JOINDER AGREEMENT, THIRD AMENDMENT and SUPPLEMENT TO CREDIT AGREEMENT

Exhibit 10.41

JOINDER AGREEMENT, THIRD AMENDMENT

and

SUPPLEMENT TO CREDIT AGREEMENT

THIS JOINDER AGREEMENT, THIRD AMENDMENT AND SUPPLEMENT TO CREDIT AGREEMENT (this “Agreement”) dated June 2, 2011, is made by and among ADK GEORGIA, LLC, a Georgia limited liability company (“ADK Georgia”), ADK POWDER SPRINGS OPERATOR, LLC, a Georgia limited liability company (“Powder Springs”), ADK LUMBER CITY OPERATOR, LLC, a Georgia limited liability company (“Lumber City”), ADK JEFFERSONVILLE OPERATOR, LLC, a Georgia limited liability company (“Jeffersonville”), ADK LAGRANGE OPERATOR, LLC, a Georgia limited liability company (“LaGrange”), ADK THOMASVILLE OPERATOR, LLC, a Georgia limited liability company (“Thomasville”), ADK OCEANSIDE OPERATOR, LLC, a Georgia limited liability company (“Oceanside”), ADK SAVANNAH BEACH OPERATOR, LLC, a Georgia limited liability company (“Savannah”), ADK THUNDERBOLT OPERATOR, LLC, a Georgia limited liability company (“Thunderbolt”), ATTALLA NURSING ADK, LLC, a Georgia limited liability company (“Attalla ADK”), MOUNTAIN TRACE NURSING ADK, LLC, an Ohio limited liability company (“Mountain Trace”; ADK Georgia, Powder Springs, Lumber City, Jeffersonville, LaGrange, Thomasville, Oceanside, Savannah, Thunderbolt, Attalla ADK and Mountain Trace are hereinafter referred to collectively as “Existing Borrowers” and each individually an “Existing Borrower”),  MT. KENN NURSING, LLC, a Georgia limited liability company (“Mt. Kenn”), ERIN NURSING, LLC, a Georgia limited liability company (“Erin”), ADCARE OPERATIONS, LLC, a Georgia limited liability company (“Operations”; Mt. Kenn, Erin and Operations are hereinafter referred to collectively as “New Borrowers” and each individually a “New Borrower”; New Borrowers and Existing Borrowers are hereinafter referred to collectively as “Borrowers” and each individually as a “Borrower”), and GEMINO HEALTHCARE FINANCE, LLC, a Delaware limited liability company (“Lender”).  Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in that certain Credit Agreement dated October 29, 2010 (as at any time amended, restated, supplemented or otherwise modified, the “Credit Agreement”), among Existing Borrowers and Lender.  Capitalized terms used herein, unless otherwise defined herein, shall have the meanings ascribed to them in the Credit Agreement.  The terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.  All references to any Person shall mean and include the successors and permitted assigns of such Person.  All references to any of the Loan Documents shall include any and all amendments or modifications thereto and any and all restatements, extensions or renewals thereof.  Wherever the phrase “including” shall appear in this Agreement, such word shall be understood to mean “including, without limitation.”

Borrowers have requested that Lender join New Borrowers to the Credit Agreement and extend credit to New Borrowers as Borrowers under the Credit Agreement.  New Borrowers are executing this Agreement to become parties to the Credit Agreement in order to induce Lender to continue to extend credit under the Credit Agreement and as consideration for the Revolving Loans previously made.

An Event of Default under the Credit Agreement has occurred, and Borrowers have requested a waiver of such Event of Default.

Accordingly, and for Ten Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by the parties hereto, Lender and Borrowers agree as follows:

1.             Joinder of New Borrowers.  In accordance with the Credit Agreement, each New Borrower by its signature below becomes a Borrower under the Credit Agreement with the same force

and effect as if originally named therein as a Borrower, and each New Borrower hereby agrees to all the terms and provisions of the Credit Agreement applicable to it as a Borrower thereunder.  Each reference to a “Borrower” in the Credit Agreement shall be deemed to include New Borrowers.  The Credit Agreement is hereby incorporated herein by reference.

2.             Amendments to Credit Agreement.  The Credit Agreement is hereby amended as follows:

(a)           By deleting the first sentence of Section 2.01(b) of the Credit Agreement and by substituting in lieu thereof the following:

(b)           On June 2, 2011, Borrowers shall execute and deliver a promissory note to Lender in the principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000) (as may be amended, modified or replaced from time to time, the “Revolving Note”).

(b)           By deleting Section 6.06(b) of the Credit Agreement and by substituting in lieu thereof the following:

(b)           Maximum Loan Turn Days.  Borrowers shall maintain at all times a Maximum Loan Turn Days, measured quarterly at the end of the fiscal quarter ending December 31, 2010 and each fiscal quarter thereafter, of not greater than 40 days.

(c)           By deleting Section 8.01(w) of the Credit Agreement and by substituting in lieu thereof the following:

(w)          CHOW.  The CHOW with respect to (i) each Healthcare Facility of ADK Georgia, Powder Springs, Lumber City, Jeffersonville, LaGrange and Thomasville shall not have been unconditionally and in writing approved by each of the appropriate Governmental Authorities, intermediaries or other designated agents with respect to each such Borrower and each such Healthcare Facility on or before February 28, 2011, (ii) each Healthcare Facility of Attalla Nursing ADK, LLC, ADK Oceanside Operator, LLC, ADK Savannah Beach Operator, LLC, and ADK Thunderbolt Operator, LLC shall not have been unconditionally and in writing approved by each of the appropriate Governmental Authorities, intermediaries or other designated agents with respect to each such Borrower and each such Healthcare Facility on or before April 30, 2011, or (iii) each Healthcare Facility of Mountain Trace Nursing ADK, LLC, Mt. Kenn Nursing, LLC, and Erin Nursing, LLC shall not have been unconditionally and in writing approved by each of the appropriate Governmental Authorities, intermediaries or other designated agents with respect to each such Borrower and each such Healthcare Facility on or before September 30, 2011; or

(d)           By deleting clauses (l) and (m) of the definition of “Eligible Accounts” set forth in Annex 1 to the Credit Agreement and by substituting in lieu thereof the following:

(l)            which has a Billing Date that is both on or after September 1, 2010 and on or after the date on which the applicable Borrower acquired the Healthcare Facility with respect to which such Account arose;

(m)          to the extent such Account is Medicaid Pending, it is not outstanding more than thirty (30) days past the date the corresponding services and/or goods were provided; and

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(n)           which complies with such other criteria and requirements as may be specified from time to time by Lender in its reasonable discretion.

(e)           By deleting the definitions of “Collateral Assignment of Transition Services Agreement”, “EBITDA”, “Transferor” and “Transition Services Agreement” set forth in Annex 1 to the Credit Agreement and by substituting in lieu thereof the following:

“Collateral Assignment of Transition Services Agreement” means, collectively, (i) the Collateral Assignment of Operations Transfer Agreement of even date herewith among ADK Georgia and Lender, and the written acknowledgment thereof by Transferor, (ii) the Collateral Assignment of Transfer Agreements dated February 25, 2011, among ADK Georgia, Attalla Nursing ADK, LLC, Mountain Trace Nursing ADK, LLC, ADK and Lender, and the written acknowledgment thereof by Transferor, and (iii) the Collateral Assignment of Transfer Agreements dated June 2, 2011, among Mt. Kenn Nursing, LLC, Erin Nursing, LLC, and Lender, and the written acknowledgment thereof by Transferor.

“EBITDA” means the sum of net income plus interest expense, plus taxes, plus depreciation and amortization, plus/minus any non-cash derivative losses/gains on or after April 1, 2011, plus non-cash stock based compensation expense on or after April 1, 2011, plus/minus any non-cash gains/losses with respect to acquisitions (net of acquisition costs) on or after April 1, 2011.

“Transferor” means, as applicable, any or all of Attalla Health Care, Inc., Five Star Quality Care-GA, LLC, Mountain Trace Enterprise LLC, Triad Health Management of Georgia, LLC, Triad Health Management of Georgia III, LLC, Triad at Jeffersonville I, LLC, Triad at LaGrange I, LLC, Triad at Lumber City I, LLC, Triad at Parkview, LLC, Triad at Powder Springs I, LLC, Triad at Tara, LLC, and Triad at Thomasville I, LLC.

“Transition Services Agreement” means, as applicable, any or all of (i) the Operations Transfer Agreement entered into as of July 31, 2010, among ADK Georgia, Triad Health Management of Georgia, LLC, Triad at Jeffersonville I, LLC, Triad at LaGrange I, LLC, Triad at Lumber City I, LLC, Triad at Powder Springs I, LLC, and Triad at Thomasville I, LLC, (ii) the Operations Transfer Agreement dated as of October 1, 2010, between Attalla Health Care, Inc., and Attalla Nursing ADK, LLC; (iii) the Operations Transfer Agreement dated as of July 31, 2010, among ADK Georgia, Triad Health Management of Georgia, LLC, Triad Health Management of Georgia III, LLC, and Triad at Tara, LLC; (iv) the Operations Transfer Agreement dated as of October 27, 2010, between Mountain Trace Enterprise LLC, and Mountain Trace Nursing ADK, LLC; (v) the Operations Transfer Agreement dated as of May 1, 2011, between Five Star Quality Care-GA, LLC, and Mt. Kenn Nursing, LLC; and (vi) the Operations Transfer Agreement dated as of May 1, 2011, between Five Star Quality Care-GA, LLC and Erin Nursing, LLC.

(f)            By adding the following definition of “Medicaid Pending” to Annex 1 of the Credit Agreement in appropriate alphabetical order:

“Medicaid Pending” means an amount that will be billed to Medicaid for services rendered to patients that are expected to qualify for such state Medicaid program, but which patients are at the time in question in the process of completing the necessary paperwork and have not yet been officially accepted by such state as eligible Medicaid patients.

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3.             Limited Waiver of Default.  An Event of Default has occurred and currently exists under the Credit Agreement as a result of Borrower’s breach of Section 8.01(w) of the Credit Agreement (the “Designated Default”).  The Designated Default exists because the CHOW with respect to the Healthcare Facility of Mountain Trace was not approved in accordance with Section 8.01(w) of the Credit Agreement on or before April 30, 2011.  Borrowers represent and warrant that the Designated Default is the only Unmatured Event of Default or Event of Default that exists under the Credit Agreement and the other Loan Documents as of the date hereof.  Subject to the satisfaction of the conditions precedent set forth in Section 7 hereof, Lender hereby waives the Designated Default in existence on the date hereof.  In no event shall such waiver be deemed to constitute a waiver of (a) any Unmatured Event of Default or Event of Default other than the Designated Default in existence on the date of this Agreement or (b) Borrowers’ obligation to comply with all of the terms and conditions of the Credit Agreement and the other Loan Documents from and after the date hereof.  Notwithstanding any prior, temporary mutual disregard of the terms of any contracts between the parties, Borrowers hereby agree that they shall be required strictly to comply with all of the terms of the Loan Documents on and after the date hereof.

4.             Acknowledgments of New Borrowers.  New Borrowers acknowledge that they have requested Lender to extend financial accommodations to Borrowers on a combined basis in accordance with the provisions of the Credit Agreement, as hereby amended.  In accordance with the terms of Article 10 of the Credit Agreement, each New Borrower acknowledges and agrees that it shall be jointly and severally liable for any and all Revolving Loans and other Obligations heretofore or hereafter made by Lender to any Borrower and for all interest, fees and other charges payable in connection therewith.  Each New Borrower hereby appoints and designates ADK Georgia as, and ADK Georgia shall continue to act under the Credit Agreement as, the Borrower Representative of each New Borrower and each other Borrower for all purposes, including requesting borrowings and receiving accounts statements and other notices and communications to Borrowers (or any of them) from Lender. Each Loan made by Lender under the Credit Agreement or any of the other Loan Documents shall be disbursed in accordance with the Credit Agreement.

5.             Security Interest.  To secure the prompt payment and performance to Lender of all of the Obligations, each New Borrower hereby grants to Lender a continuing security interest in and Lien upon all of such New Borrower’s assets, including all of the following Property and interests in Property of such Borrower, whether now owned or existing or hereafter created, acquired or arising and wheresoever located:

(a) all Accounts; (b) all Payment Intangibles; (c) all Instruments, Chattel Paper (including Electronic Chattel Paper), Documents, Letter-of-Credit Rights, Supporting Obligations and Commercial Tort Claims set forth on Schedule 5.23 to the Credit Agreement, in each case to the extent arising out of, relating to or given in exchange for or settlement of or to evidence the obligation to pay any Account or Payment Intangible; (d) all General Intangibles (including contract rights and trademarks, copyrights, patents and other intellectual property) that arise out of or relate to any Account or Payment Intangible or from which any Account or Payment Intangible arises; (e) all remedies, guarantees and collateral evidencing, securing or otherwise relating to or associated with any Account or Payment Intangible, including all rights of enforcement and collection; (f) all Commercial Lockboxes, Governmental Lockboxes, Collection Accounts and other Deposit Accounts into which Collections or other proceeds of Collateral or Advances are deposited, and all checks or Instruments from time to time representing or evidencing the same; (g) all cash, currency and other monies at any time in the possession or under the control of Lender or a bailee of Lender; (h) all books and records evidencing or relating to or associated with any of the foregoing; (i) all information and data compiled or derived with respect to any of the foregoing (other than any such information and data subject to legal

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restrictions of patient confidentiality); and (j) all Collections, Accessions, receipts and Proceeds derived from any of the foregoing.

6.             Representations and Warranties.  Mt. Kenn and Erin each represents and warrants to Lender that such New Borrower is a wholly owned Subsidiary of Operations.  Operations represents and warrants to Lender that such New Borrower is a wholly owned Subsidiary of ADK.  Each New Borrower represents and warrants to Lender that such New Borrower is engaged in the same business as the other Borrowers (or, in the case of Operations, solely as a holding company for the equity interests of Mt. Kenn, Erin and CP Nursing, LLC, a Georgia limited liability company) as part of a joint and common enterprise; that this Agreement has been duly authorized, executed and delivered by such New Borrower and constitutes a legal, valid and binding obligation of such New Borrower, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity); and that the Schedules attached hereto contain true, accurate and complete information with respect to New Borrowers and the matters covered therein and such Schedules shall be deemed to supplement and be a part of the Schedules to the Credit Agreement.  In addition, each New Borrower represents and warrants to Lender that no Event of Default or Unmatured Event of Default exists on the date hereof other than the Designated Default; that the execution, delivery and performance of this Agreement have been duly authorized by all requisite company action on the part of Borrowers and this Agreement has been duly executed and delivered by Borrowers; and that all of the representations and warranties made by Borrowers in the Credit Agreement are true and correct on and as of the date hereof.