Exhibit 10.135

 

JOINDER AGREEMENT, FIFTH AMENDMENT

and

SUPPLEMENT TO CREDIT AGREEMENT

 

THIS JOINDER AGREEMENT, FIFTH AMENDMENT AND SUPPLEMENT TO CREDIT AGREEMENT (this
“Agreement”) dated November 29, 2011, is made by and among ADK GEORGIA, LLC, a
Georgia limited liability company (“ADK Georgia”), ADK POWDER SPRINGS OPERATOR,
LLC, a Georgia limited liability company (“Powder Springs”), ADK LUMBER CITY
OPERATOR, LLC, a Georgia limited liability company (“Lumber City”), ADK
JEFFERSONVILLE OPERATOR, LLC, a Georgia limited liability company
(“Jeffersonville”), ADK LAGRANGE OPERATOR, LLC, a Georgia limited liability
company (“LaGrange”), ADK THOMASVILLE OPERATOR, LLC, a Georgia limited liability
company (“Thomasville”), ADK OCEANSIDE OPERATOR, LLC, a Georgia limited
liability company (“Oceanside”), ADK SAVANNAH BEACH OPERATOR, LLC, a Georgia
limited liability company (“Savannah”), ADK THUNDERBOLT OPERATOR, LLC, a Georgia
limited liability company (“Thunderbolt”), ATTALLA NURSING ADK, LLC, a Georgia
limited liability company (“Attalla ADK”), MOUNTAIN TRACE NURSING ADK, LLC, an
Ohio limited liability company (“Mountain Trace”), MT. KENN NURSING, LLC, a
Georgia limited liability company (“Mt. Kenn”), ERIN NURSING, LLC, a Georgia
limited liability company (“Erin”; ADK Georgia, Powder Springs, Lumber City,
Jeffersonville, LaGrange, Thomasville, Oceanside, Savannah, Thunderbolt, Attalla
ADK, Mountain Trace, Mt. Kenn and Erin are hereinafter referred to collectively
as “Existing Borrowers” and each individually as an “Existing Borrower”), CP
NURSING, LLC, a Georgia limited liability company (“New Borrower”; New Borrower
and Existing Borrowers are hereinafter referred to collectively as “Borrowers”
and each individually as a “Borrower”), ADCARE OPERATIONS, LLC, a Georgia
limited liability company (“Operations”), and GEMINO HEALTHCARE FINANCE, LLC, a
Delaware limited liability company (“Lender”).  Each capitalized term used
herein, unless otherwise defined herein, shall have the meaning ascribed to such
term in that certain Credit Agreement dated October 29, 2010 (as at any time
amended, restated, supplemented or otherwise modified, the “Credit Agreement”),
among Existing Borrowers and Lender.  Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings ascribed to them in the Credit
Agreement.  The terms “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
section, paragraph or subdivision.  All references to any Person shall mean and
include the successors and permitted assigns of such Person.  All references to
any of the Loan Documents shall include any and all amendments or modifications
thereto and any and all restatements, extensions or renewals thereof.  Wherever
the phrase “including” shall appear in this Agreement, such word shall be
understood to mean “including, without limitation.”

 

Borrowers have requested that Lender join New Borrower to the Credit Agreement
and extend credit to New Borrower as a Borrower under the Credit Agreement.  New
Borrower is executing this Agreement to become a party to the Credit Agreement
in order to induce Lender to continue to extend credit under the Credit
Agreement and as consideration for the Revolving Loans previously made.

 

Accordingly, and for Ten Dollars ($10.00) in hand paid and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged by the parties hereto, Lender and Borrowers agree as follows:

 

1.                                       Joinder of New Borrower.  In accordance
with the Credit Agreement, New Borrower by its signature below becomes a
Borrower under the Credit Agreement with the same force and effect as if
originally named therein as a Borrower, and New Borrower hereby agrees to all
the terms and provisions of the Credit Agreement applicable to it as a Borrower
thereunder.  Each reference to a “Borrower” in the Credit Agreement shall be
deemed to include New Borrower.  The Credit Agreement is hereby incorporated
herein by reference.

 

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2.                                       Conversion of Operations to Secured
Guarantor.  Each Borrower, Operations and Lender (by their signatures below),
and Guarantor (by its execution of the consent and ratification hereto), hereby
agrees that, upon satisfaction of the conditions precedent set forth in Section
8 hereof, (i) Operations shall cease to constitute a “Borrower” under the Credit
Agreement and shall thereafter constitute a “Guarantor”, and (ii) each reference
to a “Borrower” in the Credit Agreement shall be deemed to exclude Operations. 
Effective concurrently with such conversion from a “Borrower” to a “Guarantor”,
Operations ratifies and reaffirms the security interest granted by Operations in
favor of Lender pursuant to that certain Joinder Agreement, Third Amendment and
Supplement to Credit Agreement dated June 2, 2011, among Existing Borrowers,
Operations and Lender, and agrees that such security interest shall remain in
full force and effect notwithstanding Operations’ conversion to a “Guarantor”
pursuant to this Agreement.

 

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

 

(a)                                  By deleting the first sentence of Section
2.01(b) of the Credit Agreement and by substituting in lieu thereof the
following:

 

(b)                                 On November 29, 2011, Borrowers shall
execute and deliver a promissory note to Lender in the principal amount of Seven
Million Five Hundred Thousand Dollars ($7,500,000) (as may be amended, modified
or replaced from time to time, the “Revolving Note”).

 

(b)                                 By deleting Section 8.01(w) of the Credit
Agreement and by substituting in lieu thereof the following:

 

(w)                               CHOW.  The CHOW with respect to (i) each
Healthcare Facility of ADK Georgia, Powder Springs, Lumber City, Jeffersonville,
LaGrange and Thomasville shall not have been unconditionally and in writing
approved by each of the appropriate Governmental Authorities, intermediaries or
other designated agents with respect to each such Borrower and each such
Healthcare Facility on or before February 28, 2011, (ii) each Healthcare
Facility of Attalla Nursing ADK, LLC, ADK Oceanside Operator, LLC, ADK Savannah
Beach Operator, LLC, and ADK Thunderbolt Operator, LLC shall not have been
unconditionally and in writing approved by each of the appropriate Governmental
Authorities, intermediaries or other designated agents with respect to each such
Borrower and each such Healthcare Facility on or before April 30, 2011, (iii)
each Healthcare Facility of Mountain Trace Nursing ADK, LLC, Mt. Kenn Nursing,
LLC, and Erin Nursing, LLC shall not have been unconditionally and in writing
approved by each of the appropriate Governmental Authorities, intermediaries or
other designated agents with respect to each such Borrower and each such
Healthcare Facility on or before September 30, 2011, or (iv) each Healthcare
Facility of CP Nursing, LLC shall not have been unconditionally and in writing
approved by each of the appropriate Governmental Authorities, intermediaries or
other designated agents with respect to such Borrower and each such Healthcare
Facility on or before November 29, 2011; or

 

(c)                                  By deleting the definitions of “Collateral
Assignment of Transition Services Agreement” and “Transition Services Agreement”
set forth in Annex 1 to the Credit Agreement and by substituting in lieu thereof
the following:

 

“Collateral Assignment of Transition Services Agreement” means, collectively,
(i) the Collateral Assignment of Operations Transfer Agreement of even date
herewith among ADK Georgia and Lender, and the written acknowledgment thereof by
Transferor, (ii) the Collateral Assignment of Transfer Agreements dated February
25, 2011, among ADK Georgia, Attalla

 

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Nursing ADK, LLC, Mountain Trace Nursing ADK, LLC, ADK and Lender, and the
written acknowledgment thereof by Transferor, (iii) the Collateral Assignment of
Transfer Agreements dated June 2, 2011, among Mt. Kenn Nursing, LLC, Erin
Nursing, LLC, and Lender, and the written acknowledgment thereof by Transferor,
and (iv) the Collateral Assignment of Operations Transfer Agreement dated
November 29, 2011, between CP Nursing, LLC, and Lender, and the written
acknowledgment thereof by Transferor.

 

“Transition Services Agreement” means, as applicable, any or all of (i) the
Operations Transfer Agreement entered into as of July 31, 2010, among ADK
Georgia, Triad Health Management of Georgia, LLC, Triad at Jeffersonville I,
LLC, Triad at LaGrange I, LLC, Triad at Lumber City I, LLC, Triad at Powder
Springs I, LLC, and Triad at Thomasville I, LLC, (ii) the Operations Transfer
Agreement dated as of October 1, 2010, between Attalla Health Care, Inc., and
Attalla Nursing ADK, LLC; (iii) the Operations Transfer Agreement dated as of
July 31, 2010, among ADK Georgia, Triad Health Management of Georgia, LLC, Triad
Health Management of Georgia III, LLC, and Triad at Tara, LLC; (iv) the
Operations Transfer Agreement dated as of October 27, 2010, between Mountain
Trace Enterprise LLC, and Mountain Trace Nursing ADK, LLC; (v) the Operations
Transfer Agreement dated as of May 1, 2011, between Five Star Quality Care-GA,
LLC, and Mt. Kenn Nursing, LLC; (vi) the Operations Transfer Agreement dated as
of May 1, 2011, between Five Star Quality Care-GA, LLC and Erin Nursing, LLC;
and (vii) the Operations Transfer Agreement dated as of June 1, 2011, between
Five Star Quality Care-GA, LLC and CP Nursing, LLC.

 

4.                                       Consent to Erin and Mt. Kenn
Guaranties. Borrowers have requested that Lender consent to (a) the guaranty by
Erin of certain indebtedness of Erin Property Holdings, LLC (“Erin Holdings”),
and (b) the guaranty by Mt. Kenn of certain indebtedness of Mt. Kenn Property
Holdings, LLC (“Mt. Kenn Holdings”), notwithstanding the fact that such
guaranties are prohibited by Sections 7.05 and 7.12 of the Credit Agreement. 
Upon satisfaction of all conditions precedent to the effectiveness of this
Agreement as set forth in Section 8  hereof, Lender hereby:

 

(a)                                  consents, effective July 27, 2011, to the
guaranties by Erin of certain indebtedness of Erin Holdings owing to Bank of
Atlanta pursuant to that certain Term Note dated July 27, 2011, by Erin Holdings
in favor of Bank of Atlanta in the principal sum of $5,000,000, and that certain
U.S. Small Business Administration Note dated July 27, 2011, by Erin Holdings in
favor of Bank of Atlanta in the principal sum of $800,000, in each case in the
form presented to Lender prior to the date hereof; provided, that such
guaranties, and the actions taken by Erin in connection therewith, do not at any
time otherwise violate the terms of the Credit Agreement, including, without
limitation, Section 7.02 thereof;

 

(b)                                 consents, effective November 4, 2011, to the
guaranty by Mt. Kenn of certain indebtedness of Mt. Kenn Holdings owing to The
Bank of Las Vegas pursuant to that certain Loan Agreement dated November 4,
2011, among Mt. Kenn Holdings, Mt. Kenn Nursing, LLC, ADK, Hearth & Home of
Ohio, Inc., and The Bank of Las Vegas, in the form presented to Lender prior to
the date hereof, evidencing a loan in the principal sum of $3,175,200; provided,
that such guaranty, and the actions taken by Mt. Kenn in connection therewith,
does not at any time otherwise violate the terms of the Credit Agreement,
including, without limitation, Section 7.02 thereof;

 

(c)                                  consents, effective November 4, 2011, to
the guaranty by Mt. Kenn of certain indebtedness of Mt. Kenn Holdings owing to
Apax Capital, LLC pursuant to that certain Loan Agreement dated November 4, 2011
(as at any time amended, restated, modified or supplemented, the “Apax Loan
Agreement”), among Mt. Kenn Holdings, Mt. Kenn Nursing,

 

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LLC, ADK, Hearth & Home of Ohio, Inc., and Apax Capital, LLC, in the form
presented to Lender prior to the date hereof, evidencing a loan in the principal
sum of $2,222,640; provided, that such guaranty, and the actions taken by Mt.
Kenn in connection therewith, does not at any time otherwise violate the terms
of the Credit Agreement, including, without limitation, Section 7.02 thereof;
and

 

(d)                                 consents, effective November 4, 2011, to the
guaranty by Mt. Kenn of certain indebtedness of Mt. Kenn Holdings owing to
Economic Development Corporation of Fulton County pursuant to that certain Loan
Agreement dated November 4, 2011 (as at any time amended, restated, modified or
supplemented, the “CDC Loan Agreement”), among Mt. Kenn Holdings, Mt. Kenn
Nursing, LLC, ADK, Hearth & Home of Ohio, Inc., and Economic Development
Corporation of Fulton County, in the form presented to Lender prior to the date
hereof, evidencing a loan in the principal sum of $2,274,000; provided, that
such guaranty, and the actions taken by Mt. Kenn in connection therewith, does
not at any time otherwise violate the terms of the Credit Agreement, including,
without limitation, Section 7.02 thereof; provided, further, that no loan may be
advanced, or any other Indebtedness incurred, under or in connection with the
CDC Loan Agreement until all Indebtedness arising under and in connection with
the Apax Loan Agreement has been repaid in full.

 

5.                                       Acknowledgments of New Borrower.  New
Borrower acknowledges that it has requested Lender to extend financial
accommodations to Borrowers on a combined basis in accordance with the
provisions of the Credit Agreement, as hereby amended.  In accordance with the
terms of Article 10 of the Credit Agreement, New Borrower acknowledges and
agrees that it shall be jointly and severally liable for any and all Revolving
Loans and other Obligations heretofore or hereafter made by Lender to any
Borrower and for all interest, fees and other charges payable in connection
therewith.  New Borrower hereby appoints and designates ADK Georgia as, and ADK
Georgia shall continue to act under the Credit Agreement as, the Borrower
Representative of New Borrower and each other Borrower for all purposes,
including requesting borrowings and receiving accounts statements and other
notices and communications to Borrowers (or any of them) from Lender. Each Loan
made by Lender under the Credit Agreement or any of the other Loan Documents
shall be disbursed in accordance with the Credit Agreement.

 

6.                                       Security Interest.  To secure the
prompt payment and performance to Lender of all of the Obligations, New Borrower
hereby grants to Lender a continuing security interest in and Lien upon all of
New Borrower’s assets, including all of the following Property and interests in
Property of such Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:

 

(a) all Accounts; (b) all Payment Intangibles; (c) all Instruments, Chattel
Paper (including Electronic Chattel Paper), Documents, Letter-of-Credit Rights,
Supporting Obligations and Commercial Tort Claims set forth on Schedule 5.23 to
the Credit Agreement, in each case to the extent arising out of, relating to or
given in exchange for or settlement of or to evidence the obligation to pay any
Account or Payment Intangible; (d) all General Intangibles (including contract
rights and trademarks, copyrights, patents and other intellectual property) that
arise out of or relate to any Account or Payment Intangible or from which any
Account or Payment Intangible arises; (e) all remedies, guarantees and
collateral evidencing, securing or otherwise relating to or associated with any
Account or Payment Intangible, including all rights of enforcement and
collection; (f) all Commercial Lockboxes, Governmental Lockboxes, Collection
Accounts and other Deposit Accounts into which Collections or other proceeds of
Collateral or Advances are deposited, and all checks or Instruments from time to
time representing or evidencing the same; (g) all cash, currency and other
monies at any time in the possession or under the control of Lender or a bailee
of Lender; (h) all books and records evidencing or relating

 

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to or associated with any of the foregoing; (i) all information and data
compiled or derived with respect to any of the foregoing (other than any such
information and data subject to legal restrictions of patient confidentiality);
and (j) all Collections, Accessions, receipts and Proceeds derived from any of
the foregoing.

 

7.                                       Representations and Warranties.  New
Borrower represents and warrants to Lender that New Borrower is a wholly owned
Subsidiary of Operations.  New Borrower represents and warrants to Lender that
New Borrower is engaged in the same business as the other Borrowers as part of a
joint and common enterprise; that this Agreement has been duly authorized,
executed and delivered by New Borrower and constitutes a legal, valid and
binding obligation of New Borrower, enforceable against it in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting creditors
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity); and that the
Schedules attached hereto contain true, accurate and complete information with
respect to New Borrower and the matters covered therein and such Schedules shall
be deemed to supplement and be a part of the Schedules to the Credit Agreement. 
In addition, New Borrower represents and warrants to Lender that no Event of
Default or Unmatured Event of Default exists on the date hereof; that the
execution, delivery and performance of this Agreement have been duly authorized
by all requisite company action on the part of Borrowers and this Agreement has
been duly executed and delivered by Borrowers; and that all of the
representations and warranties made by Borrowers in the Credit Agreement are
true and correct on and as of the date hereof.

 

8.                                       Conditions Precedent.  The
effectiveness of this Agreement is subject to the satisfaction of each of the
following conditions precedent, in form and substance satisfactory to Lender,
unless satisfaction thereof is specifically waived in writing by Lender:

 

(a)                                  No Event of Default or Unmatured Event of
Default shall exist other than the Designated Default;

 

(b)                                 Lender shall have received from Borrowers a
duly executed counterpart of this Agreement;

 

(c)                                  Lender shall have received from Borrowers a
duly executed Third Amended and Restated Revolving Note in the amount of
$7,500,000;

 

(d)                                 Lender shall have received, reviewed and
found acceptable in all respects all organizational documents for New Borrower,
including certified resolutions, a copy of the Articles of Organization for New
Borrower certified by New Borrower’s state of formation, a copy of New
Borrower’s Operating Agreement, a good standing certificate of New Borrower
certified by New Borrower’s state of formation, and a good standing certificate
of New Borrower certified by each other state in which New Borrower is qualified
to transact business;

 

(e)                                  Lender shall have received from New
Borrower authorization to file UCC-1 financing statements and any other
appropriate documentation to perfect or continue the perfection of Lender’s
liens with respect to the assets of New Borrower and Lender shall have received
confirmation from each appropriate jurisdiction that such financing statements
have been filed in the appropriate records;

 

(f)                                    Lender shall have completed its due
diligence to ensure that Lender’s security interests and liens are or will be
first priority liens on the assets of New Borrower and that there are no other
liens on such assets other than those that are acceptable to Lender in its sole

 

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discretion, and in connection therewith shall have obtained such intercreditor
and subordination agreements (if any) as may be deemed necessary by Lender, in
form and substance satisfactory to Lender;

 

(g)                                 Lender shall have received from New Borrower
evidence of New Borrower’s liability, property and casualty insurance coverage
and insurance binders and lender’s loss payable endorsements with respect
thereto naming Lender as certificate holder, lender’s loss payee and additional
insured, as applicable;

 

(h)                                 Lender shall have received from New Borrower
such other documents, instruments and agreements (including, without limitation,
Depository Agreements in respect of the Government Lockbox) as Lender may
require in its sole discretion in form and substance satisfactory to Lender;

 

(i)                                     New Borrower shall have delivered to
Lender such financial, business and other information with respect to New
Borrower as Lender may have requested;

 

(j)                                     There shall not have occurred any
material adverse change in the operations or financial condition of Borrowers or
Guarantors;

 

(k)                                  Lender shall have received an opinion
letter from Borrowers’ and Guarantors’ legal counsel with respect to such
matters as Lender may request;

 

(l)                                     New Borrower shall have signed and
delivered to Lender notices, in the form of Exhibit 4.02(d) to the Credit
Agreement, directing the Obligors to make payment to the Government Lockbox;

 

(m)                               Lender shall have received from Operations a
duly executed Guaranty Agreement in favor of Lender, and related documents
requested by Lender (including, without limitation, certified resolutions), in
each case in form and substance satisfactory to Lender; and

 

(n)                                 Lender shall have completed its due
diligence with respect to New Borrower and the Properties of New Borrower, the
results of which shall be satisfactory to Lender.

 

9.                                       Ratification and Reaffirmation.  Each
Borrower hereby ratifies and reaffirms the Obligations, each of the Loan
Documents and all of such Borrower’s covenants, duties, indebtedness and
liabilities under the Loan Documents.

 

10                                    Additional Covenants.  To induce Lender to
enter into this Agreement, Borrowers covenant and agree that, within thirty (30)
days after the later of (i) the date that the Centers for Medicare & Medicaid
Services has made the electronic funds transfers (“EFTs”) available to a
Borrower in connection with the CHOW process, or (ii) the date of this
Agreement, Borrowers shall deliver to the Centers for Medicare & Medicaid
Services (and provide evidence to Lender of the delivery thereof) a completed
copy of Form CMS-588, together with all other documentation necessary to cause
the Centers for Medicare & Medicaid Services to direct EFTs to the Government
Lockbox.

 

11.                                 Acknowledgments of All Borrowers.  Each
Borrower acknowledges and stipulates that the Credit Agreement and the other
Loan Documents executed by Borrowers are legal, valid and binding obligations of
Borrowers that are enforceable against Borrowers in accordance with the terms
thereof; all of the Obligations are owing and payable without defense, offset or
counterclaim (and to the extent there exists any such defense, offset or
counterclaim on the date hereof, the same is hereby waived by

 

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Borrowers); and the security interests and liens granted by Borrowers in favor
of Lender are duly perfected, first priority security interests and liens.

 

12.                               No Novation, etc.  Except as otherwise
expressly provided in this Agreement, nothing herein shall be deemed to amend or
modify any provision of the Credit Agreement or any of the other Loan Documents,
each of which shall remain in full force and effect.  This Agreement is not
intended to be, nor shall it be construed to create, a novation or accord and
satisfaction, and the Credit Agreement as herein modified shall continue in full
force and effect.

 

13.                               Severability.  In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

 

14.                               Expenses of Lender.  In consideration of
Lender’s willingness to enter into this Agreement, Borrowers agree to reimburse
Lender for Lender’s reasonable out-of-pocket expenses in connection with this
Agreement, including, without limitation, the fees, disbursements and other
charges of counsel for Lender.

 

15.                               Entire Agreement.  This Agreement and the
other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether express
or implied, oral or written.  Each of the Schedules attached hereto is
incorporated into this Agreement and by this reference made a part hereof.

 

16.                               Counterparts; Electronic Signatures.  This
Agreement and any amendments, waivers, consents or supplements may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts shall constitute but one and the same
instrument.  Any manually-executed signature page hereto delivered by a party by
facsimile or other electronic transmission shall be deemed to be an original
signature hereto.

 

17.                               Effectiveness; Governing Law.  This Agreement
shall be effective when accepted by Lender (New Borrower hereby waiving notice
of such acceptance) and thereupon shall be deemed a contract made in
Pennsylvania, and shall be governed by and construed and enforced in accordance
with the laws of the Commonwealth of Pennsylvania without regard to the conflict
of laws principles thereof.

 

18.                               Successors and Assigns.  This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, representatives, executors, successors and assigns.

 

19.                               Section Titles.  Section titles and references
used in this Agreement shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreements among the parties hereto.

 

20.                               Manager Certification of Existing Borrowers
and Operations.  By their execution and delivery of this Agreement, Boyd P.
Gentry and Christopher F. Brogdon each hereby certifies that: (a) in their
respective capacities as the Chief Executive Officer and Chief Financial Officer
of ADK, Boyd P. Gentry and Martin Brew are authorized designees of each Existing
Borrower and of Operations, (b) the following Unanimous Consents in Lieu of a
Special Meeting (collectively, the “Consents”) each remain in full force and
effect:  (i) Unanimous Consents of the Sole Member and the Managers of each of
ADK

 

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Georgia, Powder Springs, Lumber City, Jeffersonville, LaGrange, and Thomasville
dated as of October 29, 2010; (ii) Unanimous Consents of the Sole Member and the
Managers of each of Oceanside, Savannah, Thunderbolt, Attalla ADK and Mountain
Trace dated as of February 21, 2011; and (iii) Unanimous Consents of the Sole
Member and the Managers of each of Mt. Kenn, Erin and Operations dated as of
June 2, 2011; (c) pursuant to the Consents, the Managers or designees of each
Existing Borrower and Operations are authorized and empowered (either alone or
in conjunction with any one or more of the other Managers of such Existing
Borrower or Operations) to take, from time to time, all or any part of the
following actions on or in behalf of such Existing Borrower or Operations, as
applicable:  (i) to make, execute and deliver to Lender this Agreement and all
other agreements, documents and instruments contemplated by or referred to
herein or executed by such Existing Borrower or Operations in connection
herewith; and (ii) to carry out, modify, amend or terminate any arrangements or
agreements at any time existing between Lender and such Existing Borrower or
Operations, as applicable; (d) any arrangements, agreements, security
agreements, or other instruments or documents referred to or executed pursuant
to this Agreement by David A. Tenwick, Boyd P. Gentry, Christopher F. Brogdon or
any other Manager of such Existing Borrower or Operations, by Martin Brew as
Chief Financial Officer of such Existing Borrower or Operations, or by the Chief
Executive Officer of ADK (currently, Boyd P. Gentry), Chief Financial Officer of
ADK (currently, Martin Brew) or an employee of such Existing Borrower or
Operations acting pursuant to delegation of authority, may be attested by such
person and may contain such terms and provisions as such person shall, in his or
her sole discretion, determine; (e) the Chief Executive Officer of ADK is a
designee of each Existing Borrower and Operations who is authorized and
empowered (either alone or in conjunction with any one or more of the Managers
or Chief Financial Officer of such Existing Borrower or Operations) to take any
action on behalf of such Existing Borrower or Operations in conjunction with the
Credit Agreement and this Agreement; (f) the Chief Financial Officer of ADK
(currently, Martin Brew) and the Controller of ADK (currently, Susan Criswell)
each are designees of each Existing Borrower who are authorized and empowered to
borrow money from time to time under the revolving line of credit per the terms
of the Credit Agreement and this Agreement, to endorse the name of any Borrower
to any checks, drafts and other instruments or orders for the payment of money,
payable to such Borrower or its order for the purpose of depositing the same in
any account or accounts of Lender with any bank, banker, or trust company or any
of the branches of any said bank, and to deal with any and all checks, drafts,
and other instruments or orders (including but not limited to preparation of
Borrowing Base Certificate documentation) for the payment of money and the
proceeds thereof as the property of Lender; and (g) set forth below is the name
and signature of the current Chief Financial Officer of ADK, Martin Brew, one
designated representative and Chief Financial Officer of each Existing Borrower
and Operations, who is authorized to sign all Credit Agreements, security
agreements, instruments, assignments, pledges, mortgages, security deeds, trust
deeds and other documents among Lender and any Existing Borrower or Operations:

 

 

Martin Brew

Chief Financial Officer

/s/ Martin Brew

 

 

of ADK, each Existing

 

 

 

Borrower and Operations

 

 

21.                               Release of Claims.  To induce Lender to enter
into this Agreement, each Borrower hereby releases, acquits and forever
discharges Lender, and all officers, directors, agents, employees, successors
and assigns of Lender, from any and all liabilities, claims, demands, actions or
causes of action of any kind or nature (if there be any), whether absolute or
contingent, disputed or undisputed, at law or in equity, or known or unknown,
that Borrowers now have or ever had against Lender arising under or in
connection with any of the Loan Documents or otherwise.  Each Borrower
represents and warrants to Lender that none of them have transferred or assigned
to any Person any claim that any of them has ever had or claimed to have against
Lender.

 

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22.                               Waiver of Jury Trial.  The parties hereto each
hereby waives the right to trial by jury in any action, suit, counterclaim or
proceeding arising out of or related to this Agreement.

 

[Signatures commence on following page.]

 

9

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IN WITNESS WHEREOF, Borrowers and Lender have duly executed this Agreement under
seal as of the date and year first above written.

 

NEW BORROWER:

 

 

 

Address for notices to New Borrower:

CP NURSING, LLC

5057 Troy Road

 

Springfield, Ohio 45502

 

 

Attn:

Mr. Martin Brew

By:

/s/ Martin Brew

Fax:

(937) 964-8222

 

Martin Brew, Chief Financial Officer

 

[Signatures continued on following page.]

 

Joinder Agreement, Fifth Amendment and Supplement to Credit Agreement (AdCare)

 

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For purposes of the Manager Certification of Existing Borrowers in Section 20
above:

 

 

 

 

 

 

 

/s/ Boyd P. Gentry

(SEAL)

 

Boyd P. Gentry

 

 

 

 

 

 

 

 

/s/ Christopher F. Brogdon

(SEAL)

 

Christopher F. Brogdon

 

 

 

 

 

 

 

 

EXISTING BORROWERS:

 

 

 

 

ADK GEORGIA, LLC

 

ADK POWDER SPRINGS OPERATOR, LLC

 

ADK LUMBER CITY OPERATOR, LLC

 

ADK JEFFERSONVILLE OPERATOR, LLC

 

ADK LAGRANGE OPERATOR, LLC

 

ADK THOMASVILLE OPERATOR, LLC

 

ADK OCEANSIDE OPERATOR, LLC

 

ADK SAVANNAH BEACH OPERATOR, LLC

 

ADK THUNDERBOLT OPERATOR, LLC

 

ATTALLA NURSING ADK, LLC

 

MOUNTAIN TRACE NURSING ADK, LLC

 

MT. KENN NURSING, LLC

 

ERIN NURSING, LLC

 

 

 

 

By:

/s/ Martin Brew

 

 

Martin Brew, Chief Financial Officer

 

 

 

 

 

 

 

OPERATIONS:

 

 

 

 

ADCARE OPERATIONS, LLC

 

 

 

 

 

 

 

By:

/s/ Martin Brew

 

 

Martin Brew, Chief Financial Officer

 

[Signatures continued on following page.]

 

Joinder Agreement, Fifth Amendment and Supplement to Credit Agreement (AdCare)

 

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LENDER:

GEMINO HEALTHCARE FINANCE, LLC

 

 

 

 

 

 

 

By:

/s/ Jeffrey M. Joslin

 

 

Jeffrey M. Joslin, Senior Portfolio

 

 

Manager

 

[Consent and Reaffirmation of Guarantor appears on next page]

 

Joinder Agreement, Fifth Amendment and Supplement to Credit Agreement (AdCare)

 

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CONSENT AND REAFFIRMATION

 

The undersigned guarantor of the Obligations of Borrowers at any time owing to
Lender hereby (i) acknowledges receipt of a copy of the foregoing Joinder
Agreement, Fifth Amendment and Supplement to Credit Agreement; (ii) consents to
Borrowers’ execution and delivery thereof and of the other documents,
instruments or agreements Borrowers agree to execute and deliver pursuant
thereto; (iii) agrees to be bound thereby; and (iv) affirms that nothing
contained therein shall modify in any respect whatsoever its guaranty of the
Obligations and reaffirms that such guaranty is and shall remain in full force
and effect.

 

IN WITNESS WHEREOF, the undersigned has caused its duly authorized officers to
execute this Consent and Reaffirmation on and as of the date of such Joinder
Agreement, Fifth Amendment and Supplement to Credit Agreement.

 

 

ADCARE HEALTH SYSTEMS, INC.

 

 

 

 

 

 

 

By:

/s/ Martin Brew

 

 

Martin Brew, Chief Financial Officer

 

Joinder Agreement, Fifth Amendment and Supplement to Credit Agreement (AdCare)

 

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