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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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| THE SECURITIES EXCHANGE ACT OF 1934 |
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(I.R.S. Employer |
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| Securities registered pursuant to Section 12(b) of the Exchange Act: |
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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.
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 period that the registrant was required to submit such files).
| 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. | |
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Accelerated filer ☐ |
| Non–accelerated filer ☐ |
Smaller reporting company |
| Emerging growth company |
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| 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 is defined in Rule 12b–2 of the Exchange Act). Yes |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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NATIONAL HEALTHCARE CORPORATION
Interim Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended June 30 |
Six Months Ended June 30 |
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| 2026 |
2025 |
2026 |
2025 |
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| Revenues: |
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| Net patient revenues |
$ | $ | $ | $ | ||||||||||||
| Other revenues |
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| Net operating revenues |
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| Cost and expenses: |
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| Salaries, wages, and benefits |
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| Other operating |
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| Facility rent |
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| Depreciation and amortization |
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| Total costs and expenses |
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| Income from operations |
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| Other income (expense): |
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| Non–operating income |
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| Interest expense |
( |
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| Unrealized gains/(losses) on marketable equity securities |
( |
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| Income before income taxes |
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| Income tax provision |
( |
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| Net income |
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| Net income attributable to noncontrolling interest |
( |
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| Net income attributable to National HealthCare Corporation |
$ | $ | $ | $ | ||||||||||||
| Earnings per share attributable to National HealthCare Corporation stockholders: |
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| Basic |
$ | $ | $ | $ | ||||||||||||
| Diluted |
$ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding: |
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| Basic |
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| Diluted |
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The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements.
NATIONAL HEALTHCARE CORPORATION
Interim Condensed Consolidated Statements of Comprehensive Income
(unaudited – in thousands)
| Three Months Ended June 30 |
Six Months Ended June 30 |
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| 2026 |
2025 |
2026 |
2025 |
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| Net income |
$ | $ | $ | $ | ||||||||||||
| Other comprehensive income/(loss): |
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| Unrealized gains/(losses) on investments in marketable debt securities |
( |
) | ( |
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| Reclassification adjustment for realized losses on sales of marketable debt securities |
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| Income tax (expense)/benefit related to items of other comprehensive income |
( |
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| Other comprehensive income/(loss), net of tax |
( |
) | ( |
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| Net income attributable to noncontrolling interest |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Comprehensive income attributable to National HealthCare Corporation |
$ | $ | $ | $ | ||||||||||||
The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements.
NATIONAL HEALTHCARE CORPORATION
Interim Condensed Consolidated Balance Sheets
(in thousands)
| June 30, 2026 |
December 31, 2025 |
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| unaudited |
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| Assets |
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| Current Assets: |
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| Cash and cash equivalents |
$ | $ | ||||||
| Restricted cash and cash equivalents, current portion |
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| Marketable equity securities |
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| Restricted marketable equity securities |
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| Restricted marketable debt securities, current portion |
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| Accounts receivable |
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| Inventories |
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| Prepaid expenses and other assets |
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| Total current assets |
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| Property and Equipment: |
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| Property and equipment, at cost |
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| Accumulated depreciation and amortization |
( |
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| Net property and equipment |
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| Other Assets: |
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| Restricted cash and cash equivalents, less current portion |
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| Restricted marketable debt securities, less current portion |
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| Deposits and other assets |
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| Operating lease right-of-use assets |
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| Goodwill |
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| Intangible assets |
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| Investments in unconsolidated companies |
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| Total other assets |
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| Total assets |
$ | $ | ||||||
The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements.
NATIONAL HEALTHCARE CORPORATION
Interim Condensed Consolidated Balance Sheets (continued)
(in thousands, except share and per share amounts)
| June 30, 2026 |
December 31, 2025 |
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| unaudited |
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| Liabilities and Stockholders’ Equity |
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| Current Liabilities: |
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| Trade accounts payable |
$ | $ | ||||||
| Operating lease liabilities, current portion |
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| Accrued payroll |
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| Amounts due to third party payors |
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| Accrued risk reserves, current portion |
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| Other current liabilities |
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| Dividends payable |
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| Long-term debt, current portion |
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| Total current liabilities |
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| Long-term debt |
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| Operating lease liabilities, less current portion |
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| Accrued risk reserves, less current portion |
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| Refundable entrance fees |
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| Deferred income taxes |
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| Other noncurrent liabilities |
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| Total liabilities |
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| Equity: |
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| Common stock, $ par value; shares authorized; and shares, respectively, issued and outstanding |
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| Capital in excess of par value |
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| Retained earnings |
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| Accumulated other comprehensive loss |
( |
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| Total National HealthCare Corporation stockholders’ equity |
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| Noncontrolling interest |
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| Total equity |
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| Total liabilities and equity |
$ | $ | ||||||
The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements.
NATIONAL HEALTHCARE CORPORATION
Interim Condensed Consolidated Statements of Cash Flows
(unaudited – in thousands)
| Six Months Ended June 30 |
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| 2026 |
2025 |
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| Cash Flows From Operating Activities: |
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| Net income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
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| Equity in losses/(earnings) of unconsolidated investments |
( |
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| Distributions from unconsolidated investments |
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| Unrealized gains on marketable equity securities |
( |
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| Realized gains on sale of marketable securities |
( |
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| Gain on sale of property and equipment |
( |
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| Deferred income taxes |
( |
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| Stock–based compensation |
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| Changes in operating assets and liabilities: |
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| Accounts receivable |
( |
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| Inventories |
( |
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| Prepaid expenses and other assets |
( |
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| Operating lease obligations |
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| Trade accounts payable |
( |
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| Accrued payroll |
( |
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| Amounts due to third party payors |
( |
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| Accrued risk reserves |
( |
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| Other current liabilities |
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| Other noncurrent liabilities |
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| Net cash provided by operating activities |
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| Cash Flows From Investing Activities: |
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| Purchases of property and equipment |
( |
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| Acquisition of skilled nursing facilities and other assets |
( |
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| Deposits in escrow for real estate acquisition | ( |
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| Collections of notes receivable |
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| Investments in unconsolidated companies |
( |
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| Purchases of marketable securities |
( |
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| Proceeds from sale of marketable securities |
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| Net cash used in investing activities |
( |
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| Cash Flows From Financing Activities: |
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| Repayments under credit facility |
( |
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| Dividends paid to common stockholders |
( |
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| Issuance of common shares |
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| Repurchase of common shares |
( |
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| Noncontrolling interest distributions |
( |
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| Entrance fee deposits |
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| Net cash used in financing activities |
( |
) | ( |
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| Net Increase/(Decrease) in Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents |
( |
) | ||||||
| Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Beginning of Period |
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| Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, End of Period |
$ | $ | ||||||
| Balance Sheet Classifications: |
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| Cash and cash equivalents |
$ | $ | ||||||
| Restricted cash and cash equivalents |
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| Total Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents |
$ | $ | ||||||
The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements.
NATIONAL HEALTHCARE CORPORATION
Interim Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except share and per share amounts)
(unaudited)
For the six months ended June 30, 2026:
| Common Stock |
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| Shares |
Amount |
Capital in Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Non- controlling Interest |
Total Stockholders' Equity |
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| Balance at January 1, 2026 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
| Net income |
– | |||||||||||||||||||||||||||
| Distributions attributable to noncontrolling interest |
– | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive loss |
– | ( |
) | ( |
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| Stock–based compensation |
– | |||||||||||||||||||||||||||
| Shares sold – options exercised |
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| Repurchase of common shares |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Dividends declared to common stockholders ($ per share) |
– | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance at March 31, 2026 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
| Net income |
– | |||||||||||||||||||||||||||
| Distributions attributable to noncontrolling interest |
– | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive loss |
– | ( |
) | ( |
) | |||||||||||||||||||||||
| Stock–based compensation |
– | |||||||||||||||||||||||||||
| Shares sold – options exercised |
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| Repurchase of common shares |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Dividends declared to common stockholders ($ per share) |
– | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance at June 30, 2026 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
For the six months ended June 30, 2025:
| Common Stock |
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| Shares |
Amount |
Capital in Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Non- controlling Interest |
Total Stockholders' Equity |
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| Balance at January 1, 2025 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
| Net income |
– | |||||||||||||||||||||||||||
| Other comprehensive income |
– | |||||||||||||||||||||||||||
| Stock–based compensation |
– | |||||||||||||||||||||||||||
| Shares sold – options exercised |
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| Repurchase of common shares |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Dividends declared to common stockholders ($ per share) |
– | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance at March 31, 2025 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
| Net income |
– | |||||||||||||||||||||||||||
| Other comprehensive income |
– | |||||||||||||||||||||||||||
| Stock–based compensation |
– | |||||||||||||||||||||||||||
| Shares sold – options exercised |
||||||||||||||||||||||||||||
| Repurchase of common shares |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Dividends declared to common stockholders ($ per share) |
– | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance at June 30, 2025 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements.
NATIONAL HEALTHCARE CORPORATION
Notes to Interim Condensed Consolidated Financial Statements
June 30, 2026
(unaudited)
Note 1 – Description of Business
National HealthCare Corporation (“NHC” or the “Company”) is a leading provider of senior health care services. As of June 30, 2026, we operate or manage, through certain affiliates,
Note 2 – Summary of Significant Accounting Policies
The listing below is not intended to be a comprehensive list of all our significant accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. generally accepted accounting principles (“GAAP”), with limited need for management’s judgment in their application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. See our audited December 31, 2025 consolidated financial statements and notes thereto which contain accounting policies and other disclosures required by U.S. GAAP. Our audited December 31, 2025 consolidated financial statements are available at our web site: www.nhccare.com.
Basis of Presentation
The unaudited interim condensed consolidated financial statements to which these notes are attached include all normal, recurring adjustments which are necessary to fairly present the financial position, results of operations and cash flows of NHC. All significant intercompany transactions and balances have been eliminated in consolidation. The consolidated financial statements include the accounts of all entities controlled by NHC. The Company presents noncontrolling interest within the equity section of its consolidated balance sheets. The Company presents the amount of consolidated net income that is attributable to NHC and the noncontrolling interest in its consolidated statements of operations.
We assume that users of these interim financial statements have read or have access to the audited December 31, 2025 consolidated financial statements and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context. Accordingly, footnotes and other disclosures which would substantially duplicate the disclosure contained in our most recent annual report to stockholders have been omitted. This interim financial information is not necessarily indicative of the results that may be expected for a full year for a variety of reasons.
Estimates and Assumptions
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and could cause our reported net income to vary significantly from period to period.
Net Patient Revenues and Accounts Receivable
Net patient revenues are derived from services rendered to patients for skilled and intermediate nursing, rehabilitation therapy, assisted living and independent living, home health care services, hospice services, and behavioral health services. Net patient revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient services. These amounts are due from patients, governmental programs, and other third-party payors, and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations.
The Company recognizes revenue as its performance obligations are completed. Routine services are treated as a single performance obligation satisfied over time as services are rendered. These routine services represent a bundle of services that are not capable of being distinct. The performance obligations are satisfied over time as the patient simultaneously receives and consumes the benefits of the healthcare services provided. Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time when those services are rendered.
We determine the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration, such as implicit price concessions. We utilize the expected value method to determine the amount of variable consideration that should be included to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. We constrain the transaction price, such that net revenues are recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future. If actual amounts of consideration ultimately received differ from our estimates, we adjust these estimates, which would affect net revenue in the period such variances become known.
Other Revenues
Other revenues include revenues from the provision of insurance services to other healthcare providers, management and accounting services to other healthcare providers, and rental income. Our insurance revenues consist of premiums that are generally paid in advance and then amortized into income over the policy period. We charge for management services based on a percentage of net revenues. We charge for accounting services based on a monthly fee or a fixed fee per bed of the healthcare center under contract. We record other revenues as the performance obligations are satisfied based on the terms of our contractual arrangements.
We recognize rental income based on the terms of our operating leases. Under certain of our leases, we receive variable rent, which is based on the increase in revenues of a lessee over a base year. We recognize variable rent annually or monthly, as applicable, when, based on the actual revenue of the lessee is earned.
During the second quarter of 2026, we recognized management fees of $
Segment Reporting
In accordance with the provisions of Accounting Standards Codification ("ASC") 280, Segment Reporting, the Company is required to report financial and descriptive information about its reportable operating segments. The Company has reportable operating segments: (1) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and behavioral health hospitals, and (2) homecare and hospice services. The Company also reports an “all other” category that includes revenues from rental income, management and accounting services fees, insurance services, and costs of the corporate office. See Note 7 for further disclosure of the Company’s operating segments.
Other Operating Expenses
Other operating expenses include the costs of care and services that we provide to the residents of our facilities and the costs of maintaining our facilities. Our primary patient care costs include drugs, medical supplies, purchased professional services, food, and professional liability insurance and licensing fees. The primary facility costs include utilities and property insurance.
During the second quarter of 2025, we contributed land to a newly-formed limited liability company resulting in an equity interest in the new entity. The fair value of the land contributed to the new entity was $
General and Administrative Costs
With the Company being a healthcare provider, the majority of our expenses are "cost of revenue" items. Costs that could be classified as "general and administrative" by the Company would include its corporate office costs, excluding stock-based compensation and incentive compensation, which were $
Long-Term Leases
The Company’s lease portfolio primarily consists of operating real estate leases for certain skilled nursing facilities, assisted and independent living facilities, homecare and hospice offices, regional offices, and pharmacy warehouses. The original terms of the leases typically range from to years. Several of the real estate leases include renewal options which vary in length and may not include specific rent renewal amounts. We determine if an arrangement is a lease at inception of a contract. We determine the lease term by assuming exercise of renewal options that are reasonably certain.
The Company records right-of-use assets and liabilities for non-cancelable real estate operating leases with original or remaining lease terms in excess of one year. Leases with a lease term of 12 months or less at inception are not recorded and are expensed on a straight-line basis over the lease term. We recognize lease components and non-lease components together and not as separate parts of a lease for real estate leases.
Operating lease right-of-use assets and liabilities are recorded at the present value of the lease payments over the lease term. The present value of the lease payments are discounted using the incremental borrowing rate associated with each lease. The variable components of the lease payment that fluctuate with the operations of a health facility are not included in determining the right-of-use assets and lease liabilities. Rather, these variable components are expensed as incurred.
Property and Equipment
Property and equipment are recorded at cost or fair value, if acquired. Depreciation is provided by the straight-line method over the expected useful lives of the assets estimated as follows: buildings and improvements,
Investments in Unconsolidated Companies
We use the equity method to account for our investments in joint ventures in which we have the ability to exercise significant influence. Original investments in these entities are recorded at cost and subsequently adjusted by our share of equity in income or losses. As of June 30, 2026, the majority of our investments in unconsolidated companies relate to two multi-family developments in Franklin, Tennessee and Hermitage, Tennessee.
Business Combinations
We account for transactions that represent business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Acquisitions are accounted for as purchases and are included in our consolidated financial statements from their respective acquisition dates. Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date using the appropriate valuation method. Goodwill generated from acquisitions is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired and liabilities assumed. In determining the fair value of identifiable assets, we use various valuation techniques. These valuation methods require us to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. Goodwill is not amortized but is subject to an annual impairment test. We perform our annual goodwill impairment assessment on the first day of the fourth quarter. Tests are performed more frequently if events occur, or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.
The Company’s indefinite-lived intangible assets consist of trade names and certificates of need and licenses. The Company reviews indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset is below its carrying amount.
Accrued Risk Reserves
We are self–insured for risks related to workers’ compensation and general and professional liability insurance. We have two wholly–owned limited purpose insurance companies that insure these risks. The accrued risk reserves include a liability for reported claims and estimates for incurred but unreported claims. Our policy is to engage an external, independent actuary to assist in estimating our exposure for claims obligations (for both asserted and unasserted claims). We reassess our accrued risk reserves on a quarterly basis.
Professional liability remains an area of particular concern to us. The long-term care industry has seen an increase in personal injury/wrongful death claims based on alleged negligence by skilled nursing facilities and their employees in providing care to residents. The Company has been, and continues to be, subject to claims and legal actions that arise in the ordinary course of business, including potential claims related to patient care and treatment. A significant increase in the number of these claims, or an increase in the amounts due as a result of these claims could have a material adverse effect on our consolidated financial position, results of operations and cash flows. It is also possible that future events could cause us to make significant adjustments or revisions to these reserve estimates and cause our reported net income to vary significantly from period to period.
We are principally self-insured for incidents occurring in all centers owned or leased by us. The coverage includes both primary policies and excess policies. In all years, settlements, if any, in excess of available insurance policy limits and our own reserves would be expensed by us.
Continuing Care Contracts
We have continuing care retirement centers (“CCRC”) within our operations. Residents at these retirement centers may enter into continuing care contracts with us.
Non-refundable fees are included as a component of the transaction price and are amortized into revenue over the actuarily determined remaining life of the resident, which is the expected period of occupancy by the resident. We pay the refundable portion of our entry fees to residents when they relocate from our community and the apartment is re-occupied. Refundable entrance fees are not included as part of the transaction price and are classified as noncurrent liabilities in our consolidated balance sheets.
We also annually estimate the present value of the cost of future services and the use of facilities to be provided to the current CCRC residents and compare that amount with the balance of non-refundable deferred revenue from entrance fees received. If the present value of the cost of future services exceeds the related anticipated revenues, a liability is recorded with a corresponding charge to income. As of June 30, 2026 and December 31, 2025, we have recorded a future service obligation liability in the amount of $
Other Noncurrent Liabilities
Other noncurrent liabilities include reserves primarily related to various uncertain income tax positions, deferred revenue, and obligations to provide future services to our CCRC residents. Deferred revenue includes the deferred gain on the sale of assets to National Health Corporation (“National”) and the non-refundable portion of CCRC entrance fees being amortized over the remaining life expectancies of the residents.
Noncontrolling Interest
The noncontrolling interest in a subsidiary is presented within total equity in the Company's interim condensed consolidated balance sheets. The Company presents the noncontrolling interest and the amount of consolidated net income attributable to NHC in its interim condensed consolidated statements of operations. The Company’s earnings per share is calculated based on net income attributable to NHC’s stockholders. The carrying amount of the noncontrolling interest is adjusted based on an allocation of the subsidiary earnings, contributions, and distributions.
Recently Adopted Accounting Guidance
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-06, "Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative," which amends U.S. GAAP to include certain disclosure requirements that are currently required under SEC Regulation S-X or Regulation S-K. Each amendment will be effective on the date on which the SEC removes the related disclosure requirement from SEC Regulation S-X or Regulation S-K. The adoption is not expected to have a material impact on the Company's financial statements as these requirements were previously incorporated under the SEC Regulations.
In November 2024, the FASB issued ASU 2024-03 "Disaggregation of Income Statement Expenses," which requires the Company to disaggregate key expense categories such as employee compensation and depreciation within its financial statements. ASU 2024-03 is effective for annual periods beginning with the Company's fiscal year 2027, and interim periods with the Company's fiscal year 2028, with early adoption permitted. We are currently evaluating the impact this ASU will have on the company's financial statements and related disclosures.
Note 3 – Acquisition of Five Skilled Nursing Facilities
On June 1, 2026, the Company purchased the land, buildings, and other specified assets and assumed certain liabilities of skilled nursing facilities from National Health Corporation (“National”) for a purchase price of $
The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocation.
The Company has performed a preliminary valuation analysis of the fair market value of the assets acquired and liabilities assumed from National. The final valuation of the assets acquired and liabilities assumed was not complete as of June 30, 2026, but will be finalized within the allowable measurement period. The following table summarizes the allocation of the preliminary purchase price as of the transaction’s closing date (in thousands):
| Amount |
||||
| Accounts receivable |
$ | |||
| Inventory |
||||
| Prepaid expenses and other assets |
||||
| Property and equipment |
||||
| Deposits and other assets |
( |
) | ||
| Intangible assets |
||||
| Total assets acquired |
||||
| Trade accounts payable |
||||
| Accrued payroll |
||||
| Other current liabilities |
||||
| Total liabilities assumed |
||||
| Total estimated fair value of the acquisition |
$ | |||
The indefinite-lived intangible assets acquired include the skilled nursing certificates of need and licenses.
The operations added during the three and six months ended June 30, 2026 were not material to the Company. Accordingly, pro-forma financial information is not presented. As of June 30, 2026, these additions have been included in the interim condensed consolidated balance sheet of the Company. The operating results have been included in the interim condensed consolidated statements of operations since the date the Company gained effective control, which was June 1, 2026.
For the three and six months ended June 30, 2026, these skilled nursing facilities contributed net operating revenues of $
Note 4 – Net Patient Revenues
The Company disaggregates revenue from contracts with customers by service type and by payor.
Revenue by Service Type
The Company’s net patient services can generally be classified into the following two categories: (1) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and behavioral health hospitals, and (2) homecare and hospice services (in thousands).
| Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| Net patient revenues: |
||||||||||||||||
| Inpatient services |
$ | $ | $ | $ | ||||||||||||
| Homecare and hospice |
||||||||||||||||
| Total net patient revenues |
$ | $ | $ | $ | ||||||||||||
For inpatient and hospice services, revenue is recognized on a daily basis as each day represents a separate contract and performance obligation. For homecare, revenue is recognized when services are provided based on the number of days of service rendered in the period of care or on a per-visit basis. Typically, patients and third-party payors are billed monthly after services are performed or the patient is discharged, and payments are due based on contract terms.
As our performance obligations relate to contracts with a duration of one year or less, the Company is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The Company has minimal unsatisfied performance obligations at the end of the reporting period as our patients are typically under no obligation to remain admitted in our facilities or under our care. As the period between the time of service and time of payment is typically one year or less, the Company did not adjust for the effects of a significant financing component.
Revenue by Payor
Certain groups of patients receive funds to pay the cost of their care from a common source. The following table sets forth sources of net patient revenues for the periods indicated:
| Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
| Source |
2026 |
2025 |
2026 |
2025 |
||||||||||||
| Medicare |
% | % | % | % | ||||||||||||
| Managed Care |
% | % | % | % | ||||||||||||
| Medicaid |
% | % | % | % | ||||||||||||
| Private Pay and Other |
% | % | % | % | ||||||||||||
| Total |
% | % | % | % | ||||||||||||
Medicare covers skilled nursing services for beneficiaries who require nursing care and/or rehabilitation services following a hospitalization of at least three consecutive days. For each eligible day a Medicare beneficiary is in a skilled nursing facility, Medicare pays the facility a daily payment, subject to adjustment for certain factors such as a wage index in the geographic area. The payment covers all services provided by the skilled nursing facility for the beneficiary that day, including room and board, nursing, therapy and drugs, as well as an estimate of capital–related costs to deliver those services.
For homecare services, Medicare pays based on the acuity level of the patient and based on periods of care. A period of care is defined as a length of care up to 30 days with multiple continuous periods allowed. The services covered by the payment include all disciplines of care, in addition to medical supplies, within the scope of the home health benefit.
For hospice services, Medicare pays a daily rate to cover the hospice’s costs for providing services included in the patient care plan. Medicare makes daily payments based on 1 of 4 levels of hospice care. All hospice care and services offered to patients and their families must follow an individualized written plan of care that meets the patient’s needs.
Our hospice service revenue is subject to certain limitations on payments from Medicare. We are subject to an inpatient cap limit and an overall Medicare payment cap for each provider number. We monitor these caps on a provider-by-provider basis and estimate amounts due back to Medicare if we estimate a cap has been exceeded. If applicable, we record these cap adjustments as a reduction to revenue.
Medicaid is operated by individual states with the financial participation of the federal government. The states in which we operate currently use prospective cost–based reimbursement systems. Under cost–based reimbursement systems, the skilled nursing facility is reimbursed for the reasonable direct and indirect allowable costs it incurred in a base year in providing routine resident care services as defined by the program.
Private pay, managed care, and other payment sources include commercial insurance, individual patient funds, managed care plans and the Veterans Administration. Private paying patients, private insurance carriers and the Veterans Administration generally pay based on the healthcare center's charges or specifically negotiated contracts. For private pay patients in skilled nursing, assisted living and independent living facilities, the Company bills for room and board charges, with the remittance being due on receipt of the statement and generally by the 10th day of the month the services are performed.
Certain managed care payors for homecare services pay on a per-visit basis. This revenue is recorded on an accrual basis based upon the date of services at amounts equal to its established or estimated per-visit rates.
State Supplemental Funding
The Company received supplemental Medicaid payments from various states. The funding generally incorporates specific use requirements primarily for direct patient care including labor related expenses or various patient care related expenses. We recorded $
Third Party Payors
Laws and regulations governing Medicare and Medicaid programs are complex and subject to interpretation. Noncompliance with such laws and regulations can be subject to regulatory actions including fines, penalties, and exclusion from the Medicare and Medicaid programs. We believe that we are following all applicable laws and regulations.
Medicare and Medicaid program revenues, as well as certain Managed Care program revenues, are subject to audit and retroactive adjustment by government representatives or their agents. Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing patient care. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become known, or as years are settled or are no longer subject to such audits, reviews, and investigations. We believe that any differences between the net revenues recorded, and final determination will not materially affect the consolidated financial statements. We have made provisions of approximately $
Note 5 – Other Revenues
Other revenues are outlined in the table below. Revenues from rental income include health care real estate properties owned by us and leased to third party operators. Revenues from management and accounting services include fees provided to manage and provide accounting services to other healthcare operators. Revenues from insurance services include premiums for workers’ compensation and professional liability insurance policies that our wholly owned insurance subsidiaries have written for certain healthcare operators to which we provide management or accounting services. "Other" revenues include miscellaneous health care related earnings (in thousands).
| Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| Rental income |
$ | $ | $ | $ | ||||||||||||
| Management and accounting services fees |
||||||||||||||||
| Insurance services |
||||||||||||||||
| Other |
||||||||||||||||
| Total other revenues |
$ | $ | $ | $ | ||||||||||||
Rental Income
The Company leases real estate assets consisting of skilled nursing facilities and assisted living facilities to third party operators. Additionally, we sublease Florida skilled nursing facilities included in our lease from National Health Investors (“NHI”) as noted in Note 8 – Long Term Leases. See Note 18 - Subsequent Events for further discussion regarding our lease with NHI.
Management Fees from National Health Corporation
Before the acquisition of the
During the second quarter of 2026, we also recognized management fees of $
Insurance Services
For workers’ compensation insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended June 30, 2026 and 2025 were $
For professional liability insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended June 30, 2026 and 2025 were $
Note 6 – Non–Operating Income
Non–operating income is comprised of the following (in thousands):
| Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| Dividends and net realized gains and losses on sales of securities |
$ | $ | $ | $ | ||||||||||||
| Interest income |
||||||||||||||||
| Equity in earnings/(loss) of unconsolidated investments |
( |
) | ||||||||||||||
| Total non-operating income |
$ | $ | $ | $ | ||||||||||||
Note 7 – Business Segments
The Company has reportable operating segments: (1) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and behavioral health hospitals; and (2) homecare and hospice services. These reportable operating segments are consistent with information used by the Company’s Chief Executive Officer, as chief operating decision maker (“CODM”), to assess performance and allocate resources. The Company also reports an “all other” category that includes revenues from rental income, management and accounting services fees, insurance services, and costs of the corporate office.
The Company’s CODM evaluates performance including pretax earnings and allocates capital resources to each segment based on an operating model that is designed to improve the quality of patient care and profitability of the Company while enhancing long-term shareholder value. The CODM does not review assets by segment in his resource allocation and therefore, assets by segment are not disclosed below.
The following table sets forth the Company’s unaudited interim condensed consolidated statements of operations by business segment (in thousands):
| Three Months Ended June 30, 2026 |
||||||||||||||||
| Inpatient |
Homecare and Hospice |
All Other |
Total |
|||||||||||||
| Revenues: |
||||||||||||||||
| Net patient revenues |
$ | $ | $ | $ | ||||||||||||
| Other revenues |
||||||||||||||||
| Net operating revenues |
||||||||||||||||
| Costs and expenses: |
||||||||||||||||
| Salaries, wages, and benefits |
||||||||||||||||
| Other operating |
||||||||||||||||
| Rent |
||||||||||||||||
| Depreciation and amortization |
||||||||||||||||
| Total costs and expenses |
||||||||||||||||
| Income from operations |
||||||||||||||||
| Non-operating income |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ||||||||||||
| Unrealized gains on marketable equity securities |
||||||||||||||||
| Income before income taxes |
$ | $ | $ | $ | ||||||||||||
| Three Months Ended June 30, 2025 |
||||||||||||||||
| Inpatient |
Homecare and Hospice |
All Other |
Total |
|||||||||||||
| Revenues: |
||||||||||||||||
| Net patient revenues |
$ | $ | $ | $ | ||||||||||||
| Other revenues |
||||||||||||||||
| Net operating revenues |
||||||||||||||||
| Costs and expenses: |
||||||||||||||||
| Salaries, wages, and benefits |
||||||||||||||||
| Other operating |
||||||||||||||||
| Rent |
||||||||||||||||
| Depreciation and amortization |
||||||||||||||||
| Total costs and expenses |
||||||||||||||||
| Income/(loss) from operations |
( |
) | ||||||||||||||
| Non-operating income |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ||||||||||||
| Unrealized losses on marketable equity securities |
( |
) | ( |
) | ||||||||||||
| Income/(loss) before income taxes |
$ | $ | $ | ( |
) | $ | ||||||||||
| Six Months Ended June 30, 2026 |
||||||||||||||||
| Inpatient |
Homecare and Hospice |
All Other |
Total |
|||||||||||||
| Revenues: |
||||||||||||||||
| Net patient revenues |
$ | $ | $ | $ | ||||||||||||
| Other revenues |
||||||||||||||||
| Net operating revenues |
||||||||||||||||
| Costs and expenses: |
||||||||||||||||
| Salaries, wages, and benefits |
||||||||||||||||
| Other operating |
||||||||||||||||
| Rent |
||||||||||||||||
| Depreciation and amortization |
||||||||||||||||
| Total costs and expenses |
||||||||||||||||
| Income/(loss) from operations |
( |
) | ||||||||||||||
| Non-operating income |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ||||||||||||
| Unrealized gains on marketable equity securities |
||||||||||||||||
| Income before income taxes |
$ | $ | $ | $ | ||||||||||||
| Six Months Ended June 30, 2025 |
||||||||||||||||
| Inpatient |
Homecare and Hospice |
All Other |
Total |
|||||||||||||
| Revenues: |
||||||||||||||||
| Net patient revenues |
$ | $ | $ | $ | ||||||||||||
| Other revenues |
||||||||||||||||
| Net operating revenues |
||||||||||||||||
| Costs and expenses: |
||||||||||||||||
| Salaries, wages, and benefits |
||||||||||||||||
| Other operating |
||||||||||||||||
| Rent |
||||||||||||||||
| Depreciation and amortization |
||||||||||||||||
| Total costs and expenses |
||||||||||||||||
| Income/(loss) from operations |
( |
) | ||||||||||||||
| Non-operating income |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ||||||||||||
| Unrealized gains on marketable equity securities |
||||||||||||||||
| Income before income taxes |
$ | $ | $ | $ | ||||||||||||
Note 8 – Long-Term Leases
Operating Leases
At June 30, 2026, we lease from NHI the real property of
The lease includes base rent plus a percentage rent. The annual base rent is $
Minimum Lease Payments
The following table summarizes the maturity of our operating lease liabilities as of June 30, 2026 (in thousands):
| Operating Leases |
||||
| 2027 |
$ | |||
| 2028 |
||||
| 2029 |
||||
| 2030 |
||||
| 2031 |
||||
| Thereafter |
||||
| Total minimum lease payments |
||||
| Less: amounts representing interest |
( |
) | ||
| Present value of future minimum lease payments |
||||
| Less: current portion |
( |
) | ||
| Noncurrent lease liabilities |
$ | |||
Note 9 – Earnings per Share
Basic net income per share is computed based on the weighted average number of common shares outstanding for each period presented. Diluted net income per share reflects the potential dilution that would have occurred if securities to issue common stock were exercised, converted, or resulted in the issuance of common stock that would have then shared in our earnings.
The following table summarizes the earnings and the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands, except for share and per share amounts):
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| Basic: |
||||||||||||||||
| Weighted average common shares outstanding |
||||||||||||||||
| Net income attributable to National HealthCare Corporation |
$ | $ | $ | $ | ||||||||||||
| Earnings per common share, basic |
$ | $ | $ | $ | ||||||||||||
| Diluted: |
||||||||||||||||
| Weighted average common shares outstanding |
||||||||||||||||
| Effects of dilutive instruments |
||||||||||||||||
| Weighted average common shares outstanding |
||||||||||||||||
| Net income attributable to National HealthCare Corporation |
$ | $ | $ | $ | ||||||||||||
| Earnings per common share, diluted |
$ | $ | $ | $ | ||||||||||||
For the three and six months ended June 30, 2026,
Note 10 – Investments in Marketable Securities
Our investments in marketable equity securities are carried at fair value with the changes in unrealized gains and losses recognized in our results of operations at each measurement date. Our investments in marketable debt securities are classified as available for sale securities and carried at fair value with the unrealized gains and losses recognized through accumulated other comprehensive income at each measurement date. Any credit-related decline in fair market values below the amortized cost of our available for sale debt securities are recorded in our results of operations through an allowance for credit losses. Realized gains and losses from securities sales are recognized in results of operations upon disposition of the securities using the specific identification method on a trade date basis. Refer to Note 11 – Fair Value Measurements for a description of the Company's methodology for determining the fair value of marketable securities.
Marketable securities consist of the following (in thousands):
| June 30, 2026 |
December 31, 2025 |
|||||||||||||||
| Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
|||||||||||||
| Investments available for sale: |
||||||||||||||||
| Marketable equity securities |
$ | $ | $ | $ | ||||||||||||
| Restricted investments available for sale: |
||||||||||||||||
| Marketable equity securities |
||||||||||||||||
| Corporate debt securities |
||||||||||||||||
| Asset-based securities |
||||||||||||||||
| U.S. Treasury securities |
||||||||||||||||
| State and municipal securities |
||||||||||||||||
| $ | $ | $ | ||||||||||||||
Included in the marketable equity securities are the following (in thousands, except share amounts):
| June 30, 2026 |
December 31, 2025 |
|||||||||||||||||||||||
| Shares |
Cost |
Fair Value |
Shares |
Cost |
Fair Value |
|||||||||||||||||||
| NHI Common Stock |
$ | $ | $ | $ | ||||||||||||||||||||
The amortized cost and estimated fair value of debt securities classified as available for sale, by contractual maturity, are as follows (in thousands):
| June 30, 2026 |
December 31, 2025 |
|||||||||||||||
| Cost |
Fair Value |
Cost |
Fair Value |
|||||||||||||
| Maturities: |
||||||||||||||||
| Within 1 year |
$ | $ | $ | $ | ||||||||||||
| 1 to 5 years |
||||||||||||||||
| 6 to 10 years |
||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Gross unrealized gains related to marketable equity securities are $
Gross unrealized gains related to available for sale marketable debt securities are $
The Company’s unrealized losses in our available for sale marketable debt securities were determined to be non-credit related. The Company has not recognized any credit related impairments for the six months ended June 30, 2026 and 2025.
For the marketable debt securities in gross unrealized loss positions, (a) it is more likely than not that the Company will not be required to sell the investment securities before recovery of the unrealized losses, and (b) the Company expects that the contractual principal and interest will be received on the investment securities.
Proceeds from the sale of available for sale marketable securities during the six months ended June 30, 2026 and 2025 were $
Note 11 – Fair Value Measurements
The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. This accounting standard establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs that may be used to measure fair value:
Level 1 – The valuation is based on quoted prices in active markets for identical instruments.
Level 2 – The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model–based valuation techniques for which all significant assumptions are observable in the market.
Level 3 – The valuation is based on unobservable inputs that are supported by minimal or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques that incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument, or valuations that require significant management judgment or estimation.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The following table summarizes fair value measurements by level at June 30, 2026 and December 31, 2025 for assets and liabilities measured at fair value on a recurring basis (in thousands):
| Fair Value Measurements Using |
||||||||||||||||
| June 30, 2026 |
Fair Value |
Quoted Prices in Active For Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
| Cash and cash equivalents |
$ | $ | $ | $ | ||||||||||||
| Restricted cash and cash equivalents |
||||||||||||||||
| Marketable equity securities |
||||||||||||||||
| Corporate debt securities |
||||||||||||||||
| Asset–backed securities |
||||||||||||||||
| U.S. Treasury securities |
||||||||||||||||
| State and municipal securities |
||||||||||||||||
| Total financial assets |
$ | $ | $ | $ | ||||||||||||
| Fair Value Measurements Using |
||||||||||||||||
| December 31, 2025 |
Fair Value |
Quoted Prices in Active Markets For Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
| Cash and cash equivalents |
$ | $ | $ | $ | ||||||||||||
| Restricted cash and cash equivalents |
||||||||||||||||
| Marketable equity securities |
||||||||||||||||
| Corporate debt securities |
||||||||||||||||
| Asset–backed securities |
||||||||||||||||
| U.S. Treasury securities |
||||||||||||||||
| State and municipal securities |
||||||||||||||||
| Total financial assets |
$ | $ | $ | $ | ||||||||||||
Note 12 – Goodwill and Other Intangible Assets
At June 30, 2026, we evaluated potential triggering events that might be indicators that our goodwill and indefinite lived intangibles were impaired. As a result of the review, there were impairment indicators regarding the Company’s goodwill that required a quantitative test to be performed. However, our accounting estimates could materially change from period to period due to changing market factors. We will continue to monitor future events, changes in circumstances, and the potential impact thereof. If actual results are not consistent with our assumptions and estimates, we may be exposed to future goodwill impairment losses.
At June 30, 2026, the following table represents the activity related to our goodwill by segment (in thousands):
| Inpatient Services |
Homecare and Hospice |
All Other |
Total |
|||||||||||||
| January 1, 2026 |
$ | $ | $ | $ | ||||||||||||
| Additions |
||||||||||||||||
| June 30, 2026 |
$ | $ | $ | $ | ||||||||||||
Indefinite-lived intangible assets consist of the following (in thousands):
| June 30, 2026 |
December 31, 2025 |
|||||||
| Trade names |
$ | $ | ||||||
| Certificates of need |
||||||||
| Licenses |
||||||||
| Total |
$ | $ | ||||||
Note 13 - Stock Repurchase Program
During the six months ended June 30, 2026, the Company repurchased
Note 14 – Stock–Based Compensation
NHC recognizes stock–based compensation expense for all stock options granted over the requisite service period using the fair value at the date of grant using the Black–Scholes pricing model. Stock–based compensation totaled $
At June 30, 2026, the Company had $
Stock Options
The following table summarizes the significant assumptions used to value the options granted for the six months ended June 30, 2026 and for the year ended December 31, 2025.
| June 30, 2026 |
December 31, |
|||||||
| Risk–free interest rate |
% | % | ||||||
| Expected volatility |
% | % | ||||||
| Expected life, in years |
||||||||
| Expected dividend yield |
% | % | ||||||
The following table summarizes our outstanding stock options for the six months ended June 30, 2026 and for the year ended December 31, 2025.
| Number of Shares |
Weighted Average Exercise Price |
Aggregate Intrinsic Value |
||||||||||
| Options outstanding at January 1, 2025 |
$ | $ | – | |||||||||
| Options granted |
– | |||||||||||
| Options exercised |
( |
) | – | |||||||||
| Options cancelled |
( |
) | – | |||||||||
| Options outstanding at December 31, 2025 |
– | |||||||||||
| Options granted |
– | |||||||||||
| Options exercised |
( |
) | – | |||||||||
| Options outstanding at June 30, 2026 |
$ | $ | ||||||||||
| Options exercisable at June 30, 2026 |
$ | $ | ||||||||||
| Options Outstanding June 30, 2026 |
Exercise Prices |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life in Years |
|||||||||||
| $ |
- | $ |
$ | |||||||||||
| $ |
- | $ |
||||||||||||
| $ | ||||||||||||||
Note 15 – Income Taxes
The Company's income tax provision as a percentage of our income before income taxes was
The Company's income tax provision as a percentage of our income before income taxes was
Typically, these percentages vary from the U.S. federal statutory income tax rate of
Our quarterly income tax provision, and our estimate of our annual effective income tax rate, is subject to variation due to several factors, including volatility based on the amount of pre-tax income or loss.
The Company is no longer subject to U.S. federal and state examinations by tax authorities for years before (with certain state exceptions).
Note 16 – Long-Term Debt
Long–term debt consists of the following (dollars in thousands):
| Maturity |
June 30, 2026 |
December 31, 2025 |
|||||||
| Credit facility, interest payable monthly |
2029 |
$ | $ | ||||||
| Less current portion |
( |
) | |||||||
| Total long-term debt, less current portion |
$ | $ | |||||||
On August 1, 2024, the Company entered into a $
Note 17 – Contingencies, Commitments and Other Matters
Accrued Risk Reserves
We have wholly–owned limited purpose insurance companies that insure risks related to workers’ compensation and general and professional liability insurance claims both for our owned and leased entities and certain of the entities to which we provide management or accounting services. The liability we have recognized for reported claims and estimates for incurred but unreported claims totals $
As a result of the terms of our insurance policies and our use of wholly owned limited purpose insurance companies, we have retained significant insurance risk with respect to workers’ compensation and general and professional liability. We consider the professional services of independent actuaries to assist us in estimating our exposures for claims obligations (for both asserted and unasserted claims) related to deductibles and exposures in excess of coverage limits, and we maintain reserves for these obligations. Such estimates are based on many variables including historical and statistical information and other factors.
Workers’ Compensation
For workers’ compensation, we utilize a wholly–owned Tennessee domiciled property/casualty insurance company to write coverage for NHC affiliates and for third–party customers. Policies are written for a duration of twelve months and cover only risks related to workers’ compensation losses. All customers are companies which operate in the senior care industry. Business is written on a direct basis.
General and Professional Liability Insurance and Lawsuits
The senior care industry has experienced significant increases in both the number of personal injury/wrongful death claims and in the severity of awards based upon alleged negligence by skilled nursing facilities and their employees in providing care to residents. The Company has been, and continues to be, subject to claims and legal actions that arise in the ordinary course of business, including potential claims related to patient care and treatment. The defense of these lawsuits may result in significant legal costs, regardless of the outcome, and can result in large settlement amounts or damage awards. Additional insurance is purchased through third party providers that serve to supplement the coverage provided through our wholly owned captive insurance company.
There is certain additional litigation incidental to our business, none of which, based upon information available to date, would be material to our financial position, results of operations, or cash flows. In addition, the long–term care industry is continuously subject to scrutiny by governmental regulators, which could result in litigation or claims related to regulatory compliance matters.
Governmental Regulations
Laws and regulations governing Medicare, Medicaid and other federal healthcare programs are complex and subject to interpretation. Management believes that it is following all applicable laws and regulations in all material respects. However, compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusions from the Medicare, Medicaid and other federal healthcare programs.
Indemnities
From time to time, the Company enters into certain types of contracts that contingently require it to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer liabilities and other claims arising from the Company’s use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company or its subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, (iv) certain agreements by and between the Company and/or its subsidiaries or affiliates, and (v) certain agreements with the Company officers, directors and others, under which the Company may be required to indemnify such persons for liabilities arising out of the nature of their relationship to the Company and/or its subsidiaries and affiliates. The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted.
Note 18 – Subsequent Event
On July 1, 2026, the Company purchased the land, facilities, and improvements of skilled nursing facilities and independent living facilities, currently leased by us as tenant, from National Health Investors (“NHI”) for a purchase price of $
The facilities subject to the agreement are located in Alabama, Florida, Kentucky, Missouri, South Carolina, Tennessee, and Virginia. NHC operates multiple skilled nursing facilities, assisted living and independent living communities, as well as homecare and hospice operations within this geographic footprint. The acquisition will complement NHC’s current asset portfolio within these regions.
For the six months ended June 30, 2026, the Company paid $
New $
On May 26, 2026, the Company entered into a credit agreement, consisting of a $
Borrowings under the credit agreement will bear interest, at NHC’s option, at a rate based on either Term SOFR or a base rate, in each case plus an applicable margin. The applicable margin will vary based on the Company’s consolidated leverage ratio and, based on the applicable pricing grid, will range from
The credit agreement contains customary representations and warranties, financial covenants, and other customary affirmative and negative covenants. The credit agreement also contains customary events of default.
On the closing date of the NHI transaction, pursuant to the terms of the credit agreement, the Company drew down the entire $
| Management's Discussion and Analysis of Financial Condition and Results of Operations. |
Forward–Looking Statements
References throughout this document to the Company include National HealthCare Corporation and its wholly owned subsidiaries. In accordance with the Securities and Exchange Commissions “Plain English” guidelines, this Quarterly Report on Form 10–Q has been written in the first person. In this document, the words “we”, “our”, “ours” and “us” refer only to National HealthCare Corporation and its wholly–owned subsidiaries and not any other person.
This Quarterly Report on Form 10–Q and other information we provide from time to time, contains certain “forward–looking” statements as that term is defined by the Private Securities Litigation Reform Act of 1995. All statements regarding our expected future financial position, results of operations or cash flows, continued performance improvements, ability to service and refinance our debt obligations, ability to finance growth opportunities, ability to control our patient care liability costs, ability to respond to changes in government regulations, ability to execute our three–year strategic plan, and similar statements including, without limitations, those containing words such as “believes”, “anticipates”, “expects”, “intends”, “estimates”, “plans”, and other similar expressions are forward–looking statements.
Forward–looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward–looking statements as a result of, but not limited to, the following factors:
| ● |
national and local economic conditions, including their effect on the availability and cost of labor, utilities and materials; |
| ● |
the effect of government regulations and changes in regulations governing the healthcare industry, including our compliance with such regulations; |
| ● |
changes in Medicare and Medicaid payment levels and methodologies and the application of such methodologies by the government and its fiscal intermediaries; |
| ● |
liabilities and other claims asserted against us, including patient care liabilities, as well as the resolution of current litigation (see Note 17 to Interim Condensed Consolidated Financial Statements included in this Form 10-Q); |
| ● |
the ability to attract and retain qualified personnel; |
| ● |
the availability and terms of capital to fund acquisitions and capital improvements; |
| ● |
the competitive environment in which we operate; |
| ● |
our need to make investments continually in our processes and information systems to protect the privacy of patients, partners and other persons and reduce the risk of successful cybersecurity attacks; |
| ● |
damage to our reputation, regulatory penalties, legal claims and liability under state and federal laws that we could suffer upon any cybersecurity or privacy breaches; |
| ● |
the ability to maintain and increase census levels; and |
| ● |
demographic changes. |
See the notes to the quarterly financial statements, and “Item 1. Business” in our 2025 Annual Report on Form 10–K for a discussion of various governmental regulations and other operating factors relating to the healthcare industry and the risk factors inherent in them. This may be found on our web site at www.nhccare.com. You should carefully consider these risks before making any investment in the Company. These risks and uncertainties are not the only ones facing us. There may be additional risks that we do not presently know of or that we currently deem immaterial. If any of the risks occur, our business, financial condition or results of operations could be materially adversely affected. In that case, the trading price of our shares of stock could decline, and you may lose all or part of your investment. Given these risks and uncertainties, we can give no assurances that these forward–looking statements will, in fact, transpire and, therefore, caution investors not to place undue reliance on them.
Overview
National HealthCare Corporation (“NHC” or the “Company”) is a leading provider of senior health care services. As of June 30, 2026, we operate or manage, through certain affiliates, 80 skilled nursing facilities with a total of 10,323 licensed beds, 26 assisted living facilities with 1,413 units, nine independent living facilities, three behavioral health hospitals, 34 homecare agencies, and 33 hospice agencies. We operate specialized care units within certain of our healthcare centers such as Alzheimer's disease care units and sub-acute nursing units. In addition, we provide insurance services, management and accounting services, and we lease properties to operators of skilled nursing and assisted living facilities. We operate in 9 states and are located primarily in the southeastern United States.
Summary of Goals and Areas of Focus
Occupancy
A primary area of management focus continues to be the rates of occupancy within our skilled nursing facilities. The overall census in owned and leased skilled nursing facilities for the three months ending June 30, 2026 was 90.1% compared to 89.4% for the same period a year ago. For the six months ended June 30, 2026, overall census in our owned and leased skilled nursing facilities was 90.0% compared to 89.3% for the same period a year ago.
Due to America’s healthcare labor shortage, the challenge of maintaining desirable patient census levels has been amplified. Management has undertaken a number of steps in order to best position our current and future health care facilities. This includes working internally to examine and improve systems to be most responsive to referral sources and payors, as well as find creative initiatives to retain and attract qualified healthcare professionals. Additionally, NHC is in various stages of partnerships with hospital systems, payors, and other post–acute alliances to better position ourselves so we are an active participant in the delivery of post-acute healthcare services.
Quality of Patient Care
CMS introduced the Five-Star Quality Rating System to help consumers, their families and caregivers compare skilled nursing facilities more easily. The Five-Star Quality Rating System gives each skilled nursing operation a rating ranging between one and five stars in various categories (five stars being the best). The Company has always strived for patient-centered care and quality outcomes as precursors to outstanding financial performance.
The tables below summarize NHC's overall performance in these Five-Star ratings versus the skilled nursing industry as of June 30, 2026:
| NHC Ratings |
Industry Ratings |
|||||||
| Total number of skilled nursing facilities, end of period |
80 | |||||||
| Number of 4 and 5-star rated skilled nursing facilities |
49 | |||||||
| Percentage of 4 and 5-star rated skilled nursing facilities |
61% | 40% | ||||||
| Average rating for all skilled nursing facilities, end of period |
3.8 | 3.0 | ||||||
Development and Growth
We are undertaking to expand our senior care operations while protecting our existing operations and markets. The following table lists our recent development activities.
| Type of Operation |
Description |
Size |
Location |
Placed in Service |
||||
| Assisted Living Facility |
New Operation |
79 units |
Tullahoma, TN |
Q2 2027 |
On June 1, 2026, the Company purchased the land, buildings, and other specified assets and assumed certain liabilities of five skilled nursing facilities from National Health Corporation (“National”) for a purchase price of $50,500,000. The operations have 639 licensed skilled nursing beds in the states of South Carolina and Tennessee.
On July 1, 2026, the Company purchased the land, facilities, and improvements of thirty-two skilled nursing facilities and three independent living facilities, currently leased by us as tenant, from National Health Investors (“NHI”) for a purchase price of $560,000,000. On the closing date of the transaction, the lease agreement with NHI is terminated. The Company currently operates and will continue to operate all of the facilities, except four Florida skilled nursing facilities. The four Florida skilled nursing facilities will continue to be subject to a third-party operator’s lease after the closing of the transaction.
We also have two multi-family developments that are currently under construction, both of which we are noncontrolling owners. These developments are located in Franklin, Tennessee and Hermitage, Tennessee with 332 units and 315 units, respectively. Our capital contributions in these developments are included in the line item "Investments in unconsolidated companies" in our interim condensed consolidated balance sheets.
Accrued Risk Reserves
Our accrued professional liability and workers’ compensation reserves totaled $121,129,000 at June 30, 2026 and are a primary area of management focus. We have set aside restricted cash and cash equivalents and marketable securities to fund our estimated professional liability and workers’ compensation liabilities.
As to exposure for professional liability claims, we have developed performance certification criteria to measure and bring focus to the patient care issues most likely to produce professional liability exposure, including in–house acquired pressure ulcers, significant weight loss and numbers of falls. These programs for certification, which we regularly modify and improve, have produced measurable improvements in reducing these incidents. Our experience is that achieving goals in these patient care areas improves both patient and employee satisfaction.
Government Reimbursement Programs
Medicare – Skilled Nursing Facilities
In July 2025, CMS released its final rule outlining fiscal year 2026 Medicare payment rates and policy changes for skilled nursing facilities, which began on October 1, 2025. The fiscal year 2026 rule equates to a net 3.2% increase in Medicare Part A payments to SNFs in fiscal year 2026 compared to 2025 levels. The rule includes a market basket increase of 3.3%, an increase of 0.6% to the market basket forecast error adjustment, and a negative 0.7% productivity adjustment. These figures do not incorporate the SNF Value Based Purchasing (“VBP”) reduction for certain SNFs subject to the net reduction in payments under the SNF VBP; those adjustments are estimated to total $208.4 million in fiscal year 2026.
In July 2026, CMS released its final rule outlining fiscal year 2027 Medicare payment rates and policy changes for skilled nursing facilities, which will begin on October 1, 2026. The fiscal year 2027 proposal equates to a net 2.4% increase in Medicare Part A payments to SNFs in fiscal year 2027 compared to 2026 levels. The rule includes a market basket increase of 3.3% minus a 0.9% productivity adjustment. CMS also finalized its proposals related to the SNF Quality Reporting Program, including the removal of two measures related to COVID-19 vaccination, a shortened data reporting timeline, and the requirement to submit assessment data for all patients regardless of payer.
For the first six months of 2026, our average Medicare per diem rate for skilled nursing facilities increased 2.6% as compared to the same period in 2025.
Medicaid – Skilled Nursing Facilities
Effective July 1, 2026 and for the fiscal year 2027, the state of Tennessee implemented specific individual nursing facility increases. We estimate the resulting increase in revenue for the 2027 fiscal year will be approximately $2,000,000 annually, or $500,000 per quarter.
Effective October 1, 2025 and for the fiscal year 2026, the state of South Carolina implemented specific individual nursing facility increases. We estimate the resulting increase in revenue for the 2026 fiscal year will be approximately $4,200,000 annually, or $1,050,000 per quarter.
For the first six months of 2026, our average Medicaid per diem increased 2.5% compared to the same period in 2025.
State Medicaid plans subject to budget constraints are of particular concern to us. Changes in federal funding coupled with state budget problems and Medicaid expansion under the Affordable Care Act have produced an uncertain environment. Some states will not keep pace with post-acute healthcare inflation. States are currently under pressure to pursue other alternatives to skilled nursing care such as community and home–based services. Medicaid programs are funded jointly by the federal government and the states and are administered by states under approved plans. Most state Medicaid payments are made under a prospective payment system or under programs which negotiate payment levels with individual providers. Some states use, or have applied to use, waivers granted by CMS to implement expansion, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards.
Medicare – Homecare Programs
In November 2025, CMS released its final rule outlining fiscal year 2026 Medicare payment rates. CMS projects payments to home health agencies in fiscal year 2026 will decrease by 1.3% or $220 million, relative to the prior year. This increase reflects a 2.4% home health payment update, reduced by a 0.9% decrease that reflects the final permanent adjustment, an estimated 2.7% decrease that reflects the final temporary adjustment, and a 0.1% decrease that reflects the updated fixed-dollar loss ratio for outlier payments. In addition, CMS is finalizing recalibrated PDGM case-mix weights, updated low-utilization payment adjustment (“LUPA”) thresholds, updated functional impairment levels, and comorbidity adjustment subgroups for 2026.
In July 2026, CMS released its proposed rule outlining fiscal year 2027 Medicare payment rates. The proposal includes a 2.4% update, which includes a 3.1% market basket update, reduced by a 1.0% point cut for productivity, as well as an 0.3% increase related to outlier payments. In addition, the agency proposes a temporary cut of 3.0% that it states is necessary to achieve budget-neutral implementation of the Patient-driven Groupings Model. CMS also proposes several policy changes related to provider enrollment provisions that it states would help reduce improper Medicare payments and protect beneficiaries. The provisions would affect any providers and suppliers participating in the Medicare program.
Medicare – Hospice
In August 2025, CMS released its final rule outlining fiscal year 2026 Medicare payment rates. CMS issued a rate increase of 2.6%, or $750 million, effective October 1, 2025. This increase results from the proposed 3.3% inpatient hospital market basket percentage increase reduced by a proposed 0.7% point productivity adjustment, required by law. The FY2026 hospice payment update also includes an update to the statutory aggregate cap amount, which limits the overall payments per patient that are made annually. The proposed hospice cap amount for FY2026 is $35,361.
In July 2026, CMS released its final rule outlining fiscal year 2027 Medicare payment rates. The final rule includes a 2.3% net increase, which includes a 3.2% market basket update and a 0.9% cut for productivity. The hospice cap would increase to $36,175. Also under the final rule, CMS finalized the fraud-based tool, the service and spending variation index (SSVI), which includes a comprehensive scoring system calculated using nine claims-based measures, each representing a different aspect of hospice utilization as well as nonhospice spending.
Segment Reporting
The Company has two reportable operating segments: (1) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and behavioral health hospitals; and (2) homecare and hospice services. These reportable operating segments are consistent with information used by the Company’s Chief Executive Officer, as chief operating decision maker (“CODM”), to assess performance and allocate resources. The Company also reports an "all other" category that includes revenues from rental income, management and accounting services fees, insurance services, and costs of the corporate office.
The Company’s CODM evaluates performance including pretax earnings and allocates capital resources to each segment based on an operating model that is designed to improve the quality of patient care and profitability of the Company while enhancing long-term shareholder value. The CODM does not review assets by segment in his resource allocation and therefore, assets by segment are not disclosed below.
The following table sets forth the Company’s unaudited interim condensed consolidated statements of operations by business segment (in thousands):
| Three Months Ended June 30, 2026 |
||||||||||||||||
| Inpatient |
Homecare and Hospice |
All Other |
Total |
|||||||||||||
| Revenues: |
||||||||||||||||
| Net patient revenues |
$ | 337,306 | $ | 41,053 | $ | - | $ | 378,359 | ||||||||
| Other revenues |
360 | - | 29,306 | 29,666 | ||||||||||||
| Net operating revenues |
337,666 | 41,053 | 29,306 | 408,025 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Salaries, wages, and benefits |
202,798 | 24,830 | 14,274 | 241,902 | ||||||||||||
| Other operating |
82,902 | 7,286 | 4,287 | 94,475 | ||||||||||||
| Rent |
8,934 | 626 | 1,980 | 11,540 | ||||||||||||
| Depreciation and amortization |
10,265 | 131 | 777 | 11,173 | ||||||||||||
| Total costs and expenses |
304,899 | 32,873 | 21,318 | 359,090 | ||||||||||||
| Income from operations |
32,767 | 8,180 | 7,988 | 48,935 | ||||||||||||
| Non-operating income |
- | - | 4,172 | 4,172 | ||||||||||||
| Interest expense |
(13 | ) | - | - | (13 | ) | ||||||||||
| Unrealized gains on marketable equity securities |
- | - | 915 | 915 | ||||||||||||
| Income before income taxes |
$ | 32,754 | $ | 8,180 | $ | 13,075 | $ | 54,009 | ||||||||
| Three Months Ended June 30, 2025 |
||||||||||||||||
| Inpatient |
Homecare and Hospice |
All Other |
Total |
|||||||||||||
| Revenues: |
||||||||||||||||
| Net patient revenues |
$ | 325,012 | $ | 38,337 | $ | - | $ | 363,349 | ||||||||
| Other revenues |
430 | - | 11,131 | 11,561 | ||||||||||||
| Net operating revenues |
325,442 | 38,337 | 11,131 | 374,910 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Salaries, wages, and benefits |
190,641 | 23,183 | 12,710 | 226,534 | ||||||||||||
| Other operating |
83,450 | 7,046 | 1,447 | 91,943 | ||||||||||||
| Rent |
8,828 | 581 | 1,919 | 11,328 | ||||||||||||
| Depreciation and amortization |
10,099 | 131 | 785 | 11,015 | ||||||||||||
| Total costs and expenses |
293,018 | 30,941 | 16,861 | 340,820 | ||||||||||||
| Income/(loss) from operations |
32,424 | 7,396 | (5,730 | ) | 34,090 | |||||||||||
| Non-operating income |
- | - | 5,132 | 5,132 | ||||||||||||
| Interest expense |
(1,993 | ) | - | - | (1,993 | ) | ||||||||||
| Unrealized losses on marketable equity securities |
- | - | (5,061 | ) | (5,061 | ) | ||||||||||
| Income/(loss) before income taxes |
$ | 30,431 | $ | 7,396 | $ | (5,659 | ) | $ | 32,168 | |||||||
| Six Months Ended June 30, 2026 |
||||||||||||||||
| Inpatient |
Homecare and Hospice |
All Other |
Total |
|||||||||||||
| Revenues: |
||||||||||||||||
| Net patient revenues |
$ | 667,636 | $ | 80,528 | $ | - | $ | 748,164 | ||||||||
| Other revenues |
747 | - | 40,935 | 41,682 | ||||||||||||
| Net operating revenues |
668,383 | 80,528 | 40,935 | 789,846 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Salaries, wages, and benefits |
399,890 | 49,485 | 27,601 | 476,976 | ||||||||||||
| Other operating |
163,982 | 13,785 | 7,945 | 185,712 | ||||||||||||
| Rent |
18,020 | 1,251 | 3,912 | 23,183 | ||||||||||||
| Depreciation and amortization |
20,676 | 261 | 1,850 | 22,787 | ||||||||||||
| Total costs and expenses |
602,568 | 64,782 | 41,308 | 708,658 | ||||||||||||
| Income/(loss) from operations |
65,815 | 15,746 | (373 | ) | 81,188 | |||||||||||
| Non-operating income |
- | - | 7,929 | 7,929 | ||||||||||||
| Interest expense |
(282 | ) | - | - | (282 | ) | ||||||||||
| Unrealized gains on marketable equity securities |
- | - | 9,989 | 9,989 | ||||||||||||
| Income before income taxes |
$ | 65,533 | $ | 15,746 | $ | 17,545 | $ | 98,824 | ||||||||
| Six Months Ended June 30, 2025 |
||||||||||||||||
| Inpatient |
Homecare and Hospice |
All Other |
Total |
|||||||||||||
| Revenues: |
||||||||||||||||
| Net patient revenues |
$ | 650,490 | $ | 74,466 | $ | - | $ | 724,956 | ||||||||
| Other revenues |
803 | - | 22,848 | 23,651 | ||||||||||||
| Net operating revenues |
651,293 | 74,466 | 22,848 | 748,607 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Salaries, wages, and benefits |
383,078 | 45,587 | 25,999 | 454,664 | ||||||||||||
| Other operating |
165,319 | 14,304 | 4,777 | 184,400 | ||||||||||||
| Rent |
17,662 | 1,189 | 3,842 | 22,693 | ||||||||||||
| Depreciation and amortization |
20,161 | 261 | 1,571 | 21,993 | ||||||||||||
| Total costs and expenses |
586,220 | 61,341 | 36,189 | 683,750 | ||||||||||||
| Income/(loss) from operations |
65,073 | 13,125 | (13,341 | ) | 64,857 | |||||||||||
| Non-operating income |
- | - | 9,211 | 9,211 | ||||||||||||
| Interest expense |
(4,099 | ) | - | - | (4,099 | ) | ||||||||||
| Unrealized gains on marketable equity securities |
- | - | 5,921 | 5,921 | ||||||||||||
| Income before income taxes |
$ | 60,974 | $ | 13,125 | $ | 1,791 | $ | 75,890 | ||||||||
Results of Operations
The following table and discussion set forth items from the interim condensed consolidated statements of operations as a percentage of net operating revenues for the three and six months ended June 30, 2026 and 2025.
Percentage of Net Operating Revenues
| Three Months Ended |
Six Months Ended June 30 |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| Net operating revenues |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Costs and expenses: |
||||||||||||||||
| Salaries, wages, and benefits |
59.3 | 60.4 | 60.4 | 60.7 | ||||||||||||
| Other operating |
23.2 | 24.5 | 23.5 | 24.7 | ||||||||||||
| Facility rent |
2.8 | 3.0 | 2.9 | 3.0 | ||||||||||||
| Depreciation and amortization |
2.7 | 3.0 | 2.9 | 2.9 | ||||||||||||
| Total costs and expenses |
88.0 | 90.9 | 89.7 | 91.3 | ||||||||||||
| Income from operations |
12.0 | 9.1 | 10.3 | 8.7 | ||||||||||||
| Non–operating income |
1.0 | 1.4 | 1.0 | 1.2 | ||||||||||||
| Interest expense |
0.0 | (0.5 | ) | 0.0 | (0.6 | ) | ||||||||||
| Unrealized gains/(losses) on marketable equity securities |
0.2 | (1.4 | ) | 1.3 | 0.8 | |||||||||||
| Income before income taxes |
13.2 | 8.6 | 12.6 | 10.1 | ||||||||||||
| Income tax provision |
(3.2 | ) | (2.2 | ) | (2.9 | ) | (2.5 | ) | ||||||||
| Net income |
10.0 | 6.4 | 9.7 | 7.6 | ||||||||||||
| Net income attributable to noncontrolling interest |
(0.1 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | ||||||||
| Net income attributable to stockholders of NHC |
9.9 | 6.3 | 9.6 | 7.5 | ||||||||||||
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Results for the quarter ended June 30, 2026 compared to the second quarter of 2025 include an 8.8% increase in net operating revenues. The net operating revenues increase was due to a 3.0% increase in same-facility net operating revenues, as well as the June 1, 2026 acquisition of the five skilled nursing facilities from National Health Corporation.
For the quarter ended June 30, 2026, GAAP net income attributable to NHC was $40,319,000 compared to net income of $23,722,000 for the same period in 2025. Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the quarter ended June 30, 2026 was $27,551,000 compared to $25,710,000 for the same period in 2025, an increase of 7.2%.
Net operating revenues
Net patient revenues increased $15,010,000, or 4.1%, compared to the same period last year.
The total census at owned and leased skilled nursing facilities for the quarter averaged 90.1%, compared to an average of 89.4% for the same quarter a year ago. Overall, the composite skilled nursing facility per diem increased 1.5% compared to the same quarter a year ago. Our Medicare and Managed Care per diem rates increased 2.2% and 2.9%, respectively, compared to the same quarter a year ago. Medicaid and private pay per diem rates increased 1.3% and 3.1%, respectively, compared to the same quarter a year ago. For the three months ended June 30, 2026 and 2025, respectively, $1,821,000 and $1,812,000 have been included in our net patient revenues for supplemental Medicaid payments from the state of Tennessee.
The operations of the five skilled nursing facilities that we acquired from National Health Corporation attributed to an increase of $5,999,000 in net patient revenues for the quarter ended June 30, 2026 compared to the same period in 2025.
Other revenues increased $18,105,000, or 156.6%, compared to the same quarter last year, as further detailed in Note 5 to our interim condensed consolidated financial statements. During the second quarter of 2026, we recognized management fees of $18,325,000 previously earned for management services prior to 2025, but these management fees were not previously recognized as such revenues. These revenues did not previously meet the recognition criteria of ASC Topic 606, Revenue from Contracts with Customers, because the underlying consideration was constrained. Upon the acquisition of the five skilled nursing facilities from National Health Corporation on June 1, 2026, the revenue recognition criteria was met and the management fees were paid and recognized in the current period.
Total costs and expenses
Total costs and expenses for the three months ended June 30, 2026 compared to the same period of 2025 increased $18,270,000, or 5.4% to $359,090,000 from $340,820,000.
Salaries, wages, and benefits increased $15,368,000, or 6.8%, to $241,902,000 from $226,534,000. Salaries, wages, and benefits as a percentage of net operating revenues was 59.3% compared to 60.4% for the three months ended June 30, 2026 and 2025, respectively.
The operations of the five skilled nursing facilities that we acquired from National Health Corporation attributed to an increase of $3,732,000 in salaries, wages, and benefits for the quarter ended June 30, 2026 compared to the same period in 2025.
Other operating expenses increased $2,532,000, or 2.8%, to $94,475,000 for the 2026 period compared to $91,943,000 for the 2025 period. Other operating expenses as a percentage of net operating revenues was 23.2% and 24.5% for the three months ended June 30, 2026 and 2025, respectively. The operations of the five skilled nursing facilities that we acquired from National Health Corporation attributed to an increase of $1,489,000 for the quarter ended June 30, 2026 compared to the same period in 2025.
During the second quarter of 2025, we contributed land to a newly-formed limited liability company resulting in an equity interest in the new entity. The fair value of the land contributed to the new entity was $5,625,000. The related cost basis of the contributed land was $2,019,000, which resulted in a gain of $3,606,000. This gain was netted with other operating expenses resulting in a decrease of $3,606,000 in other operating expenses in the prior year period.
Other income
Non–operating income decreased by $960,000 compared to the same period last year, as further detailed in Note 6 to our interim condensed consolidated financial statements. One of the drivers of the decrease in non-operating income are losses at the multi-family development in Franklin, Tennessee. The multi-family development is opening the apartment buildings in phases and some of the buildings are currently being leased. We have incurred losses of $589,000 for the second quarter of 2026 related to this development.
Income taxes
The income tax provision for the three months ended June 30, 2026 is $13,472,000 (an effective income tax rate of 24.9%).
Noncontrolling interest
The noncontrolling interest in subsidiaries is presented within total equity of the Company’s consolidated balance sheets. The Company presents the noncontrolling interest and the amount of consolidated net income attributable to NHC in its consolidated statements of operations. The Company’s earnings per share is calculated based on net income attributable to NHC’s stockholders. The carrying amount of the noncontrolling interest is adjusted based on an allocation of subsidiary earnings based on ownership interest.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Results for the six months ended June 30, 2026 compared to the same period of 2025 include a 5.5% increase in net operating revenues. The net operating revenues increase was due to a 2.9% increase in same-facility net operating revenues, as well as the June 1, 2026 acquisition of the five skilled nursing facilities from National Health Corporation.
For the six months ended June 30, 2026, GAAP net income attributable to NHC was $76,176,000 compared to net income of $55,927,000 for the same period in 2025. Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the six months ended June 30, 2026 was $57,640,000 compared to $50,549,000 for the same period in 2025, an increase of 14.0%.
Net operating revenues
Net patient revenues increased $23,208,000, or 3.2%, compared to the same period last year.
The total census at owned and leased skilled nursing facilities for the six months ended June 30, 2026 averaged 90.0%, compared to an average of 89.3% for the same period a year ago. Overall, the composite skilled nursing facility per diem increased 2.3% compared to the same period a year ago. Our Medicare per diem rates increased 2.6% and managed care per diem rates increased 2.9% compared to the same period a year ago. Medicaid and private pay per diem rates increased 2.5% and 3.4%, respectively, compared to the same period a year ago. For the six months ended June 30, 2026 and 2025, $3,605,000 and $3,684,000, respectively, have been included in our net patient revenues for supplemental Medicaid payments.
The operations of the five skilled nursing facilities that we acquired from National Health Corporation attributed to an increase of $5,999,000 in net patient revenues for the six months ended June 30, 2026 compared to the same period in 2025.
Other revenues increased $18,031,000, or 76.2%, compared to the same period last year, as further detailed in Note 5 to our interim condensed consolidated financial statements. During the second quarter of 2026, we recognized management fees of $18,325,000 previously earned for management services prior to 2025, but these management fees were not previously recognized as such revenues. These revenues did not previously meet the recognition criteria of ASC Topic 606, Revenue from Contracts with Customers, because the underlying consideration was constrained. Upon the acquisition of the five skilled nursing facilities from National Health Corporation on June 1, 2026, the revenue recognition criteria was met and the management fees were paid and recognized in the current period.
Total costs and expenses
Total costs and expenses for the six months ended June 30, 2026 compared to the same period of 2025 increased $24,908,000, or 3.6% to $708,658,000 from $683,750,000.
Salaries, wages, and benefits increased $22,312,000, or 4.9%, to $476,976,000 from $454,664,000. Salaries, wages, and benefits as a percentage of net operating revenues was 60.4% compared to 60.7% for the six months ended June 30, 2026 and 2025, respectively.
The operations of the five skilled nursing facilities that we acquired from National Health Corporation attributed to an increase of $3,732,000 in salaries, wages, and benefits for the six months ended June 30, 2026 compared to the same period in 2025.
Other operating expenses increased $1,312,000, or 0.7%, to $185,712,000 for the 2026 period compared to $184,400,000 for the 2025 period. Other operating expenses as a percentage of net operating revenues was 23.5% and 24.6% for the six months ended June 30, 2026 and 2025, respectively. The operations of the five skilled nursing facilities that we acquired from National Health Corporation attributed to an increase of $1,489,000 for the six months ended June 30, 2026 compared to the same period in 2025.
During the second quarter of 2025, we contributed land to a newly-formed limited liability company resulting in an equity interest in the new entity. The fair value of the land contributed to the new entity was $5,625,000. The related cost basis of the contributed land was $2,019,000, which resulted in a gain of $3,606,000. This gain was netted with other operating expenses resulting in a decrease of $3,606,000 in other operating expenses in the prior year period.
Other income
Non–operating income decreased by $1,282,000 compared to the same period last year, as further detailed in Note 6 to our interim condensed consolidated financial statements. One of the drivers of the decrease in non-operating income are losses at the multi-family development in Franklin, Tennessee. The multi-family development is opening the apartment buildings in phases and some of the buildings are currently being leased. For the six months ending June 30, 2026, we have incurred losses of $935,000 related to this development.
Income taxes
The income tax provision for the six months ended June 30, 2026 is $22,184,000 (an effective income tax rate of 22.4%).
Non-GAAP Financial Presentation
The Company is providing certain non-GAAP financial measures as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company’s operations and measure the Company’s performance more consistently across periods. Therefore, the Company believes this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
The tables below provide reconciliations of GAAP to non-GAAP items (dollars in thousands, except per share data):
| Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| Net income attributable to National Healthcare Corporation |
$ | 40,319 | $ | 23,722 | $ | 76,176 | $ | 55,927 | ||||||||
| Non-GAAP adjustments: |
||||||||||||||||
| Unrealized (gains)/losses on marketable equity securities |
(915 | ) | 5,061 | (9,989 | ) | (5,921 | ) | |||||||||
| Share-based compensation expense |
1,986 | 1,232 | 3,266 | 2,260 | ||||||||||||
| National management fee revenue from prior periods | (18,325 | ) | - | (18,325 | ) | - | ||||||||||
| Gain on sale of property and equipment |
- | (3,606 | ) | - | (3,606 | ) | ||||||||||
| Income tax expense/(benefit) on non-GAAP adjustments |
4,486 | (699 | ) | 6,512 | 1,889 | |||||||||||
| Non-GAAP Net income |
$ | 27,551 | $ | 25,710 | $ | 57,640 | $ | 50,549 | ||||||||
| GAAP diluted earnings per share |
$ | 2.54 | $ | 1.52 | $ | 4.82 | $ | 3.59 | ||||||||
| Non-GAAP adjustments: |
||||||||||||||||
| Unrealized (gains)/losses on marketable equity securities |
(0.06 | ) | 0.32 | (0.63 | ) | (0.38 | ) | |||||||||
| Share-based compensation expense |
0.13 | 0.08 | 0.20 | 0.14 | ||||||||||||
| National management fee revenue from prior periods | (1.15 | ) | - | (1.15 | ) | - | ||||||||||
| Gain on sale of property and equipment |
- | (0.23 | ) | - | (0.23 | ) | ||||||||||
| Income tax expense/(benefit) on non-GAAP adjustments |
0.28 | (0.04 | ) | 0.40 | 0.12 | |||||||||||
| Non-GAAP diluted earnings per share |
$ | 1.74 | $ | 1.65 | $ | 3.64 | $ | 3.24 | ||||||||
Liquidity, Capital Resources, and Financial Condition
Our primary sources of cash include revenues from the operations of our healthcare and senior living facilities, management and accounting services, rental income, and investment income. Our primary uses of cash include salaries, wages and other operating costs of our healthcare and senior living facilities, the cost of additions to and acquisitions of real property, facility rent expenses, long-term debt payments, and dividend distributions. These sources and uses of cash are reflected in our interim condensed consolidated statements of cash flows and are discussed in further detail below.
The following is a summary of our sources and uses of cash flows (dollars in thousands):
| Six Months Ended June 30 |
Six Month Change |
|||||||||||||||
| 2026 |
2025 |
$ |
% |
|||||||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents, at beginning of period |
$ | 112,187 | $ | 96,922 | $ | 15,265 | 15.7 | % | ||||||||
| Cash provided by operating activities |
105,802 | 102,074 | 3,728 | 3.7 | ||||||||||||
| Cash used in investing activities |
(101,557 | ) | (22,902 | ) | (78,655 | ) | (343.4 | ) | ||||||||
| Cash used in financing activities |
(64,154 | ) | (45,732 | ) | (18,422 | ) | (40.3 | ) | ||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents, at end of period |
$ | 52,278 | $ | 130,362 | $ | (78,084 | ) | (59.9 | )% | |||||||
Operating Activities
Net cash provided by operating activities for the six months ended June 30, 2026 was $105,802,000 as compared to $102,074,000 in the same period last year. Cash provided by operating activities consisted of net income of $76,640,000 and adjustments for non–cash items of $19,029,000. There was cash provided by working capital in the amount of $9,474,000 and $32,831,000 for the six months ended June 30, 2026 and 2025, respectively.
Included in the adjustments for non-cash items are depreciation expense, equity in earnings of unconsolidated investments, unrealized gains on our marketable equity securities, gain on sale of property and equipment, deferred taxes, and stock compensation.
Investing Activities
Net cash used in investing activities totaled $101,557,000 for the six months ended June 30, 2026, compared to $22,902,000 for the six months ended June 30, 2025. During 2026, the Company acquired five skilled nursing centers from National Health Corporation for $52,198,000, paid $20,000,000 into an escrow account to be used against the purchase price of the thirty-two skilled nursing facilities and three independent living facilities from NHI, and also purchased land in Mount Juliet, Tennessee for $2,500,000.
Cash used for property and equipment additions was $22,167,000 and $16,341,000 for the six months ended June 30, 2026, and 2025, respectively. The increase in property additions in 2026 was primarily due to the continued development and construction of an assisted living and memory care facility in Tullahoma, Tennessee. For the six months ended June 30, 2026, we contributed capital of $6,984,000 for two joint venture, multi-family developments that are under construction in Nashville, Tennessee compared to $3,205,000 for the same period in the prior year. Proceeds from the sale of marketable securities, net of purchases, resulted in cash provided by investing activities of $2,292,000 for the six months ended June 30, 2026. Cash used for purchases of marketable securities, net of proceeds, resulted in cash used of $3,821,000 for the six months ended June 30, 2025.
Financing Activities
Net cash used in financing activities totaled $64,154,000 for the six months ended June 30, 2026 compared to $45,732,000 for the six months ended June 30, 2025. During 2026, cash of $40,000,000 was used to pay down the outstanding principal balance of the long-term debt compared to $27,000,000 for the same period in the prior year. Cash used for dividend payments to common stockholders totaled $19,930,000 and $18,854,000 for the six months ended June 30, 2026 and 2025, respectively. Proceeds from the issuance of common stock totaled $19,459,000 and $6,462,000 for the six months ended June 30, 2026 and 2025, respectively. We repurchased common shares outstanding in the amount of $23,561,000 and $6,384,000 for the six months ended June 30, 2026 and 2025, respectively. The repurchased common shares were all from employee stock option exercises and were not from repurchases on the open market.
Short–term liquidity
We expect to meet our short-term liquidity requirements primarily from our cash flows from operating activities. In addition to cash flows from operations, we have current cash on hand of $39,209,000 and unrestricted marketable equity securities of $170,981,000. We also have unencumbered real estate and the borrowing capacity on our available line of credit. We believe these various resources are adequate to meet our contractual obligations and growth and development plans in the next twelve months.
Long–term liquidity
We expect to meet our long-term liquidity requirements primarily from our cash flows from operating activities, our current cash on hand of $39,209,000, our unrestricted marketable equity securities of $170,981,000, and the additional borrowing capacity on our unencumbered assets and real estate.
Our ability to meet our long–term contractual obligations, and to finance our operating requirements and growth plans will depend upon our future performance. Our future performance will be affected by business, economic, financial and other factors, including potential changes in state and federal government payment rates for healthcare, customer demand, success of our marketing efforts, pressures from competitors, and the state of the economy, including the state of financial and credit markets, as well as many unforeseen factors.
.
Commitment and Contingencies
Governmental Regulations
Laws and regulations governing Medicare, Medicaid and other federal healthcare programs are complex and subject to interpretation. Management believes that it is following all applicable laws and regulations in all material respects. However, compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusions from the Medicare, Medicaid, and other federal healthcare programs.
| Quantitative and Qualitative Disclosures About Market Risk. |
Market risk represents the potential economic loss arising from adverse changes in the fair value of financial instruments. Currently, our exposure to market risk relates primarily to our fixed–income and equity portfolios. These investment portfolios are exposed primarily to, but not limited to, interest rate risk, credit risk, equity price risk, and concentration risk. We also have exposure to market risk that includes our cash and cash equivalents. The Company's senior management has established comprehensive risk management policies and procedures to manage these market risks.
Interest Rate Risk
The fair values of our fixed–income investments fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases, respectively, in the fair values of those instruments. Additionally, the fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, the liquidity of the instrument and other general market conditions. At June 30, 2026, we have available for sale marketable debt securities in the amount of $119,367,000. The fixed maturity portfolio is comprised of investments with primarily short–term and intermediate–term maturities. The fixed maturity portfolio allows our insurance company subsidiaries to achieve an adequate risk–adjusted return while maintaining sufficient liquidity to meet obligations.
Our cash and cash equivalents consist of highly liquid investments with a maturity of less than three months when purchased. As a result of the short–term nature of our cash instruments, a hypothetical 1% change in interest rates would have minimal impact on our future earnings and cash flows related to these instruments.
Our credit facility exposes us to variability in interest payments due to changes in Secured Overnight Financing Rate ("SOFR") interest rates. We manage our exposure to this interest rate risk by monitoring available financing alternatives.
We do not currently use any derivative instruments to hedge our interest rate exposure. We have not used derivative instruments for trading purposes and the use of such instruments in the future would be subject to approvals by the Investment Committee of the Board of Directors.
Credit Risk
Credit risk is managed by diversifying the fixed maturity portfolio to avoid concentrations in any single industry group or issuer and by limiting investments in securities with lower credit ratings.
Equity Price and Concentration Risk
Our marketable equity securities are recorded at their fair market value based on quoted market prices. Thus, there is exposure to equity price risk, which is the potential change in fair value due to a change in quoted market prices. At June 30, 2026, the fair value of our marketable equity securities is approximately $190,378,000. Of the $190.4 million equity securities portfolio, our investment in NHI comprises approximately $124.4 million, or 65.3%, of the total fair value. We manage our exposure to NHI by closely monitoring the financial condition, performance, and outlook of the company. Hypothetically, a 10% change in quoted market prices would result in a related increase or decrease in the fair value of our equity investments of approximately $19.0 million. At June 30, 2026, our equity securities had net unrealized gains of $146.9 million. Of the $146.9 million of net unrealized gains, $99.6 million is related to our investment in NHI.
| Controls and Procedures. |
As of June 30, 2026, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2026.
During the period covered by this report, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
| Legal Proceedings. |
For a discussion of prior, current, and pending litigation of material significance to NHC, please see Note 17 to Interim Condensed Consolidated Financial Statements included in this Form 10-Q.
| Risk Factors. |
During the six months ended June 30, 2026, there were no material changes to the risk factors that were disclosed in Item 1A of National HealthCare Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025.
| Unregistered Sales of Equity Securities and Use of Proceeds. |
Not applicable
| Defaults Upon Senior Securities. |
None
| Mine Safety Disclosures. |
Not applicable
| Other Information. |
| Exhibits. |
| (a) |
List of exhibits |
EXHIBIT INDEX
| Exhibit No. |
Description |
|
| 3.1.1 |
||
| 3.1.2 |
||
| 3.4 |
||
| 4.1 |
||
| 10.1* |
||
| 10.2* |
||
| 31.1 |
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer |
|
| 31.2 |
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer |
|
| 32 |
||
| 101.INS |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
|
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
| 104 |
Cover Page Interactive File (embedded within the Inline XBRL document and include in Exhibit 101) *In accordance with Item 601(a)(5) of Regulation S-K, certain schedules or similar attachments to this exhibit have been omitted from this filing. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NATIONAL HEALTHCARE CORPORATION |
||
| (Registrant) |
||
| Date: August 6, 2026 |
/s/ Stephen F. Flatt |
|
| Stephen F. Flatt |
||
| Chief Executive Officer |
||
| Date: August 6, 2026 |
/s/ Brian F. Kidd |
|
| Brian F. Kidd |
||
| Senior Vice President and Chief Financial Officer |
||
Exhibit 10.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) by and between NATIONAL HEALTH CORPORATION, a Tennessee corporation (“Seller”), and NHC/OP, L.P., a Delaware limited partnership (“Buyer”), is effective as of May 14, 2026 (“Effective Date”).
RECITALS
A. Seller is the owner of certain Property (as defined below) generally known as 815 South Walnut Avenue, Cookeville, Putnam County, TN; 374 Brink Street, Lawrenceburg, Lawrence County, TN; 420 N. University Street, Murfreesboro, Rutherford County, TN; 300 Laboratory Road, Oak Ridge, Anderson County, TN; and 1018 N. Guignard Drive, Sumter, Sumter County, SC.
B. Each Property is improved with a skilled nursing facility of which Seller is the licensed operator (each, a “Facility”, and collectively, the “Facilities”).
C. Tennessee HealthCare Advisors, LLC, an affiliate of Buyer, is the manager of the Facilities located in Tennessee, and South Carolina HealthCare Advisors, LLC, an affiliate of Buyer, is the manager of the Facility located in South Carolina (each, with respect to Facilities it manages, “Manager” and together, “Managers”), all pursuant to one or more Management Agreements (as defined in Section 14.18).
D. Buyer desires to purchase the Property (as defined in Section 1.1), Facilities, and other Acquired Assets (as defined in Section 1.1) from Seller on the terms and conditions set forth in this Agreement.
E. Seller desires to sell the Property, Facilities, and other Acquired Assets to Buyer on the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, Seller and Buyer agree as follows:
1. Sale of Assets.
1.1 Acquired Assets. Seller will sell to Buyer and Buyer will buy from Seller all of Seller’s right, title, and interest to the following:
(a) good, marketable and indefeasible fee simple title in and to the parcels of land described in Exhibit A-1 attached hereto and legal description of which will be Exhibit A-2 when received from the Title Company, together with all of Seller’s right, title and interest in and to any tenements, hereditaments, appurtenances, easements, rights-of-way, interests, privileges, minerals and mineral rights, water and water rights, utility capacity and rights of way in any way related to such tracts of land, including all of Seller’s right, title and interest in and to any and all streets, alleys, roads, parking areas, curbs, curb cuts, sidewalks, landscaping and signage, sewers and public ways adjacent thereto (collectively, the “Property”);
(b) the buildings, including, the Facilities, structures, driveways, walkways, parking lots and other improvements placed, constructed, installed or located on the Property (collectively, the “Improvements”);
(c) the mechanical systems, the fixtures owned by Seller and comprising a part of or attached to the Improvements and any additions to or replacements thereof as of the Closing Date (collectively, the “Systems”);
(d) Seller’s interest in any and all permits, licenses, certificates of occupancy, approvals, government authorizations, development rights and other authorizations, to the extent assignable, that are held by Seller and issued by any governmental authority relating to the ownership, operation, planning, development, construction or use of the Facilities;
(e) the furniture, equipment, machinery, supplies, inventory, information technology systems (and any business data thereon), computers, tablets, telephones, electronic and networking hardware (including servers, routers and switches), televisions and other audio/video equipment, appliances, and all other tangible personal property owned by Seller and located at, and used in connection with, any of the Facilities, (the “Tangible Personal Property”);
(f) the Residency Agreements, admission agreements and related agreements with any of the residents at the Facilities as updated at the Closing (“Assumed Residency Agreements”);
(g) such assignable contracts related to the ownership, operation, and use of the Facilities as Buyer approves for assignment and assumption, which shall include the Assumed Residency Agreements and may include contracts with health care programs; provided that Buyer shall have no obligation to assume any obligations of Seller under any contract (i) other than those obligations to be performed after the Closing Date, (ii) that relate to or arise from any pre-Closing contract breach, violation or default by Seller, or (iii) if the assumption is conditioned upon the Buyer’s payment of money or incurrence of other consideration or material liabilities to a contract counterparty) (collectively, the “Assumed Contracts”);
(h) all vehicles used in the operation of the Facilities and included in the figures provided in the Estimated Balance Sheet (as defined below);
(i) Seller’s intellectual property, including all of Sellers’ right, title and interest in the names associated with the Facilities and all related logos, copyrights and trademarks (if any), and all other trade names actively used in the operation and marketing of the Facilities, to the extent used exclusively in connection with the Faciltiies and not used by Seller with regard to any other property or facility;
(j) any guaranties and warranties in favor of Seller relating exclusively to the Facilities, to the extent assignable, owned by Seller and received in connection with any construction, repair, maintenance or other services or materials performed or provided solely with respect to the Facilities;
(k) originals, or where not available, copies, of all books, documents, data and records related to the Facilities regardless of whether in paper, digital or other electronic form, including, without limitation, books of account, ledgers and general, financial and accounting statements and records, including internal financial statements, machinery and equipment maintenance files, resident and patient lists, employee and personnel records and lists, resident and patient medical and health records (including in paper, digital and electronic form), price lists, supplier lists, production data, quality control records and procedures, resident, patient or customer complaints and inquiry files, all compliance manuals, policies and records, research and development files, records and data (including all correspondence with any governmental authority and health care program), employee handbooks, employee records, employee agreements, employee manuals, training materials and video tapes, policies, procedures and materials related thereto, sales material and records, strategic plans, marketing and promotional surveys, material and research, and files relating to the intellectual property purchased assets (collectively, “Purchased Books and Records”); provided, however, that Seller shall be entitled to keep copies of the Purchased Books and Records to the extent required by any Laws or internal document retention or other similar policy or used in or related to any Excluded Assets or Retained Liabilities, subject to the confidentiality obligations hereunder and provided, further, that Seller shall be entitled to access to, and a right to copy, any of the Purchased Books and Records at Seller’s expense upon Seller’s reasonable request or to the extent required by any Laws applicable to Seller or used in or related to any of the Excluded Assets or with respect to any of the Acquired Assets for periods prior to the Closing Date, subject to the confidentiality obligations hereunder;
(l) telephone numbers of the Facilities;
(m) all accounts receivable, prepaid expenses, credits and advance payments;
(n) deposits, and other restricted cash and cash equivalents, including assets reflected on Seller’s balance sheet as “limited as to use,” including, without limitation, the resident trust funds; and
(o) all insurance benefits, including rights and proceeds, arising from or relating to the Acquired Assets;
(p) all Balance Sheet Assets (as defined below);
(q) all other assets, including intangible assets, owned by Sellers pertaining to or used exclusively in connection with the ownership or operation of the Facilities, including any goodwill.
All of the Property, Facilities, Improvements, Systems, Tangible Personal Property, Assumed Residency Agreements, Assumed Contracts, and other assets described in Sections 1(a) through (q) inclusive are collectively the “Acquired Assets.” The Acquired Assets shall not include, however, the Excluded Assets (as defined below).
1.2 Contingencies. Notwithstanding any other provision hereof, the transaction contemplated herein (the “Transaction”) shall be contingent upon (i) approval by the National Healthcare Corporation Board of Directors (which may grant or deny the approval for any reason in its sole discretion); (ii) Buyer’s obtaining financing acceptable to Buyer, if Buyer determines it will seek financing (in which event Buyer shall work to obtain same using diligent and good faith efforts); and (iii) approval by applicable governmental authorities of license transfers, issuance of new operating licenses and other change of ownership requirements necessary to implement the desired legal transfer from Seller to Buyer of the rights and obligations related to operation of the Facilities (collectively, the “CHOW Approvals”). In the event the contingencies in (i) and (ii) are not met, the Buyer may terminate this Agreement and have the Deposit returned to it.
1.3 Retained Liabilities. Other than Balance Sheet Liabilities expressly provided for in this Agreement, any assumed liabilities in the Management Agreements, and/or in any other separate agreement by and between Seller and Buyer (or its affiliate(s)), Buyer shall not assume or in any way be liable or responsible for any liabilities of Seller, or other liabilities, whether known or unknown, direct or indirect, however contingent, including the following liabilities of Seller (collectively, the “Retained Liabilities”):
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(a) |
the outstanding amount of all principal, interest, fees and expenses in respect of borrowed money, indebtedness, letters of credit, capital leases and installment purchases of Seller (“Indebtedness”); |
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(b) |
all obligations of Seller relating to taxes, including, without limitation, (i) any liability of Seller for any transfer taxes and any other taxes arising in connection with the consummation of the Transaction (subject to the provisions of Section 6.5 below), (ii) any taxes for which Seller is liable any retroactive adjustments to taxes made by a governmental authority that relate to the period prior to the Closing Date; |
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(c) |
Seller’s obligations under this Agreement or any agreement entered into in connection with the Transaction; |
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(d) |
any claims against Seller, or to which Seller is subject, filed or otherwise, with respect to or relating in any manner to the operations, management, ownership or affairs of Seller, the Acquired Assets, or the ownership or operation of the Facilities prior to Closing, regardless of when such matter is initiated (including, without limitation, professional liability claims); |
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(e) |
any redetermination, repayment, recoupment or adjustment to any amounts to or from any health care program with respect to the Facilities relating to the period prior to the Closing Date, regardless of whether Buyer assumes the related health care program or provider agreements following the Closing Date, including any retroactive or audit matters which relate to the period prior to the Closing Date regardless of when initiated; |
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(f) |
any rate adjustment, redetermination, repayment or recoupment after the Closing Date arising out of any failure by Seller to comply with any applicable regulations or requirements prior to the Closing Date; |
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(g) |
any regulatory or enforcement proceeding, action or investigation initiated by, or on behalf of, any health care program or governmental authority, which relates to any alleged act or failure to act of any of the Seller which occurred prior to the Closing Date, regardless of when such proceeding, action or investigation is initiated; |
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(h) |
any seller plan liabilities, including asset retirement obligations, any obligations respecting any pension, profit sharing, retirement, employee benefit or similar plan, 403(b) plan, benefit or arrangement, including any and all obligations of Seller to Employees in respect of any retirement plan; |
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(i) |
any liabilities associated with any Excluded Assets; |
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(j) |
any liabilities of Seller not disclosed in this Agreement, and any liabilities (other than assumed liabilities) asserted against or incurred by Buyer or its Affiliates after the Closing Date, in each case with respect to, or arising from, or related to, the ownership, management or operation of the Acquired Assets, and the Facilities relating to all periods of time prior to the Closing Date, including any action, inaction or conduct of Seller during such periods of time; |
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(k) |
any Liability under any contract of Seller that is not an Assumed Contract; |
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(l) |
any liability of Seller which is unrelated to the Acquired Assets, or Facilities; |
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(m) |
Seller’s transaction costs; |
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(n) |
any Balance Sheet Liabilities (as defined below) reflected on the Final Statement in the “Other Liabs incl property taxes” category provided for in Section 2.2(a) to the extent they exceed the amount of Balance Sheet Liabilities in the “Other Liabs incl property taxes” category on the Estimated Balance Sheet. |
The Retained Liabilities will remain the sole responsibility of and will be retained, paid, performed and/or otherwise discharged solely by Seller, and Seller must indemnify, defend, and hold harmless Buyer against any and all Claims (as defined below), resulting from, relating to, or arising out of the Retained Liabilities. Seller’s obligations under this Section 1.3 will survive the Closing and the delivery of the Deeds.
2. Purchase Price.
2.1 Purchase Price. As consideration for the purchase of the Acquired Assets (excluding those Balance Sheet Assets and Balance Sheet Liabilities which are subject to the Net Book Adjustment described below), Buyer will pay to Seller Fifty Million Five Hundred Thousand and 00/100 Dollars ($50,500,000.00) (the “Base Purchase Price”). As consideration for the purchase of the Balance Sheet Assets and assumption of the Balance Sheet Liabilities, the Base Purchase Price will be adjusted pursuant to the Net Book Adjustment reflected in Section 2.2 below (as so adjusted, the “Purchase Price”). The Purchase Price is payable as follows:
(a) Deposit. Within three (3) business days after the Effective Date, Buyer shall deliver by cashier’s check or wire transfer the sum of $750,000.00 (the “Deposit”) to First American Title Company, Attn: Susan Felts, 511 Union Street, Suite 1600, Nashville, TN 1600 (sfelts@firstam.com), which firm is the “Escrow Agent” or “Title Company” under this Agreement. Buyer may direct Title Company to hold the Deposit in an interest-bearing account with a national commercial bank at Buyer’s election. The Deposit will be applied against the Purchase Price at the Closing. Otherwise, the Deposit will be delivered to the party entitled to receive the Deposit in accordance with the provisions of this Agreement. The Deposit will become non-refundable to Buyer at the expiration of the Inspection Period (except as otherwise expressly provided herein) if Buyer elects to proceed with the purchase of the Property.
(b) Balance of Purchase Price. The balance of the Purchase Price, plus or minus prorations and other adjustments as provided in this Agreement, if any, is due at Closing (but subject to the post-Closing Net Book Adjustment) and must be paid by wire transfer of immediately available funds paid to Title Company on the Closing Date (as defined below).
2.2 Purchase Price Adjustments and Assumption of Certain Liabilities.
(a) The Base Purchase Price shall be adjusted to incorporate the net book value of the Balance Sheet Assets and the Balance Sheet Liabilities related solely to the Facilities transferred, as of the Closing Date (the “Net Book Value”; such adjustment, the “Net Book Adjustment”). Notwithstanding the foregoing or any other provision hereof, the Net Book Value shall not include the assets listed on Schedule 1 attached hereto (the “Excluded Assets”). The Net Book Value shall be calculated as set forth in the example included on Schedule 2 attached hereto. At least three (3) days prior to the Closing, Buyer and Seller will mutually agree on the amounts known or estimated of Balance Sheet Assets and Balance Sheet Liabilities as of Closing, which amounts will be based upon the numbers known as of April 30, 2026 (or, if the Closing does not occur on June 1, 2026, such numbers will be based upon the numbers known as of the last day of the calendar month closest to the date of the Closing to the extent reasonably practicable) and will be set forth on Schedule 2.2(a) to be attached hereto once mutually agreed (the “Estimated Balance Sheet”), and the Base Purchase Price payable at Closing has been adjusted by the Net Book Adjustment as determined pursuant to the Estimated Balance Sheet. The Balance Sheet Assets and Balance Sheet Liabilities (and the resulting Net Book Adjustmnet) are subject to post-Closing reconciliation and adjustment as provided below. By executing this Agreement, at Closing, Buyer shall and does (i) assume, purchase, and acquire from Seller all of Seller’s right, title and interest in and to the accounts receivable, estimated costs reports, inventory, and prepaid expenses of Seller, in each case incurred by Seller in the ordinary course of business and consistent with past practice (the “Balance Sheet Assets”), and (ii) assume all and full legal responsibilty, obligation and liability for all unpaid operating costs of the Facilities and recurring obligations, in each case which were incurred by Seller in the ordinary course of business and consistent with past custom and practice, and excluding the Retained Liabilities (the “Balance Sheet Liabilities”), which Balance Sheet Assets and Balance Sheet Liabilities are reflected in the categories and amounts set forth in the Estimated Balance Sheet, including any increases or decreases thereto resulting from Balance Sheet Assets and Balance Sheet Liabilities relating to the pre-Closing period that are identified at any time after Closing (including after the end of the True-Up Period (as defined below)); provided, however, notwithstanding the foregoing Buyer shall not be liable for more than the amount reflected as “Other liabs incl prop taxes” on the Estimated Balance Sheet. Within 60 days following the Closing Date (the “True-Up Period”), Buyer, with the cooperation of Managers on Seller’s behalf, shall prepare and deliver to Seller a revised balance sheet which reflects the actual amount of Balance Sheet Assets and Balance Sheet Liabilities as of the Closing Date (the “Final Statement”), which Final Statement will be prepared in a manner consistent with the Estimated Balance Sheet. Concurrently with the delivery of the Final Statement, the Base Purchase Price shall be further adjusted by the difference between the Net Book Adjustment reflected in the Estimated Balance Sheet and the Net Book Adjustment reflected in the Final Statement (“Post-Closing Adjustment”). If the Post-Closing Adjustment results in a larger reduction of the Base Purchase Price, Seller shall make payment to Buyer in the amount of the Post-Closing Adjustment within 30 business days of receiving the Final Statement. If the Post-Closing Adjustment results in a lesser reduction of the Base Purchase Price, Buyer shall make payment to Seller in the amount of the Post-Closing Adjustment within 30 business days of deliver of the Final Statement.
Notwithstanding any other provision contained herein, fifty percent (50%) of the value of movable equipment net of depreciation, as such value is reflected as a Balance Sheet Asset, shall be included as a Balance Sheet Asset as part of the Net Book Value Adjustment (and subsequent Net Book Adjustment). The other fifty percent (50%) shall be considered part of the Base Purchase Price.
In the event the parties are unable to agree on the Final Statement and Post Closing Adjustment, then an officer of each party, with the authority to decide, shall meet and confer in good faith to resolve the disagreement. If a disagreement continues for 30 days after such efforts, then the parties shall agree on a third-party accountant to review, decide and resolve the disagreement, which shall be binding on the parties.
(b) The Purchase Price shall be further adjusted to offset unpaid management fees owed by Seller to Managers through the date of Closing pursuant to the Management Agreements (the “Management Fees”). At Closing, the unpaid Management Fees which are known through April 30, 2026 (and which will be identified on Schedule 2.2(a)) will be offset against, and reduced from, the Purchase Price, and the unpaid Management Fees which are owed for May 1, 2026 through the date of Closing will be subject to reconciliation as part of the Post-Closing Adjustment process described above. By signing the limited acknowledgment and agreement below, each Manager agrees to reasonably cooperate with Seller and Buyer to prepare the Estimated Balance Sheet and Final Statement as set forth in Section 2.2(a) above and, additionally, agrees that by reducing the Purchase Price by the amount of Management Fees owed as of Closing, Seller has fully discharged its obligations to pay the Management Fees to each Manager; notwithstanding the foreoing, Seller will not be released for those obligations that survive termination pursuant to and under the terms of the Management Agreements. Each Manager shall also not make any advanced payment or pre-payment of Balance Sheet Liabilities without Seller’s prior written approval, except for any payments or pre-payments of such Balance Sheet Liabilities which are made in the ordinary course of business and consistent with past practice. The terms and obligations of this Section 2.2 will surive the Closing and the delivery of the Deeds.
2.3 Allocation. The parties agree that the portion of the Purchase Price attributable to the five Facilities for the purpose of determining transfer tax liability shall be determined by Buyer prior to Closing, subject to reasonable comments from Seller. The remainder of the Purchase Price will be deemed allocated to the personal property and intangible property that are part of the Acquired Assets.
3. Inspection Period.
3.1 Inspections. To enable Buyer to proceed with the purchase of the Property, Buyer may perform or cause to be performed certain inspections, tests and studies, including, but not limited to, environmental, engineering and soil studies (hereinafter collectively referred to as “Inspections”), and certain reviews, approvals and inquiries about the Property, so as to determine whether, in Buyer’s sole discretion, it is feasible, economically or otherwise, to acquire the Property. Buyer has from the Effective Date until 5:00 p.m. Eastern Time on the date which is the earlier of (i) the Closing Date and (ii) June 16, 2026 (the “Inspection Period”) to perform any Inspections which Buyer, in its sole discretion, deems necessary to determine the feasibility of its acquisition of the Property. If for any reason whatsoever during the Inspection Period Buyer elects, in Buyer’s sole discretion, not to proceed with the purchase of the Property, Buyer may terminate this Agreement by notifying Seller and Title Company in writing of Buyer’s election, and Title Company will return the Deposit to Buyer immediately thereafter. A failure to so notify Seller and Title Company on or before the expiration of the Inspection Period constitutes Buyer’s election to proceed with the purchase of the Property, subject to the fulfillment of Seller’s obligations hereunder. Requests for the CHOW Approvals shall be submitted no later than seven (7) days after the Effective Date.
3.2 Entry. Buyer and Buyer’s employees, contractors, and agents (“Representatives”) shall have the right to enter upon the Property during normal business hours upon reasonable prior notice to Seller and in conformance with the terms and provisions of the Management Agreements (as defined below). Buyer agrees that the scope of any soil testing and/or environmental testing (other than a Phase I environmental study) must be approved by Seller, in its sole discretion, prior to the commencement of the testing work. Investigation and due diligence activities, including any studies or work, conducted at the Property by or on behalf of Buyer are referred to herein as “Buyer’s Work.” In conducting Buyer’s Work on the Property, or otherwise accessing the Property, Buyer shall at all times: (a) comply with all laws and regulations of all applicable governmental authorities, (b) not unreasonably interfere with the business of Seller conducted at the Property, and (c) not cause any damage to the Property. Seller shall be entitled to have a representative present at all times during all Buyer’s Work. In the event Buyer does not purchase the Property, Buyer shall repair or restore any damage or disturbance which Buyer or Buyer’s Representatives shall cause to the Property. All inspection fees, engineering fees and other costs and expenses of any kind incurred by Buyer or Buyer’s Representatives relating to Buyer’s Work shall be at the sole expense of Buyer. Buyer shall keep all information obtained during its inspections and access to the Property confidential, except to those with a need to know as part of this transaction. In the event this Agreement is terminated, then Buyer shall, upon request of Seller, deliver a copy of all non-confidential reports related to, or produced as a result of, Buyer’s Work to Seller within seven (7) days of Buyer’s receipt of same. Seller shall reimburse Buyer for all out-of-pocket costs for such requested reports.
3.3 No Liens. All of Buyer’s Work performed on the Property shall be at no cost to Seller and Buyer shall not permit the creation of any lien in connection with Buyer’s Work, including, without limitation, any lien in favor of any contractor, subcontractor, materialman, mechanic, surveyor, architect or laborer engaged by Buyer. If any such lien is filed against the Property as a result of the activities of Buyer or Buyer’s agents, employees or contractors, then, within 20 days after receipt of written demand from Seller, Buyer will either cause the lien to be discharged of record by payment of the claim or posting of a bond, or will take such other action as may be reasonably acceptable to protect Seller from any loss or damage to the extent arising from such lien.
3.4 Indemnification. Buyer will indemnify, defend and hold harmless Seller against any and all liabilities, claims and damages, including, without limitation, any property damage or personal injury or claim of lien against the Property (collectively, “Claims”), resulting from Buyer’s and/or Buyer’s Representatives’ entry onto the Property (including, without limitation, reasonable attorneys’ fees and expenses paid or incurred by Seller during litigation in connection therewith, if any); provided, however, that Buyer shall have no liability for Claims to the extent arising out of (i) the mere discovery of existing environmental conditions on the Property, or (ii) the negligence or intentional misconduct of Seller. Buyer’s indemnification obligations set forth herein shall survive the termination of this Agreement.
3.5 Insurance. Concurrently with the execution of this Agreement and during the term of this Agreement, Buyer shall maintain workers’ compensation insurance in accordance with applicable law, and shall also maintain, at its expense, commercial general liability insurance with limits of not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in the aggregate. Buyer shall furnish to Seller a certificate of insurance evidencing the foregoing coverages, and naming Seller as an additional insured, prior to entry onto the Property.
3.6 Property Information. In connection with Buyer’s investigation of the Property, and subject to the remaining provisions of this Agreement, within five (5) days of the Effective Date, Seller shall make available to Buyer the information and materials relating to the Property listed on Exhibit B attached hereto, to the extent in Seller’s possession and related to the Property and to the extent not already in the possession of Buyer in connection with its operation of the Facility (collectively, the “Property Information”). Buyer specifically acknowledges and agrees the Property Information has been and shall be made available (to the extent made available) to Buyer without representation or warranty by, or recourse against, Seller, it being agreed that Buyer shall not rely on such documents and shall independently verify the truth, accuracy and completeness of said information and/or items contained therein. If Buyer fails to consummate this Transaction, Buyer shall promptly return to Seller all Property Information, and Buyer shall promptly deliver to Seller copies of all due diligence materials prepared by or for Buyer in connection with this Transaction, excluding any proprietary, privileged or confidential communications, memoranda or summaries, but without any representation, warranty, obligation or liability of Buyer or the preparer of such documents. The provisions of this Section 3.6 shall survive the Closing.
4. Title Requirements, Survey and Permitted Exceptions.
4.1 Title Evidence. The parties recognize that Seller has ordered from the Title Company ALTA extended owner’s commitments for title insurance (the “Title Commitments”) covering the Property (together with legible copies of the exception documents referenced in the Title Commitments), pursuant to which the Title Company shall agree to issue to Buyer, on the Closing of the purchase of the Property, ALTA extended owner’s title insurance policies for each Property in the amount of the portion of the Purchase Price allocated to the applicable portion of the Real Property (the “Title Insurance Policies”). The Title Company’s agreement to issue the Title Insurance Policies free of all matters except the Permitted Exceptions (as defined below) and any encumbrances placed on the Property by Buyer shall be a condition to Buyer’s obligation to close the Transaction contemplated herein. Seller will pay in full, on or before the Closing, any monetary encumbrances, including without limitation mortgages, liens for delinquent taxes, judgments, or mechanic’s liens against the Property, in each case created by or on behalf of Seller and then existing in relation to the Property (collectively, “Seller Cure Items”).
4.2 Survey. Buyer may order, at Buyer’s cost, new or updated ALTA/NSPS surveys for the Property (the “Surveys”). Such Surveys shall be performed by a surveyor licensed in the respective states in which the Property is located. If any Survey obtained by Buyer reflects a legal description for any Property that differs from the legal description contained in the applicable vesting deed(s), Seller shall, at Closing, if requested by Buyer, execute and deliver to Buyer a quitclaim deed for such Property using such legal description reflected on the applicable Survey, provided that (i) such confirmatory quitclaim deed shall be without representation or warranty of title, express or implied, and (ii) the form and substance of such confirmatory quitclaim deed and revised legal description shall be reasonably acceptable to Seller, Buyer, and the Title Company.
4.3 Objections; Cure of Title and Survey Objections. If the Title Commitments or the Surveys disclose any defects, liens, or encumbrances objectionable to Buyer, in Buyer’s discretion, Buyer may object in writing to the same no later than May 22, 2026. Matters listed in the Title Commitments or the Surveys and not objected to by Buyer within such period and matters later accepted by Buyer shall constitute “Permitted Exceptions.” As to any matters to which Buyer so objects in a timely manner, Seller shall notify Buyer in writing, within five (5) days after receipt by Seller of Buyer’s objection letter, as to which specific matters Seller is unable or unwilling to remedy and which specific matters Seller will exercise reasonable efforts to attempt to remedy (“Seller’s Response”). As to those matters to be remedied, Seller shall deliver to Buyer revised Title Commitments reflecting that such remedy has been effected, or Seller shall otherwise assure Buyer, to Buyer’s reasonable satisfaction, that such remedy will be made on or before the Closing Date. If Seller is unable or unwilling to remedy all matters objected to by Buyer and to deliver the Title Policies in accordance with the foregoing requirements, and/or if Seller fails to provide Seller’s Response within such five-day period, Buyer may, at its option: (i) consummate the Transaction and accept such title as Seller is so able or willing to convey, and without any claim against Seller or any adjustment in the Purchase Price with respect thereto, or (ii) terminate this Contract by giving written notice to Seller of the same on or prior to Anticipated Closing Date, in which event the Deposit shall be returned to Buyer. If Buyer fails to give the termination notice under clause (ii) above within such period, Buyer shall be deemed to have elected clause (i) above as to those specific matters that are set forth in such Seller’s Response or, if no Seller’s Response is provided, to have waived its objections. In the event Seller indicates that Seller will cure any of Buyer’s objections on or prior to the Closing Date but fails to so cure such objections, the same shall be deemed a default by Seller pursuant to Section 10.1 hereof, and Buyer shall have all remedies set forth therein against Seller.
4.4 Title Insurance Policy Claims. Notwithstanding anything contained in this Agreement to the contrary, with respect to all matters affecting title to the Property, and any liens or encumbrances affecting the Property, Buyer acknowledges and agrees that it is relying upon the Title Insurance Policies. If Buyer has a claim under the Title Insurance Policies and the subject matter of the claim also constitutes the breach of any representation, warranty or covenant made by Seller in this Agreement or the Deeds (as defined below), Buyer agrees that it will look first to the Title Insurance Policies for recovery of such claim, and Buyer shall only assert any claim against Seller for recovery of such claim after all remedies available to Buyer under the Title Insurance Policies are exhausted and any recovery from Seller hereunder shall be in excess of remedies received by Buyer under the Title Insurance Policies. This Section 4.4 shall survive Closing and delivery of the Deeds.
5. Intentionally Deleted
6. Closing.
6.1 Closing Date. The consummation of the Transaction (the “Closing”) shall occur on or before June 1, 2026 (the “Anticipated Closing Date”) (provided that the failure of the Closing to occur on or before such date will not affect the duration of the Inspection Period set forth above), subject to the provisions of this Section 6.1 and unless extended by agreement of the Parties (the “Closing Date”). Notwithstanding the foregoing, in the event the state licensing CHOW Approvals (the “CHOW”) have not been obtained by the Anticipated Closing Date, the Closing Date shall automatically be extended until the date that is ten (10) days following the date that CHOW Approvals are obtained. Seller and Buyer shall reasonably cooperate in requesting the CHOW Approvals and satisfying related requirements and requests of the applicble governmental authorities. Notwithstanding the foregoing, Buyer may elect (and Seller shall not unreasonably refuse) to consummate the Closing prior to the CHOW Approvals (whether upon receipt of comfort letters from the appropriate governmental entities (or reasonable equivalent thereof) or otherwise in Buyer’s discretion) and the parties will enter into an appropriate interim management/lease arrangement. In the event that the CHOW Approvals are denied with no further opportunity to appeal such denial, either party hereto shall have the right, within ten (10) days and by written notice, to terminate this Agreement and Buyer’s Deposit shall be returned to it. Notwithstanding the foregoing, in the event the actual Closing has not occurred on before the date that is nine (9) months following the Anticipated Closing Date, either party shall have the right to terminate this Agreement, with each party paying its own costs and attorney’s fees and Buyer’s Deposit being returned to it.
6.2 Possession; Seller Termination Right; Buyer Default and Cure. Possession of the Property will be delivered by Seller to Buyer on the Closing Date. Notwithstanding anything to the contrary contained herein, in the event Buyer has not terminated this Agreement during the Inspection Period, and advises Seller, or Seller otherwise becomes aware that Buyer is unable or unwilling to proceed to Closing on or prior to the Closing Date, Seller shall be entitled to provide written notice to Buyer of its intent to terminate and the basis for such termination. Buyer shall have 15 days to cure and, failing to do so, Seller may then collect the Deposit and shall not be obligated to proceed to Closing and present the Deed and the other conveyance documents as a condition to collecting the Deposit.
6.3 Seller’s Obligations at Closing. On or before the Closing Date, Seller will execute and deliver to Title Company (to be delivered to Buyer through Title Company at Closing), the following (which documents may be drafted to address one or more Sites as Buyer and Seller mutually deem appropriate, and which shall conform to the Title Company’s reasonable requirements):
(a) Special Warranty Deeds. A Special Warranty Deed (collectively, the “Deeds”) for each Property, in commercially reasonable form to be mutually agreed upon by Buyer and Seller.
(b) Non-Foreign Affidavit. A non-foreign affidavit properly executed and containing such information as is required by IRC Section 1445(b)(2) and its regulations.
(c) Bill of Sale and Assignment. A bill of sale and assignment in commercially reasonable form to be mutually agreed upon by Buyer and Seller.
(d) Assignment of Resident Agreements. If applicable, an assignment of resident agreements in commercially reasonable form to be mutually agreed upon by Buyer and Seller.
(e) Management Agreement Termination. An executed copy of the Management Agreement Termination (as defined below).
(f) Service Contracts Assignment. A signed copy of the Service Contracts Assignment (as defined below).
(g) Title Documents. Such affidavits of Seller or other documents as may be reasonably required by Title Company in order to record the closing documents and issue the Title Insurance Policies free of all matters except the Permitted Exceptions and any encumbrances placed on the Property by Buyer.
(h) Closing Statement. A closing statement setting forth the Purchase Price, the Deposit, adjustments, prorations and Closing costs as set forth herein.
(i) Additional Documents. Such other documents as may be required by the terms and conditions of this Agreement or the Title Company.
(j) Escrow Agreement. A signed copy of the Escrow Agreement (defined below).
(k) Operations Transfer Agreement (“OTA”). An OTA for each Facility in a commercially reasonable form acceptable to the Seller and Buyer.
(l) Employee Leasing Agreement. A signed Employee Leasing/Services Agreement for each Facility.
6.4 Buyer’s Obligations at Closing. On or before the Closing Date, Buyer will execute and deliver to Title Company (to be delivered to Seller through Title Company at Closing), the following:
(a) Purchase Price. The Purchase Price payable in accordance with the requirements of Section 2.1.
(b) Bill of Sale and Assignment. The bill of sale and assignment described above.
(c) Assignment of Resident Agreements. A copy of the assignment of resident agreements described above.
(d) Management Agreement Termination. An executed copy of the Management Agreement Termination.
(e) Service Contracts Assignment. A signed copy of the Service Contracts Assignment.
(f) Closing Statement. A closing statement setting forth the Purchase Price, the Deposit, adjustments, prorations and Closing costs as set forth herein.
(g) Additional Documents. Such other documents as may be required by the terms and conditions of this Agreement or the Title Company.
(h) Escrow Agreement. A signed copy of the Escrow Agreement.
(i) Employee Leasing Agreement. A signed Employee Leasing/Services Agreement for each Facility.
(j) Operations Transfer Agreement (OTA). An OTA for each Facility in a commercially reasonable form acceptable to the Seller and Buyer.
6.5 Closing Costs.
(a) Seller’s Costs. Seller will pay the following costs and expenses in connection with the Closing:
(i) One-half (1/2) of all Title Company closing charges;
(ii) All mortgage, transfer, and/or conveyance taxes and recording fees, and all documentary stamps payable upon the recording of the Deeds in connection with the conveyance of the Site in South Carolina;
(iii) The premium payable for the Title Insurance Policies (but not the costs of endorsements);
(iv) All costs of removing mortgages or other monetary liens encumbering the Property by or through Seller; and
(v) Seller’s costs of document preparation and its attorneys’ fees incurred in connection with this Agreement.
(b) Buyer’s Costs. Buyer will pay the following costs arising in connection with the Closing:
(i) One-half (1/2) of all Title Company closing charges;
(ii) All mortgage, transfer, and/or conveyance taxes and recording fees, and all documentary stamps payable upon the recording of the Deeds in connection with the conveyance of the Sites in Tennessee;
(iii) All due diligence or inspection costs incurred by Buyer;
(iv) The costs of all endorsements to the Title Insurance Policies
(v) All costs related to any loan(s) obtained by Buyer, including all costs of any lender’s title policy or policies; and
(vi) Buyer’s cost of document preparation and its attorneys’ fees incurred in connection with this Agreement.
6.6 Prorations. The following items (but in any event excluding those which are subject to the Net Book Value Adjustment as set forth above) will be prorated between Seller and Buyer as of 12:01 a.m. on the Closing Date (the “Proration Date”), and this provision shall survive Closing:
(a) Property Taxes and Assessments. City, state and county ad valorem taxes and all general and special assessments for the calendar year of Closing based on the ad valorem tax bills for the Property for such year. If the amount of any such tax or assessment to be prorated cannot be then ascertained, proration shall be computed on the basis of the rate(s) for the preceding year applied to the last assessed valuation prior to the Closing Date, and either party hereto may request reasonable subsequent adjustment within thirty (30) days following receipt of notification of the actual amounts.
(b) Operating and Utility Charges. Sanitary sewer taxes, utility charges and any other operating expenses associated with the operation of the Property, if any. Seller will endeavor to obtain final readings for utility charges for the Property as of the Closing Date.
(c) Other Prorations. Any other items that are customarily prorated in comparable transactions in the states in which each respective Site is located, and any other items Seller and Buyer mutually instruct Title Company to prorate prior to the Close of Escrow, including:
(i) Amounts payable by, or owed to, Seller pursuant to the Service Contracts; and
(ii) Any other accounts receivable owed or payable to Seller pursuant to any other agreements in connection with ownership and operation of the Property.
7. Damage. If, prior to the Closing Date, all or any part of the Property or Facilities is substantially damaged by fire, casualty, the elements or any other cause, Seller will promptly give notice to Buyer of such fact and at Buyer’s option (to be exercised within fifteen (15) days after Seller’s notice), this Agreement will terminate, in which event neither party will have any further obligations under this Agreement except for those obligations which expressly survive the termination hereof, and the Deposit will be refunded to Buyer. If Buyer fails to elect to terminate despite such damage, or if the Property is damaged but not substantially, there will be no reduction in the Purchase Price, and Seller will assign to Buyer at the Closing all of Seller’s right, title and interest to receive the proceeds of all insurance related to such damage. For purposes of this Section 7, the words “substantially damaged” mean damage that would cost $2,000,000 or more to repair.
8. Condemnation. If, prior to the Closing Date, eminent domain proceedings are commenced against all or any material part of the Property, Seller will immediately give notice to Buyer of such fact and at Buyer’s option (to be exercised within fifteen (15) days after Seller’s notice), this Agreement will terminate, in which event neither party will have further obligations under this Agreement except for those obligations which expressly survive the termination of this Agreement and the Deposit will be refunded to Buyer. If Buyer fails to elect to terminate despite such eminent domain proceedings, there will be no reduction in the Purchase Price, and Seller will assign to Buyer at the Closing all of Seller’s right, title and interest in and to any award made or to be made in the condemnation proceedings. For purposes hereof, any taking or condemnation costing less than $2,000,000.00 shall not be deemed material.
9. Representations and Warranties.
9.1 Mutual Representations and Warranties. Each party represents and warrants to the other party that:
(a) This Contract has been duly executed and delivered by such party, and constitutes the valid and binding obligation of such party, enforceable against it in accordance with the terms hereof; and
(b) The execution, delivery and performance of this Contract does not violate or breach the terms of any agreement to which it is a party or by which it or its property may be bound.
9.2 Seller Representations and Warranties. Seller represents and warrants to Buyer that the following are true and correct as of the Effective Date and as of the Closing Date:
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(a) |
Organization. Seller is (a) duly incorporated, validly existing and in good standing under the Laws of the state of its jurisdiction of incorporation and (b) duly qualified to do business and in good standing in each jurisdiction where such qualification is required by applicable Laws. |
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(b) |
Authority; Enforceability. Seller possesses all requisite corporate power and authority including required licenses, approvals and authority of all applicable governmental authorities legally necessary to own the Acquired Assets and to operate the Facilities. Seller has the full corporate right, power and authority to enter into this Agreement and, as of the Closing Date, will have the full right, power and authority to enter into all other transaction documents contemplated hereby and to consummate the Transaction contemplated herein. |
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(c) |
No Conflicts. Subject to obtaining the CHOW Approvals, to Seller’s knowledge, neither the execution, delivery and performance by Seller of any of the transaction documents contemplated herein nor the consummation of the Transaction will: (a) violate any Law applicable to Seller in any material respect; (b) result in the modification, acceleration, termination, material breach or violation of, or material default under, any contract, permit, or government authorization to which Seller is a party or by which the Acquired Assets (including the Property), the Facilities, or any portion thereof is bound; (c) require any action by (including any authorization, consent or approval) or in respect of (including notice to), any person under any contractual obligation of Seller; (d) result in the creation or imposition of a lien upon, or the forfeiture of, any Acquired Assets; or (e) result in a breach or violation of, or default under, the organizational documents of Seller. |
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(d) |
Litigation; Government Orders. There are no claims (A) pending, or, to Seller’s knowledge, threatened against or affecting, or pending or threatened by Seller, or (B) pending, or, to Seller’s knowledge, threatened against or affecting, any of Seller’s directors, managers, officers or employees with respect to the Acquired Assets or other rights of Seller. |
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(e) |
Violations. To Seller’s knowledge, no Acquired Asset is used in material violation of any Laws (including any zoning, building, ordinance, code or approval or any building permit) or any restriction of record or agreement affecting the Acquired Assets or any part thereof, or is in material default with respect to any judgment, writ, injunction or decree of any governmental authority. |
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(f) |
Facility Notices. Seller has not received any written notice of any claim, requirement or demand of any licensing or certifying agency to rework or redesign any Facility so as to conform to or comply with any existing law which has not been fully satisfied prior to the Execution Date or which will not be fully satisfied prior to the Closing Date. |
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(g) |
Permits. Except to the extent done so by Buyer (or its affiliate) in connection with management of the Facilities, Seller has obtained all permits required to own the Acquired Assets, the Facilities, and to operate the Facilities, and all such required permits remain in full force and effect. To Seller’s knowledge, Seller is, and, has been at all times during the past six (6) years, in material compliance with all terms and requirements of each permit held by such Seller. None of the permits is subject to any order, unsatisfied judgment, suspension, writ, injunction, probation or decree. Seller has not received notice of and to Seller’s knowledge, no governmental authority has commenced or has threatened an investigation of any such permit or material compliance therewith. |
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(h) |
No Condemnation Proceedings. There are not any existing or, to Seller’s knowledge, pending or threatened, condemnation or similar proceedings against the Property. |
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(i) |
Litigation. To Seller’s knowledge the Property is not subject to any pending or threatened litigation and that there are no special assessments or other impositions which are pending with respect to the Property or any portion thereof except as reflected on the applicable tax bills and Title Commitments. |
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(j) |
Foreign Person. Seller is not a “foreign person,” “foreign partnership,” “foreign trust” or “foreign estate” as those terms are defined in Section 1445 of the Internal Revenue Code. |
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(k) |
Hazardous Substances. Except as disclosed by any environmental assessment received by Buyer, to Seller’s knowledge, the Property has not been used for the production, storage, deposit or disposal of Hazardous Materials (as defined below) in violation of any applicable Environmental Laws and Regulations (as defined below). Seller has not received any written notice from any applicable governmental authority that any such substances have been placed or located upon the Property in violation of applicable Environmental Laws and Regulations. For purposes hereof, the term “Hazardous Materials” shall mean and refer to any “hazardous waste” or “hazardous substance,” as such terms are set forth in, under or pursuant to the Environmental Laws and Regulations, oil or petroleum products or their derivatives, polychlorinated biphenyls, asbestos, radioactive materials or waste, and any other toxic, ignitable, reactive, corrosive, explosive, contaminating or polluting materials which are now or in the future subject to governmental regulation. “Environmental Laws and Regulations” shall mean any federal, state or local laws now or hereafter in effect relating to pollution or protection of the environment or emissions, discharges, spills, releases or threatened releases of any Hazardous Materials into the environment (including without limitation indoor air, ambient air, surface water, ground water or land), including without limitation, the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as amended, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601 et seq., as amended, the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801 et seq., as amended, the Clean Water Act, 33 U.S.C. §§ 1251 et seq., as amended, the Clean Air Act, 42 U.S.C. §§ 7401 et seq., as amended, the Toxic Substance Control Act, 15 U.S.C. § 2601 et seq., as amended, and any rules and regulations now or hereafter promulgated under any of such acts. |
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(l) |
Agreements. Except with respect to any agreements with residents of the Facilities and/or as may be disclosed in the Title Commitment or as may constitute a part of the Permitted Encumbrances, Seller is not a party to any leases or other occupancy agreements that will be binding on the Property following the Closing. |
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(m) |
Seller Entity. Seller is not an Employee Benefit Plan as defined in Section 3(3) of ERISA. |
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(n) |
HealthCare Regulatory Compliance. To Seller’s actual knowledge, there are no actions, proceedings, or investigations pending or threatened, and Seller has not received any notice of same, regarding any non-compliance with any healthcare law with respect to the Facilities. |
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(o) |
Tax Matters. All tax returns required to have been filed by Seller have been timely filed. |
Whenever any representation or warranty of Seller is stated in this Agreement to be “to Seller’s knowledge” or words of similar import, such words mean and are strictly limited and confined to the actual present knowledge, without any obligation of inquiry or investigation, of Jeff Smith. Notwithstanding the foregoing provisions of this Section 9.2, if after the Effective Date and prior to the Closing Date, Seller learns of any actual or alleged material inaccuracy in such representations or warranties, Seller will promptly advise Buyer thereof. Seller’s representations and warranties in this Section 9.2 will survive the Closing Date for a period of twelve (12) months, but not thereafter, the parties intending that all suits or actions for breach of any such representations or warranties must be brought within such twelve (12) -month period or be forever barred; provided, however, (1) The Seller’s representations and warranties in subsections (a), (b), (c), and (m) shall survive indefinitely, (2) Seller’s total liability post-Closing for breach of its representations and warranties as contained in Section 9.2 may in no event exceed an amount equal to $2,500,000 (the “Maximum Loss Amount”), and (3) Seller has no liability whatsoever to Buyer with respect to a breach of any of Seller’s representations and warranties if Buyer obtains knowledge of a fact or circumstance the existence of which constitutes a breach of Seller’s representations and warranties prior to the Closing Date if Buyer proceeds to Closing, and the applicable representation or warranty will be deemed automatically amended to conform with the knowledge of Buyer as of the Closing Date. For the purposes of this Section 9.2, Buyer is deemed to have knowledge of any fact or circumstance set forth in any environmental assessment or other report received by Buyer prior to Closing, and the representations and warranties herein contained will be deemed automatically modified to the extent information contained in any environmental assessment or other report received by Buyer prior to Closing, or any other information known to Buyer prior to Closing, is inconsistent with the matters covered herein. Notwithstanding anything in this Agreement to the contrary, (I) Seller’s indemnity obligations in Section 11 of this Agreement, (II) Seller’s liability for attorneys’ fees provided in this Agreement, and (III) claims arising as a result of fraud or intentional misrepresentation, will each not be subject to the Maximum Loss Amount, and there will be no limit on Seller’s liability or obligations with respect to (I), (II) or (III).
9.3 LIMITATION ON SELLER’S REPRESENTATIONS AND WARRANTIES. BUYER RECOGNIZES THAT, IN CONNECTION WITH ITS MANAGEMENT OF THE FACILITIES, BUYER IS FAMILIAR WITH THE CONDITION AND NATURE OF THE PROPERTY. EXCEPT AS EXPRESSLY REPRESENTED OR WARRANTED IN THIS AGREEMENT, BUYER ACKNOWLEDGES THAT NEITHER SELLER NOR ANY AGENT, OFFICER, EMPLOYEE, SERVANT OR REPRESENTATIVE OF SELLER HAS MADE ANY STATEMENT OR REPRESENTATION (WHETHER ORAL OR IN WRITING) REGARDING THE SUBJECT MATTER OF THIS TRANSACTION OR ANY FACT THEREOF, INCLUDING WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ANY STATEMENT OR REPRESENTATION AS TO THE PHYSICAL NATURE OR CONDITION OF THE PROPERTY, SOIL AND SUBSOIL CONDITIONS, SURFACE WATER, UNDERGROUND WATER, THE PROPERTY’S FEASIBILITY FOR ANY PARTICULAR PURPOSE, DEVELOPMENT, USE, IMPROVEMENT OR OPERATION, OR ANY OTHER MATTER OR THING AFFECTING OR RELATED TO THE PROPERTY OR ANY FUTURE USE, IMPLEMENTATION, DEVELOPMENT, ENJOYMENT OR OPERATION THEREOF. BUYER AGREES THAT BUYER, IN EXECUTING, DELIVERING AND/OR PERFORMING THIS AGREEMENT, HAS NOT AND DOES NOT RELY UPON, AND THAT SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY, ANY EXPRESS OR IMPLIED WARRANTY (INCLUDING ANY WARRANTY AS TO THE PROPERTY’S FITNESS FOR A PARTICULAR USE OR PURPOSE), GUARANTY, PROMISE, STATEMENT, REPRESENTATION, ASSURANCE, PROPOSAL OR INFORMATION PERTAINING TO THE PROPERTY OR THE PROPERTY’S ZONING, POTENTIAL USE OR DEVELOPMENT, MADE OR FURNISHED BY SELLER OR BY ANY AGENT, OFFICER, EMPLOYEE, SERVANT OR OTHER PERSON REPRESENTING OR PURPORTING TO REPRESENT SELLER, EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, TO WHOMSOEVER MADE OR GIVEN DIRECTLY OR INDIRECTLY, VERBALLY OR IN WRITING. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER ACCEPTS THE PROPERTY IN “AS IS” CONDITION “WITH ALL FAULTS.” WITHOUT LIMITATION OF THE PRECEDING SENTENCE, BUYER’S SAID ACCEPTANCE OF THE PROPERTY “AS IS” AND “WITH ALL FAULTS” RELEASES SELLER FROM ANY AND ALL CLAIMS OR LIABILITY RELATING TO OR ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT (42 U.S.C. § 92601 et seq.) OR ANY OTHER ENVIRONMENTAL LAW OR CAUSE OF ACTION RELATED TO THE ENVIRONMENT. THE ACCEPTANCE OF THE DEEDS BY BUYER IS DEEMED TO BE A FULL AND COMPLETE PERFORMANCE, SATISFACTION AND DISCHARGE OF EVERY AGREEMENT, COVENANT AND OBLIGATION ON THE PART OF SELLER HEREUNDER AND NO REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT, EXPRESS OR IMPLIED, OF SELLER WILL SURVIVE THE CONVEYANCE OF TITLE EXCEPT THOSE, IF ANY, WHICH ARE HEREIN SPECIFICALLY STATED TO SURVIVE THE CLOSING.
SELLER MAY HAVE FURNISHED BUYER WITH CERTAIN STUDIES, REPORTS OR OTHER INFORMATION IN SELLER’S POSSESSION WITH RESPECT TO THE PROPERTY, INCLUDING ENVIRONMENTAL STUDIES AND SURVEYS. AS AN ACCOMMODATION TO BUYER, SELLER MAY HAVE FURNISHED TO BUYER SUCH INFORMATION; PROVIDED, HOWEVER, BUYER HEREBY ACKNOWLEDGES AND AGREES THAT SELLER MAKES ABSOLUTELY NO REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT TO ANY SUCH STUDIES, REPORTS OR INFORMATION PROVIDED BY SELLER TO BUYER. BUYER ACKNOWLEDGES AND AGREES THAT BUYER IS REQUIRED TO VERIFY THE ACCURACY AND DETAILS OF ALL SUCH STUDIES, REPORTS AND INFORMATION SO PROVIDED BY SELLER TO BUYER IN SUCH MANNER AS BUYER DEEMS APPROPRIATE.
9.4 Representations and Warranties of Buyer. Buyer represents and warrants to Seller that the following are true and correct as of the Effective Date and as of the Closing Date:
(a) Formation and Good Standing. Buyer is a limited partnership duly organized and in good standing under the laws of the State of Delaware and is authorized to consummate the transactions contemplated by this Agreement and, on the Closing Date, any Buyer-related entity to which any portion of the Property will be conveyed will be qualified to do business in the state in which such Property is located.
(b) Executive Orders. Buyer is not and is not acting, directly or indirectly, for, or on behalf of, any person or Governmental Authority named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or named by the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked Person or Governmental Authority pursuant to any Legal Requirement that is enforced or administered by the Office of Foreign Assets Control, and is not engaging in the transaction contemplated by this Agreement, directly or indirectly, on behalf of, or instigating or facilitating the transaction contemplated by this Agreement, directly or indirectly, on behalf of, any such person or Governmental Authority.
10. Default.
10.1 Default by Seller. If the sale of the Property is not consummated due to Seller’s default or breach of this Agreement, if Seller’s warranties and representations are materially untrue, or if Seller fails to perform any of Seller’s material covenants under this Agreement, and in each case such default or breach remains uncured following fifteen (15) days’ notice from Buyer to Seller, Buyer may, as Buyer’s sole and exclusive remedy, elect to either (i) terminate this Agreement, in which event the Deposit will be returned to Buyer on written demand and Seller shall reimburse Buyer for its actual out-of-pocket expenses and due diligence costs pertaining to this transaction, including without limitation, those incurred in studying the Property, and the costs and expenses incurred in negotiation of this Agreement, not to exceed $250,000 in the aggregate (collectively “Buyer’s Costs”), or (ii) pursue a claim for specific performance (the “Specific Performance Right”) of Seller’s obligation to convey title to the Property to Buyer pursuant to this Agreement, which claim for specific performance must be filed within 90 days after the scheduled Closing Date. Upon any such termination pursuant to option (i) above, the Deposit shall be immediately paid to Buyer, Seller shall pay Buyer’s Costs within ten (10) calendar days of Seller’s receipt of a written accounting thereof accompanied by reasonably supporting backup, such invoices and receipts, and this Agreement and all rights and obligations created hereunder shall be deemed of no further force or effect except for those which are expressly stated to survive. The terms of the preceding sentences of this Section 10.1 constitute Buyer’s sole and exclusive rights and remedies in the event the sale is not consummated due to a breach or default hereunder by Seller prior to Closing, and Buyer hereby irrevocably waives and relinquishes any and all other rights, in equity or at law, which it might otherwise have against Seller, including, but not limited to, any action for damages against Seller in relation to Seller’s breach or default hereunder.
10.2 Default by Buyer. If Buyer defaults in any manner under this Agreement or fails to consummate the transaction contemplated herein for any reason except for (i) any permissible reasons set forth herein, or (ii) Seller’s failure to close in accordance with the requirements of this Agreement, Seller as its sole and exclusive remedy shall be entitled to receive the Deposit, such sum being agreed upon as liquidated damages for the failure of Buyer to perform the duties, liabilities and obligations imposed on Buyer by the terms and provisions of this Agreement and because of the difficulty, inconvenience and uncertainty of ascertaining actual damages. No other damages, rights or remedies (including, but not limited to any right to enforce specific performance) are collectible, enforceable or available to Seller other than as provided in this Section 10.2. The Deposit constitutes Seller’s total damages and relief hereunder in such event.
THE PARTIES HAVE AGREED THAT SELLER’S ACTUAL DAMAGES IN THE EVENT OF BUYER’S DEFAULT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE, THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR AS A RESULT OF A DEFAULT BY BUYER UNDER THIS AGREEMENT AND IS NOT INTENDED OR CONSIDERED TO BE A PENALTY.
10.3 Attorneys’ Fees and Costs. In the event of any litigation between the parties arising out of this Agreement or the collection of any funds due Buyer or Seller pursuant to this Agreement, the prevailing party is entitled to recover from the non-prevailing party all reasonable and actual costs incurred in connection therewith, including without limitation reasonable attorneys’ and paralegals’ fees and costs, whether such fees and costs are incurred at trial, on appeal or in any bankruptcy proceedings.
10.4 Survival. The obligations of the parties set forth in this Section 10 shall survive the termination of this Agreement and/or the Closing.
11. Brokerage Commission. Seller and Buyer warrant each to the other that they have not dealt with any real estate brokers with regard to this transaction. Buyer will indemnify and hold harmless Seller from any and all commissions claimed by any broker or third party arising by virtue of this transaction whose commissions might legally arise from acts of Buyer. Seller will indemnify and hold harmless Buyer from any and all commissions claimed by any broker (including Broker) or third party arising by virtue of this transaction whose commissions might legally arise from acts of Seller. The obligations of indemnity of Buyer and Seller as contained in this Section 11 will survive the Closing.
12. Escrow Procedure. Title Company, by acceptance of the funds deposited by Buyer hereunder, agrees to hold such funds and to disburse the same only in accordance with the terms and conditions of this Agreement. In the event of a termination of this Agreement or a default under this Agreement, the Deposit will be delivered or disbursed by Title Company as provided in this Agreement. Title Company waives any termination fees if the transaction contemplated by this Agreement is terminated prior to Closing.
13. Seller’s Interim Covenants. From the Effective Date until the Closing Date or earlier termination of this Agreement, Seller will:
13.1 No Encumbrance. Except as may be expressly contemplated by the terms of this Agreement, not lien, encumber, assign, or pledge any interest in the Property, or any part of Property, without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed.
13.2 No Leases. Not, without the prior written consent of Buyer, enter into any new lease for the Property or any portion thereof which will extend past the Closing Date, except that Seller may enter into agreements with residents of the Facilities in the ordinary course of business.
13.3 Notices. Provide Buyer with a copy of any material written notices or orders received by Seller from (or issued by Seller to) any governmental agency or other similar entity with jurisdiction over the Property relating to the Property.
13.4 Entitlements. Not apply for or consent to any change or modification with respect to the zoning, development or use of any portion of the Property without Buyer’s prior written consent.
13.5 Operations. Seller shall have the right and obligation to use commercially reasonable efforts to continue to carry on business and operations at the Property and Facilities in a reasonable manner and in the ordinary course of business, in a manner consistent with that practiced by Seller prior to the Effective Date..
13.6 Material Contracts. Seller shall not, outside the ordinary course of business consistent with past practice, materially modify, terminate, or enter into, any material contracts affecting the Facilities without Buyer’s written consent, provided, however, that Seller may take any such action (i) as required by applicable Law, and (ii) in connection with the expiration of any contract in accordance with its terms.
13.7 Transfer/Disposition. Seller shall not, other than in the ordinary course of business consistent with past practice, sell, transfer or dispose of any of the Acquired Assets except for disposition of obsolete, worn-out, or replaced assets.
13.8 Permits and Certifications. Seller shall use commercially reasonable efforts to maintain all its existing and material permits, licenses, and health care program certifications related to the Facilities in good standing.
13.9 Notice of Material Adverse Effects. Seller shall promptly notify Buyer upon Seller’s knowledge of (i) any written complaint, notice of deficiency, investigation, or proceeding by any governmental authority, or (ii) any written claim or threatened claim by a third party, in each case relating to the Acquired Assets or the Facilities that would reasonably be expected to have a material adverse effect on the Acquired Assets or the operation of the Facilities.
14. Miscellaneous Provisions.
14.1 Assignment. Buyer may not assign its rights under this Agreement without the prior written consent of Seller, except that Buyer may, without the prior consent of Seller, assign its rights under this Agreement to any trust, corporation, partnership or limited liability company controlling, controlled by, under common control with Buyer, or under the control of any principals of Buyer, upon written notice to Seller and Title Company accompanied by a copy of the assignment document, all of which must be delivered to Seller and Title Company prior to Closing. Any assignment is subject to all the provisions, terms, covenants and conditions of this Agreement, and the assignor will continue to be and remain primarily liable under this Agreement. For the sake of clarity, Buyer’s rights hereunder may be assigned to more than one assignee conforming to the foregoing requirements.
14.2 Notices. All notices which are required or permitted hereunder must be in writing and will be deemed to have been given, delivered or made, as the case may be (notwithstanding lack of actual receipt by the addressee) (i) when delivered by personal delivery, (ii) three business days after having been deposited in the United States mail, certified or registered, return receipt requested, sufficient postage affixed and prepaid, (iii) one business day after having been deposited with an expedited, overnight courier service, or (iv) when delivered by email; provided, that any emailed notice purporting to either terminate this Agreement or provide notice of an asserted failure, breach or default by the other party must be followed by a hard copy thereof given within one business day thereafter that is delivered in accordance with one of the preceding subsections (i)-(iii), unless receipt of such hard copy is expressly waived by a reply email from the recipient party in response to such notice email. Any notice given by counsel to either party constitutes a notice given by and binding on the represented party. All notices shall be addressed as follows:
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Buyer: |
NATIONAL HEALTHCARE CORPORATION Attn: Stephen F. Flatt, CEO 100 E. Vine Street Murfreesboro, TN 37130 Sflatt@nhccare.com |
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With a copy to: |
NATIONAL HEALTHCARE CORPORATION Attn: Josh A. McCreary General Counsel / SVP / Secretary 100 E. Vine Street Murfreesboro, TN 37130 Josh.mccreary@nhccare.com |
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With a copy to: |
Sheppard, Mullin, Richter & Hampton LLP Attn: Scott Timpe & Tim Reimers 350 South Grand Avenue, 40th Floor Los Angeles, CA 90071 stimpe@sheppard.com; treimers@sheppard.com |
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Seller: |
NATIONAL HEALTH CORPORATION Attn: Jeff Smith jsmith@nhccare.com |
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With a copy to: |
Stonehaven Trust Company Attn: Mark Shorthouse 1050 Crown Pointe Parkway, Suite 340 Atlanta, GA 30338 mshorthouse@stonehaventrust.com |
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With a copy to: |
Polsinelli PC Attn: Sean Power 900 W 48th Place, Suite 900 Kansas City, MO 64112 spower@polsinelli.com |
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And a copy to: |
Polsinelli PC Attn: James Bergin 900 W 48th Place, Suite 900 Kansas City, MO 64112 jbergin@polsinelli.com |
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Title Company: |
First American Title Company Attn: Susan Felts 511 Union Street, Suite 1600 Nashville, TN 37219 sfelts@firstam.com |
Any party may change the address to which its notices are sent by giving the other party written notice of any such change in the manner provided in this Section 14.2, but notice of change of address is effective only upon receipt.
14.3 Entire Agreement. This Agreement embodies and constitutes the entire understanding among the parties with respect to the transaction contemplated herein, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.
14.4 Section 1031. Either party may elect to assign this Agreement to a qualified intermediary or third party to complete a like kind exchange of property in accordance with Section 1031 of the Internal Revenue Code of 1987, as amended. Any such election shall be at no cost or liability to the other party. Should this Agreement become part of a Section 1031 transaction, the non-electing party may enforce any and all representations, warranties, covenants and other obligations of the electing party under this Agreement directly against the electing party.
14.5 Survival of Provisions. To the extent that the performance of any covenant or other obligation of a party in or pursuant to this Agreement or the closing documents executed hereunder is contemplated to occur or continue after the Closing, the same shall not merge with the transfer of title to the Property, but shall remain in effect until fulfilled (subject to any express limitation thereon set forth in this Agreement).
14.6 Applicable Law. This Agreement is governed by and must be construed in accordance with the laws of the State of Tennessee. The parties consent to jurisdiction and venue in Davidson County, Tennessee, and agree that such jurisdiction and venue is the sole and exclusive venue for any and all actions or disputes related to this Agreement or any related instruments.
14.7 Headings. Descriptive headings are for convenience only and do not control or affect the meaning or construction of any provision of this Agreement.
14.8 Binding Effect. Subject to the provisions of Section 14.1, this Agreement is binding upon and inures to the benefit of the parties hereto and their successors and assigns.
14.9 Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts, each of which constitutes an original instrument, and all such counterparts together constitute one and the same instrument. Signatures to this Agreement delivered via facsimile, .pdf or other electronically transmittable means will have the same force and effect as originals.
14.10 Interpretation. Whenever the context hereof requires, the singular includes the plural, the male gender includes the female gender and neuter and vice versa. This Agreement and any related instruments may not be construed more strictly against one party than against the other by virtue of the fact that initial drafts were made and prepared by counsel for one of the parties because this Agreement and any related instruments are the product of extensive negotiations between the parties and both parties have contributed substantially and materially to the final preparation of this Agreement and all related instruments.
14.11 Severability. If any one or more of the provisions contained in this Agreement are for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision hereof, and this Agreement will be construed as if such invalid, illegal or unenforceable provision was never contained herein.
14.12 Time of Essence. Time is of the essence of each and every term, provision and covenant of this Agreement. Unless elsewhere herein expressly provided to the contrary, the expiration of any period of time prescribed in this Agreement will occur at 11:59 p.m. of the last day of the period. Should any period of time prescribed herein end on a Saturday, Sunday or legal holiday (recognized in Murfreesboro, Tennessee), the period of time will automatically be extended to 11:59 p.m. of the next full business day.
14.13 No Waiver. Neither the failure of either party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof, constitutes a waiver of either party’s right to demand exact compliance with the terms hereof.
14.14 IRS Reporting Requirements. Section 6045(e) of the Internal Revenue Code of 1986 requires that notice of the sale and purchase of the Property described in this Agreement be provided to the Internal Revenue Service (“IRS”) by preparation of and filing with the IRS of IRS Form 1099-S. Seller and Buyer will furnish and provide to Title Company all information that Title Company may require in order for Title Company to (a) comply with all instructions to the IRS Form 1099-S in the preparation thereof, and (b) prepare and timely file with the IRS said IRS Form 1099-S with respect to this transaction.
14.15 Agreement Not Recordable. Neither this Agreement nor any notice hereof may be recorded by any party hereto, or any agent of same, in any public records. Buyer will not attempt to record this Agreement or any notice thereof and that any attempt to record this Agreement or any notice thereof constitutes a default on the part of Buyer hereunder.
14.16 Return of Documents. If this Agreement is terminated or cancelled without Buyer acquiring the Property, Buyer must, within five days after request from Seller, deliver to Seller all Property Information and all other information furnished to Buyer from Seller with respect to the Property, but Buyer may retain a copy of such documentation to the extent required for auditing or regulatory compliance purposes, and Buyer need not delete electronic archives.
14.17 Confidentiality. Both Seller and Buyer agree to maintain confidentiality regarding the terms and conditions of this Agreement and any negotiations thereof, information learned relating to the condition of the Property, and any financial information of the other party; provided, however, nothing in this Section 14.17 shall prevent Buyer or Seller from disclosing such matters to its officers, employees, investment managers, investors, consultants, title companies, surveyors, attorneys, lenders and advisors who are bound by obligations of confidentiality to the disclosing party, or to governmental entities for incentive or approval purposes or as required by law. Further, Buyer is expressly permitted, following execution of this Agreement, to file any required 8K with the SEC along with a copy of this Agreement and associated press releases and thereafter, following the Closing, to issue an 8K and press releases or announcements relating Buyer’s acquisition of the Property, so long as such press releases/announcements do not contain confidential information of Seller.
14.18 Management Agreements. The parties recognize that management of the Facilities in Tennessee is presently provided for pursuant to that certain Management Agreement dated January 20, 1988, by and between Tennessee HealthCare Advisors, LLC, successor by assignment from NATIONAL HEALTHCORP L.P., and Seller, as successor by change of name from NHESOP, Inc. (the “Original Management Agreement”), as amended by a certain First Amendment, that Second Amendment dated as of January 1, 2003, that Third Amendment dated as of January 1, 2008, and that Fourth Amendment dated as of January 1, 2018, and that the management of the Facility in Sumter, South Carolina is presently provided for pursuant to that certain Management Agreement by and between Seller and South Carolina HealthCare Advisors, LLC, as partial successor in interest to NATIONAL HEALTHCORP L.P. under the Original Management Agreement, as amended (each, with respect to the Facilities to which it pertains, a “Management Agreement” and together, the “Management Agreements”). The parties shall execute a commercially-reasonable, mutually agreed upon termination of each Management Agreement with respect to the Facilities at Closing (the “Management Agreement Termination”).
14.19 Service Contracts Assignment. At Closing, Seller and Buyer shall additionally execute a commercially-reasonable, mutually agreed upon agreement by which Seller assigns, and Buyer assumes, all utility, service, equipment, repair, engineering, vendor, and other contracts pertaining to Seller’s ownership, use, and operation of the Property (but excluding any employment contracts) (the “Service Contracts”; such assignment agreement the “Service Contracts Assignment”) as Buyer indicates in writing that it wishes to assume (the “Service Contracts Assignment”) and to the extent assignable by Seller (provided, if there is any penalty or additional payment for the Service Contract Assignment, Buyer shall pay such penalty or payment) and Seller shall provide reasonable evidence of termination of all Service Contracts not so assigned and assumed.
14.20 Escrow Agreement. At or prior to Closing, the amount of two million dollars ($2,000,000.00) of the Purchase Price (the “Escrow Fund”) shall be deposited with Escrow Agent at Closing under a separate escrow agreement (the “Escrow Agreement”). The parties shall agree on the form of such Escrow Agreement, which shall be commercially reasonable and also acceptable to the Escrow Agent. The Escrow Fund shall be available for a period of twelve (12) months following Closing to compensate Buyer for indemnification claims arising under or pursuant to the terms and provisions of this Agreement and/or the OTA, including (i) any PPP loan(s) and/or government stimulus money received by Seller because of the COVID-19 pandemic that is recouped, subject to recoupment, or claimed by the government; and/or (ii) any and all losses (whether or not involving a third-party claim) paid, incurred, sustained or accrued by Buyer as a result of (A) any breach or violation of, or inaccuracy in, any representation or warranty or a breach of this Agreement, and/or (B) any liability unknown to Buyer at Closing and undisclosed by Seller; and/or (C) any amount subject to “clawback” by Medicare/Medicaid. Any portion of the Escrow Fund remaining after twelve (12) months shall be distributed outright to Seller.
14.21 Employees. Seller shall remain liable for all wages, benefits, and withholdings associated with the employees at the Facilities that accrue prior to Closing and shall hold Buyer harmless from and against same. At Closing, Buyer will execute Seller’s standard Employee Leasing/Service Agreement(s) with respect to each of the Facilities and assume responsibility for all payroll costs effective on and following the Closing Date to the extent of, and as provided for, in the Employee Leasing Agreement.
14.22 Laws. As used herein, “Laws” means all applicable federal, state, local, and foreign laws, statutes, ordinances, rules, regulations, codes, orders, judgments, decrees, injunctions, writs, permits, licenses, and other legally binding requirements of any governmental authority.
[Signatures appear on next page]
IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement as of the Effective Date.
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SELLER:
NATIONAL HEALTH CORPORATION, a Tennessee Corporation |
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By: |
/s/ Jeffrey R. Smith |
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Name: Jeffrey R. Smith Title: President |
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BUYER:
NHC/OP, L.P., a Delaware limited partnership By : NHC/Delaware, Inc., its General Partner |
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| By: | /s/ Stephen F. Flatt | ||
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Name: Stephen F. Flatt Title: President |
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LIMITED ACKNOWLEDGMENT AND AGREEMENT
Each undersigned Manager hereby acknowledges that it has received and reviewed Section 2.2 of this Agreement and agrees to be bound by, and to perform, the limited obligations expressly applicable to each Manager therein with respect to the Facilities managed by such Manager. Each Manager further acknowledges and agrees that the foregoing provisions are binding and enforceable against such Manager in accordance with the terms of this Agreement.
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Tennessee Healthcare Advisors, LLC a Tennessee limited liability company By: NHC/OP, L.P., its Sole Member By: NHC/Delaware, Inc., its General Partner |
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By: |
/s/ Stephen F. Flatt |
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Name: Stephen F. Flatt Title: President |
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South Carolina Healthcare Advisors, LLC, a South Carolina limited liability company By: NHC/OP, L.P., its Sole Member By: NHC/Delaware, Inc., its General Partner |
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| By: | /s/ Stephen F. Flatt | ||
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Name: Stephen F. Flatt Title: President |
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TITLE COMPANY’S ACCEPTANCE
The undersigned, First American Title Company, agrees to act as Title Company in accordance with the foregoing Agreement. Title Company’s Escrow Number is 2K6D.
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First American Title Company
By:/s/ Susan Felts Name: Susan Felts Title: Sales & Relationship Manager
Date Executed:5/14/26 |
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Exhibit 10.2
Execution Version
PURCHASE AND SALE AGREEMENT
by and among
National Health Investors, Inc., a Maryland corporation, on behalf of itself and its affiliates identified as a “Seller Party” in Exhibit A attached hereto
(as Seller)
and
NHC/OP, L.P., a Delaware limited partnership, on behalf of itself and its affiliates identified as a “Purchaser Party” in Exhibit A attached hereto
(as Purchaser)
Dated: April 21, 2026
Properties:
NHC Portfolio – 35 Facilities
TABLE OF CONTENTS
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Article 1. PROPERTY |
2 |
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Section 1.1 |
Property |
2 |
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Section 1.2 |
Land |
2 |
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Section 1.3 |
Improvements |
2 |
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Article 2. PURCHASE PRICE |
3 |
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Section 2.1 |
Purchase Price |
3 |
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Section 2.2 |
Payment of Purchase Price |
3 |
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Section 2.3 |
Earnest Money |
3 |
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Section 2.4 |
Seller’s Liquidated Damages Deposit |
3 |
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Section 2.5 |
Allocation of Purchase Price |
4 |
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Section 2.6 |
No Financing Contingencies |
4 |
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Article 3. REVIEW PERIOD |
4 |
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Section 3.1 |
Review Period |
4 |
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Section 3.2 |
Obtaining Title Commitment and Survey |
4 |
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Section 3.3 |
Termination Notice |
4 |
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Section 3.4 |
Termination |
5 |
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Section 3.5 |
Seller’s and Seller Parties’ Obligation to Remove Liens |
5 |
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Section 3.6 |
Press Releases and Public Disclosures |
5 |
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Section 3.7 |
Licensing. |
6 |
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Section 3.8 |
HSR Act Filing. |
6 |
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Article 4. TITLE MATTERS |
7 |
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Section 4.1 |
Title and Survey Review |
7 |
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Section 4.2 |
Monetary Liens and Other Encumbrances |
8 |
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Section 4.3 |
Conveyance |
8 |
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Section 4.4 |
Owner Policy |
8 |
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Section 4.5 |
Additional Title Matters |
8 |
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Section 4.6 |
State-Entity Quit Claim Deeds |
9 |
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Article 5. CLOSING |
9 |
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Section 5.1 |
Closing |
9 |
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Section 5.2 |
Obligations of Seller and Seller Parties |
10 |
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Section 5.3 |
Purchaser’s Obligations |
11 |
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Section 5.4 |
Possession |
11 |
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Article 6. CLOSING COSTS |
11 |
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Section 6.1 |
No Prorations |
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Section 6.2 |
Closing Costs |
12 |
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Section 6.3 |
Survival |
12 |
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Article 7. DEFAULT AND REMEDIES |
12 |
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Section 7.1 |
Termination of Agreement prior to Closing |
12 |
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Section 7.2 |
Notice of Termination; Effect of Termination |
13 |
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Section 7.3 |
Purchaser’s Default |
14 |
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Section 7.4 |
Seller or Seller Parties’ Default |
15 |
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Section 7.5 |
No Personal Liability |
16 |
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Article 8. REPRESENTATIONS, WARRANTIES AND COVENANTS |
16 |
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Section 8.1 |
Seller and Seller Parties’ Representations |
16 |
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Section 8.2 |
Purchaser’s Representations |
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Section 8.3 |
Discovery |
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Section 8.4 |
Release |
20 |
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Section 8.5 |
Interim Covenants of Seller and Purchaser |
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Article 9. CONDITIONS PRECEDENT |
21 |
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Section 9.1 |
Conditions Precedent to Purchaser and Purchaser Parties’ Obligation to Close |
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Section 9.2 |
Conditions Precedent to Seller and Seller Parties’ Obligation to Close |
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Article 10. NOTICES |
23 |
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Section 10.1 |
Notices |
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Article 11. FIRE OR OTHER CASUALTY; CONDEMNATION |
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Section 11.1 |
Casualty Damage |
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Section 11.2 |
Condemnation |
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Section 11.3 |
Survival of Provision |
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Article 12. MISCELLANEOUS |
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Section 12.1 |
Entire Agreement |
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Section 12.2 |
No Rule of Construction |
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Section 12.3 |
Multiple Counterpart; Governing Law |
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Section 12.4 |
Attorneys’ Fees |
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Section 12.5 |
Interpretation |
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Section 12.6 |
Exhibits |
25 |
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Section 12.7 |
Modifications |
25 |
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Section 12.8 |
Reporting Person |
26 |
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Section 12.9 |
Time of Essence |
26 |
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Section 12.10 |
Restructuring |
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Section 12.11 |
Assignment by Purchaser |
26 |
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Section 12.12 |
No Recordation |
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Section 12.13 |
Additional Agreements; Further Assurances |
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Section 12.14 |
Enforceability |
27 |
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Section 12.15 |
Waiver of Jury Trial |
27 |
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Section 12.16 |
Escrow Matters |
27 |
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Section 12.17 |
Like-Kind Exchange |
28 |
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Section 12.18 |
Effect on Master Lease |
28 |
List of Exhibits
EXHIBIT A - SCHEDULE OF FACILITIES, SELLER PARTIES AND PURCHASER PARTIES PER FACILITY
EXHIBIT B – LEGAL DESCRIPTIONS FOR PROPERTIES (35 Legal Descriptions)
EXHIBIT C-1 TO C-7 – FORM SPECIAL WARRANTY DEED BY STATE (AL, FL, KY, MO, SC, TN, VA)
EXHIBIT D - FIRPTA AFFIDAVIT
EXHIBIT E - PARTIAL MASTER LEASE TERMINATION AGREEMENT AND PARTIAL ASSIGNMENT AND ASSUMPTION OF MASTER LEASE
EXHIBIT F - SCHEDULE OF UNRECORDED QUITCLAIM DEEDS
EXHIBIT G - STATE-ENTITY QUIT CLAIM DEEDS AFFIDAVIT
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of the 21st day of April , 2026 (the “Effective Date”), by and between National Health Investors, Inc., a Maryland corporation (“Seller”), on behalf of itself and those of its affiliates identified a “Seller Party” in Exhibit A attached hereto and incorporated herein (each a “Seller Party” and collectively referred to as “Seller Parties”), and NHC/OP, L.P., a Delaware limited partnership (“Purchaser”), on behalf of itself and those of its affiliates identified a “Purchaser Party” in Exhibit A attached hereto and incorporated herein (each a “Purchaser Party” and collectively referred to as “Purchaser Parties”). Seller, Seller Parties, Purchaser and Purchaser Parties are each referred to herein as a “Party”, and collectively, as the “Parties”.
Recitals
WHEREAS, Seller and/or the Seller Parties identified in Exhibit A attached hereto and incorporated herein with respect to the Facilities (as defined herein) own certain parcels of land in the counties and states identified on Exhibit A attached hereto and incorporated herein and more particularly described in Exhibit B attached hereto and incorporated herein (the “Land”), upon which Land are located those certain improvements, fixtures and building(s) operated as skilled nursing facilities, assisted living facilities and/or independent living facilities (each such facility is referred to herein as a “Facility”; and collectively, such facilities are referred to herein as the “Facilities”).
WHEREAS, as of the Effective Date, Seller, as lessor, leases to Purchaser, as lessee, each of the Facilities (a) pursuant to that certain Master Agreement to Lease, dated October 17, 1991, as amended by that certain Amendment No. 1 to Master Agreement to Lease, dated June 2, 1993, as amended by that certain Amendment No. 2 to Master Agreement to Lease, dated January 15, 1996, as amended by that certain Amendment No. 3 to Master Agreement to Lease, dated July 22, 1997, as amended by that certain Amendment No. 4 to Master Agreement to Lease, dated December 31, 1997, as amended by that certain Amendment No. 5 to Master Agreement to Lease, dated December 27, 2005, as amended by that certain Amendment No. 6 to Master Agreement to Lease, dated December 26, 2012, as amended by that certain Amendment No. 7 to Master Agreement to Lease, dated August 28, 2013, as amended by that certain Amendment No. 8 to Master Agreement to Lease, dated October 30, 2020, as amended by that certain Amendment No. 9 to Master Agreement to Lease, dated March 29, 2021, and as amended by that certain Amendment No. 10 to Master Agreement to Lease, dated September 1, 2022, and (b) those short-form single Facility leases executed by the Parties on a Facility by Facility basis, which set forth a description of the Property and other limited terms (collectively, the “Master Lease”).
WHEREAS, as of the Effective Date, National Health Realty, LLC (an affiliate of Purchaser), as sublandlord, has subleased the Facilities identified as the “Florida Facilities” in Exhibit A attached hereto and incorporated herein (collectively, the “Florida Facilities”) to Solaris Healthcare Properties, LLC (the “Florida Facilities Subtenant”) pursuant to the terms of that certain Master Lease executed on or about January 1, 2016 (as thereafter amended, the “Florida Facilities Sublease”).
WHEREAS, under the terms of the Master Lease, (a) Purchaser or a Purchaser Party is the sole operator of each Facility (except for the Florida Facilities which are operated by the Florida Facilities Subtenant), (b) Purchaser or a Purchaser Party holds all local, state and federal licenses necessary to operate each Facility for its uses as of the Effective Date, (c) Purchaser or a Purchaser Party owns all items of personal property, equipment (medical and otherwise), inventory and furnishings in each Facility, (d) the Master Lease is an absolute, net lease, (e) Purchaser or Purchaser Parties are responsible for maintaining and replacing all components of and systems serving the Facilities, (f) Purchaser or Purchaser Parties are responsible to pay for all operating expenses associated with the Facilities (including, without limitation, real estate taxes, personal property taxes, costs of insurance and utilities), and (g) Purchaser or Purchaser Parties are responsible for all costs of keeping the Property in compliance with applicable laws.
WHEREAS, contemporaneously with the Closing (as defined in Section 5.1 herein), Purchaser and Seller shall execute and deliver to each other a written partial termination and partial assumption of the Master Lease whereby (i) the Master Lease shall be terminated as to all Facilities subject to the Master Lease except for the Florida Facilities, and (ii) Seller, as assignor, shall assign to Purchaser, as assignee, the Master Lease as to the Florida Facilities and Purchaser shall assume the Master Lease as to the Florida Facilities, effective as of the date of the Closing (the “Partial Master Lease Termination and Partial Assignment and Assumption of Master Lease”) substantially in the form attached hereto as Exhibit E and made a part hereof for all purposes.
WHEREAS, the Parties hereto wish to enter into this Agreement to provide for the terms and conditions upon which Seller and Seller Parties shall sell and convey the Property (as defined in Article 1 herein) to Purchaser or a Purchaser Party, and Purchaser or a Purchaser Party will purchase and acquire the Property from Seller.
NOW, THEREFORE, in consideration of (a) the foregoing Recitals which are hereby incorporated into this Agreement and (b) the premises and mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the Parties hereby agree as follows:
ARTICLE 1.
PROPERTY
Section 1.1 Property. At the Closing, and subject to the terms and conditions set forth herein, Seller and/or the applicable Seller Party shall sell, assign, transfer, convey and deliver to Purchaser or a Purchaser Party or their designated affiliate, and Purchaser or a Purchaser Party purchase and acquire from Seller or the applicable Seller Party, free and clear of all covenants, conditions and encumbrances except for the Permitted Exceptions (as defined in Section 4.1(b) herein), all of the following:
Section 1.2 Land. The Land together with all rights, title and interest of Seller and any Seller Party in and to (i) all and singular, the rights and appurtenances pertaining to such real property, including any easements and licenses, adjacent streets, alleys, rights-of-way, air rights, parking areas, and drainage rights and (ii) any and all water, water stock, water rights, riparian rights, or similar rights or privileges (including tap rights) appurtenant to or used in connection with the ownership or operation of such real property and (iii) all zoning, conditional use, variances, waivers and planning approvals related to the ownership, operation, and/or possible future development, expansion or redevelopment of such real property (all of the foregoing being hereinafter collectively referred to as the “Land”).
Section 1.3 Improvements. All buildings, improvements, structures, heating, plumbing, ventilation and HVAC systems, carpet, tile, floor coverings, security systems, sprinkler systems, and fixtures now constructed and situated on the Land, including, without limitation, the Facilities, together with all right, title and interest of Seller and any Seller Party in and to all parking areas, loading docks and similar facilities, landscaping and other improvements, structures and fixtures (all of the foregoing being hereinafter collectively referred to as the “Improvements”, and together with the Land, the “Property”).
ARTICLE 2.
PURCHASE PRICE
Section 2.1 Purchase Price. The total purchase price (the “Purchase Price”) for the Property is FIVE HUNDRED SIXTY MILLION AND NO/100 DOLLARS ($560,000,000.00).
Section 2.2 Payment of Purchase Price. On or before the Closing Date, provided this Agreement has not been terminated (pursuant to Section 3.3 or otherwise), Purchaser shall deposit with First American Title Insurance Company, National Commercial Services Unit, 511 Union Street, Suite 1600, Nashville, Tennessee 37219, attention: Susan Felts (hereinafter referred to herein as either the “Title Company” or the “Escrow Agent”), the Purchase Price (plus or minus any adjustments as set forth in this Agreement). At the Closing, and subject to the conditions of Closing as set forth herein, the Parties, by execution of the settlement statement, will direct the Escrow Agent to disburse the Purchase Price (plus or minus any adjustments as set forth in this Agreement) by wire transfer or other immediately available funds to Seller or as Seller shall direct.
Section 2.3 Earnest Money. Within five (5) Business Days after the Effective Date, Purchaser shall pay (by Purchaser’s check or wire transfer) the sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) (the “Initial Earnest Money”) to Escrow Agent to be held in escrow by Escrow Agent in accordance with the terms of this Agreement. If this Agreement has not been terminated (pursuant to Section 3.3 or otherwise) prior to the expiration of the Review Period (as hereinafter defined), then, within seven (7) Business Days after the expiration of the Review Period, Purchaser shall pay (by Purchaser’s check or wire transfer) the sum of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) (the “Additional Earnest Money”) to Escrow Agent to be held by Escrow Agent in accordance with the terms of this Agreement. The Initial Earnest Money and, if delivered in accordance with this Section 2.3, the Additional Earnest Money are collectively referred to as the “Earnest Money”. At all times during which the Earnest Money is held by the Escrow Agent, the same will be held by Escrow Agent as a deposit against the Purchase Price in accordance with the terms and provisions of this Agreement. While the Earnest Money or any portion thereof is being held by the Escrow Agent, the Earnest Money must be invested by the Escrow Agent in the following investments (“Approved Investments”): (i) money market funds, or (ii) such other short-term investment option offered by the Escrow Agent as may be reasonably agreed to by Seller and Purchaser. All interest earned on the Earnest Money will be deemed part of the Earnest Money for all purposes under this Agreement. At the Closing, the entire Earnest Money will be applied to the Purchase Price. Notwithstanding anything in this Agreement to the contrary, if this Agreement is terminated prior to Closing and the Earnest Money is to be returned to Purchaser, $100 of the Earnest Money will be paid to Seller as independent consideration for this Agreement (the “Independent Consideration”) and the balance of the Earnest Money will be returned to Purchaser.
Section 2.4 Seller’s Liquidated Damages Deposit. If this Agreement has not been terminated (pursuant to Section 3.3 or otherwise) prior to the expiration of the Review Period, then, within seven (7) Business Days after the expiration of the Review Period, Seller shall pay (by Seller’s check or wire transfer) the sum of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00) (the “Seller’s Liquidated Damages Deposit”) to Escrow Agent to be held in escrow by Escrow Agent in accordance with the terms of this Agreement. At all times during which the Seller’s Liquidated Damages Deposit is held by the Escrow Agent, the same will be held by Escrow Agent as a deposit against Seller’s obligations in Section 7.4(b). While the Seller’s Liquidated Damages Deposit or any portion thereof is being held by the Escrow Agent, the Seller’s Liquidated Damages Deposit must be invested by the Escrow Agent in the Approved Investments. All interest earned on the Seller’s Liquidated Damages Deposit will be deemed part of the Seller’s Liquidated Damages Deposit for all purposes under this Agreement. At the Closing, the entire Seller’s Liquidated Damages Deposit will be returned to Seller.
Section 2.5 Allocation of Purchase Price. The Purchase Price shall be allocated among the Property as requested by Purchaser and approved by Seller (such approval not to be unreasonably withheld, conditioned or delayed) prior to the Closing Date, and upon such approval such allocation will be set forth in a column on Exhibit A to this Agreement.
Section 2.6 No Financing Contingencies Purchaser and Purchaser Parties expressly agree and acknowledge that Purchaser’s obligations hereunder are not in any way conditioned upon or qualified by Purchaser’s ability to obtain financing of any type or nature whatsoever (i.e., whether by way of debt financing or equity investment, or otherwise) to consummate the transaction contemplated hereby.
ARTICLE 3.
REVIEW PERIOD
Section 3.1 Review Period. Purchaser and Purchaser Parties shall have from the Effective Date until the earlier of (a) 11:59 p.m. (Central Time) on May 29, 2026, or (b) the date that Purchaser and Purchaser Parties waive in writing their rights as set forth in Section 3.3 to terminate this Agreement (such earlier time period, the “Review Period”), to review and approve such matters and information with respect to the Property, and to conduct such inspections, interviews, non-invasive tests and audits of the Property, including the Facilities and their operations, as Purchaser, in its sole discretion, deems appropriate.
Section 3.2 Obtaining Title Commitment and Survey. Seller, Seller Parties, Purchaser and Purchaser Parties acknowledge and agree that (a) prior to the Effective Date, Seller has obtained and provided to Purchaser commitments for ALTA form owner’s policies of title insurance with respect to the Property from the Title Company (each a “Title Commitment” and collectively, the “Title Commitments”), setting forth the state of title to the Property, and (b) during the Review Period and prior to the Closing, Purchaser, at its sole cost, may obtain a new, certified ALTA land title survey of the Property from a licensed surveyor in the states in which the Facilities are located (each a “Survey”; and collectively, the “Surveys”).
Section 3.3 Termination Notice. If, for any or no reason, Purchaser or any Purchaser Party, in its sole and absolute discretion, is not satisfied with the results of its inspections, tests or audits, or with any other fact or situation with respect to the Property or the transaction contemplated by this Agreement, then in such event, Purchaser or any Purchaser Party shall have the right to terminate this Agreement by giving written notice of such termination to Seller on or prior to the end of the Review Period and the Earnest Money (less the Independent Consideration, which will be paid to Seller) shall be refunded to Purchaser. In the event of such termination by Purchaser or any Purchaser Party during the Review Period, this Agreement shall be null and void, and the Parties hereto shall be released from all further obligations and liabilities hereunder, except with respect to the covenants, representations, warranties and indemnities set forth herein and that expressly survive the termination of this Agreement. In the event that Purchaser or any Purchaser Party fails to give such notice of termination to Seller prior to the expiration of the Review Period, Purchaser and Purchaser Parties shall be deemed to have waived Purchaser’s right to terminate the Agreement pursuant to this Section 3.3, which shall be of no further force or effect and which shall be deemed deleted from this Agreement, and this Agreement shall continue in full force and effect subject to the other provisions hereof. In the event that Purchaser or any Purchaser Party fails to give such notice of termination to Seller prior to the expiration of the Review Period, the Earnest Money shall become non-refundable to Purchaser except in the event of a Seller’s default under Article 7 or as otherwise set forth in this Agreement.
Section 3.4 Termination. If this Agreement has been terminated prior to the expiration of the Review Period in accordance with the terms of this Article 3 only, upon written request of Seller and payment by Seller of the actual, out-of-pocket costs paid by Purchaser related to the Surveys, Purchaser will promptly deliver to Seller copies of any Surveys obtained by Purchaser and Purchaser Parties without any representation or warranty of any kind whatsoever as to such Surveys. Notwithstanding anything to the contrary herein, any termination right that Purchaser or any Purchaser Party has under this Agreement may only be exercised to this Agreement in its entirety and with respect to all the Property applying to all the Facilities. Purchaser and Purchaser Parties shall not have the right to exercise any termination right under this Agreement as to less that all the Property or less than all the Facilities. Under this Agreement, Purchaser or Purchaser Parties shall not have the right to purchase less than all the Property applicable to all the Facilities.
Section 3.5 Seller’s and Seller Parties’ Obligation to Remove Liens. Notwithstanding anything to the contrary in this Agreement but subject to Section 4.2 below, Seller and Seller Parties must remove or cause to be removed (in any event in a manner reasonably acceptable to Purchaser and sufficient to cause the Title Company to issue the Owner Policy (as defined below), or Owner Policies if separate Owner Policies are requested by Purchaser, in the form required by this Agreement) at or prior to the Closing (i) any and all monetary liens, mortgages, deeds of trust, pledges, financing statements, security interests or other encumbrances, and (ii) any mechanics’ or materialmen’s liens or claims (together, “Monetary Liens”).
Section 3.6 Press Releases and Public Disclosures. From the Effective Date through the day immediately preceding the Closing Date, Purchaser, Purchaser Parties, Seller and Seller Parties shall maintain as confidential any and all non-public information obtained about the Property, the terms of this Agreement and any and all dealings and negotiations regarding the same and the financial condition of any Party and shall not disclose such information to any third-party. The obligations set forth in this Section shall not apply to information that: (i) is or becomes generally available to the public other than as a result of a disclosure by the receiving Party or its representatives in violation of this Section; (ii) was already known to the receiving Party on a non-confidential basis prior to being furnished by the disclosing Party; or (iii) becomes available to the receiving Party on a non-confidential basis from a source other than the disclosing Party or its representatives, provided that such source is not known by the receiving Party to be bound by a confidentiality obligation to the disclosing Party. From the Effective Date through the day immediately preceding the Closing Date, except as may be permitted by the last sentence of this Section and except as may be required by law or in connection with the enforcement of any Party’s rights or obligations under this Agreement, Purchaser, Purchaser Parties, Seller and Seller Parties will not divulge any such information to other persons or entities including, without limitation, appraisers, real estate brokers, or competitors of either of the Parties. Notwithstanding the foregoing, Purchaser, Purchaser Parties, Seller and Seller Parties shall have the right to disclose information with respect to the Property and the terms of this Agreement to (a) its officers, directors, employees, attorneys, accountants, environmental auditors, engineers, surveyors, architects, brokers, financial advisors and similar professionals, potential lenders and investors, and other consultants, to the extent such party deems it necessary or appropriate in connection with the transaction contemplated by this Agreement (any such Party will inform each of the foregoing parties of such Party’s obligations under this Section); (b) its existing or prospective partners, members, equity holders or other investors, to the extent such party deems it necessary or appropriate in connection with the transaction contemplated by this Agreement, provided that such persons are informed of the confidential nature of such information and agree to be bound by the terms of this Section or are otherwise subject to confidentiality obligations no less restrictive than those set forth herein; and (c) any governmental authority, regulatory body, stock exchange or self-regulatory organization to the extent required by applicable law, regulation, rule, order or stock exchange listing requirement, or in connection with any required filings with the U.S. Securities and Exchange Commission, provided that, except with respect to governmental notices of a change of ownership (CHOW) and any other Licensing Filings (as defined below), the disclosing Party uses reasonable efforts to afford the other Parties an opportunity to first review the content of the proposed disclosure and provide reasonable comments thereon. In the event that any Party or its representatives are requested or required by court order, subpoena, civil investigative demand or similar legal process to disclose any confidential information prior to the date that immediately precedes the Closing Date, such Party shall, to the extent legally permitted, provide the other Parties with prompt written notice of such request or requirement so that the other Parties may seek an appropriate protective order or other remedy or waive compliance with the provisions of this Section. The timing and content of all press releases and other public announcements (including, without limitation, any public disclosures required by applicable law, regulation, rule, order or stock exchange listing requirement, or in connection with any required filings with the U.S. Securities and Exchange Commission) made prior to the Closing Date relating to the transactions contemplated by this Agreement shall be determined jointly by Purchaser and Seller prior to the Closing Date; provided that any Party hereto may make any public disclosure required by applicable law, regulation, rule or order; provided, however, in each case such Party uses reasonable efforts to afford the other Parties an opportunity to first review the content of the proposed disclosure and provide reasonable comments thereon. Prior to making any press release with respect to the execution of this Agreement, the releasing Party must use reasonable efforts to afford the other Parties an opportunity to first review the content of the proposed press release and provide reasonable comments thereon. Notwithstanding anything to the contrary herein, on the Closing Date or any time after the Closing Date, Purchaser, Purchaser Parties, Seller and Seller Parties may make, without the consent or approval of any other Party, any press releases or public disclosures (written and/or oral) such Party desires with respect to this Agreement and/or the transaction contemplated by this Agreement, including, without limitation, any public disclosures required by applicable law, regulation, rule, order or stock exchange listing requirement, or in connection with any required filings with the U.S. Securities and Exchange Commission.
Section 3.7 Licensing. As previously stated in the Recitals to this Agreement, Purchaser, Purchaser Parties or the Florida Facilities Subtenant are operating each Facility under the terms of the Master Leases (or under the Florida Facilities Sublease with respect to the Florida Facilities) and are the holders of all licenses, permits or certificates of need permitting each Facility to be used for its current uses. To the extent that any notice, application or filing to any governmental authority, agency or department must be submitted as a result of the transfer of the Property as contemplated by this Agreement, Purchaser, at its sole cost, shall be responsible to prepare and submit all such notices, applications and filings (collectively, the “Licensing Filings”) and to pay all such application or filing fees. Seller and Seller Parties agree to cooperate and do all things reasonably practicable to assist Purchaser with such Licensing Filings to the extent the necessary information is in the knowledge of or control of Seller or any Seller Party.
Section 3.8 HSR Act Filing. Each Party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions (including those under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”)) required under any law applicable to such Party or any of its affiliates; and (ii) use reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all governmental authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement. Following Purchaser’s strategic lead, each Party shall cooperate fully with the other Party and its affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals and share all related substantive communications subject to measures necessary to preserve privilege claims or protect competitively sensitive information. The Parties hereto shall not willfully take any action that could reasonably have the effect of materially delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals. The Parties acknowledge and agree that Purchaser shall pay the cost of any filing fees associated with the filings of Purchaser, Purchaser Parties, Seller and Seller Parties pursuant to the HSR Act.
ARTICLE 4.
TITLE MATTERS
Section 4.1 Title and Survey Review.
(a) During the Review Period, Purchaser and Purchaser Parties may review the Title Commitment and the Surveys. As of the expiration of the Review Period, provided Purchaser has not delivered a termination notice pursuant to Section 3.3, Purchaser and Purchaser Parties shall be deemed to have accepted the condition of title to the Property and agreed to accept title to the Property, subject only to the Permitted Exceptions (as defined herein) and to Purchaser’s right to object to Additional Title Matters (as defined herein). If a legal description in a Survey of any particular Property differs from the legal description of the same Property as used in the vesting deed to Seller or a Seller Party, then the Parties agree that (i) the legal description from the vesting deed to Seller or a Seller Party shall be used in the applicable Deed (which shall be a special warranty deed), and (ii) Seller or a Seller Party shall execute and deliver to Purchaser or Purchaser Parties a quit claim deed (singularly, a “Quit Claim Deed” and collectively the “Quit Claim Deeds”) for such Property using the legal description set forth in the Survey for such Property.
(b) The term “Permitted Exceptions” shall mean: (i) all real estate taxes and assessments; (ii) all easements, restrictions, rights-of-way, party wall agreements, encroachments, covenants, reservations, agreements, leases (including the Florida Facilities Sublease, but expressly excluding the Master Lease being terminated at Closing), tenancies, licenses, conditions and other matters affecting all or any portion of the Property to the extent (A) reflected on Schedule B-Part II to the Title Commitments prior to the expiration of the Review Period and not agreed by Title Company to be removed or otherwise insured over (provided if first reflected after the expiration of the Review Period, or if Title Company rescinds its agreement to remove or insure over after the expiration of the Review Period, then in each case subject to Purchaser’s right to object to Additional Title Matters); (B) reflected on any of the Surveys prior to the expiration of the Review Period (or if first reflected after the expiration of the Review Period, then subject to Purchaser’s right to object to Additional Title Matters); or (C) created by or consented and agreed to in writing by Purchaser, Purchaser Parties or their affiliates prior to or during the term of the Master Lease; (iii) all applicable laws, statutes, ordinances, rules, regulations, including without limitation, all zoning laws; (iv) all matters created by, or with the written consent of, Purchaser, Purchaser Parties or their affiliates; (v) any exceptions disclosed by any of the Title Commitments (as same may be updated from time to time) or the Surveys, in each case prior to the expiration of the Review Period and not agreed by Title Company to be removed or otherwise insured over (provided if first reflected after the expiration of the Review Period, or if Title Company rescinds its agreement to remove or insure over after the expiration of the Review Period, then in each case subject to Purchaser’s right to object to Additional Title Matters); (vi) the rights of residents of each Facility under unrecorded resident agreements with Purchaser or Purchaser Parties or their subtenants or affiliates; (vii) the rights of any subtenants subletting all or any portion of the Property under agreements with Purchaser, Purchaser Parties or their affiliates; and (viii) extended owner’s Title Policy “jacket” exclusions and exceptions from coverage contained in the Title Commitments and Title Policies issued therefrom. Notwithstanding anything to the contrary contained in this Agreement, but subject to the provisions of Section 4.2 herein, Monetary Liens and the State-Entity Quit Claim Deeds (as defined below) will not constitute Permitted Exceptions.
(c) With the exception of a few tracts of land acquired by Seller or a Seller Party during the term of the Master Lease and at the request of Purchaser or Purchaser Parties for their use in connection with the applicable Facility (the “Supplemental Properties”), Purchaser, Purchaser Parties, Seller and Seller Parties acknowledge and agree that title to the Property is derived from vesting deeds from Purchaser, Purchaser Parties and their affiliates. The Supplemental Properties are identified in Exhibit A. The Permitted Exceptions include title defects, exceptions, conditions, covenants, easements and other encumbrance (i) which affected title to the Property (other than the Supplemental Properties) when such Property was conveyed to Seller or Seller Parties by Purchaser or a Purchaser Party, (ii) which affected title to the Supplemental Properties when each such Supplemental Property was conveyed to Seller or a Seller Party by the prior owner of such Supplemental Properties, and/or (iii) which were created after such conveyance of the Property (inclusive of the Supplemental Properties) to Seller or Seller Parties, created by Seller or Seller Parties with the express written consent of Purchaser or applicable Purchaser Party, or were otherwise expressly permitted by the Master Lease to be created by Seller or Seller Parties without the express written consent of Purchaser or Purchaser Parties. Provided that Purchaser and Purchaser Parties obtain and deliver the Surveys to Seller and Seller Parties during the Review Period, Seller and Seller Parties agree to cooperate in good faith with Purchaser and Purchaser Parties to address any title defects or title issues raised by the Title Commitments or the Surveys which were created by Seller and/or any Seller Party during the period of time in which the relevant Property was subject to the Master Lease.
Section 4.2 Monetary Liens and Other Encumbrances. Notwithstanding anything to the contrary contained herein, Seller and Seller Parties shall not be required to bring any action or proceeding or take any other steps to cure or remove any defects in, objections to title, exceptions to title or to expend any monies to remove or address (a) Monetary Liens created by Purchaser or any Purchaser Party, (b) any covenant, condition, easement, exception or encumbrance created by Purchaser or any Purchaser Party (whether before or during the term of the Master Lease) which affected title to the Property (other than the Supplemental Properties) when such Property was conveyed to Seller or Seller Parties by Purchaser or a Purchaser Party, and/or (c) any covenant, condition, easement, exception or encumbrance which affected title to the Supplemental Properties when each such Supplemental Property was conveyed to Seller or a Seller Party by the prior owner of such Supplemental Properties and which were created after such conveyance of a Supplemental Property to Seller or Seller Parties, created by Seller or Seller Parties with the express written consent of Purchaser or applicable Purchaser Party, or were otherwise expressly permitted by the Master Lease to be created by Seller or Seller Parties without the express written consent of Purchaser or Purchaser Parties.
Section 4.3 Conveyance. At the Closing, Seller will convey fee simple title to the Property to Purchaser, a Purchaser Party of their designee by the Deeds (as defined in Section 5.2(a) herein), free and clear of covenants, conditions, easements or encumbrances other than the Permitted Exceptions.
Section 4.4 Owner Policy. At the Closing, the Title Company will be committed to issue, at Seller’s sole cost and expense (except for any endorsements requested by Purchaser or Purchaser Parties, the cost of which will be paid by Purchaser), at the election of Purchaser either (a) one (1) 2021 extended ALTA form Owner’s Policy of Title Insurance with extended coverage and such endorsements requested by Purchaser (the “Owner Policy”), insuring all Property in a single aggregate Owner Policy, or (b) separate Owner Policies with respect to the Property associated with each separate Facility; in each case in the amount of the Purchase Price (or allocated Purchase Price per Property, if separate Owner Policies are requested by Purchaser), insuring Purchaser’s or a Purchaser Party’s fee simple title to the Property, subject only to the Permitted Exceptions.
Section 4.5 Additional Title Matters. Approval by Purchaser of any additional title exceptions, defects, encumbrances or other title and survey matters either (i) first disclosed in writing after the end of the Review Period and not caused or created by Purchaser or a Purchaser Party, or (ii) with respect to which Title Company rescinds its agreement to remove or otherwise insure over after the expiration of the Review Period (collectively (i) and (ii), the “Additional Title Matters”) will be a condition precedent to Purchaser’s obligations to purchase the Property. Unless Purchaser gives written notice (“Title Disapproval Notice”) that it disapproves any Additional Title Matters, stating the Additional Title Matters so disapproved, before the sooner to occur of the Closing or five (5) Business Days after receipt of written notice of such Additional Title Matters, Purchaser will be deemed to have approved such Additional Title Matters. Seller will have until the Closing within which to remove the disapproved Additional Title Matters set forth therein from title (Seller having the right but not the obligation to do so). If Seller determines at any time that it is unable or unwilling to remove any one or more of such disapproved Additional Title Matters, Seller must give written notice to Purchaser to such effect; in such event, Purchaser may, at its option, terminate this Agreement upon written notice to Seller but only if given on or prior to the sooner to occur of the Closing or three (3) Business Days after Purchaser receives Seller’s notice, in which case this Agreement will immediately terminate, Purchaser will be entitled to a return of the Earnest Money (less the Independent Consideration, which will be paid to Seller), and Seller and Purchaser will have no further rights or obligations hereunder, except for the provisions hereof that expressly survive termination of this Agreement; provided, however, if (a) such Additional Title Matter is as a result of Seller’s default of its obligations under this Agreement, the provisions of Section 7.4(b) will apply, and (b) such new title exception is caused or created by Purchaser or a Purchaser Party the new title exception shall not be deemed an Additional Title Matter and Purchaser or any Purchaser Party may not object to such new title exception. If Purchaser fails to give such termination notice by such date, Purchaser will be deemed to have waived its objection to, and to have approved, the matters set forth in Seller’s notice and such matters will constitute Permitted Exceptions.
Section 4.6 State-Entity Quit Claim Deeds. Seller, Seller Parties, Purchaser and Purchaser Parties acknowledge and agree that Seller and Seller Parties report that (a) on or around October 18, 1991, Seller executed certain quit claim deeds and lease assignments as more particularly described in Exhibit F attached hereto and incorporated herein (the “State-Entity Quit Claim Deeds”) which contemplated the transfer of title to the real property associated with those Facilities in a particular state (e.g., Tennessee) to a single entity formed for purposes of holding title to all real property associated with those Facilities in the applicable state, (b) most, if not all, of the State-Entity Quit Claim Deeds were not recorded in the official records’ or register’s office for the applicable county and state and such State-Entity Quit Claim Deeds were retained in the records and files of Purchaser until approximately 2006 and thereafter were placed in the possession of Seller (if a State-Entity Quit Claim Deed was recorded in the official records, the grantee in such deed is identified as a Seller Party in Exhibit A attached hereto and will be either the sole grantor or a co-grantor in the Deeds and Quit Claim Deeds to be delivered by Seller and Seller Parties under Section 5.2(a) herein), (c) for purposes of the transaction contemplated by this Agreement and the delivery of the Deeds and Quit Claim Deeds by Seller and Seller Parties under Section 5.2(a) herein, the Parties are disregarding the existence of the unrecorded State-Entity Quit Claim Deeds and agreeing to permit each of the Deeds to be executed and delivered by Seller or Seller Party that is the owner of record of the applicable Property, and (d) Seller, Seller Parties, Purchaser and Purchaser Parties shall execute and deliver to each other and to Title Company an affidavit and agreement (the “State-Entity Quit Claim Deeds Affidavit”) in the form attached to this Agreement as Exhibit G.
ARTICLE 5.
CLOSING
Section 5.1 Closing. Subject to the satisfaction or waiver of the conditions to closing set forth in Article 9 hereof, the closing of the purchase and sale of the Property (the “Closing”) will be held through escrow with the Escrow Agent on July 1, 2026 or such earlier date as may be mutually agreed by the Parties in their sole discretion (the “Closing Date”). There will be no requirement that Seller and Purchaser physically attend the Closing, and all funds and documents to be delivered at the Closing will be delivered to the Escrow Agent unless the Parties mutually agree otherwise. Purchaser and Seller hereby authorize their respective attorneys to execute and deliver to the Escrow Agent any additional or supplementary instructions as may be necessary or convenient to implement the terms of this Agreement and facilitate the closing of the transactions contemplated hereby, provided, however, that such instructions are consistent with and merely supplement this Agreement and do not in any way modify, amend or supersede this Agreement.
Section 5.2 Obligations of Seller and Seller Parties. On or before the Closing Date, Seller and/or Seller Parties shall deliver (or cause to be delivered) to the Escrow Agent in escrow for Closing, the following with respect to the Property:
(a) A duly executed and acknowledged original Special Warranty Deed for the Property associated with each Facility (collectively, the “Deeds”) substantially in the state forms attached hereto as Exhibit C-1 through Exhibit C-7 and made a part hereof for all purposes, provided that the legal descriptions to be used in the Deeds shall be determined by Seller and Seller Parties and may include either (i) the legal description in the applicable vesting deed to Seller or any applicable Seller Party or (ii) the Survey legal descriptions for such particular Property as provided in Section 4.1(a). As provided in Section 4.1(a) herein, if a Deed from Seller or a Seller Party uses a legal description from a vesting deed that is different from the Survey legal description for such Property, such Seller or Seller Party shall execute and deliver to Purchaser or a Purchaser Party a Quit Claim Deed for such Property using the Survey legal description for such Property;
(b) A duly executed and acknowledged Partial Master Lease Termination and Partial Assignment and Assumption of Master Lease and the State-Entity Quit Claim Deeds Affidavit;
(c) Original federal certificates of “non-foreign” status (the “FIRPTA Affidavit”) duly executed by Seller and relevant Seller Parties substantially in the form attached hereto as Exhibit D and made a part hereof for all purposes;
(d) An owner’s/seller’s affidavit, in form and substance reasonably acceptable to Seller and Seller Parties, as to parties in possession and such other matters required to cause the Title Company to issue the Owner Policy (or Owner Policies if separate Owner Policies are requested by Purchaser), duly executed by Seller or the relevant Seller Party (but not otherwise) and delivered to the Title Company;
(e) A certification from Seller and Seller Parties that all representations and warranties made by Seller and Seller Parties under this Agreement are true, complete and correct in all material respects as of the Closing Date as though made on and as of the Closing Date (if accurate or, if not accurate, a description of the basis of such inaccuracy);
(f) Such evidence or documents as may reasonably be required by the Title Company evidencing the organization, status and capacity of Seller and Seller Parties and the authority of the person or persons executing the various documents on behalf of Seller and Seller Parties in connection with the sale of the Property;
(g) A duly executed copy of the mutually satisfactory settlement statement;
(h) All transfer tax declarations, returns, affidavits and similar forms and filings required by applicable law in connection with the payment of any documentary stamp taxes, transfer taxes, recording taxes or similar taxes imposed in connection with the conveyance of the Property, each duly executed by Seller or the relevant Seller Party to the extent required to be executed by the transferor under applicable law; and
(i) Such additional documents as may be reasonably required by Purchaser, the Escrow Agent or the Title Company in order to consummate the transactions hereunder (provided the same do not increase in any material respect the costs to, or liability or obligations of, Seller and Seller Parties in a manner not otherwise provided for herein).
Section 5.3 Purchaser’s Obligations. On or before the Closing Date, Purchaser and any applicable Purchaser Party shall deliver (or cause to be delivered) to the Escrow Agent in escrow for Closing, the following with respect to the Property:
(a) The Purchase Price amount set forth in Section 2.1, less the amount of the Earnest Money, by wire transfer of immediately available funds;
(b) Such evidence or documents as may reasonably be required by the Title Company evidencing the organization, status and capacity of Purchaser or Purchaser Parties and the authority of the person or persons who are executing the various documents on behalf of Purchaser and Purchaser Parties in connection with the acquisition of the Property;
(c) A duly executed and acknowledged Partial Master Lease Termination Master Lease Termination and Partial Assignment and Assumption of Master Lease and State-Entity Quit Claim Deeds Affidavit;
(d) A duly executed copy of the mutually satisfactory closing/settlement statement;
(e) All transfer tax declarations, returns, affidavits and similar forms and filings required by applicable law in connection with the payment of any documentary stamp taxes, transfer taxes, recording taxes or similar taxes imposed in connection with the conveyance of the Property, each duly executed by Purchaser or the relevant Purchaser Party to the extent required to be executed by the transferee under applicable law; and
(f) Such additional documents as may be reasonably required by Seller, the Escrow Agent or the Title Company in order to consummate the transactions hereunder (provided the same do not increase in any material respect the costs to, or liability or obligations of, Purchaser and Purchaser Parties in a manner not otherwise provided for herein).
Section 5.4 Possession. Subject to the partial termination of the Master Lease as to all Facilities other than the Florida Facilities and the assignment of the Master Lease as to the Florida Facilities only, possession of the Property with respect to each Facility shall be delivered to Purchaser or the Purchaser Party taking title to the Property with respect to a particular Facility by Seller and Seller Parties at the Closing, subject only to the Permitted Exceptions (inclusive of the tenancy rights of the Florida Facilities Subtenant pursuant to the Florida Facilities Sublease).
ARTICLE 6.
CLOSING COSTS
Section 6.1 No Prorations. The Parties agree that (i) prior to the Closing Date and pursuant to the Master Lease, Purchaser, as lessee, is responsible to pay all taxes, assessments, utility charges and operating expenses in connection with the use and occupancy of the applicable Property accruing prior to the Closing Date, and (ii) as between Seller, Seller Parties, Purchaser and Purchaser Parties, at Closing there shall not be a proration of such taxes, assessments, utility charges, operating expenses and any rents and revenues in connection with the applicable Facilities under this Agreement.
Section 6.2 Closing Costs.
(a) At the Closing, Seller and Seller Parties shall be responsible for payment of the following: (i) their own attorneys’ fee, (ii) one-half of any escrow closing fee charged by the Title Company and Escrow Agent, (iii) the cost of the premium for the Owner Policy (or Owner Policies if separate Owner Policies are requested by Purchaser) but excluding the cost of any endorsements requested by Purchaser or a Purchaser Party, and (iv) any commission owed by Seller and Seller Parties to its broker, Blueprint Healthcare Real Estate Advisors, LLC (“Seller’s Broker”). At the Closing, Purchaser and Purchaser Parties shall be responsible for the payment of the following: (i) their own attorneys’ fees, (ii) one-half of the escrow closing fee charged by the Title Company and Escrow Agent, (iii) the cost of any endorsements to the Owner Policy (or Owner Policies if separate Owner Policies are requested by Purchaser) requested by Purchaser, (iv) all recording fees, transfer taxes, documentary stamp taxes or similar taxes due on the recording of the Deeds, (v) the costs of all third-party due diligence reports obtained by Purchaser or any Purchaser Party, inclusive of the Surveys, and (vi) the costs of any other closing costs not enumerated above.
(b) EACH PARTY HERETO REPRESENTS TO THE OTHER THAT (I) EXCEPT FOR ANY COMMISSION DUE TO SELLER’S BROKER BY SELLER, THERE ARE NO REAL ESTATE COMMISSIONS, FINDERS’ FEES OR BROKERS’ FEES THAT HAVE BEEN OR WILL BE INCURRED IN CONNECTION WITH THIS AGREEMENT OR THE SALE OF THE PROPERTY, AND (II) OTHER THAN SELLER’S BROKER WHICH HAS BEEN RETAINED EXCLUSIVELY BY SELLER, SUCH PARTY HAS NOT AUTHORIZED ANY BROKER OR FINDER TO ACT ON SUCH PARTY’S BEHALF IN CONNECTION WITH THE SALE AND PURCHASE HEREUNDER. EACH PARTY HERETO AGREES TO INDEMNIFY AND HOLD HARMLESS THE OTHER PARTY FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, COSTS OR EXPENSES OF ANY KIND OR CHARACTER ARISING OUT OF OR RESULTING FROM ANY AGREEMENT, ARRANGEMENT OR UNDERSTANDING ALLEGED TO HAVE BEEN MADE BY SUCH PARTY WITH ANY BROKER OR FINDER OTHER THAN SELLER’S BROKER IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. AT THE CLOSING, SELLER SHALL PAY ANY COMMISSION DUE TO SELLER’S BROKER FOR ITS BROKER SERVICES IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT. THIS OBLIGATION WILL SURVIVE THE CLOSING OR ANY EARLIER TERMINATION OF THIS AGREEMENT.
Section 6.3 Survival. The terms of this Article 6 shall survive any termination of this Agreement and the Closing and delivery of the Deeds. Except for the provisions of this Agreement which are explicitly stated to survive the Closing, (a) none of the terms of this Agreement shall survive the Closing, and (b) the delivery of the Deeds, and other Closing documents and instruments by Seller and Seller Parties and the acceptance thereof by Purchaser and Purchaser Parties shall effect a merger, and be deemed the full performance and discharge of every obligation on the part of Purchaser, Purchaser Parties, Seller and Seller Parties to be performed hereunder.
ARTICLE 7.
DEFAULT AND REMEDIES
Section 7.1 Termination of Agreement prior to Closing. This Agreement may be terminated and the transactions contemplated hereunder may be abandoned at any time prior to the Closing, as follows:
(a) By mutual written consent of Seller, Seller Parties, Purchaser and Purchaser Parties (in which event the Earnest Money shall be refunded to Purchaser, less the amount of the Independent Consideration which will be paid to Seller); or
(b) Subject to Section 8.3, Seller and Seller Parties may terminate this Agreement by giving written notice to Purchaser at any time prior to the Closing in the event of a breach by Purchaser or any Purchaser Party of its representations or warranties as set forth in Section 8.2 provided that Seller or Seller Parties have notified Purchaser of the breach of representation and the breach of representation has continued without cure for a period of fifteen (15) days after the notice of the breach; or
(c) Seller and Seller Parties may terminate this Agreement by giving written notice to Purchaser after the scheduled Closing Date if Purchaser has failed to consummate the Closing and failed to deliver the Purchase Price to Escrow Agent on the scheduled Closing Date despite Seller and Seller Parties having performed in all material respects all their obligations under this Agreement to be performed as of the time of such failure to consummate the Closing. For purposes of this Section 7.1(c), subject to Section 8.3, any failure of a Seller Condition (as defined below) to be satisfied on the Closing Date where such failure was caused by the gross negligence, willful misconduct, or breach of this Agreement by Purchaser or any Purchaser Party will constitute a failure by Purchaser and Purchaser Parties to consummate the Closing; or
(d) In addition to Purchaser’s and Purchaser Parties’ termination rights under Section 3.3 during the Review Period and subject to Section 8.3, Purchaser and Purchaser Parties may terminate this Agreement by giving written notice to Seller at any time prior to the Closing in the event of a breach by Seller or any Seller Party of its representations or warranties as set forth in Section 8.1 provided that Purchaser and Purchaser Parties have notified Seller of the breach of representation and the breach of representation has continued without cure for a period of fifteen (15) days after the notice of the breach; or
(e) In addition to Purchaser’s and Purchaser Parties’ termination rights under Section 3.3 during the Review Period, Purchaser and Purchaser Parties may terminate this Agreement by giving written notice to Seller after the scheduled Closing Date if Seller has failed to consummate the Closing despite Purchaser and Purchaser Parties having performed in all material respects all their obligations under this Agreement to be performed as of the time of such failure to consummate the Closing (provided that Purchaser will have no obligation to deliver the Purchase Price to Escrow Agent if Seller is in default under this Agreement on the Closing Date). For purposes of this Section 7.1(e), subject to Section 8.3, any failure of a Purchaser Condition (as defined below) to be satisfied on the Closing Date where such failure was caused by the gross negligence, willful misconduct, or breach of this Agreement by Seller or any Seller Party will constitute a failure by Seller and Seller Parties to consummate the Closing.
For the avoidance of doubt, the Parties hereto agree that should this Agreement be terminated or should the Closing of the transaction contemplated by this Agreement not occur for any reason, then the Master Lease shall remain in full force and effect and shall not be affected by the termination of this Agreement.
Section 7.2 Notice of Termination; Effect of Termination.
(a) If Purchaser, any Purchaser Party, Seller or any Seller Party seeks to terminate this Agreement pursuant to Section 7.1(b) through Section 7.1(e), such Party will provide written notice of termination to such other Party specifying with particularity the reason for such termination.
(b) If Purchaser, any Purchaser Party, Seller or any Seller Party terminates this Agreement pursuant to Section 7.1, this Agreement will forthwith become void and there will be no liability or obligation on the part of any Party hereto (other than those liabilities that expressly survive any termination of this Agreement and those liabilities set forth in Section 7.3 and Section 7.4 below); provided, however, that no such termination (or any provision of this Agreement) will relieve any Party from liability for damages arising out of fraud.
Section 7.3 Purchaser’s Default.
(a) If Seller terminates this Agreement pursuant to Section 7.1(b), then Seller and Seller Parties’ sole and exclusive remedy shall be to receive the Initial Earnest Money plus any accrued interest from Escrow Agent as liquidated damages under this Agreement (and the remainder of the Earnest Money shall be refunded to Purchaser). Following the termination of this Agreement by Seller pursuant to Section 7.1(b), Seller, Seller Parties, Purchaser and Purchaser Parties shall have no further rights, obligations, or liabilities under this Agreement, except for those obligations and liabilities in this Agreement that expressly survive termination. Purchaser and Purchaser Parties shall in no event whatsoever be liable to Seller and Seller Parties for any other damages of any kind whatsoever, and, except as expressly set forth in this Section 7.3, Seller and Seller Parties hereby unconditionally and irrevocably waive any claim for monetary damages against Purchaser or Purchaser Parties arising out of this Agreement, which waiver shall survive the termination of this Agreement. IN CONNECTION WITH THE FOREGOING, THE PARTIES RECOGNIZE THAT SELLER AND SELLER PARTIES WILL INCUR EXPENSES AND REPUTATIONAL HARM IF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT IS TERMINATED BY SELLER PURSUANT TO SECTION 7.1(b); FURTHER, THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER AND SELLER PARTIES CAUSED BY THE TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 7.1(b), AND THAT THE INITIAL EARNEST MONEY (TOGETHER WITH INTEREST EARNED THEREON) REPRESENTS THE PARTIES’ BEST CURRENT ESTIMATE OF SUCH DETRIMENT AND RECEIPT OF THE INITIAL EARNEST MONEY (TOGETHER WITH INTEREST EARNED THEREON) BY SELLER IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER AND SELLER PARTIES PURSUANT TO APPLICABLE LAW AND WILL NOT BE DEEMED TO CONSTITUTE A FORFEITURE OR PENALTY.
(b) If Seller terminates this Agreement pursuant to Section 7.1(c), then Seller and Seller Parties’ sole and exclusive remedy shall be to receive the Earnest Money (inclusive of the Initial Earnest Money and the Additional Earnest Money plus any accrued interest) from Escrow Agent as liquidated damages under this Agreement. Following the termination of this Agreement by Seller pursuant to Section 7.1(c), Seller, Seller Parties, Purchaser and Purchaser Parties shall have no further rights, obligations, or liabilities under this Agreement, except for those obligations and liabilities in this Agreement that expressly survive termination. Purchaser and Purchaser Parties shall in no event whatsoever be liable to Seller and Seller Parties for any other damages of any kind whatsoever, and, except as expressly set forth in this Section 7.3, Seller and Seller Parties hereby unconditionally and irrevocably waive any claim for monetary damages against Purchaser or Purchaser Parties arising out of this Agreement, which waiver shall survive the termination of this Agreement. IN CONNECTION WITH THE FOREGOING, THE PARTIES RECOGNIZE THAT SELLER AND SELLER PARTIES WILL INCUR EXPENSES AND REPUTATIONAL HARM IF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT IS TERMINATED BY SELLER PURSUANT TO SECTION 7.1(c); FURTHER, THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER AND SELLER PARTIES CAUSED BY THE TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 7.1(c), AND THAT THE EARNEST MONEY (INCLUSIVE OF THE INITIAL EARNEST MONEY AND THE ADDITIONAL EARNEST MONEY PLUS ANY ACCRUED INTEREST) REPRESENTS THE PARTIES’ BEST CURRENT ESTIMATE OF SUCH DETRIMENT AND RECEIPT OF THE EARNEST MONEY (TOGETHER WITH INTEREST EARNED THEREON) BY SELLER IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER AND SELLER PARTIES PURSUANT TO APPLICABLE LAW AND WILL NOT BE DEEMED TO CONSTITUTE A FORFEITURE OR PENALTY.
Section 7.4 Seller or Seller Parties’ Default.
(a) If Purchaser terminates this Agreement pursuant to Section 7.1(d), then Purchaser and Purchaser Parties’ sole and exclusive remedies shall be to receive (i) a refund of the Earnest Money plus any accrued interest from Escrow Agent (less the amount of the Independent Consideration, which will be paid to Seller), and (ii) a payment from Seller equal to the amount of Purchaser’s and Purchaser Party’s third-party out-of-pocket costs incurred in connection with this Agreement including their due diligence investigation of the Property (which, third-party out-of-pocket costs, include without limitation, reasonable legal fees, the costs of the Surveys, and costs incurred in connection with this Agreement) (the “Pursuit Costs”), all of which Pursuit Costs shall not exceed cumulatively $2,000,000.00. Following the termination of this Agreement by Purchaser pursuant to Section 7.1(d), Seller, Seller Parties, Purchaser and Purchaser Parties shall have no further rights, obligations, or liabilities under this Agreement, except for those obligations and liabilities in this Agreement that expressly survive termination. Seller and Seller Parties shall in no event whatsoever be liable to Purchaser and Purchaser Parties for any other damages of any kind whatsoever, and, except as expressly set forth in this Section 7.4, Purchaser and Purchaser Parties hereby unconditionally and irrevocably waive any claim for monetary damages against Seller or Seller Parties arising out of this Agreement, which waiver shall survive the termination of this Agreement. IN CONNECTION WITH THE FOREGOING, THE PARTIES RECOGNIZE THAT PURCHASER AND PURCHASER PARTIES WILL INCUR EXPENSES AND REPUTATIONAL HARM IF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT IS TERMINATED BY PURCHASER PURSUANT TO SECTION 7.1(d); FURTHER, THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO PURCHASER AND PURCHASER PARTIES CAUSED BY THE TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 7.1(d), AND THAT REFUND OF THE EARNEST MONEY (TOGETHER WITH INTEREST EARNED THEREON) TO PURCHASER AND RECEIPT OF A PAYMENT FROM SELLER AND SELLER PARTIES EQUAL TO THE PURSUIT COSTS REPRESENTS THE PARTIES’ BEST CURRENT ESTIMATE OF SUCH DETRIMENT AND RECEIPT OF THE EARNEST MONEY (TOGETHER WITH INTEREST EARNED THEREON) AND THE REIMBURSEMENT OF THE PURSUIT COSTS IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO PURCHASER AND PURCHASER PARTIES PURSUANT TO APPLICABLE LAW AND WILL NOT BE DEEMED TO CONSTITUTE A FORFEITURE OR PENALTY.
(b) If Purchaser terminates this Agreement pursuant to Section 7.1(e) or any other provision of this Agreement to which this Section 7.4(b) is stated to apply, then Purchaser and Purchaser Parties’ sole and exclusive remedy shall be to receive as liquidated damages (i) a refund of the Earnest Money (inclusive of the Initial Earnest Money and the Additional Earnest Money plus any accrued interest) from Escrow Agent, and (ii) the Seller’s Liquidated Damages Deposit from the Escrow Agent. Following the termination of this Agreement by Purchaser pursuant to Section 7.1(e) or any other provision of this Agreement to which this Section 7.4(b) is stated to apply, Seller, Seller Parties, Purchaser and Purchaser Parties shall have no further rights, obligations, or liabilities under this Agreement, except for those obligations and liabilities in this Agreement that expressly survive termination. Seller and Seller Parties shall in no event whatsoever be liable to Purchaser and Purchaser Parties for any other damages of any kind whatsoever, and, except as expressly set forth in this Section 7.3, Purchaser and Purchaser Parties hereby unconditionally and irrevocably waive any claim for monetary damages against Seller and Seller Parties arising out of this Agreement, which waiver shall survive the termination of this Agreement. IN CONNECTION WITH THE FOREGOING, THE PARTIES RECOGNIZE THAT PURCHASER AND PURCHASER PARTIES WILL INCUR EXPENSES AND REPUTATIONAL HARM IF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT IS TERMINATED BY PURCHASER PURSUANT TO SECTION 7.1(e) OR ANY OTHER PROVISION OF THIS AGREEMENT TO WHICH THIS SECTION 7.4(b) IS STATED TO APPLY; FURTHER, THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO PURCHASER AND PURCHASER PARTIES CAUSED BY THE TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 7.1(e) OR ANY OTHER PROVISION OF THIS AGREEMENT TO WHICH THIS SECTION 7.4(b) IS STATED TO APPLY, AND THAT THE EARNEST MONEY (INCLUSIVE OF THE INITIAL EARNEST MONEY AND THE ADDITIONAL EARNEST MONEY PLUS ANY ACCRUED INTEREST) TOGETHER WITH THE SELLER’S LIQUIDATED DAMAGES DEPOSIT REPRESENTS THE PARTIES’ BEST CURRENT ESTIMATE OF SUCH DETRIMENT AND RECEIPT OF THE EARNEST MONEY (TOGETHER WITH INTEREST EARNED THEREON) AND THE SELLER’S LIQUIDATED DAMAGES DEPOSIT BY PURCHASER IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO PURCHASER AND PURCHASER PARTIES PURSUANT TO APPLICABLE LAW AND WILL NOT BE DEEMED TO CONSTITUTE A FORFEITURE OR PENALTY. Notwithstanding anything to the contrary herein, if Purchaser and Purchaser Parties are entitled to terminate this Agreement under Section 7.1(e) herein as a result of Seller and Seller Parties having failed to consummate the Closing on the scheduled Closing Date despite Purchaser and Purchaser Parties having performed in all material respects all their obligations under this Agreement to be performed as of the time of such failure to consummate the Closing, Purchaser and Purchaser Parties covenant to Seller and Seller Parties that (a) Purchaser and Purchaser Parties shall be obligated exercise such termination right on or before the date that is fifteen (15) days after the scheduled Closing Date, and (b) Purchaser and Purchaser Parties shall not record any memorandum or lis pendens against the Facilities so as to cloud the title to the Property and prevent a subsequent sale of the Property by Seller and Seller Parties.
Section 7.5 No Personal Liability. In no event shall any officer, director, agent, employee, member, owner, partner, or shareholder of Purchaser or Purchaser Parties and their partners, if applicable, be personally liable for any of Purchaser’s and Purchaser Parties’ obligations under this Agreement or the documents to be delivered at the Closing. In no event shall any officer, director, agent, employee, member, owner, partner, or shareholder of Seller or Seller Parties or their partners be personally liable for any of Seller’s obligations under this Agreement or the documents to be delivered at the Closing. In no event will Seller, Seller Parties, Purchaser, or Purchaser Parties be liable for any consequential, punitive or special damages under this Agreement.
ARTICLE 8.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 8.1 Seller and Seller Parties’ Representations. Seller and Seller Parties hereby represent and warrant to Purchaser and Purchaser Parties, as of the Effective Date, as follows:
(a) Seller and each Seller Party is a duly organized and validly existing corporation, limited partnership or limited liability company under the state of its formation/organization and in good standing under the laws of the state in which any Property it owns is located and authorized to conduct business in such state.
(b) This Agreement has been duly authorized, executed and delivered by Seller and the relevant Seller Parties, and is, and at the time of the Closing will be, a legal, valid and binding obligation of Seller and the relevant Seller Parties enforceable against Seller and Seller Parties in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting right of creditors generally and to general principals of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). Seller and Seller Parties have the capacity and complete authority to enter into and perform this Agreement, and no consent, approval or other action by any person or entity will be needed thereafter to authorize Seller’s or Seller Parties’ execution and performance of this Agreement.
(c) Neither this Agreement nor any agreement, document or instrument executed or to be executed in connection with the same, nor anything provided in or contemplated by this Agreement or any such other agreement, document or instrument, does now or will hereafter materially breach, violate, invalidate, cancel, make inoperative or interfere with, or result in the acceleration or maturity of, any agreement, document, instrument, right or interest, or applicable laws affecting or relating to Seller, Seller Parties, or the Property.
(d) Neither Seller nor any Seller Party is a foreign corporation, foreign partnership, foreign trust or foreign estate (as defined in the Internal Revenue Code (the “Code”), and Seller and Seller Parties are not subject to the provisions of Sections 897(a) or 1445 of the Code related to the withholding of sales proceeds to foreign persons.
(e) Neither Seller nor any of its subsidiaries, nor to Seller’s knowledge, any of its controlled affiliates, directors, officers or employees has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any person to improperly influence official action by that person for the benefit of Seller or its subsidiaries or affiliates, or to otherwise secure any improper advantage. In connection with this Agreement, Seller and its subsidiaries have conducted and will conduct their businesses in material compliance with all applicable the Anti-Corruption Laws, the Anti-Money Laundering Laws and Sanctions (as each such term is defined in Section 8.1(g) herein).
(f) Neither Seller nor any of its subsidiaries, or, to Seller’s knowledge, any of its controlled affiliates, directors, officers or employees is an individual or entity that is, or is owned or controlled by one or more Persons that are: (i) the subject of Sanctions; or (ii) located, organized or resident in Russia, Venezuela, or a country or territory that is, or whose government is the subject of comprehensive territorial Sanctions (including, without limitation, Crimea, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic regions, or any other Covered Region of Ukraine identified pursuant to Executive Order 14065, Cuba, Iran, North Korea, and Syria).
(g) Neither Seller or any Seller Party is an “employee benefit plan” as defined in Section 3.3 of the Employee Retirement Income Security Act of 1974 (“ERISA”), which is subject to Title I of ERISA, or a “plan” as defined in Section 4975(e)(1) of the Code, which is subject to Section 4975 of the Code. The assets of Seller and Seller Parties do not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Code. Neither Seller nor any Seller Party is a “governmental plan” within the meaning of Section 3(32) of ERISA, and assets of Seller and Seller Parties do not constitute plan assets of one or more such plans. Transactions by or with Seller and Seller Parties are not in violation of state statutes applicable to Purchaser or Purchaser Parties regulating investments of and fiduciary obligations with respect to governmental plans.
(h) (i) neither Seller nor any Seller Party owns any equipment, furniture, furnishings, machinery, supplies and other tangible personal property located at the Property and which is used in connection with the use, operation or maintenance of the Property, (ii) neither Seller nor any Seller Party is party to any leases (other than the Master Lease), occupancy agreements, service contracts or vendor contracts with respect to the Property, and (iii) to Seller’s knowledge, neither Seller nor any Seller Party holds any governmental permits, licenses, approvals (including, without limitation, any certificates of need, accreditations, certifications, permits, consents, waivers, exemptions, variances, and other healthcare licenses and approvals relating to the operation of the Facilities), warranties or guarantees on work, products or services in connection with the Property.
(i) As used in this Article 8, the following definitions shall apply:
(i) “Anti-Corruption Laws” means, collectively (a) the U.S. Foreign Corrupt Practices Act of 1977, (b) the UK Bribery Act 2010, and (c) any other applicable law, regulation, order, decree or directive having the force of law and relating to bribery or corruption;
(ii) “Anti-Money Laundering Laws” means the applicable financial recordkeeping and reporting requirements of the Bank Secrecy Act of 1970, as amended, applicable provisions of the USA PATRIOT Act of 2001, including all amendments thereto and regulations promulgated thereunder, the Money Laundering Control Act of 1986, the Anti-Money Laundering Act of 2020, the anti-money laundering statutes of all jurisdictions to the extent applicable to Purchaser or any Purchaser Party or any of its subsidiaries, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency, and
(iii) “Sanctions” means any sanctions administered or enforced by the by the United States Government (including the U.S. Department of Treasury’s Office of Foreign Assets Control and the U.S. Department of State), the United Nations Security Council, the European Union, His Majesty’s Treasury, or any other relevant sanctions authority.
Each of the representations, warranties, covenants and certifications of the Seller Parties set forth herein shall be remade as of the Closing Date and survive the Closing for a period of one (1) year. As used in this Section 8.1, the term “Seller’s knowledge” and the like means the current, actual knowledge of Kristin S. Gaines, Senior Vice President and Chief Transaction Officer of Seller (the “Seller Knowledge Party”), without a duty of investigation and inquiry. Seller represents and warrants that the Seller Knowledge Party is the person most knowledgeable about the subject matter contained in each representation and warranty provided herein. For the avoidance of doubt, in no event shall the Seller Knowledge Party or any other officer or employee of Seller, Seller Parties or any of their affiliates have any personal liability with respect to, or on account of, any breach of any representation or warranty made in this Section 8.1.
Section 8.2 Purchaser’s Representations. Purchaser and Purchaser Parties hereby represent and warrant to Seller and Seller Parties, as of the Effective Date hereof, as follows:
(a) Purchaser is a duly organized and validly existing limited partnership in good standing under the laws of the State of Delaware and qualified to do business in the state in which each Facility is located. Each Purchaser Party is a duly organized and validly existing limited liability company in good standing under the laws of its state of organization and qualified to do business in the state in which each Facility is located. This Agreement has been duly authorized, executed and delivered by Purchaser and Purchaser Parties, and is, and at the time of the Closing will be, a legal, valid and binding obligation of Purchaser and Purchaser Parties enforceable against Purchaser and Purchaser Parties in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting right of creditors generally and to general principals of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(b) Purchaser and Purchaser Parties have the capacity and complete authority to enter and perform this Agreement, and no consent, approval or other action by any person or entity will be needed thereafter to authorize Purchaser’s or Purchaser Parties’ execution and performance of this Agreement.
(c) Purchaser and Purchaser Parties are familiar with the source of funds for the Purchase Price and represents that, to the best of its knowledge after due inquiry and investigation, all such funds derived from legitimate business activities within the United States of America and/or from loans from a banking or financial institution chartered or organized within the United States of America.
(d) Neither Purchaser, Purchaser Parties nor any of its subsidiaries, nor to Purchaser’s or Purchaser Parties’ knowledge, any of their controlled affiliates, directors, officers or employees has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any person to improperly influence official action by that person for the benefit of Purchaser, Purchaser Parties and their subsidiaries or affiliates, or to otherwise secure any improper advantage. In connection with this Agreement, Purchaser, Purchaser Parties and their subsidiaries have conducted and will conduct their businesses in material compliance with all applicable the Anti-Corruption Laws, the Anti-Money Laundering Laws and Sanctions (as each such term is defined herein).
(e) Neither Purchaser, Purchaser Parties nor any of their subsidiaries, or, to the Purchaser’s or Purchaser Parties’ knowledge, any of their controlled affiliates, directors, officers or employees are an individual or entity that is, or are owned or controlled by one or more Persons that are: (i) the subject of Sanctions; or (ii) located, organized or resident in Russia, Venezuela, or a country or territory that is, or whose government is the subject of comprehensive territorial Sanctions (including, without limitation, Crimea, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic regions, or any other Covered Region of Ukraine identified pursuant to Executive Order 14065, Cuba, Iran, North Korea, and Syria).
(f) (a) Purchaser and Purchaser Parties are not an “employee benefit plan” as defined in Section 3.3 of ERISA, which is subject to Title I of ERISA, or a “plan” as defined in Section 4975(e)(1) of the Code, which is subject to Section 4975 of the Code; and (b) the assets of Purchaser and Purchaser Parties do not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Code; and (c) Purchaser and Purchaser Parties are not a “governmental plan” within the meaning of Section 3(32) of ERISA, and assets of Purchaser do not constitute plan assets of one or more such plans; and (d) transactions by or with Purchaser and Purchaser Parties are not in violation of state statutes applicable to Purchaser or any Purchaser Party regulating investments of and fiduciary obligations with respect to governmental plans.
The representations and warranties of Purchaser and Purchaser Parties in this Section 8.2 shall be remade as of the Closing Date and survive the Closing for the same period of time as Seller and Seller Parties’ representations, and warranties survive under Section 8.1. As used in this Section 8.2, the term “Purchaser Parties’ knowledge” and the like means the current, actual knowledge of Brian Kidd, the Chief Financial Officer of Purchaser (the “Purchaser Knowledge Party”), without a duty of investigation and inquiry. Purchaser represents and warrants that the Purchaser Knowledge Party is the person most knowledgeable about the subject matter contained in each representation and warranty provided herein. For the avoidance of doubt, in no event shall the Purchaser Knowledge Party or any other officer or employee of Purchaser, Purchaser Parties or any of their affiliates have any personal liability with respect to, or on account of, any breach of any representation or warranty made in this Section 8.2.
Section 8.3 Discovery. If (a) Seller, any Seller Party, Purchaser or any Purchaser Party discovers, prior to or at the Closing, that any representation or warranty of the other Party is false, misleading or inaccurate in any material and adverse respect, (b) the discovering party has given the breaching Party written notice of the breach, and (c) the breach has continued without cure for a period of fifteen (15) days after the delivery of notice of the breach, then (i) if Purchaser or a Purchaser Party is the discovering Party with respect to the representations or warranties of Seller or any Seller Party, then Purchaser and Purchaser Parties shall be entitled to pursue its remedies under Sections 7.1(d) and 7.4(a) of this Agreement (provided that if the representations or warranties set forth in Sections 8.1(a), (b) or (c) are false, misleading or inaccurate in any material respect on the Closing Date, then the same will be treated as a failure by Seller and Seller Parties to consummate the Closing and Purchaser and Purchaser Parties shall be entitled to pursue its remedies under Sections 7.1(e) and 7.4(b) of this Agreement); and (ii) if Seller or Seller Parties are the discovering Party with respect to the representations or warranties of Purchaser or any Purchaser Party, then Seller and Seller Parties shall be entitled to pursue its remedies under Sections 7.1(b) and 7.3(a) of this Agreement (provided that if the representations or warranties set forth in Sections 8.2(a) or (b) are false, misleading or inaccurate in any material respect on the Closing Date, then the same will be treated as a failure by Purchaser and Purchaser Parties to consummate the Closing and Seller and Seller Parties shall be entitled to pursue its remedies under Sections 7.1(c) and 7.3(b) of this Agreement). If the discovering Party elects to proceed to Closing, such Party cannot later bring a claim against the other as to such discovered matter.
Section 8.4 Release. Purchaser and Purchaser Parties have made (or as of the expiration of the Review Period will have made) a physical inspection and business review, investigation, and evaluation of the Property, have found the Property suitable for Purchaser’s use, and are taking the Property at Closing in their “AS IS”, “WHERE IS” condition subject to any representation, warranty or covenant specifically provided in this Agreement or the Deeds, certificates, instruments, agreements, and other documents of Seller and any Seller Parties (including, without limitation, those set forth in Section 5.2) delivered at or in connection with the Closing (collectively with this Agreement, the “Conveyance Documents”), Purchaser and Purchaser Parties acknowledge and agree that, except as otherwise specifically provided in the Conveyance Documents, Seller and Seller Parties are not making any representation, warranty or covenant whatsoever with respect to the condition or current or future performance of the Property, or any portion thereof, or the suitability of the Property for any particular purpose, and Purchaser and Purchaser Parties are relying solely on its inspection of the Property and due diligence investigations with respect thereto. Subject to any representation, warranty or covenant specifically provided in the Conveyance Documents, Purchaser and Purchaser Parties expressly waive any claim or action against Seller or Seller Parties with respect to the condition or current or future performance of the Property or the business of the Facilities. SUBJECT TO ANY REPRESENTATION, WARRANTY OR COVENANT SPECIFICALLY PROVIDED IN THE CONVEYANCE DOCUMENTS, PURCHASER AND PURCHASER PARTIES ACKNOWLEDGE THAT SELLER AND SELLER PARTIES MAKE NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE PROPERTY, OR ANY PART THEREOF, EITHER AS TO THEIR FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY PURCHASER AND PURCHASER PARTIES. SUBJECT TO ANY REPRESENTATION, WARRANTY OR COVENANT SPECIFICALLY PROVIDED IN THE CONVEYANCE DOCUMENTS, PURCHASER, FOR ITSELF AND FOR PURCHASER PARTIES AND THEIR AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS, AND EMPLOYEES, HEREBY WAIVE, RELEASE AND FOREVER DISCHARGE SELLER AND SELLER PARTIES AND THEIR EMPLOYEES, AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS (COLLECTIVELY THE “RELEASEES”) FROM ANY AND ALL RIGHTS, CLAIMS AND DEMANDS AT LAW OR IN EQUITY, WHETHER KNOWN OR UNKNOWN AT THE TIME OF THIS AGREEMENT, WHICH PURCHASER OR ANY PURCHASER PARTY HAS OR MAY HAVE IN THE FUTURE, ARISING OUT OF THE PHYSICAL, ENVIRONMENTAL, ECONOMIC OR LEGAL CONDITION OF THE PROPERTY (INCLUDING, WITHOUT LIMITATION, ALL CLAIMS IN TORT OR CONTRACT AND ANY CLAIM FOR INDEMNIFICATION OR CONTRIBUTION) ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT (42 U.S.C. SECTION 9601, ET SEQ.) OR ANY SIMILAR FEDERAL, STATE OR LOCAL STATUTE, RULE OR REGULATION, AND ALL OTHER TITLE OR DUE DILIGENCE MATTERS DESCRIBED IN ANY OTHER PROVISIONS OF THIS AGREEMENT. PURCHASER AND PURCHASER PARTIES WAIVE ALL OBJECTIONS AND COMPLAINTS, WHETHER KNOWN OR UNKNOWN, CONCERNING THE PHYSICAL CHARACTERISTICS AND ANY EXISTING CONDITIONS OF THE PROPERTY, INCLUDING SELLER’S AND SELLER PARTIES’ OBLIGATIONS UNDER THE MASTER LEASE OR IN ANY WAY RELATING TO THE PHYSICAL, ENVIRONMENTAL OR LEGAL COMPLIANCE STATUS OF THE PROPERTY, WHETHER ARISING BEFORE OR AFTER THE EFFECTIVE DATE OF THIS AGREEMENT. PURCHASER AND PURCHASER PARTIES, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER, SELLER PARTIES AND ALL OTHER RELEASEES FROM AND AGAINST ANY AND ALL MATTERS AFFECTING THE PROPERTY (OTHER THAN ANY REPRESENTATION, WARRANTY OR COVENANT SPECIFICALLY PROVIDED IN THE CONVEYANCE DOCUMENTS), INCLUDING, ANY AND ALL COMPLAINTS OR OBJECTIONS CONCERNING THE PHYSICAL CHARACTERISTICS OF THE PROPERTY OR EXISTING PROPERTY CONDITIONS. PURCHASER AND PURCHASER PARTIES WAIVE THE BENEFITS OF ANY LAW, WHICH GENERALLY PROVIDES THAT A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A PURCHASER OR ANY PURCHASER PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH, IF KNOWN BY HIM/HER, MAY HAVE MATERIALLY AFFECTED HIS/HER TRANSACTION WITH SELLER OR SELLER PARTIES.
Section 8.5 Interim Covenants of Seller and Purchaser. Between the Effective Date and the Closing:
(a) Seller, Seller Parties, Purchaser and Purchaser Parties shall not encumber the Property with any Monetary Liens or other easements, restrictions, rights-of-way, party wall agreements, encroachments, covenants, reservations, agreements, leases, tenancies, licenses, conditions and other matters affecting all or any portion of the Property;
(b) Seller and Seller Parties shall not sell, transfer, or otherwise dispose of (or agree to sell, transfer, or otherwise dispose of) any of the Property or any interest therein or agree to do any of the foregoing;
(c) Seller and Seller Parties shall not waive or release any of their rights with respect to the Property or permit any of such rights to lapse where such lapse could be prevented by a ministerial act; and
(d) Seller, Seller Parties, Purchaser and Purchaser Parties shall take no action, and must use their commercially reasonably efforts to prevent the occurrence of any event or the existence of any condition, which would result in any of such Party’s representations and warranties in the Conveyance Documents not being true and correct.
ARTICLE 9.
CONDITIONS PRECEDENT
Section 9.1 Conditions Precedent to Purchaser and Purchaser Parties’ Obligation to Close. Purchaser and Purchaser Parties shall not be obligated to perform under this Agreement unless all the following conditions precedent are satisfied (or waived in writing by Purchaser or Purchaser Parties) and are otherwise true and correct as of the Closing Date (each, a “Purchaser Condition”):
(a) All the representations and warranties of Seller and Seller Parties shall be true and correct in all material respects (except for any representations and warranties that are already qualified by materiality or words of similar import, which shall be true and correct in all respects) as of the Closing Date, as though made on and as of the Closing Date.
(b) Seller and Seller Parties shall have performed all their covenants, agreements, and obligations under this Agreement in all material respects and shall otherwise not be in default.
(c) Purchaser shall have received a Partial Master Lease Termination and Partial Assignment and Assumption of Master Lease, duly executed by Seller with such partial termination and partial assignment and assumption being effective as of the Closing Date.
(d) The filings of Purchaser, Purchaser Parties, Seller and Seller Parties pursuant to the HSR Act, if any, shall have been made and the applicable waiting period and any extensions thereof shall have expired or been terminated.
(e) The Title Company is irrevocably committed to issue the Owner Policies for each Facility at the Closing.
(f) The Licensing Filings (to the extent such Licensing Filings can be filed prior to the Closing) have all been made and accepted by the respective governmental authority, agency or department, and no rejections, objections, requests for further information, or other responses which would operate to prohibit the Closing have been provided by such governmental authority, agency or department.
(g) Any other conditions precedent to the obligations of Purchaser and Purchaser Parties as set forth elsewhere in this Agreement have been satisfied (or waived in writing by Purchaser or Purchaser Parties).
Seller and each Seller Party shall use reasonable efforts to satisfy each Purchaser Condition set forth in this Section 9.1. If any Purchaser Condition in this Section 9.1 in favor of Purchaser and Purchaser Parties shall not be satisfied as of the Closing Date, Purchaser and any Purchaser Party may either (a) waive in writing any unsatisfied Purchaser Conditions and proceed to Closing, (b) elect to extend the Closing Date for up to an additional thirty (30) days by written notice to Seller, or (c) terminate this Agreement by giving written notice to Seller, in which event the Earnest Money will be refunded to Purchaser, less the amount of the Independent Consideration which will be paid to Seller, and this Agreement will forthwith become void and there will be no liability or obligation on the part of any Party hereto (other than those liabilities that expressly survive any termination of this Agreement). If Purchaser and Purchaser Parties elect to close, Purchaser and Purchaser Parties will be deemed to have waived any Purchaser Conditions known by Purchaser or any Purchaser Party to be unsatisfied at the Closing.
Section 9.2 Conditions Precedent to Seller and Seller Parties’ Obligation to Close. Notwithstanding anything to the contrary contained herein, the obligation of Seller and each Seller Party to close the sale of the Property as contemplated by this Agreement is expressly conditioned upon the fulfillment, by and as of the time of the Closing, of each of the conditions listed below (each, a “Seller Condition”), provided that Seller, at its election, evidenced by written notice delivered to Purchaser at or prior to the Closing, may waive any of such conditions: (i) Purchaser and Purchaser Parties shall have executed and delivered to Escrow Agent all of the documents and shall have paid all sums of money and shall have taken or caused to be taken all of the other actions required of Purchaser or any Purchaser Party in this Agreement; (ii) all representations and warranties made by Purchaser or any Purchaser Party in this Agreement shall be true and correct in all material respects (except for any representations and warranties that are already qualified by materiality or words of similar import, which shall be true and correct in all respects) as of the Closing Date as though made on and as of the Closing Date, and (iii) Purchaser and Purchaser Parties shall have complied, in all material respects, with its covenants contained in this Agreement. If any Seller Condition in this Section 9.2 in favor of Seller and Seller Parties shall not be satisfied as of the Closing Date, Seller and any Seller Party may either (a) waive in writing any unsatisfied Seller Conditions and proceed to Closing, (b) elect to extend the Closing Date for up to an additional thirty (30) days by written notice to Purchaser, or (c) terminate this Agreement by giving written notice to Purchaser, in which event the Earnest Money will be refunded to Purchaser, less the amount of the Independent Consideration which will be paid to Seller, and this Agreement will forthwith become void and there will be no liability or obligation on the part of any Party hereto (other than those liabilities that expressly survive any termination of this Agreement). If Seller and Seller Parties elect to close, Seller and Seller Parties will be deemed to have waived any Seller Conditions known by Seller or any Seller Party to be unsatisfied at the Closing.
ARTICLE 10.
NOTICES
Section 10.1 Notices. Any notice, demand or other communication which may or is required to be given under this Agreement must be in writing and must be: (a) personally delivered; (b) transmitted by United States postage prepaid mail, registered or certified mail, return receipt requested; (c) transmitted by reputable overnight courier service, such as Federal Express; or (d) email (provided that if a notice is delivered via email such notice must also be sent by Federal Express or similar reputable overnight courier service for receipt on the following Business Day after such email was sent; provided, however, the date of delivery shall be deemed the date of delivery of the email as further provided herein), to Purchaser, Purchaser Parties, Seller and Seller Parties as listed below.
Except as otherwise specified herein, all notices and other communications shall be deemed to have been duly given on (i) the date of receipt if delivered personally, (ii) two (2) Business Days after the date of posting if transmitted by registered or certified mail, return receipt requested, (iii) the first (1st) Business Day after the date of notice, if transmitted by reputable overnight courier service, and (iv) upon receipt of an email (if received on a Business Day before 5 p.m. Central Time; otherwise it will be deemed delivered on the next Business Day), as the case may be, whether accepted or refused. A notice or other communication not given as herein provided shall only be deemed given if and when such notice or communication and any specified copies are actually received in writing by the Party and all other persons to whom they are required or permitted to be given.
Purchaser, Purchaser Parties, Seller and Seller Parties may change their respective addresses for purposes herewith notice given to the other Parties in accordance with the provisions of this Section, but such notice shall not be deemed to have been duly given, unless and until it is actually received by the other Parties. Notices hereunder shall be directed as follows:
| If to Seller and Seller Parties:
|
c/o National Health Investors, Inc. Email: kgaines@nhireit.com Email: legalnotice@nhireit.com |
| with copy to:
|
Holland & Knight LLP 511 Union St., Ste. 2700 |
If to Purchaser and Purchaser Parties:
|
|
National Healthcare Corporation 100 East Vine Street Murfreesboro, TN 37130 Attn: Josh McCreary, General Counsel Email: josh.mccreary@nhccare.com |
| With a copy to:
|
Sheppard, Mullin, Richter & Hampton LLP 350 South Grand Avenue, 40th Floor Los Angeles, CA 90071-3460 Attn: Timothy Reimers, Esq. & Scott Timpe, Esq. Email: treimers@sheppard.com; stimpe@sheppard.com |
|
If to Escrow Agent & Title Company:
|
First American Title Insurance Company |
Purchaser’s counsel may deliver any notice required or otherwise permitted to be given by Purchaser or any Purchaser Party hereunder with the same effect as if given directly by Purchaser or any Purchaser Party. Seller’s counsel may deliver any notice required or otherwise permitted to be given by Seller or any Seller Party thereunder with the same effect as if given directly by Seller or any Seller Party.
ARTICLE 11.
FIRE OR OTHER CASUALTY; CONDEMNATION
Section 11.1 Casualty Damage. Any loss or damage to any Improvements relating to any Facility prior to the Closing Date shall not affect this Agreement and the Parties shall proceed to closing without any adjustment to the Purchase Price (it being understood that each Facility is required to be insured by Purchaser or applicable Purchaser Party, as lessee, under the Master Lease). Purchaser shall bear the risk of loss until the Closing.
Section 11.2 Condemnation. If, prior to Closing, any condemnation or eminent domain proceedings are initiated against all or any portion of the Property with respect to any Facility, such proceedings shall not affect this Agreement and the Parties shall proceed to closing without any adjustment to the Purchase Price. Seller and the relevant Seller Parties shall assign to Purchaser at the Closing all rights and interest of Seller and such Seller Parties in and to any condemnation awards payable or to become payable on account of such condemnation or eminent domain proceedings.
Section 11.3 Survival of Provision. The provisions of this Article 11 shall survive the Closing.
ARTICLE 12.
MISCELLANEOUS
Section 12.1 Entire Agreement. Except with respect to any surviving obligations of the Parties under the Master Lease, this Agreement constitutes the entire agreement among the Parties hereto and supersedes any prior understanding, letter of intent or written or oral agreements among the Parties concerning the Property.
Section 12.2 No Rule of Construction. This Agreement has been drafted by Seller, Seller Parties, Purchaser and Purchaser Party and no rule of construction shall be invoked against either Party with respect to the authorship hereof or of any of the documents to be delivered by the respective Parties at the Closing.
Section 12.3 Multiple Counterpart; Governing Law. This Agreement may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one and the same instrument and shall be construed and interpreted under the laws of the State of Tennessee (without regard to conflicts of laws). This Agreement may be executed by pdf or other electronic signatures (including DocuSign) of one or more of the Parties hereto, which signatures shall be binding on such Parties as if original signatures were obtained.
Section 12.4 Attorneys’ Fees. In the event of any litigation or other proceeding brought by either Party hereunder, the prevailing party shall be entitled to recover its attorneys’ fees and costs of suit. The court in such litigation or other proceeding shall be requested to designate the prevailing party, if any.
Section 12.5 Interpretation. This Agreement shall, unless otherwise specified herein, be subject to the following rules of interpretation: (a) the singular includes the plural and the plural the singular; (b) words importing any gender include the other genders; (c) references to persons or entities include its permitted successors and assigns; (d) words and terms which include a number of constituent parts, things or elements, including the terms Improvements, Permitted Exceptions, and Property, shall be construed as referring separately to each constituent part, thing or element thereof, as well as to all of such constituent parts, things or elements as a whole; (e) references to statutes are to be construed as including all rules and regulations adopted pursuant to the statute referred to and all statutory provisions consolidating, amending or replacing the statute referred to; (f) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments thereto or changes therein entered into in accordance with its respective terms; (g) the words “approve” or “consent” or “agree” or derivations of said words or words of similar import mean, unless otherwise expressly provided herein or therein, the prior approval, consent, or agreement in writing of the person holding the right to approve, consent or agree with respect to the matter in question, and the words “require” or “judgment” or “satisfy” or derivations of said words or words of similar import mean the requirement, judgment or satisfaction of the person who may make a requirement or exercise judgment or who must be satisfied, which approval, consent, agreement, requirement, judgment or satisfaction shall, unless otherwise expressly provided herein or therein, be in the sole and absolute discretion of the person holding the right to approve, consent or agree or who may make a requirement or judgment or who must be satisfied; (h) the words “include” or “including” or words of similar import shall be deemed to be followed by the words “without limitation”; (i) the words “hereto” or “hereby” or “herein” or “hereof” or “hereunder,” or words of similar import, refer to this Agreement in its entirety; (j) references to sections, articles, paragraphs or clauses are to the sections, articles, paragraphs or clauses of this Agreement; and (k) numberings and headings of sections, articles, paragraphs and clauses are inserted as a matter of convenience only and shall not affect the construction of this Agreement.
Section 12.6 Exhibits. The Exhibits attached hereto shall be deemed to be an integral part of this Agreement.
Section 12.7 Modifications. This Agreement cannot be changed orally, and no executory agreement shall be effective to waive, change, modify or discharge it in whole or in part unless such executory agreement is in writing and is signed by the Parties against whom enforcement of any waiver, change, modification or discharge is sought. Any such modification need not be joined in by the Title Company.
Section 12.8 Reporting Person. Purchaser, Purchaser Parties, Seller and Seller Parties hereby designate the Title Company as the “reporting person” pursuant to the provisions of Section 6045(e) of the Code of 1986, as amended.
Section 12.9 Time of Essence. Time is of the essence to Seller, Seller Parties, Purchaser and Purchaser Parties in the performance of this Agreement, and they have agreed that strict compliance by all of them is required as to any date and/or time set out herein. The term “Business Day” shall mean any calendar day that is not a Saturday, Sunday or legal holiday recognized by the State of Tennessee. If the final day of any period of time set out in any provision of this Agreement falls upon a day that is not a Business Day, then and in such event, the time of such period shall be extended to the next Business Day.
Section 12.10 Restructuring. If Seller determines, in its sole discretion, that the structure of the transactions contemplated hereunder may jeopardize Seller’s ability to qualify as a Real Estate Investment Trust under the Code, then Purchaser, Purchaser Parties, Seller and Seller Parties agree to use commercially reasonable efforts to modify the structure of the transactions contemplated hereunder in such a way as to not to jeopardize such qualification, provided, however, such modified structure shall not result in detrimental economics to any Party, or increase the obligations or reduce the rights of any Party.
Section 12.11 Assignment by Purchaser. This Agreement is binding upon and will inure to the benefit of the Parties and its respective heirs, legal representatives, and permitted successors and assigns. Purchaser and Purchaser Parties shall not assign this Agreement or its rights hereunder to any individual or entity without the prior written consent of Seller, which consent Seller may grant or withhold in its sole discretion, and any such assignment shall be null and void ab initio, except that Purchaser or Purchaser Parties may (a) collaterally assign its rights under this Agreement to a lender, (b) assign its rights under this Agreement to one or more entities directly or indirectly affiliated, controlled by, controlling, or under common control with Purchaser or any Purchaser Party, and (c) specify additional or alternative Purchaser Parties (in which case such additional or alternative Purchaser Parties will be designated on Exhibit A prior to the expiration of the Review Period), provided that such additional or alternative Purchaser Parties are entities directly or indirectly affiliated, controlled by, controlling, or under common control with Purchaser or any Purchaser Party. In the event of any permitted assignment by Purchaser or a Purchaser Party, other than a collateral assignment to a lender, any assignee shall assume all obligations and liabilities of Purchaser and Purchaser Parties under this Agreement but, notwithstanding such assumption, Purchaser and Purchaser Parties shall continue to be liable hereunder.
Section 12.12 No Recordation. Seller, Seller Parties, Purchaser and Purchaser Parties agree that neither this Agreement nor any memorandum or notice hereof shall be recorded, and Purchaser and Purchaser Parties agree (a) not to file any notice of pendency or other instrument (other than a judgment) against the Property or any portion thereof in connection herewith and (b) to indemnify, defend and hold harmless Seller and Seller Parties against all liabilities, including, without limitation, reasonable attorneys’ fees and expenses, incurred by Seller or Seller Parties by reason of the filing by Purchaser or a Purchaser Party of such notice of pendency or other instrument. Nothing in this Section 12.12 will prohibit Purchaser or a Purchaser Party from recording, at its sole cost and expense, the Partial Master Lease Termination and Partial Assignment and Assumption of Master Lease in the applicable public land records for each Facility if Purchaser or any Purchaser Party elects to do so.
Section 12.13 Additional Agreements; Further Assurances. Subject to the terms and conditions herein provided, each of the Parties hereto shall execute and deliver such documents as the other Party shall reasonably request in order to consummate and make effective the transactions contemplated by this Agreement; provided, however, that the execution and delivery of such documents by such Party shall not result in any additional liability or cost to such Party.
Section 12.14 Enforceability. If any term or provision of this Agreement or the application thereof to any person, property or circumstance shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons, property or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby and each term and provision of this Agreement shall be valid and be enforceable to the fullest extent permitted by law, and the court which determined that a provision is invalid or unenforceable shall be asked to interpret this Agreement in a manner so that the Parties receive the benefit of its bargain.
Section 12.15 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, THE PROPERTY OR THE RELATIONSHIP OF PURCHASER, PURCHASER PARTIES, SELLER AND SELLER PARTIES HEREUNDER.
Section 12.16 Escrow Matters.
(a) Escrow Instructions. Upon their execution of this Agreement, Seller, Seller Parties, Purchaser and Purchaser Party shall deliver an executed counterpart of this Agreement to Escrow Agent via electronic mail to serve as the instructions to Escrow Agent for consummation of the transaction, and Escrow Agent shall execute this Agreement to acknowledge acceptance of the escrow contemplated by this Agreement. Seller, Seller Parties, Purchaser and Purchaser Parties shall execute such additional and supplementary escrow instructions as may be appropriate to enable Escrow Agent to comply with the terms of this Agreement, provided, however, that in the event of any conflict between the provisions of this Agreement and any supplementary escrow instructions, the terms of this Agreement shall prevail.
(b) Duties of Escrow Agent. Escrow Agent’s duties shall be determined solely by the express provisions of this Section 12.16 and are purely ministerial in nature and shall include (i) accepting and distributing the certificates, instruments and documents to be delivered by Seller, Seller Parties, Purchaser or Purchaser Parties in connection herewith and (ii) preparing the closing/settlement statement.
(c) Costs and Expenses of Escrow Agent. If costs or expenses are incurred by Escrow Agent because of litigation or a dispute between Seller, Seller Parties, Purchaser and Purchaser Parties concerning this Agreement (which litigation or dispute does not involve any action, omission or failure to act by Escrow Agent), the non-prevailing party in such litigation shall pay Escrow Agent’s reasonable costs and expenses. Except for such costs and expenses, no fee or charge shall be due or payable to Escrow Agent for its services under this Agreement except its customary escrow and closing fee.
(d) Limitation of Liability of Escrow Agent. Seller, Seller Parties, Purchaser and Purchaser Parties acknowledge and agree that Escrow Agent has assumed no liability under this Agreement except for its gross negligence or willful misconduct and that Escrow Agent may seek advice from its own counsel and shall be fully protected in any action taken by it in good faith in accordance with the opinion of its counsel. Escrow Agent shall not be responsible or liable in any manner whatsoever for the correctness, genuineness or validity of any document or instrument, or any signature thereon, deposited with or delivered to Escrow Agent pursuant to this Agreement. Escrow Agent may act in reliance upon any such document or instrument which Escrow Agent in good faith believes to be genuine and duly authorized, without investigation as to the correctness, genuineness or validity thereof. Escrow Agent shall not be liable under this Agreement except for the performance of such duties and obligations as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against Escrow Agent.
(e) Return of Escrow Documents. Notwithstanding anything to the contrary in this Section 12.16, in the event the Closing does not occur on or before the Closing Date, Escrow Agent shall, unless it is notified by Seller and Purchaser to the contrary within five (5) Business Days after the Closing Date, return to the depositor thereof each item which was deposited pursuant to this Agreement. Any such return shall not, however, relieve Seller, Seller Parties, Purchaser or Purchaser Parties of any liability which such Parties may have relating to its wrongful failure to close the transaction contemplated by this Agreement.
Section 12.17 Like-Kind Exchange. Each Party to this Agreement acknowledges and agrees that either of them may consummate the transactions set forth herein as part of a like kind exchange of real properties (the “Exchange”) pursuant to Section 1031 of the Code by an assignment of such Party’s rights hereunder to a qualified intermediary or an exchange accommodation titleholder. Notwithstanding any provision in this Agreement to the contrary, in the event either Party (as an “Electing Party”) elects to engage in an Exchange, the other Party (as the “Consenting Party”) agrees to (i) consent to the assignment of the Electing Party’s rights hereunder to a qualified intermediary or exchange accommodation titleholder in order to facilitate such Exchange, and (ii) execute any and all documents as may be necessary to effect the purposes of this Section 12.17. Any actions taken by the Parties in conformance with this Section 12.17 shall be at the cost of the Electing Party (except for minor legal fees incurred by the Consenting Party for review of Exchange-related documents). No action permitted under this Section 12.17, including (without limitation) any assignment of rights under this Agreement, shall relieve the Electing Party of any of its obligations or liabilities under this Agreement, whether occurring before, at or after the Closing Date. The Consenting Party shall not by this Agreement or acquiescence to the Exchange be responsible for compliance with or be deemed to have warranted to the Electing Party that the Exchange complies with, Section 1031 of the Code.
Section 12.18 Effect on Master Lease. This Agreement is not, and should not be construed as (A) an offer of settlement with respect to any claims or demands (i) Purchaser has or might have against Seller, or (ii) Seller has or might have against Purchaser, in each case with respect to the Master Lease, or (B) a limitation or waiver of any rights, claims, or defenses of Seller or Purchaser under the Master Lease, and all such rights, claims and defenses are expressly reserved by Seller and Purchaser. Notwithstanding the foregoing, all deadlines, notice periods, and cure periods which pertain to such rights, claims, and defenses are hereby tolled until the earlier of (I) the Closing, and (II) the date which is thirty (30) days following the termination of this Agreement.
[SEE SIGNATURES ON THE FOLLOWING PAGES]
IN WITNESS WHEREOF, this Agreement has been executed by Seller (on behalf of itself and each of the identified Seller Parties in Exhibit A attached hereto) as of the Effective Date.
SELLER:
National Health Investors, Inc., a Maryland corporation (on behalf of itself and each of the identified Seller Parties in Exhibit A attached hereto)
By: /s/ Kristin S. Gains
Print Name: Kristin S. Gaines
Title: Senior Vice President and Chief Transaction Officer
[Purchaser’s signature on following page]
IN WITNESS WHEREOF, this Agreement has been executed by Purchaser (on behalf of itself and each of the identified Purchaser Parties in Exhibit A attached hereto) as of the Effective Date.
PURCHASER:
NHC/OP, L.P., a Delaware limited partnership (on behalf of itself and each of the identified Purchaser Parties in Exhibit A attached hereto)
By: NHC Delaware, Inc., a Delaware corporation
Its: General Partner
By: /s/ Stephen F. Flatt
Print Name: Stephen F. Flatt
Title: President
A fully executed copy of this Agreement has been received by Escrow Agent on or prior to the Effective Date, and by execution hereof, Escrow Agent hereby covenants and agrees to be bound by the terms of Section 12.16 (and any other related provisions) of this Agreement.
|
FIRST AMERICAN TITLE INSURANCE COMPANY
By: /s/Susan Felts |
EXHIBIT A
SCHEDULE OF FACILITIES, SELLER PARTIES AND PURCHASER PARTIES AND PURCHASE PRICE ALLOCATION PER FACILITY
|
Facility No.
|
Property Name and Address
|
Seller Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Purchaser Parties for Property
*To be confirmed during Review Period |
Type of Facility |
Purchase Price Allocation
*To be confirmed during Review Period |
|
1. |
NHC HealthCare, Anniston
Calhoun County |
NHI |
NHC HealthCare/Anniston, LLC |
151 SNF beds |
|
|
2. |
NHC HealthCare, Moulton
Lawrence County |
NHI and NHI-REIT of Alabama, L.P. |
NHC HealthCare/Moulton, LLC |
136 SNF Beds |
|
|
3. |
NHC Bayonet Point Health &
Pasco County |
NHI and NHI/REIT of Florida, L.P. |
National Health Realty, LLC |
180 SNF Beds |
1 Parcels 3 and 6 of this Property constitute Supplemental Properties.
|
Facility No.
|
Property Name and Address
|
Seller Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Purchaser Parties for Property
*To be confirmed during Review Period |
Type of Facility |
Purchase Price Allocation
*To be confirmed during Review Period |
|
4. |
NHC Parkway Health & Rehabilitation Center
Martin County |
NHI |
National Health Realty, LLC |
177 SNF Beds |
|
|
5. |
NHC Health Center of Merritt Island
Brevard County |
NHI |
National Health Realty, LLC |
180 SNF Beds |
|
|
6. |
NHC Health Center of Plant City
Hillsborough County |
NHI |
National Health Realty, LLC |
180 SNF Beds |
2 The portion of this Property conveyed to NHI on February 28, 1996 constitutes a Supplemental Property.
3 Parcel 1 of this Property constitutes a Supplemental Property.
|
Facility No.
|
Property Name and Address
|
Seller Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Purchaser Parties for Property
*To be confirmed during Review Period |
Type of Facility |
Purchase Price Allocation
*To be confirmed during Review Period |
|
7. |
NHC HealthCare, Glasgow
Barren County |
NHI |
NHC HealthCare/Glasgow, LLC |
194 SNF Beds 12 AL Beds |
|
|
8. |
NHC HealthCare, Desloge
St. Francois County |
NHI |
NHC HealthCare/Desloge, LLC |
120 SNF Beds |
|
|
9. |
NHC HealthCare, Joplin
Newton County |
NHI |
NH HealthCare/Joplin, LLC |
124 SNF Beds |
|
|
10. |
NHC HealthCare, Kennett Dunklin County |
NHI |
NHC HealthCare/Kennett, LLC |
170 SNF Beds |
|
|
11. |
NHC Maryland Heights
St. Louis County |
NHI |
NHC HealthCare/Maryland Heights, LLC |
220 SNF Beds |
|
Facility No.
|
Property Name and Address
|
Seller Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Purchaser Parties for Property
*To be confirmed during Review Period |
Type of Facility |
Purchase Price Allocation
*To be confirmed during Review Period |
|
12. |
NHC HealthCare, St. Charles
St. Charles County |
NHI |
NHC HealthCare/St. Charles, LLC |
120 SNF Beds |
|
|
13. |
Lake St. Charles Retirement Center
St. Charles County |
NHI |
NHC Place/Lake St. Charles, LLC |
26 ALF Units and 152 ILF Units (Total 178 Units) |
|
|
14. |
NHC HealthCare, Anderson
Anderson County |
NHI/Anderson, LLC |
NHC HealthCare/Anderson, LLC |
290 SNF Beds |
|
|
15. |
NHC HealthCare, Greenwood
Greenwood County |
NHI |
NHC HealthCare/Greenwood, LLC |
152 SNF Beds |
|
Facility No.
|
Property Name and Address
|
Seller Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Purchaser Parties for Property
*To be confirmed during Review Period |
Type of Facility |
Purchase Price Allocation
*To be confirmed during Review Period |
|
16. |
NHC HealthCare, Laurens
Laurens County |
NHI and NHI/Laurens, LLC |
NHC HealthCare/Laurens, LLC |
176 SNF Beds |
|
|
17. |
NHC HealthCare, Athens
McMinn County |
NHI |
NHC HealthCare/Athens, LLC |
86 SNF Beds |
|
|
18. |
NHC HealthCare, Chattanooga
Hamilton County |
NHI |
NHC HealthCare/Chattanooga, LLC |
200 SNF Beds |
|
|
19. |
NHC Parkwood Retirement Apartments
Hamilton County |
NHI |
NHC HealthCare/Chattanooga, LLC |
30 ILF Units |
4 The portion of this Property conveyed to NHI on January 17, 1997 constitutes a Supplemental Property.
|
Facility No.
|
Property Name and Address
|
Seller Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Purchaser Parties for Property
*To be confirmed during Review Period |
Type of Facility |
Purchase Price Allocation
*To be confirmed during Review Period |
|
20. |
NHC HealthCare, Dickson
Dickson County |
NHI |
NHC HealthCare/Dickson, LLC |
191 SNF Beds 20 ALF Units |
|
|
21. |
NHC HealthCare, Franklin
Williamson County |
NHI |
NHC HealthCare/Franklin, LLC |
80 SNF Beds |
|
|
22. |
NHC HealthCare, Hendersonville
Sumner County |
NHI |
NHC HealthCare/Hendersonville, LLC |
122 SNF Beds |
|
|
23. |
NHC Colonial Hill Retirement Center
Washington County |
NHI |
NHC HealthCare/Johnson City, LLC |
63 ILF Units |
|
|
24. |
NHC HealthCare, Johnson City
Washington County |
NHI |
NHC HealthCare/Johnson City, LLC |
167 SNF Beds |
|
Facility No.
|
Property Name and Address
|
Seller Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Purchaser Parties for Property
*To be confirmed during Review Period |
Type of Facility |
Purchase Price Allocation
*To be confirmed during Review Period |
|
25. |
NHC HealthCare, Lewisburg
Marshall County |
NHI |
NHC HealthCare/Lewisburg, LLC |
100 SNF Beds |
|
|
26. |
NHC HealthCare, McMinnville
Warren County |
NHI |
NHC HealthCare/McMinnville City, LLC |
115 SNF Beds |
|
|
27. |
NHC HealthCare, Milan
Gibson County |
NHI |
NHC HealthCare/Milan, LLC |
117 SNF Beds |
|
|
28. |
NHC HealthCare, Oakwood
Marshall County |
NHI |
NHC HealthCare/Oakwood, LLC |
60 SNF Beds |
|
Facility No.
|
Property Name and Address
|
Seller Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Purchaser Parties for Property
*To be confirmed during Review Period |
Type of Facility |
Purchase Price Allocation
*To be confirmed during Review Period |
|
29. |
NHC HealthCare, Pulaski Giles County |
NHI |
NHC HealthCare/Pulaski, LLC |
102 SNF Beds |
|
|
30. |
NHC HealthCare, Scott
Lawrence County |
NHI |
NHC HealthCare/Scott, LLC |
60 SNF Beds |
|
|
31. |
NHC HealthCare, Sequatchie
Sequatchie County |
NHI |
NHC HealthCare/Sequatchie, LLC |
110 SNF Beds |
|
|
32. |
NHC HealthCare, Smithville
DeKalb County |
NHI |
NHC HealthCare/Smithville, LLC |
114 SNF Beds 6 ALF Units |
|
Facility No.
|
Property Name and Address
|
Seller Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Purchaser Parties for Property
*To be confirmed during Review Period |
Type of Facility |
Purchase Price Allocation
*To be confirmed during Review Period |
|
33. |
NHC HealthCare, Somerville Fayette County |
NHI |
NHC HealthCare/Somerville, LLC |
72 SNF Beds 12 ALF Beds |
|
|
34. |
NHC HealthCare, Sparta
White County |
NHI |
NHC HealthCare/Sparta, LLC |
96 SNF Beds |
|
|
35. |
NHC HealthCare, Bristol
Washington County, VA Sullivan County, TN |
NHI and NHI-REIT of Virgina, L.P. |
NHC HealthCare/Bristol, LLC |
120 SNF Beds |
“Florida Facilities” mean the following Facilities: Facility No. 3, Facility No. 4, Facility No. 5 and Facility No. 6 above.
EXHIBIT E
PARTIAL MASTER LEASE TERMINATION AGREEMENT AND PARTIAL ASSIGNMENT AND ASSUMPTION OF MASTER LEASE
This Partial Master Lease Termination Agreement and Partial Assignment and Assumption of Master Lease (this “Agreement”) is entered into as of July 1, 2026 (the “Effective Date”), by and between National Health Investors, Inc., a Maryland corporation (“Landlord”), on behalf of itself and those of its affiliates identified a “Landlord Party” in Exhibit A attached hereto and incorporated herein (each a “Landlord Party” and collectively referred to as “Landlord Parties”), and NHC/OP, L.P., a Delaware limited partnership (“Tenant”), on behalf of itself and those of its affiliates identified a “Tenant Party” in Exhibit A attached hereto and incorporated herein (each a “Tenant Party” and collectively referred to as “Tenant Parties”). Landlord, Landlord Parties, Tenant and Tenant Parties are each referred to herein as a “Party”, and collectively, as the “Parties”.
Recitals
WHEREAS, Landlord and/or the Landlord Parties identified in Exhibit A attached hereto and incorporated herein with respect to the Facilities (as defined herein) own certain parcels of land in the counties and states identified on Exhibit A attached hereto and incorporated herein (the “Land”), upon which Land are located those certain improvements, fixtures and building(s) operated as skilled nursing facilities, assisted living facilities and/or independent living facilities (each such facility is referred to herein as a “Facility”; and collectively, such facilities are referred to herein as the “Facilities”).
WHEREAS, as of the Effective Date, Landlord, as lessor, leases to Tenant, as lessee, each of the Facilities (a) pursuant to that certain Master Agreement to Lease, dated October 17, 1991, as amended by that certain Amendment No. 1 to Master Agreement to Lease, dated June 2, 1993, as amended by that certain Amendment No. 2 to Master Agreement to Lease, dated January 15, 1996, as amended by that certain Amendment No. 3 to Master Agreement to Lease, dated July 22, 1997, as amended by that certain Amendment No. 4 to Master Agreement to Lease, dated December 31, 1997, as amended by that certain Amendment No. 5 to Master Agreement to Lease, dated December 27, 2005, as amended by that certain Amendment No. 6 to Master Agreement to Lease, dated December 26, 2012, as amended by that certain Amendment No. 7 to Master Agreement to Lease, dated August 28, 2013, as amended by that certain Amendment No. 8 to Master Agreement to Lease, dated October 30, 2020, as amended by that certain Amendment No. 9 to Master Agreement to Lease, dated March 29, 2021, and as amended by that certain Amendment No. 10 to Master Agreement to Lease, dated September 1, 2022, and (b) those short-form single Facility leases executed by the Parties on a Facility by Facility basis, which set forth a description of the Land and the Facilities and other limited terms (collectively, the “Master Lease”).
WHEREAS, the Facilities located in Florida and identified as Facility Nos. 3, 4, 5 and 6 on Exhibit A attached hereto and the Land owned by Landlord with respect to such Facility Nos. 3, 4, 5 and 6 are hereinafter referred to as the “Florida Facilities”.
WHEREAS, Tenant, Tenant Parties, Landlord and Landlord Parties are parties to that certain Purchase and Sale Agreement, dated April __, 2026, as amended (the “Transaction Agreement”), pursuant to which Landlord shall sell to Tenant and Tenant shall purchase from Landlord the Land and the Facilities in accordance with the terms of the Transaction Agreement. In connection with the closing of the transaction contemplated by the Transaction Agreement, Tenant, Tenant Parties, Landlord and Landlord Parties are executing and delivering the Conveyance Documents (as defined in the Transaction Agreement).
WHEREAS, simultaneously with the closing of the purchase and sale of the Land and the Facilities pursuant to the Transaction Agreement, Tenant, Tenant Parties, Landlord and Landlord Parties desire to, effective as of the Effective Date (a) terminate the Master Lease as to all Land and all Facilities except for the Florida Facilities (which Florida Facilities will remain subject to the Master Lease) (all Facilities, excluding the Florida Facilities, are hereinafter referred to as the “Terminated Facilities”)5, and (b) assign the Master Lease as to the Florida Facilities only from Landlord, as assignor, to National Health Realty, LLC (the “Florida Assignee”), as assignee, and memorialize the terms and conditions on which such partial termination and partial assignment of the Master Lease will occur.
NOW, THEREFORE, in consideration of the Recitals which are incorporated herein and the foregoing premises and the covenants of the Parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:
1. Partial Termination. The Master Lease is hereby terminated as of the Effective Date as to the Terminated Facilities only, and, from and after the Effective Date, Tenant shall have no further right, title or interest in and to the Terminated Facilities pursuant to the Master Lease or to any deposits, reserves, or other amounts required to be paid by Tenant under the Master Lease as to the Terminated Facilities. From and after the Effective Date, other than the Surviving Obligations as to the Terminated Facilities (as defined herein), Landlord, Landlord Parties, Tenant and Tenant Parties shall have no further obligations to each other under the Master Lease with respect to the Terminated Facilities. Notwithstanding anything to the contrary herein, Landlord, Landlord Parties, Tenant and Tenant Parties agree that (a) the Master Lease is not terminated as to the Florida Facilities, and (b) any rights of first offer or first refusal to purchase or lease any property granted in the Master Lease as to any Facility or all Facilities and any rights of first offer or refusal to develop or manage any property or facility granted in the Master Lease shall not survive the Effective Date of the partial termination of the Master Lease.
2. Surviving Obligations. Landlord, Landlord Parties, Tenant and Tenant Parties acknowledge and agree that the following obligations of Landlord and Tenant under the Master Lease with respect to the Terminated Facilities shall survive the termination of the Master Lease with respect to the Terminated Facilities as of the Effective Date (collectively, the “Surviving Obligations as to the Terminated Facilities”):
(a) Any obligations of Landlord, any Landlord Party, Tenant and any Tenant Party under the Master Lease with respect to the Terminated Facilities which expressly survive the termination of the Master Lease pursuant to the terms of the Master Lease; and
(b) Tenant’s obligation to deliver to Landlord for the Termination Partial Calendar Year (as defined herein) Tenant’s Certification (as defined in Section 2.06.02 of the Master Lease) of the Gross Revenues (as defined in Section 2.06.01 of the Master Lease) together with a certificate from the Tenant’s nationally reputable accounting firm which shall state, that in accordance with certain agreed upon procedures, such firm has agreed Tenant’s Gross Revenues for each of the Facilities (inclusive of the Florida Facilities) as set forth in Tenant’s Certification to the Company’s general ledger as of June 30, 2026. Such accounting firm will also agree Gross Revenue by entity (inclusive of the Facilities set forth in Tenant’s certification exclusive of the Florida facilities) to the June 30, 2026 Form 10-Q. Any differences identified during these procedures will be documented in the written report of Tenant’s nationally reputable accounting firm (the “Accounting Firm’s Agreed Upon Procedures Report”) that will accompany Tenant’s Certification. Landlord and Tenant agree that (i) as of the Effective Date, Tenant has paid to Landlord estimated Percentage Rent in the amount of $4,061,823.12 (“Estimated Payment Amount”) for the partial calendar year (commencing January 1, 2026 and ending on June 30, 2026) (the “Termination Partial Calendar Year”), (ii) Tenant shall be obligated to deliver to Landlord the Tenant’s Certification and the Accounting Firm’s Agreed Upon Procedures Report for the period covered by the Termination Partial Calendar Year on or before August 31, 2026, which shall include a reconciliation of the Percentage Rent actually payable by Tenant to Landlord for the Termination Partial Calendar Year, (iii) in the event Tenant’s Estimated Payment Amount is greater than the amount of actual Percentage Rent Tenant should have paid, then Landlord shall refund such overpayment to Tenant within 30-days following the date Landlord receives the later of Tenant’s Certification and the Accounting Firm’s Agreed Upon Procedures Report, (iv) in the event Tenant’s Estimated Payment Amount is less than the amount of actual Percentage Rent Tenant should have paid, then Tenant shall pay to Landlord such underpayment within 30-days following the date Landlord receives the later of Tenant’s Certification and the Accounting Firm’s Agreed Upon Procedures Report, and (v) the third party accounting firm of Tenant is satisfactory to Landlord to provide the Accounting Firm’s Agreed Upon Procedures Report, and (vi) Tenant’s Certification may be given by National Healthcare Corporation. For the avoidance of doubt, Landlord, Landlord Parties, Tenant and Tenant Parties acknowledge and agree that the accounting for and reconciliation of the Gross Revenues and Percentage Rent under this paragraph as to the Termination Partial Calendar Year shall be an accounting and reconciliation of such Gross Revenues and Percentage Rent for all Facilities (inclusive of the Florida Facilities).
5 NTD: Identity of Florida Assignee to be confirmed.
3. Partial Assignment of Master Lease.
(a) Partial Assignment and Assumption of Master Lease as to the Florida Facilities. Landlord does hereby transfer, assign, convey and deliver to Florida Assignee, effective as of the Effective Date, its entire right, title and interest in the Master Lease with respect to the Florida Facilities only (and for the avoidance of doubt, the Master Lease will not be assigned with respect to the Terminated Facilities and will be terminated with respect to the Terminated Facilities pursuant to paragraph 1 above). In exchange for the assignment of the Master Lease as to the Florida Facilities only from Landlord to Florida Assignee and other good and valuable consideration, Florida Assignee does hereby accept this assignment and, for the benefit of Landlord, Florida Assignee expressly assumes and agrees to perform all of the terms, covenants, conditions and obligations of Landlord arising under the Master Lease with respect to the Florida Facilities from and after the Effective Date. Florida Assignee shall be permitted to record, at its sole cost, in the official land records of the appropriate county, a memorandum evidencing the assignment of the Master Lease as to the Florida Facilities only.
(b) Florida Assignee’s Indemnification of Landlord. Florida Assignee shall defend, protect, indemnify, and hold Landlord harmless from and against any and all liabilities, obligations, claims, suits, losses, costs, damages, or expenses (including court costs and reasonable attorneys’ fees) arising from or relating to the failure of Florida Assignee to fully perform all of its obligations as “landlord” under the Master Lease with respect to the Florida Facilities from and after the Effective Date.
(c) Landlord’s Indemnification of Florida Assignee. Landlord shall defend, protect, indemnify and hold Florida Assignee harmless from and against any and all liabilities, obligations, claims, suits, losses, costs, damages, or expenses (including court costs and reasonable attorneys’ fees) arising from or relating to the failure of Landlord to fully perform all of its obligations as “landlord” under the Master Lease with respect to the Florida Facilities prior to the Effective Date.
4. Mutual Release.
(a) Effective as of the Effective Date, each Party (i) knowingly, voluntarily, unconditionally, irrevocably, and expressly forever discharges and releases the other Parties and their respective members, shareholders, limited partners, general partners, officers, managers, directors, owners, employees, agents, representatives, attorneys, beneficiaries, predecessors, successors and assigns (collectively with the other Parties, the “Released Parties”) of and from, and remises and waives any Damages and/or Claims (as defined below), and (ii) knowingly, voluntarily and expressly waives and relinquishes all rights and benefits, and covenants and agrees not to commence any action, legal proceeding, cause of action or suits in law or equity, of whatever kind or nature, directly or indirectly, with or against the Released Parties, in connection with any Damages and/or Claims.
(b) Each Party acknowledges that, subsequent to the execution of this Agreement, it may discover Damages and/or Claims which are unknown or unanticipated as of the Effective Date, including unknown or unanticipated Damages and/or Claims that arose from, or are based upon or relate to, matters for which such Party’s release is given under this Agreement, and that, if known on the Effective Date, may have materially affected such Party’s decision to execute this Agreement. This Agreement contemplates the extinguishment of any such unknown or unanticipated Damages and/or Claims.
(c) Each Party agrees, represents and warrants that (i) it is represented by counsel; (ii) it has read and fully understands the provisions of this Agreement and the waivers and released contained in this Agreement; (iii) it has been specifically advised by its counsel of the consequences of the above waiver and release and this Agreement generally; (iv) the waivers and releases in this Agreement have been negotiated and agreed upon in light of such review and advice; (v) it has not assigned, transferred, pledged, hypothecated, or otherwise conveyed its interest in the Master Lease and the Damages and/or Claims; and (vi) each Party hereby expressly waives and relinquishes all rights and benefits it may have under applicable law which would limit the waiver and release in this Agreement to the Damages and/or Claims which are known to or anticipated by such Party.
(d) As used in this Agreement, “Damages and/or Claims” means any and all manner of, any actions, causes of action, suits, claims, counterclaims, demands, costs, debts, rent, dues, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, acknowledgments, extents, executions, liens, remedies, liabilities judgments, defenses, assertions, allegations, rights of setoff, sums of money owed, proceedings, doings, omissions, loss of services, attorneys’ fees and expenses, and all expenses and compensation related in any way to all known or unknown injuries or damages resulting, now or later, from the Termination and Eviction, whether fixed or contingent, asserted or unasserted, known or unknown, at law or in equity, in contract or tort, unsecured, secured, priority, administrative, or otherwise, suspected or unsuspected, accrued or unaccrued, patent or latent, liquidated or unliquidated, pending or threatened, and all resulting damages, including but not limited to actual damages, compensatory damages, consequential damages, statutory damages, punitive and exemplary damages, pre-judgment and post-judgment interest, attorneys’ fees and costs of court, and all other damages, which any Party has, ever had, or may have now or hereafter, against the Released Parties for, upon, or by reason of the Master Lease, the Terminated Facilities, and/or the Florida Facilities, but excluding in any event: (i) the rights, remedies, representations, warranties, indemnities, covenants and other obligations created by this Agreement, the Transaction Agreement, and the Conveyance Documents; and (ii) the Surviving Obligations as to the Terminated Facilities.
5. Final Agreement. This Agreement reflects the entire and final agreement of the Parties thereto with respect to the subject matter hereof and supersedes all prior negotiations, discussions and writings with respect thereto.
6. Defined Terms. Capitalized words not otherwise defined herein shall have the meaning ascribed to such word in the Master Lease.
7. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same document. Further, this Agreement may be executed by electronic means including, but not limited to, pdf or other electronic signatures (including Docusign).
8. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee, without giving effect to any conflict of laws principles which would cause the laws of any other jurisdiction to apply.
9. Attorneys’ Fees. In the event any litigation or other proceeding brought by any Party hereunder, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and costs of suit. The court in such litigation or other proceeding shall be requested to designated the prevailing party, if any.
10. Interpretation. This Agreement shall, unless otherwise specified herein, be subject to the following rules of interpretation: (a) the singular includes the plural and the plural the singular; (b) words importing any gender include the other genders; (c) references to persons or entities include its permitted successors and assigns; (d) words and terms which include a number of constituent parts, things or elements shall be construed as referring separately to each constituent part, thing or element thereof, as well as to all of such constituent parts, things or elements as a whole; (e) references to statutes are to be construed as including all rules and regulations adopted pursuant to the statute referred to and all statutory provisions consolidating, amending or replacing the statute referred to; (f) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments thereto or changes therein entered into in accordance with its respective terms; (g) the words “approve” or “consent” or “agree” or derivations of said words or words of similar import mean, unless otherwise expressly provided herein or therein, the prior approval, consent, or agreement in writing of the person holding the right to approve, consent or agree with respect to the matter in question, and the words “require” or “judgment” or “satisfy” or derivations of said words or words of similar import mean the requirement, judgment or satisfaction of the person who may make a requirement or exercise judgment or who must be satisfied, which approval, consent, agreement, requirement, judgment or satisfaction shall, unless otherwise expressly provided herein or therein, be in the sole and absolute discretion of the person holding the right to approve, consent or agree or who may make a requirement or judgment or who must be satisfied; (h) the words “include” or “including” or words of similar import shall be deemed to be followed by the words “without limitation”; (i) the words “hereto” or “hereby” or “herein” or “hereof” or “hereunder,” or words of similar import, refer to this Agreement in its entirety; (j) references to sections, articles, paragraphs or clauses are to the sections, articles, paragraphs or clauses of this Agreement; and (k) numberings and headings of sections, articles, paragraphs and clauses are inserted as a matter of convenience only and shall not affect the construction of this Agreement.
[Remainder of page intentionally left blank]
[Signature page follows]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.
LANDLORD:
National Health Investors, Inc., a Maryland corporation (on behalf of itself and each of the identified Landlord Parties in Exhibit A attached hereto)
By:
Print Name: Kristin S. Gaines
Title: Senior Vice President and Chief Transaction Officer
TENANT:
NHC/OP, L.P., a Delaware limited partnership (on behalf of itself and each of the identified Tenant Parties in Exhibit A attached hereto)
By: NHC Delaware, Inc., a Delaware corporation
Its: General Partner
By:
Print Name:
Title:
EXHIBIT A to Partial Master Lease Termination Agreement and Partial Assignment and Assumption of Master Lease
SCHEDULE OF FACILITIES, LANDLORD PARTIES AND TENANT PARTIES
|
Facility No.
|
Property Name and Address
|
Landlord Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Tenant Parties for Property
*To be confirmed during Review Period |
Type of Facility |
|
1. |
NHC HealthCare, Anniston
Calhoun County |
NHI |
NHC HealthCare/Anniston, LLC |
151 SNF beds |
|
2. |
NHC HealthCare, Moulton
Lawrence County |
NHI and NHI-REIT of Alabama, L.P. |
NHC HealthCare/Moulton, LLC |
136 SNF Beds |
|
3. |
NHC Bayonet Point Health &
Pasco County |
NHI and NHI/REIT of Florida, L.P. |
National Health Realty, LLC |
180 SNF Beds |
6 Parcels 3 and 6 of this Property constitute Supplemental Properties.
|
Facility No.
|
Property Name and Address
|
Landlord Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Tenant Parties for Property
*To be confirmed during Review Period |
Type of Facility |
|
4. |
NHC Parkway Health & Rehabilitation Center
Martin County |
NHI |
National Health Realty, LLC |
177 SNF Beds |
|
5. |
NHC Health Center of Merritt Island 32953-50347
Brevard County |
NHI |
National Health Realty, LLC |
180 SNF Beds |
|
6. |
NHC Health Center of Plant City 33566-75478
Hillsborough County |
NHI |
National Health Realty, LLC |
180 SNF Beds |
7 The portion of this Property conveyed to NHI on February 28, 1996 constitutes a Supplemental Property.
8 Parcel 1 of this Property constitutes a Supplemental Property.
|
Facility No.
|
Property Name and Address
|
Landlord Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Tenant Parties for Property
*To be confirmed during Review Period |
Type of Facility |
|
7. |
NHC HealthCare, Glasgow
Barren County |
NHI |
NHC HealthCare/Glasgow, LLC |
194 SNF Beds 12 AL Beds |
|
8. |
NHC HealthCare, Desloge
St. Francois County |
NHI |
NHC HealthCare/Desloge, LLC |
120 SNF Beds |
|
9. |
NHC HealthCare, Joplin
Newton County |
NHI |
NH HealthCare/Joplin, LLC |
124 SNF Beds |
|
10. |
NHC HealthCare, Kennett
Dunklin County |
NHI |
NHC HealthCare/Kennett, LLC |
170 SNF Beds |
|
11. |
NHC Maryland Heights
St. Louis County |
NHI |
NHC HealthCare/Maryland Heights, LLC |
220 SNF Beds |
|
Facility No.
|
Property Name and Address
|
Landlord Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Tenant Parties for Property
*To be confirmed during Review Period |
Type of Facility |
|
12. |
NHC HealthCare, St. Charles
St. Charles County |
NHI |
NHC HealthCare/St. Charles, LLC |
120 SNF Beds |
|
13. |
Lake St. Charles Retirement Center
St. Charles County |
NHI |
NHC Place/Lake St. Charles, LLC |
26 ALF Units and 152 ILF Units (Total 178 Units) |
|
14. |
NHC HealthCare, Anderson
Anderson County |
NHI/Anderson, LLC |
NHC HealthCare/Anderson, LLC |
290 SNF Beds |
|
15. |
NHC HealthCare, Greenwood
Greenwood County |
NHI |
NHC HealthCare/Greenwood, LLC |
152 SNF Beds |
|
Facility No.
|
Property Name and Address
|
Landlord Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Tenant Parties for Property
*To be confirmed during Review Period |
Type of Facility |
|
16. |
NHC HealthCare, Laurens
Laurens County |
NHI and NHI/Laurens, LLC |
NHC HealthCare/Laurens, LLC |
176 SNF Beds |
|
17. |
NHC HealthCare, Athens
McMinn County |
NHI |
NHC HealthCare/Athens, LLC |
86 SNF Beds |
|
18. |
NHC HealthCare, Chattanooga
Hamilton County |
NHI |
NHC HealthCare/Chattanooga, LLC |
200 SNF Beds |
|
19. |
NHC Parkwood Retirement Apartments
Hamilton County |
NHI |
NHC HealthCare/Chattanooga, LLC |
30 ILF Units |
9 The portion of this Property conveyed to NHI on January 17, 1997 constitutes a Supplemental Property.
|
Facility No.
|
Property Name and Address
|
Landlord Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Tenant Parties for Property
*To be confirmed during Review Period |
Type of Facility |
|
20. |
NHC HealthCare, Dickson
Dickson County |
NHI |
NHC HealthCare/Dickson, LLC |
191 SNF Beds 20 ALF Units |
|
21. |
NHC HealthCare, Franklin
Williamson County |
NHI |
NHC HealthCare/Franklin, LLC |
80 SNF Beds |
|
22. |
NHC HealthCare, Hendersonville
Sumner County |
NHI |
NHC HealthCare/Hendersonville, LLC |
122 SNF Beds |
|
23. |
NHC Colonial Hill Retirement Center
Washington County |
NHI |
NHC HealthCare/Johnson City, LLC |
63 ILF Units |
|
Facility No.
|
Property Name and Address
|
Landlord Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Tenant Parties for Property
*To be confirmed during Review Period |
Type of Facility |
|
24. |
NHC HealthCare, Johnson City
Washington County |
NHI |
NHC HealthCare/Johnson City, LLC |
167 SNF Beds |
|
25. |
NHC HealthCare, Lewisburg
Marshall County |
NHI |
NHC HealthCare/Lewisburg, LLC |
100 SNF Beds |
|
26. |
NHC HealthCare, McMinnville
Warren County |
NHI |
NHC HealthCare/McMinnville City, LLC |
115 SNF Beds |
|
27. |
NHC HealthCare, Milan
Gibson County |
NHI |
NHC HealthCare/Milan, LLC |
117 SNF Beds |
|
Facility No.
|
Property Name and Address
|
Landlord Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Tenant Parties for Property
*To be confirmed during Review Period |
Type of Facility |
|
28. |
NHC HealthCare, Oakwood
Marshall County |
NHI |
NHC HealthCare/Oakwood, LLC |
60 SNF Beds |
|
29. |
NHC HealthCare, Pulaski
Giles County |
NHI |
NHC HealthCare/Pulaski, LLC |
102 SNF Beds |
|
30. |
NHC HealthCare, Scott
Lawrence County |
NHI |
NHC HealthCare/Scott, LLC |
60 SNF Beds |
|
31. |
NHC HealthCare, Sequatchie
Sequatchie County |
NHI |
NHC HealthCare/Sequatchie, LLC |
110 SNF Beds |
|
Facility No.
|
Property Name and Address
|
Landlord Parties for Property
(“NHI” = National Health Investors, Inc., a Maryland corporation)
*To be confirmed during Review Period
|
Tenant Parties for Property
*To be confirmed during Review Period |
Type of Facility |
|
32. |
NHC HealthCare, Smithville
DeKalb County |
NHI |
NHC HealthCare/Smithville, LLC |
114 SNF Beds 6 ALF Units |
|
33. |
NHC HealthCare, Somerville
Fayette County |
NHI |
NHC HealthCare/Somerville, LLC |
72 SNF Beds 12 ALF Beds |
|
34. |
NHC HealthCare, Sparta
White County |
NHI |
NHC HealthCare/Sparta, LLC |
96 SNF Beds |
|
35. |
NHC HealthCare, Bristol
Washington County, VA Sullivan County, TN |
NHI and NHI-REIT of Virgina, L.P. |
NHC HealthCare/Bristol, LLC |
120 SNF Beds |
“Florida Facilities” mean the following Facilities: Facility No. 3, Facility No. 4, Facility No. 5 and Facility No. 6 above.
EXHIBIT 31.1
CERTIFICATION
I, Stephen F. Flatt, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of National HealthCare Corporation; |
|
2. |
Based on my knowledge, this quarterly 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 quarterly 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 function); |
|
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: August 6, 2026
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/s/ Stephen F. Flatt |
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Stephen F. Flatt |
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Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Brian F. Kidd, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of National HealthCare Corporation; |
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2. |
Based on my knowledge, this quarterly 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 quarterly report; |
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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; |
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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: |
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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; |
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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; |
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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 |
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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 |
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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 function): |
|
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 |
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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: August 6, 2026
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/s/ Brian F. Kidd |
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Brian F. Kidd |
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Senior Vice President and Chief Financial Officer |
Exhibit 32
Certification of Quarterly Report on Form 10-Q
of National HealthCare Corporation
For the Quarter Ended June 30, 2026
The undersigned hereby certify, pursuant to 18 U.S.C. Section 906 of the Sarbanes-Oxley Act of 2002, that, to the undersigned's best knowledge and belief, the Quarterly Report on Form 10-Q for National HealthCare Corporation ("Issuer") for the period ending June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the "Report"):
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(a) |
fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(b) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. |
This Certification accompanies the Quarterly Report on Form 10-Q of the Issuer for the quarterly period ended June 30, 2026.
This Certification is executed as of August 6, 2026.
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/s/Stephen F. Flatt |
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Stephen F. Flatt |
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Chief Executive Officer |
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/s/ Brian F. Kidd |
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Brian F. Kidd |
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Senior Vice President and Chief Financial Officer |
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A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
