Document:

Exhibit 10.159

 

GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT (“this Agreement”), dated as of June 1, 2010, is made and entered into by ADCARE HEALTH SYSTEMS, INC., an Ohio corporation (the “Guarantor”), to and for the benefit of BANK OF OKLAHOMA, N.A., as trustee under a Trust Indenture, dated as of June 1, 2010, the address of which is One Williams Center, Tulsa Oklahoma 74192 (together with its successors and assigns, the “Trustee”),

 

W I T N E S S E T H:

 

Background. Pursuant to a resolution adopted by The Medical Clinic Board of the City of Hoover (the “Issuer”) and the Trust Indenture reference above (the “Indenture), the Issuer expects to issue its: (i) $5,845,000 The Medical Clinic Board of the City of Hoover First Mortgage Revenue Bonds (Riverchase Village, ADK, LLC Project) Series 2010A (the “Series 2010A Bonds”); and (ii) $520,000 The Medical Clinic Board of the City of Hoover First Mortgage Revenue Bonds (Riverchase Village, ADK, LLC Project) Series 2010B (Taxable) (the “Series 2010B (Taxable) Bonds” and, together with the Series 2010A Bonds, the “Series 2010 Bonds”).

 

The Issuer will use the proceeds from the sale of the Series 2010 Bonds to undertake a project (the “Project”) for the benefit of Riverchase Village, ADK, LLC, a Georgia limited liability company (the “Lessee”), consisting of: (i) the Issuer’s costs of the acquisition and rehabilitation of the 108-unit assisted living facility located at 1851 Data Drive, Hoover, Alabama 35244 (the “Facility”) (as more particularly described in the Security Agreement), (ii) providing deposits into certain of the funds and accounts established under the Indenture, including a deposit to the Debt Service Reserve Fund for the Series 2010 Bonds, and (iii) the payment of certain costs of issuance of the Bonds, such Project to be financed through the Issuer for the Lessee.

 

The Issuer will lease the Facility to the Lessee pursuant to a Lease Agreement, dated as of June 1, 2010 (the “Lease Agreement”). The Lessee will be required to make all of its payment obligations under the Lease Agreement (the “Lease Payments”) directly to the Trustee in such amounts as will enable the Trustee to pay, when due, the principal of, premium if any, and interest on, the Series 2010 Bonds and all other amounts, fees, penalties, premiums, adjustments, expenses, counsel fees and other payments due pursuant to the terms of the Indenture. The source of funds available to the Lessee to make the Lease Payments will be the revenues generated by the operation of the Facility (the “Gross Revenues”).

 

As security for the Series 2010 Bonds, the Issuer will, pursuant to a Mortgage and Security Agreement, dated as of June 1, 2010 (the “Mortgage and Security Agreement”), (i) grant the Trustee (subject to Permitted Encumbrances) a first lien on and security interest in all of the land, buildings and other improvements that constitute the Facility, and (ii) assign to the Trustee all of the Issuer’s rights under the Lease Agreement (except for certain “Reserved Rights” of the Issuer), but including all of its rights to collect and receive the Lease Payments thereunder. In addition, the Lessee will join in the Mortgage and Security Agreement to subject to the lien thereof,

 

 

and the security interest created thereby, all of its right, title and interest in and to the Facility, and in, to and under the Lease Agreement, and in and to the Gross Revenues and all of its other personal property now or hereafter located in the Facility.

 

In order to enhance the marketability of the Series 2010 Bonds, the underwriter of the Series 2010 Bonds (the “Underwriter”) has requested that the Guarantor execute and deliver this Agreement, and the Guarantor is willing to do so.

 

NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt of which is acknowledged by the Guarantor hereby, and as an inducement to the purchasers of the Series 2010 Bonds to purchase the same, the Guarantor, hereby agrees as follows:

 

Section 1.  Representations and Warranties.

 

1.01.       The Guarantor represents and warrants that the Guarantor has all requisite power and authority to execute and deliver this Agreement, that such execution and delivery has been duly authorized by or on behalf of the Guarantor, and that this Agreement constitutes the valid, binding and enforceable obligation of the Guarantor.

 

1.02.       The Guarantor further represents and warrants that neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby nor the fulfillment of or compliance with the terms or conditions of this Agreement conflicts with or results in a breach of any of the terms, conditions or provisions of the Guarantor’s operating agreement, or any agreement or instrument to which the Guarantor is a party or by which the Guarantor or any of the Guarantor’s property is bound.

 

1.03.       The Guarantor further represents and warrants that it is affiliated with the Lessee (in that (i) it has an option to purchase the membership interests in the Lessee for significantly less than fair market value, and (ii) it is the Management Company, under the Lease Agreement, of the Facility through its wholly owned subsidiary, Adcare Management Company, Inc., an Ohio corporation), and that the sale of the Series 2010 Bonds and the execution and delivery of this Agreement will result in direct and material financial benefits to the Guarantor.

 

Section 2.  Covenants and Guaranties.

 

2.01. The Guarantor hereby absolutely and unconditionally guarantees to the Trustee, for the benefit of the holders of the Series 2010 Bonds, all of the obligations of the Lessee under the Lease Agreement, including specifically, but without limitation, the obligation to make payments from time to time to the Trustee in amounts sufficient for the Trustee to pay, as and when due, all principal of, premium if any, and interest on, the Series 2010 Bonds. The Guarantor hereby further absolutely and unconditionally guarantees to the Trustee that if, on or at any time after the fifteenth (15th) day next preceding that date on which a payment on account of the

 

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principal of or interest on the Series 2010 Bonds shall be due and payable (each such payment being herein called a “Bond Payment”, and the date on which the same shall be due and payable being herein called a “Bond Payment Date”), the Trustee shall notify the Guarantor (i) that there are insufficient funds in the Interest Account of the Bond Fund for the Series 2010 Bonds, or the Principal Account of the Bond Fund for the Series 2010 Bonds, as the case may be (both established under the Indenture), to make such Bond Payment, and (ii) the amount of such insufficiency (the “Bond Payment Shortfall”), the Guarantor will, no later than the fifth (5th) day next preceding the Bond Payment Date referenced in the aforesaid notification, pay over, or cause to be paid over, to the Trustee, in immediately available funds, for deposit into the aforesaid Interest Account for the Series 2010 Bonds, or the aforesaid Principal Account for the Series 2010 Bonds, as the case may be, monies equal to the Bond Payment Shortfall.

 

2.02.       The Guarantor agrees that payments required of it by the provisions of Paragraph 2.01 hereof shall be made prior to any withdrawal by the Trustee of funds now or hereafter on deposit in any debt service reserve fund for the Series 2010 Bonds that has been established, or hereafter may be established, under the Indenture.

 

2.03.       The Guarantor further agrees with the Trustee that the Guarantor will pay all expenses and charges (including court costs and reasonable attorneys’ fees) paid or incurred by the Trustee in enforcing the obligations of the Guarantor under this Agreement, whether the same shall be enforced by suit or otherwise.

 

2.04.       The obligations of the Guarantor under this Agreement shall be joint and several, continuing, absolute and unconditional, and shall not be affected, modified or impaired upon the happening from time to time of any event, including, without limitation, any of the following, whether or not with notice to or the consent of the Guarantor:

 

(a)      The compromise, settlement, release or termination of any of the obligations, covenants or agreements of the Issuer, the Trustee, the Lessee, the Guarantor, or the Underwriter (collectively, the “Transaction Parties”) under this Agreement or any of the documents relating to the Series 2010 Bonds (collectively, the “Transaction Documents”);

 

(b)      The failure to give notice to the Guarantor of the occurrence of a default under the terms and provisions of this Agreement or any of the other Transaction Documents, except as specifically provided in this Agreement;

 

(c)        The surrender or impairment of any collateral held by any Transaction Party for any obligation guaranteed hereby, or for the Series 2010 Bonds;

 

(d)      The waiver of the payment, performance or observance by any Transaction Party of any of its obligations, covenants or agreements contained in any of the Transaction Documents;

 

(e)       The extension of the time for payment of any amount owing or payable under any of the Transaction Documents, or of the time for performance of any other obligation, covenant or agreement under or arising out of any of the Transaction Documents, or the

 

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extension or the renewal of any thereof;

 

(f)       The modification or amendment (whether material or otherwise) of any obligation, covenant or agreement set forth in any of the Transaction Documents;

 

(g)       Any failure, omission, delay or lack on the part of any Transaction Party to enforce, assert or exercise any right, power or remedy conferred with respect to any other Transaction Party by any of the Transaction Documents;

 

(h)      The voluntary or involuntary liquidation, dissolution, partition, sale or other disposition of all or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings affecting, any Transaction Party, or any of the assets of any of them, or any allegation or contest of the validity of this Agreement or any of the other Transaction Documents in any proceeding; or

 

(i)        The invalidity, irregularity, illegality or unenforceability or any defect in (i) any of the Transaction Documents or (ii) any collateral security for any obligation contained therein.

 

2.05.       No set-off, counterclaims, reductions, or diminution of obligation, or any defense of any kind or nature which the Guarantor has or may have against any other Transaction Party shall affect, modify or impair the Guarantor’s obligations hereunder. Nothing in this Agreement shall be interpreted or construed as a waiver by the Guarantor of any rights or claims the Guarantor may have against any other Transaction Party, or any third party under this Agreement or otherwise, but any recovery upon such rights and claims shall be had from such persons by virtue of the Guarantor’s independent action, it being the intent of this Agreement that the Guarantor shall be unconditionally and absolutely obligated to perform fully all of its obligations, agreements and covenants under this Agreement without set-off.

 

2.06.       If the Guarantor shall fail to make any payment required of it hereunder, the Trustee, in its sole discretion, shall have the right to proceed first and directly against the Guarantor under this Agreement without being required to proceed against or exhaust any other remedies which it may have and without resorting to any other security then held by it.

 

2.07.       Upon any payment by the Guarantor pursuant to Paragraph 2.01 hereof, the Guarantor shall be subrogated to the Trustee in respect of, and shall be deemed an assignee of, the Trustee’s right (and all remedies in respect of such right) to commence proceedings against the Lessee to collect the amount of the Bond Payment Shortfall (together with interest thereon at the per annum rate of eleven percent (11%)) that relates to such payment made by the Guarantor, but such commencement and collection of any such amount by the Guarantor shall be subject to the provisions of Paragraph 2.08 hereof.

 

2.08.       The repayment to the Guarantor of any amounts paid by it pursuant to the provisions of this Agreement is, and at all times and in all events and circumstances shall be, subject, junior and subordinate to the prior payment in full of all principal and premium (if any) of,

 

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and interest on, the Series 2010 Bonds. The Guarantor may not commence proceedings against the Lessee or the Facility to collect any amounts owed it pursuant to the provisions of Paragraph 2.07 hereof until (i) the entire principal amount of the Series 2010 Bonds, together with all interest accrued thereon and premium, if any, payable in connection therewith, shall have been paid in full, or (ii) the Trustee shall have commenced proceeding against the Lessee or the Facility to collect any such principal, interest or premium, whichever shall first occur. For the purposes of this Agreement all references to the “principal amount of the Series 2010 Bonds” and other phrases of similar import shall mean and include not only the Series 2010 Bonds themselves, but all other indebtedness, if any, incurred to refund, repay or otherwise replace any of the Series 2010 Bonds.

 

2.09.       The Guarantor hereby expressly waives notice in writing, or otherwise, from the Trustee of its acceptance and reliance on this Agreement.

 

2.10.       This Agreement is entered into by the Guarantor for the benefit of the Trustee (as trustee for the holders of the Series 2010 Bonds), and its successors and assigns, and the Trustee shall be entitled to enforce performance and observance of this Agreement and of the guaranty and other provisions herein contained to the same extent as if it was a signatory hereto.

 

2.11.       The terms of this Agreement may be enforced as to any one or more breaches either separately or cumulatively.

 

Section 3.  Extent of Liability; Suspension; Termination.

 

3.01.       The obligations of the Guarantor hereunder shall be with full recourse against the Guarantor, and the maximum liability of the Guarantor hereunder shall equal the aggregate of: (a) the sum of (i) the unpaid principal amount of the Series 2010 Bonds, plus (ii) all premium, if any, payable in respect of such principal amount, plus (iii) all interest accrued or to accrue, from time to time, in respect of such principal amount; plus (b) all amounts for which the Guarantor may become obligated pursuant to the provisions of Paragraph 2.03 hereof.

 

3.02.       At such time as there no longer shall be outstanding any principal amount of the Series 2010 Bonds, nor premium payable in respect thereof, nor any interest accrued thereon, and thereafter a period of one full year shall have passed without any proceeding under the Bankruptcy Code or any law of the United States or of any state relating to insolvency, receivership, or debt adjustment, having been instituted by or against the Lessee or the Guarantor, this Agreement shall terminate, and the Guarantor shall have no further liability hereunder.

 

Section 4.  Amendments, Remedies.

 

4.01.       No amendment, change, modification, alteration or termination of any of the Transaction Documents shall be made which would in any way increase the burden of the Guarantor’s obligations under this Agreement without obtaining the prior written consent of the Guarantor.

 

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4.02.       Without the prior written consent of the Underwriter, which may not be unreasonably withheld, the Guarantor may not assign any of his, her or its obligations hereunder to any other person or entity. Each of the Trustee and the Underwriter may assign its rights and obligations hereunder to any successor in interest.

 

4.03.       No remedy herein conferred upon or reserved to the Trustee hereunder or under any applicable law is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default, omission or failure of performance hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Trustee to exercise any remedy reserved to it in this Agreement, it shall not be necessary to give any notice, other than such notice as may be herein expressly required. If any provision contained in this Agreement should be breached by any party and thereafter duly waived by the other party so empowered to act, such waiver shall be limited to the particular breach so waived at that particular time, and shall not be deemed to waive such breach at any other time or any other breach hereunder at any time. No amendment, release or modification of this Agreement shall be established by conduct, custom or course of dealing, but solely by an instrument in writing duly executed by the parties thereunto duly authorized by this Agreement.

 

Section 5.  Miscellaneous.

 

5.01.       This Agreement and the rights and obligations of the parties hereto (including third party beneficiaries) shall be governed, construed and interpreted according to the laws of the State of Georgia, other than its rules regarding the choice of law.

 

5.02.       This Agreement constitutes the entire agreement of the Transaction Parties with regard to the subject matter hereof, and this Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

5.03.       If any provision of this Agreement shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any Constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.

 

5.04.       This Agreement may be amended only by a written agreement signed by the Trustee and the Guarantor.

 

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5.05.       References herein to attorney’s fees shall be deemed to include attorney’s fees through all proceedings, including, but not limited to, negotiations, administrative hearings, trials, and appeals.

 

5.06.       All notices or other communications to be given under this Agreement shall be in writing, shall be sent by certified mail, postage pre-paid and return receipt requested, to the applicable address set forth in the heading of this Agreement (or to any other address as the Guarantor, the Trustee or the Underwriter may, from time to time, elect by the giving of such notice), and shall be deemed given when delivered to such address.

 

lN WITNESS WHEREOF, the Guarantor has executed this Agreement as of the date and year first above written.

 

 

	
 
    	
ADCARE HEALTH SYSTEMS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Scott Cunningham
    
	
 
    	
 
    	
Chief Financial Officer and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(SEAL)
    	
 
    	
 
    
				

 

7Exhibit 10.160

 

PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT (this “Agreement”), dated as of the 15 day of September, 2011 (the “Effective Date”), is made by and between JRT Group Properties, LLC, a Georgia limited liability company (“Seller”) and AdCare Hembree Road Property, LLC, a Georgia limited liability company (“Purchaser”).

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, Seller owns that certain parcel of real property located at 1145 Hembree Road, Roswell, Fulton County, Georgia 30076, being Units 110, 120, 130, 140, 210, 220, 230 and 240 of Building 1145 of the Offices at Hembree, a condominium, as more particularly described on Exhibit “A” attached hereto and incorporated herein by reference (the “Real Property”) and all personal property located on and used in connection with the Real Property except for the personal property identified on Exhibit “B” (the “Personal Property”) (hereinafter, the Real Property and the Personal Property are collectively referred to as the “Property”);

 

WHEREAS, Seller wishes to sell and Purchaser wishes to purchase the Property subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1. Purchase. Seller agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller, the Property, pursuant to the terms and conditions hereinafter set forth.

 

SECTION 2. Purchase Price. The purchase price for the Property shall be the sum of the following: (i) all outstanding indebtedness as of the Closing Date, which is secured by a first priority deed to secure debt on the Real Property and (ii) all unpaid and past due real and personal property taxes on the Property as of the Closing Date, to be paid in immediately available funds at Closing.

 

SECTION 3. [Intentionally Omitted].

 

SECTION 4. Seller’s Covenants, Representations and Warranties.

 

(A)          As a material inducement to Purchaser to enter into this Agreement and to pay the Purchase Price for the Property as set forth herein, Seller hereby covenants, warrants and represents to Purchaser as follows:

 

(i)            Seller is authorized to enter into and perform all its obligations under this Agreement. This Agreement is, and all documents to be executed by Seller pursuant hereto will be, the valid and binding obligations of Seller enforceable in accordance with their respective terms.

 

 

(ii)           The Seller is  not a party to any litigation or administrative proceedings nor, is Seller aware of a threat of any litigation or administrative proceedings, which could affect the Property or Seller’s right to enter into this Agreement or to consummate the transactions contemplated by this Agreement. The Seller is not subject to any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental department, agency, board, bureau or instrumentality issued or entered in a proceeding to which the Seller is or was a party which is binding upon Seller.

 

(iii)          The Property is not subject to any lease, tenancy or other arrangement and from the date hereof to the Closing Date, no lease, tenancy, or other arrangement applicable to the Property, will be entered into by Seller without the prior written approval of Purchaser.

 

(iv)          The Property shall, on the Closing Date, be in the same condition as it was on the date of Purchaser’s execution of this Agreement, normal wear excepted. Immediately prior to “Closing” (as hereinafter defined) Seller will have good and marketable fee simple title to the Property.

 

(v)           All documents required by this Agreement to be delivered by Seller to Purchaser are and will be true, correct and complete in all material respects and contain no material omissions that make such documents false or misleading.

 

(vi)          To the best of Seller’s knowledge and belief, without actual examination or review having been made, that (a) the Property is in compliance with all applicable zoning and building laws, ordinances and regulations and (b) the Property has all necessary legal rights, utility service, and access to a public street.

 

(vii)         Except for encumbrances described in the Title Commitment, Seller holds good and marketable title to the Property, free and clear of restrictions on or conditions to transfer or assignment, and free and clear of liens, pledges, charges, or encumbrances.

 

(viii)        There is no litigation, proceeding, or governmental investigation pending or threatened in eminent domain, for rezoning or otherwise against Seller that relates to or affects the Property.

 

(ix)           During the time in which Seller has owned the Property, Seller has not used, generated, transported, treated, constructed, deposited, stored, disposed, placed or located at, on, under or from the Property any flammable explosives, radioactive materials, hazardous or toxic substances, materials or wastes, pollutants or contaminants defined, listed or regulated by any local, state or federal environmental laws.

 

(x)            Seller is not a “foreign person” for purposes of § 1455 of the Internal Revenue Code.

 

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(B)           All of the foregoing representations and warranties shall be applicable, true, correct and complete, both as of the date hereof and as of the Closing Date, and Seller shall, as stated in Section 11(B) of this Agreement, certify in writing at Closing that each and all of said representations and warranties are true, correct and complete as of and with respect to that date.

 

(C)           Notwithstanding anything else to the contrary herein, the parties acknowledge and agree that the improvements on the property are being purchased “as-is” with no representations or warranties regarding their condition(s).

 

SECTION 5. Purchaser’s Covenants, Representations and Warranties.

 

(A)          As a material inducement to Seller to enter into this Agreement and to sell the Property to Purchaser as set forth herein, Purchaser hereby covenants, warrants and represents to Seller as follows:

 

(i)            The Purchaser is a Georgia limited liability company and has full power and authority to carry on its business as now being conducted and to enter into and perform all its obligations under the Agreement. This Agreement and all documents to be executed by Purchaser pursuant hereto will be the valid and binding obligations of Purchaser enforceable with their respective terms. All action required by law and by any agreement, arrangement or document to authorize the execution and delivery of this Agreement by Purchaser and the consummation of the transactions contemplated hereby has been or will be taken and the execution and delivery of this Agreement or the consummation of any of the transactions contemplated herein shall not violate or conflict with any provisions of any lease, mortgage, note or any other agreement or arrangement to or of which Purchaser is subject.

 

(ii)           The Purchaser is not a party to any litigation nor is Purchaser aware of a threat of any litigation that would affect Purchaser’s right to enter into this Agreement or to consummate the transaction contemplated by this Agreement.

 

(B)           All of the foregoing representations and warranties shall be applicable, true, correct and complete, both as of the date hereof and as of the Closing Date, and Purchaser shall, as stated in Section 12(B) of this Agreement, certify in writing at Closing that each and all of said representations and warranties are true, correct and complete as of and with respect to that date.

 

SECTION 6. Condition of Title and Survey.

 

(A)          The Property shall be conveyed to Purchaser by Limited Warranty Deed to be delivered to Purchaser at Closing, free and clear of all liens and encumbrances, except those caused by or on behalf of Purchaser and except that the Property may be subject to the lien for taxes for the current year, if not yet due and payable, and other matters of record acceptable to Purchaser in its sole discretion. Purchaser shall have the option to obtain a title insurance commitment for a title insurance policy on behalf of a title company acceptable to Purchaser (the “Title Commitment”). Should the Title

 

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Commitment disclose exceptions to title unacceptable to Purchaser, other than liens and encumbrances which Seller shall cause to be released at Closing and the lien for current year taxes, Purchaser shall so notify Seller in writing at least 10 days before Closing and Seller shall be given a reasonable time in which to correct any such exceptions. If Seller fails to correct such exceptions within such time period, Purchaser may elect, as its sole remedy, to either (i) grant Seller additional time within which to cure any exception, if Seller requests such additional time; or (ii) accept title in its existing condition; or (iii) terminate this Agreement and have returned to Purchaser all Earnest Money.

 

(B)           Prior to Closing, Purchaser may obtain a current survey of the Property prepared and certified by a surveyor registered and licensed in the State of Georgia (the “Survey”). The Survey shall certify as to any flood plain restrictions affecting the Property and shall identify and locate all easements or encroachments which traverse or affect the Property and shall set forth the location, availability and, where appropriate, dimensions or diameters of all utilities servicing the land, including, without limitation, water, sewer, electric and telephone. The legal description for documents necessary or appropriate to consummate the purchase or sale contemplated herein shall be based upon the Survey, as revised if applicable. The Survey shall be sufficient to enable the title insurer to delete the general exception relating to survey matters.

 

(C)           Prior to Closing, Purchase may obtain an environmental assessment of the Property (the “Environmental Report”). Should the Environmental Report disclose environmental conditions unacceptable to Purchaser, Purchaser shall so notify Seller in writing before Closing and Seller shall be given a reasonable time in which to correct any such conditions. If Seller fails to correct such conditions within such time period, Purchaser may elect, as its sole remedy, to either (i) grant Seller additional time within which to cure any condition, if Seller requests such additional time; or (ii) accept the Property in its existing condition; or (iii) terminate this Agreement and have returned to Purchaser all Earnest Money.

 

SECTION 7. Closing Costs. Purchaser shall pay for all closing costs including, without limitation, the cost of any title examination, the Title Commitment and title insurance premium, the Survey, the Environmental Report, the transfer taxes required for the transfer of the Real Property to Purchaser and all recording fees.

 

SECTION 8. [Intentionally Omitted.]

 

SECTION 9. Date of Closing. The Purchaser shall close the transaction contemplated herein (the “Closing”) on or before October 31, 2011; the exact time and date of which to be determined by Purchaser (the “Closing Date”) at the offices of Purchaser’s counsel in Atlanta Georgia. The above date may be further extended as may be agreed to in writing by the parties.

 

SECTION 10. Waivers. The waiver by any party of any breach by the other of any term, covenant or condition herein contained shall not be deemed to be a waiver of any other condition or of any subsequent breach of the same or of any other term, covenant or condition herein contained. No delay or omission in the exercise of any right or remedy accruing to any party as a result of a breach by the other party under this Agreement shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring.

 

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SECTION 11. Conditions Precedent to Obligations of Purchaser. The obligations of Purchaser under this Agreement are subject to, and shall be conditioned upon, the satisfaction (or the waiver in writing by Purchaser) prior to the Closing of each of the following conditions:

 

(A)          Compliance by Seller and Representations Correct. All of the covenants and obligations of this Agreement to be complied with and performed by Seller at or before the Closing shall have been complied with and performed, and the representations and warranties made by Seller in this Agreement shall be true and correct (i) on and as of the date of this Agreement, and (ii) on and as of the Closing, with the same force and effect as though such representations and warranties had been made on and as of the Closing.

 

(B)           Certificate. Seller shall have delivered to Purchaser a certificate, dated the Closing Date, certifying to the fulfillment of the conditions set forth in subparagraph (A) above.

 

(C)           No Legal Action. No action, suit, investigation, other proceeding or claim shall have been threatened or instituted before any court or before or by any government or governmental agency or instrumentality either (i) to impose any restriction, limitations or conditions with respect to the transactions contemplated by this Agreement, or (ii) to obtain damages or other relief in connection with such transactions. No action, suit, investigation, or other proceeding or claim against Seller shall have been instituted before any court or before or by any government or governmental agency or instrumentality, domestic or foreign which might adversely affect the Property or the Facility.

 

(D)          Approval. Purchaser’s Board of Directors or Executive Committee shall have approved the transactions contemplated hereunder,

 

(E)           Additional Documents. Seller shall have furnished such other duly executed documents as may be required, in the reasonable opinion of Purchaser, (i) to evidence the accuracy of Seller’s representations and warranties and (ii) to perfect or evidence the performance of the covenants and agreements made and to be performed by Seller and the compliance by Seller with all conditions to be satisfied by Seller.

 

SECTION 12. Conditions Precedent To Obligations of Seller. The obligations of Seller under this Agreement are subject to, and shall be conditioned upon the satisfaction (or the waiver in writing by Seller) prior to the Closing of each of the following conditions:

 

(A)          Compliance by Purchaser and Representations Correct. All of the covenants and obligations of this Agreement to be complied with and performed by Purchaser at or before the Closing shall have been complied with and performed, and the representations and warranties made by Purchaser in this Agreement, shall be correct (a) on and as of the date of this Agreement, and (b) on and as of the Closing, with the same force and effect as though such representations and warranties had been made on and as of the Closing.

 

(B)           Certificate. Purchaser shall have delivered to Seller a certificate, dated the Closing Date, duly executed by Purchaser, certifying to the fulfillment of the conditions set forth in subparagraph (A) above.

 

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(C)           No Legal Action. No action, suit, investigation, other proceeding or claim shall have been threatened or instituted before any court or before or by any government or governmental agency or instrumentality either (1) to impose any restrictions, limitations or conditions with respect to the transaction contemplated by this Agreement or (2) to obtain damages or other relief in connection with such transactions. No action, suit, investigation or other proceeding or claim against Purchaser shall have been instituted before any court or before or by any government or governmental agency or instrumentality, domestic or foreign, which might adversely affect the Property or the Facility.

 

(D)          Additional Documents. Purchaser shall have furnished Seller with such other duly executed documents as may be required, in the reasonable opinion of Seller (i) to evidence the accuracy of Purchaser’s representations and warranties and (ii) to perfect or evidence the performance of the covenants and agreements made and to be performed by Purchaser and the compliance by Purchaser with all conditions to be satisfied by Purchaser.

 

SECTION 13. Deliveries at Closing. At Closing, Seller shall deliver to Purchaser, in consideration of payment to Seller of the Purchase Price, the following:

 

(A)          Limited Warranty Deed conveying the Real Property.

 

(B)           Bill of Sale conveying Personal Property.

 

SECTION 14. Assignment. Neither party may assign any of its right, title, or interest in and to this Agreement without the written consent of the other party.

 

SECTION 15. Commissions and Fees. Purchaser hereby represents and warrants to Seller that it has not dealt with any real estate agent, broker or finder in connection with this transaction and agrees to indemnify Seller for all damages, costs and liability that may result from breach of this warranty and representation. Seller hereby represents and warrants to Purchaser that, Seller has not dealt with any real estate agent, broker or finder in connection with this transaction and agrees to indemnify Purchaser for all damages, costs and liability that may result from breach of this warranty and representation.

 

SECTION 16. Condemnation. Seller represents that it has received no notice of any condemnation proceedings against the whole or any part of the Property. If prior to the Closing Date, all or a substantial portion of either the Property shall be condemned or taken by eminent domain by any competent authority for any public or quasi-public use or purpose, then, in such event, Purchaser shall have the option to terminate this Agreement or close the transactions herein provided for. If Purchaser shall elect pursuant to such option to terminate this Agreement, this Agreement shall be null and void and the Earnest Money shall be returned to Purchaser, If, however, Purchaser shall elect to close this transaction, then there shall be an abatement in the Purchase Price equal to the amount of proceeds of any condemnation award allowed.

 

SECTION 17. Default. If either party defaults under this Agreement, the other party shall have all rights or remedies permitted in law or at equity. Before a party may declare a default hereunder, it shall give written notice to the other party specifying the failure of the other

 

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party under this Agreement and the other party shall have ten (10) days from the receipt of such notice to cure such default.

 

SECTION. 18. Notices. All notices provided for herein shall be made either by certified or registered mail and deposited in the U.S. Mail, postage prepaid, or by overnight delivery service, to the following addresses:

 

	
To   Purchaser:
    	
AdCare   Health Systems, Inc.
    
	
 
    	
Two   Buckhead Plaza
    
	
 
    	
3050   Peachtree Road NW, Suite 355
    
	
 
    	
Atlanta,   Georgia 30305
    
	
 
    	
Attn:   Boyd P. Gentry
    
	
 
    	
 
    
	
To   Seller:
    	
Hembree   Properties, LLC
    
	
 
    	
1145   Hembree Road
    
	
 
    	
Roswell,   Georgia 30076
    
	
 
    	
Attn: Robert Lancaster
    

 

Any notices sent as provided herein shall be deemed delivered when actually received.

 

SECTION 19. Miscellaneous.

 

(A)          This Agreement sets forth all promises, agreements, conditions, inducements and understanding between and among the parties and there are no promises, agreements, conditions, inducements, warranties, representations, oral or written, express or implied, between them, other than as herein set forth. This Agreement shall not be modified or amended in any manner except by an instrument in writing executed by the parties.

 

(B)           The headings contained in this Agreement are for convenience and reference only, and in no way modify, interpret or construe the meaning of the parties.

 

(C)           All terms, agreements, covenants, conditions, representations, warranties and provisions herein made shall survive the Closing.

 

(D)          This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but such counterparts shall together constitute hut one and the same instrument.

 

(E)           This Agreement shall be construed and enforced in accordance with the laws of the State of Georgia. If any provision of this Agreement is determined to be illegal or unenforceable, such determination shall not affect the remaining terms of this Agreement. If litigation is instituted based upon this Agreement, the prevailing party shall be entitled to recover all expenses, including reasonable attorney fees.

 

(F)           Each of the parties shall execute such other documents as may be reasonably necessary to carry out the intent as well as comply with the provisions of this Agreement.

 

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(G)           Subject to Section 14, this Agreement shall be binding upon and inure to the benefit of the respective parties and their heirs, executors, personal representatives, successors and assigns.

 

[Signatures on Next Page]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first set forth.

 

	
 
    	
PURCHASER:
    
	
 
    	
 
    
	
 
    	
ADCARE   HEMBREE ROAD PROPERTY, LLC,
    
	
 
    	
a Georgia   limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Boyd P. Gentry
    
	
 
    	
 
    	
Boyd P. Gentry, Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
JRT GROUP   PROPERTIES, LLC,
   a Georgia limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Rob Lancaster
    
	
 
    	
Name:
    	
Rob Lancaster
    
	
 
    	
Title:
    	
Member
    

 

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