Document:

rhe-ex106_510.htm

Exhibit 10.6

AGREEMENT REGARDING LEASE & NOTE

This Agreement Regarding Lease and Note (this "Agreement") is made effective as of August 27, 2020 (the "Effective Date"), by and among ADK GEORGIA, LLC, a Georgia limited liability company ("Landlord"), REGIONAL HEALTH PROPERTIES, INC., a Georgia Corporation, f/k/a AdCare Health Systems, Inc. ("Lender"), OS TYBEE, LLC, a Georgia limited liability company, SB TYBEE, LLC, a Georgia limited liability company, and JV JEFFERSONVILLE, LLC, a Georgia limited liability company (collectively, "Tenant"). Landlord, Lender, and Tenant are sometimes hereinafter collectively referred to in this Agreement as the "Parties" and each as a "Party."

The following recitals are a material part of this Agreement.

A.Landlord and Tenant are parties to that certain Master Sublease Agreement dated as of June 18, 2016 (the "Lease").

B.Pursuant to the Lease, Tenant has leased from Landlord all of Landlord's right, title and interest in and to certain land (the "Land"), the senior living facilities located thereon (collectively, the "Facilities"), and the furniture, furnishings, fixtures, equipment, machinery, and other personal property owned or leased by Landlord and located at the Facilities (collectively, the "Personal Property," and together with the Land and the Facilities, collectively, the "Property").

C.In connection with the Lease, Tenant executed in favor of Landlord that certain Security Agreement dated July 6, 2016 (the "Security Agreement"). Pursuant to the Security Agreement, Tenant granted to Landlord a first priority security interest in all of the cash, accounts receivable, assets, FF&E, records, goodwill, contracts, agreements and properties, both tangible and intangible, owned or leased by Tenant that are used in connection with the ownership, operation or development of the Property (the "Collateral").

D.In connection with the Lease, Lender, through its predecessor entity AdCare Health Systems, Inc., made a loan to Tenant (the "Loan"), which Loan is evidenced by, among other things, that certain Promissory Note dated July 6, 2016 in the original principal amount of $1,000,000.00 executed by Tenant in favor of Lender (the "Note").

E.In connection with the Loan, Lender, Tenant, and Congressional Bank entered into that certain Subordination Agreement dated April 6, 2017 (the "Subordination Agreement"). Pursuant to the Subordination Agreement, Lender subordinated the Loan and the payment of principal and interest on the Loan to a $2,500,000.00 revolving credit facility extended to Tenant by Congressional Bank (the "AR Line"). Pursuant to Section 3.9 of the Subordination Agreement, the Subordination Agreement remains in full force and effect until

(a)all Senior Liabilities (as defined in the Subordination Agreement) have been paid in full and

(b)the Lender (as defined in the Subordination Agreement) shall have no obligation to make further advances under the Senior Note (as defined in the Subordination Agreement) or extend any other credit under any of the other Senior Debt Documents (as defined in the Subordination Agreement) (the "Subordination Termination Conditions").

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F.The Lease, Security Agreement, and Note, together with all other documents evidencing, securing or executed in connection with the Lease are sometimes referred to in this Agreement as the "Lease Documents."

G.Tenant has repaid the AR Line in full and the Subordination Termination Conditions set forth in the Subordination Agreement have been met. Landlord, Lender, and Tenant desire to make certain modifications to the Loan and Lease as set forth herein.

H.In furtherance of restructuring the Tenant's finances and reducing the sums due Lender, Tenant has undertaken a SBA loan which requires a Security Interest in the same Tenant assets as that given to Landlord though not disturbing the priority of the existing security interests.

NOW, THEREFORE, in consideration of the mutual agreements set forth herein and for

other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows.

1.Recitals; Acknowledgments. The Recitals set forth above are true and accurate, are a material part of this Agreement and are hereby incorporated by reference, and the parties are entitled to rely thereon.

2.Continued Effect of Lease Documents. Tenant acknowledges and confirms that the Lease Documents to which it is a party were and have been duly authorized, signed and delivered, that subject to this Agreement and the Amended Promissory Note, each of the Lease Documents is valid, binding and enforceable against Tenant in accordance with its terms, and that each lien and security interest created in favor of Landlord under the Lease Documents has been duly and validly created and perfected upon the Property.

3.Modification of Loan & Note. Tenant acknowledges and agrees that the current amount owed to Lender under the Loan and Note is $1,309,040.00. Contemporaneous with execution of this Agreement, Tenant shall make a payment to Lender in the amount of $450,000.00 (the "Initial Payment"). In consideration of the Initial Payment and subject to the other terms and conditions of this Agreement, including, without limitation, Tenant's assumption of the Bed Tax Liability (as defined herein), Landlord shall reduce the balance of the Loan and Note to $470,000.00 (the "Remaining Balance"). The Remaining Balance shall bear interest at the rate of 8% and be repaid by Tenant in equal monthly payments of $9,529.91 over sixty (60) months. Contemporaneous with execution of this Agreement, Tenant shall execute the Amended Promissory Note attached hereto as "Exhibit 1" (the "Amended Note").

4.Savannah Beach Bed Tax Liability. Tenant acknowledges and agrees that there exists unpaid fees due and owing under Georgia's Nursing Home Provider Fee Act relating to the Facility located in Tybee Island, Georgia and leased by Tenant SB Tybee, LLC in the approximate amount of $350,000.00 (the "Bed Tax Liability"). Tenant hereby assumes all liability for the Bed Tax Liability, in whatever amount such liability is ultimately determined or

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imposed, and agrees to indemnify and hold Landlord and Lender harmless from any and all liabilities, costs, expenses, fees, or other amounts of any nature relating to the Bed Tax liability.

5.Cross Default of Loan and Lease. Any default or event of default under the Loan and Amended Note shall constitute a default or event of default under the Lease. Any default or event of default under the Lease shall constitute a default or event of default under the Loan and Amended Note. The Collateral shall secure both Tenant's obligations to Landlord under the Lease and Tenant's obligations to Lender under the Loan and Amended Note. To the extent the Lease, Security Agreement, or any other Lease Document is inconsistent with the foregoing, such Lease Document is hereby amended to incorporate the provisions of this Section 5.

6.No Other Liens. Tenant hereby represents and warrants that the AR Line has been repaid in full and that the Subordination Termination Conditions have occurred. Other than the Tenant SBA loans dated May 27, 2020 and the granting of a security interest and lien in the Collateral in favor of the SBA, which is expressly approved by the Landlord, and any other Bed Tax or other Tax lien, Tenant agrees not to pledge, hypothecate, or grant a security interest or any other interest in the Collateral to any party without Landlord's express written consent.

7.Ratification of Tenant Obligations. Subject to the terms and conditions of this Agreement, Tenant hereby (i) ratifies each of its obligations under the Lease Documents (the "Tenant Obligations") and confirms that such Tenant Obligations, and all waivers, covenants and agreements by Tenant in the Lease Documents remain in full force and effect for the benefit of Landlord and Lender, (ii) reaffirms its continuing liability for payment and/or performance of all of the Tenant Obligations, and (iii) confirms that such Tenant Obligations have not been modified or amended except to the extent of this Agreement and the Amended Promissory Note, and that Tenant's obligations and liabilities under such Tenant Obligations have not otherwise been limited, impaired or affected.

8.Additional Documents / Further Assurances. Tenant shall at any time, and from time to time, upon a reasonable timeframe and reasonable written request of Landlord or Lender, sign and deliver such further documents and do such further acts and things as Landlord or Lender may reasonably request to affect the purposes of this Agreement to the extent that same are relevant to the undisputed status of the Lease and Loan. Tenant may contest Landlord and /or Lender requests within ten (10) days of actual receipt of the request, as unnecessary or exceeding the scope/extent of the Parties agreements.

9.Authorization of Agreement. The execution of this Agreement has been duly authorized by all necessary corporate, partnership or similarly required action of the Parties, and the individuals and entities executing this Agreement on behalf of the Parties have been duly authorized and empowered to bind the Parties, respectively, by such execution.

10.Time is of the Essence. Time is of the essence with respect to all agreements and obligations of the Parties contained herein.

11.Entire Agreement; Written Modifications Only. This Agreement, the exhibit attached hereto, and the documents referred to herein or contemplated herein, constitute the sole

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and entire agreement between the Parties with respect to the subject matter hereof, and there are no other covenants, promises, agreements or understandings regarding the same. This Agreement, including the provisions of this Section, may not be modified except by written amendment to this Agreement signed by the Parties affected by the same, and the Parties hereby: (a) expressly agree that it shall not be reasonable for either of them to rely on any alleged, non-written amendment to this Agreement; (b) irrevocably waive any and all right to enforce any alleged, non-written amendment to this Agreement; and (c) expressly agree that it shall be beyond the scope of authority (apparent or otherwise) for any of their respective agents to agree to any non-written modification of this Agreement.

12.No Third-Party Beneficiaries. This Agreement is solely for the benefit of the Parties hereto and no persons other than the undersigned, their successors and/or assigns shall be entitled to claim or receive any benefit by reason of this Agreement.

13.Due Diligence Performed; Parties Fully Informed; No Right to Rely. Each Party to this Agreement hereby warrants, represents and agrees that it has, by itself and with the assistance of counsel (or, if without the assistance of counsel, such Party having of its own volition chosen not to seek such assistance), performed any and all due diligence and investigation it deems necessary or desirable in connection with making a fully informed decision to enter into and sign this Agreement. Tenant and Guarantors are each relying on its own investigations and its own decision-making processes in determining to sign this Agreement, are not relying on the representations or omissions of each other or of Landlord in so doing, and fully understand the terms and provisions of this Agreement and of the documents contemplated hereby.

14.Severability. If any one or more of the provisions of this Agreement are deemed unenforceable, the remainder of this Agreement shall, at the sole option of Landlord or Lender, remain enforceable in accordance with the balance of the terms of the Agreement.

15.Delay Not a Waiver. Neither the failure nor any reasonable delay on the part of Landlord or Lender to exercise any right, power or privilege under this Agreement or under any document executed in connection herewith shall operate as a waiver of such right, power or privilege and any single or partial exercise of any such right, power or privilege shall not preclude any other or further exercise thereof relating to any future exercise of such right, power or privilege.

16.Successors and Assigns. This Agreement shall be binding on each Party's successors and assigns.

17.Construction of Agreement. The following rules of construction are applicable for the purposes of this Agreement and all documents and instruments supplemental hereto unless the context clearly requires otherwise:

(a)All references herein to numbered sections are references to the sections hereof.

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(b)The terms "include," "including," and similar terms shall be construed as if followed by the phrase "without being limited to."

(c)The term "Property" shall be construed as if followed by the phrase "or any part thereof."

(d)All references to obligations, monetary sums or the like that are owed to Landlord under this Agreement or the other Lease Documents (including references to the "Lease Obligations" or "Tenant Obligations") shall be construed as if followed by the phrase "or any part thereof."

(e)Words of masculine, feminine or neutral gender shall mean and include the correlative words of the other genders, and words importing the singular number shall mean and include the plural, and vice versa.

(f)No inference in favor of or against any Party hereto shall be drawn from the fact that such party has drafted any portion of this Agreement or any portion of the Lease Documents.

(g)All references to Leases or the Lease Documents shall be deemed to include all existing modifications, amendments, extensions, restatements, or replacements of any of the Leases or Lease Documents made by mutual written agreement of and signed by the Parties.

(h)The terms "person" and "Party" shall mean any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, entity, or government (whether federal, state, county, city, municipal, or otherwise, including an instrumentality, division, agency, body, or department thereof).

(i)Section headings are included in this Agreement for convenience of reference only and shall not constitute part of this Agreement for any other purpose.

18.Counterparts. This Agreement may be executed in more than one counterpart, each of which shall be deemed an original and shall be binding upon any party executing the same and all of which together shall constitute one and the same document. This Agreement shall become effective when all parties hereto have executed a counterpart hereof. A signature of a Party by electronic transmission shall be deemed to constitute an original and fully effective signature of such Party.

19.Governing Law. This Agreement shall be governed by the laws of the State of Georgia without regard to conflicts of law provisions.

[The remainder of this page is intentionally left blank. Signatures appear on the following

page(s).]

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a Georgia corporation
LANDLORD:

M

ADK GEORGIA, LLC,

a Georgialimited liability company

LENDER:

ADCARE HEALTH SYSTEMS, INC.,

By:

Name: Brent Morrison Title: CEO

By:

Name: Brent Title: CEO

Morrison
[Signatures continue on mart page]
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TENANTS:

OS TYBEE, LLC,

a Georgia limited liability company

				
	
By:
	
 
	

	
 

	
 
	
 

	
Name: David. Lemcke
	
 

Title: CFO

SB TYBEE, LLC,

a Georgia limited liability company

Title: CFO

JV JEFFERSON, LLC,

a Georgia limited liability company

By:
Name:  David Lemcke 

Title: CFO

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Exhibit 1

(Amended Promissory Note)

8 of 88/28/2020, 9:25 AMrhe-ex107_511.htm

Exhibit 10.7

CONSULTING AGREEMENT

This CONSULTING AGREEMENT (the "Agreement") is entered into on August 16, 2020

(the "Effective Date"), by and between Regional Health Properties, Inc. (the "Company") d EC Business Partners, LLC (the "Consultant") and, solely with respect to Sections 4, 5, 6, 8, 9 and 12 hereof, E. Clinton Cain ("Cain").

WHEREAS, the Company desires to have the consulting services of Consultant as described herein, including that Consultant make Cain available to provide certain services to the Company as described herein; and

WHEREAS, Consultant desires to render such services on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual promises and obligations herein, and other valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereto agree as follows:

1.Consulting Services.

(a)Consultant will make Cain available to the Company and, as appropriate, the

subsidiaries and other controlled affiliates of the Company, to provide, and will cause Cain to provide, the following services (the "Services") on the terms and conditions set forth in this Agreement:

(i)to serve, on an interim basis, as the Company's "principal financial officer" and "principal accounting officer" as contemplated under the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations promulgated thereunder;

(ii)to perform all duties and fulfill all responsibilities typically completed by, or required of, the principal financial officer and principal accounting officer of a public company in the United States, including (A) together with the Company's Chief Executive Officer (the "CEO"), establishing and maintaining disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act ("disclosure controls"), and internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act ("ICFR"); (B) making required evaluations and disclosures in the Company's filings with the Securities and Exchange Commission (the "SEC") relating to the effectiveness of, and changes in, disclosure controls and ICFR; (C) coordinating with the Company's independent public accountants with respect to quarterly reviews and annual audits; (D) coordinating with the Audit Committee (the "Audit Committee") of the Company's Board of Directors (the "Board") and providing all information necessary, appropriate or required for or by the Audit Committee in connection with such reviews and audits; (E) disclosing to the Company's independent public accountants and the Audit Committee (x) all ICFR significant deficiencies and material weaknesses and (y) any fraud, whether or not material, that involves the Company's management or other employees; (F) preparing the Company's financial statements and signing (as the Company's principal financial officer and principal accounting officer) the Company's annual, quarterly and current reports filed with the SEC; (G) reviewing the Company's annual and quarterly reports prior to filing with the SEC to determine, based on Cain's knowledge, that (x) any such report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading and (y) the financial statements and other financial information included in any such report fairly present in all material respects the financial condition, results of operations and cash flows of the Company; (H) providing the certifications required to be filed with the

 

Exhibit 10.7

SEC as exhibits to the Company's annual and quarterly reports; and (I) reviewing the Company's current reports prior to filing with the SEC;

(iii)to oversee the Company's accounting and finance organization (including treasury and tax functions) and financial and accounting compliance functions;

(iv)to assist and advise on the Company's financing, recapitalization or strategic transactions, including preparing, reviewing and, if required, signing (as the Company's principal financial officer and principal accounting officer) all filings made by the Company with the SEC in connection therewith;

(v)to perform such other duties reasonably requested by the CEO or Board which are consistent with the position of principal financial officer and principal accounting officer of the Company; and

(vi)to perform such other accounting and financial advisory services, including such consulting, advisory and transition services upon the Company's hiring of a new Chief Financial Officer, as the CEO or the Board may reasonably request.

(b)The Services under this Agreement will all be performed by Cain and may not be subcontracted or assigned by Consultant or Cain to any other person. Cain will spend, and Consultant will cause Cain to spend, such number of hours per week rendering the Services as is necessary to provide the Services on the terms and conditions set forth in this Agreement. In rendering the Services, Cain will, and Consultant will cause Cain to: (i) perform the Services in a professional and workmanlike manner in accordance with best industry standards for similar services; (ii) exercise reasonable skill and care in performing the Services; (iii) devote sufficient time and resources to ensure that the Services are performed in a timely and reliable fashion; (iv) comply with all applicable federal, state and local laws, regulations and other requirements of any governmental or regulatory agency, entity, or official(s) (collectively, "Governmental Authority"); and (v) comply with all lawful directives of the CEO or the Board.

(c)If and to the extent requested by the CEO or the Board, following the termination of this Agreement, Cain will provide, and Consultant will cause Cain to provide, such assistance, representations and certifications as may be requested or necessary in order to enable the Company to make timely filing of its next succeeding quarterly or annual report, whichever is first required to be filed by the Company with the SEC following such termination. To the extent that Cain is requested by the Company to provide such assistance, representations or certifications, Consultant will be compensated for the time Cain spent providing such assistance, representations or certifications at a rate of up to $165 per hour, with the actual hourly rate to be set weekly by Consultant based on the specific tasks to be performed, and for purposes of this Agreement, such additional assistance shall be deemed to be part of the Services hereunder.

(d)Cain and Consultant will report directly to the CEO.

2.Fees and Expenses. During the term of this Agreement, the Company will pay Consultant for the time Cain spent rendering the Services at a rate of up to $165 per hour, with the actual hourly rate to be set weekly by Consultant based on the specific tasks to be performed. Consultant shall be paid on the last business day of each week for the prior week's Services.

3.Term and Termination. This Agreement shall commence on the Effective Date and shall continue until terminated as follows:

 

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Exhibit 10.7

(a)Consultant may terminate this Agreement at any time, for any or for no reason, upon thirty (30) days' prior written notice of such termination to the Company.

(b)The Company may terminate this Agreement at any time, for any or for no reason, upon thirty (30) days' prior written notice of such termination to Consultant; provided, however, if the Company hires a new Chief Financial Officer, then the Company may terminate this Agreement at any time thereafter, for any or for no reason, immediately upon written notice of such termination to Consultant.

4.Work Product. All Work Product (defined below) shall be work made for hire by Consultant or Cain and owned by the Company. If any of the Work Product may not, by operation of law or otherwise, be considered work made for hire by Consultant or Cain for the Company, or if ownership of all right, title and interest to the legal rights therein shall not otherwise vest exclusively in the Company, Consultant and Cain hereby assign to the Company, and upon the future creation thereof automatically assign to the Company, without further consideration, the ownership of all Work Product. The Company shall have the right to obtain and hold in its own name copyrights, patents, registrations, and any other protection available in the Work Product. Consultant and Cain agree to perform, during or after termination of this Agreement, such further acts as may be necessary or desirable to transfer, perfect and defend the Company's ownership of the Work Product as requested by the Company. Each of Consultant and Cain agree that the Company will receive good and valid title to all Work Product, free and clear of all encumbrances and liens of any kind, and all Work Product is and shall be Consultant's or Cain's original work (except for material in the public domain or provided by the Company) and does not and will not violate or infringe upon the intellectual property rights or any other right whatsoever of any person, firm, corporation or other entity. For purposes of this Agreement, "Work Product" means the data, materials, formulas, research, documentation, computer programs, communication systems, audio systems, system designs, inventions (whether or not patentable), and all works of authorship, including all worldwide rights therein under patent, copyright, trade secret, confidential information, moral rights and other property rights, created or developed in whole or in part by Consultant or Cain, during the term of this Agreement, within the scope of the Services or that otherwise relates in any manner to the business or projected business of the Company and its affiliates.

5.Confidentiality, Non-Disparagement and Non-Solicitation.

(a)Each of Consultant and Cain acknowledges that, during the term of this Agreement and while Cain otherwise provides Services hereunder, Consultant and Cain will have access to and become acquainted with various confidential or proprietary information, including pending or potential transactions, financial information concerning the Company, its business plans, personnel and strategies, trade secrets, inventions, innovations, processes, information, records and specifications owned or licensed by the Company or used by the Company in connection with the operation of its business including, the Company's business and product processes, methods, operator and vendor lists, accounts and procedures. Each of Consult and Cain agrees that neither Consultant nor Cain will disclose any of the aforesaid confidential or proprietary information, directly or indirectly, or use any of it in any manner, either during the term of this Agreement or at any time thereafter, except as required under this Agreement. To the extent permitted by law and subject to Section 10, upon receipt of any subpoena, court order, or other legal process compelling the disclosure of confidential or proprietary information, each of Consultant and Cain agree to give prompt written notice to the Company so as to permit the Company to protect its interests in confidentiality to the fullest extent possible. All files, records, documents, blueprints, specifications, information, letters, notes, media lists, original artwork/creative, notebooks, and similar items relating to the business of the Company, whether prepared by Consultant, Cain or otherwise coming into Consultant's or Cain's possession, shall remain the exclusive property of the Company. Neither Consultant nor Cain shall retain any copies of the foregoing without the Company's prior written permission. Upon the termination of this Agreement, or whenever requested by the Company, each of Consultant and Cain shall

 

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Exhibit 10.7

immediately deliver to the Company all such files, records, documents, specifications, information, and other items in Consultant's or Cain's possession or under their control.

(b)Each of Consultant and Cain agrees that, during the term of this Agreement and at all times thereafter, neither Consultant nor Cain will disparage, directly or indirectly, the Company or its officers, directors, or affiliates in any way, or through any medium. Each of Consultant and Cain agrees to provide full cooperation and assistance in assisting the Company to investigate such statements if the Company reasonably believes that Consultant or Cain is the source of any such statements. The foregoing shall not apply to statutorily privileged statements made by Consultant or Cain to Governmental Authorities.

(c)Each of Consultant and Cain agrees that, during the term of this Agreement and for a period of 12 months after the date this Agreement is terminated, neither Consultant, Cain nor any company or other entity controlled by Consultant or Cain (whether currently existing or hereafter acquired or formed) shall, directly or indirectly, in any capacity: (i) solicit or induce, or attempt to solicit or induce, any employee of, or any person who accepts employment with, the Company or its affiliates to leave the employ of the Company or any of its affiliates for any reason whatsoever; or (ii) hire or employ any employee of, or any person who accepts employment with, the Company or any of its affiliates.

6.Company Policies. Each of Consultant and Cain acknowledges receipt of, and agrees that each of Consultant and Cain has read and reviewed, understands and will comply, as if an officer and employee of the Company, with all Company policies, including the Company's Code of Business Conduct and Ethics Policy, Insider Trading Policy, Related Party Transaction Policy and all similar policies, and with all other policies and procedures of the Company as may be in effect from time to time and applicable to the Company's officers.

7.Indemnification. The Company agrees to defend, indemnify (including providing for the advancement of expenses and reasonable attorneys' fees) and hold harmless Cain for any and all acts taken or omitted to be taken by Cain hereunder (except for bad faith, gross negligence or willful misconduct) as if Cain was an officer of the Company. This defense, indemnity and hold harmless obligation shall apply to Cain to the extent provided in the articles of incorporation and bylaws of the Company in accordance with the same terms, conditions, limitations, standards, duties, rights and obligations as are applicable to an officer of the Company.

8.Independent Consultant. This Agreement shall not render or be construed as creating: (i) a partnership, joint venture or any other form of association between the Company and Consultant or Cain; or (ii) an employment relationship between the Company and Cain or other personnel or members of Consultant's internal staff or management, for tax purposes or any other purpose, and the parties hereto shall at all times be and remain independent contractors only. Neither this Agreement nor the performance of Services hereunder shall create or give rise to any right of employment with the Company in favor of Cain (during the term of this Agreement or otherwise) or any right to continue in such capacity beyond the term of this Agreement, and Consultant shall be solely responsible for providing Cain all employment compensation and benefits. Without limiting the generality of this Section 8, Cain shall not be eligible to participate in any vacation, group medical or life insurance, disability, profit sharing or retirement benefits or any other fringe benefits or benefit plans offered by the Company to its employees, and the Company will not be responsible for withholding or paying any income, payroll, Social Security or other federal, state or local taxes, making any insurance contributions, including unemployment or disability, or obtaining worker's compensation insurance on Consultant's or Cain's behalf. Consultant shall be responsible for, and Consultant and Cain shall indemnify the Company against, all such taxes or contributions, including penalties and interest.

 

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Exhibit 10.7

9.Remedies. Each of Consultant and Cain acknowledges that breach of the provisions of Section 4 or Section 5 would result in irreparable injury and permanent damage to the Company and its affiliates, which prohibitions or restrictions each of Consultant and Cain acknowledges are both reasonable and necessary under the circumstances, singularly and in the aggregate, to protect the interests of the Company and its affiliates. Each of Consultant and Cain recognizes and agrees that the ascertainment of damages in the event of a breach of Sections 4 or 5 would be difficult, and that money damages alone would be an inadequate remedy for the injuries and damages that would be suffered by the Company and its affiliates from breach by Consultant or Cain. Each of Consultant and Cain therefore agrees: (i) that, in the event of a breach of Section 4 or 5, the Company, in addition to and without limiting any of the remedies or rights that it may have at law or in equity or pursuant to this Agreement, shall have the right to injunctive relief or other similar remedy to specifically enforce the provisions hereof; and (ii) to waive and not to (x) assert any defense to the effect that the Company has an adequate remedy at law with respect to any such breach, (y) require that the Company submit proof of the economic value of any trade secret, or (z) require that the Company post a bond or any other security.

10.Reports to Government Authorities. Notwithstanding the foregoing, nothing in this Agreement prohibits or restricts Consultant or Cain from lawfully: (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by any Governmental Authority regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to Consultant or Cain individually (and not directed to the Company) from any such Governmental Authorities; (iii) testifying, participating or otherwise assisting in an action or proceeding by any such Governmental Authorities relating to a possible violation of law; or (iv) making any other disclosures that are protected under the whistleblower provisions of any applicable law.

11.Successors and Assigns. All of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, if any, successors, and permitted assigns.

12.Choice of Law, Venue. This Agreement was made in the State of Georgia and shall be governed by, construed and enforced in all respects in accordance with the laws of the State of Georgia. Any legal action or proceeding with respect to this Agreement may be brought only in the Superior Court of Fulton County, State of Georgia, or in the United States District Court for the Northern District of Georgia, Atlanta Division. By execution and delivery of this Agreement, each party hereto accepts for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. In addition to any other means provided by law, each party hereto further irrevocably consents to the service of process from any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the respective party at its address for notices pursuant to this Agreement, such service to become effective upon the earlier of actual receipt or five days after such mailing. No party hereto shall have the right to commence legal proceedings or otherwise proceed against any other party hereto in any jurisdiction other than the aforesaid courts in the State of Georgia. Each party hereto irrevocably waives any objection which it may now or hereafter have or claim to have to the jurisdiction or venue of the courts referred to above with respect to any of the aforesaid actions or proceedings arising out of or in connection with this Agreement, and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Each party hereto hereby further irrevocably waives the right to trial by jury in any action or proceeding brought hereunder.

13.Waiver. Waiver by one party hereto of breach of any provision of this Agreement by the other shall not operate or be construed as a continuing waiver.

 

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Exhibit 10.7

14.Assignment. Consultant shall not assign any of its rights, or delegate or subcontract any of its duties or obligations or the performance of any of its duties under this Agreement, without the prior written consent of the Company. Any assignment in violation of the foregoing shall be deemed null and void.

15.Notices. Any notice or other communication required or permitted to be delivered to any party hereto under this Agreement shall be in writing and shall be deemed properly delivered, given and received: (i) upon receipt when delivered by hand; (ii) at the end of the first business day after being sent by nationally recognized overnight delivery service for next business day delivery; (iii) if sent by email transmission prior to 5:00 p.m. recipient's local time, then upon transmission when receipt is confirmed; or (iv) if sent by email transmission after 5:00 p.m. recipient's local time and receipt is confirmed, then the business day following the date of transmission; provided that, in each case, the notice or other communication is sent to the physical address or email address set forth beneath the name of such party below (or to such other physical address or email address as such party shall have specified in a written notice given to the other parties hereto):

If to Consultant or Cain:

EC Business Partners

5552 Leaf Ridge Lane

Buford GA 30518

Attention: Clinton Cain

Email: Clinton.Cain@Regionalhealthproperties.com 

and Clinton.Cain@ ECBusinesspartners.com 

If to the Company:

Regional Health Properties, Inc.

454 Satellite Boulevard, NW

Suite 100

Suwanee, Georgia 30024

Attention: Chief Executive Officer

Email: Brent.Morrison@regionalhealthproperties.com 

16.Modification or Amendment. No amendment, change or modification of this Agreement shall be valid unless in writing signed by the parties hereto.

17.Entire Understanding. This Agreement constitutes the entire understanding and agreement of the parties hereto, and any and all prior agreements, understandings, and representations are hereby terminated and canceled in their entirety and are of no further force and effect.

18.Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, then the parties hereto agree that the court making such determination shall have the power to limit such term or provision, to delete specific words or phrases or to replace such term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be valid and enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable

 

6

 

Exhibit 10.7

term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term or provision.

19.Survival. The terms and conditions of Sections 1(c), 4, 5, 7, 8, 9, 10 and 12 shall survive the termination of this Agreement.

20.Construction. For purposes of this Agreement: (i) the words "include," "includes" and "including" shall be deemed to be followed by the words "without limitation"; (ii) the word "or" is not exclusive; and (iii) the words "herein," "hereof," "hereby," "hereto" and "hereunder" refer to this Agreement as a whole. The definitions given for any defined terms in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Unless the context otherwise requires, references herein: (x) to Sections mean the Sections of this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement 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

21.Counterparts. This Agreement may be executed in multiple counterparts and by facsimile signature, each of which shall be deemed an original and all of which together shall constitute one instrument.

[Signature Page Follows.]

 

7

 

Exhibit 10.7

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

THE COMPANY:

REGIONAL HEALTH PROPERTIES, INC. 

 

 

:CONSULTANT:

EC BUSJ ESS PARTNERS, LLC

By:
Name: E. Clinton Cain

Its: Chief Executive Officer

SOLELY WITH RESPECT TO SECTIONS 4, 5, 6, 8, 9 AND 12 HEREOF:

E. CLINTON CAIN

 

 

Exhibit 10.7

Signature Page to Consulting Agreement

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