Exhibit 10.9

 

SUBORDINATION AGREEMENT

 

THIS SUBORDINATION AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”) is made and entered into May 30,
2013, by and between FIRST COMMERCIAL BANK, a Missouri corporation (“FCB”), and
GEMINO HEALTHCARE FINANCE, LLC, a Delaware limited liability company (together
with its successors and assigns, “Gemino”).  Unless otherwise defined herein,
all capitalized terms used herein shall have the respective meanings assigned to
such terms in the Gemino Credit Agreement (as defined herein).

 

W I T N E S S E T H:

 

WHEREAS, NW 61st Nursing, LLC, a Georgia limited liability company, and certain
of its Affiliates (individually and collectively, the “Company”), and Gemino are
or from time to time hereafter may be parties to that certain Credit Agreement
dated the date hereof (collectively with all replacements, substitutions,
renewals, or refinancings for the obligations under such Credit Agreement, in
each case as amended, restated, supplemented or otherwise modified from time to
time, the “Gemino Credit Agreement”) pursuant to which Gemino has made and will
from time to time make loans and provide other financial accommodations to the
Company, which loans are secured by a lien on, and security interest in, certain
of the Company’s assets and properties, all as more particularly described in
the Gemino Loan Documents (as defined below);

 

WHEREAS, Northwest Property Holdings, LLC, a Georgia limited liability company
(“Northwest Property”) issued to FCB that certain Promissory Note dated
December 31, 2012, in the original principal amount of $1,501,500 (as in effect
on the date hereof, the “Northwest Property Note”) to evidence certain loans
made by FCB to Northwest Property.

 

WHEREAS, Company has guaranteed the obligations of Northwest Property owing to
FCB under the Northwest Property Note pursuant to a certain Commercial Guaranty
dated December 31, 2012 (as in effect on the date hereof, the “FCB Guaranty”),
which guaranty is secured by a lien on, and security interest in, certain of
Company’s assets and properties, all as more particularly described in the
Second Lien Loan Documents (as defined below);

 

WHEREAS, in order to induce Gemino to enter into the Gemino Credit Agreement and
the other Gemino Loan Documents (as defined below) and Gemino to extend the
financial accommodations to Company pursuant to the Gemino Credit Agreement, and
in consideration thereof, and in consideration of any loans or other financial
accommodations extended by Gemino to Company, whether pursuant to the Gemino
Credit Agreement or otherwise, FCB has agreed to enter into this Agreement; and

 

WHEREAS, it is a condition to entering into the Gemino Credit Agreement and the
Gemino Loan Documents and the extension of loans and other financial
accommodations by Gemino to Company under the Gemino Credit Agreement that FCB
enter into this Agreement.

 

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NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, FCB hereby agrees with Gemino as follows:

 

1.             Definitions.

 

“Applicable Law” shall mean, with respect to any Person, any law, ordinance,
policy, manual provision, administrative guidance, statute, rule or regulation,
or any determination of an arbitrator or a court or other governmental
authority, in each case applicable to or binding upon such Person or any of its
assets, or to which such Person or any of its assets is subject.

 

“Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11
U.S.C. §§101 et seq., as in effect from time to time.

 

“Collateral” means all assets and properties of any kind whatsoever (including
all Gemino Collateral), real or personal, tangible or intangible and wherever
located, of Company (including any stock or other equity securities), whether
now owned or hereafter acquired, and upon which a Lien is now or hereafter
granted or purported to be granted by such Person in favor of a Secured
Creditor, as security for all or any part of the Obligations and the proceeds
(including insurance proceeds) thereof.

 

“Company” has the meaning set forth in the recitals hereto.

 

“Enforcement Action” means, upon the occurrence and during the continuation of
an Event of Default and in connection with the exercise of remedies:  (i) any
action by any Secured Creditor to foreclose on the Lien of such Person in any
Collateral, (ii) any action by any Secured Creditor to take possession or
control of, or sell or otherwise realize upon, or to exercise any other rights
or remedies with respect to, including, without limitation through a stock
power, power of attorney, other transfer document or otherwise, any Collateral,
including, without limitation, a sale, transfer or other disposition of any
Collateral by Company with the consent of, or at the direction of, a Secured
Creditor, (iii) any action by any Secured Creditor to retain, or direct or cause
Company to retain, a broker, investment banker or appraiser to sell (or appraise
in connection with a proposed sale) all or any material portion of the
Collateral, and which action has been designated as an “Enforcement Action” in a
written notice to Gemino or FCB, as the case may be, and to Company, (iv) the
delivery of any notice, claim or demand relating to the Collateral to any Person
in the possession or control of any Collateral or acting as bailee, custodian or
agent for any holder of a Lien in respect of any Collateral, (v) any action by
any Secured Creditor to retain, or direct or cause Company to retain, a
restructuring officer, crisis manager or similar Person in respect of Company,
(vi) the taking of any other actions by a Secured Creditor to collect or enforce
all or any part of the Obligations payable to such Secured Creditor or any
claims in respect thereof against (x) Company or (y) any of Company’s Property,
including the taking of control or possession of, or the exercise of any right
of setoff or other legal right with respect to, any Property of Company or the
sale, transfer or other disposition of any interest in such Property or assets,
or (vii) the commencement by any Secured Creditor (or joinder with any Person in
the commencement) of any legal proceedings or actions against, in connection
with, or with respect to (x) Company or (y) any of Company’s Property or assets
or any Collateral to facilitate the actions described in any of clauses (i),
(ii), (iii), (iv), (v) and (vi) above,

 

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including any Proceeding and any action to have the automatic stay lifted in any
Proceeding of Company.

 

“FCB Debt” means any and all present and future indebtedness, liabilities and
obligations, whether matured or unmatured, contingent or absolute, direct or
indirect, now or hereafter existing, due or to become due by Company to FCB as
may be evidenced by the Second Lien Loan Documents or any other documents,
instruments or agreements now or hereafter executed and delivered by Company
with, to or in favor of FCB.

 

“FCB Guaranty” has the meaning set forth in the recitals hereto.

 

“Gemino” has the meaning set forth in the recitals hereto.

 

“Gemino Collateral” shall mean all of the types and items of Property of Company
that are described in Exhibit A attached hereto and made a part hereof, whether
such Property is acquired, created or arises prior to, during the pendency of or
after any Proceeding.

 

“Gemino Credit Agreement” has the meaning set forth in the recitals hereto.

 

“Gemino Debt” as used herein, shall mean any and all Obligations (as defined in
the Gemino Credit Agreement), including, without limitation, any and all now
existing and future indebtedness, obligations or liabilities of the Company to
Gemino under the Gemino Credit Agreement and any other Gemino Loan Document,
whether direct or indirect, absolute or contingent, secured or unsecured,
arising under, or in connection with, the Gemino Credit Agreement or any other
Gemino Loan Document (including, without limitation, any guaranty executed in
connection therewith) in favor of Gemino, as each of the foregoing may be from
time to time amended, modified, waived, supplemented, extended, renewed,
deferred, refinanced, replaced, refunded or restated, in whole or in part, in
accordance with the terms and conditions thereof, by operation of law or
otherwise, whether any of the foregoing arises before or after commencement of a
Proceeding, including any and all expenses (including, without limitation,
reasonable attorneys’ fees and disbursements), premiums, fees and charges
incurred in connection therewith and any interest thereon, including, without
limitation, any post-petition interest accruing on such Gemino Debt after
Company becomes subject to a Proceeding (whether or not such interest is
allowable or enforceable against Company or recoverable against Company or its
bankruptcy estates), whether by means of an adequate protection payment or
otherwise.  For all purposes hereunder, Gemino Debt shall also include all
indebtedness, obligations and liabilities of the Company to repay any amounts
previously paid by the Company pursuant to the Gemino Credit Agreement, which
amounts have been returned to the Company, to the Company’s bankruptcy estates,
to a trust or similar structure established under a plan of reorganization or
liquidation of Company or to a trustee or similar Person by Gemino pursuant to
Sections 542, 544, 545, 547, 548, 549, 550, 553 and 724(a) of the Bankruptcy
Code or otherwise under other applicable legislation.

 

“Gemino Loan Documents” means the Gemino Credit Agreement, all Loan Documents
(as such term is defined in the Gemino Credit Agreement) and all other
agreements, documents and instruments at any time executed or delivered by
Company or any other Person with, to or in favor of

 

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Gemino in connection therewith or related thereto, in each case, as amended,
restated, supplemented or otherwise modified from time to time.

 

“Lien” means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or otherwise) or preference, priority or other right or preferential
arrangement of any kind or nature whatsoever and any contingent or other
agreement to provide any of the foregoing.

 

“Obligations” means the Gemino Debt and the FCB Debt, collectively.

 

“Paid in Full” or “Payment in Full” shall mean the indefeasible payment in full
in cash of all Gemino Debt and the irrevocable termination of all commitments to
lend or otherwise extend credit under the Gemino Loan Documents.  Gemino Debt
shall be considered to be outstanding whenever any commitment to make loans or
otherwise extend credit under the Gemino Loan Documents is outstanding.

 

“Person” means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or governmental authority.

 

“Proceeding” means any insolvency, bankruptcy, receivership, trusteeship,
custodianship, liquidation, dissolution, reorganization, foreclosure, assignment
for the benefit of creditors or similar case or proceeding for the liquidation,
dissolution, reorganization, recapitalization, adjustment or marshalling of
assets or liabilities, or other winding up of Company or any of its respective
Property, in each case whether involuntary or voluntary or whether or not under
the Bankruptcy Code.

 

“Property” means, with respect to any Person, all property and interests in
property of such Person, whether real, personal or mixed, whether now owned or
existing or hereafter acquired or arising and wheresoever located.

 

“Release Notice” has the meaning given to it in Section 6(c).

 

“Secured Creditor” means Gemino and FCB, individually and collectively.

 

“FCB” has the meaning set forth in the recitals hereto.

 

“Second Lien Loan Documents” means the FCB Guaranty and all other agreements,
documents and instruments at any time executed or delivered by Company with, to
or in favor of FCB in connection therewith or related thereto (including,
without limitation, that certain Commercial Security Agreement dated
December 31, 2012, among Company, Northwest Property and FCB), in each case, as
amended, restated, supplemented or otherwise modified from time to time.

 

“Transferee” has the meaning given to it in Section 2.

 

“UCC” means the Uniform Commercial Code, as in effect from time to time in any
applicable jurisdiction.

 

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2.             Restriction on Transfer.  Without limiting any other provision of
this Agreement, FCB hereby covenants and agrees that, until such time as this
Agreement is terminated as provided herein, FCB will not directly or indirectly
sell, assign, transfer, endorse, pledge, encumber or otherwise dispose of
(whether by means of participation or otherwise) any portion of the FCB Debt or
any interest therein to any Person (each such transferee, a “Transferee”),
unless such Transferee shall have agreed in writing to be bound in all respects
by the terms and provisions of this Agreement.

 

3.             Inducement.  This Agreement is executed as an inducement to
Gemino to make loans or advances to the Company or otherwise to extend credit or
financing accommodations to the Company, and to enter into the Gemino Loan
Documents and to continue a financing arrangement with the Company and is
executed in consideration of Gemino entering into the Gemino Loan Documents and
continuing such financing arrangement.

 

4.             Continuing Agreement.  This Agreement (a) may be terminated only
upon the occurrence of the Payment in Full of the Gemino Debt, (b) is a
continuing agreement of subordination, (c) shall be binding upon FCB, Company
and their respective successors, transferees and assigns, and (d) shall inure to
the benefit of Gemino and be enforceable by Gemino and its successors,
transferees and assigns.  Without limiting the generality of the foregoing,
nothing herein shall limit the ability of Gemino to assign or otherwise transfer
the Gemino Debt to any other Person in accordance with the terms of the Gemino
Credit Agreement, and such other Person shall thereupon become vested with all
the rights and benefits in respect thereof granted to Gemino herein or
otherwise.  FCB hereby waives any right it may have under Applicable Law to
revoke this Agreement or any of the provisions hereof.

 

5.             Non-Offset, etc.  Without limiting any other provision of this
Agreement, FCB hereby covenants and agrees that, until such time as this
Agreement is terminated as provided herein, FCB will not assert any right,
directly or indirectly, of setoff or recoupment against the FCB Debt.

 

6.             Liens on Collateral.

 

(a)           Rights as Unsecured Creditors.  Notwithstanding anything to the
contrary set forth in this Section 6, nothing in this Section 6 is intended or
shall be deemed or construed to limit in any way the exercise by FCB against
Company or its Property of any of FCB’s rights and remedies as an unsecured
creditor of Company so long as such rights and remedies are not exercised in
contravention of this Agreement, and, subject to the other terms and provisions
of this Agreement, FCB may exercise at any time against Company or its Property
FCB’s rights and remedies as an unsecured creditor of Company under the Second
Lien Loan Documents and Applicable Law.  In the event FCB becomes a judgment
Lien creditor in respect of Gemino Collateral as a result of its enforcement of
its rights as an unsecured creditor, such judgment Lien shall be deemed
subordinated to the Liens of Gemino on the same basis as the other Liens of FCB
are so subordinated to the Liens of Gemino under this Agreement.

 

(b)           Lien Subordination.  Notwithstanding the date, manner or order of
grant, attachment or perfection of the Liens on all or any part of the
Collateral granted to Gemino and FCB, respectively, and notwithstanding the
provisions of the UCC or any other Applicable Law or decision, or the terms or
provisions of the Gemino Loan Documents or Second Lien Loan

 

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Documents, respectively, or any other circumstance whatsoever, each of Gemino
and FCB hereby agrees that (a) Gemino shall have a first, prior, senior and
continuing Lien on all of the Gemino Collateral to secure the prompt and
complete payment, performance and observance of all Gemino Debt, and (b) any
Lien on all or any part of the Gemino Collateral now or hereafter held by FCB,
regardless of when or how acquired, whether by grant, statute, operation of law,
subrogation or otherwise, shall be in all respects and for all purposes subject
to, junior to and subordinate to all Liens on all or any part of the Gemino
Collateral granted to or held by Gemino.  Subject to the terms and provisions of
this Agreement, including the respective definitions of “Gemino Debt” and “FCB
Debt” set forth in Section 1 hereof, the relative priorities of the respective
Liens described in this Section 6(b) shall not be altered or otherwise affected
by any amendment, modification, supplement, extension, renewal, restatement,
replacement or refinancing of the Gemino Debt or FCB Debt, respectively, or by
any action or inaction which Gemino, on the one hand, or FCB, on the other hand,
may take or fail to take, in each case in respect of the Collateral.

 

(c)           Release of Gemino Collateral.  In the event Gemino releases or
agrees to release any of its Liens on all or any part of the Gemino Collateral
in connection with the sale, transfer or other disposition thereof at the
request of Company or pursuant to any Enforcement Action or otherwise, Gemino
agrees to notify FCB in writing at least two (2) Business Days in advance
thereof with such notice describing with reasonable specificity the portion of
the Gemino Collateral to be sold or disposed of and further stating that such
Gemino Collateral will be sold free and clear of the Liens of Gemino and FCB
(each such notice a “Release Notice”).  FCB acknowledges, confirms and agrees
that upon Gemino providing such a Release Notice to FCB in accordance with
Section 18 hereof, FCB shall be deemed automatically and unconditionally to have
consented to such sale or other disposition under the Second Lien Loan Documents
and the Lien of FCB on such Gemino Collateral automatically and unconditionally
shall be deemed to be, and shall be, released and terminated contemporaneously
with the release by Gemino of its Lien thereon.  FCB agrees that no further act
or documentation shall be necessary to evidence the release and termination by
FCB of such Lien and the delivery of the Release Notice to FCB and the release
by Gemino of its Lien on the Gemino Collateral shall be prima facie evidence of
FCB’s release and termination of its Lien upon such Gemino Collateral.  In the
event that Gemino reasonably requests FCB to execute and deliver any formal
release or termination of FCB’s Lien upon such Gemino Collateral, FCB agrees to
execute the same forthwith.  Notwithstanding the terms and provisions of this
Section 6(c), in the event that Gemino releases its Liens on the Gemino
Collateral in connection with the Payment in Full of the Gemino Debt, FCB shall
not be obligated to release its Liens (nor be deemed to release its Liens as
contemplated above) on any Gemino Collateral remaining after giving effect to
the Payment in Full of the Gemino Debt (and any sale, transfer or other
disposition of Gemino Collateral occurring in connection therewith).

 

(d)           Perfection.  Gemino, on the one hand, and FCB, on the other hand,
shall be solely responsible for perfecting and maintaining the perfection of
their respective Liens on each item constituting Collateral.  The provisions of
this Section 6(d) are intended solely to govern the respective Lien priorities
as between the holders of Gemino Debt and the holders of FCB Debt and shall not
impose on any such Person any obligations in respect of the disposition of
proceeds of any Collateral which would conflict with prior perfected claims
therein in favor of any other Person or any applicable order or decree of any
court or governmental authority or any Applicable Law.

 

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(e)           Notice of Liens.  FCB and Gemino each acknowledge that this
Agreement shall constitute notice of their respective interests in the
Collateral under and for any purpose such a notice may be required by the UCC.

 

7.             Management of Gemino Collateral.  Until the Payment in Full of
the Gemino Debt, and both in and outside of a Proceeding, the holders of Gemino
Debt (or any representative thereof) shall have the exclusive right to manage,
perform and enforce the terms of the Gemino Debt and the Gemino Loan Documents
with respect to all Gemino Collateral and to exercise and enforce all privileges
and rights thereunder and with respect thereto, in each case in the exercise of
their business judgment and sole and absolute discretion, including, without
limitation, the sole and exclusive right to take or retake control or possession
of any Gemino Collateral, to hold, prepare for sale, process, sell, lease,
foreclose upon, collect, exercise rights or remedies with respect to, dispose
of, or liquidate any Gemino Collateral, to incur expenses in connection with any
of the foregoing and to exercise all rights and remedies of a secured lender
under the UCC, and FCB shall not take or seek to take any such action.  In
furtherance and not in limitation of the foregoing, FCB waives any and all
rights to direct the method or challenge the appropriateness of any action by
any holder of Gemino Debt (or any representative thereof) in connection with,
and any right to object to, a strict foreclosure with respect to any Gemino
Collateral, waives any and all rights of redemption and hereby consents to each
holder of Gemino Debt (or any representative thereof) dealing in all respects
with the Gemino Collateral as if there were no Liens on the Gemino Collateral
securing FCB Debt.

 

8.             Proceedings.

 

(a)           Covenants of FCB.  In the event of any Proceeding involving
Company, FCB agrees that it will:

 

(i)            not object to, contest or oppose (or support any other Person in
objecting to, contesting or opposing), and waives any right to object to,
contest or oppose, any sale, transfer or other disposition of all or any part of
the Gemino Collateral free and clear of Liens or other claims of FCB under
Section 363 of the Bankruptcy Code or any other law applicable to such
Proceeding if Gemino has consented to such sale, transfer or disposition;

 

(ii)           (A) at the request of Gemino, challenge, contest or otherwise
object to any use of cash collateral or debtor-in-possession financing under
Sections 363 or 364 of the Bankruptcy Code or otherwise that is challenged,
contested or otherwise objected to by Gemino and (B) not challenge, contest or
otherwise object to (or support any other Person in challenging, contesting or
otherwise objecting to) in any manner (1) any use of cash collateral or
debtor-in-possession financing under Sections 363 or 364 of the Bankruptcy Code
or otherwise that is consented to or provided by Gemino, (2) any request by
Gemino for “adequate protection” under Sections 361, 362, 363 or 364 of the
Bankruptcy Code (or its equivalent) or (3) any objection by Gemino to any
motion, relief, action or proceeding based on a Gemino’s claim of lack of
adequate protection;

 

(iii)          not assert (or support any other Person in asserting) in any
manner any right it may have to adequate protection of its interest in any
Gemino Collateral absent written consent or direction of Gemino; provided, that
(A) if Gemino is granted adequate

 

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protection in the form of a Lien on additional or replacement collateral in
connection with use of cash collateral or any debtor-in-possession financing
under Sections 363 or 364 of the Bankruptcy Code, FCB may seek adequate
protection in the form of a Lien on such additional or replacement collateral,
which Lien, if granted, will be subordinate to the Liens securing the Gemino
Debt and any such debtor-in-possession financing on the same basis as the other
Liens securing the FCB Debt are so subordinated under this Agreement, and (B) in
the event Gemino consents to the request by FCB to seek adequate protection in
respect of its FCB Debt and such adequate protection request is granted in the
form of a Lien on additional or replacement collateral, then FCB agrees that
Gemino may seek and obtain, and FCB hereby consents to the granting of, a senior
Lien on such additional or replacement collateral as security for the Gemino
Debt and for any debtor-in-possession financing provided by Gemino and to any
other Liens granted to Gemino as adequate protection on the same basis as the
other Liens securing the FCB Debt are subordinated under this Agreement.  If and
to the extent any such additional or replacement Liens are insufficient to
provide adequate protection of the interests of FCB, any claim of FCB under
Section 507(b) of the Bankruptcy Code shall be subordinate in right of payment
to any claim of Gemino consistent with this Agreement;

 

(iv)          immediately segregate and turn over to Gemino any adequate
protection of its interest in any Gemino Collateral that it receives, directly
or indirectly, in any Proceeding for application to the Gemino Debt owed to
Gemino, other than adequate protection of the type described in clause
(iii) above;

 

(v)           not seek (or support any other Person seeking) to have the
automatic stay of Section 362 of the Bankruptcy Code (or any similar stay under
any other Applicable Law) lifted, vacated or modified with respect to any Gemino
Collateral without the prior written consent of Gemino; provided, that, in the
case of this clause (v), if Gemino seeks such aforementioned relief, FCB hereby
irrevocably consents thereto and shall join in any such motion or application
seeking such relief if requested by Gemino;

 

(vi)          (A) not object to, contest or oppose (or support any other Person
in objecting to, contesting or opposing) in any manner an election under
Section 1111(b) of the Bankruptcy Code by Gemino and (B) and does expressly
waive any claim it may now or hereafter have arising under, in connection with
or out of the election by Gemino of the application of Section 1111(b) of the
Bankruptcy Code;

 

(vii)         not assert or enforce, at any time when any Gemino Debt exists
that has not been Paid in Full, any claim under Section 506(c) of the Bankruptcy
Code senior to or on a parity with the Gemino Debt for costs or expenses of
preserving or disposing of any Gemino Collateral;

 

(viii)        not object to, contest or oppose (or support any other Person in
objecting to, contesting or opposing) in any manner the exercise by Gemino of
the right to “credit bid” Gemino Debt pursuant to Section 363(k) of the
Bankruptcy Code or other Applicable Law in any Proceeding; and

 

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(ix)          not request (or cause or support any other Person to request)
judicial relief, in any Proceeding or in any other court, that would hinder,
delay, limit or prohibit the lawful exercise or enforcement of any right or
remedy otherwise available to Gemino or that would limit, invalidate, avoid, set
aside or subordinate any senior Lien or Gemino Loan Document or grant the Liens
of FCB equal ranking to the senior Liens of Gemino in or to the Gemino
Collateral.

 

(b)           Prohibition on Contesting Liens.  Each of Gemino and FCB agrees
not to seek to challenge, to avoid, to subordinate or to contest or directly or
indirectly to cause or support any other Person in challenging, avoiding or
contesting in any judicial or other proceeding, including, without limitation,
any Proceeding, the priority, validity, extent, perfection or enforceability of
any Lien held by Gemino or FCB, as the case may be, on all or any part of the
Collateral; provided, that nothing in this Section 8(b) is intended or shall be
deemed or construed to limit in any way the ability of Gemino or FCB to enforce
all of the terms and provisions of this Agreement.  As between Gemino, on the
one hand, and FCB, on the other hand, the terms of this Agreement shall govern
and control even if part or all of the FCB Debt or Gemino Debt, as the case may
be, or the respective Liens securing payment, observance and performance thereof
are avoided, disallowed, set aside or otherwise invalidated in any Proceeding or
otherwise.

 

9.             Marshalling; Additional Waiver.  FCB hereby waives to the fullest
extent permitted by Applicable Law any rights such Person may have under
Applicable Law to assert the doctrine of marshalling or otherwise to require
Gemino to marshal any Property of Company for the benefit of FCB.  FCB expressly
waives all notice of the acceptance by Gemino of the subordination and other
terms and provisions of this Agreement and all the notices whatsoever not
specifically required pursuant to the terms of this Agreement or under the UCC
in connection with any foreclosure on or sale of Property of the Company, and
FCB expressly consents to reliance by Gemino upon the subordination and other
terms and provisions of this Agreement.

 

10.          No Liability.  Gemino shall not in any event be liable for: (a) any
failure to prove the FCB Debt; (b) any failure to exercise any rights with
respect thereto; (c) any failure to collect any sums payable thereon; or (d) any
impairment or nonpayment of the FCB Debt that results, directly or indirectly,
from the exercise by Gemino of any of its rights or remedies under this
Agreement, the Gemino Credit Agreement, the other Gemino Loan Documents or under
Applicable Law.

 

11.          Subordination Rights Not Impaired by Acts or Omissions of the
Company or Gemino.  No right of Gemino to enforce subordination as provided in
this Agreement will at any time in any way be prejudiced or impaired by any act
or failure to act on the part of Company or by any act or failure to act by
Gemino, or by any noncompliance by FCB or any agent thereof with the terms of
this Agreement, regardless of any knowledge thereof with which any such Person
may have or otherwise be charged.  Gemino may extend, renew, modify or amend any
terms of the Gemino Debt or any security therefor or guaranty thereof and grant
any waiver, release or consent in respect of, or release, sell or exchange such
security and otherwise deal freely with Company and its respective Affiliates,
all without notice to or consent from FCB and without in any way impairing or
affecting this Agreement.

 

12.          No Enforcement Action.  FCB hereby agrees that, so long as any
Gemino Debt shall remain unpaid, or the Gemino Credit Agreement shall be in
effect, FCB shall not commence (or

 

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cause the commencement of) an Enforcement Action or join with or support any
other creditor of Company (other than Gemino) in commencing an Enforcement
Action.

 

13.          Action Against.  If FCB, in violation of this Agreement, shall
commence an Enforcement Action against Company, Company may interpose as a
defense or dilatory plea the making of this Agreement, or upon failure to do so,
Gemino is hereby irrevocably authorized to intervene and to interpose such
defense or plea in its name or in the name of Company.  If FCB shall attempt to
enforce, collect or realize upon any FCB Debt or any collateral, security or
guarantees (if any) securing the FCB Debt in violation of this Agreement,
Company may, by virtue of this Agreement, restrain any such enforcement,
collection or realization, or upon failure to do so Gemino may restrain such
enforcement, collection or realization, either in its own name or in the name of
Company.

 

14.          Further Assurances.  FCB and Company will at their expense and at
any time and from time to time promptly execute and deliver all further
instruments and documents and take all further action that may be reasonably
necessary to reflect the priorities set forth herein and to protect any right or
interest of Gemino granted hereunder or to enable Gemino to exercise and enforce
its rights and remedies hereunder, including, without limitation, to amend
financing statements to reflect that the Liens relating thereto are subordinate
to the Liens of Gemino as provided herein.

 

15.          Modifications to the Second Lien Loan Documents.  Except as
otherwise expressly permitted under the Gemino Credit Agreement or any other
applicable Gemino Loan Document, none of the Second Lien Loan Documents shall be
amended or otherwise modified without obtaining the prior written consent of
Gemino, or as otherwise permitted under the Gemino Credit Agreement, so as to
provide for (a) the granting or obtaining of any collateral security or
obtaining any Lien on any Gemino Collateral or (b) any other amendment or
modification which would have a material adverse effect on the operations of any
Company, Gemino’s security interests in the Gemino Collateral or the claims of
Gemino.

 

16.          No Impairment of Company’s Obligations.  Subject to all of Gemino’s
rights as provided in this Agreement, nothing contained in this Agreement shall
impair, as between Company, on the one hand, and FCB, on the other hand, the
obligation of Company, which is unconditional and absolute, to pay the FCB Debt
to FCB as and when all or any portion thereof shall become due and payable in
accordance with the FCB Guaranty or prevent FCB, upon any default under the FCB
Debt, from exercising all rights, powers and remedies otherwise provided therein
or by Applicable Law.

 

17.          Entire Agreement, etc.  This Agreement embodies the whole agreement
of the parties with respect to the subject matter hereof and may not be modified
except in writing executed and delivered by the parties hereto.  The failure of
Gemino to exercise any right hereunder shall not be construed as a waiver of the
right to exercise the same or any other rights at any other time and from time
to time thereafter, and such rights shall be considered as cumulative rather
than alternative.  No knowledge of any breach or other non-observance by FCB of
the terms and provisions of this Subordination Agreement shall constitute a
waiver, nor a waiver of any obligations to be performed by FCB hereunder.

 

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18.          Notices.  All notices and other communications hereunder shall be
sent in accordance with the provisions of, and to the addresses set forth in,
the Gemino Credit Agreement, and if to FCB, to the address set forth below:

 

First Commercial Bank

303 W. Market

P.O. Box 574

Dexter, MO 63841

Attention: Norman B. Harty, President

Facsimile: 573-624-8884

 

19.          Construction.  Except as otherwise expressly provided herein, the
rules of interpretation set forth in the Gemino Credit Agreement shall apply
mutatis mutandis to this Agreement.

 

20.          CHOICE OF LAW; JURISDICTION; JURY TRIAL WAIVER; ETC.  THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA.  EACH OF THE PARTIES HERETO AGREES THAT ANY
FEDERAL COURT IN THE EASTERN DISTRICT OF PENNSYLVANIA OR ANY STATE COURT IN
PHILADELPHIA, PENNSYLVANIA SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN OR AMONG THE PARTIES HERETO PERTAINING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT OR TO ANY MATTER ARISING HEREFROM.  EACH OF THE
PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURT.  EACH OF THE PARTIES HERETO
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
PROCEEDING IN ANY SUCH COURT OR THAT SUCH PROCEEDING WAS BROUGHT IN AN
INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME.  EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO A JURY TRIAL AS TO ANY DISPUTE UNDER THIS
AGREEMENT.

 

21.          Counterparts; Effectiveness.  This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
(and by facsimile or other electronic transmission) and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute
but one and the same instrument.

 

22.          Severability.  Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

23.          Conflicts.  In the event of any conflict between the provisions of
this Agreement and the provisions of any of the Second Lien Loan Documents, the
provisions of this Agreement shall govern and control.

 

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24.          Successors and Assigns.  The provisions of this Agreement shall be
binding upon, and inure to the benefit of, Gemino and FCB and their respective
successors and assigns.

 

25.          Section Headings.  The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.

 

(Signature Pages Follow)

 

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Signature Page to Subordination Agreement

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Subordination Agreement effective as of the date first above written.

 

 

FIRST LIEN LENDER:

 

 

 

GEMINO HEALTHCARE FINANCE, LLC

 

 

 

 

By:

/s/ Jeffrey M. Joslin

 

 

Jeffrey M. Joslin, Senior Portfolio Manager

 

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Signature Page to Subordination Agreement

 

 

SECOND LIEN CREDITOR:

 

 

 

FIRST COMMERCIAL BANK

 

 

 

 

By:

/s/ [Illegible]

 

Name:

 

 

Title:

 

 

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Signature Page to Subordination Agreement

 

The undersigned Company referred to in the foregoing Subordination Agreement
(“Subordination Agreement”) hereby agrees to comply with all of the terms and
provisions of the Subordination Agreement in all respects.  Company hereby
covenants that it will not, and will not allow any of its members to, make any
payment on account of, recognize any forgiveness, assignment or transfer of, nor
give any security for, the FCB Debt while the Subordination Agreement is in
effect.

 

COMPANY:

NW 61ST NURSING, LLC

 

 

 

 

By:

/s/ Boyd P. Gentry

 

 

Boyd P. Gentry, Manager

 

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