Document:

Exhibit 10.34

Exhibit 10.34
	
					
	 
	 
	 
	 
	 

	This instrument was prepared by 
and should be mailed to:  
 
 
Gutnicki LLP 
4711 Golf Road, Suite 200 
Skokie, Illinois 60076 
Attn:  Abraham A. Gutnicki, Esq.
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	This space reserved for Recorder’s use only.

	 
	 
	 
	 
	 

ASSIGNMENT OF RENTS AND LEASES 

THIS ASSIGNMENT OF RENTS AND LEASES (“Assignment”) is made and delivered as of September 27, 2013 by QC Property Holdings, LLC, a Georgia limited liability company (“Assignor”), to and for the benefit of Housing & Healthcare Funding, LLC, a Delaware limited liability company, its successors and assigns (“Assignee”). 

R E C I T A L S:

A.    Pursuant to the terms of a Loan and Security Agreement dated as of even date herewith (as amended, modified, replaced or restated from time to time, the “Loan Agreement”) by and between Assignor and Assignee, Assignee has agreed to make to Assignor a loan in the original principal amount of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) (the “Loan”).  The Loan is evidenced by a promissory note of even date herewith made payable by Assignor to the order of Assignee in the maximum principal amount of the Loan (the “Note”).  

B.    Assignor owns the Premises (as hereinafter defined) and leases the Premises to QC Nursing, LLC, a Georgia limited liability company (“Lessee”), pursuant to that certain Lease Agreement dated as of June 25, 2012 by and between Assignor and Lessee, as amended from time to time (the “Operating Lease”).

D.    As an affiliate of Assignor, Lessee will receive substantial benefit from the availability of the Loan by Assignee to Assignor.

E.    A condition precedent to Assignee’s making of the Loan to Assignor is the execution and delivery by Assignor of this Assignment.  

NOW, THEREFORE, in consideration of the foregoing recitals, which are hereby incorporated as if fully set forth herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto mutually agree as follows:

1.    Definitions.  All capitalized terms which are not defined herein shall have the meanings ascribed thereto in that certain Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of even date herewith from Assignor to and for the benefit of Assignee (as amended, modified, replaced or restated from time to time, the “Mortgage”) encumbering certain real property located in Oklahoma County, Oklahoma, and described on Exhibit A attached hereto and made a part hereof, together with certain other collateral as described in the Mortgage, given as security for the Loan.

2.    Grant of Security Interest.  Assignor hereby grants, transfers, sets over and assigns to Assignee, all of the right, title and interest of Assignor in and to (i) all of the rents, revenues, issues, profits, proceeds, receipts, income, accounts and other receivables arising out of or from the land legally described in Exhibit A attached hereto and made a part hereof and all buildings and other improvements located thereon (said land and improvements being hereinafter referred to collectively as the “Premises”), including, without limitation, lease termination fees, purchase option fees and other fees and expenses payable under any lease (all of the foregoing collectively referred to herein as the “Rents”); (ii) all leases and subleases (collectively, “Leases”), now or hereafter existing, of all or any part of the Premises together with all guaranties of any of such Leases and all security deposits delivered by tenants thereunder, whether in cash or letter of credit; (iii) all rights and claims for damage against tenants arising out of defaults under the Leases, including rights to termination fees and compensation with respect to rejected Leases pursuant to Section 365(a) of the Federal Bankruptcy Code or any replacement Section thereof; and (iv) all tenant improvements and fixtures located on the Premises.  This Assignment is an absolute transfer and assignment of the foregoing interests to Assignee given to secure:

(a)    Payment by Assignor when due of (i) the indebtedness evidenced by the Note and any and all renewals, extensions, replacements, amendments, modifications and refinancings thereof; (ii) any and all other indebtedness and obligations that may be due and owing to Assignee by Assignor under or with respect to the Loan Documents (as defined in the Loan Agreement); and (iii) all costs and expenses paid or incurred by Assignee in enforcing its rights hereunder, including without limitation, court costs and reasonable attorneys’ fees; and

(b)    Observance and performance by Assignor of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of Assignor or any other obligor to or benefiting Assignee which are evidenced or secured by or otherwise provided in the Note, this Assignment or any of the other Loan Documents, together with all amendments and modifications thereof.

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3.    Representations and Warranties of Assignor.  Assignor represents and warrants to Assignee that:

(a)    this Assignment, as executed by Assignor, constitutes the legal and binding obligation of Assignor enforceable in accordance with its terms and provisions;

(b)    Assignor is the lessor under all Leases;

(c)    there is no other existing assignment of Assignor’s entire or any part of its interest in or to any of the Leases or any of the Rents assigned hereunder, nor has Assignor entered into any agreement to subordinate any of the Leases or such Assignor’s right to receive any of the Rents assigned hereunder;

(d)    Assignor has not executed any instrument or performed any act which may prevent Assignee from operating under any of the terms and provisions hereof or which would limit Assignee in such operation; and

(e)    there are no defaults by Assignor under any of the Leases and, to Assignor’s knowledge, there are no material defaults by tenants under any Leases.

4.    Covenants of Assignor.  Assignor covenants and agrees that so long as this Assignment shall be in effect:

(a)    Except for the Operating Lease existing as of the date hereof and the lease(s) listed on Schedule 2.1(p) to the Loan Agreement, Assignor shall not lease any portion of the Premises, or permit any sublease of any portion of the Premises, unless Assignor obtains Assignee’s prior written consent to all aspects of such lease; 

(b)    Assignor shall observe and perform all of the covenants, terms, conditions and agreements contained in the Leases to be observed or performed by Assignor thereunder, and Assignor shall not do or suffer to be done anything to impair the security thereof.  Assignor shall not (i) release the liability of any tenant under any Lease, (ii) consent to any tenant’s withholding of rent or making monetary advances and off‐setting the same against future rentals, (iii) consent to any tenant’s claim of a total or partial eviction, (iv) consent to a tenant termination or cancellation of any Lease (as defined below), except as specifically provided therein, or (v) enter into any oral leases with respect to all or any portion of the Premises;

(c)    Assignor shall not collect any of the Rents assigned hereunder more than thirty days in advance of the time when the same shall become due, except for security or similar deposits;

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(d)    Assignor shall not make any other assignment of its entire or any part of its interest in or to any or all Leases, or any or all Rents assigned hereunder, except as specifically permitted by the Loan Documents;

(e)    Assignor shall not modify the terms and provisions of any Lease, nor shall Assignor give any consent (including, but not limited to, any consent to any assignment of, or subletting under, any Lease) or approval required or permitted by such terms and provisions or cancel or terminate any Lease, without Assignee’s prior written consent;

(f)    Assignor shall not accept a surrender of any Lease or convey or transfer, or suffer or permit a conveyance or transfer of, the premises demised under any Lease or of any interest in any Lease so as to effect, directly or indirectly, proximately or remotely, a merger of the estates and rights of, or a termination or diminution of the obligations of, any tenant thereunder; any termination fees payable under a Lease for the early termination or surrender thereof shall be paid jointly to Assignor and Assignee.  Assignor hereby assigns any such payment to Assignee and further covenants and agrees that upon the request of Assignee, it will duly endorse to the order of Assignee any such check, the proceeds of which shall be applied in accordance with the provisions of Paragraph 8 below;

(g)    Assignor shall not alter, modify or change the terms of any guaranty of any Lease, or cancel or terminate any such guaranty or do or permit to be done anything which would terminate any such guaranty as a matter of law without the prior written consent of Assignee;

(h)    Assignor shall not waive or excuse the obligation to pay rent under any Lease;

(i)    Assignor shall, at its sole cost and expense, appear in and defend any and all actions and proceedings arising under, relating to, or in any manner connected with, any Lease or the obligations, duties or liabilities of the lessor or any tenant or guarantor thereunder, and shall pay all reasonable costs and expenses of Assignee, including court costs and reasonable attorneys’ fees, in any such action or proceeding in which Assignee may appear;

(j)    Assignor shall give prompt notice to Assignee of any notice of any default by Assignor under any Lease received from any tenant or guarantor thereunder;

(k)    Assignor shall enforce the observance and performance of each covenant, term, condition and agreement contained in each Lease to be observed and performed by the tenants and guarantors thereunder and shall immediately notify Assignee of any material breach by the tenant or guarantor under any such Lease;

(l)    Assignor shall not permit any of the Leases to become subordinate to any lien or liens other than liens securing the indebtedness secured hereby or liens for general real estate taxes not delinquent;

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(m)    Assignor shall not execute hereafter any Lease unless there shall be included therein a provision providing that the tenant thereunder acknowledges that such Lease has been assigned pursuant to this Assignment and agrees not to look to Assignee as mortgagee, beneficiary, lender in possession or successor in title to the Premises for accountability for any security deposit required by lessor under such Lease unless such sums have actually been received in cash by Assignee as security for tenant’s performance under such Lease, and any such lease shall further provide that the same shall be subordinate to the provisions of the Mortgage; and

(n)    If any tenant under any Lease is or becomes the subject of any proceeding under the Federal Bankruptcy Code, as amended from time to time, or any other federal, state or local statute which provides for the possible termination or rejection of the Leases assigned hereby, Assignor covenants and agrees that if any such Lease is so terminated or rejected, no settlement for damages shall be made without the prior written consent of Assignee, and any check in payment of damages for termination or rejection of any such Lease will be made payable both to Assignor and Assignee.  Assignor hereby assigns any such payment to Assignee and further covenants and agrees that upon the request of Assignee, it will duly endorse to the order of Assignee any such check, the proceeds of which shall be applied in accordance with the provisions of Paragraph 8 below.

5.    Rights Prior to Default.  Unless or until an Event of Default (as defined in Paragraph 6) shall occur, Assignor shall have the right to collect, at the time provided for the payment thereof (but in no event more than thirty (30) days in advance), all Rents assigned hereunder, and to retain, use and enjoy the same.  Upon the occurrence of an Event of Default, Assignor’s right to collect such rents, issues, income and profits shall immediately terminate without further notice thereof to Assignor.  Assignee shall have the right to notify the tenants under the Leases of the existence of this Assignment at any time.

6.    Events of Default.  An “Event of Default” shall occur under this Assignment upon the occurrence of (a) a breach by Assignor of any of the covenants, agreements, representations, warranties or other provisions hereof which is not cured or waived within the applicable grace or cure period, if any, set forth in the Mortgage or (b) any other Event of Default described in the Note, the Mortgage, or any of the other Loan Documents.

7.    Rights and Remedies Upon Default.  At any time upon or following the occurrence of any Event of Default, Assignee, at its option, may exercise any one or more of the following rights and remedies without any obligation to do so, without in any way waiving such Event of Default, without further notice or demand on Assignor, without regard to the adequacy of the security for the obligations secured hereby, without releasing Assignor or any guarantor of the Note from any obligation, and with or without bringing any action or proceeding to foreclose the Mortgage or any other lien or security interest granted by the Loan Documents:

(a)    Declare the unpaid balance of the principal sum of the Note, together with all accrued and unpaid interest thereon, immediately due and payable;

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(b)    Enter upon and take possession of the Premises, either in person or by agent or by a receiver appointed by a court, and have, hold, manage, lease and operate the same on such terms and for such period of time as Assignee may deem necessary or proper, with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as may seem proper to Assignee, to make, enforce, modify and accept the surrender of Leases, to obtain and evict tenants, to fix or modify rents, and to do any other act which Assignee deems necessary or proper;

(c)    Either with or without taking possession of the Premises, demand, sue for, settle, compromise, collect, and give acquittances for all Rents and pursue all remedies for enforcement of the Leases and all the lessor’s rights therein and thereunder.  This Assignment shall constitute an authorization and direction to the tenants under the Leases to pay all rents and other amounts payable under the Leases to Assignee, without proof of default hereunder, upon receipt from Assignee of written notice to thereafter pay all such rents and other amounts to Assignee and to comply with any notice or demand by Assignee for observance or performance of any of the covenants, terms, conditions and agreements contained in the Leases to be observed or performed by the tenants thereunder, and Assignor shall facilitate in all reasonable ways Assignee’s collection of such Rents, and upon request will execute written notices to the tenants under the Leases to thereafter pay all such rents and other amounts to Assignee; and

(d)    Make any payment or do any act required herein of Assignor in such manner and to such extent as Assignee may deem necessary, and any amount so paid by Assignee shall become immediately due and payable by Assignor with interest thereon until paid at the Default Rate (as defined in the Note) and shall be secured by this Assignment.

8.    Application of Proceeds.  All sums collected and received by Assignee out of the Rents following the occurrence of any one or more Events of Default shall be applied in accordance with applicable law and, unless otherwise specified in such law or laws, in such order as Assignee shall elect in its sole and absolute discretion.

9.    Limitation of Assignee’s Liability.  Assignee shall not be liable for any loss sustained by Assignor resulting from Assignee’s failure to let the Premises or from any other act or omission of Assignee in managing, operating or maintaining the Premises following the occurrence of an Event of Default.  Assignee shall not be obligated to observe, perform or discharge, nor does Assignee hereby undertake to observe, perform or discharge any covenant, term, condition or agreement contained in any Lease to be observed or performed by the lessor thereunder, or any obligation, duty or liability of Assignor under or by reason of this Assignment.  Assignor shall and does hereby agree to indemnify, defend (using counsel satisfactory to Assignee) and hold Assignee harmless from and against any and all liability, loss or damage which Assignee may incur under any Lease or under or by reason of this Assignment and of and from any and all claims and demands whatsoever which may be asserted against Assignee by reason of any alleged obligation or undertaking on its part to observe or perform any of the covenants, terms, conditions and agreements contained in any Lease; provided, however, in no event shall Assignor be liable for any liability, loss or damage which Assignee incurs as a direct result of Assignee’s gross negligence or willful 

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misconduct.  Should Assignee incur any such liability, loss or damage under any Lease or under or by reason of this Assignment or in the defense of any such claim or demand, the amount thereof, including reasonable costs, expenses and attorneys’ fees, shall become immediately due and payable by Assignor with interest thereon at the Default Rate and shall be secured by this Assignment and the other Loan Documents.  This Assignment shall not operate to place responsibility upon Assignee for the care, control, management or repair of the Premises or for the carrying out of any of the covenants, terms, conditions and agreements contained in any Lease, nor shall it operate to make Assignee responsible or liable for any waste committed upon the Premises by any tenant, occupant or other party, or for any dangerous or defective condition of the Premises, or for any negligence in the management, upkeep, repair or control of the Premises resulting in loss or injury or death to any tenant, occupant, licensee, employee or stranger.  Nothing set forth herein or in the Mortgage, and no exercise by Assignee of any of the rights set forth herein or in the Mortgage, shall constitute or be construed as constituting Assignee a “lender in possession” of the Premises, in the absence of the taking of actual possession of the Premises by Assignee pursuant to the provisions hereof or of the Mortgage.

10.    No Waiver.  Nothing contained in this Assignment and no act done or omitted to be done by Assignee pursuant to the rights and powers granted to it hereunder shall be deemed to be a waiver by Assignee of its rights and remedies under any of the Loan Documents.  This Assignment is made and accepted without prejudice to any of the rights and remedies of Assignee under the terms and provisions of such instruments, and Assignee may exercise any of its rights and remedies under the terms and provisions of such instruments either prior to, simultaneously with, or subsequent to any action taken by it hereunder.  Assignee may take or release any other security for the performance of the obligations secured hereby, may release any party primarily or secondarily liable therefor, and may apply any other security held by it for the satisfaction of the obligations secured hereby without prejudice to any of its rights and powers hereunder.

11.    Further Assurances.  Assignor shall execute or cause to be executed such additional instruments (including, but not limited to, general or specific assignments of such Leases as Assignee may designate) and shall do or cause to be done such further acts, as Assignee may request, in order to permit Assignee to perfect, protect, preserve and maintain the assignment made to Assignee by this Assignment.

12.    Assignment Pursuant to Statute.  This is an assignment of rents and profits pursuant to 46 Okla. Stat. 4 et seq., as amended from time to time.

13.    Security Deposits.  Assignor acknowledges that Assignee has not received for its own account any security deposited by any tenant pursuant to the terms of the Leases and that Assignee assumes no responsibility or liability for any security so deposited.

14.    Severability.  If any provision of this Assignment is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, Assignee and Assignor shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this 

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Assignment, and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect.

15.    Successors and Assigns.  This Assignment is binding upon Assignor and its legal representatives, successors and assigns, and the rights, powers and remedies of Assignee under this Assignment shall inure to the benefit of Assignee and its successors and assigns.

16.    Written Modifications.  This Assignment shall not be amended, modified or supplemented without the written agreement of Assignor and Assignee at the time of such amendment, modification or supplement.

17.    Duration.  This Assignment shall become null and void at such time as Assignor shall have paid the principal sum of the Note, together with all interest thereon, and shall have fully paid and performed all of the other obligations secured hereby and by the other Loan Documents.

18.    Governing Law.  This Assignment shall be governed by and construed in accordance with the laws of the State of Maryland.

19.    Notices.  All notices, demands, requests and other correspondence which are required or permitted to be given hereunder shall be deemed sufficiently given when delivered or mailed in the manner and to the addresses of Assignor and Assignee, as the case may be, as specified in the Mortgage.

20.    WAIVER OF TRIAL BY JURY.  ASSIGNOR AND ASSIGNEE (BY ACCEPTANCE HEREOF), HAVING BEEN REPRESENTED BY COUNSEL, EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS ASSIGNMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS ASSIGNMENT OR (B) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS ASSIGNMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. ASSIGNOR AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST ASSIGNEE OR ANY OTHER PERSON INDEMNIFIED UNDER THIS ASSIGNMENT ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

[Signature page to follow]

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IN WITNESS WHEREOF, Assignor has executed and delivered this Assignment of Rents and Leases as of the day and year first above written. 
	
				
	 
	ASSIGNOR:

	 
	 
	 
	 

	 
	QC Property Holdings, LLC,

	 
	a Georgia limited liability company

	 
	 
	 
	 

	 
	 
	By:
	/s/ Ronald W. Fleming

	 
	 
	Name:
	Ronald W. Fleming

	 
	 
	Title:
	Manager

	 
	 
	 
	 

	 
	 
	 
	 

	
			
	

STATE OF ______________
	)
	 

	 
	)
	ss

	COUNTY OF ____________
	)
	 

I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Ronald W. Fleming, the Manager of QC Property Holdings, LLC, a Georgia limited liability company (the “Company”), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such __________________, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act as _____________________ of the Company and as the free and voluntary act of the Company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal, this ___ day of _________, 2013.
	
		
	 
	 

	 
	NOTARY PUBLIC

	 
	 

	 
	(SEAL)

Assignment of Rents and Leases / QC Property Holdings, LLC
Signature Page 

EXHIBIT A

Legal Description

A part of the Northeast Quarter (NE/4) of Section Sixteen (16), Township Thirteen (13) North, Range Four (4) West of the Indian Meridian in the City of Oklahoma City, Oklahoma County, Oklahoma, said part being more particularly described as follows:

Beginning at a point located South 00°28'33" East a distance of 503.87 feet and North 89°31 '27" East a distance of 30.00 feet from the Northwest Comer of said Northeast Quarter (NE/4);

Thence from said Point of Beginning South 00°28'33" East a distance of293.65 feet to a point on a curve to the right, said curve having a central angle of 15°52'38" and a radius of
205.65 feet;

Thence along the arc of said curve in a Southwesterly direction a distance of 56.99 feet;

Thence South 89°51'09" East a distance of 722.34 feet;

Thence North 00°28'33" West a distance of 350.00 feet;
Thence North 89°51 '09" West a distance of 714.50 feet to the Point of Beginning. 
Together with rights of ingress and egress established by the easement estate created by
Weschase Partners Limited Partnership, an Oklahoma limited partnership in favor of Weschase Land Co. Limited Partnership, an Oklahoma limited partnership,  filed January 20, 1987, recorded in Book 5576, Page 1628, and more particularly described as follows:

The North  15 feet of the following described tract:

A part of the Northeast Quarter (NE/4) of Section Sixteen (16), Township Thirteen (13) North, Range Four (4) West of the Indian Meridian, in the City of Oklahoma City, Oklahoma County, Oklahoma, said part being more particularly described as follows:

Beginning at a point located on the East right-of-way line of Brandon Place, South 00°28'33" East 503.87 feet and North 89°31 '27" East 30.00 feet from the Northwest Comer of said Northeast Quarter (NE/4);

Thence from said Point of Beginning, said easement being 15.00 feet North and 15.00 feet South of the following described line;

South 89°51'09" East 584.00 feet to the point of termination.

Property Address: 13500 Brandon Place, Oklahoma City, OK APN:
3861-14-947-1090Exhibit 10.35

Exhibit 10.35

THIRD MODIFICATION AGREEMENT

THIS THIRD MODIFICATION AGREEMENT dated as of September 30, 2013 (this “Agreement”), is entered into by and among ADK THOMASVILLE OPERATOR, LLC (“Borrower 1”), ADK LUMBER CITY OPERATOR, LLC (“Borrower 2”), ADK JEFFERSONVILLE OPERATOR, LLC (“Borrower 3”), ADK LAGRANGE OPERATOR, LLC (“Borrower 4”), ADK POWDER SPRINGS OPERATOR, LLC (“Borrower 5”), ADK OCEANSIDE OPERATOR, LLC (“Borrower 6”), ADK THUNDERBOLT OPERATOR, LLC (“Borrower 7”), ADK SAVANNAH BEACH OPERATOR, LLC (“Borrower 8”), ATTALLA NURSING ADK, LLC (“Borrower 9”), MOUNTAIN TRACE NURSING ADK, LLC, an Ohio limited liability company (“Borrower 10”), MT. KENN NURSING, LLC (“Borrower 11”), ERIN NURSING, LLC (“Borrower 12”), CP NURSING, LLC (“Borrower 13”), BENTON NURSING, LLC (“Borrower 14”), VALLEY RIVER NURSING, LLC (“Borrower 15”), PARK HERITAGE NURSING, LLC (“Borrower 16”), HOMESTEAD NURSING, LLC (“Borrower 17”), WOODLAND MANOR NURSING, LLC (“Borrower 18”), MOUNTAIN VIEW NURSING, LLC (“Borrower 19”), LITTLE ROCK HC&R NURSING, LLC (“Borrower 21”), GLENVUE H&R NURSING, LLC (“Borrower 24”) and COOSA NURSING ADK, LLC (“Borrower 25”) each a Georgia limited liability company except as hereinabove set forth (the “Existing Borrowers”), QC NURSING, LLC (“Borrower 26”) a Georgia limited liability company (the “New Borrower” and together with the Existing Borrowers, the “Borrowers”), ADCARE HEALTH SYSTEMS, INC., an Ohio corporation (the “Guarantor”) (the Borrowers and the Guarantor being sometimes referred to herein collectively as the “Borrower/Guarantor Parties”), and THE PRIVATEBANK AND TRUST COMPANY, an Illinois banking corporation (“Lender”).
RECITALS

A.    The Borrower/Guarantor Parties and the Lender heretofore entered into the following documents (collectively, the “Documents”):
(i)    Loan and Security Agreement dated as of September 20, 2012 (the “Loan Agreement”), by and among the Existing Borrowers, Northridge HC&R Nursing, LLC (“Borrower 20”), Woodland Hills HC Nursing, LLC (“Borrower 22”), and APH&R Nursing, LLC, each a Georgia limited liability company (“Borrower 23” and together with Borrowers 20 and 22, the “Released Borrowers”; the Released Borrowers together with the Existing Borrowers, the “Original Borrowers”), and the Lender.
(ii)    Promissory Note dated September 20, 2012 (the “Note”), from the Original Borrowers to the Lender in the principal amount of $10,600,000.
(iii)    Guaranty of Payment and Performance dated as of September 20, 2012, by the Guarantor to and for the benefit of the Lender.

B.    The Documents were previously modified and amended by the following documents (the  “Previous Modifications”): (i) the Modification Agreement dated as of October 26, 2012, by and among the Original Borrowers, the Guarantor and the Lender; and (ii) the Memorandum of Agreement dated January 25, 2013 (the “Second Modification”), by and among the Released Borrowers and the Lender.
C.    The Released Borrowers were released from their respective obligations under the Documents pursuant to the Second Modification.
D.    The parties desire to make certain modifications and amendments to the Documents, as modified and amended by the Previous Modifications, as more fully provided for herein, all as modifications, amendments and continuations of, but not as novations of, the Documents.
AGREEMENTS

In consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
Section 1.    Recitals Part of Agreement; Defined Terms; References to Documents.
(a)    The foregoing Recitals are hereby incorporated into and made a part of this Agreement.
(b)    All capitalized terms used and not otherwise defined in this Agreement shall have the meanings set forth in the Loan Agreement.
(c)    Except as otherwise stated herein, all references in this Agreement to any one or more of the Documents shall be deemed to include the previous modifications and amendments to the Documents provided for in the Previous Modification, whether or not express reference is made to such previous modifications and amendments.
Section 2.    Release of ADK Jeffersonville Operator, LLC, ADK Oceanside Operator, LLC and ADK Savannah Beach Operator, LLC.  ADK Jeffersonville Operator, LLC (“Borrower 3”), ADK Oceanside Operator, LLC (“Borrower 6”) and ADK Savannah Beach Operator, LLC (“Borrower 8”) have each requested that they be released from their respective obligations under the Documents due to the fact that each of them no longer operates a Facility.  The Lender is agreeable to such request and hereby releases Borrower 3, Borrower 6 and Borrower 8 as Borrowers under the Loan Agreement, and releases the Collateral which is the property of Borrower 3, Borrower 6 and Borrower 8 as security for the Loan.
Section 3.    Addition of New Borrower.
(a)    The New Borrower is hereby added as a Borrower under the Loan Agreement and the Note, each as modified and amended by the Previous Modifications.  The New Borrower hereby joins in the Loan Agreement and the Note, each as modified and amended by the Previous 

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Modifications, and agrees to be jointly and severally bound and obligated under the Loan Agreement and the Note with the other parties thereto, and hereby joins in all of the representations, warranties, covenants and grants of security interests by the Borrowers which are contained therein, and other provisions by which the Borrowers are bound which are contained therein, all with the same effect as if the New Borrower had executed the Loan Agreement and the Note as of September 20, 2012.  All references in the Documents to the Borrowers under the Loan Agreement and the Note shall be deemed to include a reference to the New Borrower.  All of the Documents, as modified and amended by the Previous Modifications, are hereby further modified and amended to incorporate the foregoing provisions of this paragraph.
(b)    The following new defined terms are hereby added in alphabetical order in Section 1.1 of the Loan Agreement: 
Borrower 26:  As defined in the Preamble hereto.
Borrower 26 Permitted Liens:  Liens and security interests in its property granted by Borrower 26 to HHC, provided that the HHC Consent and Subordination has been entered into by the parties thereto and  is in full force and effect.
HHC:  Housing & Healthcare Funding, LLC, a Delaware limited liability company.
HHC Loan:  The loan by HHC to QC Property Holdings, LLC (the “QC Owner”), the owner of the Quail Creek Facility, as from time to time modified, amended, increased, renewed and extended.
HHC Consent and Subordination:  The Consent and Subordination dated as of September 30, 2013, by and between Lender, HHC, Borrower 26, the QC Owner and Guarantor.
Quail Creek Facility:  Borrower 26’s Facility described in the definition of the term Facility in this Agreement.
Quail Creek Project:  The Project in which the Quail Creek Facility is located.
(c)    The definition of the term “Borrowers” in Section 1.1 of the Loan Agreement, as modified and amended by the Previous Modifications, is hereby further modified and amended in its entirety to read as follows effective as of the date of this Agreement, with the existing definition of the term “Borrowers” in Section 1.1 of the Loan Agreement, as modified and amended by the Previous Modifications, to continue to be effective for periods prior to the date of this Agreement:
Borrowers:  Borrowers 1 through 26, except for Borrowers 3, 6, 8, 20, 22 and 23.
(d)    The definition of the term “Facility” in Section 1.1 of the Loan Agreement, as modified and amended by the Previous Modifications, is hereby further modified and amended in 

3

its entirety to read as follows effective as of the date of this Agreement, with the existing definition of the term “Facility” in Section 1.1 of the Loan Agreement, as modified and amended by the Previous Modifications, to continue to be effective for periods prior to the date of this Agreement:
Facility:  Each of the 20 Facilities which are operated by Borrowers in the Projects, described as follows:
	
						
	 
	Facility
	Borrower
	Facility Name
	Location
	Beds

	 
	1
	Borrower 1
	Thomasville Nursing and Rehab Center
	120 Skyline Drive, Thomasville, Thomas County, Georgia
	52

	 
	2
	Borrower 2
	Lumber City Nursing and Rehabilitation Center
	93 Highway 19, Lumber City, Telfair County, Georgia
	86

	 
	3
	Borrower 3
	Released
	 
	 

	 
	4
	Borrower 4
	LaGrange Nursing and Rehab Center
	2111 West Point Road, LaGrange, Troup County, Georgia
	138

	 
	5
	Borrower 5
	Powder Springs Nursing and Rehab Center
	3460 Powder Springs Road, Powder Springs, Cobb County, Georgia
	208

	 
	6
	Borrower 6
	Released
	 
	85

	 
	7
	Borrower 7
	Tara at Thunderbolt Nursing and Rehabilitation Center
	3223 Falligant Avenue, Thunderbolt, Chatham County, Georgia
	134

	 
	8
	Borrower 8
	Released
	 
	50

	 
	9
	Borrower 9
	Attalla Health Care
	915 Stewart Avenue SE, Attalla, Etowah County, Alabama
	182

	 
	10
	Borrower 10
	Mountain Trace Nursing and Rehabilitation Center
	417 Mountain Trace Road, Sylva, Jackson County, North Carolina
	106

	 
	11
	Borrower 11
	Autumn Breeze Healthcare Center
	1480 Sandtown Road, Marietta, Cobb County, Georgia
	109

	 
	12
	Borrower 12
	Southland Healthcare and Rehab Center
	606 Simmons Street, Dublin, Laurens County, Georgia
	126

	 
	13
	Borrower 13
	College Park Healthcare Center
	1765 Temple Avenue, College Park, Fulton County, Georgia
	100

4

	
						
	 
	14
	Borrower 14
	Bentonville Manor Nursing Home
	224 South Main Street, Bentonville, Benton County, Arkansas
	95

	 
	15
	Borrower 15
	River Valley Health and Rehabilitation Center
	5301 Wheeler Ave, Fort Smith, Sebastian County, Arkansas
	117

	 
	16
	Borrower 16
	Heritage Park Nursing Center
	1513 South Dixieland Road, Rogers, Benton County, Arkansas
	100

	 
	17
	Borrower 17
	Homestead Manor Nursing Home
	826 North Street, Stamps, LaFayette County, Arkansas
	94

	 
	18
	Borrower 18
	Eaglewood Care Center
	2000 Villa Road, Springfield, Clark County, Ohio
	113

	 
	19
	Borrower 19
	Stone County Nursing and Rehabilitation Center
	706 Oak Grove Street, Mountain View, Stone County, Arkansas
	97

	 
	20
	Borrower 20
	Released
	 
	 

	 
	21
	Borrower 21
	Little Rock Healthcare and Rehab, a/k/a West Markham Sub Acute & Rehab Center
	5720 W. Markham, Little Rock, Pulaski County, Arkansas
	157

	 
	22
	Borrower 22
	Released
	 
	 

	 
	23
	Borrower 23
	Released
	 
	 

	 
	24
	Borrower 24
	Glenvue Health and Rehabilitation
	721 N. Veterans Boulevard, Glennville, Tatnall County, Georgia
	160

	 
	25
	Borrower 25
	Coosa Valley Healthcare
	513 Pineview Avenue,
Glencoe, Etowah County, Alabama 35905
	124

	 
	26
	Borrower 26
	Quail Creek Nursing and Rehabilitation Center
	13500 Brandon Place, Oklahoma City, Oklahoma County, Oklahoma
	118

(e)    The definition of the term “Leases” in Section 1.1 of the Loan Agreement, as modified and amended by the Previous Modifications, is hereby further modified and amended in its entirety to read as follows effective as of the date of this Agreement, with the existing definition of the term “Leases” in Section 1.1 of the Loan Agreement, as modified and amended by the Previous Modifications, to continue to be effective for periods prior to the date of this Agreement:
Leases:  Leases by Owners to each of Borrower 11 through Borrower 26 (except for Borrowers 20, 22, 23 and 25) of the respective Projects and subleases by Sublessor to each of Borrower 1 through Borrower 8 (except for Borrowers 3, 6 and 8) of the respective Projects dated as follows:

5

	
					
	 
	Facility
	Borrower
	Owner/Sublessor
	Date of Lease/Sublease

	 
	1
	Borrower 1
	Owner, Master Lease Lessor - William Foster
Sublessor - ADK Georgia, LLC
	Master Lease - August 1, 2010
Sublease - August 1, 2010

	 
	2
	Borrower 2
	Owner, Master Lease Lessor - William Foster
Sublessor - ADK Georgia, LLC
	Master Lease - August 1, 2010
Sublease - August 1, 2010

	 
	3
	Borrower 3
	Released
	 

	 
	4
	Borrower 4
	Owner, Master Lease Lessor - William Foster
Sublessor - ADK Georgia, LLC
	Master Lease - August 1, 2010
Sublease - August 1, 2010

	 
	5
	Borrower 5
	Owner, Master Lease Lessor - William Foster
Sublessor - ADK Georgia, LLC
	Master Lease - August 1, 2010
Sublease - August 1, 2010

	 
	6
	Borrower 6
	Released
	 

	 
	7
	Borrower 7
	Owner, Master Lease Lessor - William Foster
Sublessor - ADK Georgia, LLC
	Master Lease - August 1, 2010
Sublease - September 1, 2010

	 
	8
	Borrower 8
	Released
	 

	 
	9
	Borrower 9
	Owner, Borrower 9
	None

	 
	10
	Borrower 10
	Owner, Borrower 10
	None

	 
	11
	Borrower 11
	Owner, Mt. Kenn Property Holdings, LLC
	May 1, 2011

	 
	12
	Borrower 12
	Owner, Erin Property Holdings, LLC
	May 1, 2011

6

	
					
	 
	13
	Borrower 13
	Owner, CP Property Holdings, LLC
	September 6, 2011

	 
	14
	Borrower 14
	Owner, Benton Property Holdings, LLC
	August 31, 2011

	 
	15
	Borrower 15
	Owner, Valley River Property Holdings, LLC
	August 31, 2011

	 
	16
	Borrower 16
	Owner, Park Heritage Property Holdings, LLC
	August 31, 2011

	 
	17
	Borrower 17
	Owner, Homestead Property Holdings, LLC
	August 31, 2011

	 
	18
	Borrower 18
	Owner, Woodland Manor Property Holdings, LLC
	December 29, 2011

	 
	19
	Borrower 19
	Owner, Mount V Property Holdings, LLC
	November 30, 2011

	 
	20
	Borrower 20
	Released
	 

	 
	21
	Borrower 21
	Owner, Little Rock HC&R Property Holdings, LLC
	April 1, 2012

	 
	22
	Borrower 22
	Released
	 

	 
	23
	Borrower 23
	Released
	 

	 
	24
	Borrower 24
	Owner, Glenvue H&R Property Holdings, LLC
	June 19, 2012

	 
	25
	Borrower 25
	Owner, Borrower 25
	None

	 
	26
	Borrower 26
	Owner, QC Property Holdings, LLC
	June 25, 2012, amended July 1, 2012

(f)    Section 7.1(a) of the Loan Agreement is hereby modified and amended in its entirety to read as follows effective as of the ate of this Agreement, with the existing Section 7.1(a) of the Loan Agreement to continue to be effective for periods prior to the date of this Agreement:
(a)    Except for a security interest granted to Lender and, in the case of Borrower 26, Borrower 26 Permitted Liens, each Borrower agrees that all of the personal property, fixtures, attachments, furnishings and equipment owned by it will be kept free and clear of all chattel mortgages, vendor’s liens, and all other liens, claims, encumbrances and security interests whatsoever, and that such Borrower will be the absolute owner of said personal property, fixtures, attachments and equipment.  Borrowers, on request, shall furnish Lender with satisfactory evidence of such ownership, and of the terms of purchase and payment therefor.
(g)    Section 7.1 of the Loan Agreement is hereby modified and amended to add the following as subparagraph (e) effective as of the date of this Agreement:

7

(e)    Borrower 26 shall promptly furnish to Lender copies of all notices of default and other material documents and communications sent or received by Borrower 26 under or relating to the HHC Loan.
(h)    Section 7.10(a)(i) of the Loan Agreement is hereby modified and amended in its entirety to read as follows effective as of the ate of this Agreement, with the existing Section 7.10(a)(i) of the Loan Agreement to continue to be effective for periods prior to the date of this Agreement:
(i)    Tangible assets, excepting only (A) sales or other dispositions of property no longer useful in connection with the operation of a Facility, provided that prior to the sale or other disposition thereof, such property has been replaced by property of at least equal value and utility, and (B) in the case of Borrower 26, Borrower 26 Permitted Liens;
(i)    Section 7.14 of the Loan Agreement is hereby modified and amended in its entirety to read as follows effective as of the date of this Agreement, with the existing Section 7.14 of the Loan Agreement to continue to be effective for periods prior to the date of this Agreement:
7.14    Security Interest Matters.  This Agreement is intended to be a security agreement under the Code for the purpose of creating the security interests provided for herein.  Borrowers shall execute and deliver such additional security agreements and other documents as Lender shall from time to time request in order to create and perfect such security interests.  With exception, in the case of Borrower 26, of Borrower 26 Permitted Liens, Borrowers shall keep all of the Collateral free and clear of all other liens, security interests and encumbrances.  Borrower 26 may grant liens and security interests in its property to HHC provided that the HHC Consent and Subordination has been entered into by the parties thereto and is in full force and effect.
(j)    Effective as of the date of this Agreement, the following new subparagraphs (r) and (s) are added to Section 10.1 of the Loan Agreement:
(r)    The occurrence of any Default or Event of Default under the HHC Loan on the Quail Creek Project; or
(s)    If there is any action taken by HHC to foreclose or otherwise enforce or realize on its liens or security interests in any collateral of Borrower 26’s in which the Lender has a lien or  security interest.
(k)    The address for notices to the New Borrower shall be the address for notices to Borrowers set forth in Section 12.10 of the Loan Agreement, and the Loan Agreement, as modified and amended by the Previous Modifications, is hereby modified and amended accordingly.
(l)    The New Borrower hereby represents and warrants to the Lender as follows:

8

(i)    The nature of the New Borrower entity and the State in which it is organized are as stated in the first paragraph of this Agreement.  The organizational number of the New Borrower in such State is as follows:
	
				
	 
	Borrower
	Organizational Number
	 

	 
	Borrower 26
	12032778
	 

(ii)    The address of the New Borrower’s chief executive office is the address for notices to the New Borrower set forth in Section 12.10 of the Loan Agreement.
(iii)    The New Borrower has no place of business other than the chief executive office referred to in (ii) above and at its Facility.
(m)    Exhibit A to the Loan Agreement, as modified and amended by the Previous Modifications, is hereby further modified and amended in its entirety to be as attached to this Agreement effective as of the date of this Agreement, with the existing Exhibit A to the Loan Agreement, as modified and amended by the Previous Modifications,  to continue to be effective for periods prior to the date of this Agreement.
(n)    The address for notices to the New Borrower shall be the address for notices to Borrowers set forth in Section 12.10 of the Loan Agreement, and the Loan Agreement, as modified and amended by the Previous Modifications, is hereby modified and amended accordingly.
Section 4.    Attachment to Note.  The Lender may, and prior to any transfer by it of the Note shall, attach a copy of this Agreement to the original Note and place an endorsement on the original Note making reference to the fact that such attachment has been made.
Section 5.    Representations and Warranties.  The term “Signing Entity” as used in this Section means any entity (other than a Borrower/Guarantor Party itself) that appears in the signature block of any Borrower/Guarantor Party in this Agreement, any of the Documents or any of the Previous Modifications, if any.  In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby represent and warrant to the Lender as follows as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement:
(a)    Each Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of which is stated in the Preambles to this Agreement, and if such State is not the State in which its Facility is located, such Borrower is duly registered or qualified to transact business and in good standing in the State in which its Facility is located.  Each Borrower has all necessary power and authority to carry on its present business, and has full right, power and authority to enter into this Agreement, each of the Documents to which it is a party and the Previous Modifications, and to perform and consummate the transactions contemplated hereby and thereby.

9

(b)    The Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio, has all necessary power and authority to carry on its present business, and has full right, power and authority to enter into this Agreement, each of the Documents to which it is a party and the Previous Modifications, and to perform and consummate the transactions contemplated hereby and thereby.
(c)    Each Signing Entity is duly organized, validly existing and in good standing under the laws of the State in which it is organized, has all necessary power and authority to carry on its present business, and has full right, power and authority to execute this Agreement, the Documents and the Previous Modifications in the capacity shown in each signature block contained in this Agreement, the Documents and the Previous Modifications in which its name appears, and such execution has been duly authorized by all necessary legal action applicable to such Signing Entity.
(d)    This Agreement, the Documents and the Previous Modifications have been duly authorized, executed and delivered by such of the Borrower/Guarantor Parties as are parties thereto, and this Agreement, the Documents and the Previous Modifications constitute valid and legally binding obligations enforceable against such of the Borrower/Guarantor Parties as are parties thereto.  The execution and delivery of this Agreement, the Documents and the Previous Modifications and compliance with the provisions thereof under the circumstances contemplated therein do not and will not conflict with or constitute a breach or violation of or default under the organizational documents of any Borrower/Guarantor Party or any Signing Entity, or any agreement or other instrument to which any of the Borrower/Guarantor Parties or any Signing Entity is a party, or by which any of them is bound, or to which any of their respective properties are subject, or any existing law, administrative regulation, court order or consent decree to which any of them is subject.
(e)    The Borrower/Guarantor Parties are in full compliance with all of the terms and conditions of the Documents to which they are a party and the Previous Modifications, and no Default or Event of Default has occurred and is continuing with respect to any of the Documents or the Previous Modifications.
(f)    There is no litigation or administrative proceeding pending or threatened to restrain or enjoin the transactions contemplated by this Agreement, any of the Documents or the Previous Modifications, or questioning the validity thereof, or in any way contesting the existence or powers of any of the Borrower/Guarantor Parties or any Signing Entity, or in which an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by this Agreement, any of the Documents or the Previous Modifications, or would result in any material adverse change in the financial condition, properties, business or operations of any of the Borrower/Guarantor Parties.
(g)    The statements contained in the Recitals to this Agreement are true and correct.
Section 6.    Documents to Remain in Effect; Confirmation of Obligations; References.  The Documents shall remain in full force and effect as originally executed and delivered by the parties, except as previously modified and amended by the Previous Modifications and as expressly modified and amended herein.  In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby (i) confirm and reaffirm all of their obligations under the Documents, as previously modified and amended by the Previous Modifications and as modified 

10

and amended herein; (ii) acknowledge and agree that the Lender, by entering into this Agreement, does not waive any existing or future default or event of default under any of the Documents, or any rights or remedies under any of the Documents, except as expressly provided herein; (iii) acknowledge and agree that the Lender has not heretofore waived any default or event of default under any of the Documents, or any rights or remedies under any of the Documents; and (iv) acknowledge and agree that they do not have any defense, setoff or counterclaim to the payment or performance of any of their obligations under, or to the enforcement by the Lender of, the Documents, as previously modified and amended by the Previous Modifications and as modified and amended herein, including, without limitation, any defense, setoff or counterclaim based on the covenant of good faith and fair dealing.  All references in the Documents to any one or more of the Documents, or to the “Loan Documents,” shall be deemed to refer to such Document, Documents or Loan Documents, as the case may be, as previously modified and amended by the Previous Modifications and as modified and amended by this Agreement.  Electronic records of executed documents maintained by the Lender shall be deemed to be originals thereof.
Section 7.    Certifications, Representations and Warranties.  In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby certify, represent and warrant to the Lender that all certifications, representations and warranties contained in the Documents and the Previous Modifications and in all certificates heretofore delivered to the Lender are true and correct as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement, and all such certifications, representations and warranties are hereby remade and made to speak as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement.
Section 8.    Entire Agreement; No Reliance.  This Agreement sets forth all of the covenants, promises, agreements, conditions and understandings of the parties relating to the subject matter of this Agreement, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between them relating to the subject matter of this Agreement other than as are herein set forth.  The Borrower/Guarantor Parties acknowledge that they are executing this Agreement without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein.
Section 9.    Successors.  This Agreement shall inure to the benefit of and shall be binding upon the parties and their respective successors, assigns and legal representatives.
Section 10.    Severability.  In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.
Section 11.    Amendments, Changes and Modifications.  This Agreement may be amended, changed, modified, altered or terminated only by a written instrument executed by all of the parties hereto.

11

Section 12.    Construction.
(a)    The words “hereof,” “herein,” and “hereunder,” and other words of a similar import refer to this Agreement as a whole and not to the individual Sections in which such terms are used.
(b)    References to Sections and other subdivisions of this Agreement are to the designated Sections and other subdivisions of this Agreement as originally executed.
(c)    The headings of this Agreement are for convenience only and shall not define or limit the provisions hereof.
(d)    Where the context so requires, words used in singular shall include the plural and vice versa, and words of one gender shall include all other genders.
(e)    The Borrower/Guarantor Parties and the Lender, and their respective legal counsel, have participated in the drafting of this Agreement, and accordingly the general rule of construction to the effect that any ambiguities in a contract are to be resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Agreement.
Section 13.    Counterparts; Electronic Signatures.  This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document.  Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof.  An electronic record of this executed Agreement maintained by the Lender shall be deemed to be an original.
Section 14.    Governing Law.  This Agreement is prepared and entered into with the intention that the law of the State of Illinois shall govern its construction and enforcement.

[SIGNATURE PAGE(S) AND EXHIBIT(S),
IF ANY, FOLLOW THIS PAGE]

12

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
	
				
	 
	ADK THOMASVILLE OPERATOR, LLC

	 
	ADK LUMBER CITY OPERATOR, LLC

	 
	ADK JEFFERSONVILLE OPERATOR, LLC

	 
	ADK LAGRANGE OPERATOR, LLC

	 
	ADK POWDER SPRINGS OPERATOR, LLC

	 
	ADK OCEANSIDE OPERATOR, LLC

	 
	ADK THUNDERBOLT OPERATOR, LLC

	 
	ADK SAVANNAH BEACH OPERATOR, LLC

	 
	ATTALLA NURSING ADK, LLC

	 
	MOUNTAIN TRACE NURSING ADK, LLC

	 
	MT. KENN NURSING, LLC

	 
	ERIN NURSING, LLC

	 
	CP NURSING, LLC

	 
	BENTON NURSING, LLC

	 
	VALLEY RIVER NURSING, LLC

	 
	PARK HERITAGE NURSING, LLC

	 
	HOMESTEAD NURSING, LLC

	 
	WOODLAND MANOR NURSING, LLC

	 
	MOUNTAIN VIEW NURSING, LLC

	 
	LITTLE ROCK HC&R NURSING, LLC

	 
	GLENVUE H&R NURSING, LLC

	 
	COOSA NURSING ADK, LLC

	 
	QC NURSING, LLC

	 
	 
	 
	 

	 
	By:
	/s/ David Rubenstein

	 
	 
	David Rubenstein, Manager of each Borrower

	 
	 
	 
	 

	 
	 
	 
	 

	 
	ADCARE HEALTH SYSTEMS, INC.

	 
	 
	 
	 

	 
	By:
	/s/ Ronald W. Fleming

	 
	 
	Ronald W. Fleming, Chief Financial Officer

AdCare Portfolio Operator Loan Third Modification Agreement
Signature Page 1

	
				
	 
	THE PRIVATEBANK AND TRUST COMPANY

	 
	 
	 
	 

	 
	By:
	/s/ Amy K. Hallberg

	 
	 
	Amy K. Hallberg, Managing Director

AdCare Portfolio Operator Loan Third Modification Agreement
Signature Page 2

Exhibit A

DIRECT AND INDIRECT OWNERSHIP OF BORROWERS

[See Attached Organization Chart]

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