Exhibit 10.205

 

EXECUTION COPY

 

EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT,

AND FOURTH AMENDMENT TO PROMISSORY NOTE

 

THIS EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT, AND FOURTH AMENDMENT TO
PROMISSORY NOTE (this “Agreement”) is made as of April 30, 2019, by and among QC
PROPERTY HOLDINGS, LLC, a Georgia limited liability company (“Borrower”), ADCARE
HEALTH SYSTEMS, INC., a Georgia corporation (“AdCare”), REGIONAL HEALTH
PROPERTIES, INC., a Georgia corporation (“Regional Health” and together with
AdCare, collectively, the “Guarantors”; the Guarantors and the Borrower are
collectively the “Obligors”), and CONGRESSIONAL BANK, a Maryland chartered
commercial bank and its successors and assigns (“Lender”).

 

RECITALS

 

A.Borrower and Lender are parties to that certain Loan and Security Agreement
dated as of September 27, 2013 (as amended by that certain First Amendment to
Loan and Security Agreement, Consent and Release dated December 31, 2015, that
certain Second Amendment to Loan and Security Agreement dated September 19,
2016, that certain Third Amendment to Loan and Security Agreement dated May 12,
2017, that certain Fourth Amendment to Loan and Security Agreement dated August
10, 2017, that certain Fifth Amendment to Loan and Security Agreement dated
December 29, 2017, that certain Sixth Amendment to Loan and Security Agreement
dated March 2, 2018 and that certain Seventh Amendment to Loan and Security
Agreement dated April 30, 2018, and as further amended, restated, supplemented
or otherwise modified and in effect from time to time, the “Loan Agreement”),
pursuant to which the Lender made to Borrower a term loan in the aggregate
principal amount of $5,000,000 (the “Loan”), as evidenced by that Promissory
Note (Term Note) dated as of September 27, 2013 by Borrower payable to Lender
(as amended by that certain First Amendment to Promissory Note dated September
19, 2016, that certain Second Amendment to Promissory Note dated March 2, 2018
and that certain Third Amendment to Promissory Note dated April 30, 2018, and as
further amended, restated, supplemented or otherwise modified and in effect from
time to time, the “Note”).

 

B.On or about December 7, 2018, Lender delivered to Borrower a letter notifying
Borrower that Events of Default occurred because the Obligors failed to comply
with Section 11.18 of the Loan Agreement in that the following Financial
Covenants were not met: (i) Borrower failed to meet the minimum Debt Service
Coverage Ratio for the months ended August 31, 2018 and September 30, 2018, and
(ii) the Facility failed to meet the Minimum Census for the trailing twelve
month period ended June 30, 2018 (collectively, the “Specified Events of
Default”).

 

C.The Obligors and Lender have agreed to amend the Loan Documents as set forth
herein, subject to the terms, conditions and understandings set forth herein.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Lender and the Obligors hereby agree as follows.

 

AGREEMENTS

 

1.Definitions. Capitalized terms used herein (including in the Recitals hereto)
and not otherwise defined shall have the meaning given to such terms in the Loan
Agreement.

2.Amendment to Note. The Note is hereby amended to replace the words “on or
before April 30, 2019 (the “Maturity Date”)” in Section 1 thereof with the words
“on or before the Maturity Date (as defined in the Loan Agreement)”.

 

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3.Amendments to Loan Agreement. The Loan Agreement is hereby amended as follows:

 

(a)Section 1.1 of the Loan Agreement is hereby amended to amend and restate the
following defined term in its entirety:

 

Maturity Date: June 30, 2019, subject to the Extension Option. If the Extension
Option is exercised herein, “Maturity Date” shall mean the Extended Maturity
Date.

 

(b)Section 1.1 of the Loan Agreement is hereby amended to add the following
defined terms in correct alphabetical order:

 

Extended Maturity Date: As defined in Section 3.6 hereof.

 

Extension Option: As defined in Section 3.6 hereof.

 

Purchase Agreement: The Purchase and Sale Agreement dated April 15, 2019 by and
between Borrower, Northwest Property Holdings, LLC, Attalla Nursing ADK, LLC and
CP Property Holdings, LLC, as sellers, and Attalla Realty LLC, College Park
Realty LLC, Quail Creek Realty LLC and Northwest Realty LLC, as buyer, pursuant
to which Borrower has agreed to sell the Property subject to the terms and
conditions therein.

 

(c)Section 3.6 of the Loan Agreement is hereby amended and restated in its
entirety

as follows:

 

3.6Extension Option. Borrower may extend  the  Maturity  Date  (the extension
option) from June 30, 2019 to July 31, 2019 (such extended date, the “Extended
Maturity Date”) upon Borrower’s satisfaction of the following conditions: (i)
Borrower shall have delivered to Lender written notice of its intent to exercise
the Extension Option no earlier than forty-five (45) days and no later than
thirty (30) days prior to the Maturity Date; (ii) no Default or Event of Default
shall have occurred and be continuing; (iii) the Closing Date and Scheduled
Closing Date (each as defined in the Purchase Agreement) shall have been
extended and the Purchase Agreement shall otherwise still be in full force and
effect, including with respect to the Property; (iv) Lender shall have received
such additional information or costs as Lender may request; and (v) Lender shall
have approved such extension in its commercially reasonable discretion.

 

(d)Section 14.1(n) of the Loan Agreement is hereby amended and restated in its
entirety as follows:

 

(n)the termination of the Purchase Agreement for any reason;

 

(e)Section 3) of Annex I of the Loan Agreement is hereby amended and restated in
its entirety as follows:

3)Debt Service Coverage Ratio. Measured as of the last day of each calendar
month for the Test Period then ended, Borrower shall maintain a Debt Service
Coverage Ratio of at least 1.25:1.00.

 

4.Conditions. The effectiveness of this Agreement is subject to the fulfillment
of the following conditions precedent:

 

(a)Lender shall have received the following documents, each duly executed by all
of the parties thereto and each in form and substance satisfactory to Lender:

 

 

(i)

this Agreement;

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(ii)

Certifications of Beneficial Ownership from each Obligor;

 

 

(iii)

certificates of good standing of each Obligor from the state of formation of
such Obligor as Lender may require;

 

 

(iv)

the results of recent lien searches in such jurisdictions as Lender may require;
and

 

 

(v)

such other documents, instruments, certificates, legal opinions, information and
agreements as Lender may request; and

 

(b)Lender shall have received all costs, fees and expenses payable pursuant to
Section 9.

 

5.Waiver. The Lender hereby waives the Specified Events of Default; provided,
however, that this Section 5 shall be strictly limited to the Specified Events
of Default and shall not be deemed to waive any defaults under the following
provisions after the date of this Agreement or after the period stated, or any
other defaults arising out of non-compliance by the Obligors with any of the
Loan Documents, whether or not the events, facts or circumstances giving rise
to  such  non-compliance  existed on or prior to the date hereof.

 

6.Acknowledgements, Representations and Warranties. In order to induce Lender to
enter into this Agreement, each of the Obligors (as applicable), for itself, and
for its respective heirs, personal representatives, successors and assigns,
hereby acknowledges, represents and warrants to Lender as follows:

 

(a)The Obligors (to the extent of their respective obligations under the Loan
Documents, as applicable) are responsible for reimbursing or otherwise paying
all of the fees and expenses of Lender, including, without limitation, all costs
and expenses related to any field examination, appraisals and/or business risk
reviews, all recordation and transfer taxes and all attorneys’ fees and expenses
(including in-house counsel) incurred by Lender in connection with the Loan, the
Loan Documents and the collection and enforcement of any or all of the Loan
Obligations and the preparation and execution of this Agreement and any other
instruments, documents or agreements executed and delivered in connection
herewith or required hereby, whether previously incurred or incurred in the
future (collectively, the “Enforcement Costs”). Notwithstanding any provision of
the Loan Documents to the contrary, the Enforcement Costs shall be deemed to be
part of the Loan Obligations, and shall be payable in full by the Obligors (to
the extent of their respective obligations under the Loan Documents, as
applicable) upon execution and delivery of this Agreement, and thereafter, upon
demand.

(b)Each Obligor has full power and authority (as applicable) to enter into this
Agreement and to incur and perform all obligations and covenants contained
herein, all of which have been duly authorized by all proper and necessary
action (as applicable).  No consent or approval  of  equity holders of, lenders
to, or other creditors of any Obligor, or any other Person, and no consent,
approval, filing or registration with or notice to any governmental authority,
is required as a condition to the validity of this Agreement or the performance
of any Obligor’s obligations hereunder.

 

(c)All understandings, representations, warranties and recitals contained or
expressed in this Agreement are true, accurate, complete and correct in all
respects; and, no such understanding, representation, warranty or recital fails
or omits to state or otherwise disclose any material fact or information
necessary to prevent such understanding, representation, warranty or recital
from being misleading. All of the representations and warranties set forth in
the Loan Documents remain in full force and effect, and are reaffirmed as of the
date of this Agreement. All information included in each Certificate of
Beneficial Ownership is true and correct in all respects. The Obligors
acknowledge and agree that Lender has been induced in part to enter into this
Agreement based upon Lender’s justifiable reliance on the truth, accuracy, and
completeness of all understandings, representations, warranties and recitals
contained in this Agreement and the other Loan Documents. There is no fact known
to any of the Obligors which such Obligor has not disclosed to Lender in writing
on or prior to the date of this Agreement which would materially and adversely
affect the understandings of Lender expressed in this Agreement or any
representation, warranty or recital contained in this Agreement.

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(d)Each of the Loan Documents (as amended hereby) continues in full force and
effect notwithstanding the execution and delivery of this Agreement. Each
Obligor hereby reissues, ratifies and confirms the enforceability and validity
of all Loan Documents to which it is a party and agrees that this Agreement and
each of the Loan Documents to which such Obligor is a party constitute the
legal, valid and binding obligations of such Obligor, enforceable in accordance
with their respective terms. In addition, each Obligor acknowledges and agrees
that neither the execution and delivery of this Agreement and/or any related
documents nor any of the terms, provisions, covenants or agreements contained in
this Agreement shall in any manner release, impair, lessen, modify, waive or
otherwise affect the liability and obligations of such Obligor under the terms
of the Loan Documents, except to the extent expressly set forth herein. Lender
may disseminate any information it now has or hereafter obtains pertaining to
the Loan Obligations, including any security for any of the Loan Obligations,
any credit or other information on any collateral or security for any of the
Loan Obligations (including appraisals, environmental reports and assessments,
and market studies), the Obligors, any of the Obligors’ principals, partners or
members to the following: (i) any actual or prospective assignee or participant;
(ii) Lender’s affiliates; (iii) any regulatory body having jurisdiction over
Lender; or (iv) any other party as necessary or appropriate in Lender’s
reasonable judgment in connection with the enforcement of Lender’s rights and
remedies under the Loan Documents.

 

(e)Lender has acted in good faith and has conducted itself in a commercially
reasonable manner in its relationships with each Obligor in connection with this
Agreement and in connection with the Loan, the Loan Obligations and the Loan
Documents; the Obligors hereby waiving and releasing any claims to the contrary.
No Obligor has any defenses, affirmative or otherwise, rights of setoff, rights
of recoupment, claims, counterclaims, actions or causes of action of any kind or
nature whatsoever against Lender or any past, present or future agent, attorney,
legal representative, predecessor in interest, subsidiary, affiliate, successor,
assign, employee, stockholder, director or officer of Lender (including Lender,
collectively, the “Lender Group”), directly or indirectly, arising out of, based
upon, or in any manner connected with, any transaction, event, circumstance,
action, failure to act, or occurrence of any sort or type, whether known or
unknown, which occurred, existed, was taken, permitted, or begun prior to the
execution of this Agreement and occurred, existed, was taken, permitted or begun
in accordance with, pursuant to, or by virtue of the Loan Obligations or any of
the terms or conditions of the Loan Documents, or which directly or indirectly
relate to or arise out of or in any manner are connected with the Loan
Obligations or any of the Loan Documents; to the extent any such defenses,
affirmative or otherwise, rights of setoff, rights of recoupment, claims,
counterclaims, actions or causes of action exist or existed, such defenses,
rights, claims, counterclaims, actions and causes of action are hereby forever
waived, discharged and released.  Each Obligor hereby acknowledges and agrees
that the execution of  this Agreement by Lender shall not constitute an
acknowledgment of or admission by any member of the Lender Group of the
existence of any claims or of liability for any matter or precedent upon which
any claim or liability may be asserted. Each Obligor further acknowledges and
agrees that, to the extent any such claims may exist, they are of a speculative
nature so as to be incapable of objective valuation and that, in any event, the
value to each Obligor of the covenants and obligations of Lender contained in
this Agreement and the other documents executed and delivered in connection with
this Agreement substantially and materially exceeds any and all value of any
kind or nature whatsoever of any such claims. Each Obligor further acknowledges
and agrees that Lender is not in any way responsible or liable for the previous,
current or future condition or deterioration of the business operations and/or
financial condition of any Obligor and that Lender has not breached any
agreement or commitment to loan money or otherwise make financial accommodations
available to any Obligor or to fund any operations of any Obligor at any time.

 

(f)EACH OBLIGOR HEREBY ACKNOWLEDGES THAT IT HAS FREELY AND VOLUNTARILY ENTERED
INTO THIS AGREEMENT AFTER AN ADEQUATE OPPORTUNITY AND SUFFICIENT PERIOD OF TIME
TO REVIEW, ANALYZE AND DISCUSS (I) ALL TERMS AND CONDITIONS OF THIS AGREEMENT,
(II) ANY AND ALL OTHER DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND (III) ALL FACTUAL AND LEGAL
MATTERS RELEVANT TO THIS AGREEMENT AND/OR ANY AND ALL SUCH OTHER DOCUMENTS, WITH
COUNSEL FREELY AND INDEPENDENTLY SELECTED BY SUCH OBLIGOR. EACH OBLIGOR FURTHER
ACKNOWLEDGES AND AGREES THAT (I) IT HAS ACTIVELY AND WITH FULL UNDERSTANDING
PARTICIPATED IN THE NEGOTIATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS
EXECUTED AND DELIVERED IN CONNECTION WITH THIS

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AGREEMENT AFTER CONSULTATION AND REVIEW WITH ITS COUNSEL, (II) ALL OF THE TERMS
AND CONDITIONS OF THIS AGREEMENT AND THE OTHER DOCUMENTS EXECUTED AND DELIVERED
IN CONNECTION WITH THIS AGREEMENT HAVE BEEN NEGOTIATED AT ARM’S-LENGTH, AND
(III) THIS AGREEMENT AND ANY AND ALL SUCH OTHER DOCUMENTS HAVE BEEN NEGOTIATED,
PREPARED AND EXECUTED WITHOUT FRAUD, DURESS, UNDUE INFLUENCE, OR COERCION OF ANY
KIND OR NATURE WHATSOEVER HAVING BEEN EXERTED BY OR IMPOSED UPON ANY PARTY TO
THIS AGREEMENT BY ANY OTHER PARTY. NO PROVISION OF THIS AGREEMENT OR SUCH OTHER
DOCUMENTS SHALL BE CONSTRUED AGAINST OR INTERPRETED TO THE DISADVANTAGE OF ANY
PARTY TO THIS AGREEMENT BY ANY COURT OR OTHER GOVERNMENTAL OR JUDICIAL AUTHORITY
BY REASON OF SUCH PARTY HAVING OR BEING DEEMED TO HAVE STRUCTURED, DICTATED OR
DRAFTED SUCH PROVISION.

 

(g)There are no proceedings or investigations pending or, so far the as each
Obligor knows, threatened, before any court or arbitrator or before or by any
governmental, administrative or judicial authority or agency against such
Obligor.

 

(h)There is no statute, regulation, rule, order or judgment, no charter, by-law,
or preference stock provision of the Obligors, and no provision of any mortgage,
indenture, contract or other agreement binding on the Obligors or any of its,
his, her or their respective properties, which would prohibit or cause a default
under or in any way prevent the execution, delivery, performance, compliance or
observance of any of the terms and conditions of this Agreement and/or any of
the other documents executed and delivered in connection with this Agreement.

 

(i)Each Obligor hereby acknowledges and agrees that it is obligated to pay and
perform the Loan Obligations in accordance with the terms and conditions of the
Loan Documents. Each Obligor further acknowledges and confirms that any and all
collateral previously, simultaneously herewith or hereafter pledged as security
for any or all of the Loan Obligations does and shall continue to secure all
such Obligations. Lender has, and will continue to have as security for the Loan
Obligations, and Borrower hereby grants and re-grants to Lender, a valid and
perfected lien on and security interest in such Borrower’s right, title and
interest in all of the collateral pledged by it as security for any or all of
the Loan Obligations. The grant of the security interest in such collateral
shall continue in full force and effect until such time as all of the Loan
Obligations have been indefeasibly paid in full. Borrower hereby irrevocably
authorizes Lender at any time and from time to time to file any initial
financing statements, amendments thereto and continuation statements as
authorized by applicable law, reasonably required by Lender to establish or
maintain the validity, perfection and priority of the security interests granted
in the Loan Documents and this Agreement.

 

7.Further Assurances. Upon Lender’s request, the Obligors shall execute and
deliver to Lender such additional documents, amendments, confirmation,
supplements, instruments, certificates and agreements as Lender may reasonably
request from time to time in order to effectuate this Agreement or any document
executed in connection with this Agreement, or to ratify and confirm any of the
Loan Documents or this Agreement or any document executed in connection with
this Agreement, and the rights of Lender hereunder and thereunder. Further,
promptly following any request therefor, each Obligor shall provide information
and documentation reasonably requested by Lender for purposes of compliance with
applicable “know your customer” and anti-money-laundering rules and regulations,
including, without limitation, the PATRIOT Act.

 

8.Releases and Waivers.

 

(a)Each Obligor knowingly and voluntarily forever releases, acquits and
discharges the Lender Group, from and of any and all claims, damages, losses,
costs, expenses, compensation, causes of actions, counterclaims, suits,
judgments, obligations, liabilities, indebtedness, debts, affirmative and other
defenses, setoffs, and demands of any kind or nature whatsoever, in law, in
equity or otherwise, whether presently known or unknown, which the Obligors may
have had, now have, upon, or by reason of any matter, course or thing whatsoever
relating to, arising out of, based upon, or in any manner connected with,
directly or indirectly, any transaction, contracts, controversies, promises,
duties, event, circumstance, action, failure to act, or occurrence of any sort
or type, whether known or unknown, which occurred, existed, was taken,
permitted, begun, or otherwise related or connected to or with (i) any or all of
the Loan Obligations, this Agreement, any or all of the Loan Documents, (ii)
Lender’s acts, statements, conduct, representations and omissions made in
connection therewith, including, without limitation, the terms and conditions of
this Agreement, and (iii) any fact, matter, transaction or event relating
thereto, whether known or unknown, suspected or unsuspected, whether presently
enforceable or enforceable in the future, that could, might or may be claimed to
exist, whether liquidated or unliquidated, each as though fully set forth herein
at length.

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(b)Without implying any limitation on the foregoing, each Obligor hereby agrees
that from and after the date hereof, it will not assert to any person or entity
that any deterioration of the business operations or financial condition of the
Obligor was caused by any breach of contract or wrongful act of any member of
the Lender Group, including, without limitation, any act to loan money or make
other financial accommodations available to the Obligor or to fund any
operations of the Obligor at any time. Each Obligor hereby knowingly and
voluntarily, forever releases, acquits and discharges the Lender Group from and
of any and all claims that any member of the Lender Group is in any way
responsible for the past, current or future condition or deterioration of the
business operations and/or financial condition of the Obligor, and from and of
any and all claims that any member of the Lender Group breached any agreement.

 

(c)Each Obligor hereby waives the provisions of any applicable laws restricting
the release of claims that the Obligor does not know or suspect to exist at the
time of release, which, if known, would have materially affected the decision to
agree to these releases. In this connection, each Obligor hereby agrees,
represents and warrants to Lender that it realizes and acknowledges that factual
matters now unknown may have given or may hereafter give rise to causes of
action, claims, demands, debts, controversies, damages, costs, losses, expenses
and/or other rights, claims or amounts which are presently unknown,
unanticipated and unsuspected, and each Obligor further agrees, represents and
warrants that the releases provided herein have been negotiated and agreed upon
in light of that realization and the Obligor nevertheless hereby intends to
release, discharge and acquit the parties set forth herein from any such unknown
causes of action, claims, demands, debts, controversies, damages, costs, losses,
expenses and/or other rights, claims or amounts that are in any manner set forth
in or related to any or all of the Loan Obligations, this Agreement, any or all
of the Loan Documents and all dealings in connection therewith.

 

9.Fees; Expenses. As consideration for entering into this Agreement, Borrower
shall pay to Lender: (i) a non-refundable amendment closing fee equal to
$15,000, payable on or before the date hereof; and (ii) on or before the date
hereof, all costs, fees and expenses of Lender incurred on or before the date
hereof in connection with the preparation, execution and delivery of this
Agreement and any and all other documents executed and delivered in connection
with this Agreement including, without limitation, attorney’s fees and expenses
(including in-house counsel) and appraisal fees.

 

10.Affirmation. Except as specifically amended hereby, the Loan Documents (and
all covenants, terms, conditions and agreements therein) shall remain in full
force and effect, and are hereby ratified and confirmed in all respects by the
Obligors party thereto. Each Obligor hereby issues, ratifies and confirms the
representations, warranties and covenants contained in the Loan Documents to
which it is a party. Except as expressly provided hereunder, each Obligor
covenants and agrees to comply with all of the terms, covenants and conditions
of the Loan Documents to which it is a party, as amended hereby, notwithstanding
any prior course of conduct, waivers, releases or other actions or inactions on
Lender’s part which might otherwise constitute or be construed as a waiver of or
amendment to such terms, covenants and conditions.

 

11.No Waiver or Novation. The execution, delivery and effectiveness of this
Agreement shall not operate as a waiver, diminishment, impairment or
extinguishment of any right, power or remedy of Lender, nor constitute a waiver
of any provision of the Loan Documents or any other document, instruments and
agreements executed or delivered in connection with any of the foregoing. Except
as expressly set forth in Section 5 hereof with respect to the Specified Events
of Default) nothing herein is intended to be or shall be construed as a waiver
of any existing Defaults or Events of Default under the Loan Documents or any of
Lender’s rights and remedies in respect of such Defaults or Events of Default.
This Agreement (together with any other document executed in connection
herewith) is not intended to be, nor shall it be construed as, a novation of the
Loan or the Loan Obligations.

 

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12.Notices. All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered by hand or overnight delivery service or when mailed by
certified mail, postage prepaid, as follows:

 

If to any Obligor:

c/o QC Property Holdings, LLC

 

454 Satellite Boulevard, Ste. 404

 

Suwanee, GA 30024

 

Attention: Manager

 

If to Lender:

Congressional Bank

 

5515 Security Lane, Suite 740

 

North Bethesda, MD 20852

 

Attention: Amy Heller

 

with a copy to:

Miles & Stockbridge P.C.

 

1201 Pennsylvania Avenue, NW, Suite 900

 

Washington, DC 20004

 

Attention: Abbey M. Ruby

 

The Lender hereby gives notice to the Obligors that all notices to be provided
under the Loan Documents shall be given to Lender at its address set forth above
or at such other address as Lender may hereafter specify in a notice given in
the manner required under the Loan Documents.

 

13.Waiver of Jury Trial. NOTWITHSTANDING ANY OTHER PROVISION OF ANY LOAN
DOCUMENT TO THE CONTRARY, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE  LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION THEREWITH OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER THEORY). EACH PARTY HERETO  (a) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER, (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER DOCUMENTS CONTEMPLATED
HEREBY, BASED UPON AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION AND (c) CERTIFIES THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE.

 

14.Venue and Jurisdiction. Notwithstanding any other provision of any Loan
Document to the contrary, each Obligor agrees that any action or suit against
Lender arising out of or relating to any of the  Loan Documents shall be filed
in federal court or state court located in the Montgomery County in the State of
Maryland. Each Obligor agrees that Lender shall not be deemed to have waived its
right to enforce this section by filing an action or suit against any Obligor in
a venue outside of the State of Maryland. If Lender does commence an action or
suit arising out of or relating to any of the Loan Documents, each Obligor
agrees that the case may be filed in federal court or state court in the State
of Maryland. Lender reserves the right to commence an action or suit in any
other jurisdiction where any Obligor or any collateral has any presence or is
located. Each Obligor consents to personal jurisdiction and venue in such forum
selected by Lender and waives any right to contest jurisdiction and venue and
the convenience of any such forum. The provisions of this section are material
inducements to Lender’s acceptance of this Agreement.

 

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15.Other Agreements. The parties to this Agreement further agree:

(a)This Agreement shall be governed by, and construed in accordance with, the
laws of Maryland, without regard to any choice of law, rules or principles to
the contrary. Nothing in this paragraph shall be construed to limit or otherwise
affect any rights or remedies of Lender under federal law.

 

(b)In case one or more provisions contained in this Agreement shall be invalid,
illegal, or unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions contained in this Agreement shall
remain effective and binding and shall not be affected or impaired thereby.

 

(c)If there is any conflict between the terms of this Agreement, any of the
documents executed and delivered in connection with this Agreement and any of
the other Loan Documents, the terms of this Agreement shall prevail.

 

(d)This Agreement may be amended, modified or supplemented only by written
agreement of the parties hereto. No provision of this Agreement may be waived
except in writing signed by the party against whom such waiver is sought to be
enforced.

 

(e)This Agreement sets forth the final and entire agreement and understanding of
the parties hereto, superseding all prior representations, understandings and
agreements, written or oral, not expressly set forth in this Agreement or in any
other documents executed and delivered in connection herewith.

 

(f)This Agreement shall constitute a “Loan Document” under the Loan Agreement
and the other Loan Documents.

 

(g)As used in this Agreement, the singular number shall include the plural, the
plural the singular and the use of the masculine, feminine or neuter gender
shall include all genders, as the context may require.

 

(h)The Recitals are part of this Agreement. The headings, titles and captions of
this Agreement are for the convenience only and are not part of this Agreement.

 

(i)Time is of the essence of this Agreement with respect to the Obligors.

 

(j)This Agreement shall be binding upon and inure to the benefit of the Obligors
and Lender and each of their respective heirs, personal representatives,
successors, and assigns; provided, however, that no Obligor shall assign any of
its rights or obligations under this Agreement.

 

(k)This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
agreement. Each party to this Agreement agrees that the respective signatures of
the parties may be delivered by fax, “.PDF,” or other electronic means
acceptable to Lender and that the parties may rely on a signature so delivered
as an original. Any party who chooses to deliver its signature in such manner
agrees to provide promptly to the other parties a copy of this Agreement with
its inked signature, but the party’s failure to deliver a copy of this Agreement
with its inked signature shall not affect the validity, enforceability and
binding effect of this Agreement.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

 

BORROWER:

 

QC PROPERTY HOLDINGS, LLC,

a Georgia•limited liability company

 

 

 

By:

 

Brent Morrison

 

Name:

 

Brent Morrison

Title:

 

Manager

 

GUARANTORS:

 

ADCARE HEALTH SYSTEMS, INC.,

a Georgia•corporation

 

By:

 

Brent Morrison

 

Name:

 

Brent Morrison

Title:

 

Manager

 

 

REGIONAL HEALTH PROPERTIES, INC.,

a Georgia•corporation

 

By:

 

Brent Morrison

 

Name:

 

Brent Morrison

Title:

 

Manager

 

LENDER:

 

CONGRESSIONAL BANK,

a Maryland chartered commercial bank

 

 

By:

 

Paise K. Ela

 

Name:

 

Paise K. Ela

Title:

 

Authorized Signatory