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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 1, 2010</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>Date of
Earliest Event Reported: &nbsp;October 26, 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="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt">On October 26,
2010, AdCare Health Systems, Inc. (the &#147;Company&#148;) 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 $11,050,000 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 December 31, 2010. &nbsp;On October 29,
2010, the Company entered into an amendment and joinder agreement (the &#147;Joinder
Agreement&#148;) to effectuate the sale of an additional $750,000 in principal amount
of Notes. &nbsp;The initial sale of $11,050,000 in principal amount of Notes
occurred on October 26, 2010, and the subsequent sale of $750,000 in principal
amount of Notes occurred on October 29, 2010. &nbsp;C.K. Cooper &amp; Company
acted as lead placement agent for the financing, with GVC Capital, LLC and
Cantone Research Partners serving as co-placement agents.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt">Approximately
$3.5 million in principal amount of the Notes were issued in exchange for, and
as a result of the cancellation of, an equal principal amount of promissory
notes previously issued on September 30, 2010, as reported by the Company in a
Form 8-K filed with the Securities and Exchange Commission on October 6,
2010.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt">The Notes are
convertible, at any time following their issuance, into shares of common stock
of the Company (the &#147;Common Stock&#148;) at an initial conversion price of $4.13 per
share, which is equal to an initial conversion rate of 242.1308 shares per
$1,000 principal amount of the Notes. &nbsp;The initial conversion price, which
is equal to 115% of the 15-day volume-weighted average price of the Company&#146;s
common stock prior to the closing of the financing, is subject to (i) adjustment
for any stock dividend, stock split, combination of shares, reorganization,
recapitalization, reclassification or other similar event, and (ii) full-ratchet
anti-dilution protection, such that if and whenever on or after the closing
date, the Company issues or sells, or is deemed to have issued or sold, any
shares of Common Stock (but excluding Excluded Securities (as defined in the
Notes) and shares of Common Stock deemed to have been issued or sold by the
Company in connection with any Excluded Securities) for a consideration per
share (the &#147;New Issuance Price&#148;) less than a price equal to the conversion price
in effect immediately prior to such issue or sale (the foregoing a &#147;Dilutive
Issuance&#148;), then immediately after such Dilutive Issuance the conversion price
then in effect shall be reduced to an amount equal to the New Issuance Price.
&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"><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt">The Notes are
unsecured and subordinated in right of payment to existing and future senior
indebtedness.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt">The Notes mature
on October 26, 2013. &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"><BR></P>
<P style="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt">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 &nbsp;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">&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px">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">&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px">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; MARGIN-BOTTOM: 13px"><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; PADDING-LEFT: 96px; MARGIN-BOTTOM: -16px; PAGE-BREAK-BEFORE: always; TEXT-INDENT: -48px; FONT-FAMILY: Symbol">&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px">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; PADDING-LEFT: 96px; MARGIN-BOTTOM: -16px; TEXT-INDENT: -48px; FONT-FAMILY: Symbol">&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px">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">&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px">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">&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px">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">&#183;</P>
<P style="MARGIN-TOP: 0px; PADDING-LEFT: 96px; MARGIN-BOTTOM: 13px">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 Joinder
Agreement and the form of Lock-Up Agreement entered into in connection with the
private placement, copies of which are filed herewith as Exhibits 10.1, 10.2,
10.3, 10.4 and 10.5, respectively. &nbsp;A copy of the press release announcing
the initial closing of the private placement on October 26, 2010 is attached
hereto as Exhibit 99.1 and is hereby incorporated by reference. A copy of the
press release announcing the additional closing on October 29, 2010 is attached
hereto as Exhibit 99.2 and is hereby incorporated by reference. The foregoing
documents have been attached to 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: 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 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>Securities Purchase Agreement dated October 26, 2010, by and
among AdCare Health Systems, Inc. and the investors named therein.
</P></TD></TR></TABLE>
<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>3</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 14px; PAGE-BREAK-BEFORE: always"
align=justify><BR><BR></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>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>Registration Rights Agreement dated October 26, 2010, by and
among AdCare Health Systems, Inc. and the investors named therein.
</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>Form of Subordinated Convertible Note. </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>Amendment No. 1 to Securities Purchase Agreement, Amendment
No. 1 to Registration Rights Agreement and Joinder Agreement, dated as of
October 29, 2010, by and among AdCare Health Systems, Inc. and the
investors named therein. </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>10.5</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>Form of Lock-Up Agreement. &nbsp;Each of the directors and
officers identified on Schedule 7(xii) of the Securities Purchase
Agreement entered into a Lock-Up Agreement with AdCare Health Systems,
Inc. </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 October 26, 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 1, 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>4</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 1, 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>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 14px"><BR><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>5</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: 12pt; MARGIN-BOTTOM: 32px; PAGE-BREAK-BEFORE: always; LINE-HEIGHT: 14pt"
align=center><B>EXHIBIT INDEX</B></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>Securities Purchase Agreement dated October 26, 2010, by and
among AdCare Health Systems, Inc. and the investors named therein.
</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>Registration Rights Agreement dated October 26, 2010, by and
among AdCare Health Systems, Inc. and the investors named therein.
</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>Form of Subordinated Convertible Note. </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>Amendment No. 1 to Securities Purchase Agreement, Amendment
No. 1 to Registration Rights Agreement and Joinder Agreement, dated as of
October 29, 2010, by and among AdCare Health Systems, Inc. and the
investors named therein. </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>10.5</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>Form of Lock-Up Agreement. &nbsp;Each of the directors and
officers identified on Schedule 7(xii) of the Securities Purchase
Agreement entered into a Lock-Up Agreement with AdCare Health Systems,
Inc.</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 October 26, 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 1, 2010.
</P></TD></TR></TABLE>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 14px"><BR></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>6</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 1, 2010
Date of
Earliest Event Reported:  October 26, 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 26,
2010, AdCare Health Systems, Inc. (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 $11,050,000 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 December 31, 2010.  On October 29,
2010, the Company entered into an amendment and joinder agreement (the "Joinder
Agreement") to effectuate the sale of an additional $750,000 in principal amount
of Notes.  The initial sale of $11,050,000 in principal amount of Notes
occurred on October 26, 2010, and the subsequent sale of $750,000 in principal
amount of Notes occurred on October 29, 2010.  C.K. Cooper & Company
acted as lead placement agent for the financing, with GVC Capital, LLC and
Cantone Research Partners serving as co-placement agents.
Approximately
$3.5 million in principal amount of the Notes were issued in exchange for, and
as a result of the cancellation of, an equal principal amount of promissory
notes previously issued on September 30, 2010, as reported by the Company in a
Form 8-K filed with the Securities and Exchange Commission on October 6,
2010.
The Notes are
convertible, at any time following their issuance, into shares of common stock
of the Company (the "Common Stock") at an initial conversion price of $4.13 per
share, which is equal to an initial conversion rate of 242.1308 shares per
$1,000 principal amount of the Notes.  The initial conversion price, which
is equal to 115% of the 15-day volume-weighted average price of the Company's
common stock prior to the closing of the financing, is subject to (i) adjustment
for any stock dividend, stock split, combination of shares, reorganization,
recapitalization, reclassification or other similar event, and (ii) full-ratchet
anti-dilution protection, such that if and whenever on or after the closing
date, the Company issues or sells, or is deemed to have issued or sold, any
shares of Common Stock (but excluding Excluded Securities (as defined in the
Notes) and shares of Common Stock deemed to have been issued or sold by the
Company in connection with any Excluded Securities) for a consideration per
share (the "New Issuance Price") less than a price equal to the conversion price
in effect immediately prior to such issue or sale (the foregoing a "Dilutive
Issuance"), then immediately after such Dilutive Issuance the conversion price
then in effect shall be reduced to an amount equal to the New Issuance Price.
 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 October 26, 2013.  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;
2
·
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;
·
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 Joinder
Agreement and the form of Lock-Up Agreement entered into in connection with the
private placement, copies of which are filed herewith as Exhibits 10.1, 10.2,
10.3, 10.4 and 10.5, respectively.  A copy of the press release announcing
the initial closing of the private placement on October 26, 2010 is attached
hereto as Exhibit 99.1 and is hereby incorporated by reference. A copy of the
press release announcing the additional closing on October 29, 2010 is attached
hereto as Exhibit 99.2 and is hereby incorporated by reference. The foregoing
documents have been attached to 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 2.03. 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 9.01.  Financial Statements and Exhibits.
(d)
Exhibits
Exhibit Number
Description of Exhibit
10.1
Securities Purchase Agreement dated October 26, 2010, by and
among AdCare Health Systems, Inc. and the investors named therein.
3
10.2
Registration Rights Agreement dated October 26, 2010, by and
among AdCare Health Systems, Inc. and the investors named therein.
10.3
Form of Subordinated Convertible Note.
10.4
Amendment No. 1 to Securities Purchase Agreement, Amendment
No. 1 to Registration Rights Agreement and Joinder Agreement, dated as of
October 29, 2010, by and among AdCare Health Systems, Inc. and the
investors named therein.
10.5
Form of Lock-Up Agreement.  Each of the directors and
officers identified on Schedule 7(xii) of the Securities Purchase
Agreement entered into a Lock-Up Agreement with AdCare Health Systems,
Inc.
99.1
Press Release dated October 26, 2010.
99.2
Press Release dated November 1, 2010.
4
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 1, 2010
ADCARE
HEALTH SYSTEMS, INC.
By:
/s/ Scott Cunningham
Name:
Scott Cunningham
Title:
 Chief Financial Officer
5
EXHIBIT INDEX
Exhibit Number
Description of Exhibit
10.1
Securities Purchase Agreement dated October 26, 2010, by and
among AdCare Health Systems, Inc. and the investors named therein.
10.2
Registration Rights Agreement dated October 26, 2010, by and
among AdCare Health Systems, Inc. and the investors named therein.
10.3
Form of Subordinated Convertible Note.
10.4
Amendment No. 1 to Securities Purchase Agreement, Amendment
No. 1 to Registration Rights Agreement and Joinder Agreement, dated as of
October 29, 2010, by and among AdCare Health Systems, Inc. and the
investors named therein.
10.5
Form of Lock-Up Agreement.  Each of the directors and
officers identified on Schedule 7(xii) of the Securities Purchase
Agreement entered into a Lock-Up Agreement with AdCare Health Systems,
Inc.
99.1
Press Release dated October 26, 2010.
99.2
Press Release dated November 1, 2010.
6