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UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): October 3,
2022
ETHEMA
HEALTH CORPORATION
(Exact name of registrant
as specified in its charter)
Colorado |
000-15078 |
84-1227328 |
(State
or other jurisdiction of
incorporation
or organization) |
(Commission
File Number) |
(IRS
Employer
Identification
No.) |
950
Evernia Street, West
Palm Beach, Florida
33401 |
(Address
of principal executive offices) |
(416)
500-0020 |
(Registrant’s
telephone number, including area code) |
Check the appropriate
box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
[
] |
|
Written
communications pursuant to Rule 425 under the Securities Act |
[
] |
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act |
[
] |
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[
] |
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
The
descriptions listed below in each section do not purport to be complete and in each case are qualified in their entirety
by
reference to the Exhibits listed with each section.
Item
1.01 Entry into a Material Definitive Agreement.
On
June 28, 2023 Ethema Health Corporation (“Ethema”
or the “Company”), Cranberry Cove Holdings Ltd., (“CCH”), and Leonite Capital, LLC, (“Leonite”
and together with the Company and CCH, the “Parties”) entered into a Share Exchange Agreement that would transfer
the ownership of CCH from Ethema to Leonite effective June 30, 2023.
Leonite
exchanged their $400,000 Series B preferred stock in the Company together with accrued and outstanding dividends of $61,183 for all of
the outstanding stock in CCH. CCH had $700,000 of Series A preferred shares outstanding to Leonite and accrued dividends outstanding
as of June 30, 2023 of $244,734. In addition CCH had a mortgage outstanding of $3,525,223 and Government Assistance Loans of $45,317
which were assumed by Leonite with the sale. The company recorded a gain on the sale of CCH in the amount of $2,496,069
The
Share Exchange Agreement, a copy of which is attached hereto as Exhibit 10.1.
Item
2.01 Completion of Acquisition or Disposition of Assets.
The
Company subsidiary, Evernia Health Center, LLC, (“Evernia”) had an option to purchase its leased real estate at 950 Evernia
Street, West Plam Beach Florida (“950”). The option was a part of the Evernia lease and it was an option to purchase for
$5,000,000.00. The option expired unexercised on January 1, 2022 at which time Evernia extended the lease for a five year term ending
on January 31, 2027. The Company wanted to ensure that 950 would be available for its subsidiary Evernia on a long term basis and therefore,
on October 3, 2022 the Company entered into a purchase and sale agreement with Evernia Station Limited Partnership for the purchase of
950 for the sum of $5,500,000 (“Purchase Agreement”). The closing was originally set for February 1, 2023. Through a series
of 6 addendums to the Purchase Agreement requiring the payment of a total $180,000 in extension fees, the Closing was extended to August
3, 2023.
The
foregoing description of the Purchase Agreement and Adendums does not purport to be complete and is qualified in its entirety by reference
to the Purchase Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.
On
February 27, 2023 the Company signed a listing agreement with Stream Capital Partners listing 950 for sale at a price of $9,568,000 for
the purposes of identifying a buyer that would purchase and then lease back 950 to the Company for the long term. The agreement is attached
hereto as exhibit 10.3.
On
May 4, 2023 the Company signed a Letter of Intent with Pontus Net Lease Advisers, LLC (“LOI”) to sell 950 for $8,500,000
and leaseback 950 to the Company for a term of twenty years with two ten year extensions. The LOI is attached hereto as Exhibit 10.4.
On
May 19, 2023 the Company signed a purchase and sale agreement with Pontus Net Lease Advisors to sell 950 for $8,500,000 as per the conditions
set forth in the LOI. The purchase and sale agreement is attached hereto as Exhibit 10.5
On
August 4, 2023 the Company completed both the purchase of 950 from Evernia Station Limited Partnership and the sale of 950 to Pontus
Net Lease Advisors, LLC. Net proceeds on the two transactions after payment of the extension fees was $2,820,000 and expenses for the
two transaction not including the extension fees totaled $520,627.60.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On
August 4, 2023 the Company entered into a long term lease for 950 with an initial term of twenty years, and two ten year extension options.
The lessor is Pontus EHC Palm Beach, LLC , a Delaware limited liability company and a portfolio company of Pontus Net Lease Advisors,
LLC. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75%
per year for a total term lease obligation of $19,595,653 over the initial twenty-year term. The Lease is personally guaranteed by the
Company President and the guarantee may be released after 5 years based on certain financial and performance metrics being met. The lease
is attached hereto as Exhibit 10.6
On
August 4, 2023 the Company replaced the original lease between Evernia and Evernia Station Limited Partners with a new lease mirroring
the previous lease but between Evernia and the Company. A copy of the new Lease is attached hereto as Exhibit 10.7.
Item
3.02 Unregistered Sales of Equity Securities.
On
June 28, 2023 the Company entered into a Warrant Exchange Agreement with Leonite that exchanged a Warrant outstanding to Leonite originally
issued on June 12, 2020 for a new Warrant dated June 30, 2023. The old warrant and the new warrant are attached to the Warrant exchange
Agreement which is attached hereto as Exhibit 10.8. The substantial changes to the warrant affect the number of shares in the warrant,
the exercise price and the term. The original warrant provided for Leonite to have a continuing right to purchase a 20% share of the
outstanding common shares until it expired on June 12, 2025 which was originally set at 326,286,847 shares. The new warrant fixed the
20% figure at the current outstanding share amount being 745,810,761 shares with no allowance for adjustment, except normal adjustments
due to splits or consolidations, until the new expiry date of June 30, 2027. The exercise price in the original warrant was set at $0.10
but with allowance for adjustments would have been exercisable at $0.0004 per share. The exercise price in the new warrant is set at
$0.001 and only adjustable if the Company issues any shares at a price less than the exercise price during the warrant period except
for any issuance of shares to the Company president or related party on any debt outstanding to those parties as of June 30, 2023, and
only to a limit of $0.0005 per share. The Warrant Exchange agreement was conditional on Leonite receiving a full payment of all of its
outstanding loans originally set as by July 20, 223. This date was extended and all of the notes were repaid on August 4, 2023. Leonite
held several notes at June 30, 2023, some of which were convertible into shares at variable rates. The dates of the notes were July 12,
2020, May 3, 2022, June 1, 2022 and March 1, 2022. The total amount repaid to Leonite was $1,449,000.
There
were two other convertible notes outstanding with variable rate conversions originally issued as part of the 2020 restructuring, which
were repaid in full on August 4, 2023. The first payment was $65,449.87 to Ed Blasiak for his note dated September 14, 2020 and the second
payment was $179,474.35 to Joshua Bauman for his note dated September 14, 2020.
Item
7.01 Regulation FD Disclosure.
Press
releases related to the transactions covered by this 8-k were released on October 5, 2022, March 1, 2023, April 4, 2023, June 8 2023,
July 17, 2023 and August 11, 2023. These press releases are attached as Exhibit 10.9
Item
9.01 Financial Statements and Exhibits.
Exhibit
No. Description
10.1 Share Exchange Agreement
10.2 Purchase Agreement and Addendums
10.3 Stream Capital Partners Listing Agreement
10.4 Pontus Net Lease Advisors Letter of Intent
10.5 Pontus Net Lease Advisers Agreement of Purchase and Sale
10.6 Pontus EHC Palm Beach, LLC Lease
10.7 Ethema Health Corporation Lease to Evernia Health Center
10.8 Warrant Exchange Agreement
10.9 Press Releases
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date:
August 11, 2023
By:
/s/ Shawn E. Leon
Name:
Shawn E. Leon
Title:
CEO
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 10.7
COMMERCIAL
LEASE
THIS
COMMERCIAL LEASE (the “Lease”), made as of the 4th day of August, 2023 ("Execution Date"), between Ethema
Health Corporation, a Colorado corporation ("Landlord") and Evernia Health Center, LLC, a Florida limited liability company,
or its permitted assigns ("Tenant").
W
I T N E S S E T H:
In
consideration of the covenants herein contained on the part of Tenant to be kept and performed, Landlord hereby leases to Tenant, and
Tenant hereby leases from Landlord, the Premises located at 950 Evernia Street, West Palm Beach, Florida 33401, as more particularly
described on Exhibit 1 (“Leased Premises”).
For
clarity, the improvements located on the Leased Premises consists of a 21,000 +/- square foot building consisting of three (3) floors,
two (2) floors of residential units and one (1) floor of unfinished commercial space.
TO
HAVE AND TO HOLD the same unto Tenant on the following terms and conditions:
BUSINESS
PROVISIONS
A. COMMENCEMENT
DATE. The Commencement Date and Effective Date of this Lease is February 1, 2019.
B.
LEASE TERM. The Lease Term shall commence on the Commencement Date and expire on the last day
of the thirty sixth (36th) month thereafter ("Initial Lease Term").
Provided:
(i) this Lease is in full force and effect; and (ii) Tenant is not then in default hereunder, Tenant shall have the right to elect to
extend the Lease Term for one (1) term of sixty (60) months (the "Extended Lease Term”). The Extended Lease Term shall be
upon the terms, covenants and agreements provided in this Lease, provided, however: (a) that the Rent shall be due on the first (1st)
day of the Extended Lease Term; (b) Tenant shall not be entitled to any Reduced Rent; and (c) Tenant shall not be entitled to any Tenant
Allowance or any other incentive(s) or allowances. If Tenant elects to extend the Lease Term, Tenant shall give notice to Landlord of
such election on or before October 1, 2021 to extend the Lease Term for the Extended Lease Term. The phrase "Lease Term" shall
include the Initial Lease Term and Extended Lease Term, as the case may be.
Notwithstanding
the foregoing, if: (i) Tenant is not then in default hereunder; (ii) Tenant has paid all Rent hereunder; and (iii) Tenant has completed
and paid for Tenant’s Work, Tenant shall have the right to terminate this Lease (“Lease Termination Option”) during
the period commencing on February 1, 2020 and ending on September 30, 2021 (“Lease Termination Period”) after: (a) not less
than one hundred twenty (120) days prior written notice to Landlord (“Lease Termination Notice”); (b) payment of a lease
termination fee equal to three (3) months Minimum Rent (“Lease Termination Fee”); and (c) Tenant delivers the Leased Premises
to Landlord in the condition required by this Lease.
For
clarity, the Lease Termination Option only exists during the Lease Termination Period.
C.
PERMITTED USE. The Permitted Use of the Leased Premises is inpatient
detox, residential inpatient services, out-patient detox, medically assisted treatment facility, partial hospitalization, intensive outpatient,
out-patient, lab facilities, or any other related business to the treatment of substance abuse and mental health.
Nothing
in this Lease shall be construed to require Tenant to continuously operate its business for the Permitted Use.
D. MINIMUM
RENT. Tenant shall pay Minimum Rent as follows:
During
the first year of the Initial Lease Term, the Minimum Rent shall be Twenty Four Thousand ($24,000.00) Dollars per month.
The
Minimum Rent shall be increased by five percent (5%) per annum, cumulative, commencing on March 1, 2020 and on March 1 of each successive
year during the Lease Term.
Notwithstanding
the foregoing:
(a) The
Minimum Rent Commencement Date for the second and third floors (without bifurcating the Leased Premises) shall be March 1, 2019, provided,
however, that fifty percent (50%) of the Minimum Rent for the second and third floor (i.e. Eight Thousand ($8,000.00) Dollars per month)
shall be abated until September 1, 2019, at which time Tenant shall commence payments of the full Minimum Rent for the second and third
floors of Sixteen Thousand ($16,000.00) Dollars per month.
(b) The
Minimum Rent Commencement Date for the first floor (without bifurcating the Leased Premises) shall be the earlier of: (i) August 1, 2019;
or (ii) the first (1st) day of the month following the issuance of a certificate of occupancy (whether temporary or permanent)
for Tenant’s Work on the first floor, at which time fifty percent (50%) of the Minimum Rent for the first floor (i.e. Four Thousand
($4,000.00) Dollars per month) shall be abated until the earlier of: (1) November 1, 2019; or (2) receipt of DCF Licensing, at which
time Tenant shall commence payment of full Minimum Rent for the first floor of Eight Thousand ($8,000.00) Dollars per month.
On
the Effective Date, Tenant shall pay the sum of Sixteen Thousand ($16,000.00) Dollars as prepaid Minimum Rent to be applied to the first
payments of Minimum Rent hereunder.
E. ADDITIONAL
RENT. All payments to be made by Tenant hereunder shall be deemed to be Additional Rent. The term Rent shall include Minimum Rent and
Additional Rent. The Additional Rent Commencement Date shall be the Effective Date.
F. SECURITY
DEPOSIT. On the Effective Date, Tenant shall pay the sum of Sixteen Thousand ($16,000.00) Dollars as a Security Deposit. On October 1,
2019, Tenant shall pay the additional sum of Eight Thousand ($8,000.00) Dollars as a Security Deposit.
G. IMPROVEMENT
ALLOWANCE. Landlord shall reimburse Tenant, as an improvement
allowance as follows: (i) the amount actually expended for costs for Tenant’s Work on the first floor, not to exceed One Hundred
Thousand ($100,000.00) Dollars (“First Floor Allowance”); (ii) the amount actually expended for costs for Tenant’s
Work on the second floor, not to exceed Twenty Five Thousand ($25,000.00) Dollars; and (iii) the amount actually expended for costs for
Tenant’s Work made on the third floor, not to exceed Twenty Five Thousand ($25,000.00) Dollars (the “Improvement Allowance”).
The
Improvement Allowance with respect to the first floor shall be paid pursuant to the Draw Schedule attached hereto as Exhibit 6 and in
accordance with standard construction loan disbursement requirements utilized by an institutional lender doing business in Palm Beach
County, Florida, including Landlord’s receipt of the following, each in form and substance satisfactory to Landlord: (i) a timely
request for an advance, together with all required supporting documentation; (ii) Landlord obtaining a title search through the date
of the advance and insuring that, except as previously approved by Landlord in writing, there has been no change in the status of title
to the Leased Premises; (iii) a satisfactory inspection by Landlord verifying that Tenant’s Work for which the advance is requested
has been completed in accordance with the Approved Plans; and (iv) such other documents, instruments, information, agreements and certificates
as Landlord may reasonably require, including the documents listed below. The Improvement Allowance with respect to the first floor shall
be paid within ten (10) days after receipt of items (i) – (iv).
Landlord
shall retain ten percent (10%) of the First Floor Allowance until the final draw and receipt of all of the information and documents
set forth in the following paragraph.
Except
as provided above, the Improvement Allowance with respect to the second and third floor shall be paid pursuant to the Draw Schedule attached
hereto as Exhibit 6 and within ten (10) days after the later of: (i) completion of Tenant’s Work on the particular floor; and (ii)
Tenant’s furnishing the following to Landlord: (a) an invoice with paid receipts evidencing payment of not less than the applicable
Draw; and (b) lien releases from all such contractors, subcontractors, suppliers and materialmen
that performed Tenant’s Work so that no mechanic’s lien can exist under Applicable Laws.
H. LANDLORD’S
DELIVERY. The Leased Premises is absolutely and without
exception, subject to: (i) all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating
the use of the Leased Premises (“Applicable Laws”); (ii) any easements, conditions, encumbrances, covenants, reservations,
restrictions or matters of record; and (iii) all existing leases for space in the Leased Premises pursuant to the Rent Roll attached
hereto as Exhibit 2 (“Space Leases”). On the Effective Date, the Space Leases shall become subleases and Tenant, as sub-landlord,
may deal with the Space Leases, including the termination thereof or the eviction of the tenants thereunder as Tenant deems appropriate,
provided, however, that Tenant shall indemnify Landlord against all loss on account thereof pursuant to Section 12.5 hereof.
Except
as required by: (i) Applicable Law; (ii) Governmental Authorities; (iii) Landlord’s Lender; or (iv) normal and customary construction
related documents as necessary to complete Tenant’s Work, Tenant shall not record, nor cause or allow to be recorded, additional
documents pertaining to title without the prior written consent of Landlord, which consent may be granted or denied in Landlord’s
sole discretion, exercised reasonably.
Landlord,
to its actual knowledge, makes the following representations: (i) the Improvements are not subject to any physical defects and the Property
is zoned for the Permitted Use; and (ii) the Improvements are zoned for up to sixty (60) beds of inpatient medical detox and substance
abuse rehabilitation, subject to the WPB Building Services zoning letter dated 02-26-17, DAC Staff Report dated 07-12-17 and DAC Order,
dated 08-09-17, a copy of which is attached hereto as Exhibit 3.
For
the purpose of the foregoing representations, the term “actual knowledge” shall mean
only the actual, and not constructive, knowledge of Barrett M. Singer and such term shall not imply any: (i) duty of inspection, other
than inspection of Landlord’s files and records kept in the ordinary course of its business; and (ii) any duty to make physical
inspections or tests of the Leased Premises. Landlord represents and warrants that Barrett M. Singer is the person with the most knowledge
of the Leased Premises.
Except
as set forth to the contrary in this Lease: (i) the Leased Premises is being leased in "as is, where is, and with all faults"
condition; (ii) Tenant acknowledges that it had the opportunity to retain independent, qualified professionals to inspect the Leased
Premises and has determined that the condition of the Leased Premises is acceptable; (iii) Tenant acknowledges
that neither Landlord nor any person, firm or entity (“Person”) acting for, or on behalf of, Landlord, has made any representations
or warranties of any nature whatsoever concerning the Leased Premises, including, but not limited to: (a) the quantity or quality of
the Leased Premises; (b) the suitability of the Leased Premises for any particular purpose, including zoning and land use laws; or (c)
the physical condition of the Leased Premises including: (1) environmental conditions; (2) geological conditions; (3) usages or future
usage of adjoining properties; (4) current and future access to the Leased Premises; (5) the Improvements or any part thereof; (6) compliance
of the Leased Premises with any or all past, present or future federal, state or local ordinances, rules, regulations or laws, building,
fire or zoning ordinances, codes or other similar laws; (7) the habitability, merchantability, marketability, profitability or fitness
of the Leased Premises or the Improvements, for any particular purpose, apparent, non-apparent or latent, which now exist or which may
hereafter exist; and (8) Landlord shall have no liability for any claims or losses that Tenant or its successors or assigns may incur
as a result of construction of the Improvements and/or other defects which may now or hereafter exist with respect to the Leased Premises.
Tenant
acknowledges that, except as set forth in this Lease, it is relying solely upon its own inspections and is not relying upon any information,
representation, guaranty or warranty (whether express or implied, oral or written, material or immaterial) that may have been given by
or made on behalf of Landlord, or any Person acting on behalf of Landlord.
THE
REPRESENTATIONS AND WARRANTIES OF LANDLORD CONTAINED IN THIS LEASE ARE THE ONLY REPRESENTATIONS AND WARRANTIES GIVEN CONCERNING THE LEASED
PREMISES AND THERE ARE NO OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE.
I. TENANT’S
WORK. Tenant’s Work will include the items listed on the DAC Staff Report dated 07-12-17 and DAC Order, dated 08-09-17. Tenant
shall comply with all of the provisions of said Report and Order.
All
plans and specifications for Tenant’s Work are subject to Landlord’s approval pursuant to Paragraph 8.02 hereof.
Tenant
shall, at Tenant’s expense, obtain all permits and/or governmental approvals necessary to complete Tenant’s Work.
J. TENANT’S
SIGNAGE. Subject to Applicable Laws, Tenant,
at Tenant’s expense, will have the right to install the maximum exterior signage, subject to Landlord’s prior written approval
which shall not be unreasonably withheld or delayed.
Tenant
shall, at Tenant’s expense, be responsible to obtain all sign permits.
Tenant
shall: (i) maintain all Tenant signage in good and working condition and in accordance with Applicable Laws; and (ii) remove all Tenant
signage at the expiration of the term and repair all damages caused by such removal.
K. NATURE
OF LEASE. This Lease is a, so called, triple net bond, lease that is completely carefree to Landlord. Except as expressly set forth in
this Lease, Landlord is not responsible for: (i) any costs, charges, expenses, and outlays of any nature whatsoever arising from, or
relating to, the Leased Premises, or the use and occupancy thereof, or the contents thereof; (ii) the maintenance of any portion of the
Leased Premises whatsoever; or (iii) the business carried on in the Leased Premises. Tenant shall pay all charges, expenses, costs, and
outlays of every nature and kind relating to the Leased Premises.
L. GUARANTOR.
Q Health Services, Inc. On the Effective Date, Guarantor shall execute and deliver the Guaranty in the form attached as Exhibit 4.
M. BROKER.
None.
N. PURCHASE
OPTION. If: (i) this Lease is in full force and effect; and (ii) Tenant is not then in default hereunder, Tenant shall, at any time prior
to the expiration of the Initial Lease Term, have the option to purchase the Leased Premises pursuant to the Option Agreement and Agreement
for Sale and Purchase attached hereto as Composite Exhibit 5.
O. CONFLICT.
In the event of a conflict between the Business Provisions and the Standard Provisions, the Business Provisions shall prevail.
STANDARD
PROVISIONS
1. CERTIFICATE/MEMORANDUM.
At any time after the Commencement Date, at Landlord’s request, Tenant shall execute a certificate or memorandum setting forth
such date and other pertinent data as may be requested by Landlord.
2. RENT.
2.1
Tenant shall pay to Landlord the Rent, in advance and without demand, beginning on the applicable
Rent Commencement Date, in the required monthly installments on the first day of each month of the Lease Term. If Tenant is obligated
to begin paying Rent as set forth herein on a day other than the first day of the month, Tenant shall pay Rent, equal to one-thirtieth
(1/30th) of the monthly Rent multiplied by the number of days in such fractional month, on the Rent Commencement Date and shall commence
paying full monthly Rent as of the first day of the next succeeding month.
2.2 Tenant
shall pay its Proportionate Share of Taxes to Landlord pursuant to Section 4, in advance and without demand, on the same date as payments
of Minimum Rent.
2.3 Tenant
shall pay any and all sales tax, tax on rents, and any other charges, taxes and/or impositions now in existence or hereinafter imposed,
if any.
2.4 The
covenant of Tenant to pay Rent is separate and distinct from any other covenants herein contained. Tenant shall have no right of setoff
or reduction in the payment of Rent for any reason.
2.5 All
payments required hereunder shall be in United States currency.
3.
SECURITY DEPOSIT. Tenant has delivered the Security Deposit to Landlord as security
for Tenant's faithful performance of Tenant's obligations hereunder. If Tenant fails to pay Rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Lease, Landlord may use, apply or retain all or any portion of the Security Deposit for
the payment of Rent or for the payment of any other sum to which Landlord may be entitled by reason of Tenant's default, or to compensate
Landlord for any loss or damage which Landlord may suffer thereby. If Landlord uses or applies all or any portion of the Security Deposit,
Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to the full amount. Landlord is not required to keep the Security Deposit separate from its general accounts or to cause interest
to accrue thereon or account to Tenant for any interest which is earned thereon. If Tenant performs all of its obligations hereunder,
the Security Deposit, or so much thereof as shall not therefore have been applied by Landlord, shall be returned, without interest, to
Tenant within thirty (30) days after: (i) the expiration of the Lease Term; and (ii) Tenant has vacated the Demised Premises as required
by the provisions hereof. No trust relationship is created herein between Landlord and Tenant with respect to the Security Deposit. The
Security Deposit is not an advance payment of Rent and is not a measure of Landlord's loss or damages.
4.
TAXES.
4.1 Tenant
shall pay all Property Taxes ("Property Taxes") for each full or partial Calendar Year during the Lease Term. Unless otherwise
consented to by Landlord, Tenant hereby waives any right it may have, by statute or otherwise, to protest Property Taxes.
4.2 Tenant
shall pay to Landlord an amount equal to one-twelfth (1/12th) of the estimated Property Taxes on the first day of each month
during the Lease Term (or prorated portion thereof). Payments for the initial month, if a partial month, shall be prorated on the same
basis as payments of Minimum Rent. Monthly Property Taxes shall be based on the Property Taxes, as estimated by Landlord, for the year
in question, and such payments are subject to increase or decrease on a periodic basis, as determined by Landlord to accurately reflect
Tenant's obligation. Property Taxes shall be reconciled annually. If Tenant's total payment of Property Taxes are less than Tenant's
actual obligation to pay Property Taxes, Tenant shall pay the difference to Landlord on demand. If Tenant's total payments of Property
Taxes are more than Tenant's actual obligation to pay Property Taxes, Landlord shall retain such excess and credit it against the next
payment of Property Taxes due from Tenant.
4.3 As
used herein, the term "Property Taxes" shall include all forms of assessment, license fee, use fee (such as SWA fees) levy,
penalty, water and sewer rents (except water meter charges and sewer rent based thereon) and other governmental impositions, charges
and taxes of every kind and nature whatsoever, extraordinary as well as ordinary, general and special, foreseen and unforeseen, and all
installments thereof (including interest on amounts which may be paid in installments) which shall or may, during the Lease Term, be
levied, assessed or imposed by any authority having the direct or indirect power to tax (including, without limitation, any city, county,
state or federal government, or any school, agricultural, lighting, drainage or other improvement or other taxing district) as against
Landlord, the Leased Premises, and all costs incurred by Landlord in contesting or negotiating the same with taxing authorities. Nothing
herein contained shall be construed to include within the definition of Property Taxes, any inheritance, estate, succession, transfer,
gift, franchise, corporation, income or profit tax or capital levy that is, or may be, imposed upon Landlord, provided, however, that
if, at any time after the date hereof, the methods of taxation shall be altered so that, in lieu of, or as a substitute for, the whole
or any part of the Property Taxes now levied, assessed or imposed on real estate as such, there is levied, assessed or imposed: (a) a
tax on the rents received from Tenant; or (b) a license fee measured by the rents receivable by Landlord; or (c) a tax or license fee
imposed upon Landlord which is otherwise measured by, or based in whole or part upon, the Leased Premises or the rents received therefrom;
or (d) an income or franchise tax, then the same shall be included in the definition of Property Taxes and shall be computed as if the
amount of such tax or fee so payable that would be due if the Leased Premises were the only property of Landlord subject thereto. In
addition to the foregoing, if any Governmental Authority acting under any existing or future law, ordinance or regulation, levy, assess
or impose a tax, excise and/or assessment upon or against this Lease, the execution hereof and/or the Rent, payable by Tenant to Landlord
whether by way of, substitution for, or in addition to, any existing tax or otherwise, and whether or not evidenced by documentary stamps
or the like, Tenant shall be responsible for and shall pay such tax, excise and/or assessment, or, if paid by, or due from, Landlord,
or Tenant shall reimburse Landlord for the amount thereof, as the case may be.
4.4 Tenant
shall pay, prior to delinquency, all taxes assessed against and levied upon trade fixtures, furnishings, equipment, inventory and all
other personal property of Tenant located in the Leased Premises or elsewhere and shall provide proof of payment to Landlord within ten
(10) days after written request. Tenant shall cause said trade fixtures, furnishings, equipment, inventory and all other personal property
to be assessed and billed separately from the real property or other property of Landlord. However, if any of Tenant's personal property
is assessed with, or as, Landlord's property, Tenant shall pay to Landlord the taxes attributable to said personal property within thirty
(30) days after receipt of a written statement setting forth the amount thereof.
5. USE.
5.1 Tenant
may only use the Leased Premises for the Permitted Use.
5.2 Tenant
shall not abandon or vacate the Leased Premises.
5.3 The
Leased Premises shall not be utilized in any way in manner which would violate Applicable Laws or any matters of title which may have
been granted with respect to the Leased Premises.
5.4 Tenant
shall comply with all Applicable Laws in effect during the Lease Term, including, without limitation, the Americans with Disabilities
Act.
5.5 Tenant
shall maintain the Leased Premises in a clean and sanitary manner, free from dirt, trash, garbage and rubbish and in accordance with
Applicable Laws.
5.6 In
the event Tenant conducts any activity within the Leased Premises which increases the insurance premium cost or invalidates any insurance
policy carried by Landlord, Tenant shall pay, as Additional Rent, upon demand of Landlord, any such increased cost.
5.7 Except
in strict compliance with Applicable Laws relating to environmental conditions and industrial hygiene, Tenant shall not use, nor permit
the use of, the Leased Premises or any part thereof, for the storage, transportation or disposal of "hazardous" or "toxic"
materials as commonly known or otherwise defined under any law relating to environmental conditions and industrial hygiene, including,
without limitation, the Resource Conversation and Recovery Act of 1976, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Super Fund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act and
any applicable federal or state law or regulation classifying or identifying hazardous or toxic materials. Tenant shall provide to Landlord,
promptly after receipt of same, photocopies of all notices of violation received by it with regard to any rules, regulations or laws
applicable to such materials, the commencement of any enforcement action, the service of any potentially responsible party demand letter
from any private or governmental party, or the loss of any operating permit by reason of the use or release of any such materials.
6. MAINTENANCE
AND REPAIR.
6.1 Landlord
shall not be responsible to maintain the Leased Premises or make any improvements or repairs of any kind in, to, or upon, the Leased
Premises.
6.2 Tenant
shall, at its sole cost and expense, maintain, repair, and replace the Leased Premises, including without limitation, all structural
and nonstructural repairs and replacements to the roof, utility lines on the exterior of the Improvements, including the building, foundation
and exterior walls, storefronts, plate glass windows, doors, door closure devices, window and door frames, molding, locks and hardware,
foundations, HVAC systems, plumbing systems, electrical systems, mechanical systems and all equipment, parking areas, sidewalks, water,
sewer and gas connections, pipes and mains. Tenant shall maintain all drives, sidewalks, parking areas, and lawns on or about the Leased
Premises in a clean and orderly condition, free of accumulations of dirt and rubbish. Tenant shall at all times maintain, operate and
otherwise manage the Leased Premises on a basis and in a manner consistent with first class standards in the West Palm Beach market area.
All repairs shall, to the extent reasonably achievable, be at least equivalent in quality to the original work or the property to be
repaired shall be replaced. Tenant will not take or omit to take any action the taking or omission of which might materially impair the
value or the usefulness of the Leased Premises or any parts thereof.
Tenant,
at its own cost and expense, shall enter into, and continuously maintain, a regularly scheduled preventive maintenance/service contract
with a licensed maintenance contractor reasonably approved by Landlord, for servicing all HVAC systems and equipment serving the Leased
Premises. An executed copy of such contract shall be delivered to Landlord. The service contract must include all services suggested
by the equipment manufacturer in the operations/maintenance manual and must become effective on the date Tenant takes possession of the
Leased Premises.
6.3 Tenant
shall permit Landlord to inspect the Leased Premises at all reasonable times, and if Landlord gives Tenant good faith notice of maintenance
problem areas, Tenant shall deliver to Landlord a plan of correction within ten (10) business days after receipt of the notice.
Tenant shall diligently pursue correction of all problem areas within sixty (60) days after receipt of the notice and, upon expiration
of the sixty (60) day period, shall deliver evidence of completion to Landlord or an interim report evidencing Tenant’s diligent
progress towards completion and, at the end of the next sixty (60) day period, evidence of satisfactory completion.
6.4 Tenant
shall, at its sole cost and expense, make any additions, changes, improvements or alterations to the Leased Premises, including structural
alterations, which may be required by any Governmental Authorities or Applicable Law, including those required to maintain licensure
or certification, whether such changes are required by Tenant’s Permitted Use, changes in Applicable Law, defects existing as of
the date of this Lease, or any other cause whatever. All such additions, changes, improvements or alterations shall comply with all laws
requiring such alterations and with the provisions of Section 10.
7.
USE AND ACCEPTANCE OF PREMISES. Tenant shall use and occupy the Leased Premises
exclusively for the Permitted Use and for all lawful and licensed ancillary uses, and for no other purpose without the prior written
consent of Landlord. Tenant shall obtain and maintain all approvals, licenses, and consents needed to use and operate the Leased Premises
for the Permitted Use and all lawful and licensed ancillary uses. Tenant shall deliver to Landlord complete copies of surveys, examinations,
certification and licensure inspections, compliance certificates, and other similar reports issued to Tenant by any Governmental Authority
within ten (10) business days after Tenant’s receipt of each item.
Tenant
agrees that, during the Term, it shall use and keep the Leased Premises in a careful, safe and proper manner: (i) not commit or suffer
waste thereon; (ii) not use or occupy the Leased Premises for any unlawful purposes; (iii) not use or occupy the Leased Premises or permit
the same to be used or occupied, for any purpose or business deemed extrahazardous on account of fire, environmental laws or otherwise;
(iv) keep the Leased Premises in such repair and condition as may be required by Governmental Authorities, free of all cost to Landlord;
and (v) not permit any acts to be done which will cause the cancellation, invalidation, or suspension of any insurance coverage or policy.
8. ALTERATIONS/TENANT’S
WORK.
8.1 Except
as specifically set forth herein to the contrary, Tenant shall not, without first obtaining the written consent of Landlord, make any
alterations, additions, or improvements in, to, or on and about the Leased Premises.
8.2 Prior
to Tenant commencing any alteration, modification, or other work (the cost of which exceeds $5,000.00) (“Tenant's Work”),
Tenant shall:
(i) Submit
its plans and specifications (“Plans”), prepared by a licensed professional architect or planner (including floor load calculations)
to Landlord not less than thirty (30) days prior to the commencement of Tenant’s Work.
(ii)
Within ten (10) days after receipt of such Plans, Landlord shall advise Tenant whether or not
it has approved or disapproved of the Plans.
Landlord
may approve or disapprove of the Plans or may impose reasonable conditions with respect to same. If Landlord approves the Plans, Landlord
may condition its approval upon Tenant agreeing to remove same at the expiration of the Term, or earlier termination of this Lease.
This
process shall be repeated until Landlord has approved of the Plans ("Approved Plans").
(iii) Tenant
shall utilize a licensed, responsible Contractor to complete Tenant's Work.
(iv) All
Tenant's Work shall be completed promptly and in a lien free, first class, good and workmanlike manner, and in compliance with all legal
requirements and the Approved Plans. All Tenant's Work shall be subject to Landlord's inspection, from time to time.
(v) Tenant
shall only install new, or like new, fixtures and equipment.
8.3 All
alterations, additions of personalty and improvements, whether temporary or permanent in character, which may be made upon the Leased
Premises, either by Landlord or Tenant, except furnishings, movable trade fixtures and machinery installed by Tenant, shall be the property
of Landlord and shall remain upon, and be surrendered with, the Leased Premises at the termination of this Lease, without compensation
to Tenant or, at the election of Landlord, be removed by Tenant.
8.4 All
approved venting, opening, sealing, waterproofing or any alteration of the roof made by Tenant shall, if elected by Landlord, be performed
by a roofing contractor designated by Landlord.
9. LIENS.
Tenant, or all Persons claiming by, through or under Tenant, shall not create or permit to be created or to remain un-discharged, any
lien, encumbrance or charge upon the Leased Premises or Landlord's interest therein or the income therefrom. Tenant shall not do, or
suffer, any other matter or thing whereby the estate, right and interest of Landlord in the Leased Premises is, or might be, impaired
or encumbered. If any such lien, claim or notice of lien or contract is filed against Landlord or the Leased Premises, Tenant shall,
within ten (10) days after notice thereof, cause the same to be discharged of record by payment, deposit, bond, order of court of competent
jurisdiction or otherwise. If Tenant fails to cause such lien or notice of lien to be discharged within the period provided, Landlord,
in addition to any other rights or remedies, may, but shall not be obligated to, discharge the same by either paying the amount claimed
to be due or transfer the same to bond. Any amount paid by Landlord and all reasonable costs and expenses, including attorneys' fees
incurred in connection therewith, together with interest thereon at the Default Rate from the date of payment or incurring of the cost
and expense, shall be paid by Tenant to Landlord on demand.
THE
LEASED PREMISES AND THE INTEREST OF LANDLORD IN THE LEASED PREMISES IS NOT SUBJECT TO LIENS FOR IMPROVEMENTS MADE BY, OR FOR THE ACCOUNT
OF, TENANT.
10. STORE
FRONTS AND SIGNS. Except as shown on the Approved Plans, Tenant
shall not, without Landlord's prior written consent which may be granted or denied in Landlord's sole discretion, exercised reasonably:
(a) make any changes to, or paint, the store front; (b) install any exterior lighting, decorations or paintings; or (c) erect or install
any signs, window or door lettering, place cards, decorations or advertising media of any type which is visible from the exterior of
the Leased Premises.
Tenant
shall pay all expenses incurred with regard to the design, construction and installation of Tenant's signs including, without limitation,
professional and permit fees. All signs must be professionally prepared. Tenant shall maintain all signs in good condition and in proper
operating order.
11. UTILITIES.
Tenant shall contract for, and pay before delinquency, all utility services rendered or furnished to the Leased Premises, including heat,
water, gas, electricity, fire protection, trash removal, sewer rental, sewage treatment facilities, utility hook-ups and the like, together
with all taxes or other charges levied on same. In no event shall Landlord be liable for the quality, quantity, failure or interruption
of utility services to the Leased Premises.
Landlord
may, without being liable for doing so, shut off and discontinue gas, water, electricity and any or all utilities whenever such shut
off or discontinuance is necessary to make repairs or alterations which Landlord may be required to make pursuant to the provisions of
Section 16.2.1 of this Lease. No such action by Landlord shall entitle Tenant to an abatement of, or reduction in, Rent or be construed
as an eviction or disturbance of possession or as an election by Landlord to terminate this Lease. Landlord, shall not, in any way, be
responsible or liable on account of such action.
In
the event that any Governmental Authority orders any mandatory, energy conservation measures, Tenant shall comply with such measures
including, but not limited to, a reduction in operating hours or lighting usage. Tenant's compliance with such requirements shall not
entitle Tenant to any abatement of, or reduction in, Rent or be construed as an eviction or disturbance of possession or as an election
by Landlord to terminate this Lease. Landlord shall not, in any way, be responsible or liable on account of such action.
12. INSURANCE
AND INDEMNITY.
12.1 Tenant
shall, at Tenant's expense, obtain and keep in force during the Lease Term, a special form policy of commercial general liability insurance,
with contractual liability broad form general liability endorsement, with general liability and general aggregate amount and per occurrence
limits of at least $3,000,000.00, covering any and all claims for injuries to Persons in or upon the Leased Premises, insuring the indemnity
provisions set forth in this Article.
Landlord
shall have the right, exercisable in its sole judgment, at any time by giving prior written notice thereof to Tenant, to require Tenant
to: (i) increase the limit and coverage amount of any insurance Tenant is required to maintain pursuant to this Section to an amount
that Landlord or Landlord’s Lender may, in its sole judgment, deem sufficient; or (ii) purchase other insurance and/or endorsements
in such amounts or types as Landlord or Landlord’s Lender may require from time to time.
12.2
Tenant shall, at Tenant's expense, obtain and keep in force during the Lease Term, a policy
or policies of property damage liability insurance, with limits of not less than $300,000.00, together with broad form all peril coverage
for the full replacement value of Tenant's property, including, but not limited to, inventory, trade fixtures, furnishings and other
personal property.
12.3 Tenant
shall, at Tenant’s expense, obtain and keep in
force during the Lease Term the following property insurance policy insuring the Leased Property against:
(a) Loss
or damage commonly covered by a “Special Form” policy insuring against physical loss or damage to the improvements and personal
property, including but not limited to, risk of loss from fire and other hazards, collapse, transit coverage, vandalism, malicious mischief,
theft, (if the Leased Property is in earthquake zone 1 or 2) and sinkholes (if usually recommended in the area of the Leased Property).
The policy shall be in the amount of the full replacement value of the improvements (currently covered in the amount of $3,268,525.00)
and personal property and shall contain a deductible amount acceptable to Landlord. The policy shall include a stipulated value endorsement
or agreed amount endorsement and endorsements for contingent liability for operations of building laws, demolition costs and increased
cost of construction.
(b) If
applicable, loss or damage by explosion of steam boilers, pressure vessels, or similar apparatus, now or hereafter installed on the Leased
Property, in commercially reasonable amounts acceptable to Landlord.
(c) Consequential
loss of rents and income coverage insuring against all “Special Form” risk of physical loss or damage with limits and deductible
amounts acceptable to Landlord covering risk of loss during the first twelve (12) months of reconstruction, and containing an endorsement
for extended period of indemnity of at least six (6) months, and shall be written with a stipulated amount of coverage if available
at a reasonable premium.
(d) If
the Leased Property is located, in whole or in part, in a federally designated 100-year flood plain area, flood insurance for the improvements
in an amount equal to the lesser of: (i) the full replacement value of the improvements; or (ii) the maximum amount of insurance
available for the Improvements under all federal and private flood insurance programs.
(e) Loss
or damage caused by the breakage of plate glass in commercially reasonable amounts acceptable to Landlord.
(f) Loss
or damage commonly covered by blanket crime insurance including employee dishonesty, loss of money orders or paper currency, depositor’s
forgery, and loss of property of patients accepted by Tenant for safekeeping, in commercially reasonable amounts acceptable to Landlord.
(g) Loss
or damage commonly covered by a, so called, environmental liability policy in commercially reasonable amounts acceptable to Landlord.
12.4 Tenant
shall, at Tenant's expense, obtain and keep in force the following insurance: (a) business income insurance covering all insurable risks
in an amount equal to one (1) year's Rent; (b) Worker's Compensation Insurance covering all Persons employed, directly or indirectly
in connection with any work, repair, or alteration performed by Tenant and all Employees and agents of Tenant as required by Applicable
Law; (c) special form insurance insuring against physical loss or damage to Tenant’s personal property, fixtures, and equipment;
and (d) in connection with any construction by Tenant, a builder’s completed value risk policy of insurance in a non-reporting
form insuring against all “special form” risk of physical loss or damage to the improvements, including endorsements providing
coverage for building materials and supplies and temporary premises. The builder’s risk policy shall be in the amount of full replacement
value of the improvements and shall contain a deductible in commercially reasonable amounts acceptable to Landlord.
12.5 Tenant
shall, and does hereby, indemnify and hold Landlord harmless from and against all claims, loss, cost, damage or expense arising, unless
due to the gross negligence or willful misconduct of Landlord or its agents and employees, from: (a) Tenant's use of the Leased Premises
or from the conduct of Tenant's business or from any activity, work or things done, permitted or suffered by Tenant, its agents, contractors,
employees, invitees, licensees, sub-tenants and guests, in or about the Leased Premises or elsewhere; (b) the utilities located within
or under the Leased Premises causing injury to any Persons or property whomsoever or whatsoever; (c) any act or omission of Tenant, its
agents, contractors, employees, invitees, licensees, subtenants and guests; and (d) any breach of this Lease by Tenant. This indemnity
includes all costs, attorneys' fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought
thereon, and shall, at Landlord's election, either defend Landlord with counsel acceptable to Landlord or pay the cost of Landlord's
counsel when due.
12.6 Landlord
shall not be liable to Tenant for injury to Tenant's business or any loss of income therefrom or for damage to the goods, wares, merchandise
or other property of, nor to Tenant, Tenant's agents, contractors, employees, invitees, licensees, subtenants and guests, or any other
Person in or about the Leased Premises, whether the damage or injury results from a condition existing or arising in the Leased Premises,
or from other sources or places, unless due to the gross negligence or willful misconduct of Landlord or its agents or employees.
12.7 Tenant
hereby releases Landlord, its officers, directors, shareholders, employees, agents, contractors, and invitees (“Landlord Parties”)
from any and all claims or causes of action whatsoever which Tenant might otherwise now or hereafter possess resulting in or from or
in any way connected with any loss covered or which should have been covered by insurance, including the deductible and/or uninsured
portion thereof, maintained and/or required to be maintained by Tenant pursuant to this Lease.
Tenant
shall cause its insurance and extended coverage policies in respect of Tenant's property to contain a waiver of subrogation provision.
12.8
Any insurance policies required to be maintained by Tenant hereunder shall name Landlord and
Landlord’s Lender as additional insureds and loss payees as their interests may appear. Additional
insured status on the commercial general liability insurance shall be by an endorsement satisfactory to Landlord or provided on ISO Form
2026 or its equivalent, without modification, as elected by Landlord and Landlord’s Lender.
12.9
Such insurance policies may not be modified or terminated without thirty (30) days prior written
notice to Landlord and Landlord’s Lender. Insurance required hereunder shall be issued by reputable and independent insurers permitted
to do business in the State in which the Leased Premises is located and rated in Best's Insurance Guide, or any successor thereto (or,
if there be none, an organization having a national reputation) as having a general policyholder rating of A-V or better. Such policies
or duly executed certificates of insurance, reflecting all the requirements of this Article, shall be promptly delivered to Landlord
and Landlord’s Lender and renewals thereof as required shall be delivered to Landlord and Landlord’s Lender at least thirty
(30) days prior to the expiration of the respective policies.
12.10 Each
policy evidencing the insurance to be carried by Tenant under this Lease shall contain a clause that such policy and the coverage evidenced
thereby shall be primary with respect to any policies carried by Landlord, and that any coverage carried by Landlord shall be excess
insurance.
13. DAMAGE
AND OBLIGATION TO RESTORE.
13.1 Tenant
shall give prompt written notice to Landlord of any damage caused to the Leased Premises by fire or other casualty.
13.2 If:
(a) the Leased Premises is damaged by any uninsurable casualty; or (b) the Leased Premises is damaged to an extent in excess of twenty-five
(25%) percent of the cost of replacement thereof, Landlord may elect either to terminate this Lease or to proceed to rebuild and repair
the Leased Premises. If Landlord elects to terminate this Lease, it shall give written notice of such election to Tenant within ninety
(90) days after the occurrence of the casualty. If Landlord elects to rebuild and repair, this Lease shall remain in full force and effect,
subject to the provisions hereinafter contained.
13.3 If
the Leased Premises is damaged, regardless of the extent thereof, during the last twelve (12) months of the Lease Term, Landlord may
elect to terminate this Lease by giving written notice to Tenant within ninety (90) days after the date of occurrence of such damage.
13.4 Except
as otherwise provided herein, in the event that Landlord is obligated to repair the Leased Premises Landlord shall proceed with reasonable
efforts to rebuild and repair the Leased Premises. Landlord's obligation to rebuild and repair shall be limited to restoring the Leased
Premises, to the extent practical, to substantially the condition in which same existed prior to the casualty (excluding all leasehold
improvements, personal property and trade fixtures installed by Tenant) and shall be limited to the extent of the insurance proceeds
made available to Landlord for such restoration. Tenant, promptly upon completion of such work by Landlord, will proceed with all due
diligence to restore the remainder of the Leased Premises, including, but not limited to, the repair or restoration of signs, fixtures
and equipment and open the Leased Premises for business as soon as possible. During any period of reconstruction or repair of the Leased
Premises, Tenant shall continue the operation of its business within the Leased Premises to the extent practicable.
13.5 In
the event Landlord elects to, or is required to, restore the Leased Premises and Tenant is deprived of the occupancy and use of a material
portion of the Leased Premises, Minimum Rent and all other Additional Rent, shall, to the extent of payments pursuant to Tenant’s
business income policy, equitably abate until Landlord has completed its restoration as provided herein, provided, however, notwithstanding
the foregoing, the Rent shall recommence in full at the earlier of: (i) the date Tenant reopens for business; or (ii) the date upon which
Landlord completes its restoration and redelivers the Leased Premises to Tenant for the completion of Tenant's restoration and/or fixturing.
The Lease Term shall "toll" during any such period of total abatement of Rent.
13.6 Notwithstanding
anything to the contrary, in the event the Leased Premises is damaged to such an extent that Landlord, in its sole discretion, elects
to not rebuild or restore the Leased Premises, Landlord may terminate this Lease by giving written notice to Tenant, and this Lease shall
terminate and become null and void thirty (30) days after said notice.
14. EMINENT
DOMAIN.
14.1 If
any part of the Leased Premises is permanently or temporarily taken, condemned or transferred by agreement in lieu of condemnation for
any public or quasi-public use or purpose by any condemning authority, whether or not this Lease is terminated, the entire compensation
award therefor, both leasehold and reversion, shall be the property of Landlord without any deduction therefrom for any present or future
estate of Tenant. Tenant hereby assigns to Landlord all its right, title and interest to any such award, provided, however, that Tenant
shall be entitled to pursue a claim for moving and relocation expenses, its trade fixtures and equipment and improvements which are the
property of Tenant, as long as Tenant's claim for any of the same does not reduce or diminish Landlord's award. Tenant shall execute
all documents required to accomplish such result.
14.2 If
any portion of the Leased Premises is permanently taken, condemned or transferred as aforesaid, at Landlord's option, this Lease shall
terminate as of the time possession thereof vests in the condemning authority or earlier date upon which Tenant must surrender possession
to condemning authority. If this Lease is not terminated, Landlord shall, to the extent proceeds are made available to Landlord to do
so, at its own expense, repair and restore the portion of the Leased Premises not affected by the taking, in which event the Rent shall
be reduced in proportion to the area of the Leased Premises taken, effective at the time possession vests in the condemning authority.
If the Leased Premises or any part thereof is temporarily taken, condemned or transferred as aforesaid, the Rent shall be abated during
the period of such temporary taking by the amount Landlord receives from the condemning authority to compensate it for the loss of use
of the Leased Premises.
14.3 If
Landlord elects to terminate this Lease, it shall give written notice of such election to Tenant within thirty (30) days after the occurrence
of the taking.
14.4 If
any part of the Leased Premises is taken (regardless of the extent thereof) during the last twelve (12) months of the Lease Term, Landlord
may elect to terminate this Lease by giving written notice to Tenant within thirty (30) days after the date of such taking.
14.5 Except
as otherwise provided herein, in the event the Leased Premises is taken, Landlord shall proceed with reasonable efforts to rebuild and
repair the Leased Premises. Landlord's obligation to rebuild and repair shall be, to the extent possible in view of the taking, limited
to restoring the Leased Premises to substantially the condition in which same existed prior to the taking (excluding all leasehold improvements,
personal property and fixtures installed by Tenant) and shall be limited to the extent of the condemnation proceeds available to Landlord
for such restoration. Tenant, promptly upon completion of such work by Landlord, will proceed with all due diligence to restore the remainder
of the Leased Premises, including, but not limited to, the repair or restoration of signs, fixtures and equipment and open the Leased
Premises for business as soon as possible. During any period of reconstruction or repair of the Leased Premises, Tenant shall continue
the operation of its business within the Leased Premises to the extent practicable.
14.6 In
the event Landlord elects to, or is required to, restore the Leased Premises and Tenant is deprived of the occupancy and use of a material
portion of the Leased Premises, Minimum Rent and all other Additional Rent, shall, to the extent of payments pursuant to Tenant’s
business income policy, equitably abate until Landlord has completed its restoration as provided herein, provided, however, notwithstanding
the foregoing, the Rent shall recommence in full at the earlier of: (i) the date Tenant reopens for business; or (ii) the date upon which
Landlord completes its restoration and redelivers the Leased Premises to Tenant for the completion of Tenant's restoration and/or fixturing.
The Lease Term shall "toll" during any such period of total abatement of Rent.
14.7 Notwithstanding
anything to the contrary, in the event any portion of the Leased Premises is taken to such an extent that Landlord, in its sole discretion,
elects to not rebuild or restore the Leased Premises, Landlord may terminate this Lease by giving thirty (30) days prior written notice
to Tenant.
15. ASSIGNMENT
AND SUBLETTING.
15.1 Tenant
shall not voluntarily, involuntarily or by operation of law, assign, sell, mortgage, pledge or in any manner transfer this Lease or any
estate or interest therein or sublet the Leased Premises or any part thereof, or grant any license, concession or other right to occupy
any portion of the Leased Premises, without the prior written consent of Landlord, which shall not be unreasonably withheld. If Tenant
requests such approval, it shall be liable for all costs associated therewith and shall deposit, in advance, with Landlord, Landlord's
reasonable estimate thereof. Consent by Landlord to one or more assignments or sublettings shall not operate as a waiver of Landlord's
rights as to any subsequent assignments and subletting.
A
transfer of control, whether or not a transfer of voting stock or other beneficial interest whereby effective control of Tenant is transferred
from one Person to another, shall be deemed a transfer hereunder.
Notwithstanding
the foregoing, without Landlord’s consent, Tenant shall have the right to assign or sublet to: (i) affiliates or any other successor
entity whether by merger or consolidation; and (ii) an authorized dealer/vendor. Tenant shall have the right to assign or sublet to other
Persons with the consent of Landlord, not to be unreasonably withheld, provided sub-lessee or assignee is creditworthy and has adequate
experience to operate the business for the Permitted Use.
Notwithstanding
any subletting, Tenant and Guarantor shall, at all times, remain fully responsible and liable for compliance with all of the obligations
of Tenant and Guarantor, including the payment of Rent.
In
the event of an assignment to an assignee, as long as the assignee and any guarantor have, at the time of the assignment, a net worth
equal to, or greater than, that of Tenant and Guarantor, Tenant and Guarantor shall be released from all further obligations hereunder
except for any indemnities pertaining to events which transpired prior to the date of the assignment. If such assignee and guarantor
do not have a net worth equal to, or greater than, that of Tenant and Guarantor, Tenant and Guarantor shall, at all times, remain fully
responsible and liable for compliance with all of the obligations of Tenant and Guarantor, including the payment of Rent.
A
termination of this Lease by Landlord or the recovery of possession of the Leased Premises by Landlord or any voluntary or other surrender
of this Lease by Tenant or a mutual cancellation thereof, shall not work a merger and shall at the option of Landlord, terminate all
or any existing franchises or concessions, licenses, permits, subleases, sub-tenancies or the like between Tenant and any third party
with respect to the Leased Premises, or may, at the option of Landlord, operate as an assignment to Landlord of Tenant’s interest
in same. Following an Event of Default, Landlord shall have the right to require any subtenants to pay all sums due under such subleases
directly to Landlord.
15.2
Any sublease
shall: (i) be subject to, and shall incorporate by reference, all of the terms and conditions of this Lease (except those terms and conditions
relating to Rent, Additional Rent, and any other amount due under this Lease); (ii) require the subtenant to acknowledge that it has
reviewed and agreed to all of the terms and conditions of this Lease and agree not to do, or fail to do, anything that would cause a
default under this Lease; (iii) provide that subtenant shall not have the right to exercise the Option granted to Tenant in the Business
Provisions and Tenant will not do so on its behalf; (iv) contain a waiver of subrogation in favor of Landlord and shall require subtenant’s
insurance policies to provide a waiver of subrogation; (v) prohibit the further subletting of the Leased Premises or assignment of the
sublease by subtenant without first obtaining Landlord’s prior written approval; (vi) require subtenant to obtain Landlord’s
prior written approval to any alterations to the Leased Premises to the extent Tenant is required to do so; (vii) require: (a) subtenant
to send Landlord copies of any and all notices concerning the Leased Premises that Tenant is obligated to provide to Landlord; and (b)
Tenant to send Landlord copies of any and all notices concerning the Leased Premises that are provided to subtenant; (viii) provide that,
at Landlord’s option, the sublease shall not terminate in the event that this Lease terminates and require subtenant to execute
an attornment agreement, if Landlord shall elect to have the sublease continue beyond the date of termination of this Lease. Such attornment
agreement shall be in form and content acceptable to Landlord pursuant to which subtenant confirms it is in direct privity of contract
with Landlord and that all obligations owed to Tenant under the sublease shall become obligations owed to Landlord for the balance of
the term of the sublease. Unless and until such time as an attornment agreement is executed by Tenant pursuant to the terms and conditions
hereof, nothing contained in the sublease shall create or shall be construed or deemed to create privity of contract or privity of estate
between Landlord and subtenant; (ix) provide that subtenant shall have no right (and shall waive any rights it may have) to hold Landlord
responsible for any liability in connection with the Leased Premises, including, any liability arising from the noncompliance with any
federal, state, or local laws applicable to the Leased Premises; (x) provide that: (1) nothing in the sublease shall amend or shall be
construed or deemed to amend this Lease; and (2) Tenant and subtenant shall not amend the sublease without the prior written consent
of Landlord.
15.3 In
the event of the transfer and assignment by Landlord of its interest in the Lease and/or Leased Premises, Landlord shall thereafter be
released from any further obligations in connection with this Lease, and Tenant agrees to look solely to such successor in interest for
performance of all obligations arising thereafter.
16.
DEFAULT AND REMEDIES.
16.1
The following shall constitute Events of Default:
16.1.1
If Tenant defaults in the payment of any sum of money, whether Rent, or otherwise, and such
default shall continue for ten (10) days after written notice.
16.1.2
If Tenant defaults in any other manner and such default shall continue for the period within
which performance is required to be made by specific provision of this Lease, or, if no such period is so provided, for twenty (20) days
after written notice.
16.1.3 If
any execution or attachment is issued against Tenant or any of Tenant's property and is not discharged or vacated within ten (10) days
after written notice.
16.1.4
If Tenant or any Guarantor commences, in any court pursuant to any statute either of the United
States or of any State, an insolvency or bankruptcy proceeding (including, without limitation, a proceeding for liquidation, reorganization
or for adjustment of debts of an individual with regular income), or if such a proceeding is commenced against Tenant or any Guarantor
and either an order for relief is entered against such party or such party fails to secure a discharge of the proceeding within sixty
(60) days of the filing thereof, or if Tenant or any Guarantor becomes insolvent or is unable to, or admits in writing its inability
to pay its debts as they become due, or makes an assignment for the benefit of creditors or petitions for or enters into an arrangement
with its creditors or a custodian is appointed or takes possession of Tenant's or any Guarantor's property, whether or not a judicial
proceeding is instituted in connection with such arrangement or in connection with the appointment of such custodian.
16.1.5
If any financial statement or information given to Landlord by Tenant, any assignee or subtenant
of Tenant, any successor in interest of Tenant or any Guarantor is materially false.
16.1.6
If Tenant abandons the Leased Premises.
16.1.7
If Tenant removes, attempts to remove, or expresses or displays any intention to remove any
of Tenant's goods or property or any goods or property of others from the Leased Premises, other than in the ordinary and usual course
of business, at any time (regardless of the day, or hour of the day or night, and regardless of whether any sum of money payable pursuant
to this Lease is then in arrears). Any such removal shall be deemed conclusively to have been made fraudulently or clandestinely with
intent to prevent Landlord from distraining or realizing on such goods or property.
16.2
Upon the occurrence of an Event of Default, Landlord shall have the option to pursue any one
or more of the following remedies without notice or demand whatsoever, except as required herein, and in addition to, and not in limitation
of any other remedy or right permitted to it by law or in equity or by this Lease.
16.2.1 Landlord,
with or without terminating this Lease and without waiving such Event of Default, may perform, correct or repair any condition which
Tenant has failed to keep, observe, perform or satisfy. Landlord may take, on behalf of Tenant, whatever steps Landlord deems necessary
to cure the Event of Default. Landlord may re-enter the Leased Premises for such purposes without being liable for prosecution or claim
for damages therefor. Tenant shall fully reimburse and compensate Landlord, on demand, for all costs and expenses incurred by Landlord
in such performance, correction or repair, including, without limitation, accrued interest from the date of demand until date of payment
at the Default Rate.
16.2.2 Landlord
may terminate this Lease, in which event Tenant shall surrender the Leased Premises to Landlord within ten (10) business days thereafter.
If Tenant fails to do so, Landlord may, without prejudice to any other remedy it may have, enter upon and take possession of the Leased
Premises and expel or remove Tenant and any other Person who may be occupying the Leased Premises or any part thereof, without being
liable for prosecution or any claim of damages therefor.
16.2.3 Landlord
may recover possession of the Leased Premises, with or without terminating this Lease, at Landlord's option, in the manner prescribed
by any applicable statute, including without limitation, statutes relating to summary process. Any demand for Rent, reentry for conditions
broken, and any and all notices to quit, including without limitation, the notice required by the provisions of Applicable Law, or other
formalities of any nature, to which Tenant may be entitled, are hereby specifically waived. In any possessory action for nonpayment of
Rent or other charge due hereunder, Tenant expressly waives any defense other than payment, provided, however, that this provision shall
not be deemed to preclude Tenant from making any claims or defenses in a separate proceeding.
Tenant's
obligation to pay Rent is independent of any duty or obligation of Landlord pursuant to this Lease.
16.2.4 Landlord
may re-let the Leased Premises upon such terms and conditions and for such rental as Landlord deems advisable, without thereby avoiding
or terminating this Lease, and Tenant shall remain liable for any and all Rent and other charges and expenses pursuant to this Lease.
For the purpose of re-letting, Landlord is authorized to make such repairs or alterations, to the Leased Premises and/or to remove or
store Tenant's or other occupants' possessions as may be necessary, in the sole discretion of Landlord, for the purpose of such reletting,
and if a sufficient sum is not realized from such re-letting after payment of all costs and expenses of such repairs, alteration or storage
and the expense of such reletting and the collection of rent accruing therefrom, each month in an amount equal to the Rent, Tenant shall
pay such deficiency each month upon demand therefor. Actions to collect such amounts may be brought from time to time, on one or more
occasions, without the necessity of Landlord's waiting until the expiration of the Lease Term.
In
the event of termination of the Lease or repossession of the Leased Premises for default as described in this Lease, Landlord has no
obligation to relet or attempt to relet the Leased Premises, or any portion thereof, or to collect rental after reletting. In the event
of reletting, Landlord may relet the whole or any portion of the Leased Premises, as agent for Tenant or for Landlord's own account,
for any period, to any tenant and for any use and purpose. Landlord shall owe no duty or obligation to Tenant if Landlord attempts to
relet the Leased Premises or, in any way, to mitigate Landlord's damages in the event of termination or repossession of the Leased Premises
for a default hereunder.
16.2.5 Landlord
may accelerate the balance of all Rent due to the end of the Lease Term and collect the then present value (calculated with a discount
factor of 8% per annum) thereof by applying of the difference between (x) the entire amount of Minimum Rent and Property Taxes and other
charges and assessments which in Landlord's reasonable determination would become due and payable during the remainder of the Lease Term
(in the absence of the termination of this Lease), and (y) the then fair market rental value of the Leased Premises for the remainder
of the Lease Term. Upon the acceleration of such amounts, Tenant agrees to pay the same at once, in addition to all Rent, costs, charges,
assessments, and reimbursements theretofore due. Such payment shall not constitute a penalty or forfeiture, but shall constitute liquidated
damages for Tenant's failure to comply with the terms and provisions of this Lease. In computing such liquidated damages, there shall
be added to such deficiency any reasonable expenses as Landlord incurs in connection with re-letting, including, but not limited to,
court costs, attorneys' fees and disbursements, brokerage fees, and for putting and keeping the Leased Premises in good order or preparing
the Leased Premises for reletting. Furthermore, such amount shall be construed as liquidated damages and shall constitute a debt provable
in bankruptcy or receivership.
16.2.6 Accelerate
the Rent for the balance of the Lease Term.
In
the event that Landlord takes possession of the Leased Premises pursuant to the provisions hereof, Landlord shall have the right to keep
in place and use all of the furniture, fixtures and equipment at the Leased Premises, including that which is owned by or leased to Tenant,
at all times prior to any foreclosure thereon by Landlord or repossession thereof by any lessor thereof or third party having a lien
thereon. Landlord shall also have the right to remove from the Leased Premises, without the necessity of obtaining a distress warrant,
writ of sequestration or other legal process, all or any portion of such furniture, fixtures, equipment and other property located thereon
and place same in storage at any premises within the County in which the Leased Premises is located. In such event, Tenant shall be liable
to Landlord for costs incurred by Landlord in connection with the removal and storage. Landlord shall also have the right to relinquish
possession of all or any portion of such furniture, fixtures, equipment and other property to any Person ("Claimant") claiming
to be entitled to possession thereof which presents to Landlord a copy of any instrument represented to Landlord by Claimant to have
been executed by Tenant (or any predecessor of Tenant) granting Claimant the right under various circumstances to take possession of
such furniture, fixtures, equipment or other property, without the necessity on the part of Landlord to inquire into the authenticity
of Tenant's signature thereon and without the necessity of Landlord's making any investigation or inquiry as to the validity of the factual
or legal basis upon which Claimant purports to act. The rights of Landlord herein stated shall be in addition to any and all other rights
which Landlord has or may hereafter have at law or in equity, and Tenant stipulates and agrees that the rights herein granted Landlord
are commercially reasonable. Landlord shall in no event be liable to Tenant, including, without limitation, liability for trespass or
conversion, with respect to any actions taken pursuant to this Article.
16.3
In the event of a breach or threatened breach by Tenant of any of the covenants or provisions
of this Lease, Landlord shall have the right of injunction, without the necessity of showing irreparable injury or the necessity of posting
a bond. In addition, Landlord shall have the right to invoke any remedy allowed at law or in equity as if such remedies were specifically
provided for in this Lease. Any particular remedy specified in this Lease shall not preclude Landlord from any other remedies under this
Lease, or now or hereafter existing at law or in equity or by statute.
16.4
Tenant and Guarantor, if applicable, expressly waive: (i) the service of notice of intention
to re-enter or to institute legal proceedings and any and all rights or redemption granted by or under any present or future laws; (ii)
the benefit of all laws, nor or hereafter in force, exempting any goods on the Leased Premises, or elsewhere, from distraint, levy or
sale in any legal proceedings taken by Landlord to enforce any rights pursuant to this Lease; (iii) the benefit of all laws existing
now or hereafter enacted regarding any limitation as to the goods upon which, or the time within which, distress is to be made after
removal of goods of Tenant or others from the Leased Premises and the obligation of proving or identifying the goods distrained, it being
the purpose and intent of this provision that all goods of Tenant, whether upon the Leased Premises or not, shall be liable to distress
for Rent at any time after Tenant's default pursuant to this Lease, including particularly, but not limited to, those goods removed from
the Leased Premises clandestinely and fraudulently, as defined above; (iv) the right to issue a writ or replevin for the recovery of
any goods seized under a distress for rent or levy upon an execution for Rent, damages or otherwise and all rights relating to Landlord/Tenant
relationship under any law, ordinance or statute, to the extent that they might limit Landlord's right to cause the distrained goods
to be sold; and (v) the right to delay execution on any real estate that may be levied upon to collect any amount which may become due
pursuant to the terms and conditions of this Lease and any right to have the same appraised.
16.5
If Landlord cannot terminate this Lease or Tenant's right of possession because of the application
of bankruptcy or similar laws, then Tenant, as a debtor in possession or any Trustee, shall: (i) within the statutory time, assume or
reject this Lease; and (ii) not seek or request any extension or adjournment of any application to assume or reject this Lease by Landlord.
Tenant, as debtor in possession, or any Trustee may only assume this Lease if (A) it cures or provides adequate assurance that it will
promptly cure any default hereunder, (B) it compensates or provides adequate assurance that it will promptly compensate Landlord for
any actual pecuniary loss to Landlord resulting from Tenant's defaults, including without limitation accrued interest as set forth herein
and attorneys' fees as a result of such default, and (C) it provides adequate assurance of performance during the Lease Term of all of
the terms, covenants and provisions of this Lease to be performed by Tenant. In no event after the assumption of this Lease shall any
then-existing default remain uncured for a period in excess of the earlier of ten (10) days or the time period set forth herein. Adequate
assurance of performance shall include, without limitation, adequate assurance (1) of the source payment of Rent reserved hereunder,
and (2) that the assumption of this Lease will not breach any provision hereunder, and will not cause a breach of any other lease, financing
agreement or other agreement relating to the Leased Premises.
Unless
prohibited by Applicable Law, Tenant shall pay Landlord the amount of all reasonable legal fees and expenses incurred by Landlord arising
out of, or resulting from, any bankruptcy case involving Tenant, including the filing by, or against, Tenant of any petition for relief
under any applicable bankruptcy or similar law.
16.6
In case of any action or proceeding brought concerning or arising out of the terms and provisions
of this Lease, the non-prevailing party in any such action or proceeding shall pay all costs, expenses and reasonable attorneys' fees
incurred by the prevailing party or its agents or both, at all levels of proceedings, including appeals, collections and bankruptcy.
16.7
No waiver of any covenant or condition or of the breach of any covenant or condition of the
Lease shall be taken to constitute a waiver of any subsequent breach of such covenant or condition nor to justify or authorize the non-observance
on any other occasion of the same or of any other covenant or condition hereof. No acceptance of Rent by Landlord at any time when Tenant
is in default hereunder shall be construed as a waiver of such default or of Landlord's right to terminate this Lease on account of such
default. No waiver or indulgence granted by Landlord to Tenant shall be taken as an estoppel against Landlord. If at any time, Tenant
is in default hereunder, an acceptance by Landlord of Rent during the continuance of such default or the failure on the part of Landlord
promptly to avail itself of such other rights or remedies as Landlord may have shall not be construed as a waiver of such default, but
Landlord may at any time thereafter terminate this Lease on account of such default or pursue its rights and remedies hereunder.
16.8
Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord
within a reasonable time, but in no event earlier than thirty (30) days after written notice by Tenant to Landlord and Landlord’s
Lender whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform
such obligations, provided, however, that if the curing of Landlord's obligations requires more than thirty (30) days to cure, Landlord
shall not be in default if Landlord commences its efforts to cure within such thirty (30) day period and thereafter diligently prosecutes
the same to completion.
16.9
Late payment by Tenant of Rent and other sums due hereunder will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited
to, processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any mortgage encumbering the
Leased Premises. Accordingly, if any installment of Rent or any other sum due from Tenant has not been received by Landlord or Landlord's
designee within three (3) days after such amount is due, Tenant shall pay to Landlord a late charge equal to six (6%) percent of such
overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur
by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default
with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. In
the event any check tendered by Tenant is not be honored for any reason, Tenant shall pay to Landlord, immediately on demand, a service
fee of One Hundred ($100.00) Dollars.
16.10
Any sum due and owing by Tenant hereunder shall bear interest at the highest rate allowed by
law from the due date until paid, including post judgment (“Default Rate”).
17. LANDLORD'S
LIEN. IN ADDITION TO ANY LIEN PROVIDED TO LANDLORD AT LAW, TO SECURE THE PAYMENT OF ALL RENT AND OTHER SUMS OF MONEY DUE AND
TO BECOME DUE AND THE FAITHFUL PERFORMANCE OF THE LEASE BY TENANT, TENANT HEREBY GRANTS TO LANDLORD AN EXPRESS FIRST AND PRIOR LIEN AND
SECURITY INTEREST ON ALL PROPERTY (INCLUDING FIXTURES, EQUIPMENT, CHATTELS AND MERCHANDISE) WHICH MAY BE PLACED IN, OR BROUGHT UPON,
THE LEASED PREMISES, AND ALSO UPON ALL PROCEEDS OF ANY INSURANCE WHICH MAY ACCRUE TO TENANT BY REASON OF DESTRUCTION OF OR DAMAGE TO
ANY SUCH PROPERTY. SUCH PROPERTY SHALL NOT BE REMOVED THEREFROM WITHOUT THE WRITTEN CONSENT OF LANDLORD UNTIL ALL RENT AND OTHER SUMS
OF MONEY THEN DUE TO LANDLORD HEREUNDER SHALL FIRST HAVE BEEN PAID. THIS LIEN AND SECURITY INTEREST IS GIVEN IN ADDITION TO LANDLORD'S
STATUTORY LIEN AND SHALL BE CUMULATIVE THERETO. CONCURRENTLY WITH THE EXECUTION OF THE LEASE (OR LATER IF REQUESTED BY LANDLORD AT ITS
DISCRETION), TENANT SHALL EXECUTE AND DELIVER TO LANDLORD UNIFORM COMMERCIAL CODE FINANCING STATEMENTS IN SUFFICIENT FORM SO THAT WHEN
PROPERLY FILED, THE SECURITY INTEREST HEREBY GIVEN SHALL BE PERFECTED. THE LIEN AND SECURITY INTEREST CREATED HEREBY SHALL TERMINATE
WHEN ALL OF THE RENT AND OTHER SUMS OF MONEY BECOMING DUE DURING THE LEASE TERM SHALL HAVE BEEN PAID IN FULL.
18. SUBORDINATION
AND ATTORNMENT. This Lease is subordinate to all liens and encumbrances affecting the Leased Premises, at any time and from time
to time. This Lease is subordinate to any ground lease, mortgage or any other hypothecation or security interest hereafter placed upon
the Leased Premises and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements
and extensions thereof. The subordination set forth herein is self-operative, and no further instrument of subordination shall be required
for any purpose. If any lender or ground lessor elects to have this Lease be prior to the lien of its mortgage or ground lease, and gives
written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage or ground lease, whether this Lease is dated prior
or subsequent to the date of said mortgage or ground lease.
Tenant
agrees to execute any documents required to evidence such subordination or to make this Lease prior to the lien of any mortgage or ground
lease, as the case may be, and failing to do so within ten (10) days after written demand, does hereby make, constitute and irrevocably
appoint Landlord as Tenant's attorney in fact and in Tenant's name, place and stead, to do so.
Tenant
shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage
encumbering the Leased Premises, attorn to the purchaser at any foreclosure sale and recognize such purchaser as Landlord pursuant to
this Lease and shall execute any documents required to evidence same.
19. ESTOPPEL
CERTIFICATE. Landlord or Tenant shall, at any time upon not less than ten (10) days prior written notice from the other, execute,
acknowledge and deliver to the requesting party or designees, a statement in writing: (i) certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified is
in full force and effect) and the date to which the Rent and other charges are paid in advance, if any; and (ii) acknowledging that there
are not, to its knowledge, any uncured defaults on the part of the requesting party (or specifying such defaults if any are claimed).
Any such statement may be conclusively relied upon by any prospective purchaser or existing or prospective lender.
At
Landlord's option, Tenant's failure to deliver such statement within such time shall be an Event of Default. In addition, within ten
(10) days after delivery of the request if Tenant has not delivered such statement, it shall be conclusive evidence that: (i) this Lease
is in full force and effect, without modification except as may be represented in good faith; (ii) there are no uncured defaults by Landlord;
and (iii) not more than one (1) month's Rent has been paid in advance.
20. NOTICES.
Any notice, request, demand, approval, consent or other
communication which Landlord or Tenant may be required or permitted to give to the other, shall be in writing and shall be mailed by
certified mail, return receipt requested, or via overnight courier, at the addresses specified below or to such other address as either
party shall have designated by written notice to the other. Notice shall be deemed given three (3) business days after same shall have
been deposited in an official United States Post Office, postage prepaid, or one (1) day after being deposited with an authorized representative
of an overnight courier service such as Federal Express.
If
to Landlord: Ethema Health Corporation
Attention:
Barrett M. Singer, Manager
220
Essex Lane
West
Palm Beach, Florida 33405
With
a copy to: Robert Lee Shapiro, Esq.
Robert
Lee Shapiro, P.A.
2401
PGA Blvd., Suite 280-B
Palm
Beach Gardens, Florida 33410
If
to Tenant: Evernia Health Center, LLC
Attention:
Lawrence B. Hawkins, CEO
2110
North Florida Mango, Suite 101
West
Palm Beach, Florida 33409
With
a copy to: Jeff C. Pepin, Esq.
Mesa
& Pepin, LLC
3418
Poinsettia Avenue
West
Palm Beach, Florida 33407
If
Landlord’s Lender has given notice to Tenant that it is the holder of a mortgage encumbering the Leased Premises and such notice
includes the address to which notices are to be sent, Tenant shall give to Landlord’s Lender notice simultaneously with any notice
given to Landlord to correct any alleged default of Landlord hereunder. Landlord’s Lender shall have the right, within thirty (30)
days after receipt of notice, to correct or remedy such default before Tenant may take any action pursuant to this Lease by reason of
such default, provided, however, Tenant may take no action pursuant to this Lease by reason of such default if Landlord’s Lender
has commenced, during said thirty (30) day period, to remedy the alleged default and continues thereafter to use its diligence to remedy
the alleged default. If Landlord’s Lender has previously notified Tenant, any notice of default given to Landlord shall be null
and void unless simultaneous notice has been given to Landlord’s Lender.
21. SURRENDER.
Upon the expiration or termination of this Lease, Tenant shall deliver and surrender the Leased Premises to Landlord in good order and
condition, ordinary wear and tear excepted, and shall deliver all keys and combinations to locks, safes and vaults to Landlord. Before
surrendering the Leased Premises, Tenant shall remove all its moveable personal property, including trade fixtures and decorations and,
if requested by Landlord, all alterations and additions, and shall repair any damage caused thereby. All floor coverings, window, wall
and ceiling treatments shall not be removed from the Leased Premises. If Tenant fails to repair any damage caused by the removal of such
property from the Leased Premises, Landlord may restore the Leased Premises, and all such costs incurred thereby shall be paid by Tenant.
If Tenant fails to remove its property upon the expiration of the Lease Term, said property shall, at Landlord's option, be deemed abandoned
and shall become the property of Landlord or Landlord may cause it to be removed, stored or disposed of at Tenant's expense.
22. HOLDING
OVER. Tenant may not remain in possession of the Leased Premises after the expiration of the Lease Term. If Tenant remains in
possession of the Leased Premises after the expiration of the Lease Term, Tenant shall become a tenant at sufferance and any such holding
over shall not constitute an extension of this Lease. During such holding over, Tenant shall pay two hundred percent (200%) of the Rent
in effect as of the expiration date until Tenant surrenders possession. Nothing contained herein shall be interpreted to grant permission
to Tenant to holdover or to deprive Landlord of any rights and remedies with respect thereto.
23. BROKER'S
FEE. Each party warrants to the other that, unless otherwise provided in this Lease, it has dealt with no real estate broker
or agent in connection with this Lease other than as stated in the Business Provisions. Each party covenants and agrees to defend, indemnify
and save the other party harmless from and against any actions, damages, real estate commissions, fees, costs and/or expenses, including
reasonable attorneys' fees, resulting or arising from any commissions, fees, costs and/or expenses claimed by, or due to, any real estate
broker or agent which claims to have dealt with such party in connection with this Lease.
24. LANDLORD'S
RIGHTS. Landlord and Landlord’s Lender and their respective agents shall have the right to enter the Leased Premises,
upon reasonable notice during Tenant's business hours for the purposes of inspecting same, showing the same to prospective purchasers
and lenders, or lessees, and making such repairs to the Leased Premises or, subject to the terms of this Lease, to the building of which
they are a part as Landlord may deem necessary and desirable.
25. MISCELLANEOUS
PROVISIONS.
25.1 Tenant
shall not record this Lease. Tenant shall, within ten (10) days after request by Landlord, execute and deliver a memorandum of the Lease
for the purpose of recordation in a form prescribed by Landlord.
25.2 Nothing
herein contained shall be deemed or construed by the parties hereto, nor by any third party, as creating a relationship of principal
and agent or of partnership or of joint venture between the parties hereof. Neither the method of computation of Rent, nor any other
provisions contained herein, nor any acts of the parties hereto, shall be deemed to create any relationship between the parties hereto
other than the relationship of Landlord and Tenant.
25.3 The
invalidity of any provision of this Lease as determined by a court of competent jurisdiction shall in no way affect the validity of any
other provision hereof. Each party acknowledges that it was represented by counsel in connection with this Lease and that each of them
or their respective counsel reviewed and revised this Lease. Any rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this Lease.
25.4
Time is of the essence.
25.5 The
captions used herein are for convenience only and do not limit or amplify the provisions hereof.
25.6 Upon
Tenant paying the Rent reserved hereunder and observing and performing all the covenants, conditions and provisions on Tenant's part
to be observed and performed hereunder, Tenant shall have quiet possession of the Leased Premises against disturbance by Landlord or
those Persons claiming by, through or under Landlord, for the entire Lease Term, subject to all the provisions of the Lease.
25.7 The
Lease shall be governed by the laws of the State of Florida. TO THE EXTENT ALLOWABLE BY LAW, BOTH PARTIES WAIVE TRIAL BY JURY. Exclusive
venue for any action hereunder shall be in Palm Beach County, Florida.
Subject
to the provisions hereof restricting assignment or subletting by Tenant and regarding Landlord's liability, this Lease shall bind the
parties, their personal representatives, successors and assigns.
25.8 The
terms "Landlord" and "Tenant", as used herein, denote both singular and plural and all genders. Where "Tenant"
consists of more than one Person, whether natural or artificial, all the Persons constituting "Tenant" shall be jointly and
severally liable for all obligations to be performed by Tenant herein. If Tenant is a corporation or other entity, Tenant shall furnish
to Landlord such evidence as Landlord may require in order to evidence the authority of Tenant to execute and deliver the Lease and to
perform its obligations hereunder.
25.9
Notwithstanding any provisions herein to the contrary, there shall be absolutely no personal
liability on the part of Landlord, its directors, officers or shareholders, or any of its partners, their directors, officers or shareholders,
with respect to any of the terms, conditions and covenants of this Lease. Tenant shall look solely to the interest of Landlord in the
Leased Premises for the satisfaction of each and every remedy of Tenant.
25.10 The
submission of this Lease for examination by Tenant does not constitute an offer or an option to lease the Leased Premises, nor is it
intended as a reservation of the Leased Premises for the benefit of Tenant, nor shall the Lease have any force or validity until and
unless a copy of it is returned to Tenant duly executed by Landlord.
25.11 No
payment by Tenant or receipt by Landlord of a lesser amount than any payment of Rent stipulated in this Lease shall be deemed to be other
than on account of the earliest stipulated Rent then due and payable.
25.12 Landlord
may instruct Tenant to forward all sums due Landlord to a "lock box" account maintained by Landlord which will result in such
checks being automatically deposited to Landlord's account without review or inspection prior to the same being deposited. Landlord shall
not be bound by an endorsement or statement on any check or any letter accompanying any check or payment and no such endorsement, statement
or letter shall be deemed an accord and satisfaction, whether such check or letter is forwarded to Landlord's "lock box" or
directly to Landlord, Agent or elsewhere and Landlord or Landlord's bank may accept such check or payment or prejudice to Landlord's
right to recover the balance of Rent or pursue any other remedy provided in this Lease, at law or in equity.
25.13 All
Tenant's payment and indemnity obligations pursuant to this Lease, and those which by their nature are to be performed after the termination
hereof, shall survive the termination of this Lease.
25.14 Tenant
shall maintain the interior of the Leased Premises as a smoke free environment. Except in a designated smoking area approved by Landlord,
no smoking shall be permitted in the interior of the Leased Premises, including, but not limited to, hallways, lavatories, lobbies, and
stairways. Landlord may designate an area outside the Building as a specific smoking area. Tenant shall be responsible for complying
with and observing all laws, rules, and regulations pertaining to smoking prohibitions within the Leased Premises as to Tenant, its employees,
customers and invitees and for any damages which may be caused by smoking and/or the use of tobacco products on the Leased Premises.
25.15 To
the extent permitted by Applicable Law, Tenant shall have the right to seek and apply for any tax abatement with respect to the Leased
Premises. Any tax abatement, irrespective of whether such abatement results from Tenant’s efforts, shall inure to the benefit of
and belong to Tenant.
25.16 Each
provision performable by Tenant hereunder shall be deemed both a covenant and a condition.
25.17 This
Lease contains all agreements of the parties with respect to any matter mentioned herein. No prior agreement or understanding pertaining
to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of modification.
[remainder
of page intentionally left blank]
Witnesses:
Landlord:
___________________________ Ethema
Health Corporation,
Print
Name: _______________ a Colorado corporation
By:
___________________________________
___________________________ Print
Name: Shawn Leon
Print
Name: _________________ Title: President
Date: August
4, 2023
Tenant:
___________________________ Evernia
Health Center, LLC,
Print
Name: _______________ a Florida limited liability company
By:
____________________________________
___________________________ Print
Name: Shawn Leon
Print
Name: _________________ Title: Manager
Date:
August 4, 2023
Exhibit
1
Leased
Premises
Exhibit
2
Rent
Roll
Exhibit
3
DAC
Staff Report/DAC Order
Exhibit
4
Exhibit
5
Option
Agreement/Agreement for Sale and Purchase
Exhibit
6
Draw
Schedule
Exhibit 10.8
Exhibit 10.9
Ethema
Closes on Real Estate transaction and Eliminates Major Debt
West
Palm Beach, FL, August 11, 2023 – Ethema Health Corporation (OTCPINK: GRST) (“Ethema”, “GRST” or the “Company”), filed
an 8-K today reporting on the real estate transaction that closed August 4, 2023 and the history of agreements that led to the final
closing. The net result of all the transactions on the company financial statements will be reflected in part on the Q2 filing and the
balance on the Q3 filing.
Mr.
Shawn Leon, Company CEO reported, “The closing of this deal is the result of a lot of hard work and effort and has directly benefited
our shareholders. It is a huge improvement in the overall health of the Company. We have managed to keep our issued common stock static
since March 2, 2022, which was difficult given the large amount of convertible debt we carried throughout that time. This real estate
deal has eliminated a lot of debt, including all variable rate convertible debt and the Company is now free to focus on growth.”
Ethema
is proud of our core mission which centers on delivering compassionate, evidence-based addiction treatment. We operate under stringent
ethical standards and maintain a robust admission process driven by patients' individual needs and clinical necessities. We remain steadfast
in our commitment to serve those battling addiction.
About
Ethema Health Corporation
Ethema
Health Corporation (OTCPINK: GRST) operates in the behavioral healthcare space specifically in the treatment of substance use disorders.
Ethema developed a unique style of treatment over the last decade and has had much success with in-patient treatment for adults. Ethema
will continue to develop world class programs and techniques for North America. For more information you can visit our website
at www.ethemahealth.com .
Notice
Regarding Forward-Looking Statements
The
information contained herein includes forward-looking statements. These statements relate to future events or to our future financial
performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,
performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed
or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will,
materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current
views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations,
results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.
For
information please contact:
Ethema
Health Corporation
shawn@ethemahealth.com
Text
to 416-500-0020
Twitter
@healthethema
Ethema
Executes Two Real Estate Transactions and Major Debt Repayment
WEST
PALM BEACH, FL - (NewMediaWire)
- July 17, 2023 - Ethema Health Corporation (OTCPINK: GRST) (“Ethema”, “GRST” or the “Company”) is
pleased to announce the results of the global restructuring efforts with its senior lender and the property purchase in West Palm
Beach.
First,
the Company is pleased to announce that is has signed a binding purchase and sale agreement to sell and leaseback the property located
at 950 Evernia Street, West Palm Beach for $8,500,000 contemporaneously with the purchase of the property for $5,500,000. The Company
will simultaneously enter into a twenty-year lease on the Property. The agreement became legally binding on July 13, 2023, and it is
expected to conclude on or before August 3, 2023. The three million dollar spread is profit to the Company before expenses. Second,
as a result of the sale leaseback transaction, the Company will have the resources to pay off all of the outstanding senior lender debt
at the closing of the transaction. The senior lender had previously extended the forbearance agreement to allow for the Company
to complete this process. Third, the Company has agreed to sell the subsidiary that owns the Canadian property to its
senior lender in exchange for all of the senior lender’s preferred shares, accrued and unpaid dividends, and the assumption of
the property mortgage. The Company will emerge from this transaction with a greatly streamlined cap table, an improved balance sheet,
and a new focus on an “asset light” business model.
Overall,
the impact of this transaction will equate to a net reduction in debt of approximately $6.7 million and shareholder equity is expected
to improve by $2 million for an overall positive improvement on the balance sheet of $8.7 million.
The
Company also renegotiated the maturities of all of its remaining debt that had either expired or had no fixed terms of repayment. This
puts the Company in a position to manage the repayment of those debts over time or convert them to equity. In addition, the senior
lender has agreed to exchange its warrant issued on June 12, 2020 for a new warrant with improved terms for the Company including a limit
on the right to purchase up to 20% of the Company’s shares, and limits on antidilution rights. With these changes in hand, the
Company is poised to raise new equity through its Reg A+ offering and to continue on with expansion and growth. There are no plans
to consolidate the stock and there will be no remaining outstanding debt that contains any variable rate conversion feature.
The
Company further reports that its ARIA subsidiary’s extremely strong results in April and May continued in June and overall revenue
for the ARIA subsidiary will be approximately $1,450,000 for the quarter, which will result in ARIA’s highest quarterly profit
to date. The second quarter results will be released before August 14, 2023.
The
previous announced LOI for the purchase of an acquisition in South Carolina was terminated due to an inability to extend it any further
without a commitment of funds to close. Until such time as the Company has the resources and cash on hand to consummate such an acquisition,
it will defer entering into any further LOI.
Mr.
Shawn Leon, Company CEO, reported, “Our focus on reducing debt has paid off in spades with this combination of transactions.
If there was any doubt about our ability to get out from under our debt and succeed, that doubt has certainly been squashed with these
developments. We created three million of cash without issuing debt or equity and improved our balance sheet by $8.7 million.
These are stellar results for a company that has been trading at market-cap below $2 million. Our balance sheet is cleaner,
healthier and stronger. This is a great foundation upon which to continue to grow the Company and is fantastic progress for Ethema.”
Mr. Leon further added, “I have been questioned often about what our plans are to consolidate the stock and I can report that there
are no near term plans to do so. I can only see that happening in conjunction with an up-listing when that time comes, and I believe
it will come, based on our much stronger financial position, fantastic opportunities, and our vast experience in the addiction treatment industry.”
Ethema
is proud of our core mission which centers on delivering compassionate, evidence-based addiction treatment. We operate under stringent
ethical standards and maintain a robust admission process driven by patients' individual needs and clinical necessities. We remain steadfast
in our commitment to serve those battling addiction.
About
Ethema Health Corporation
Ethema
Health Corporation (OTCPINK: GRST) operates in the behavioral healthcare space specifically in the treatment of substance use disorders.
Ethema developed a unique style of treatment over the last decade and has had much success with in-patient treatment for adults. Ethema
will continue to develop world class programs and techniques for North America. For more information you can visit our website
at www.ethemahealth.com .
Notice
Regarding Forward-Looking Statements
The
information contained herein includes forward-looking statements. These statements relate to future events or to our future financial
performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,
performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed
or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will,
materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current
views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations,
results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.
For
information please contact:
Ethema
Health Corporation
shawn@ethemahealth.com
Text
to 416-500-0020
Twitter
@healthethema
Ethema
Reports Updates and Extends Forbearance
WEST
PALM BEACH, FL - (NewMediaWire)
- June 8, 2023 - Ethema Health Corporation (OTCPINK: GRST) (“Ethema”, “GRST” or the “Company”) is
pleased to update shareholders on several initiatives that the Company has been working on most recently. The company is in negotiation
with its senior lender on repayment of its debt and convertible notes. The lender has agreed to extend the original forbearance
agreement expiring June 8, 2023, until June 28, 2023 to agree to a plan for repayment of the Leonite debts and convertible loans. These
parties are also negotiating a global restructuring of outstanding securities that is expected to be announced shortly. The plan would
greatly reduce the complexity of the Company’s balance sheet, as well as reduce substantial liabilities.
The
Company’s initiative on purchasing the West Palm Beach real estate is also in its final stages and will be part of the expected
resolution as part of the senior debt restructuring. These two initiatives have delayed both the start of the Reg A+ capital raise
and the completion of the acquisition. All of these initiatives are interdependent on each other, and it is expected that they
will be resolved by June 30, 2023.
The
Company further reports that its ARIA subsidiary achieved extremely strong results in April and May with over 1 million in revenue for
the two months. The company expects this revenue rate to continue for June. If revenue continues as projected, the second quarter
will set new highs for profitability.
Mr.
Shawn Leon, Company CEO, reported, “Our focus on growth and repayment of debt should yield some very substantial results in the
second quarter.” Mr. Leon further added, “It came to my attention recently that misinformation about our Company was shared
in an online forum accusing the company of being the subject of a wrongful death lawsuit and that the Company was accused of ‘patient
brokering’. (CASE NUMBER: 502021CA002289 AN, Mark Stricklin v multiple parties.) The case named the prior
treatment center ‘Evernia Sation’ that previously occupied the location at 950 Evernia Street and Evernia Health Center,
LLC (DBA ARIA). Once the Plaintiff was notified that Evernia Health Center, LLC (DBA ARIA) was incorrectly named in the suit,
Evernia Health Center was dropped from the suit on 4/18/2023 with prejudice, (Document 160 in the public case file above). Another
co-defendant ‘Transformations Treatment Center’ who is not affiliated with any of the other named parties was the party indicated
in the suit as being a party to ‘patient brokering’. Evernia Health Center, LLC was never named as a party to this
count and Evernia Health Center was not in operation at the time of the death of Mr. Strickland. The entire case was resolved on
May 24, 2023 in mediation and the case was dismissed with prejudice. Evernia Health Center had nothing to do with the wrongful
death case, and is not involved in any patient brokering.”
Ethema
is proud of our core mission which centers on delivering compassionate, evidence-based addiction treatment. We operate under stringent
ethical standards and maintain a robust admission process driven by patients' individual needs and clinical necessities. We remain steadfast
in our commitment to serve those battling addiction.
About
Ethema Health Corporation
Ethema
Health Corporation (OTCPINK: GRST) operates in the behavioral healthcare space specifically in the treatment of substance use disorders.
Ethema developed a unique style of treatment over the last decade and has had much success with in-patient treatment for adults. Ethema
will continue to develop world class programs and techniques for North America. For more information you can visit our website
at www.ethemahealth.com .
Notice
Regarding Forward-Looking Statements
The
information contained herein includes forward-looking statements. These statements relate to future events or to our future financial
performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,
performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed
or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will,
materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current
views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations,
results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.
For
information please contact:
Ethema
Health Corporation
shawn@ethemahealth.com
Text
to 416-500-0020
Twitter
@healthethema
Ethema
Posts Strong Year End Results
West
Palm Beach, FL - (NewMediaWire)
- April 4, 2023 - Ethema Health Corporation (OTCPINK: GRST) (“Ethema”, “GRST” or the “Company”), on
March 31, 2023 filed the 10-K 2023 annual report. The Company’s Evernia subsidiary continued its growth and had an operating
income of $0.5 million, including a depreciation and amortization charge of $0.4 million ($0.9 million before depreciation and amortization),
marginally below our target for 2022. The Company’s wholly owned subsidiary, PB Billing LLC which started operating in May
2022, had an operating income of $0.1 million for the year. After corporate overhead expenses the Group achieved an operating
profit of $0.6 million, including depreciation and amortization of $0.5 million ($1.1 million before depreciation and amortization).
The
disposition of the two previous non-core operating subsidiaries that are reflected in the year end statements resulted in a net gain
for the Company due to the elimination of liabilities carried in those subsidiaries. These certain liabilities were assumed by
our CEO, upon acquisition of the previous subsidiaries. Due to the related party nature of these transactions, the gain of $0.6
million is reflected in the Statement of changes in stockholder’s deficit. The assumption of these liabilities by our CEO
had a positive impact on our balance sheet in line with our drive to eliminate debt and liabilities.
The
Company has entered into a definitive agreement for the acquisition of the target Company it previously announced it was working
on. A deposit has been posted with an escrow agent pending the final due diligence to be completed mid-May with a final closing
date set for July 1, 2023. The Company will provide more details when the agreement goes firm after final due diligence.
The company is located outside of Florida in the South Eastern United States.
The
acquisition of the real property in which Evernia operates in West Palm Beach was deferred for up to four months from the original closing
date of February 1, 2023, as the Company is exploring different financing alternatives that could be used to further reduce debt and
provide capital for the acquisition. This would require less equity in the near term which would ultimately be less expensive for
the Company.
Mr.
Shawn Leon, Company CEO, reported, “We are pleased with last year’s results and although we had a very soft December and
January, our Evernia operation is doing very well and we have had our largest average daily census ever in March, 2023. We managed
to improve our balance sheet with the divestiture of two of our non-core subsidiaries and we are positioning the group for further growth
with the potential acquisition of the target entity mentioned above. The real property transaction may provide us with sufficient
capital to reduce debt and contribute to our acquisition and expansion costs. We will know the outcome of our strategy in
April. If we are able to consummate the acquisition contemplated above, we expect revenues and operating results for 2023 to increase
substantially over 2022.”
About
Ethema Health Corporation
Ethema
Health Corporation (OTCPINK: GRST) operates in the behavioral healthcare space specifically in the treatment of substance use disorders.
Ethema developed a unique style of treatment over the last decade and has had much success with in-patient treatment for adults. Ethema
will continue to develop world class programs and techniques for North America. For more information you can visit our website
at www.ethemahealth.com .
Notice
Regarding Forward-Looking Statements
The
information contained herein includes forward-looking statements. These statements relate to future events or to our future financial
performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,
performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed
or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will,
materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current
views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations,
results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.
For
information please contact:
Ethema
Health Corporation
shawn@ethemahealth.com
Text
to 416-500-0020
Twitter
@healthethema
Ethema
Extends Dates for Debt Repayment and Real Estate Closing
West
Palm Beach, FL - (NewMediaWire)
- March 01, 2023 - Ethema Health Corporation (OTCPINK: GRST) (“Ethema”, “GRST” or the “Company”),
has signed an extension and forbearance agreement with Leonite Capital Inc. extending the due date for its note due March 1, 2023. The
Company will continue to pay interest on the note and it will be due May 8, 2023.
The
Company has also extended the closing on the purchase of the real estate at 950 Evernia Street for a period of 120 days from February
1, 2023 to June 1, 2023. Each successive thirty-day extension will cost the Company an increasing fee amount that would reach
a total of $70,000.00 if all extensions are used. Although the Company has lined up financing with a partnership interest, it would require
the Company to keep its valuable cash invested in the property over the long run. The Company is pursuing other options for the real
estate ownership that would not only get the Company its deposit money out but allow it to get additional funds from the real estate
which could be used to eliminate debt.
The
Company is nearing the completion of the definitive agreements on the previously announced acquisition. Once a final agreement is reached,
there will be a short due diligence period followed by a thirty day closing period. The purchase of the acquisition will be funded by
the financing raised by the Reg A+ offering.
The
Company is also nearing the Completion of a Letter of Intent for a lease location in Orlando, Florida for a de novo growth facility.
The
Reg A+ offering will soon have a new marketing plan and will soon be hosted on the Dealmaker platform. The Company experienced a short
period of time where its website was not available during the process of integrating it into a new platform system that will be compatible
with the new marketing plan and Dealmaker platform.
Mr.
Shawn Leon, Company CEO, reported, “The first two months of the year have been very busy with the real estate purchase, the acquisition
and growth plan, the Reg A+ financing and the continued management of the ARIA facility in West Palm Beach.
Although
it looks like the Aria facility will fall just short of its $1,000,000 EBITDA goal for calendar 2022, the PB Billing subsidiary and Cranberry
Cove subsidiary will be on budget. The 10-K will be filed at the end of March and will reflect the divestiture of two of the subsidiaries
previously used in the operation of Seastone Delray Healthcare and Greenestone Clinic Muskoka. This will help clean up the balance sheet
and together with our current efforts we expect that only the Series N convertible notes and the shareholder advances to my family will
remain as the only non-real property debt by the end of the second quarter this year.”
About
Ethema Health Corporation
Ethema
Health Corporation (OTCPINK: GRST) operates in the behavioral healthcare space specifically in the treatment of substance use disorders.
Ethema developed a unique style of treatment over the last decade and has had much success with in-patient treatment for adults. Ethema
will continue to develop world class programs and techniques for North America. For more information you can visit our website
at www.ethemahealth.com .
Notice
Regarding Forward-Looking Statements
The
information contained herein includes forward-looking statements. These statements relate to future events or to our future
financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels
of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements
since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could,
and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement
reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating
to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise
these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated
in these forward-looking statements, even if new information becomes available in the future.
For
information please contact:
Ethema
Health Corporation
shawn@ethemahealth.com
Text
to 416-500-0020
Twitter
@healthethema
Company
Signs Purchase and Sale Agreement to Acquire Property and Ends Third Quarter Strong
West
Palm Beach, FL -(NewMediaWire)
- October 5, 2022 - Ethema Health Corporation (OTCPINK: GRST) (“Ethema” “GRST” or the “Company”) previously
announced that it had entered into an option to purchase the building at 950 Evernia Street, West Palm Beach. This building is
leased by the ARIA subsidiary for its addiction treatment operations. On October 3, 2022, Ethema signed a purchase and sale agreement
(“Agreement”) to purchase the building and paid a $350,000.00 deposit as part of the Agreement, bringing the total deposit
to $400,000 after getting credit for the $50,000.00 option payment. The Agreement has a closing date of January 31, 2023.
The Agreement also provides for a seller’s note which will provide the majority of the balance of funds necessary to close the
deal. The company plans to raise additional equity for the purchase through a Regulation A financing.
On
September 30, 2022 the Company’s ARIA subsidiary obtained occupancy of its newly built first floor space and is now in the process
of moving offices and staff out of space on the second and third floors, making room to add additional beds on the upper floors.
These beds will come on stream early this month. The first-floor space will also provide additional capacity for outpatient services.
This is the last step required to reach the full capacity of the property.
Mr.
Shawn Leon, Company CEO, reported, “We are pleased with the Company’s ability to have reached these steps towards providing
full capacity and securing long term control over the ARIA property. Our third quarter revenues set a new record and we had
an approximately 25% revenue increase over the second quarter in spite of the usual summer soft period in our industry. Full results
will be posted with our quarterly filing. We have also attempted to secure additional growth and expansion outside of the ARIA
property, but neither of the opportunities the Company was working on in the third quarter were won by the Company and went to other
bidders. We will continue to pursue similar opportunities to expand. We continue to work on eliminating debt, especially
convertible debt, and with stronger cash flow each month and the potential to raise new equity with a Regulation A offering at much higher
prices than the current market, we believe we will be able to make significant strides on that front in the fourth quarter.”
About
Ethema Health Corporation
Ethema
Health Corporation (OTCPINK: GRST) operates in the behavioral healthcare space specifically in the treatment of substance use disorders.
Ethema developed a unique style of treatment over the last decade and has had much success with in-patient treatment for adults. Ethema
will continue to develop world class programs and techniques for North America. For more information you can visit our website
at www.ethemahealth.com.
Notice
Regarding Forward-Looking Statements
The
information contained herein includes forward-looking statements. These statements relate to future events or to our future financial
performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,
performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed
or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will,
materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current
views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations,
results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.
For
information please contact:
Ethema
Health Corporation
shawn@ethemahealth.com
Text
to 416-500-0020
Twitter
@healthethema
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- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
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- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
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- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
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- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.
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- DefinitionLocal phone number for entity.
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- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
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- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.
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