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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="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>Washington, D.C. 20549</B></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center><B>FORM
8-K</B></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center>CURRENT REPORT</P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center>PURSUANT TO SECTION 13 OR 15(d) OF </P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=center>THE
SECURITIES EXCHANGE ACT OF 1934</P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=center>Date
of Report: &nbsp;May 5, 2011</P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=center>Date
of earliest event reported: &nbsp;April 29, 2011</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: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
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>
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<TD width=319></TD>
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<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center>Ohio</P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>(State or Other Jurisdiction</I></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>of Incorporation)</I></P></TD>
<TD vAlign=top width=319>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center>333-131542</P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>(Commission file Number)</I></P></TD></TR></TABLE>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center>31-1332119</P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>(IRS Employer Identification No.)</I></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=center>5057
Troy Road, Springfield, Ohio &nbsp;45502-9032</P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>(Address of principal executive offices) &nbsp;(Zip
code)</I></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center><I>Registrant&#146;s Telephone Number, Including Area Code</I></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt"
align=center>(937) 964-8974</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;] &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;] &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;] &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;] &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="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>1</P>
<P style="MARGIN: 0px"><BR></P>
<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="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=justify>On
April 6, 2011, AdCare Health Systems, Inc. (the &#147;Company&#148;), filed Form 8-K
reporting entry into a material definitive agreement on March 31, 2011.
&nbsp;The April 6, 2011, Form 8-K is hereby incorporated by reference.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=justify>On
March 31, 2011, the Company entered into a Securities Purchase Agreement (the
&#147;Purchase Agreement&#148;) with certain accredited investors (the &#147;Purchasers&#148;) to
sell and issue to the Purchasers in reliance on Section 4(2) of the Securities
Act of 1933, as amended (the &#147;Securities Act&#148;), an aggregate of $2,115,000 in
principal amount of the Company&#146;s Subordinated Convertible Notes (the &#147;Notes&#148;),
bearing 10.0% interest per annum payable quarterly in cash in arrears beginning
June 30, 2011. &nbsp;On April 29, 2011, the Company issued an additional
$1,783,000 in principal amount of the Notes.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=justify>The
Notes are convertible into shares of common stock of the Company at $5.30 per
share. &nbsp;The initial conversion price is subject to adjustment for any stock
dividend, stock split, combination of shares, reorganization, recapitalization,
reclassification or other similar event. &nbsp;However, unless the Company first
obtains the approval of its stockholders as required by the applicable rules of
the NYSE Amex, in no event shall the Company be obligated to issue any shares of
Common Stock upon conversion of the Notes if the issuance of such shares of
Common Stock would exceed the aggregate number of shares of Common Stock which
the Company may issue upon conversion of the Notes without breaching the
Company&#146;s obligations under the rules and regulations of the NYSE Amex.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=justify>The
Notes are unsecured and subordinated in right of payment to existing and future
senior indebtedness.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=justify>The
Notes mature on April 29, 2014. &nbsp;However, if after six (6) months from the
closing of the transaction, the Common Stock trades at or above 200% of the
conversion price for 20 out of 30 consecutive trading days, with an average
daily trading volume of over 50,000 shares, then the Company may, subject to the
satisfaction of certain other conditions, redeem the Notes in cash at a price
equal to the sum of (i) 100% of the principal being redeemed plus (ii) any
accrued and unpaid interest on the principal, plus late charges, if any (the
principal amount being redeemed, plus any accrued and unpaid interest, plus any
other charges, is collectively referred to in this Report as the &#147;Redemption
Amount&#148;). &nbsp;</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=justify>In
addition, holders may require the Company to redeem all or a portion of their
Notes upon a change of control transaction, as described in the Notes, at a
redemption price in cash equal to the greater of (i) 110% of the Redemption
Amount being redeemed and (ii) the product of (A) the Redemption Amount being
redeemed multiplied by (B) the quotient determined by dividing (1) the greatest
closing sale price of the shares of Common Stock during the period beginning on
the date immediately preceding the earlier to occur of (x) the consummation of
the change of control and (y) the public announcement of such change of control
and ending on the date the holder delivers its redemption notice to the Company,
by (2) the conversion price then in effect. &nbsp;</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Additionally, the Notes may become immediately due and payable
upon an &#147;event of default,&#148; which, with respect to each Note, generally
includes, without limitation, each of the following:</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -48px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px"
align=justify>any registration failure under the terms of the registration
rights agreement;</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -48px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px"
align=justify>the suspension from trading or failure of the Common Stock to be
listed on the NYSE Amex or any other national securities exchange for a period
of five (5) consecutive trading days or for more than an aggregate of fifteen
(15) trading days in any 365-day period;</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -48px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px"
align=justify>the Company&#146;s (A) failure to cure a conversion failure by delivery
of the required number of shares of Common Stock within the time period
specified in the Notes, or (B) notice of our intention not to comply with a
request for conversion of any Notes into shares of Common Stock;</P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 13px" align=justify><BR><BR></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>2</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: -16px; PAGE-BREAK-BEFORE: always; TEXT-INDENT: -48px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px"
align=justify>failure to pay any amount of principal, interest or other amounts
when and as due under the Notes (if such failure continues beyond the expiration
of any applicable cure or grace periods);</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -48px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px"
align=justify>specific events of bankruptcy, insolvency, reorganization or
liquidation;</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -48px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px"
align=justify>the Company breaches any material warranty, covenant or other term
or condition of any transaction document, except, in the case of a breach of a
covenant or other term or condition of any transaction document which is
curable, only if such breach continues for a period of at least ten (10) days;
and</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -48px; FONT-FAMILY: Symbol"
align=justify>&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px"
align=justify>any event of default occurs with respect to any other Notes.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>In connection with the issuance of the Notes, the Company entered
into a Registration Rights Agreement with the Purchasers obligating the Company
to register for resale the shares of the Common Stock issuable upon the
conversion of the Notes on a registration statement on Form S-3 to be filed with
the Securities and Exchange Commission within fifty (50) days after the closing
of the sale of the Notes.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Additionally, in connection with the financing, the Company also
entered into customary Lock-Up Agreements with each of its directors and
officers. The Lock-Up Agreements expire on the 180th day following the closing
date of the financing. </P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>This announcement is not an offer to sell either the Notes or the
Common Stock issuable upon conversion of the Notes. &nbsp;Neither the Notes nor
the shares of Common Stock issuable upon conversion of the Notes have been
registered under the Securities Act, and the foregoing may not be offered or
sold in the United States absent registration or availability of an applicable
exemption from registration.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>The foregoing description of the private placement does not
purport to be complete and is qualified in its entirety by reference to the
Purchase Agreement, Registration Rights Agreement, the form of Note, the form of
Lock-Up Agreement entered into in connection with the private placement,
previously filed with Form 8-K on April 6, 2011, and hereby incorporated by
reference. &nbsp;The foregoing documents provide investors with information
regarding their terms. &nbsp;They are not intended to provide any other factual
information about the Company or the Purchasers. &nbsp;In particular, the
assertions embodied in the representations and warranties contained in the
Purchase Agreement, as qualified by the Disclosure Schedule attached thereto,
were used for the purpose of allocating risk between the Company and the
Purchasers rather than establishing matters as facts. &nbsp;Accordingly, you
should not rely on the representations and warranties in the Purchase Agreement
as characterizations of the actual state of facts about the Company or the
Purchasers.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify><B>Item 2.01. &nbsp;Completion of Acquisition or Disposition of
Assets.</B></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>On December 3, 2010, AdCare Health Systems, Inc. (the &#147;Company&#148;)
filed Form 8-K reporting under Item 1.01 its entry into a purchase agreement to
acquire three skilled nursing facilities located in Georgia. &nbsp;The December
3, 2010, Form 8-K is incorporated by reference in this filing.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>On April 29, 2011, Erin Property Holdings, LLC, a wholly owned
subsidiary of the Company completed the acquisition of the operations of and
selected assets of a skilled nursing facility from SPTIHS Properties Trust and
Five Star Quality Care-GA, LLC. &nbsp;The property acquired is known as
Southland Care Center (&#147;SCC&#148;), a 126 bed skilled nursing facility located in
Dublin, Georgia. &nbsp;The purchase price was $6,850,000. &nbsp;Also, on April
29, 2011, Mt Kenn Property Holdings, LLC, a wholly owned subsidiary of the
Company completed the acquisition of the operations of and selected assets of a
skilled nursing facility from SPTIHS Properties Trust and Five Star Quality
Care-GA, LLC. &nbsp;The property acquired is known as Autumn Breeze Healthcare
Center (&#147;ABHC&#148;), a 109 bed skilled nursing facility located in Marietta,
Georgia. &nbsp;The purchase price was $5,900,000.</P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 14px" align=justify><BR><BR></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>3</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; PAGE-BREAK-BEFORE: always; LINE-HEIGHT: 12.5pt"
align=justify>Through separate Operations Transfer Agreements, the Company
obtained control of the facilities effective May 1, 2011. &nbsp;The Company had
paid $500,000 in earnest money upon entering the purchase agreement and an
additional $400,000 to extend the closing date to April 29, 2011.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>To complete the acquisition of SCC, the Company issued a secured
promissory note (the &#147;SCC Note&#148;) for $5,800,000. &nbsp;The SCC Note matures on
April 30, 2012, accrues interest at a variable rate of LIBOR plus 3.75% per
annum and may be repaid without penalty. &nbsp;The SCC Note is secured by the
SCC facility and guaranteed by AdCare Health Systems, Inc.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>To complete the acquisition of ABHC, the Company issued a secured
promissory note (the &#147;ABHC Note&#148;) for $4,500,000. &nbsp;The ABHC Note matures on
April 30, 2012, accrues interest at a variable rate of LIBOR plus 3.75% per
annum and may be prepaid at any time without penalty. &nbsp;The ABHC Note is
secured by the ABHC facility and is guaranteed by AdCare Health Systems,
Inc.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>The Company plans to replace this short term financing with
permanent long term financing prior to each &nbsp;Note&#146;s maturity date.</P>
<P
style="MARGIN-TOP: 5px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>The third facility, a 126 bed skilled nursing facility located in
College Park, Georgia, may be acquired at a later date.<B> </B></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: 5px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>The disclosure set forth above under Item 1.01 is hereby
incorporated by reference into this Item 2.03.</P>
<P
style="MARGIN-TOP: 5px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify><B>Item 3.02. &nbsp;Unregistered Sale of Equity
Securities.</B></P>
<P
style="MARGIN-TOP: 5px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>The disclosure set forth above under Item 1.01 is hereby
incorporated by reference into this Item 3.02.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify><B>Item 8.01 Other Matters</B></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>On May 2, 2011, the Company issued a press release announcing the
completion of the acquisitions described under Item 2.01 above. &nbsp;A copy of
the press release is attached as Exhibit 99.1 to this Form 8-K.</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>The information in this Item 8.01 and Exhibit 99.1 is being
furnished and shall not be deemed &#147;filed&#148; for purposes of Section 18 of the
Securities and Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;) or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set forth in such
filing.</P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 14px" align=justify><BR><BR></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>4</P>
<P style="MARGIN: 0px"><BR></P>
<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; PADDING-LEFT: 48px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: -16px; TEXT-INDENT: -24px; LINE-HEIGHT: 12.5pt"
align=justify>a.</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 16px; LINE-HEIGHT: 12.5pt"
align=justify><U>Financial Statements of Business Acquired.</U> &nbsp;The
financial statements required by Item 9.01(a) are not included with this report.
&nbsp;The Company intends to file these financial statements by amendment not
later than 71 calendar days after the date this Form 8-K is required to be filed
with the Securities and Exchange Commission.</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: -16px; TEXT-INDENT: -24px; LINE-HEIGHT: 12.5pt"
align=justify>b.</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 16px; LINE-HEIGHT: 12.5pt"
align=justify><U>Pro Forma Financial Information.</U> &nbsp;The pro forma
financial information required under 9.01(b) is not included with this report.
&nbsp;The Company intends to file this pro forma financial information by
amendment no later than 71 calendar days after the date this Form 8-K is
required to be filed with the Securities and Exchange Commission.</P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 14px" align=justify><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 align=center>
<TR style="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 style="BACKGROUND-COLOR: #ccffcc" 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 style="BACKGROUND-COLOR: #ccffcc" vAlign=top width=511>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Erin Property Holdings, LLC Promissory Note dated April 29,
2011</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>Erin Property Holdings, LLC Deed to Secure Debt, Assignment
of Rents and Security Agreement dated April 29, 2011</P></TD></TR>
<TR>
<TD style="BACKGROUND-COLOR: #ccffcc" 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 style="BACKGROUND-COLOR: #ccffcc" vAlign=top width=511>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt"
align=justify>Mt. Kenn Property Holdings, LLC Promissory Note dated April
29, 2011</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>Mt. Kenn Property Holdings, LLC Deed to Secure Debt,
Assignment of Rents and Security Agreement dated April 29, 2011</P></TD></TR>
<TR>
<TD style="BACKGROUND-COLOR: #ccffcc" 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 style="BACKGROUND-COLOR: #ccffcc" 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 May 2, 2011</P></TD></TR></TABLE>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 16px" align=justify><BR></P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 14px" align=justify><BR><BR></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>5</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; PAGE-BREAK-BEFORE: always; LINE-HEIGHT: 12.5pt"
align=justify>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;May 5, 2011 </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>
/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: 12pt; MARGIN-BOTTOM: 16px; LINE-HEIGHT: 14pt">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: 16px"><BR><BR></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>6</P>
<P
style="MARGIN: 0px"><BR></P></DIV></BODY>
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SECURITIES AND EXCHANGE COMMISSION
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:  May 5, 2011
Date
of earliest event reported:  April 29, 2011
AdCare Health Systems, Inc.
(Exact Name of Registrant as specified in its Charter)
Ohio
(State or Other Jurisdiction
of Incorporation)
333-131542
(Commission file Number)
31-1332119
(IRS Employer Identification No.)
5057
Troy Road, Springfield, Ohio  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
April 6, 2011, AdCare Health Systems, Inc. (the "Company"), filed Form 8-K
reporting entry into a material definitive agreement on March 31, 2011.
 The April 6, 2011, Form 8-K is hereby incorporated by reference.
On
March 31, 2011, the Company entered into a Securities Purchase Agreement (the
"Purchase Agreement") with certain accredited investors (the "Purchasers") to
sell and issue to the Purchasers in reliance on Section 4(2) of the Securities
Act of 1933, as amended (the "Securities Act"), an aggregate of $2,115,000 in
principal amount of the Company's Subordinated Convertible Notes (the "Notes"),
bearing 10.0% interest per annum payable quarterly in cash in arrears beginning
June 30, 2011.  On April 29, 2011, the Company issued an additional
$1,783,000 in principal amount of the Notes.
The
Notes are convertible into shares of common stock of the Company at $5.30 per
share.  The initial conversion price is subject to adjustment for any stock
dividend, stock split, combination of shares, reorganization, recapitalization,
reclassification or other similar event.  However, unless the Company first
obtains the approval of its stockholders as required by the applicable rules of
the NYSE Amex, in no event shall the Company be obligated to issue any shares of
Common Stock upon conversion of the Notes if the issuance of such shares of
Common Stock would exceed the aggregate number of shares of Common Stock which
the Company may issue upon conversion of the Notes without breaching the
Company's obligations under the rules and regulations of the NYSE Amex.
The
Notes are unsecured and subordinated in right of payment to existing and future
senior indebtedness.
The
Notes mature on April 29, 2014.  However, if after six (6) months from the
closing of the transaction, the Common Stock trades at or above 200% of the
conversion price for 20 out of 30 consecutive trading days, with an average
daily trading volume of over 50,000 shares, then the Company may, subject to the
satisfaction of certain other conditions, redeem the Notes in cash at a price
equal to the sum of (i) 100% of the principal being redeemed plus (ii) any
accrued and unpaid interest on the principal, plus late charges, if any (the
principal amount being redeemed, plus any accrued and unpaid interest, plus any
other charges, is collectively referred to in this Report as the "Redemption
Amount").
In
addition, holders may require the Company to redeem all or a portion of their
Notes upon a change of control transaction, as described in the Notes, at a
redemption price in cash equal to the greater of (i) 110% of the Redemption
Amount being redeemed and (ii) the product of (A) the Redemption Amount being
redeemed multiplied by (B) the quotient determined by dividing (1) the greatest
closing sale price of the shares of Common Stock during the period beginning on
the date immediately preceding the earlier to occur of (x) the consummation of
the change of control and (y) the public announcement of such change of control
and ending on the date the holder delivers its redemption notice to the Company,
by (2) the conversion price then in effect.
Additionally, the Notes may become immediately due and payable
upon an "event of default," which, with respect to each Note, generally
includes, without limitation, each of the following:
·
any registration failure under the terms of the registration
rights agreement;
·
the suspension from trading or failure of the Common Stock to be
listed on the NYSE Amex or any other national securities exchange for a period
of five (5) consecutive trading days or for more than an aggregate of fifteen
(15) trading days in any 365-day period;
·
the Company's (A) failure to cure a conversion failure by delivery
of the required number of shares of Common Stock within the time period
specified in the Notes, or (B) notice of our intention not to comply with a
request for conversion of any Notes into shares of Common Stock;
2
·
failure to pay any amount of principal, interest or other amounts
when and as due under the Notes (if such failure continues beyond the expiration
of any applicable cure or grace periods);
·
specific events of bankruptcy, insolvency, reorganization or
liquidation;
·
the Company breaches any material warranty, covenant or other term
or condition of any transaction document, except, in the case of a breach of a
covenant or other term or condition of any transaction document which is
curable, only if such breach continues for a period of at least ten (10) days;
and
·
any event of default occurs with respect to any other Notes.
In connection with the issuance of the Notes, the Company entered
into a Registration Rights Agreement with the Purchasers obligating the Company
to register for resale the shares of the Common Stock issuable upon the
conversion of the Notes on a registration statement on Form S-3 to be filed with
the Securities and Exchange Commission within fifty (50) days after the closing
of the sale of the Notes.
Additionally, in connection with the financing, the Company also
entered into customary Lock-Up Agreements with each of its directors and
officers. The Lock-Up Agreements expire on the 180th day following the closing
date of the financing.
This announcement is not an offer to sell either the Notes or the
Common Stock issuable upon conversion of the Notes.  Neither the Notes nor
the shares of Common Stock issuable upon conversion of the Notes have been
registered under the Securities Act, and the foregoing may not be offered or
sold in the United States absent registration or availability of an applicable
exemption from registration.
The foregoing description of the private placement does not
purport to be complete and is qualified in its entirety by reference to the
Purchase Agreement, Registration Rights Agreement, the form of Note, the form of
Lock-Up Agreement entered into in connection with the private placement,
previously filed with Form 8-K on April 6, 2011, and hereby incorporated by
reference.  The foregoing documents provide investors with information
regarding their terms.  They are not intended to provide any other factual
information about the Company or the Purchasers.  In particular, the
assertions embodied in the representations and warranties contained in the
Purchase Agreement, as qualified by the Disclosure Schedule attached thereto,
were used for the purpose of allocating risk between the Company and the
Purchasers rather than establishing matters as facts.  Accordingly, you
should not rely on the representations and warranties in the Purchase Agreement
as characterizations of the actual state of facts about the Company or the
Purchasers.
Item 2.01.  Completion of Acquisition or Disposition of
Assets.
On December 3, 2010, AdCare Health Systems, Inc. (the "Company")
filed Form 8-K reporting under Item 1.01 its entry into a purchase agreement to
acquire three skilled nursing facilities located in Georgia.  The December
3, 2010, Form 8-K is incorporated by reference in this filing.
On April 29, 2011, Erin Property Holdings, LLC, a wholly owned
subsidiary of the Company completed the acquisition of the operations of and
selected assets of a skilled nursing facility from SPTIHS Properties Trust and
Five Star Quality Care-GA, LLC.  The property acquired is known as
Southland Care Center ("SCC"), a 126 bed skilled nursing facility located in
Dublin, Georgia.  The purchase price was $6,850,000.  Also, on April
29, 2011, Mt Kenn Property Holdings, LLC, a wholly owned subsidiary of the
Company completed the acquisition of the operations of and selected assets of a
skilled nursing facility from SPTIHS Properties Trust and Five Star Quality
Care-GA, LLC.  The property acquired is known as Autumn Breeze Healthcare
Center ("ABHC"), a 109 bed skilled nursing facility located in Marietta,
Georgia.  The purchase price was $5,900,000.
3
Through separate Operations Transfer Agreements, the Company
obtained control of the facilities effective May 1, 2011.  The Company had
paid $500,000 in earnest money upon entering the purchase agreement and an
additional $400,000 to extend the closing date to April 29, 2011.
To complete the acquisition of SCC, the Company issued a secured
promissory note (the "SCC Note") for $5,800,000.  The SCC Note matures on
April 30, 2012, accrues interest at a variable rate of LIBOR plus 3.75% per
annum and may be repaid without penalty.  The SCC Note is secured by the
SCC facility and guaranteed by AdCare Health Systems, Inc.
To complete the acquisition of ABHC, the Company issued a secured
promissory note (the "ABHC Note") for $4,500,000.  The ABHC Note matures on
April 30, 2012, accrues interest at a variable rate of LIBOR plus 3.75% per
annum and may be prepaid at any time without penalty.  The ABHC Note is
secured by the ABHC facility and is guaranteed by AdCare Health Systems,
Inc.
The Company plans to replace this short term financing with
permanent long term financing prior to each  Note's maturity date.
The third facility, a 126 bed skilled nursing facility located in
College Park, Georgia, may be acquired at a later date.
Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth above under Item 1.01 is hereby
incorporated by reference into this Item 2.03.
Item 3.02.  Unregistered Sale of Equity
Securities.
The disclosure set forth above under Item 1.01 is hereby
incorporated by reference into this Item 3.02.
Item 8.01 Other Matters
On May 2, 2011, the Company issued a press release announcing the
completion of the acquisitions described under Item 2.01 above.  A copy of
the press release is attached as Exhibit 99.1 to this Form 8-K.
The information in this Item 8.01 and Exhibit 99.1 is being
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set forth in such
filing.
4
Item 9.01.  Financial Statements and Exhibits.
a.
Financial Statements of Business Acquired.
The
financial statements required by Item 9.01(a) are not included with this report.
 The Company intends to file these financial statements by amendment not
later than 71 calendar days after the date this Form 8-K is required to be filed
with the Securities and Exchange Commission.
b.
Pro Forma Financial Information.
The pro forma
financial information required under 9.01(b) is not included with this report.
 The Company intends to file this pro forma financial information by
amendment no later than 71 calendar days after the date this Form 8-K is
required to be filed with the Securities and Exchange Commission.
Exhibit Number
Description of Exhibit
10.1
Erin Property Holdings, LLC Promissory Note dated April 29,
2011
10.2
Erin Property Holdings, LLC Deed to Secure Debt, Assignment
of Rents and Security Agreement dated April 29, 2011
10.3
Mt. Kenn Property Holdings, LLC Promissory Note dated April
29, 2011
10.4
Mt. Kenn Property Holdings, LLC Deed to Secure Debt,
Assignment of Rents and Security Agreement dated April 29, 2011
99.1
Press Release dated May 2, 2011
5
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:  May 5, 2011
ADCARE
HEALTH SYSTEMS, INC.
By:
/s/Scott Cunningham
Name:
Scott Cunningham
Title:
 Chief Financial Officer
6