Document:

3.31.2015 - Ex 10.31 NW 61st Nursing Fifth amendment

	
		
	 
	Exhibit 10.31

FIFTH AMENDMENT TO CREDIT AGREEMENT

THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made and entered into as of the 25th day of March, 2015, by and among NW 61ST NURSING, LLC, a Georgia limited liability company ("NW 61st"), GEORGETOWN HC&R NURSING, LLC, a Georgia limited liability company ("Georgetown"), SUMTER N&R, LLC, a Georgia limited liability company ("Sumter"; NW 6t t, Georgetown and Sumter are hereinafter referred to collectively as "Borrowers" and each individually as a "Borrower"), each with its chief executive office at 1145 Hembree Road , Roswell, Georgia 30076, and GEMINO HEALTH CARE FINANCE, LLC, a Delaware limited liability company (hereinafter referred to as "Lender") with an office at One International Plaza, Suite 220, Philadelphia , Pennsylvania  19113.

Recitals:

Lender and Borrowers are parties to a certain Credit Agreement dated May 30, 2013 (as at any time amended, restated, modified or supplemented, the "Credit Agreement") pursuant to which Lender has made certain revolving credit loans to Borrowers.

The parties desire to amend the Credit Agreement as hereinafter set forth.

Events of Default under (and as defined in) the Credit Agreement have occurred. Borrowers have requested a waiver of such Events of Default. Lender is willing to waive such Events of Default, subject to the terms and condition s set forth herein.

NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby severally acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1.    Definitions. All capitalized terms used in this Amendment, unless otherwise defined herein,
shall have the meaning ascribed to such terms in the Credit Agreement.

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

(a)By deleting the reference to "March 31, 2015" from Section 2.01(d) of the Credit Agreement and by substituting in lieu thereof a reference to "April 30, 2015".

		
	(b)
	By deleting Section 6.06(a) of the Credit Agreement in its entirety and by substituting

in lieu thereof the following:

(a)       Minimum Fixed Charge Coverage Ratio. Borrowers shall cause ADK to maintain at all times a Fixed Charge Coverage Ratio measured quarterly (i) at the end of the fiscal quarter ending March 31, 2014, of at least 1.00:1, (ii) at the end of the fiscal quarter ending June 30, 2014, of at least 1.05:I, (iii) at the end of the fiscal quarters ending September 30,2014 and December 31,2014, of at least 1.10:1, (iv) at the end of the fiscal quarter ending March 31, 2015, of at least 0.80: 1, and (v) at the end of each fiscal quarter thereafter, of at least 1.10:1.

370 1122_2

2.Limited Waiver of Default. Borrowers acknowledge that Events of Default have occurred and currently exist under the Credit Agreement as a result of (i) Borrowers' breach of Section 6.06(a) of the Credit Agreement ,due to the failure of ADK to maintain a Fixed Charge Coverage Ratio of at least 1.10to 1.0 at the end of the fiscal quarter ending December 31, 

2014, and (ii) the occurrence of defaults by certain of Borrowers' affiliates in violation of Section 8.01(y) of the Credit Agreement as a result of the same circumstances that resulted in Borrowers' breach of Section 6.06(a) of the Credit Agreement (collectively , the "Designated Default s"). Each Borrower represent s and warrants that the Designated Defaults are the only Defaults or Events of Default that exist 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 9 hereof, Lender waives the Designated Defaults as in existence on the date hereof . In no event shall such waiver be deemed to constitute a waiver of (a) any Default or Event of Default other than the Designated Defaults in existence on the date of this Amendment or (b) Borrowers' obligations 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 term s of any contracts between the parties , each Borrower hereby agrees that it shall be required strictly to comply with all of the terms of the Loan Documents on and after the date hereof.

3.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.

S.    Acknowledgments and Stipulations. Each Borrower acknowledges and stipulates that the Credit Agreement and the other Loan Documents executed by such Borrower are legal, valid and binding obligations of such Borrower that are enforceable against such Borrower 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 each Borrower); the security interests and liens granted by such Borrower in favor of Lender are duly perfected , first priority security interests and liens; and the unpaid principal amount of the Loans on and as of March 25,2015, totaled  $1.018,695.56.

1.Representations and Warranties. Each Borrower represents and warrants to Lender, to induce Lender to enter into this Amendment, that no Event of Default or Unmatured Event of Default exists on the date hereof other than the Designated Defaults; the execution, delivery and performance of this Amendment have been duly authorized by all requisite company action on the part of each Borrower and this Amendment has been duly executed and delivered by each Borrower; and all of the representation s and warranties made by Borrowers in the Credit Agreement are true and correct on and as of the date hereof.

2.Reference to Credit Agreement. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement," "hereunder," or words of like import shall mean and be a reference to the Credit Agreement , as amended by this Amendment.

		
	3.
	Breach of Amendment. This Amendment shall be part of the Credit Agreement and a breach

of any representation, warranty or covenant herein shall constitute an Event of Default.

4.Conditions Precedent. The effectiveness of the amendments contained in Section 2 hereof and the limited waiver contained in Section 3 hereof are 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:

Borrowers; and
		
	(a)
	Lender  shall have received  a counterpart  of  this Amendment  duly executed  by

(b)Lender shall have received a Consent and Reaffirmation to this Amendment duly executed by ADK.

1.Amendment Fees; Expenses of Lender. In consideration of Lender's willingness to enter
into this Amendment, Borrowers agree to pay to Lender (i) a waiver and amendment fee in the amount of
$5,000 in immediately available funds on the date hereof and (ii) an extension fee in the amount of $2,500 in immediately available funds on the date hereof. Additionally, Borrowers agree to pay, on demand , all costs and expenses incurred by Lender in connection with the preparation , negotiation and execution of this Amendment and any other Loan Document s executed pursuant hereto and any and all amendment s, modification s, and supplements thereto, includin g, without limitation , the costs and fees of Lender's legal counsel and any taxes or expenses associated with or incurred in connection with any instrument or agreement referred to herein or contemplated hereby.

		
	2.
	Governing Law.  This Amendment shall be governed by and construed in accordance with

the internal laws of the Commonwealth of Pennsylvania.

3.Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

4.No Novation, etc. Except as otherwise expressly provided in this Amendment, nothing herein shall be deemed to amend or modify any provi sion of the Credit Agreement or any of the other Loan Document s, each of which shall remain in full force and effect. This Amendment 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.

5.Counterparts; Electronic Signatures. This Amendment may beexecuted in any number of counterparts and by different partie s to this Amendment on separat e counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any manually executed signature page to this Amendment delivered by a party by facsimile or other electronic transmi ssion shall be deemed to be an original signature hereto.

6.Further Assurances. Borrowers agree to take such further action s as Lender shall reasonably request from time to time in connection herewith to evidence or give effect to the amendments set forth herein or any of the transactions contemplated hereby.

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

8.Manager Certification of each Borrower. By his execution and delivery of this Amendm ent, William McBride, III hereby certifies that: (a) the Unanimous Consents of the Sole Member and the Managers (the "Consent") of NW 6ls1 Nur sing, LLC dated as of May 30, 2013, Georgetown HC&R Nursing, LLC, dated as of June 24, 2013, and Sumter N&R , LLC, dated as of June 24,2013, remain in full force and effect,except that the current Manager of all Borrowers is now William McBride, III,the individual currently serving as Chief Executive Officer of ADK; (b) pursuant to the Consents, theManagers or designees of each Borrower are authorized and empowered (either alone or in conjunction with any one or more of the other Managers of such Borrower) to take, from time to time, all or any part of the following actions on or in behalf of such Borrower, as applicable: (i) to make, execute and deliver to Lender this Amendment and all other agreements, document s and instruments contemplated by or referred to herein or executed by such Borrower in connection herewith; and (ii) to carry out, modify, amend or terminate any arrangements or

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers on the date first written above.

For purposes of the Manager Certification of Borrowers in Section 17 above:

/s/ William McBride, III   (SEAL)
William McBride, III

Borrowers:    NW 61st NURSING, LLC
GEORGETOWN HC&R NURSING, LLC
SUMTER N&R, LLC

By:    /s/ William McBride, III
Name:      William McBride, III
Title:    Manager of each Borrower

[Signatures continued on following page.]

Fifth Amendm ent to Cred it Agree m ent (ADK ..: NW 6l st)

agreements at any time existing between Lender and such Borrower, as applicable; (c) any arrangements, agreements, security agreements , or other instruments or documents referred to or executed pursuant to this Amendment by William McBride, III, or any other Manager of a Borrower or an employee of a Borrower or ADK acting pursuant to delegation of authority, may be attested by such person and may contain such terms and provi sions as such person shall, in his or her sole discretion , determine; and (d) set forth below is the name and signature of the current Chief Executive Officer of ADK and Manager of each . w -, William McBride, III:
William McBride, III    Chief Executive Officer of ADK and Manager of each Borrower
/s/ William McBride, III

1.Release of Claims. To induce Lender to enter into this Amendment, 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 such Borrower now has 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 such Borrower has not transferred or assigned to any Person any claim that such Borrower ever had or claimed to have against Lender.

2.Waiver of Jury Trial. To the fullest extent permitted by applicable law, 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 Amendment.

[Remainder of page intentionally left blank; signatures begin on following page.]

LENDER:        GEMINO HEALTHCARE FINANCE, LLC

By:    /s/ Jeffrey M. Joslin
Jeffrey M. Joslin, Vice President

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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 Fifth Amendment to Credit Agreement; (ii) consents to Borrowers' execution and delivery thereof and of the other document s, instrument s 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 Obligation s and reaffirm s that such guaranty is and shall remain in full force and effect.

IN WITNESS WHEREOF , the undersigned has executed this Consent and Reaffirmation as of the date of such Fifth Amendment to Credit Agreement.

ADCARE HEALTH SYSTEMS, INC.

By:     /s/ William McBride, III
Name: William McBride, III

Title: Chief Executive Officer3.31.2015 - Ex. 10.32 PrivateBank Ninth Loan Modification

	
		
	 
	Exhibit 10.32

NINTH MODIFICATION AGREEMENT

THIS NINTH MODIFICATION AGREEMENT dated as of May 1, 2015 (this “Agreement”), is entered into by and among ADK LUMBER CITY OPERATOR, LLC (“Borrower 2”), ADK LAGRANGE OPERATOR, LLC (“Borrower 4”), ADK POWDER SPRINGS OPERATOR, LLC (“Borrower 5”), ADK THUNDERBOLT OPERATOR, LLC (“Borrower 7”), ATTALLA NURSING ADK, LLC (“Borrower 9”), MOUNTAIN TRACE NURSING ADK, LLC, an Ohio limited liability company (“Borrower 10”), ERIN NURSING, LLC (“Borrower 12”), CP NURSING, LLC (“Borrower 13”), BENTON NURSING, LLC (“Borrower 14”), VALLEY RIVER NURSING, LLC (“Borrower 15”), PARK HERITAGE NURSING, LLC (“Borrower 16”), HOMESTEAD NURSING, LLC (“Borrower 17”), MOUNTAIN VIEW NURSING, LLC (“Borrower 19”), LITTLE ROCK HC&R NURSING, LLC (“Borrower 21”), COOSA NURSING ADK, LLC (“Borrower 25”), and QC NURSING, LLC (“Borrower 26”), each a Georgia limited liability company except as hereinabove set forth (the “Borrowers”), ADCARE HEALTH SYSTEMS, INC., a Georgia corporation (the “Guarantor”) (the Borrowers and the Guarantor being sometimes referred to herein collectively as the “Borrower/Guarantor Parties”), and THE PRIVATEBANK AND TRUST COMPANY, an Illinois banking corporation (“Lender”).
RECITALS

A.    The Borrower/Guarantor Parties and the Lender heretofore entered into the following documents (collectively, the “Documents”):
(i)    Loan and Security Agreement dated as of September 20, 2012 (the “Loan Agreement”), by and among the Borrowers named therein and the Lender.
(ii)    Promissory Note dated September 20, 2012 (the “Note”), from the Borrowers named therein to the Lender in the principal amount as amended effective April 1, 2015, of $6,000,000, and in the principal amount as amended effective August 1, 2015, of $5,750,000.
(iii)    Guaranty of Payment and Performance dated as of September 20, 2012, by the Guarantor to and for the benefit of the Lender.
B.    The parties previously entered into following documents (the “Previous Modifications”) which modified and amended or contained additional agreements concerning the Documents (all of which modifications, amendments and additional agreements are referred to herein as “Amending” the Documents): (i) the Modification Agreement dated as of October 26, 2012; (ii) the Memorandum of Agreement dated January 25, 2013 (the “Second Modification”); (iii) the Third Modification Agreement dated as of September 30, 2013 (the “Third Modification”); (iv) the Fourth Modification Agreement dated as of November 26, 2013; (v) the Fifth Modification Agreement dated as of July 22, 2014; (vi) the Sixth Modification Agreement dated as of September 24, 2014 (the “Sixth Modification”); (vii) the Seventh Modification Agreement dated as of 

December 17, 2014 (the “Seventh Modification”); (viii) the Pledge Agreement dated as of April 16, 2015, by the Guarantor to the Lender; and (ix) the Eighth Modification Agreement dated as of April 1, 2015 (the “Eighth Modification”).
C.    Borrower 20, Borrower 22 and Borrower 23 (as defined in the Second Modification) were released from their respective obligations under the Documents pursuant to the Second Modification.
D.    Borrower 3, Borrower 6 and Borrower 8 (as defined in the Third Modification) were released from their respective obligations under the Documents pursuant to the Third Modification.
E.    Borrower 1, Borrower 18 and Borrower 24 (as defined in the Sixth Modification) were released from their respective obligations under the Documents pursuant to the Sixth Modification.
F.    Borrower 11 (as defined in the Seventh Modification) was released from its obligations under the Documents pursuant to the Seventh Modification.
G.    Borrowers 2, 5, 7, 9, 10, 12 and 25 transferred operations of their facilities with the consent of the Lender granted in the Eighth Modification.
H.    The parties desire to make certain modifications and amendments to the Documents, as 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; New Defined Terms Added to Loan Agreement; Post-Closing Requirements.
(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.
(d)    The defined terms “Transferred Facility”, “Transferring Borrower”, “New Operator”, “Transfer Date” and “Transfer Documents” which were added to Section 1.1 of the 

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Loan Agreement in the Eighth Modification are hereby modified and amended by adding to each of them the new information which appears in Section 2 of this Agreement.
(e)    Not later than May 15, 2015, the Borrower shall deliver to the Lender (i) entity certificates for the Borrowers and the Guarantor in substantially the same form as the entity certificates for the Borrowers and the Guarantor delivered to the Lender in connection with the Eighth Modification, and (ii) legal opinions relating to this Agreement from attorneys in the States of Arkansas, Alabama, North Carolina, Ohio and Oklahoma, in substantially the same form as the legal opinions delivered by such attorneys with respect to the Eighth Modification.
Section 2.    Lender Consent to Transfer of Operations to Additional New Operators.  In addition to the consents to transfers of operations of Facilities contained in the Eighth Modification, the Borrowers and the Guarantor hereby request that the Lender consent to the transfer of operations of each Facility listed below (each of which shall be a “Transferred Facility”) by the Borrower which is the operator of such Facility (each of which shall be a “Transferring Borrower”), to the New Operator listed opposite the name of such Facility below (each of which shall be a “New Operator”), effective as of the Transfer Date listed opposite the name of such Facility below (each of which shall be a “Transfer Date”), pursuant to the Transfer Documents described opposite the name of such Facility below (each of which shall be “Transfer Documents”), and the Lender hereby grants such consent.
	
							
	

Facility and Borrower
Number
	

Facility Name
	

Borrower
	

Owner or Original Sublessor Leasing to Borrower
	

New Operator
	

Transfer
Date
	

Transfer Documents

	4
	LaGrange Nursing and Rehabilitation Center
	Borrower 4

ADK LaGrange Operator, LLC
	Owner, Master Lease Lessor - William Foster
Sublessor - ADK Georgia, LLC
	C.R. of LaGrange, L.C., a Georgia limited liability company

Affiliate of C. Ross Management, LLC (New Sponsor of Facility 13)
	April 1, 2015
	Direct Sublease Agreement by ADK Georgia, LLC dated April 1, 2015

Operations Transfer Agreement dated March 17, 2015

	13
	College Park Healthcare Center
	Borrower 13

CP Nursing, LLC
	Owner, CP Property Holdings, LLC
	Healthcare at College Park, LLC, a Georgia limited liability company

Affiliate of C. Ross Management, LLC (New Sponsor of Facility 4)
	April 1, 2015
	Sublease Agreement by CP Nursing, LLC, to C.R. of College Park, LLC, a Georgia limited liability company, dated February 18, 2015

Sub-Sublease Agreement by C.R. of College Park, LLC, to Healthcare at College Park, LLC, dated April 1, 2015

Operations Transfer Agreement dated March 31, 2015

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	16
	Heritage Park Nursing Center
	Borrower 17

ADK Thunderbolt Operator, LLC
	Park Heritage Nursing, LLC
	Highlands of Rogers Dixieland, LLC, a Delaware limited liability company

Affiliate of Aria Healthcare (New Sponsor of Facilities 17, 19 and 21)
	May 1, 2015
	Sublease Agreement by Borrower 16 dated January 15, 2015, as amended by Amendments dated February 27, 2015, March 31, 2015, and April 30, 2015

Operations Transfer Agreement dated January 16, 2015

	

17
	Homestead Manor Nursing Home
	Borrower 17

Homestead Nursing, LLC
	Owner, Homestead Property Holdings, LLC
	Highlands Of Stamps, LLC, a Delaware limited liability company

Affiliate of Aria Healthcare (New Sponsor of Facilities 16, 19 and 21)
	May 1, 2015
	Sublease Agreement by Borrower 17 dated January 15, 2015, as amended by Amendments dated February 27, 2015, March 31, 2015, and April 30, 2015

Operations Transfer Agreement dated January 16, 2015

	19
	Stone County Nursing and Rehabilitation Center
	Borrower 19

Mountain View Nursing, LLC
	Owner, Mount V Property Holdings, LLC
	Highlands Of Little Rock South Cumberland, LLC, a Delaware limited liability company

Affiliate of Aria Healthcare (New Sponsor of Facilities 16, 17 and 19)
	May 1, 2015
	Sublease Agreement by Borrower 19 dated January 15, 2015, as amended by Amendments dated February 27, 2015, March 31, 2015, and April 30, 2015

Operations Transfer Agreement dated January 16, 2015

	21
	Little Rock HC&R Nursing
	Borrower 21

Little Rock HC&R Nursing, LLC
	Owner, Little Rock HC&R Property Holdings, LLC
	Highlands of Little Rock West Markham, LLC, , a Delaware limited liability company

Affiliate of Aria Healthcare (New Sponsor of Facilities 16, 17 and 19)
	May 1, 2015
	Sublease Agreement by Borrower 21 dated January 15, 2015, as amended by Amendments dated February 27, 2015, March 31, 2015, and April 30, 2015

Operations Transfer Agreement dated January 16, 2015

Section 7.11 of the Loan Agreement shall be deemed to be modified and amended to permit the transfer of operations of the aforesaid Transferred Facilities to the aforesaid New Operators under the aforesaid Transfer Documents, and to permit the operation of the aforesaid Transferred Facilities by the aforesaid New Operators from and after their respective aforesaid Transfer Dates.

Section 3.    Reductions of Loan Amount.

(a)    Pursuant to the Eighth Modification, the amount of the Loan and the Note and the Loan Amount were reduced from $8,815,000 to $6,000,000, effective as of the date of April 1, 2015, date of the Eighth Modification.

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(b)    Pursuant to the Eighth Modification, the amount of the Loan and the Note and the Loan Amount were further reduced from $6,000,000 to $5,750,000, effective as of August 1, 2015.
(c)    The amount of the Loan and the Note and the Loan Amount are hereby further reduced from $5,750,000 to $3,750,000, effective as of September 1, 2015, and all of the Documents, as Amended by the Previous Modifications, are hereby modified and amended accordingly.
(d)    Without limitation on the generality of the foregoing provisions of this Section, the dollar amounts that appear in the Documents, as Amended by the Previous Modifications, in reference to the amount of the Loan and the Note are hereby modified and amended to be the respective reduced amounts set forth above in this Section effective as of the respective reduction dates set forth above in this Section, including, without limitation, in the defined term “Loan Amount” in Section 1.1 of the Loan Agreement, in the upper left corner of page 1 of the Note, in the definition of the term “Loan” in Section 1 of the Note, and in Recital paragraph A of the Guaranty, each as Amended by the Previous Modifications.
(e)    If any reduction of the Loan Amount which is provided for in this Section results in a reduction of the Availability that causes the outstanding principal balance of the Loan together with the combined face amount of all outstanding Letters of Credit, to exceed the reduced Availability, the Borrowers shall make such repayments of the Loan as shall be necessary to eliminate such excess, as required by the Loan Agreement, including, without limitation, Sections 3.4(b) and 7.4 thereof.  In the event that at the time of any such reduction of the Availability there is no principal balance outstanding on the Loan, or if a payment made as described above in this paragraph causes no principal balance to be outstanding on the Loan, and if the combined face amount of all outstanding Letters of Credit exceeds the reduced Availability, then the Borrowers shall immediately deposit the amount of such excess in a cash collateral account as security for the Loan in the name of one or more of the Borrowers with the Lender, and shall maintain such amount on deposit in such cash collateral account so long as and to the extent that the face amount of the combined face amount of all outstanding Letters of Credit exceeds the Availability, as required by the Loan Agreement, including, without limitation, Section 3.4(b) thereof.
Section 4.    Eighth Modification Provisions to Apply; Additional Change Relating to Certain Eligible Accounts.
(a)    All of the provisions of Sections 4 through 8 of the Eighth Modification shall apply not only to and with respect to the Transferred Facilities, Transferring Borrowers, New Operators, Transfer Dates and Transfer Documents which are identified in the Eighth Modification, but also to the Transferred Facilities, Transferring Borrowers, New Operators, Transfer Dates and Transfer Documents which are identified in this Agreement.
(b)    In addition to the provisions of Section 4 of the Eighth Modification, the Accounts of Borrowers 16, 17, 19 and 21 shall cease to be Eligible Accounts on the date of this Agreement, 

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for the reason that the New Operators of Facilities 16, 17, 19 and 21 declined to deliver estoppel agreements relating to their Transfer Documents in a form acceptable to the Lender.
Section 5.    Attachment to Note.  The Lender may, and prior to any transfer by it of the Note shall, attach a copy of this Agreement to the original Note and place an endorsement on the original Note making reference to the fact that such attachment has been made.
Section 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 any of the Previous Modifications, if any.  In order to induce the Lender to enter into this Agreement, the Borrower/Guarantor Parties hereby represent and warrant to the Lender as follows as of the date of this Agreement and if different, as of the date of the execution and delivery of this Agreement:
(a)    Each Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of which is stated in the Preambles to this Agreement, and if such State is not the State in which its Facility is located, such Borrower is duly registered or qualified to transact business and in good standing in the State in which its Facility is located.  Each Borrower has all necessary power and authority to carry on its present business, and has full right, power and authority to enter into this Agreement, each of the Documents to which it is a party and the Previous Modifications, and to perform and consummate the transactions contemplated hereby and thereby.
(b)    The Guarantor is a corporation 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.
(c)    Each Signing Entity is duly organized, validly existing and in good standing under the laws of the State in which it is organized, has all necessary power and authority to carry on its present business, and has full right, power and authority to execute this Agreement, the Documents and the Previous Modifications in the capacity shown in each signature block contained in this Agreement, the Documents and the Previous Modifications in which its name appears, and such execution has been duly authorized by all necessary legal action applicable to such Signing Entity.
(d)    This Agreement, the Documents and the Previous Modifications have been duly authorized, executed and delivered by such of the Borrower/Guarantor Parties as are parties thereto, and this Agreement, the Documents and the Previous Modifications constitute valid and legally binding obligations enforceable against such of the Borrower/Guarantor Parties as are parties thereto.  The execution and delivery of this Agreement, the Documents and the Previous Modifications and compliance with the provisions thereof under the circumstances contemplated therein do not and will not conflict with or constitute a breach or violation of or default under the organizational documents of any Borrower/Guarantor Party or any Signing Entity, or any agreement or other instrument to which any of the Borrower/Guarantor Parties or any Signing Entity is a party, 

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or by which any of them is bound, or to which any of their respective properties are subject, or any existing law, administrative regulation, court order or consent decree to which any of them is subject.
(e)    The Borrower/Guarantor Parties are in full compliance with all of the terms and conditions of the Documents to which they are a party and the Previous Modifications, and no Default or Event of Default has occurred and is continuing with respect to any of the Documents or the Previous Modifications.
(f)    There is no litigation or administrative proceeding pending or threatened to restrain or enjoin the transactions contemplated by this Agreement, any of the Documents or the Previous Modifications, or questioning the validity thereof, or in any way contesting the existence or powers of any of the Borrower/Guarantor Parties or any Signing Entity, or in which an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by this Agreement, any of the Documents or the Previous Modifications, or would result in any material adverse change in the financial condition, properties, business or operations of any of the Borrower/Guarantor Parties.
(g)    The statements contained in the Recitals to this Agreement are true and correct.
Section 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 

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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.
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 

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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.
Section 16.    Waiver of Trial by Jury.  THE PROVISIONS OF THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS RELATING TO WAIVER OF TRIAL BY JURY SHALL APPLY TO THIS AGREEMENT.

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

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

	 
	ADK LUMBER CITY OPERATOR, LLC

	 
	ADK LAGRANGE OPERATOR, LLC

	 
	ADK POWDER SPRINGS OPERATOR, LLC

	 
	ADK THUNDERBOLT OPERATOR, LLC

	 
	ATTALLA NURSING ADK, LLC

	 
	MOUNTAIN TRACE NURSING ADK, LLC

	 
	ERIN NURSING, LLC

	 
	CP NURSING, LLC

	 
	BENTON NURSING, LLC

	 
	VALLEY RIVER NURSING, LLC

	 
	PARK HERITAGE NURSING, LLC

	 
	HOMESTEAD NURSING, LLC

	 
	MOUNTAIN VIEW NURSING, LLC

	 
	LITTLE ROCK HC&R NURSING, LLC

	 
	COOSA NURSING ADK, LLC

	 
	QC NURSING, LLC

	 
	 

	 
	 

	 
	By
	/s/ William McBride

	 
	 
	William McBride III, Manager of Each Borrower

	 
	 
	 

	 
	 
	 

	 
	ADCARE HEALTH SYSTEMS, INC.

	 
	 
	 

	 
	 
	 

	 
	By
	/s/ William McBride

	 
	 
	William McBride, Chief Executive Officer 

	 
	 
	 

	 
	 
	 

	 
	THE PRIVATEBANK AND TRUST COMPANY

	 
	 
	 

	 
	 
	 

	 
	By
	/s/ Amy K. Hallberg

	 
	 
	Amy K. Hallberg, Managing Director

- AdCare Portfolio Operator Loan Ninth Modification Agreement -
- Signature Page -

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