EXHIBIT 10.1    
WAIVER, AMENDMENT AND FORBEARANCE
THIS WAIVER, AMENDMENT AND FORBEARANCE, dated as of October 26, 2013 (the
“Agreement”), is entered into by and among ADCARE HEALTH SYSTEMS, INC., an Ohio
corporation (the “Company”), and ANTHONY J. CANTONE (“Cantone”) and ATTOSA
FINANCIAL LLC (“Attosa” and, collectively with Cantone, the “Cantone Holders”).
RECITALS
WHEREAS, reference is made to: (i) the Securities Purchase Agreement, dated as
of October 26, 2010, by and among the Company and the investors signatory
thereto (the “SPA”); and (ii) the Subordinated Convertible Notes issued by the
Company pursuant to the SPA (collectively, the “Notes” and, each, a “Note”);
WHEREAS, Cantone holds a Note with a an original Principal amount of FIVE
HUNDRED THOUSAND DOLLARS ($500,000.00), and Attosa holds a Note with an original
Principal amount of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000.00)
(together, the “Cantone Notes”), which together represent in excess of a
majority of the: (i) aggregate principal amount of the Notes outstanding as of
the date hereof (and, therefore, the Cantone Holders constitute the Required
Holders under the Notes); and (ii) the aggregate amount of Registrable
Securities, as defined in the SPA (with such majority referred to in the
immediately preceding clause (i) and clause (ii) being referred hereafter in
this Agreement collectively as the “Required Holders”);
WHEREAS, the Cantone Holders, in their capacity as the Required Holders, agree
to certain amendments, waivers and forbearances with respect to the Notes and
other Transaction Documents (as defined in the SPA) as set forth herein; and
WHEREAS, capitalized terms used herein but not otherwise defined shall have the
meanings set forth in the Notes.
NOW, THEREFORE, in consideration of the agreements herein and for other value
received, the parties hereto agree as follows:
1.Waiver. The Cantone Holders, as the Required Holders:
(a)forever and irrevocably waive, discharge and release, with respect to each
Transaction Document (including without, limitation, each Cantone Note and each
other Note): (i) any and all Events of Default, defaults, breaches or violations
thereunder which have occurred up to and including the date of this Agreement;
(ii) any event which has occurred that, with the passage of time, or the failure
to cure or the giving of notice would result in an Event of Default, default,
breach or violation thereunder; and (iii) any and all Events of Default,
defaults, breaches and violations which may result or arise thereunder from the
Company’s failure to pay Principal, Interest, Late Charges or any other amount
by the Maturity Date (collectively, the “Waived Defaults”); and
(b)forever and irrevocably waive, discharge and release, the application,
requirements and impact of: (i) Section 6(a), Section 6(c) and Section 6(d) of
each Cantone Note and each other Note; and (ii) the fourth sentence of Section
9(e) of the SPA (collectively, the “Waived Agreements” and, together with the
Waived Defaults, the “Waived Provisions”).

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In connection with the foregoing, the Cantone Holders, as the Required Holders,
agree that the Buyers (as defined in the SPA) and the holders of the Notes may
not and will not: (i) exercise any default remedy available to them under any
Transaction Document or applicable law with respect to the Waived Provisions; or
(ii) enforce collection from the Company of any amounts owing under any
Transaction Document with respect to the Waived Provisions.
2.Amendment. The Cantone Holders, as the Required Holders, amend each Cantone
Note, each other Note and the other Transaction Documents, as applicable, as
follows:
(a)The definition of Maturity Date in Section 1 of the Notes (including each
Cantone Note and each other Note) is amended to delete the words “October 26,
2013” and replace them in their entirety with “August 29, 2014”.
(b)Section 25(q) of the Notes (including each Cantone Note and each other Note)
is amended to delete such section and replace it in its entirety with the
following: “(q) “Interest Rate” means twelve (12.0%) per annum.”
(c)The last sentence of Section 1 of the Notes (including each Cantone Note and
each other Note) is amended to delete such sentence and replace it in its
entirety with the following: “Notwithstanding anything herein to the contrary,
the Company may prepay at any time, upon sixty (60) days prior notice, any
portion of the outstanding Principal, accrued and unpaid Interest or accrued and
unpaid Late Charges on Principal and Interest, if any, under this Note or any
Other Note; provided, however, that the shares of Common Stock issuable upon
conversion of any Note which is so prepaid must be: (i) registered for resale
under the Securities Act of 1933, as amended, or (ii) otherwise sellable under
Rule 144 of such act without volume limitations thereunder.”
(d)The Notes (including each Cantone Note and each other Note) is amended to
delete Section 6(a), Section 6(c) and Section 6(d) thereof in their entirety.
(e)The Notes (including each Cantone Note and each other Note) and the other
Transaction Documents are amended in all respects necessary to provide,
notwithstanding anything to the contrary herein or therein, that no Default
Interest, Late Charges or any other amounts shall accrue or otherwise be payable
thereunder with respect to the Waived Provisions.
(f)The SPA is amended to delete the fourth sentence of Section 9(e) thereof in
its entirety.
3.Other Agreements.
(a)No later than seventy-five (75) days after the date of this Agreement, the
Company shall file with the Securities and Exchange Commission a registration
statement seeking to register under the Securities Act of 1933, as amended, the
resale by the holders of the Notes of the shares of Common Stock issuable upon
conversion of the Notes; provided, however, that the Company is not required to
include in such registration statement any shares for any such holder who does
not consent to such inclusion.
(b)With respect to each Cantone Note and each other Note, the Company shall pay
to the holder thereof an amount in cash equal to two percent (2%) of any
Principal converted by such holder before August 29, 2014, with such amount
being payable no later than three (3) Trading Days after any such conversion.

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4.Miscellaneous.
(a)The headings herein are for convenience only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(b)In case any one or more of the provisions of this Agreement shall be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
(c)This Agreement shall be deemed part of the Notes. Except as specifically
provided herein, the Notes (including each Cantone Note and each other Note)
remain unchanged and, as amended hereby, are and shall remain in full force and
effect.
[Signature Page Follows]

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IN WITNESS WHEREOF, the Company and the Cantone Holders, as the Required
Holders, have executed, or caused this Agreement to be duly executed by a duly
authorized officer, as of the date first above indicated.

 
ADCARE HEALTH SYSTEMS, INC.
 
 
 
 
 
 
 
 
 
By:
/s/ Ronald W. Fleming
 
 
Name:
Ronald W. Fleming
 
 
Title:
Chief Financial Officer
 
 
 
 
 
 
 
 
 
ATTOSA FINANCIAL LLC
 
 
 
 
 
 
 
 
 
By:
/s/ Anthony J. Cantone
 
 
Name:
Anthony J. Cantone
 
 
Title:
Managing Member
 
 
 
 
 
 
 
 
 
/s/ Anthony J. Cantone
 
ANTHONY J. CANTONE, individually

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