UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
December 30, 2013
AdCare Health Systems, Inc.
(Exact Name of Registrant as Specified in Charter)
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Georgia
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001-33135
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31-1332119
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(State or Other Jurisdiction of
Incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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1145 Hembree Road
Roswell, Georgia 30076
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(Address of Principal Executive Offices)
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(678) 869-5116
(Registrant’s telephone number, including area code)
Not applicable.
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01
Entry into a Material Definitive Agreement.
On December 31, 2013, certain subsidiaries (the “Borrowers”) of AdCare Health Systems, Inc. (the “Company”) entered into a Note, Mortgage and Loan Agreement Modification Agreement (the “Loan Modification”) with Metro City Bank (“Metro”), which modified that certain Loan Agreement, dated December 31, 2012, between the Borrowers and Metro (as amended, the “Metro Credit Facility”). The Loan Modification, among other things: (i) extends the maturity date of the Metro Credit Facility from February 1, 2014 to February 1, 2015; and (ii) increases the total amount available to the Borrowers under the Metro Credit Facility from $6,950,000 to $9,000,000. In connection with the Loan Modification, the Borrowers: (1) will deposit an additional $200,000 with Metro to be held as additional cash collateral; and (2) will repay the existing promissory notes under the Metro Credit Facility and issue new promissory notes in favor of Metro in the amount of $9,000,000.
Subsidiaries of the Company are also borrowers under three credit facilities with Metro used to fund the purchase price of the acquisition of two skilled nursing facilities in Alabama and a skilled nursing facility located in Arkansas.
Item 5.02
Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
On December 30, 2013, the Company entered into an Amendment to Employment Agreement (each, an “Amendment”), dated December 11, 2013, for each of: (i) Boyd P. Gentry, the Company’s Chief Executive Officer; (ii) Ronald W. Fleming, the Company’s Chief Financial Officer; (iii) David Rubenstein, the Company’s Chief Operating Officer; and (iv) Melissa L. Green, the Company’s Senior Vice President of Clinical Operations ((i) through (iv), the “Officers”). Pursuant to the Amendments, each of the Officers has agreed to accept options (the “Cash Replacement Options”) to purchase common stock of the Company, no par value (the “Common Stock”), granted pursuant to the Company’s 2011 Stock Incentive Plan (the “Plan”) in lieu of cash compensation otherwise payable to them under their respective employment agreements in the amounts of $50,000, $20,000, $25,000 and $15,000 for Messrs. Gentry, Fleming and Rubenstein and Ms. Green, respectively. The Cash Replacement Options will be granted on November 12
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of each year in respect of compensation for the following calendar year (the “Subsequent Year”) and have an exercise price equal to the fair market value (as defined in the Plan) of the Common Stock on the date of grant. The Cash Replacement Options will vest with respect to 1/12
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of the underlying shares of Common Stock on the last day of each month of the Subsequent Year, with vesting to be accelerated upon a “change in control” of the Company (as such term is defined in the Plan). Each Cash Replacement Option will have a value equal to the amount of cash compensation such option is intended to replace in respect of compensation for the Subsequent Year, with such value to be determined as of the date of grant and in accordance with the Black-Scholes-Merton option-pricing model. The Officers will cease receiving the Cash Replacement Options in lieu of cash compensation upon a change of control (as defined in each Officer’s respective employment agreements). The Officers’ agreement to accept the Cash Replacement Options in lieu of cash compensation does not reduce or increase their salary for purposes of calculating any post-termination, change in control
or severance payments, or any other payments or benefits calculated based upon salary, otherwise payable to the Officers pursuant to their respective employment agreement.
The Amendment pertaining to Mr. Fleming’s employment agreement also modified the definition of a “change in control” in his employment agreement to make it identical to the change in control definition in the employment agreements of Messrs. Gentry and Rubenstein and Ms. Green.
In addition, the Amendment pertaining to Mr. Gentry’s employment agreement modified his employment agreement to also provide that, if he resigns his employment for any reason within three months after the occurrence of a “change in control” (as such term is defined in his employment agreement), then he shall receive the same severance pay and benefits he would otherwise have received under his employment agreement if he had resigned his employment for good reason or the Company had terminated his employment without cause during the three months before, or the twenty-four months, after a change of control.
Item 2.03
Creation of a Direct Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by this reference.
Item 9.01
Financial Statements and Exhibits.
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99.1
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Note, Mortgage and Loan Agreement Modification Agreement, dated December 31, 2013, by and among Sumter Valley Property Holdings, LLC, Georgetown HC&R Property Holdings, LLC and Metro City Bank.
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99.2
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Amendment to Employment Agreement between AdCare Health Systems, Inc. and Boyd P. Gentry, dated as of December 11, 2013 but executed and delivered on December 30, 2013.
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99.3
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Amendment to Employment Agreement between AdCare Health Systems, Inc. and Ronald W. Fleming, dated as of December 11, 2013 but executed and delivered on December 30, 2013.
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99.4
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Amendment to Employment Agreement between AdCare Health Systems, Inc. and David Rubenstein, dated as of December 11, 2013 but executed and delivered on December 30, 2013.
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99.5
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Amendment to Employment Agreement between AdCare Health Systems, Inc. and Melissa L. Green, dated as of December 11, 2013 but executed and delivered on December 30, 2013.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: December 31, 2013
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ADCARE HEALTH SYSTEMS, INC.
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/s/ Boyd P. Gentry
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Boyd P. Gentry
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Chief Executive Officer
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EXHIBIT INDEX
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99.1
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Note, Mortgage and Loan Agreement Modification Agreement, dated December 31, 2013, by and among Sumter Valley Property Holdings, LLC, Georgetown HC&R Property Holdings, LLC and Metro City Bank.
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99.2
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Amendment to Employment Agreement between AdCare Health Systems, Inc. and Boyd P. Gentry, dated as of December 11, 2013 but executed and delivered on December 30, 2013.
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99.3
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Amendment to Employment Agreement between AdCare Health Systems, Inc. and Ronald W. Fleming, dated as of December 11, 2013 but executed and delivered on December 30, 2013.
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99.4
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Amendment to Employment Agreement between AdCare Health Systems, Inc. and David Rubenstein, dated as of December 11, 2013 but executed and delivered on December 30, 2013.
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99.5
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Amendment to Employment Agreement between AdCare Health Systems, Inc. and Melissa L. Green, dated as of December 11, 2013 but executed and delivered on December 30, 2013.
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Exhibit 99.1
Prepared by:
Richard G. Gaalema
Kitchens Kelley Gaynes, PC
5555 Glenridge Connector
Glenridge Highlands One, Suite 800
Atlanta, GA 30342
NOTE, MORTGAGE AND LOAN AGREEMENT MODIFICATION AGREEMENT
THIS NOTE, MORTGAGE AND LOAN AGREEMENT MODIFICATION AGREEMENT (“Modification”) is made and entered into effective as of the 30th day of December, 2013, by and among SUMTER VALLEY PROPERTY HOLDINGS, LLC and GEORGETOWN HC&R PROPERTY HOLDINGS, LLC (hereinafter collectively referred to as the “Borrowers”) and METRO CITY BANK (hereinafter referred to as “Lender”).
W I T N E S S E T H
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WHEREAS, Borrowers and Lender are parties to that certain Loan Agreement dated as of December 31, 2012 (the “Loan Agreement”), pursuant to which Lender agreed to loan Borrowers funds for the acquisition of two skilled nursing facilities in South Carolina (the “Loan”), as more particularly outlined in the Loan Agreement;
WHEREAS, in connection with the Loan, Borrowers executed and delivered to Lender a Promissory Note dated December 31, 2012, in the original principal amount of Six Million Nine Hundred Fifty Thousand 00/100ths Dollars ($6,950,000.00) payable to Lender (said Note being hereinafter referred to as the "Note"); and
WHEREAS, the parties desire to amend the Note to: (1) increase the loan amount to Nine Million and 00/100ths Dollars ($9,000,000.00) and (2) extend the maturity date to February 1, 2015, and the parties desire to amend the Loan Agreement as more particularly described herein.
NOW, THEREFORE, for and in consideration of TEN AND NO/100 ($10.00) DOLLARS, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrowers and Lender hereby agree as follows:
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1.
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Borrowers and Lender acknowledge and agree that the original principal balance due under the Note is Nine Million and 00/100ths Dollars ($9,000,000.00). All references to the Loan amount in the Note, the Loan Agreement and any other loan documents executed in connection with the Note shall be adjusted accordingly.
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2.
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Borrowers and Lender acknowledge and agree that the maturity date of the Note shall be extended from February 1, 2014 through and including February 1, 2015, and that all references to the maturity date in the Note, the Loan Agreement and any other loan documents executed in connection with the Note shall be adjusted accordingly.
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3.
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The parties agree that all references to a loan commitment letter dated December 24, 2012 shall now reflect a loan commitment letter dated December 16, 2013 and signed by Borrowers on December 18, 2013. Moreover, the parties acknowledge and agree as follows:
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(a)
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that the allocation of the Loan shall be $5,000,000 to the acquisition of the skilled nursing facility known as the Sumter Property and $4,000,000 to the acquisition of the skilled nursing facility known as the Georgetown Property;
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(b)
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that Lender is holding $585,440 as additional Cash Collateral Deposits, allocated as follows: (i) Sumter Property - $200,000 as a project fund, and $211,200 in a certificate of deposit; and (ii) Georgetown Property - $174,240 in a certificate of deposit;
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(c)
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In connection with this Modification, Lender is requiring that Borrowers increase the Cash Collateral Deposits held by Lender by a total amount of $200,000, which increased Deposit amount may be paid in equal monthly installments of $14,000 per month until the total reaches $200,000 or until the Loan is refinanced or pre-paid and which installments are allocated as follows: (i) Sumter Property - $7,750 per month and (ii) Georgetown Property - $6,250 per month.
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(d)
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notwithstanding anything in the Note or any other Loan document to the contrary, Lender is entitled to no prepayment penalty if the Loan is refinanced with USDA B&I loans or paid at maturity.
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4.
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Except as expressly set forth herein, all other terms and conditions of the Note shall remain in full force and effect. In no event shall this Modification, or any provision hereof, in any way be held to invalidate or impair any right or remedy granted Lender under the terms of the Note evidencing Borrower’s indebtedness to Lender. This Modification shall not be considered a novation, and nothing contained herein shall be deemed to extinguish any part of the original Note, Mortgages or other collateral given to secure the Note, including but not limited to that certain Mortgage of Real Estate Security Agreement and Financing Statement from Sumter Valley Property Holdings, LLC dated December 31, 2012, recorded January 7, 2013 in Book 1181, Page 2024, Sumter County, South Carolina and that certain Mortgage of Real Estate Security Agreement and Financing Statement from Georgetown HC&R Property Holdings, LLC
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dated December 31, 2012, recorded January 7, 2013 in Book 2062, Page 134, Georgetown County, South Carolina (the “Mortgages”) shall now secure the Note as modified and the maximum indebtedness under the Mortgages shall now be $9,000,000.00.
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5.
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This Modification shall be construed in accordance with the laws of the State of Georgia and shall be binding upon the parties hereto, their successors and assigns.
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IN WITNESS WHEREOF,
Borrowers and Lender have hereunto set their hands and seals as of the date first written above.
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WITNESSES:
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SUMTER VALLEY PROPERTY HOLDINGS, LLC a Georgia limited liability company
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__________________________
By: (SEAL)
Boyd P. Gentry, Manager
__________________________
STATE OF GEORGIA)
COUNTY OF
FULTON)
I, ___________________________, Notary Public for ___________ do hereby certify that Boyd P. Gentry as Manager of Sumter Valley Property Holdings, LLC, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal this the ________
day of December, 2013.
______________________________________
NOTARY PUBLIC FOR _____________
MY COMMISSION EXPIRES: ______
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WITNESSES:
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GEORGETOWN HC&R PROPERTY HOLDINGS, LLC, a Georgia limited liability company
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__________________________
By: (SEAL)
Boyd P. Gentry, Manager
__________________________
STATE OF GEORGIA)
COUNTY OF FULTON)
I, ___________________________, Notary Public for ___________ do hereby certify that Boyd P. Gentry as Manager of Georgetown HC&R Property Holdings, LLC, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal this the ________
day of December, 2013.
______________________________________
NOTARY PUBLIC FOR ___________
MY COMMISSION EXPIRES: ______
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WITNESSES:
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METRO CITY BANK, a Georgia banking company
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__________________________
By:
Its:___________________________
__________________________
STATE OF GEORGIA)
COUNTY OF GWINNETT)
I, ___________________________, Notary Public for Georgia do hereby certify that ______________as the _________ of Metro City Bank, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal this the ________
day of December, 2013.
______________________________________
NOTARY PUBLIC FOR GEORGIA
MY COMMISSION EXPIRES: ______
The undersigned Guarantors hereby acknowledges and agree with the foregoing increase in the loan amount and extension of the maturity date and acknowledge that the amounts set forth in the loan documents including the Guaranty Agreements are modified accordingly:
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WITNESSES:
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GEORGETOWN HC&R NURSING, LLC, a Georgia limited liability company
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__________________________
By: (SEAL)
Boyd P. Gentry, Manager
__________________________
STATE OF GEORGIA)
COUNTY OF
FULTON)
I, ___________________________, Notary Public for _______________ do hereby certify that Boyd P. Gentry as Manager of Georgetown HC&R Nursing, LLC, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal this the ________
day of December, 2013.
______________________________________
NOTARY PUBLIC FOR _______________
MY COMMISSION EXPIRES: ______
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WITNESSES:
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SUMTER N&R, LLC, a Georgia limited liability company
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__________________________
By: (SEAL)
Boyd P. Gentry, Manager
__________________________
STATE OF GEORGIA)
COUNTY OF
FULTON)
I, ___________________________, Notary Public for _______________ do hereby certify that Boyd P. Gentry as Manager of Sumter N&R, LLC, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal this the ________
day of December, 2013.
______________________________________
NOTARY PUBLIC FOR _______________
MY COMMISSION EXPIRES: ______
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WITNESSES:
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ADCARE HEALTH SYSTEMS, INC., a Georgia corporation
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__________________________
By:
Boyd P. Gentry, President and Chief Executive Officer
__________________________
(Corporate Seal)
STATE OF GEORGIA)
COUNTY OF FULTON)
I, ___________________________, Notary Public for _______________ do hereby certify that Boyd P. Gentry as President and Chief Executive Officer of Adcare Health Systems, Inc., personally appeared before me this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal this the ________
day of December, 2013.
______________________________________
NOTARY PUBLIC FOR _______________
MY COMMISSION EXPIRES: ______
Exhibit 99.2
AMENDMENT TO EMPLOYMENT AGREEMENT
between
AdCare Health Systems, Inc.
and
Boyd P. Gentry
This Amendment (this "Amendment") is made the 11th day of December, 2013, and amends the Employment Agreement dated January 7, 2010 (the
"Employment
Agreement") between AdCare Health Systems, Inc. (the
"Company")
and Boyd P. Gentry (the "Officer").
Background
The Company and the Officer desire to amend the Employment Agreement to reduce the Officer's annual base salary by $50,000 in exchange for the annual grant of an option to purchase common stock of the Company and to provide for an additional severance right upon a change in control.
Statement of Agreement
For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree that the Employment Agreement is amended as follows:
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1.
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By adding the following to the end of Section 3(a):
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"Notwithstanding the foregoing, effective January 1, 2014, the Officer's Annual Salary shall be reduced, solely for purposes of this Section 3(a) and for no other purposes of this Agreement, by $50,000 per year, which reduction shall be applied ratably in substantially equal installments from each installment of Annual Salary that is payable during the year. The Annual Salary reduction shall not be taken into account for Section 3(b), Section 6(c) or any other section or purpose of this Agreement. The reduction shall remain in effect until the date of a Change in Control (as defined in the Employment Agreement) during the Employment Term, at which date the Annual Salary shall be restored without reduction prospectively and without adjustment for the past reductions. In exchange for the Annual Salary reduction, the Company shall grant the Officer an option annually during the Employment Term under the Company's 2011 Stock Incentive Plan (or other plan if the 2011 Stock Incentive Plan is not available), which shall be an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code to the maximum extent permissible under the applicable plan (the
"Option").
Each Option shall be granted on November 12 of each calendar year preceding the calendar year in which the Annual Salary reduction is to occur. (Therefore, the first Option shall be granted on November 12, 2013.) Each Option shall be calculated by the Company to have a value as of the date of grant, using the Black-Scholes methodology or other methodology for valuing the Option that is consistent with generally accepted accounting principles ("GAAP"), that is equal to $50,000. Each Option shall vest one twelfth (1/12) on the last day of each month as to which the related reduction in the installment of Annual Salary applies (so the first one twelfth (1/12) vesting shall occur on January 31, 2014), subject to the Officer's continued employment by the Company on the vesting date. In the event of a "change in control" (as defined in the 2011 Stock Incentive Plan (or other plan if the 2011 Stock Incentive Plan is not available), or as defined in the Employment Agreement in the absence of a plan definition) that occurs during the Employment Term, any unvested portion of the Option shall become one hundred percent (100%) vested upon the date of the change in control. The unvested portion of the Option shall be forfeited
upon termination of the Officer's employment. The Option exercise price shall be the fair market value per share on the date of grant of the Option as determined pursuant to the 2011 Stock Incentive Plan (or other plan if the 2011 Stock Incentive Plan is not available)."
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2.
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By deleting Section 6(c) in its entirety and substituting therefor the following:
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"(c) If
the Officer resigns his employment for Good Reason or the Company terminates the Officer's employment without Cause (other than due to the Officer
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s Disability), the Officer, or his successors and assigns, shall receive the severance pay and benefits hereafter provided. The severance pay shall be an amount equal to two (2) times the sum of Annual Salary plus Target Bonus, payable in substantially equal installments at least monthly for twenty-four (24) months after the termination date, plus if such termination occurs within three (3) months before or twenty-four (24) months after the occurrence of a "Change in Control," an additional one time the sum of Annual Salary plus Target Bonus, payable in substantially equal installments at least monthly for twelve (12) months beginning immediately after twenty-four (24) months following the termination date. Notwithstanding the foregoing, if the Officer resigns his employment for any reason upon or within three (3) months after the occurrence of a "Change in Control," the Officer, or his successors and assigns, shall receive severance pay (in lieu of the severance pay described in the immediately preceding sentence) in an amount equal to three (3) times the sum of Annual Salary plus Target Bonus, payable in substantially equal installments at least monthly for thirty-six (36) months after the termination date. For the period for which severance pay is paid, i.e., twenty-four (24) or thirty-six (36) months following termination of employment (the "Severance Period"), the Officer and his family shall be entitled to continue to be covered under all employee benefit plans of the Company under which executive officers of the Company are covered and at the same cost and under the same terms and conditions as apply to executive officers, provided, however, that if the Company is unable under applicable law or the insurer will not permit the Officer to be covered under any such plan, the Company shall pay to the Officer an amount each month during the Severance Period equal to the Company's cost of coverage for similarly situated executive officers. For purposes of this Agreement, termination of employment and similar terms means a termination of employment constituting a "separation from service" within the meaning of Code Section 409A. Notwithstanding the foregoing, to the extent necessary to avoid the Officer incurring a tax under Code Section 409A, any amount that is otherwise due
within six (6) months following termination of employment shall be de1ayed until six (6) months after termination of employment. The provisions contained in this Section shall survive the termination of the Officer's employment"
Except as specifically amended hereby, the Employment Agreement shall remain in full
force and effect as prior to this Amendment.
The parties have executed this Amendment, each of which if executed in counterpart shall be deemed to be an origina1, as of the date set forth at the beginning hereof.
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THE COMPANY:
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THE OFFICER:
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ADCARE HEALTH SYSTEMS, INC.
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Boyd P. Gentry
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By: /s/ David A. Tenwick
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/s/ Boyd P. Gentry
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David A. Tenwick
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Chairman
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Exhibit 99.3
AMENDMENTTO EMPLOYMENT AGREEMENT
between
AdCare Health Systems, Inc.
and
Ronald W. Fleming
This Amendment (this "Amendment") is made the 11th day of December, 2013, and amends the Employment Agreement dated July 3, 2013 (the "Employment Agreement") between AdCare Health Systems, Inc. (the "Company") and Ronald W. Fleming (the "Officer").
Background
The Company and the Officer desire to amend the Employment Agreement to reduce the Officer's annual base salary by $20,000 in exchange for the annual grant of an option to purchase common stock of the Company.
Statement of Agreement
For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree that the Employment Agreement is amended as follows:
1.
By adding the following to the end of Section 3(a):
"Notwithstanding the foregoing, effective January 1, 2014, the Annual Salary shall be reduced, solely for purposes this Section 3(a) and for no other purposes of this Agreement, by
$20,000 per year, which reduction shall be applied ratably in substantially equal installments from each installment of Annual Salary that is payable during the year. The Annual Salary reduction shall not be taken into account for Section 3(b), Section 5(c) or any other section or purpose of this Agreement. The reduction shall remain in effect until the date of a Change in Control (as defined in Section 3(c)) during the Employment Term, at which date the Annual Salary shall be restored without reduction prospectively and without adjustment for the past reductions. In exchange for the Annual Salary reduction, the Company shall grant the Officer an option to purchase shares of Common Stock (as defined in Section 3(c)) annually during the Employment Term under the 2011 Plan (as defined in Section 3(c)) (or other plan if the 2011 Plan is not available), which shall be an "incentive stock option" within the meaning of Section 422 of the Code (as defined in Section 5(c)) to the maximum extent permitted pursuant to the terms of the 2011 Plan (or other plan if the 201 1 Plan is not available)(the "Option"). Each Option shall be granted on November 12 of each calendar year preceding the calendar year in which the Annual Salary reduction is to occur. (Therefore, the first Option shall be granted on November 12, 2013.) Each Option shall be calculated by the Company to have a value as of the date of grant, using the Black-Scholes methodology or other methodology for valuing the Option that is consistent with generally accepted accounting principles ("GAAP"), that is equal to
$20,000. Each Option shall vest one twelfth (1/12) on the last day of each month as to which the related reduction in the installment of Annual Salary applies (so the first one twelfth (1/12) vesting shall occur on January 31, 2014), subject to the Officer's continued employment by the Company on the vesting date. In the event of a "change in control" (as defined in the 2011 Plan (or such other plan under which the Option is granted), or as defined in the Employment Agreement in the absence of a plan definition) that occurs during the Employment Term, any unvested portion of the Option shall become one hundred percent (100%) vested upon the date of the change in control. The unvested portion of the Option shall be forfeited upon termination of the Officer's employment. The Option exercise price shall be the fair market value per share on the date of grant of the Option as determined pursuant to the 2011
Plan (or other plan if the 2011 Plan is not available)."
2.
By substituting the following definition of "Change in Control" for the definition in Section 3(c) of the Employment Agreement:
'"Change in Control ' means one or more sales or dispositions, within a twelve (12) month period, of assets representing a majority of the value of the assets of the Company or the acquisition (whether by purchase or through a merger or otherwise) of common stock of the Company immediately following which the holders of common stock of the Company immediately prior to such acquisition cease to own directly or indirectly common stock of the Company or its legal successor representing more than fifty percent (50%) of the voting power of the common stock of the Company or its legal successor."
Except as specifically amended hereby, the Employment Agreement shall remain in full force and effect as prior to this Amendment.
The parties have executed this Amendment, each of which if executed in counterpart shall be deemed to be an original, as of the date set forth at the beginning hereof.
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THE COMPANY:
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THE OFFICER:
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ADCARE HEALTH SYSTEMS, INC.
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Ronald W. Fleming
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By: /s/ Boyd P. Gentry
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/s/ Ronald W. Fleming
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Boyd P. Gentry,
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President and CEO
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Exhibit 99.4
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
between
AdCare Health Systems, Inc.
and
David Rubenstein
This Second Amendment (this "Amendment") is made the
11th
day of December,
2013,
and amends the Employment Agreement dated November
15, 2011
(the "Employment Agreement") between AdCare Health Systems, Inc. (the "Company") and David Rubenstein (the "Officer").
Background
The Company and the Officer desire to amend the Employment Agreement to reduce the Officer's annual base salary by
$25,000
in exchange for the annual grant of an option to purchase common stock of the Company.
Statement of Agreement
. For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree that the Employment Agreement is amended by adding the following to the end of Section 3(a):
"Notwithstanding the foregoing, effective January
1, 2014,
the Annual Salary shall be reduced, solely for purposes this Section 3(a) and for no other purposes of this Agreement, by
$25,000
per year, which reduction shall be applied ratably in substantially equal installments from each installment of Annual Salary that is payable during the year. The Annual Salary reduction shall not be taken into account for Section 3(d), Section 5(c) or any other section or purpose of this Agreement. The reduction shall remain in effect until the date of a Change in Control (as such term is defined in the Company's
2011
Stock Incentive Plan (the
"2011
Plan")) during the Employment Term, at which date the Annual Salary shall be restored without reduction prospectively and without adjustment for the past reductions. In exchange for the Annual Salary reduction, the Company shall grant the Officer an option to purchase shares of Common Stock (as defined in Section 3(d)) annually during the Employment Term under the Company's
2011
Plan (or other plan if the
2011
Plan is not available), which shall be an "incentive stock option" within the meaning of Section
422
of the Internal Revenue Code (the "Code") to the maximum extent permitted pursuant to the terms of the
2011
Plan (or other plan if the
2011
Plan is not available) (the "Option"). Each Option shall be granted on November
12
of each calendar year preceding the calendar year in which the Annual Salary reduction is to occur. (Therefore, the first Option shall be granted on November
12, 2013.)
Each Option shall be calculated by the Company to have a value as of the date of grant, using the Black-Scholes methodology or other methodology for valuing the Option that is consistent with generally
accepted accounting principles ("GAAP"), that is equal to $25,000. Each Option shall vest one twelfth (1/12) on the last day of each month as to which the related reduction in the installment of Annual Salary applies (so the first one twelfth (1/12) vesting shall occur on January 31, 2014), subject to the Officer's continued employment by the Company on the vesting date. In the event of a "change in control" (as defined in the 2011 Plan (or such other plan under which the Option is granted), or as defined in the Employment Agreement in the absence of a plan definition) that
occurs during the Employment Term, any unvested portion of the Option shall become one hundred percent (100%) vested upon the date of the change in control. The unvested portion of the Option shall be forfeited upon termination of the Officer's employment. The Option exercise price shall be the fair market value per share on the date of grant of the Option as determined pursuant to the 2011 Plan (or other plan if the 2011 Plan is not available)."
Except as specifically amended hereby, the Employment Agreement shall remain in full force and effect as prior to this Amendment.
The parties have executed this Amendment, each of which if executed in counterpart shall be deemed to be an original, as of the date set forth at the beginning hereof.
THE COMPANY: THE OFFICER:
ADCARE HEALTH SYSTEMS, INC.
President and CEO
reduction in the installment of Annual Salary applies (so the first one twelfth (1/12) vesting shall
occur on January 31, 2014), subject to the Officer's continued employment by the Company on the vesting date. In the event of a "change in control" (as defined in the 2011 Stock Incentive Plan (or other plan if the 2011 Stock Incentive Plan is not available), or as defined in the Employment Agreement in the absence of a plan definition) that occurs during the Employment Term, any unvested portion of the Option shall become one hundred percent (100%) vested upon the date of the change in control. The unvested portion of the Option shall be forfeited upon termination of the Officer's employment. The Option exercise price shall be the fair market value per share on the date of grant of the Option as determined pursuant to the 2011 Stock Incentive Plan (or other plan if the 2011 Stock Incentive Plan is not available)."
Except as specifically amended hereby, the Employment Agreement shall remain in
full
force and effect as prior to this Amendment.
The parties have executed this Amendment, each of which if executed in counterpart shall be deemed to be an original, as of the date set forth at the beginning hereof.
THE COMPANY: THE OFFICER:
By:
ADCARE HEAL
TH SYSTEMS, INC. David Rubenstein
Boyd P. Gentry
President and CEO
Exhibit 99.5
AMENDMENT TO EMPLOYMENT AGREEMENT
between
AdCare Health Systems, Inc.
and
Melissa L. Green
This Amendment (this "Amendment") is made the 11th day of December, 2013, and amends the Employment Agreement dated August 6, 2012 (the "Employment Agreement") between AdCare Health Systems, Inc. (the "Company") and Melissa L. Green (the "Officer").
Background
The Company and the Officer desire to amend the Employment Agreement to reduce the Officer's annual base salary by $15,000 in exchange for the annual grant of an option to purchase common stock of the Company.
Statement of Agreement
For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree that the Employment Agreement is amended by adding the following to the end of Section 3(a):
"Notwithstanding the foregoing, effective January 1, 2014, the Annual Salary shall be reduced, solely for purposes this Section 3(a) and for no other purposes of this Agreement, by
$15,000 per year, which reduction shall be applied ratably in substantially equal installments from each installment of Annual Salary that is payable during the year. The Annual Salary reduction shall not be taken into account for Section 3(b), Section 5(c) or any other section or purpose of this Agreement. The reduction shall remain in effect until the date of a Change in Control (as such term is defined in the Company's 2011 Stock Incentive Plan (the "2011 Plan")) during the Employment Term, at which date the Annual Salary shall be restored without reduction prospectively and without adjustment for the past reductions. In exchange for the Annual Salary reduction, the Company shall grant the Officer an option to purchase shares of common stock of the Company annually during the Employment Term under the 2011 Plan (or other plan if the 2011 Plan is not available), which shall be an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code (the "Code") to the maximum extent permitted pursuant to the terms of the 2011 Plan (or other plan if the 2011 Plan is not available) (the
"Option").
Each Option shall be granted on November 12 of each calendar year preceding the calendar year in which the Annual Salary reduction is to occur. (Therefore, the first Option shall be granted on November 12, 2013.) Each Option shall be calculated by the Company to have a value as of the date of grant, using the Black-Scholes methodology or other methodology for valuing the Option that is consistent with generally accepted accounting principles ("GAAP"), that is equal to $15,000. Each Option shall vest one twelfth (1/12)
on the last day of
each month as to which the related reduction in the installment of Annual Salary applies (so the first one twelfth (1/12) vesting shall occur on January 31, 2014), subject to the Officer's continued employment by the Company on the vesting date. In the event of a "change in control" (as defined in the 2011 Plan (or such other plan under which the Option is granted), or as defined in the Employment Agreement in the absence of a plan definition) that occurs during the Employment Term, any unvested portion of the Option shall become one hundred percent
(100%) vested upon the date of the change in control. The unvested portion of the Option shall be forfeited upon termination of the Officer's employment. The Option exercise price shall be the fair market value per share on the date of grant of the Option as determined pursuant to the 2011 Plan (or other plan if the 2011 Plan is not available)."
Except as specifically amended hereby, the Employment Agreement shall remain in full force and effect as prior to this Amendment.
The parties have executed this Amendment, each of which if executed in counterpart shall be deemed to be an original, as of the date set forth at the beginning hereof.
THE COMPANY: THE OFFICER:
ADCARE HEALTH SYSTEMS, INC. Melissa L. Green
President and CEO
occur on January 31, 2014), subject to the Officer's continued employment by the Company on the vesting date. In the event of a
"change
in control" (as defined in the 2011 Stock Incentive Plan (or other plan if the 2011 Stock Incentive Plan is not available), or as defined in the Employment Agreement
in the absence of a plan definition) that occurs during the Employment Term, any unvested portion of the Option shall become one hundred percent (100%) vested upon the date of the change in control. The unvested portion of the Option shall be forfeited upon termination of the Officer's employment. The Option exercise price shall be the fair market value per share on the date of grant of the Option as determined pursuant to the 2011 Stock Incentive Plan (or other plan if the 2011 Stock Incentive Plan is not available)."
Except as specifically amended hereby, the Employment Agreement shall remain in full force and effect as prior to this Amendment.
The parties have executed this Amendment, each of which if executed in counterpart shall be deemed to be an original, as of the date set forth at the beginning hereof.
THE COMPANY: THE OFFICER:
ADCARE
HEAL
TH SYSTEMS, INC. Melissa L. Green
By:
Boyd P. Gentry
President and CEO
