On September 6, 2018, Regional Health Properties, Inc. and certain of its subsidiaries entered into a new Forbearance Agreement with Pinecone Realty Partners II, LLC pursuant to which Pinecone agreed, subject to the terms and conditions set out in the New Forbearance Agreement, to forbear for a specified period of time from exercising its default-related rights and remedies (including the acceleration of the outstanding loans and charging interest at the specified default rate) with respect to specified events of default (the “Specified Defaults”) under the Loan Agreement, dated as of February 15, 2018, among the Company, certain of its subsidiaries and Pinecone. As previously reported, the Company and certain of its subsidiaries entered into a Forbearance Agreement with Pinecone with respect to the Loan Agreement on May 18, 2018. However, as previously reported, the forbearance period under the Original Forbearance Agreement terminated on July 6, 2018 because the Company did not satisfy certain conditions set out therein. Pursuant to the New Forbearance Agreement, the Company and Pinecone agreed to amend certain provisions of the Loan Agreement. Such amendments, among other things: (i) remove the restriction on prepaying the loans during the thirteen (13) month-period after the Closing Date; (ii) provide a thirty (30)-day cure period for certain events of default and a fifteen (15)-day cure period for certain failures to provide information or materials pursuant to the Loan Agreement; (iii) increase the finance fee payable on repayment or acceleration of the loans, depending on the time at which the loans are repaid; and (iv) increase the outstanding principal balance owed by (a) approximately $0.7 million to reimburse Pinecone for its accrued and unpaid expenses and to pay outstanding interest payments for prior interest periods and (b) $1.5 million as a non-refundable payment of additional interest. During the forbearance period under the New Forbearance Agreement, the interest rate will revert from the default rate of 18.5% per annum to the ongoing rate of 13.5% per annum. The New Forbearance Agreement amends the Loan Agreement to require the company to hire a financial advisor and/or Chief Strategy Officer reasonably acceptable to Pinecone no later than September 13, 2018 to advise management and the Company’s board of directors on operational improvements and to assist in coordinating overall company strategy, whose engagement shall include assisting the Company to obtain one or more sources of refinancing to repay the obligations under the Loan Agreement. The New Forbearance Agreement also amends the Loan Agreement to permit the Company to substitute or replace the operators of certain of the Company’s facilities without the prior written consent of Pinecone, provided that such substitution or replacement is on commercially reasonable terms, has been approved by a Financial Advisor or the CSO, and the terms of which have been disclosed to Pinecone no later than two (2) business days prior to entry into definitive documentation and Pinecone has not objected during such time period.