Document:

Exhibit

FIFTH AMENDMENT TO  
SECOND AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT AND OMNIBUS RELEASE 
THIS FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT AND OMNIBUS RELEASE (this “Amendment”) dated as of May 13, 2019, by and among CIBC BANK USA, formerly known as The PrivateBank and Trust Company, an Illinois banking corporation (together with its successors and assigns, “Administrative Agent”) in its capacity as administrative agent for the Lenders (as defined below), the Lenders, and the Affiliates of DIVERSICARE HEALTHCARE SERVICES, INC. identified on the signature pages as “Borrower” (individually and collectively, “Borrower”).
WHEREAS, Borrower, Administrative Agent, and the financial institutions signatories thereto (the “Lenders”) are parties to that certain Second Amended and Restated Term Loan and Security Agreement dated as of February 26, 2016 (as the same has been, and may hereafter be, amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”; all capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Loan Agreement as amended by this Amendment); 
WHEREAS, Borrower has requested that DIVERSICARE HILLCREST, LLC, DIVERSICARE LAMPASAS, LLC, and DIVERSICARE YORKTOWN, LLC (individually and collectively, the “Released Borrower”) be removed as a party to the Loan Agreement and the Financing Agreements to which it is a party and Administrative Agent release all Liens in favor of Administrative Agent, for the benefit of the Lenders, in the assets and property of the Released Borrower and Administrative Agent and the Lenders have agreed to such removal and release, in each case as provided in, and subject to the terms and conditions of, this Agreement; 
WHEREAS, Borrower, Administrative Agent and Lenders desire to amend the Loan Agreement as provided in and subject to the terms and conditions of this Amendment;
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto (intending to be legally bound) hereby agree as follows:
1.Amendments to Loan Agreement.  Subject to the satisfaction of the conditions set forth in Section 5 below and in reliance upon the representations and warranties set forth in Section 4 below, Borrower, Administrative Agent and Lenders hereby amend the Loan Agreement as follows:
(a)    The following additional definitions are hereby added to Section 1.1 of the Loan Agreement in alphabetical order:
“Affiliate Revolving Borrowers (QIPP)” means each of the “Borrowers” party to the Affiliate Revolving Loan Agreement (QIPP) as a “Borrower” from time to time.
“Affiliate Revolving Loan (QIPP)” means, collectively, those certain revolving loans made by the Lenders to the Affiliate Revolving Borrowers (QIPP) from time to time pursuant to the Affiliate Revolving Loan Agreement (QIPP).
“Affiliate Revolving Loan Agreement (QIPP)” means that certain Revolving Loan and Security Agreement dated as of May 13, 2019 by and among DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee corporation, in its capacity as borrowing agent for the Affiliate Revolving Borrowers (QIPP), the Affiliate Revolving Borrowers (QIPP), the Lenders and the Administrative Agent, as the same may be restated, modified, supplemented or amended from time to time.
“Affiliate Revolving Loan Financing Agreement (QIPP)” means each “Financing Agreement” as defined in the Affiliate Revolving Loan Agreement (QIPP), as any of the same may be restated, modified, supplemented or amended from time to time.
“Affiliate Revolving Loan Liabilities (QIPP)” means the “Liabilities” as defined in the Affiliate Revolving Loan Agreement (QIPP).
(b)    The definitions of “EBITDA” and “EBIDTAR” in Section 1.1 of the Loan Agreement are hereby amended and restated in their entirety to read as follows:
“EBITDA” means with respect to the Borrower and the Affiliate Revolving Borrowers (QIPP), for any period of determination, the sum of the net earnings of the consolidated Borrower and Affiliate Revolving Borrowers (QIPP) before nonrecurring items (in accordance with GAAP and as reasonably agreed to by the Administrative Agent), interest, taxes, depreciation, and amortization (including amortized transaction expense), in each case without duplication and all as determined in accordance with GAAP, consistently applied.
“EBITDAR” means with respect to the Borrower and the Affiliate Revolving Borrowers (QIPP), for any period of determination, the sum of the net earnings of the consolidated Borrower and Affiliate Revolving Borrower (QIPP) before nonrecurring items (in accordance with GAAP and as reasonably agreed to by the Administrative Agent), interest, taxes, depreciation, amortization (including amortized transaction expense) and rent, in each case without duplication and all as determined in accordance with GAAP, consistently applied.
(c)    The first sentence of Section 6.6 is hereby amended and restated to read as follows:  “All Liabilities of the Borrowers under this Agreement and each of the Financing Agreements, and all of the Affiliate Revolving Loan Liabilities under the Revolving Loan Agreement and each of the Affiliate Revolving Loan Financing Agreements, are cross-collateralized and (y) all Liabilities of the Borrowers under this Agreement and each of the Financing Agreements, all of the Affiliate Revolving Loan Liabilities (QIPP) under the Affiliate Revolving Loan Agreement (QIPP) and each of the Affiliate Revolving Loan Financing Agreements (QIPP) and all of the Affiliate Revolving Loan Liabilities under the Revolving Loan Agreement and each of the Affiliate Revolving Loan Financing Agreements are cross-defaulted.”
(d)    Section 7.28 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:
7.28    Consideration.  Borrower acknowledges that it desires to have this Agreement and the Financing Agreements to which the Borrower is a party cross-collateralized and cross-defaulted and have the Collateral serve as collateral for all of the Liabilities and Affiliate Revolving Loan Liabilities.  The Affiliated Revolving Borrowers, the Affiliate Revolving Borrowers (QIPP) and the Borrowers are Affiliates of each other.  Each Borrower will derive substantial direct and indirect benefit (financial and otherwise) from funds made available to the Affiliated Revolving Borrowers pursuant to the Revolving Loan Agreement and the Affiliate Revolving Borrowers (QIPP) pursuant to the Affiliate Revolving Loan Agreement (QIPP), and it is and will be to each Borrower’s, Affiliate Revolving Borrower (QIPP)’s and Affiliated Revolving Borrower’s advantage to assist each other in procuring such funds from the Lenders.
(e)    Section 11.1(ee) is hereby amended and restated in its entirety to read as follows:
(ee)    an “Event of Default” shall occur under or pursuant to the Revolving Loan Agreement, any Affiliate Revolving Loan Financing Agreement, the Affiliate Revolving Loan Agreement (QIPP) or any Affiliate Revolving Loan Financing Agreement (QIPP).
(f)    Section 9.12 (a) is hereby amended by adding “and Affiliate Revolving Borrowers (QIPP)” immediately after “Borrower”. The final two unnumbered paragraphs in Section 9.12 are hereby amended and restated in their entirety to read as follows:
“The Borrower, Affiliate Revolving Borrowers (QIPP) and the Guarantor acknowledge and agree that the calculation and computation of the foregoing financial covenants shall be pursuant to and in accordance with the last sentence of Section 8.1(c) hereof.
Administrative Agent, Lenders, Borrower, Affiliate Revolving Borrowers (QIPP) and Guarantor acknowledge and agree that for purposes of the calculation and computation of the foregoing financial covenants in subparagraphs (b), (c) and (d), the terms “Fixed Charge Coverage Ratio”, “Adjusted EBITDA”, and “Current Ratio”, for purposes of this Section 9.12, shall all be as defined, calculated and measured in the Revolving Loan Agreement, on a consolidated basis, for Guarantor and all Affiliated Revolving Borrowers and Affiliate Revolving Borrowers ( QIPP) thereunder.”
(g)    Section 12.21(b) is hereby amended to amend and restate the last sentence therein to read as follows:  “Each Borrower has determined that it is in its best interest to procure the Loan with the credit support of the other Borrowers as contemplated by this Agreement and the other Financing Agreements as well as permit the cross-collateralization with the Affiliate Revolving Loan Liabilities, Revolving Loan Agreement and Affiliate Revolving Loan Financing Agreements and cross-default with the Affiliate Revolving Loan Liabilities, Revolving Loan Agreement and Affiliate Revolving Loan Financing Agreements and Affiliate Revolving Loan Liabilities (QIPP), Affiliate Revolving Loan Agreement (QIPP) and Affiliate Revolving Loan Financing Agreements (QIPP) as contemplated hereunder.”
(h)    The notice information for Opus Bank in Annex A (Commitments) is hereby amended and restated in its entirety as follows:
Opus Bank
2101 Rosecrans Ave.
Suite 4300
El Segundo, CA 90245
Attn.:  Sangjin Na, VP, Portfolio Manager, Healthcare Banking
Tel.:  (310) 481-6214
Fax:  (949) 250-9988, Attn: Kathy Brennan
2.    Release.  Subject to the terms and conditions contained herein and notwithstanding anything contained in the Financing Agreements to the contrary:
(a)    From and after the date hereof, (i) each Released Borrower is released as a Borrower under the Loan Agreement and Subsidiary under the applicable Pledge Agreement and all references to “Borrower” in the Loan Agreement or any of the Financing Agreements to which it is a party or “Subsidiary” under the applicable Pledge Agreement are amended to remove such Released Borrower from therewith, and (ii) all Liens in favor of Administrative Agent, for the benefit of the Lenders, on the assets and property of each Released Borrower are released.
(b)    All obligations of the Released Borrower (other than contingent indemnification obligations), in its capacity as a Borrower, created by the Financing Agreements, or in its capacity as a Subsidiary, created under the applicable Pledge Agreement, are hereby released without any further action by any party hereto.
3.    No Other Amendments.  Borrower acknowledges and expressly agrees that this Amendment is limited to the extent expressly set forth herein and shall not constitute a modification or amendment of the Loan Agreement or any other Financing Agreements or a course of dealing at variance with the terms or conditions of the Loan Agreement or any other Financing Agreements (other than as expressly set forth in this Amendment and the other instruments, agreements, certificates and documents required to be executed and delivered in connection herewith).
4.    Representations and Warranties.  In order to induce Administrative Agent and Lenders to enter into this Amendment, Borrower hereby represents and warrants to Administrative Agent and Lenders (which representations and warranties shall survive the execution and delivery hereof), both before and after giving effect to this Amendment that:
(a)    Each of the representations and warranties of each Borrower contained in the Loan Agreement and the other Financing Agreements to which Borrower is a party are true and correct in all material respects (without duplication of any materiality carve out already provided therein) on and as of the date hereof, in each case as if made on and as of such date, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date);
(b)    Borrower has the corporate or limited liability company (as applicable) power and authority (i) to enter into the Loan Agreement as amended by this Amendment and (ii) to do all acts and things as are required or contemplated hereunder to be done, observed and performed by Borrower;
(c)    This Amendment has been duly authorized, validly executed and delivered by one or more duly authorized officers of Borrower, and each of this Amendment, the Loan Agreement as amended hereby, and each of the other Financing Agreements to which Borrower is a party, constitutes the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, subject to bankruptcy, insolvency or other similar laws affecting the enforcement of creditor’s rights and remedies generally;
(d)    The execution and delivery of this Amendment and performance by Borrower under this Amendment, the Loan Agreement and each of the other Financing Agreements to which Borrower is a party do not and will not require the consent or approval of any regulatory authority or governmental authority or agency having jurisdiction over Borrower that has not already been obtained, nor be in contravention of or in conflict with the organizational documents of Borrower, or any provision of any statute, judgment, order, indenture, instrument, agreement, or undertaking, to which Borrower is party or by which Borrower’s respective assets or properties are bound; and
(e)    No Default or Event of Default will result after giving effect to this Amendment, and no event has occurred that has had or could reasonably be expected to have a Material Adverse Effect after giving effect to this Amendment. 
5.    Conditions Precedent to Effectiveness of this Amendment.  The amendments contained in Section 1 and the release contained in Section 2 of this Amendment shall become effective on the date hereof as long as each of the following conditions precedent is satisfied as determined by Administrative Agent:
(a)    all of the representations and warranties of Borrower under Section 4 hereof, which are made as of the date hereof, are true and correct;
(b)    receipt by Administrative Agent of duly executed signature pages to this Amendment from Borrower and Lenders;
(c)    Administrative Agent shall have received a duly executed Reaffirmation of Second Amended and Restated Guaranty in the form attached hereto;
(d)    Administrative Agent shall have received a duly executed Reaffirmation of Pledge Agreements in the form attached hereto; 
(e)    Administrative Agent shall have received the amount of reasonable fees and out-of-pocket costs and expenses of counsel to Administrative Agent in connection with the Amendment pursuant to Section 8 hereof and otherwise due and owing pursuant to the Loan Agreement; and
(f)    Administrative Agent shall have received such other certificates, schedules, exhibits, documents, opinions, affidavits, instruments, reaffirmations, amendments, or consents that Administrative Agent may reasonably require, if any.
1.    Reaffirmation; References to Loan Agreement; Additional Agreements and Covenants; Etc.
(a)    Borrower acknowledges and agrees that all of Borrower’s obligations and Liabilities under the Loan Agreement and the other Financing Agreements, as amended hereby, are and shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment.  The first priority perfected security interests and Liens and rights in the Collateral securing payment of the Liabilities are hereby ratified and confirmed by Borrower in all respects.
(b)    Upon the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean and be a reference to the Loan Agreement, as amended by this Amendment.
(c)    The failure by Administrative Agent, at any time or times hereafter, to require strict performance by any Borrower of any provision or term of the Loan Agreement, this Amendment or any of the Financing Agreements shall not waive, affect or diminish any right of Administrative Agent hereafter to demand strict compliance and performance herewith or therewith.  Any suspension or waiver by Administrative Agent of a breach of this Amendment or any Event of Default under or pursuant to the Loan Agreement shall not, except as expressly set forth in a writing signed by Administrative Agent, suspend, waive or affect any other breach of this Amendment or any Event of Default under or pursuant to the Loan Agreement, whether the same is prior or subsequent thereto and whether of the same or of a different kind or character.  None of the undertakings, agreements, warranties, covenants and representations of any Borrower contained in this Amendment, shall be deemed to have been suspended or waived by Administrative Agent unless such suspension or waiver is (i) in writing and signed by Administrative Agent (and, if applicable, the Required Lenders) and (ii) delivered to Borrower by Administrative Agent or its counsel.
(d)    In no event shall Administrative Agent’s execution and delivery of this Amendment establish a course of dealing among Administrative Agent, any Borrower, pledgor or Guarantor or any other obligor, or in any other way obligate Administrative Agent to hereafter provide any amendments or modifications or, if at any time applicable, consents or waivers with respect to the Loan Agreement or any other Financing Agreement.  The terms and provisions of this Amendment shall be limited precisely as written and shall not be deemed (x) to be a consent to any amendment or modification of any other term or condition of the Loan Agreement or of any of the Financing Agreements (except as expressly provided herein or in any of the other instruments, agreements, certificates and documents required to be executed and delivered in connection herewith); or (y) to prejudice any right or remedy which Administrative Agent or the Lenders may now have under or in connection with the Loan Agreement or any of the other Financing Agreements.  In the event an ambiguity or question of intent or interpretation arises, this Amendment shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Amendment.
(e)    Except as expressly provided herein (or in any of the other instruments, agreements, certificates and documents required to be executed and delivered in connection herewith), the Loan Agreement and all of the other Financing Agreements shall remain unaltered, and the Loan Agreement and all of the other Financing Agreements shall remain in full force and effect and are hereby ratified and confirmed in all respects.
2.    Release.
(a)    In consideration of, among other things, the consent and amendments provided for herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, Borrower and Guarantor (on behalf of themselves and their respective subsidiaries, Affiliates, successors and assigns), and, to the extent permitted by applicable law and the same is claimed by right of, through or under the above, for their past, present and future employees, directors, members, managers, partners, agents, representatives, officers, directors, and equity holders (all collectively, with Borrower and Guarantor, the “Releasing Parties”), do hereby unconditionally, irrevocably, fully, and forever remise, satisfy, acquit, release and discharge Administrative Agent and Lenders and each of Administrative Agent’s and Lender’s past, present and future officers, directors, agents, employees, attorneys, parent, shareholders, successors, assigns, subsidiaries and Affiliates and all other persons and entities to whom Administrative Agent or Lenders would be liable if such persons or entities were found in any way to be liable to any of the Releasing Parties (collectively, the “Lender Parties”), of and from any and all manner of action and actions, cause and causes of action, claims, cross-claims, charges, demands, counterclaims, suits, proceedings, disputes, debts, dues, sums of money, accounts, bonds, covenants, contracts, controversies, damages, judgments, liabilities, damages, costs, 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, proceedings or cause of action of whatever nature, whether in law, equity or otherwise (including, without limitation, those arising under 11 U.S.C. §§ 541-550 and interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses, and incidental, consequential and punitive damages payable to third parties), whether known or unknown, fixed or contingent, joint and/or several, secured or unsecured, due or not due, primary or secondary, liquidated or unliquidated, contractual or tortious, direct, indirect, or derivative, asserted or unasserted, foreseen or unforeseen, suspected or unsuspected, now existing, heretofore existing or which may have heretofore accrued against any or all of Lender Parties, whether held in a personal or representative capacity, that the Releasing Parties (or any of them) have or may have against the Lender Parties or any of them (whether directly or indirectly) and which are based on any act, fact, event, action or omission or any other matter, condition, cause or thing occurring at or from any time prior to and including the date hereof in any way, directly or indirectly arising out of, connected with or relating to this Amendment, the Loan Agreement or any other Financing Agreement and the transactions contemplated hereby and thereby, the Collateral or the Liabilities, and all other agreements, certificates, instruments and other documents and statements (whether written or oral) related to any of the foregoing, other than any applicable good faith claim as to which a final determination is made in a judicial proceeding (in which Administrative Agent and any of the Released Parties have had an opportunity to be heard) which determination includes a specific finding that Administrative Agent acted in a grossly negligent manner or with actual willful misconduct or illegal activity.  Borrower and Guarantor each acknowledges that Administrative Agent and Lenders are specifically relying upon the representations, warranties and agreements contained herein and that such representations, warranties and agreements constitute a material inducement to Administrative Agent and Lenders in entering into this Amendment.
(b)    Borrower and Guarantor each understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c)    To the furthest extent permitted by law, Borrower and Guarantor each hereby knowingly, voluntarily, intentionally and expressly waives and relinquishes any and all rights and benefits that it respectively may have as against Lender Parties under any law, rule or regulation of any jurisdiction that would or could have the effect of limiting the extent to which a general release extends to claims which a Lender Party or Releasing Party does not know or suspect to exist as of the date hereof.  Borrower and Guarantor each hereby acknowledges that the waiver set forth in the prior sentence was separately bargained for and that such waiver is an essential term and condition of this Amendment (and without which the amendment in Section 1 and the release in Section 2 hereof would not have been agreed to by Administrative Agent and Lenders).
3.    Costs and Expenses.  Without limiting the obligation of Borrower to reimburse Administrative Agent for all costs, fees, disbursements and expenses incurred by Administrative Agent as specified in the Loan Agreement, Borrower agrees to and shall pay on demand all reasonable costs, fees, disbursements and expenses of Administrative Agent in connection with the preparation, negotiation, revision, execution and delivery of this Amendment and the other agreements, amendments, modifications, reaffirmations, instruments and documents contemplated hereby, including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses. All obligations provided herein shall survive any termination of this Amendment and the Loan Agreement as amended hereby.
4.    Financing Agreement.  This Amendment shall constitute a Financing Agreement.
5.    Titles.  Titles and section headings herein shall be without substantive meaning and are provided solely for the convenience of the parties.
6.    Severability; Etc.  Whenever possible, each provision of this Amendment shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Amendment.  The parties hereto have participated jointly in the negotiation and drafting of this Amendment.  In the event an ambiguity or question of intent or interpretation arises, this Amendment shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Amendment.
7.    Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, no Borrower may assign any of its respective rights or obligations under this Amendment without the prior written consent of Administrative Agent.
8.    Further Assurances.  Borrower shall, at its own cost and expense, cause to be promptly and duly taken, executed, acknowledged and delivered all such further acts, certificates, instruments, reaffirmations, amendments, documents and assurances as may from time to time be necessary or as Administrative Agent may from time to time reasonably request in order to more fully carry out the intent and purposes of this Amendment or any of the other instruments, agreements, certificates and documents required to be executed and delivered in connection herewith.
9.    Counterparts; Faxes.  This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.  A signature hereto sent or delivered by facsimile or other electronic transmission shall be as legally binding and enforceable as a signed original for all purposes.
10.    Governing Law.  This Amendment shall be governed by and construed and enforced in accordance with the internal laws of the State of Illinois, without regard to conflict of law principles that would require the application of any other laws.
[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have duly executed this Fifth Amendment to Second Amended and Restated Term Loan and Security Agreement and Omnibus Release as of the day and year first above written.
	
			
	BORROWER:

	DIVERSICARE AFTON OAKS, LLC

	DIVERSICARE BRIARCLIFF, LLC

	DIVERSICARE CHISOLM, LLC

	DIVERSICARE HARTFORD, LLC

	DIVERSICARE WINDSOR HOUSE, LLC

	 

	By:
	Diversicare Leasing Corp., its sole member

	 
	By:
	/s/Kerry D. Massey

	 
	Name:   Kerry D. Massey

	 
	Its:   Executive Vice President and Chief Financial Officer

	DIVERSICARE OF CHANUTE, LLC

	DIVERSICARE OF COUNCIL GROVE, LLC

	DIVERSICARE OF HAYSVILLE, LLC

	DIVERSICARE OF SEDGWICK, LLC

	DIVERSICARE OF HUTCHINSON, LLC

	DIVERSICARE OF LARNED, LLC

	By:
	

Diversicare Kansas, LLC, its sole member

	 
	By:
	/s/Kerry D. Massey

	 
	Name:   Kerry D. Massey

	 
	Its:   Executive Vice President and Chief Financial Officer

	
			
	DIVERSICARE PROPERTY CO., LLC

	 
	 

	 
	By:
	/s/Kerry D. Massey

	 
	Name:   Kerry D. Massey

	 
	Its:   Executive Vice President and Chief Financial Officer

	
			
	

DIVERSICARE AFTON OAKS PROPERTY, LLC

	DIVERSICARE BRIARCLIFF PROPERTY, LLC

	DIVERSICARE CHANUTE PROPERTY, LLC

	DIVERSICARE CHISOLM PROPERTY, LLC

	DIVERSICARE COUNCIL GROVE PROPERTY, LLC

	DIVERSICARE HAYSVILLE PROPERTY, LLC

	DIVERSICARE HARTFORD PROPERTY, LLC

	DIVERSICARE HILLCREST PROPERTY, LLC

	DIVERSICARE LAMPASAS PROPERTY, LLC

	DIVERSICARE LARNED PROPERTY, LLC

	DIVERSICARE SEDGWICK PROPERTY, LLC

	DIVERSICARE WINDSOR HOUSE PROPERTY, LLC

	DIVERSICARE YORKTOWN PROPERTY, LLC

	DIVERSICARE HUTCHINSON PROPERTY, LLC

	DIVERSICARE SELMA PROPERTY, LLC

	By:
	Diversicare Property Co., LLC, its sole member

	 
	By:
	/s/Kerry D. Massey

	 
	Name:   Kerry D. Massey

	 
	Its:   Executive Vice President and Chief Financial Officer

	
			
	DIVERSICARE OF SELMA, LLC

	By:
	Diversicare Holding Company, LLC, its sole member

	 
	By:
	/s/Kerry D. Massey

	 
	Name:   Kerry D. Massey

	 
	Its:   Executive Vice President and Chief Financial Officer

RELEASED BORROWER:

DIVERSICARE HILLCREST, LLC
DIVERSICARE LAMPASAS, LLC
DIVERSICARE YORKTOWN, LLC

		
	By:
	DIVERSICARE LEASING CORP., its sole member

By:  /s/Kerry D. Massey             
    Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

	
	
	Acknowledged and Agreed:
DIVERSICARE HEALTHCARE SERVICES, INC. 
 
By: /s/James R. McKnight, Jr.        
Name:   James R. McKnight, Jr. 
Its:   President and Chief Executive Officer

ADMINISTRATIVE AGENT:

CIBC BANK USA, formerly known as The PrivateBank and Trust Company, in its capacity as administrative agent

By:_/s/Adam D. Panos____________________
Name: Adam D. Panos
Its:  Managing Director

LENDER:

CIBC BANK USA, formerly known as The PrivateBank and Trust Company

By: _/s/Adam D. Panos____________________
Name:  Adam D. Panos
Its:  Managing Director

LENDER:

BANKERS TRUST COMPANY
 

By: /s/Jon M. Doll___________________________
Name:  Jon M. Doll
Its:  Vice President

LENDER:

BOKF, NA D/B/A BANK OF OKLAHOMA
 

By: /s/Ky Chaffin                
Name:  Ky Chaffin
Its:  Senior Vice President

LENDER:

CIT BANK, N.A.

By: /s/Richard Reynoso            
Name:  Richard Reynoso
Its:  Vice President

	
		
	LENDER:

	OPUS BANK,  
a California commercial bank 

	By:
	/s/Sangjin Na         

	 
	Name:  Sangjin Na

	 
	Its:  Vice President

	
		
	LENDER:

	FRANKLIN SYNERGY BANK

	By:
	/s/Lisa Fletcher

	 
	Name:  Lisa Fletcher

	 
	Its:  Senior Vice President

	 
	 

REAFFIRMATION OF SECOND AMENDED AND RESTATED GUARANTY

Dated as of May 13, 2019
The undersigned (“Guarantor”) hereby (i) confirms and agrees with CIBC BANK USA, formerly known as The PrivateBank and Trust Company, an Illinois banking corporation, in its capacity as administrative agent (together with its successors and assigns, “Administrative Agent”) that Guarantor’s Second Amended and Restated Guaranty dated as of February 26, 2016 made in favor of Administrative Agent (as amended or modified, “Guaranty”), remains in full force and effect and is hereby ratified and confirmed in all respects, including with regard to the Second Amended and Restated Term Loan and Security Agreement dated as of February 26, 2016, as amended prior to the date hereof and as further amended by the foregoing Fifth Amendment to Second Amended and Restated Term Loan and Security Agreement and Omnibus Release (“Amendment”), and each reference to the “Loan Agreement” shall refer to the Loan Agreement as amended by the Amendment; (ii) represents and warrants to Administrative Agent, which representations and warranties shall survive the execution and delivery hereof, that Guarantor’s representations and warranties contained in the Guaranty are true and correct as of the date hereof, with the same effect as though made on the date hereof, except to the extent that such representations expressly related solely to an earlier date, in which case such representations were true and correct on and as of such earlier date (and except for the representations in Section 10(b) thereof which were true and correct on and as of the date when made); (iii) agrees and acknowledges that such ratification and confirmation is not a condition to the continued effectiveness of the Amendment or the Guaranty; and (iv) agrees that neither such ratification and confirmation, nor Administrative Agent’s solicitation of such ratification and confirmation, constitutes a course of dealing giving rise to any obligation or condition requiring a similar or any other ratification or confirmation from the undersigned with respect to subsequent amendments or modifications, if any, to the Loan Agreement, as amended by the Amendment or any other Financing Agreement (as defined in the Loan Agreement, as amended by the Amendment).  The execution, delivery and effectiveness of this instrument shall not operate as a waiver of any right, power or remedy of Administrative Agent under or pursuant to the Guaranty.  Guarantor acknowledges and agrees that Guarantor has received and reviewed a fully-executed copy of the Amendment (and any other instrument, document or agreement executed or delivered in connection therewith) and understands the contents thereof.  A signature hereto sent or delivered by facsimile or other electronic transmission shall be as legally binding and enforceable as a signed original for all purposes.  This instrument shall be governed by and construed and enforced in accordance with the internal laws of the State of Illinois, without regard to conflict of law principles that would require the application of any other laws.
[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has duly executed this Reaffirmation of Second Amended and Restated Guaranty on and as of the date above.

DIVERSICARE HEALTHCARE SERVICES, INC. (F/K/A ADVOCAT INC.)
 

By:/s/James R. McKnight, Jr.                
Name: James R. McKnight, Jr.
Its:    President and Chief Executive Officer

    

REAFFIRMATION OF PLEDGE AGREEMENTS

Dated as of May 13, 2019
For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the undersigned, respectively and as applicable hereby (a) confirms and agrees with CIBC BANK USA, formerly known as The PrivateBank and Trust Company, an Illinois banking corporation, in its capacity as administrative agent (together with its successors and assigns, “Administrative Agent”), that (i) Second Amended and Restated Pledge Agreement by and between Diversicare Management Services Co. and Administrative Agent dated as of February 26, 2016, (ii) Second Amended and Restated Pledge Agreement by and between Advocat Finance, Inc. and Administrative Agent dated as of February 26, 2016, (iii) Second Amended and Restated Pledge Agreement by and between Diversicare Leasing Corp. and Administrative Agent dated as of February 26, 2016, (iv) Second Amended and Restated Pledge Agreement by and between Senior Care Florida Leasing Corp. and Administrative Agent dated as of February 26, 2016, (v) Amended and Restated Pledge Agreement by and between Diversicare Leasing Company II, LLC and Administrative Agent dated as of February 26, 2016, (vi) Amended and Restated Pledge Agreement by and between Diversicare Kansas, LLC and Administrative Agent dated as of February 26, 2016, (vii) Second Amended and Restated Pledge Agreement by and between Diversicare Healthcare Services, Inc. (f/k/a Advocat Inc.) and Administrative Agent dated as of February 26, 2016, (viii) Pledge Agreement by and between Diversicare Leasing Company III, LLC and Administrative Agent dated as of October 1, 2016 and effective as of October 3, 2016, (ix) Amended and Restated Pledge Agreement by and between Diversicare Property Co., LLC and Administrative Agent dated as of February 26, 2016 and (x) Amended and Restated Pledge Agreement by and between Diversicare Holding Company, LLC and Administrative Agent dated as of February 26, 2016 (the foregoing, as the same may be amended, restated, supplemented or otherwise modified from time to time, individually, “Pledge Agreement” and, collectively, “Pledge Agreements”), each remains in full force and effect and is hereby ratified and confirmed in all respects, including with regard to the Second Amended and Restated Term Loan and Security Agreement dated as of February 26, 2016 by and among those certain affiliates of Diversicare Healthcare Services, Inc. that are signatories thereto as borrowers, Administrative Agent and the Lenders, as the same has been amended prior to the date hereof and as amended by the foregoing Fifth Amendment to Second Amended and Restated Term Loan and Security Agreement and Omnibus Release dated of even date herewith (“Amendment”), and each reference to the “Loan Agreement” shall refer to the Loan Agreement as amended by the Amendment, and all of the undersigned’s respective liabilities and obligations under and pursuant to the respective Pledge Agreement, as modified by the Amendment (if and as applicable), are and shall be valid and enforceable and shall not be impaired or limited in any way by the execution, delivery or effectiveness of the Amendment; (b) represents and warrants to Administrative Agent and Lenders, which representations and warranties shall survive the execution and delivery hereof, that each of the undersigned’s representations and warranties contained in the Pledge Agreement are true and correct as of the date hereof, with the same effect as though made on the date hereof, except to the extent that such representations expressly related solely to an earlier date, in which case such representations were true and correct on and as of such earlier date, each of the undersigned has the full right, authority and power to enter into this Reaffirmation and this Reaffirmation constitutes the legal, valid and binding obligation of each of the undersigned, enforceable against each of the undersigned in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar law affecting creditor’s rights generally and general principles of equity; (c) agrees and acknowledges that such ratification and confirmation is not a condition to the continued effectiveness of the Amendment or the Pledge Agreement; and (d) agrees that neither such ratification and confirmation, nor the solicitation of such ratification and confirmation by Administrative Agent and Lenders, constitutes a course of dealing giving rise to any obligation or condition requiring a similar or any other ratification or confirmation from the undersigned with respect to subsequent amendments or modifications, if any, to the Loan Agreement, as amended by the Amendment or any other Financing Agreement (as defined in the Loan Agreement).  The execution, delivery and effectiveness of this instrument shall not operate as a waiver of any right, power or remedy of Administrative Agent or Lenders under the Pledge Agreements.  Each of the undersigned acknowledges and agrees that it has received and reviewed a fully-executed copy of the Amendment and understands the contents thereof.  A signature hereto sent or delivered by facsimile or other electronic transmission shall be as legally binding and enforceable as a signed original for all purposes.  Illinois law shall govern the construction, interpretation and enforcement of this instrument.
[Signature Page Follows]

IN WITNESS WHEREOF, each of the undersigned has duly executed this Reaffirmation of Pledge Agreements on and as of the date above.
DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee corporation

By: /s/Kerry D. Massey            
Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

 
ADVOCAT FINANCE INC., a Delaware corporation

By:  /s/Kerry D. Massey            
Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

 
DIVERSICARE LEASING CORP.,  
a Tennessee corporation

By: /s/Kerry D. Massey            
Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

SENIOR CARE FLORIDA LEASING, LLC, a Delaware limited liability company

By:  Diversicare Leasing Corp., its sole member

By: /s/Kerry D. Massey            
Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

DIVERSICARE LEASING COMPANY II, LLC, a Delaware limited liability company

By: /s/Kerry D. Massey            
Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

DIVERSICARE KANSAS, LLC, a Delaware limited liability company 
 
By:    DIVERSICARE HOLDING COMPANY, LLC, its sole member
 

By: /s/Kerry D. Massey            
Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

DIVERSICARE LEASING COMPANY III, LLC,  
a Delaware limited liability company

By: /s/Kerry D. Massey            
Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

DIVERSICARE HEALTHCARE SERVICES, INC., a Delaware corporation 
 

By: /s/James R. McKnight, Jr.        
Name: James R. McKnight, Jr.
		
	Its:
	President and Chief Executive Officer

DIVERSICARE PROPERTY CO., LLC, 
a Delaware limited liability company 
 

By: /s/Kerry D. Massey            
Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

DIVERSICARE HOLDING COMPANY, LLC, a Delaware limited liability company
  
    By: /s/Kerry D. Massey            
Name: Kerry D. Massey
		
	Its:
	Executive Vice President and Chief Financial Officer

DM3\5665521.4rdvt-ex101_12.htm

 

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is made and entered into on April 9, 2019, by and between Red Violet, Inc., a Delaware corporation (the “Company”) and the individual identified on Exhibit A, attached hereto (the “Executive”) and is effective as of the Effective Date (as hereinafter defined).

 

RECITALS

 

WHEREAS, the Company desires to retain the services of Executive pursuant to the terms and conditions set forth herein and Executive desires to become employed by the Company on such terms and conditions; and

 

NOW, THEREFORE, in consideration of the foregoing, the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree as follows:

 

AGREEMENT

 

1.Term of Agreement. This Agreement will be effective on the Effective Date. The term shall be for the period set forth on Exhibit A attached hereto (the “Term”). 

2.Position and Duties. During the Term, the Executive shall serve the Company in the position and perform the duties as are set forth on Exhibit A attached hereto.

3.Full Business Time and Attention. Except as otherwise set forth in this Agreement, the Executive shall (a) devote his full business time, attention, skill and energy exclusively to the duties and responsibilities of his position; (b) service the Company faithfully, diligently and to the best of his ability; (c) use his best efforts to promote the success of the Company; and (d) cooperate fully with the Company’s Board of Directors (the “Board”) and Chief Executive Officer in the advancement of the Company’s best interests to assure full and efficient performance of his duties hereunder.  Nothing contained herein shall require Executive to follow any directive or to perform any act which would violate any laws, ordinances, regulations or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority. Executive shall act in accordance in all material respects with all laws, ordinances, regulations or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority.

4.[Intentionally Omitted.]

5.Compensation and Benefits. During the Term:

(a)Base Salary. The Executive shall be paid the annual base salary set forth on Exhibit A attached hereto, or such greater amount as may be determined by the Company from time to time in its sole discretion, payable in equal periodic installments according to the Company’s customary payroll practices, but not less frequently than monthly (the “Base Salary”). The Base Salary may be increased but not decreased without the Executive’s written consent.

(b)Benefits. The Executive shall, during the Term, be eligible to participate, commensurate with the Executive’s position, in such retirement, life insurance, hospitalization, major medical, fringe and other Executive benefit plans that the Company generally maintains for its full-time Executives (collectively, the “Benefits”). Notwithstanding the foregoing, the Company may discontinue or terminate at any time any Executive benefit plan, policy or program now existing or hereafter adopted and will not be required to compensate the Executive for such discontinuance or termination; provided, however, that the Company shall be required to offer to the Executive any rights or benefits extended to other Executives in the event of termination of such plans or benefits, including, but not limited to coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 

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(“COBRA”).  Executive shall be entitled to four (4) weeks of paid vacation during each calendar year, to be taken during such calendar year at times selected by Executive, as well as paid holidays and personal days according to Company policy in effect from time to time.

(c)Bonus. The Executive shall be entitled to cash bonuses, commensurate with the Executive’s position, as the Board may determine from time to time.

(d)Equity Incentive Compensation. The Executive shall be entitled to participate, commensurate with the Executive’s position, in the Company’s incentive compensation plan(s) (i.e., stock/restricted stock units/options/warrants, etc. (each individually or collectively, “Equity Awards”)), pursuant to the Red Violet, Inc. Stock Incentive Plan or such other equity plan or arrangement as may be in effect from time to time (such plan or arrangement hereinafter referred to as the “Plan”). Any Equity Awards shall be documented on an award agreement which shall at least conform to the terms and conditions set forth in this paragraph (the “Award Agreement”). Any Equity Awards shall vest immediately upon: (i) a Change in Control (defined below), (ii) a termination of Executive’s employment by the Company Without Cause, (iii) a termination of employment by Executive for Good Reason, or (iv) Executive’s death or Disability. Shares of the Company’s Common Stock shall be issued with respect to the vested Equity Awards upon the earlier of: (i) a Change in Control, or (ii) Executive’s “separation from service” as defined for purposes of Code Section 409A (the “Delivery Event”); provided, however, that the delivery of shares shall be delayed until the earlier of (A) six (6) months following separation from service, or (B) Executive’s death, if necessary to comply with the requirements of Code Section 409A. All shares underlying vested Equity Awards shall be delivered to Executive upon a Delivery Event regardless as to the reason triggering such Delivery Event (including the reason the Executive’s employment is terminated). This Section 5(d) shall be in addition to and shall not in any way modify, amend or restate any other grant of equity awards, including restricted stock units, made pursuant to this Agreement or to any grant agreement previously executed by Executive.  

For purposes hereof, a “Change in Control” shall mean:

(i)any one (1) person, or more than one (1) person acting as a group, acquires ownership of common stock of the Company or any material subsidiary that, together with common stock held by such person or group, possesses more than fifty percent (50%) of the total fair market value or total voting power of the common stock of the Company or such subsidiary; provided, however, that if any one (1) person, or more than one (1) person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the common stock of the Company, the acquisition of additional common stock by the same person or persons will not be considered a Change in Control under this Agreement;

(ii)during any period of twelve (12) consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Company or any material subsidiary (the “Board”) (together with any new or replacement directors whose election by the Board, or whose nomination for election by the Company’s or any material subsidiary’s shareholders, was approved by a vote of at least a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or 

(iii)any one (1) person, or more than one (1) person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by the person or persons) assets from the Company or any material subsidiary outside of the ordinary course of business, that have a gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company or such material subsidiary immediately prior to such acquisition or acquisitions. For purposes of this Section, “gross fair market value” means the value of the assets of the Company or any material subsidiary, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. Notwithstanding anything to the contrary in this Agreement, the following shall not be treated as a Change in Control under this Agreement:

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(A)a transfer of assets from the Company or any material subsidiary to a shareholder of the Company (determined immediately before the asset transfer); 

(B)a transfer of assets from the Company or any material subsidiary  to an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company or such material subsidiary; 

(C)a transfer of assets from the Company or any material subsidiary  to a person, or more than one (1) person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding capital stock of the Company or material subsidiary; or 

(D)a transfer of assets from the Company or material subsidiary to an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in clause (C) above.

However, to the extent necessary for the Executive to avoid adverse tax consequences under Section 409A of the Internal Revenue Code, and its implementing regulations and guidance, a Change of Control shall not be deemed to occur unless it constitutes a “change in the ownership or effective control of a corporation or in the ownership of a substantial portion of the assets of a corporation” under Treas. Reg. Section 1.409A-3(i)(5), as revised from time to time.

(e)Expenses. The Company shall pay on behalf of the Executive (or reimburse Executive for) reasonable documented expenses incurred by Executive in the performance of his duties under this Agreement and, in accordance with the Company’s existing policies and procedures pertaining to the reimbursement of expenses to Executives in general. Notwithstanding anything herein to the contrary or otherwise, except to the extent any expense or reimbursement provided pursuant to this Section 5(e) does not constitute a “deferral of compensation” within the meaning of Section 409A of the Code (as defined below): (i) the amount of expenses eligible for reimbursement provided to the Executive during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to the Executive in any other calendar year, (ii) the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred, (iii) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit and (iv) the reimbursements shall be made pursuant to objectively determinable and nondiscretionary Company policies and procedures regarding such reimbursement of expenses.

6.Termination of Employment.

(a)By the Company. The Company may terminate this Agreement and Executive’s employment, for the following reasons:

(i)Death. Executive’s employment and this Agreement shall terminate immediately upon the death of the Executive.

(ii)Disability. The Company may terminate this Agreement and the Executive’s employment with the Company immediately upon a determination of Disability. For purposes of this Agreement the Executive has a “Disability” if, for physical or mental reasons, the Executive is unable to perform the essential duties required of the Executive under this Agreement, even with a reasonable accommodation, for a period of six (6) consecutive months or a period of one hundred eighty (180) days during any twelve (12) month period, as determined by an independent medical professional mutually acceptable to the parties. Executive shall submit to a reasonable number of examinations by the independent medical professional making the determination of Disability.

(iii)For Cause. The Company may terminate this Agreement and the Executive’s employment with the Company at any time for Cause. For purposes of this Agreement, “Cause” is defined 

3

 

 

as: (1) Executive’s conviction of or plea of guilty or nolo contendere to a felony which involves moral turpitude or results in material harm to the Company, (2) Executive’s fraud against the Company, theft, misappropriation or embezzlement of the assets or funds of the Company or any customer, or any breach of fiduciary duty owed to the Company, or engagement in misconduct that is materially injurious to the Company, including any violation of any of the restrictions set forth in the Confidentiality, Nondisclosure, Noncompetition, Nonsolicitation and Nondisparagement Agreement as entered into between the Executive and the Company (the “Restrictive Covenant Agreement”), (3) Executive’s gross negligence of his duties or willful misconduct in the performance of his duties under this Agreement, and (4) Executive’s material breach of this Agreement and failure to cure such breach within thirty (30) days after the receipt of written notice of such breach from Company.  For purposes of this Section, no act, or failure to act, on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company (or any act which the Executive omits to do because of the Executive’s reasonable belief that such act would violate law or the Company’s standards of ethical conduct in its corporate policies) shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.  The termination of employment of the Executive shall not be deemed to be for Cause unless and until (A) within a reasonable period of time prior to the Board meeting at which the Board will determine whether Cause exists, the Executive is provided written notice of such meeting and, unless prohibited by law, a reasonable opportunity to review prior to such meeting all information to be presented to the Board with respect to whether Cause exists, (B) the Executive is afforded the opportunity, together with counsel for the Executive, to be heard before the Board, (C) there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose finding that, in the good faith opinion of the Board, the Executive committed the conduct that constitutes Cause and specifying the particulars thereof in detail, and (D) if the conduct or act alleged to provide grounds for the Executive’s termination for Cause is curable in the discretion of the Board, the Executive has not cured such conduct within thirty (30) days from the date of receiving a copy of the resolution adopted by the Board.

(iv)Without Cause or Refusal to Accept Assignment. Notwithstanding anything in this Agreement to the contrary, the Company may terminate this Agreement and the Executive’s employment at any time during the Term without Cause for any reason or no reason at all upon ninety (90) days’ prior written notice to Executive.  In the event any successor of the Company refuses to accept assignment of this Agreement, then this Agreement shall be deemed terminated without Cause.

(b)By Executive. The Executive may terminate this Agreement and his employment with the Company, for the following reasons:

(i)For Any Reason. The Executive may terminate this Agreement and his employment hereunder at any time for any reason or for no reason at all; provided, however, that the Executive provides the Company with at least sixty (60) days (“Executive Termination Period”) prior written notice.

(ii)For Good Reason. The Executive may terminate this Agreement and his employment hereunder for “Good Reason” (as hereinafter defined). “Good Reason” for purposes of this Agreement means the occurrence of any of the following without the Executive’s written consent: (i) a material reduction in the Executive’s Base Salary as in effect immediately prior to such reduction; (ii) a material adverse change in the Executive’s title, duties or responsibilities; (iii) a relocation of Executive’s principal office by more than fifty (50) miles from the Company’s office in Boca Raton, Florida; or (iv) any material breach of this Agreement by Company. The Company and Executive agree that “Good Reason” shall not exist unless and until Executive provides the Company with written notice of the acts alleged to constitute Good Reason within ninety (90) days of Executive’s knowledge of the occurrence of such event, and the Company fails to cure such acts within thirty (30) days of receipt of such notice. Executive must 

4

 

 

terminate employment within sixty (60) days following the expiration of such cure period for the termination to be on account of Good Reason.

(c)Compensation Upon Termination.

(i)Death. Upon termination of this Agreement due to the Executive’s death, the Company shall pay to the Executive’s estate the Executive’s Base Salary accrued through the date of the Executive’s death. Upon payment to the Executive of the foregoing amount, the Company shall have no further obligation or liability to or for the benefit of the Executive under this Agreement, except as required by applicable law or any Award Agreement.

(ii)Disability. Upon termination of this Agreement due to the Executive’s Disability, the Company shall pay to the Executive the Executive’s Base Salary and Benefits accrued through the date of the determination of the Executive’s Disability. Upon payment to the Executive of the foregoing amount, the Company shall have no further obligation or liability to or for the benefit of the Executive under this Agreement, except as required by applicable law or any Award Agreement.

(iii)For Cause. Upon termination of this Agreement for Cause, the Company shall pay to the Executive the Executive’s Base Salary and Benefits accrued through the date of the Executive’s termination. Upon payment to the Executive of the foregoing amount, the Company shall have no further obligation or liability to or for the benefit of the Executive under this Agreement, except as required by applicable law.

(iv)Without Cause or Refusal to Accept Assignment. In the event the Company terminates this Agreement without Cause or any successor of the Company refuses to accept assignment of this Agreement, the Company shall pay to the Executive one year of the Executive’s Base Salary in accordance with the Company’s payroll practices in effect from time to time, provided, however, the Executive is not in violation of the Restrictive Covenant Agreement. Upon payment to the Executive of the foregoing amount, the Company shall have no further obligation or liability to or for the benefit of the Executive under this Agreement, except as required by applicable law or any Award Agreement.

(v)For Any Reason. In the event the Executive terminates this Agreement and his employment with the Company for any reason during the Term, the Company shall pay to the Executive the Executive’s Base Salary and Benefits through the date of the expiration of the Executive Termination Period. Upon payment to the Executive of the foregoing amount, the Company shall have no further obligation or liability to or for the benefit of the Executive under this Agreement, except as required by applicable law.

(vi)For Good Reason. If the Executive terminates this Agreement and his employment for Good Reason, the Company shall pay to the Executive one year of the Executive’s Base Salary in accordance with the Company’s payroll practices in effect from time to time, provided, however, the Executive is not in violation of the Restrictive Covenant Agreement. Upon payment to the Executive of the foregoing amount, the Company shall have no further obligation or liability to or for the benefit of the Executive under this Agreement, except as required by applicable law or any Award Agreement.

7.Indemnification. Notwithstanding anything to the contrary herein, including, without limitation, Section 6(c) of this Agreement, to the fullest extent permitted by the law, the Company will indemnify, defend and hold Executive harmless from and against any and all third-party claims, demands, investigations, actions, suits, proceedings, awards and/or judgments, including reasonable costs and attorneys’ fees, when and as incurred by Executive arising out of or related to the operations, business, or affairs of or any act or failure to act on behalf of the Company, any of its subsidiaries, directors or shareholders, or any of their respective affiliates during the course of his employment with the Company (even if the action or investigation is brought post Executive’s termination) and/or in his capacity as an Executive of the Company, except to the extent that any of the foregoing is determined by final, nonappealable order of a court of competent jurisdiction to have been primarily caused by the bad faith, gross negligence, willful or intentional misconduct, knowing violation of law or criminal activity of such Executive. 

5

 

 

The Company shall obtain coverage for the Executive under an insurance policy covering the Company’s directors and officers against claims set forth herein if such coverage for Executive is possible at reasonable cost; provided, however, that it is understood and agreed that the Company’s obligation to indemnify the Executive as set forth in this Section 7 shall not be affected by the Company’s ability or inability to obtain such insurance coverage. The Company’s obligations under this Section 7 shall survive the termination or expiration of this Agreement.  The indemnification provided in this Section 7 shall not be deemed exclusive and shall be in addition to any other indemnification rights and/or remedies to which the Executive might be entitled to under the law, another agreement or otherwise.

8.Covenant Not to Compete. In recognition of the need of the Company to protect its goodwill and legitimate business interests, Executive agrees that the terms and conditions of the Restrictive Covenant Agreement, are hereby incorporated into this Agreement. Notwithstanding the foregoing, Executive’s covenants in the Restrictive Covenant Agreement are independent covenants and any claim by Executive against the Company under this Agreement or otherwise shall not excuse Executive’s obligations under the Restrictive Covenant Agreement. If Executive’s employment with the Company expires or is terminated, this Agreement shall continue in full force and effect to the extent necessary or appropriate to enforce the Executive’s obligations and agreements under the Restrictive Covenant Agreement.

9.Notice. Any notice required or desired to be given under this Agreement shall be in writing and shall be addressed as follows:

If to Company:Red Violet, Inc.

2650 North Military Trail, Suite 300

Boca Raton, Florida 33431

If to Executive:Jeffrey Dell

8607 Wendy Lane East

West Palm Beach, FL 33411

 

Notice shall be deemed given on the date it is deposited in the United States mail, first class postage prepaid and addressed in accordance with the foregoing, or the date otherwise delivered in person, whichever is earlier. The address to which any notice must be sent may be changed by providing written notice in accordance with this Section 9.

10.General Provisions.

(a)Amendments. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. This Agreement may only be altered or amended by mutual written consent of the Company and the Executive.

(b)Applicable Law. This Agreement shall be governed in accordance with the laws of the State of Florida regardless of the conflict of laws rules or statutes of any jurisdiction.

(c)Successors and Assigns. This Agreement will be binding upon the Executive’s heirs, executors, administrators or other legal representatives or assigns. This Agreement will not be assignable by the Executive, but shall be assigned by the Company in connection with the sale, lease, license, assignment, merger, consolidation, share exchange, liquidation, transfer, conveyance or other disposition (whether direct or indirect) of all or substantially all of its business and/or assets in one or a series of related transactions (individually and/or collectively, a “Fundamental Transaction”). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Employment Agreement. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Employment Agreement referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the 

6

 

 

obligations of the Company under this Employment Agreement with the same effect as if such Successor Entity had been named as the Company herein.

(d)No Waiver. The failure of any party to this Agreement to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision, nor in any way to affect the validity of this Agreement or any part thereof or the right of any party under this Agreement to enforce each and every such provision. No waiver or any breach of this Agreement shall be held to be a waiver of any other or subsequent breach.

(e)Section Headings, Construction. The headings used in this Agreement are provided for convenience only and shall not affect the construction or interpretation of this Agreement. All words used in this Agreement shall be construed to be of such gender or number as the circumstances require. In no event shall the terms or provisions hereof be construed against any party on the basis that such party or counsel for such party drafted this Agreement or the attachments hereto.

(f)Severability. If any provision of this Agreement is held to be invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable.

(g)Counterparts. This Agreement may be executed in one or more counterparts each of which shall be deemed to be an original of this Agreement and all of which, when taken together, shall be deemed to constitute one and the same agreement.

(h)Opportunity to Review. The Executive represents that the Executive has been provided with an opportunity to review the terms of the Agreement with legal counsel.

(i)Compliance with Code Section 409A. This Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and, if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Code Section 409A. For purposes of Code Section 409A, each payment of compensation under this Agreement shall be treated as a separate payment of compensation. Any amounts payable solely on account of an involuntary termination shall be excludible from the requirements of Code Section 409A, either as separation pay or as short-term deferrals to the maximum possible extent. Any reference to the Executive’s “termination” or “termination of employment” shall mean the Executive’s “separation from service” as defined in Code Section 409A from the Company and all entities with whom the Company would be treated as a single employer for purposes of Code Section 409A. Notwithstanding anything to the contrary in this Agreement, if the Company determines (i) that on the date the Executive’s employment with the Company terminates or at such other time that the Company determines to be relevant, the Executive is a “specified Executive” (as such term is defined under Treasury Regulation 1.409A-1(i)(1)) of the Company and (ii) that any payments to be provided to the Executive pursuant to this Agreement are or may become subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code if provided at the time otherwise required under this Agreement, then such payments shall be delayed until the date that is six (6) months after the date of the Executive’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)) with the Company, or, if earlier, the date of the Executive’s death.  Any payments delayed pursuant to this Section shall be made in a lump sum on the first day of the seventh (7th) month following the Executive’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)), or, if earlier, the date of the Executive’s death. Nothing herein shall be construed as a guarantee of any particular tax treatment to Executive and the Company shall have no liability to the Executive with respect to any penalties that might be imposed on the Executive by Code Section 409A for any failure of this Agreement or otherwise.

(j)Attorneys’ Fees. In any action or proceeding (including any appeals) brought to enforce any provision of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees and costs.

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[Signature Page Follows]

 

 

8

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first written above.

		
	
 
	
RED VIOLET, INC.

 

 

By: /s/ Derek Dubner
Name: Derek Dubner
Title: CEO

 

	
 
	
 

EXECUTIVE

 

 

/s/ Jeffrey Dell
 Jeffrey Dell

 

	
 
	
 

 

 

9

 

 

EXHIBIT A

	
 
	
1.
	
Effective Date: April 1, 2019

	
 
	
2.
	
Executive Name: Jeffrey Dell

	
 
	
3.
	
Position: Chief Information Officer

	
 
	
4.
	
Duties: As determined by the Board and/or Chief Executive Officer

	
 
	
5.
	
Location of Employment: Boca Raton, Florida

	
 
	
6.
	
Term: Commencing on the Effective Date and ending March 26, 2021 (the “Term Expiration Date”); provided, that, upon the Term Expiration Date this Agreement shall automatically renew for successive one (1) year terms, unless either party provides written notice to the other no less than one hundred twenty (120) days prior to the commencement of each such renewal term setting forth a desire to terminate this Agreement.  Termination of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the termination of this Agreement and the termination of the Executive’s employment with the Company.

	
 
	
7.
	
Base Salary: $250,000 per annum

 

 

 

 

 

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