Material Agreement - Form 425

Item 1.01 Entry into a Material Definitive Agreement

Agreement and Plan of Merger

On January 3, 2025, Regional Health Properties, Inc., a Georgia corporation ("Regional"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with SunLink Health Systems, Inc., a Georgia corporation ("SunLink"). The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, (a) SunLink will be merged with and into Regional (the "Merger"), with Regional surviving the Merger, and (b) at the effective time of the Merger (the "Effective Time"), each five shares of common stock, no par value per share, of SunLink ("SunLink Common Stock") issued and outstanding immediately prior to the Effective Time (other than Excluded Shares (as defined in the Merger Agreement)) will be converted into the right to receive (i) one validly issued, fully paid and nonassessable share of common stock, no par value per share ("Regional Common Stock"), of Regional (the "Regional Common Stock Consideration"), and (ii) subject to adjustment pursuant to the terms and conditions of the Merger Agreement, one validly issued, fully paid and nonassessable share of Regional Series D Preferred Stock (as defined below) (the "Regional Preferred Stock Consideration").

The Merger Agreement provides that, effective as of the Effective Time, each SunLink Equity Award (as defined in the Merger Agreement) that is then outstanding and unexercised shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to represent a SunLink Equity Award with respect to SunLink Common Stock and shall thereafter automatically be cancelled and shall cease to exist and no consideration shall be delivered in exchange therefor.

At the Effective Time, Regional's board of directors shall consist of six directors, of whom (i) two directors shall be designated by Regional, (ii) two directors shall be designated by SunLink, and (iii) two directors, Scott Kellman and C. Christian Winkle, shall be designated by the mutual agreement of Regional and SunLink; provided, however, that up to two additional directors may be placed on the Regional board of directors by the holders of 12.5% Series B Cumulative Redeemable Preferred Shares (the "Regional Series B Preferred Stock") in accordance with the articles of incorporation of Regional as in effect immediately prior to the Effective Time. At the Effective Time, Brent S. Morrison, President and Chief Executive Officer of Regional, will serve as President and Chief Executive Officer of the combined company, and Robert M. Thornton, President and Chief Executive Officer of SunLink, will serve as Executive Vice President - Corporate Strategy of the combined company.

Regional's board of directors unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the issuance of the Regional Common Stock Consideration and the issuance of the Regional Preferred Stock Consideration (the "Regional Stock Issuance"), are fair to, and in the best interests of, Regional and its shareholders; (ii) adopted the Merger Agreement; (iii) approved the Merger and the Regional Stock Issuance; (iv) directed that the Merger Agreement, the Merger and the Regional Stock Issuance be submitted to Regional's shareholders for approval; and (v) resolved to recommend approval of the Merger Agreement, the Merger and the Regional Stock Issuance by Regional's shareholders.

The completion of the Merger is subject to satisfaction or waiver of certain customary closing conditions, including (a) the receipt of the required approvals from the shareholders of Regional, (b) the receipt of the required approvals from the shareholders of SunLink, (c) the absence of any governmental order or law making illegal or otherwise prohibiting the consummation of the Merger or imposing, individually or in the aggregate, a burdensome condition, (d) the effectiveness of the Registration Statement on Form S-4 (the "Registration Statement") to be filed by Regional, and (e) the authorization for listing of the shares of Regional Common Stock to be issued in connection with the Merger on NYSE American ("NYSE American"). The obligation of each party to consummate the Merger is also conditioned upon certain other conditions precedent.

The Merger Agreement contains customary representations and warranties of Regional and SunLink relating to their respective businesses, financial statements and public filings, in each case generally subject to customary materiality qualifiers. Additionally, the Merger Agreement provides for customary pre-closing covenants of Regional and SunLink, including, subject to certain exceptions, covenants relating to conducting their respective businesses in the ordinary course consistent with past practice.