Document:

Exhibit 10.17

 

EXECUTION VERSION

 

SECOND AMENDMENT TO SECURED LOAN AGREEMENT

AND PAYMENT GUARANTY

 

This SECOND AMENDMENT TO SECURED LOAN AGREEMENT AND PAYMENT GUARANTY (this “Amendment”), made this 27th day of June, 2013, by and among WOODLAND HILLS HC PROPERTY HOLDINGS, LLC, NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC, APH&R PROPERTY HOLDINGS, LLC, WOODLAND HILLS HC NURSING, LLC, NORTHRIDGE HC&R NURSING, LLC, and APH&R NURSING, LLC, each a Georgia limited liability company (each a “Borrower,” and together, the “Borrowers”), ADCARE HEALTH SYSTEMS, INC., an Ohio corporation, ADCARE PROPERTY HOLDINGS, LLC, an Ohio limited liability company, and ADCARE OPERATIONS, LLC, a Georgia limited liability company (each a “Guarantor”, and together, the “Guarantors”), and KEYBANK NATIONAL ASSOCIATION, a national banking association, its successors and assigns (“Lender”).

 

W I T N E S S E T H:

 

WHEREAS, Borrowers entered into that certain Secured Loan Agreement dated as of December 28, 2012, as amended by that First Amendment to Secured Loan Agreement and Payment Guaranty dated as of May 31, 2013 (as so amended, the “Loan Agreement”), pursuant to which Lender made a $16,500,000 term loan to Borrowers (the “Loan”); and

 

WHEREAS, all capitalized terms used herein have the meanings ascribed thereto in the Loan Agreement unless otherwise provided herein; and

 

WHEREAS, the Obligations of Borrowers are guaranteed by the Guarantors pursuant to the Guaranties; and

 

WHEREAS, Loan Parties have requested certain waivers and that certain terms of the Loan Agreement and the Parent Guaranty be modified and amended as hereinafter set forth; and

 

WHEREAS, Lender has agreed to such waivers, modifications and amendments as set forth herein, subject to the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Amendment hereby agree as follows:

 

1.                                      Waivers. Lender acknowledges that (a) Parent has advised that it will fail to meet the Total EBITDAR to AdCare Fixed Charges ratio of .85 to 1.0 for the fiscal quarter ending June 30, 2013 as required pursuant to Subparagraph 6(c)(i) of the Parent Guaranty as in effect prior to the effectiveness of this Amendment; and (b) Borrowers have advised that they will fail to comply with §10.1(w) of the Loan Agreement by permitting the Implied Debt Service Coverage for the Projects to be less than 1.0 to 1.0 for the fiscal quarter ending June 30, 2013 (the events described in clauses (a) and (b), collectively, the “Events”). Lender waives any Default or Event of Default that may exist solely as a result of the Events described in clauses (a) and (b) only.

 

 

2.                                      Amendment to Section 9.4 of the Loan Agreement. Section 9.4 of the Loan Agreement, Required Repairs, Replacements, Renovations and Other Work, is hereby amended by deleting the date “June 28, 2013” found in clause (a) of such Section and substituting therefor the date “July 31, 2013”.

 

3.                                      Amendment to Subparagraph 6(c) of the Parent Guaranty. The language of Subparagraph 6(c)(i) of the Parent Guaranty is deleted in its entirety and the following is substituted in lieu thereof:

 

“(c)(i) Guarantor shall not permit the ratio of AdCare Total EBITDAR (as hereinafter defined) to AdCare Fixed Charges (as hereinafter defined), in each case tested as of the end of each fiscal quarter, to be less than (A) 1.1 to 1.0 on a trailing one (1) quarter basis for the test period ending September 30, 2013, (B) 1.15 to 1.0 on a trailing one (1) quarter basis for the test period ending December 31, 2013, and (C) 1.15 to 1.0 on a trailing two (2) quarter basis for the test period ending March 31, 2014 and thereafter.”

 

4.                                      Acknowledgement Regarding CHP Note. The parties acknowledge that CHP Note was prepaid at a discount and that $2,000,000 of proceeds of prepayment was deposited in the Cash Collateral Account.

 

5.                                      No Other Amendments, Waivers. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided or permitted herein, operate as an amendment or waiver of any right, power or remedy of Lender under the Loan Agreement, the Parent Guaranty or any of the other Loan Documents, nor constitute an amendment or waiver of any provision of the Loan Agreement, the Parent Guaranty or any of the other Loan Documents. Except for the amendments expressly set forth above, the text of the Loan Agreement, the Parent Guaranty and all other Loan Documents shall remain unchanged and in full force and effect, and Borrowers and Guarantors hereby ratify and confirm their respective obligations thereunder, as herein modified and amended. This Amendment shall not constitute a course of dealing with Lender at variance with the Loan Agreement, the Parent Guaranty or the other Loan Documents such as to require further notice by Lender to require strict compliance with the terms of the Loan Agreement, the Parent Guaranty and the other Loan Documents in the future.

 

6.                                      Conditions of Effectiveness. This Amendment shall become effective as of the date hereof when, and only when, the following conditions have been met to the satisfaction of Lender:

 

(a)                                 Counterparts of this Amendment duly executed by each Borrower and each Guarantor have been received by Lender;

 

(b)                                 The representations and warranties made pursuant to Section 5 of this Amendment shall be true and correct; and

 

(c)                                  The Loan Parties have paid all reasonable and documented expenses incurred by Lender in connection with the execution and delivery of this Amendment, together

 

2

 

with reasonable fees and actually incurred expenses of Lender’s counsel with respect to this Amendment and other post-closing matters.

 

7.                                     Representations and Warranties. Each of the Loan Parties represents and warrants as follows:

 

(a)                                 The execution, delivery and performance by each Borrower and each Guarantor of this Amendment are within each such party’s legal powers, have been duly authorized by all necessary shareholder, partner or member action and do not contravene (i) any such Borrower’s or any such Guarantor’s organizational documents, respectively, or (ii) any law or contractual restriction binding on or affecting such Person;

 

(b)                                 No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body, except for those already obtained or made, is required for the due execution, delivery and performance by any Borrower or any Guarantor of this Amendment;

 

(c)                                  This Amendment constitutes the legal, valid and binding obligations of each such party, enforceable against such Person in accordance with their respective terms, provided that enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditor’s rights generally and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefore may be brought;

 

(d)                                 All of the representations and warranties of the Loan Parties in the Loan Documents are true and correct in all material respects as of the date hereof (or if such representations and warranties by their terms relate solely to an earlier date, then as of such earlier date); and

 

(e)                                  No Default or Event of Default is existing and none would result, in each case upon this Amendment becoming effective and after giving effect hereto.

 

8.                                      Reaffirmation of Guaranties. By execution of this Amendment, each Guarantor reaffirms and restates its guaranty of the Obligations pursuant to its Guaranty and agrees that its obligations thereunder are not released, diminished, impaired or reduced or otherwise adversely affected by this Amendment, except as expressly provided herein with respect to the Parent Guaranty.

 

9.                                      Release of Claims. As further consideration to induce the Lender to execute, deliver and perform this Amendment, each Borrower and each Guarantor hereby represents and warrants that there are no claims, causes of action, suits, debts, obligations, liabilities, defenses, counterclaims, or demands of any kind, character or nature whatsoever, fixed or contingent, which such Borrower or such Guarantor may have, or claim to have, against the Lender in connection with the Loan, the Loan Agreement and the other Loan Documents, and each Borrower and each Guarantor hereby releases, acquits, and forever discharges the Lender, and each and every past and present subsidiary, affiliate, stockholder, officer, director, agent, servant, employee, representative,

 

3

 

and attorney of the Lender (collectively, the “Released Parties”), from any and all claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys’ fees) of any kind, character, or nature whatsoever, known or unknown, fixed or contingent, which such Borrower or such Guarantor may have or claim to have now against each of such Released Parties from the beginning of time until and through the First Amendment Effective Date.

 

10.                               Reference to and Effect on the Loan Documents. Upon the effectiveness of this Amendment, on and after the date hereof: (a) each reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Loan Agreement, and each reference in the other Loan Documents to the “Loan Agreement,” “thereunder,” “thereof” or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as amended and modified hereby, and (b) each reference in the Parent Guaranty to “this Guaranty,” “hereunder,” “hereof” or words of like import referring to the Parent Guaranty, and each reference in the other Loan Documents to the “Parent Guaranty,” “thereunder,” “thereof” or words of like import referring to the Parent Guaranty, shall mean and be a reference to the Parent Guaranty as amended and modified hereby.

 

11.                               Costs, Expenses and Taxes. Borrowers agree to pay on demand all reasonable out-of-pocket expenses of Lender actually incurred in connection with the preparation, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of Lender’s counsel with respect thereto and with respect to advising Lender as to its rights and responsibilities hereunder and thereunder.

 

12.                               Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to the conflict of laws principles thereof.

 

13.                               Loan Document. This Amendment shall be deemed to be a Loan Document for all purposes.

 

14.                               Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile or other electronic transmission shall be as effective as delivery of a manually executed counterpart hereof.

 

[The remainder of this page is intentionally left blank]

 

4

 

IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as of the date first set forth above.

 

	
BORROWERS:
    	
WOODLAND HILLS HC PROPERTY
    
	
 
    	
HOLDINGS, LLC
    
	
 
    	
NORTHRIDGE HC&R PROPERTY
    
	
 
    	
HOLDINGS, LLC
    
	
 
    	
APH&R PROPERTY HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ronald W. Fleming
    
	
 
    	
Name:
    	
Ronald W. Fleming
    
	
 
    	
Title:
    	
Chief Financial Officer of AdCare Health
    
	
 
    	
 
    	
Systems, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WOODLAND HILLS HC NURSING, LLC
    
	
 
    	
NORTHRIDGE HC&R NURSING, LLC
    
	
 
    	
APH&R NURSING, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ronald W. Fleming
    
	
 
    	
Name:
    	
Ronald W. Fleming
    
	
 
    	
Title: 
    	
Chief Financial Officer of AdCare Health
    
	
 
    	
 
    	
Systems, Inc.
    

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

Signature Page to Second Amendment To Secured Loan Agreement and Payment Guaranty

 

 

[Execution of Second Amendment to Secured Loan Agreement

and Payment Guaranty Continued]

 

 

	
GUARANTORS:
    	
ADCARE HEALTH SYSTEMS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ronald W. Fleming
    
	
 
    	
Name:
    	
Ronald W. Fleming
    
	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ADCARE OPERATIONS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Ronald W. Fleming
    
	
 
    	
Name:
    	
Ronald W. Fleming
    
	
 
    	
Title: 
    	
Chief Financial Officer of AdCare Health
    
	
 
    	
 
    	
Systems, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ADCARE PROPERTY HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Ronald W. Fleming
    
	
 
    	
Name: 
    	
Ronald W. Fleming
    
	
 
    	
Title: 
    	
Chief Financial Officer of AdCare Health
    
	
 
    	
 
    	
Systems, Inc.
    

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

Signature Page to Second Amendment To Secured Loan Agreement and Payment Guaranty

 

 

[Execution of Second Amendment to Secured Loan Agreement 

and Payment Guaranty Continued]

 

	
LENDER:
    	
KEYBANK NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:  
    	
/s/ Eric Hafertepen
    
	
 
    	
 
    	
Name: 
    	
ERIC HAFERTEPEN
    
	
 
    	
 
    	
Title: 
    	
VICE PRESIDENT
    

 

Signature Page to Second Amendment To Secured Loan Agreement and Payment GuarantyExhibit 10.18

 

15780226

06-26-13

 

THIRD MODIFICATION AGREEMENT

 

THIS THIRD MODIFICATION AGREEMENT dated as of June 26, 2013 (this “Agreement”), is entered into by and among LITTLE ROCK HC&R PROPERTY HOLDINGS, LLC, a Georgia limited liability company (the “Borrower”), ADCARE HEALTH SYSTEMS, INC., an Ohio corporation (“AdCare”), LITTLE ROCK HC&R NURSING, LLC, a Georgia limited liability company (the “Operator”) (AdCare and the Operator being sometimes referred to herein collectively as the “Guarantors”) (the Borrower and the Guarantors being sometimes referred to herein collectively as the “Borrower/Guarantor Parties”), and THE PRIVATEBANK AND TRUST COMPANY, an Illinois banking corporation (“Lender”).

 

RECITALS

 

A.                                    The Borrower/Guarantor Parties and the Lender heretofore entered into the following documents (collectively, the “Documents”):

 

(i)                                     Loan Agreement dated as of March 30, 2012 (the “Loan Agreement”), by and among the Borrower, Northridge HC&R Property Holdings, LLC, a Georgia limited liability company (“Northridge”), Woodland Hills HC Property Holdings, LLC, a Georgia limited liability company (“Woodland”) and the Lender. Northridge and Woodland were released from their respective obligations under the Loan Agreement and the other Documents pursuant to the Second Modification (as defined below).

 

(ii)                                  Promissory Note A dated March 30, 2012, from the Borrower to the Lender in the principal amount of $13,664,956, which, along with Note B and Note C described below, replaced the Promissory Note dated March 30, 2012, from the Borrower, Northridge and Woodland to the Lender in the principal amount of $21,800,000.

 

(iii)                               Promissory Note B dated March 30, 2012 (“Note B”) from Northridge to the Lender in the principal amount of $4,507,038, which, along with Note A and Note C described below, replaced the Original Note. Note B was released pursuant to the Second Modification.

 

(iv)                              Promissory Note C dated March 30, 2012 (“Note C”) from Woodlands to the Lender in the principal amount of $3,628,006, which, along with Note A and Note B, replaced the Original Note. Note C was released pursuant to the Second Modification.

 

(v)                                 Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012, by Borrower to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019925.

 

 

(vi)                              Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 (“Mortgage 2”), by Northridge to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019978. Mortgage 2 was released pursuant to the Second Modification.

 

(vii)                           Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 (“Mortgage 3”), by Woodlands to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019971. Mortgage 3 was released pursuant to the Second Modification.

 

(viii)                        Absolute Assignment of Rents and Leases dated as of April 1, 2012, by Borrower to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019926.

 

(ix)                              Absolute Assignment of Rents and Leases dated as of April 1, 2012 (“Assignment of Rents 2”), by Northridge to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019979. Assignment of Rents 2 was released pursuant to the Second Modification.

 

(x)                                 Absolute Assignment of Rents and Leases dated as of April 1, 2012 (“Assignment of Rents 3”), by Woodlands to and for the benefit of the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on April 5, 2012, as Document No. 2012019972. Assignment of Rents 3 was released pursuant to the Second Modification.

 

(xi)                              Environmental Indemnity Agreement dated as of March 30, 2012 (the “Indemnity Agreement”), by the Borrower, Northridge, Woodlands, the Guarantors, Northridge HC&R Nursing, LLC, a Georgia limited liability company (the “Northridge Operator”), and Woodland Hills HC Nursing, LLC, a Georgia limited liability company (the “Woodland Operator”), to and for the benefit of the Lender. Northridge, Woodland, the Northridge Operator and the Woodland Operator were released from their respective obligations under the Indemnity Agreement pursuant to the Second Modification.

 

(xii)                           Guaranty of Payment and Performance dated as of March 30, 2012 (the “Guaranty”), by the Guarantors, the Northridge Operator and the Woodlands Operator to and for the benefit of the Lender. The Northridge Operator and the Woodland Operator were released from their respective obligations under the Guaranty pursuant to the Second Modification.

 

B.                                    The Documents were previously modified and amended by the following documents (the “Previous Modifications”): (i) the Modification Agreement dated as of June 15, 2012, but effective as of March 30, 2012, by and among the Borrower/Guarantor Parties and

 

2

 

the Lender, recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on June 22, 2012, as Document No. 2012038003, and (ii) the Second Modification Agreement dated as of December 28, 2012 (the “Second Modification”), by and among the Borrower/Guarantor Parties and the Lender, a Memorandum of which Second Modification Agreement was recorded in the Official Records of Larry Crane, Pulaski County Circuit/County Clerk, on January 4, 2013, as Document No. 2013001265.

 

C.                                    The Documents, as modified and amended by the Previous Modifications, encumber the real estate described in Exhibit A attached hereto and the personal property located thereon.

 

D.                                    The parties desire to make certain modifications and amendments to the Documents, as modified and amended by the Previous Modifications, as more fully provided for herein, all as modifications, amendments and continuations of, but not as novations of, the Documents.

 

AGREEMENTS

 

In consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

Section 1.                                          Recitals Part of Agreement; Defined Terms; References to Documents.

 

(a)                                 The foregoing Recitals are hereby incorporated into and made a part of this Agreement.

 

(b)                                 All capitalized terms used and not otherwise defined in this Agreement shall have the meanings set forth in the Loan Agreement.

 

(c)                                  Except as otherwise stated herein, all references in this Agreement to any one or more of the Documents shall be deemed to include the previous modifications and amendments to the Documents provided for in the Previous Modifications, whether or not express reference is made to such previous modifications and amendments.

 

Section 2.                                          Change in Minimum Fixed Charge Coverage Ratio of Operator. Notwithstanding anything to the contrary contained in the Loan Agreement, Section 7.15 of the Loan Agreement shall not apply with respect to the fiscal quarter ended March 31, 2013. Section 7.15 of the Loan Agreement is hereby modified and amended in its entirety to read as follows effective for the fiscal quarter ended June 30, 2013 and for each fiscal quarter thereafter, with the existing Section 7.15 of the Loan Agreement to continue to be effective for fiscal quarters ended prior to June 30, 2013 (with the exception of the fiscal quarter ended March 31, 2013, as provided in the first sentence of this Section):

 

7.15                        Minimum Fixed Charge Coverage Ratio of Operator. It is a condition of this Agreement and the Loan that as of the end of each period set forth below, the ratio of —

 

3

 

(i)                                     the amount of the EBITDAR/Fully Adjusted for the Operator for such period, to

 

(ii)                                  the sum of the amounts of the following for the Operator for such period: (A) Rental Expense, plus (B) Interest Charges, plus (C) Distributions, other than any amounts which were treated as an expense for accounting purposes, 

 

shall be not less than 1.05 to 1.00. The periods referred to above are as follows:

 

Minimum Fixed Charge Coverage Ratio Period

 

Fiscal quarter ending on June 30, 2013

 

Two fiscal quarters ending on September 30, 2013

 

Three fiscal quarters ending on March 31, 2014

 

Four fiscal quarters ending on June 30, 2014, and on the last day of each fiscal quarter thereafter

 

Section 3.                                          Limited Waiver of Fixed Charge Coverage Ratio of Operator. The Lender hereby waives compliance with the requirements of Section 7.15 of the Loan Agreement with respect to the fiscal quarter ended December 31, 2012. This is a one-time waiver, and the Lender does not waive compliance with the requirements of Section 7.15 of the Loan Agreement for any fiscal quarter other than the fiscal quarter ended December 31, 2012.

 

Section 4.                                          Change in Minimum EBITDAR of Operator. Section 7.16 of the Loan Agreement is hereby modified and amended in its entirety to read as follows effective for the calendar month February, 2013, and subsequent calendar months, with the existing Section 7.16 of the Loan Agreement to continue to be effective for calendar months prior to February, 2013 (subject to the limited waiver provided for in Section 5 of this Agreement):

 

7.16                        Minimum EBITDAR of Operator.

 

(a)                                 It is a condition of this Agreement and the Loan that the EBITDAR/Management Fee Adjusted for Operator for each calendar month set forth in the table below, shall be not less than the amount set forth opposite such month in the table below:

 

	
 
    	
 
    	
Minimum EBITDAR
    	
 
    
	
Calendar Months
    	
 
    	
for Operator
    	
 
    
	
February, 2013
    	
 
    	
$
    	
15,000
    	
 
    
	
March, 2013
    	
 
    	
$
    	
15,000
    	
 
    
	
April, 2013
    	
 
    	
$
    	
75,000
    	
 
    

 

4

 

(b)                                 Until such time as paragraph (c) of this Section becomes effective, it is a condition of this Agreement and the Loan that the EBITDAR/Fully Adjusted for Operator for each calendar month commencing with the calendar month ended May 31, 2013, shall be not less than the amount set forth opposite such month in the table below:

 

	
May, 2013
    	
 
    	
$
    	
100,000
    	
 
    
	
June and July, 2013
    	
 
    	
$
    	
150,000
    	
 
    
	
August, 2013 and Each   Calendar
    	
 
    	
 
    	
 
    
	
Month Thereafter
    	
 
    	
$
    	
160,000
    	
 
    

 

(c)                                  Effective for the first fiscal quarter ending after the EBITDAR/Fully Adjusted for Operator has been not less than $160,000 for each of six consecutive calendar months, as shown in monthly financial statements of Operator and compliance certificates furnished to Lender as provided in Section 7.4 of this Agreement, it is a condition of this Agreement and the Loan that the EBITDAR/Fully Adjusted for Operator for each fiscal quarter shall be not less than $480,000.

 

Section 5.                                          Limited Waiver of Minimum EBITDAR of Operator. The Lender hereby waives compliance with the requirements of Section 7.16(a) of the Loan Agreement with respect to the calendar months ended December, 2012 and January, 2013. This is a one-time waiver, and the Lender does not waive compliance with the requirements of Section 7.16(a) of the Loan Agreement for any calendar month before the calendar month ended December 31, 2012 or after the calendar month ended January 31, 2013.

 

Section 6.                                          Representations and Warranties. The term “Signing Entity” as used in this Section means any entity (other than a Borrower/Guarantor Party itself) that appears in the signature block of any Borrower/Guarantor Party in this Agreement, any of the Documents or the Previous Modifications, if any. In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby represent and warrant to the Lender as follows as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement:

 

(a)                                 Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Georgia, has all necessary power and authority to carry on its present business, and has full right, power and authority to enter into this Agreement, each of the Documents to which it is a party and the Previous Modifications, and to perform and consummate the transactions contemplated hereby and thereby.

 

(b)                                 AdCare is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio, has all necessary power and authority to carry on its present business, and has full right, power and authority to enter into this Agreement, each of the Documents to which it is a party and the Previous Modifications, and to perform and consummate the transactions contemplated hereby and thereby.

 

5

 

(c)                                  Operator is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Georgia and duly registered to transact business and in good standing in the state of Arkansas. Operator has full power and authority to carry on its present business, and has full right, power and authority to enter into this Agreement and each of the Documents to which it is a party and to perform and consummate the transactions contemplated hereby and thereby.

 

(d)                                 Each Signing Entity is duly organized, validly existing and in good standing under the laws of the State in which it is organized, has all necessary power and authority to carry on its present business, and has full right, power and authority to execute this Agreement, the Documents and the Previous Modifications in the capacity shown in each signature block contained in this Agreement, the Documents and the Previous Modifications in which its name appears, and such execution has been duly authorized by all necessary legal action applicable to such Signing Entity.

 

(e)                                  This Agreement, each of the Documents and the Previous Modifications have been duly authorized, executed and delivered by such of the Borrower/Guarantor Parties as are parties thereto, and this Agreement, each of the Documents and the Previous Modifications constitute a valid and legally binding obligation enforceable against such of the Borrower/Guarantor Parties as are parties thereto. The execution and delivery of this Agreement, the Documents and the Previous Modifications and compliance with the provisions thereof under the circumstances contemplated therein do not and will not conflict with or constitute a breach or violation of or default under the organizational documents of any Borrower/Guarantor Party or any Signing Entity, or any agreement or other instrument to which any of the Borrower/Guarantor Parties or any Signing Entity is a party, or by which any of them is bound, or to which any of their respective properties are subject, or any existing law, administrative regulation, court order or consent decree to which any of them is subject.

 

(f)                                   The Borrower/Guarantor Parties are in full compliance with all of the terms and conditions of the Documents to which they are a party and the Previous Modifications, and no Default or Event of Default has occurred and is continuing with respect to any of the Documents or the Previous Modifications.

 

(g)                                  There is no litigation or administrative proceeding pending or threatened to restrain or enjoin the transactions contemplated by this Agreement or any of the Documents or the Previous Modifications, or questioning the validity thereof, or in any way contesting the existence or powers of any of the Borrower/Guarantor Parties or any Signing Entity, or in which an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by this Agreement or any of the Documents or the Previous Modifications, or would result in any material adverse change in the financial condition, properties, business or operations of any of the Borrower/Guarantor Parties.

 

(h)                                 The statements contained in the Recitals to this Agreement are true and correct.

 

6

 

Section 7.                                          Documents to Remain in Effect; Confirmation of Obligations; References. The Documents shall remain in full force and effect as originally executed and delivered by the parties, except as previously modified and amended by the Previous Modifications and as expressly modified and amended herein. In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby (i) confirm and reaffirm all of their obligations under the Documents, as previously modified and amended by the Previous Modifications and as modified and amended herein; (ii) acknowledge and agree that the Lender, by entering into this Agreement, does not waive any existing or future default or event of default under any of the Documents, or any rights or remedies under any of the Documents, except as expressly provided herein; (iii) acknowledge and agree that the Lender has not heretofore waived any default or event of default under any of the Documents, or any rights or remedies under any of the Documents; and (iv) acknowledge and agree that they do not have any defense, setoff or counterclaim to the payment or performance of any of their obligations under, or to the enforcement by the Lender of, the Documents, as previously modified and amended by the Previous Modifications and as modified and amended herein, including, without limitation, any defense, setoff or counterclaim based on the covenant of good faith and fair dealing. All references in the Documents to any one or more of the Documents, or to the “Loan Documents,” shall be deemed to refer to such Document, Documents or Loan Documents, as the case may be, as previously modified and amended by the Previous Modifications and as modified and amended by this Agreement. Electronic records of executed documents maintained by the Lender shall be deemed to be originals thereof.

 

Section 8.                                          Certifications, Representations and Warranties. In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby certify, represent and warrant to the Lender that all certifications, representations and warranties contained in the Documents and the Previous Modifications and in all certificates heretofore delivered to the Lender are true and correct as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement, and all such certifications, representations and warranties are hereby remade and made to speak as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement.

 

Section 9.                                          Entire Agreement; No Reliance. This Agreement sets forth all of the covenants, promises, agreements, conditions and understandings of the parties relating to the subject matter of this Agreement, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between them relating to the subject matter of this Agreement other than as are herein set forth. The Borrower/Guarantor Parties acknowledge that they are executing this Agreement without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein.

 

Section 10.                                   Successors. This Agreement shall inure to the benefit of and shall be binding upon the parties and their respective successors, assigns and legal representatives.

 

Section 11.                                   Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

 

7

 

Section 12.                                   Amendments, Changes and Modifications. This Agreement may be amended, changed, modified, altered or terminated only by a written instrument executed by all of the parties hereto.

 

Section 13.                                   Construction.

 

(a)                                 The words “hereof,” “herein,” and “hereunder,” and other words of a similar import refer to this Agreement as a whole and not to the individual Sections in which such terms are used.

 

(b)                                 References to Sections and other subdivisions of this Agreement are to the designated Sections and other subdivisions of this Agreement as originally executed.

 

(c)                                  The headings of this Agreement are for convenience only and shall not define or limit the provisions hereof.

 

(d)                                 Where the context so requires, words used in singular shall include the plural and vice versa, and words of one gender shall include all other genders.

 

(e)                                  The Borrower/Guarantor Parties and the Lender, and their respective legal counsel, have participated in the drafting of this Agreement, and accordingly the general rule of construction to the effect that any ambiguities in a contract are to be resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Agreement.

 

Section 14.                                   Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same document. Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Agreement maintained by the Lender shall be deemed to be an original.

 

Section 15.                                   Governing Law. This Agreement is prepared and entered into with the intention that the law of the State of Illinois shall govern its construction and enforcement, except that insofar as this Agreement relates to a Document which by its terms is governed by the law of the State of Arkansas, this Agreement shall also be governed by the law of the State of Arkansas.

 

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

 

8

 

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

 

 

	
 
    	
LITTLE ROCK HC&R PROPERTY HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By 
    	
/s/ Boyd P. Gentry
    
	
 
    	
 
    	
Boyd P. Gentry, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ADCARE HEALTH SYSTEMS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By 
    	
/s/ Boyd P. Gentry
    
	
 
    	
 
    	
Boyd P. Gentry, President and
    
	
 
    	
 
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
LITTLE ROCK HC&R NURSING, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By 
    	
/s/ Boyd P. Gentry
    
	
 
    	
 
    	
Boyd P. Gentry, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THE PRIVATEBANK AND TRUST COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Amy K. Hallberg, Managing Director
    

 

- AdCare Little Rock Owner Loan Third Modification Agreement -

- Signature Page 1 -

 

 

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

 

 

	
 
    	
LITTLE ROCK HC&R PROPERTY HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Boyd P. Gentry, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ADCARE HEALTH SYSTEMS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Boyd P. Gentry, President and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
LITTLE ROCK HC&R NURSING, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Boyd P. Gentry, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THE PRIVATEBANK AND TRUST COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/ Amy K. Hallberg
    
	
 
    	
 
    	
Amy K. Hallberg, Managing Director
    

 

- AdCare Little Rock Owner Loan Third Modification Agreement -

- Signature Page 1 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00219-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00219-of-00352.parquet"}]]