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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;June 16, 2011</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>Date of
Earliest Event Reported: &nbsp;June 10, 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: 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="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>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; PAGE-BREAK-BEFORE: always; 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="FONT-SIZE: 10.5pt; MARGIN: 0px; LINE-HEIGHT: 12.5pt" align=justify>On
June 10, 2011, Mountain Trace ADK, LLC, a wholly owned subsidiary of AdCare
Health Systems, Inc. (the &#147;Company&#148;) entered Promissory Notes in the aggregate
principal amount of $1,000,000 (the &#147;Notes&#148;). &nbsp;The Notes mature April 1,
2013, and bear interest at the per annum rate equal to 11% &nbsp;payable
quarterly in arrears the first day of each January, April, July and October
beginning July 1, 2011. &nbsp;The Notes are subject to mandatory prepayment in
the aggregate principal amount of $250,000 on each of October 1, 2011, April 1,
2012 and October 1, 2012. &nbsp;The Notes may also be prepaid without penalty by
providing fifteen days prior notice. &nbsp;The Company received proceeds of
$895,000 net of legal and other financing costs. &nbsp;The Company plans to use
the proceeds for general corporate purposes.</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><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="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>Form of Promissory Note </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>2</P>
<P style="MARGIN: 0px"><BR></P>
<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;June 16, 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>
&nbsp;/s/Martin D. Brew</U></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 336px; FONT-SIZE: 10.5pt; MARGIN-BOTTOM: 14px; LINE-HEIGHT: 12.5pt">Name:
Martin D. Brew</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>3</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 12pt; MARGIN-BOTTOM: 32px; PAGE-BREAK-BEFORE: always; LINE-HEIGHT: 14pt"
align=right>Exhibit 10.1</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px" align=center><U>PROMISSORY NOTE</U></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px"
align=justify>&nbsp;&nbsp;<B><U>THIS PROMISSORY NOTE HAS NOT BEEN, AND WILL NOT
BE, REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE &#147;1933 ACT&#148;) OR THE
SECURITIES LAWS OF ANY STATE. &nbsp;THIS PROMISSORY NOTE CANNOT BE TRANSFERRED
UNLESS (A) SUBSEQUENTLY REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE
SECURITIES LAWS, OR (B) EXEMPTIONS FROM SUCH REGISTRATIONS ARE AVAILABLE.
&nbsp;THE PAYEE OF THIS PROMISSORY NOTE, BY THE PAYEE&#146;S ACCEPTANCE HEREOF, WILL
BE DEEMED TO HAVE REPRESENTED AND AGREED THAT HE OR SHE IS ACQUIRING THIS
PROMISSORY NOTE FOR HIS OR HER OWN ACCOUNT, AND NOT WITH THE VIEW TOWARD RESALE,
DISTRIBUTION, SUBDIVISION, OR FRACTIONALIZATION THEREOF</U>.</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px" align=justify>$ ___, ___.__
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;June
__, 2011</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px" align=justify>FOR
VALUE RECEIVED, MOUNTAIN TRACE NURSING ADK, LLC, an Ohio limited liability
company (the &#147;Maker&#148;), hereby promises to pay to the order of
_____________________ (the &#147;Payee&#148;) the principal amount of ____________
Thousand Dollars ($___,___.__), together with simple interest thereon at the
rate of Eleven Percent (11.00%) per annum. &nbsp;This Note is one of a series of
promissory notes (collectively, including this Note, the &#147;Notes&#148;), all of which
are of like tenor except as to denomination, are issued on a parity basis, and
do not, in the aggregate, exceed $1,000,000.00 in principal amount. &nbsp;The
principal amount of this Note shall become due and payable on April 1, 2013 (the
&#147;Principal Amount Due Date&#148;). &nbsp;This Note will bear interest at the per
annum rate of eleven percent (11%). &nbsp;Interest on the principal amount of
this Note outstanding from time to time, from the date thereof, to the day on
which all such principal shall be repaid (whether on the Principal Amount Due
Date or otherwise), shall be paid in arrears, quarterly, on the first day of
each January, April, July and October, beginning July 1, 2011, and
contemporaneously with the final payment of the principal amount of this
Note.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px" align=justify>All of
the Notes will be subject to mandatory prepayment in the aggregate principal
amount (for all Notes) of $250,000 on each of October 1, 2011, and April 1 and
October 1, 2012. &nbsp;The Maker may also prepay the Notes in whole or in part,
at any time, upon fifteen (15) days&#146; prior notice, without penalty or premium,
but with accrued interest on the principal amount prepaid, to the date of such
prepayment. &nbsp;Upon any prepayment in part of the Notes, whether optional or
mandatory, the Notes will be prepaid proportionately. &nbsp;Provided, however,
that the portion of any Note to be prepaid will be in the principal amount of
$1,000 or any integral multiple thereof.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 36px"
align=justify>&nbsp;&nbsp;&nbsp;Upon the occurrence of an Event of Default (as
hereinafter defined), the Payee shall be entitled to collect a late charge of
one and one-half percent (1.50%) of such principal and &nbsp;accrued interest
for each month or part thereof that principal or accrued interest remains past
due and unpaid (the &#147;Late Charge&#148;). &nbsp;Provided, however, that no Late Charge
shall accrue from and after an acceleration of the principal amount of this Note
as herein provided.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px" align=justify>The
Maker&#146;s obligations hereunder are guaranteed by AdCare Health Systems, Inc., a
publicly-held Ohio corporation (&#147;AdCare&#148;), the common stock of which is traded
on the New York Stock Exchange and the American Stock Exchange under the symbol
&#147;ADK&#148;, pursuant to a Guaranty Agreement in favor the holders of the Notes (the
&#147;AdCare Guaranty Agreement&#148;).</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>4</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 12pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; TEXT-INDENT: 48px"
align=justify>Each of the following events is hereby defined as, and is declared
to be and to constitute, an &#147;Event of Default&#148;:</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px" align=justify>(a)
&nbsp;&nbsp;Failure of the Maker to make a payment of interest or principal as
required herein for a period of five (5) days after receipt of notice from the
Payee that the same was not paid when due.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px" align=justify>(b)
&nbsp;&nbsp;Any proceeding under the Bankruptcy Code or any law of the United
States or of any state relating to insolvency, receivership, or debt adjustment
being instituted by the Maker or AdCare, or any such proceeding being instituted
against the Maker or AdCare, and being consented to by the Maker or AdCare, as
the case may be, or remaining undismissed for sixty (60) days, or the Maker&#146;s
making, or AdCare&#146;s making, an assignment for the benefit of creditors,
admitting in writing an inability to pay debts generally as they become due, or
becoming insolvent.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px" align=justify>(c)
&nbsp;&nbsp;The occurrence of any event of default which remains uncured after
the expiration of any applicable cure period under any other Note, or any other
instrument creating, evidencing or guarantying any other indebtedness for
borrowed money of the Maker, or AdCare, or any other entity in which AdCare has
an equity interest.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px" align=justify>(d)
&nbsp;&nbsp;The occurrence of any event of default which remains uncured after
the expiration of any applicable cure period under the AdCare Guaranty
Agreement.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px"
align=justify>Whenever any Event of Default shall have happened, any of the
following remedial steps may be taken:</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px" align=justify>(a)
&nbsp;&nbsp;The Payee may declare immediately due and payable all sums which the
Maker is obligated to pay to the Payee pursuant to this Note or otherwise,
together with any interest accrued thereon, late charges, as provided for
herein, and reasonable counsel fees and costs of suit incurred for the
collection of the same.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px" align=justify>(b)
&nbsp;&nbsp;Upon the occurrence of any Event of Default and upon acceleration of
the entire unpaid principal balance of the amount owned by the Maker to the
Payee hereunder, interest shall continue to accrue thereafter, to the extent
legally permissible, at a rate of eighteen percent (18.00%) per annum, until the
principal amount hereof, together with all interest accrued thereon, shall be
paid in full, including the period following entry of any judgment. &nbsp;Both
before and after any Event of Default, interest shall be computed on the basis
of a 360-day year and the actual number of days elapsed.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px" align=justify>(c)
&nbsp;&nbsp;If the Payee shall retain the services of counsel as a result of any
Event of Default under this Note, the Maker shall pay the costs incurred by the
Payee in connection with proceedings to recover any sums due hereunder.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px" align=justify>No
right or remedy herein conferred upon or reserved to the Payee is intended to be
exclusive of any other right or remedy herein or by law provided, but each shall
be cumulative and in addition to every other right or remedy herein given or now
or hereafter existing at law or in equity or by statute, and may be pursued
singly, successively or together at the sole discretion of the Payee and may be
exercised as often as the occasion shall occur.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px" align=justify>The
Maker waives presentment, demand and protest, and consents to any number of
renewals or extensions of the time of payment hereof without notice. &nbsp;The
granting, without notice, of any extension of time for the payment of any sum
due under this Note or for the performance of any covenant, condition or
agreement thereof, or the taking or release of any other security shall in no
way release or discharge the liability of the Maker. &nbsp;No waiver by the
Payee of any breach by the Maker of any of its obligations, agreements or
covenants herein shall be a waiver of any subsequent breach or of any
obligation, agreement or covenant, nor shall any forbearance by the Payee of its
rights or remedies be a waiver with respect to that or any other breach.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center>5</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 12pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; TEXT-INDENT: 48px"
align=justify>Time is of the essence in the Maker&#146;s performance of all of its
obligations under this Note.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px" align=justify>Any
notices or other communication to be given under this Note may be given by
delivering the same in writing as follows:</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 12pt; MARGIN-BOTTOM: -18px; LINE-HEIGHT: 14pt">As
to the Maker:</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 288px">Mountain Trace
Nursing ADK, LLC</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 288px">5057 Troy Road</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 288px">Springfield, Ohio
45502</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 288px">Attn:
&nbsp;Manager</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 12pt; MARGIN-BOTTOM: -18px; LINE-HEIGHT: 14pt">As
to the Payee:</P>
<P
style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 288px">_____________________________</P>
<P
style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 288px">_____________________________</P>
<P
style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 288px">_____________________________</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px"
align=justify>Whenever used in this Note, unless the context clearly indicates a
contrary intent:</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px" align=justify>(a)
&nbsp;&nbsp;The use of the masculine gender shall include the feminine or neuter
genders, and vice versa, as the context may require; and</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px" align=justify>(b)
&nbsp;&nbsp;The singular number shall include the plural and the plural the
singular as the context may require.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px" align=justify>This
Note shall be governed and construed in accordance with the substantive laws of
the State of Georgia.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px" align=justify>&nbsp;</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px" align=justify>IN
WITNESS WHEREOF, the Maker has duly executed this Note on the day and year first
above written.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 12pt; MARGIN-BOTTOM: -18px; LINE-HEIGHT: 14pt"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 288px"
align=justify>MOUNTAIN TRACE NURSING ADK, LLC</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 288px"
align=justify>&nbsp;By: &nbsp;______________________________</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 336px"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Christopher F. Brogdon</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 384px"
align=justify>&nbsp;&nbsp;&nbsp;Manager</P>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 32px" align=justify>&nbsp;</P>
<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: 32px" align=justify><BR><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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_
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:  June 16, 2011
Date of
Earliest Event Reported:  June 10, 2011
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 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On
June 10, 2011, Mountain Trace ADK, LLC, a wholly owned subsidiary of AdCare
Health Systems, Inc. (the "Company") entered Promissory Notes in the aggregate
principal amount of $1,000,000 (the "Notes").  The Notes mature April 1,
2013, and bear interest at the per annum rate equal to 11%  payable
quarterly in arrears the first day of each January, April, July and October
beginning July 1, 2011.  The Notes are subject to mandatory prepayment in
the aggregate principal amount of $250,000 on each of October 1, 2011, April 1,
2012 and October 1, 2012.  The Notes may also be prepaid without penalty by
providing fifteen days prior notice.  The Company received proceeds of
$895,000 net of legal and other financing costs.  The Company plans to use
the proceeds for general corporate purposes.
Item 9.01.  Financial Statements and Exhibits.
(d)
Exhibits
Exhibit Number
Description of Exhibit
10.1
Form of Promissory Note
2
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:  June 16, 2011
ADCARE
HEALTH SYSTEMS, INC.
By:
/s/Martin D. Brew
Name:
Martin D. Brew
Title:
 Chief Financial Officer
3
Exhibit 10.1
PROMISSORY NOTE
THIS PROMISSORY NOTE HAS NOT BEEN, AND WILL NOT
BE, REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR THE
SECURITIES LAWS OF ANY STATE.  THIS PROMISSORY NOTE CANNOT BE TRANSFERRED
UNLESS (A) SUBSEQUENTLY REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE
SECURITIES LAWS, OR (B) EXEMPTIONS FROM SUCH REGISTRATIONS ARE AVAILABLE.
 THE PAYEE OF THIS PROMISSORY NOTE, BY THE PAYEE'S ACCEPTANCE HEREOF, WILL
BE DEEMED TO HAVE REPRESENTED AND AGREED THAT HE OR SHE IS ACQUIRING THIS
PROMISSORY NOTE FOR HIS OR HER OWN ACCOUNT, AND NOT WITH THE VIEW TOWARD RESALE,
DISTRIBUTION, SUBDIVISION, OR FRACTIONALIZATION THEREOF
.
$ ___, ___.__
                                                                                               June
__, 2011
FOR
VALUE RECEIVED, MOUNTAIN TRACE NURSING ADK, LLC, an Ohio limited liability
company (the "Maker"), hereby promises to pay to the order of
_____________________ (the "Payee") the principal amount of ____________
Thousand Dollars ($___,___.__), together with simple interest thereon at the
rate of Eleven Percent (11.00%) per annum.  This Note is one of a series of
promissory notes (collectively, including this Note, the "Notes"), all of which
are of like tenor except as to denomination, are issued on a parity basis, and
do not, in the aggregate, exceed $1,000,000.00 in principal amount.  The
principal amount of this Note shall become due and payable on April 1, 2013 (the
"Principal Amount Due Date").  This Note will bear interest at the per
annum rate of eleven percent (11%).  Interest on the principal amount of
this Note outstanding from time to time, from the date thereof, to the day on
which all such principal shall be repaid (whether on the Principal Amount Due
Date or otherwise), shall be paid in arrears, quarterly, on the first day of
each January, April, July and October, beginning July 1, 2011, and
contemporaneously with the final payment of the principal amount of this
Note.
All of
the Notes will be subject to mandatory prepayment in the aggregate principal
amount (for all Notes) of $250,000 on each of October 1, 2011, and April 1 and
October 1, 2012.  The Maker may also prepay the Notes in whole or in part,
at any time, upon fifteen (15) days' prior notice, without penalty or premium,
but with accrued interest on the principal amount prepaid, to the date of such
prepayment.  Upon any prepayment in part of the Notes, whether optional or
mandatory, the Notes will be prepaid proportionately.  Provided, however,
that the portion of any Note to be prepaid will be in the principal amount of
$1,000 or any integral multiple thereof.
Upon the occurrence of an Event of Default (as
hereinafter defined), the Payee shall be entitled to collect a late charge of
one and one-half percent (1.50%) of such principal and  accrued interest
for each month or part thereof that principal or accrued interest remains past
due and unpaid (the "Late Charge").  Provided, however, that no Late Charge
shall accrue from and after an acceleration of the principal amount of this Note
as herein provided.
The
Maker's obligations hereunder are guaranteed by AdCare Health Systems, Inc., a
publicly-held Ohio corporation ("AdCare"), the common stock of which is traded
on the New York Stock Exchange and the American Stock Exchange under the symbol
"ADK", pursuant to a Guaranty Agreement in favor the holders of the Notes (the
"AdCare Guaranty Agreement").
4
Each of the following events is hereby defined as, and is declared
to be and to constitute, an "Event of Default":
(a)
  Failure of the Maker to make a payment of interest or principal as
required herein for a period of five (5) days after receipt of notice from the
Payee that the same was not paid when due.
(b)
  Any proceeding under the Bankruptcy Code or any law of the United
States or of any state relating to insolvency, receivership, or debt adjustment
being instituted by the Maker or AdCare, or any such proceeding being instituted
against the Maker or AdCare, and being consented to by the Maker or AdCare, as
the case may be, or remaining undismissed for sixty (60) days, or the Maker's
making, or AdCare's making, an assignment for the benefit of creditors,
admitting in writing an inability to pay debts generally as they become due, or
becoming insolvent.
(c)
  The occurrence of any event of default which remains uncured after
the expiration of any applicable cure period under any other Note, or any other
instrument creating, evidencing or guarantying any other indebtedness for
borrowed money of the Maker, or AdCare, or any other entity in which AdCare has
an equity interest.
(d)
  The occurrence of any event of default which remains uncured after
the expiration of any applicable cure period under the AdCare Guaranty
Agreement.
Whenever any Event of Default shall have happened, any of the
following remedial steps may be taken:
(a)
  The Payee may declare immediately due and payable all sums which the
Maker is obligated to pay to the Payee pursuant to this Note or otherwise,
together with any interest accrued thereon, late charges, as provided for
herein, and reasonable counsel fees and costs of suit incurred for the
collection of the same.
(b)
  Upon the occurrence of any Event of Default and upon acceleration of
the entire unpaid principal balance of the amount owned by the Maker to the
Payee hereunder, interest shall continue to accrue thereafter, to the extent
legally permissible, at a rate of eighteen percent (18.00%) per annum, until the
principal amount hereof, together with all interest accrued thereon, shall be
paid in full, including the period following entry of any judgment.  Both
before and after any Event of Default, interest shall be computed on the basis
of a 360-day year and the actual number of days elapsed.
(c)
  If the Payee shall retain the services of counsel as a result of any
Event of Default under this Note, the Maker shall pay the costs incurred by the
Payee in connection with proceedings to recover any sums due hereunder.
No
right or remedy herein conferred upon or reserved to the Payee is intended to be
exclusive of any other right or remedy herein or by law provided, but each shall
be cumulative and in addition to every other right or remedy herein given or now
or hereafter existing at law or in equity or by statute, and may be pursued
singly, successively or together at the sole discretion of the Payee and may be
exercised as often as the occasion shall occur.
The
Maker waives presentment, demand and protest, and consents to any number of
renewals or extensions of the time of payment hereof without notice.  The
granting, without notice, of any extension of time for the payment of any sum
due under this Note or for the performance of any covenant, condition or
agreement thereof, or the taking or release of any other security shall in no
way release or discharge the liability of the Maker.  No waiver by the
Payee of any breach by the Maker of any of its obligations, agreements or
covenants herein shall be a waiver of any subsequent breach or of any
obligation, agreement or covenant, nor shall any forbearance by the Payee of its
rights or remedies be a waiver with respect to that or any other breach.
5
Time is of the essence in the Maker's performance of all of its
obligations under this Note.
Any
notices or other communication to be given under this Note may be given by
delivering the same in writing as follows:
As
to the Maker:
Mountain Trace
Nursing ADK, LLC
5057 Troy Road
Springfield, Ohio
45502
Attn:
 Manager
As
to the Payee:
_____________________________
_____________________________
_____________________________
Whenever used in this Note, unless the context clearly indicates a
contrary intent:
(a)
  The use of the masculine gender shall include the feminine or neuter
genders, and vice versa, as the context may require; and
(b)
  The singular number shall include the plural and the plural the
singular as the context may require.
This
Note shall be governed and construed in accordance with the substantive laws of
the State of Georgia.
IN
WITNESS WHEREOF, the Maker has duly executed this Note on the day and year first
above written.
MOUNTAIN TRACE NURSING ADK, LLC
By:  ______________________________
Christopher F. Brogdon
Manager
6