Item 1.01Entry into a Material Definitive Agreement.
On
The Agreement provides for, among other things, the: (i) termination of that certain (a) Sublease Agreement, dated as ofJanuary 31, 2015 , which were due to expireAugust 31, 2027 , between Regional andTara Tenant (the "Tara Sublease"), under which Regional subleases toTara Tenant the skilled nursing and assisted living facility located inThunderbolt, Georgia (the "Tara Facility"), and (b) Sublease Agreement, dated as ofJanuary 31, 2015 , between Regional and Powder Springs Tenant (the "Powder Springs Sublease", together with the Tara Sublease, the "Subleases"), under which Regional subleases to Powder Springs Tenant the skilled nursing facility located inPowder Springs, Georgia (the "Powder Springs Facility", together with the Tara Facility, the "Facilities"); (ii) transition of the operation of the Facilities to Regional; and (iii) settlement of outstanding amounts owed by the Tenants to Regional under the Subleases. In connection with the Subleases, Regional and the Wellington Parties entered into several ancillary security agreements with respect to the Facilities, each dated as ofJanuary 25, 2019 , including guarantees (the "Guarantees"), pledge agreements (the "Pledge Agreements"), subordination agreements (the "Subordination Agreements") and security agreements (the "Security Agreements").
Scheduled rent payments under the Subleases constitute approximately 22% of
Regional's anticipated annual revenue in 2020. As of
Under the Agreement, possession, custody, control and operation of the
Facilities will transition from the Tenants to Regional (the "Transition") at
Upon the occurrence of the Transition, the Subleases, Guarantees, Pledge Agreements and Subordination Agreements will terminate automatically without any further action needed by any party. Additionally, the Wellington Parties and Regional agreed to a mutual release whereby each party releases, acquits, and forever discharges one another from any and all charges, complaints, claims, liabilities, demands, costs, losses, debts, and expenses of any nature whatsoever (including attorneys' fees and costs actually incurred), known or unknown, suspected or unsuspected, accrued or not accrued, whether in law in equity, that existed from the beginning of time to the Transition Date.
Subject only to the OTAs and the Agreement, Regional will not in any way be liable for any contractual obligations or liabilities of the Wellington Parties owed to third parties arising prior to the Transition Date. Regional will pay and/or assume all vacation days, sick days and paid time off accruing on or before the Transition Date.
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Regional will indemnify the Wellington Parties from liabilities arising from or
relating to any unpaid nursing home provider fees relating in any way to the
Facilities for the period prior to and/or after
Until the Transition Date occurs, neither: (i) the execution of the Agreement; (ii) the execution of any document or instrument required under the Agreement; nor (iii) the consummation of the transactions and agreements set forth in the Agreement will in any manner (a) rescind or cure any existing default under the Subleases, (b) reinstate the Subleases to current status, or (c) constitute an accord and satisfaction. Regional's agreement to forego immediate pursuit of its rights and remedies constitutes a postponement and forbearance only, and does not constitute a waiver of any such rights or remedies.
The Agreement includes customary termination events, including: (i) the failure
of the Tenants to perform any of their obligations under the Agreement where
such failure continues for a period of ten business days after the Tenants
receipt of written notice from Regional; or (ii) either Tenant institutes or has
instituted against Tenant or the Facilities any bankruptcy, reorganization,
receivership, assignment for the benefit of creditors, conservatorship,
custodianship, sequestration, or other similar judicial or non-judicial
proceeding; or (iii) the Transition Date has not occurred on or before
Item 1.02Termination of a Material Definitive Agreement.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference in this Item 1.02.
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