Exhibit 10.21

 

MANAGEMENT FEE SUBORDINATION AGREEMENT

 

Dated:  June 28, 2013

 

To:                             Gemino Healthcare Finance, LLC

One International Plaza

Suite 220

Philadelphia, PA  19113

 

To induce GEMINO HEALTHCARE FINANCE, LLC, a Delaware limited liability company
(together with its successors and assigns, “Lender”), to make loans and extend
credit from time to time for the benefit of GEORGETOWN HC&R NURSING, LLC, a
Georgia limited liability company (“Georgetown”) and SUMTER N&R, LLC, a Georgia
limited liability company (“Sumter”; Georgetown and Sumter, together with their
respective successors and permitted assigns, are collectively referred to herein
as the “Companies” ) pursuant to the terms of that certain Credit Agreement
dated May 30, 2013, among the Companies and certain affiliates of the Companies,
such other Persons joined thereto as a Borrower from time (such affiliates and
other Persons are hereinafter referred to, together with the Companies, as
“Borrower”) and Lender (as amended, restated, supplemented or replaced from time
to time, the “Credit Agreement”), ADCARE ADMINISTRATIVE SERVICES, LLC, a Georgia
limited liability company (together with its successors and assigns, the
“Undersigned”), hereby agrees as follows:

 

1.                                      The payment of any and all Subordinated
Debt is expressly subordinated to the  Senior Debt to the extent and in the
manner set forth in this Management Fee Subordination Agreement (this
“Subordination Agreement”).  The term “Subordinated Debt” means the obligations
owing by Borrower to the Undersigned pursuant to the terms and conditions of
(i) that certain Administrative Support Agreement dated as of January 1, 2013 by
and between Georgetown and the Undersigned, and (ii) that certain Administrative
Support Agreement dated as of January 1, 2013 by and between Sumter and the
Undersigned (the foregoing agreements being referred to collectively herein as
the “Management Agreement”).  Neither the Undersigned nor Borrower shall amend
or modify the Management Agreement in any manner adverse to Lender without the
prior written consent of Lender.  The term “Senior Debt” means any and all
Obligations of Borrower to Lender under, in connection with, or in any way
related to (including debtor-in-possession financing), the Credit Agreement
(including, without limitation, any interest accruing thereon after maturity or
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding).  Capitalized terms not defined herein shall have the meaning set
forth in the Credit Agreement.

 

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2.                                      As long as no Event of Default or
Unmatured Event of Default has occurred and is continuing, and if no Event of
Default or Unmatured Event of Default would result from the making of any such
payments, the Companies may pay and the Undersigned may accept the fees payable
by the Companies to the Undersigned pursuant to the Management Agreement (the
“Management Fees”).  Notwithstanding the foregoing, upon the occurrence of an
Event of Default or an Unmatured Event of Default, The Companies shall not make
and the Undersigned shall not receive any of the Management Fees without
Lender’s prior written consent.

 

3.                                      Any payments on the Subordinated Debt
received by the Undersigned, other than as expressly permitted in Section 2
above, shall be held in trust for Lender and the Undersigned will forthwith turn
over any such payments in the form received, properly endorsed, to Lender to be
applied to the Senior Debt as determined by Lender.

 

4.                                      The Undersigned agrees that it will not
make any assertion or claim in any action, suit or proceeding of any nature
whatsoever in any way challenging the priority, validity or effectiveness of the
liens and security interests granted to Lender under and in connection with the
Credit Agreement, or any amendment, extension, replacement thereof or related
agreement, instrument or document between Lender and Borrower.

 

5.                                      At no time will the Undersigned commence
any action or proceeding against any Borrower to recover all or any part of the
Subordinated Debt not paid when due and shall not join with any creditor, in
bringing any proceeding against any Borrower under any liquidation,
conservatorship, bankruptcy, reorganization, rearrangement, or other insolvency
law now or hereafter existing, unless and until the Senior Debt shall be Paid in
Full.  The term “Paid in Full” means the indefeasible payment in full in cash of
all Senior Debt and the irrevocable termination of all commitments to lend or
otherwise extend credit under the Credit Agreement.  Subject to the foregoing,
the Undersigned may accelerate the amount of the Subordinated Debt upon the
occurrence of (i) the acceleration of the Senior Debt; and (ii) the filing of a
petition under the United States Bankruptcy Code by any Company.

 

6.                                      In the event of any liquidation,
conservatorship, bankruptcy, reorganization, rearrangement, or other insolvency
proceeding of any Company, the Undersigned will, at Lender’s request, file any
claims, proofs of claim, or other instruments of similar character necessary to
enforce the obligations of Company in respect of the Subordinated Debt and will
hold in trust for Lender and pay over to Lender in the same form received, to be
applied on the Senior Debt as determined by Lender, any and all money, dividends
or other assets received in any such proceedings on account of the Subordinated
Debt, unless and until the Senior Debt shall be Paid in Full, including, without
limitation, interest owing to Lender after the commencement of a bankruptcy
proceeding at the rate specified in the Credit Agreement, whether or not such
interest is an allowable claim in any such proceeding.  Lender may, as
attorney-in-fact for the Undersigned, take such action on behalf of the
Undersigned, and the Undersigned hereby appoints Lender as attorney-in-fact for
the Undersigned to demand, sue for, collect, and receive any and all such money,
dividends or other assets and give acquittance therefore and to file any claim,
proof of claim or other instrument of similar character and to take such other
proceedings in Lender’s name or in the name of the Undersigned, as Lender may
deem necessary or advisable for the enforcement of this Subordination
Agreement.  The Undersigned will execute and deliver to Lender such other and

 

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further powers of attorney or other instruments as Lender reasonably may request
in order to accomplish the foregoing.

 

7.                                      Lender may at any time and from time to
time, without the consent of or notice to the Undersigned, without incurring
responsibility to the Undersigned and without impairing or releasing any of
Lender’s rights, or any of the obligations of the Undersigned hereunder:

 

(a)                                 Change the amount, manner, place or terms of
payment or change or extend the time of payment of or renew or alter the Senior
Debt, or any part thereof, or amend, supplement or replace the Credit Agreement
and/or any notes executed in connection therewith in any manner or enter into or
amend, supplement or replace in any manner any other agreement relating to the
Senior Debt;

 

(b)                                 Sell, exchange, release or otherwise deal
with all or any part of any property at any time pledged or mortgaged by any
party to secure or securing the Senior Debt or any part thereof;

 

(c)                                  Release anyone liable in any manner for the
payment or collection of the Senior Debt;

 

(d)                                 Exercise or refrain from exercising any
rights against any Borrower or others (including the Undersigned); and

 

(e)                                  Apply sums paid by any party to the Senior
Debt in any order or manner as determined by Lender.

 

8.                                      The Undersigned shall advise each future
assignee of all or any part of the Subordinated Debt that the Subordinated Debt
is subordinated to the Senior Debt in the manner and to the extent provided
herein.  The Undersigned represents that no part of the Subordinated Debt or any
instrument evidencing the same has been transferred or assigned, and the
Undersigned will not transfer or assign, except to Lender, any part of the
Subordinated Debt while any Senior Debt remains outstanding, unless such
transfer or assignment is made expressly subject to this Subordination
Agreement.  Upon Lender’s request, the Undersigned will place on the Management
Agreement a legend in such form as Lender may determine to the effect that the
indebtedness evidenced thereby is subordinated and subject to the prior payment
in full of all Senior Debt pursuant to this Subordination Agreement, as well as
deliver all such instruments to Lender.

 

9.                                      This Subordination Agreement contains
the entire agreement between the parties regarding the subject matter hereof and
may be amended, supplemented or modified only by written instrument executed by
Lender and the Undersigned.

 

10.                               The Undersigned represents and warrants that
neither the execution or delivery of this Subordination Agreement nor
fulfillment of nor compliance with the terms and provisions hereof will conflict
with, or result in a breach of the terms, conditions, or provisions of or
constitute a default under any agreement or instrument to which the Undersigned
or any of the Undersigned’s assets is now subject.

 

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11.                               Any notice of acceptance of this Subordination
Agreement is hereby waived.

 

12.                               This Subordination Agreement may be assigned
by Lender in whole or in part in connection with any assignment or transfer of
any portion of the Senior Debt.

 

13.                               This Subordination Agreement shall be binding
upon the Undersigned, and the Undersigned’s successors, representatives and
assigns.

 

14.                               Except as provided in Section 2 above, each
Borrower agrees that it will not make any payment on any of the Management Fees
or take any other action in contravention of the provisions of this
Subordination Agreement.

 

15.                               GOVERNING LAW.  THIS SUBORDINATION AGREEMENT,
AND ALL MATTERS ARISING OUT OF OR RELATING TO THIS SUBORDINATION AGREEMENT,
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAWS, AND SHALL BE CONSTRUED WITHOUT THE AID OF ANY CANON, CUSTOM OR RULE OF
LAW REQUIRING CONSTRUCTION AGAINST THE DRAFTSMAN.

 

16.                               CONSENT TO JURISDICTION.  THE UNDERSIGNED,
EACH BORROWER AND LENDER HEREBY IRREVOCABLY CONSENT TO THE NONEXCLUSIVE
JURISDICTION OF, AND VENUE IN, ANY STATE OR FEDERAL COURT LOCATED IN THE
COMMONWEALTH OF PENNSYLVANIA IN ANY AND ALL ACTIONS AND PROCEEDINGS WHETHER
ARISING HEREUNDER OR UNDER ANY OTHER AGREEMENT OR UNDERTAKING.  EACH BORROWER
AND THE UNDERSIGNED WAIVE ANY OBJECTION TO IMPROPER VENUE AND FORUM
NON-CONVENIENS TO PROCEEDINGS IN ANY SUCH COURT OR COURTS AND ALL RIGHTS TO
TRANSFER FOR ANY REASON.  THE UNDERSIGNED AND EACH BORROWER IRREVOCABLY AGREE TO
SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO THE ADDRESS OF
THE APPROPRIATE PARTY SET FORTH HEREIN.

 

17.                               WAIVER OF JURY TRIAL.  THE UNDERSIGNED, EACH
BORROWER AND LENDER HEREBY WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL
IN CONNECTION WITH ANY LITIGATION COMMENCED BY OR AGAINST LENDER WITH RESPECT TO
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, WHETHER SOUNDING IN TORT, CONTRACT
OR OTHERWISE.

 

[Remainder of Page Intentionally Left Blank;

Signatures Appear on the Following Pages.]

 

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Signature Page to Management Fee Subordination Agreement

 

Dated as of the date first written above.

 

 

 

UNDERSIGNED:

ADCARE ADMINISTRATIVE SERVICES, LLC

 

 

 

By:

/s/ Boyd P. Gentry

 

 

Boyd P. Gentry, Manager

 

Address for Notices:

145 Hembree Road

Roswell, Georgia 30076

Attn:                    Manager

Fax No.:  (404) 842-1899

 

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Signature Page to Management Fee Subordination Agreement

 

Intending to be legally bound, each of the following consents and agrees to the
terms of this Subordination Agreement as of the date first above written:

 

 

BORROWER:

NW 61st NURSING, LLC

 

GEORGETOWN HC&R NURSING, LLC

 

SUMTER N&R, LLC

 

 

 

By:

/s/ Boyd P. Gentry

 

 

Boyd P. Gentry, Manager

 

 

Address for notices to Borrower:

145 Hembree Road

Roswell, Georgia 30076

Attn:                    Manager

Fax No.:  (404) 842-1899

 

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Signature Page to Management Fee Subordination Agreement

 

Agreed to and Acknowledged:

 

 

 

LENDER:

GEMINO HEALTHCARE FINANCE, LLC

 

 

 

 

 

By:

/s/ Jeffrey M. Joslin

 

 

Jeffrey M. Joslin, Senior Portfolio Manager

 

Address for notices to Lender:

 

Gemino Healthcare Finance, LLC

1 International Plaza, Suite 220

Philadelphia, Pennsylvania 19113

Attn:  Thomas Schneider

Fax:  (610) 870-5401

 

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