Regards,/s/ David A. TenwickDavid Tenwick, CEO I accept the Separation Agreement as outlined above./s/ David Rubenstein8/14/14David RubensteinDate

David Rubenstein

230 Spalding Springs Lane

Atlanta, GA 30350

Dear Mr. Rubenstein,

On behalf of AdCare Health Systems, Inc. ("AdCare"}, this letter of separation ("Separation Agreement") outlines the terms of your separation from AdCare. In this Agreement, the terms "you" and "your" refer to you, David Rubenstein, and the terms "us," "we," and "our" refer to AdCare, and are collectively referred to as the "parties." Other than as described below, this Separation Agreement, re-attests the parties' agreement to the terms of your Employment Agreement dated November 15, 2011 that outlines the terms of your employment with AdCare ("Employment Agreement"). The parties agree your last day of employment will be on December 31, 2014 {"Termination Date"). The parties further agree the termination is "Without Cause" as defined in your Employment Agreement.

Please sign the last page and return to David Tenwick, CEO/President, if this offer is acceptable and reflects our entire Separation Agreement. This Separation Agreement is effective upon full execution by the parties ("Effective Date").

Severance: You will be paid one-year annual severance in the amount of your current salary ($325,000) ("Severance") subject to all applicable withholdings, beginning immediately post the Termination Date and expiring December 31, 2015.    In the event of a "Change in Control" as defined in your employment agreement, your Severance will become immediately and fully payable to you.

Bonus: You are eligible for the full amount of your annual bonus outlined in your Employment Agreement and AdCare's Executive Incentive Plan ("Bonus") based on the Company's performance through September 30, 2014. Bonus will be paid to you when 2014 financials are finalized, on or before March 31, 2015.