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<P style="FONT-SIZE: 14pt; MARGIN: 0px; LINE-HEIGHT: 16pt"
align=center><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>Washington, D.C. &nbsp;20549</B></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 14pt; MARGIN: 0px; LINE-HEIGHT: 16pt" align=center><B>FORM
8-K</B></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=center>CURRENT
REPORT</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=center>PURSUANT
TO SECTION 13 OR 15(d) OF </P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=center>THE
SECURITIES EXCHANGE ACT OF 1934</P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>Date of
Report: &nbsp;November 4, 2010</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>Date of
Earliest Event Reported: &nbsp;October 29, 2010</P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 18.5pt; MARGIN: 0px; LINE-HEIGHT: 20.5pt"
align=center><B>AdCare Health Systems, Inc.</B></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt"
align=center><I>(Exact Name of Registrant as specified in its Charter)</I></P>
<P style="MARGIN: 0px" align=center><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 align=center>
<TR style="DISPLAY: none; FONT-SIZE: 0px" height=0>
<TD width=400></TD>
<TD width=357></TD></TR>
<TR>
<TD vAlign=bottom width=400>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><B>Ohio</B></P></TD>
<TD vAlign=bottom width=357>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><B>31-1332119</B></P></TD></TR>
<TR>
<TD vAlign=top width=400>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>(State or other jurisdiction of</I></P>
<P
style="FONT-SIZE: 10.5pt; MARGIN: 0px; TEXT-INDENT: 87px; LINE-HEIGHT: 12.5pt"><I>incorporation
or organization)</I></P></TD>
<TD vAlign=top width=357>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>(I.R.S. Employer Identification No.)</I></P></TD></TR>
<TR>
<TD vAlign=bottom width=400>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><B>5057 Troy Rd, Springfield, OH</B></P></TD>
<TD vAlign=bottom width=357>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><B>45502-9032</B></P></TD></TR>
<TR>
<TD vAlign=top width=400>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>(Address of principal executive offices)</I></P></TD>
<TD vAlign=top width=357>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>(Zip Code)</I></P></TD></TR></TABLE>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><B>Registrant&#146;s Telephone Number, Including Area Code</B></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><B>(937) 964-8974</B></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>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 (See General Instruction A2. below):</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>[ &nbsp;] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>[ &nbsp;] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>[ &nbsp;] Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>[ &nbsp;] Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)).</P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 16px" align=justify><BR><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>1</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; PAGE-BREAK-BEFORE: always; LINE-HEIGHT: 12.5pt"
align=justify><B>Item 1.01. Entry into a Material Definitive Agreement.</B></P>
<P
style="MARGIN-TOP: 5px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>On October 29, 2010, AdCare Health Systems, Inc. (the &#147;Company&#148;)
completed the Assignment and Transfer Agreement (&#147;ATA&#148;) entered on July 30,
2010, and previously reported on Form 8-K dated August 5, 2010, and on Form
8-K/A on August 16, 2010 both of which are hereby incorporated by reference.
&nbsp;At closing, the Company paid an additional $100,000 as an extension fee to
extend the ATA from September 30, 2010, to October 31, 2010. &nbsp;Additionally,
the Company paid $375,000 as a security deposit. &nbsp;The facilities are
located in Georgia and consist of two skilled nursing facilities with an
aggregate of 300 licensed skilled nursing beds.</P>
<P
style="MARGIN-TOP: 5px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>The Company began leasing and managing the operations of the
facilities that are part of the ATA beginning November 1, 2010, under the terms
of the Third Amended and Restated Multiple Facilities Lease (the &#147;lease&#148;).
&nbsp;The lease assignor entered the lease with an initial term which began on
March 1, 2003. &nbsp;The first of three options to renew the lease was exercised
by the lease assignor on May 1, 2010. &nbsp;The renewal expires on April 30,
2022. &nbsp;The Company has two additional options to renew the lease for a
period of ten years each subject to certain terms and conditions. &nbsp;The
initial rent payments for the facilities will total $125,000 per month with an
annual rate increase of 3% effective May 1 each year. &nbsp;The amended and
restated lease contains various covenants including a requirement for minimum
qualified capital expenditures of $375 per licensed bed to improve the
facilities. &nbsp;The minimum qualified capital expenditure shall be increased
annually in proportion to increases in the CPI.</P>
<P
style="MARGIN-TOP: 5px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify><B>Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant.</B></P>
<P
style="MARGIN-TOP: 6px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: normal"
align=justify>Also on October 29, 2010, AdCare subsidiaries ADK Powder Springs
Operators, LLC, ADK Lumber City Operator, LLC, ADK Jeffersonville Operator, LLC,
ADK LaGrange Operator, LLC and ADK Thomasville Operator, LLC (collectively the
&#147;Borrowers&#148;) &nbsp;entered into a Credit Agreement (the &#147;Agreement&#148;) with a
lender, Gemino Healthcare Finance, LLC, (the &#147;Lender&#148;) to provide a credit
facility (the &#147;Credit Facility&#148;) in the maximum amount of $5,000,000 limited by
certain borrowing base restrictions. &nbsp;In addition, certain minimum balances
are required to be maintained through the initial term of the credit facility.
Borrowing under the Credit Facility is not limited to use by the Borrowers and
may be used by the Company for various business purposes. &nbsp;The Company
agreed to guaranty the obligations of the subsidiaries under the Credit
Facility. &nbsp;<FONT style="FONT-SIZE: 11pt">The initial term of the Credit
Facility ("Initial Term") shall expire on October&nbsp;29, 2013.</FONT> The
Lender will make advances to the Borrowers from time to time in the form of
revolving loans. &nbsp;The aggregate amount of the revolving loans shall not
exceed the maximum credit limit. &nbsp;Initially, the Borrowers pledged as
collateral their accounts receivable. &nbsp;The Company will have the ability to
add additional subsidiaries to the credit facility subject to certain terms and
conditions with the Lender. &nbsp;Each revolving loan is subject to <FONT
style="FONT-SIZE: 11pt">interest on the outstanding principal amount thereof
from the date made until such revolving loan is paid in full, at a rate per
annum equal to the LIBOR Rate plus the Applicable Margin (together, the
"Interest Rate"). &nbsp;The Interest Rate on all amounts outstanding under the
Credit Facility shall be adjusted daily based on the LIBOR Rate with a LIBOR
Floor of 2.50% to 2.25% depending on the principal amount outstanding. &nbsp;The
Applicable Margin will be 4.75% to 5.00% depending on the principal amount
outstanding. &nbsp;The loan is subject to various fees including but not limited
to the following:</FONT></P>
<P
style="MARGIN-TOP: 6px; PADDING-LEFT: 48px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -24px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 13pt"
align=justify>A one time commitment fee of $50,000 paid to Lender.</P>
<P
style="MARGIN-TOP: 5px; PADDING-LEFT: 48px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -24px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: normal"
align=justify>An early termination fee of <FONT style="FONT-SIZE: 11pt">two
percent (2.0%), if such early termination occurs on or prior to the first
anniversary of the date of the Agreement; one percent (1.0%) if such early
termination occurs after the first anniversary date of the Agreement but on or
prior to the second anniversary of the date of this Agreement; and no
Termination Fee shall be due if such early termination occurs after the second
anniversary of the date of this Agreement.</FONT></P>
<P
style="MARGIN-TOP: 6px; PADDING-LEFT: 48px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -24px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 13pt"
align=justify>An unused line fee equal to one-half percent (0.5%) per annum of
the unused portion of the Credit Facility.</P>
<P
style="MARGIN-TOP: 6px; PADDING-LEFT: 48px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -24px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 13pt"
align=justify>A collateral monitoring fee equal to one-half percent (0.5%) per
annum of the average daily outstanding balance of the Revolving Loans during
each month.</P>
<P
style="MARGIN-TOP: 5px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Borrowing under the Credit &nbsp;Facility is limited to 85% of
certain eligible accounts receivable of the Borrowers. &nbsp;The initial
borrowing limit established by the lender at closing was approximately
$1,300,000. &nbsp;The borrowing limit is reevaluated monthly based on the
collateral provided by the accounts receivable of the Borrowers.
&nbsp;Conditions of the Agreement require the Borrowers to pay interest on a
minimum balance of $1,000,000. &nbsp;Consequently, the Borrowers drew $1,000,000
at closing and the Company has retained the proceeds for use as working capital
in the operations of its facilities. &nbsp;The Lender has first priority
security interest in substantially all assets of the Borrowers. &nbsp;Certain
other financial covenants apply.</P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 14px" align=justify><BR><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>2</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; PAGE-BREAK-BEFORE: always; LINE-HEIGHT: 12.5pt"
align=justify><B>Item 9.01. &nbsp;Financial Statements and Exhibits.</B></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: -16px; TEXT-INDENT: 48px; LINE-HEIGHT: 12.5pt"
align=justify>(d)</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; TEXT-INDENT: 96px; LINE-HEIGHT: 12.5pt"
align=justify>Exhibits</P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="DISPLAY: none; FONT-SIZE: 0px" height=0>
<TD width=127></TD>
<TD width=511></TD></TR>
<TR>
<TD vAlign=top width=127>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify><U>Exhibit Number</U></P></TD>
<TD vAlign=top width=511>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify><U>Description of Exhibit</U></P></TD></TR>
<TR>
<TD vAlign=top width=127>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>10.1</P></TD>
<TD vAlign=top width=511>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Third Amended and Restated Multiple Facilities Lease dated
October 29, 2010.</P></TD></TR>
<TR>
<TD vAlign=top width=127>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>10.2</P></TD>
<TD vAlign=top width=511>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Assignment and Assumption of Second Amended and Restated
Multiple Facilities Lease and Consent of Lessor dated October 29,
2010.</P></TD></TR>
<TR>
<TD vAlign=top width=127>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>10.3</P></TD>
<TD vAlign=top width=511>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Gemino Healthcare Finance, LLC Credit Agreement dated
October 29, 2010. </P></TD></TR>
<TR>
<TD vAlign=top width=127>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>10.4</P></TD>
<TD vAlign=top width=511>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Gemino Healthcare Finance, LLC Guaranty Agreement dated
October 29, 2010</P></TD></TR>
<TR>
<TD vAlign=top width=127>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>99.1</P></TD>
<TD vAlign=top width=511>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Press Release dated November 2, 2010.</P></TD></TR>
<TR>
<TD vAlign=top width=127>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>99.2</P></TD>
<TD vAlign=top width=511>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Press Release dated November 3, 2010.
</P></TD></TR></TABLE>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>&nbsp;&nbsp;</P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 16px" align=center><BR><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>3</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; PAGE-BREAK-BEFORE: always; TEXT-INDENT: 48px; LINE-HEIGHT: 12.5pt"
align=center>SIGNATURES</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; TEXT-INDENT: 48px; LINE-HEIGHT: 12.5pt"
align=justify>Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereto duly authorized.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Date: &nbsp;November 4, 2010</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 336px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt">ADCARE
HEALTH SYSTEMS, INC.</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 336px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt">By:<U>
&nbsp;/s/ Scott Cunningham</U></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 336px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt">Name:
Scott Cunningham</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 336px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt">Title:
&nbsp;Chief Financial Officer</P>
<H1>&nbsp;</H1>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 14px"><BR><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>4</P>
<P
style="MARGIN: 0px"><BR></P></BODY>
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_
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:  November 4, 2010
Date of
Earliest Event Reported:  October 29, 2010
AdCare Health Systems, Inc.
(Exact Name of Registrant as specified in its Charter)
Ohio
31-1332119
(State or other jurisdiction of
incorporation
or organization)
(I.R.S. Employer Identification No.)
5057 Troy Rd, Springfield, OH
45502-9032
(Address of principal executive offices)
(Zip Code)
Registrant's Telephone Number, Including Area Code
(937) 964-8974
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 (See General Instruction A2. below):
[  ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[  ] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[  ] Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)
[  ] Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)).
1
Item 1.01. Entry into a Material Definitive Agreement.
On October 29, 2010, AdCare Health Systems, Inc. (the "Company")
completed the Assignment and Transfer Agreement ("ATA") entered on July 30,
2010, and previously reported on Form 8-K dated August 5, 2010, and on Form
8-K/A on August 16, 2010 both of which are hereby incorporated by reference.
 At closing, the Company paid an additional $100,000 as an extension fee to
extend the ATA from September 30, 2010, to October 31, 2010.  Additionally,
the Company paid $375,000 as a security deposit.  The facilities are
located in Georgia and consist of two skilled nursing facilities with an
aggregate of 300 licensed skilled nursing beds.
The Company began leasing and managing the operations of the
facilities that are part of the ATA beginning November 1, 2010, under the terms
of the Third Amended and Restated Multiple Facilities Lease (the "lease").
 The lease assignor entered the lease with an initial term which began on
March 1, 2003.  The first of three options to renew the lease was exercised
by the lease assignor on May 1, 2010.  The renewal expires on April 30,
2022.  The Company has two additional options to renew the lease for a
period of ten years each subject to certain terms and conditions.  The
initial rent payments for the facilities will total $125,000 per month with an
annual rate increase of 3% effective May 1 each year.  The amended and
restated lease contains various covenants including a requirement for minimum
qualified capital expenditures of $375 per licensed bed to improve the
facilities.  The minimum qualified capital expenditure shall be increased
annually in proportion to increases in the CPI.
Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Also on October 29, 2010, AdCare subsidiaries ADK Powder Springs
Operators, LLC, ADK Lumber City Operator, LLC, ADK Jeffersonville Operator, LLC,
ADK LaGrange Operator, LLC and ADK Thomasville Operator, LLC (collectively the
"Borrowers")  entered into a Credit Agreement (the "Agreement") with a
lender, Gemino Healthcare Finance, LLC, (the "Lender") to provide a credit
facility (the "Credit Facility") in the maximum amount of $5,000,000 limited by
certain borrowing base restrictions.  In addition, certain minimum balances
are required to be maintained through the initial term of the credit facility.
Borrowing under the Credit Facility is not limited to use by the Borrowers and
may be used by the Company for various business purposes.  The Company
agreed to guaranty the obligations of the subsidiaries under the Credit
Facility.
The initial term of the Credit
Facility ("Initial Term") shall expire on October 29, 2013.
The
Lender will make advances to the Borrowers from time to time in the form of
revolving loans.  The aggregate amount of the revolving loans shall not
exceed the maximum credit limit.  Initially, the Borrowers pledged as
collateral their accounts receivable.  The Company will have the ability to
add additional subsidiaries to the credit facility subject to certain terms and
conditions with the Lender.  Each revolving loan is subject to
interest on the outstanding principal amount thereof
from the date made until such revolving loan is paid in full, at a rate per
annum equal to the LIBOR Rate plus the Applicable Margin (together, the
"Interest Rate").  The Interest Rate on all amounts outstanding under the
Credit Facility shall be adjusted daily based on the LIBOR Rate with a LIBOR
Floor of 2.50% to 2.25% depending on the principal amount outstanding.  The
Applicable Margin will be 4.75% to 5.00% depending on the principal amount
outstanding.  The loan is subject to various fees including but not limited
to the following:
·
A one time commitment fee of $50,000 paid to Lender.
·
An early termination fee of
two
percent (2.0%), if such early termination occurs on or prior to the first
anniversary of the date of the Agreement; one percent (1.0%) if such early
termination occurs after the first anniversary date of the Agreement but on or
prior to the second anniversary of the date of this Agreement; and no
Termination Fee shall be due if such early termination occurs after the second
anniversary of the date of this Agreement.
·
An unused line fee equal to one-half percent (0.5%) per annum of
the unused portion of the Credit Facility.
·
A collateral monitoring fee equal to one-half percent (0.5%) per
annum of the average daily outstanding balance of the Revolving Loans during
each month.
Borrowing under the Credit  Facility is limited to 85% of
certain eligible accounts receivable of the Borrowers.  The initial
borrowing limit established by the lender at closing was approximately
$1,300,000.  The borrowing limit is reevaluated monthly based on the
collateral provided by the accounts receivable of the Borrowers.
 Conditions of the Agreement require the Borrowers to pay interest on a
minimum balance of $1,000,000.  Consequently, the Borrowers drew $1,000,000
at closing and the Company has retained the proceeds for use as working capital
in the operations of its facilities.  The Lender has first priority
security interest in substantially all assets of the Borrowers.  Certain
other financial covenants apply.
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Item 9.01.  Financial Statements and Exhibits.
(d)
Exhibits
Exhibit Number
Description of Exhibit
10.1
Third Amended and Restated Multiple Facilities Lease dated
October 29, 2010.
10.2
Assignment and Assumption of Second Amended and Restated
Multiple Facilities Lease and Consent of Lessor dated October 29,
2010.
10.3
Gemino Healthcare Finance, LLC Credit Agreement dated
October 29, 2010.
10.4
Gemino Healthcare Finance, LLC Guaranty Agreement dated
October 29, 2010
99.1
Press Release dated November 2, 2010.
99.2
Press Release dated November 3, 2010.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereto duly authorized.
Date:  November 4, 2010
ADCARE
HEALTH SYSTEMS, INC.
By:
/s/ Scott Cunningham
Name:
Scott Cunningham
Title:
 Chief Financial Officer
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