Exhibit 10.11

 

EXECUTION VERSION

FIRST AMENDMENT

TO SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT

This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT (this
“Amendment”) is entered into as of June 12, 2019 by and among CP PROPERTY
HOLDINGS, LLC, a Georgia limited liability company, as borrower (the “CP
Borrower”), NORTHWEST PROPERTY HOLDINGS, LLC, a Georgia limited liability
company, as borrower (the “Northwest Borrower”), ATTALLA NURSING ADK, LLC, a
Georgia limited liability company, as borrower (the “Attalla Borrower”), ADCARE
PROPERTY HOLDINGS, LLC, a Georgia limited liability company, as borrower and
guarantor (“AdCare Holdco”; the CP Borrower, the Northwest Borrower, the Attalla
Borrower and AdCare Holdco are collectively referred to herein as “Borrowers”
and each, as a “Borrower”), HEARTH & HOME OF OHIO, INC., a Georgia corporation,
as guarantor (the “HHO Guarantor”), REGIONAL HEALTH PROPERTIES, INC. a Georgia
corporation, as guarantor (the “RHP Guarantor”), ADCARE OPERATIONS, LLC, a
Georgia limited liability company, as guarantor (the “AdCare Ops”), ADCARE
ADMINISTRATIVE SERVICES, LLC, a Georgia limited liability company, as guarantor
(“AdCare Admin”), ADCARE CONSULTING, LLC, a Georgia limited liability company,
as guarantor (“AdCare Consulting”), ADCARE FINANCIAL MANAGEMENT, LLC, a Georgia
limited liability company, as guarantor (“AdCare Financial”), ADCARE OKLAHOMA
MANAGEMENT, LLC, a Georgia limited liability company, as guarantor (“AdCare
OK”), and ADCARE EMPLOYEE LEASING, LLC, a Georgia limited liability company, as
guarantor (“AdCare Employee”; the HHO Guarantor, AdCare Holdco, the RHP
Guarantor, AdCare Ops, AdCare Admin, AdCare Consulting, AdCare Financial, AdCare
OK and AdCare Employee are collectively referred to herein as “Guarantors” and
each, as a “Guarantor”), and PINECONE REALTY PARTNERS II, LLC, a Delaware
limited liability company, as lender (together with its successors and assigns,
the “Lender”) and (except to the extent set forth herein) amends that certain
Second Amended and Restated Forbearance Agreement, dated as of March 29, 2019
(the “Second A&R Forbearance Agreement”), by and among the Credit Parties and
the Lender.

RECITALS

WHEREAS, certain Credit Parties and the Lender are parties to that certain Loan
Agreement, dated as of February 15, 2018 (as the same may be amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the
“Loan Agreement”);

WHEREAS, the Credit Parties and the Lender entered into that certain Second A&R
Forbearance Agreement, pursuant to which the Lender agreed, subject to the terms
and conditions thereof, to forbear during the Forbearance Period (as defined
therein) from exercising certain of its default-related rights and remedies
against the Credit Parties with respect to the Specified Defaults;

WHEREAS, upon the request of the Credit Parties, the Lender, subject to the
terms and conditions set forth herein, has agreed to the amendments to the
Second A&R Forbearance Agreement, and other agreements, as set forth herein.

NOW, THEREFORE, in consideration of the foregoing, the terms, covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

 

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SECTION 1. Definitions. Unless otherwise defined herein, all capitalized terms
used but not defined in this Amendment shall have the meanings given to such
terms in the Second A&R Forbearance Agreement, as amended, supplemented or
otherwise modified by this Amendment, or the Loan Agreement, as applicable.

SECTION 2. Amendments. Subject to the satisfaction of the conditions set forth
in Section 3 hereof:

(a)Section 5(b) of the Second A&R Forbearance Agreement is hereby amended by
deleting “the Letter of Intent” from clause (iii) and replacing it with “that
certain Purchase and Sale Agreement, dated as of April 15, 2019, by and among
certain Credit Parties and Attalla Realty LLC, an Alabama limited liability
company, College Park Realty LLC, a Georgia limited liability company, Quail
Creek Realty LLC, an Oklahoma limited liability company, and Northwest Realty
LLC, an Oklahoma limited liability company, as amended by that certain first
amendment dated as of May 15, 2019, that certain second amendment dated as of
May 20, 2019, that certain third amendment dated as of May 23, 2019, that
certain fourth amendment dated as of May 31, 2019, and that certain fifth
amendment dated as of June 12, 2019”;

(b)Section 5(d) of the Second A&R Forbearance Agreement is hereby amended by
deleting “May 30, 2019” set forth therein and replacing it with “June 13, 2019
(it being understood and agreed that, as of the Amendment Effective Date (as
defined in the First Amendment to this Agreement dated June 12, 2019), no
Default or Event of Default  has occurred pursuant to this Section 5(d))”;

(c)Section 5(e)(ii) of the Second A&R Forbearance Agreement is hereby amended by
deleting “July 3, 2019” set forth therein and replacing it with “August 15,
2019”; and

(d)Section 5(f)(i)(A) of the Second A&R Forbearance Agreement is hereby amended
by amending and restating such section in its entirety as set forth below:

“(A)[Reserved].”

SECTION 3. Conditions. This Amendment shall be effective on the first day (the
“Amendment Effective Date”) upon which each of the following conditions
precedent shall have been satisfied:

(a)(i) the Lender shall have received a counterpart signature of the Credit
Parties to this Amendment and (ii) the Credit Parties shall have received a
counterpart signature of the Lender to this Amendment;

(b)the Lender shall have received from the Borrowers a fee in an amount equal to
$25,000 payable in immediately available funds, which fee shall be fully earned
and payable on the Amendment Effective Date;

(c)the Borrowers shall have paid to Lender a non-refundable payment as
additional interest, payable in-kind by increasing the outstanding principal
amount of Loans held by such Lender by an amount equal to $462,500 (with such
increase being applied to each outstanding Loan on a pro rata basis in
accordance with the outstanding principal amount thereof prior to such payment),
whereupon from and after such date such amounts shall be added to and constitute
Obligations;

(d)the Lender shall have received a legal, valid and binding copy of a fifth
amendment to that certain Purchase and Sale Agreement, dated as of April 15,
2019, by and among certain Credit Parties and Attalla Realty LLC, an Alabama
limited liability company, College Park Realty LLC, a Georgia limited liability
company, Quail Creek Realty LLC, an Oklahoma limited liability company, and
Northwest Realty LLC, an Oklahoma limited liability company, having terms
acceptable to the Lender; and

(e)the Lender shall have received from the Borrowers reimbursement in full in
immediately available funds for all accrued and unpaid Expenses.

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SECTION 4. Representations and Warranties. Each Credit Party represents and
warrants to the Lender, on the Amendment Effective Date, that the following
statements are true and correct in all material respects on and as of such date:

(a)the execution, delivery and performance of this Amendment has been duly
authorized by all requisite corporate or limited liability company action on the
part of such  Credit Party; this Amendment has been duly executed and delivered
by such Credit Party; and this Amendment constitutes a valid and binding
agreement of such Credit Party, enforceable against such Credit Party in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability;

(b)no approval, consent, exemption, authorization or other action by, or
material notice to, or material filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery
or performance by, or enforcement against, the Borrowers or any other Credit
Party of this Amendment;

(c)the execution, delivery and performance by each Borrower and the other Credit
Parties of this Amendment do not (i) contravene the terms of the Borrowers’ or
any other Credit Party’s certificate or articles of incorporation, certificate
of formation, limited liability company agreement or by-laws (or equivalent
constitutional, organizational and/or formation documents), as applicable; (ii)
conflict with or result in any breach or contravention of, or the creation of
any Lien under, (A) any indenture, mortgage, deed of trust, Loan Agreement or
loan agreement, or any other material agreement, contract or instrument to which
any Borrower or any other Credit Party is a party or by which it or any of its
properties or assets is bound or to which it may be subject or (B) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which any Borrower or any other Credit Party or the properties or assets of
any Borrower or any other Credit Party is subject; (iii) violate any Applicable
Law; or (iv) result in a limitation on any governmental approvals applicable to
the business, operations or properties of any Borrower or any other Credit
Party;

(d)all of the Obligations are secured by a legal, valid and enforceable first
priority security interest in and Lien on the Collateral in favor of the Lender;

(e)there are no offsets, counterclaims or defenses to the liabilities or
obligations (including any Obligations) under any of the Loan Documents, or to
the rights, remedies or powers of the Lender in respect of any of the
Obligations or any of the Loan Documents;

(f)the execution and delivery of this Amendment has not established any course
of dealing between the parties hereto or created any obligation, commitment or
agreement of the Lender with respect to any future modification, amendment,
waiver, forbearance or related transactions with respect to the Obligations, the
Collateral or any of the Loan Documents; and

(g)except for the Specified Defaults, no Default or Event of Default has
occurred or is continuing under this Amendment, the Loan Agreement or any other
Loan Document.

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SECTION 5. Repayment. If the Credit Parties pay the Obligations in full in cash
(excluding  the Specified Principal Amount, but including any accrued and unpaid
interest, or other fees or premiums payable, in respect of the Specified
Principal Amount) on or prior to August 15, 2019, Lender shall forgive the
Specified Principal Amount, which shall not be required to be repaid and shall
be automatically cancelled. “Specified Principal Amount” means $137,500 in
aggregate principal amount of the Loans (applied to each outstanding Loan on a
pro rata basis in accordance with the outstanding principal amount thereof prior
to such payment) and does not include any accrued and unpaid interest, or fees
or premiums payable, in respect of the Specified Principal Amount.

SECTION 6. Ratification of Liability.

Each of the Borrowers and each other Credit Party hereby ratifies and reaffirms
all of its payment and performance obligations and obligations to indemnify,
contingently or otherwise, under this Amendment and each other Loan Document to
which such party is a party, and each such party hereby ratifies and reaffirms
its grant of Liens on, or security interests in, its properties pursuant to such
Loan Documents to which it is a party as security for the Obligations, and
confirms and agrees that such Liens and security interests hereafter secure all
of the Obligations. This Amendment shall in no manner affect or impair the
Obligations or the Liens securing the payment and performance thereof. Each of
the Borrowers and each other Credit Party (a) acknowledges receipt of a copy of
this Amendment and all other agreements, documents and instruments executed
and/or delivered in connection herewith, (b) consents to the terms and
conditions of the same, and (c) agrees and acknowledges that each of the Loan
Documents remains in full force and effect and is hereby ratified and confirmed.

SECTION 7. Release. Each of the Credit Parties (on behalf of itself and its
Affiliates) for itself and for its successors in title and assignees and for its
past, present and future employees, agents, representatives (other than legal
representatives), officers, directors, shareholders, and trustees (each, a
“Releasing Party” and collectively, the “Releasing Parties”), does hereby
remise, release and discharge, and shall be deemed to have forever remised,
released and discharged, the Lender, the Lender’s successors-in-title, legal
representatives and assignees, past, present and future officers, directors,
partners, general partners, limited partners, managing directors, members,
affiliates, shareholders, trustees, agents, employees, consultants, principals,
experts, advisors, attorneys and other professionals and all other persons and
entities to whom the Lender or its successors-in-title, legal representatives
and assignees, past, present and future officers, directors, affiliates,
shareholders, trustees, agents, employees, consultants, experts, advisors,
attorneys and other professionals would be liable if such persons or entities
were found to be liable to any Releasing Party or any of them (collectively,
hereinafter the “Releasees”), from any and all manner of action and actions,
cause and causes of action, claims, charges, demands, counterclaims,
crossclaims, suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, rights of setoff and recoupment,
controversies, damages, judgments, expenses, executions, liens, claims of liens,
claims of costs, penalties, attorneys’ fees, or any other compensation, recovery
or relief on account of any liability, obligation, demand or cause of action of
whatever nature, whether in law, equity or otherwise (including, without
limitation, any claims relating to (i) the making or administration of the
Loans, including, without limitation, any such claims and defenses based on
fraud, mistake, duress, usury or misrepresentation, or any other claim based on
so-called “lender liability” theories, (ii) any covenants, agreements, duties or
obligations set forth in the Loan Documents, (iii) increased financing costs,
interest or other carrying costs, (iv) penalties, (v) lost profits or loss of
business opportunity, (vi) legal, accounting and other administrative or
professional fees and expenses and incidental, consequential and punitive
damages payable to third parties, (vii) damages to business reputation, or
(viii) any claims arising under 11 U.S.C. §§ 541-550 or any claims for avoidance
or recovery under any other federal, state or foreign law equivalent), whether
known or unknown, fixed or contingent, joint and/or several, secured or
unsecured, due or not due, primary or secondary, liquidated or unliquidated,

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contractual or tortious, direct, indirect, or derivative, asserted or
unasserted, foreseen or unforeseen, suspected or unsuspected, now existing,
heretofore existing or which may heretofore accrue against any of the Releasees,
and which are, in each case, based on any act, fact, event or omission or other
matter, cause or thing occurring at any time prior to or on the date hereof in
any way, directly or indirectly arising out of, connected with or relating to
the Loan Agreement or any other Loan Document and the transactions contemplated
thereby, and all other agreements, certificates, instruments and other documents
and statements (whether written or oral) related to any of the foregoing (each,
a “Claim” and collectively, the “Claims”). Each of the Releasing Parties further
stipulates and agrees with respect to all Claims, that it hereby waives, to the
fullest extent permitted by applicable law, any and all provisions, rights, and
benefits conferred by any applicable U.S. federal or state law, or any principle
of common law, that would otherwise limit a release or  discharge of any unknown
Claims pursuant to this Section 7. Each of the Credit Parties, on behalf of
itself and its successors, assigns, and other legal representatives, hereby
absolutely, unconditionally and irrevocably, covenants and agrees with and in
favor of each Releasee that it will not sue (at law, in equity, in any
regulatory proceeding or otherwise) any Releasee on the basis of any Claim
released, remised and discharged by the Borrowers or any other Credit Party
pursuant to this Section 7. If any Credit Party or any of its successors,
assigns or other legal representatives violates the foregoing covenant, the
Borrowers and other Credit Parties, each for itself and its successors, assigns
and legal representatives, agrees to pay, in addition to such other damages as
any Releasee may sustain as a result of such violation, all attorneys’ fees and
costs incurred by any Releasee as a result of such violation. For the avoidance
of doubt, the provisions of this Section 7 shall survive the occurrence of a
Termination Event.

SECTION 8. Construction. This Amendment and all other agreements and
documents  executed and/or delivered in connection herewith have been prepared
through the joint efforts of all of the parties hereto. Neither the provisions
of this Amendment or any such other agreements and documents nor any alleged
ambiguity herein or therein shall be interpreted or resolved against any party
on the ground that such party or its counsel drafted this Amendment or such
other agreements and documents, or based on any other rule of strict
construction. Each of the parties hereto represents and declares that such party
has carefully read this Amendment and all other agreements and documents
executed in connection therewith and that such party knows the contents thereof
and signs the same freely and voluntarily. The parties hereto acknowledge that
they have been represented by legal counsel of their own choosing in
negotiations for and preparation of this Amendment and all other agreements and
documents executed in connection herewith and that each of them has read the
same and had their contents fully explained by such counsel and is fully aware
of their contents and legal effect.

SECTION 9. Execution of Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which when taken together shall constitute one and the same
instrument.

SECTION 10. Continuing Effect of the Loan Agreement.

(a)The Lender has not waived, is not by this Amendment waiving, and has no
intention of waiving any of the Specified Defaults, any other Defaults or Events
of Default or any of the liabilities or obligations (including any Obligations)
under any of the Loan Documents, and the Lender has not agreed to forbear with
respect to any rights or remedies concerning any Defaults or Events of Default
(other than, during the Forbearance Period, the Specified Defaults solely to the
extent expressly set forth in the Second A&R Forbearance Agreement, as amended,
supplemented or otherwise modified by this Amendment), which may have occurred
or are continuing as of the date hereof or which may occur after the date
hereof, all of which rights are ratified and affirmed in all respects and shall
continue in full force and effect. Subject to Section 2(b) of the Second A&R
Forbearance Agreement (solely with respect to the Specified Defaults and only

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during the Forbearance Period), the Lender reserves the right, in its
discretion, to exercise any or all of its rights and remedies under the Loan
Agreement and the other Loan Documents, at law or otherwise as a result of any
Defaults or Events of Default which may be continuing on the date hereof or any
Defaults or Events of Default that may occur after the date hereof, and the
Lender has not waived any of such rights or remedies, and nothing in this
Amendment, and no delay on the Lender’s part in exercising any such rights or
remedies, should be construed as a waiver of any such rights or remedies.

(b)Nothing herein shall be deemed to entitle the Borrowers to a consent to, or a
waiver, amendment, modification or other change of, any of the terms,
conditions, obligations, covenants or agreements contained in the Loan Agreement
in similar or different circumstances.

(c)This Amendment shall apply and be effective only with respect to the
provisions of the Second A&R Forbearance Agreement specifically referred to
herein. After the effectiveness of this Amendment, any reference to the Second
A&R Forbearance Agreement shall mean the Second A&R Forbearance Agreement as
amended and modified hereby.

SECTION 11. Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 12. Loan Document. This Amendment shall constitute a Loan Document. It
shall be an immediate Event of Default under the Loan Agreement if any Borrower
or any other Credit Party fails to perform, keep or observe any term, provision,
condition, covenant or agreement contained in this Amendment or if any
representation or warranty made by any Borrower or any other Credit Party under
or in connection with this Amendment shall be untrue, false or misleading in any
respect when made.

SECTION 13. Assignments; No Third Party Beneficiaries. This Amendment shall be
binding upon and inure to the benefit of the Borrowers, the other Credit
Parties, the Lender and their respective successors and assigns; provided that
neither the Borrowers nor any other Credit Party shall be entitled to delegate
any of its duties hereunder and shall not assign any of its rights or remedies
set forth in this Amendment without the prior written consent of the Lender, in
its sole discretion. No person other than the parties hereto and the Lender
shall have any rights hereunder or be entitled to rely on this Amendment and all
third-party beneficiaries rights are hereby expressly disclaimed.

SECTION 14. Amendment. No amendment, modification or waiver of the terms of this
Amendment shall be effective except in a writing signed by the Credit Parties
and the Lender.

SECTION 15. Arms-Length/Good Faith; Review and Construction of Documents. This
Amendment has been negotiated at arms-length and in good faith by the parties
hereto. The Credit Parties (a) have had the opportunity to consult with legal
counsel of their own choice and have been afforded an opportunity to review this
Amendment with their legal counsel, (b) have reviewed this Amendment and fully
understand the effects thereof and all terms and provisions contained in this
Amendment, and (c) have executed this Amendment of their own free will and
volition. Furthermore, the Credit Parties acknowledge that (i) this Amendment
shall be construed as if jointly drafted by the Credit Parties and the Lender,
and (ii) the recitals contained in this Amendment shall be construed to be part
of the operative terms and provisions of this Amendment.

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SECTION 16. Submission to Jurisdiction; Waiver of Venue; Waiver of Trial by
Jury; Headings; Severability; Preferences; Prior Agreements. The provisions of
Sections 14.4, 14.6, 14.8, 14.9, 14.10 and 14.13 of the Loan Agreement are
hereby incorporated into this amendment, mutatis mutandis.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered by their respective duly authorized officers as of the date first
written above.

 

BORROWERS:

 

 

 

CP PROPERTY HOLDINGS, LLC,

a Georgia limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

NORTHWEST PROPERTY HOLDINGS, LLC, a

Georgia limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

ATTALLA NURSING ADK, LLC, a Georgia

limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

ADCARE PROPERTY HOLDINGS, LLC, a

Georgia limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

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GUARANTORS:

 

 

 

REGIONAL HEALTH PROPERTIES, INC., a

Georgia corporation

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Chief Executive Officer

 

ADCARE PROPERTY HOLDINGS, LLC, a

Georgia limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

HEARTH & HOME OF OHIO, INC., a Georgia

limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

President, Secretary and Treasurer

 

ADCARE OPERATIONS, LLC, a Georgia

limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

ADCARE ADMINISTRATIVE SERVICES,

LLC, a Georgia limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

ADCARE CONSULTING, LLC, a Georgia

limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

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ADCARE FINANCIAL MANAGEMENT, LLC,

a Georgia limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

ADCARE OKLAHOMA MANAGEMENT,

LLC, a Georgia limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

ADCARE EMPLOYEE LEASING, LLC, a

Georgia limited liability company

 

 

 

By:

 

/s/ Brent Morrison

 

 

Name:

Brent Morrison

 

 

Title:

Manager

 

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LENDER:

 

 

 

PINECONE REALTY PARTNERS II, LLC, a

Delaware limited liability company

 

 

 

By:

 

Pinesap Investments, LLC, a Delaware

 

 

limited liability company, its Manager

 

 

 

 

 

By:

Pine Companies, LLC, a California

 

 

 

limited liability company, its Manager

 

 

 

 

 

 

 

By:

/s/ Brian Timmer

 

 

 

 

Name:

Brian Timmer

 

 

 

 

Title:

Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Forbearance Agreement Amendment]

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