Exhibit 10.4

GUARANTY

THIS GUARANTY (this “Guaranty”) is made as of April 6, 2017 by ADCARE HEALTH
SYSTEMS, INC., a Georgia Corporation, its successors and assigns (“Guarantor”)
to and for the benefit of CONGRESSIONAL BANK, a Maryland chartered commercial
bank (“Lender”).

WHEREAS, OS Tybee LLC, SB Tybee LLC and JV Jeffersonville LLC, each a Georgia
limited liability company, (each a “Borrower” and collectively, the “Borrowers”)
and Lender have entered into that certain Revolving Credit and Security
Agreement dated as of the date hereof (as amended, supplemented or modified from
time to time, the “Loan Agreement”), pursuant to which Borrowers have agreed to
borrow from Lender, and Lender has agreed to make a loan to Borrowers, pursuant
to a revolving credit facility (the “Loan”), all in accordance with and subject
to the terms and conditions set forth in the Loan Agreement, and the other Loan
Documents (as defined in the Loan Agreement);

WHEREAS, as a condition precedent to the obligation of Lender to execute and
deliver and perform under the Loan Agreement and the other Loan Documents and to
make the Loan pursuant to the Loan Agreement, Guarantor is required, and has
agreed, to execute and deliver this Guaranty;

WHEREAS, Lender is willing to execute, deliver and perform under the Loan
Agreement and the other Loan Documents and to make the Loan only upon the
condition that Guarantor executes and delivers to Lender this Guaranty and
agrees to perform and to comply with his or her obligations under this Guaranty;

WHEREAS, the Guarantor is a direct or indirect owner of Borrowers and/or an
affiliate of
Borrowers, and as such each will receive a direct benefit from the making of the
Loan to Borrowers.

NOW, THEREFORE, in consideration of the foregoing and of the covenants and
agreements hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, and as an inducement for Lender to enter into the Loan
Agreement and the other Loan Documents, Guarantor, intending to be legally bound
hereby, agrees as follows:

1. All capitalized terms in this Guaranty and not defined herein shall have the
defined meanings provided in the Loan Agreement. Whenever the context so
requires, each reference to gender includes the masculine and feminine, the
singular number includes the plural and vice versa. The words “hereof” “herein”
and “hereunder” and words of similar import when used in this Guaranty shall
refer to this Guaranty as a whole and not to any particular provision of this
Guaranty, and references to section, article, annex, schedule, exhibit and like
references are references to this Guaranty unless otherwise specified. A Default
or Event of Default shall “continue” or be “continuing” until such Default or
Event of Default has been cured or waived by Lender. References in this Guaranty
to any Person shall include such Person and its successors and permitted
assigns.

2. Guarantor unconditionally and absolutely guarantees, as surety, (i) the due
and punctual payment and performance when due of the Obligations and any and all
other monies and amounts due or which may become due on or with respect to the
foregoing, and the due and punctual performance and observance by Borrowers of
all of the other terms, covenants, agreements and conditions of the Loan
Documents, in any case whether according to the present terms thereof, at any
earlier or accelerated date or dates as permitted under the Loan Documents or
pursuant to any extension of time or to any change in the terms, covenants,
agreements and conditions thereof now or at any time hereafter made or granted,
(ii) all liabilities and obligations of Guarantor hereunder and (iii) all costs,
expenses and liabilities

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(including, without limitation, reasonable attorneys’ fees and expenses,
documentation and diligence fees and legal expenses, and search, audit,
recording, professional and filing fees and expenses) that may be incurred or
advanced by Lender in any way in connection with the foregoing and/or otherwise
required to be paid by Guarantor hereunder (collectively, such items in clauses
(i) through (iii) being the “Guaranteed Obligations”). Guarantor acknowledges
that this Guaranty shall be deemed a continuing guaranty of the Guaranteed
Obligations under the Loan Documents.

3. This Guaranty is a guaranty of payment and not a guaranty of collection. If
any Guaranteed Obligation is not satisfied when due, whether by acceleration or
otherwise, the Guarantor shall forthwith satisfy such Guaranteed Obligation,
upon demand, consistent with the terms hereof, and no such satisfaction shall
discharge the obligations of the Guarantor hereunder until all Guaranteed
Obligations have been indefeasibly paid in cash and performed and satisfied in
full and the Loan Agreement terminated. The liability of Guarantor under this
Guaranty shall be joint and several and primary and direct and not conditional
or contingent upon the enforceability of any obligation, the solvency of
Borrowers or any other Person, any obligation or circumstance which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guaranty or the pursuit by Lender of any remedies it may have against Borrowers
or any other guarantor of the Guaranteed Obligations or any other Person.
Without limiting the generality of the foregoing, Lender shall not be required
to make any demand on Borrowers or any other guarantor of the Guaranteed
Obligations or any other Person or to sell at foreclosure or otherwise pursue or
exhaust its remedies against any Collateral of Borrowers or any other guarantor
of the Guaranteed Obligations or any other Person before, simultaneously with or
after enforcing its rights and remedies hereunder against Guarantor, and any one
or more successive and/or concurrent actions may be brought against Guarantor in
the same action brought against Borrowers or any other guarantor of the
Guaranteed Obligations or any other Person or in separate actions, as often as
Lender may deem advisable, in its sole discretion. The obligations of Guarantor
hereunder shall not in any way be affected by any action taken or not taken by
Lender, or by the partial or complete unenforceability or invalidity of any
other guaranty or surety agreement, pledge, assignment, Lien or other security
interest or security for any of the Guaranteed Obligations or of the value,
genuineness, validity or enforceability of the Collateral or any of the
Guaranteed Obligations. The liability of Guarantor hereunder is absolute and
unconditional irrespective of the taking or accepting by Lender of any other
security or guaranty for, or right of recourse with respect to, any or all of
the Guaranteed Obligations.

4. Guarantor hereby represents and warrants to Lender (which representations and
warranties shall survive the execution and delivery of this Guaranty and the
making of Advances under the Loan Agreement) that:

(A) Guarantor has full legal capacity to execute, deliver and perform this
Guaranty and other Loan Documents to which he or she is a party, and to
consummate the transactions contemplated hereunder and under the other Loan
Documents to which he or she is a party, and Guarantor is under no legal
restriction, limitation or disability that would prevent Guarantor from doing
any of the foregoing;

(B) This Guaranty and the other Loan Documents to which Guarantor is a party
have been duly executed and delivered by Guarantor and constitute the legal,
valid and binding obligation of Guarantor, enforceable against Guarantor in
accordance with its terms, subject to the effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law affecting the

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enforceability of creditors’ rights generally and to the effect of general
principles of equity which may limit the availability of equitable remedies
(whether in a proceeding at law or in equity);

(C) The execution, delivery and performance by Guarantor of this Guaranty and
the other Loan Documents to which Guarantor is a party and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary actions on the part of Guarantor (none of which
actions have been modified or rescinded and all of which are in full force and
effect) and do not and will not (1) conflict with or violate any provision of
any applicable law, statute, rule, regulation, ordinance, license or tariff or
any judgment, decree or order of any court or other Governmental Authority
binding on or applicable to Guarantor or any of Guarantor's properties or
assets, (2) conflict with, result in a breach of, constitute a default of or an
event of default under, or an event, fact, condition or circumstance which, with
notice or passage of time or both, would constitute or result in a conflict,
breach, default or event of default under, require any consent not obtained
under, or result in or require the acceleration of any indebtedness pursuant to,
any indenture, agreement or other instrument to which Guarantor is a party or by
which Guarantor or any of Guarantor’s properties or assets are bound or subject;
or (3) result in the creation or imposition of any Lien or encumbrance of any
nature whatsoever upon any of the properties or assets of Guarantor, except
those contemplated hereunder or under the other Loan Documents;

(D) Guarantor is not (1) a party or subject to any judgment, order or decree or
any agreement, document or instrument or subject to any restriction, any of
which do or would adversely affect or prevent Guarantor’s ability to execute or
deliver, perform under, consummate the transactions contemplated by, or observe
the covenants and agreements contained in, this Guaranty or the other Loan
Documents to which Guarantor is a party, or to pay the Guaranteed Obligations;
or (2) in default or breach of the performance, observance or fulfillment of any
obligation, covenant or condition contained in any agreement, document or
instrument to which Guarantor is a party or by which Guarantor or any of his
properties or assets is or are bound or subject, which default or breach, if not
remedied within any applicable grace period or cure period, could reasonably be
expected to have or result in a Material Adverse Change, nor is there any event,
fact, condition or circumstance which, with notice or passage of time, or both,
would constitute or result in a conflict, breach, default or event of default
under, any of the foregoing which, if not remedied within any applicable grace
or cure period, could reasonably be expected to have or result in a Material
Adverse Change;

(E) Guarantor is in compliance with all laws, statutes, rules, regulations,
ordinances and tariffs of any Governmental Authority with respect or applicable
to his/them and/or his/their assets and properties and is not in violation of
any order, judgment or decree of any court or other Governmental Authority or
arbitration board or tribunal, in each case except where noncompliance or
violation could not reasonably be expected to have or result in a Material
Adverse Change, and there is no event, fact, condition or circumstance which,
with notice or passage of time, or both, would constitute or result in any
noncompliance with, or any violation of, any of the foregoing, in each case
except where noncompliance or violation could not reasonably be expected to have
or result in a Material Adverse Change;

(F) There is no action, suit, proceeding or investigation pending or, to
Guarantor’s knowledge, threatened, before or by any court, arbitrator or
Governmental Authority (1) against or affecting the Collateral, Guarantor, this
Guaranty or the other Loan Documents to which Guarantor is a party or the
transactions contemplated hereby or thereby, (2) that questions or could prevent
the validity of this Guaranty or the other Loan Documents to which Guarantor is
a party or the right or ability of Guarantor to execute or delivery this
Guaranty or such other documents or to consummate the transactions contemplated
hereby and thereby; (3) that could reasonably be expected to have or result in,
either individually or in the aggregate, any Material Adverse Change, or (4)
that could reasonably be

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expected to result in any change in the current equity ownership of Guarantor or
otherwise in a Change of
Control, nor is Guarantor aware that there is any basis for the foregoing;

(G) None of the business or properties of Guarantor, any relationship between
Guarantor and any other Person, any circumstance in connection with the
execution, delivery and performance of and consummation of the transactions
contemplated by this Guaranty and other Loan Documents to which Guarantor is a
party, requires any consent, approval or authorization of, or filing,
registration or qualification which has not been obtained with, any Governmental
Authority or any other Person;

(H) Guarantor is not a party to and has not entered into any agreement, document
or instrument that conflicts with this Guaranty or that otherwise relates to the
Guaranteed Obligations (other than the Loan Documents to which he is a party);

(I) The obligations of Guarantor under this Guaranty are not subordinated in any
way to any other obligation of Guarantor or to the rights of any other Person;

(J) No representation or warranty made by Guarantor in this Guaranty or in any
other Loan Document contains any untrue statement of material fact or omits to
state any fact necessary to make the statements herein or therein not materially
misleading, and there is no fact known to Guarantor which Guarantor has not
disclosed to Lender in writing which could reasonably be expected to have or
result in a Material Adverse Change;

(K) Guarantor hereby confirms, adopts, and makes, as to himself, as if set out
in full herein, all of the other representations and warranties not expressly
included in this Guaranty that are set forth in the Loan Agreement and that
designate any Guarantor (as defined in the Loan Agreement), and shall be deemed
to have made all such representations and warranties has to himself in this
Guaranty as if set out in full herein; and

(L) The foregoing representations and warranties are made with the knowledge and
intention that Lender is relying and will rely thereon, and such representations
and warranties shall survive the execution and delivery of this Guaranty.

5. Guarantor hereby waives demand, setoff, counterclaim, presentment, protest,
notice of dishonor or non-payment, as well as all defenses with respect to any
and all instruments, notice of acceptance hereof, notice of Loans or Advances
made, credit extended, collateral received or delivered, or any other action
taken by Lender in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein, it being the
intention hereof that Guarantor shall remain liable as a guarantor consistent
with the terms hereof until the full amount of all Guaranteed Obligations
consistent with the terms hereof shall have been indefeasibly paid in full in
cash and performed and satisfied in full and the Loan Agreement terminated,
notwithstanding any act, omission or anything else which might otherwise operate
as a legal or equitable discharge of Guarantor. The pleading of any statute of
limitations as a defense to any demand against Guarantor hereunder and/or under
any other Loan Document is expressly waived by Guarantor.

6. Guarantor acknowledges and agrees that its obligations as Guarantor shall not
be impaired, modified, changed, released or limited in any manner whatsoever by
any impairment, modification, change, release or limitation of the liability of
Borrowers or any other guarantor of the Guaranteed Obligations or any other
Person or its or their respective estates in bankruptcy resulting from

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the operation of any present or future provision of the bankruptcy laws or other
similar statute, or from the decision of any court. Guarantor waives any defense
based upon Lender’s election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal
Bankruptcy Code or any successor statute or any defense based upon any borrowing
or any grant of a security interest under Section 364 of the Federal Bankruptcy
Code.

7. Guarantor acknowledges and agrees that Lender shall have the full right and
power, in its sole discretion and without any notice to or consent from
Guarantor and without affecting or discharging, in whole or in part, the
liability of Guarantor hereunder to deal in any manner with the Guaranteed
Obligations and any security or guaranties therefor, including, without
limitation, to (A) release, extend, renew, accelerate, compromise or substitute
and administer the Guaranteed Obligations and other obligations under the Loan
Documents in any manner it sees fit, (B) release any or all collateral for the
Guaranteed Obligations, (C) release any guarantor of the Guaranteed Obligations,
(D) extend the time for payment of the Guaranteed Obligations or any part
thereof, (E) change the interest rate on the Guaranteed Obligations or any Note
under the Loan Agreement, (F) accelerate the Guaranteed Obligations, (G) reduce
or increase the obligations or the outstanding principal amount of the
Guaranteed Obligations or any Note under the Loan Agreement, (H) make any
change, amendment or modification whatsoever to the terms or conditions of the
Loan Documents, (I) extend, in whole or in part, on one or any number of
occasions, the time for the payment of any principal or interest or any other
amount pursuant to any Note or other Loan Documents or for the performance of
any term or condition of the Loan Documents, (J) settle, compromise, release,
substitute, impair, enforce or exercise, or fail or refuse to enforce or
exercise, any claims, rights, or remedies, of any kind or nature, which Lender
may at any time have against Borrowers or any other guarantor of the Guaranteed
Obligations or any other Person, or with respect to any security interest of any
kind held by Lender at any time, whether under any Loan Document or otherwise,
(K) release or substitute any security interest of any kind held by Lender at
any time, (L) collect and retain or liquidate any collateral subject to such
security interest, (M) make advances for the purpose of performing any term or
covenant contained in the Loan Documents with respect to which the Borrowers or
any other guarantor of the Guaranteed Obligations is in default, (N) foreclose
on any of the Collateral, (N) grant waivers or indulgences, (O) take additional
collateral, (P) obtain any additional guarantors, (Q) take a deed in lieu of
foreclosure, and/or (R) take or fail to take any other action whatsoever with
respect to the Guaranteed Obligations. Guarantor hereby waives and agrees not to
assert against Lender any rights which a guarantor or surety could exercise, and
expressly waive all rights and defenses that Guarantor may have because the
Guaranteed Obligations are secured by real property. Notwithstanding any other
provision of this Guaranty or any other Loan Document, Guarantor agrees that
Lender has no duties of any nature whatsoever to Guarantor, whether express or
implied, by virtue of this Guaranty, or any other Loan Document, operation of
law or otherwise.

8. Guarantor agrees that its obligations hereunder are irrevocable and
independent of the obligations of Borrowers or any other guarantor of the
Guaranteed Obligations or any other Person. Guarantor shall take all necessary
and appropriate actions to ensure that this Guaranty is and remains enforceable
against Guarantor in accordance with its terms and that Guarantor complies with
each of its obligations hereunder. Guarantor shall not (a) cause or permit to be
done, or enter into or make or become a party to any agreement (oral or
written), arrangement or commitment to do or cause to be done, any of the things
prohibited by this Guaranty or any other Loan Document to which he is a party or
that would breach this Guaranty, any other Loan Document to which he is a party
or any other instrument,

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agreement, arrangement, commitment or document to which Guarantor is a party or
by which his or any of its properties or assets is or may be bound or subject,
or (b) enter into or make or become a party to any agreement, document or
instrument or arrangement that conflicts with this Guaranty or the other Loan
Documents to which he is a party or that would prevent Guarantor from complying
with and performing under this Guaranty or the other Loan Documents to which he
is a party.

9. Guarantor agrees and acknowledges that the Loan Agreement contains
limitations on the Indebtedness which Borrowers may incur, and Guarantor
represents and warrants that there is no present indebtedness owing by Borrowers
to Guarantor as of the date hereof. Guarantor agrees to so abide by such
restrictions, provided that to the extent that there is deemed to be any
indebtedness by Borrowers in favor of Guarantor, the following shall apply:

(A) Guarantor subordinates all present and future indebtedness owing by any
Borrower to Guarantor to the obligations at any time owing by any to Lender
under the Note and the other Loan Documents. Guarantor assigns all such
indebtedness to Lender as security for this Loan Agreement, the Note and the
other Loan Documents.

(B) Guarantor agrees to make no claim on such indebtedness until all obligations
of
Borrowers under the Note and the other Loan Documents have been fully
discharged.

(C) Guarantor further agrees not to assign all or any part of such indebtedness
without the prior written consent of Lender, which consent may be granted or
withheld by Lender in its sole and absolute discretion. If Lenders so requests,
(i) all instruments evidencing such indebtedness shall be duly endorsed and
delivered to Lender, (ii) all security for such indebtedness shall be duly
assigned and delivered to Lender, (iii) such indebtedness shall be enforced,
collected and held by Guarantor as trustee for Lender and shall be paid over to
Lender on account of the Loan but without reducing or affecting in any manner
the liability of Borrowers under the other provisions of this Loan Agreement,
and (iv) Guarantor shall execute, file and record such documents and instruments
and take such other action as Lender deems necessary or appropriate to perfect,
preserve and enforce Lender’s rights in and to such indebtedness and any
security therefor. If Guarantor fails to take any such action, Lender, as
attorney-in-fact for Guarantor, is hereby authorized to do so in the name of
Guarantor. The foregoing power of attorney is coupled with an interest and
cannot be revoked.

10. So long as any of the Guaranteed Obligations hereunder shall be owing to
Lender, no Guarantor shall, without the prior written consent of Lender,
commence or join with any other party in commencing any bankruptcy,
reorganization or insolvency proceedings of or against any other Borrowers or
any guarantor. In any bankruptcy or other proceeding in which the filing of
claims is required by law, Guarantor shall file all claims which Guarantor may
have against any Borrower or guarantor relating to any indebtedness of any
Borrower or guarantor to such Guarantor and shall assign to Lender all rights of
Guarantor thereunder. If any Guarantor does not file any such claim, Lender, as
attorney-in-fact for such Guarantor, is hereby authorized to do so in the name
of such Guarantor or, in Lender’s discretion, to assign the claim to a nominee
and to cause proof of claim to be filed in the name of Lender’s nominee. The
foregoing power of attorney is coupled with an interest and cannot be revoked.
Lender or its nominee shall have the right, in its reasonable discretion, to
accept or reject any plan proposed in such proceeding and to take any other
action which a party filing a claim is entitled to do. In all such cases,
whether in administration, bankruptcy or otherwise, the person or persons
authorized to pay such claim shall pay to Lender the amount payable on such
claim and, to the full extent necessary for that purpose, Guarantor hereby
assigns to Lender all of such Guarantor’s rights to any such payments or
distributions; provided, however, Guarantor’s obligations hereunder shall not be
satisfied except to the extent that Lender receives cash by reason of any such
payment or distribution. If Lender receives anything

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hereunder other than cash, the same shall be held as collateral for amounts due
under this Loan Agreement. Notwithstanding anything to the contrary herein, the
liability of Guarantor hereunder shall be reinstated and revised, and the rights
of Lender shall continue, with respect to any amount at any time paid by or on
behalf of any Guarantor on account of the Note or the other Loan Documents which
Lender shall restore or return by reason of the bankruptcy, insolvency or
reorganization of any Guarantor or for any other reasons, all as though such
amount had not been paid.

11. Guarantor agrees that he shall have no right of subrogation whatever with
respect to the Guaranteed Obligations guaranteed hereby or to any collateral
securing such Guaranteed Obligations unless and until such Guaranteed
Obligations have been irrevocably and indefeasibly paid in full in cash and
performed in full and the Loan Agreement and this Guaranty have been terminated.

12. Guarantor acknowledges and agrees that, as an owner or affiliate of
Borrowers, (a) he or she will benefit from the execution, delivery and
performance by Lender of the Loan Agreement and the other Loan Documents and the
advancement of the Loans to Borrowers, (b) the Loan by Lender constitutes
valuable consideration to Guarantor, (c) this Guaranty is intended to be an
inducement to Lender to execute, deliver and perform the Loan Agreement and the
other Loan Documents and to extend credit and the Loans to Borrowers, whether
the Guaranteed Obligations were created or acquired before or after the date of
this Guaranty, and (d) Lender is relying upon this Guaranty in making and
advancing the Loans to Borrowers.

13. Guarantor agrees that this Guaranty shall inure to the benefit of, and may
be enforced by, Lender, all future holders of any Note, or any of the Guaranteed
Obligations or any of the Collateral and all Transferees (as defined below), and
each of their respective successors and permitted assigns, and shall be binding
upon and enforceable against Guarantor and Guarantor’s assigns and successors.
Guarantor agrees that it may not assign, delegate or transfer this Guaranty or
any of its rights or obligations under this Guaranty without the prior written
consent of Lender. Nothing contained in this Guaranty or any other Loan Document
shall be construed as a delegation to Lender of Guarantor’s duty of performance,
including, without limitation, any duties under any account or contract in which
Lender has a security interest or Lien. GUARANTOR ACKNOWLEDGES THAT LENDER AT
ANY TIME AND FROM TIME TO TIME MAY SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS
IN OR TRANSFER ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS GUARANTY,
ANY NOTE, THE GUARANTEED OBLIGATIONS, THE COLLATERAL AND/OR THE LOAN DOCUMENTS
TO ONE OR MORE OTHER PERSONS, INCLUDING, WITHOUT LIMITATION, FINANCIAL
INSTITUTIONS (EACH SUCH TRANSFEREE, ASSIGNEE OR PURCHASER, A “TRANSFEREE”). In
such case, the Transferee shall have all of the rights and benefits with respect
to the portion of such Guaranteed Obligations, any Note, this Guaranty, the
Collateral and the Loan Documents held by it as fully as if such Transferee were
the original holder thereof (including without limitation rights of set-off and
recoupment), and shall become vested with all of the powers and rights given to
Lender hereunder with respect thereto, and shall be deemed to be a “Lender” for
all purposes hereunder, the predecessor Lender shall thereafter be forever
released and fully discharged from any liability or responsibility hereunder
with respect to the rights and interests so assigned, and either Lender or any
Transferee may be designated as the sole agent to manage the transactions and
obligations contemplated herein. Notwithstanding any other provision of this
Guaranty or any other Loan Document, Lender may disclose to any Transferee all
information, and may furnish to such Transferee copies of reports, financial
statements, certificates, and documents obtained under any provision of this
Guaranty or any Loan Document.

14. Guarantor hereby agrees to take or cause to be taken such further actions,
to obtain such consents and approvals and to duly execute, deliver and file or
cause to be executed, delivered and filed such further agreements, assignments,
instructions, documents and instruments as may be necessary or as

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may be reasonably requested by Lender in order to fully effectuate the purposes,
terms and conditions of this Guaranty and the consummation of the transactions
contemplated hereby and performance and payment of the Guaranteed Obligations
hereunder, whether before, at or after the performance and/or consummation of
the transactions contemplated hereby or the occurrence of a Default or Event of
Default under any Loan Document.

15. Notwithstanding and without limiting or being limited by any other provision
of this Guaranty or the Loan Documents, Guarantor shall pay all costs and
expenses incurred by Lender or any of its Affiliates, including, without
limitation, documentation and diligence fees and expenses, all search, audit,
appraisal, recording, professional and filing fees and expenses and all other
out-of-pocket charges and expenses (including, without limitation, UCC and
judgment and tax lien searches and UCC filings and fees for post-Closing UCC and
judgment and tax lien searches), and reasonable attorneys’ fees and expenses,
(a) in any effort to enforce this Guaranty or any other Loan Document and/or any
related agreement, document or instrument or to effect collection hereunder or
thereunder, (b) in connection with entering into, negotiating, preparing,
reviewing and executing this Guaranty, any other Loan Document and all related
agreements, documents and instruments, (c) arising in any way out of
administration of the Guaranteed Obligations or the security interests or Liens
created with respect thereto, including without limitation, any wire transfer
fees or audit expenses or filing or recordation fees, (d) in connection with
instituting, maintaining, preserving and enforcing Lender’s rights hereunder
and/or all related agreements, documents and instruments, (e) in defending or
prosecuting any actions, claims or proceedings arising out of or relating to
this Guaranty, and/or any related agreement, document or instrument, (f) in
seeking or receiving any advice with respect to its rights and obligations under
this Guaranty, any other Loan Document and/or all related agreements, documents
and instruments, and/or (g) in connection with any modification, amendment,
supplement, waiver or extension of this Guaranty, any other Loan Document and/or
any related agreement, document or instrument, and all of the same shall be part
of the Guaranteed Obligations. If Lender or any of its Affiliates uses in-house
counsel for any of the purposes set forth above or any other purposes under this
Guaranty for which Guarantor is responsible to pay or indemnify, Guarantor
expressly agrees that its Guaranteed Obligations include reasonable charges for
such work performed.

16. Any notice or request under this Agreement shall be given to Lender or
Guarantor, as applicable at the address below, or at such other address as such
party may hereafter specify in a notice given in the manner required under this
Section 16. Any notice or request hereunder shall be given in writing and given
only by and shall be deemed to have been received upon (each a “Receipt”): (i)
registered or certified mail, return receipt requested, on the date on which
such is received as indicated in such return receipt, (ii) delivery by a
nationally recognized overnight courier, one Business Day after deposit with
such courier, or (iii) facsimile transmission or e-mail, upon sender's receipt
of confirmation of proper transmission, followed by delivery by one of the other
means identified in (i) or (ii); provided, however, that if any notice is
tendered to an addressee and delivery thereof is refused by such addressee, such
notice shall be effective upon such tender unless expressly set forth in such
notice.

If to Lender: Congressional Bank
6701 Democracy Boulevard, Suite 400
Bethesda, Maryland 20817
Attention: Amy Heller

With a copy to: Gutnicki LLP
4711 Golf Road, Suite 200
Skokie, Illinois 60076
Attn: Stacy J Flanigan, Esq. Facsimile: 847-933-9285

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Email: sflanigan@gutnicki.com

If to Guarantor: AdCare Health Systems, Inc.
454 Satellite Boulevard, Suite 100
Suwanee, Georgia 30024
Attn: Allan Rimland
Facsimile: (678) 869-5123
Email: Allan.Rimland@adcarehealth.com

With a Copy to: Reicker, Pfau, Pyle & McRoy, LLP
1421 State Street, Suite B Santa Barbara, CA 93101
Attn: Andrew D. Simons
Phone: (805) 966-2440
Facsimile: (805) 966-3320
Email: asimons@rppmh.com

17. Guarantor hereby agrees and acknowledges that no course of action or delay,
renewal or extension of this Guaranty or any rights or obligations hereunder,
release of any other guarantor of the Obligations or any of the foregoing, or
delay, failure or omission on Lender’s part in enforcing this Guaranty, or any
other Loan Document or in exercising any right, remedy, option or power
hereunder or thereunder shall affect the liability of Guarantor or operate as a
waiver of such or of any other right, remedy, power or option or of any default,
nor shall any single or partial exercise of any right, remedy, option or power
hereunder or thereunder affect the liability of Guarantor or preclude any other
or further exercise of such or any other right, remedy, power or option. No
waiver by Lender of any one or more defaults by Guarantor in the performance of
any of the provisions of this Guaranty shall operate or be construed as a waiver
of any future default or defaults, whether of a like or different nature.
Notwithstanding any other provision of this Guaranty or any other Loan Document,
by completing the Closing or by making Advances, Lender does not waive a breach
of any representation or warranty of Guarantor under this Guaranty or under any
other Loan Document, and all of Lender’s claims and rights resulting from any
breach or misrepresentation by Guarantor are specifically reserved by Lender.

18. If any term or provision of this Guaranty is adjudicated to be invalid under
applicable laws or regulations, such provision shall be inapplicable to the
extent of such invalidity or unenforceability without affecting the validity or
enforceability of, the remainder of this Guaranty which shall be given effect so
far as possible.

19. It is the express intention and agreement of the Guarantor that all
obligations, covenants, agreements, representations, warranties, waivers and
indemnities made by Guarantor herein shall survive the execution, delivery and
termination of this Guaranty until all Guaranteed Obligations are performed in
full and indefeasibly paid in full in cash and the Loan Agreement is terminated.

20. Lender shall have the right in its sole discretion to determine which
rights, powers, Liens, security interests or remedies Lender may at any time
pursue, relinquish, subordinate or modify or to take any other action with
respect thereto and such determination will not in any way modify or affect any
of Lender’s rights, powers, Liens, security interests or remedies hereunder or
under any of the Loan Documents, under applicable law or at equity. The
enumeration of the rights and remedies herein is not intended to be exhaustive.
The rights and remedies of Lender described herein are cumulative and are not
alternative to or exclusive of any other rights or remedies which Lender
otherwise may have by contract or at law or in equity, and the partial or
complete exercise of any right or remedy shall not preclude any

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other further exercise of such or any other right or remedy. Nothing herein
shall be deemed to limit the right of Lender to obtain an order of prejudgment
attachment against any Guarantor, whether or not Lender shall have exercised any
other rights or remedies with respect to any Collateral.

21. This Guaranty shall be effective on the date hereof and shall continue in
full force and effect until the full performance and indefeasible payment in
full in cash of all Guaranteed Obligations and termination of this Guaranty and
the Loan Documents, all in accordance with the Loan Agreement, and the rights
and powers granted to Lender hereunder shall continue in full force and effect
notwithstanding the termination of this Guaranty or fact that Borrowers’
borrowings under the Loan Agreement may from time to time be temporarily in a
zero or credit position until all of the Guaranteed Obligations have been
indefeasibly paid in full in cash and performed and satisfied in full. Guarantor
waives any rights which it may have under the UCC or otherwise to demand the
filing of termination statements with respect to the Collateral, and Lender
shall not be required to send such termination statements to Guarantor, or to
file them with any filing office, unless and until this Guaranty and the Loan
Agreement shall have been terminated in accordance with their respective terms
and all Guaranteed Obligations shall have been performed in full and
indefeasibly paid in full in cash.

22. Notwithstanding the foregoing, or any other provision of this Guaranty to
the contrary:

(A) Notwithstanding anything hereinabove set forth to the contrary, the
Guaranteed Obligations of the Guarantor under this Guaranty shall terminate with
respect to the Guarantor, and the Guarantor shall be released from any liability
with respect to the Guaranteed Obligations, upon the later of (i) eighteen (18)
months after the Closing Date; or (ii) the date upon which trailing twelve (12)
month Fixed Charge Coverage Ratio (as defined in the Loan Agreement) is greater
than or equal to 1.10:1.0 (the “Burn-Off”). Pursuant to the terms of this
paragraph, this Guaranty shall terminate and the Guarantors shall be released
from any liability only with respect to the Guaranteed Obligations, after the
Burn Off.

23. Governing Law

(A) THIS GUARANTY AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT GIVING EFFECT TO ITS
CHOICE OF LAW PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A
DIFFERENT JURISDICTION.

(B) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF MONTGOMERY
COUNTY CIRCUIT COURT SITTING IN ROCKVILLE, MARYLAND AND OF THE UNITED STATES
DISTRICT COURT OF MARYLAND AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH MARYLAND STATE OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY SHALL AFFECT ANY
RIGHT THAT LENDER OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AGAINST BORROWERS OR ANY LOAN PARTY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

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(C) GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (A)
OF THIS SECTION 23. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(D) EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF PROCESS AND AGREEMENT
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 16 HEREOF. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY
TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

24. This Guaranty may be executed in one or more counterparts, all of which
taken together shall constitute one and the same instrument. This Guaranty may
be executed by facsimile transmission or PDF, which facsimile signatures and PDF
shall be considered original executed counterparts for purposes of this
Guaranty, and Guarantor agrees that it will be bound by its own facsimile or PDF
signature and that it accepts the facsimile or PDF signature of each other party
to this Guaranty.

25. Notwithstanding and without limiting any other provision of this Guaranty or
any Loan Document, Guarantor shall indemnify Lender and its Affiliates and its
and their respective managers, members, officers, employees, Affiliates, agents,
representatives, accountants, successors, assigns and attorneys and their
respective Affiliates (collectively, the “Indemnified Persons”) from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, in-house documentation and diligence
fees and legal expenses and reasonable fees and disbursements of counsel) which
may be imposed on, incurred by or asserted against Lender or any other
Indemnified Person with respect to or arising out of any aspect of, or in any
litigation, proceeding or investigation instituted or conducted by any
Governmental Authority or any other Person with respect to, or any transaction
contemplated by or referred to in, or any matter related to or any aspect of,
this Guaranty or any of the Guaranteed Obligations or any of the Loan Documents
or any agreement or document contemplated hereby or thereby, whether or not
Lender or such Indemnified Person is a party thereto, except to the extent that
any of the foregoing results directly from the gross negligence or willful
misconduct of Lender or such Indemnified Person. Lender agrees to give Guarantor
reasonable notice of any event of which Lender becomes aware for which
indemnification may be required under this Section 25, and Lender may elect (but
is not obligated) to direct the defense thereof, provided that the selection of
counsel shall be subject to Guarantor’s consent, which consent shall not be
unreasonably withheld or delayed. Lender and any other Indemnified Person may,
in its reasonable discretion, take such actions as it deems necessary and
appropriate to investigate, defend or settle any event or take other remedial or
corrective actions with respect thereto as may be necessary for the protection
of Lender or any of the other Indemnified Persons, its or their interest or the
Collateral generally If any Indemnified Person uses in-house counsel for any of
the purposes set forth above or any other purposes under this Guaranty for which
Guarantor is responsible to pay or indemnify, Guarantor expressly agrees that
its indemnification obligations include reasonable charges for such work
performed.

26. GUARANTOR HEREBY EXPRESSLY, KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT OR ANY RELATED

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AGREEMENT OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY GUARANTOR OR LENDER
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 27 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF SUCH GUARANTOR TO THE WAIVER OF ITS RIGHT TO
TRIAL BY JURY.

27. This Guaranty and the other Loan Documents to which Guarantor is a party
constitute the entire agreement between Guarantor and Lender with respect to the
subject matter hereof and thereof, and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof or thereof.
Neither this Guaranty nor any provision hereof may be changed, modified,
amended, restated, waived, supplemented, canceled or terminated other than by an
agreement in writing signed by Lender and Guarantor. Guarantor acknowledges that
Guarantor has been advised by counsel in connection with the negotiation and
execution of this Guaranty and the other Loan Documents to which he is a party
and is not relying upon oral representations or statements inconsistent with the
terms and/or provisions of this Guaranty or such documents. Any waiver of this
Guaranty by Lender shall be limited solely to the express terms and provisions
of such waiver.

28. This Guaranty is not intended to benefit or confer any rights upon Borrowers
or upon any third party other than Lender, who is an intended beneficiary hereof
and for whose benefit this Guaranty is explicitly made.

29. In addition to any other rights Lender may have hereunder or under any of
the Loan Documents or under applicable law or at equity consistent with the
terms hereof, upon the occurrence and continuation of any Event of Default,
Lender shall have the right to apply any property of Guarantor held by Lender to
reduce the Guaranteed Obligations. In addition to and consistent with the
provisions set forth in this Guaranty and the other Loan Documents, Lender shall
have the right to exercise any and all other rights, options and remedies
provided for herein or in any other Loan Document, under the UCC or at law or in
equity generally, including, without limitation, the right (a) to foreclose its
security interests and Liens, (b) to realize upon or to take possession of or
sell any of the Collateral with or without judicial process (other than
Collateral consisting of Accounts owed or owing by Medicaid/Medicare Account
Debtors absent a court order or compliance with applicable law), and (c) to
exercise such rights and powers with respect to the Collateral as Guarantor
might exercise (other than with respect to Collateral consisting of Accounts
owed or owing by Medicaid/Medicare Account Debtors absent a court order or
compliance with applicable law).

30. Lender shall have no responsibility for or obligation or duty with respect
to all or any part of the Collateral or any matter or proceeding arising out of
or relating thereto or to this Guaranty, including without limitation, any
obligation or duty to collect any sums due in respect thereof or to protect or
preserve any rights pertaining thereto. Guarantor hereby waives any and all
defenses and counterclaims it may have or could interpose in any action or
procedure brought by Lender to obtain an order of court recognizing the
assignment or security interests and Liens of Lender in and to the Collateral.

31. Guarantor agrees (a) to treat this Guaranty and all other Loan Documents and
all provisions thereof confidentially and not to transmit any copy hereof or
thereof or disclose the contents hereof or thereof, in whole or in part, to any
Person (including, without limitation, any financial institution or
intermediary) without Lender’s prior written consent, other than to Guarantor’s
advisors and officers on a need-to-know basis, (b) that Guarantor shall inform
all such Persons who receive

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information concerning this Guaranty or any of the Loan Documents of the
confidential nature hereof and thereof and shall direct them to treat the same
confidentially and not to disclose it to any other Person, and (c) that each of
them shall agree to be bound by these provisions. Lender shall have the right to
review and approve all materials that Guarantor prepares that contain Lender’s
name or describe or refer to this Guaranty or any Loan Document or any of the
terms hereof or thereof or any of the transactions contemplated hereby or
thereby. Notwithstanding any other provision of this Guaranty or any Loan
Document, Guarantor shall not, and shall not permit any of its Subsidiaries to,
use Lender’s name (or the name of any of Lender’s Affiliates) in connection with
any of its business operations. Nothing contained in this Guaranty or in any of
the other Loan Documents is intended to permit or authorize Guarantor to make
any contract on behalf of Lender.

32. Upon the exercise by Lender or any of its Affiliates of any right or remedy
under this Guaranty or any other Loan Document that requires any consent,
approval or registration with, or consent, qualification or authorization by,
any Governmental Authority, Guarantor will execute and deliver, or will cause
the execution and delivery of, all applications, certificates, instruments and
other documents that Lender may be required to obtain for such governmental
consent, approval, registration, qualification or authorization.

33. In addition to and notwithstanding any other provision of this Guaranty or
any other Loan Document, Lender, in its sole discretion, shall have the right,
at any time that Guarantor fails to do so, without prior notice to Guarantor, to
(i) obtain insurance covering any of the Collateral as and to the extent
required under the Loan Agreement; (ii) pay for the performance of any of the
Guarantor’s obligations hereunder following notice and failure to pay; (iii)
discharge taxes, liens, security interests, or other encumbrances at any time
levied or placed on any of the Collateral in violation of this Guaranty unless
Guarantor is in good faith with due diligence by appropriate proceedings
contesting those items; and (iv) pay for the maintenance and preservation of any
of the Collateral. Such expenses and advances shall be added to the Guaranteed
Obligations until reimbursed to Lender and shall be secured by the Collateral.
Any such payments and advances by Lender shall not be construed as a waiver by
Lender of an Event of Default or any other rights, remedies or powers of Lender
hereunder, or under any other Loan Document or otherwise.

34. Unless expressly provided herein to the contrary, Guarantor agrees that any
approval, consent, waiver or satisfaction of Lender with respect to any matter
that is subject of this Guaranty or the other Loan Documents may be granted or
withheld by Lender in its sole and absolute discretion.

35. Notwithstanding any other provision of this Guaranty or any other Loan
Document, Guarantor voluntarily, knowingly, unconditionally and irrevocably,
with specific and express intent, for and on behalf of itself and its Affiliates
and its and their respective heirs, managers, members, directors, officers,
employees, shareholders, Affiliates, agents, representatives, accountants,
attorneys, successors and assigns and their respective Affiliates (collectively,
the “Releasing Parties”) hereby does fully and completely release and forever
discharge the Indemnified Parties and any other Person, business or insurer
which may be responsible or liable for the acts or omissions of any of the
Indemnified Parties, or who may be liable for the injury or damage resulting
therefrom (collectively, with the Indemnified Parties, the “Released Parties”),
of and from any and all actions, causes of action, damages, claims, obligations,
liabilities, costs, expenses and demands of any kind whatsoever, at law or in
equity or otherwise, whether matured or unmatured, vested or contingent, whether
or not resulting from acts or conduct of any or all of them, that the Releasing
Parties or any of them have against the Released Parties or any of them (whether
directly or indirectly) at any time and as of the date each Advance is made or
requested hereunder or any other financial accommodation is made or extended to
Borrowers or Guarantor hereunder or under any Loan Document, except to the
extent that any of the foregoing arises out of the gross negligence or willful
misconduct of any Released Party. Guarantor acknowledges that

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the foregoing release is a material inducement to Lender’s decision to extend to
Borrowers and Guarantor the financial accommodations hereunder and under the
Loan Documents and has been relied upon by Lender in agreeing to make the Loan
and in making each Advance.

36. In any litigation, arbitration or other dispute resolution proceeding
relating to this Guaranty or to any of the other Loan Documents, Guarantor
waives any and all defenses, objections and counterclaims it may have or could
interpose with respect to any director, officer, employee or agent of Guarantor
and/or its and their Affiliates being deemed to be employees or managing agents
of Guarantor for purposes of all applicable law or court rules regarding the
production of witnesses by notice for testimony (whether in a deposition, at
trial or otherwise). Guarantor waives any and all defenses, objections and
counterclaims it may have or could interpose with respect to Lender’s counsel in
any such dispute resolution proceeding examining any such individuals as if
under cross-examination and using any discovery deposition of any of them in
that proceeding as if it were an evidence deposition. Guarantor waives any and
all defenses, objections and counterclaims it may have or could interpose with
respect to it using all commercially reasonable efforts to produce in any such
dispute resolution proceeding, at the time and in the manner requested by
Lender, all Persons, documents (whether in tangible, electronic or other form)
and/or other things under its control and relating to the dispute in any
jurisdiction that recognizes that (or any similar) distinction. Nothing in this
section shall be deemed to waive any right of privilege under applicable law.

[SIGNATURES APPEARS ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day and year
first above written.

a104guarantypeachheal_image2.jpg [a104guarantypeachheal_image2.jpg]GUARANTOR:

/s/ Allan Rimland
President

ADCARE HEALTH SYSTEMS, INC., a Georgia corporation

Guaranty
AdCare Health Systems, Inc.
Signature Page

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