owned by Cibolo Rodeo and a personal guarantee by BJ Parrish, the Chief Operating Officer of the Company.

2K Hospitality Secured Note.

On August 18, 2021, the Company through its subsidiary that owned the Buda hotel property and a subsidiary that owns land located in Cibolo, Texas, jointly entered into a secured promissory note with 2K Hospitality, LLC, in the principal amount of $120,000, payable without interests (assuming no payment default) in 12 monthly payments commencing on November 1, 2021. The obligations are secured by a second mortgage on the Cibolo, Texas property. The obligations of this note are guaranteed by BJ Parrish, a director and Chief Operating Officer of the Company.

Artesia Note.

On April 1, 2013, the Company executed a promissory note with FirstCapital Bank of Texas, N.A. for a principal amount of $314,500 (“Artesia Note”). the Company executed an amendment to the Artesia Note on July 23, 2018 (“Amended Artesia Note”). The Amended Artesia Note had a principal balance of $266,048 upon execution. The original maturity date of the note was March 1, 2018, which was extended to June 23, 2033 in the Amended Artesia Note. The note requires equal monthly principal and interest payments through maturity and has no prepayment penalties. The note has a variable interest rate equal to the greater of 6.0% or the Prime rate plus 1.0%. The note is collateralized by a security interest in the property and other assets within the property and is guaranteed by certain officers and directors of the Company. As of September 30, 2021, the interest rate for this loan is 6% (the greater of 6% or the Prime rate of 3.25% plus 1.0%).

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Tamir Note.

On March 12, 2010, the Company executed a promissory note with Tamir Enterprises, Ltd. for a principal amount of $475,000 (“Tamir Note”). The Company has executed subsequent amendments to the Tamir Notes on March 1, 2013, March 12, 2016, and March 19, 2019 (collectively, the “Amended Artesia Note”). The Amended Artesia Note had a principal balance of $300,000 upon execution. As a result of the March 19, 2019 amendment, the maturity date of the note is March 12, 2022. The note requires monthly interest payments through maturity and has no prepayment penalties. The note has a fixed interest rate of 12.0% plus an additional 2% for accrued interest outstanding. The note is collateralized by a security interest in the property and other assets within the property and is guaranteed by certain officers and directors of the Company.

Leander Note.

On October 5, 2018, the Company executed a loan agreement with Equity Security Investments for a principal amount of $700,000 (“Leander Note”) to refinance existing financing for the hotel. The note had an original maturity date of October 5, 2019 and was collateralized by a security interest in the property and other assets within the property and is guaranteed by certain officers and directors of the Company. The Company exercised an extension option which extended the maturity of the note to October 5, 2020. The note required interest only monthly payments with the full principal balance becoming due upon the maturity date. The note has a fixed interest rate 12.75%. As of October 12, 2020, the maturity of the note has been extended to April 5, 2021.

On April 20, 2021, the Company has exercised a one-year extension option on the Leander note that extends the new maturity date to April 5, 2022. The note has a fixed interest rate of 12.75%, which requires payment of interest on monthly rest, until the Maturity Date, at which time all outstanding principal and interest shall be finally due and payable.

Notes Payable.

The Company has notes payable to Cibolo Creek Partners, LLC, its affiliate Round Rock Development Partners, LP. These notes have a maturity date of December 31, 2025, and there is no interest accruing on any of these notes. Each of these lenders was a related party when the obligations were incurred. For more information, see Note 9 - Related Party Transactions.

Commitments and Contingencies

Contingencies.

The tenant, MCA Simpsonville Operating Company LLC, referred to as Tenant, of the MCA community that is located in Simpsonville, South Carolina, referred to as the Simpsonville facility, and other affiliates of the Company have a dispute with the landlord of the Simpsonville Facility, MC-Simpsonville, SC-UT, LLC, referred to as the Landlord, and its affiliates (Embree Group of Companies: Embree Construction Group, Inc., Embree Asset Group, Inc., and Embree Capital Markets Group, Inc., referred to collectively as Embree) under the terms of the lease regarding alleged material construction and related defects of the Simpsonville Facility and other memory care facilities that have been built by Embree and are leased by subsidiaries of MCA, including the significant costs and additional investment that was required by MCA to remedy such defects. The Tenant has stopped paying rent and related charges under the lease for the Simpsonville Facility from and after January 1, 2019. The Landlord has made demands for past rent but has not instituted legal action against the Tenant. Instead, the Landlord filed a lawsuit against the guarantors of the lease, including Trident Healthcare Properties I, L.P., referred to as Trident, which is a wholly owned subsidiary of the Company and an unconditional guaranty of such lease; and the personal guarantors of the Tenant’s obligations under the Lease, including the Company’s Chairman and Chief Executive Officer. The Company has an obligation to indemnify and hold such individuals (other than the Company’s Chairman) harmless under such personal guarantees, and Trident is a consolidated subsidiary in the Company’s financial statements. The Company’s Chairman has indemnified the Company for all obligations of the Company with respect to obligations to the Landlord in connection with this litigation, including the Company’s obligations to such indemnified individuals and the Company’s subsidiaries. This litigation is captioned and numbered MC-Simpsonville, SC-UT, LLC v. Steve Person, et. al., Cause No. 19-0651-C368 and is pending in the 368th Judicial District Court of Williamson County, Texas. On October 21, 2020, the trial court has issued a judgment on damages in the amount of $2,801,365. The trial court has not made findings of fact related to the Tenant’s liability under the Lease. Additionally, the Guarantors has appealed the trial court judgement as they believed it has reasonable likelihood of success to reduce the judgment in the amount of $248,074 in attorney’ fees. The appellate court recently entered a ruling reversing and remanding the attorneys’ fees portion of the judgment to the trial court for renewed proceedings on that issue. After the entry of the appellate court’s ruling, the Guarantors filed a motion for rehearing on the narrow issue of pre-judgment interest calculation, on which the Guarantors believe that they have a reasonable likelihood of success. The Company has accrued an amount that it determines is reasonable with respect to this contingency. The Landlord filed a second action against Trident and the other guarantors on April 9, 2021, for claims similar to the action described above including relief for payment of rent past due and reimbursement of taxes from October 2020 to the time of the trial in this action. Trident and the other guarantors intend to respond to this action. The Company is not able to determine if it will prevail in such litigation. The Company has entered into an agreement to transfer certain operations, including lease obligations, of the Simpsonville Facility. See Note 15 - Subsequent Events.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Certain subsidiaries of the Company that operate hotel assets have not paid employment related taxes such as required withholdings for Texas State unemployment taxes and federal income tax and employee and employer contributions for FICA (Social Security and Medicare) taxes, and federal unemployment tax for the period from December 31, 2018 to December 31, 2019. These subsidiaries have since made the appropriate filings with the Internal Revenue Service and the Company has accrued the full estimated amount of the underpaid taxes as well as the estimated penalties and interest. As of September 30, 2020, the amount of the estimated taxes, penalties, and interest, assuming that there is no waiver or mitigation of the penalties, is $596,326. The Company has accrued this amount in its unaudited condensed consolidated financial statements as of September 30, 2020.

A subsidiary of the Company has been sued by Naples Property Ventures, LLC, alleging breach under a contract for sale of the Naples property and facility. In its complaint, Naples Property Ventures, LLC is seeking specific performance under the contract. The complaint was served on November 10, 2021. The Company denies these claims, is preparing a response to the complaint and believes that it has meritorious defenses or responses to these claims.

In addition, from time to time, the Company becomes involved in litigation matters in the ordinary course of its business. Such litigations include an action that alleges negligence and other claims regarding the death of a resident in a memory care facility. One case is Michael Inderrieden, Individually and as Personal Representative of the Estate of Thomas Inderrieden v. MCA Simpsonville Operating Company, LLC dba Memory Care of Simpsonville; Allied Integral United, Inc. dba Clearday; Memory Care America, LLC.; MCA Management Company, Inc.; and MC-Simpsonville, SC-1-UT, LLC, which action was brought in South Carolina state court on July 7, 2021 in which the plaintiff alleges various acts and breaches by the defendants that resulted in the death of a resident. Such action has been referred to the Company’s insurance carrier and is in the discovery phase of litigation. Although the Company is unable to predict with certainty the eventual outcome of any litigation, the Company does not believe any of its currently pending litigation is likely to have a material adverse effect on its business.

Prior to the closing of the merger, on November 20, 2020, the landlord of the Company’s former headquarters, Prologis Texas III LLC, commenced an action asserting that the Company breached its lease agreement. The Company has answered the compliant on January 11, 2021 and continues to believe that it has meritorious defenses or responses to these claims.

Indemnification Agreements.

Certain lease and other obligations of the Company are guaranteed in whole or in part by James Walesa and/or BJ Parrish and others. The Company has agreed to indemnify and hold each such individual harmless for all liabilities and payments on account of any such guaranty. The lease obligations of the Company for its lease obligations for four of its five MCA facilities, including the lease of the MCA community that is located in Simpsonville, South Carolina, referred to as the Simpsonville facility. This is the facility that is the subject of a litigation and judgement against certain of our subsidiaries. We have been fully indemnified by James Walesa for all obligations that the Company may incur with respect to an adverse judgement against the Company, including any post-judgement interest. Such indemnification by James Walesa is under an agreement dated as of July 30, 2020. Under such agreement, James Walesa receives a fee equal to 2% of the total amount payable by AIU or any of its subsidiaries which is payable in units of shares of the Clearday Care Preferred and Clearday Warrants at $10.00 per unit, which is the same as the cash payment for such units by third parties in the offering of such units by Clearday Care. In the event that Mr. Walesa is required to make any payments under this indemnification, then Company will issue shares of Clearday Care Preferred and Clearday Warrants, at $10.00 per unit, for the amount of such payment.

Subsequently, an amendment to the indemnification agreement above was signed on January 19, 2021 in which additional securities were pledged on behalf of James Walesa for all obligations that Company may incur with respect to an adverse judgement and/or any post-judgement interest. In the event that Mr. Walesa is required to make any payments under this amended indemnification agreement, then Company will issue shares of AIU Care, AIU Warrants and AIU Common Stock at $10.00 per unit as well as Series A Preferred at $20.00 per unit, for the amount of such payment.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Superconductor Merger Commitment.

During the nine months ended September 30, 2021, the Company agreed to pay Superconductor $120,000 per month beginning with February until June 30, 2021 (the “Operating Payments”) or an aggregate amount equal to $600,000, subject to certain deferment. All such obligations were eliminated by consolidation upon the closing of the merger. In connection with the merger, a liability to certain former officers of Superconductor was incurred under the terms of Officer Agreements, which may be paid in Common Stock. The total value owed was accrued as of September 30, 2021 and is included in the net assets acquired in the merger in the amount of $1,000,000.

Earnings Per Share

Basic net income (loss) per common share is calculated by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares and potentially dilutive securities outstanding for the period. For the Company’s diluted earnings per share calculation, the Company uses the “if-converted” method for preferred stock and convertible debt and the “treasury stock” method for Warrants and Options.

The following tables set forth the potentially dilutive shares that were anti-dilutive in their respective periods as the Company had net losses in 2021 and 2020, respectively.

Dilution shares calculation	For the Nine Months ended September 30,
	2021		2020
Series A Convertible Preferred Stock		64		182
Series F 6.75% Convertible Preferred Stock		11,439,480		11,439,691
Series I 10.25% Convertible Preferred Stock		1,789,495		567,561
Limited Partnership Units		2,864,607		1,392,028
Warrants		3,281,508		1,828,242
Stock Options		3,641		7,863
Total participating securities		19,378,796		15,235,566

Reserved 2,860,800 shares of Common Stock that will be issued and distributed to holders of the Clearday, Inc. Series F Preferred Stock that do not sell such shares until after the date that is six months after the effective date of the merger (Such shares being the 1,200,000 shares of AIU Common Stock reserved by AIU for issuance contingent on certain financial transactions.

Related Party Transactions

Background.

The Related Party Disclosures Topic provides disclosure requirements for related party transactions and certain common control relationships. Accounting and reporting issues concerning certain related party transactions and relationships are addressed in other Topics.

Information about transactions with related parties is useful in comparing an entity’s results of operations and financial position with those of prior periods and with those of other entities. It helps users of financial statements to detect and explain possible differences.

Debt.

There are some loans in which executive management has loaned money to the Company. In addition, there are loans made by the Company itself in which certain executives personally guarantee the debt.

Cibolo Creek Partners, LLC (“Cibolo Creek”) and its affiliate Round Rock Development Partners, LP (“RRDP”) have from time to time made loans to us under revolving credit notes that bear interest at the then applicable federal rate and are payable on demand or other date that was specified by such lender. In December 2018, AIU acquired businesses affiliated with Cibolo Creek. As of September 30, 2021, Cibolo Creek and Round Rock were owed $641,804 and $500,000 respectively by the Company.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Guarantees.

From time-to-time certain officers and directors will personally guarantee a loan. There is a guarantee fee agreement in place that details the amount of the fee as well as payment terms for certain executives in the Company. The amount of the fee is capped at 1% of the amount of the outstanding note regardless of how many guarantors there are on the loan.

Agents.

Arkadios Capital, LLC

The Company’s president is currently a registered representative with Arkadios Capital LLC (“Arkadios”), a SEC full-service broker dealer. The Company entered into a placement agreement with Arkadios as a broker agent in 2019 and have retained their services as a non-exclusive placement agent in connection with the offering by AIU Alt Care and Clearday OZ Fund of their securities. No amounts have been earned or paid under this arrangement to date.

10.

Non-Consolidated Investment

During the nine months ended September 30, 2021, the Company sold its investment in one of their non-consolidated entities, Westover Town Center for a consideration of $1.4 Million to HR Interest Inc. on dated April 19, 2021. Additionally, the Company recorded a gain on sale of this investment in the amount of $1,172,151.

11.

Acquisitions

On May 28, 2021, the Company acquired all of the equity interests of Primrose Wellness Group LLC (“Primrose”), a San Antonio, Texas licensed adult day care facility that provides affordable daily care services, including ADLs (activities of daily living), nursing services, physical rehabilitative services and other supportive services, primarily to military veterans, including those with VA benefits. The acquisition required the approval of the Texas Department of Health and Human Services. The Company plans to expand the daily activities provided by Primrose including offering its proprietary Clearday Restore services, which provides a combination of aromatherapy and massage therapy designed to help people with a wide range of lifestyle limiting conditions. The Company acquired Primrose for a cash purchase price in the amount of $300,000 that is payable in three equal installments at the closing, and at six months after the closing and one year after the closing. In connection with this acquisition, the Company modified the existing lease terms and guaranteed the lease obligations in full and agreed to employ the two founders of Primrose. The acquisition was not a material acquisition under applicable accounting principles and, accordingly, pro forma information is not required to be provided.

Since the acquisition in May 28, 2021, Primrose has generated approximately $150,000 in revenue and has a net loss of approximately $27,000 for the nine months ended September 30, 2021.

12.

Goodwill

Schedule Of Goodwill

	Primrose Wellness Group, LLC		Merger
Goodwill as of January 1, 2021	$	-	$	-
Goodwill arising from acquisitions		223,929		3,058,464
Goodwill as of September 30, 2021	$	223,929	$	3,058,464

	●	For Primrose acquisition information See Note 11 – Acquisitions
	●	For merger related information See Note 2 - Description of business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern

13.

Deficit

In connection with the merger, the certificate of incorporation of Clearday, Inc. was amended. Prior to such amendment, under the charter of Clearday, Inc. (which was the charter of STI), there were 25,000,000 authorized shares of Common Stock and 2,000,000 authorized shares of preferred stock, each par value $0.001 per share. The certificate of incorporation of Clearday, Inc., as amended in connection with the merger, provides for 80,000,000 authorized shares of Common Stock and 10,000,000 authorized shares of preferred stock, each par value $0.001 per share.

Common Stock

Prior to the merger, Clearday, Inc. had 3,151,780 issued and outstanding shares of Common Stock, which included 400,000 shares held by AIU. The shares held by AIU were cancelled in connection with the merger, resulting in 2,751,780 shares of issued and outstanding shares of Common Stock as of the effective time of the merger. In connection with the merger, Clearday, Inc.

●

Effected the 3.773585 -for-1 Reverse Stock Split and issued approximately 546,820 True Up Shares, as described in Note 1.

●

Issued 13,638,395 shares of Common Stock to the holders of shares of AIU common stock.

●

Reserved 100,000 shares of Common Stock for the conversion or exchange of warrants and convertible securities and shares to be issued to officers of STI under the Officer Agreements.

●

Reserved 2,860,800 shares of Common Stock that will be issued and distributed to holders of the Clearday, Inc. Series F Preferred Stock that do not sell such shares until after the date that is six months after the effective date of the merger (such shares being the 1,200,000 shares of AIU common stock reserved by AIU for issuance contingent on certain financial transactions).

STI did not issue any restricted shares of the Common Stock for compensation during the nine month period ending September 30, 2021.

AIU awarded restricted shares of its common stock in the amount of 453,316 shares (representing 1,080,984 shares of Clearday, Inc. Common Stock) to various officers, directors and a consultant; during the nine months ended September 30, 2020. For the nine months ended September 30, 2021, AIU awarded restricted stock in the amount of 57,000 shares (representing 135,923 shares of Clearday, Inc. Common Stock) to various officers and employees. Such shares of AIU common stock shares were vested for compensation for services in the amount of $570,000 during 2021.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Liquidation Preference.

In the event of the Company’s liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of the Company’s debts and other liabilities and the satisfaction of any liquidation preferences that may be granted to the holders of any then outstanding shares of preferred stock.

Rights and Preferences.

Holders of common stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock, which the Company may designate and issue in the future.

Voting Rights.

Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. The Company’s amended and restated certificate of incorporation and amended and restated bylaws do not provide for cumulative voting rights. Because of this absence of cumulative voting, the holders of a majority of the shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they should so choose. In addition, the Company’s amended and restated certificate of incorporation also provides that the Company’s directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the consolidated voting power of all the Company’s stockholders entitled to vote on the election of directors, voting together as a single class.

Subject to supermajority votes for some matters, matters shall be decided by the affirmative vote of the Company’s stockholders having a majority in voting power of the votes cast by the stockholders present or represented and voting on such matter, provided that the holders of the Company’s common stock are not allowed to vote on any amendment to the Company’s certificate of incorporation that relates solely to the terms of one or more series of preferred stock if the holders of such affected series are entitled, either separately or together with the holders or one or more such series, to approve such amendment. The affirmative vote of the holders of at least 75% of the votes that all of the Company’s stockholders would be entitled to cast in any annual election of directors and, in some cases, the affirmative vote of a majority of minority stockholders entitled to vote in any annual election of directors are required to amend or repeal the Company’s bylaws, amend or repeal certain provisions of the Company’s certificate of incorporation, approve certain transactions with certain affiliates, or approve the sale or liquidation of the Company. The vote of a majority of minority stockholders applies when an individual or entity and its affiliates or associates together own more than 50% of the voting power of the Company’s then outstanding capital stock.

Preferred Stock

Prior to the merger, AIU had Series A 6.75% cumulative convertible preferred stock, $0.01 par value, 4,606,853 shares of such securities were issued and outstanding as of December 31, 2020. Each share of Series A preferred stock has a stated value equal to the Series A original issue price. The conversion rate to the number of shares of AIU common stock is equal to 1 share for each share of Series A preferred stock. In connection with the securities, they were either converted into AIU common stock and then exchanged for the Company Common Stock or exchanged for shares of the Company’s Series F 6.75% cumulative convertible preferred stock, $0.001 par value. The Company has 5,000,000 shares authorized with 4,797,052 and 4,606,853 issued and outstanding as of September 30, 2021 and December 30, 2020, respectively. The Series F Preferred Stock has a stated value of $20.00 per share is exchangeable at the option of the holder into approximately 2.38 shares of the Company’s Common Stock, subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations. See Note 14 - Preferred Stock – Mezzanine, for accounting treatment of the Series F Preferred Stock.

The Series A Preferred Stock of the Company that was issued and outstanding prior to the merger remains issued and outstanding. Such preferred stock has a $.001 par value, 2,000,000 shares authorized, and 328,925 shares issued and outstanding as of September 30, 2021 and December 31, 2020. Except for a preference on liquidation of $0.01 per share, each share of Series A Preferred Stock is the economic equivalent of ten twelfths of a share of common stock into which it is convertible. Except as required by law, the Series A Preferred Stock will not have any voting rights.

On December 31, 2018, AIU acquired the businesses of certain affiliates and entities and issued AIU’s Series A Preferred Stock (which has been exchanged for shares of the Company’s Series F Preferred Stock in the merger).

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Dividends and Distributions

For the Nine months ended September 30,2021 and September 30, 2020, the Company recognized dividends for the 6.75% Series F preferred stock in the amount of $7,617,716 and $8,197,740 respectively. For the three months ended September 30,2021 and 2020, the Company recognized dividends for the 6.75% Series F preferred stock in the amount of $2,089,878 and $2,712,400, respectively.

Warrants

The Company has two separate types of warrants that are outstanding: (1) the warrants that were granted and outstanding by STI prior to the effective date of the merger and (2) the warrants assumed by the Company that were granted by AIU prior to the effective date of the merger.

STI Warrants Prior to the Merger Effective Date.

The following is a summary of such outstanding warrants at September 30 2021:

Summary of Outstanding Warrants

	Common Shares
	Total		Currently Exercisable		Exercise Price per Share		Expiration Date

Warrants related to August 2016 financing		2,481		2,481	$	646.95	February 2, 2022
Warrants related to December 2016 financing		31,796		31,796	$	431.3	December 14, 2021
Warrants related to March 2018 financing		7,331		7,331	$	245.84	September 9, 2023
Warrants related to March 2018 financing		513		513	$	340.73	March 6, 2023
Warrants related to July 2018 financing		119,241		119,241	$	75.48	July 25, 2023
Warrants related to July 2018 financing		7,154		7,154	$	94.35	July 25, 2023
Warrants related to May 2019 financing		5,518		5,518	$	26.96	May 23, 2024
Warrants related to October 2019 financing		100,719		100,719	$	5.39	October 10, 2024
Warrants related to October 2019 financing		14,336		14,336	$	6.74	October 8, 2024
Warrants issued by AIU that after the merger (described below)		3,281,508		3,281,508	$	5.00	November 15, 2029

Warrants that were issued by AIU and have been assumed by Clearday in the merger.

As of September 30 2021, there are 1,376,118 warrants that were issued by AIU to investors in the Alt Care Preferred and units of limited partnership interests in Clearday OZ Fund. As of the effective date of the merger, such warrants were assumed by the Company and amended and restated to represent the same number of shares of the Company’s Common Stock that would have been issued had the holders exercised such warrants in full prior to the effective date of the merger, or an aggregate of 3,281,508 shares of the Company’s Common Stock. Each warrant may be exercised for cash at an exercise price equal to $5.00 per share, subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Prior to the closing of the merger, AIU issued to a consultant that is subject to an development agreement a warrant representing 500,000 shares of the Company’s Common Stock as of the effective date of the merger at an exercise price of $11.00 per share, which may be paid by customary cashless exercise. Such warrant is subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations.

Stock Options

At September 30, 2021, we continued to have the two active equity award option plans, the 2003 Equity Incentive Plan and the 2013 Equity Incentive Plan (collectively, the “Stock Option Plan”) that were in effect for STI prior to the effective date of the merger. Although we can only grant new options under the 2013 Equity Incentive Plan. Under our Stock Option Plan, stock awards were made to our former directors, key employees, consultants, and non-employee directors and consisted of stock options, restricted stock awards, performance awards, and performance share awards. Stock options were granted at prices no less than the market value on the date of grant. There were no stock option exercises during the three and nine months ended September 30, 2021. None of the option grantees continued in service after the effective date of the merger. The expiration date for all of the options under the Stock Option Plan granted to any officer, director or consultant is generally the last day of the three (3)-month period following the date that such person ceases their continuous status in such capacity, subject to certain accelerated termination events that are not applicable.

As of September 30, 2021, the aggregate outstanding options under the Stock Option Plan was 7,851 shares, at an exercise price per share of $19.20 to $26,280 with a weighted average exercise price of $211.21. All such options were exercisable. The Stock Option Plan provides for proportionate adjustment to the number of shares represented by the options and the exercise price for certain events, including the reverse stock split and the issuance of the True Up Shares that were effected in connection with the merger. After such adjustments, the aggregate number of shares represented by the options is 3,641 and the price per share is between $41.40 and $56,672.74, with a weighted average exercise price equal to $455.54.

At September 30, 2021, no options had an exercise price less than the current market value. All of the stock options award that were outstanding as of September 30, 2021 were to officers and directors whose service terminated on September 9, 2021 in connection with the merger. Accordingly, all such options that have not been exercised on December 8, 2021 shall expire.

Restricted Stock

On March 31, 2021, AIU issued an additional 57,000 total shares of restricted common stock to executives of AIU representing approximately 135,600 shares of Clearday, Inc. Common Stock. For the nine months ended September 30, 2021, shares issued of restricted common stock vest over 33 months and the Company valued the 57,000 shares at $10 per share, on the date of the agreement.

As of September 30, 2021, the Company has awarded restricted stock worth $5,103,160 or 510,316 shares to various officers, directors and consultants that will be amortized over the requisite service period. As of September 30, 2021, there was $1,489,540 in unamortized stock compensation

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Equity of Subsidiary

Non-Controlling Interest

In November 2019, a certificate of incorporation was entered into by AIU Alt Care for Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share that authorizes the issuance of 1,500,000 shares of preferred stock and 1,500,000 of common stock and designated 700,000 as Series I Preferred Stock. Each share of Series I Preferred Stock has a stated value equal to the Series I Preferred Stock original issue price. For the three months ended September 30, 2021 and 2020, $0 and $400,000 was invested in AIU Alt Care, respectively in exchange for 0 and 40,000 shares of such preferred stock, respectively. For the nine months ended September 30, 2021 and 2020, $897,000 and $955,000 was invest in AIU Alt Care, respectively in exchange for 89,700 and 95,500 shares of such preferred stock, respectively.

In October 2019, AIU Alt Care formed AIU Impact Management, LLC and they formed Clearday OZ Fund which is managed by AIU Impact Management, LLC, as the general partner. For the three months ended September 30, 2021 and 2020, $1,431,455 and $0 was invested in Clearday Oz Fund, respectively, respectively. For the nine months ended September 30, 2021 and 2020, $2,444,725 and $400,000 was invested in Clearday Oz Fund, respectively.

The exchange rate for each of the Alt Care Preferred Stock and the limited partnership units in Clearday OZ Fund to Clearday, Inc. Common Stock is equal to (i) the aggregate investment amount for such security plus accrued dividends at 10.25% per annum, (ii) divided by 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date. Prior to the merger, these securities were exchangeable to shares of AIU common stock at a rate of 1 share for every $10.00 of aggregate amount of the investment plus such accrued dividends.

On March 31, 2020, AIU Alt Care entered into an independent consulting agreement, or the Consulting Agreement, pursuant to which the Company issued 5,000 shares of AIU Alt Care Preferred Stock to the Consultant as partial consideration for financial services rendered. In connection with this transaction, the Company valued the 5,000 shares of AIU Alt Care Preferred Stock at $10 per share for $50,000, on the date of the agreement. The vesting date is September 9, 2022.

A certain officer was repaid $175,000 in the first quarter of 2020 towards a $500,000 payable that was owed; the remaining balance of $325,000 was converted as of September 30, 2020 to 32,500 shares of Alt Care Preferred Stock and 32,500 warrants to purchase shares of the Company’s common stock. In November 2020, the same officer was issued 6,000 Preferred shares in exchange for a $60,000 guaranty fee. See Note 7 – Indemnification Agreements

Non-Controlling Interest Loss Allocation.

The Company applied ASC 810-10 guidance to correctly allocate the percentage of loss attributable to the NCI of each company. For the nine months ended September 30, 2021, the loss for AIU Alt Care is $559,270 and Clearday Oz Fund is $334,712. Additionally, for the nine months ended September 30, 2020, the losses for both AIU Alt Care and Clearday OZ were $423,742 and $1,267,440, respectively. Based on 99% ownership interest, AIU Alt Care and Clearday OZ fund incurred a loss attributable to the NCI in the amount of $553,677 and $331,364, respectively in 2021 and incurred losses of $419,506 and $1,254,766, respectively, for 2020.

Cumulative Convertible Preferred Stock and Limited Partnership Interests in Subsidiaries (NCI).

For the nine months ended September 30, 2021, AIU Alt Care closed subscriptions and issued and sold 89,700 shares of Series I Cumulative Convertible Preferred Stock (the “Alt Care Preferred Stock”), par value $0.01 per share, and 244,473 units of limited partnership interests in Clearday OZ Fund.

The terms and conditions of the Alt Care Preferred Stock and the limited partnership interests in the Clearday OZ Fund allow the investors in such interests to exchange such securities into the Company’s common stock at the then Company common stock price. For the nine months ended September 30, 2021, AIU Alt Care and Clearday OZ fund has issued 1,270,515 and 2,010,150 warrants, respectively.

Each warrant has a term of ten years and provides for the purchase of the 1 share of the Company’s common stock at a cash exercise price equal to 50% of the price per share of the Company’s common stock when the Company becomes a public company by filing a registration statement, reverse merger or other transaction. The number of shares of the Company’s common stock and the warrant exercise price will be subject to adjustment for stock dividends, stock splits, combinations or other similar recapitalizations after the initial exercise price has been determined.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Dividends on the Alt Care Preferred Stock and preferred distributions on the units of limited partnership interests in Clearday OZ Fund are at each calendar quarterly month end at the applicable dividend rate (10.25%) on the original issue price of the Alt Care Preferred Stock or the units limited partnership interests. Dividends will either (a) be payable in cash, if and to the extent declared by the board of directors or the general partner, or (b) by issuing Dividend Shares equal to the aggregate accrued dividend divided by the Series I Original Issue Price. Dividends, if noticed to the Holder, will be payable after the Dividend Payment Date.

Each of the Company, Alternative Care and Clearday OZ Fund shall redeem the Alt Care Preferred Stock or the units of limited partnership interests on the 10 Year Redemption Date that is ten years after the final closing of the offering. The securities provide for a redemption in cash or shares of common stock at the option of Clearday, Inc., in an amount equal to the unreturned investment in the Alt Care Preferred Stock or units of limited partnership interests. Upon consummation of certain equity offerings prior to May 1, 2022, AIU Alt Care may, at its option, redeem all or a part of the Alt Care Preferred Stock for the liquidation preference plus a make-whole premium. In addition, upon the occurrence of, among other things (i) any change of control, (ii) a liquidation, dissolution, or winding up, (iii) certain insolvency events, or (iv) certain asset sales, each holder may require the Company to redeem for cash all of such holder’s then outstanding shares of Alt Care Preferred Stock.

The Certificate of Designation also sets forth certain limitations on the Company’s ability to declare or make certain dividends and distributions and engage in certain reorganizations. The limited partnership agreement has similar provisions.

Subject to certain exceptions, the holders of Alt Care Preferred Stock and the units of limited partnership interests have no voting power and no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of shares of capital stock or partnership interests, and are not be entitled to call a meeting of such holders for any purpose, nor are they entitled to participate in any meeting of the holders of the Company’s common stock or participate in the management of Clearday OZ Fund by its general partner.

14.

Preferred Stock - Mezzanine

The Company has 10,000,000 shares of preferred stock authorized, par value $0.001 per share, including 5,000,000 designated as Series F Preferred Stock and 4,797,082 shares outstanding as of September 30, 2021. Pursuant to the Certificate of Designations of Series F Preferred Stock, upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (“Liquidation Event”), including any Deemed Liquidation Event, as defined in the Certificate of Designations and unless otherwise determined by the majority of the holders of the Series F Preferred Stock that a transaction is not a Deemed Liquidation Event, the holders of the then outstanding Series F Preferred Stock shall be entitled to be paid a liquidation preference (“Preference Amount”) out of the assets of the Company available for distribution to its stockholders equal to the original issue price and, plus any accumulated and unpaid dividends. As the payment of this Preference Amount is not solely within the control of the Company, the Series F Preferred Stock does not qualify as permanent equity and has been classified as mezzanine or temporary equity. The Series F Preferred Stock is not redeemable, and it was not probable that there would be a Liquidation Event as of September 30, 2021. Therefore, the Company is not currently required to accrete the Series F Preferred Stock to the aggregate liquidation value.

15.

Income Taxes

The Company did not recognize a benefit or provision for income taxes for the nine months ended September 30, 2021 and September 30, 2020.

The Company evaluates its deferred tax assets on a quarterly basis to determine if a valuation allowance is required based on whether it is more likely than not that some portion of the deferred tax asset would not be realized. The Company has assessed its position and decided that a 100% valuation allowance as of September 30, 2021 and September 30, 2020 is necessary at this time.

Schedule of Tax Provision

	2021		2020
	For the three months ended September 30,
	2021		2020
Current tax provision (benefit):
Federal	$	-	$	-
State		-		-
Total current tax benefit		-		-
Deferred Tax provision:
Federal		-		-
State		-		-
Total deferred tax provision		-		-
Total tax provision	$	-	$	-

	For the Three Months ended September 30,
	2021			2020
Taxes at statutory U.S. federal income tax rate		21.0	%		21.0	%
State and local income taxes, net of federal tax benefit		6.7	%		6.9	%
Other differences, net		0	%		0	%
Valuation allowance		-27.7	%		-27.9	%
Effective tax rate		-	%		-	%

15.

Subsequent Events

We evaluated subsequent events and transactions occurring after September 30, 2021 through the date of this Report.

Clearday, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

Sale of the Buda Property.

On October 1, 2021, Pritor Longhorn Buda Hotel, LLC, a subsidiary of the Company (“Buda”), completed the disposition of one of the Company’s non-core assets: an improved property located in Buda, Texas (the “Buda Property”) that was previously operated as a franchised hotel. As previously reported, the operations for the Company’s hotel properties that it owned during 2020, including the Buda Property, were effectively suspended in response to the COVID-19 pandemic in April, 2020. The Buda Property was one of the Company’s assets held for disposition.

The sales price attributable for the Buda Property was $4,350,000, subject to customary adjustments and prorations and further adjusted by a net increase of approximately $402,000 for insurance proceeds related to certain casualty claims related to the property. The Buda Property was subject to a mortgage note and other long term obligations in the aggregate of approximately $4,500,000 including a mortgage note in favor of bank lender that was in default and subject to forbearance and financing by a lender that was used to pay the property taxes on the Buda Property and additional financing that was incurred by Buda on August 18, 2021 by the Buda Property buyer of $120,000 which was used to pay related occupancy taxes. The net proceeds from the sale of the Buda Property, including these claims and other adjustments including customary prorations, was approximately $186,154, which includes an accommodation by the mortgage lender to reduce the mortgage obligations. The $120,000 seller note is payable in 12 equal monthly installments beginning November 1, 2021. This note is guaranteed by BJ Parrish, a Company executive officer and director, and one of the Clearday subsidiaries which granted a security interest unimproved property held by a Company subsidiary that subordinate to such property mortgage.

The sale of the Buda Property completes the sale or disposition of all of the Company’s hotel properties and relieves approximately $4,500,000 of financing liabilities and approximately $4,100,000 of long term assets, net of accumulated depreciation, from the Company’s consolidated balance sheet.

Sale of Undivided Interests in the Naples Property.

The Company sold undivided interests in the land and improvements (the “Naples Property”) that are used for its Memory Care of Naples care facility that is located in Naples, Florida (the “Naples Facility”). The purchase agreement provides that an aggregate cash amount of $3,141,000 was received by Clearday for the sale of undivided interests equal to 67.36% of the aggregate interests in the Naples Property. The remaining 32.64% of the undivided interests in the Naples Property will be retained by MCA Naples, LLC. The undivided property interests will be held as a tenancy in common under the terms of a Tenant in Common Agreement (“TIC Agreement”). The closing of the purchase and sale of the undivided interests is subject to the closing conditions set forth in the purchase agreement, including the consent to purchase and sale by the existing mortgage lender or refinancing of the mortgage debt. The purchase agreement provided for a non-refundable advance of the purchase price. Accordingly, the aggregate purchase price amount has been received by the Company. This transaction was reported by the Company in a Current Report on Form 8K that was filed on November 1, 2021.

Receipt of ERTC Refunds.

The Company received an additional $650,000 in refunds in the fourth quarter from the overpayment of employer taxes under the employee retention tax credit (“ERTC”) for certain of our employees under the CARES Act with respect to payments made by us during the second and third quarters of 2021. As of November 12, 2021, we have received $2,201,316 of such refunds.

Joint Venture for the Development of Robotic Services.

On November 11, 2021, we entered into a Strategic Alliance, Development and Distribution Terms Agreement (the “JV Agreement”) with Invento Research Inc. (“Invento”) to focus on the development and deployment of robotic services that combine content and uses (or robotic applications) that empower, enhance and protect care workers providing services in the following (collectively, the “JV Core Business Market”): (1) the home and residential health and non-acute care markets, (2) residential care facilities such as assisted living, nursing home, skilled nursing and memory care facilities, (3) health care markets through hospitals, doctor offices, ambulatory surgical care centers, urgent care centers, and medical clinics, and (4) laboratories (e.g., facilities that administer blood testing services), occupational and physical therapy centers, and (5) telehealth applications.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Report. Some of the information contained in this discussion and analysis including information with respect AIU, its plans, and strategy for its business and related financing, includes forward-looking statements that involve risks and uncertainties. On September 9, 2021, AIU completed a merger with Superconductor Technologies Inc. (Refer to the financial statement Note 1 – Description of business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern). In connection with the merger, Superconductor changed its name to Clearday, Inc. and continued the business of AIU as the acquired company and continued certain businesses of STI. The following discussion uses the term Clearday to mean the business and operations of AIU prior to the merger with Superconductor continued after the merger and the business of STI that is continued after the merger, unless otherwise indicated.

General Industry Trends.

AIU began its business on December 31, 2018 when it acquired the businesses of certain private funds that were engaged in providing residential memory care services and other businesses (the “2018 Acquisition”). As a result of the 2018 Acquisition, Clearday owned and controlled the acquired businesses that included memory care residential care facilities operated by Memory Care America LLC (“MCA”) and other businesses and assets held for disposition.

The Company’s strategy is to provide innovative non-acute care and wellness solutions that disrupt the traditional senior care model primarily virtually through digital channels with its Clearday at Home service, that it developed during 2020 and launched in Q1 2021 through consumer and business to business (B2B) sales channels, and through its facilities. The Company owns and operates five residential memory care facilities that are located in four U.S. states, under the Company’s subsidiary, MCA. The MCA facilities focus on treating residents suffering from any of the 25 forms of dementia that may be treated in a residential care facility, Alzheimer’s being the most common. The Company uses its knowledge and its experience in treating dementia and other cognitive disorders to develop technology-enabled businesses, aligned to next-generation non-acute care and wellness services and products, including adult day care and home care products and services.

Clearday has two business segments:

●

Non-Acute Care and Wellness, is Clearday’s operating business including:

	-	Clearday’s innovative non-acute care and wellness services and products, including a virtual service delivered through digital channels (Clearday at Home), and adult day care (Clearday Clubs);
	-	Clearday’s existing MCA communities;
	-	Further development and commercial sales of robotic technologies;
	-	Commercialization of its advanced air quality products; and
	-	All of Clearday’s general and administrative and research and development functions.

●

Non-Core Assets and Related Businesses, which includes all of the assets that are held for disposition.

All net proceeds from dispositions of the non-core assets and related businesses since the 2018 Acquisition have been used by Clearday for its working capital and to fund the development of its innovative non-acute care and wellness businesses.

All of the Company’s long-lived assets are located in the United States and, during the nine months ended September 30, 2021 and 2020, respectively, all of the Company’s revenue was derived from within the United States.

During the nine months ended September 30, 2021, Clearday continued to focus on developing the next generation of tech-enabled non-acute care and wellness solutions.

Seasonality.

MCA’s residential care facilities are seasonal in nature. Generally, residential care facilities suffer revenue losses in November and December as there are losses of residents which often increases during the holiday periods.

Results of Operations.

The Company’s revenues come entirely from its five residential memory care facilities which operate in four states, and the activities related to developing tech enabled businesses that provide services and products to enhance the lives and health to older consumers. MCA earns revenue primarily by providing services to individual residents for a specified monthly fee, which fee includes all services such as room, meals and programs and to a lesser extent, certain community fees for a resident to move into a facility. All of MCA’s revenues are “private pay” which are charged directly to the resident and paid by such individual’s family or administrator. Residents may terminate services upon advance notice of a specified period.

Certain costs and expenses incurred by the Company are accounted for as “Other Selling, General & Administrative expenses” and “Research and Development expense”, including costs and expenses that are summarized below. The Company does not expect to incur the same level or amount for the following costs and expenses on a recurring basis to support its planned operations.

These costs and expenses include:

(1) Development costs and expenses for the innovative services, including Clearday at Home, which primarily consisted of payments to a third-party consulting firm to develop the Clearday at Home and Clearday Club business models, strategies, branding and marketing, and to a lesser extent, the employment costs of the Company personnel dedicated to such development activities. For the nine months ended September 30, 2021 and 2020, these amounts were $534,727 and $1,112,816 respectively. The decrease is primarily because of the amount of costs and expenses that were capitalized by the Company related to the creation of a virtual software platform used for Clearday at Home and related digital services.

(2) Accounting and finance expenses related to the merger and becoming a public company, which primarily consisted of accounting and consulting fees incurred to improve the accounting and finance department, the audit of the Company’s financial statements. For the nine months ended September 30, 2021 and 2020 these costs were approximately $1,123,587 and $1,345,071 respectively. While some of these expenses will continue, such as audit fees, the Company has reduced its reliance on third party consultants as it increases the size and skill set of its accounting and financial staff from the Company’s initial audits for the periods ended 2018 and 2019.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(3) Equity based compensation, which primarily consisted of restricted stock grants to the Company’s executives and third-party consultants. For nine months ended September 30, 2021 and 2020, these amounts were $1,915,044 and $1,251,225 respectively. While the Company expects to continue to use equity-based compensation in future years and has granted additional restricted stock awards in 2021, the size of the grants incurred in 2020 included certain one-time compensation amounts to the Company’s General Counsel and certain consultants are not expected to continue at such levels on a recurring basis.

(4) Lease Disputes and Offering Costs, which primarily consisted of legal and related costs in connection with the Simpsonville litigation described under Note 7 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report. For the nine months ended September 30, 2021 and 2021, these amounts were $851,079 and $520,803, respectively.

In addition, the Company realized a gain of approximately $744,000 during the nine months ended September 30, 2021 on their investment in shares of Superconductor Common Stock. The value of the Superconductor Common Stock held by AIU during the nine months ended September, 2021 had an aggregate loss of approximately $.54 million. These shares were cancelled in connection with the merger on September 9, 2021 described under “Note 1 – Description of business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern”.

MCA expenses are primarily related to the MCA facilities and providing care to the residents, including:

	●	wages and benefits, including wages and wage-related expenses, such as health insurance, workers’ compensation insurance and other benefits for the Company MCA employees, including MCA management;
	●	MCA facility operating expenses, including utilities, housekeeping, dietary, maintenance, regulatory requirements, insurance and administrative costs and salaries, including the compensation to persons who develop, market and provide our innovative products and services;
	●	lease expenses for four of the five MCA facilities;
	●	other general and administrative expenses, principally comprised of general management including the Company’s headquarters, general insurance, legal, accounting and investments in technology;
	●	depreciation and amortization expense on buildings and furniture and equipment;
	●	interest expenses for loans and other financings related to the MCA businesses, including loans to one lessor of three of the MCA facilities and the mortgage financing of the one owned MCA facility; and
	●	Other expenses for the development of technology used in supporting operations and next generation of tech-enabled non-acute care and wellness solutions

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Key Statistical Data For the three months ended September 30, 2021 and 2020:

The following tables present a summary of our operations for the three months ended September 30, 2021 and 2020 (dollars in thousands, except per unit amounts):

	Three months ended,						Increase/(Decrease)
	September 30, 2021			September 30, 2020			Amount			Percent
Revenues:
MCA Resident Facilities	$	2,852		$	2,637		$	215			8.1	%

Operating expenses:
Wages and benefits		2,232			2,058			174			8.5	%
MCA facility operating expenses		2,269			1,092			1,177			107.8	%
Lease expenses ⁽¹⁾		888			917			(29	)		(3.2	)%
Impairment		4,396			-			4,396			100.0	%
Other general & administrative expenses⁽²⁾		3,540			999			2,541			254.3	%
Research & development expenses		120			813			(693	)		(85.2	)%
Depreciation and amortization		129			149			(20	)		(13.7	)%
Total operating expenses		13,574			6,028			7,546			125.2	%

Operating loss		(10,722	)		(3,391	)		(7,331	)		216.2	%

Other (income) expenses
Interest		31			95			(64	)		(67.6	)%
Gain on disposal of assets		(121	)		-			(121	)		100.0	%
Unrealized gain/(loss) on equity investments ⁽³⁾		(220	)		1,040			(1,260	)		(121.2	)%
Other (income) expenses		(451	)		(5	)		(446	)		(7816.9	)%
Total other/(income) expenses		(761	)		1,130			(1,891	)		(167.6	)%

Net Loss from continuing operations		(9,961	)		(4,521	)		(5,440	)		120.33	%
Income from discontinued operations, net of tax (Note 5)		(502	)		(900	)		398			(44.2	)%
Net loss	$	(10,463	)	$	(5,421	)	$	(5,042	)		61.6	%

Total Number of facilities		5			5

Total resident capacity ⁽⁴⁾		320			320

Average resident days ⁽⁵⁾		206			214
Average resident day % ⁽⁶⁾		68.6			71.3
Percent of senior living revenue from private and other sources		100	%		100	%

⁽¹⁾

Lease expenses includes the accrual of rent and related amounts that have not been paid to the lessor of the Simpsonville facility in connection with a dispute described under Note 7 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report based on the amounts stated in the applicable lease agreement.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

⁽²⁾	Includes certain non-recurring fees and costs related to the merger of approximately $2.6 million.
⁽³⁾	The Unrealized (Gain)/Loss on Securities relates to the Superconductor Common Stock held by the Company was cancelled in connection with the merger as described under “Note 1 – Description of business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern.”
⁽⁴⁾	Is the maximum regulatory approved capacity for the facilities not adjusted for limitations to resident capacity due to COVID and related restrictions.
⁽⁵⁾	Average resident days is computed as follows: (i) the number of paid residents during any day during the specified period, divided by (ii) the total number of calendar days in such period.
⁽⁶⁾	Average resident day % is equal to the percentage of the average resident days during the specified period divided by the average of the total number of beds for all for all of the facilities during such period. This number is not adjusted to reflect a reduction of the number of available beds because of regulatory requirements due to COVID and related restrictions, which continued in force as of September 30, 2021 and vary from state to state.

MCA Revenue. MCA revenue. Revenue from the MCA facilities increased by approximately 8.1%, or approximately $.21 million, primarily due to increased resident and other fees and similar occupancy percentage of the resident rooms during this period available to be sold after giving effect to the COVID and related restrictions.

Wages and Benefits. Wages and benefits increased by 8.5%, or approximately $.17 million primarily due to a need to hire additional employees as the impact of the COVID-19 pandemic has become more manageable with vaccines as well as better preventative healthcare.

MCA Facility Operating Expense. Operating expense increased by 107.8% or approximately $1.17 million, primarily due to 1) an increase in compensation primarily to develop and support “Clearday Clubs” and “Clearday at Home” and related digital product and service lines, 2) additional costs for advertising and marketing to help develop these new product and service lines and 3) costs associated with personal protection equipment (PPE), testing supplies as well as an increase in sanitation and janitorial supplies for the applying of microSURE disinfectant and other related costs due to the COVID-19 pandemic.

Lease Expenses. Lease or rent expenses decreased by approximately 3.2%, or approximately $.03 million primarily due to certain non-building leases expenses in 2020 that do not occur in 2021.

Other General and Administrative Expense. Other general and administrative expenses increased by approximately 252.3% or $2.5 million, primarily due to an increase in fees paid for financial advisor fees to our investment banker of approximately $2.6 million related to the merger described under “Note 1 – Description of business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern.” Additionally, there was an increase in stock compensation due to additional stock awards in 2021 of approximately $.07 million as well as increases in insurance premiums.

Depreciation and Amortization. Depreciation and amortization decreased by approximately 13.7% or approximately $.02 million primarily due to lower remaining net capitalized asset balances for leasehold improvements being subject to depreciation during this period.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Interest Expense. Interest expense decreased by 67.6%, or approximately $.06 million primarily due to lower interest expenses due to the repayment of certain debt during this period offset by increases in interest expense related to higher interest rate financings that were incurred in the latter part of the third quarter of 2021.

Unrealized (Gain)/Loss On Disposal Of Assets. Unrealized (gain)/loss on disposal of assets increased due to the Company selling its interest a non-consolidated entity, Westover Town Center in the amount of $1.4 million. There was an additional adjustment of approximately $.12 million in the third quarter to account for all of the cash received for interest owned in investment.

Unrealized Gain/Loss On Securities. Unrealized (gain)/loss increased due to the issuance of shares of STI common stock that was issued in exchange for a 100% preferred equity interest in an AIU subsidiary. These shares were cancelled in connection with the merger.

Loss On Impairment. For the three months ended September 30, 2021, we recognized a long-lived asset impairment of $4.4 million to reduce the carrying value of certain of our long-lived assets to their estimated fair values.

Key Statistical Data For the nine months ended September 30, 2021 and 2020:

The following tables present a summary of our operations for the nine months ended September 30, 2021 and 2020 (dollars in thousands, except per unit amounts):

	Nine months ended,						Increase/(Decrease)
	September 30, 2021			September 30, 2020			Amount			Percent
Revenues:
MCA Resident Facilities	$	9,894		$	9,306		$	588			6.3	%

Operating expenses:
Wages and benefits		6,937			6,509			428			6.6	%
MCA facility operating expenses		4,590			3,025			1,565			51.7	%
Lease expenses ⁽¹⁾		3,385			3,446			(61	)		(1.7	)%
Impairment		4,396			-			4,396			100.0	%
Other general & administrative expenses		7,986			4,643			3,343			72.0	%
Research & development expenses		535			1,113			(578	)		(51.9	)%
Depreciation and amortization		433			461			(28	)		(6.1	)%
Total operating expenses		28,262			19,197			9,065			47.2	%

Operating loss		(18,368	)		(9,891	)		(8,477	)		85.7	%

Other (income) expenses
Interest		304			378			(74	)		(19.5	)%
Gain on disposal of assets		(1,172	)		-			(1,172	)		100.0	%
Unrealized gain/(loss) on equity investments ⁽²⁾		(744	)		1,040			(1,784	)		171.5	%
Other (income) expenses		(589	)		(26	)		(563	)		2,165.4	%
Total other/(income) expenses		(2,201	)		1,392			(3,593	)		(258.1	)%

Net Loss from continuing operations		(16,167	)		(11,283	)		(4,884	)		57.8	%
Income from discontinued operations, net of tax (Note 5)		130			3,097			2,967			(95.8	)%
Net loss	$	(16,037	)	$	(8,186	)	$	(7,851	)		95.9	%

Total Number of facilities		5			5

Total resident capacity⁽³⁾		320			320

Average resident days ⁽⁴⁾		225			210
Average resident day % ⁽⁵⁾		75.0			69.0
Percent of senior living revenue from private and other sources		100	%		100	%

⁽¹⁾	Lease expenses includes the accrual of rent and related amounts that have not been paid to the lessor of the Simpsonville facility in connection with a dispute described under Note 7 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report based on the amounts stated in the applicable lease agreement.
⁽²⁾	Includes certain non-recurring fees and costs related to the merger of approximately $2.6 million.
⁽³⁾	The Unrealized (Gain)/Loss on Securities relates to the Superconductor Common Stock held by the Company was cancelled in connection with the merger as described under “Note 1 – Description of business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern.”
⁽⁴⁾	Is the maximum regulatory approved capacity for the facilities not adjusted for limitations to resident capacity due to COVID and related restrictions.
⁽⁵⁾	Average resident days is computed as follows: (i) the number of paid residents during any day during the specified period, divided by (ii) the total number of calendar days in such period.
⁽⁶⁾	Average resident day % is equal to the percentage of the average resident days during the specified period divided by the average of the total number of beds for all for all of the facilities during such period. This number is not adjusted to reflect a reduction of the number of available beds because of regulatory requirements due to COVID and related restrictions, which continued in force as of September 30, 2021 and vary from state to state.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

MCA Revenue. MCA revenue. Revenue from the MCA facilities increased by approximately 6.3% or approximately $.58 million, primarily due to the increase of the average resident days as well as a 4% increase in resident fees. The average resident days increased to 225 or 7.2% for the nine months ended 2021 compared to 210 for the same period during 2020.

Wages and Benefits. Wages and benefits increased by 6.6%, or approximately $.43 million primarily due to an increase of the number of employees to respond to the COVID-19 pandemic as well as an increase of our average salaries and wage, including increased overtime expenses. Additionally, there was an increase in additional staffing needed to develop “Clearday Clubs” and “Clearday Virtual” product lines. The 9 month period ending September 30, 2020 included approximately 6 months prior to the onset of the increased wages and benefits required to respond to the COVID-19 pandemic.

MCA Facility Operating Expense. MCA facility operating expense increased by 51.7% or approximately $1.6 million, primarily due to 1) an increase in compensation primarily to develop and support “Clearday Clubs” and “Clearday at Home” and related digital product and service lines, 2) additional costs for advertising and marketing to help develop these new product and service lines and 3) costs associated with personal protection equipment (PPE), testing supplies as well as an increase in sanitation and janitorial supplies for the applying of microSURE disinfectant and other related costs due to the COVID-19 pandemic.

Lease Expenses. Lease or rent expenses decreased by approximately 1.7%, or approximately $.03 million primarily due to lease concessions that were granted in the lease of three facilities in the bankruptcy case that is described under Note 7 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report. The amount of the decrease does not give effect to the litigation regarding the Simpsonville facility, which payments have been withheld in connection with a dispute with the lessor and its affiliates. Additionally, there was a one-time adjustment to non-cash lease expenses relating to Clearday’s lease liabilities of approximately $.13 million primarily due to certain non-building leases expenses in 2020 that do not occur in 2021.

Other General and Administrative Expense. Other general and administrative expenses increased by approximately 72% or approximately $3.3 million, primarily due an increase in fees paid for financial advisor fees to our investment banker of approximately $2.6 million related to the merger described under “Note 1 – Description of business, Basis of Presentation, Summary of Significant Accounting Policies, Liquidity and Going Concern.” Additionally, there was an increase in stock compensation due to additional stock awards in 2021, increases in insurance premiums. This period also included increased compensation for executives and staff who were onboarded during the latter part of Q3, 2020, and accordingly were not present during the full first nine months of 2020, offset in part by decreases in accounting costs of approximately $.22 million as we reduced our reliance on third party consultants that supplemented our accounting and financial staff.

Research and Development Expense. Research and development expenses decreased by 51.9% or approximately $.58 million, related primarily to the capitalization of the costs the creation of a virtual software platform.

Depreciation and Amortization. Depreciation and amortization decreased by approximately 6.1% or approximately $.03 million primarily due to lower remaining net capitalized asset balances for leasehold improvements being subject to depreciation during this period.

Interest Expense. Interest expense decreased by 19.5%, or approximately $.07 million primarily due to the payment of certain debt during this period offset in party by the interest expense related to higher interest financings that were incurred in the latter part of the third quarter of 2021.

Unrealized (Gain)/Loss on Disposal of Assets. Unrealized (gain)/loss on disposal of assets increased due to the Company selling its investment in one of their non-consolidated entities, Westover Town Center for $1.4 million. The sale agreement is dated April 19, 2021 and the gain on sale of this investment amounts to approximately $1.1 million.

Unrealized Gain/Loss on Securities. Unrealized (gain)/loss increased due to the issuance of shares of STI common stock that was issued in exchange for a 100% preferred equity interest in an AIU subsidiary. These shares were cancelled in connection with the merger.

Loss on Impairment. For the nine months ended September 30, 2021, we recognized a long-lived asset impairment of $4.4 million to reduce the carrying value of certain of our long-lived assets to their estimated fair values.

Concentration of Risk—Revenues.

The Company’s revenue for the nine months ended 2021 and 2020 consist of operations from their five Memory Care residential facilities in four states. The Company expects to continue to be dependent on revenues from the MCA communities until the other planned businesses have revenues. Any failure of the MCA communities to continue these businesses would significantly and adversely impact the Company. The MCA revenues are primarily private pay and do not rely on reimbursements from Medicare or Medicaid. The Company expects that such concentration will continue until revenues are realized from its Clearday Clubs and digital service Clearday at Home. The Company acquired an adult day care on May 28, 2021, which generated approximately $125,000 in revenue in the three months ended September 30, 2021.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Non-Core Assets

The Company considers all its assets that are not used in the non-acute care and wellness industry as non-core assets. The non-core assets as of September 30, 2021 are:

	●	One hotel property that suspended its operations since March, 2020 due to COVID-19 and which was sold on October 1, 2021;
	●	Commercial real estate investments; and
	●	Investments in land.

The Company continues to evaluate the manner to sell or otherwise monetize such assets.

Disposition Activities

During the nine months ended September 30, 2021, the Company sold the following non-core assets:

	●	One hotel property, one located in Round Rock, Texas that was sold in the third quarter of 2019 and one located in San Antonio, Texas that was sold in the first quarter of 2020; and
	●	A commercial real estate property located in San Antonio, Texas that is owned by Clearday’s subsidiary Hill Country Partners, L.P. and sold in the first quarter of 2020.

During the nine months ended September 30, 2021, Clearday has:

●

Transferred the Sea World hotel property to the lender, and

Sold its investment in a medical office building

The COVID-19 pandemic has slowed the ability of the Company to dispose of its remaining non-core assets and lowered the expected price of such remaining assets. The Company recently has received an offer to sell one of its non-core assets, an investment in land, and expect to continue its efforts to sell its non-core assets to fund its operations.

Revenues of the Non-Core Assets.

The Company primarily derived revenues from Non-Core Assets from rents and related charges.

Liquidity and Capital Resources.

Clearday requires cash to fund its current operations and continued innovation of non-acute care and wellness services. As of September 30, 2021, Clearday has an accumulated deficit of $68,647,469, loss from continued operations of $16,167,625 and losses from cash flows from operating activities in continuing operations in the amount of $9,813,745. Clearday’s strategy is to use the net proceeds from the sale of its non-core assets and the capital raised by its subsidiaries Clearday Care and Clearday OZ Fund through the issuance of the Clearday Care Preferred and Clearday OZ LP Interests to fund such operations and activities. The COVID-19 pandemic has interrupted the non-core sale process and, to a certain extent, reduced the expected net proceeds.

Clearday does not have sufficient cash resources from the net cash flows of operations, from its current operations, to sustain its operations for the next twelve months and will rely on the continued sale of non-core assets and the sale of its securities.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The impact of the COVID-19 pandemic could continue to have a material adverse effect on Clearday’s business, results of operations, financial condition, liquidity and prospects in the near-term and beyond 2021. The ultimate impact of the COVID-19 pandemic on Clearday’s results of operations, financial condition and cash flows is highly uncertain, and cannot currently be accurately predicted. Clearday’s results of operations, financial condition and cash flows are dependent on future developments, including the duration of the pandemic and the related length of Clearday’s impact on the global economy, such as a lengthy or severe recession or any other negative trend in the U.S. or global economy and any new information that may emerge concerning the COVID-19 pandemic and the actions to contain it or treat Clearday’s impact, which at the present time are highly uncertain and cannot be predicted with any accuracy.

Clearday expects that the following factors will affect our future liquidity:

●	Operating costs for the MCA facilities will be effected and are expected to decrease, primarily because:


			During 2021, employee costs will be subsidized under the Employee Retention Credit under the CARES Act; and

			Transfer of the Simpsonville memory care facility, which is currently operating at a significant operating loss, including the entry of an interim management agreement to a third party during September, 2021 that limits the operating loss funding requirements of the Company.

●	Operating revenues for the MCA facilities will be effected and are expected to increase, primarily because:

			The opportunity to increase the average occupancy as regulators are re-evaluating the number of beds required for COVID-19 and related quarantine areas; and

			Ability to increase revenues by providing certain additional products and services to residents, including Clearday Calm Rooms.

●	Selling and general administrative costs will be effected and are expected to decrease, primarily because:

		○	We expect to reduce our reliance on consultants that have a higher cost than its employees that have assumed such functions and work; and

		○	The significant product development costs that are recorded as operating expenses are expected to remain consistent or be lower as the Clearday at Home and Clearday Clubs business models, strategies and marketing plans have been developed.

●	Other factors include:

		○	Expected revenues and net cash flow from Clearday Clubs including Clearday Patriot located in San Antonio, Texas, which was acquired during May 2021;

		○	Clearday at Home and Clearday Clubs including Clearday Patriot adult day care centers are expected to have significantly less per person (customer / resident) costs, including lease and wages and benefits, than amounts incurred for the MCA facilities and are expected to operate with significantly better operating margins.

		○	Expected revenues from certain products including our joint venture for robotic products and services and our advanced air quality products through its distribution arrangement with a global engineering firm;

		○	Additional debt financing of MCA facilities, however, there cannot be any assurance that such financing will be available on terms that are acceptable if at all; and

		○	We will have additional costs and expenses incurred in the merger, including fees to our financial advisor and costs generally of being a public company.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

MCA Initiatives.

As business operations for residential care facilities began to normalize in the COVID-19 environment, we continued our evaluation of our businesses. We expect to:

	●	Continue our sales and marketing training to maintain and increase resident or census occupancy percentages per available room in our facilities maintained after September 30, 2021;
	●	Increase revenues per resident through the sale of innovative products and services, including Clearday Calm Rooms and digital and robotic services, as well as other revenue opportunities;
	●	Use innovative services such as digital platforms and robotic service to empower and enhance caregiver efficiency and effectiveness which are intended to reduce employee / caregiver stress and turnover.

During the latter part of the third quarter of 2021, MCA began marketing its “Calm Rooms” initially at our Little Rock facility. Calm Rooms incorporate Clearday Restore therapies and other premium services and are able to charge a premium monthly fee. There are no significant revenues from such sales in such quarter.

COVID-19. The pandemic and the regulatory responses and additional initiatives have and will likely continue to have a material effect to Company’s core businesses and operations.

Funding History.

Clearday has historically financed its operations primarily through the sale of its equity securities in private placements. Clearday has incurred negative cash flows from operations. On September 30, 2021, Clearday had an aggregate amount of cash and restricted cash of $0.6 million and a deficit of $68.8 million

Cash Flows.

The following table ($ in 000) shows a summary of Clearday’s cash flows for the nine months ended September 30, 2021 and 2020:

	Nine months ended September 30,
	2021			2020
Net cash used in operating activities of continuing operations	$	(10,142	)	$	(6,368	)
Net cash used in operating activities for discontinued operations		776			(1,030	)
Net cash used in operating activities		(9,366	)		(7,398	)

Net cash used in investing activities of continuing operations		15			(219	)
Net cash provided by investing activities of discontinued operations		-			15,354
Net cash provided by investing activities		15			15,135

Net cash provided by financing activities of continuing operations		9,524			2,219
Net cash used in financing activities of discontinued operations		(479	)		(12,144
Net cash (used)/provided in financing activities		9,045			(9,925	)
Net decrease in cash and restricted cash	$	(306	)	$	(2,188	)

Operating Activities.

Net cash used in operating activities was $9.0 million for nine months ended September 30, 2021, and $7.4 million for the nine months ended September 30, 2020. Net cash used in continuing operations for the nine months ended September 30, 2021 resulted from a net loss of $16.0 million adjusted for certain non-cash items including: (i) an increase in stock-based compensation for certain officers, directors and consultative services of $1.9 million (ii) depreciation and amortization of $0.4 million, (iii) $1.4 million of non-cash lease expenses and $1.7 million of Right of Use Asset Impairment losses relating to Clearday’s Right of Use Assets, (iv) a $4.4 million increase in impairment losses for our MCA Naples facility, (v) an increase in allowance for doubtful debts by $0.1 million, (vi) an increase in the unrealized gain on securities in the amount of $0.7 million, and (vii) a gain on the sale of a non-consolidated subsidiary of $1.2 million.

Investing Activities.

Net cash used in investing activities was $0.3 million for the nine months ended September 30, 2021, and net cash provided of $15.1 million for the nine months ended September 30, 2020. Net cash used for the nine months ended September 30, 2021, consists primarily of investment activities in payments for capitalized software costs of $1.6 million, $0.1 million in cash from the merger with STI and the sale of a non-consolidated subsidiary in the amount of $1.2 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Financing Activities.

Net cash provided by financing activities was $9.0 million for the nine months ended September 30, 2021, and net cash used of $9.9 million for the nine months ended September 30, 2020. Net cash provided by financing activities for the nine months ended September 30, 2021, consisted primarily of net proceeds received from the new loans is $11.3 million (i) cash in-flow from the sale of preferred and member interests in non-controlling entity of $3.1 million; (ii) repayment of long-term debt in the amount of $4.8 million.

HHS Government Grants

Upon conclusion that AIU is reasonably assured that it has met the conditions of the grant, it must measure the amount of unreimbursed health-care related expenses and lost revenue related to COVID-19 at the end of each reporting period and release that amount from Refundable Advance to Other Revenue. During the nine months ended September 30, 2021 the Company has received grant amounting to $289,487 and total grant received so far by the Company amounts to $675,868.

Contractual Obligations and Commitments.

See the “Commitment and Contingencies” section within Note 7 of the unaudited condensed consolidated financial statements within this Quarterly analysis, which information is incorporated herein by reference

Legal Proceedings.

Clearday is subject to legal proceedings. The disclosures in this part of Management’s Discussion and Analysis of Financial Condition and Results of Operations are provided under Item 1 Note 7 to the financial statements – Commitments and Contingencies.

Off-Balance Sheet Arrangements.

Clearday is not a party to any off-balance sheet transactions. Clearday has no guarantees or obligations other than those which arise out of normal business operations.

Cash and Restricted Cash.

Restricted cash as of September 30, 2021 and December 31, 2020 includes cash that Clearday deposited as security for obligations arising from property taxes, property insurance and replacement reserve Clearday is required to establish escrows as required by Clearday’s mortgages and certain resident security deposits.

Critical Accounting Policies and Significant Judgments and Estimates.

The preparation of the unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition, Results of Operations – Critical Accounting Policies and Estimates” and the notes to our unaudited condensed consolidated financial statements included in this Quarterly analysis.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

During the three months ended September 30, 2021 and nine months ended September 30, 2021, there were no significant changes in our accounting policies and estimates other than the newly adopted accounting standards that are disclosed in Note 2 to our unaudited condensed consolidated financial statements.

Impact of Climate Change.

Concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other costs at The Company’s communities to increase. In the long-term, the Company believes any such increased costs will be passed through and paid by the Company’s residents and other customers in higher charges for The Company’s services. However, in the short-term, these increased costs, if material in amount, could materially and adversely affect the Company’s financial condition and results of operations.

Some observers believe severe weather in different parts of the world over the last few years is evidence of global climate change. Severe weather has had and may continue to have an adverse effect on certain senior living communities The Company operates. Flooding caused by rising seas levels and severe weather events, including hurricanes, tornadoes and widespread fires may have an adverse effect on the senior living communities the Company operates. The Company mitigates these risks by procuring insurance coverage The Company believes adequate to protect the Company from material damages and losses resulting from the consequences of losses caused by climate change. However, the

Company cannot be sure that its mitigation efforts will be sufficient or that future storms, rising sea levels or other changes that may occur due to future climate change could not have a material adverse effect on the Company’s financial results.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this section.

Item 4. Evaluation of Disclosure Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), has evaluated its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Report. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired controls objectives. Any “material weaknesses” in the Company’s internal controls may arise because of the internal control environment of the Company. Based upon that evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were ineffective. Specifically, the company does not have adequate segregation of duties that adequately restrict user and privileged access to certain financial applications, programs, and data to appropriate company personnel; do not adequately limit access to electronic payment systems for authorized expenditures; and have inadequate cyber controls regarding the protection of our data and restricting data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately. Management has identified these weaknesses and have adopted a program to remediate such weaknesses.

Remediation Plan. The Company has instituted efforts to remediate these concerns and enhance The Company’s internal control environment to remediate these issues by the end of the year or in the beginning of the first quarter of 2022. However, any failure to maintain effective controls could result in significant deficiencies or material weaknesses and cause the Company to fail to meet the Company’s periodic reporting obligations or result in material misstatements in the Company’s financial statements. The Company may also be required to incur costs to improve its internal control system and hire additional personnel. This could negatively impact the Company’s results of operations.

Changes in Internal Control over Financial Reporting

There has been changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as noted below.

The financial and management controls of the Company of the Company during the third quarter of 2021 have changed as a result of the merger. The officers and directors of AIU became the officers and directors of the Company as of the effective date of the merger and the accounting and financial management processes of AIU became the accounting and management processes of the Company.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

Information on material developments in our legal proceedings is included in Note 7 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.

Item 1A. Risk Factors.

As a smaller reporting company, the Company is not required to include a summary of Risk Factors. This Report is the first quarterly report after the previously reported merger of the Company with Allied Integral United, Inc. (“AIU”) in which AIU was the accounting acquiror under Generally Accepted Accounting Principles. In view of the change of the Company resulting from the merger, the Company has elected to provide the following summary of material risk factors. By providing the following disclosures in this Item 1A, the Company does not undertake any obligation to include disclosures under Item 1A in future quarterly reports on Form 10-Q while the Company is a smaller reporting company.

The recent unprecedented events related to the COVID-19 pandemic have caused significant market disruptions and may have longer-term effects that Clearday cannot predict.

The recent unprecedented events related to the COVID-19 pandemic have caused significant market disruptions and may have longer-term effects that Clearday cannot predict. The equity and other market professionals continue to assess the consequences of the global pandemic and the extent and effectiveness of government responses, the responses of the Federal Reserve Bank and other governmental and non-governmental organizations cannot be predicted.

The residents of Clearday’s MCA communities and the clients of Clearday at Home and Clearday adult day care programs are primarily older individuals with pre-existing conditions, including conditions that significantly compromise their immunity. The additional procedures undertaken by MCA and the adult day care businesses will likely result in reduced operating cash flow and profit margins. Although Clearday has procedures that address infectious diseases and contamination in a community environment, Clearday is not able to provide assurance that the communities will not be significant affected, including widespread contagion that could result in a suspension or closing of a facility. Additionally, state or federal regulatory authorities may require, and industry groups may provide, additional measures that could limit the number of individuals that may be treated at a facility, require additional staff or employees or other measures that may require significant investment or operating cost. The additional costs have primarily resulted from regulatory requirements to increase staff and provide quarantine areas. Additionally, during the initial stage of the COVID-19 pandemic, admissions to Clearday’s residential care facilities were suspended and adult day care centers were closed.

During such occasions, Clearday may experience a decline in clients. Further, depending on the severity of any occurrence, Clearday may be required to incur costs to identify, contain and remedy the impacts of those occurrences at MCA communities or adult day care facilities. As a result, these occurrences could significantly adversely affect the results of operations.

The proposed adult day care business has greater risks with respect to COVID-19 and other pandemics due to, among other reasons, that appropriate regulatory agencies may close such businesses, limit the capacity of such businesses, or require additional procedures or capital expenditures designed to protect customers that are costly. During the COVID-19 pandemic, many states closed adult day care centers for a period of time.

The additional procedures and precautions undertaken by adult day care businesses, such as MCA, in response to COVID-19 will likely result in reduced operating cash flow and profit margins.

Although Clearday has procedures that address infectious diseases and contamination in a community environment, Clearday is not able to provide assurance that the communities will not be significantly affected, including widespread contagion that could result in suspending or closing a facility. Depending on the severity of any occurrence, Clearday may be required to incur costs to identify, contain and remedy the impacts of those occurrences at MCA communities and their adult day care facilities.

Additionally, state or federal regulatory authorities may require, industry groups may provide or Clearday may otherwise determine that it would be prudent, to implement certain additional measures and/or quarantine procedures that may require significant investment and/or operating costs, such measures may include limiting the number of individuals that may be treated at a facility while requiring additional staff to manage treatment during the COVID-19 pandemic. During this time, Clearday may also experience a decline in occupancy due to residents terminating their agreements due to the uncertainty of COVID-19 and its effects on adult day care businesses and senior living facilities. Such investments and increased costs may adversely affect Clearday’s operations. The extent and duration of the impact of the COVID-19 pandemic on Clearday’s overall business is uncertain, and our ability to raise capital could be impaired.

Any other severe cold and flu season, epidemics or any other widespread illnesses could adversely affect the occupancy of Clearday’s senior living communities and facilities.

The revenues of Clearday will be dependent in large part on the occupancy levels at the MCA communities and the members of the Clearday Clubs and any other adult day care facility or other non-acute care and wellness center that will be owned or operated by Clearday. Even if the disruption to the markets and facilities are not as pronounced as during the COVID-19 pandemic, there could be significant reduction in Clearday’s revenues and there could be government or other regulatory intervention that materially increase costs, which would likely materially reduce the operating results of Clearday.

Clearday’s non-acute care and wellness business has significant concentration in industry and geographic areas which exposes Clearday to changes in market conditions in this industry and in those areas.

Clearday’s existing residential care facilities are located in the Little Rock Arkansas area (1), Naples, Florida (1), Simpsonville, South Carolina (1) and the San Antonio / Austin area of Texas (2). Clearday expects to grow our adult day care business primarily in specified markets in Texas and continue offering such services in Naples, Florida. The Clearday at Home or digital service offerings of Clearday are national in scope, but are not as of the date of this report significant compared to the MCA revenues. Accordingly, Clearday will continue to have a high concentration in select geographic markets. Additionally, all of Clearday’s business, other than related to our remaining non-core assets, are engaged or will be engaged in the non-acute care and wellness industry. As a result of this industry and geographic concentrations, the conditions affecting older Americans and the of local economies and real estate markets, changes in governmental rules and regulations, particularly with respect to senior citizens, acts of nature and other factors that may result in a decrease in demand for Clearday’s services in these areas could have an adverse effect on Clearday’s revenues, results of operations and cash flow. In addition, Clearday will be particularly susceptible to revenue loss, cost increases or damage caused by severe weather conditions or natural disasters such as hurricanes, wildfires, earthquakes or tornadoes in those areas.

Circumstances that adversely affect the ability of older adults or their families to pay Clearday for our adult day care services could cause our revenues and results of operations to decline.

Clearday expects that payment for our adult day care services will be private pay and not rely on government benefits, such as Medicare and Medicaid, which are generally not available for such services, and for benefits or payments available to veterans through the United States Department of Veterans Affairs. Clearday has currently priced the basic service fee for our adult day care centers at a monthly amount that is generally expected to be less than the monthly payment benefits to retirees from the Social Security Administration and Clearday expects that older adults that live with family members will have sufficient funds to pay such service fees and their other household expenses. There can be no assurance that the expected service fee by Clearday will be at an amount that can be afforded by Clearday’s target market for our Clearday Clubs. Economic downturns, higher levels of unemployment among family members, lower levels of consumer confidence, stock market volatility and/or changes in demographics, including the unprecedented effects of the COVID-19 pandemic, could adversely affect the ability of older adults to afford Clearday’s expected adult day care service fees and could result in decreased fees and revenues resulting in a decline of Clearday’s estimated operating results as many of the operating costs for an adult day care center will not vary in relation to a decrease in club members or revenues.

Clearday may not be able to operate our business or implement the business strategies.

Clearday intends to develop and expand new businesses including in the areas of home care services and products and provide services or otherwise have revenue from related services which may include retail sales of products including products that incorporate the technology of the Sapphire Cryocooler that was acquired in the merger, and provide other longevity care services. Clearday continues to evaluate such opportunities and other strategies or business opportunities that Clearday believes would be complimentary to our existing businesses, specifically, our residential care facilities and the digital service offering, and where Clearday may benefit from certain synergies in management and leverage of assets. There can be no assurance, however, that Clearday will be able to implement our business strategy in a manner that realizes any of our intended benefits, including that Clearday will be able to acquire, internally develop or enter into strategic alliances for intended or prospective business lines.

Clearday’s planned business and growth strategy may not yield anticipated returns, may result in disruptions to the business of, may strain management resources and/or may be dilutive to Clearday’s stockholders.

Clearday’s business and growth strategies involve the development (by organic growth or, to a lesser extent, through acquisitions and joint ventures) of businesses that are focused on tech-enabled non-acute care and wellness. In evaluating Clearday’s business opportunities, Clearday will make certain assumptions regarding the expected future performance and prospects. However, newly acquired businesses or investments in businesses, or strategic alliances, may fail to perform as expected, and Clearday may not be able to manage those businesses in a manner that meets our expectations. In particular, Clearday’s acquisition activities may be subject to the following risks:

	●	Clearday businesses that are acquired or conducted through joint ventures do not realize the synergies that it expects and require substantially greater investment than it anticipated;

	●	Clearday may acquire or invest in businesses that realize net cash losses initially and/or for a period of time that is longer than Clearday anticipated;

	●	If Clearday finances acquisitions or strategic alliances by incurring debt, Clearday’s cash flow may be insufficient to meet the required principal and interest payments;

	●	Clearday may be unable to quickly and efficiently integrate new acquisitions or strategic alliances, and as a result Clearday’s results of operations and financial condition could be adversely affected;

	●	Operating expenses of an acquired business or a strategic alliance may exceed budgeted amounts;

	●	Management may be diverted from operations; and

	●	Clearday may be required to have management teams that are not proven or that do not, for any number of reasons, perform as expected.

If Clearday cannot operate our businesses or strategic alliances to meet our financial expectations, Clearday’s financial condition, results of operations, cash flow and per share trading price our Common Stock could be adversely affected.

Clearday may use its securities and/or the securities our subsidiaries as consideration in connection with our acquisition strategy which could result in significant dilution to the relative ownership interest of holders of our capital stock prior to such acquisitions.

In addition, it is likely that Clearday will use its or a subsidiary’s securities as consideration, in part or whole, for the purchase of acquired businesses as part of our asset and business acquisition strategy. Such securities may carry rights or preferences different from or superior to those of Clearday’s common stock. Moreover, if such securities include Clearday’s common stock or securities senior to or pari passu to or convertible or exchangeable into shares of Clearday’s common stock, the relative ownership interest of the holders of the Clearday’s capital stock would be subject to dilution.

Clearday’s strategy includes businesses that are in development or early stages and such strategies and businesses include additional venture stage risks and there is no assurance that Clearday may be able to develop our businesses organically or through acquisitions.

A fundamental strategy of Clearday is the continued development of our services, including Clearday at Home and Clearday Clubs as well as related businesses. Clearday at Home does not have any material revenues as of the date of this Report. Clearday Clubs has opened its initial location to be branded as Clearday Patriot by the acquisition of an adult day care center in San Antonio, Texas. Clearday’s ability to successfully execute future development in accordance with our business plan, or at all, will be impacted by a number of factors, including the ability to sell our remaining non-core assets, the availability of additional financing, including additional equity financing, on terms acceptable to Clearday, the availability of government programs such as the Cares Act, market trends, the ability to identify and execute business opportunities, including acquisitions that meet the parameters of the Clearday business plan, and increased competition for sites for the expansion opportunities or acquisitions. The development and acquisitions of future businesses may result in unforeseen operating difficulties and may require additional financial resources and attention from management. Failure to identify suitable development or acquisition businesses, effectively execute the Clearday business strategy or operating difficulties of businesses that Clearday may acquire in the future could have an adverse effect on Clearday’s financial condition, results of operations, cash flows and liquidity.

Clearday will require additional capital and there is no assurance that any debt or equity financing will be available on acceptable terms, if at all.

To the extent that Clearday develops its business through financing, including additional equity financing, there cannot be assurance that financing will be available on acceptable terms, if at all, or that Clearday may be able to satisfy the conditions precedent required to secure borrowings or utilize credit facilities, which could reduce the number, or alter the type, of investments that Clearday would make otherwise and the ability for it to expand its businesses. Any such limitation on such financing or sales of our remaining non-core assets may reduce income. To the extent that financing proves to be unavailable when needed, Clearday may also be compelled to modify our business strategy. Any failure to obtain financing or realize the sale of our remaining non-core assets or other assets may have a material adverse effect on the continued development or growth of Clearday’s businesses. We do not have any binding agreement with an investment banker to provide additional capital. There is no assurance that the public market conditions, the market acceptance of Clearday, the price and volume of our common stock and other factors, will enable any such offering will be consummated on terms acceptable to Clearday or that AGP will then decide that it would then manage or participate in any such offering.

If Clearday fails to identify and quickly respond to changes and trends in non-acute care and wellness preferences, our business, financial condition, results of operations and prospects will be adversely impacted.

Clearday expects to provide services to the non-acute care and wellness industry and expects the products and services to be subject to dynamic changes. The needs and preferences of older adults have generally changed over the past several years, including preferences to reside in their homes longer or permanently, as well as changes in services and offerings, including delivery of home healthcare services, utilization of outpatient rehabilitation services and services that address their increasing desire to maintain active lifestyles. If Clearday fails to identify such changes and quickly and successfully respond to such changes to deliver accepted products and services, then competitors will be able to successfully penetrate the markets that Clearday will operate and Clearday will not be able to successfully grow or maintain our businesses, which would adversely affect our business, financial condition, results of operations and prospects.

Our debt leverage and financing arrangements that we may enter into may, under certain circumstances, contain restrictions and limitations that could impact our ability to operate our business.

Clearday has incurred its long term and other debt, primarily, in connection with the financing of (1) long term assets that are now held for sale, and (2) the financing of the MCA Naples facility and operations. The indebtedness of Clearday may have the effect, among other things, of reducing the flexibility of Clearday to respond to changing business and economic conditions, requiring us to use increased amounts of cash flow to service indebtedness and increasing our borrowing costs.

Our remaining non-core assets that are held for disposition are treated differently under GAAP.

A material amount of the assets on the Clearday balance sheet are held for disposition. These assets are treated differently under GAAP than the assets that are used in Clearday’s operating non-acute care and wellness business. These differences are described in greater detail in the footnotes to the financial statements that are included in this report and the audited financial statements of Allied Integral United, Inc., including that these assets are not subject to depreciation and such assets have not been subject to depreciation expense with respect to these assets from and after December 31, 2018.

The remaining non-core assets may not have the net realizable value that is estimated.

Clearday intends to finance, in part, our development and expansion of our tech-enabled non-acute care and wellness businesses by the sale of our remaining non-core assets. A significant amount of our remaining non-core assets of Clearday have been sold since January 1, 2019 and the net proceeds have been used in Clearday’s operations and business development. Clearday is not expected to make additional investments in any of these assets to be able to reposition the asset to achieve their highest or best use or otherwise achieve a better value. Further, certain of our remaining non-core assets may require additional investment to maintain, such as replacement or repairs, and deferring maintenance and other related costs could decrease the net realizable value of our remaining non-core assets. There can be no assurance that the value of our remaining non-core assets will be able to be sold for the net realizable value that is estimated or the amount that such assets are on the financial statements of Clearday.

Operators of senior care facilities must comply with the rules and regulations of governmental reimbursement programs and certification requirements, fraud and abuse regulations and are subject to new legislative developments.

The healthcare industry is highly regulated by federal, state and local licensing requirements, facility inspections, reimbursement policies, regulations concerning capital and other expenditures, certification requirements and other laws, regulations and rules. Any failure to comply with such laws, requirements and regulations could affect Clearday’s ability to operate the facilities that Clearday owns or finances. Healthcare operators are subject to federal and state laws and regulations that govern financial and other arrangements between healthcare providers. These laws prohibit certain direct and indirect payments or fee-splitting arrangements between healthcare providers that are designed to induce or encourage the referral of patients to, or the recommendation of, a particular provider for medical products and services. They also require compliance with a variety of safety, health, staffing and other requirements relating to the design and conditions of the licensed facility and quality of care provided.

These regulations may also enable the regulatory agency to place liens on properties. Possible sanctions for violation of these laws and regulations include loss of licensure or certification, the imposition of civil monetary and criminal penalties, and potential exclusion from the Medicare and Medicaid programs. Failure of Clearday to comply with these rules or regulations could have an adverse effect on our financial condition or results of operations.

In addition, this area of the law currently is subject to intense scrutiny. Additional laws and regulations may be enacted or adopted that could require changes in the design of the properties and its joint venture’s operations and thus increase the costs of these operations.

Private third-party payers continue to try to reduce healthcare costs.

Private third-party payers such as insurance companies continue their efforts to control healthcare costs through direct contracts with healthcare providers, increased utilization review practices and greater enrollment in managed care programs and preferred provider organizations. These third-party payers increasingly demand discounted fee structures and the assumption by healthcare providers of all or a portion of the financial risk. These efforts of third-party payers to limit the amount of payments that Clearday or others may receive for healthcare services could adversely affect Clearday and would adversely affect Clearday even if such insurance policies do not cover residential or non-residential care facilities that Clearday will operate as the total household cash flow would be reduced and there would be less funds available for Clearday’s services. At the same time, as a result of competitive pressures, Clearday’s ability to maintain operating margins through price increases to private pay options may be limited.

Healthcare policy changes, including proposals to reform the U.S. healthcare system, may harm the Clearday’s future business.

Healthcare costs have risen significantly over the past decade. There have been and continue to be proposals by legislators, regulators and third-party payors to keep these costs down. Clearday is unable to assess with certainty the extent of governmental requirements and regulations that will apply to Clearday’s care and wellness businesses.

The Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010 (together, the “Healthcare Reform Act”) is a sweeping measure intended to expand healthcare coverage within the U.S., primarily through the imposition of health insurance mandates on employers and individuals, the provision of subsidies to eligible individuals enrolled in plans offered on the health insurance exchanges, and the expansion of the Medicaid program. This law has substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry. In addition, the Healthcare Reform Act imposes an annual fee, which will increase annually, on sales by branded pharmaceutical manufacturers starting in 2011. The financial impact of these discounts, increased rebates and fees and the other provisions of the legislation on Clearday’s business is unclear and there can be no assurance that Clearday’s business will not be materially adversely affected. In addition, these and other ongoing initiatives in the United States have increased and will continue to increase pressure on pricing and operations of residential and non-residential care facilities. The announcement or adoption of any government initiatives could have an adverse effect on potential revenues from any product that Clearday may successfully develop.

Moreover, additional legislative or regulatory changes remain possible and appear likely. In this regard, the TCJA, signed into law in December 2017, includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Healthcare Reform Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”. The nature and extent of any additional legislative or regulatory changes to the Healthcare Reform Act are uncertain at this time. Clearday expects that the Healthcare Reform Act, as currently enacted or as it may be amended in the future, and other healthcare reform measures that may be adopted in the future could have a material adverse effect on Clearday’s industry generally. In addition to the Healthcare Reform Act, there will continue to be proposals by legislators at both the federal and state levels, regulators and third party payors to keep healthcare costs down while expanding individual healthcare benefits.

Various healthcare reform proposals have also emerged at the state level. Clearday cannot predict what healthcare initiatives, if any, will be implemented at the federal or state level, or the effect any future legislation or regulation will have on Clearday. However, an expansion in government’s role in the U.S. healthcare industry may lower the revenues for future products and adversely affect Clearday’s future business, possibly materially.

Clearday is unable to determine the effect of the amount of wage increases that are expected with labor shortages and any regulatory changes effected by the administration of President Biden, including regulations regarding minimum wages and benefits.

The healthcare industry, and businesses in general, have experienced, and may continue to experience, significant labor shortages, particularly for care givers. Clearday will continue to compete with other senior living community and day care operators, among others, to attract and retain qualified personnel responsible for the day to day operations of Clearday’s current and planned care and wellness businesses. The market for qualified staff, including professional staff such as nurses, therapists and other healthcare professionals, is highly competitive, and periodic or geographic area shortages of such healthcare professionals may require us to increase the wages and benefits that we offer to our employees in order to attract and retain such personnel or to utilize temporary personnel at an increased cost. Additionally, any shortages of staff may require us to retain per diem employees and incur overtime, each of which would increase our wage and benefit expenses. In addition, employee benefit costs, including health insurance and workers’ compensation insurance costs, have materially increased in recent years and Clearday cannot predict the future impact of the Healthcare Reform Act, or any other future healthcare legislation, on the cost of employee health insurance. Increasing employee health insurance and workers’ compensation insurance costs may materially and adversely affect our earnings. From time to time labor unions may attempt to organize Clearday’s employees. If Clearday’s employees were to unionize, it could result in business interruptions, work stoppages, the degradation of service levels due to work rules, or increased operating expenses that may adversely affect our results of operations.

Clearday cannot be sure that labor costs will not increase or that any increases will be recovered by corresponding increases in the rates that Clearday will charge to our clients or otherwise. Any significant failure by us to control labor costs or to pass any increases on to clients through rate increases could have a material adverse effect on our business, financial condition and results of operations. Further, increased costs charged to Clearday’s clients may reduce Clearday’s occupancy and growth and related revenues.

Additionally, healthcare and elder care are important political issues. President Biden has used, and may continue to use, executive orders to achieve policy goals and objectives. In addition, such policy goals and objectives may be realized through legislation that is sponsored or otherwise supported by President Biden’s administration. Clearday is unable to assess the consequences to improvements to the healthcare systems and that may be realized by such actions, including any effect of increased costs or taxes.

The planned care and wellness business may require Clearday to make significant capital expenditures to maintain and improve care centers.

Clearday’s planned adult day care and clinics and related facilities may require from time to time significant expenditures to address required ongoing maintenance or to make them more attractive to Clearday’s clients. Physical characteristics of facilities are mandated by various government authorities; changes in these regulations may require Clearday to make significant expenditures. Supply chain issues and building material shortages have increased, and may continue to increase, construction costs, including the costs for expected leasehold improvements. In addition, Clearday may often be required to make significant capital expenditures when Clearday acquires, leases or manages new facilities. Clearday’s available financial resources may be insufficient to fund these expenditures. Clearday may be unable to pay increased rent at any facility without experiencing losses.

Because the merger resulted in an ownership change under Section 382 of the Internal Revenue Code Clearday, Clearday’s pre-merger NOL carryforwards and certain other tax attributes are subject to limitations.

If a corporation undergoes an “ownership change” within the meaning of Section 382 of the Internal Revenue Code (“Section 382”), the corporation’s NOL carryforwards and certain other tax attributes arising before the ownership change are subject to limitations on use after the ownership change. In general, an ownership change occurs if there is a cumulative change in the corporation’s equity ownership by certain stockholders that exceeds fifty percentage points over a rolling three-year period. Similar rules may apply under state tax laws. The merger that closed on September 9, 2021 resulted in an ownership change for Clearday and, accordingly, Clearday’s NOL carryforwards and certain other tax attributes will be subject to limitations (or disallowance) on their use after such merger. The Section 382 limitation will cause a significant portion of Clearday’s pre-merger net operating loss carryforwards to never be utilized. In addition, if Clearday is determined to have discontinued its historic pre-merger business following the merger, subject to certain exceptions, the Section 382 limitation could eliminate all possibility of utilizing Clearday’s pre-merger NOL carryforwards. Additional ownership changes in the future could result in additional limitations on Clearday’s NOL carryforwards. Consequently, even if we achieve profitability, we may not be able to utilize a material portion of the NOL carryforwards and other tax attributes, which could have a material adverse effect on our cash flow and results of operations.

Clearday has a limited history of operations, and our Clearday at Home and Clearday Care adult day care businesses are each an emerging business that will expose us to the risks and uncertainties associated with operating and growing an emerging business within an emerging industry.

Each of the innovative care solutions and the adult day care business to be conducted by Clearday Care is significant to Clearday’s growth opportunities and plans. These businesses include the virtual day care business and the adult day care services through physical locations. Clearday does not have any material operational history in such businesses by which potential investors can evaluate our past performance and likelihood of success. As of the date of this report, the adult day care business does not include any operating adult day care centers that were developed by Clearday or use our proprietary Clearday Clubs format. The financial position and results of operations of Clearday, including our most recent financial statements included in this report, are not indicative of the tech-enabled non-acute care and wellness businesses that we intend to pursue, including the adult day care facilities under the Clearday Clubs brand. Such Clearday businesses do not have any earnings history for investors to estimate our future level of sales or profitability or whether Clearday will in fact have sales or profitability. As a result of such industry and geographic focus, the conditions affecting older Americans as well as the local economies and real estate markets in such geographic areas, including, but not limited to, changes in governmental rules and regulations (particularly with respect to senior citizens), acts of nature and other factors that may result in a decrease in demand for our services in these areas could have an adverse effect on Clearday’s revenues, results of operations and cash flow. A core component of our strategy is the development and expansion of our tech-enabled non-acute care and wellness businesses and to fund such plan in part by the sale of our remaining non-core assets such as commercial properties. Our ability to successfully execute future development in accordance with our business plan, or at all, will be impacted by a number of factors, including the ability to sell the remaining non-core assets, the availability of financing on terms acceptable to us, market trends, the ability to identify and execute business opportunities (including acquisitions that meet the parameters of the Clearday business plan), and increased competition for sites for the expansion opportunities or acquisitions. Any such limitation on any such financing or sale of the remaining non-core assets may reduce income.

If Clearday fails to identify such changes and quickly and successfully respond to such changes to deliver accepted products and services, then competitors will be able to successfully penetrate the markets in which Clearday operates which may limit Clearday’s ability to successfully grow and/or maintain our businesses, which would adversely affect our business, financial condition, results of operations and prospects.

Clearday incurred substantial expenses related to the completion of the September 9, 2021 merger.

Clearday incurred substantial expenses in connection with the completion of the September 9, 2021 merger. The substantial majority of these costs will be non-recurring expenses related to the merger, including a substantial fee payable to AGP and legal and other professional fees and expenses and the fees related to the registration and issuance of the common stock issued in connection with such merger. Clearday does not have excess cash flows from its existing businesses to fund the payment of such additional expenses and will require revenues from its innovative businesses or the ability to raise capital through the sale of securities. There can be no assurance that the Company will be able to raise additional funds through the sale of its securities on terms that are acceptable or at all.

Risk Factors That May Generally Apply To an Investment In Securities

The price of Clearday’s common stock may decrease.

The market price of the Clearday’s common stock may decline as a result of a number of reasons, including if:

	●	the planned development and expansion by Clearday of the adult day care business or digital services is delayed or not successful; or

	●	Clearday’s business and prospects are not consistent with the expectations of financial or industry analysts.

Our ability to protect our patents and other proprietary rights is uncertain, exposing us to possible losses of competitive advantage.

Our efforts to protect our proprietary rights may not succeed in preventing infringement by others or ensure that these rights will provide us with a competitive advantage. Pending patent applications may not result in issued patents and the validity of issued patents may be subject to challenge. Third parties may also be able to design around the patented aspects of the products or design around our copyrights, including the coding for our digital services. Additionally, certain of the issued patents and patent applications are owned jointly with third parties. Because any owner or co-owner of a patent can license its rights under jointly-owned patents or applications, inventions made by us jointly with others are not subject to our exclusive control. Any of these possible events could result in losses of competitive advantage.

We depend on specific patents and licenses to technologies, and it will likely need additional technologies in the future that it may not be able to obtain.

We utilize technologies under licenses of patents from others for certain of our products. These patents may be subject to challenge, which may result in significant litigation expense (which may or may not be recoverable against future royalty obligations). Additionally, we may be required to utilize intellectual property rights owned by others, including patents developed by a third-party engineering firm for the cryogenic air quality system, and may seek licenses to do so. Such licenses may not be obtainable on commercially reasonable terms, or at all. It is also possible that Clearday may inadvertently utilize intellectual property rights held by others, which could result in substantial claims.

Other parties may have the right to utilize technology important to our business.

We utilize certain intellectual property rights under non-exclusive licenses or have granted to others the right to utilize certain intellectual property rights licensed from a third party. Because we may not have the exclusive rights to utilize such intellectual property, other parties may be able to compete with us, which may harm our business.

We will face significant competition.

We will compete with numerous care and wellness companies, including developers, owners and operators of residential and non-residential facilities, many of which own or operate facilities that are similar to Clearday’s current and planned facilities in the same markets in which we are, or will be located. Clearday will compete with numerous other managers and operators of care and wellness businesses that are focused on the longevity market, including adult day care centers and products that compete with products that will be distributed by Clearday. Some of Clearday’s competitors are larger and have greater financial resources than us and some of our competitors are not for profit entities which have endowment income and may not face the same financial pressures as us. We cannot be sure that we will be able to attract a sufficient number of clients or residents at rates that will generate acceptable returns or that we will be able to attract employees and keep wages and other employee benefits, insurance costs and other operating expenses at levels which will allow us to compete successfully and operate profitably.

Clearday’s competition may also be from senior housing, senior healthcare, home healthcare, medical and healthcare providers that expand their services or otherwise provide comparable services or utilize tech-enabled products and services that Clearday will utilize. Any such companies or combination of companies may have referral or strategic relationships that reduce the number of consumers that would otherwise use Clearday’s products or services. In recent years, a significant number of new senior age communities and services have been developed and continue to be developed. Accordingly, Clearday expects to have increased competitive pressures, particularly in certain geographic markets where Clearday’s intends to operate longevity care services. These competitive challenges may prevent Clearday from establishing, maintaining or improving revenues, which may adversely affect Clearday.

Federal, state and local employment related laws and regulations could increase Clearday’s cost of doing business, and Clearday may fail to comply with such laws and regulations.

Clearday’s operations are subject to a variety of federal, state and local employment related laws and regulations, including, but not limited to, the U.S. Fair Labor Standards Act, which governs matters such as minimum wages, the Family and Medical Leave Act, overtime pay, compensable time, recordkeeping and other working conditions, and a variety of similar laws that govern these and other employment related matters. Because labor represents (and will represent) a significant portion of Clearday’s ordinary operating expenses from its care and wellness businesses, compliance with these evolving laws and regulations could substantially increase Clearday’s cost of doing business, while failure to do so could subject Clearday to significant back pay awards, fines and lawsuits. Clearday’s failures to comply with federal, state and local employment related laws and regulations could have a material adverse effect on our business, financial condition and results of operations.

The US federal minimum wage increases in five steps over five years ending with a $15 minimum wage in 2025, with automatically increase in line with changes in the median hourly wage in the economy. Certain states have increased the minimum wage to $15 per hour. Additionally, we have received benefits of the Employee Retention Credits under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) which is expected to end at the end of 2021 This and other labor related actions have increased the cost of our operating expenses. The extent of such actions cannot be predicted with any certainty.

Clearday may fail to comply with laws governing the privacy and security of personal information, including relating to health information.

Clearday will be required to comply with federal and state laws governing the privacy, security, use and disclosure of personally identifiable information and protected health information. State laws also govern protected health information, and rules regarding state privacy rights. Other federal and state laws govern the privacy of other personally identifiable information. If Clearday fails to comply with applicable federal or state standards, then we could be subject to civil sanctions and criminal penalties, which could materially and adversely affect Clearday’s business, financial condition and results of operations.

Clearday will continue to incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies.

Clearday will continue to incur significant legal, accounting and other expenses, including costs associated with public company reporting requirements. Clearday will also incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as rules implemented by the SEC and any exchange that Clearday may have its common stock listed. These rules and regulations are expected to increase the Clearday’s legal and financial compliance costs and to make some activities more time consuming and costly. The executive officers of Clearday will continue to need to devote substantial time to gaining expertise regarding operations as a public company and compliance with applicable laws and regulations. These rules and regulations also have made it expensive for Clearday to obtain directors’ and officers’ liability insurance. As a result, it may be more difficult for Clearday to attract and retain qualified individuals to serve on our board of directors or as our executive officers, which may adversely affect investor confidence in Clearday and could cause our business or stock price to suffer.

Clearday may become subject to litigation, which could have an adverse effect on its performance.

Clearday may from time to time become subject to litigation, including claims relating to our residential care and other operations. Clearday’s planned businesses include the continuation of our residential care facilities, adult day care and our planned in-home care which are businesses that are regulated and have a high risk for plaintiff actions. Some of these claims may result in significant defense costs and potentially significant judgments against us, some of which are not, or cannot be, insured against. Clearday generally intends to vigorously defend itself; however, we cannot be certain of the ultimate outcomes of any claims that may arise in the future. Resolution of these types of matters against the us may result in Clearday having to pay significant fines, judgments, or settlements, which, if uninsured, or if the fines, judgments, and settlements exceed insured levels, could adversely impact Clearday’s earnings and cash flows, thereby having an adverse effect on Clearday’s financial condition, results of operations, cash flow and per share trading price of our common stock. Certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flows, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.

Clearday depends on key personnel whose continued service is not guaranteed.

Clearday’s ability to manage its businesses and anticipated future growth depends, in large part, upon the efforts of key personnel, particularly James Walesa, our Chairman and Chief Executive Officer, and B.J. Parrish, our director and Chief Operating Officer. Such key personnel have extensive knowledge and relationships and exercise substantial influence over Clearday’s operational, financing, acquisition and disposition activity.

There is significant competition in the care and wellness industry for experienced personnel and there is a risk that Clearday may not be able to continue to retain our key personnel. The loss of services of one or more members of Clearday’s executive management team, or Clearday’s inability to attract and retain highly qualified personnel, could adversely affect Clearday’s business, diminish Clearday’s investment opportunities and weaken Clearday’s relationships with lenders, business partners, existing and prospective tenants and industry personnel, which could adversely affect us.

Clearday relies on information technology and systems in its operations, and any material failure, inadequacy, interruption or security failure of that technology or those systems could materially and adversely affect us.

Clearday will continue to rely on information technology and systems, including the internet and commercially available software, to process, transmit, store and safeguard information and to manage or support a variety of our business processes, including financial transactions and maintenance of records, which may include personally identifiable information of employees, residents and clients. If Clearday experiences security breaches or other similar failures, or other inadequacies or interruptions of our information technology, we could incur material costs and losses and our operations could be disrupted as a result. Further, third-party vendors could experience similar events with respect to their information technology and systems that impact the products and services they provide to us. We will continue to rely on commercially available systems, software, tools and monitoring, as well as our internal procedures and personnel, to provide security for processing, transmitting, storing and safeguarding confidential resident, customer and vendor information, such as personally identifiable information related to our employees and others, including our residents and clients, and information regarding their and Clearday’s financial accounts. We will continue to take various actions, and may incur significant costs, to maintain and protect the operation and security of our information technology and systems, including the data maintained in those systems. However, it is possible that these measures will not prevent the systems’ improper functioning or a compromise in security, such as in the event of a cyberattack or the improper disclosure of personally identifiable information.

Security breaches, computer viruses, attacks by hackers, online fraud schemes and similar breaches can create significant system disruptions, shutdowns, fraudulent transfer of assets or unauthorized disclosure of confidential information. The cybersecurity risks to Clearday and our third party vendors are heightened by, among other things, the evolving nature of the threats faced, advances in computer capabilities, new discoveries in the field of cryptography and new and increasingly sophisticated methods used to perpetuate illegal or fraudulent activities against Clearday, including cyberattacks, email or wire fraud and other attacks exploiting security vulnerabilities in Clearday’s or third parties’ information technology networks and systems or operations. Any failure to maintain the security, proper function and availability of Clearday’s information technology and systems, or certain third party vendors’ failure to similarly protect their information technology and systems that are relevant to the Clearday or our operations, or to safeguard Clearday’s business processes, assets and information could result in financial losses, interrupt Clearday’s operations, damage our reputation, cause us to be in default of material contracts and subject us to liability claims or regulatory penalties. Any or all of the foregoing could materially and adversely affect our business and the value of our securities.

Changes in tax laws or other actions could have a negative effect on us.

At any time, the federal or state income tax laws, or the administrative interpretations of those laws, may be amended. Federal and state tax laws are constantly under review by persons involved in the legislative process, the IRS, the U.S. Department of the Treasury and state taxing authorities. Changes to the tax laws, regulations and administrative interpretations, which may have retroactive application, could adversely affect us. The administration of President Biden has recently proposed changes to the Internal Revenue Code that, if enacted, could have adverse tax consequences for us. Such proposals are subject to significant changes. There cannot be any assurances as to any changes in the Internal Revenue Code that may be implemented, including any that may be adverse to us.

Clearday’s insurance may not cover potential losses, including from adverse weather conditions, natural disasters and other events.

We carry commercial property, liability and other insurance coverage on our businesses. We select policy specifications and insured limits that we believe to be appropriate and adequate given the relative risk of loss, the cost of the coverage and industry practice. We do not expect to carry insurance for losses such as loss from riots or war because such coverage is not available or is not available at commercially reasonable rates. Some of our policies, including those covering losses due to terrorism and certain other insurance policies, are subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses, which could adversely affect our operations. We may discontinue terrorism or other insurance if the cost of premiums for any such policies exceeds, in our judgment, the expected benefit from carrying the policies. If following the termination or failure to renew any insurance policy we experience an adverse uninsured event, we may be required to incur significant costs, which could materially adversely affect our business and financial performance. Additionally, insurance to cover the risk of business interruptions may not be available or available at commercially reasonable rates and may not cover the specific events that require a closure of interrupt of any of our businesses.

If we experience a loss that is uninsured or that exceeds policy limits, we could lose the capital invested in the assets and businesses that that was made. Furthermore, we may not be able to obtain adequate insurance coverage at reasonable costs in the future as the costs associated with property and casualty renewals may be higher than anticipated.

Clearday’s operations will be subject to risks from adverse weather and climate events.

Severe weather may have an adverse effect on certain senior living or adult day care facilities to be operated by us and by our remaining non-core assets. Flooding caused by rising sea levels and severe weather events, including hurricanes, tornadoes and widespread fires have had and may have in the future an adverse effect on such assets and facilities and result in significant losses to us and interruption of our business. We may incur significant costs and losses as a result of these activities, both in terms of operating, preparing and repairing our residential care communities or adult day care centers or the properties owned by use in anticipation of, during and after a severe weather or climate-related event and in terms of potential lost business due to the interruption in operations that may not be adequately covered by insurance.

Terrorist attacks or riots in any locations in which Clearday acquires properties could significantly impact the demand for, and value of, Clearday’s properties.

Terrorist attacks and other acts of terrorism or war or riots would severely impact the demand for, and value of, Clearday’s planned businesses. Terrorist attacks in any of the metropolitan areas in which the Clearday expects to have operations also could directly impact the value of Clearday through damage, destruction, loss or increased security costs, and could thereafter materially impact the availability or cost of insurance to protect against such acts. A decrease in demand could make it difficult to maintain the expansion of the adult day care business in accordance with the business plan. To the extent that any future terrorist attack otherwise disrupts Clearday’s planned businesses, it may impair the ability to make timely payments to fund operations, which would harm the operating results and could materially and adversely affect us.

Current government policies regarding interest rates and trade policies may cause a recession.

The U.S. Federal Reserve policy regarding the timing and amount of future increases in interest rates and changing U.S. and other countries’ trade policies may hinder the growth of the U.S. economy. It is unclear whether the U.S. economy will be able to withstand these challenges and continue sustained growth. Economic weakness in the U.S. economy generally or a new U.S. recession would likely adversely affect Clearday’s financial condition, including by limiting Clearday’s ability to pay rent or other obligations and causing the value of Clearday’s owned and operated senior living communities, and remaining non-core assets and of our securities to decline. Further, general economic conditions, such as inflation, commodity costs, fuel and other energy costs, costs of labor, insurance and healthcare, interest rates, and tax rates, affect our operating and general and administrative expenses, and we have no control or limited ability to control such factors. Such economic uncertainties and conditions may adversely affect us and others, including our landlords, and our clients, such as by reducing access to funding or credit, increasing the cost of credit, limiting the ability to manage interest rate risk and increasing the risk that obligations will not be fulfilled, as well as other impacts which Clearday is unable to fully anticipate.

As a “smaller reporting company,” Clearday may avail itself of reduced disclosure requirements, which may make Clearday’s common stock less attractive to investors.

Clearday is a “smaller reporting company” under applicable SEC rules and regulations. As a “smaller reporting company,” Clearday may rely on exemptions from certain disclosure requirements that are applicable to other public companies, such as simplified executive compensation disclosures and reduced financial statement disclosure requirements in our SEC filings. Clearday may continue to rely on such exemptions for so long as it remains a “smaller reporting company”. These exemptions include reduced financial disclosure, reduced disclosure obligations regarding executive compensation, and not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002.

Decreased disclosures in Clearday’s SEC filings due to its status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects. Clearday cannot predict if investors will find the Clearday’s common stock less attractive if it relies on these exemptions. If some investors find Clearday’s common stock less attractive as a result, there may be a less active trading market for Clearday’s common stock and Clearday’s stock price may be more volatile. Clearday may take advantage of the reporting exemptions applicable to a smaller reporting company until it is no longer a smaller reporting company, which status would end once it has a public float greater than $250 million. In that event, Clearday could still be a smaller reporting company if its annual revenues were below $100 million, and it has a public float of less than $700 million. Clearday’s reliance on these exemptions may result in the public finding that Clearday’s common stock to be less attractive and adversely impact the market price of Clearday’s common stock or the trading market thereof.

Clearday expects to not pay cash dividends on its common stock and investors may have to sell their shares in order to realize value for their investment.

Clearday has not paid any cash dividends on its common stock and does not intend to pay cash dividends in the foreseeable future. Clearday intends to use its cash for reinvestment in the development and expansion of the care and wellness businesses and to pay its debt and lease obligations. As a result, investors may have to sell their shares of common stock to realize any of their investment.

Clearday’s internal controls over financial reporting may not be effective which could have a significant and adverse effect on Clearday’s business and reputation.

Clearday is subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC thereunder (“Section 404”). Section 404 requires Clearday to report on the design and effectiveness of its internal controls over financial reporting.

Some, but not all, of Clearday’s officers and directors have experience as officers or directors of a public company. Clearday’s internal controls have certain material weaknesses, including insufficient segregation of duties. Clearday has instituted efforts to remediate these concerns and enhance Clearday’s internal control environment to remediate these issues by the end of 2021. However, any failure to maintain effective controls could result in significant deficiencies or material weaknesses and cause Clearday to fail to meet its periodic reporting obligations or result in material misstatements in Clearday’s financial statements. Clearday may also be required to incur costs to improve its internal control system and hire additional personnel. This could negatively impact the Clearday’s results of operations.

Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses and divert management’s attention from operating Clearday’s business, which could have a material adverse effect on Clearday’s business.

There have been other changing laws, regulations and standards relating to corporate governance and public disclosure in addition to the Sarbanes-Oxley Act, as well as new regulations promulgated by the SEC and rules promulgated by national securities exchanges. These new or changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. As a result, Clearday’s efforts to comply with evolving laws, regulations and standards are likely to continue to result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. Clearday’s board members, Chief Executive Officer and Chief Financial Officer could face an increased risk of personal liability in connection with the performance of their duties. As a result, Clearday may have difficulty attracting and retaining qualified board members and executive officers, which could have a material adverse effect on Clearday’s business. If Clearday’s efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies, Clearday may incur additional expenses to comply with standards set by regulatory authorities or governing bodies which would have a material adverse effect on Clearday’s business and results of operations.

Delaware law could discourage a change in control, or an acquisition of Clearday by a third party, even if the acquisition would be favorable to stockholders.

The DGCL contains provisions that may have the effect of making more difficult or delaying attempts by others to obtain control of Clearday, even when these attempts may be in the best interests of stockholders. Delaware law imposes conditions on certain business combination transactions with “interested stockholders”. These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in Clearday’s control or management, including transactions in which stockholders might otherwise receive a premium for their shares of common stock over then current market prices. These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests.

Clearday’s board has the authority to issue “Blank Check” Preferred Stock, which could affect the rights of holders of the Clearday’s common stock and may delay or prevent a takeover that could be in the best interests of Clearday’s stockholders.

The board of Clearday has the authority to issue shares of preferred stock (the “Series Preferred Stock”), in one or more series and to fix the number of shares constituting any such series, the voting powers, designation, preferences and relative participation, optional or other special rights and qualifications, limitations or restrictions thereof, including the dividend rights and dividend rate, terms of redemption (including sinking fund provisions), redemption price or prices, conversion rights and liquidation preferences of the shares constituting any series, without any further vote or action by the stockholders. Similarly, the Clearday board may authorize a subsidiary of Clearday to issue securities that may have any such rights, powers or preferences. The issuance of any such securities could affect the rights of the holders of Clearday’s common stock. For example, such issuance could result in a class of securities outstanding that would have preferential voting, dividend, and liquidation rights over Clearday’s common stock, and could (upon conversion or otherwise) enjoy all of the rights appurtenant to the shares of our common stock. The authority possessed by the board of directors to issue Series Preferred Stock or any such other securities could potentially be used to discourage attempts by others to obtain control of Clearday through any merger, tender offer, proxy contest or otherwise by making such attempts more difficult or costly to achieve. The board of directors may issue the Series Preferred Stock or any such other securities without stockholder approval and with voting and conversion rights which could adversely affect the voting power of holders of our common stock. There are no agreements or understandings for the issuance of Series Preferred Stock any such other securities.

The market price and volume of Clearday’s common stock fluctuates significantly and could result in substantial losses for individual investors.

The stock market from time to time experiences significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These broad market fluctuations may cause the market price and volume of Clearday’s common stock to decrease. In addition, the market price and volume of Clearday’s common stock is highly volatile.

Factors that may cause the market price and volume of the Clearday’s common stock to decrease include:

	●	changes in stock market analyst recommendations regarding Clearday’s common stock or lack of analyst coverage;

	●	fluctuations in Clearday’s results of operations, timing and announcements of our corporate news;

	●	any adverse investor reaction to the September 9, 2021 merger;

	●	adverse actions taken by regulatory agencies with respect to any facilities or their operations or therapeutic based procedures that Clearday provides;

	●	any lawsuit involving any care or services or products that Clearday provides;

	●	announcements of technological innovations by Clearday’s competitors;

	●	public concern as to the safety of services or products developed by Clearday or others;

	●	regulatory developments in the United States and in foreign countries;

	●	the care and wellness industry conditions generally and general market conditions;

	●	failure of Clearday’s results of operations to meet the expectations of stock market analysts and investors;

	●	sales of Clearday’s common stock by its executive officers, directors and five percent stockholders or sales of substantial amounts of Clearday’s common stock, including amounts that are sold on market orders when there is insufficient volume and activity regarding our common stock;

	●	changes in accounting principles; and

	●	loss of any of our key employees and officers.

Further, Clearday’s common stock will be subject to market disruptions that devalue the equity markets broadly, or certain sectors, which are caused by events that are not related to the business and operations of Clearday. Recent events in exchange listed securities resulted in significant loss of market value of shares for, among other matters, pandemics and market reaction to perceived global interconnected economies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits.

Number		Description of Document

10.1	*	Settlement Agreement dated as of July 31, 2019 by and among Invesque Holdings, LP (“Invesque”), MHI-MC New Braunfels, LP (“New Braunfels”), MHI-MC San Antonio, LP (“San Antonio”), and MHI Little Rock, LP (“Little Rock”; together with New Braunfels and San Antonio, the “Landlords”; together with Invesque, the “Landlord Parties”), Memory Care America LLC (“MCA”), MCA Mainstreet Tenant LLC (“MCA Mainstreet”), MCA Westover Hills Operating Company, LLC (“MCA Westover Operating”), MCA Management Company, Inc. (“MCA Management”); MCA New Braunfels Operating Company, LLC (“MCA New Braunfels”), MCA Westover Hills, LLC (“MCA Westover”), and Memory Care at Good Shepherd, LLC (“MCA Good Shepherd”; together with MCA, MCA Mainstreet, MCA Westover Operating, MCA Management, MCA New Braunfels, and MCA Westover, the “Debtors”), Trident Healthcare Properties I, L.P. (“Trident”), Steve Person (“Mr. Person”), James Walesa (“Mr. Walesa”), and B.J. Parrish.

10.2	*	Second Amended and Restated Promissory Note dated July 31, 2019 in the initial principal amount of $3,328,105.65 issued by Memory Care America LLC, a Tennessee limited liability company (“MCA”), MCA Mainstreet Tenant LLC, a Tennessee limited liability company (“MCA Mainstreet”), MCA Westover Hills Operating Company, LLC, a Tennessee limited liability company (“MCA Westover Operating”), MCA Management Company, Inc. (“MCA Management”), a Tennessee corporation, MCA New Braunfels Operating Company, LLC, a Tennessee limited liability company (“MCA New Braunfels”), MCA Westover Hills, LLC, a Delaware limited liability company (“MCA Westover”), and Memory Care at Good Shepherd, LLC, an Arkansas limited liability company (“MCA Good Shepherd”; together with MCA, MCA Mainstreet, MCA Westover Operating, MCA New Braunfels, and MCA Westover, the “Debtors”), to the order Invesque Holdings, LP, a Delaware limited partnership (“Invesque”), MHI-MC New Braunfels, LP, a Delaware limited partnership (“New Braunfels”), MHI-MC San Antonio, LP, a Delaware limited partnership (“San Antonio”), and MHI Little Rock, LP, a Delaware limited partnership (“Little Rock”; together with Invesque, New Braunfels and San Antonio, together with their respective successors and assigns, the “Landlord Parties”).

10.3	*	Second Amendment to Lease Agreement dated as of July 31, 2019 by and between MHI-MC San Antonio, LP, a Delaware limited partnership (“Landlord”), and MCA Mainstreet Tenant, LLC, a Tennessee limited liability company (“Tenant”) and the First Amendment to such Lease Agreement, dated as of June 29, 2018 and the Lease Agreement, dated December 16, 2016 (the “Original Lease”), regarding the memory care facility located on the Leased Property and commonly known as Memory Care of Westover Hills.

10.4	*	Second Amendment To Lease Agreement dated as of July 31, 2019 by and between MHI-MC New Braunfels, LP, a Delaware limited partnership (“Landlord”), and MCA Mainstreet Tenant, LLC, a Tennessee limited liability company (“Tenant”) and the First Amendment to such Lease Agreement, dated as of June 29, 2018 and the Lease Agreement, dated December 16, 2016, regarding the memory care facility located on the Leased Property and commonly known as Memory Care of New Braunfels.

10.5	*	Second Amendment To Lease Agreement dated as of July 31, 2019 by and between MHI Little Rock, LP, a Delaware limited partnership (“Landlord”), and MCA Mainstreet Tenant, LLC, a Tennessee limited liability company (“Tenant”) and the First Amendment to such Lease Agreement, dated as of June 29, 2018 and the Lease Agreement, dated December 16, 2016 regarding memory care facility located on the Leased Property and commonly known as Memory Care of Little Rock.

10.6	*	Amended, Restated And Consolidated Guaranty Agreement dates as of July 31, 2019, by each guarantor named therein to Invesque Holdings, LP, a Delaware limited partnership and the other guaranteed parties named therein as to the obligations described therein.

10.7	*	Reaffirmation of Pledge Agreement dated as of July 31, 2019, by Trident Healthcare Properties I, LP, a Delaware limited partnership for the benefit of Invesque Holdings, LP, a Delaware limited partnership (successor-in-interest to Invesque Financing, LP, formerly known as Mainstreet Health Financing, LP).

10.8	*	Lease Agreement dated as of February 3, 2016 by and between MC-Simpsonville, SC-1 UT, LLC, a Utah limited liability company and MCA Simpsonville Operating Company, LLC, a Tennessee limited liability company; and First Amendment thereto dated as of October 17, 2017, and Second Amendment thereto dated as of March 12, 2018 and the Third Amendment thereto dated as of May ___, 2018.

10.9	*	Settlement Agreement dated as of March 10, 2021 by and between Pender Capital Asset Based Lending Fund I, L.P., a limited partnership (“Pender”) on the one hand and Pritor Longhorn Seaworld, LLC, James Walesa, and B.J. Parrish, on the other.

10.10	*	Amended and Restated Promissory Note dated April 1, 2015 by Memory Care America, LLC as the maker, payable to the order of Betty Gearhart in the original principal amount of $238,577.81 and the Amendment thereto dated April 1, 2017 and the Second Amendment thereto dated March 5, 2020.

10.11	*	Assignment and Security Agreement dated July 13, 2012 by and between Memory Care America, LLC and Betty Gearhart, as the secured party.

10.12	*	Amended and Restated Promissory Note dated as of April 1, 2019 by Allied Integral United, Inc., now known as Clearday Operations, Inc., payable to The Five C’s LLC in the principal amount of $325,000.

10.13.1	*	Mortgage and Security Agreement dated April 28, 2021 by MCA Naples, LLC, a Tennessee limited liability company in favor of Benworth Capital Partners, LLC, a Florida limited liability company.

10.13.2	*	Solvency Affidavit by James Walesa and MCA Naples Holdings, LLC, a Tennessee limited liability company, in favor of Benworth Capital Partners, LLC, a Florida limited liability company, dated April 28, 2021.

10.13.3	*	Subordination Agreement dated April 28, 2021 by and among Benworth Capital Partners, LLC, a Florida limited liability company, MCA Naples, LLC, a Tennessee limited liability company and James Walesa.

10.13.4	*	Continuing and Unconditional Guaranty dated April 28, 2021 by MCA Naples Holding, LLC, a Tennessee limited liability company in favor of Benworth Capital Partners, LLC, a Florida limited liability company.

10.13.5	*	Deed in Lieu Agreement dated April 28, 2021 by MCA Naples, LLC, a Tennessee limited liability company and the escrow agent named therein in favor of Benworth Capital Partners, LLC, a Florida limited liability company.

10.13.6	*	Assignment of Rents and Leases dated April 28, 2021 by MCA Naples, LLC, a Tennessee limited liability company, as assignor, and Benworth Capital Partners, LLC, a Florida limited liability company, as assignee.

10.13.7	*	Subordination, Nondisturbance and Attornment Agreement dated April 28, 2021 by and among Benworth Capital Partners, LLC, a Florida limited liability company, MCA Naples Operating Company, LLC, a Tennessee limited liability company, and MCA Naples, LLC, a Tennessee limited liability company.

10.13.8	*	Continuing and Unconditional Guaranty dated April 28, 2021 by James Walesa in favor of Benworth Capital Partners, LLC, a Florida limited liability company.

10.13.9	*	Loan Agreement dated April 28, 2021 by and between MCA Naples, LLC, a Tennessee limited liability company and Benworth Capital Partners, LLC, a Florida limited liability company.

10.13.10	*	Promissory Note dated April 28, 2021 by MCA Naples, LLC, a Tennessee limited liability company payable to the order of Benworth Capital Partners, LLC, a Florida limited liability company and the ACH Rider thereto.

10.14.1	*	Commercial Loan Agreement dated as of October 5, 2018 by and between Leander Associates, LTD, a Texas limited partnership, as borrower, James Walesa, as the guarantor, and Equity Secured Investments, Inc. as the lender.

10.14.2	*	Modification and Extension of Real Estate Lien and Note dated as of October 5, 2020 by and between Leander Associates, LTD, a Texas limited partnership, as borrower, James Walesa, as the guarantor, and Equity Secured Investments, Inc. as the lender.

10.14.3	*	Guaranty Agreement dated October 4, 2018 by James Walesa in favor of Equity Secured Investments, Inc.

10.15.1	*	Commercial Loan Agreement dated as of March 26, 2021 by and among AIU 8800 Village Drive, LLC, a Delaware limited liability company, as the borrower, James Walesa, as the guarantor, and Equity Secured Fund I, LLC, as the borrower.

10.15.2	*	Environmental Indemnification Agreement dated as of March 26, 2021 by and among AIU 8800 Village Drive, LLC, a Delaware limited liability company, as the borrower, James Walesa, as the guarantor, and Equity Secured Fund I, LLC, as the borrower.

10.15.3	*	Assignment of Leases and Rents dated as of March 26, 2021 by AIU 8800 Village Drive, LLC, a Delaware limited liability company in favor of Equity Secured Fund I, LLC.

10.15.4	*	Promissory Note dated March 26, 2021 by AIU 8800 Village Drive, LLC, a Delaware limited liability company, payable to the order of Equity Secured Fund I, LLC in the initial principal amount of $1,000,000.

10.15.5	*	Deed of Trust with Security Agreement and Assignment of Rents dated March 26, 2021 by AIU 8800 Village Drive, LLC, a Delaware limited liability company, unto the trustee named therein.

10.15.6	*	Guaranty Agreement dated March 26, 2021 by James Walesa in favor of Equity Secured Fund I, LLC.

10.16.1	*	Term Promissory Note dated July 23, 2018 by SRP Artesia, LLC, a Delaware limited liability company, as borrower, payable to the order of Firstcapital Bank of Texas, N.A., a national banking association, as lender in the initial principal amount of $266,048.29.

10.16.2	*	Renewal, Extention and Amendment Agreement regarding the amendment to the Deed of Trust and Security Agreement regarding the Term Promissory Note issued by SRP Artesia, LLC payable to the order of Firstcapital Bank of Texas, N.A., a national banking association.

10.17.1	*	Renewal, Extension, and Modification of Real Estate Note and Lien dated as of March 12, 2019 by Cibolo Rodeo, Ltd., a Texas limited partnership, as borrower, in favor Tamir Enterprises, Ltd., as the lender.

10.18.1	*	Promissory Note dated as of August 18, 2021, by Pritor Longhorn Buda Hotel, LLC, a Delaware limited liability company, and Cibolo Rodeo, Ltd., a Texas limited partnership, payable to the order of 2K Hospitality, LLC, a Texas limited liability company, as lender, in the initial principal amount of $120,000.

10.18.2	*	Deed of Trust, Security Agreement - Financing Statement dated August 18, 2021 by Cibolo Rodeo, Ltd., a Texas limited partnership in favor of the trustee named therein for the benefit of 2K Hospitality LLC, a Texas limited liability company, as the lender.

10.18.3	*	Guaranty Agreement dated as of August 18, 2021 by Billie Jay Parrish a.k.a. B.J. Parrish to and in favor of 2K Hospitality, LLC, a Texas limited liability company.

10.19	*	Purchase Agreement dated as of August 18, 2021, by and between CFG Merchant Solutions, LLC, a Delaware limited liability company, as the buyer, and MCA Naples, LLC, as Seller and the personal guaranty of performance of the obligations thereunder dated as of August 18, 2021 by Christen Hemmens and the Additional Seller Addendum thereto, and the Consent and Reaffirmation of the Guarantor thereto.

10.20	^	Operations Transfer, Interim Management and Security Agreement dated as of September 9, 2021, by and between MCA Simpsonville Operating Company, LLC and Brookstone Terrace of Simpsonville, LLC. Previously filed as exhibit 10.1 on the Current Report on form 8-K filed on September 15, 2021.

10.21	*	Standard Merchant Cash Advance Agreement dated as of September 10, 2021 by and between LG Funding LLC, as the merchant, and each of MCA Naples, LLC, Memory Care America LLC, MCA Management Company, Inc., MCA Naples Operating Company, LLC and MCA Naples Holdings, LLC, the addendums thereto, and the guarantee of the obligations thereunder dated as of September 10, 2021 by Christin Hemmens.

10.22	^	Futures Receipts Sale and Purchase Agreement dated as of September 28, 2021, by and between MCA New Braunfels Operating Company LLC and Cloudfund LLC d/b/a Samson Group and the Personal Guaranty of Performance by James Walesa for the benefit of Cloudfund LLC d/b/a Samson Group dated September 28, 2021 and the addendums thereto. Previously filed as Exhibit 10.1 in the Current Report on form 8-K filed on October 4, 2021.

10.23	^	Revenue Purchase Agreement and Security Agreement and Guaranty of Performance dated September 28, 2021 between Samson MCA LLC, as the funder, and MCA New Braunfels Operating Company LLC and the Security Agreement and Guaranty of Performance and the Appendixes thereof, and the Personal Guaranty of Performance by James Walesa for the benefit of Samson MCA LLC dated September 28, 2021. Previously filed as Exhibit 10.2 in the Current Report on form 8-K filed on October 4, 2021.

10.24	^	Agreement between Clearday, Inc., a Delaware corporation, and Emerging Markets Consulting, LLC dated as of October 18, 2021. Previously filed as Exhibit 10.1 in the Current Report on form 8-K filed on October 19, 2021.

10.25	^	Purchase and Sale Agreement dated as of October 26, 2021 by and between MCA Naples, LLC and the purchasers party thereto and the form of the Tenants in Common Agreement among MCA Naples, LLC and the other holders of the undivided interests in the property named therein. Previously filed as exhibit 10.1 and exhibit 10.2, respectively, in the Current Report on form 8-K filed on November 1, 2021.

10.26	*	Form of the Amended and Restated Limited Partnership Agreement of Clearday Alternative Care OZ Fund LP.

10.27	*	Promissory Note dated September 10, 2021 by Clearday, Inc. payable to the order of A.G.P. / Alliance Global Partners in the initial principal amount of $2,630,000.

10.28.1	*	Business Loan Agreement dated October 2, 2019 by and among Memory Care America LLC, MCA New Braunfels Operating Company, LLC and James T. Walesa and ServisFirst Bank, and the Change in Terms Agreement thereto.

10.28.2	*	Commercial Guaranty dated October 2, 2019 BJ Parrish, as the guarantor, in favor of ServisFirst Bank with respect to the obligations of under the Business Loan Agreement dated as of even date.
10.28.3	*	Commercial Guaranty dated October 2, 2019 by John S. Person, as the guarantor, in favor of ServisFirst Bank with respect to the obligations of under the Business Loan Agreement dated as of even date.

10.28.4	*	Commercial Security Agreement dated October 2, 2019 by and among MCA New Braunfels Operating Company, LLC, as the grantor, Memory Care America LLC, MCA New Braunfels Operating Company, LLC and James T. Walesa, as the borrowers, and ServisFirst Bank and the lender.

10.29.1	*	Advisory and Development Agreement dated as of August 10, 2021 by and between Sterling Select II Advisory LLC, and Allied Integral United, Inc.

10.29.2	*	Warrant dated August 10, 2021the purchase of shares of Common Stock, par value $0.001 per share, of Clearday, Inc., issued to Sterling Select II Advisory LLC.

10.30	*	Services Agreement dated as of March 6, 2019 by and between Thinktiv, Inc. and Allied Integral United, Inc.

10.31	*	Amended And Restated Backstop Indemnity Agreement, dated as of February 26, 2020 by and among (a) Allied Integral United, Inc., (the “Corporation”); and each of Steve Person, and James Walesa, and BJ Parrish.

10.32.1	*	Simpsonville Backstop Indemnity Agreement dated as of July 30, 2020 by and among James Walesa and Allied Integral United, Inc. and the Amendment thereto dated as of January 19, 2021.

10.32.2	*	Securities Pledge Agreement dated as of January 19, 2021 by and among James Walesa and Allied Integral United, Inc.

10.33	*	Form of the Restricted Stock Award Agreement by and among Clearday, Inc. and the grantee named therein.
10.34	*	Form of the Indemnity Agreement by and among Clearday, Inc. and the officer or director named therein.
10.35	^	Employment Agreement of Randall Hawkins dated as of September 1, 2020. Filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on September 10, 2021.

10.36	^	Form of the Officer Agreements. Filed as Exhibit F to the Amended and Restated Agreement and Plan of Merger, dated as of June 11, 2021 by and among Superconductor Technologies Inc., a Delaware corporation, AIU Special Merger Company, Inc., a Delaware corporation, and Allied Integral United, Inc., a Delaware corporation that was filed as Annex A to the Registration Statement on Form S-4/A (Registration No. 333-256138) filed on June 14, 2021.

10.37	*	Form of the Warrant issued to the Investors in securities issued by AIU Alternative Care, Inc.and Clearday Alternative Care OZ Fund LP

31.1	*	Statement of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	*	Statement of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	**	Statement of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	**	Statement of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	*	Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document*

101.CAL		Inline XBRL Calculation Linkbase Document*

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB		Inline XBRL Label Linkbase Document*

101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document*

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Filed herewith.

**	Furnished, not filed.

^	Filed previously as described above

SIGNATURES

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

	CLEARDAY, INC.

Dated: November 19, 2021	/s/ T. Randall Hawkins
	T. Randall Hawkins
	Chief Financial Officer

	/s/ James T. Walesa
	James T. Walesa
	President and Chief Executive Officer

Exhibit 10.1

EXHIBIT A

FORM OF SECOND AMENDED AND RESTATED PROMISSORY NOTE

SECOND AMENDED AND RESTATED

PROMISSORY NOTE

$3,328,105.65

EFFECTIVE DATE: [ ], 2019

1. Agreement to Pay. FOR VALUE RECEIVED, Memory Care America LLC, a Tennessee limited liability company (“MCA”), MCA Mainstreet Tenant LLC, a Tennessee limited liability company (“MCA Mainstreet”), MCA Westover Hills Operating Company, LLC, a Tennessee limited liability company (“MCA Westover Operating”), MCA Management Company, Inc. (“MCA Management”), a Tennessee corporation, MCA New Braunfels Operating Company, LLC, a Tennessee limited liability company (“MCA New Braunfels”), MCA Westover Hills, LLC, a Delaware limited liability company (“MCA Westover”), and Memory Care at Good Shepherd, LLC, an Arkansas limited liability company (“MCA Good Shepherd”; together with MCA, MCA Mainstreet, MCA Westover Operating, MCA New Braunfels, and MCA Westover, the “Debtors”), hereby jointly and severally promise to pay to the order Invesque Holdings, LP, a Delaware limited partnership (“Invesque”), MHI-MC New Braunfels, LP, a Delaware limited partnership (“New Braunfels”), MHI-MC San Antonio, LP, a Delaware limited partnership (“San Antonio”), and MHI Little Rock, LP, a Delaware limited partnership (“Little Rock”; together with Invesque, New Braunfels and San Antonio, together with their respective successors and assigns, the “Landlord Parties”), the principal sum of THREE MILLION THREE HUNDRED TWENTY- EIGHT THOUSAND ONE HUNDRED FIVE AND 65/100 DOLLARS ($3,328,105.65), at the place and in the manner hereinafter provided, together with interest thereon at the rate or rates described below, and any and all other amounts which may be due and payable hereunder from time to time pursuant to and upon the terms and conditions set forth below, on or before January 1, 2024 (the “Maturity Date”).

2. Interest Rate.

2.1 Interest Prior to Default. Interest shall accrue on the outstanding principal balance of this Note at a fixed annual rate equal to eight and one-half percent (8.5%) (the “Interest Rate”). Interest shall accrue and shall be calculated on the basis of a year consisting of 360 days and charged for the actual number of days elapsed. For purposes of this Second Amended and Restated Promissory Note (this “Note”), the date of first disbursement shall be deemed to be July 1, 2019.

2.2 Interest Upon Maturity Date and After Default. From and after the Maturity Date or upon the occurrence and during the continuance of an Event of Default (as hereinafter defined), interest shall accrue on the balance of principal remaining unpaid during any such period at an annual rate (“Default Rate”) equal to five percent (5%) plus the Interest Rate; provided, however, in no event shall the Default Rate exceed the maximum rate permitted by law. The interest accruing under this paragraph shall be immediately due and payable, jointly and severally, by Debtors to the holders of this Note upon demand and shall be additional indebtedness evidenced by this Note.

3. Payment Terms.

3.1 Principal and Interest. Payments of principal and interest due under this Note shall be made as follows:

(a) Commencing on July 8, 2019 and continuing on the fifth business day of each month thereafter through and including December 1, 2019, Debtors shall pay the Landlord Parties payments of interest in kind, in the amount of all accrued and unpaid interest on the outstanding principal balance of this Note as of such date, by adding such amount to the outstanding principal amount of this Note (inclusive of any interest theretofor added to the outstanding principal amount of this Note); and

(b) Commencing on January 8, 2020 and continuing on the fifth business day of each month thereafter, Debtors shall pay the Landlord Parties payments of interest in cash, in the amount of all accrued and unpaid interest on the outstanding principal balance of this Note as of such date; and

(c) Debtors acknowledge and agree that upon release to the Landlord Parties of the escrowed funds in the amount of $500,000 pursuant to the terms and conditions of that certain Settlement Agreement dated as of [ ], 2019, by and among the Debtors, the Guarantors (as defined below), and the Landlord Parties (the “Settlement Agreement”), such escrowed funds shall be applied to the outstanding principal balance of this Note; and

(d) No later than September 30, 2019, Debtors shall pay the Landlord Parties a principal payment in the amount of $500,000; and

(e) No later than December 31, 2019, Debtors shall pay the Landlord Parties a principal payment in the amount of $500,000; and

(f) Commencing on January 8, 2020, and continuing on the fifth business day of each month thereafter, Debtors shall pay the Landlord Parties equal monthly principal and interest payments in the amount of $47,811.51, subject to adjustment for any additional payments of principal otherwise made from and after such date; and

(g) The unpaid principal balance of this Note, if not sooner paid or declared to be due in accordance with the terms hereof, together with all accrued and unpaid interest thereon and any other amounts due and payable hereunder or under any other agreements, instruments or other documents, evidencing, securing or guarantying obligations of any party under this Note (collectively, the “Loan Documents”), shall be due and payable in full on the Maturity Date.

3.2 Application of Payments. Prior to the occurrence of an Event of Default, all payments and prepayments on account of the indebtedness evidenced by this Note shall be applied as follows: (a) first, to fees, expenses, costs and other similar amounts then due and payable to the Landlord Parties hereunder, including, without limitation, any late charges due hereunder, (b) second, to accrued and unpaid interest on the principal balance of this Note, (c) third, to the payment of principal due in the month in which the payment or prepayment is made, (d) fourth, to any other amounts then due the Landlord Parties hereunder or under any of the Loan Documents, and (e) last, to the unpaid principal balance of this Note in the inverse order of maturity. Any prepayment on account of the indebtedness evidenced by this Note shall not extend or postpone the due date or reduce the amount of any subsequent monthly payment of principal and interest due hereunder. After an Event of Default has occurred and is continuing, payments may be applied by the Landlord Parties to amounts owed hereunder and under the Loan Documents in such order and manner of application as the Landlord Parties shall mutually determine, in their sole discretion.

3.3 Method of Payments. All payments of principal and interest hereunder shall be paid by wire transfer in immediately available funds, which, at the time or times of payment, is the legal tender for public and private debts in the United States of America, and shall be made at such place as the Landlord Parties or the legal holder or holders of this Note may from time to time appoint in any payment invoice or otherwise in writing.

3.4 No Offset Rights. Debtors shall have no right to offset, setoff or deduct any payments due from any Debtor to any Landlord Party under this Note. All amounts due under this Note and the Pledge Agreement shall be payable without any counterclaim or defense whatsoever.

3.5 Late Charge. If any payment of interest or principal due hereunder is not made on the date payment is due in accordance with the terms hereof, then, in addition to the payment of the amount so due, Debtors shall pay to the Landlord Parties a “late charge” of five cents for each whole dollar so overdue to defray part of the cost of collection and handling such late payment. Debtors agree that the damages to be sustained by the holders hereof for the detriment caused by any late payment are extremely difficult and impractical to ascertain, and that the amount of five cents for each one dollar due is a reasonable estimate of such damages, does not constitute interest, and is not a penalty.

3.6 Prepayment. Debtors may voluntarily prepay the principal balance of this Note, in whole or in part, without penalty or premium, at any time, provided Debtors pay with such prepayment all accrued interest and all other outstanding amounts then due and unpaid under this Note and the Pledge Agreement.

4. Waivers. Debtors and all others who now or may at any time become liable for all or any part of the obligations evidenced hereby, expressly agree hereby to be jointly and severally bound, and jointly and severally: (i) waive presentment and demand for payment, notices of nonpayment and of dishonor, protest of dishonor, and notice of protest; (ii) waive any and all notices in connection with the delivery and acceptance hereof and all other notices in connection with the performance, default, or enforcement of the payment hereof or hereunder, including notice of intent to accelerate; (iii) waive any and all lack of diligence and delays in the enforcement of the payment hereof; (iv) agree that the liability of each Debtor, any Guarantor, endorser or obligor shall be unconditional, joint and several and subject to no defenses or offset rights against any Landlord Party, and without regard to the liability of any other person or entity for the payment hereof, and shall not in any manner be affected by any indulgence or forbearance granted or consented to by the Landlord Parties to any of them with respect hereto; (v) consent to any and all extensions of time, renewals, waivers, or modifications that may be granted by the Landlord Parties with respect to the payment or other provisions hereof, and to the release of any security at any time given for the payment hereof, or any part thereof, with or without substitution, and to the release of any person or entity liable for the payment hereof; and (vi) consent to the addition of any and all other makers, endorsers, Guarantors, and other obligors for the payment hereof, and to the acceptance of any and all other security for the payment hereof, and agree that the addition of any such makers, endorsers, Guarantors or other obligors, or security shall not affect the liability of any Debtor, any Guarantor and all others now liable for all or any part of the obligations evidenced hereby.

5. Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” under this Note:

5.1 The failure by Debtors, regardless of whether any notice has been received by any Debtor of such failure, to pay when due any installment of principal or interest payable pursuant to this Note or any other amount payable to the Landlord Parties under this Note within five (5) business days of the date when due; or

5.2 The occurrence of the dissolution, insolvency or winding-up, as applicable, of any Debtor or Trident (as hereinafter defined); or

5.3 A proceeding under any bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of debt or receivership law or statute is filed against any Debtor or Trident, and such proceeding is not dismissed within sixty (60) days of the date of its filing, or a proceeding under any bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of debt or receivership law or statute is filed by any Debtor or Trident, or any Debtor or Trident makes an assignment for the benefit of creditors, or any Debtor or Trident takes any action to authorize any of the foregoing; or

5.4 Any Debtor or Trident is enjoined, restrained, or in any way prevented by the order of any court or any administrative or regulatory agency from conducting all or any material part of its business affairs and such order is not vacated within sixty (60) days; or

5.5 The occurrence of any default or event of default under any of (i) this Note, (ii) the Leases (as defined in the Settlement Agreement), (iii) that certain Pledge Agreement dated as of November 6, 2017, by and among MCA, Trident Healthcare Properties I, LP, a Delaware partnership (“Trident”), and Invesque (as reaffirmed as of the date hereof), (iv) the Settlement Agreement or (v) that certain Amended, Restated and Consolidated Guaranty Agreement, dated as of the date hereof (the “A&R Guaranty”), made by MCA, B.J. Parrish, an individual, James Walesa, and individual, Steve Person, an individual, and Trident (collectively, the “Guarantors”, and each, a “Guarantor”) (the documents referenced in clauses (i) through (v) are referred to herein as the “Debtor Documents”).

6. Remedies. Upon the occurrence of any Event of Default, at the election of the holders hereof, and without notice, (x) the principal balance remaining unpaid under this Note, and all unpaid interest accrued thereon and any other amounts due hereunder, shall be and become immediately due and payable in full, and (y) the Landlord Parties shall have the right to present the Consent Judgment (as defined in the Settlement Agreement) to the Superior Court of Marion County, State of Indiana, and upon entry shall be permitted to take any action on or pursuant to, and/or otherwise to record, levy on, execute or collect from any of the Guarantors, the judgment awarded therein. Failure to exercise any of the remedies hereunder shall not constitute a waiver of the right to exercise same in the event of any subsequent Event of Default. No holder hereof shall, by any act of omission or commission, be deemed to waive any of its rights, remedies or powers hereunder or otherwise unless such waiver is in writing and signed by the holders hereof, and then only to the extent specifically set forth therein. The rights, remedies and powers of the holders hereof as provided in this Note are cumulative and concurrent, and may be pursued singly, successively or together against any Debtor or any security given at any time to secure the repayment hereof, all at the sole discretion of the holders hereof. If any suit or action is instituted or attorneys are employed to collect this Note or any part hereof, Debtors promise and agree, jointly and severally, to pay all costs of collection, including reasonable attorneys’ fees and court costs.

7. Other General Agreements.

7.1 Each Debtor represents and acknowledges that such Debtor: (i) is a sophisticated business person with significant experience in the operation of business ventures and the incurrence of indebtedness in connection therewith, and (ii) is represented by counsel with respect to the drafting and execution of this Note.

7.2 Debtors represent and warrant to the Landlord Parties as follows:

(a) Each Debtor is duly organized, is validly existing and in good standing under the laws of the state of its organization. Each Debtor has the full right, power and authority to enter into this Note and all documents contemplated hereby, and to consummate the transactions contemplated by this Note. All requisite action has been taken by each Debtor in connection with entering into this Note, and the consummation of the transaction contemplated hereby. Each person signing this Note and the other documents contemplated by this Note on behalf of each Debtor has the legal right, power and authority to bind such Debtor.

(b) The execution, delivery and performance by Debtors of this Note and the instruments referenced herein and the transaction contemplated hereby will not conflict with, or with or without notice or the passage of time or both, result in a breach of, violate any term or provision of, or constitute a default under any articles of formation, bylaws, partnership agreement, operating agreement, indenture, deed of trust, mortgage, contract, agreement (oral or written), judicial or administrative order, or any law to which any Debtor is bound.

(c) No approval or consent from any person or entity (including any partners, shareholder, member, creditor, investor or governmental authority) is required for Debtors to execute, deliver or perform this Note or the other instruments contemplated hereby or for Debtors to consummate the transactions contemplated hereby, except such approvals and consents as have been obtained on or prior to the date hereof. This Note and all documents required hereby to be executed by Debtors are and shall be valid, legally binding obligations of and enforceable against Debtors in accordance with their terms.

(d) No Debtor is a Prohibited Person (as hereinafter defined). To each Debtor’s knowledge, none of its investors, affiliates or brokers or other agents (if any), acting or benefiting in any capacity in connection with this Note is a Prohibited Person. The funds or other assets Debtors will pay to the Landlord Parties under this Note are not the property of, or beneficially owned, directly or indirectly, by a Prohibited Person; and the funds or other assets Debtors will pay to the Landlord Parties under this Note are not the proceeds of specified unlawful activity as defined by 18 U.S.C. § 1956(c)(7). “Prohibited Person” means any of the following: (a) a person that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order No. 13224 on Terrorist Financing (effective September 24, 2001) (the “Executive Order”); (b) a person owned or controlled by, or acting for or on behalf of any person that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (c) a person that is named as a “specially designated national” or “blocked person” on the most current list published by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) at its official website, http://www.treas.gov/offices/enforcement/ofac; (d) a person that is otherwise the target of any economic sanctions program currently administered by OFAC; or (e) a person that is affiliated with any person identified in clause (a), (b), (c) and/or (d) above.

7.3 Time is of the essence hereof.

7.4 This Note is governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the statutes, laws and decisions of the State of Indiana. This Note may not be changed or amended orally but only by an instrument in writing signed by the party against whom enforcement of the change or amendment is sought.

7.5 None of the Landlord Parties shall be construed for any purpose to be a partner, joint venturer, agent or associate of any Debtor or of any lessee, operator, concessionaire or licensee of any Debtor in the conduct of its business, and by the execution of this Note, Debtors agree, jointly and severally, to indemnify, defend, and hold the Landlord Parties harmless from and against any and all damages, costs, expenses and liability that may be incurred by any Landlord Party as a result of a claim that a Landlord Party is such partner, joint venturer, agent or associate.

7.6 The obligations and liabilities of each Debtor under this Note shall be joint and several and shall be binding upon and enforceable against each Debtor and their respective successors and assigns. This Note shall inure to the benefit of and may be enforced by each Landlord Party and its successors and assigns.

7.7 If any provision of this Note is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, Debtors and the Landlord Parties shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Note, and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect.

7.8 If the interest provisions herein or in any of the Loan Documents shall result, at any time during the term of this Note, in an effective rate of interest which, for any month, exceeds the limit of usury or other laws applicable to this Note, all sums in excess of those lawfully collectible as interest of the period in question shall, without further agreement or notice between or by any party hereto, be applied upon principal immediately upon receipt of such monies by the Landlord Parties, with the same force and effect as though the payer has specifically designated such extra sums to be so applied to principal and the Landlord Parties had agreed to accept such extra payment(s) as a premium-free prepayment. Notwithstanding the foregoing, however, the Landlord Parties may at any time and from time to time elect by notice in writing to Debtors to reduce or limit the collection to such sums which, when added to the said first-stated interest, shall not result in any payments toward principal in accordance with the requirements of the preceding sentence.

7.9 Any Landlord Party may assign its interest in this Note without the prior written consent of Debtors. No Debtor may assign its interest in this Note, or any other agreement with the Landlord Parties or any portion thereof, either voluntarily or by operation of law, without the prior written consent of the Landlord Parties.

8. Notices. Any notices, communications and waivers under this Agreement shall be in writing and shall be (i) delivered in person, (ii) mailed, postage prepaid, either by registered or certified mail, return receipt requested, (iii) by overnight express carrier, or (iv) by facsimile or email transmission, addressed in each case as follows:

	To the Landlord Parties:	c/o Invesque Inc.
		211 W. Main Street, Suite 400
		Carmel, Indiana 46032
		Attn: Ms. Azin Lotfi, Esq., General Counsel Email: alotfi@invesque.com

	With a copy to:	Arnall Golden Gregory LLP
		171 17^th Street, NW, Suite 2100
		Atlanta, Georgia 30363
		Attn.: Hedy Rubinger, Esq.
		Email: hedy.rubinger@agg.com

	To Debtors:	c/o Memory Care America, LLC
		2211 NW Military Highway, Suite 201
		San Antonio, Texas 78213
		Attention: Chief Financial Officer

	With a copy to:	Loeb & Loeb LLP
		10100 Santa Monica Boulevard, Suite 2200
		Los Angeles, California 90067
		Attention: Bernard R. Given II, Esq.

or to any other address as to any of the parties hereto, as such party shall designate in a written notice to the other party hereto. All notices sent pursuant to the terms of this paragraph shall be deemed received (i) if personally delivered, then on the date of delivery, (ii) if sent by overnight express carrier, then on the next federal banking day immediately following the day sent, (iii) if sent by registered or certified mail, then on the earlier of the third federal banking day following the day sent or when actually received, or (iv) if sent by facsimile as evidenced by receipt of a successful transmission report or email (followed by delivery by one of the other means identified in (i)-(iii)).

9. CONSENT TO JURISDICTION. TO INDUCE THE LANDLORD PARTIES TO ACCEPT THIS NOTE, EACH DEBTOR IRREVOCABLY AGREES THAT, SUBJECT TO the LANDLORD PARTIES’ SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE WILL BE LITIGATED IN THE STATE COURTS OF HAMILTON COUNTY, INDIANA OR THE FEDERAL COURTS OF THE SOUTHERN DISTRICT OF INDIANA, INDIANAPOLIS DIVSION. EACH DEBTOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY SUCH COURT, WAIVES PERSONAL SERVICE OF PROCESS UPON SUCH DEBTOR, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO SUCH DEBTOR AT THE ADDRESS STATED IN THIS NOTE AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

10. WAIVER OF JURY TRIAL. EACH DEBTOR AND EACH LANDLORD PARTY (BY ACCEPTANCE OF THIS NOTE), HAVING BEEN REPRESENTED BY COUNSEL, KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS NOTE, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH DEBTOR AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST ANY LANDLORD PARTY ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

11. Pledge Agreement. This Note is secured by the liens and security interests created under the Pledge Agreement.

12. Amendment and Restatement. This Note is an amendment and restatement of, and replaces in its entirety, that certain Amended and Restated Promissory Note executed by MCA in favor of Invesque dated effective as of November 6, 2018, in the original principal amount of Three Hundred Thousand and No/100 Dollars ($300,000.00) (the “Original Note”), and is not intended to serve as a novation or an accord and satisfaction of the indebtedness evidenced thereby. The Debtors hereby further acknowledge and agree that the principal amount of this Note represents an amendment, restatement and consolidation of the amounts set forth on Schedule I hereto, which amounts are due and owing to the Landlord Parties pursuant to the Original Note and the Leases (as defined in the Settlement Agreement).

[Signature Pages Follow]

IN WITNESS WHEREOF, Debtors have executed and delivered this Second Amended and Restated Promissory Note under seal as of the day and year first written above.

	DEBTORS:

	Memory Care America LLC,
	a Tennessee limited liability company

	By:	(SEAL)
	Name:
	Title:

	MCA Mainstreet Tenant LLC,
	a Tennessee limited liability company

	By:	(SEAL)
	Name:
	Title:

	MCA Westover Hills Operating Company, LLC, a Tennessee limited liability company

	By:	(SEAL)
	Name:
	Title:

	MCA Management Company, Inc., a Tennessee corporation

	By:	(SEAL)
	Name:
	Title:

	MCA New Braunfels Operating Company, LLC, a Tennessee limited liability company

	By:	(SEAL)
	Name:
	Title:

	MCA Westover Hills, LLC, a Delaware limited liability company

	By:	(SEAL)
	Name:
	Title:

	Memory Care at Good Shepherd, LLC, an Arkansas limited liability company

	By:	(SEAL)
	Name:
	Title:

Schedule I

Initial Promissory Note due 4/1/2019	$	300,000.00
Taxes Paid by IVQ in January 2019
Little Rock Real Estate Tax Bill 2017	$	117,491.31
New Braunfels Real Estate Tax Bill 2018	$	163,156.31
New Braunfels Personal Property Tax Bill 2018	$	18,569.44
San Antonio Real Estate Tax Bill 2018	$	214,582.75
San Antonio Personal Property Tax Bill 2018	$	25,985.73
Total	$	539,785.54
Accrued Rent Through 6/1/19
Little Rock	$	574,837.50
New Braunfels	$	606,187.02
Westover Hills	$	628,414.02
Total	$	1,809,438.54
Additional Considerations
Late Payment Charge (Rent Only)	$	-
Recovery of Lease Deposit used for tax payments	$	394,213.20
Unpaid Interest on $300k Note (through 6/1)	$	-
Tax Escrow Owed to IVQ per Lease Amendment (through 6/1)	$	284,668.37
Total Considerations	$	678,881.57
Aggregate Promissory Note	$	3,328,105.65

Exhibit 10.2

SECOND AMENDED AND RESTATED

PROMISSORY NOTE

$3,328,105.65

EFFECTIVE DATE: July 31, 2019

2. Interest Rate.

3. Payment Terms.

3.1 Principal and Interest. Payments of principal and interest due under this Note shall be made as follows:

(c) Debtors acknowledge and agree that upon release to the Landlord Parties of the escrowed funds in the amount of $500,000 pursuant to the terms and conditions of that certain Settlement Agreement dated as of July 5, 2019, by and among the Debtors, the Guarantors (as defined below), and the Landlord Parties (the “Settlement Agreement”), such escrowed funds shall be applied to the outstanding principal balance of this Note; and

(d) No later than September 30, 2019, Debtors shall pay the Landlord Parties a principal payment in the amount of $500,000; and

(e) No later than December 31, 2019, Debtors shall pay the Landlord Parties a principal payment in the amount of $500,000; and

5. Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” under this Note:

5.2 The occurrence of the dissolution, insolvency or winding-up, as applicable, of any Debtor or Trident (as hereinafter defined); or

7. Other General Agreements.

7.2 Debtors represent and warrant to the Landlord Parties as follows:

7.3 Time is of the essence hereof.

To the Landlord Parties:		c/o Invesque Inc.
		211 W. Main Street, Suite 400
		Carmel, Indiana 46032
		Attn: Ms. Azin Lotfi, Esq., General Counsel
		Email: alotfi@invesque.com

With a copy to:		Arnall Golden Gregory LLP
		171 17^th Street, NW, Suite 2100
		Atlanta, Georgia 30363
		Attn.: Hedy Rubinger, Esq.
		Email: hedy.rubinger@agg.com

To Debtors:		c/o Memory Care America, LLC
		2211 NW Military Highway, Suite 201
		San Antonio, Texas 78213
		Attention: Chief Financial Officer

With a copy to:		Loeb & Loeb LLP
		10100 Santa Monica Boulevard, Suite 2200
		Los Angeles, California 90067
		Attention: Bernard R. Given II, Esq.

11. Pledge Agreement. This Note is secured by the liens and security interests created under the Pledge Agreement.

[Signature Pages Follow]

IN WITNESS WHEREOF, Debtors have executed and delivered this Second Amended and Restated Promissory Note under seal as of the day and year first written above.

	DEBTORS:

	Memory Care America LLC,
	a Tennessee limited liability company

By:	/s/ B.J. Parrish	(SEAL)
Name:	B.J. Parrish
Title:	Authorized Agent

	MCA Mainstreet Tenant LLC,
	a Tennessee limited liability company

By:	/s/ B.J. Parrish	(SEAL)
Name:	B.J. Parrish
Title:	Authorized Agent

	MCA Westover Hills Operating Company, LLC,
	a Tennessee limited liability company

By:	/s/ B.J. Parrish	(SEAL)
Name:	B.J. Parrish
Title:	Authorized Agent

	MCA Management Company, Inc.,
	a Tennessee corporation

By:	/s/ B.J. Parrish	(SEAL)
Name:	B.J. Parrish
Title:	Authorized Agent

	MCA New Braunfels Operating Company, LLC,
	a Tennessee limited liability company

By:	/s/ B.J. Parrish	(SEAL)
Name:	B.J. Parrish
Title:	Authorized Agent

	MCA Westover Hills, LLC,
	a Delaware limited liability company

By:	/s/ B.J. Parrish	(SEAL)
Name:	B.J. Parrish
Title:	Authorized Agent

	Memory Care at Good Shepherd, LLC,
	an Arkansas limited liability company

By:	/s/ B.J. Parrish	(SEAL)
Name:	B.J. Parrish
Title:	Authorized Agent

Schedule I

Initial Promissory Note due 4/1/2019	$	300,000.00
Taxes Paid by IVQ in January 2019
Little Rock Real Estate Tax Bill 2017	$	117,491.31
New Braunfels Real Estate Tax Bill 2018	$	163,156.31
New Braunfels Personal Property Tax Bill 2018	$	18,569.44
San Antonio Real Estate Tax Bill 2018	$	214,582.75
San Antonio Personal Property Tax Bill 2018	$	25,985.73
Total	$	539,785.54

Accrued Rent Through 6/1/19
Little Rock	$	574,837.50
New Braunfels	$	606,187.02
Westover Hills	$	628,414.02
Total	$	1,809,438.54

Additional Considerations
Late Payment Charge (Rent Only)	$	-
Recovery of Lease Deposit used for tax payments	$	394,213.20
Unpaid Interest on $300k Note (through 6/1)	$	-
Tax Escrow Owed to IVQ per Lease Amendment (through 6/1)	$	284,668.37
Total Considerations	$	678,881.57
Aggregate Promissory Note	$	3,328,105.65

Exhibit 10.3

Exhibit 10.4

Exhibit 10.5

Exhibit 10.6

AMENDED, RESTATED AND CONSOLIDATED GUARANTY AGREEMENT

Effective as of July 31, 2019, the undersigned (each a “Guarantor” and collectively, the “Guarantors”), do hereby, jointly, severally and unconditionally guarantee to Invesque Holdings, LP, a Delaware limited partnership (“Invesque”), MHI-MC New Braunfels, LP, a Delaware limited partnership (“New Braunfels”), MHI-MC San Antonio, LP, a Delaware limited partnership (“San Antonio”), and MHI Little Rock, LP, a Delaware limited partnership (“Little Rock”; together with Invesque, New Braunfels and San Antonio, together with their respective successors and assigns, the “Landlord Parties”),(i) the full and prompt payment when due, whether by acceleration or otherwise, with such interest as may accrue thereon, either before or after maturity thereof, the then outstanding amount of that certain Second Amended and Restated Promissory Note, dated as of the date hereof (the “Note”), from Memory Care America LLC, a Tennessee limited liability company (“MCA”), MCA Mainstreet Tenant LLC, a Tennessee limited liability company (“MCA Mainstreet”), MCA Westover Hills Operating Company, LLC, a Tennessee limited liability company (“MCA Westover Operating”), MCA Management Company, Inc. (“MCA Management”), a Tennessee corporation, MCA New Braunfels Operating Company, LLC, a Tennessee limited liability company (“MCA New Braunfels”), MCA Westover Hills, LLC, a Delaware limited liability company (“MCA Westover”), and Memory Care at Good Shepherd, LLC, an Arkansas limited liability company (“MCA Good Shepherd”; together with MCA, MCA Mainstreet, MCA Westover Operating, MCA Management, MCA New Braunfels, and MCA Westover, the “Debtors”), to the Landlord Parties in the aggregate principal amount of $3,328,105.65 (together with any renewals, modifications, consolidations and extensions thereof, the “Note”), (ii) the full and prompt payment and performance of any and all obligations of MCA Mainstreet under that certain Lease Agreement with San Antonio dated on or about December 16, 2016, as amended by that certain First Amendment to Lease Agreement dated June 29, 2018 and that certain Second Amendment to Lease Agreement dated as of the date hereof (as amended from time to time, the “San Antonio Lease”), (iii) the full and prompt payment and performance of any and all obligations of MCA Mainstreet under that certain Lease Agreement with New Braunfels dated on or about December 16, 2016, as amended by that certain First Amendment to Lease Agreement dated June 29, 2018 and that certain Second Amendment to Lease Agreement dated as of the date hereof (as amended from time to time, the “New Braunfels Lease”),(iv) the full and prompt payment and performance of any and all obligations of MCA Mainstreet under that certain Lease Agreement with Little Rock dated on or about December 16, 2016, as amended by that certain First Amendment to Lease Agreement dated June 29, 2018 and that certain Second Amendment to Lease Agreement dated as of the date hereof (as amended from time to time, the “Little Rock Lease”; together with the San Antonio Lease and the New Braunfels Lease, the “Leases”), (v) the full and prompt payment and performance of any and all obligations of the Debtors and the Guarantors under that certain Settlement Agreement with the Landlord Parties, dated as of July 5, 2019 (the “Settlement Agreement”) and (vi) all actual loss, damages, costs and expenses that may arise in connection with the foregoing clauses (i)-(v), including, without limitation, all reasonable attorneys’ fees, court costs, accounting fees, investigation costs and other disbursements incurred by the Landlord Parties (the foregoing obligations set forth in the foregoing clauses (i) and (vi), collectively, the “Guaranteed Obligations”).

Notwithstanding the foregoing or anything to the contrary set forth herein, B.J. Parrish, an individual, shall not be liable for any of the Debtors’ prospective obligations under the Leases.

This Amended, Restated and Consolidated Guaranty Agreement (this “Guaranty”) is an absolute and unconditional guaranty of the full and punctual payment and performance by Debtors of the Guaranteed Obligations, and not of collectability only, and is in no way conditioned upon any requirement that any Landlord Party first attempt to collect any of such obligations from any Debtor or any other party or resort to any security or other means of obtaining payment or performance or upon any other contingency whatsoever.

Each Guarantor hereby irrevocably waives presentment, demand and protest, notice of acceptance hereof, notice of any action taken or omitted by any Landlord Party in reliance hereon and any requirement that the Landlord Parties be diligent or prompt in making demands hereunder, giving notice of any default by any Debtor or asserting any other right of the Landlord Parties hereunder.

The Landlord Parties shall be at liberty, without giving notice to or obtaining the consent of any Guarantor and without relieving any Guarantor of any liability hereunder, to deal with Debtors and with each other party who now is or after the date hereof becomes liable in any manner for the Guaranteed Obligations, in such manner as the Landlord Parties in their sole discretion deem fit, and to this end each Guarantor gives the Landlord Parties full authority in their sole discretion to do any or all of the following: (a) extend credit, make loans and afford other financial accommodations to Debtors at such times, in such amounts and on such terms as the Landlord Parties may approve; (b) vary the terms and grant extensions or renewals of the Guaranteed Obligations; (c) grant time, waivers or other indulgences in respect thereto; (d) vary, exchange, release or discharge, wholly or partially, or delay in or abstain from perfecting, maintaining the perfection of, or enforcing any security or guaranty or other means of obtaining payment of any such obligation; (e) accept partial payments from Debtors or any such other party; (f) release or discharge, wholly or partially, any endorser or guarantor; and (g) compromise or make any settlement or other partial payment arrangement with Debtors or any such other party.

All sums payable by Guarantors hereunder shall be paid without notice or demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of any Guarantor hereunder shall in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (i) any bankruptcy proceeding relating to any Debtor or any Guarantor or indemnitor, or any action taken with respect to the Note, any Lease or this Guaranty by any trustee or receiver of any Debtor or any Guarantor or indemnitor, or by any court, in any such proceeding; (ii) any claim which any Debtor has or might have against any Landlord Party; (iii) any default or failure on the part of any Landlord Party to perform or comply with any of the terms hereof or of any other agreement with any Debtor; (iv) any assignment, amendment, renewal, expansion, supplement, modification or waiver of, or change in, any of the terms, covenants, conditions or provisions of any Lease, the Note or the Settlement Agreement, or by reason of any extension of time that may be granted by any Landlord Party to any Debtor or a changed or different use of the Premises (as defined in the Leases) consented to in writing by any Landlord Party and MCA Mainstreet or (v) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not such Guarantor shall have notice or knowledge of any of the foregoing.

Guarantors hereby expressly agree that the validity of this Guaranty and the obligations of Guarantors hereunder shall in no way be terminated, affected, diminished or impaired by reason of the assertion or the failure to assert by the Landlord Parties against the Debtors (or against Debtors’ successors and assigns) of any of the rights or remedies reserved to or by relief of the Debtors from any of the Debtors’ obligations under the Note, the Leases or the Settlement Agreement, or Trident Healthcare Properties I, LP’s obligations under the Pledge Agreement (as defined in the Note) to further secure the Debtors’ obligations to the Landlord Parties under the Note, or otherwise by (a) the release or discharge of any of the Debtors in any creditor’s proceedings, receivership, bankruptcy or other proceedings; (b) the impairment, limitation or modification of the liability of any of the Debtors or the estate of any of the Debtors in bankruptcy, or of any remedy for the enforcement of the Debtors’ said liability under the Note, the Leases or the Settlement Agreement resulting from the operation of any present or future provision of the Federal Bankruptcy Code, as amended from time to time, or any other statute, or from the decision in any court; or (c) the rejection or disaffirmance of any Lease in any such proceedings.

In addition to all other remedies available to the Landlord Parties at law or in equity upon the occurrence of an Event of Default (as defined in the Note) under the Note, the Landlord Parties shall have the right to present the Consent Judgment (as defined in the Settlement Agreement) to the Superior Court of Marion County, State of Indiana, and upon entry shall be permitted to take any action on or pursuant to, and/or otherwise to record, levy on, execute or collect from any of the Guarantors, the judgment awarded therein.

All of the Landlord Parties’ rights and remedies under this Guaranty are intended to be distinct, separate and cumulative, and no such right and remedy therein or herein mentioned is intended to be in exclusion of or a waiver of any of the others. The obligation of Guarantors hereunder shall not be released by the Landlord’s Parties’ receipt, application, release or compromise of security under the Pledge Agreement or otherwise given for the performance and observance of covenants and conditions required to be performed and observed by the Debtors, nor shall Guarantors be released by the maintenance of or execution upon any lien which the Landlord Parties may have or assert against the Debtors and/or the Debtors’ assets.

Each Guarantor knowingly, absolutely, unconditionally and irrevocably waives any and all right to assert any defense, set-off, counterclaim or cross-claim of any nature whatsoever (other than mandatory or compulsory counterclaims or cross-claims) with respect hereto or the obligations of such Guarantor hereunder in any action or proceeding brought by the Landlord Parties (or any of them) to collect the outstanding balance of the principal amount, accrued and unpaid interest, late charges, and other amounts owing, or any portion thereof, including, without limitation, any and all defences arising by reason of (i) any amendment, modification, extension or renewal of any of the Leases, the Note or the Settlement Agreement, (ii) any failure to give notice of default (except for the notices required by the terms of the Leases), (iii) any failure to pursue potential remedies with due diligence, (iv) any failure to resort to other security (whether under the Pledge Agreement or other remedies available under applicable law, (v) any failure of the Landlord Parties to take any action to terminate the Leases, or to take possession of and relet the Premises for MCA Mainstreet’s account, (vi) the guarantor-principal relationship, and the same shall not operate to release Guarantors from any of their undertakings as set forth herein. Each Guarantor confirms that the foregoing waiver is informed and voluntary.

Each Guarantor hereby represents and warrants:

If such Guarantor is a natural person, such Guarantor has the requisite legal capacity to execute and deliver this Guaranty and to perform his under this Guaranty. If such Guarantor is not a natural person, such Guarantor has been duly organized, is validly existing and in good standing under the laws of the state of its organization and has the full right, power and authority to enter into this Guaranty and all documents contemplated hereby, and to consummate the transactions contemplated by this Guaranty.

Such Guarantor is a direct or indirect owner of the legal and beneficial owners of indirect ownership interests in, or is an affiliate of, a Debtor and, accordingly, such Guarantor will derive substantial benefit from the execution of the Note and continuation of the Leases.

Such Guarantor has reviewed with the benefit of legal counsel the terms of this Guaranty. Neither any Landlord Party nor any other person has made any representation, warranty or statement to such Guarantor in order to induce such Guarantor to execute this Guaranty.

The execution, delivery and performance by such Guarantor of this Guaranty will not conflict with, or with or without notice or the passage of time or both, result in a breach of, violate any term or provision of, or constitute a default under any indenture, deed of trust, mortgage, contract, agreement (oral or written), judicial or administrative order, or any law to which Guarantor is bound.

There are no conditions precedent to the effectiveness of this Guaranty that have not been either satisfied or waived.

Such Guarantor has, independently and without reliance upon any Landlord Party, and based on such documents and information as he, she or it has deemed appropriate, made his, her or its own credit analysis and decision to enter into this Guaranty.

This Guaranty constitutes a legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally.

Such Guarantor is not insolvent and the obligations of such Guarantor set forth in this Guaranty will not render such Guarantor insolvent. Such Guarantor does not have any outstanding debt or liabilities that would materially adversely affect such Guarantor’s ability to fully perform his, her or its obligations under this Guaranty.

No petition in bankruptcy (voluntary or otherwise), attachment, execution proceeding, assignment for the benefit of creditors, or petition seeking reorganization or insolvency, arrangement or other action or proceeding under federal or state bankruptcy law is pending against or contemplated (or, to such Guarantor’s knowledge, threatened) by or against such Guarantor.

Such Guarantor is not a Prohibited Person (as hereinafter defined). The funds or other assets Guarantor will pay to the Landlord Parties under this Guaranty are not the property of, or beneficially owned, directly or indirectly, by a Prohibited Person; and the funds or other assets Guarantor will pay to the Landlord Parties under this Guaranty are not the proceeds of specified unlawful activity as defined by 18 U.S.C. § 1956(c)(7). “Prohibited Person” means any of the following: (a) a person that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order No. 13224 on Terrorist Financing (effective September 24, 2001) (the “Executive Order”); (b) a person owned or controlled by, or acting for or on behalf of any person that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (c) a person that is named as a “specially designated national” or “blocked person” on the most current list published by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) at its official website, http://www.treas.gov/offices/enforcement/ofac; (d) a person that is otherwise the target of any economic sanctions program currently administered by OFAC; or (e) a person that is affiliated with any person identified in clause (a), (b), (c) and/or (d) above.

Such Guarantor acknowledges that such Guarantor is a sophisticated party and has consulted with legal counsel regarding the meaning and effect of the terms and conditions of this Guaranty and confirms that such Guarantor is informed and is entering into this Guaranty voluntarily and without duress.

Such Guarantor represents and warrants that the value of the consideration received and to be received by Guarantors is reasonably worth at least as much as the liability and obligations of Guarantors hereunder, and such liability and obligations may reasonably be expected to benefit Guarantors directly or indirectly.

Until all the covenants and conditions in in the Note, the Leases and the Settlement Agreement on the Debtors’ part to be performed and observed are fully performed and observed, Guarantors (a) shall have no right of subrogation against the Debtors by reason of any payments or acts or performance by Guarantors in compliance with the obligations of Guarantors hereunder, (b) waive any right to enforce any remedy which Guarantors now or hereafter shall have against the Debtors by reason of any one or more payment or acts or performance in compliance with the obligations of Guarantors hereunder and (c) subordinate any liability or indebtedness of the Debtors now or hereafter held by Guarantors to the obligations of the Debtors to the Landlord Parties.

Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent so prohibited or unenforceable without affecting 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.

The assignment by the Landlord Parties of this Note, and/or the avails and proceeds thereof, made either with or without notice to Guarantors, shall in no manner whatsoever release Guarantors from any liability hereunder. This Guaranty shall inure to the benefit of each Landlord Party and its successors and assigns and shall be binding on each Guarantor and such Guarantor’s respective heirs, personal representatives, successors and assigns.

This Guaranty shall be governed by and construed in accordance with the laws of the State of Indiana without regard to conflicts of laws principles. Guarantors hereby consent to jurisdiction in any State or Federal Court located in Marion County, Indiana.

Guarantors agree, jointly and severally, to the extent permitted by law, to pay any costs or expenses, including the reasonable attorneys’ fees, incurred by the Landlord Parties in enforcing this Guaranty.

Notwithstanding anything to the contrary elsewhere in this Guaranty, Steve Person (“Person”) and James Walesa (“Walesa”) shall be released from any liabilities or obligations under the Leases first arising under this Guaranty after the date on which both the Release Conditions are met at the same time, but shall not be released from any liabilities that accrue under the Leases under this Guaranty prior to the date both of the Release Conditions are met at the same time. The term “Release Conditions” means (i) MCA has demonstrated a net worth, determined according to U.S. Generally Accepting Accounting Principles of greater than Thirty Million Dollars ($30,000,000.00), and (ii) the Premises (as defined under the Leases), in the aggregate, has had occupancy of eighty-five percent or greater for two (2) or more consecutive calendar quarters.

This Guaranty is an amendment, restatement and consolidation of, and replaces in their entirety, (i) that certain Guaranty executed by Trident Healthcare Properties I, L.P., a Delaware limited partnership (“Trident”), Walesa and B.J. Parrish, dated November 6, 2017, in favor of certain of the Landlord Parties, and (ii) that certain Lease Guaranty executed by MCA, Trident, Person and Walesa, dated on or about December 16, 2016, in favor of certain of the Landlord Parties, and, in each case, is not intended to serve as a novation or an accord and satisfaction of the obligations evidenced thereby.

[Signature Pages Follow]

IN WITNESS WHEREOF, the undersigned has duly executed this Guaranty as of the day and year first written above.

	GUARANTORS:

	TRIDENT HEALTHCARE PROPERTIES I, LP, a Delaware partnership

	By:
	Name:
	Title:

	MEMORY CARE AMERICA LLC, a Tennessee limited liability company

	By:
	Name:
	Title


	B. J. PARRISH*

	/s/ JAMES WALESA
	JAMES WALESA

	/s/ STEVE PERSON
	STEVE PERSON

* The Guaranteed Obligations of B.J. Parrish are limited as set forth in the second paragraph of this Guaranty.

Exhibit 10.7

Exhibit 10.8

Exhibit 10.9

SETTLEMENT AGREEMENT

This Settlement Agreement (“Agreement”), effective March 10, 2021 (the “Effective Date”), is made by and between Pender Capital Asset Based Lending Fund I, L.P., a limited partnership (“Pender”) on the one hand and Pritor Longhorn Seaworld, LLC (“Borrower”), James Walesa (“Walesa”), and B.J. Parrish (“Parrish”) on the other hand.

Walesa and Parrish shall collectively be referred to hereinafter as “Guarantors”. Pender, Borrower, and Guarantors are collectively referred to as the “Parties” and are each individually a “Party.”

WHEREAS, Pender West Credit 1 REIT, L.L.C., a Delaware limited liability company (“Pender West”) and Borrower entered into the July 12, 2019 Loan Agreement, Promissory Note, Deed of Trust, and other loan documents in connection with a loan in the original principal amount of $3,395,000.00 (the “Loan”). The Loan, together with all other loan documents, were assigned from Pender West to Pender pursuant to that certain Transfer and Assignment of Note, Lien and Other Documents dated December 15, 2020.

WHEREAS, the July 12, 2019 Deed of Trust, Assignment of Rents, Security Agreement, and Fixture Filing (“Deed of Trust”) was recorded under County Clerk’s Document No. 20190135797 of the Real Property Records of Bexar County, Texas. The Deed of Trust was assigned from Pender West to Pender pursuant to that certain Assignment of Deed of Trust dated December 15, 2020, but recorded on February 2, 2021 as Document No. 20210028901 in the Real Property Records of Bexar County, Texas.

WHEREAS, the Deed of Trust conveys the Mortgaged Property with power of sale to a Trustee as security for the Indebtedness, and the Mortgaged Property includes a tract of land commonly known as 1605 W. Loop 1604 S, San Antonio, TX 78245, described as “A 2.0050 acre tract also being a part of and out of Lot 1, Block 14, C.B. 4336 of the Dove River Commercial B Subdivision, Recorded in Volume 9624, Page 25 and a portion of a 4.0080 acre tract of land according to deed recorded in Volume 16630, Page 2066 of the Deed and Plat Records of Bexar County, Texas,” with said tract being more particularly described by meets and bounds in the Deed of Trust.

WHEREAS, Guarantors each signed the July 12, 2019 Payment Guaranty in which each Walesa and Parrish agreed, upon the occurrence of an Event of Default under the Loan Documents, to pay the Guaranteed Obligations immediately on demand by Pender, regardless of any defense, right of setoff, or claims Borrower or a Guarantor may have against Pender.

SETTLEMENT AGREEMENT – Page 1

WHEREAS, Borrower has defaulted under its obligations under the Loan Documents.

WHEREAS, the Parties have entered into this Agreement for the purposes of resolving any and all disputes and potential disputes arising out of or related in any way to the Loan, the Loan Documents, the Mortgaged Property, Borrower’s default, and the transfer of ownership of the Mortgaged Property.

NOW, THEREFORE, in consideration of the mutual agreements and promises detailed herein, the Parties agree, acknowledge, represent, covenant, and warrant the as set forth below. All capitalized terms in this Agreement not otherwise defined herein, shall have the meaning provided in the Loan Documents, as that term is defined in the Deed of Trust.

1.	Cash Consideration. Immediately upon execution of this Agreement, Borrower shall pay Pender $15,000 for the costs associated with preparing this Agreement, facilitating the Liquidation Event (as hereinafter defined) and preparing all documents associated therewith, and for the costs incurred or to be incurred for any Site Inspection.

2.	Pre-Transfer Site Visit. Following execution of this Agreement, Borrower acknowledges and agrees that Pender may visit and inspect the Mortgaged Property, on such date and at such time and place as Pender determines appropriate (“Site Inspection”). At such Site Inspection, Borrower shall provide all information requested by Pender at the Site Inspection and ensure that any employee, representative, affiliate or associate of Borrower with pertinent information relating to the business processes, operations, financials, franchise relationship, staffing, room rates, and/or construction of the hotel located on the Mortgaged Property are present at such Site Inspection or readily available to provide all the applicable information requested by Pender. The Parties specifically agree that the general manager, contractor, director of finance, franchise coordinator or the comparable counterpart of any individual holding such title, shall be present at the Site Inspection.

3.	Surrender of Mortgaged Property. Following execution of this Agreement, Borrower shall (and the Guarantors shall cause the Borrower to), on a date and time specified by Pender in its sole discretion, surrender possession of all Mortgaged Property to Pender (“Surrender Date”). On the Surrender Date, Borrower will provide Pender with all keys to the Mortgaged Property and all documents and information related to the Mortgaged Property. After the Surrender Date, Borrower and Guarantors will not access the Mortgaged Property without Pender’s consent or claim any right to own, enter, possess, or control the Mortgaged Property.

SETTLEMENT AGREEMENT – Page 2

4.	Deed in Lieu; Foreclosure Sale. In consideration for the terms of this Agreement, Borrower and Guarantors shall, in Pender’s sole and absolute discretion, either (each, as applicable, “Liquidation Event”) (i) deed the Mortgaged Property to Pender no later than March 15, 2021 using the form of deed specified by Pender in lieu of a foreclosure sale, or (ii) permit the commencement and completion of a foreclosure sale with title transferring to Pender, its designee, or as otherwise required pursuant to applicable law. On the date of recording and completion of the Liquidation Event and the lapse of any applicable appeal period related thereto, Pender agrees to waive all accrued Default Interest, unpaid late charges, and accrued late fees owed under the Loan Documents on the express condition that Borrower and Guarantors have complied with all other terms of this Agreement. On and after the Effective Date, Borrower and Guarantors understand and agree that they will not, in any manner whatsoever, contest, interfere with or object to the applicable Liquidation Event of the Mortgaged Property (including the sale of any personal property related thereto), nor shall Borrower and/or Guarantors seek to unwind any sale or pursue any lawsuit or appeal relating to the Liquidation Event. Borrower hereby further waives any and all rights of redemption granted by or under present or future law related to the Liquidation Event. For the avoidance of any doubt, a voluntary bankruptcy of the Borrower or an involuntary bankruptcy of the Borrower (without Pender’s prior written consent or which is not promptly contested by Borrower in good faith), a temporary restraining order, or a lawsuit initiated by Borrower against Pender, prior to the completion of the applicable Liquidation Event and the lapse of any appeal period, shall each constitute an example of an interference with the Pender's Liquidation Event and will be a violation of this Agreement. After the Liquidation Event, but in any event no later than March 15, 2021, the interest on the Loan and other charges on the Loan shall cease.

5.	Payment Guaranty Cap. Upon the closing of a sale of the Mortgaged Property by Pender to an unaffiliated third party bona fide purchaser for less than the amounts owed under the Loan Documents, exclusive of any default interest and on the express condition that Borrower and Guarantors have complied with all other terms of this Agreement, Pender will collect a total amount of no more than $300,000.00 from Guarantors under the Payment Guaranty. Any deficiency following the sale or disposition shall be calculated based on the net proceeds received by Pender after deducting all out-of-pocket non-affiliate third party costs and expenses of sale.

6.	Liens and Debts. Borrower shall ensure that there are no liens on the Mortgaged Property other than those that are both (a) reported in a title report approved by Pender, and (b) accepted in writing by Pender. Borrower shall be responsible for payment of all debts and liabilities pertaining to the Mortgaged Property that are not expressly assumed by Pender in writing and that exist as of the date of the recording and completion of the Liquidation Event, to the extent Pender is responsible for such costs. If Pender has paid a lien and/or debt covered by this paragraph or in the event Pender is responsible for a lien and/or debt covered by this paragraph, Borrower shall make Pender whole by paying such amounts to Pender within five (5) business days after Borrower receives notice of the amount owed.

SETTLEMENT AGREEMENT – Page 3

7.	Property Taxes. Borrower shall be solely responsible for and shall pay all property taxes for the Mortgaged Property relating to any time period prior to the effective date of the Liquidation Event. Borrower shall pay (i) the 2020 property taxes for the Mortgaged Property no later than May 17, 2021, and (ii) the 2021 property taxes for the Mortgaged Property attributable to any time period prior to the effective date of the Liquidated Event once they become due and payable, prior to such taxes becoming delinquent.

8.	Cooperation. Borrower and Guarantors shall cooperate with Pender in all material respects during the transition of ownership of the Mortgaged Property up until Pender obtains title to the Mortgaged Property (“Transition Period”). During the Transition Period, (i) Borrower shall be responsible for caretaking of the Mortgaged Property to the extent reasonably requested by Pender, and (ii) all costs and expenses relating to the operation, caretaking and transition of the Mortgaged Property shall be Borrower’s sole responsibility up until the completion of the Liquidation Event. During and after the Transition Period, Borrower shall provide Pender with access to all books, records, vendors, and proprietary processes and procedures related to the operations of the Mortgaged Property to the extent in Borrower’s possession, and Borrower shall have a continuing obligation to cooperate with any other reasonable requests from Pender.

9.	Franchise Status. Microtel Inns and Suites Franchising, Inc. (“Franchisor”), and Borrower are parties to that certain franchise or membership agreement dated July 12, 2019 and certain related agreements (“Primary Agreement”), under which Borrower agreed to operate and maintain a Microtel Inn & Suites Facility at the Mortgaged Property. Pender, Borrower and Guarantors have agreed that Borrower shall assign and Pender shall assume the rights and obligations set forth in the Primary Agreement, with any such agreement approved by Franchisor and in a form reasonably acceptable to Franchisor and Pender (“Franchise Assumption Agreement”). In consideration for Pender assuming the Primary Agreement, Borrower shall pay Lender $150,000. Borrower shall have the option to pay the $150,000 immediately upon execution of this Agreement or as follows: (i) an initial payment of $50,000 immediately after the Settlement Agreement is executed, and (ii) the remaining $100,000 shall be paid in four installments of $25,000, with each such installment payment being made on May 3, 2021, July 1, 2021, September 1, 2021, November 1, 2021. For any period prior to the Liquidation Event, Borrower must pay Franchisor any and all amounts owned pursuant to its terms, such that Borrower’s account balance with Franchisor shall be zero, and no further amounts shall be owed to Franchisor. To the extent Franchisor has timely remitted all such payments, and Franchisor is not otherwise in default of this Agreement, the $150,000 paid by Borrower shall reduce Borrower's payoff obligations as referenced and modified pursuant to the terms of this Agreement. Borrower and Guarantors further agree that the obligations and terms set forth in that certain Assignment and Security Agreement dated July 12, 2019 in so far as it relates to the Primary Agreement (“Assignment and Security Agreement”), executed by Borrower for the benefit of Pender, shall survive indefinitely, including without limitation, the indemnification obligations set forth therein. This section is a material part of this Agreement and failure to comply with the terms set forth herein shall constitute a material breach of this Agreement.

SETTLEMENT AGREEMENT – Page 4

10.	Covenant not to Sue. Borrower and Guarantors covenant not to sue Pender for any claim or cause of action arising out of or related to the Loan, the Loan Documents, the Mortgaged Property, or the transfer of ownership of the Mortgaged Property.

11.	Initial Release. Borrower and Guarantors and each of their respective trustees, subsidiaries, parents, affiliates, predecessors, successors, assignees, partners, directors, officers, employees, owners, agents, representatives, and attorneys fully release and forever discharge and hold harmless Pender along with its respective subsidiaries, parents, affiliates, predecessors, successors, assignees, partners, directors, officers, employees, owners, agents, representatives, and attorneys of and from any and all claims, debts, liabilities, demands, obligations, costs, expenses, damages, injuries, defenses, actions and causes of action of every nature, character and description, known or unknown, existing as of the Effective Date, that arise out of or relate in any way to the Loan, the Loan Documents, or the Mortgaged Property.

12.	Final Release. Immediately after the completion of the Liquidation Event, Borrower and Guarantors shall be required to sign a release for the benefit of Pender substantially in the form attached hereto as Exhibit A (the “Final Release”).

13.	Representations and Warranties. Each signatory hereto represents and warrants that (a) he/she/it has the authority without further approval required to bind the Parties for whom that signatory acts; and (b) the claims, suits, rights and/or interests which are the subject matter of this Agreement are owned by the Party asserting same, have not been assigned, transferred, or sold, and are free of encumbrance.

SETTLEMENT AGREEMENT – Page 5

14.	Other Documents. The Parties agree that they shall cooperate and execute any and all other and further documents which are or become necessary to accomplish the purpose of this Agreement.

15.	Arms-Length Negotiations, etc. The Parties agree that this Agreement has been fully and freely bargained for after having consulted with their own legal counsel, is the product of arms-length negotiation, has not been entered into under threat or duress, is not a contract of adhesion, and that no presumption shall be indulged in favor of any Party in the event that a court is called to construe its terms.

16.	Choice of Law and Venue. This Settlement Agreement is made and performable in Bexar County, Texas, and shall be construed in accordance with the laws of the State of Texas.

17.	Entire Agreement. This Agreement, including any exhibits and the recitals set forth above, which are hereby fully incorporated into this Agreement by reference, constitutes a single, integrated, written contract expressing the entire understanding and agreement between the Parties. The terms of the Agreement are contractual and not merely recitals. There is no other agreement, written or oral, expressed or implied, between the Parties with respect to the subject matter of this Agreement. The Parties expressly disclaim any allegation of fraudulent inducement with respect to this Agreement generally, and also expressly disclaim any reliance on any representation, statement, or omission made by any person including, but not limited to, any other Party or any agent, attorney, or representative of any other Party relating in any way to the subject matter, basis, reasonableness, or effect of this Agreement. To avoid any possible doubt, the Parties expressly warrant, represent, agree, and acknowledge the following:

	a.	No Party is relying on any statement or representation, whether oral, written, or otherwise, of any other person including without limitation any other Party, their agents, and/or their attorneys, when compromising and settling any right, claim, demand and/or cause of action, whether known or unknown;

	b.	No promise or agreement that is not contained in writing in this Agreement has been made in connection with executing this Agreement and the releases contained in this Agreement;

	c.	Each Party is relying solely on its own judgment and advice of its own counsel when deciding whether to enter into this Agreement. Each Party has been represented by legal counsel who has read and explained to her/him/it the entire contents of this Agreement, including its releases and its legal consequences;

	d.	Each Party has entered into this Agreement freely and without duress and has done so after full opportunity to consult with the legal counsel and other professionals of its choice; and

	e.	No Party will make any future claim that it was fraudulently induced to enter into this Agreement by way of any false or misleading statements, representations, or nondisclosures (whether oral, written, or otherwise), by any person including, without limitation, any other Party, its agents, or its attorneys, unless said misrepresentation is expressly stated in this Agreement.

SETTLEMENT AGREEMENT – Page 6

18.	Severability. If any provision or section of this Agreement is ever found to be unenforceable it will not affect the enforceability of any other provision or section of this Agreement.

19.	Amendments and Waivers. This Agreement may not be amended, supplemented, or modified, nor may compliance with any provision of this Agreement be waived, except in each case by an instrument in writing duly entered into by all Parties. No waiver, modification, or amendment of any provision of this Agreement shall be deemed, or shall constitute, a waiver, modification, or amendment of any other provision, whether or not similar.

20.	Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the Parties, and shall be binding on their respective affiliates, executors, administrators, personal representatives, heirs, successors, and assigns of each.

21.	Time of the Essence. Time is of the essence in the performance of this Agreement.

22.	Attorney’s Fees. In the event of any breach of this Agreement or if an action must be brought to enforce the terms of this Agreement, the non-breaching Party and/or the prevailing party in such action are entitled to recover from the breaching Party all attorney’s fees, expenses, and costs incurred as result of the breach and/or in enforcing the terms of this Agreement.

23.	Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be and have the same force and effect of an original, and all of which, taken together, shall constitute and be construed as a single agreement. A copy of this Agreement shall have the same force and effect as an original.

This Agreement has been executed by the Parties on the dates indicated below, but is effective for all purposes once fully executed by all Parties as of the Effective Date.

SETTLEMENT AGREEMENT – Page 7

EXECUTION

By executing this Agreement, each signatory represents and warrants that he or she has the authority without further approval required to bind the Party for whom that signatory acts.

[The signatures and acknowledgments are on the following pages.]

SETTLEMENT AGREEMENT – Page 8

Exhibit 10.10

Exhibit 10.11

Exhibit 10.12

AMENDED AND RESTATED

PROMISSORY NOTE

$325,000

April 1, 2019

FOR VALUE RECEIVED, the undersigned, Allied Integral United, Inc., a Delaware corporation (“Borrower”), promises to pay to the order of the Five C’s LLO (“Holder”), in lawful currency of the United States of America, at such place as the Holder from time to time may designate in writing, the principal sum of THREE HUNDRED AND TWENTY-FIVE THOUSAND DOLLARS ($325,000.00), together with interest thereon computed on the unpaid outstanding principal balance from the date of first set forth above (“Disbursement Date”) at the fixed rate of 9.85% interest per annum.

The term of this Promissory Note (“Note”) shall be TWO YEARS from the Disbursement Date. Borrower has the exclusive right to extend the term of this Note until December 31, 2021 with notification to Holder. Interest shall be calculated on the basis of a three hundred sixty-five (365) day year. Interest shall accrue beginning on the Disbursement Date and shall be paid to Holder in monthly installments. The entire unpaid principal and any accrued interest shall be due and payable in full on or before the expiration of the term.

In the event that Borrower fails to make any payment of principal or interest under this Note when due, the Borrower acknowledges and agrees that the Holder may commence legal proceedings to collect the amounts due under this Note, and shall be entitled to collect from the Borrower all of its costs and expenses of collection or enforcement including, but not limited to, reasonable attorneys’ fees and expenses.

Principal and interest under this Note may be pre-paid in whole or in part at any time without premium or other prepayment charge. Any partial prepayment of principal or interest shall reduce the final payment(s).

Borrower expressly waives presentment for payment, notice of nonpayment, protest, notice of protest, bringing of suit, and diligence in taking any action to claim the amounts owing hereunder and is and shall be directly and primarily liable for the amount of all sums owing and to be owing hereon and agrees that this Note, or any payment hereunder, may be extended from time to time without affecting such liability.

During the existence of any default or delinquency under the terms of this Note or under the terms of any instrument executed or to be executed as security for the payment hereof, Holder is expressly authorized to apply all payments made on this Note to the payment of such part of any delinquency as it may elect.

The remedies of the Holder as provided herein shall be cumulative and concurrent and may be pursued singularly, successively or together, at the sole discretion of the Holder, and may be exercised as often as occasion therefor shall arise. No act or omission of the Holder, including specifically any failure to exercise any right, remedy, or recourse, shall be deemed to be a waiver or release of the same, such waiver or release to be effected only through a written document executed by the Holder and then only to the extent specifically recited therein. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event. Notwithstanding anything herein to the contrary, in no event shall interest payable hereunder be in excess of the maximum rate allowed by applicable law. In the event any sums payable hereunder are determined to be in excess of the maximum allowable rate, amounts in excess of such maximum rate shall be deemed payments of principal.

Time is of the essence of this Note. Where used herein, the singular shall refer to the plural, the plural to the singular, and the masculine and feminine shall refer to any gender.

This Note shall be governed by and construed under the laws of the State of Texas, except as such may be pre-empted by applicable law or regulation of the United States of America governing the charging or receiving of interest.

The provisions hereof shall be binding upon the parties, their successors and assigns. The provisions hereof are severable such that the invalidity or unenforceability of any provision hereof shall not affect the validity or enforceability of the remaining provisions.

IN WITNESS WHEREOF, this instrument has been executed on the day and year first above written.

	BORROWER :

	ALLIED INTEGRAL UNITED, INC.

	By:	/s/ James T. Walesa
		James T. Walesa
	Its:	CEO

Exhibit 10.13.1

Exhibit 10.13.2

Exhibit 10.13.3

Exhibit 10.13.4

Exhibit 10.13.5

Exhibit 10.13.6

Exhibit 10.13.7

Exhibit 10.13.8

Exhibit 10.13.9

Exhibit 10.13.10

Exhibit 10.14.1

Exhibit 10.14.2

Exhibit 10.14.3

Exhibit 10.15.1

Exhibit 10.15.2

Exhibit 10.15.3

Exhibit 10.15.4

Exhibit 10.15.5

Exhibit 10.15.6

Exhibit 10.16.1

Exhibit 10.16.2

Exhibit 10.17.1

Exhibit 10.18.1

Exhibit 10.18.2

Exhibit 10.18.3

Exhibit 10.19

Exhibit 10.21

Exhibit 10.26

CLEARDAY ALTERNATIVE CARE OZ FUND LP

AMENDED AND RESTATED

LIMITED PARTNERSHIP AGREEMENT

Dated as of the First Closing Date as Defined Herein

As amended September 9, 2020

CLEARDAY ALTERNATIVE CARE OZ FUND LP

Amended And Restated

Limited Partnership Agreement

Table of Contents

ARTICLE 1 GENERAL PROVISIONS		1

Section 1.01.	Continuation of Limited Partnership	1
Section 1.02.	Partnership Name	1
Section 1.03.	Principal Place of Business and Offices	1
Section 1.04.	Term	2
Section 1.05.	Names of Partners	2
Section 1.06.	Fiscal Year	2
Section 1.07.	Purposes of Partnership	2
Section 1.08.	Limitations on Limited Partners	3
Section 1.09.	Liability of Limited Partners	3
Section 1.10.	Certain Definitions	3

ARTICLE 2 MANAGEMENT OF PARTNERSHIP		7

Section 2.01.	Management Generally	7
Section 2.02.	Authority of the General Partner	7
Section 2.03.	Reliance by Third Parties	7
Section 2.04.	Activity of the General Partner	8
Section 2.05.	Exculpation	8
Section 2.06.	Indemnification	8
Section 2.07.	Other Business Ventures	9

ARTICLE 3 CAPITAL ACCOUNTS OF LIMITED PARTNERS		9

Section 3.01.	Limited Partners	9
Section 3.02.	Capital Contributions	9
Section 3.03.	Ownership Percentages	10
Section 3.04.	Withholding	10
Section 3.05.	Expenses	10

ARTICLE 4 CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS		11

Section 4.01.	Capital Accounts	11
Section 4.02.	Adjustments to Capital Accounts	11
Section 4.03.	Allocation of Net Profits and Net Losses	11
Section 4.04.	Special Allocations	11
Section 4.05.	Negative Capital Accounts	12
Section 4.06.	Tax Matters	12
Section 4.07.	Distributions	13
Section 4.08.	Withdrawals	13
Section 4.09.	Limitation on Distributions	13
Section 4.10.	Limited Partners not Creditors	13

ARTICLE 5 CERTAIN TAX MATTERS RELATED TO DISTRIBUTIONS		13

Section 5.01.	Tax Distributions	13
Section 5.02.	Liability for Certain Taxes	14

ARTICLE 6 TRANSFERABILITY, ASSIGNMENT AND SUBSTITUTION		14

Section 6.01.	Restrictions on Transfers of Interest	14
Section 6.02.	Assignees	15
Section 6.03.	Substituted Limited Partners	15
Section 6.04.	Transfer of Interests by General Partner	16

ARTICLE 7 DURATION AND TERMINATION OF PARTNERSHIP		16

Section 7.01.	Duration	16
Section 7.02.	Termination	16

ARTICLE 8 EXCHANGE OF INTERESTS		17

Section 8.01.	Right to Exchange for Parent Common Stock	17
Section 8.02.	Reservation of Shares of Parent Common Stock	17

ARTICLE 9 REDEMPTION		17

Section 9.01.	Mandatory Redemption and Recapitalization	17

ARTICLE 10 REPORTS TO LIMITED PARTNERS; BOOKS AND RECORDS		18

Section 10.01.	Clearday and Parent	18
Section 10.02.	Additional Information to Limited Partners	18
Section 10.03.	Books and Records	18
Section 10.04.	Partnership Representative	18

ARTICLE 11 ERISA AND SIMILAR MATTERS		18

Section 11.01.	General	18
Section 11.02.	ERISA Matters	18
Section 11.03.	Governmental Plan Partners	19
Section 11.04.	Private Foundation Partners	20

ARTICLE 12 MISCELLANEOUS		20

Section 12.01.	Entire Agreement	20
Section 12.02.	Power of Attorney	20
Section 12.03	Amendments to Agreement; Actions by Written Consent; Consent by Silence; Certain Consent	21
Section 12.04.	Notices	21
Section 12.05.	Good Will	21
Section 12.06.	Additional Instruments	21
Section 12.07.	Headings	22
Section 12.08.	Other Businesses	22
Section 12.09.	Conflicts Derived by Dual Status of the General Partner	22
Section 12.10.	Governing Law	22
Section 12.11.	Venue; Waiver of Jury Trial	22
Section 12.12.	Adjustment of Basis of Partnership Property	22
Section 12.13.	Representations, Warranties, Covenants and Understandings of Limited Partners	22
Section 12.14.	Opportunity Zone Investment	22

Exhibit A		Form of the Joinder Agreement

Exhibit B		Form of the Certificate of Designation of Clearday for the Preferred Stock

AMENDED AND RESTATED

LIMITED PARTNERSHIP AGREEMENT

CLEARDAY ALTERNATIVE CARE OZ FUND LP

Dated as of September 9, 2021

This Amended and Restated Limited Partnership Agreement (as amended or restated from time to time, this “Agreement”) of CLEARDAY ALTERNATIVE CARE OZ FUND LP (the “Partnership”) is made as of the date written above by and among Clearday Impact Management LLC, a Delaware limited liability company (the “General Partner”), as general partner, AIU Alternative Care, Inc., a Delaware corporation that was incorporated under the name AIU Alternative Care, Inc., and the initial limited partner of the Partnership (“Clearday”) and such other person or persons admitted as a limited partner in the Partnership in accordance with the terms and provisions of this Agreement (each a “Limited Partner” and, collectively, the “Limited Partners”).

WHEREAS, pursuant to a limited partnership agreement of the Partnership (the “Original Agreement”) made between the General Partner and Clearday, the General Partner and Clearday formed the Partnership by filing a Certificate of Limited Partnership with the Delaware Secretary of State on the date that the Partnership was formed;

WHEREAS, the General Partner and the Limited Partners admitted to the Partnership as of the date of this Agreement have determined to amend and restate the Original Agreement to govern the management and operation of the Partnership and the relationship of the parties from and after the date hereof in accordance with the terms and subject to the conditions set forth herein;

WHEREAS, on the date set forth above, there was a merger of whereby a wholly owned subsidiary of Parent merged with and into Allied Integral United, Inc. whereby Allied Integral United, Inc. was the surviving entity and this Agreement was further amended and restated whereas in connection with such merger the Limited Partners agreed to certain amendments;

NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the General Partner, Clearday and the other Limited Partners do hereby agree that Original Agreement is hereby amended and restated in its entirety as follows:

ARTICLE 1 GENERAL PROVISIONS

Section 1.01. Continuation of Limited Partnership.

The Partners hereby agree to continue the Partnership as a limited partnership pursuant to the provisions of the Act and pursuant to the terms of this Agreement. The General Partner, for itself and as agent for the Limited Partners, shall make every reasonable effort to ensure that all certificates and documents are properly executed, and shall accomplish all filing, recording, publishing and other acts necessary or appropriate for compliance with all the requirements for the

continuation of the Partnership as a limited partnership under the Act and under all other laws of the State of Delaware or other jurisdictions in which the General Partner determines that the Partnership may conduct business. The General Partner shall continue as General Partner of the Partnership upon its execution of a counterpart signature page to this Agreement. Each Person who is or is to be admitted as a Limited Partner pursuant to this Agreement shall accede to this Agreement and any amendment to or novation thereof by executing (either itself or through the General Partner as its attorney-in-fact and agent) a counterpart signature page to this Agreement and/or such subscription agreements, deeds or adherence or other documents as may be acceptable to the General Partner. The rights and duties of the limited partners shall be as provided in the Act, except as modified by this Agreement.

Section 1.02. Partnership Name.

The Partnership shall do business under the name of CLEARDAY ALTERNATIVE CARE OZ FUND LP or such other name as the General Partner may determine.

Section 1.03. Principal Place of Business and Offices.

The principal place of business of the Partnership is c/o AIU Alternative Care, Inc., formerly known as AIU Alternative Care, Inc., at the principal place of business of such entity, Attention: Chief Executive Officer. The Partnership may from time to time change its principal place of business and may establish additional places of business when and where required by the business of the Partnership. The Partnership’s registered office and registered agent in the State of Delaware shall be as set forth in the Partnership’s Certificate of Limited Partnership, until such time as either is changed in accordance with the Act.

Section 1.04. Term.

The term of the Partnership commenced on the date the original Certificate of Limited Partnership was filed with the Delaware Secretary of State and shall continue in existence in perpetuity, unless the Partnership’s existence is sooner terminated pursuant to Section 7.02.

Section 1.05. Names of Partners.

(a) The General Partner is Clearday Impact Management LLC, a Delaware limited liability company whose address is c/o AIU Alternative Care, Inc., at the address set forth above.

(b) The names and addresses of all of the Limited Partners (as hereinafter defined) and the amounts of their respective contributions to the Partnership (“Capital Contributions”) are set forth in a schedule or schedules attached hereto (each, a “Schedule”), which is hereby incorporated by reference into and made a part of this Agreement and which shall be amended by the General Partner from time to time as necessary.

Section 1.06. Fiscal Year.

The fiscal year of the Partnership shall begin on the 1st day of January and end on the 31st day of December of each year (the “Fiscal Year”); provided, however, that the first Fiscal Year of the Partnership commenced on the date of filing of the Certificate of Limited Partnership in the State of Delaware and shall end on December 31, 2019. The Fiscal Year in which the Partnership shall terminate shall begin on January 1 and end on the date of termination of the Partnership.

Section 1.07. Purposes of Partnership.

(a) The Partnership is organized to engage in any lawful act or activity for which limited partnerships may be organized under the laws of the State of Delaware.

(b) Without limiting the general provisions of the foregoing, the purposes of the Partnership include, without limitation, each of the following

(i) To invest in capital stock, subscriptions, warrants, bonds, notes, debentures and other debt instruments (whether subordinated, convertible or otherwise), and other securities of whatever kind or nature (including, without limitation, derivatives and equity interests in private entities), of any domestic or foreign corporation, partnership, limited liability company, government or entity whatsoever (including foreign governments or entities), in rights and options relating thereto, including put and call options or any combination thereof, and in currencies, currency, financial and index options, or any combination thereof, whether readily marketable or not (all such items being herein individually referred to as a “Security” and collectively referred to as “Securities”);

(ii) To operate the issuers (a “Portfolio Company”) of any Securities and exercise all rights related to such Securities, including exercise all governance and management rights;

(iii) To finance the any of the Securities and finance any of the Portfolio Companies on terms and conditions determined by the Partnership provided that no such financing shall permit the Company to cause any liability of a Limited Partner to any lender under the terms of definitive agreements with respect to any such financing;

(iv) To engage in such other related activities and transactions as the General Partner may from time to time determine;

(v) To enter into, make and perform all contracts and other undertakings, and engage in all activities and take all such actions, as may be necessary or advisable for carrying out the purposes of the Partnership;

(vi) To maintain for the conduct of Partnership affairs one or more offices and in connection therewith rent or acquire office space, engage personnel, whether part-time or full-time, and do such other acts as may be necessary or advisable in connection with the maintenance and administration of such office or offices;

(vii) To engage attorneys, independent accountants, securities brokers, investment advisers, appraisers, experts and such other professional and non-professional persons as may be necessary or advisable;

(viii) To open, maintain and close bank and brokerage accounts and draw checks or other orders for the payment of money, and

(ix) Generally, to take all actions, execute all documents and incur such expenses on behalf of the Partnership as may be necessary or advisable in connection with the foregoing.

(c) The purposes of the Partnership include engaging in any of the foregoing activities in connection or coordination with such activities and transactions by its Affiliates, including Clearday.

Section 1.08. Limitations on Limited Partners.

No Limited Partner shall: (i) be permitted to take part in the management or control of the business or affairs of the Partnership, (ii) have any voice in the management or operation of any property, (iii) have the power to remove the General Partner, (iv) have the power to influence the management of the Partnership, whether by voting or approval rights or by changing or altering any Section of this Agreement, including this Section 1.08, by vote, consent or otherwise, or (v) have the authority or power in its capacity as a Limited Partner to act as agent for or on behalf of the Partnership, or any other Limited Partner, to do any act that would be binding on the Partnership, or any other Limited Partner, or to incur any expenditures on behalf of or with respect to the Partnership.

Section 1.09. Liability of Limited Partners.

The liability of each Limited Partner for the losses, debts and obligations of the Partnership, except as expressly set forth in this Agreement, shall be limited to such Limited Partner’s Capital Contribution and share of any undistributed assets of the Partnership, except to the extent a Limited Partner shall be liable under applicable law for previous distributions made to such Limited Partner under the terms of this Agreement, including Section 5.02, where the Partnership does not have sufficient assets to discharge its liabilities, and such Limited Partner had knowledge thereof at the time of distribution, or where such liability is founded upon misstatements or misrepresentations contained in such Limited Partner’s subscription agreement or related documents delivered in connection with the purchase of an Interest, or upon a breach of this Agreement.

Section 1.10. Certain Definitions.

The following defined terms used in this Agreement shall have the respective meanings specified below.

(a) “Act” means the Delaware Revised Uniform Limited Partnership Act, as amended from time to time.

(b) “Adjusted Capital Account” shall mean, with respect to any Partner at any time, such Partner’s Capital Account at such time (i) increased by the sum of (A) the amount of such Partner’s share of partnership minimum gain (as defined in Treasury Regulations Section 1.704-2(g)(1)), (B) the amount of such Partner’s share of the minimum gain attributable to a partner nonrecourse debt and (C) the amount of the deficit balance in such Partner’s Capital Account which such Partner is obligated to restore, if any, and (ii) decreased by reasonably expected adjustments, allocations and distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),(5) and (6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

(d) “Aggregate Annual Tax Liability” shall have the meaning ascribed to such term in Section 5.01(a).

(e) “Affiliate” shall have the meaning ascribed to such term in Section 2.04.

(f) “Agreement” shall have the meaning ascribed to such term in the preamble hereto.

(g) “Business Day” means any day (other than a Saturday or Sunday) when banks in New York are open for business or such other day or days as determined by the General Partner in its sole discretion.

(h) “Capital Account” shall have the meaning ascribed to such term in Section 4.01.

(i) “Capital Contribution” shall have the meaning ascribed to such term in Section 1.05(b).

(j) “Class” shall have the meaning ascribed to such term in Section 3.01(c).

(k) “Clearday” shall have the meaning ascribed to such term in the preamble hereto.

(l) “Clearday Subsidiary” means AIU Alternative Care, Inc., a Delaware corporation that is part of the Merger.

(m) “Code” shall mean the United States Internal Revenue Code of 1986, as amended.

(n) “Damages” shall have the meaning ascribed to such term in Section 2.06(a).

(o) “Deemed Capital Distributions” shall have the meaning ascribed to such term in Section 9.01(b).

(p) “Delegee” shall have the meaning ascribed to such term in Section 2.01(a).

(q) “Depreciation” shall mean for each Fiscal Year, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal Year, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the depreciation, amortization or other cost recovery deduction for income tax purposes for such Fiscal Year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for income tax purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.

(r) “Distributable Cash” shall mean the aggregate amount of the Partnership’s net cash flow during the relevant period, including: (i) the cash receipts less expenses of the Partnership from its operations; (ii) the net amount of cash borrowed by the Partnership less the amount used to refinance any Partnership indebtedness; (iii) the net amount of any insurance proceeds less the amount of such insurance proceeds used to repair, replace or otherwise compensate the Partnership for the loss underlying such insurance proceeds; (iv) the net proceeds from the sale or other disposition of assets of the Partnership, including any investments, fees, payoffs or interest collections and capital received from securitizations or other assets held for investment; provided, that, as provided in Section 4.07(a), the Partnership has no obligation to distribute Distributable Cash due to, among other reasons, the discretion of the General Partner.

(s) “DOL Regulations” shall mean Department of Labor Regulation Section 2510.3-101, as modified by Section 3(42) of ERISA.

(t) “ERISA” shall have the meaning ascribed to such term in Section 11.01.

(u) “ERISA Partner” shall have the meaning ascribed to such term in Section 11.02(a)

(v) “Exchange Act” shall have the meaning ascribed to such term in Section 6.01(b).

(w) “First Closing Date” shall mean the date of the initial Capital Contribution by a Limited Partner that is not an Affiliate of the General Partner.

(x) “Fiscal Quarter” shall mean any one or more of the following: (i) January 1 to March 31 of each Fiscal Year; (ii) April 1 to June 30 of each Fiscal Year; (iii) July 1 to September 30 of each Fiscal Year; (iv) October 1 to December 31 of each Fiscal Year; and (v) such other periods as may be designated from time to time as a Fiscal Quarter by the General Partner.

(y) “Fiscal Year” shall have the meaning ascribed to it in Section 1.06.

(z) “General Partner” shall have the meaning ascribed to such term in the preamble hereto.

(aa) “General Partner Parties” shall have the meaning ascribed to such term in Section 2.05.

(bb) “Gross Asset Value” shall mean, with respect to any asset, the asset’s adjusted basis for U.S. federal income tax purposes, except as follows:

(i) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, as determined by the contributing Partner and the General Partner;

(ii) The Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as determined by the General Partner as of the following times: (A) the acquisition of an additional interest in the Partnership by any Additional Limited Partner or Substitute Limited Partner or existing Partner in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Partnership to a Partner of more than a de minimis amount of property as consideration for an interest in the Partnership; and (C) the liquidation of the Partnership within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses (A) and (B) shall be made only if the General Partner reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;

(iii) The Gross Asset Value of any Partnership asset distributed to any Partner shall be adjusted to equal the gross fair market value of such asset on the date of distribution or other applicable date, in each case, as determined by the General Partner; and

(iv) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and Article 4 hereof; provided, however, that Gross Asset Values shall not be adjusted to the extent the General Partner determines that an adjustment pursuant to subparagraph (ii) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph. If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraphs (i), (ii) or (iii) of this definition, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Income and Losses.

(cc) “Governmental Plan Partner” shall have the meaning ascribed to such term in Section 11.03.

(dd) “Interest” means the limited partnership interests in the Partnership held by a Limited Partner.

(ee) “Investment Manager” shall have the meaning ascribed to such term in Section 2.01(a).

(ff) “Joinder Agreement” shall mean the joinder to this Agreement in the form set forth as Exhibit A, attached hereto, as such form may be supplemented or modified by the General Partner.

(gg) “Limited Partner” shall have the meaning ascribed to such term in the preamble hereto.

(hh) “Memorandum” shall mean the Confidential Private Placement Memorandum used by Clearday to offer its Preferred Units, as such document is amended and supplemented from time to time.

(ii) “Merger” means the merger of Clearday Subsidiary with a transitory subsidiary of Parent that closed on the Merger Effective Date.

(jj) “Merger Effective Date” means closing date.

(kk) “Net Profit and Net Loss” shall mean, for any Fiscal Quarter or such other period as determined by the General Partner, the net income or net loss of the Partnership for such Fiscal Quarter or such other period, as the case may be, determined in accordance with Section 703(a) of the Code, including any items that are separately stated for purposes of Section 702(a) of the Code, as determined in accordance with federal income tax accounting principles, with the following adjustments:

(i) any income of the Partnership that is exempt from U.S. federal income tax shall be included as income;

(ii) any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to U.S. Treasury Regulations Section 1.704-1(b)(2)(iv)(i) shall be treated as current expenses;

(iii) any and all other adjustments required to be made in order to determine Capital Account balances in compliance with Treasury Regulations Section 1.704-1(b); provided, however that amounts that are specially allocated under Section 4.02 shall not be taken into account.

(ll) “Original Agreement” shall have the meaning ascribed to such term in the recitals hereto

(mm) “Ownership Percentage” shall have the meaning ascribed to such term in Section 3.03.

(nn) “Parent” means: (i) prior to the Merger Effective Date: Allied Integral United, Inc. a Delaware corporation which, prior to the Merger Effective Date, is the sole owner of the common stock of Clearday; and (ii) from and after the Merger Effective Date: Clearday, Inc., a Delaware corporation that was incorporated on May 11, 1987 under the name Superconductor Technologies Inc. and the sole owner of Clearday Subsidiary, Inc. which is the sole owner of the common stock of Clearday.

(oo) “Parent Common Stock” shall have the meaning ascribed to such term in Section 8.01(a).

(pp) “Partnership” shall have the meaning ascribed to such term in the preamble hereto.

(qq) “Partnership Nonrecourse Debt” has the meaning given the term “nonrecourse liability” in Treasury Regulations Section 1.752-1(a)(2).

(rr) “Partner Nonrecourse Debt Minimum Gain” shall have the meaning ascribed to such term in Section 4.04(b).

(ss) “Partnership Representative” shall have the meaning ascribed to such term in Section 10.04.

(tt) “Private Foundation Partner” shall have the meaning ascribed to such term in Section 11.04.

(uu) “Portfolio Company” shall have the meaning ascribed to such term in Section 1.07(b).

(vv) “Preferred Stock” means the shares of the 10.25%% Series I Cumulative Convertible Preferred Stock of Clearday issued in the offering described in the Memorandum.

(ww) “Preferred Units” means units of the Preferred Stock and the Warrants.

(xx) “Reserves” shall mean the amount of the reserves determined from time to time by the General Partner for the payment of Organizational Expenses, Operating Expenses and other liabilities and general contingencies of the Partnership as well as for any required tax withholdings, even if such reserves are not required by U.S. GAAP.

(yy) “Schedule” shall have the meaning ascribed to such term in Section 1.05(b).

(zz) “SEC” shall have the meaning ascribed to such term in Section 2.01(a).

(aaa) “Security” shall have the meaning ascribed to such term in Section 1.07(b).

(bbb) “Stated Distribution Rate” shall have the meaning ascribed to such term in Section 9.01(b).

(ccc) “Subsequent Closing” shall have the meaning ascribed to such term in Section 3.01(d).

(ddd) “Substituted Limited Partner” shall have the meaning ascribed to such term in Section 6.03(a).

(eee) “Subscription Documents” shall mean the subscription agreement and other documents provided by an investor in the offering described in the Memorandum, including the subscription agreement for the purchase of Interests.

(fff) “TCJA” means the U.S. Tax Cuts and Jobs Act.

(ggg) “Transfer” shall have the meaning ascribed to such term in Section 6.01(a).

(hhh) “Transferee” shall have the meaning ascribed to such term in Section 6.02(a).

(iii) “Transferor” shall have the meaning ascribed to such term in Section 6.02(a).

(jjj) “Treasury Regulations” shall mean the U.S. Department of Treasury regulations promulgated under the Code.

(kkk) “U.S. GAAP” has the meaning set forth in Section 3.05(a).

(lll) “Warrants” means the warrants to purchase shares of common stock of Parent that are offered in the offering described in the Memorandum.

ARTICLE 2 MANAGEMENT OF PARTNERSHIP

Section 2.01. Management Generally.

(a) Management by the General Partner. The management of the Partnership shall be vested exclusively in the General Partner; provided that the General Partner may delegate to any other person (a “Delegee”) any or all of the General Partner’s power and authority in any or all aspects of the management of the Partnership and its business. The General Partner has delegated the Partnership’s investment management responsibilities to Clearday, as the investment manager of the Partnership (the “Investment Manager”). The Investment Manager is not registered with the Securities and Exchange Commission (the “SEC”) as an investment adviser pursuant to the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Limited Partners may take no part in the management of the Partnership, and shall have no authority or right to act on behalf of the Partnership in connection with any matter. The officers of an Investment Manager may have such authority to act on behalf of the Partnership, to execute agreements, documents and instruments on behalf of the Partnership and take such other actions for the benefit of the Partnership as from time to time authorized by the General Partner.

(b) TCJA.

(i) The General Partner and the Partnership shall use their respective commercially reasonable efforts to manage the business of the Partnership so that at all times prior to the date the Interests are redeemed in accordance with Section 9.01 the Partnership shall qualify and continue to qualify as a “qualified opportunity fund”.

(ii) In accordance with such efforts, the General Partner may restrict the business and affairs of the Partnership so that it invests in Portfolio Companies that are, within the meaning of the TCJA, opportunity zone business stock or opportunity zone partnership interests issued by entities that qualify as a qualified opportunity zone business (within the meaning of the TCJA).

(iii) There can be no assurance that all of the initial capital contributions of the Limited Partners will be invested in a manner that will cause the Partnership to qualify and maintain its qualification as a qualified opportunity fund.

(iv) The efforts of the Partnership to qualify and continue to qualify as a “qualified opportunity fund” Clearday may cause the General Partner to acquire certain entities or Securities in an Affiliate of the Partnership. Under any such investment structure, the Partners and the Partnership will not have the benefit of such investments, including the net cash flow from such businesses.

(c) The Partnership expects to use all of the investment by the Limited Partners within the period time that is required for investment in qualified assets. In the event that the Partnership is not able to invest such net proceeds of the Capital Contributions, the Partnership will redeem the interests of the Limited Partners, first redeeming the Interests of Clearday and then the Interests of the other Limited Partners, pro rata on the basis of the Capital Contributions.

Section 2.02. Authority of the General Partner.

The General Partner shall have the power, on behalf and in the name of the Partnership, to carry out any and all of the purposes of the Partnership and to perform all acts and enter into and perform all contracts and other undertakings that it may deem necessary or advisable in connection therewith or incidental thereto, and to appoint one or more agents to accomplish the foregoing.

Section 2.03. Reliance by Third Parties.

Third persons dealing with the Partnership are entitled to rely conclusively upon the power or authority of the General Partner as herein set forth.

Section 2.04. Activity of the General Partner.

The General Partner, and its principals, managers, officers, directors, employees or persons acting in a similar capacity (collectively, “Affiliates”) shall devote such of their time as in their sole judgment is reasonably required for the conduct of the Partnership’s business. Nothing herein contained shall be deemed to preclude the General Partner and/or its Affiliates, consistent with the foregoing and its fiduciary obligations to the Limited Partners and the Partnership, or any Delegee, from (i) acting as a director, officer or employee of any corporation, a trustee of any trust, an executor or administrator of any estate, a partner of any partnership, or an executive or administrative official of any other business entity whether or not in competition with the Partnership, (ii) participating in profits derived from the investments in or of any such corporation, trust, estate, partnership or other business entity or person, (iii) engaging directly or indirectly in any other business or entity in which the Partnership has a Securities position, subject to applicable law, (iv) directly or indirectly purchasing, selling and holding Securities or Assets for the account of any such other business or entity or for its own account, subject to applicable law, or (v) engaging in such other business activities which may generate consulting fees, advisory fees or finder fees for the raising of capital and other investment related services. No Limited Partner shall, by reason of being a Limited Partner in the Partnership, have any right to participate in any manner in any profits or income earned or derived by or accruing to the General Partner or Affiliates from the conduct of any activities other than the activities of the Partnership or from any transaction in Securities effected by the General Partner and/or Affiliates for any account other than that of the Partnership.

Section 2.05. Exculpation.

Notwithstanding any provision of this Agreement to the contrary, to the fullest extent not prohibited by the Act, neither the General Partner nor any of its affiliates, nor any of its or their respective principals, managers, members, partners, officers, directors, equity holders, agents or other applicable representatives (collectively, the “General Partner Parties”) shall be liable, responsible or accountable in damages or otherwise (including for any loss due to action or inaction of any person or entity retained by the Partnership) to the Partnership or any Limited Partner, or any of their respective affiliates, principals, managers, members, partners, officers, directors, equity holders, agents or other applicable representatives, assignees or transferees, or to third parties for any act or omission performed or omitted by them on behalf of the Partnership and in a manner believed in good faith by them to be within the scope of the authority granted to them by this Agreement except when such action or failure to act is found by a court of competent jurisdiction upon entry of a final judgment to have been the result of the General Partner’s fraud, gross negligence or willful misconduct in the performance or non-performance of its duties to the Partnership. The General Partner Parties may consult with counsel and accountants in respect of the Partnership’s affairs and be fully protected and justified in any action or inaction that is taken in good faith and in accordance with the information, reports, statements, advice or opinion provided by such persons. Notwithstanding the foregoing, nothing in this Agreement shall in any way constitute a waiver or limitation of any rights that the Limited Partners may have under federal or state securities laws or under ERISA.

Section 2.06. Indemnification.

(a) Notwithstanding any provision of this Agreement to the contrary, to the fullest extent not prohibited by the Act, the Partnership shall indemnify and hold harmless the General Partner Parties from and against any and all losses, damages, obligations, penalties, claims, actions, suits, judgments, settlements, liabilities, costs, and expenses (including, without limitation, reasonable attorneys’ and accountants’ fees, as well as other costs and expenses incurred in connection with the defense of any actual or threatened action or proceeding or any investigation, inquiries by governmental agencies or request for information from any regulator) and amounts paid in settlement of any claims (collectively “Damages”) suffered or sustained by any of the foregoing persons as a result of or in connection with any act performed by them under this Agreement or otherwise on behalf of the Partnership; provided, however, that such indemnity shall be payable only if such damages were not found by a court of competent jurisdiction upon entry of a final judgment to have been the result of the General Partner’s fraud, gross negligence, or willful misconduct in the performance or non-performance of its duties to the Partnership, and in the case of criminal proceedings, that the indemnified party or parties had no reasonable cause to believe was unlawful. The General Partner may, in its sole discretion, cause the Partnership to advance to any person or entity entitled to indemnification hereunder reasonable attorney’s fees and other costs and expenses incurred in connection with the defense of any action or proceeding or any investigation that arises out of such conduct, provided that all such advances will be promptly repaid if it is subsequently determined that the person or entity receiving such advance was no entitled to indemnification hereunder. No indemnification may be made and each indemnified party or parties shall reimburse the Partnership to the extent of any indemnification previously made in respect of any claim, issue or matter as to which the indemnified party or parties shall have been adjudged by a court of competent jurisdiction pursuant to a final, non-appealable judgment, to be liable for gross negligence, fraud, or willful misconduct in the performance of its duties to the Partnership or would not otherwise be entitled to be held harmless under Section 2.05 unless, and only to the extent that, the court in which such action or suit was brought determines that in view of all the circumstances of the case, despite the adjudication of liability the indemnified party(ies) is fairly and reasonably entitled to indemnity for those expenses that the court deems proper. Any indemnity under this Section 2.06(a) shall be paid from, and only to the extent of, the Partnership’s assets, and no Limited Partner shall have any personal liability on account thereof.

(b) All rights to indemnification permitted in this Agreement and payment of associated expenses shall not be affected by the termination and dissolution of the Partnership or the removal, resignation, withdrawal, insolvency, bankruptcy, termination or dissolution of the General Partner.

Section 2.07. Other Business Ventures.

The General Partner and its Affiliates and each of the Limited Partners and their respective Affiliates may engage in or possess an interest in other business ventures of every nature and description for their own account, independently or with others, whether or not such other enterprises shall be in competition with any activities of the Partnership. None of the Partnership, the Limited Partners or the General Partner shall have any right by virtue of this Agreement in and to such independent ventures or to the income or profits derived therefrom.

ARTICLE 3 CAPITAL ACCOUNTS OF LIMITED PARTNERS

Section 3.01. Limited Partners.

(a) The names, addresses and Capital Contributions of each of the Limited Partners shall be maintained by the General Partner with the records of the Partnership, and such record shall be confidential and not provided to any other Limited Partner unless otherwise determined by the General Partner.

(b) The Limited Partners in the Partnership shall be

(i) each person that has

(1)

executed and delivered the Subscription Documents for an investment in the Partnership;

(2)

whose investment has been accepted by the General Partner;

(3)

who has made a cash Capital Contribution to the Partnership;

(4)

who has executed and delivered this Agreement as of First Closing Date or a Joinder Agreement as of the date of any other closing of an offering described in the Memorandum; and

(ii) each person that is a Substituted Limited Partner.

(c) The Partnership may NOT establish any number of designated class of Interests (each, a “Class”) having separate rights, fees, allocations, powers, preferences, obligations, qualifications, limitations, restrictions and/or duties, with or without respect to specified property or obligations of the Partnership or profits and losses associated with specified property or obligations without the prior approval of the Limited Partners holding a majority of the Interests.

(d) Subsequent Closings.

(i) The General Partner may admit one or more persons in the Partnership as a Limited Partner that completes the Subscription Documents to the satisfaction of the General Partner, who makes a cash investment in the Company as a Capital Contribution for the purchase of such person’s Interests in connection with a closing (each a “Subsequent Closing”) of the offering of securities described in the Memorandum, and who executes and delivers a Joinder Agreement.

(ii) The Capital Contribution by a person that is admitted as a Limited Partner in a Subsequent Closing shall be used by the Partnership in the discretion of the General Partner for investments by the Partnership and shall not be used to distribute such funds to the then existing Limited Partners.

(iii) To the extent necessary, the General Partner shall cause the books and records of the Partnership to be amended to reflect as appropriate the issuance of additional Interests in the Partnership to a person in connection with a Subsequent Closing, as promptly as is practicable after such occurrence.

Section 3.02. Capital Contributions.

(a) Each Limited Partner shall make a Capital Contribution to the Partnership by way of cash equal to the amount set forth opposite such Limited Partner’s name in the Schedule, which amount shall, other than in the case of the Capital Contribution of Clearday, equal the amount that such Limited Partner agreed to contribute or invest in the Partnership in the offering described in the Memorandum. Except upon the prior consent of the General Partner, the minimum initial Capital Contribution for each Limited Partner shall be the amount set forth in the Memorandum.

(b) The terms of the offering of the Interests shall be consistent in all material respects as described in the Memorandum, unless otherwise described in this Agreement.

(c) The Capital Contribution of Clearday shall be an amount that is equal to the gross proceeds of the offering of the Preferred Units or such other amount as determined by Clearday from time to time to reflect additional investment in the Securities and Portfolio Companies of the Partnership.

(d) In determining the Capital Contribution of Clearday as of the date of the last closing of the offering described in the Memorandum, it is acknowledged that the aggregate gross proceeds of the offering of the Preferred Units shall be contributed to the Partnership and the Partnership shall pay the organizational and initial offering expenses as described in Section 3.05. Accordingly, the Ownership Percentage of Clearday as of the date of the last closing of the offering described in the Memorandum shall be equal to (i) the number of shares of the Preferred Stock that would have been issued by Clearday to the Limited Partners if the Limited Partners (other than Clearday) invested their Capital Contributions for investment in such shares of Preferred Stock; (ii) divided by the aggregate number of shares of Preferred Stock issued by Clearday in such offering.

(e) Clearday may make additional Capital Contributions and will make additional Capital Contributions in the amount equal to the net proceeds of the sale of assets by Parent and its other subsidiaries that are not used as investment or other financing of direct or indirect investments by Parent in assets or businesses that are consistent with the care and wellness investment strategy of Parent.

Section 3.03. Ownership Percentages.

An “Ownership Percentage” shall be determined for each Limited Partner for each Fiscal Quarter of the Partnership by dividing the amount of such Limited Partner’s Capital Account by the sum of the Capital Accounts of all of the Limited Partners for such Fiscal Quarter. The Ownership Percentages shall be set forth in a Schedule filed with the records of the Partnership within thirty (30) days after the commencement of each Fiscal Quarter of the Partnership, or such other period as reasonably determined by the General Partner.

Section 3.04. Withholding.

If the Company is required by applicable law to pay any tax that is specifically attributable to a Limited Partner (or to a Person having the tax status of a Limited Partner or the tax status of the direct or indirect shareholders, members, or other owners of such Limited Partner), including non-U.S., U.S. federal, commonwealth or state withholding taxes, commonwealth and/or state personal property taxes, and commonwealth and/or state unincorporated business taxes, then such Limited Partner shall indemnify and reimburse the Company for such tax (and any related interest and penalties). The Company may offset Distributions and other amounts which any Limited Partner is otherwise entitled to receive under this Agreement against a Limited Partner’s indemnification obligations under this Section and, to the extent offset, such amount shall be treated as distributed or otherwise paid to such Limited Partner for all purposes of this Agreement (other than as necessary to properly maintain Capital Accounts or to properly determine the allocations of Net Profits and Net Losses). A Limited Partner’s obligation to pay or indemnify for a tax (and related interest and penalties) under this provision shall survive the Limited Partner’s Transfer of its Units and the termination, dissolution, liquidation, or winding up of the Company. Any payment pursuant to this Section will not be treated as a capital contribution to the Company but will, to the extent necessary to properly maintain Capital Accounts, increase a Limited Partner’s Capital Account.

Section 3.05. Expenses.

(a) Organizational and Initial Offering Expenses.

(i) The Partnership shall pay organizational and initial offering expenses related to the offering of the Interests and the organizational and initial offering expenses of Clearday regarding its offering of the Preferred Units, in each case, on a pro rata basis, determined on the basis of the aggregate Capital Contributions by the Limited Partners, other than Clearday, and the gross proceeds to Clearday for the issuance of the Preferred Units. The organizational and initial offering expenses shall include the fees, disbursements and expenses and other amounts payable by Clearday or the Partnership in connection with the organization of Clearday, the General Partner, and the Partnership, solicitation of the investment in the Preferred Units or the Interests, the preparation of the Memorandum including amendments and supplements thereto, the filing fees and expenses, including for the filing of notice filings under state securities laws, the preparation of the definitive agreements and documents, including this Agreement, the certificate of incorporation of Clearday, the certificate of designation of Clearday for the preferred stock, the warrant to purchase shares of Parent common stock, the subscription documents for the offering of the Interests and/or the Preferred Units and other documents ancillary or related thereto, the preparation and filing of the Form D related to the offering of the Preferred Units and/or the Interests and amounts that have been advanced for offering expenses by Parent or its Affiliates in connection with any of the foregoing.

(ii) The General Partner may elect, in its sole discretion, to expense such costs as incurred or to amortize such organizational and initial offering expenses over a period of sixty (60) months from the commencement of operations of the Partnership. However, the amortization of these expenses over a period that is greater than 12 months is a divergence from with U.S. generally accepted accounting principles (“U.S. GAAP”).

(iii) If the Partnership is terminated before its organizational and initial offering expenses are fully amortized, any unamortized expenses will be recognized. If a Limited Partner withdraws all or part of its Interest(s) before the Partnership’s organizational and initial offering expenses are fully amortized, the General Partner may, but is not required to, accelerate a proportionate share of the unamortized expenses based upon the amount being withdrawn and reduce proceeds for such withdrawal by the amount of such accelerated expenses.

(b) Operating Expenses. The Partnership will pay all of the operating expenses of the Partnership which shall include reimbursement to Clearday or its Affiliates of expenses incurred for the benefit of the Partnership.

ARTICLE 4 CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS

Section 4.01. Capital Accounts.

There shall be established and maintained on the books of the Partnership a separate capital account for each Partner in accordance with Treasury Regulations Section 1.704-1(b) and with the definitions and methods of adjustment set forth in this Agreement (a “Capital Account”).

Section 4.02. Adjustments to Capital Accounts.

As of the close of business of the last day of each Fiscal Year, the balance in each Partner’s Capital Account shall be adjusted by: (a) increasing such balance by such Partner’s (i) allocable share of Net Profit (allocated in accordance with the this Article 4) and (ii) Capital Contributions, if any, and (b) decreasing such balance by (x) the amount of cash and the value of securities or other property (net of liability) distributed to such Partner during such Fiscal Year and (y) such Partner’s allocable share of Net Loss (allocated in accordance with this Article 4). Each Partner’s Capital Account shall be further adjusted with respect to any special allocations pursuant to this Article 4.

Section 4.03. Allocation of Net Profits and Net Losses.

Subject to any special allocations pursuant to Section 4.04 thereof, Net Profits and Net Loss for any Fiscal Year (or items thereof as necessary) shall be allocated among the Partners, to the extent possible first, so that no Partner has a deficit balance in its Capital Account and second, in such a manner as to cause the balance in the Capital Account of each Partner, as adjusted to reflect the allocations provided hereunder, to be equal to the aggregate amount of cash such Partner would receive if the Partnership were liquidated and each asset of the Partnership were sold for an amount of cash equal to its respective Gross Asset Value, all debt obligations were satisfied in accordance with their respective terms (limited with respect to each Partnership Nonrecourse Debt or Partner Nonrecourse Debt to the Gross Asset Value of the asset(s) securing such debt) and the remaining cash were distributed as provided in Section 4.07 of this Agreement.

Section 4.04. Special Allocations.

(a) Minimum Gain Chargeback. Notwithstanding any other provision of this Agreement to the contrary, if there is a net decrease in the Partnership’s “partnership minimum gain” (as defined in Treasury Regulations Section 1.704-2(d)), items of income and gain shall be allocated to all Partners in accordance with Treasury Regulations Section 1.704-2(f); such allocations are intended to comply with the minimum gain chargeback requirements of Treasury Regulations Section 1.704-2 and shall be interpreted consistently therewith.

(b) Partner Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulations Section 1.704-2(i)(4) and notwithstanding any other provision of this Article 4 to the contrary, if there is a net decrease in “partner nonrecourse debt minimum gain” attributable to a “partner nonrecourse debt” (as determined under Treasury Regulations Section 1.704-2(i)(5) (“Partner Nonrecourse Debt Minimum Gain”) during any Fiscal Year, each Partner who has a share of such Partner Nonrecourse Debt Minimum Gain shall be specially allocated items of Partnership income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Partner’s share of the net decrease in such Partner Nonrecourse Debt Minimum Gain, determined in accordance with Treasury Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section is intended to comply with the partner nonrecourse debt minimum gain chargeback requirement in Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(c) Qualified Income Offset. No allocation may be made to a Partner to the extent such allocation causes or increases a deficit balance in such Partner’s Adjusted Capital Account. Notwithstanding any other provision of this Agreement to the contrary except paragraphs (a) and (b) of this Section 4.04, in the event that a Partner unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) which results in such Partner having or increasing a negative adjusted Capital Account balance (as determined above), then such Partner shall be allocated items of income and gain in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, such negative balance in such Partner’s Adjusted Capital Account as quickly as possible. This provision is intended to satisfy the “qualified income offset” items of the Code.

(d) Risk of Loss Allocation. Any item of “partner nonrecourse deduction” (as defined in Treasury Regulation Section 1.704-2(i)(2)) with respect to a “partner nonrecourse debt” (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated to the Partner or Partners who bear the economic risk of loss for such Partner Nonrecourse Debt in accordance with Treasury Regulations Section 1.704-2(i)(1).

(e) Allocation of Excess Nonrecourse Liabilities. For the purpose of determining each Partner’s share of Partnership nonrecourse liabilities pursuant to Treasury Regulations Section 1.752-3(a)(3), and solely for such purpose, each Partner’s interest in Partnership profits is hereby specified to be equal to the ratio (stated as a percentage) of their respective Capital Contributions to the Partnership.

(f) Gross Income Allocation. In the event any Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of (i) the amount such Partner is obligated to restore pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section shall be made only if and to the extent that such Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article 4 have been made.

(g) Section 704(c) Allocation. Solely for federal, state, and local income tax purposes and not for book or Capital Account purposes, depreciation, amortization, gain, or loss with respect to property that is properly reflected on the Partnership’s books at a value that differs from its adjusted basis for federal income tax purposes shall be allocated in accordance with the principles and requirements of Code Section 704(c) and the Regulations promulgated thereunder, and in accordance with the requirements of the relevant provisions of the Regulations issued under Code Section 704(b). The General Partner may use any method permitted pursuant to Treasury Regulations Section 1.704-3 for all allocations with respect to contributed property. For Capital Account purposes, depreciation, amortization, gain, or loss with respect to property that is properly reflected on the Partnership’s books at a value that differs from its adjusted basis for tax purposes shall be determined in accordance with the rules of Treasury Regulations Section 1.704-1(b)(2)(iv)(g).

(h) Transfers During The Taxable Year. All items of income, gain, loss and deductions allocable pursuant to Article 4 hereof for a Fiscal Year with respect to any Interest which may have been transferred (if permitted pursuant to the terms hereof) during such year shall be allocable between the transferor and transferee using any reasonable method determined by the General Partner; provided, that in all events that the method utilized shall be permitted under the Code and the applicable regulations promulgated under the Code.

Section 4.05. Negative Capital Accounts.

Except as may be required by law, no Partner shall be required to reimburse the Partnership for any negative balance in such Partner’s Capital Account, provided that each such Partner shall remain fully liable to make contributions of capital to the extent of such Partner’s Capital Commitment.

Section 4.06. Tax Matters.

For U.S. federal, state and local income tax purposes, the income, gains, losses, deductions and credits of the Partnership shall, for each taxable period, be allocated among the Partners in the same manner and in the same proportion as such items have been allocated to the Partners’ Capital Accounts. Notwithstanding the foregoing, the General Partner shall have the power to make such allocations as may be necessary to ensure that such allocations are in accordance with the interests of the Partners in the Partnership. The Partnership shall be operated in a manner consistent with that of a partnership for U.S. federal income tax purposes until such time as when the General Partner determines that the Partnership’s treatment as a partnership for U.S. federal income tax purposes is not in the best interest of the Partnership or the Partners. The Partners agree to the tax treatment of the Partnership as provided herein and shall not take any action inconsistent with such treatment. All matters concerning allocations for U.S. federal, state and local and foreign income tax purposes, including accounting procedures, not expressly provided for by the terms of this Agreement shall be equitably determined in good faith by the General Partner. At the written request of any Limited Partner, the General Partner may cause the Partnership to make the election under Section 754 of the Code.

Section 4.07. Distributions.

(a) Distributions shall be made, unless otherwise specified under Section 5.01, at the sole discretion of the General Partner.

(b) The Partnership may distribute Distributable Cash to the Partners in such amounts and on such dates as determined by the General Partner. All distributions of Distributable Cash shall be paid to the Partners as provided below in Section 4.07(c). The Partnership will be entitled to from time to time create appropriate Reserves, even if such reserves are not required by GAAP in amounts deemed necessary by the General Partner.

(c) Distributions shall be made pro rata in accordance with the Ownership Percentages of the Limited Partners. The General Partner shall not receive any distributions.

(d) No Limited Partner shall have the right to receive distributions in property other than cash.

Section 4.08. Withdrawals.

No Limited Partner shall be entitled to withdraw any amount from its Capital Account unless and to the extent required by the General Partner in accordance with Article 11.

Section 4.09. Limitation on Distributions.

No distribution under this Agreement shall be made in respect of any Interest to the extent that, after giving effect to the distribution, all liabilities of the Partnership, other than liabilities to the Limited Partners on account of their Interests, exceed the fair market value of the Partnership’s assets.

Section 4.10. Limited Partners not Creditors.

Except where a Limited Partner is a creditor of the Partnership, a Limited Partner does not have the status of, and is not entitled to the remedies available to a creditor of the Partnership with respect to distributions.

ARTICLE 5 CERTAIN TAX MATTERS RELATED TO DISTRIBUTIONS

Section 5.01. Tax Distributions.

(a) As of December 31 of each year, the General Partner shall determine the deemed tax liability of the Limited Partners (“Aggregate Annual Tax Liability”) for federal, state and local income taxes based on the net taxable income and gains allocated to the Limited Partners by the Partnership during such year, assuming a combined marginal tax rate that is payable by an individual taxpayer that is a resident of New York, New York or such local jurisdiction in the United States that is greater.

(i) On or prior to April 14 of each calendar year, the Partnership shall distribute an amount equal to the Aggregate Annual Tax Liability computed by the Partnership on the basis of its reasonable estimates of such amount as of December 31 of the prior calendar year, to the extent that such amount has not been previously distributed in such prior calendar year.

(ii) Notwithstanding the forgoing provisions of this Section 5.01(a), the distributions under this Section 5.01(a) shall be made only to the extent that the Partnership has available cash resources to make such distributions in accordance with the Act.

(iii) The General Partner shall use its commercially reasonable efforts to maintain adequate reserves so that the distributions described in this Section 5.01(a) are made on a timely basis, which shall include incurring debt or other financing from third parties or Affiliates.

(b) The General Partner may withhold from any amount payable to any Limited Partner, any taxes required to be paid or withheld by the Partnership on behalf of or for the account of such Limited Partner as provided in Section 5.02. Any such taxes shall be deemed to be a distribution or payment to such Limited Partner.

(c) No distribution shall be made in respect of any Interest to the extent that, after giving effect to the distribution, all liabilities of the Partnership, other than liabilities to the Limited Partners on account of their Interests, exceed the fair market value of the Partnership’s assets.

(d) Subject to this Section 5.01, and except where a Limited Partner is a creditor of the Partnership, a Limited Partner does not have the status of, and is not entitled to the remedies available to a creditor of the Partnership with respect to distributions.

Section 5.02. Liability for Certain Taxes.

(a) In the event that the Partnership shall be required to make payments to any federal, state or local or any foreign taxing authority with respect to any Limited Partner’s allocable share of income, the amount of such taxes shall be considered a loan to such Limited Partner, and such Limited Partner shall be liable for, and shall pay, any taxes so required to be withheld and paid over by the Partnership within ten (10) days after the General Partner’s request therefor. Alternatively, the General Partner may deduct the amount of such taxes from such Limited Partner’s Capital Account and treat it as cash distributed to such Limited Partner in which case, the amount of distributions to such Limited Partner under Section 5.01 shall be reduced by such payment.

(b) The Partnership may withhold and pay over to the U.S. Internal Revenue Service (or any other relevant taxing authority) such amounts as it is required to withhold or pay over, pursuant to the Code or any other applicable law, on account of a Limited Partner’s distributive share of the Partnership’s items of gross income, income or gain. Any taxes so withheld or paid over with respect to a Limited Partner’s allocable share of the Partnership’s gross income, income or gain shall be deemed to be a distribution or payment to such Limited Partner, reducing the amount otherwise distributable to such Limited Partner pursuant to this Agreement and reducing the Capital Account of such Limited Partner. Each Limited Partner agrees to indemnify the Partnership and the applicable Series in full for any amounts required to be withheld pursuant to this 5.05(b) with respect to such Limited Partner (including, without limitation, any interest, penalties and expenses associated with such payments), and each Limited Partner shall promptly upon notification of an obligation to indemnify pursuant to this Section 5.02(b) make a cash payment to the Partnership, as requested, equal to the full amount to be indemnified with interest to accrue on any portion of such cash payment not paid in full when requested, calculated at a rate equal to 10% per annum, compounded as of the last day of each year (but not in excess of the highest rate per annum permitted by law). Each Limited Partner grants to the Partnership a security interest in such Limited Partner’s Interest to secure the Limited Partner’s obligation to pay the Partnership the amounts required to be paid pursuant to this Section.

(c) The General Partner shall not be obligated to apply for or obtain a reduction of, or exemption from, withholding tax on behalf of any Limited Partner that may be eligible for such reduction or exemption. To the extent that a Limited Partner claims to be entitled to a reduced rate of, or exemption from, a withholding tax pursuant to an applicable income tax treaty, or otherwise, the Limited Partner shall furnish the General Partner with such information and forms as such Limited Partner may be required to complete where necessary to comply with any and all laws and regulations governing the obligations of withholding tax agents. Each Limited Partner represents and warrants that any such information and forms furnished by such Limited Partner shall be true and accurate and agrees to indemnify the Partnership and each of the Limited Partners from any and all damages, costs and expenses resulting from the filing of inaccurate or incomplete information or forms relating to such withholding taxes.

ARTICLE 6 TRANSFERABILITY, ASSIGNMENT AND SUBSTITUTION

Section 6.01. Restrictions on Transfers of Interest.

(a) No sale, transfer, exchange, assignment or other disposal of, and no creation of a derivative with respect to, any portion of a Limited Partner’s Interest(s), (each, a “Transfer”), may be made without the prior written consent of the General Partner, which consent may be granted or withheld in the sole discretion of the General Partner, unless otherwise provided in this Agreement. Any act by a Limited Partner in violation of this Section 6.01 shall be void ab initio and not be binding upon or recognized by the Partnership (regardless of whether the General Partner has knowledge thereof), unless approved or consented to in writing by the General Partner.

(b) In the event that the General Partner consents to a Transfer, such Transfer of a Limited Partner’s Interest shall not be made unless the General Partner has been satisfied that:

(i) when added to the total of all other Transfers of Interests within the preceding twelve (12) months, it would not result in the Partnership being considered to have terminated for federal income tax purposes;

(ii) it would not violate any federal or state securities, commodities or futures laws, including any investor suitability standards applicable to the Partnership or the Interest(s) that is the subject of the Transfer;

(iii) it would not cause the Partnership to lose its status as a partnership for federal income tax purposes; and

(iv) it would not require the Partnership to register as an investment company under the Investment Company Act of 1940, as amended;

(v) such Transfer would not be in violation of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

(vi) such Transfer would not require the Partnership to register the Interests with the SEC under the Exchange Act;

(vii) otherwise adversely affect the status of the Partnership under any federal or state law.

(c) Each Limited Partner Transferring its Interest(s) shall pay all reasonable expenses, including attorneys’ fees, incurred by the General Partner Partnership in connection with such Transfer.

(d) The General Partner shall consent to the Transfer of Interests by a Limited Partner if the conditions to such Transfer under Section 6.01(b) are satisfied and the expenses of such Transfer that would be incurred by the General Partner or the Partnership are paid by the Limited Partner.

Section 6.02. Assignees.

(a) The Partnership shall not recognize for any purpose any purported Transfer of a Limited Partner unless all the provisions of this Agreement shall have been complied with and there shall have been filed with the Partnership a notification of such Transfer, in form satisfactory to the General Partner, executed and acknowledged by both the Limited Partner requesting the Transfer (the “Transferor”) and the other party to the proposed Transfer (the “Transferee”), and such notification (i) contains the acceptance by the Transferee of all of the terms and provisions of this Agreement and of the Partnership’s subscription agreement and related documents approved by the General Partner, if applicable, and (ii) represents that such Transfer was made in accordance with all applicable laws and regulations. Any Transfer shall be recognized by the Partnership as effective only as of such date as shall be designated by the Partnership as reasonably convenient for it.

(b) The Transferee of a Limited Partner’s Interest(s), unless and until admitted as a Substituted Limited Partner in such Limited Partner’s stead in the sole discretion of the General Partner, shall not have any statutory or other rights of the Transferor under any applicable law or this Agreement, other than the right to receive distributions with respect to the Interest(s) that is the subject of the Transfer. Anything herein to the contrary notwithstanding, both the Partnership and the General Partner shall be entitled to treat the Transferor as the absolute owner of such Interest(s) in all respects, and shall incur no liability for distributions made in good faith to it, until such time as the requirements of this Article 6 have been fulfilled.

Section 6.03. Substituted Limited Partners.

(a) No Limited Partner shall have the right to substitute a Transferee, donee, heir, legatee, distributee or other recipient of such Limited Partner’s Interest(s) as a Limited Partner in its place. Any such Transferee, donee, heir, legatee, distributee or other recipient of an Interest (whether pursuant to a voluntary or involuntary transfer) shall be admitted to the Partnership as a “Substituted Limited Partner” only (i) with the prior written consent of the General Partner, which consent may be granted or withheld in the sole discretion of the General Partner, (ii) by satisfying the other requirements of this Article 6 and (iii) upon an amendment to this Agreement and the Partnership’s Certificate of Limited Partnership recorded in the proper records of each jurisdiction in which such recordation is necessary to qualify the Partnership to conduct business or to preserve the limited liability of the Limited Partners. Any such consent by the General Partner may be evidenced by the execution by the General Partner of an amendment to this Agreement evidencing the admission of such person as a Substituted Limited Partner. The Limited Partners hereby consent and agree to such admission of a Substituted Limited Partner by the General Partner, and agree that the General Partner may, on behalf of each Limited Partner and on behalf of the Partnership, cause the Certificate of Limited Partnership of the Partnership to be appropriately amended, and recorded as so amended, and the books and records of the Partnership to appropriately reflect such admission, in the event of such admission.

(b) Each Substituted Limited Partner, as a condition to its admission as a Substituted Limited Partner, shall execute and acknowledge such instruments, in form and substance satisfactory to the General Partner, as the General Partner deems necessary or desirable to effectuate such admission and to confirm the agreement of the Substituted Limited Partner to be bound by all the terms and provisions of this Agreement. Further, each Limited Partner agrees, upon the request of the General Partner, to execute such certificates or other documents and perform such acts as the General Partner deems appropriate to preserve the limited liability status of the Partnership after the completion of any Transfer of Interest(s)

(c) Each Limited Partner hereby agrees to indemnify the Partnership and each other Limited Partner against any loss, damage, cost or expense (including, without limitation, tax liabilities or loss of tax benefits) arising directly or indirectly as a result of any Transfer or proposed Transfer by such Limited Partner in violation of this Article 6.

Section 6.04. Transfer of Interests by General Partner.

To the extent permissible under applicable law, nothing in this Agreement shall be deemed to prevent the merger of the General Partner with another corporation, limited liability company, limited partnership or other entity, the reorganization of the General Partner into or with any other corporation, limited liability company, limited partnership or other entity, the transfer of all equity interests in, or all or substantially all of the assets of, the General Partner or the assumption of the rights, duties (including status as the manager of the Partnership) and liabilities of the General Partner by, in the case of a merger, reorganization or consolidation, the surviving entity by operation of law or, in the case of a transfer of equity interests in or assets of the General Partner, the transferee of such equity interests or assets.

ARTICLE 7 DURATION AND TERMINATION OF PARTNERSHIP

Section 7.01. Duration.

The Partnership shall continue in perpetuity, unless sooner terminated by the General Partner. The Partnership may be terminated earlier, at any time, by the General Partner or otherwise in accordance with applicable law.

Section 7.02. Termination.

(a) At the time a termination has occurred in accordance with Section 7.01:

(i) the General Partner may either appoint:

(1) an unaffiliated third party or

(2) itself or one or more Affiliates to serve as liquidator to oversee the winding up process of the Partnership’s affairs in an orderly manner.

(ii) the General Partner (or any duly appointed liquidator, as the case may be) shall, within a reasonable time period after completion of a final audit of the Partnership’s books and records, make distributions out of the Partnership’s net assets in the following manner and order:

(1) to creditors, including Limited Partners or former Limited Partners who are creditors, to the extent permitted by law, in satisfaction of the liabilities of the Partnership (whether by payment or by establishment of reserves), with such liabilities to be paid by the Partnership, to the extent permitted by applicable law; and

(2) to the Limited Partners in the proportion of their respective Ownership Percentage.

(b) Notwithstanding the foregoing, upon dissolution of the Partnership, the General Partner or other liquidator of the Partnership, in its sole discretion, shall have the authority to place the Partnership’s assets, or any portion thereof, in a trust or some other arrangement rather than distribute such assets, or any portion thereof, in accordance with the above. The investments therein and any proceeds from a disposition of such investments will be distributed to the Limited Partners when appropriate, as determined by the General Partner or other liquidator in its sole and absolute discretion.

(c) The General Partner or any liquidator appointed in accordance with Section 7.02(a)(ii) above may, upon a decision to terminate of the Partnership, take any further action permitted by applicable law in furtherance of the orderly liquidation of the assets of the Partnership.

(d) The priorities identified among creditors in Section 7.02(b) are subject to applicable law and contractual rights or remedies of creditors of the Partnership in respect of liabilities owed to such creditors.

ARTICLE 8 EXCHANGE OF INTERESTS

Section 8.01. Right to Exchange for Parent Common Stock.

(a) Parent agrees to exchange shares of its common stock, par value $0.01 per share or such other securities that may be issued upon the exchange of the Preferred Stock (“Parent Common Stock”), on the terms and conditions provided in this Article 8.

(b) The number of shares of Parent Common Stock that will be issued by Parent to a Limited Partner who elects to exchange its Interests for shares of Parent Common Stock shall be determined as if the Capital Contributions by such Limited Partner were used to purchase shares of Preferred Stock in the offering described in the Memorandum and such Limited Partner were exchanging such shares of Preferred Stock in accordance with the terms of such Preferred Stock as set forth in the certificate of designations of the Preferred Stock. Accordingly, if a Limited Partner invested $100,000 as its Capital

Contribution in the Partnership, then such Limited Partner shall be deemed to have purchased 10,000 shares of Preferred Stock and have the right to exchange its Interests in accordance with the terms of the certificate of designation of the Preferred Stock, mutatis mutandis (with applicable conforming changes). The certificate of designation of Clearday for its Preferred Stock is in the form attached hereto as Exhibit B, it being acknowledged that Clearday may make such changes prior to the First Closing Date that are not adverse to a holder of Preferred Stock in any material respects and that are not inconsistent with the terms of the Preferred Stock described in the Memorandum.

(c) Each Limited Partner may exercise its right to exchange its Interests for shares of Parent Common Stock by providing such notices and delivering an assignment of Interests to the Partnership in accordance with the terms of the certificate of designation of the Preferred Stock, mutatis mutandis.

Section 8.02. Reservation of Shares of Parent Common Stock.

Parent shall reserve and maintain a reserve from its authorized and unissued shares of Parent Common Stock such number of shares of Parent Common Stock that are subject to issuance upon exchange of all outstanding shares of Preferred Stock and all Interests held by the Limited Partners (other than the Interests held by Clearday).

ARTICLE 9 REDEMPTION

Section 9.01. Mandatory Redemption and Recapitalization.

(a) On the date that is thirty (30) business days after the date that is ten (10) years after the date (July 6, 2021) of last closing of the offering described in the Memorandum, the Partnership shall effect a redemption and recapitalization of all of the Interests of the Limited Partners. The redemption price for such Interests shall be equal to the Capital Contribution made by such Limited Partners less the amount, if any, of the Deemed Capital Distributions to such Limited Partners. Notwithstanding the foregoing, each Limited Partner shall receive a notice that is delivered not later than thirty (30) business days prior to the date of any such redemption described above to the effect that such Limited Partner may elect to exchange such Limited Partner’s Interests in accordance with Article 8 prior to the effective date of such redemption. Any such payment for such redemption may be at the option of the Partnership in cash or Clearday Common Stock valued at the 20 day volume weighted average closing price of such common stock on the exchange or trading market for such common stock as of the date of such redemption.

(b) For the purposes of this Agreement, the following capitalized terms shall have the respective meanings set forth below.

(i) “Deemed Capital Distributions” shall mean the distributions to the Limited Partners in excess of the Stated Distribution Rate on the Capital Contributions of the Limited Partners.

(ii) “Stated Distribution Rate” shall mean a rate equal to 10.25%, per annum, compounded annually.

(c) From and after the redemption of the Interests provided in 9.01(a), the sole partnership interests in the Partnership shall be the general partnership interests held by the General Partner. The Partnership shall cause a recapitalization of the partnership interests in the Partnership so that effective on the date of the redemption of the Interests in the Partnership in accordance with Section 9.01(a), the Partnership shall: (i) issue limited partnership interests to Clearday and amend this Agreement so that all limited partnership interests in the Partnership are held by Clearday, or (ii) convert the Partnership to a Delaware limited liability company that is wholly owned by Clearday on such terms and conditions as determined by the General Partner.

ARTICLE 10 REPORTS TO LIMITED PARTNERS; BOOKS AND RECORDS

Section 10.01. Clearday and Parent.

Each Limited Partner (other than Clearday) shall receive a copy of each report that Clearday or Parent provides to its stockholders. Notwithstanding the forgoing, if a report that would be required to be delivered to a Limited Partner is filed with the SEC by Parent or any of its Affiliates, then such report shall be deemed to have been duly delivered by the Partnership to the Limited Partners.

Section 10.02. Additional Information to Limited Partners.

(a) As soon as practicable following completion of the calendar year, but not later than the date required by the Code, the Partnership shall cause to be prepared and mailed to each Limited Partner, as of the end of such fiscal year, a form K-1 or successor form.

(b) The General Partner shall provide such information as reasonably requested by a Limited Partner to determine that the Partnership qualifies as a “qualified opportunity fund” under the TCJA.

Section 10.03. Books and Records.

At all times during the continuation of the Partnership, the General Partner shall keep or cause to be kept full and true books of account of the business of the Partnership. All of said books of account, together with an executed copy of the Certificate of Limited Partnership, and any amendments thereto, shall at all times be maintained at the principal offices of the Partnership, and shall be open to the inspection and examination by any Limited Partner or his representative at such time during normal business hours as may be mutually convenient to the General Partner and such Limited Partner.

Section 10.04. Partnership Representative.

The General Partner shall be the “partnership representative” within the meaning of Section 6223 of the Code (and any similar provisions under any applicable state or local or foreign tax laws) (the “Partnership Representative”). The Partnership Representative shall have the right to retain professional assistance in respect of any audit of the Partnership and all expenses and fees incurred by the Partnership Representative on behalf of the Partnership as Partnership Representative shall be reimbursed by the Partnership. The Partnership shall, or the General Partner shall cause the Partnership to, to the extent eligible, make the election under Section 6221(b) of the Code with respect to determinations of adjustments at the Partnership level and take any other action such as disclosures and notifications necessary to effectuate such election. If the election described in the preceding sentence is not available, to the extent applicable, the Partnership shall or the General Partner shall cause the Partnership to make the election under Section 6226(a) of the Code with respect to the alternative to payment of imputed underpayment by partnership and take any other action such as filings, disclosures and notifications necessary to effectuate such election.

ARTICLE 11 ERISA AND SIMILAR MATTERS

Section 11.01. General.

If, to the extent, and at such times as any assets of the Partnership are deemed to be “plan assets” within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), of any Limited Partner that is an employee benefit plan governed by ERISA, the General Partner will be, and hereby acknowledges that it will be considered to be, a fiduciary within the meaning of Section 3(21) of ERISA as to that Limited Partner. In such an event, or if any partner, employee, agent or Affiliate of the General Partner, is ever held to be a fiduciary of any Limited Partner, then, in accordance with Sections 405(b)(1), 405(c)(2) and 405(d) of ERISA, the fiduciary responsibilities of that Person shall be limited to the person’s duties in administering the business of the Partnership, and the Person shall not be responsible for any other duties to such Limited Partner, specifically including evaluating the initial or continued appropriateness of this investment in the Partnership under Section 404(a)(1) of ERISA.

Section 11.02. ERISA Matters.

(a) Each Limited Partner that is an “employee benefit plan” or that is an entity that is deemed to hold “plan assets” (an “ERISA Partner”) within the meaning of, and subject to the provisions of ERISA, hereby (i) acknowledges that it is its understanding that neither the Partnership, the General Partner, nor any of the Affiliates of the General Partner, are “fiduciaries” of such Limited Partner within the meaning of ERISA by reason of the Limited Partner investing its assets in, and being a Limited Partner of, the Partnership; (ii) acknowledges that it has been informed of and understands the investment objectives and policies of, and the investment strategies that may be pursued by, the Partnership; (iii) acknowledges that it is aware of the provisions of Section 404 of ERISA relating to the requirements for investment and diversification of the assets of employee benefit plans and trusts and subject to ERISA; (iv) represents that it has given appropriate consideration to the facts and circumstances relevant to the investment by that ERISA Partner’s plan in the Partnership and has determined that such investment is reasonably designed, as part of such portfolio, to further the purposes of such plan; (v) represents that, taking into account the other investments made with the assets of such plan, and the diversification thereof, such plan’s investment in the Partnership is consistent with the requirements of Section 404 and other provisions of ERISA; (vi) acknowledges that it understands that the current distribution of cash will not be a primary objective of the Partnership; and (vii) represents that, taking into account the other investments made with the assets of such plan, the investment of assets of such plan in the Partnership is consistent with the cash flow requirements and funding objectives of such plan.

(b) Notwithstanding any other provision of this Agreement to the contrary, each ERISA Partner upon demand by the General Partner shall withdraw from the Partnership or Transfer its Interests to another Person or exercise its right to exchange its Interests into Parent Conversion Stock as provided in this Agreement, in whole or in part, at the time and in the manner hereinafter provided, that either the ERISA Partner or the General Partner shall obtain an opinion of counsel (which counsel shall be reasonably acceptable to the General Partner) to the effect that, as a result of applicable statutes, regulations, case law, administrative interpretations, or similar authority (i) the continuation of the ERISA Partner as a Limited Partner of the Partnership or the conduct of the Partnership will result, or there is a material likelihood the same will result, in a material violation of ERISA, or (ii) all or any portion of the assets of the Partnership constitute assets of the ERISA Partner for the purposes of ERISA and are subject to the provisions of ERISA to substantially the same extent as if owned directly by the ERISA Partner. In the event of the issuance of such opinion of counsel, a copy of such opinion shall, if required by the General Partner, be given to all the ERISA Partners, together with the written demand of the General Partner for the ERISA Partner to withdraw or so Transfer its Interests, in whole or in part. Thereupon, unless the General Partner is able to eliminate the necessity for such withdrawal or Transfer to the reasonable satisfaction of the ERISA Partner and the General Partner, whether by correction of the condition giving rise to the necessity of such Limited Partner’s withdrawal or Transfer of Interests, or the amendment of this Agreement, or otherwise, such Limited Partner shall withdraw or Transfer its interest in the Partnership to the extent demanded by the General Partner, such withdrawal or Transfer to be effective upon the last day of the fiscal quarter during which such written notice and opinion is received.

(c) The Limited Partner that withdraws or Transfers its Interest in the Partnership under this Article 11 shall be entitled to receive within one hundred twenty (120) days after the date of such withdrawal or Transfer an amount equal to the fair market value of such Partner’s Interest subject to such withdrawal or Transfer as of the effective date of such withdrawal or Transfer, as determined by the General Partner in good faith; provided, that (i) the General Partner shall provide such Limited Partner with a notice of its fair market valuation of such Interest; and (ii) if such Limited Partner objects to such fair market valuation of such Interest within ten (10) Business Days after receipt of such notice, then the fair market value of such Limited Partner’s Interest subject to such withdrawal or Transfer shall be conclusively determined by an independent qualified appraiser proposed by such Limited Partner and approved by the General Partner (which approval shall not be unreasonably withheld, delayed or conditioned).

(d) Any distribution or payment to a withdrawing Limited Partner pursuant to this Section 11.02: (i) may, as determined by the General Partner, be made in cash, in securities, in the form of a promissory note, the terms of which shall be mutually agreed upon by the General Partner and the withdrawing Limited Partner, or any combination thereof (which agreement shall not be unreasonably withheld, delayed or conditioned); and

(ii) shall reduce the amount of the Capital Contributions of such Limited Partner and the Preferred Return thereon, but not below zero.

Section 11.03. Governmental Plan Partners.

Notwithstanding any other provision of this Agreement to the contrary, any Limited Partner that is a “governmental plan” as defined in Title 29, section 1002(32) of the United States Code (a “Governmental Plan Partner”) may elect (and upon the approval of the General Partner shall be permitted) to withdraw from the Partnership, or upon demand by the General Partner shall withdraw from the Partnership, in each case, in whole or in part to the extent demanded by the General Partner, if either the Governmental Plan Partner or the General Partner shall obtain an opinion of counsel (which counsel shall be reasonably acceptable to the General Partner) to the effect that the Governmental Plan Partner, the Partnership, or the General Partner (including its Affiliates) would be in material violation of any law, statute, regulation or ordinance applicable to the Governmental Plan Partner, the Partnership or the General Partner as a result of the Governmental Plan Partner continuing as a Limited Partner. In the event of the issuance of the opinion of counsel referred to in the preceding sentence, the withdrawal of and disposition of the Governmental Plan Partner’s interest in the Partnership shall be governed by the last two sentences of Section 11.02(b) and Section 11.02(c) and Section 11.02(d), as if the Governmental Plan Partner were an ERISA Partner.

Section 11.04. Private Foundation Partners.

Notwithstanding any other provision of this Agreement to the contrary, any Limited Partner that is a “private foundation” as described in Section 509 of the Code (a “Private Foundation Partner”), may elect (and upon the approval of the General Partner shall be permitted) to withdraw from the Partnership, or upon demand by the General Partner shall withdraw from the Partnership, in each case, in whole or in part to the extent demanded by the General Partner, if either the Private Foundation Partner or the General Partner shall obtain an opinion of counsel (which counsel shall be reasonably acceptable to the General Partner) to the effect that such withdrawal is necessary in order for the Private Foundation Partner to avoid (a) excise taxes imposed by Subchapter A of Chapter 42 of the Code (other than Sections 4940 and 4942 thereof), or (b) a material breach of the fiduciary duties of its trustees under any federal or state law applicable to private foundations or any rule or regulation adopted thereunder by any agency, commission, or authority having jurisdiction. In the event of the issuance of the opinion of counsel referred to in the preceding sentence, the withdrawal of and disposition of the Private Foundation Partner’s interest in the Partnership shall be governed by the last two sentences of Section 11.02(b) and Section 11.02(c) and Section 11.02(d), as if the Private Foundation Partner were an ERISA Partner.

ARTICLE 12 MISCELLANEOUS

Section 12.01. Entire Agreement.

This Agreement (i) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof; (ii) shall be binding on the executors, administrators, estates, heirs and legal successors and representatives of each of the Limited Partners; (iii) shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to its conflict of law principles; and (iv) may be executed in several counterparts with the same effect as if the parties executing the several counterparts had all executed one counterpart; provided, however, that each separate counterpart shall have been executed by the General Partner. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed as if such invalid or unenforceable provision were omitted.

Section 12.02. Power of Attorney.

(a) Each Limited Partner does hereby constitute and appoint the General Partner, and any member, manager, director or officer of the General Partner, as his true and lawful representative and attorney-in-fact, in such Limited Partner’s name, place and stead, to make, execute, sign, acknowledge, swear to and file:

(i) a Certificate of Limited Partnership of the Partnership and all amendments thereto as may be required under the Act;

(ii) any Amendment to this Agreement duly approved as provided in Section 12.03(a) or by operation of Section 12.03(b);

(iii) any and all instruments, certificates, and other documents which may be deemed necessary or desirable to effect the winding-up and termination of the Partnership (including, but not limited to, a Certificate of Cancellation of the Certificate of Limited Partnership); and

(iv) any business certificate, fictitious name certificate, amendment thereto, or other instrument or document of any kind necessary or desirable to accomplish the business, purposes and objectives of the Partnership, or which is required by any applicable federal, state or local law.

(b) This power of attorney is coupled with an interest, is irrevocable, and shall survive, and shall not be affected by, the subsequent adjudication of incompetency, bankruptcy or death of any of the Limited Partners, and shall be binding upon any assignee thereof.

(c) Such representative and attorney-in-fact shall not, however, have any right, power or authority to amend or modify this Agreement when acting in such capacity.

Section 12.03. Amendments to Agreement; Actions by Written Consent; Consent by Silence; Certain Consent.

(a) In accordance with Section 12.03(b), the terms and provisions of this Agreement may be modified or amended at any time with the written consent of Limited Partners having an aggregate Ownership Percentages (other than the Ownership Percentages of Clearday) in excess of fifty percent (50%) and the written consent of the General Partner, insofar as is consistent with the laws governing this Agreement; provided, however, that, without the consent of the Limited Partners, the General Partner may

(i) amend the Partnership’s records to reflect changes validly made in the Limited Partners of this Partnership and the Capital Contributions and Ownership Percentages of the Limited Partner or

(ii) amend or modify this Agreement

(1)

to form, qualify or continue the Partnership as a limited partnership in all jurisdictions in which the Partnership conducts or plans to conduct business,

(2)

to satisfy any requirements, conditions, guidelines, or options contained in any opinion, directive, order, ruling or regulation of the SEC, the Internal Revenue Service, Commodity Futures Trading Commission, National Futures Association, FINRA, or any other federal or state agency, or in any federal or state statute, compliance with which the General Partner deems to be in the best interest of the Partnership, including, without limitation, any amendment or modification necessary to prevent the Partnership from in any manner being deemed to be an “Investment Company” subject to the provisions of the Investment Company Act of 1940, as amended, to ensure that the Partnership will not be treated as a corporation for federal income tax purposes, or to comply with provisions of the Advisers Act, as amended, if necessary,

(iii) to change the name of the Partnership,

(iv) to make any change necessary to reflect

(1)

any change in the Act or

(2)

General Partner’s or any of its affiliates’ decision to register as an investment advisor under the Advisers Act, as amended, or

(v) to make any change that does not adversely affect the Limited Partners in any material respect or that is necessary or desirable to cure any ambiguity or correct or supplement any provision herein contained which may be incomplete or inconsistent with any other provision herein contained.

(b) Without the specific written consent of each Limited Partner affected thereby, no modification of or amendment to this Agreement shall (i) reduce the Capital Account of any Limited Partner; or (ii) amend the rights of the Limited Partner under this Section 12.03.

(c) All actions, votes or consents required or permitted to be taken by the Limited Partners will be taken by the written consent of Limited Partners holding in aggregate not less than the minimum Ownership Percentages specified herein as to the particular action, vote or consent. Notwithstanding the foregoing, for purposes of obtaining any such consent as to any matter proposed by the General Partner, the General Partner may, in the notice seeking consent of Limited Partners, require a response within a specified period (which will not be less than fifteen (15) days) and failure to give the General Partner written notice of opposition to the proposed action within that period will constitute a vote and consent to approve the proposed action. Except as otherwise expressly provided in the proposal for an action, that action will be effective immediately after the required signatures have been obtained or, if applicable, the expiration of the period within which responses were required, if that requirement was imposed and there were not votes cast against such action in the amount necessary to prevent the action from becoming effective.

Section 12.04. Notices.

Each notice relating to this Agreement shall be in writing and delivered by hand, by mail or by electronic mail. All notices to the Partnership shall be addressed to its principal office. All notices addressed to a Limited Partner shall be addressed to such Limited Partner at his address set forth in the Schedule. Any Limited Partner may designate a new address by notice to that effect given to the Partnership. A notice shall be deemed to have been effectively given when mailed to the proper address or delivered by hand.

Section 12.05. Good Will.

No value shall be placed on the name or good will of the Partnership. The good will and name of the Partnership shall be and remain the exclusive possession of the General Partner.

Section 12.06. Additional Instruments.

Each Limited Partner hereby agrees upon the request of the General Partner to execute and deliver, from time to time, such other certificates or other documents as may be necessary or advisable in connection with the Partnership.

Section 12.07. Headings.

The titles of the Articles and the headings of the Sections of this Agreement are for convenience of reference only, and are not to be considered in construing the terms and provisions of this Agreement.

Section 12.08. Other Businesses.

The General Partner and any Limited Partner, or any stockholder, officer, director, partner, manager, Affiliate or agent of the General Partner or any Limited Partner, may engage in or possess any interest in other business ventures of any kind, nature or description, independently or with others, including, but not limited to, investments in, and financing, acquiring and disposing of, Securities, investments and management counseling, brokerage services, or serving as officers, directors, advisors or agents of other companies, whether such ventures are competitive with the Partnership or otherwise, and neither the Partnership nor the Limited Partners shall have any rights or obligations by virtue of this Agreement or the Partnership relationship created hereby in or to such independent ventures or the income or profits or losses derived therefrom.

Section 12.09. Conflicts Derived by Dual Status of the General Partner.

In the event of any inconsistency or conflict between the rights and obligations of the General Partner as the general partner and as a Limited Partner under this Agreement, the rights and obligations of the General Partner shall control.

Section 12.10. Governing Law.

It is the intention of the Limited Partners that the internal laws of the State of Delaware (excluding the conflicts of laws provisions thereof), as the same may be amended from time to time, shall govern the validity of this Agreement, the construction of its terms, interpretation of the rights and duties of the Limited Partners, and all disputes arising from any of the foregoing.

Section 12.11. Venue; Waiver of Jury Trial.

(a) Subject to Section 12.11(b), each Limited Partner and the General Partner, on behalf of itself and/or the Partnership, hereby (i) agrees that any and all litigation arising out of this Agreement shall be conducted only in state or federal courts located in the State of Delaware, (ii) agrees that such courts shall have the exclusive jurisdiction to hear and decide such matters, (iii) expressly waives any right to a trial by jury in any action or proceeding to enforce or defend any right, power or remedy under or in connection with this Agreement or arising from any relationship existing in connection with this Agreement, (iv) agrees that any such action, shall be tried before a court and not before a jury; and (v) consents to service of process by personal service in any manner in which notice may be delivered hereunder in accordance with Section 12.04.

(b) Each Limited Partner hereby submits to the personal jurisdiction of such courts described in Section 12.11(a) and waives any objection such Limited Partner may now or hereafter have to venue or that such courts are inconvenient forums.

Section 12.12. Adjustment of Basis of Partnership Property.

In the event of a distribution of Partnership property to a Limited Partner or an assignment or other transfer (including by reason of death) of all or part of the interest of a Limited Partner in the Partnership, at the request of a Limited Partner, the General Partner, in its discretion, may cause the Partnership to elect, pursuant to Section 754 of the Code, or the corresponding provision of subsequent law, to adjust the basis of the Partnership property as provided by Section 734 and 743 of the Code.

Section 12.13. Representations, Warranties, Covenants and Understandings of Limited Partners.

The representations, warranties, covenants, and understandings of each Limited Partner, as set forth in a subscription agreement and related documents, if any, completed and signed by each Limited Partner prior to its admission to the Partnership are incorporated herein by reference and made a part hereof as if originally contained herein.

Section 12.14. Opportunity Zone Investment

Each Limited Partner, by purchasing or taking any Interests, acknowledges that such Limited Partner is making an investment in an qualified opportunity fund under the TCJA.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date first set forth above.

General Partner:
Clearday Impact Management LLC

By:
Name:
Title:

Limited Partners:

Each person who shall sign a Limited Partner Signature Page in the form attached in the Subscription Agreement and who shall be accepted by the General Partner to the Partnership as a Limited Partner.

As to all matters in Article 8

and Article 12

Clearday, Inc.

By:
Name:
Title:

Exhibit 10.27

PROMISSORY NOTE

$2,630,000.00

September 10, 2021

New York, NY

FOR VALUE RECEIVED, Clearday, Inc., a Delaware corporation which was formerly known as Superconductor Technologies Inc. (along with its subsidiaries, “Borrower”), promises to pay to A.G.P./Alliance Global Partners (“Lender”), the principal sum first set forth above (the “Loan Amount”) at Lender’s office, or at such other place as Lender may from time to time designate in writing, in lawful money of the United States, together with all accrued interest thereon as provided in this Promissory Note (this “Note”), and all other amounts due and payable under this Note, as they may be amended, restated, supplemented, or otherwise modified from time to time in accordance with their terms. This Note is issued further to the terms and conditions of that that certain Advisory Agreement dated July 25, 2019 by and between Lender and AIU Alternative Care, Inc., an acronym of Borrower, as amended by an Addendum to Advisory Agreement dated as of November 1, 2019 (the “Advisory Agreement”); capitalized terms not otherwise defined herein shall have the same meaning as defined in the Advisory Agreement and is payment for the services under the Advisory Agreement as of the date of this Note.

1. Acknowledgement of Obligations. The Borrower has effected a merger further to an Agreement and Plan of Merger (as amended from time to time, the “Merger Agreement”) by and among Superconductor Technologies Inc. (“Superconductor”), AIU Special Merger Company, Inc., a Delaware corporation and wholly-owned subsidiary of Superconductor (“Merger Sub”), and Allied Integral United, Inc., a Delaware corporation that conducts its business under the trade name Clearday (“AIU”) further to which Merger Sub merged with and into AIU, with AIU continuing as a wholly-owned subsidiary of Superconductor, further to which AIU is currently required to have paid Lender an aggregate fee that is equal to the Loan Amount (the “Deferred Fee Amount”). Borrower hereby acknowledges, confirms and agrees that as of the date hereof, Borrower is indebted to Lender under the Advisory Agreement in an amount equal to the Deferred Fee Amount, plus any other fees, costs, expenses and other charges now or hereafter payable under the Advisory Agreement, notwithstanding that the Advisory Agreement was executed by AIU Alternative Care, Inc. (collectively, the “Obligations”) and such Obligations are unconditionally owed by Borrower to Lender, without offset, defense or counterclaim of any kind, nature or description whatsoever. Superconductor hereby assumes the Obligations of AIU Alternative Care, Inc. and AIU under the Advisory Agreement and the Lender, as party to the Advisory Agreement, permits the full assignment of all rights of AIU Alternative Care, Inc. and AIU under the Advisory Agreement to Superconductor.

2. Interest. Except as otherwise provided in this Note, the outstanding Loan Amount shall accrue interest at a rate per annum equal to two percent (2%) (the “Interest Rate”) from the Initial Payment Date (as defined below) until the entire Loan Amount, all accrued and unpaid interest thereon, and all other amounts and indebtedness payable under this Note, are paid in full, whether at maturity, upon acceleration, by prepayment, or otherwise.

3. Computation of Interest. All computations of interest shall be made on the basis of the actual number of days elapsed in a year of 365 days. Interest shall commence to accrue on the Loan Amount on the Initial Payment Date, and shall not accrue on the Loan Amount on the day on which it is paid if payment is made to Lender prior to 12:00 p.m. Pacific time. Any payment of principal on this Note after 12:00 p.m. Pacific time on any Business Day shall be credited against this Note on the next Business Day and interest will continue to accrue until so credited. As used herein, “Business Day” means a day other than a Saturday, Sunday, or other day on which commercial banks in New York, New York are authorized or required by law to close.

4. Scheduled Payments and Due Date.

4.1 The Borrower will make payments as provided in this Section 4:

4.2 On or prior to October 8, 2021 (the “Initial Payment Date”), the Borrower shall make a payment of $60,000 against amounts due under this Note.

4.3 From and after the Initial Payment Date, monthly payments of $30,000 shall be made on the 8th calendar day of each subsequent month.

4.4 On the earlier of (i) the date that is one year from the Initial Payment Date (the “Maturity Date”) and (ii) the date on which all amounts under the Note shall become due and payable pursuant to Section 8, the aggregate amount of the then outstanding and unpaid Loan Amount, together with all accrued and unpaid interest thereon, shall become immediately due and payable in full.

5. Prepayments. Borrower may make voluntary prepayments of the principal balance of this Note, in full at any time or in part from time to time, without premium or penalty; provided, however, that Borrower shall be required to prepay the then outstanding principal balance of this Note with 50% of the net proceeds (which shall be deemed gross proceeds minus direct selling costs, expenses and commissions) received, directly or indirectly, by Borrower and/or its subsidiaries from the issuance of any equity or equity-linked financing (including convertible debt), less any selling commissions.

6. Application of Payment. All payments made hereunder shall be applied : first, to the payment of any fees or charges outstanding hereunder and/or under the Advisory Agreement (that have not been paid by this Note) as determined by Lender in its sole discretion; second, to accrued interest at the Interest Rate or the Default Rate, as applicable; and third, to the payment of the principal amount outstanding under this Note. However, after an Event of Default, all payments made hereunder may be applied by Lender in such order, priority and in such proportion as Lender shall elect in its sole discretion. No amount repaid hereunder may be re-borrowed.

7. Default Interest. If any amount payable under this Note is not paid when due (without regard to any applicable grace periods), whether at the stated maturity, by acceleration or otherwise, the outstanding Loan Amount of this Note shall bear interest at the Interest Rate plus 5% (the “Default Rate”) from the date payment was due until such delinquent payment is paid in full. Borrower acknowledges that it would be extremely difficult or impracticable to determine Lender’s actual damages resulting from any late payment or default, and such interest at the Default Rate is a reasonable estimate of those damages and does not constitute a penalty.

8. Events of Default. The occurrence of any of the following events shall constitute an event of default (an “Event of Default”) under this Note:

8.1 Failure to Pay. Borrower fails to pay any principal amount, interest or any other amount when due under this Note.

8.2 Default Under any A.G.P. Agreement. Borrower fails to perform any other obligation set forth in this Note or the Advisory Agreement beyond the expiration of all applicable notice and grace periods.

8.3 Assignment for the Benefit of Creditors. Borrower makes an assignment for the benefit of creditors, or generally fails to pay its debts as they become due and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such indebtedness.

8.4 Bankruptcy. (i) Borrower commences any case, proceeding, petition, or other action seeking appointment of a receiver, liquidator or trustee for Borrower or for all or substantially all of Borrower’s assets; (ii) Borrower is adjudicated as bankrupt or insolvent; (iii) any petition for bankruptcy, reorganization or other arrangement pursuant to federal bankruptcy law, or any similar federal or state law, is filed by or against, consented to, or acquiesced in by, Borrower; or (iv) any proceeding for the dissolution or liquidation of Borrower is instituted; provided, however, that if such appointment, adjudication, petition or proceeding (each, a “Bankruptcy Action”) was involuntary and not consented to by Borrower, then no Event of Default will be deemed to have occurred if such Bankruptcy Action is discharged, stayed or dismissed within 60 days.

9. Remedies. Upon the occurrence of an Event of Default and at any time thereafter and during the continuance of such Event of Default, (i) the parties expressly understand and agree that the Deferred Fee Amount shall not be in any way reduced (other than by the Initial Payment) or subject to this Note and the entire unpaid balance on the Deferred Fee Amount shall then again become immediately due and payable and (ii) the Lender may exercise any or all of its rights, powers, or remedies under the Advisory Agreement or applicable law or available in equity. The remedies of Lender, as provided in this Note and the Advisory Agreement, shall be cumulative and concurrent and may be pursued singly, successively, or together, at the sole discretion of Lender, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

10. No Waiver. No failure to exercise and no delay in exercising on the part offender, of any right, remedy, power, or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. No waiver by Lender of any of its rights or of any such breach, default, or failure of condition shall be effective, unless the waiver is expressly stated in a writing signed by Lender.

11. Waivers. Borrower hereby waives presentment, demand for payment, protest, notice of dishonor, notice of protest or nonpayment, notice of intent to accelerate, notice of acceleration of maturity, and diligence in connection with the enforcement of this Note or the taking of any action to collect sums owing hereunder. Borrower hereby further waives and renounces, to the fullest extent permitted by law, all rights to the benefits of any statute of limitations and any moratorium, reinstatement, marshaling, forbearance, valuation, stay, extension, redemption, appraisement, exemption, and homestead now or hereafter provided by the laws of the United States of America and of each state thereof, both as to itself and in and to all of its property, real and personal, against the enforcement and collection of the obligations evidenced by this Note or the Advisory Agreement.

12. Expenses. Borrower shall reimburse Lender on demand for all out-of-pocket costs, expenses, and fees (including expenses and fees of its counsel) incurred by Lender in connection with the collection of this Note and the enforcement of Lender’s rights hereunder and thereunder.

13. Governing Law. This Note and any claim, controversy, dispute, or cause of action (whether in contract, equity, tort, or otherwise) based upon, arising out of, or relating to this Note and the transactions contemplated hereby shall be governed by the laws of the State of New York without giving effect to its principles of choice of law or conflicts of law.

14. Jurisdiction and Venue.

14.1 Borrower hereby irrevocably and unconditionally: (a) agrees that any legal action, suit, or proceeding arising out of or relating to this Note may be brought in state or federal courts located in the County of New York, State of New York; and (b) submits to the jurisdiction of any such court in any such action, suit, or proceeding. Final judgment against Borrower in any action, suit, or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment.

14.2 Borrower irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Note in any court referred to in Section 14.1 and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

15. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS NOTE, THE ACKNOWLEDGEMENT AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, EQUITY, TORT, OR ANY OTHER THEORY. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN BY BORROWER, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

16. Miscellaneous.

16.1 Time of Essence. Time shall be of the essence with respect to all of Borrower’s obligations under this Note.

16.2 Integration. This Note and the documents described herein constitute the entire understanding of Borrower and Lender with respect to the matters discussed herein, and supersede all prior and contemporaneous discussions, agreements, and representations, whether oral or written. This Note may only be modified in a writing signed by Lender, or its loan servicing agent, and Borrower.

16.3 Severability. If any term or provision of this Note is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Note or invalidate or render unenforceable such term or provision in any other jurisdiction.

16.4 Successors and Assigns. This Note may be assigned or transferred, in whole or in part, by Lender to any person at any time without notice to or the consent of Borrower. Borrower may not assign or transfer this Note or any of its rights hereunder without the prior written consent of Lender. This Note shall inure to the benefit of and be binding upon the parties hereto and their permitted assigns.

16.5 Sale of Note. Lender shall have the absolute and unrestricted right at any time or from time to time, and without notice to or consent by Borrower, any guarantor, or any other person, to sell or assign all or any portion of this Note, and/or may grant or sell participation interests therein, to one or more persons. Borrower shall, and shall cause any guarantor and indemnitor to, execute, acknowledge, and deliver any and all instruments reasonably requested by Lender to satisfy any purchaser or participant that the unpaid indebtedness evidenced by this Note is outstanding and payable without defense, offset, or counterclaim of any kind on the terms and provisions set out in this Note and the Acknowledgement Agreement. Such assignee(s) or participant(s) shall have the rights and benefits with respect to this Note as such assignee(s) or participant(s) would have if they were the Lender originally named in this Note.

16.6 Notice. All notices required or permitted by this Note shall be in writing and shall be deemed to have been duly given when delivered against receipt, or when deposited in the United States mail, registered mail, postage pre-paid, return receipt requested, addressed to Borrower at 8800 Village Drive, 2nd Floor, San Antonio, Texas 78217, and the Lender at 590 Madison Ave 28th Floor, New York, NY 10022. Either party may change the address to which notices are to be sent by giving notice of such change of address in conformity with the foregoing provisions

Exhibit 10.28.1

Exhibit 10.28.2

Exhibit 10.28.3

Exhibit 10.28.4

Exhibit 10.29.1

Advisory and Development Agreement

This Advisory and Development Agreement (this “Agreement”) is dated this 10^th day of August, 2021 (the “Effective Date”) is by and between Sterling Select II Advisory LLC, with offices at 111 Great Neck Road, Great Neck, NY 11021 (“Sterling Select”, also referred to as “Service Provider”); and Allied Integral United, Inc., with offices at 8800 Village Drive, Suite 106, San Antonio, TX 78217 and (“Clearday”, also referred to as “Service Recipient”, each of Sterling Select and Clearday are a “Party” and collectively, the “Parties”).

WHEREAS, Sterling Select (www.sterlingselect.com) is a venture development and investment platform with a close relationship with Sterling Equities (www.sterlingequities.com);

WHEREAS, Sterling Select provides a range of advisory services to drive shareholder value and advance the business operations, including the introduction of business opportunities to increase the sales and revenues, of their clients;

WHEREAS, Clearday has utilized its knowledge of the longevity market, elder care best-practices, and its significant experience in treating dementia, to develop and provide innovative, tech-enabled platform in alignment with the changing characteristics, expectations, and behaviors of the longevity consumer market;

WHEREAS, Sterling Select believes it has the capabilities and skills to help Clearday reach its goals and also assist Clearday in scaling its core business and also expand into delivering other healthcare content and solutions through Clearday’s platform, such as treating diabetes, drug and alcohol addiction and other care;

WHEREAS, Clearday desires to retain Sterling Select for services related to Clearday’s innovative core businesses, including its Clearday Clubs, Clearday at Home and cryogenic based atmosphere conditioning system, to build a strategic support relationship with Sterling Select and its Affiliates and explore other services, including those related to expanding out of said core businesses;

WHEREAS, Clearday is a party to an Agreement and Plan of Merger (the “Merger Agreement”) with Superconductor Technologies Inc. (“SCON”) and the other parties thereto, which provides for the acquisition of SCON by the holders of securities issued by Clearday and its subsidiaries through the merger of a subsidiary of SCON with and into Clearday with Clearday being the surviving entity in such merger (the “Merger”) and the issuance and reservation for issuance by SCON of its shares of common stock, par value $0.001 per share (“SCON Common Stock”);

WHEREAS, the Merger Agreement and the Merger are described in the S-4 registration statement that has been filed by SCON and the amendments and prospectus supplements thereto, Registration No. 333-256138 (the “Registration Statement”);

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of Sterling Select and Clearday agree as follows:

1. Services.

(a) Services.

(i) Service Provider shall provide, or cause one or more of its Affiliates to provide, to Service Recipient, and Service Recipient shall receive, the Services for the Term pursuant to the terms of this Agreement and its Exhibits A and B, which are attached hereto.

(ii) The term “Services” means to provide business development advice and services, including introductions to potential clients and strategic partners, with a focus on increasing sales and revenues and also creating pilot, testing, and evaluation opportunities for, in whole or in part, the Clearday Core Businesses with a primary focus in the geographic areas of the United States commencing initially in the areas of Palm Beach County, Florida and the Tri-State New York City metropolitan area (such areas, and as mutually agreed to in writing, are the “Priority Areas”. As part of the “Services” is the evaluation of the Service Recipient as a whole as a healthcare services delivery platform, or of the constituent parts of Clearday Core Business, whether proprietary or otherwise, including but not limited to market applications and receptivity, specifications and performance and interest by customers and strategic partner candidates.

(iii) The term “Clearday Core Businesses” means (i) the current businesses, efforts, and written plans regarding Clearday Clubs, and Clearday at Home, as currently described on Clearday’s websites, (ii) cryogenic based atmosphere (HVAC) conditioning system (also described or referred to as “oxygenator”), and (iii) such other businesses or services as may be from time to time mutually agreed to in writing by the Parties, each in their sole and absolute discretion.

(iv) In providing, or otherwise making available, the Services to Service Recipient, Service Provider may use its own personnel or the personnel of any of its Affiliates or of any consultant or subconsultant to each; provided, however, that Service Provider shall remain responsible for ensuring that its obligations with respect to such Services are satisfied with respect to all Services provided by such entities or persons. Each of Service Provider and any such Affiliates and such consultant or subconsultant shall be referred to as a “Service Provider Party”.

(v) Service Provider Parties may provide demonstrations and exhibits of the products and services of Clearday. However, unless otherwise agreed, no Service Provider Party may resell, license the use of or otherwise permit the use by others of any such products or services.

(b) Standard of Performance. Each Service Provider Party shall perform, or shall cause to be performed, all Services in a commercially reasonable manner. Without limiting the foregoing, the parties acknowledge that there is no assurance by any Service Provider Party that any Introduced Relationship of a Service Provider Party will consummate a transaction with Clearday or that any transaction terms will be on terms that Clearday considers acceptable.

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(c) Third Party Approvals. The Parties agree to cooperate in good faith and use commercially reasonable efforts, all at Clearday’s sole cost and expense, to obtain any necessary consent, authorization, order or approval of, or any exemption by, (each, a “Third Party Approval”) any Person that is not a party to this Agreement (a “Third Party”) required under any existing contract or agreement with a Third Party to allow the applicable Service Provider Party to perform, or cause to be performed, all Services to be provided by the Service Provider Parties hereunder; provided, however, that neither Party shall be required to accept any term or condition, commit to pay any amount, incur any obligation in favor of or offer or grant any accommodation (financial or otherwise), regardless of any provision to the contrary in the existing contract or agreement, to any Third Party to obtain any such Third Party Approval.

(d) Compliance with Laws. Subject to the terms and conditions of this Agreement, the Parties will comply, and will cause their Affiliates that they control and their and such Affiliates’ respective employees to comply, with all applicable laws applicable to its performance under this Agreement, including but not limited to the provision and receipt of the Services and the receipt of the compensation due hereunder. In connection with this Agreement, no Party shall knowingly take any action in violation of any such applicable law that results in liability being imposed on the other Party.

(e) Service Provider Party Expenses. Subject to Section 1(c), each Service Provider Party shall pay for all of its fees, costs and expenses incurred by it or any of its Affiliates in connection with the performance of the Services by the Service Provider Party. Notwithstanding the previous sentence, Sterling Select shall be permitted to receive reimbursement for any and all out of pocket expenses incurred, including reasonable travel and entertainment, provided that in each instance, all such expenses were incurred pursuant to the prior written approval of Clearday and submitted for reimbursement with customary receipts and invoices; all such reimbursements to be made within thirty (30) days of compliance with this Section 1(e).

(f) Force Majeure. No Service Provider Party shall be liable to Service Recipient for any interruption of service, any delays or any failure to perform under this Agreement caused, directly or indirectly, by matters or events occurring that are beyond the reasonable control of such Service Provider Party, including but not limited to strikes, work stoppages, riots, civil disobedience, accidents, acts of war or terrorism, civil or military disturbances and shutdowns, nuclear or natural catastrophes or acts of God, epidemics and pandemics, and interruptions, loss or malfunctions of any infrastructure matters including utilities, communications or computer (software and hardware) services (each a “Force Majeure Event”).

(g) Cooperation; Further Actions. Service Recipient and its Affiliates shall reasonably cooperate with each Service Provider Party to the extent necessary or appropriate to facilitate the performance of the Services in accordance with the terms of this Agreement and shall use reasonable best efforts to make available, and cause each of its Affiliates to make available, on a timely basis to any Service Provider Party all information and materials reasonably requested by such Service Provider Party to enable it to provide the Services hereunder. Without limiting the generality of the foregoing, Service Recipient shall, and shall cause its Affiliates to, at no cost to any Service Provider Party, use its commercially reasonable efforts to: (i) make available on a timely basis to any Service Provider Party all information and materials requested by such Service Provider Party to the extent reasonably necessary for the performance or receipt of the Services; (ii) upon reasonable notice, give or cause to be given to the Service Provider Parties reasonable access, during regular business hours and at such other times as are reasonably required, to the relevant premises and personnel to the extent reasonably necessary for the performance or receipt of the Services; and (iii) give Service Provider Parties reasonable access to utilize the information, facilities, personnel and assets of Service Recipient and its Affiliates to the extent commercially reasonably necessary for the performance or receipt of the Services.

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(h) Security Policies. Each Party agrees that its Representatives (as defined in the NDA) having access to the properties, facilities, infrastructure, personnel, software or other technology of the other Party and its Affiliates in connection with the performance, receipt or delivery of a Service, shall, and that it shall cause such of its Representatives having such access to, comply with all security policies, procedures and guidelines (including physical security, network access, internet security, confidentiality, protection of proprietary information, use of information technology resources and personal data security guidelines) of such other Party and its Affiliates that are made known or provided to such party reasonably in advance. Each Party shall ensure that any access described by this Section 1(h) shall be used by it and its Representatives having such access only for the purposes contemplated by, and subject to the terms of, this Agreement and the NDA.

(i) Advisory Capacity. During the Term, Service Provider shall act only in a support and advisory capacity to Service Recipient and Affiliates with respect to the Services. The Parties expressly agree that the arrangement established by this Agreement is not intended to be a delegation of Service Recipient’s or its Affiliates’ managerial or corporate responsibilities to any Service Provider Party. Without limiting the generality of the foregoing, nothing in this Agreement shall be construed to permit or authorize any Service Provider Party to make any decision or enter into any contract for or on behalf of Service Recipient or its Affiliates, which shall remain the sole responsibility of Service Recipient or its Affiliates.

2. Exclusive Service Provider.

(a) Scope and Term of Exclusive Services.

(i) During the Exclusivity Term and subject to the compliance with the Service Recipient Conditions (as defined below), Sterling Select shall not, directly or indirectly, provide services, in whole or in part, substantially similar to the Services expressly listed in Phase I and II of Exhibit A (but only with respect to the Clearday Core Business and only to that extent, regardless of whether the scope of Services has expanded pursuant to Phase II or III), to a Competitor of Clearday (such Services referred to as “Exclusive Services”).

(ii) The term for the Exclusive Service obligations provided in Section 2(a)(i) (the “Exclusivity Term”) shall be the period commencing on the date of this Agreement and expiring on the date provided below in this Section 2(a)(ii):

(A) If this Agreement has been terminated in accordance with Section 8(a)(i)(A) as a result of a breach by the Service Recipient or terminated in accordance with Section 8(a)(i)(B), then on the date of such termination unless a longer period of the Exclusivity Term is mutually agreed by the Parties in connection with such termination; or

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(B) If this Agreement has been terminated in accordance with Section 8(a)(i)(A) as a result of a breach by the Service Provider, then on the date that is six months after the date of such termination unless a longer period of the Exclusivity Term is mutually agreed by the Parties in connection with such termination; or

(C) If the Service Recipient Conditions, other than Section 2(b)(iii)(D), are not met, then on the date of such event; provided, that Service Recipient may extend the termination of the Exclusivity Term for a period of up to six months by continuing to pay the Monthly Advance and extending the term for the payment of the Revenue Share Payments by such additional period that the Monthly Advance is continued.

Notwithstanding the provisions of Section 2(a)(ii), the Exclusive Term shall terminate on the date that Service Recipient (on a consolidated basis) exits, sells, winds down or otherwise terminates its Clearday Core Businesses, including reducing the investment in the Clearday Core Businesses by more than 20% of the then current annual budget allocations, other than as a result of lack of capital or net available cash or it being evident that Clearday is continuing such businesses, then this Section 2 shall not apply with respect to such division or part of such Clearday Core Business/es.

(b) For purposes of this Agreement, the following capitalized terms shall have the respective meanings provided below:

(i) “Competitor” shall mean a Person who derives at least 50% of its gross revenues from services similar to any of the Clearday Core Businesses, individually or in the aggregate.

(ii) “Continued Equity Compensation Condition” shall mean that the volume weighted average closing price of SCON Common Stock for the twenty (20) trading days ending September 1, 2022, is less than 45% below the exercise price of Compensation Warrant.

(iii) “Service Recipient Conditions”: shall mean:

(A) the Merger has closed on a prior to the date that is sixty (60) days after the date of this Agreement;

(B) Service Recipient is in compliance with all applicable laws in all material respects;

(C) the Compensation Warrant is duly granted to Service Provider and assumed by SCON as of the closing of the Merger and the shares of SCON Common Stock that are issuable in accordance with the terms of the Compensation Warrant are registered under the Registration Statement as of the closing of the Merger;

(D) Service Recipient is not in breach of the terms of this Agreement or the NDA.

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3. Compensation.

In consideration of the Services and the commitments made hereunder by Service Provider, including the Exclusive Services, Service Recipient agrees to pay Service Provider the following:

(i) the payment of the Monthly Advance described in Exhibit B (the “Monthly Advance”);

(ii) the grant or issuance of the Compensation Warrants described on Exhibit B (the “Compensation Warrants”), including that the exercise price is equal to $11.00 per share payable in cash, a three year term and the vesting milestones or achievements described on Exhibit B, all as may be modified by the Parties from time to time;

(iii) the ability for Service Provider to gain additional warrants; and

(iv) the Revenue Share Payments described on Exhibit B (the “Revenue Share Payments”), including the vesting milestones or achievements, all as may be modified by the Parties from time to time.

4. Confidentiality.

Reference is made to that certain Confidentiality Agreement by and among the Parties to this Agreement dated as of June 11, 2021 (the “NDA”). The terms and conditions of the NDA are ratified and confirmed by the Parties to this Agreement and will continue in full force and effect in accordance with its terms. To the extent that there is any conflict with respect to the terms of this Agreement and the terms of the NDA other than with respect to Section 7 of this Agreement, the terms of the NDA will supersede and control, unless otherwise agreed in writing; and provided further that the terms of the NDA (other than as it relates to Non-Circumvention, which shall govern) shall continue in full force and effect for a period that is not less than two (2) years after the date that this Agreement is terminated.

5. Dispute Resolution

(a) Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by arbitration in New York, New York before one arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules. Judgment on the award in such arbitration (the “Award”) may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction.

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(b) The parties shall maintain the confidential nature of the arbitration proceeding and the Award, including the hearing, except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as may be necessary in connection with a court application for a preliminary remedy, a judicial challenge to an Award or its enforcement, or unless otherwise required by law or judicial decision.

(c) In any arbitration arising out of or related to this Agreement, the arbitrator is not empowered to award punitive or exemplary damages, except where permitted by statute, and the Parties waive any right to recover any such damages.

(d) In any arbitration arising out of or related to this Agreement, the arbitrator may not award any incidental, indirect or consequential damages, including damages for lost profits.

(e) In any arbitration arising out of or related to this Agreement, the arbitrator shall award to the prevailing party, if any, the reasonably costs and attorneys’ fees reasonably incurred by the prevailing party in connection with the arbitration.

(f) The Parties adopt and agree to implement the JAMS Optional Arbitration Appeal Procedure (as it exists on the effective date of this Agreement) with respect to any final award in an arbitration arising out of or related to this Agreement.

6. Indemnification; Representations; Exclusion of Warranties; Limitation of Liability; Limited Use

(a) Indemnification.

(i) Subject to Section 6(b) and Section 6(d), in all respects, Service Recipient shall indemnify and hold harmless Service Provider, any other Service Provider Party, their respective Affiliates and its and their respective Representatives (collectively, the “Service Provider Indemnitees”) from and against any and all claims, damages, losses, liabilities and expenses (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses in connection with any court or arbitration or collection action whether involving a third party claim or a claim solely between the Parties) (collectively, “Damages”) asserted against or incurred by any Service Provider Indemnitee as a result of, in connection with or arising out of Service Provider providing the Services under this Agreement that are not in violation of any policies or commercially reasonable written instructions of Service Recipient, in each case, in any material respect, and are not otherwise in material breach of its obligations under this Agreement.

(ii) In furtherance of the provisions set forth in Section 6(d), no Service Provider Indemnitee shall have any liability, whether direct or indirect, in contract or tort or otherwise, to Service Recipient or its Affiliates or any other Person for or in connection with the Services provided or to be provided by or on behalf of any Service Provider Indemnitee pursuant to this Agreement, the transactions contemplated hereby or any actions or inactions by or on behalf of a Service Provider Indemnitee in connection with any such Services or the transactions contemplated hereby, except to the extent the same result directly from or arising out of a the gross negligence or willful misconduct of such Service Provider Indemnitee.

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(b) Representations; Exclusion of Warranties.

(i) Mutual Representations. Each Party represents and warrants to the other Party that:

(A) it has full right, power, and authority to enter into this Agreement, to perform its obligations under this Agreement, and that it will perform its obligations hereunder in accordance with all applicable laws, rules and regulations;

(B) its execution, delivery, and performance of this Agreement does not and will not conflict with, violate, or result in a breach of any other agreement, judgment, order, stipulation, or decree by which such Party is bound;

(C) As of the date of the closing of the Merger, the Compensation Warrants will have been duly authorized and granted to Sterling Select and the shares of SCON Common Stock that will be issued by SCON under such Compensation Warrant will, when issued in accordance with the terms of the Compensation Warrant, be duly and validly issued, fully paid and non-assessable and registered under the Registration Statement.

(D) the use of such Party’s intellectual property and Confidential Information shall not interfere with, infringe upon, violate, trespass or in any manner contravene the rights of any third party, including any such third party’s intellectual property rights and/or privacy rights, or cause the other Party to be in breach of any applicable law, rule or regulation under which it is bound.

(ii) Exclusion of Warranties: NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, THE SERVICES TO BE PROVIDED BY SERVICE PROVIDER OR ANY OF ITS AFFILIATES UNDER THIS AGREEMENT, AS WELL AS ANY RECORDS OR ASSISTANCE PROVIDED BY EITHER PARTY HEREUNDER, ARE FURNISHED IN AN “AS IS” CONDITION AND ON A “WHERE IS” BASIS WITH NO WARRANTIES, AND EACH PARTY EXPRESSLY EXCLUDES AND DISCLAIMS ANY WARRANTIES UNDER OR ARISING AS A RESULT OF THIS AGREEMENT, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON- INFRINGEMENT OR ANY OTHER WARRANTY WHATSOEVER.

(c) Indemnification Claim Procedures. If any Service Provider Indemnitee has a claim against Service Recipient under Section 6(a) (a “Claim”), such Service Provider Indemnitee shall promptly deliver to Service Recipient a written notice (a “Claim Notice”) setting forth a description in reasonable detail of the nature of the Claim, the basis for the Service Provider Indemnitee’s request for indemnification under Section 6(a) and a reasonable estimate (if calculable) of any Damages suffered or expected to be suffered with respect to such Claim. The failure to so deliver a Claim Notice to Service Recipient shall not relieve Service Recipient from its indemnification obligations hereunder, except if and only to the extent that Service Recipient is materially prejudiced by such failure. Service Recipient shall have 30 days from receipt of any such notice to give notice of dispute of the Claim to the Service Provider Indemnitee. The Service Provider Indemnitee shall reasonably cooperate and assist Service Recipient in determining the validity of any Claim by Service Recipient and in otherwise resolving such matters. Such assistance and cooperation shall include, during normal business hours, (i) providing reasonable access to and copies of information and Records relating to such matters and (ii) furnishing employees, as reasonably determined by Service Recipient, to assist in the investigation, defense and resolution of such matters. If Service Recipient disputes a Claim, the Service Provider Indemnitee and Service Recipient shall attempt to resolve in good faith such dispute within forty-five (45) days of Service Recipient delivering written notice to the Service Provider Indemnitee of such dispute. If such dispute is not so resolved within such forty-five (45)-day period, then either Party may initiate an action in accordance with this Agreement with respect to the subject matter of such dispute.

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(d) Limitation of Liability: Exclusion of Damages.

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY WILL BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES IN CONNECTION WITH THIS AGREEMENT. THIS DISCLAIMER APPLIES WITHOUT LIMITATION (I) TO CLAIMS ARISING FROM THE PROVISION OF THE SERVICES OR ANY FAILURE OR DELAY IN CONNECTION THEREWITH (UNLESS SUCH DAMAGES ARE AWARDED TO AN UNAFFILIATED THIRD PARTY BY A COURT OF COMPETENT JURISDICTION IN RESPECT OF A THIRD PARTY CLAIM AND THE PARTY LIABLE FOR SUCH DAMAGES IS ENTITLED TO INDEMNIFICATION UNDER SECTION 6(a) OF THIS AGREEMENT IN CONNECTION THEREWITH), (II) TO CLAIMS FOR LOST PROFITS OR OPPORTUNITIES, (III) REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR OTHERWISE, AND (IV) REGARDLESS OF WHETHER SUCH DAMAGES ARE FORESEEABLE OR WHETHER SERVICE PROVIDER OR SERVICE RECIPIENT, AS APPLICABLE, OR ANY OF ITS AFFILIATES OR REPRESENTATIVES HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY, THIS SECTION 6(d) SHALL NOT APPLY TO BREACHES OF OBLIGATIONS OF CONFIDENTIALITY, NON-CIRCUMVENTION UNDER THR NDA AND OF SECTION 7(a)-(d) BELOW.

(e) Indemnification as Exclusive Remedy. Except for the termination rights provided under Section 8, the indemnification provisions of this Section 7 shall be the sole and exclusive monetary remedy for liability relating to or arising out of this Agreement; provided, however, that the foregoing shall not affect the availability of equitable remedies for any Party with respect to breaches of confidentiality, non-circumvention, publicity and use of names obligations under the NDA.

(f) Use of Service Provider Analysis and Related Work Product. The opinions, valuations, projections, analysis and other similar work product provided by Service Provider to Service Recipient, if any, are for Service Recipient’s benefit and may not, without the express prior written consent of Service Provider, be disclosed to or relied upon in any manner by any other Person, other than an Affiliate of Service Recipient that is controlled by Service Recipient, other than governmental authorities or as may be required by applicable law.

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7. Rights to Intellectual Property; Publicity; Use of Names; Reservation of Rights; Electronic Access

(a) Ownership and Reservation of Rights. Each Party shall retain all right, title and interest in and to its intellectual property, software, technology and data used in connection with the Services. Neither Party shall remove or alter any copyright, trademark, confidentiality or other proprietary notices that appear on any intellectual property, software, technology and data owned or licensed by the other Party, and each Party shall reproduce any such notices on any and all of its copies of any intellectual property, software, technology and data owned or licensed by the other Party.

(b) No party shall have any right to the intellectual property rights of the other Party under the terms of this Agreement.

(c) No Party shall contest or claim an ownership or license right of the intellectual property rights of the other Party unless otherwise agreed in a separate agreement.

(d) The NDA shall govern the making of public statements or the use of the Parties’ and their Affiliates’ names, likeness, logos, investors and beneficial owners’ identities.

(e) Work Product. Unless otherwise agreed in writing by mutual consent, any work product (including all intellectual property therein) solely related to the Core Clearday Business that is created or developed by a Service Provider Party in connection with the Services and specifically for Service Recipient or at the written request of Service Recipient in connection therewith (“Work Product”), shall be deemed “works made for hire” as that phrase is defined in the Copyright Revision Act of 1976 (17 U.S.C. §101) and shall be the sole and exclusive property of the Service Recipient. In the event that for any reason such Work Product is not deemed “works made for hire,” then each Service Provider Party agrees to (and shall cause any of its Representatives involved with the Services to) use commercially reasonable efforts to assign and transfer, and does hereby assign and transfer, to the Service Recipient any and all of each Service Provider Party’s rights, title and interest in and to such Work Product. Each Service Provider Party shall, at no cost to such Service Provider Party, execute and deliver any and all instruments and other documents and take such other actions as may be reasonably necessary or reasonably requested by the Service Recipient to document the aforesaid assignment and transfer of such Work Product to the Service Recipient, or to enable the Service Recipient to secure, register, maintain, enforce or otherwise fully protect its rights in and to such Work Product. Each Service Provider Party hereby waives any and all of its moral rights that each Service Provider Party may have in such Work Product.

8. Termination of Services; Effect of Termination; Transition and Modification

(a) Termination. Notwithstanding the provisions of this Agreement,

(i) A Party may terminate this Agreement

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(A) promptly after the date of any material breach by the other Party that is provided after (x) notice of such breach and (y) a reasonable period for such breaching party to cure such breach, which shall be not less than ten (10) Business Days, if such breach was not cured in all material respects within such period; or

(B) any time that is after two years after the date of this Agreement after at least thirty (30) days’ notice of such termination;

(ii) Service Provider may terminate this Agreement on no less than ninety (90) days written notice to Service Recipient if Service Recipient fails to meet any of (b)-(c) of the Service Recipient Conditions .

(iii) The Parties will in good faith renegotiate the terms of this Agreement in the event that clause (a) of the Service Recipient Conditions is not met.

(b) Effect of Termination.

(i) Upon termination of this Agreement pursuant to Section 8(a)(i) due to a breach by Service Recipient or pursuant to Section 8(a)(ii) due to a failure of Service Recipient Conditions (b)-(c), then Service Provider (and each Service Provider Party) shall have no further obligation to provide the Services and Service Provider shall be entitled to:

(A) Continuation of the Monthly Retainer in accordance with its terms;

(B) Payment of the Revenue Share Amounts in accordance with its terms; and

(ii) Upon termination of this Agreement pursuant to Section 8(a)(i) due to a breach by Service Provider, then

(A) No further payments of the Monthly Advance shall be required; and

(B) All Compensation Warrants that have not been vested shall be forfeited and terminated.

(iii) The Parties agree to apply Section 8(b)(i) and Section 8(b)(ii) to all additional compensation due Service Provider if the same is provided for after the modifications of the scope of the Services as contemplated in the description of Phase II and Phase III of Exhibit B, if any, as reasonably practical.

(iv) The Parties agree that notwithstanding any termination pursuant to this Section 8, the provisions of Section 5, Section 6, Section 7, Section 9 shall survive any such termination indefinitely, and those provisions of the NDA that are stated to survive shall survive for the periods defined therein.

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(c) Continued Liability in Event of Breach. Any Party that has committed a breach or default of its obligations under this Agreement shall be responsible for the damages incurred by the other Party as a result of such breach or default, in addition to any rights under Section 8(a) or Section 8(b).

(d) Transition. Following termination of this Agreement, unless the Parties are in a good faith dispute regarding this Agreement, each Party agrees to cooperate in good faith (at Service Recipient’s sole expense) and use commercially reasonable efforts to provide for an orderly transition of the Services to Service Recipient or to a successor service provider.

(e) Modification. Notwithstanding any provision of this Agreement to the contrary, if the Continued Equity Compensation Condition is not met and the Revenue Share Payments received by Service Provider for the annual period ending September 30, 2022 is less than amounts that may be mutually agreed, then the Exclusivity Period will terminate and for the remainder the Term of this Agreement, the Services that are required by Sterling Select shall be limited to the use of their good offices with respect to prior introductions and commercial initiatives, provided, that no more than 10 hours of senior staff or executive time shall be required in any calendar month remaining in the Term.

9. Miscellaneous

(a) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party.

(b) Entire Agreement; No Third-Party Beneficiaries. This Agreement (as amended, modified and supplemented from time to time) and the Exhibits, Schedules and appendices hereto and thereto, and including the NDA, constitute the entire agreement, and supersede all prior agreements and understandings, representations and warranties, both written and oral, among the Parties with respect to the subject matter hereof.

(i) Neither this Agreement nor any rights, interests or obligations that may accrue to the Parties hereunder may be transferred or assigned without the prior written consent of the other Party; provided that Service Provider may assign any of its rights, interests and obligations under this Agreement (in whole or in part) to any one or more of its Affiliates, but no such assignment shall release Service Provider from any liability or obligation under this Agreement.

(ii) It is acknowledged that the obligations of Clearday will be assumed by SCON as of the date of the Merger and that the Compensation Warrant will be a warrant issued by SCON.

(iii) Any purported assignment in violation of this Section 9(c) shall be null and void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns.

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(d) Independent Contractor Status. Nothing in this Agreement shall constitute or be deemed to constitute a partnership, joint venture or any other relationship between the Parties. Neither Party is now, nor shall it be made by this Agreement, an agent, employee or legal representative of the other Party or any of its Affiliates for any purpose. Each Party acknowledges and agrees that neither Party shall have authority or power to bind the other Party or any of its Affiliates or to contract in the name of, or create a liability against, the other Party or any of its Affiliates in any way or for any purpose, to accept any service of process upon the other Party or any of its Affiliates or to receive any notices of any kind on behalf of the other Party or any of its Affiliates. Each Party is and shall be an independent contractor in the performance of Services hereunder and nothing herein shall be construed to be inconsistent with this status.

(e) D&O Insurance. Clearday shall provide proof of commercially reasonable directors and officers liability insurance with commercially reasonable coverage and limits within sixty (60) days of the Effective Date and shall to the extent generally permitted under such policies permit any person employed by Clearday that is a Representative of Sterling Select is covered under such policy.

10. Certain Definitions.

(a) For the purposes of this Agreement, the following capitalized terms shall have the respective meanings ascribed to such terms below.

(i) “Affiliate” of any specified Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. As used herein, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or other interests, by contract or otherwise. Notwithstanding the foregoing, Service Provider and its Affiliates shall not be deemed to be Affiliates of Service Recipient or its Affiliates

(ii) “Business Day” means any day except Saturday or Sunday on which commercial banks are not required or authorized to close in New York, New York.

(iii) “Governmental Entity” means any national, federal, state, county, municipal, local or foreign government, or other political subdivision thereof, or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, any entity exercising executive, legislative, judicial, regulatory, taxing or administrative functions of or pertaining to government and any arbitrator or arbitral body or panel of competent jurisdiction.

(iv) “Introduced Relationship” shall mean and include Introduced Persons and Opportunities as each of those terms are defined in NDA and shall also include all Named Entities listed on Exhibit A and their Affiliates and Control Persons (as defined in Exhibit A) that are specified by Service Provider to Clearday.

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(v) “Law” means any federal, state, provincial, municipal, domestic or foreign law (including common law), statute, ordinance, rule, regulation, code or Judgment issued, promulgated, made, rendered, entered into or enforced by or with any Governmental Entity.

(vi) “Person” means any individual, general or limited partnership, corporation, limited liability company, joint stock company, trust, joint venture, unincorporated organization, association or any other entity, including any Governmental Entity, or any Group consisting of two or more of the foregoing.

(vii) “Term” of this Agreement shall mean that period that commences on the date of this Agreement and, subject to any earlier termination as provided in this Agreement.

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IN WITNESS WHEREOF, each of the undersigned has duly authorized and executed and delivered this Agreement as of the date first written above.

	Sterling Select II Advisory LLC

	By:	/s/ Christopher J. Steele
	Name:	Christopher J. Steele
	Title:	Managing Director

	Allied Integral United, Inc.
	d/b/a Clearday

	By:	/s/ Richard M. Morris
	Name:	Richard M. Morris
	Title:	EVP

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Exhibit A

Further Description of Services

The Parties agree that this Exhibit A provides more details around the Services to be provided by Service Provider under the Agreement. In the event of a conflict between this Exhibit A and the Agreement, unless otherwise expressly provided in Exhibit A, the provisions of the Agreement shall govern. The Parties agree that the overall objective of the Agreement and the Services is the accelerating the sales, revenues and market acceptance and overall awareness of Clearday and the Clearday Core Businesses.

Phase I (during the Term of this Agreement)

Subject to more definitive time period expressly provided in each instance, as promptly as reasonably practical and through the Term, Sterling Select shall:

1.	Within the first two (2) weeks of this Phase 1,

Initiate contact with senior executives, decision-makers, owners and/or board or advisory board members or the like (“Control Persons”) of at least the Named Entities (defined below) for the introduction of Clearday and one or more alliances and sales of products and services within the Clearday Core Business (the “Purpose”); and

Work with Clearday to develop and approve for publication and release a mutually acceptable press release regarding this Agreement and its Purpose.

Solicit for Clearday’s benefit, if and as practicable, information from receptive contacts, including but not limited to those connected to the Named Entities, relevant opportunities, marketing information, level of interest/priority and competitive assessment of the Clearday Core Business products and services with a view to establishing meaningful strategic alliances and/or sales.

Solicit the Named Entities and other Introduced Persons for referrals for the Purpose to meaningful “warm” introductions that extend market reach for, and awareness of, Clearday. In connection therewith, schedule and jointly attend calls and meetings (which may be virtual) with senior executives of the Named Entities and their respective Affiliates, and other Introduced Persons as applicable and practicable within the time frame, for the Purpose and related “follow-up” efforts including assisting Clearday advance its Clearday Core Businesses – with the goal of accelerating – sales cycle and project timeframes, proposing and outlining pilot/test projects and proposing and outlining contracts.

Sponsor and support Clearday in becoming Sterling Select’s first portfolio listed on its website using the Clearday logo under a new descriptive channel entitled “Health Care Services” and a link to the Myclearday.com website; for clarity, such designation and listing requires the approval of outside parties who shall act in their sole and absolute discretion.

Sponsor and support Clearday’s efforts to secure formal evaluation, development, testing, contract or other form of commercial arrangement regarding the Purpose and an accompanying joint press release with any of the counterparties to such commercial arrangement; it being understood that Clearday prefers such counterparty to be one of the Named Entities or their Affiliates and it being understood that one of the purposes of the joint press release is to demonstrate good faith traction of the mutual efforts of the Parties to the Agreement.

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Work with Clearday to solicit commercial interest from Sterling Equities, its Affiliates or other Name Entities and provide advice and assist the same for the purpose of purchasing a cryogenic air quality system (code named: oxygenator) for one of such entities suitable real estate assets which system will be financed by Clearday and sold to such applicable customer with payment subject to the system satisfying stated atmosphere quality conditions agreed to in advance and after a successful pilot/test as determined by such applicable customer in their sole discretion.

7.	For purposes of this Agreement, the term “Named Entities” shall be the following and any other Person mutually agreed to in writing by the Parties:

Sterling Equities or its Affiliates including but not limited to:

(i) Sterling American Properties, Inc.;

(ii) Sterling Project Development;

(iii) Sterling Residential Management; and

(iv) Sterling Commercial Management.

In the event that the parties agree to grant of additional warrants as referred to in Exhibit B, paragraph 5, the following shall be included as Services. If there is no such grant of additional warrants, then Phase II and Phase III shall not be included as Services and, notwithstanding the provision of the Agreement, shall not be part of the Exclusive Services.

Phase II (expected time frame is during days 91-to the end of the Term of this Agreement)

1.	Work with Clearday to evaluate responses from Phase I engagements and reassess as needed for market development priorities and new priorities or new or other services, if any.

2.	Expand contact list for the Purpose and expanded scope to the extent commercially reasonably practicable and to the extent that is mutually agreed.

Upon successful demonstration of an oxygenator project (as described above), solicit introduction to large New York Metro Area healthcare systems (“Healthcare System”) and provide advice and assist with the negotiations with the same specifically for the purpose of selecting suitable real estate assets, which may be in Long Island, New York or Boca Raton, Florida locations, for the purchase of oxygenators in its healthcare facilities.

Work with Clearday to recommend enhanced efforts as needed to expand strategic or commercial interest with such Healthcare System, provide advice and assist with the negotiation with such Healthcare System using services by, or having a strategic alliance with, Clearday to support older Americans, specifically using Clearday at Home and Clearday Clubs. Assist in the negotiation and presentation by Clearday with such Healthcare System to expand the use the Clearday electronic platform for delivery of other healthcare content and care for issues such as drug and alcohol addiction, diabetes and mental health care, which the Parties agree are currently outside of the Core Clearday Business.

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Work with Clearday to consider and evaluate strategic relationship options stemming from feedback of Sterling Select contacts and introductions; including evaluation of opportunities, if any, directly with Sterling Select and Sterling Select’s Affiliates on development of affinity relationships for Clearday with relationships of Sterling Select and their founders and Affiliates, including major employers, insurance companies and financial companies with a focus on (i) providing Clearday at Home or Clearday Club memberships as an employee benefit; (ii) distributing Clearday at Home or Clearday Club memberships to policy holders and financial service clients; and (iii) develop distribution strategies for such companies to reduce policy claims requiring medical and health care payments.

Phase III (expected time frame is during days 271 through the end of Term)

1.	Continue efforts Phase II, as detailed above and as modified by the Parties during such Phase and continue the promotion, active market and business development work with new and contacts from Phase I and II engagement.

2.	Work with Clearday to evaluate initial feedback from Phase I and II engagements and reassess as needed for market development priorities and new priorities or Services, if any.

Solicit and present strategic relationship opportunities that fit the acceptable strategies and work with Clearday to evaluate deal structures. Develop affinity relationships for Clearday with relationships of Sterling Select and their founders and Affiliates, which may include family offices and other institutional investors, investment advisers and managers.

4.	Develop other strategies to accelerate the growth and revenues of Clearday.

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Exhibit B

Terms of Compensation

The Parties agree that this Exhibit B provides the consideration with respect to the Services provided under the Agreement and as further described in Exhibit A. Unlike Exhibit A, in the event of a conflict between this Exhibit B and the Agreement, the provisions of this Exhibit B shall govern. In consideration for the Services provided to Clearday, Select shall receive the following:

A monthly cash advance of $10,000 per month, commencing August 1, 2021 and continuing through and until January 31, 2022, and each monthly payment is payable in advance of the 1^st of each month during such six (6) month period, which payment shall be a non-refundable advance against Revenue Share Payments described below, and shall continue for such 6 month period or such longer period as may be mutually agreed in writing and which may be paid under any alternative arrangements as may be mutually agreed (such payments being the “Monthly Advance”);

Revenue Share: Subject to the following provisions of this Section 2, Clearday shall pay Sterling Select a revenue share of all revenues received by Clearday as result of any and all business activities brought about by directly or indirectly by Sterling Select or directly through Introduced Relationships (collectively, the “Revenue Share Payments”):

(a)

Sales of Clearday at Home: The Revenue Share Payment for revenue generated by sale of Clearday at Home shall be calculated by using a mutually agreed allocation of the aggregate commission rate set by Clearday for sales of Clearday at Home that have a regular suggested monthly subscription price of more than $200 for sales of Clearday at Home, if such sales were a direct or indirect result of the introduction of an Introduced Relationship (or an Affiliate of such Introduced Relationship), which such commission rate shall have a target amount of 10% and be subject to good faith negotiations between the Parties (and subject to a maximum amount of commissions payable by Clearday so that the net revenues is not below a minimum amount for such products as from time to time specified by Clearday, and which are generally applicable to distributors or wholesalers of Clearday); provided, however, that Sterling Select shall always be entitled to the most favorable terms provided by Clearday to any other enterprise (wholesaler, master licensor, master franchisor or similar person) in this regard with respect to the Priority Areas.

(b)

Sales of Clearday Club Individual Memberships: The Revenue Share Payment for revenue generated by sales of Clearday Clubs, where ever situated, if such sales were a direct or indirect result of the introduction of an Introduced Relationship (or an Affiliate of such Introduced Relationship), including for clarity, through corporate wellness or health or fringe benefit programs, shall be calculated by using a mutually agreed allocation of the sales commissions rate set by Clearday for sales of Clearday Club individual memberships which such commission rate shall have a target amount of $20/month per fully paid monthly membership, and be subject to good faith negotiations between the Parties; provided, however, that Sterling Select shall always be entitled to the most favorable terms provided by Clearday to any other enterprise (wholesaler, master licensor, master franchisor or similar person) in this regard with respect to the Priority Areas.

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(c)

Revenues from Licenses: The Revenue Share Payment for revenues generated by Clearday entering into an exclusive license, including but not limited to a franchise relationship, of Clearday Clubs anywhere, and/or an exclusive license of Clearday at Home distribution, shall be calculated by using a commission rate that is negotiated in good faith by the parties, if such license was a direct or indirect result of the introduction of an Introduced Relationship (or an Affiliate of such Introduced Relationship), subject to the organizational costs and expenses of such transaction subject to such limitations that may be mutually agreed, provided further that Sterling Select shall always be entitled to the most favorable terms provided by Clearday to any other enterprise (wholesaler, master licensor, master franchisor or similar person) with respect to the Priority Areas.

(d)

Sales of Oxygenator: The Revenue Share Payment for revenue generated by sales of each Oxygenator shall be equal to $20,000 for each of the first twenty (20) Oxygenator units, and $15,000 for each unit thereafter, sold as a direct or indirect result of the introduction of an Introduced Relationship (or an Affiliate or such Introduced Relationship); provided, further that Sterling Select shall always be entitled to the most favorable terms provided by Clearday to any other enterprise (wholesaler, master licensor, master franchisor or similar person) in this regard with respect to the Priority Areas.

(e)

General Advisory and Miscellaneous Revenues: Except as expressly provided in Sections 2(a)-(d) above or as expressly provided otherwise in this Agreement, the Revenue Share Payment for business or revenue opportunities presented or Introduced by Sterling Select shall be mutually agreed by the Parties in good faith.

(f)

Length of Obligations: All Revenue Share Payments obligations of Clearday pursuant to this Section 2 shall commence on the date that Clearday receives the revenues for which the Revenue Share Payments corresponds to and continue until the earlier of: (a) the cessation of Clearday receiving such revenues; and (b) three (3) years after the Term of this Agreement regardless of any earlier termination of this Agreement.

(g)

Payment Terms: Clearday shall pay Sterling Select its applicable Revenue Share Payments quarterly in arrears but not later than within thirty (30) calendar days of Clearday fiscal quarter.

(h)

Audits: The Parties agree that each shall exercise commercially reasonable efforts in assisting the other in determining the accuracy of all calculations, and the receipt, of all Revenue Share Payments. In any dispute regarding the computation of Revenue Share Payments that remains unresolved for more than ninety (90) days, the Parties agree to cooperate with any commercially reasonable auditor retained by the other or a review of such computation by the independent accountants of the Company. In the event the audit report generated by such auditor shows a discrepancy of more than 5%, the other Party shall correct such discrepancy and also reimburse the fees of the auditor.

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(i)

Tail Period and ROFR. Notwithstanding anything contained in the Agreement to the contrary, unless the Agreement is terminated pursuant to Section 8(a)(i)(A) because of a breach by Service Provider: (a) Sterling Select shall be entitled to all Revenue Share Payments pursuant to, and in accordance with, this Section 2 if any sale, license or other transaction that is covered in this Section 2 occurs between the termination of this Agreement and twelve (12) months thereafter (“Tail Period”). Additionally, unless the Agreement is terminated pursuant to Section 8(a)(i)(A) because of a breach by Service Provider, Sterling Select is hereby granted, during the term and for the Tail Period, a right of first refusal in the event Clearday offers any exclusive license or other exclusive or exclusionary market or similar marketing rights to any bona fide third person that is a wholesaler, master licensor, master franchisor or similar person covering any part or all of the Clearday Core Business in the Priority Areas.

For the purposes of this Exhibit, the term “indirect” shall mean where it is reasonably foreseeable at the time of the Introduction by Sterling Select of the Introduced Relationship that such Person(s) are the cause of such transaction, sale, arrangement or agreement that generated the revenue described above. For example, for the purposes of this Exhibit, any direct Introduction with respect to a hospital system or medical practice includes the other medical practices that are associated with such hospital system or medical practice even if not an Affiliate. Either Party may require upon reasonable notice that the other Party list any such indirect relationship and any dispute will be resolved through mediation and arbitration.

3.	Compensation Warrants will be issued with the following terms and such other terms and conditions as mutually agreed:

(a)

Coverage: 500,000 shares of SCON Common Stock effective at the closing of the Merger.

(b)

Warrant Price: $11.00 per share which is a 10% premium to the opening price of the SCON Common Stock at the close of the Merger (the “Warrant Price”).

(c)

Anti-Dilution: Only for customary fundamental transactions and customary weighted average anti-dilution protection with excluded securities as agreed by the parties.

(d)

Term: 3 years.

(e)

Exercise Method: Cash payment

(f)

Registration Rights: The warrants will be issued prior to the closing of the Merger. Accordingly, the underlying shares of common stock will be registered under the Registration Statement.

(g)

Risk of Forfeiture: Subject to the terms of the Agreement, the Warrants shall be deemed fully vested and owned by Sterling Select upon execution of this Agreement; provided, however that 66% of the same shall be subject to a reducing risk of forfeiture based on earlier termination pursuant to Section 8(a)(i)(A) of the Agreement as a result of a breach by Service Provider. The risk of forfeiture will reduce equally over eight (8) calendar quarters of the Term. Notwithstanding such reducing risk of forfeiture, the risk of forfeiture may be eliminated in whole or in part based on the achievement of certain specified objectives of Services as defined and mutually agreed to in writing by Clearday and Select at any time; to wit, the Parties agree that there shall be no risk of forfeiture if gross revenues contracted for which Revenue Share Payments are based and payable are $2 million or more during any 12-month period during the Term or thereafter.

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Prior to the commencement of Services described in Phase II and Phase III of Exhibit A, the Parties will negotiate in good faith for the grant of additional warrants similar to the Compensation Warrants, including the number and exercise price of such additional warrants and any registration rights with respect to such shares of SCON Common Stock.

To the extent Clearday and Sterling Select, alone or in conjunction with a Sterling Select Affiliate, enter into a joint venture or similar form of strategic arrangement, the Parties agree to negotiate commercial terms in good-faith including possible conversion of any Revenue Share Payments or contribution of Compensation Warrants or other compensation.

M&A Fee: Sterling Select shall be entitled to a fee equal to three percent (3%) of the net proceeds received by the Clearday under a transaction that results in a change of control of Clearday, whether by merger with, or sale of all or substantially all of Company’s assets and/or business operations, to or Affiliate of, an Introduced Relationship and which Sterling Select is the procuring cause of such transaction or provides significant advisory services in connection with such transaction which percentage shall be reduced to one percent (1%) if the transaction is with an Introduced Relationship or Affiliate of such person does not provide significant advisory services in connection with such transaction (“M&A Fee”); provided that any M&A Fee paid hereunder shall be due and payable to Select on the closing of such transaction if such transaction is for cash consideration (or will receive such share of equity of stock for stock or combination), upon receipt by the Clearday and/or its equity owners of the closing proceeds therefrom, in the same manner, kind, timing and subject to the same conditions as are the proceeds realized or to be realized thereunder by the Clearday and provided that such change of control transaction occurs during the Term or any period that is two years after the Term; and

Investment by Introduced Person: Sterling Select shall be entitled to receive in cash or stock for assistance in the execution of any other transaction(s) than as described in paragraph 7 above (if additional services are requested in writing and accepted in writing by the Parties) which shall be negotiated on a case-by-case basis with the mutual consent of the Parties. For reference purposes only, if any Introduced Relationship, or any Affiliate or person working with or related to such Introduced Relationship makes a cash investment into (including providing any form of debt financing to) Clearday during the Term or during the Tail Period, Clearday agrees that the rate of three percent (3%) of such invested capital shall be used by the Clearday as a measure of additional compensation payable to Sterling Select.

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Exhibit 10.29.2

WARRANT

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.

Warrant Certificate No.: A-1

Original Issue Date: August 10, 2021

FOR VALUE RECEIVED, Allied Integral United, Inc., a Delaware corporation that has an agreement with Superconductor Technologies Inc., a Delaware corporation (the “Company”), hereby certifies that Sterling Select II Advisory LLC, a Delaware limited liability company, or its registered assigns (the “Holder”) is entitled to purchase from the Company 500,000 (Five Hundred Thousand) duly authorized, validly issued, fully paid and nonassessable shares of Common Stock at a purchase price per share of $11.00 (subject to adjustment as provided herein, the “Exercise Price”), all subject to the terms, conditions and adjustments set forth below in this Warrant. Certain capitalized terms used herein are defined in Section 1 hereof.

1. Definitions. As used in this Warrant, the following terms have the respective meanings set forth below:

“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price in effect as of the Exercise Date in accordance with the terms of this Warrant.

“Board” means the board of directors of the Company.

“Business Day” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the city of San Antonio, Texas are authorized or obligated by law or executive order to close.

“Common Stock” means the common stock, par value $0.001per share, of the Company, and any capital stock into which such Common Stock shall have been converted, exchanged or reclassified following the date hereof.

“Common Stock Deemed Outstanding” means, at any given time, the sum of (a) the number of shares of Common Stock actually outstanding at such time, plus (b) the number of shares of Common Stock issuable upon exercise of Options actually outstanding at such time, plus (c) the number of shares of Common Stock issuable upon conversion or exchange of Convertible Securities actually outstanding at such time (treating as actually outstanding any Convertible Securities issuable upon exercise of Options actually outstanding at such time), in each case, regardless of whether the Options or Convertible Securities are actually exercisable at such time; provided, that Common Stock Deemed Outstanding at any given time shall not include shares owned or held by or for the account of the Company or any of its wholly-owned subsidiaries.

“Company” has the meaning set forth in the preamble.

“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.

“Excluded Issuances” means any issuance or sale (or deemed issuance or sale in accordance with Section 4(d)) by the Company after the Original Issue Date of:

(a) shares of Common Stock issued upon the exercise of this Warrant;

(b) shares of Common Stock (as such number of shares is equitably adjusted for subsequent stock splits, stock combinations, stock dividends and recapitalizations) issued directly or upon the exercise of Options to directors, officers, employees, or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company, in each case authorized by the Board and issued pursuant to any compensation program of the Company or any of its subsidiaries (including all such shares of Common Stock and Options outstanding prior to the Original Issue Date);

(c) shares of Common Stock issued upon the conversion or exercise of Options (other than Options covered by clause (b) above) or Convertible Securities issued at or prior to the Original Issue Date, provided that such securities are not amended after the date hereof to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof;

(d) shares of Common Stock, Options or Convertible Securities issued

(i) to persons in connection with a joint venture, strategic alliance or other commercial relationship with such person (including persons that are customers, suppliers and strategic partners of the Company) relating to the operation of the Company’s business and not for the primary purpose of raising equity capital,

(ii) in connection with a transaction in which the Company, directly or indirectly, acquires another business or its tangible or intangible assets, or

(iii) to lenders as equity kickers in connection with debt financings of the Company, in each case where such transactions have been approved by the Board;

(e) shares of Common Stock in an offering for cash for the account of the Company that is underwritten on a firm commitment basis and is registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended;

(f) shares of Common Stock, Options or Convertible Securities issued to the lessor or vendor in any office lease or equipment lease or similar equipment financing transaction in which the Company obtains the use of such office space or equipment for its business; or

(g) shares of Common Stock, Options or Convertible Securities issued to:

(i) any person providing an equity facility where the price of Common Stock issued is at a discount to the market price that will be at a 10% discount to the market and the facility size is $150mm available after the Company is listed on any US or non US stock exchange; or

(ii) any person that is a distributor or licensee or franchisee of any of the products or services of the Company or any of its subsidiaries; or

(iii) any person that is an Affiliate of the initial Holder of this Warrant issued primarily for services to be provided.

“Exercise Date” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., New York City time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Agreement, the Warrant and the Aggregate Exercise Price.

“Exercise Agreement” has the meaning set forth in Section 3(a)(i).

“Exercise Period” has the meaning set forth in Section 2.

“Exercise Price” has the meaning set forth in the preamble.

“Fair Market Value” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Stock for such day on all securities exchanges on which the Common Stock may at the time be listed; (b) if there have been no sales of the Common Stock on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Stock on all such exchanges at the end of such day; (c) if on any such day the Common Stock is not listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided, that if the Common Stock is listed on any domestic securities exchange, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Stock is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the “Fair Market Value” of the Common Stock shall be the fair market value per share as determined jointly by the Board and the Holder; provided, that if the Board and the Holder are unable to agree on the fair market value per share of the Common Stock within a reasonable period of time (not to exceed 30 days from the Company’s receipt of the Exercise Agreement), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Board and the Holder/engaged by the Company). The determination of such firm shall be final and conclusive, and the fees and expenses of such valuation firm shall be borne by the Company.

In determining the Fair Market Value of the Common Stock, an orderly sale transaction between a willing buyer and a willing seller shall be assumed, using valuation techniques then prevailing in the securities industry without regard to the lack of liquidity of the Common Stock due to any restrictions (contractual or otherwise) applicable thereto or any discount for minority interests and assuming full disclosure of all relevant information and a reasonable period of time for effectuating such sale and assuming the sale of all of the issued and outstanding Common Stock (including fractional interests) calculated on a fully diluted basis to include the conversion or exchange of all securities then outstanding that are convertible into or exchangeable for Common Stock and the exercise of all rights and warrants then outstanding and exercisable to purchase shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock; provided, that such assumption shall not include those securities, rights and warrants (a) owned or held by or for the account of the Company or any of its subsidiaries, or (b) convertible or exchangeable into Common Stock where the conversion, exchange or exercise price per share is greater than the Fair Market Value.’

“Holder” has the meaning set forth in the preamble.

“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

“Original Issue Date” means August 10, 2021, provided that the right to purchase any shares of Common Stock under this Warrant are subject to the consummation of the Specified Merger.

“Nasdaq” means The NASDAQ Stock Market LLC.

“OTC Bulletin Board” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system.

“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

“Pink OTC Markets” means the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink.

“Specified Merger” means the merger of the Company and the other parties thereto that is described by the Company in the registration statement on Form S-4 (registration no. 333-256138).

“Warrant” means this Warrant and all warrants issued upon division or combination of, or in substitution for, this Warrant.

“Warrant Shares” means the shares of Common Stock or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.

2. Term of Warrant. Subject to the terms and conditions hereof, at any time or from time to time after the date of the closing of the Merger and prior to 5:00 p.m., New York City time, on August 31, 2024 or, if such day is not a Business Day, on the next preceding Business Day (the “Exercise Period”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to adjustment as provided herein).

3. Exercise of Warrant.

(a) Exercise Procedure. This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:

(i) surrender of this Warrant to the Company at its then principal executive offices (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction), together with an Exercise Agreement in the form attached hereto as Exhibit A (each, an “Exercise Agreement”), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and

(ii) payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b).

(b) Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Agreement, by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price.

(c) Delivery of Stock Certificates. Upon receipt by the Company of the Exercise Agreement, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with Section 3(a) hereof), the Company shall, as promptly as practicable, and in any event within Three (3) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, together with cash in lieu of any fraction of a share, as provided in Section 3(d) hereof. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Agreement and shall be registered in the name of the Holder or, subject to compliance with Section 7 below, such other Person’s name as shall be designated in the Exercise Agreement. This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

(d) Fractional Shares. The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant. As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

(e) Delivery of New Warrant. Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with Section 3(c) hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

(f) Valid Issuance of Warrant and Warrant Shares; Payment of Taxes. With respect to the exercise of this warrant, the Company hereby represents, covenants and agrees:

(i) This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

(ii) All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all taxes, liens and charges.

(iii) The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares may be listed at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).

(iv) The Company shall use its commercially reasonable efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any domestic securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares are listed at the time of such exercise.

(v) The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

(g) Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a public offering or a sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

(h) Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant, and the par value per Warrant Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Warrant Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

4. Adjustment to Exercise Price and Number of Warrant Shares. In order to prevent dilution of the purchase rights granted under this Warrant, the Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 4 (in each case, after taking into consideration any prior adjustments pursuant to this Section 4).

(a) Adjustment to Exercise Price Upon Issuance of Common Stock. Except as provided in Section 4(c) and except in the case of an event described in either Section 4(e) or Section 4(f), if the Company shall, at any time or from time to time after the Original Issue Date, issue or sell, or in accordance with Section 4(d) is deemed to have issued or sold, any shares of Common Stock without consideration or for consideration per share less than the Exercise Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then immediately upon such issuance or sale (or deemed issuance or sale), the Exercise Price in effect immediately prior to such issuance or sale (or deemed issuance or sale) shall be reduced (and in no event increased) to an Exercise Price equal to the quotient obtained by dividing:

(i) the sum of (A) the product obtained by multiplying the Common Stock Deemed Outstanding immediately prior to such issuance or sale (or deemed issuance or sale) by the Exercise Price then in effect plus (B) the aggregate consideration, if any, received by the Company upon such issuance or sale (or deemed issuance or sale); by

(ii) the sum of (A) the Common Stock Deemed Outstanding immediately prior to such issuance or sale (or deemed issuance or sale) plus (B) the aggregate number of shares of Common Stock issued or sold (or deemed issued or sold) by the Company in such issuance or sale (or deemed issuance or sale).

(b) Adjustment to Number of Warrant Shares Upon Adjustment to Exercise Price. Upon any and each adjustment of the Exercise Price as provided in Section 4(a), the number of Warrant Shares issuable upon the exercise of this Warrant immediately prior to any such adjustment shall be increased to a number of Warrant Shares equal to the quotient obtained by dividing:

(i) the product of (A) the Exercise Price in effect immediately prior to any such adjustment multiplied by (B) the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to any such adjustment; by

(ii) the Exercise Price resulting from such adjustment.

(c) Exceptions To Adjustment Upon Issuance of Common Stock. Anything herein to the contrary notwithstanding, there shall be no adjustment to the Exercise Price or the number of Warrant Shares issuable upon exercise of this Warrant with respect to any Excluded Issuance.

(d) Effect of Certain Events on Adjustment to Exercise Price. For purposes of determining the adjusted Exercise Price under Section 4(a) hereof, the following shall be applicable:

(i) Issuance of Options. If the Company shall, at any time or from time to time after the Original Issue Date, in any manner grant or sell (whether directly or by assumption in a merger or otherwise) any Options, whether or not such Options or the right to convert or exchange any Convertible Securities issuable upon the exercise of such Options are immediately exercisable, and the lowest price per share (determined as provided in this paragraph and in Section 4(d)(v) ) for which any one share of Common Stock is issuable upon the exercise of any such Option or upon the conversion or exchange of any Convertible Security issuable upon the exercise of any such Option is less than the Exercise Price in effect immediately prior to the time of the granting or sale of such Options, then such share of Common Stock issuable upon the exercise of such Option or upon conversion or exchange of such Convertible Security issuable upon the exercise of such Option shall be deemed to have been issued as of the date of granting or sale of such Options (and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price under Section 4(a)), at a price per share equal to such lowest price per share. For purposes of this Section 4(d)(i) , the lowest price per share for which any one share of Common Stock is issuable upon the exercise of any such Option or upon the conversion or exchange of any Convertible Security issuable upon the exercise of any such Option shall be equal to the sum (which sum shall constitute the applicable consideration received for purposes of Section 4(a)) of the lowest amounts of consideration, if any, received or receivable by the Company as consideration with respect to any one share of Common Stock upon each of (A) the granting or sale of the Option, plus (B) the exercise of the Option, plus (C) in the case of an Option which relates to Convertible Securities, the issuance or sale of the Convertible Security and the conversion or exchange of the Convertible Security. Except as otherwise provided in Section 4(d)(iii), no further adjustment of the Exercise Price shall be made upon the actual issuance of Common Stock or of Convertible Securities upon exercise of such Options or upon the actual issuance of Common Stock upon conversion or exchange of Convertible Securities issuable upon the exercise of such Options.

(ii) Issuance of Convertible Securities. If the Company shall, at any time or from time to time after the Original Issue Date, in any manner grant or sell (whether directly or by assumption in a merger or otherwise) any Convertible Securities, whether or not the right to convert or exchange any such Convertible Securities is immediately exercisable, and the lowest price per share (determined as provided in this paragraph and in Section 4(d)(v) ) for which one share of Common Stock is issuable upon the conversion or exchange of any such Convertible Securities is less than the Exercise Price in effect immediately prior to the time of the granting or sale of such Convertible Securities, then such share of Common Stock issuable upon conversion or exchange of such Convertible Security shall be deemed to have been issued as of the date of granting or sale of such Convertible Securities (and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price under Section 4(a)), at a price per share equal to such lowest price per share. For purposes of this Section 4(d)(ii), the lowest price per share for which any one share of Common Stock is issuable upon the conversion or exchange of any such Convertible Security shall be equal to the sum (which sum shall constitute the applicable consideration received for purposes of Section 4(a)) of the lowest amounts of consideration, if any, received or receivable by the Company as consideration with respect to any one share of Common Stock upon each of (A) the granting or sale of the Convertible Security, plus (B) the conversion or exchange of the Convertible Security. Except as otherwise provided in Section 4(d)(iii), no further adjustment of the Exercise Price shall be made upon the actual issuance of Common Stock upon conversion or exchange of such Convertible Securities or by reason of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Exercise Price have been made pursuant to the other provisions of this Section 4(d).

(iii) Change in Terms of Options or Convertible Securities. Upon any change in any of (A) the lowest amounts of consideration, if any, received or receivable by the Company as consideration with respect to any one share of Common Stock upon the granting or sale of any Options or Convertible Securities referred to in Section 4(d)(i) or Section 4(d)(ii) hereof, (B) the lowest amounts of additional consideration, if any, payable to the Company with respect to any one share of Common Stock upon exercise of any Options or upon the issuance, conversion or exchange of any Convertible Securities referred to in Section 4(d)(i) or Section 4(d)(ii) hereof, (C) the rate at which Convertible Securities referred to in Section 4(d)(i) or Section 4(d)(ii) hereof are convertible into or exchangeable for Common Stock, or (D) the maximum number of shares of Common Stock issuable in connection with any Options referred to in Section 4(d)(i) hereof or any Convertible Securities referred to in Section 4(d)(ii) hereof (in each case, other than in connection with an Excluded Issuance), then (whether or not the original issuance or sale of such Options or Convertible Securities resulted in an adjustment to the Exercise Price pursuant to this Section 4) the Exercise Price in effect at the time of such change shall be adjusted or readjusted, as applicable, to the Exercise Price which would have been in effect at such time pursuant to the provisions of this Section 4 had such Options or Convertible Securities still outstanding provided for such changed consideration, conversion rate or maximum number of shares, as the case may be, at the time initially granted, issued or sold, but only if as a result of such adjustment or readjustment the Exercise Price then in effect is reduced, and the number of Warrant Shares issuable upon the exercise of this Warrant immediately prior to any such adjustment or readjustment shall be correspondingly adjusted or readjusted pursuant to the provisions of Section 4(b).

(iv) Treatment of Expired or Terminated Options or Convertible Securities. Upon the expiration or termination of any unexercised Option (or portion thereof) or any unconverted or unexchanged Convertible Security (or portion thereof) for which any adjustment (either upon its original issuance or upon a revision of its terms) was made pursuant to this Section 4 (including without limitation upon the redemption or purchase for consideration of all or any portion of such Option or Convertible Security by the Company), the Exercise Price then in effect hereunder shall forthwith be changed pursuant to the provisions of this Section 4 to the Exercise Price which would have been in effect at the time of such expiration or termination had such unexercised Option (or portion thereof) or unconverted or unexchanged Convertible Security (or portion thereof), to the extent outstanding immediately prior to such expiration or termination, never been issued.

(v) Calculation of Consideration Received. If the Company shall, at any time or from time to time after the Original Issue Date, issue or sell, or is deemed to have issued or sold in accordance with Section 4(d), any shares of Common Stock, Options or Convertible Securities: (A) for cash, the consideration received therefor shall be deemed to be the net amount received by the Company therefor; (B) for consideration other than cash, the amount of the consideration other than cash received by the Company shall be the fair value of such consideration, except where such consideration consists of marketable securities, in which case the amount of consideration received by the Company shall be the market price (as reflected on any securities exchange, quotation system or association or similar pricing system covering such security) for such securities as of the end of business on the date of receipt of such securities; (C) for no specifically allocated consideration in connection with an issuance or sale of other securities of the Company, together comprising one integrated transaction, the amount of the consideration therefor shall be deemed to be the fair value of such portion of the aggregate consideration received by the Company in such transaction as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be, issued in such transaction/shall be deemed to be $0.01/shall be deemed to have been issued without consideration]; or (D) to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be, issued to such owners. The net amount of any cash consideration and the fair value of any consideration other than cash or marketable securities shall be determined in good faith jointly by the Board and the Holder.

(vi) Record Date. For purposes of any adjustment to the Exercise Price or the number of Warrant Shares in accordance with this Section 4, in case the Company shall take a record of the holders of its Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be; provided, that if before the distribution to its holders of Common Stock the Company legally abandons its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

(vii) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company or any of its wholly-owned subsidiaries, and the disposition of any such shares (other than the cancellation or retirement thereof or the transfer of such shares among the Company and its wholly-owned subsidiaries) shall be considered an issue or sale of Common Stock for the purpose of this Section 4.

(viii) Other Dividends and Distributions. Subject to the provisions of this Section 4(d), if the Company shall, at any time or from time to time after the Original Issue Date, make or declare, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or any other distribution payable in securities of the Company (other than a dividend or distribution of shares of Common Stock, Options or Convertible Securities in respect of outstanding shares of Common Stock), cash or other property, then, and in each such event, provision shall be made so that the Holder shall receive upon exercise of the Warrant, in addition to the number of Warrant Shares receivable thereupon, the kind and amount of securities of the Company, cash or other property which the Holder would have been entitled to receive had the Warrant been exercised in full into Warrant Shares on the date of such event and had the Holder thereafter, during the period from the date of such event to and including the Exercise Date, retained such securities, cash or other property receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this Section 4 with respect to the rights of the Holder; provided, that no such provision shall be made if the Holder receives, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities, cash or other property in an amount equal to the amount of such securities, cash or other property as the Holder would have received if the Warrant had been exercised in full into Warrant Shares on the date of such event.

(e) Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Stock. If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Stock or any other capital stock of the Company payable in shares of Common Stock or in Options or Convertible Securities, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 4(e) shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

(f) Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 4(e)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Stock reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 4(f) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 4(f), the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 2 instead of giving effect to the provisions contained in this Section 4(f) with respect to this Warrant.

(g) Certain Events. If any event of the type contemplated by the provisions of this Section 4 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features) occurs, then the Board shall make an appropriate adjustment in the Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant so as to protect the rights of the Holder in a manner consistent with the provisions of this Section 4; provided, that no such adjustment pursuant to this Section 4(g) shall increase the Exercise Price or decrease the number of Warrant Shares issuable as otherwise determined pursuant to this Section 4.

(h) Certificate as to Adjustment.

(i) As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later than twenty (20) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

(ii) As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than twenty (20) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

(i) Notices. In the event:

(i) that the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(ii) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person; or

(iii) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then, and in each such case, the Company shall send or cause to be sent to the Holder at least five (5) Business Days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.

5. Purchase Rights. In addition to any adjustments pursuant to Section 4 above, if at any time the Company grants, issues or sells any shares of Common Stock, Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of Common Stock (the “Purchase Rights”), then the Holder shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder would have acquired if the Holder had held the number of Warrant Shares acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. Anything herein to the contrary notwithstanding, the Holder shall not be entitled to the Purchase Rights granted herein with respect to any Excluded Issuance.

6. Not Subject to Any Stockholders Agreement. This Warrant and all Warrant Shares issuable upon exercise of this Warrant are not subject to any stockholders agreement.

7. Transfer of Warrant. Subject to the transfer conditions referred to in the legend endorsed hereon, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B, together with funds sufficient to pay any transfer taxes described in Section 3(f)(v) in connection with the making of such transfer. Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

8. Holder Not Deemed a Stockholder; Limitations on Liability. Except as otherwise specifically provided herein (including Section 4(d)(viii)) prior to the issuance to the Holder of the Warrant Shares to which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 8, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

9. Replacement on Loss; Division and Combination.

(a) Replacement of Warrant on Loss. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided, that, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

(b) Division and Combination of Warrant. Subject to compliance with the applicable provisions of this Warrant as to any transfer or other assignment which may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders or their agents or attorneys. Subject to compliance with the applicable provisions of this Warrant as to any transfer or assignment which may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

10. No Impairment. The Company shall not, by amendment of its Certificate of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the Holder in order to protect the exercise rights of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant.

11. Compliance with the Securities Act.

(a) Agreement to Comply with the Securities Act; Legend. The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 11 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “Securities Act”). This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”

(b) Representations of the Holder. In connection with the issuance of this Warrant, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:

(i) The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.

(ii) The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

(iii) The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

12. Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

13. Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 13).

If to the Company:

8800 Village Drive
Suite 106
San Antonio, Texas 78217
Email: as provided to the initial Holder

Attention: Chief Executive Officer

If to the Holder:

111 Great Neck Road

Great Neck, NY 11021

E-mail: as provided to the Company

Attention: Managing Director

14. Cumulative Remedies. Except to the extent expressly provided in Section 8 to the contrary, the rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

15. Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

16. Entire Agreement. This Warrant constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.

17. Successor and Assigns. This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

18. No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

19. Headings. The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

20. Amendment and Modification; Waiver. Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

21. Severability. If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

22. Governing Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware.

23. Submission to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of New York in each case located in the County of Nassau, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

24. Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

25. Counterparts. This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

26. No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

27. Condition to Effectiveness. The terms and provisions of this Warrant shall be void ab initio if the Specified Merger is not closed on or prior to September 30, 2021.

[signature page follows]

IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.

	Clearday, Inc.

	By:	/s/ James Walesa
	Name:	James Walesa
	Title:	CEO

Accepted and agreed,

Sterling Select II Advisory LLC

By:	/s/ Christopher J. Steele
Name:	Christopher J. Steele
Title:	Managing Director

Exhibit 10.30

THINKTIV CONFIDENTIAL

SERVICES AGREEMENT

This Services Agreement (“Agreement”) is made by and between Thinktiv, Inc. whose principal place of business is located at 1011 San Jacinto Blvd. #202, Austin, Texas 78701 (“Thinktiv”) and Allied Integral United, Inc., having its principal place of business at 2211 NW Military Highway, Suite 201, San Antonio, TX 78213 (“Client”) and entered into as of March 6, 2019 (the “Effective Date”).

1	Scope of Services

1.1	Thinktiv agrees to provide the services (“Services”) described on separately executed statements of work (the “SOW”) as may from time to time be issued hereunder.

1.2	Each SOW shall define a specific Service authorized by Client, the Service schedule or term, the applicable pricing, and other appropriate terms and conditions.

1.3	Each SOW shall be governed by the terms and conditions of this Agreement; however, in the event of any conflict between this Agreement and a SOW, the provisions of the SOW shall prevail.

1.4	Thinktiv shall have the right to use third parties (“Third Party Consultants”) in performance of its obligations and Services hereunder and, for purposes of this Agreement, all references to Thinktiv or its employees shall be deemed to include such Third Party Consultants.

1.5	Each SOW shall remain in effect until it has expired on its own terms, is terminated in accordance with this Agreement, or the Service authorized thereunder is completed.

1.6	Client acknowledges and agrees that the Services are advisory in nature only. Accordingly, Thinktiv is not responsible for investigating, and cannot be liable to the Client for or relied upon to disclose, any errors, fraud, or illegal acts that may exist, or any other matters outside the scope of the Services. Further, all advice and services provided to Client in connection with this engagement are intended solely for the benefit and use of Client in connection with the matters described above, and accordingly no such advice or Services shall be relied upon by any person or entity other than Client. Finally, Client acknowledges and agrees that the Services are not in the nature of legal advice, and that with respect to the negotiation and documentation of any transaction, as well as the Client’s review of and entry into this Agreement, Client has been and will be represented by legal counsel of its own choosing.

2	Price and Payment

2.1

The Services provided by Thinktiv shall be at the pricing set forth in the applicable SOW. In the event a SOW does not reference any specific pricing or the Services are not referenced in the SOW, such Services shall be performed at Thinktiv’s then-current standard time and material rates and charges.

2.2

Thinktiv will submit invoices for charges and expenses hereunder weekly. Client shall make payment of each invoice in US dollars within thirty (30) days from the invoice date. Client shall reimburse Thinktiv for all reasonable travel, food, lodging and other out-of-pocket expenses incurred in performance of a given Service.

2.3	Any late payment shall be subject to any costs of collection (including reasonable legal fees) and shall bear interest at the rate of one and one-half percent (1.5%) per month (prorated for partial periods) or at the maximum rate permitted by law, whichever is less.

2.4

The charges required to be paid hereunder do not include any amount for taxes or levy (including interest and penalties). Client shall reimburse Thinktiv and hold Thinktiv harmless from all sales, use, VAT, excise, property, or other taxes or levies which Thinktiv is required to collect or remit to applicable tax authorities. This provision does not apply to Thinktiv’s income or franchise taxes, or any taxes for which Client is exempt, provided Client has furnished Thinktiv with a valid tax exemption certificate.

3	Confidential Information

3.1

Each party agrees at all times to keep strictly confidential all Confidential Information (as hereafter defined) belonging to the other party. “Confidential Information” shall mean any information, technical data or know-how including, but not limited to, that which comprises or relates to the other party’s confidential and proprietary trade secrets, hardware, software, screens, specifications, designs, plans, drawings, data, prototypes, discoveries, research, developments, processes, procedures, intellectual property, market research, marketing techniques and plans, business plans and strategies, customer names and other information related to customers, price lists, pricing policies and financial information or other business and/or technical information and materials, in oral, demonstrative, written, electronic, graphic or machine-readable form and any analyses, compilations, studies or documents related thereto.

3.2

Each party shall at all times protect and safeguard the Confidential Information of the other and agrees not to, in whole or in part, sell, lease, license, assign, transfer, or disclose the Confidential Information to any third party and shall not copy, reproduce or distribute the Confidential Information except as expressly permitted in this Agreement. Each party shall take every reasonable precaution to prevent the theft, disclosure, and the unauthorized copying, reproduction or distribution of the Confidential Information. The parties agree, however, that Thinktiv may disclose Confidential Information on a confidential basis to a Third Party Consultant in connection with any work that the Third Party Consultant is performing on behalf of Thinktiv.

THINKTIV CONFIDENTIAL

3.3

Each party acknowledges that the other party shall have the right to take all reasonable steps to protect its Confidential Information, including, but not limited to, seeking injunctive relief and any other remedies as may be available at law or in equity in the event the other party does not fulfill its obligations under this Section.

3.4

Each party agrees to restrict access to the other party’s Confidential Information only to those employees and/or Third Party Consultants who (i) require access in the course of their assigned duties and responsibilities, and (ii) have agreed in writing to be bound by provisions no less restrictive than those set forth in this Section.

3.5

Without granting any right or license, the obligations of the parties hereunder shall not apply to any material or information that: (i) is, or at any time becomes, a part of the public domain through no act or omission of the receiving party; (ii) is independently discovered or developed by the receiving party without use of the disclosing party’s Confidential Information; (iii) is rightfully obtained from a third party without any obligation of confidentiality; or (iv) is already known by the receiving party without any obligation of confidentiality prior to obtaining the Confidential Information from the disclosing party. In addition, neither party shall be liable for disclosure of Confidential Information if made in response to a valid order of a court or authorized agency of government, provided that notice is promptly given to the party whose Confidential Information is to be so disclosed so that such party may seek a protective order and/or engage in other efforts to minimize the required disclosure. The parties shall cooperate in seeking the protective order and engaging in such other efforts.

3.6	Nothing in this Agreement shall preclude Thinktiv from using in any manner or for any purpose it deems necessary, the know-how, techniques, or procedures acquired or used by Thinktiv in the performance of Services hereunder.

4	Ownership

4.1

In the event Thinktiv provides any deliverables that are specified in a SOW (“Deliverables”), unless otherwise provided in a SOW, upon payment, Client shall own all right, title and interest in the copyright to the Deliverables, subject to Thinktiv’s rights in the Non-Custom Elements. Upon payment, all Deliverables are “works made for hire” to the extent allowed by law. In the event any Deliverables are not deemed “works made for hire,” upon payment Thinktiv hereby assigns and transfers all right, title and interest in the Deliverables to Client.

4.2

To the extent that any Deliverable incorporates any software or other materials (including design, coding, user interfaces, visual elements and data models) developed prior to or independently of the Services for Client or for which Client does not pay (“Non-Custom Elements”), Thinktiv retains ownership in such Non-Custom Elements and upon payment for the Deliverable incorporating the Non-Custom Elements, grants to Client a worldwide, nonexclusive, license to reproduce, distribute, perform and display (publicly or otherwise), and otherwise use and exploit the Non-Custom Elements and derivative works thereof solely in connection with the applicable Deliverable.

4.3

Notwithstanding anything contained herein, all general know-how, systems, software (including any modifications, enhancements, and updates), documentation, tools, utilities, methodologies, specifications, techniques and other materials resulting from Thinktiv’s performance of the Services (together with the intellectual property rights therein but excluding any Client Confidential Information) shall vest in Thinktiv. Furthermore, notwithstanding anything to the contrary in the Agreement or in a Statement of Work, Client hereby grants to Thinktiv a worldwide, nonexclusive, perpetual, irrevocable, royalty-free, transferable, sub-licensable license to (i) modify and otherwise create derivative works based on Generic Components and (ii) reproduce, distribute, perform and display (publicly or otherwise), and otherwise use and exploit the Generic Components and derivative works thereof. “Generic Components” shall mean any code, algorithm, materials, process or other items of Deliverables that have been developed or created by Thinktiv that are owned by Client and do not include or disclose any Client Confidential Information.

4.4	Thinktiv shall have no maintenance or support obligations with respect to any Deliverables or any other software (including design, coding, user interfaces, visual elements, and data models), materials, and/or related documentation provided to Client by Thinktiv under this Agreement.

Client’s Facilities. To the extent required by Thinktiv, Client will make available to Thinktiv certain of its facilities, computer resources, software, networks, personnel, and business information as are required to perform any Service hereunder. Thinktiv agrees to comply at all times with Client’s rules and regulations regarding safety, security, and conduct which Client provides to Thinktiv in writing.

Warranties. Thinktiv warrants that it has the right to enter into this Agreement. EXCEPT AS OTHERWISE STATED IN THIS AGREEMENT, THINKTIV MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED INCLUDING EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.

THINKTIV CONFIDENTIAL

Indemnity. Client shall defend, indemnify and hold harmless Thinktiv and its affiliates and their officers, directors, employees, agents and successors and assigns (“Indemnified Parties”) against (i) any and all demands, claims, and causes of action in connection with any advice rendered to Client by the Indemnified Parties (each a “Claim”); (ii) any and all damages, claims, liabilities, penalties, loss, time expended, costs and expenses arising from or related to a Claim (whether under a theory of negligence, strict liability, contract or otherwise), incurred by Indemnified Parties, including, without limitation, reasonable attorneys’ fees and costs and investigative costs (collectively, “Loss”). Indemnification shall apply even if the Loss is due in whole or in part to the negligence of any Indemnified Parties, but excluding any damages to the extent that the damages are finally determined to have resulted from the gross negligence or willful misconduct of any Indemnified Parties.

Limitation of Liability. IN NO EVENT SHALL THINKTIV BE LIABLE ON ANY THEORY OF LIABILITY, WHETHER IN AN EQUITABLE, LEGAL, OR COMMON LAW ACTION ARISING HEREUNDER FOR CONTRACT, STRICT LIABILITY, INDEMNITY, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE, FOR DAMAGES WHICH, IN THE AGGREGATE, EXCEED THE AMOUNT OF CHARGES PAID BY CLIENT FOR THE SERVICES WHICH GAVE RISE TO SUCH DAMAGES IN THE SIX (6) MONTH PERIOD PRIOR TO SUCH CLAIM AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY REMEDY. IN NO EVENT SHALL THINKTIV BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND AND HOWEVER CAUSED, INCLUDING BUT NOT LIMITED TO BUSINESS INTERRUPTION OR LOSS OF PROFITS, BUSINESS OPPORTUNITIES, OR GOOD WILL EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGE, AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY REMEDY.

7	Termination

7.1

This Agreement or any SOW hereunder may be terminated prior to expiration or completion in accordance with the following: (i) by Thinktiv if Client fails to make any payments due hereunder within fifteen (15) days after Thinktiv delivers notice of default to Client; (ii) by either party without cause on thirty (30) days prior written notice. However, no such termination shall be effective until all applicable SOWs have been completed; (iii) by either party in the event the other (i) has failed to perform any obligation required to be performed under this Agreement or a SOW and such failure is not corrected within thirty (30) days from receipt of written notice advising of such failure from the other party; or (ii) files a petition for bankruptcy or insolvency, has an involuntary petition filed against it, commences an action providing for relief under bankruptcy laws, files for the appointment of a receiver, or is adjudicated a bankrupt concern and such determination is not rescinded within sixty (60) days.

7.2	Client shall pay a prorata portion of any Service, which is incomplete at the time of termination and for which payments have not been made, and upon such payment Thinktiv shall deliver to Client copies of all such incomplete work.

7.3	Upon termination or expiration of this Agreement or any SOW, each party shall deliver to the other all copies of all applicable Confidential Information of the other party.

8	General Terms and Conditions

8.1

Independent Contractor. Thinktiv is an independent contractor and nothing in this Agreement shall be deemed to make Thinktiv an agent, employee, partner or joint venturer of Client. Neither party shall have authority to bind, commit, or otherwise obligate the other party in any manner whatsoever.

8.2

Expenses and Attorneys’ Fees. In the event any action, including arbitration, is brought to enforce any provision of this Agreement or any SOW or to declare a breach of this Agreement, the prevailing party shall be entitled to recover, in addition to any other amounts awarded, reasonable legal and other related costs and expenses, including attorney’s fees.

8.3	Assignment. Client may not assign or transfer its rights under this Agreement whether by operation of law, change of control, or in any other manner, without the prior written consent of Thinktiv. Any attempt to assign or transfer this Agreement by Client shall be void.

8.4

Notices. Any notice required under this Agreement shall be given in writing and shall be deemed effective upon delivery to the party addressed. All notices shall be sent to the applicable address specified on the face page hereof or to such other address as the parties may designate in writing. Unless otherwise specified, all notices to Thinktiv shall be sent to the attention of the President with a copy to the General Counsel.

8.5

Force Majeure. Thinktiv shall not be liable to Client for any delay or failure of Thinktiv to perform its obligations hereunder if such delay or failure arises from any cause or causes beyond the reasonable control of Thinktiv. Such causes shall include, but are not limited to, acts of God, floods, fires, loss of electricity or other utilities, labor strike, or delays by Client in providing required resources or support or performing any other requirements hereunder.

8.6	Reservation of Rights. Thinktiv reserves all rights not specifically granted herein.

8.7

Entire Agreement. This Agreement and its SOWs constitute the entire agreement between the parties regarding the subject matter hereof and supersede all proposals, prior discussions and writings between the parties with respect thereto. The terms and conditions of any purchase order or other instrument issued by Client in connection with this Agreement shall not be binding on Thinktiv.

THINKTIV CONFIDENTIAL

8.8	Modifications. The parties agree that this Agreement cannot be altered, amended or modified, except in writing which is signed by an authorized representative of both parties.

8.9

Nonsolicitation. During the term of this Agreement and for a period of two (2) years thereafter, Client agrees not to hire, solicit, nor attempt to solicit, the services of any employee or Third Party Consultant of Thinktiv without the prior written consent of Thinktiv. Client further agrees not to hire, solicit, nor attempt to solicit, the services of any former employee or Third Party Consultant of Thinktiv for a period of one (1) year from such former employee’s or Third Party Consultant’s last date of service with Thinktiv. Violation of this provision shall entitle Thinktiv to assert liquidated damages against Client equal to two hundred percent (200%) of the solicited person’s gross annual compensation.

8.10	Headings. Headings are for reference purposes only, have no substantive effect, and shall not enter into the interpretation hereof.

8.11	No Waiver. No failure or delay in enforcing any right or exercising any remedy will be deemed a waiver of any right or remedy.

8.12	Severability and Reformation. If any portion of this Agreement is determined to be or becomes unenforceable or illegal, such portion shall be reformed to the minimum extent necessary in order for this Agreement to remain in effect in accordance with its terms as modified by such reformation.

8.13	Survival. The provisions set forth in Sections 1.6, 2, 3, 4, 6.2, 7, 8, and 10 of this Agreement shall survive termination or expiration of this Agreement.

8.14

Publicity. Client agrees to cooperate with Thinktiv (i) in providing oral and/or written references to Thinktiv’s prospective customers; (ii) in providing oral and/or written references to press and industry analysts; and (iii) in delivering pre-approved quotations to be used in Thinktiv’s sales and marketing materials. Thinktiv may include Client’s tradename and logo on publicly displayed customer lists (including Thinktiv’s Internet Web Site).

8.15

Mediation. Except as provided herein, no civil action with respect to any dispute, claim or controversy arising out of or relating to this Agreement may be commenced until the matter has been submitted to the American Arbitration Association (“AAA”) for mediation. Either party may commence mediation by providing to AAA and the other party a written request for mediation, setting forth the subject of the dispute and the relief requested. The parties will cooperate with AAA and with one another in selecting a mediator and in scheduling the mediation proceedings. The mediation will be conducted in accordance with the Commercial Mediation rules of the AAA. The parties covenant that they will participate in the mediation in good faith, and that they will share equally in its costs. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator are confidential, privileged and inadmissible for any purpose, including impeachment, in any litigation or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation. Either party may seek equitable relief prior to the mediation to (i) preserve the status quo pending the completion of that process; or (ii) prevent disclosure of Confidential Information or misuse of intellectual property. Except for such an action to obtain equitable relief, neither party may commence a civil action with respect to the matters submitted to mediation until after the completion of the initial mediation session or forty-five (45) days after the date of filing the written request for mediation, whichever occurs first. Mediation may continue after the commencement of a civil action if the parties so desire. The provisions of this Section may be enforced by any court of competent jurisdiction and the party seeking enforcement shall be entitled to an award of all reasonable costs, fees and expenses, including attorneys’ fees, to be paid by the party against whom enforcement is ordered.

8.16

Choice of Law. THIS AGREEMENT SHALL BE GOVERNED AND INTERPRETED BY THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF. ANY ACTION OR SUIT RELATED TO THIS AGREEMENT SHALL BE BROUGHT IN AUSTIN, TEXAS AND EACH PARTY HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS.

THINKTIV CONFIDENTIAL

The parties hereto agree to the foregoing as evidenced by their signatures below.

Agreed to by:

THINKTIV, INC.		ALLIED INTEGRAL UNITED, INC.

By:	/s/ Steve Waters	By:	/s/ Jim Walesa

Name:	Steve Waters	Name:	James Walesa

Title:	Chief Strategy & Ventures Officer	Title:	Chief Executive Officer

Date:	March 6, 2019	Date:	March 6, 2019

Exhibit 10.31

AMENDED AND RESTATED

BACKSTOP INDEMNITY AGREEMENT

AMENDED AND RESTATED BACKSTOP INDEMNITY AGREEMENT, made and entered into on this 26^th day of February, 2020 (the “Agreement”), among (a) Allied Integral United, Inc., a Delaware corporation having an address at 8800 Village Drive, Suite 201, San Antonio, Texas 78217(the “Corporation”); and each of Steve Person, an individual that is a domicile in the State of Texas (“Person”), and James Walesa, an individual that is a domicile in the State of Texas (“Walesa”), and BJ Parris, an individual that is a domicile in the State of Texas (“Parrish” and, together with Person and Walesa, each a “Guarantor” and, collectively, the “Guarantors”). The Corporation and the Guarantors are sometimes referred to herein, individually and generically, as a “Party” and collectively, as the “Parties”.

WITNESSETH:

WHEREAS, the Corporation entered into a Backstop Indemnity Agreement dated as of December 31, 2018 with Steve Person and James Walesa which provided, inter alia, for the Corporation to indemnify such individuals for all liabilities and payment obligations that are incurred by such persons under guarantees or indemnification or co-borrower obligations;

WHEREAS, the Corporation desires to ratify and confirm such agreement and extend such indemnity obligation to Parrish;

WHEREAS, the Guarantors have guaranteed certain obligations of subsidiaries of the Corporation the and may in the future guarantee the obligations of the Corporation or its subsidiaries, pursuant to the agreements that provide for a Guarantor to act as a payment Guarantor, an indemnitor, a co-borrower (collectively, the “Guaranteed Obligations”);

WHEREAS, each of the Guarantors agreed to provide their personal guaranty or obligation of the Guaranteed Obligations for the benefit of the Corporation or one of its subsidiaries (each, the “Primary Obligor”) that had the primary obligation with respect to the Guaranteed Obligations;

NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, each of the parties hereto does hereby covenant and agree as follows:

1. Incorporation of Recitals and Exhibits. The recitals to this Agreement and any exhibits or schedules attached hereto are hereby incorporated by reference into this Agreement as if fully and completely set forth herein.

2. Certain Additional Defined Terms:

(a) “Guaranteed Person” shall mean the person that is owed the Guaranteed Obligations.

(b) “Payment” shall mean any payment made by any Guarantor on account of the Guaranteed Obligations.

(c) “Pro Rata Share” shall mean, with respect to any Guaranteed Obligations, the liability of each Guarantor with respect thereto as determined pursuant to Section 3.

(d) “Reimbursed Party” shall mean any Guarantor entitled to receive any payment pursuant to this Agreement.

(e) “Reimbursing Party” shall mean any Party obligated to make any payment to any other Party pursuant to this Agreement.

3. Payments/Pro Rata Share.

(a) If a Guarantor shall make any Payment (whether before or after demand by the Guaranteed Person), then

i the Corporation shall promptly reimburse and repay such Guarantor the full amount of such payment; and

ii any Guarantor that has paid less than the amount that required by such Guarantor, divided by the number of Guarantor’s that have such Guaranteed Obligations (per person if more than one), such percentage being 100%, if there is only one Guarantor with such Guaranteed Obligation; 50% if there are only two Guarantors with such Guaranteed Obligation; or 33% if there are three Guarantors with such Guaranteed Obligation (such percentage being the “Pro Rata Share”) shall promptly pay the other Guarantor or Guarantors the amount required so that each Guarantor has paid his Pro Rata Share of the Guaranteed Obligations that has paid by the Guarantors.

4. Interest. Any amounts owed pursuant to this Agreement and not paid within five (5) days of demand therefor shall accrue interest at the rate equal to 15% per annum, compounded annually (the “Contribution Rate”).

5. Fee. The Corporation shall pay each Guarantor a fee that is equal to $50,000 per annum, which may be paid by the issuance and delivery of the common stock of the Corporation, as determined by the Board of Directors of the Corporation in its reasonable discretion in good faith, but in any event not less than 200% of the par value of such shares.

6. Remedies. In the event any of the Parties defaults in the payment of its Guaranteed Obligations hereunder to any one or more other Parties, then any one or more Reimbursed Parties may institute legal action to enforce such payments

7. Termination of Agreement. The agreement of the Parties herein shall remain in full force and effect until all of the Guaranteed Obligations and all amounts owing under this Agreement shall be terminated and/or paid in full and the time during which any such Payment could be avoided as a preference or otherwise rescinded under the United States Bankruptcy Code or any other similar Federal or state law related to solvency, rehabilitation, liquidation or reorganization has expired.

8. Reformation. If any provision hereof shall be invalid under applicable law, then such provisions shall be deemed omitted to the extent invalid, but the remaining provisions hereof shall be given effect in accordance with the intent hereof, and the Parties agree to execute such amendments to this Agreement as may be required in order to give full effect to the intent hereof.

9. Unconditional Guaranteed Obligations. This Agreement creates an obligation of payment and not of collection and each of the Parties waives (i) any right to require that any action be brought against any Party prior to, or at the same time as, any other Party or any other person or party, (ii) any right to require that resort be had to any other security held by any Party, (iii) all notice to which any one or more Parties might otherwise be entitled and (iv) notice of presentment, protest, notice of protest, notice of non-payment, notice of dishonor, notice of intent to accelerate and notice of acceleration with respect to a default hereunder by any Party. Each Party hereby consents and agrees and acknowledges that Guaranteed Obligations hereunder shall not be released or discharged by any act or omission of any Party or any other person which would otherwise constitute or create a legal or equitable defense in favor of such Party.

10. Collection Costs. If any dispute arises between any Parties with respect to this Agreement, then all reasonable attorney’s fees and disbursements incurred by the prevailing Party in any action, arbitration or other judicial or quasi-judicial proceeding with respect to such dispute shall be paid, on demand, with interest thereon at the Contribution Rate from the date incurred until the date paid in full, by the non-prevailing Party.

11. Binding Effect; Assignment and Assumption; No Third-Party Beneficiaries.

(a) This Agreement shall be binding upon and inure to the benefit of each Party and their respective successors, assigns and legal representatives; provided, however, that no Party may, without prior written consent of the other Parties, assign any of its rights, powers, duties or Guaranteed Obligations hereunder.

(b) The Corporation shall, as a condition to entering into any agreement regarding the merger of the Corporation where the Corporation is not the surviving entity in such merger, or any transaction in which another Person owns all or substantially all of the assets of the Corporation or whereby the Corporation becomes a subsidiary of another Person, provide that the Person that acquires such assets is such surviving entity or is such parent entity assume all of the obligations of the Corporation under this Agreement to each Guarantor as fully as if such acquirer, surviving entity or parent entity was the original obligor hereunder.

(c) There shall be no third-party beneficiaries of this Agreement other than the persons described in clause (a) of this Section, and nothing herein shall be construed to be for the benefit of or enforceable by any third party.

12. Amendments. This Agreement may not be modified, waived or terminated except by an instrument in writing executed by all of the Parties.

13. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of law.

14. Counterparts. This Agreement may be executed in any number of counterparts, with the same effect as if all of the parties had signed the same document. All counterparts shall be construed together and constitute one Agreement.

15. Consent to Jurisdiction. Each Party hereby irrevocably submits to the non-exclusive jurisdiction of any state or federal court sitting in the State of New York, County of New York in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated hereby and hereby irrevocably agrees that all claims in respect of such action or proceeding maybe heard and determined in such district court or, to the extent permitted by law, in such federal court. The Parties hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.

16. Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, UNCONDITIONALLY AND INTENTIONALLY FOREVER WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER ARISING IN TORT OR CONTRACT) BROUGHT BY ANY PARTY AGAINST SUCH PARTY ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.

17. Subrogation. To the extent, but only to the extent, required by the Loan Agreement and the Guaranty, no Party shall exercise any right of subrogation with respect to any other Party with respect to Payments made to Lender until such time as all Guaranteed Obligations owed to Lender shall have been irrevocably paid in full. To the extent, but only to the extent, required by the Loan Agreement and the Guaranty, and to the extent permitted by law, each Party irrevocably releases and waives any subrogation rights or right of payment, contribution or indemnity (whether arising by operation of law, contract or otherwise) such Party may have against any other Parties if and to the extent any such right or rights would give rise to a claim under the U.S. Bankruptcy Code that Payments to Lender with respect to the Guaranteed Obligations constitute a preference in favor of any Party or a claim under the Bankruptcy Code that any such preference is recoverable from Lender. If Guarantor receives any payment from Borrower pursuant to any right of subrogation or otherwise with respect to the Guaranteed Obligations, Guarantor shall share such payment with each Party pro rata in accordance with the amounts of their respective Payments.

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Backstop Indemnity Agreement as of the day and year first above written.

	Allied Integral United, Inc.
	d/b/a Clearday, Inc.

	By:	/s/ James Walesa
	Name:	James Walesa
	Title:	CEO

	/s/ Steve Person

	Steve Person, Individually

	/s/ James Walesa

	James Walesa, Individually

	/s/ BJ Parrish

	BJ Parrish, Individually

Exhibit 10.32.1

SIMPSONVILLE BACKSTOP INDEMNITY AGREEMENT

This Simpsonville Backstop Agreement (this “Agreement”) is dated as of July 30, 2020 and is made by and among James Walesa, an individual that is a domicile in the State of Texas (“Walesa”) and Allied Integral United, Inc., a Delaware corporation having an address at 8800 Village Drive, Suite 201, San Antonio, Texas 78217(the “Corporation”).

Reference is made to that certain Amended And Restated Backstop Indemnity Agreement, dated as of February 26, 2020 (the “Backstop Indemnity Agreement”), by and among (a) the Corporation; and each of Steve Person, an individual that is a domicile in the State of Texas (“Person”), Walesa, and BJ Parris, an individual that is a domicile in the State of Texas (“Parrish” and, together with Person and Walesa, each a “Guarantor” and, collectively, the “Guarantors”). Capitalized terms used in this Agreement that are not otherwise defined in this Agreement shall have the respective meanings ascribed to such terms in the Backstop Indemnity Agreement.

WHEREAS, a copy of the Backstop Indemnity Agreement is attached to this Agreement as Exhibit I;

WHEREAS, pursuant to the Backstop Indemnity Agreement, the Corporation has indemnified each Guarantor for the Guaranteed Obligations;

WHEREAS, certain subsidiaries of the Corporation are parties to that certain litigation (the “Simpsonville Litigation”) captioned and numbered MC-Simpsonville, SC-UT, LLC v. Steve Person, et. al., Cause No. 19-0651-C368 in the 368th Judicial District Court of Williamson County, Texas (the “Specified Court”), including Memory Care America LLC (“MCA”) and Trident Healthcare Properties I, L.P. (“Trident” and, together with MCA (the “Specified Subsidiaries”);

WHEREAS, the Specified Subsidiaries may have liabilities under any judgement of the Specified Court;

WHEREAS, Walesa has agreed to fully indemnify the Corporation from and against all obligations of the Specified Subsidiaries with respect to any judgement of the Specified Court, including without limitation, all post judgment interest and costs payable by any Specified Subsidiary with respect to the Simpsonville Litigation (the “Walesa Guaranteed Obligations”);

2. Obligations of Walesa.

(a) Walesa shall promptly reimburse and repay the Corporation the full amount of the Walesa Guaranteed Obligations that is paid by the Corporation or any subsidiary of the Corporation, including without limitation, the Specified Subsidiaries.

(b) If any obligation of Walesa under Section 2(a) is not paid as and when any such obligations are due and payable by the Corporation or any of the Specified Subsidiaries, then Walesa shall pay an additional amount that is equal to 15% per annum, compounded annually (the “Contribution Rate”), from the date such obligations are due and payable until the date of full payment by Walesa.

(d) Walesa hereby releases the Corporation from and against any obligation under the Backstop Indemnity Agreement arising from or related to the Walesa Guaranteed Obligations.

3. Fee and Payments.

(a) The Corporation shall pay Walesa a fee that is equal to 2% of the amount of any judgement of the Specified Court, plus all post-judgement interest that is awarded by the Specified Court in the event that the Specified Subsidiaries (or any of them) appeal any such judgement.

(b) The fee that is payable by the Corporation shall be paid by the Corporation causing its subsidiary AIU Alternative Care, Inc. issuing shares of its 10.25% Series I Cumulative Convertible Preferred Stock (“Clearday Care Preferred”) and the Corporation granting warrants (“Clearday Warrants”) to purchase shares of the common stock of the Corporation at a unit price equal to $10.00 per unit. The fee shall be payable promptly after the date or dates that the fee is determined.

(c) The Corporation will provide (and will cause AIU Alternative Care, Inc. to provide) additional units of Clearday Care Preferred and Clearday Warrants for any and all payments that are made by Walesa at a price equal to $10.00 per unit.

4. Remedies. In the event that Walesa is in default in the payment of its Walesa Guaranteed Obligations hereunder, then the Corporation may institute legal action to enforce the payment of such obligations.

5. Reformation. If any provision hereof shall be invalid under applicable law, then such provisions shall be deemed omitted to the extent invalid, but the remaining provisions hereof shall be given effect in accordance with the intent hereof, and the Parties agree to execute such amendments to this Agreement as may be required in order to give full effect to the intent hereof.

6. Unconditional Guaranteed Obligations. This Agreement creates an obligation of payment and not of collection and Walesa waives (i) any right to require that resort be had to any security held by any of the Specified Subsidiaries, (ii) all notice to which Walesa might otherwise be entitled, (iii) notice of presentment, protest, notice of protest, notice of non-payment, notice of dishonor, notice of intent to accelerate and notice of acceleration with respect to a default hereunder by Walesa, and (iv) the Corporation or any subsidiary of the Corporation, including any of the Specified Subsidiaries, pursuing any rights against any Guaranteed Person under any obligation of such person to indemnify the plaintiff in the Specified Litigation. Walesa hereby consents and agrees and acknowledges that Walesa Guaranteed Obligations hereunder shall not be released or discharged by any act or omission of the Corporation or any of the Specified Subsidiaries or any other person which would otherwise constitute or create a legal or equitable defense in favor of Walesa.

7. Collection Costs. If any dispute arises between any Parties with respect to this Agreement, then all reasonable attorney’s fees and disbursements incurred by the prevailing Party in any action, arbitration or other judicial or quasi-judicial proceeding with respect to such dispute shall be paid, on demand, with interest thereon at the Contribution Rate from the date incurred until the date paid in full, by the non-prevailing Party.

8. Binding Effect; Assignment and Assumption; No Third-Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of each Party and their respective successors, assigns and legal representatives; provided, however, that no Party may, without prior written consent of the other Parties, assign any of its rights, powers, duties or Walesa Guaranteed Obligations hereunder.

9. Amendments. This Agreement may not be modified, waived or terminated except by an instrument in writing executed by all of the Parties.

10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to principles of conflicts of law.

11. Counterparts. This Agreement may be executed in any number of counterparts, with the same effect as if all of the parties had signed the same document. All counterparts shall be construed together and constitute one Agreement.

12. Consent to Jurisdiction. Each Party hereby irrevocably submits to the non- exclusive jurisdiction of any state or federal court sitting in the State of Texas, County of Bexar in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated hereby and hereby irrevocably agrees that all claims in respect of such action or proceeding maybe heard and determined in such district court or, to the extent permitted by law, in such federal court. The Parties hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.

13. Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, UNCONDITIONALLY AND INTENTIONALLY FOREVER WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER ARISING IN TORT OR CONTRACT) BROUGHT BY ANY PARTY AGAINST SUCH PARTY ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Backstop Indemnity Agreement as of the day and year first above written.

	Allied Integral United, Inc. d/b/a Clearday, Inc.

	By:	/s/ BJ Parrish
	Name:	B.J. Parrish
	Title:	Chief Operating Officer

	/s/ James Walesa
	James Walesa, Individually

EXHIBIT I

Copy of the Backstop Indemnity Agreement

[attached hereto]

AMENDMENT TO THAT CERTAIN

SIMPSONVILLE BACKSTOP INDEMNITY AGREEMENT

This amendment (this “Amendment”) to the Simpsonville Backstop Agreement (the “Agreement”) is dated as of January 19_, 2021 and is made by and among James Walesa, an individual that is a domicile in the State of Texas (“Walesa”) and Allied Integral United, Inc., a Delaware corporation having an address at 8800 Village Drive, Suite 201, San Antonio, Texas 78217(the “Corporation”).

Reference is made to the Agreement dated as of July 30, 2020. Capitalized terms used in this Amendment that are not otherwise defined in this Amendment shall have the respective meanings ascribed to such terms in the Agreement.

WHEREAS, Walesa has agreed to fully indemnify the Corporation from and against all Walesa Guaranteed Obligations;

WHEREAS, under the Agreement, the obligations of Walesa are unsecured and personal obligations of Walesa;

WHEREAS, the Corporation has cause to believe that cash resources of Walesa may become subject to payment to MC-Simpsonville, SC-UT, LLC and its affiliates and, accordingly, for the Corporation to have reasonable assurances for the Walesa Guaranteed Obligations to be paid on a timely basis by Walesa, the Corporation and Walesa have agreed that Walesa will guaranty the Walesa Guaranteed Obligations by the pledge of Walesa’s stock or equity interests in the Corporation and each of its subsidiaries.

1. Incorporation of Recitals and Exhibits. The recitals to this Agreement and any exhibits or schedules attached hereto are hereby incorporated by reference into this Agreement as if fully and completely set forth herein.

2. Obligations of Walesa.

Section 2(c) of the Agreement is hereby amended to read in its entirety as follows:

The obligations of Walesa under this Agreement are personal obligations of Walesa and secured by the pledge of all stock or any equity interests of Walesa in the Corporation and its subsidiaries (collectively, the “Pledged Securities”), including without limitation: (i) shares of common stock, par value $0.01 per share (“AIU Common Stock”); (ii) warrants to purchase shares of AIU Common Stock (“AIU Warrants”); (iii) shares of 6.75% Series A Cumulative Convertible Preferred Stock, par value $0.01 per share (“Series A Preferred”); and (iv) shares ofthe 10.25% Series I Cumulative Convertible Preferred Stock, par value $0.01 per share, of AIU Alternative Care, Inc., a Delaware corporation (“AIU Care”). The pledge of the Pledged Securities shall be under the terms and conditions of that certain Securities Pledge Agreement dated as of even date of this Amendment.

3. Ratification. The terms and conditions of the Agreement are, as amended by the terms of this Amendment, hereby ratified and confirmed in all respects. From and after the date of this Amendment, the terms and conditions of the Agreement shall be amended in all respects by the terms and conditions of this Amendment.

4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Texas, without regard to principles of conflicts oflaw.

5. Counterparts. This Amendment may be executed in any number of counterparts, with the same effect as if all of the parties had signed the same document. All counterparts shall be construed together and constitute one amendment or agreement for amendment.

6. IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment as of the day and year first above written.

Allied Integral United, Inc.

d/b/a Clearday, Inc.

ATTACHMENT

Copy of Securities Pledge Agreement

[attached hereto]

Exhibit 10.32.2

SECURITIES PLEDGE AGREEMENT

TIDS SECURITIES PLEDGE AGREEMENT (this “Agreement”) is made as of January 19_ 2021 (the “Effective Date”), by and among James Walesa, an individual that is a domicile in the State of Texas (“Walesa” also referred to as the “Pledgor”) and Allied Integral United, Inc., a Delaware corporation having an address at 8800 Village Drive, Suite 201, San Antonio, Texas 78217 (the “Corporation” and also referred to as the “Pledgee”). (collectively, the “Pledgor”) in favor of the Pledgee.

RECITALS:

WHEREAS, Pledgee has obligations (the “Walesa Guaranteed Obligations”) under that certain Simpsonville Backstop Agreement, as amended to and including the date ofthis Agreement (the “Indemnity Agreement”);

WHEREAS, the Pledgee has agreed to collateralize and secure the Walesa Guaranteed Obligations by granting a security interest in the securities listed on Schedule A, attached hereto, and all and any other securities issued by the Corporation or any subsidiary of the Corporation, including any options or warrants or other rights to acquire any securities of the Corporation or any subsidiary ofthe Corporation or any subsidiary ofthe Corporation (collectively, the “Pledged Securities”);

WHEREAS, capitalized terms used in this Agreement and not otherwise defined herein shall have the meaning ascribed to such term in the Indemnity Agreement; and

WHEREAS, in order to secure the payment ofany and all obligations ofPledgor under the Indemnity Agreement, Pledgor hereby pledges and grants Pledgee a security interest in all of the Pledged Securities in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises, the truth and accuracy of which are hereby acknowledged by the Parties, and in order to induce Pledgee to continue to incur obligations regarding the Simpsonville Litigation without currently demanding the fully payment thereof on or prior to the date of this Agreement and for other good and valuable consideration, the receipt and sufficiency ofwhich is hereby acknowledged, Pledgor hereby agrees as follows:

AGREEMENT:

1.	Definitions.

(a) The term “Company” shall mean the Corporation and, unless the context otherwise requires, AIU Alternative Care, Inc., a Delaware corporation and each other subsidiaries of the Corporation and/or their respective successors.

(b) The term “Event of Default” shall mean and include: (i) any material inaccuracy in any representation or warranty made by Pledgor in this Agreement; (ii) any breach of Pledgor’ s covenants contained in this Agreement; or (iii) any default under the terms of the Indemnity Agreement that is not cured within five (5) business days after notice of such default by the Corporation.

(c) The term “Instruments” shall mean each certificate or other instrument (if any) representing any of the Pledged Securities.

(d) The term “Obligations” shall mean all debts, obligations and liabilities of Pledgor to Pledgee under the Indemnity Agreement, including the Walesa Guaranteed Obligations.

(e) The term “Securities Laws” shall mean, collectively, the Securities Act of 1933, as amended, as now or hereafter in effect, any similar federal or state statute and blue sky laws now or hereafter enacted analogous in purpose or effect.

(f) The term “UCC” shall mean the Uniform Commercial Code as now enacted or hereafter in effect in the State of Delaware.

(g) All other capitalized terms not defined herein shall have the meanings ascribed thereto in the Indemnity Agreement.

2.	Pledge and Security Interest.

To secure all of the Obligations, Pledgor hereby grants, pledges, hypothecates, assigns and delivers to Pledgee a first priority security interest in all of Pledgor’s respective right, title and interest in and to the Pledged Securities, including, without imitation (i) all rights and interest of Pledgor in the capital of the Company deriving or arising from the Pledged Securities and, subject to Section 7, all rights of Pledgor to receive distributions, cash, instruments and other property from time to time receivable or otherwise distributable in respect of the Pledged Securities, (ii), subject to Section 7, all other payments due or to become due to Pledgor in respect of the Pledged Securities including, but not limited to, all rights of Pledgor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Pledged Securities, (iii), subject to Section 6, any right of Pledgor to perform and exercise consensual or voting rights thereunder and to compel performance and otherwise exercise all remedies thereunder deriving or arising from the Pledged Securities,

(iv) subject to Section 7, all rights of Pledgor deriving or arising from the Pledged Securities, to all property and assets of the Company (whether real property, inventory, equipment, contract rights, accounts, receivables, general intangibles, securities, instruments, chattel paper, documents, choses in action, licenses, permits or otherwise), (v) all certificates or instruments (if any) evidencing the Pledged Securities or other ownership thereof in the Company or its assets, and (vi) to the extent not included in the foregoing, all proceeds of any and all of the foregoing (including, without limitation, proceeds that constitute property of the types described above).

3.	Delivery of Certificates for Pledged Securities.

Simultaneously with the execution of this Agreement, Pledgor shall transfer and deliver to Pledgee the Instruments evidencing the Pledged Securities. The foregoing Instruments shall be accompanied by a unit transfer power, duly endorsed in blank by Pledgor, to the benefit of Pledgee. Pledgee shall have the right, upon Pledgor’s default in the payment or performance of the Obligations, in its discretion, to transfer to or to register in the name of Pledgee or any of its nominees any or all of the Pledged Securities; provided, that Pledgee shall promptly notify Pledgor of any such transfer or registration, but the failure to provide such notice will not invalidate such transfer or registration; provided, further, that upon the cure or waiver of any such default, the Pledgee shall promptly re-transfer such Pledged Securities to Pledgor and register such Pledged Securities in the name of Pledgor.

4.	Additional Property to be Pledged.

If Pledgor receives, or becomes entitled to receive, any units or other Instruments representing securities of the Company with respect to such Pledged Securities (including, without limitation, any certificates issued pursuant to the declaration of a dividend or unit split, or pursuant to a merger, recapitalization or reorganization), Pledgor agrees to accept the same as Pledgee’s and to hold the same in an express trust for the benefit of Pledgee and to deliver the same forthwith to Pledgee, in the identical form in which the same was received, and, upon request of Pledgee, together with Pledgor’s unit transfer power duly executed in blank. Such certificates shall be held on behalf of Pledgee subject to the terms hereof as further security for the Obligations. All such Instruments required to be pledged under this Section 4 shall be included within, held, applied and disposed of as part of the Pledged Securities pursuant to the terms of this Agreement. All other proceeds of, substitutions for and distributions regarding the Pledged Securities received by Pledgor will be held by Pledgor in express trust for Pledgee, will not be commingled with any other funds or property of Pledgor, and will be turned over to Pledgee in precisely the form received (but endorsed by Pledgor, if necessary) not later than the business day following the day of their receipt by Pledgor; and all proceeds of, substitutions for and distributions relating to the Pledged Securities will be held by Pledgee as Pledged Securities hereunder.

5.	Certain Representation, Warranties and Covenants of Pledgor.

Pledgor makes the following representations, warranties and covenants to Pledgee:

(a) Ownership. The Pledged Securities are titled in the name of Pledgor and Pledgor is the sole legal and beneficial owner of the Pledged Securities.

(b)

Authority.

(i) Pledgor has all necessary power and authority and capacity to enter into this Agreement and perform Pledgor’s obligations hereunder.

(ii)

The execution, delivery and performance of this Agreement:

	(A)	does not require the approval of any governmental agency, other entity or person; and

	(B)	will not violate any law, agreement or restriction by which Pledgor is bound.

(iii) This Agreement is the legal, valid and binding obligation of Pledgor, and is enforceable against Pledgor in accordance with its terms.

(i) The Pledged Securities are, and during the term of this Agreement will be, owned by Pledgor free and clear of any pledge, mortgage, security interest, hypothecation, lien, charge, encumbrance, conditional sale and other title retention agreements, choate and inchoate tax liens, assessments, covenants, restrictions, reservations, rights or claims of third parties, other burdens and any security interest therein, except the security interest granted under this Agreement for the benefit of Pledgee.

(ii) The Pledged Securities are, and during the term of the Agreement will be, free from any rights of first refusal or other restrictions (other than those in favor of Pledgee) that could impair, impede or affect Pledgee’s sale of the Pledged Securities. The Pledged Securities are not subject to any restrictions on transfer and/or disposition by Pledgor or Pledgee.

(d)

Maintenance of Security Interest; Defend Pledgee’s Rights.

(i) Pledgor will take any action reasonably requested by Pledgee to preserve the Pledged Securities and to perfect, establish the priority of, continue perfection and enforce Pledgee’s interest in the Pledged Securities and Pledgee’s rights under this Agreement (including the delivery of any unit powers and endorsements deemed necessary by Pledgee). Pledgor warrants and will defend and preserve Pledgee’s right, title and first priority security interest in and to the Pledged Securities against the claims and legal proceeding of any and all third parties.

(ii)

In addition, Pledgor will:

	(A)	pay and discharge when due all taxes, levies and other charges or fees which may be assessed against the Pledged Securities;
	(B)	not sell, assign (by operation of law or otherwise), transfer or otherwise dispose of the Pledged Securities to any party;
	(C)	not permit the Pledged Securities to be used or owned in violation of any applicable law, regulation or policy of insurance;
	(D)	not make any instructions or entitlement orders which are contrary to the terms of this Agreement; and
	(E)	not create or suffer to exist any lien or encumbrance upon or with respect to the Pledged Securities, except the p edge, assignment, hypothecation and security interest created by tbis Agreement.

(e) Certificates and Instruments. Tue Instruments described herein are all o :the Instruments, whether or not in the possession of Pledgor, which relate to the Pledge Secunties, and all of such Instruments are being delivered to Pledgee contemporaneously herewith.

(f) Holding Periods. Pledgor will promptly furnish to Ple gee sue inf ation as Pledgee deems necessary to comply with Securities Laws as to the holding and d1sposrb.on of any Pledged Securities, and to determine the status of the Pledged Securities under Securities Laws, all in form satisfactory to Pledgee and at Pledgor’ s expense.

6.	Exercise of Voting Rights.

Until the occurrence of an Event of Default, Pledgor shall be entitled to exercise all voting and other rights pertaining to the Pledged Securities for any purpose not inconsistent with this Agreement. During the continuance of an Event of Default, Pledgee shall have the sole right, without notice, to exercise voting and all other rights under or with respect to the Pledged Securities and give consents, waivers and ratifications in respect thereof, and Pledgor shall deliver to Pledgee such proxies and other documents as Pledgee may request to effectuate the foregoing.

7.	Dividend and Distributions.

(a) Unless an Event of Default is then continuing, Pledgor shall be entitled to receive and retain any ordinary distributions (including tax distributions) paid with respect to the Pledged Securities. During the continuance of an Event of Default, all dividends and other distributions and returns of capital with respect to the Pledged Securities shall be paid to Pledgee and shall be applied by Pledgee to the Obligations in the manner described in Section 7(b) hereof.

(b) Notwithstanding the foregoing, Pledgor’s right to receive and retain any and all distributions, dividends and payments in respect of the Pledged Securities purported to be pledged and assigned by Pledgor hereunder shall be further limited as follows: (i) distributions paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any such Pledged Securities; and (ii) distributions paid or payable in cash in respect of any such Pledged Securities in connection with a partial or total liquidation or dissolution of the Company shall be forthwith delivered to Pledgee to hold and shall, if received by Pledgor, be received in trust for the benefit of Pledgee, be segregated from the other property or funds of Pledgor and be forthwith delivered to Pledgee as collateral in the same form as so received (with any necessary endorsement or assignment) to be applied to the Obligations in such order as Pledgee may determine in its sole and absolution discretion.

8.	Events of Default; Remedies.

(a) During the continuance of an Event of Default, Pledgee shall be entitled to exercise all of the rights and remedies available to a secured party under the UCC as may be amended from time to time and other applicable law and all rights and remedies available to it under this Agreement. In any event, such rights and remedies shall include, without limitation: (i) the right to exercise and enforce its rights under Sections 6 and 7 hereof with respect to the Pledged Securities; and (ii) the right to sell, assign, transfer, endorse and deliver the whole or any part of the Pledged Securities or any interest therein at public or private sale for cash, upon credit or for other property, for immediate or future delivery, and for such price or prices and on such terms as Pledgee in its sole discretion shall deem appropriate. Pledgee shall conduct any such sale of the Pledged Securities effected by it in compliance with (or under an exemption from) applicable Securities Laws. Upon consummation of any such sale, Pledgee shall have the right to assign, transfer, endorse and deliver to the purchaser or purchasers thereof the Pledged Securities or any portion thereof so sold. Each such purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Pledgor and Pledgor does hereby waive all rights of redemption, stay and appraisal which Pledgor now has or may at any time in the future have under any rule of law or statute now exiting or hereafter enacted. Pledgee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) Terms of Sale. At any sale made pursuant to this Section 8, Pledgee may bid for or purchase, free from any right of redemption, stay and appraisal on the part of Pledgor (all said rights being also hereby waived and released to the extent permitted by law), any portion of or all the Pledged Securities offered for sale and may make payment on account thereof by using any claim, or any portion thereof, then due and payable to Pledgee from Pledgor.

(c) Application of Proceeds. During the continuance of an Event of Default, the proceeds of the sale or other disposition of any of the Pledged Securities shall be applied by Pledgee as follows: (i) first, to the payment of the costs and expenses of such sale or other disposition, including the out-of-pocket expenses of Pledgee and the reasonable fees and expenses of legal counsel employed in connection therewith, and to the payment of all reasonable costs and expenses incurred by Pledgee in connection with the administration and enforcement of this Agreement; (ii) second, to the payment of accrued and unpaid interest upon the Obligations described; (iii) third, to the payment of all unpaid Obligations; and (iv) fourth, any surplus after such application shall be paid to Pledgor, the representatives and assigns of Pledgor or as otherwise required by law or as a court of competent jurisdiction may direct.

(d) Notwithstanding any provision contained herein to the contrary, Pledgor shall neither pursue any recourse nor seek any remedies against Pledgor but shall exercise all of Pledgor’s rights and remedies available under this Agreement or at law solely with respect to the Pledged Securities.

9.	Further Assurances.

Pledgor agrees to cooperate with Pledgee and to execute and deliver, or cause to be executed and delivered, all such other papers and to take all such other actions as Pledgee may request from time to time in order to carry out the purposes of this Agreement. Without limiting the foregoing, Pledgor agrees that all Pledged Securities shall at all times be in such form that Pledgee may sell, transfer, or otherwise dispose of same without any signature, action, or assistance from Pledgor; and Pledgor agrees to deliver to Pledgee the Pledged Securities (whether pledged at inception, by substitution or by addition) endorsed in blank and with executed unit powers, as appropriate and as requested by Pledgee. Pledgor further authorizes Pledgee to file one or more :financing or continuation statements, and amendments thereto, relative to all or any part of the Pledged Securities without the signature of the Pledgor where permitted by law. A photocopy or other reproduction of this Agreement or any :financing statement covering the Pledged Securities, or any part thereof shall be sufficient as a :financing statement where permitted by law.

10.	Return of Pledged Securities.

This Agreement shall create a continuing pledge, assignment of, hypothecation of and security interest in the Pledged Securities and shall remain in full force and effect until the irrevocable payment in full of all Obligations or the termination of this Agreement in writing by Pledgee, whichever occurs first. When all of the Obligations are irrevocably and fully paid and fully discharged, this Agreement shall terminate (except as otherwise provided herein) and Pledgor shall be entitled to the return of all the Pledged Securities not used or applied toward payment and discharge of the Obligations, and Pledgee agrees, upon such full payment and discharge of such Obligations, to return all such Pledged Securities which then may be in its custody hereunder to Pledgor or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.

11.	Duty of Pledgee; Exercise of Rights and Remedies.

Absent gross negligence or intentional misconduct, Pledgee shall neither have any duty to protect or preserve any of the Pledged Securities nor any income with respect thereto or as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining to any of the Pledged Securities. Pledgor expressly acknowledges that Pledgee has no duty to: (a) insure the Pledged Securities against hazards; (b) give to Pledgor any notices, account statements, proxies or communications received by Pledgee regarding the Pledged Securities; (c) perfect or continue perfection of any security interest in the Pledged Securities in favor of Pledgor; (d) inform Pledgor of any decline in the value of the Pledged Securities or the existence of any option or elections with respect to the Pledged Securities; (e) take any action to invest or manage the Pledged Securities; (f) exercise, preserve or notify Pledgor with respect to any exchanges, puts, calls, redemptions, conversions, maturities, offers, tenders and other rights or requirements regarding the Pledged Securities or Pledgor’ s interest therein; or (g) sue or otherwise take action to preserve Pledgor’s or Pledgee’s interest in the Pledged Securities. After an Event of Default, Pledgee may exercise its rights and remedies with respect to any of the Pledged Securities without resort or regard to other security or sources of payment for Pledgor’s obligations. The foregoing also applies if Pledgee is deemed entitlement holder as to any Pledged Securities.

12.	Terms Subject to Applicable Law.

All rights, powers and remedies provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement invalid, illegal or unenforceable. If any term of this Agreement or any application thereof shall be held to be invalid, illegal or unenforceable, the validity of any other terms of this Agreement or any other applications of such term shall in no way be affected thereby.

13.	Security Interest Absolute.

The obligations of Pledgor under this Agreement are independent of the Obligations, and a separate action or actions may be brought and prosecuted against Pledgor to enforce this Agreement. All rights of Pledgee and the assignment, hypothecation and security interest hereunder, and all obligations of Pledgor hereunder, shall be absolute and unconditional, to the extent permitted by applicable law, irrespective of: (a) any lack of validity or enforceability of the Indemnity Agreement or any other agreement or instrument relating to the Obligations; (b) any change in the time, manner or place of payment of or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any document relating to the Obligations, including, without limitation, any increase in the Obligations resulting from the extension of additional credit to the Company; (c) any taking, exchange, release or non-perfection of any other collateral, or any taking, release or amendment or waiver of, or consent to departure from any guaranty, for all or any of the Obligations; (d) any manner of application of collateral, or proceeds thereof, to all or any of the Obligations, or any manner of sale or other disposition of any collateral for all or any of the Obligations or any other assets of Secured Party; or (e) any other circumstances which might otherwise constitute a defense available to, or a discharge of, Pledgor or a third party grantor of a security interest.

14.	Miscellaneous.

(a) Waivers. No failure to exercise, and no delay in exercising on the part of Pledgee, any right, power or remedy under this Agreement or the Indemnity Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or remedy hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power, or remedy. The failure of Pledgee to insist upon the strict observance or enforcement of any provision of this Agreement or the Indemnity Agreement shall not be construed as a waiver or relinquishment of such provision. Any waiver of any right, power, remedy, term or condition contained herein shall only be effective if it is in writing and signed by Pledgee and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Pledgor hereby waives any claim of marshalling of assets against Pledgee.

(b) Survival of Agreements. All representations, warranties, covenants and agreements made by Pledgor in this Agreement or in any instrument, document or certificate furnished hereunder or in connection herewith shall be deemed to have been relied upon by Pledgee, notwithstanding any investigation heretofore or hereafter made by Pledgee, and shall survive the execution and delivery of this Agreement.

(c) Governing Law. This Agreement shall be construed in accordance with the laws of the State of Texas, without application of its conflict oflaw principles.

(d) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of Pledgee and Pledgor and their respective successors and assigns. This Agreement shall not be assigned by Pledgor. Pledgee may assign or otherwise transfer all or any portion of its rights in the Pledged Securities, and such assignee shall thereupon become vested with all of the benefits in respect thereof granted to Pledgee herein or otherwise.

(e) Counterparts; Amendments. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which when taken together shall be deemed to constitute one and the same agreement. This Agreement may only be amended by a writing executed by Pledgor and Pledgee.

(f) Headings. The Section headings set forth in this Agreement are for convenience of reference only and shall not be deemed to define or limit the provisions hereof or to affect in any way their construction and application.

(g) Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder (each, a “Notice”) shall be in writing and addressed to the parties at the addresses set forth on the signature page of this Agreement (or to such other address that may be designated by the receiving party from time to time in accordance with this Section). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre paid), facsimile or email (with confirmation of transmission) or certified or registered mail (in each case, return receipt requested, postage pre-paid). Except as otherwise provided in this Agreement, a Notice is effective only (a) upon receipt by the receiving party, and (b) if the party giving the Notice has complied with the requirements of this Section.

(h) Reinstatement. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by Pledgee in respect of the Obligations is rescinded or must otherwise be restored or returned by Pledgee upon the insolvency or banlauptcy of Pledger or upon the appointment of any intervenor or conservator of, or trustee or similar official for Pledger or any substantial part of its assets, or otherwise, all as though such payments had not been made.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed the foregoing Securities Pledge Agreement as of the Effective Date.

PLEDGOR:

/s/ James Walesa
James Walesa, Individually

Address for Notices:
c/o Allied Integral United, Inc. 8800 Village Drive. 2nd Floor San Antonio, TX 78217

PLEDGEE:

ALLIED INTEGRAL UNITED, INC.,
A Delaware corporation

By:
	Name:
	Title:

Address for Notices:
8800 Village Drive. 2nd Floor San Antonio, TX 78217 Attention: Secretary

Schedule A

Pledged Securities

1.	Stock of Allied Integral United, Inc.

		a.	140,091.00 shares of Corporation’s common stock (ATIJ Common Stock)

		b.	48,500.00 warrants to purchase ATIJ Common Stock

		c.	181,659.00 shares of the Corporation’s 6.75% Series A Cumulative Convertible Preferred Stock, par value $0.01 per share and all accrued interest thereon

2.	Stock of AIU Alternative Care, Inc.

		a.	48,500.00 shares of the 10.25% Series I Cumulative Convertible Preferred Stock, par value $0.01 per share, of ATIJ Alternative Care, Inc., and all accrued interest thereon

Exhibit 10.33

Restricted Stock Award Agreement

This Restricted Stock Award Agreement (this “Agreement”) is made and entered into as of [DATE], [YEAR] by and between Clearday, Inc., a Delaware corporation (the “Company”) and [NAME] (the “Holder”).

WHEREAS, the Company has employed the Holder for services to the Company or any of its subsidiaries under an agreement, written or oral (the “Services Agreement”); and

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its shareholders to grant to the Holder the award of Restricted Stock provided for herein for services to be provided by the Holder as additional compensation;

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

1. Grant of Restricted Stock.

The Company hereby issues to the Holder on the date of this Agreement (the “Grant Specified Date”) a Restricted Stock Award consisting of, in the aggregate, [ INSERT THE NUMBER OF SHARES] shares of Common Stock of the Company (the “Restricted Stock”), on the terms and conditions and subject to the restrictions set forth in this Agreement. The grant of the Restricted Stock is in addition to the shares of Common Stock or other awards that the Company may issue under the terms and conditions of any equity incentive plan that may have been adopted by the Company (the “Plan”).

2. Consideration.

The grant of the Restricted Stock is made in consideration of the services to be rendered by the Holder to the Company under the terms of the Services Agreement. The Holder shall have been deemed to have paid to the Company, and the Company shall be deemed to have received, value that is in excess of the par value of the Restricted Stock as of the Grant Specified Date and the shares of the Restricted Stock is duly and validly issued, fully paid and non-assessable.

3. Restricted Period; Vesting.

3.1. Except as otherwise provided herein, provided that the Holder continues to provide services under the terms of the Services Agreement or as otherwise may be agreed by the Company and the Holder and such services have not been terminated by the Company or the Holder under the terms of the Services Agreement or otherwise (“Continuous Service”) through the applicable vesting date, and further provided that any additional conditions set forth in SECTION 3.2 have been satisfied, the Restricted Stock will vest in accordance with the following schedule:

Vesting Date	Shares of Restricted Stock
[to insert]	[to insert]

3.2. Additional Conditions to Vesting. The Restricted Stock will not vest until the following conditions are satisfied or waived in the discretion of the Company:

3.2.1. The date that is 6 months after the date that (i) the Company conducts and offering of its equity securities in an offering registered under the Securities Act of 1933, as amended (the “Securities Act”); or (ii) the Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); OR

3.2.2. The Acquired Stock Trading Date of the equity securities (“Newco Stock”) that are issued by a corporation that is subject to the periodic reporting requirements (a “Public Company Acquiror”) for the acquisition of all or substantially all of the assets or equity securities of the Company; OR

3.2.3. If earlier, the date that is two (2) years after the Grant Specified Date.

3.3. For the purposes of this Agreement, the term “Acquired Stock Trading Date” shall mean the date that the holder of the Newco Stock has the right to sell the Newco Stock or the common stock that would be issued by the Public Company Acquiror upon the exercise or conversion of such Newco Stock on a market or exchange without the holder obtaining any regulatory consents or approvals, other than filings that may be required under SEC Rule 144.

3.4. The period over which the Restricted Stock vests is referred to as the “Restricted Period”.

4. Risk of Forfeiture.

4.1. Notwithstanding the provisions of Section 3, the shares of Restricted Stock issued to Holder are subject to the risk of forfeiture described in this Section 4 and upon any of the events described in this Section 4.1and all shares of Restricted Stock that are not then vested under the provisions of Section 3 shall be cancelled and void ab initio.

4.1.1. The Holder’s Continuous Service is terminated by the Company because of (i) a breach or default by Holder under the terms of the Service Agreement which is not cured within 30 days; or (ii) the services that are provided by Holder cause the Company or its subsidiaries to infringe upon the intellectual property rights of another person;

4.1.2. The Holder terminates the services of Holder under the Services Agreement other than for nonpayment of amounts that are due and payable or other breach by the Company, in each case, after a failure to cure such nonpayment within 30 days.

4.2. Notwithstanding the provisions of Section 3, the shares of Restricted Stock issued to Holder will vest upon the closing of a transaction that results in a Change in Control.

4.3. For the purposes of this Agreement, the phrase “Change in Control” shall mean the following:

4.3.1. any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 50% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (I) of SECTION 4.3.3, below;

4.3.2. during any period of twelve (12) month period, individuals who at the beginning of such period constitute the Board, and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose election by the Board or nomination for election by the Company’s shareholders was approved by a majority vote of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved, cease for any reason to constitute at least a majority of the Board;

4.3.3. there is consummated a merger or consolidation of the Company with any other corporation or other entity, other than (I) a merger or consolidation which results in (A) the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation and (B) the individuals who comprise the Board immediately prior thereto constituting immediately thereafter at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof, or (II) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 50% or more of the combined voting power of the Company’s then outstanding securities; or

4.3.4. the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the assets of the Company (it being conclusively presumed that any sale or disposition is a sale or disposition by the Company of all or substantially all of its assets if the consummation of the sale or disposition is contingent upon approval by the Company’s stockholders unless the Board expressly determines in writing that such approval is required solely by reason of any relationship between the Company and any other Person or an Affiliate of the Company and any other Person), other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity (i) at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale or disposition and (ii) the majority of whose board of directors immediately following such sale or disposition consists of individuals who comprise the Board immediately prior thereto.

4.4. Notwithstanding SECTION 4.3 to the contrary, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the capital stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

5. Representations of the Holder.

5.1. The Holder is not acquiring the Restricted Stock for any distribution or assignment and understands that the Restricted Stock may not be sold, transferred or assigned in whole or in part.

5.2. The Holder acknowledges that the Restricted Stock granted herein is subject to dilution.

5.3. The Holder agrees that to vote all of the shares of the Common Stock in favor of any transaction that is a Change in Control that is supported by the Board.

6. Restrictions.

Subject to any exceptions set forth in this Agreement, during the Restricted Period, the Restricted Stock or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Holder. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Stock or the rights relating thereto during the Restricted Period shall be wholly ineffective and, if any such attempt is made, the Restricted Stock will be forfeited by the Holder and all of the Holder’s rights to such shares shall immediately terminate without any payment or consideration by the Company.

7. Rights as Shareholder; Dividends.

7.1. The Holder shall be the record owner of the Restricted Stock until the shares of Common Stock are sold or otherwise disposed of, and shall be entitled to all of the rights of a shareholder of the Company including, without limitation, the right to vote such shares and receive all dividends or other distributions paid with respect to such shares. Notwithstanding the foregoing, any dividends or other distributions shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid.

7.2. The Company may issue stock certificates or evidence the Holder’s interest by using a restricted book entry account with the Company’s transfer agent. Physical possession or custody of any stock certificates that are issued shall be retained by the Company until such time as the Restricted Stock vests.

7.3. If the Holder forfeits any rights he or she has under this Agreement in accordance with Section 3 of this Agreement, the Holder shall, on the date of such forfeiture, no longer have any rights as a shareholder with respect to the Restricted Stock and shall no longer be entitled to vote or receive dividends on such shares.

8. No Right to Continued Service. This Agreement shall not confer upon the Holder any right to be retained as a Holder of the Company or in any other capacity. Further, nothing in this Agreement shall be construed to limit the discretion of the Company to terminate the Holder’s Continuous Service at any time.

9. Adjustments. If any change is made to the outstanding Common Stock or the capital structure of the Company, if required, the shares of Common Stock shall be adjusted in the same manner on a pro rata basis as though all of the Restricted Stock is vested.

10. Tax Liability and Withholding.

10.1. As a condition to the issuance of any Restricted Stock, the Company may withhold, or require the Holder to pay or reimburse the Company for, any taxes which the Company determines are required to be withheld under federal, state or local law in connection with the grant or vesting of the Restricted Stock.

10.2. Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Holder’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant or vesting of the Restricted Stock or the subsequent sale of any shares and (b) does not commit to structure the Restricted Stock to reduce or eliminate the Holder’s liability for Tax-Related Items.]

11. Section 83(b) Election. The Holder may make an election under Code Section 83(b) (a “Section 83(b) Election”) with respect to the Restricted Stock. Any such election must be made within thirty (30) days after the Grant Specified Date. If the Holder elects to make a Section 83(b) Election, the Holder shall provide the Company with a copy of an executed version and satisfactory evidence of the filing of the executed Section 83(b) Election with the US Internal Revenue Service. The Holder agrees to assume full responsibility for ensuring that the Section 83(b) Election is actually and timely filed with the US Internal Revenue Service and for all tax consequences resulting from the Section 83(b) Election.

12. Compliance with Law. The issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Holder with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. No shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Holder understands that the Company is under no obligation to register the shares of Common Stock with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

13. Legends. A legend may be placed on any certificate(s) or other document(s) delivered to the Holder indicating restrictions on transferability of the shares of Restricted Stock pursuant to this Agreement or any other restrictions that the Board may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any applicable federal or state securities laws or any stock exchange on which the shares of Common Stock are then listed or quoted.

14. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the CEO of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Holder under this Agreement shall be in writing and addressed to the Holder at the Holder’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

15. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Delaware without regard to conflict of law principles.

16. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Holder and the Holder’s beneficiaries, executors, administrators and the person(s) to whom the Restricted Stock may be transferred by will or the laws of descent or distribution.

17. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each provision of this Agreement shall be severable and enforceable to the extent permitted by law.

18. Amendment. This Agreement may be amended only with the consent of the Holder and the Company.

19. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

20. Acceptance. The Holder has read and understands the terms and provisions thereof, and accepts the Restricted Stock subject to all of the terms and conditions of this Agreement. The Holder acknowledges that there may be adverse tax consequences upon the grant or vesting of the Restricted Stock or disposition of the shares and that the Holder has been advised to consult a tax advisor prior to such grant, vesting or disposition.

[signature page follows]

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

	Clearday, Inc.

	By:
	Name:
	Title:

	Holder


	[NAME]

Exhibit 10.34

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into as of ____________, by and between Clearday, Inc., a Delaware corporation (the “Company”), and the undersigned individual (“Indemnitee”).

WITNESSETH THAT:

WHEREAS, highly competent persons have become more reluctant to serve corporations as directors, officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Amended and Restated Certificate of Incorporation of the Company (the “Certificate”) and the Bylaws of the Company (the “By-laws”) require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”). The Certificate, the By-laws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board with respect to indemnification;

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

Indemnification Agreement

WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate and the By-laws and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and

WHEREAS, Indemnitee does not regard the protection available under the Certificate, the By-laws or insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director, or in any similar capacity, without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified.

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a director of the Company after the date hereof, the parties hereto agree as follows:

1. Indemnity of Indemnitee.

The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent not prohibited by law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

(a) Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(a) if, by reason of his Corporate Status (as hereinafter defined), Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), liability and loss (including judgments, fines, ERISA excise taxes or penalties, amounts paid or to be paid in settlement, and any interest, assessments, or other charges imposed on any such amounts, and any federal, state, local, or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement) (collectively, “Liabilities”) actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the interests of the Company and with respect to any criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful, it being acknowledged that any action taken by the Indemnitee upon the advice of counsel shall provide a rebuttable presumption that such action was not opposed to the interests of the Company or that Indemnitee had no reasonable cause to believe his conduct was unlawful.

(b) Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually incurred by Indemnitee, or on Indemnitee’s behalf, in connection with such Proceeding if Indemnitee acted in good faith; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware (or any successor thereto, the “Delaware Court”) shall determine that such indemnification may be made.

Indemnification Agreement

(c) Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent not prohibited by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 1 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

(d) If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses and Liabilities, but not, however, for the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled.

2. Additional Indemnity.

(a) In addition to, and without regard to any limitations on, the indemnification provided for in Section 1, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including, without limitation, a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee.

(b) In addition to, and without regard to any limitations on, the indemnification provided for in Section 1, in the event that the Company provides rights to any person by reason of their Corporate Status or otherwise incurs a similar indemnification obligation to any individual or entity that provides any greater rights to such indemnified individual or entity than the rights provided to Indemnitee, then without any further action by any party to this Agreement, the Indemnitee shall be provided such greater rights.

(c) The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7) to be unlawful.

Indemnification Agreement

3. Contribution.

(a) Whether or not the indemnification provided in Sections 1 or 2 is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless (i) such settlement provides for a full and final release of all claims asserted against Indemnitee, or (ii) the Indemnitee engaged in willful misconduct that violates applicable law or gross negligence, or (iii) the Indemnity consents to such settlement.

(b) Without diminishing or impairing the obligations of the Company set forth in Section 3(b), if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses (including, without limitation, attorneys’ fees and disbursements), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the Law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

Indemnification Agreement

(c) The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

(d) To the fullest extent not prohibited under law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

4. Indemnification for Expenses of a Witness.

Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

5. Advancement of Expenses.

Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status, including without limitation, any retainers or similar payments or deposits, within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

6. Procedures and Presumptions for Determination of Entitlement to Indemnification.

It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

Indemnification Agreement

(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a), a determination, if required by law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board: (1) by a majority vote of the Disinterested Directors, even though less than a quorum, (2) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum, (3), if there are no Disinterested Directors, or if the Disinterested Directors so direct, by Independent Legal Counsel (as defined below) in written advice to the Board, a copy of which shall be delivered to Indemnitee, or (4) if so directed by the Board, by the stockholders of the Company.

(c) If the determination of entitlement to indemnification is to be made by Independent Legal Counsel pursuant to Section 6(b), the Independent Legal Counsel shall be selected as provided in this Section 6(c). The Independent Legal Counsel shall be selected by the Board. Indemnitee may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Legal Counsel so selected does not meet the requirements of “Independent Legal Counsel” as defined in Section 13, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Legal Counsel. If a written objection is made and substantiated, the Independent Legal Counsel selected may not serve as Independent Legal Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a), no Independent Legal Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court or other court of competent jurisdiction for resolution of any objection which shall have been made by Indemnitee to the Company’s selection of Independent Legal Counsel and/or for the appointment as Independent Legal Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Legal Counsel under Section 6(b). The Company shall pay any and all reasonable fees and expenses of Independent Legal Counsel incurred by such Independent Legal Counsel in connection with acting pursuant to Section 6(b), and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Legal Counsel was selected or appointed.

Indemnification Agreement

(d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the Company (including, without limitation, by its directors or Independent Legal Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including, without limitation, by its directors or Independent Legal Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(e) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including, without limitation, financial statements, or on information supplied to Indemnitee by the officers of the Enterprise (as hereinafter defined) in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(f) If the person, persons or entity empowered or selected under this Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

Indemnification Agreement

(g) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including, without limitation, providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Legal Counsel, member of the Board or stockholder of the Company shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement. Any costs or expenses (including, without limitation, attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(h) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(i) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

Indemnification Agreement

7. Remedies of Indemnitee.

(a) In the event that (i) a determination is made pursuant to Section 6 that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within one hundred and eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication.

(b) In the event that a determination shall have been made pursuant to Section 6(b) that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).

(c) If a determination shall have been made pursuant to Section 6(b) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under law.

(d) In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

(e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any court having jurisdiction over such proceeding that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

Indemnification Agreement

(f) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

8. Non-Exclusivity; Survival of Rights; Insurance; Subrogation; No Presumption.

(a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under law, the Certificate, the By-laws, any agreement, a vote of stockholders, a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the DGCL or other law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Certificate, the By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies. In connection with any sale of the Company, including any merger, the Company shall use its reasonable commercial efforts to maintain an insurance policy for a reasonable period or “tail” after the closing date of such sale or merger.

Indemnification Agreement

(c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

(f) For purposes of this Agreement, to the fullest extent permitted by law, the termination of any Proceeding, action, suit or claim, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that the Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law.

9. Exception to Right of Indemnification.

Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under law.

Indemnification Agreement

10. Duration of Agreement.

All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is a director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise), plus three (3) years thereafter, and shall continue in all events thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7) by reason of his Corporate Status, not matter when instituted, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives. Notwithstanding the foregoing, no legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against the Indemnitee, the Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such period; provided, however, that if any shorter statute of limitations is otherwise applicable to any such cause of action, such shorter statute of limitations shall govern.

11. Security.

To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.

12. Enforcement.

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

13. Definitions.

For purposes of this Agreement

Indemnification Agreement

(a) “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company, a subsidiary of the Company or of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company. For the avoidance of doubt, “Corporate Status” does not include the status of a person described in the foregoing sentence in his or her role as a representative of any stockholder of the Company.

(b) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(c) “Enterprise” shall mean the Company and any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary.

(d) “Expenses” shall include all attorneys’ fees, disbursements, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

(e) “Independent Legal Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Legal Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(f) “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or director of the Company, by reason of any action taken by him or of any inaction on his part while acting as an officer or director of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, limited liability company, joint venture, trust or other Enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant Section 7 to enforce his rights under this Agreement.

Indemnification Agreement

14. Severability.

The invalidity of unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by law. In the event any provision hereof conflicts with any law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

15. Modification and Waiver.

No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

16. Notice By Indemnitee.

Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

17. Notices.

All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if such address is so provided under this Section 17 and sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

Indemnification Agreement

(a) To Indemnitee at the address set forth below Indemnitee signature hereto or to the address that the Company has on file for tax purposes.

	(b)	To the Company at:
		Clearday, Inc.
		8800 Village Drive, Suite 106
		San Antonio, TX 78217
		Attention: Chairman of the Board

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be; provided, that any notice providing such other address shall be effective only if such notice expressly references this Agreement and this Section 17.

18. Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

19. Headings.

The headings of the Sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

20. Arbitration.

Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in San Antonio, Texas if the Indemnitee commences the action or proceeding or the State of domicile of the Indemnitee if the Company commences the action or proceeding, in each case, before three arbitrators. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules or a similar arbitration organization selected by the Company in good faith and pursuant to similar rules. Judgment on the Award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction and shall not remove the exclusive jurisdiction of the Delaware Court of Chancery to the extent such court has exclusive jurisdiction with respect to any action or proceeding relating to this Agreement or the subject matter of this Agreement.

Indemnification Agreement

21. Governing Law and Consent to Jurisdiction.

This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that, subject to the provisions of Section 20, any action or proceeding arising out of or in connection with this Agreement shall be brought and maintained only in the Delaware Court, and not in any other state or federal court in the United States of America or any court in any other country, unless the Delaware Court is unable to adjudicate such action or proceeding, whereupon such action or proceeding may be brought and maintained in any court of competent jurisdiction, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, unless such action or proceeding is brought or maintained in another court as provided in clause (i) above, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably the Delaware Court as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, unless such action or proceeding is brought or maintained in another court as provided in clause (i) above, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum, unless such action or proceeding is brought or maintained in another court as provided in clause (i) above.

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Indemnification Agreement

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

	COMPANY

	CLEARDAY, INC.

	By:
	Name:
	Title:

INDEMNITEE
By:

Name:
Address for notices
[On file with the Company]

Exhibit 10.37

WARRANT NUMBER

A - «Warrant_Certificate»

Warrant Shares: «Number»

CLEARDAY, INC.

AMENDED AND RESTATED WARRANT

TO PURCHASE SHARES OF COMMON STOCK

EXPLANATORY NOTE:

This Warrant represents the warrant to purchase the common stock, par value $0.01 per share, of Allied Integral United, Inc., a Delaware corporation (“AIU”), that was issued to the initial holder of this Warrant in the offering by (i) AIU Alternative Care, Inc., a Delaware corporation and a subsidiary of AIU (“Clearday Care”), of its 10.25%% Series I Cumulative Convertible Preferred Stock, par value $0.01 per share (the “Clearday Care Preferred”); and (ii) Clearday Alternative Care OZ Fund LP, a Delaware limited partnership that is a subsidiary of Clearday Care (“Clearday OZ Fund”), of its units of the limited partnership interests (“Clearday OZ LP Interests”) AS AMENDED TO REFLECT the merger (“Merger”) and the related transactions under the Agreement and Plan of Merger (“Merger Agreement”) among Superconductor Technologies Inc., a Delaware corporation (“Superconductor”) AIU Special Merger Company, Inc., a wholly owned subsidiary of Superconductor (“Merger Sub”), and AIU.

Accordingly, this Warrant now represents and evidenced the shares of Common Stock, par value $0.001 per share of Superconductor, which has changed its name to Clearday, Inc., after given effect to all of the adjustments to the initial warrant in connection with the Merger, a fundamental transaction under this Warrant.

THIS WARRANT HAS NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE REGISTRATION STATEMENT ON FORM S-4 (REGISTRATION NO. 333-256138)

THIS WARRANT HAS A TERM OF TEN (10) YEARS AFTER THE INITIAL CLOSING DATE OF THE OFFERING OR NOVEMBER 15, 2029

THIS CERTIFIES THAT, for value received, «SUBSCRIBER»

(together with its successors and assigns, the “Holder”), commencing «Issue__Effective_Date» (the “Date of Issue”) is entitled to purchase, subject to the conditions set forth below, at any time and from time to time, in whole or in part, during the Exercise Period (as defined in Section 1.3), that number of fully paid and non-assessable shares (the “Shares”) of common stock, par value $0.001 per share (“Common Stock”), of CLEARDAY, Inc., a Delaware corporation formerly known as Superconductor Technologies Inc. (the “Company”), that is not more than the Warrant Share Number (as defined in Section 1.1), subject to the further provisions of this warrant to purchase newly issued shares of Common Stock (the “Warrant”), at the Warrant Exercise Price (as defined in Section 1.2), subject to the further provisions of this Warrant.

1. EXERCISE OF WARRANT

The terms and conditions upon which this Warrant may be exercised, and the shares of Common Stock covered hereby which may be purchased hereunder, are as follows:

1.1. Warrant.

(a) The Company hereby issues to the Holder this Warrant.

(b) The number of Shares that the Holder is entitled to purchase under the terms and conditions of this Warrant (the “Warrant Share Number”) is equal to «Number», subject to adjustment as provided in Section 4 of this Warrant.

(c) For the purposes of this Agreement, the following terms shall have the respective meanings ascribed thereto in this Section 1.1(c):

(i) “Affiliate” shall have the meaning ascribed to such term under the Securities Act and the regulations promulgated thereunder.

(ii) “Business Day” shall mean any date that the banks and the securities markets are in New York, New York open for business for the conduct of business in the regular course on such date.

(iii) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(iv) “IPO” shall mean the offering of Common Stock by the Company that is described in the Registration Statement.

(v) “Person” shall mean any individual, trust or entity or governmental authority or agency.

(vi) “VWAP” shall mean the volume weighted average price per share of common stock calculated on the basis of the closing price and the trading volume of the Common Stock on the applicable securities exchange (defined as the New York Stock Exchange, the American Stock Exchange or any of tier or market of Nasdaq) or market and, is such securities exchange does not report the trading price or volume, then the VWAP will be determined at the last 20 day VWAP or the price that is determined by an independent valuation firm as of the end of the fiscal year.

1.2. The Warrant Exercise Price. The exercise price for the Warrant (the “Warrant Exercise Price”) shall be equal, per share, subject to adjustment as provided in Section 4: 50% of the following, as applicable:

(a) if the Common Stock is offered in an IPO, then the gross price offered and sold to purchasers in such offering;

(b) if Company files a Form 10 registration statement, then the closing price of the Common Stock on the first day that such registration statement is effective;

(c) if the Company merges with or into a Person (or effects a transaction that provides an effect that is substantially similar to a merger that is described in Section 4.2 or Section 4.3 of this Warrant) that is, on the closing date of such merger or such other transaction, a company that is subject to the reporting obligations of the Exchange Act (a, “Public Company”), then the VWAP of the public company common stock for the 20 trading days prior to such closing date, adjusted as appropriate and certified by the Company, for the number of shares of such common stock issued by such other Person in exchange for one share of Common Stock.

The Company hereby certifies that such price as adjusted as appropriate for the reverse merger under the Merger Agreement is $10.00 per share.

(d) The initial exercise price per Warrant is $5.00.

1.3. Method of Exercise.

(a) The Holder of this Warrant may exercise, in whole or in part, the purchase rights evidenced by this Warrant during the period commencing on the Date of Issue of this Warrant and ending on the date that is ten (10) years after the Initial Closing, or November 15, 2029, unless extended by the Company in its sole discretion (the “Exercise Period”). Such exercise shall be effected by:

(i) the surrender of the Warrant, together with a duly executed copy of the form of subscription attached hereto (a “Notice of Exercise”), to the Secretary of the Company at its principal offices;

(ii) the payment to the Company, by certified check or bank draft payable to its order, of an amount equal to the aggregate Warrant Exercise Price for the number of Shares for which the purchase rights hereunder are being exercised; and

(iii) the delivery to the Company, if necessary, to assure compliance with federal and state securities laws, of an instrument executed by the Holder certifying that the Shares are being acquired for the sole account of the Holder and not with a view to any resale or distribution.

(b) Conditions to Exercise of the Warrant.

(i) Notwithstanding the provisions of any provision of this Warrant, including Section 1.3, the exercise of this Warrant is contingent upon the Company’s satisfaction that the issuance of the Shares for which this Warrant is being exercised is exempt from the requirements of the Securities Act and all applicable state securities laws or the Shares are duly registered under the Securities Act. The Holder of this Warrant agrees to execute any and all documents deemed necessary by the Company to effect the exercise of this Warrant.

(ii) Notwithstanding anything to the contrary contained herein, the number of Shares that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act (the “Beneficial Ownership”, does not exceed 4.99% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise) (the “Maximum Percentage”). For the avoidance of doubt, except as otherwise provided herein in connection with a transaction described in Section 4.3 (a “Fundamental Transaction”), this Warrant may not be exercised in whole or in part if the Holder’s Beneficial Ownership (as calculated herein) exceeds the Maximum Percentage prior to such exercise. For such purposes, Beneficial Ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. This provision shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction of this Warrant or under any other provision of Section 4. This restriction may not be waived except by the Holder providing a notice to the Company as provided herein. For any reason at any time, upon the written or oral request of the Holder, the Company shall promptly confirm in writing (which may be by electronic mail) to the Holder the number of shares of Common Stock then outstanding. To the extent that the limitation contained in this Section 1.3(b)(ii) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which a portion of this Warrant is exercisable shall be in the sole discretion of a Holder, and the submission of a Notice of Exercise shall be deemed to be each Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination other than its obligation in this Section 1.3(b)(ii) above to, upon the Holder’s request, confirm in writing to the Holder the number of shares of Common Stock then outstanding. Notwithstanding any provision of this Section 1.3(b)(ii) to the contrary, the limitations on the exercise of this Warrant under this Section 1.3(b)(ii) shall not be applicable from and after the date that is 61 days after the date that the Holder provides written notice to the Company that the Holder elects to have Beneficial Ownership of the Company’s Common Stock in excess of the Maximum Percentage, in which case such Holder shall have the right to exercise this Warrant without the limitations of this Section 1.3(b)(ii); provided, that the limitations of this Section 1.3(b)(ii) shall again be applicable to any assignee of this Warrant until 61 days after such assignee provides such notice to the Company.

(iii) THIS WARRANT MAY NOT BE EXERCISED UNTIL THE FOLLOWING DATE: the date that the Company (or the Person with whom the Company merges) is a Public Company.

1.4. Issuance of Shares. In the event the purchase rights evidenced by this Warrant are exercised in whole or in part, one or more certificates for the purchased Shares shall be issued as soon as practicable thereafter to the Holder.

1.5. Partial Exercise. If this Warrant shall have been exercised only in part, then the Company shall, at the time of delivery of the certificate or certificates for the Shares purchased upon such exercise, also deliver to the Holder a new Warrant evidencing the remaining outstanding unexercised balance of Shares purchasable hereunder.

1.6. Cancellation. Notwithstanding anything in this Warrant to the contrary, this Warrant shall be cancelled, and shall not be exercisable, if it is not exercised before the expiration of the Exercise Period.

2. TRANSFER RESTRICTIONS

2.1. Transfer. This Warrant and the Shares issuable upon exercise hereof are “restricted securities” as such term is defined by the rules and regulations promulgated under the Securities Act. This Warrant and the Shares issuable upon exercise hereof may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of this Warrant or the Shares issuable upon exercise hereof, other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Holder, the Company may require the transferor to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of the transferred Warrant or Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Warrant and the Agreement and shall have the rights and obligations of a Holder under this Warrant and the Agreement.

2.2. Legend.

(a) Unless a registration statement regarding the Shares is effective, such as the Registration Statement on Form S-4 (Registration No. . 333-256138), the Holder agrees to the imprinting of a legend on any of the Shares issuable upon exercise hereof in the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE CORPORATION. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

(b) Notwithstanding the foregoing, certificates evidencing this Warrant or the Shares issuable upon exercise hereof shall not contain any legend (including the legend set forth above), (i) while a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of this Warrant or such Shares issuable upon exercise hereof pursuant to Rule 144, (iii) if this Warrant or such Shares issuable upon exercise hereof are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to this Warrant or such Shares issuable upon exercise hereof and without volume or manner-of-sale restrictions, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).

2.3. Sale. The Holder agrees that the Holder will sell this Warrant or any Shares issuable upon exercise hereof only pursuant to either: (i) the registration requirements of the Securities Act, including any applicable prospectus delivery requirements; or (ii) an exemption therefrom, and that if this Warrant or any Shares issuable upon exercise hereof are sold pursuant to any such effective registration statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing the Shares or this Warrant is predicated upon the Company’s reliance upon this understanding.

3. Fractional Shares

Notwithstanding that the number of Shares purchasable upon the exercise of this Warrant may have been adjusted pursuant to the terms hereof, the Company shall nonetheless not be required to issue fractions of Shares upon exercise of this Warrant or to distribute certificates that evidence fractional shares, provided that in lieu of any fraction shares, the Company shall make a cash payment to the Holder in an amount equal to the fair market value (as determined by the Board of Directors of the Company in its reasonable good faith) of such fractional share.

4. ANTIDILUTION PROVISIONS

4.1. Stock Splits and Combinations. If the Company shall at any time subdivide or combine its outstanding shares of Common Stock, this Warrant shall, after that subdivision or combination, evidence the right to purchase the number of shares of Common Stock that would have been issuable as a result of that change with respect to the shares of Common Stock which were purchasable under this Warrant immediately before that subdivision or combination. If the Company shall at any time subdivide the outstanding shares of Common Stock, the Warrant Exercise Price then in effect immediately before that subdivision shall be proportionately decreased, and, if the Company shall at any time combine the outstanding shares of Common Stock, the Warrant Exercise Price then in effect immediately before that combination shall be proportionately increased. Any adjustment under this section shall become effective at the close of business on the date the subdivision or combination becomes effective.

4.2. Reclassification, Exchange and Substitution. If the Common Stock issuable upon exercise of this Warrant shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for above), the Holder of this Warrant shall, on its exercise, be entitled to purchase for the same aggregate consideration, in lieu of the Common Stock that the Holder would have been entitled to purchase but for such change, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to purchase by the Holder on exercise of this Warrant immediately before that change.

4.3. Reorganizations, Mergers, Consolidations or Sale of Assets.

(a) If at any time there shall be a capital reorganization of the Company’s Common Stock (other than a combination, reclassification, exchange, or subdivision of shares provided for elsewhere above) or merger or consolidation of the Company with or into another entity, or the sale of the Company’s properties and assets as, or substantially as, an entirety to any other person or entity, then, as a part of such reorganization, merger, consolidation or sale, lawful provision shall be made so that the Holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified in this Warrant and upon payment of the Warrant Exercise Price then in effect, the number of shares of Common Stock or other securities or property of the Company, or of the Successor Entity resulting from such merger or consolidation, to which a holder of the Common Stock deliverable upon exercise of this Warrant would have been entitled in such capital reorganization, merger, or consolidation or sale if this Warrant had been exercised immediately before that capital reorganization, merger, consolidation, or sale, as further adjusted by the provisions of this Section 4 of this Warrant with respect to such shares of Common Stock or other securities of the applicable Successor Entity. In any such case, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder of this Warrant after the reorganization, merger, consolidation, or sale to the end that the provisions of this Warrant (including adjustment of the Warrant Exercise Price then in effect and number of Shares purchasable upon exercise of this Warrant) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. The Company shall, within thirty (30) days after making such adjustment, give written notice (by first class mail, postage prepaid) to the Holder of this Warrant at the address of the Holder shown on the Company’s books. That notice shall set forth, in reasonable detail, the event requiring the adjustment and the method by which the adjustment was calculated, and specify the Warrant Exercise Price then in effect after the adjustment and the increased or decreased number of Shares or the other shares or property purchasable upon exercise of this Warrant. When appropriate, that notice may be given in advance and include as part of the notice required under other provisions of this Warrant.

(b) The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 4 pursuant to written agreements in form and substance approved in good faith by the Company prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

The amendments that amend and restate this Warrant reflect the amendments required as of the closing of the Merger under this Section 4.3.

4.4. Calculations. All calculations under this Section 4 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 4, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

5. Reservation of Stock Issuable Upon Exercise.

The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the exercise of this Warrant such number of its shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of this Warrant, in addition to such other remedies as shall be available to the Holder of this Warrant, the Company will use its best efforts to take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but un-issued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

6. RIGHTS PRIOR TO EXERCISE OF WARRANT

6.1. This Warrant does not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to receive dividends or other distributions, to exercise any preemptive rights, to vote, or to consent or to receive notice as a stockholder of the Company. If, however, at any time prior to the termination of this Warrant and prior to its exercise, any of the following events shall occur:

(a) the Company shall declare any dividend payable in any securities upon its shares of Common Stock or make any distribution (other than a regular cash dividend) to the Holders of its shares of Common Stock; or

(b) the Company shall offer to the holders of its shares of Common Stock any additional Warrant of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any right to subscribe for or purchase any thereof; or

(c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation, merger, sale, transfer or lease of all or substantially all of its property, assets and business as an entirety that provided in Section 4) shall be proposed and action by the Company with respect thereto has been approved by the Company’s Board of Directors;

then in any one or more of said events the Company shall give notice in writing of such event to the Holder at the last address of the Holder as it shall appear on the Company’s records at least twenty (20) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividends, distribution, or subscription rights, or for the determination of stockholders entitled to vote on such proposed dissolution, liquidation or winding up. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to publish, mail or receive such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of any action taken in connection with such dividend, distribution or subscription rights, or such proposed dissolution, liquidation or winding up. Each person in whose name any certificate for shares of Common Stock is to be issued shall for all purposes be deemed to have become the holder of record of such shares on the date on which this instrument was surrendered and payment of the Warrant Exercise Price was made, irrespective of the date of delivery of such stock certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares of Common Stock at the close of business on the next succeeding date on which the stock transfer books are open.

7. SUCCESSORS AND ASSIGNS

The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder hereof and their respective successors and permitted assigns. Any Successor Entity shall provide an appropriate supplement to this Warrant to evidence its assumption of the obligations under this Warrant as provided in Section 4.3(b). This Warrant being issued by the Company

8. LOSS OR MUTILATION

8.1. Upon receipt by the Company of satisfactory evidence of the ownership of and the loss, theft, destruction, or mutilation of any Warrant, and (i) in the case of loss, theft, or destruction, upon receipt by the Company of indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt of such Warrant and upon surrender and cancellation of such Warrant, the Company shall execute and deliver in lieu thereof a new Warrant representing the right to purchase an equal number of shares of Common Stock. The Company may charge a fee or any such replacement and a fee for any such indemnification, which it expects to be the amount typically charged by its Stock Record Agent with respect to any indemnity and charged to replace a lost certificate for Common Stock.

8.2. The Holder also acknowledges that each of the Shares issuable upon the due exercise hereof will be subject to any transfer restrictions in the Company’s Certificate of Incorporation, including a right of first refusal to the Company, and the certificate or certificates evidencing the Shares will bear a legend to this effect.

9. TERMINATION DATE

This Warrant shall terminate upon the sooner of (a) TEN (10) YEARS from the Date of the Initial Closing, or until November 15, 2029; or (b) the exercise of all or any portion of this Warrant pursuant to the terms of Section 1 hereof;

10. GOVERNING LAW

This Warrant and any dispute, disagreement or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the internal laws of the State of Delaware without regard to conflicts of law.

11. HEADINGS

The headings and captions used in this Warrant are used only for convenience and are not to be considered in construing or interpreting this Warrant. All references in this Warrant to sections and exhibits shall, unless otherwise provided, refer to sections hereof and exhibits attached hereto, all of which exhibits are incorporated herein by this reference.

12. NOTICES.

All notices or other communications given or made hereunder shall be in writing and shall be mailed by certified mail, delivered by professional courier or hand, or transmitted via email or facsimile, to such party’s address as set forth in the Warrant Register, or such other address as the Holder or the Company shall notify the other in writing as above provided. Any notice sent in accordance with this section shall be effective on the date three days after the date of mailing or, if delivered by hand or professional courier, or transmitted via email or facsimile with delivery receipt (or acknowledgement or confirmation which may be by electronic means), on the date of delivery, provided, however, that notices to the Company will be effective upon receipt.

13. SEVERABILITY.

If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Warrant and the balance of this Warrant shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

14. Registration and Transfer of Warrants, etc.

14.1. Warrant Register; Ownership of Warrants. Each Warrant issued by the Company shall be numbered and shall be registered in a warrant register (the “Warrant Register”) as it is issued and transferred, which Warrant Register shall be maintained by the Company at its principal office or, at the Company’s election and expense, by a Warrant Agent or the Company’s transfer agent. The Company shall be entitled to treat the registered Holder of any Warrant on the Warrant Register as the owner in fact thereof and the Holder for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other Person, and shall not be affected by any notice to the contrary, except that, if and when any Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer thereof as the owner of such Warrant for all purposes. Subject to Section 10, a Warrant, if properly assigned, may be exercised by a new holder without a new Warrant first having been issued.

15. certain other provisions

15.1. Any reference to an action or event to occur on a specified date that is not a Business Day shall be a reference to the immediately following Business Day.

15.2. Any calculations of the number of Shares to be issued upon the exercise of this Warrant, in whole or in part, shall be made by the Company and, absent manifest error, such calculation shall be conclusive and binding.

15.3. The terms and conditions of this Warrant shall not be amended, modified or supplemented other than in accordance with a written amendment signed by the Holder and the Company that specifically provides for such amendment, modification or supplement.

16. Cooperation in the Registration of Shares.

The Company shall have the right, but not the obligation, to register the Shares in a Registration Statement and cause such Registration Statement to be effective under the Securities Act, and shall have the right and obligation to so register the Shares under the Registration Rights Agreement. In any such registration by the Company, the Holder shall cooperate with the Company and provide the Company with all information reasonably requested from time to time by the Company.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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

COMPANY

Allied Integral United, Inc.

	By:
	Name:	James Walesa
	Title:	Chief Executive Officer

INITIAL HOLDER

«SUBSCRIBER»

By:

Name:
	[Print Name]

Title:
	[if applicable]

Additional Signatory, if applicable

By:

Name:
	[Print Name]

Title:
	[if applicable]

NOTICE OF WARRANT EXERCISE

To: Allied Integral United, Inc.

8800 Village Drive

2^ndFloor

San Antonio, TX 78217

Ladies and Gentlemen:

The undersigned, , hereby elects to purchase, pursuant to the provisions of the foregoing Warrant held by the undersigned, shares of the common stock (“Common Stock”) of Allied Integral United, Inc. (or the applicable Successor Entity as provided in such Warrant the “Corporation”)

Payment of the purchase price of an aggregate amount of $__________ which is the number of shares of Common Stock set forth above multiplied by the exercise price of $________ per Share required under such Warrant accompanies this notice.

The undersigned hereby represents and warrants to the Corporation on the date of this Exercise Notice, that:

1. the undersigned is acquiring such Common Stock for the account of the undersigned and not for resale or with a view to distribution of such Common Stock or any part hereof;

2. the undersigned is fully aware of the transfer restrictions affecting restricted securities under the pertinent securities laws;

3. the undersigned understands that the shares of Common Stock purchased hereby are restricted securities and that the certificate or certificates evidencing the same will bear a legend to that effect unless such shares of Common Stock are covered by an effective registration statement;

4. the undersigned is the beneficial and record owner of such Warrant and that the exercise and payment of the aggregate exercise price set forth above has

a. if the holder of such Warrant is not an individual, been duly authorized as appropriate and the undersign that has signed this Exercise Notice is duly authorized to execute and delivery this Exercise Notice on behalf of the holder of such Warrant; or

b. if the holder of such Warrant is an individual, such individual has full capacity to sign this Exercise Notice;

5. the payment of the aggregate exercise price of such Warrant under this Exercise Notice has been paid in full with funds that are not subject to any restriction or refund;

6. such Warrant and the shares of Common Stock issued upon the exercise set forth in this Exercise Notice are free and clear of all liens, encumbrances or adverse interests and that the delivery of the shares of Common Stock purchased hereby may be issued to the undersigned as the holder of such Warrant at the address of such holder set forth in the register of the Warrants, and without any restriction noted on the stock record of the Corporation.

NOTICE OF WARRANT EXERCISE
Page 2

If the number of shares of Common Stock purchased hereby is less than the number of shares of Common Stock covered by the Warrant, the undersigned requests that a new Warrant of like tenor representing the number of shares of Common Stock not so purchased be issued and delivered as follows:

ISSUE TO:
	(NAME OF HOLDER)

	(ADDRESS, INCLUDING ZIP CODE)

	(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

DELIVER TO:


	(NAME)

	(ADDRESS, INCLUDING ZIP CODE)

DATED: __________, ____.

Signature:
Name:
Title:
Address:

EXHIBIT 31.1

Statement Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by

Principal Executive Officer

Regarding Facts and Circumstances Relating to Exchange Act Filings

I, James T. Walesa, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Clearday, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2021
	/s/ James T. Walesa
	James T. Walesa
	President and Chief Executive Officer

EXHIBIT 31.2

Statement Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by

Principal Financial Officer

Regarding Facts and Circumstances Relating to Exchange Act Filings

I, T. Randall Hawkins, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Clearday, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2021
	/s/ T. Randall Hawkins
	T. Randall Hawkins
	Chief Financial Officer

EXHIBIT 32.1

Statement Pursuant to Section 906 the Sarbanes-Oxley Act of 2002

Principal Executive Officer

Regarding Facts and Circumstances Relating to Exchange Act Filings

Dated: November 19, 2021

I, James T. Walesa, Chief Executive Officer of Clearday, Inc., hereby certify, to my knowledge, that:

1. the accompanying Quarterly Report on Form 10-Q of Clearday, Inc. for the three month period ended September 30, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Clearday, Inc.

IN WITNESS WHEREOF, the undersigned has executed this Statement as of the date first written above.

	/s/ James T. Walesa
	James T. Walesa
	President and Chief Executive Officer

EXHIBIT 32.2

Statement Pursuant to Section 906 the Sarbanes-Oxley Act of 2002

Principal Financial Officer

Regarding Facts and Circumstances Relating to Exchange Act Filings

Dated: November 19, 2021

I, T. Randall Hawkins, Chief Financial Officer of Clearday, Inc., hereby certify, to my knowledge, that:

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Clearday, Inc.

	/s/ T. Randall Hawkins
	T. Randall Hawkins
	Chief Financial Officer