Document:

Exhibit 10.40

 

COMMERCIAL GUARANTY

 

	
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References   in the boxes above are for Lender’s use only and do not limit the   applicability of this document to any particular loan or item. Any item above   containing ***** has been omitted due to text length limitations.
    

 

	
Borrower:
    	
CP PROPERTY HOLDINGS, LLC 
    	
Lender:
    	
THE BANK OF LAS VEGAS 
    
	
 
    	
CP NURSING, LLC 
    	
 
    	
622   DOUGLAS AVE 
    
	
 
    	
1765 TEMPLE AVENUE
    	
 
    	
PO   BOX 3210 
    
	
 
    	
COLLEGE PARK, GA 30337
    	
 
    	
LAS   VEGAS, NM 87701 
    
	
 
    	
 
    	
 
    	
(505)   425-7565
    
	
 
    	
 
    	
 
    	
 
    
	
Guarantor: 
    	
CONNIE B. BROGDON 
    	
 
    	
 
    
	
 
    	
1765 TEMPLE AVENUE
    	
 
    	
 
    
	
 
    	
COLLEGE PARK, GA 30337
    	
 
    	
 
    

 

CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower, or any one or more of them, to Lender, and the performance and discharge of all Borrower’s obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lenders remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower’s obligations under the Note and Related Documents. Under this Guaranty, Guarantor’s liability is unlimited and Guarantor’s obligations are continuing.

 

INDEBTEDNESS. The word “Indebtedness” as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection coats and legal expenses related thereto permitted by law, attorneys’ fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. “Indebtedness” includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of Borrower, or any one or more of them, and any present or future judgments against Borrower, or any one or more of them, future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; Joint or several or Joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated.

 

If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender’s rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor’s liability will be Guarantor’s aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.

 

CONTINUING GUARANTY. THIS IS A “CONTINUING GUARANTY” UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER, OR ANY ONE OR MORE OF THEM, TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.

 

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor’s other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor’s written notice of revocation must be mailed to Lender, by certified mail, at Lender’s address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to new indebtedness created after actual receipt by Lender of Guarantor’s written revocation. For this purpose and without limitation, the term “new indebtedness” does not include the indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due, For this purpose and without limitation, “new indebtedness” does not include all or part of the indebtedness that is: incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of the indebtedness. This Guaranty shall bind Guarantor’s estate as to the indebtedness created both before and after Guarantor’s death or incapacity, regardless of Lender’s actual notice of Guarantor’s death. Subject to the foregoing. Guarantor’s executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the indebtedness, even to zero dollars ($0.00), shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor’s heirs, successors and assigns so long as any of the indebtedness remains unpaid and even though the indebtedness may from time to time be zero dollars ($0.00).

 

OBLIGATIONS OF MARRIED PERSONS.  Any married person who signs this Guaranty hereby expressly agrees that recourse under this Guaranty may be had against both his or her separate property and community property.

 

GUARANTOR’S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantors liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower, (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the indebtedness or any part of the indebtedness, including increases and decreases of the rate of interest on the indebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of this Guaranty or the indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of

 

 

payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

 

GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower’s request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of Guarantor’s assets, or any interest therein; (F) upon Lender’s request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor’s financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor’s financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor’s financial condition; (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor’s risks under this Guaranty, and Guarantor further agrees that, absent a request for information. Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship with Borrower.

 

GUARANTOR’S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following;

 

Annual Statements. As soon as available, but in no event later than ninety (90) days after the end of each fiscal year, Guarantor’s balance sheet and income statement for the year ended, compiled by a certified public accountant satisfactory to Lender.

 

Interim Statements. As soon as available, but in no event later than thirty (30) days after the end of each fiscal quarter, Guarantor’s balance sheet and profit and loss statement for the period ended, prepared by Guarantor.

 

Tax Returns. As soon available, but in no event later than thirty (30) days after the applicable filing date for the tax reporting period ended, Federal and other governmental tax returns, prepared by a certified public accountant satisfactory to Lender.

 

Additional Requirements. ANNUAL FINANCIAL STATEMENTS MUST BE COMPILED BY CPA AND ARE DUE WITHIN 90 DAYS AFTER FISCAL YEAR END ON ALL GUARANTORS; COPIES OF TAX RETURNS MUST BE PREPARED BY CPA AND ARE DUE WITHIN 30 DAYS AFTER THE APPLICABLE FILING DATE ON ALL GUARANTORS.

 

All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct.

 

GUARANTOR’S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender’s power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever.

 

Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any “one action” or “anti-deficiency” law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender’s commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor’s subrogation rights or Guarantor’s rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower’s liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower’s trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.

 

Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both.

 

GUARANTOR’S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor’s full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public, policy.

 

SUBORDINATION OF BORROWER’S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of

 

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Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.

 

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Guaranty:

 

Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys’ Fees; Expenses. Guarantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Guarantor also shall pay all court costs and such additional fees as may be directed by the court.

 

Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty.

 

Governing Law.  This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of New Mexico without regard to its conflicts of law provisions.

 

Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor’s attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor’s intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender’s attorneys’ fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.

 

Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words “Borrower” and “Guarantor” respectively shall mean all and any one or more of them. The words “Guarantor,” “Borrower,” and “Lender” include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.

 

Notices. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled “DURATION OF GUARANTY.” Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Guarantor agrees to keep Lender informed at all times of Guarantor’s current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.

 

No Waiver by Lender.  Lender shall not be deemed to have waived any rights  under this Guaranty unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender’s rights or of any of Guarantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

 

Successors and Assigns. Subject to any limitations stated in this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be binding upon and inure to the benefit of the parties, their successors and assigns.

 

DEFINITIONS.  The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code:

 

Borrower. The word “Borrower” means CP PROPERTY HOLDINGS, LLC; and CP NURSING, LLC and includes all co-signers and co-makers signing the Note and all their successors and assigns.

 

GAAP.  The word “GAAP” means generally accepted accounting principles.

 

Guarantor. The word “Guarantor” means everyone signing this Guaranty, including without limitation CONNIE F. BROGDON, and in each case, any signer’s successors and assigns.

 

Guaranty. The word “Guaranty” means this guaranty from Guarantor to Lender.

 

Indebtedness. The word “Indebtedness” means Borrower’s indebtedness to Lender as more particularly described in this Guaranty. 

 

Lender. The word “Lender” means THE BANK OF LAS VEGAS, its successors and assigns.

 

Note. The word “Note” means and includes without limitation all of Borrower’s promissory notes and/or credit agreements evidencing Borrower’s loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements.

 

Related Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental

 

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agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the indebtedness.

 

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”. NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED MAY 25, 2011.

 

	
GUARANTOR:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Connie B. Brogdon
    	
 
    
	
CONNIE   B. BROGDON
    	
 
    

 

4Exhibit 10.41

 

JOINDER AGREEMENT, THIRD AMENDMENT

and

SUPPLEMENT TO CREDIT AGREEMENT

 

THIS JOINDER AGREEMENT, THIRD AMENDMENT AND SUPPLEMENT TO CREDIT AGREEMENT (this “Agreement”) dated June 2, 2011, is made by and among ADK GEORGIA, LLC, a Georgia limited liability company (“ADK Georgia”), ADK POWDER SPRINGS OPERATOR, LLC, a Georgia limited liability company (“Powder Springs”), ADK LUMBER CITY OPERATOR, LLC, a Georgia limited liability company (“Lumber City”), ADK JEFFERSONVILLE OPERATOR, LLC, a Georgia limited liability company (“Jeffersonville”), ADK LAGRANGE OPERATOR, LLC, a Georgia limited liability company (“LaGrange”), ADK THOMASVILLE OPERATOR, LLC, a Georgia limited liability company (“Thomasville”), ADK OCEANSIDE OPERATOR, LLC, a Georgia limited liability company (“Oceanside”), ADK SAVANNAH BEACH OPERATOR, LLC, a Georgia limited liability company (“Savannah”), ADK THUNDERBOLT OPERATOR, LLC, a Georgia limited liability company (“Thunderbolt”), ATTALLA NURSING ADK, LLC, a Georgia limited liability company (“Attalla ADK”), MOUNTAIN TRACE NURSING ADK, LLC, an Ohio limited liability company (“Mountain Trace”; ADK Georgia, Powder Springs, Lumber City, Jeffersonville, LaGrange, Thomasville, Oceanside, Savannah, Thunderbolt, Attalla ADK and Mountain Trace are hereinafter referred to collectively as “Existing Borrowers” and each individually an “Existing Borrower”),  MT. KENN NURSING, LLC, a Georgia limited liability company (“Mt. Kenn”), ERIN NURSING, LLC, a Georgia limited liability company (“Erin”), ADCARE OPERATIONS, LLC, a Georgia limited liability company (“Operations”; Mt. Kenn, Erin and Operations are hereinafter referred to collectively as “New Borrowers” and each individually a “New Borrower”; New Borrowers and Existing Borrowers are hereinafter referred to collectively as “Borrowers” and each individually as a “Borrower”), and GEMINO HEALTHCARE FINANCE, LLC, a Delaware limited liability company (“Lender”).  Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in that certain Credit Agreement dated October 29, 2010 (as at any time amended, restated, supplemented or otherwise modified, the “Credit Agreement”), among Existing Borrowers and Lender.  Capitalized terms used herein, unless otherwise defined herein, shall have the meanings ascribed to them in the Credit Agreement.  The terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.  All references to any Person shall mean and include the successors and permitted assigns of such Person.  All references to any of the Loan Documents shall include any and all amendments or modifications thereto and any and all restatements, extensions or renewals thereof.  Wherever the phrase “including” shall appear in this Agreement, such word shall be understood to mean “including, without limitation.”

 

Borrowers have requested that Lender join New Borrowers to the Credit Agreement and extend credit to New Borrowers as Borrowers under the Credit Agreement.  New Borrowers are executing this Agreement to become parties to the Credit Agreement in order to induce Lender to continue to extend credit under the Credit Agreement and as consideration for the Revolving Loans previously made.

 

An Event of Default under the Credit Agreement has occurred, and Borrowers have requested a waiver of such Event of Default.

 

Accordingly, and for Ten Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by the parties hereto, Lender and Borrowers agree as follows:

 

1.             Joinder of New Borrowers.  In accordance with the Credit Agreement, each New Borrower by its signature below becomes a Borrower under the Credit Agreement with the same force

 

 

and effect as if originally named therein as a Borrower, and each New Borrower hereby agrees to all the terms and provisions of the Credit Agreement applicable to it as a Borrower thereunder.  Each reference to a “Borrower” in the Credit Agreement shall be deemed to include New Borrowers.  The Credit Agreement is hereby incorporated herein by reference.

 

2.             Amendments to Credit Agreement.  The Credit Agreement is hereby amended as follows:

 

(a)           By deleting the first sentence of Section 2.01(b) of the Credit Agreement and by substituting in lieu thereof the following:

 

(b)           On June 2, 2011, Borrowers shall execute and deliver a promissory note to Lender in the principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000) (as may be amended, modified or replaced from time to time, the “Revolving Note”).

 

(b)           By deleting Section 6.06(b) of the Credit Agreement and by substituting in lieu thereof the following:

 

(b)           Maximum Loan Turn Days.  Borrowers shall maintain at all times a Maximum Loan Turn Days, measured quarterly at the end of the fiscal quarter ending December 31, 2010 and each fiscal quarter thereafter, of not greater than 40 days.

 

(c)           By deleting Section 8.01(w) of the Credit Agreement and by substituting in lieu thereof the following:

 

(w)          CHOW.  The CHOW with respect to (i) each Healthcare Facility of ADK Georgia, Powder Springs, Lumber City, Jeffersonville, LaGrange and Thomasville shall not have been unconditionally and in writing approved by each of the appropriate Governmental Authorities, intermediaries or other designated agents with respect to each such Borrower and each such Healthcare Facility on or before February 28, 2011, (ii) each Healthcare Facility of Attalla Nursing ADK, LLC, ADK Oceanside Operator, LLC, ADK Savannah Beach Operator, LLC, and ADK Thunderbolt Operator, LLC shall not have been unconditionally and in writing approved by each of the appropriate Governmental Authorities, intermediaries or other designated agents with respect to each such Borrower and each such Healthcare Facility on or before April 30, 2011, or (iii) each Healthcare Facility of Mountain Trace Nursing ADK, LLC, Mt. Kenn Nursing, LLC, and Erin Nursing, LLC shall not have been unconditionally and in writing approved by each of the appropriate Governmental Authorities, intermediaries or other designated agents with respect to each such Borrower and each such Healthcare Facility on or before September 30, 2011; or

 

(d)           By deleting clauses (l) and (m) of the definition of “Eligible Accounts” set forth in Annex 1 to the Credit Agreement and by substituting in lieu thereof the following:

 

(l)            which has a Billing Date that is both on or after September 1, 2010 and on or after the date on which the applicable Borrower acquired the Healthcare Facility with respect to which such Account arose;

 

(m)          to the extent such Account is Medicaid Pending, it is not outstanding more than thirty (30) days past the date the corresponding services and/or goods were provided; and

 

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(n)           which complies with such other criteria and requirements as may be specified from time to time by Lender in its reasonable discretion.

 

(e)           By deleting the definitions of “Collateral Assignment of Transition Services Agreement”, “EBITDA”, “Transferor” and “Transition Services Agreement” set forth in Annex 1 to the Credit Agreement and by substituting in lieu thereof the following:

 

“Collateral Assignment of Transition Services Agreement” means, collectively, (i) the Collateral Assignment of Operations Transfer Agreement of even date herewith among ADK Georgia and Lender, and the written acknowledgment thereof by Transferor, (ii) the Collateral Assignment of Transfer Agreements dated February 25, 2011, among ADK Georgia, Attalla Nursing ADK, LLC, Mountain Trace Nursing ADK, LLC, ADK and Lender, and the written acknowledgment thereof by Transferor, and (iii) the Collateral Assignment of Transfer Agreements dated June 2, 2011, among Mt. Kenn Nursing, LLC, Erin Nursing, LLC, and Lender, and the written acknowledgment thereof by Transferor.

 

“EBITDA” means the sum of net income plus interest expense, plus taxes, plus depreciation and amortization, plus/minus any non-cash derivative losses/gains on or after April 1, 2011, plus non-cash stock based compensation expense on or after April 1, 2011, plus/minus any non-cash gains/losses with respect to acquisitions (net of acquisition costs) on or after April 1, 2011.

 

“Transferor” means, as applicable, any or all of Attalla Health Care, Inc., Five Star Quality Care-GA, LLC, Mountain Trace Enterprise LLC, Triad Health Management of Georgia, LLC, Triad Health Management of Georgia III, LLC, Triad at Jeffersonville I, LLC, Triad at LaGrange I, LLC, Triad at Lumber City I, LLC, Triad at Parkview, LLC, Triad at Powder Springs I, LLC, Triad at Tara, LLC, and Triad at Thomasville I, LLC.

 

“Transition Services Agreement” means, as applicable, any or all of (i) the Operations Transfer Agreement entered into as of July 31, 2010, among ADK Georgia, Triad Health Management of Georgia, LLC, Triad at Jeffersonville I, LLC, Triad at LaGrange I, LLC, Triad at Lumber City I, LLC, Triad at Powder Springs I, LLC, and Triad at Thomasville I, LLC, (ii) the Operations Transfer Agreement dated as of October 1, 2010, between Attalla Health Care, Inc., and Attalla Nursing ADK, LLC; (iii) the Operations Transfer Agreement dated as of July 31, 2010, among ADK Georgia, Triad Health Management of Georgia, LLC, Triad Health Management of Georgia III, LLC, and Triad at Tara, LLC; (iv) the Operations Transfer Agreement dated as of October 27, 2010, between Mountain Trace Enterprise LLC, and Mountain Trace Nursing ADK, LLC; (v) the Operations Transfer Agreement dated as of May 1, 2011, between Five Star Quality Care-GA, LLC, and Mt. Kenn Nursing, LLC; and (vi) the Operations Transfer Agreement dated as of May 1, 2011, between Five Star Quality Care-GA, LLC and Erin Nursing, LLC.

 

(f)            By adding the following definition of “Medicaid Pending” to Annex 1 of the Credit Agreement in appropriate alphabetical order:

 

“Medicaid Pending” means an amount that will be billed to Medicaid for services rendered to patients that are expected to qualify for such state Medicaid program, but which patients are at the time in question in the process of completing the necessary paperwork and have not yet been officially accepted by such state as eligible Medicaid patients.

 

3

 

3.             Limited Waiver of Default.  An Event of Default has occurred and currently exists under the Credit Agreement as a result of Borrower’s breach of Section 8.01(w) of the Credit Agreement (the “Designated Default”).  The Designated Default exists because the CHOW with respect to the Healthcare Facility of Mountain Trace was not approved in accordance with Section 8.01(w) of the Credit Agreement on or before April 30, 2011.  Borrowers represent and warrant that the Designated Default is the only Unmatured Event of Default or Event of Default that exists under the Credit Agreement and the other Loan Documents as of the date hereof.  Subject to the satisfaction of the conditions precedent set forth in Section 7 hereof, Lender hereby waives the Designated Default in existence on the date hereof.  In no event shall such waiver be deemed to constitute a waiver of (a) any Unmatured Event of Default or Event of Default other than the Designated Default in existence on the date of this Agreement or (b) Borrowers’ obligation to comply with all of the terms and conditions of the Credit Agreement and the other Loan Documents from and after the date hereof.  Notwithstanding any prior, temporary mutual disregard of the terms of any contracts between the parties, Borrowers hereby agree that they shall be required strictly to comply with all of the terms of the Loan Documents on and after the date hereof.

 

4.             Acknowledgments of New Borrowers.  New Borrowers acknowledge that they have requested Lender to extend financial accommodations to Borrowers on a combined basis in accordance with the provisions of the Credit Agreement, as hereby amended.  In accordance with the terms of Article 10 of the Credit Agreement, each New Borrower acknowledges and agrees that it shall be jointly and severally liable for any and all Revolving Loans and other Obligations heretofore or hereafter made by Lender to any Borrower and for all interest, fees and other charges payable in connection therewith.  Each New Borrower hereby appoints and designates ADK Georgia as, and ADK Georgia shall continue to act under the Credit Agreement as, the Borrower Representative of each New Borrower and each other Borrower for all purposes, including requesting borrowings and receiving accounts statements and other notices and communications to Borrowers (or any of them) from Lender. Each Loan made by Lender under the Credit Agreement or any of the other Loan Documents shall be disbursed in accordance with the Credit Agreement.

 

5.             Security Interest.  To secure the prompt payment and performance to Lender of all of the Obligations, each New Borrower hereby grants to Lender a continuing security interest in and Lien upon all of such New Borrower’s assets, including all of the following Property and interests in Property of such Borrower, whether now owned or existing or hereafter created, acquired or arising and wheresoever located:

 

(a) all Accounts; (b) all Payment Intangibles; (c) all Instruments, Chattel Paper (including Electronic Chattel Paper), Documents, Letter-of-Credit Rights, Supporting Obligations and Commercial Tort Claims set forth on Schedule 5.23 to the Credit Agreement, in each case to the extent arising out of, relating to or given in exchange for or settlement of or to evidence the obligation to pay any Account or Payment Intangible; (d) all General Intangibles (including contract rights and trademarks, copyrights, patents and other intellectual property) that arise out of or relate to any Account or Payment Intangible or from which any Account or Payment Intangible arises; (e) all remedies, guarantees and collateral evidencing, securing or otherwise relating to or associated with any Account or Payment Intangible, including all rights of enforcement and collection; (f) all Commercial Lockboxes, Governmental Lockboxes, Collection Accounts and other Deposit Accounts into which Collections or other proceeds of Collateral or Advances are deposited, and all checks or Instruments from time to time representing or evidencing the same; (g) all cash, currency and other monies at any time in the possession or under the control of Lender or a bailee of Lender; (h) all books and records evidencing or relating to or associated with any of the foregoing; (i) all information and data compiled or derived with respect to any of the foregoing (other than any such information and data subject to legal

 

4

 

restrictions of patient confidentiality); and (j) all Collections, Accessions, receipts and Proceeds derived from any of the foregoing.

 

6.             Representations and Warranties.  Mt. Kenn and Erin each represents and warrants to Lender that such New Borrower is a wholly owned Subsidiary of Operations.  Operations represents and warrants to Lender that such New Borrower is a wholly owned Subsidiary of ADK.   Each New Borrower represents and warrants to Lender that such New Borrower is  engaged in the same business as the other Borrowers (or, in the case of Operations, solely as a holding company for the equity interests of Mt. Kenn, Erin and CP Nursing, LLC, a Georgia limited liability company) as part of a joint and common enterprise; that this Agreement has been duly authorized, executed and delivered by such New Borrower and constitutes a legal, valid and binding obligation of such New Borrower, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity); and that the Schedules attached hereto contain true, accurate and complete information with respect to New Borrowers and the matters covered therein and such Schedules shall be deemed to supplement and be a part of the Schedules to the Credit Agreement.  In addition, each New Borrower represents and warrants to Lender that no Event of Default or Unmatured Event of Default exists on the date hereof other than the Designated Default; that the execution, delivery and performance of this Agreement have been duly authorized by all requisite company action on the part of Borrowers and this Agreement has been duly executed and delivered by Borrowers; and that all of the representations and warranties made by Borrowers in the Credit Agreement are true and correct on and as of the date hereof.

 

7.             Conditions Precedent.  The effectiveness of this Agreement is subject to the satisfaction of each of the following conditions precedent, in form and substance satisfactory to Lender, unless satisfaction thereof is specifically waived in writing by Lender:

 

(a)           No Event of Default or Unmatured Event of Default shall exist other than the Designated Default;

 

(b)           Lender shall have received from Borrowers a duly executed counterpart of this Agreement;

 

(c)           Lender shall have received from Borrowers a duly executed Second  Amended and Restated Revolving Note in the amount of $7,500,000;

 

(d)           Lender shall have received, reviewed and found acceptable in all respects all organizational documents for New Borrowers, including certified resolutions, a copy of the Articles of Organization for each New Borrower certified by such New Borrower’s state of formation, a copy of each New Borrower’s Operating Agreement, a good standing certificate of each New Borrower certified by such New Borrower’s state of formation, and a good standing certificate of each New Borrower certified by each other state in which such New Borrower is qualified to transact business;

 

(e)           Lender shall have received from each New Borrower authorization to file UCC-1 financing statements and any other appropriate documentation to perfect or continue the perfection of Lender’s liens with respect to the assets of such New Borrower and Lender shall have received confirmation from each appropriate jurisdiction that such financing statements have been filed in the appropriate records;

 

5

 

(f)            Lender shall have completed its due diligence to ensure that Lender’s security interests and liens are or will be first priority liens on the assets of each New Borrower and that there are no other liens on such assets other than those that are acceptable to Lender in its sole discretion, and in connection therewith shall have obtained such intercreditor and subordination agreements as may be deemed necessary by Lender, in form and substance satisfactory to Lender;

 

(g)           Lender shall have received from New Borrowers evidence of New Borrowers’ liability, property and casualty insurance coverage and insurance binders and lender’s loss payable endorsements with respect thereto naming Lender as certificate holder, lender’s loss payee and additional insured, as applicable;

 

(h)           Lender shall have received from New Borrowers such other documents, instruments and agreements (including, without limitation, Depository Agreements in respect of the Government Lockbox) as Lender may require in its sole discretion in form and substance satisfactory to Lender;

 

(i)            New Borrowers shall have delivered to Lender such financial, business and other information with respect to New Borrowers as Lender may have requested;

 

(j)            There shall not have occurred any material adverse change in the operations or financial condition of Borrowers;

 

(k)           Lender shall have received an opinion letter from Borrowers’ legal counsel with respect to such matters as Lender may request;

 

(l)            Each New Borrower shall have signed and delivered to Lender notices, in the form of Exhibit 4.02(d) to the Credit Agreement, directing the Obligors to make payment to the Government Lockbox; and

 

(m)          Lender shall have completed its due diligence with respect to New Borrowers and the Properties of New Borrowers, the results of which shall be satisfactory to Lender.

 

8.             Ratification and Reaffirmation.  Each Borrower hereby ratifies and reaffirms the Obligations, each of the Loan Documents and all of such Borrower’s covenants, duties, indebtedness and liabilities under the Loan Documents.

 

9              Additional Covenants.  To induce Lender to enter into this Agreement, Borrowers covenant and agree that, within thirty (30) days after the later of (i) the date that the Centers for Medicare & Medicaid Services has made the electronic funds transfers (“EFTs”) available to a Borrower in connection with the CHOW process, or (ii) the date of this Agreement, Borrowers shall deliver to the Centers for Medicare & Medicaid Services (and provide evidence to Lender of the delivery thereof) a completed copy of Form CMS-588, together with all other documentation necessary to cause the Centers for Medicare & Medicaid Services to direct EFTs to the Government Lockbox.

 

10.           Acknowledgments of All Borrowers.  Each Borrower acknowledges and stipulates that the Credit Agreement and the other Loan Documents executed by Borrowers are legal, valid and binding obligations of Borrowers that are enforceable against Borrowers in accordance with the terms thereof; all of the Obligations are owing and payable without defense, offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof, the same is hereby waived by Borrowers); and the security interests and liens granted by Borrowers in favor of Lender are duly perfected, first priority security interests and liens.

 

6

 

11.           No Novation, etc.  Except as otherwise expressly provided in this Agreement, nothing herein shall be deemed to amend or modify any provision of the Credit Agreement or any of the other Loan Documents, each of which shall remain in full force and effect.  This Agreement is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and the Credit Agreement as herein modified shall continue in full force and effect.

 

12.           Severability.  In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

13.           Expenses of Lender.  In consideration of Lender’s willingness to enter into this Agreement, Borrowers agree to reimburse Lender for Lender’s reasonable out-of-pocket expenses in connection with this Agreement, including, without limitation, the fees, disbursements and other charges of counsel for Lender.

 

14.           Entire Agreement.  This Agreement and the other Loan Documents, together with all other instruments, agreements and certificates executed by the parties in connection therewith or with reference thereto, embody the entire understanding and agreement between the parties hereto and thereto with respect to the subject matter hereof and thereof and supersede all prior agreements, understandings and inducements, whether express or implied, oral or written.  Each of the Schedules attached hereto is incorporated into this Agreement and by this reference made a part hereof.

 

15.           Counterparts; Electronic Signatures.  This Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.  Any manually-executed signature page hereto delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature hereto.

 

16.           Effectiveness; Governing Law.  This Agreement shall be effective when accepted by Lender (New Borrowers hereby waiving notice of such acceptance) and thereupon shall be deemed a contract made in Pennsylvania, and shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania without regard to the conflict of laws principles thereof.

 

17.           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, representatives, executors, successors and assigns.

 

18.           Section Titles.  Section titles and references used in this Agreement shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto.

 

19.           Manager Certification of Existing Borrowers.  By their execution and delivery of this Agreement, Boyd P. Gentry and Christopher F. Brogdon each hereby certifies that: (a) in his capacity as the Chief Executive Officer of ADK, Boyd P. Gentry is an authorized designee of each Existing Borrower, (b) the following Unanimous Consents in Lieu of a Special Meeting (collectively, the “Consents”) each remain in full force and effect:  (i) Unanimous Consents of the Sole Member and the Managers of each ADK Georgia, Powder Springs, Lumber City, Jeffersonville, LaGrange, and Thomasville dated as of October 29, 2010; and (ii) Unanimous Consents of the Sole Member and the Managers of each Oceanside, Savannah, Thunderbolt, Attalla ADK and Mountain Trace dated as of February 21, 2011; (c) pursuant to the Consents, the Managers or designees of each Existing Borrower are

 

7

 

authorized and empowered (either alone or in conjunction with any one or more of the other Managers of such Existing Borrower) to take, from time to time, all or any part of the following actions on or in behalf of such Existing Borrower:  (i) to make, execute and deliver to Lender this Agreement and all other agreements, documents and instruments contemplated by or referred to herein or executed by such Existing Borrower in connection herewith; and (ii) to carry out, modify, amend or terminate any arrangements or agreements at any time existing between such Existing Borrower and Lender; (d) any arrangements, agreements, security agreements, or other instruments or documents referred to or executed pursuant to this Agreement by David A. Tenwick, Boyd P. Gentry, Christopher F. Brogdon or any other Manager of such Existing Borrower, or by the Chief Executive Officer of ADK (currently, Boyd P. Gentry) or an employee of such Existing Borrower acting pursuant to delegation of authority, may be attested by such person and may contain such terms and provisions as such person shall, in his or her sole discretion, determine; (e) the Chief Executive Officer of ADK is a designee of such Existing Borrower who is authorized and empowered (either alone or in conjunction with any one or more of the Managers of such Existing Borrower) to take any action on behalf of such Existing Borrower in conjunction with the Credit Agreement and this Agreement; (f) the Chief Financial Officer of ADK (currently, J. Scott Cunningham) and the Controller of ADK (currently, Susan Criswell) each are designees of such Existing Borrower who are authorized and empowered to borrow money from time to time under the revolving line of credit per the terms of the Credit Agreement and this Agreement, to endorse the name of any Borrower to any checks, drafts and other instruments or orders for the payment of money, payable to such Borrower or its order for the purpose of depositing the same in any account or accounts of Lender with any bank, banker, or trust company or any of the branches of any said bank, and to deal with any and all checks, drafts, and other instruments or orders (including but not limited to preparation of Borrowing Base Certificate documentation) for the payment of money and the proceeds thereof as the property of Lender; and (f) set forth below is the name and signature of the current Chief Executive Officer of ADK, Boyd P. Gentry, one designated representative and Manager of each Existing Borrower, who is authorized to sign all Credit Agreements, security agreements, instruments, assignments, pledges, mortgages, security deeds, trust deeds and other documents among Borrower and Lender:

 

	
Boyd   P. Gentry 
    	
Chief   Executive
    	
/s/   Boyd P. Gentry
    
	
 
    	
Officer   of ADK and
    
	
 
    	
Manager   of each Existing Borrower
    

 

20.          Release of Claims.  To induce Lender to enter into this Agreement, each Borrower hereby releases, acquits and forever discharges Lender, and all officers, directors, agents, employees, successors and assigns of Lender, from any and all liabilities, claims, demands, actions or causes of action of any kind or nature (if there be any), whether absolute or contingent, disputed or undisputed, at law or in equity, or known or unknown, that Borrowers now have or ever had against Lender arising under or in connection with any of the Loan Documents or otherwise.  Each Borrower represents and warrants to Lender that none of them have transferred or assigned to any Person any claim that any of them has ever had or claimed to have against Lender.

 

21.          Waiver of Jury Trial.  The parties hereto each hereby waives the right to trial by jury in any action, suit, counterclaim or proceeding arising out of or related to this Agreement.

 

[Signatures commence on following page.]

 

8

 

IN WITNESS WHEREOF, Borrowers and Lender have duly executed this Agreement under seal as of the date and year first above written.

 

	
NEW   BORROWERS:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address   for notices to New Borrowers:
    	
 
    	
MT.   KENN NURSING, LLC
    
	
5057   Troy Road
    	
 
    	
 
    
	
Springfield,   Ohio 45502
    	
 
    	
 
    
	
Attn:   
    	
Mr. Scott   Cunningham
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
Fax:   
    	
(937)   964-8222
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address   for notices to New Borrowers:
    	
 
    	
ERIN   NURSING, LLC
    
	
5057   Troy Road
    	
 
    	
 
    
	
Springfield,   Ohio 45502
    	
 
    	
 
    
	
Attn:   
    	
Mr. Scott   Cunningham
    	
 
    	
 
    
	
Fax:   
    	
(937)   964-8222
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address   for notices to New Borrowers:
    	
 
    	
ADCARE   OPERATIONS, LLC
    
	
5057   Troy Road
    	
 
    	
 
    
	
Springfield,   Ohio 45502
    	
 
    	
 
    
	
Attn:   
    	
Mr. Scott   Cunningham
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
Fax:   
    	
(937)   964-8222
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    

 

[Signatures continued on following page.]

 

Joinder Agreement, Third Amendment and Supplement to Credit Agreement (AdCare)

 

 

	
For   purposes of the Manager Certification of Existing Borrowers in   Section 19 above:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Boyd P. Gentry
    	
(SEAL)
    	
 
    	
 
    
	
Boyd   P. Gentry
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Christopher F. Brogdon
    	
(SEAL)
    	
 
    	
 
    
	
Christopher   F. Brogdon
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
EXISTING   BORROWERS:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
ADK   GEORGIA, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
ADK   POWDER SPRINGS OPERATOR, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
ADK   LUMBER CITY OPERATOR, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
ADK   JEFFERSONVILLE OPERATOR, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    

 

[Signatures continued on following page.]

 

Joinder Agreement, Third Amendment and Supplement to Credit Agreement (AdCare)

 

 

	
 
    	
 
    	
ADK   LAGRANGE OPERATOR, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
ADK   THOMASVILLE OPERATOR, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
ADK   OCEANSIDE OPERATOR, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
ADK   SAVANNAH BEACH OPERATOR, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
ADK   THUNDERBOLT OPERATOR, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
ATTALLA   NURSING ADK, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
MOUNTAIN   TRACE NURSING ADK, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
 
    	
Boyd   P. Gentry, Manager
    

 

[Signatures continued on following page.]

 

Joinder Agreement, Third Amendment and Supplement to Credit Agreement (AdCare)

 

 

	
LENDER:
    	
GEMINO   HEALTHCARE FINANCE, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Jeffrey M. Joslin
    
	
 
    	
 
    	
Jeffrey   M. Joslin, Senior Portfolio
    
	
 
    	
 
    	
Manager
    

 

[Consent and Reaffirmation of Guarantor appears on next page]

 

Joinder Agreement, Third Amendment and Supplement to Credit Agreement (AdCare)

 

 

CONSENT AND REAFFIRMATION

 

The undersigned guarantor of the Obligations of Borrowers at any time owing to Lender hereby (i) acknowledges receipt of a copy of the foregoing Joinder Agreement, Third Amendment and Supplement to Credit Agreement; (ii) consents to Borrowers’ execution and delivery thereof and of the other documents, instruments or agreements Borrowers agree to execute and deliver pursuant thereto; (iii) agrees to be bound thereby; and (iv) affirms that nothing contained therein shall modify in any respect whatsoever its guaranty of the Obligations and reaffirms that such guaranty is and shall remain in full force and effect.

 

IN WITNESS WHEREOF, the undersigned has caused its duly authorized officers to execute this Consent and Reaffirmation on and as of the date of such Joinder Agreement, Third Amendment and Supplement to Credit Agreement.

 

	
 
    	
ADCARE HEALTH SYSTEMS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
Boyd   P. Gentry, Chief Executive Officer
    

 

Joinder Agreement, Third Amendment and Supplement to Credit Agreement (AdCare)

 

 

List of Attached Schedules

 

	
Schedule   5.01
    	
 
    	
Borrowers’   States of Qualifications
    
	
Schedule   5.02
    	
 
    	
Jurisdictions   of Organization/Chief Executive Office/Other Locations of Collateral
    
	
Schedule   5.03
    	
 
    	
Provider   Identification Numbers
    
	
Schedule   5.04
    	
 
    	
Pending   Litigation
    
	
Schedule   5.06
    	
 
    	
Permitted   Liens
    
	
Schedule   5.09
    	
 
    	
Fiscal   Year End/Tax Identification Number/Organization Number
    
	
Schedule   5.11
    	
 
    	
Guaranties, Investments   and Borrowings
    
	
Schedule   5.13
    	
 
    	
Other   Associations
    
	
Schedule   5.14
    	
 
    	
Environmental   Matters
    
	
Schedule   5.15
    	
 
    	
Capital   Stock
    
	
Schedule   5.23
    	
 
    	
Commercial   Tort Claims
    
	
Schedule   5.24
    	
 
    	
Letter-of-Credit   Rights
    
	
Schedule   5.25
    	
 
    	
Intellectual   Property
    
	
Schedule   7.06
    	
 
    	
Investments
    
	
Schedule   7.12
    	
 
    	
Indebtedness

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