Exhibit 10.3

AMENDED AND RESTATED

RETENTION BONUS AGREEMENT

THIS AMENDED AND RESTATED RETENTION BONUS AGREEMENT (“Agreement”) is made and
entered into as of March 15, 2012, by and between ADVOCAT INC., a Delaware
corporation (hereinafter, the “Company”), and L. GLYNN RIDDLE, JR. (“Riddle”)
and amends and restates the Retention Bonus Agreement between the parties dated
December 20, 2011 (the “Original Agreement”).

WHEREAS, Original Agreement term ends March 31, 2012;

WHEREAS, the Company has requested and Riddle has agreed that Riddle will remain
as Chief Financial Officer past the term of the Original Agreement; and

WHEREAS, the parties have agreed to amend and restate the Original Agreement to
extend the term and to make other changes as set forth herein.

In consideration of the mutual covenants contained in this Agreement, the
parties hereby agree as follows:

1. Retention. The Company hereby retains Riddle in the position of Chief
Financial Officer and Riddle hereby accepts said retention by the Company on the
terms and conditions specified herein.

2. Term. The term of this Agreement shall commence on the date hereof and,
unless earlier terminated in accordance with the provisions set forth herein
below, shall terminate upon the earlier of (i) the date the new Chief Financial
Officer is hired by and begins working for the Company or (ii) December 31, 2012
(the “Retention Period”). Notwithstanding anything to the contrary in this
Section 2, the provisions of Section 9 will survive the expiration or earlier
termination of this Agreement.

3. Duties of Riddle. Riddle shall continue to perform the duties of CFO and
those duties which are assigned to him by the Board of Directors or Chief
Executive Officer of the Company through the Retention Period. Riddle agrees to
devote his full time, attention and skill to his duties hereunder throughout the
Retention Period and to be in a position to sign the certifications required to
be filed with the Company’s SEC filings. In connection herewith, the Company
agrees to ensure that Riddle remains connected and has access to all information
of the Company required to enable Riddle to be in a position to sign such
certifications. The parties acknowledge that Riddle may continue to actively
seek a new job opportunity during the term of this Agreement.

4. Compensation.

(a) As compensation for the duties and services performed by Riddle, the Company
will increase Riddle’s annual base salary as provided in the Employment
Agreement to $300,000, subject to federal and state withholding allowances and
in accordance with the Company’s standard payroll practices. Such base salary
may be further increased from time to time in the ordinary course by the Board
of Directors.

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(b) In addition, the Company acknowledges that Riddle is performing his job for
the benefit of the Company at a time when he has expressed a desire to resign.
Thus, the Company agrees that, in addition to, and without limitation of, any
other compensation contemplated hereby, but only if Riddle continues to be
employed by the Company through March 31, 2012 and has executed and not revoked
within the revocation period a valid release agreement in a form reasonably
acceptable to the Company, upon termination of employment, the Company will pay
Riddle a lump sum payment equal to 3/4ths of his annual base salary upon the
effectiveness of the release. In all events this payment shall be made on or
before March 15, 2013.

5. Options, SARs and Restricted Stock. As a further inducement for Riddle to
remain through the Retention Period, one hundred percent (100%) of all unvested
options, SOSARs, and restricted stock granted to Riddle under the Company’s 1994
Non-Qualified Stock Option Plan, 2005 Long Term Incentive Plan, or 2010 Long
Term Incentive Plan or any other equity plan shall be deemed vested as of
March 31, 2012, provided that Riddle continues to be employed by the Company
through such date. The Company shall cause the options and SOSARs vested
pursuant to this Section 5 to remain exercisable for nine months following the
end of the Retention Period or such shorter period that does not constitute an
extension under Treasury Regulation Section 1.409A-1(b)(5)(v)(C)(1). All
Restricted Stock that vests prior to the end of the Retention Period and those
shares that vest as a result of this Section 5 shall be promptly issued to
Riddle upon vesting.

6. Restricted Stock Units. All of the restricted share units in the account of
Riddle under the 2008 Stock Purchase Plan For Key Personnel (“2008 Stock Plan”),
shall be deemed vested as of March 31, 2012, provided that Riddle continues to
be employed by the Company through such date. The delivery to Riddle by the
Company of unrestricted shares of common stock of the Company equal to the
number of restricted shares units held by Riddle under the 2008 Stock Plan
adjusted for dividends through the actual settlement date, rounded down to the
nearest whole share, shall be made upon the settlement date provided in such
restricted share unit agreement, subject to Section 10(c), below, and the
Company will make a payment to Riddle in amount representing the value of any
remaining fractional restricted share units held by Riddle using the value per
share as determined under Section 2(p) of the 2008 Stock Plan. Any restricted
stock units that are held by Riddle at the time of such termination of
employment shall be settled in accordance with their terms.

7. Benefits. Riddle shall also be entitled to participate in all benefit plans
and programs through the Retention Period that are available to Riddle as of the
date of this Agreement, provided such are continued after the date hereof. If
Riddle elects to continue COBRA benefits at the end of the Retention Period,
each month for the first nine (9) months following the end of the Retention
Period, the Company shall reimburse Riddle for the cost of group health and
dental insurance premiums under COBRA, subject to any required withholding. In
addition, should Riddle elect to continue any disability insurance or life
insurance under the Company’s plans, the Company shall reimburse Riddle f or the
first nine months of such continued coverage, for the cost of such disability
insurance premiums, and life insurance premiums, subject to any required
withholding. Note that the Company will not continue EIRP payments to Riddle
following the end of the Retention Period.

 

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8. Termination.

(a) The Company shall have the right at any time, by written notice to Riddle to
terminate this Agreement for any reason. In the event that the Company shall
terminate Riddle pursuant to this section, Riddle shall be entitled to the
benefits as provided in Sections 4(b), 5, 6, and 7 of this Agreement and the end
of the Retention Period shall be the date of such termination. Notwithstanding
the above, it is the intent of the Company at all times to comply with the
Americans With Disabilities Act, the Family and Medical Leave Act and any other
applicable federal and state employment laws.

(b) Riddle shall have the right at any time, by written notice to the Company to
terminate this Agreement for any reason. In the event that Riddle shall
terminate his employment pursuant to this section, Riddle shall be entitled to
the benefits as provided in Sections 4(b), 5, 6, and 7 of this Agreement and the
end of the Retention Period shall be the date of such termination.

9. Confidential Information. In consideration of the covenants of the Company
contained herein, Riddle agrees that the provisions of Section IX of the
Employment Agreement will remain in full force and effect during and after the
Retention Period and that for purposes of Section IX of the Employment Agreement
Riddle will be deemed to have submitted his voluntary resignation at the end of
the Retention Period. Provided Riddle maintains the confidentiality of Company
information, the Company acknowledges that it will consent to Riddle’s
employment as chief financial officer, or other financial position with a
company operating in the nursing home industry.

10. Section 409A Compliance.

(a) This Agreement and any payments or benefits provided pursuant to the
Employment Agreement shall be interpreted, operated and administered in a manner
intended to avoid the imposition of additional taxes under Section 409A of the
Code. Further, the parties acknowledge and agree that the form and timing of the
payments and benefits to be provided pursuant to this Agreement are intended
comply with Section 409A of the Code or to be exempt from, or to comply with,
one or more exceptions to the requirements of Section 409A of the Code.
Notwithstanding any provision of this Agreement to the contrary, the Company,
its affiliates, subsidiaries, successors, and each of their respective officers,
directors, employees and representatives, neither represent nor warrant the tax
treatment under any federal, state, local, or foreign laws or regulations
thereunder (individually and collectively referred to as the “Tax Laws”) of any
payment or benefits contemplated by this Agreement including, but not limited
to, when and to what extent such payments or benefits may be subject to tax,
penalties and interest under the Tax Laws.

(b) If and to the extent required to comply with Section 409A, no payment or
benefit required to be paid under this Agreement on account of termination of
Riddle’s employment shall be made unless and until Riddle incurs a “separation
from service” within the meaning of Section 409A. For purposes of Section 409A,
(i) Riddle may not, directly or indirectly, designate the calendar year of
payment; and (ii) no acceleration of the time and form of payment of any
nonqualified deferred compensation to Riddle, or any portion thereof, shall be
permitted.

 

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(c) Delayed Payments.

(i) Notwithstanding any other payment schedule provided herein to the contrary,
if, and only if, Riddle is deemed on his termination date to be a “specified
employee” within the meaning of that term under section 409A(a)(2)(B) of the
Code, then the terms of this Subsection shall apply as required by Section 409A.
Any payment that is considered deferred compensation under Section 409A payable
on account of a “separation from service” shall be made on the date that is the
earlier of (y) the expiration of the six (6) month period measured from the date
of such “separation from service” of Riddle or (z) the date of Riddle’s death
(the “Delay Period”) to the extent required under Section 409A. Upon the
expiration of the Delay Period, all payments delayed pursuant to the immediately
preceding sentence (whether they otherwise would have been payable in a single
sum or in installments in the absence of such delay) shall be paid to Riddle in
a lump sum by the Company, and all remaining payments due under this Agreement
shall be paid or provided in accordance with the normal payment dates specified
for them herein.

(ii) To the extent that any benefits to be provided during the Delay Period are
considered deferred compensation under Section 409A provided on account of a
“separation from service,” and such benefits are not otherwise exempt from
Section 409A, Riddle shall pay the cost of such benefits during the Delay
Period, and the Company shall reimburse Riddle, to the extent that such costs
otherwise would have been paid by the Company or to the extent that such
benefits otherwise would have been provided by the Company at no cost to Riddle,
the Company’s share of the cost of such benefits upon expiration of the Delay
Period, and any remaining benefits shall be reimbursed or provided by the
Company in accordance with the procedures specified herein.

(d) Notwithstanding any other provision of the plans or programs constituting
the benefits described herein, (i) the amount of expenses eligible for
reimbursement and the provision of in-kind benefits during any calendar year
shall not affect the amount of expenses eligible for reimbursement or the
provision of in-kind benefits in any other calendar year; (ii) the reimbursement
of an eligible expense shall be made on or before December 31 of the calendar
year following the calendar year in which the expense was incurred; and
(iii) the right to reimbursement or right to in-kind benefit shall not be
subject to liquidation or exchange for another benefit.

(e) Notwithstanding the applicable provisions of this Agreement regarding the
timing of payments, any payment or benefit due hereunder which is contingent
upon receipt of a release will be paid or begin to be paid within sixty
(60) days following Riddle’s termination of employment (subject to
Section 10(c), if applicable). Notwithstanding the foregoing, if such 60-day
period begins in one taxable year of Riddle and ends in the subsequent taxable
year of Riddle, the payments will be paid or begin to be paid in the subsequent
taxable year (subject to Section 10(c), if applicable).

11. Assignments; Successors and Assigns. The rights and obligations of Riddle
hereunder are not assignable or delegable and any prohibited assignment or
delegation will be null and void. The Company may assign and delegate this
Agreement to a successor in interest to the

 

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Company’s business. Any such assignment shall expressly include the obligations
herein and shall not relieve the Company of same. The provisions hereof shall
inure to the benefit of and be binding upon the permitted successors and assigns
of the parties hereto.

12. Governing Law/Arbitration. This Agreement shall be interpreted under,
subject to and governed by the substantive laws of the State of Tennessee
without giving effect to provisions thereof regarding conflict of laws, and all
questions concerning its validity, construction, and administration shall be
determined in accordance thereby.

13. Counterparts. This Agreement may be executed simultaneously in any number of
counterparts, each of which will be deemed an original but all of which will
together constitute one and same instrument.

14. Invalidity. The invalidity or unenforceability of any provision of this
Agreement shall not affect any other provision hereof, and this Agreement shall
be construed in all respects as if such invalid or unenforceable provision was
omitted. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid and enforceable.

15. Exclusiveness. This Agreement and the Employment Agreement constitute the
entire understanding and agreement between the parties with respect to the
retention by the Company of Riddle and supersedes any and all other agreements,
oral or written, between the parties. Except for the provisions of Section IX of
the Employment Agreement, this Agreement supersedes and replaces the Employment
Agreement. Section IX of the Employment Agreement continues in full force and
effect.

16. Modification. This Agreement may not be modified or amended except in
writing signed by the parties. No term or condition of this Agreement will be
deemed to have been waived except in writing by the party charged with waiver. A
waiver shall operate only as to the specific term or condition waived and will
not constitute a waiver for the future or act on anything other than that which
is specifically waived.

17. Notices. All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid by registered mail, return receipt requested,
or when delivered if by hand, overnight delivery service or confirmed facsimile
transmission, to the following:

(a) If to the Company, at 1621 Galleria Boulevard, Brentwood, TN 37027,
Attention: CEO, or at such other address as may have been furnished to Riddle by
the Company in writing; or

(b) If to Riddle, at the address stated below, or such other address as may have
been furnished to the Company by Riddle in writing.

 

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18. Consolidation, Merger or Sale of Assets. Nothing in this Agreement shall
preclude the Company from consolidating or merging in to or with, or
transferring all or substantially all of its assets to, another corporation
which assumes this Agreement and all obligations and undertaking of the Company
hereunder. No such consolidation, merger or transfer shall affect the rights of
Riddle or the obligations of the Company hereunder.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

“COMPANY” ADVOCAT INC. By:  

/s/ Kelly Gill

Title:  

President & CEO

“RIDDLE”

/s/ L. Glynn Riddle, Jr.

L. Glynn Riddle, Jr. Riddle’s Principal Address: 1203 Signature Court Franklin,
Tennessee 37064

 

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