Document:

Exhibit

Exhibit 10.139

SECOND AMENDMENT TO 
THIRD AMENDED AND RESTATED MULTIPLE FACILITIES LEASE
GEORGIA LESSOR – BONTERRA/PARKVIEW, LLC
AND
ADK BONTERRA/PARKVIEW, LLC
DATED: SEPTEMBER 1, 2015
Facilities:

(Parkview Manor Nursing Home (Atlanta, Georgia)) 
(Bonterra Nursing Center (East Point, Georgia))

SECOND AMENDMENT TO THIRD AMENDED AND RESTATED
 MULTIPLE FACILITIES LEASE 
(Parkview Manor Nursing Home (Atlanta, Georgia)) 
(Bonterra Nursing Center (East Point, Georgia))
THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED MULTIPLE FACILITIES LEASE (“Second Amendment”) is executed and delivered as of September 1, 2015, and is entered into by Georgia Lessor – Bonterra/Parkview, LLC, a Maryland limited liability company (successor to Georgia Lessor – Bonterra/Parkview, Inc. by conversion) (“Lessor”), and ADK Bonterra/Parkview, LLC, a Georgia limited liability company (“Lessee”).
RECITALS:

A.    Lessee has executed and delivered to Lessor a Third Amended and Restated Multiple Facilities Lease dated as of October 29, 2010, as amended by First Amendment to Third Amended and Restated Multiple Facilities Lease dated June 14, 2013 (as previously amended, the “Existing Master Lease”) pursuant to which Lessee leases from Lessor certain healthcare facilities located in the State of Georgia.
B.    Lessee has requested that Lessor consent to the sublease for the Facilities and, pursuant to the Consent to Subleases, Landlord desires to do so.
C.    Lessor and Lessee desire to amend the Existing Master Lease to, among other things, (i) acknowledge the Consent to Sublease, (ii) amend the expiration of the Initial Term, and (iii) amend the Options to Renew.  
NOW THEREFORE, the parties agree as follows:
1.Definitions.  Any capitalized term used but not defined in this Second Amendment will have the meaning assigned to such term in the Existing Master Lease.  From and after the date of this Second Amendment, each reference in the Existing Master Leases or the other Transaction Documents to the "Lease" or "Master Lease" means, as applicable, the Existing Master Lease as modified by this Second Amendment.  Additionally:  
		
	a.
	The following definitions in Section 2.1 of the Existing Master Lease are amended and restated in their entirety as follows:

Cash Flow:  For any period, the sum of (a) Net Income of Lessee and any Sublessee (on a consolidated basis) arising solely from the operation of the Facilities for the applicable period, and (b) the amounts deducted in computing Lessee’s and Sublessee’s Net Income for the period for (i) depreciation, (ii) amortization, (iii) the greater of the Base Rent and Wellington Sublease Rent (the amount added back for Base Rent or Wellington Sublease Rent to be the amount used, whether actual amounts paid or “straight-line” rent amounts, in calculating Net Income), (iv) interest (including payments in the nature of interest under capitalized leases and interest on any Purchase Money Financing), (v) income taxes (or, if greater, income tax actually 

Second Amendment to Third Amended and Restated Multiple Facilities Lease (Parkview and Bonterra)
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paid during the period) and (vi) management fees, and less (c) an imputed management fee equal to five percent (5%) of gross revenues.
Cash Flow to Rent Ratio:  For any fiscal period, the ratio of Cash Flow to the greater of the actual Base Rent or Wellington Sublease Rent payable.  
Expiration Date: means August 31, 2025, or August 31, 2037 if the second Renewal Term has been exercised, or August 31, 2049 if the third Renewal Term as been exercised.
Lease Year: means each twelve-month period from and including May 1 through April 30.  The Parties acknowledge that the last Lease Year of the Term will be a partial Lease Year.
Rent:      Collectively, Base Rent, Wellington Base Rent, and Additional Charges.
Sublease:    Subleases expressly approved in writing by Lessor prior to execution by Lessee.  As of the date of the Second Amendment, the Wellington Sublease is the only Sublease.
Sublessee:     A Sublessee under a Sublease. As of the date of the Second Amendment, the Wellington Sublessee is the only Subleesee.
Transaction Documents:  means the following documents: this Lease, the Guaranties, the Letter of Credit Agreement, the Security Agreement, the Pledge Agreement, the Subordination Agreements, the Consent to Sublease, and any security agreements, pledge agreements, letter of credit agreements, guarantees, notes or other documents which evidence, secure or otherwise relate to this Lease, or the transactions contemplated by this Lease; and any and all amendments, modifications, extensions and renewals of any of the foregoing documents.
		
	b.
	The following definitions are added to Section 2.1 of the Master Lease:

Consent to Sublease:  That certain Sublease Consent Agreement dated as of the date of this Second Amendment by and among Lessor, Lessee, Wellington Guarantors and the Subtenants.
Wellington Base Rent:  For the applicable period, the Wellington Base Rent will be thirty-seven and one half percent (37.5%) of the difference between (i) the Wellington Sublease Rent for such period, and (ii) the Base Rent for such period; if the Base Rent exceeds the Wellington Sublease Rent, the amount of the Wellington Base Rent will be $0.00.
Wellington Sublease Rent:  means the annual amount of base rent payable under the Wellington Sublease.  
Wellington Sublessee:  means collectively, 460 Auburn Avenue, L.P., a Georgia limited partnership and 2801 Felton Avenue, L.P., a Georgia limited partnership.

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Second Amendment to Third Amended and Restated Multiple Facilities Lease (Parkview and Bonterra)
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Wellington Sublease:  means the sublease agreement between Lessee (as sublandlord) and Wellington Sublesees (as subtenants) dated July 20, 2015 for the sublease of the Facilities.
2.    Term Amendments.  Section 1.3 of the Existing Master Lease is amended and restated in its entirety as follows:
1.3    Option to Renew.  Lessee is hereby granted three (3) successive options to renew this Lease (each a “Renewal Term”).  The first option to renew has been exercised and is for the period of May 1, 2010 thru August 31, 2025.  The second option to renew is for the period of September 1, 2025 thru August 31, 2037.  The third option to renew is for the period of September 1, 2037 thru August 31, 2049.  The maximum Term if such options are exercised of approximately thirty-nine (39) Lease Years, four (4) months.  Lessee’s exercise of the second and third options to renew this Lease are subject to the following terms and conditions (which conditions may be waived by Lessor in its sole discretion):  
(a)    An option to renew is exercisable only by Notice to Lessor at least one hundred and eighty (180) days, and not more than three hundred sixty (360) days, prior to the expiration of the Initial Term (or prior to the expiration of the preceding Renewal Term, as the case may be);
(b)    No Event of Default or Unmatured Event of Default shall have occurred and be continuing either at the time a renewal option is exercised or at the commencement of a Renewal Term;
(c)    During a Renewal Term, all of the terms and conditions of this Lease shall remain in full force and effect; and
(d)    Lessee may exercise its options to renew with respect to all (and no fewer than all) of the Leased Properties.
3.     Payment of Rent.  Section 3.1 of the Existing Master Lease is amended and restated in its entirety as follows:
3.1    Base Rent; Monthly Installments. In addition to all other payments to be made by Lessee under this Lease, Lessee shall pay Lessor the Base Rent and Wellington Base Rent in lawful money of the United States of America which is legal tender for the payment of public and private debts, Lessee shall pay the Base Rent and Wellington Base Rent in advance, in equal, consecutive monthly installments, each of which shall be in an amount equal to monthly Base Rent and Wellington Base Rent payable for the Lease Year in which such installment is payable. The first installment of Base Rent shall be payable on the Commencement Date, together with a prorated amount of Base Rent for the period from the Commencement Date until the last day of the first full calendar month of the Term; and the first installment of Wellington Base Rent shall be payable on September 1, 2015.  Thereafter, installments of Base Rent and Wellington Base Rent shall be payable on the first (1st) day of each calendar month.  Base Rent and Wellington Base Rent shall 

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Second Amendment to Third Amended and Restated Multiple Facilities Lease (Parkview and Bonterra)
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be paid to Lessor, or to such other Person as Lessor from time to time may designate by Notice to Lessee, by wire transfer of immediately available federal funds to the bank account designated in writing by Lessor. If Lessor directs Lessee to pay any Base Rent, Wellington Base Rent, or Additional Charges to any Person other than Lessor, Lessee shall send to Lessor, simultaneously with payment of the Base Rent, Wellington Base Rent, or Additional Charges, a copy of the transmittal letter or invoice and check evidencing such, or such other evidence of payment as Lessor requires.
4.    Cash Flow to Rent Ratio.  Pursuant to Section 8.2.3 of the Existing Master Lease, Lessee covenanted to maintain, on a consolidated basis with the Sublessees, a Cash Flow to Rent Ratio (in each case, for the immediately preceding 12 month period) not less than 1.30:1.  Lessor agrees that Lessee’s and Wellington Sublessee’s, and their consolidated Cash Flow to Rent Ratio will not be required to comply with the requirements of Section 8.2.3 until the twelve month period ending September 30, 2016.
5.    Representations and Warranties of Lessee. Lessee hereby represents and warrants as of the date of this Second Amendment as follows:  (i) it is duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of organization; (ii) the execution, delivery and performance by it of this Second Amendment and the Transaction Documents, as applicable, are within its powers, have been duly authorized, and do not contravene (A) its articles of organization, operating agreement, or other organizational documents, or (B) any applicable law; (iii) no consent, license, permit, approval or authorization of, or registration, filing or declaration with any Governmental Authority or other Person (except for those that have already been obtained), is required in connection with the execution, delivery, performance, validity or enforceability of this Second Amendment or the Transaction Documents, as applicable, by or against it; (iv) this Second Amendment and the Transaction Documents, as applicable, have been duly executed and delivered by it; (v) this Second Amendment and the Transaction Documents, as applicable, constitute its legal, valid and binding obligations enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity; (vi) it is not in default under the Transaction Documents and no Event of Default or Unmatured Event of Default exists, has occurred or is continuing, (vii) all Impositions required to be paid by Lessee under the Existing Master Lease as of the date of this Second Amendment have been paid in full; (viii) Lessor has fully performed all of its obligations under each of the Transactions Documents through the date of this Second Amendment, and Lessor is in full compliance with its obligations under each of the Transaction Documents; and (ix) prior to the date of this Second Amendment, Lessee has made no Distributions to the holders of their equity securities or any Affiliate in violation of the Existing Master Lease.
6.    Single, Indivisible Lease.  Notwithstanding Landlord's approval of the Wellington Sublease in the Consent to Sublease, the Master Lease constitutes one indivisible lease of the Leased Property and not separate leases governed by similar terms. The Leased Property constitute one economic unit, and the Base Rent, Wellington Base Rent, and all other provisions have been negotiated and agreed to based on a demise of all of the Leased Property to Tenant as a single, composite, inseparable transaction and would have been substantially different had separate leases or a divisible lease been intended. Except as expressly provided in this Lease for specific, isolated purposes (and then only to the extent expressly otherwise stated), all provisions of this Lease apply equally and 

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uniformly to all of the Leased Property as one unit. An Event of Default with respect to any Leased Property is an Event of Default as to all of the Leased Property. The parties intend that the provisions of this Lease shall at all times be construed, interpreted and applied so as to carry out their mutual objective to create an indivisible lease of all of the Leased Property and, in particular but without limitation, that, for purposes of any assumption, rejection or assignment of this Lease under 11 U.S.C. 365, this is one indivisible and non-severable lease and executory contract dealing with one legal and economic unit and that this Lease must be assumed, rejected or assigned as a whole with respect to all (and only as to all) of the Leased Property.
7.    Expenses of Lessor. Lessee shall pay all reasonable expenses of Lessor incurred in connection with this Second Amendment, including reasonable attorneys fees and expenses.
8.    Release.  Each of Lessee, Sublessees, and their Affiliates hereby releases and forever discharges each of Lessor and its respective successors, assigns, agents, shareholders, directors, officers, employees, parent corporations, subsidiary corporations, affiliated corporations, and affiliates, from any and all claims, debts, liabilities, demands, obligations, costs, expenses, actions and causes of action, of every nature and description, whether known or unknown, absolute, mature, or not yet due, liquidated or non-liquidated, contingent, non-contingent, direct, or indirect or otherwise arising prior to the date hereof; provided, however, that such release and discharge shall not release Lessor for failure to comply with the terms and conditions of the Master Lease relating to the period after the date of this Second Amendment.
9.    Execution and Counterparts.  This Second Amendment may be executed in any number of counterparts, each of which, when so executed and delivered, shall be deemed to be an original, but when taken together shall constitute one and the same Second Amendment.
10.    Headings.  Section headings used in this Second Amendment are for reference only and shall not affect the construction of the Second Amendment.
11.    Enforceability.  Except as expressly and specifically set forth herein, the Existing Master Lease remains unmodified and in full force and effect.  In the event of any discrepancy between the Existing Master Lease and this Second Amendment, the terms and conditions of this Second Amendment will control and the Existing Master Lease is deemed amended to conform hereto
SIGNATURE PAGES FOLLOW

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Second Amendment to Third Amended and Restated Multiple Facilities Lease (Parkview and Bonterra)
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Signature Page to
SECOND AMENDMENT TO THIRD AMENDED AND RESTATED 
MULTIPLE FACILITIES LEASE 
(Parkview Manor Nursing Home (Atlanta, Georgia)) 
(Bonterra Nursing Center (East Point, Georgia))

LESSOR:
Georgia Lessor – Bonterra/Parkview, LLC, a Maryland limited liability company (successor to Georgia Lessor – Bonterra/Parkview, Inc. by conversion)
By:    /s/ Daniel J. Booth
Name:    Daniel J. Booth
Title:    Chief Operating Officer

THE STATE OF MARYLAND       )
)
COUNTY OF     BALTIMORE        )
This instrument was acknowledged before me on August 27, 2015, by Daniel J. Booth, the Chief Operating Officer of Georgia Lessor – Bonterra/Parkview, LLC, a Maryland limited liability company, on behalf of the company.
	
					
	 
	 
	Notary Public
	/s/ Judith A. Jacobs

	 
	 
	 
	Judith Jacobs
	 

 
        

Signature Page - 1 of 2

LESSEE:
ADK Bonterra/Parkview, LLC, a Georgia limited liability company

By:    /s/ William McBride
Name:    William McBride
Title:    Manager

THE STATE OF GEORGIA          )
)
COUNTY OF FULTON               )
This instrument was acknowledged before me on August 31, 2015, by William McBride, the Manager of ADK Bonterra/Parkview, LLC, a Georgia limited liability company, on behalf of said company.
	
					
	 
	 
	Notary Public
	/s/ Kirsten N. Parker

	 
	 
	 
	Kirsten N. Parker
	 

Acknowledgement and Ratification follows.

Signature Page - 2 of 2

Acknowledgement and Ratification to
SECOND AMENDMENT TO THIRD AMENDED AND RESTATED 
MULTIPLE FACILITIES LEASE 
(Parkview Manor Nursing Home (Atlanta, Georgia)) 
(Bonterra Nursing Center (East Point, Georgia))

The undersigned hereby ratify and affirm their respective Guaranties, Pledge Agreements, Security Agreements, Subordination Agreements and other Transaction Documents, and acknowledge and agree that the performance of the Master Lease and obligations described therein are secured by their Guaranties, Pledge Agreements, Security Agreement, Subordination Agreement and other Transaction Documents on the same terms and conditions in effect prior to this Second Amendment.  The undersigned hereby join in the release set forth in Section 8 of the Second Amendment.
ADCARE HEALTH SYSTEMS INC., an Ohio corporation

By:    /s/ William McBride
Name:    William McBride
Title:  Chairman and CEO

HEARTH & HOME OF OHIO, INC., an Ohio corporation

By:    /s/ William McBride
Name:     William McBride
Title:     Chairman and CEO

Acknowledgement Page - 1 of 1Exhibit

Exhibit 10.140

AGREEMENT REGARDING LEASE AND SUBLEASE

THIS AGREEMENT REGARDING LEASE AND SUBLEASE (this “Agreement”) is entered into as of the 1st day of August, 2015, by COVINGTON REALTY, LLC, an Ohio limited liability company (“Landlord”), ADCARE HEALTH SYSTEMS, INC., a Georgia corporation (“Tenant”), and CC SNF LLC, a Florida corporation (“Subtenant”).

Recitals

A.    Landlord and Tenant are parties to a Lease Agreement dated August 26, 2002, as amended by a First Amendment to Lease Agreement dated July 14, 2003, a Second Amendment to Lease Agreement dated April 1, 2008, a Third Amendment to Lease Agreement dated May 1, 2011, and a Fourth Amendment to Lease Agreement dated April 14, 2014 (the “Fourth Amendment”) (as so amended, the “Prime Lease”), pursuant to which Landlord leased to Tenant the facility commonly known as Covington Care Center, 75 Mote Drive, Covington, Ohio (the “Leased Premises”), including related personal property, as more particularly described in the Prime Lease.

B.    Tenant desires to sublease the Leased Premises to Subtenant, and Subtenant desires to sublease the Leased Premises from Tenant, pursuant to a Sublease Agreement dated August 1, 2015 (the “Sublease”).  

C.    Pursuant to Section 16.01 of the Lease, Tenant may not sublease the Leased Premises without the prior written consent of Landlord.  Therefore, Tenant and Subtenant have requested that Landlord consent to the Sublease.

D.    Landlord is willing to consent to the Sublease, on and subject to the terms and conditions set forth in this Agreement.

Statement of Agreement

Landlord, Tenant and Subtenant hereby agree as follows:

1.    Express Assumption of Prime Lease by Tenant.  The original tenant under the Prime Lease was Adcare Health Systems, Inc., an Ohio corporation.  However, Adcare Health Systems, Inc. has been dissolved and no longer exists as an Ohio corporation.  Tenant, which is a Georgia corporation authorized to transact business in Ohio, expressly and retroactively assumes the Prime Lease.
2.    Amendment of Prime Lease.  The Prime Lease is amended as follows:
a.    Base Rent.  Effective as of May 1, 2014, the annual base rent under the Prime Lease was set at $600,000.00.  Effective as of May 1, 2015 and each May 1 thereafter, the annual Base Rent under the Prime Lease shall be adjusted to 102% of the annual base rent in effect immediately prior to such date.

b.    Term.  The term of the Prime Lease is extended through April 30, 2025.  Tenant has no option to extend the term of the Prime Lease beyond April 30, 2025.

3.    Non-Disturbance and Attornment.  If the Prime Lease terminates prior to April 30, 2025 other than by reason of fire or other casualty pursuant to Section 4.07 of the Prime Lease or condemnation pursuant to Article 12 of the Prime Lease, then, as of the date of such termination (the “Early Termination Date”), the Sublease shall become a direct lease between Landlord, as landlord, and Subtenant, as tenant, on the same terms and conditions as are provided for in the Prime Lease (as if the Prime Lease had not terminated), provided that the rent shall be as provided in the Sublease.  If the Sublease becomes a direct lease between Landlord and Subtenant as provided above, then (a) Tenant shall, on the Early Termination Date, pay over to Landlord the security deposit made by Subtenant pursuant to Section 3 of the Sublease, (b) Landlord shall not be subject to the obligations of Tenant accruing under the Sublease prior to the Early Termination Date, (c) Subtenant shall not have any claims or rights of offset as against Landlord with respect to the obligations of Tenant accruing under the Sublease prior to the Early Termination Date, and (d) Subtenant will be responsible to Landlord for curing any defaults by Tenant existing under the Prime Lease as of the Early Termination Date.

4.    Security Deposit.  Subtenant is paying to Tenant a security deposit in accordance with Section 3 of the Sublease.  Until such time, if any, that the Sublease becomes a direct lease between Landlord and Subtenant and Tenant pays over to Landlord the security deposit as contemplated by Section 3 of this Agreement, Landlord shall not have any obligations to Subtenant or otherwise with respect to the security deposit.
5.    Replacement Reserve.  On the date of this Agreement and on the first day of each calendar month after the date of this Agreement until termination of the Prime Lease, Tenant shall pay $3,000 to Landlord, in addition to any other amounts owing by Tenant to Landlord under the Prime Lease, which Landlord shall deposit in a federally insured account in the name of Landlord (such funds being called the “Replacement Reserve Funds”).  Any interest earned on the Replacement Reserve Funds shall be added to and become a part of the Replacement Reserve Funds.  Landlord shall disburse the Replacement Reserve Funds to pay or reimburse Subtenant for actual costs of capital improvements and capital replacements to the Leased Premises (“Capital Costs”) as determined in accordance with generally accepted accounting principles.  From time to time as Subtenant incurs Capital Costs, Subtenant may submit to Landlord a written request for disbursement of Replacement Reserve Funds to pay or reimburse Subtenant for such Capital Costs, which written request shall be supported by such backup documentation as Landlord may reasonably request.  Within 15 days after receipt of such a written request and backup documentation, Landlord shall disburse Replacement Reserve Funds to pay or reimburse Subtenant for the applicable Capital Costs.  Any balance of Replacement Reserve Funds remaining upon termination of the Prime Lease shall be retained by Landlord without restriction.
6.    Costs.  Tenant shall pay or reimburse Landlord for the reasonable attorneys’ fees incurred by Landlord in connection with the Sublease and this Agreement within 30 days after invoice by Landlord.

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7.    Consent by Landlord to Sublease.  Landlord consents to the Sublease, on and subject to the terms of this Agreement.  Landlord’s consent is limited to the Sublease, and does not apply to any assignment of the Prime Lease or the Sublease or to any further sublease or all or any portion of the Leased Premises.  Subtenant shall not assign the Sublease or further sublease all or any portion of the Leased Premises without the prior written consent of Landlord, which consent may be given or withheld by Landlord as Landlord shall determine in its sole discretion.
8.    Continuing Effect of Prime Lease.  To the extent that the provisions of this Agreement are inconsistent with the provisions of the Prime Lease, the provisions of this Agreement shall control and the Prime Lease shall be deemed to be amended hereby.  Except as amended by this Agreement, the provisions of the Prime Lease remain in full force and effect.  Tenant remains primarily and fully liable for all of its obligations under the Prime Lease. 

9.    Sublease; Amendments.  Tenant and Subtenant represent and warrant to Landlord that a true, correct and complete copy of the Sublease is Exhibit A hereto, and that the Sublease, as affected by this Agreement, constitutes the entire agreement of Tenant and Subtenant with respect to the sublease of the Leased Premises by Tenant to Subtenant.  Tenant and Subtenant will not modify or amend the Sublease, or agree to any early termination of the Sublease, without the prior written consent of Landlord, which Landlord will not unreasonably withhold.

10.    Priority of Prime Lease.  The Prime Lease is superior to the Sublease in all respects.  Except to the extent, if any, that the Sublease becomes a direct lease between Landlord and Subtenant as contemplated by Section 3 of this Agreement, the Sublease imposes no obligations upon Landlord and Landlord shall not be or be deemed a party to the Sublease.

11.    General Obligations of Subtenant to Landlord.  Subtenant agrees, for the benefit of Landlord, to comply with each and every covenant, agreement and condition on the part of Tenant to be performed under the Prime Lease, other than the payment of rent.

12.    Estoppel Statements.  Tenant and Subtenant shall, from time to time, upon not less than ten business days’ prior written request by Landlord, execute and deliver to Landlord and/or other third parties designated by Landlord a statement in writing addressed to such party as Landlord shall designate, certifying that the Sublease is unmodified and in full force and effect and that Subtenant has no defenses, offsets or counterclaims against its obligations to pay the rent and to perform its other covenants under the Sublease (or, if there have been any permitted modifications thereunder that the same is in full force and effect as modified and stating the modifications and, if there are any defenses, offsets, counterclaims or defaults, setting them forth in reasonable detail), the dates to which rent has been paid, a statement that neither Tenant nor Subtenant is in default under the Sublease (or if in default, the nature of such default, in reasonable detail), and any additional factual information reasonably requested by Landlord.  Any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser or mortgagee of the Leased Premises.

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13.    Notices.  Each of Tenant and Subtenant shall, simultaneously with the giving of any default notice to the other under the Sublease, give a copy of the same to Landlord in accordance with the provisions of the Prime Lease.

14.    Insurance Certificates.  Landlord (and its designees) shall be a named insured under Subtenant’s insurance policies and shall receive certificates evidencing such insurance upon execution hereof and thereafter upon five days’ written request, which insurance shall not be cancelable on less than 30 days’ prior written notice to Landlord.  Subtenant shall comply with the insurance requirements of the Prime Lease, including securing insurance in such amounts and policies as is required for Tenant to secure under the Prime Lease; provided that the terms of this Section shall not excuse Tenant from, or otherwise affect, Tenant’s obligations under the Prime Lease regarding insurance.

15.    Release; Indemnification.  Subtenant releases Landlord (and any and all persons claiming by, through or under Landlord) from any liability for any loss or damage of any kind or for any injury to or death of persons or damage to property of Subtenant or any other person from any cause whatsoever (including, without limitation, bursting pipes, water leaks and smoke) by reason of the use, occupancy or enjoyment of the Leased Premises by Subtenant or any person therein or holding under Subtenant, except to the extent any such liability is caused by the negligence or willful misconduct of Landlord or its agents.  Subtenant shall indemnify and hold harmless Landlord harmless from and against any and all liabilities, claims, costs and expenses arising from or in any way related to the use or occupancy of the Leased Premises by or through Subtenant, except to the extent caused by the negligence or willful misconduct of Landlord, or any breach of the Sublease or this Agreement by Subtenant.  

16.    Binding Effect.  This Agreement shall be binding upon the parties and their respective successors and assigns.

17.    Entire Agreement.  This Agreement, together with the Prime Lease and the Sublease, constitutes the entire agreement among the parties regarding the subject matter hereof.  This Agreement may not be modified or amended other than by an instrument in writing signed by all parties.

18.    Captions.  The captions to the Sections of this Agreement have been inserted for convenience only and shall in no way modify or restrict any provisions hereof or be used to construe any such provisions.

19.    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio.

20.    Multiple Counterparts.  This Agreement may be signed in multiple counterparts, which counterparts, when assembled with the signatures of all parties, shall constitute one document.

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Executed as of the date first written above.

	
				
	 
	 
	COVINGTON REALTY, LLC

	 
	 
	 
	 

	 
	 
	By:
	/s/ Fred D. Kanter

	 
	 
	Name:
	Fred D. Kanter

	 
	 
	Title:
	Manager

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	ADCARE HEALTH SYSTEMS, INC.

	 
	 
	 
	 

	 
	 
	By:
	/s/ William McBride

	 
	 
	Name:
	William McBride

	 
	 
	Title:
	Chief Executive Officer

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	CC SNF LLC

	 
	 
	 
	 

	 
	 
	By:
	/s/ Bruce E. Wertheim

	 
	 
	Name:
	Bruce E. Wertheim

	 
	 
	Title:
	Manager

	 
	 
	 
	 

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EXHIBIT A

(copy of Sublease attached)

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