FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated October 28,
2008, is made and entered into on the terms and conditions hereinafter set
forth, by and between NATIONAL HEALTHCARE CORPORATION, a Delaware corporation
(the "Borrower"), and BANK OF AMERICA, N.A., a national banking association
("Lender").

RECITALS:

1.

Pursuant to a Credit Agreement dated as of October 30, 2007, by and between the
Borrower and the Lender (as the same heretofore has been or hereafter may be
further amended, restated, supplemented, extended, renewed, replaced or
otherwise modified from time to time, the "Credit Agreement"), the Lender agreed
to make Loans to the Borrower and to issue Letters of Credit for the account of
the Borrower, all as more specifically described in the Credit Agreement.

2.

The parties hereto desire to amend the Credit Agreement in certain respects as
more particularly hereinafter set forth.

AGREEMENTS:

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of all of which are hereby acknowledged, the parties
hereto agree as follows:

1.

Amendment of Section 1.1.  Section 1.1 of the Credit Agreement is hereby amended
by inserting the following new definitions in the appropriate locations
according to alphabetical order, or by amending and restating existing
definitions to read as indicated, as applicable:

"Applicable Rate" means, (a) in connection with computations of interest for
Loans and Letters of Credit, a rate per annum equal to (i) 0.00% with respect to
Base Rate Loans, (ii) 0.375% with respect to Eurodollar Rate Loans, and
(iii) 0.375% with respect to Letters of Credit, and (b) in connection with
computations of commitment fees, a rate per annum equal to (i) five one
hundredths of one percentage point (0.05%) for each day that Total Outstandings
are less than $37,500,000, and (ii) two one hundredths of one percentage point
(0.02%) for each day that Total Outstandings are equal to or greater than
$37,500,000.

"First Amendment" means the First Amendment to Credit Agreement dated
October 28, 2008, by and between the Borrower and the Lender.

"First Amendment Effective Date" means October 28, 2008.

--------------------------------------------------------------------------------

"Maturity Date" means the later of (a) October 27, 2009 and (b) if maturity is
extended pursuant to Section 2.12, such extended maturity date as determined
pursuant to such Section.

2.

Amendment of Section 2.08.  Section 2.08 of the Credit Agreement is hereby
amended to read as follows:

2.08.  Commitment Fees.  In addition to certain fees described in
subsections (h) and (i) of Section 2.03, the Borrower shall pay to the Lender a
commitment fee equal to the Applicable Rate times the actual daily amount by
which the Commitment exceeds the Total Outstandings.  The commitment fee shall
accrue at all times during the Availability Period, including at any time during
which one or more of the conditions in Article 4 is not met, and shall be due
and payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after the
First Amendment Effective Date, and on the Maturity Date.  The commitment fee
shall be calculated quarterly in arrears, and if there is any change in the
Applicable Rate during any quarter, the actual daily amount shall be computed
and multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect.

3.

Amendment of Section 5.13.  Section 5.13 is hereby amended to read as follows:

5.13

Subsidiaries.  As of the First Amendment Effective Date, the Borrower has no
Subsidiaries other than those specifically disclosed in Part (a) of
Schedule 5.13 and has no equity investments in any other Person other than those
specifically disclosed in Part (b) of Schedule 5.13.  The organizational
structure of the Borrower and its Subsidiaries is in all material respects as
described in Schedule 5.13.

4.

Amendment of Section 6.01.

(a)

Subsection 6.01(a) is hereby amended by inserting the following after the words
"fiscal year of the Borrower" and prior to the comma in the second line:

(or, if earlier, within five (5) days after the filing with the SEC of the
Borrower's Annual Report on Form 10-K for such fiscal year)

(b)

Subsection 6.01(b) is hereby amended by inserting the following after the words
"fiscal year of the Borrower" and prior to the comma in the second line:

(or, if earlier, within five (5) days after the filing with the SEC of the
Borrower's Quarterly Report on Form 10-Q for such period)

5.

Amendment of Section 6.11.  Section 6.11 is hereby amended by inserting
"(including permitted Investments)" immediately after the word "purposes" in the
second line.

-2-

--------------------------------------------------------------------------------

6.

Amendment of Section 7.02.  Subsection 7.02(b) is hereby amended to read as
follows:

(b)

Investments in existence on the First Amendment Effective Date and identified on
Schedule 7.02 to the First Amendment, and any refinancing, refunding, renewal or
extension of any such Investment that does not increase the amount thereof;

7.

Amendment of Section 7.03.  Subsection 7.03(b) is hereby amended to read as
follows:

(b)

Indebtedness outstanding on the First Amendment Effective Date and listed on
Schedule 7.03 to the First Amendment and any refinancings, refundings, renewals
or extensions thereof; provided that (i) the amount of such Indebtedness is not
increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized
thereunder, and (ii) Indebtedness subordinated to the Obligations may be
refinanced only on subordination terms that are at least as favorable to the
Lender as, and no more restrictive on the Borrower than, those for the
subordinated Indebtedness being refinanced, and in an amount not less than the
amount outstanding at the time of refinancing;

8.

Amendment of Section 7.06.  Subsection 7.06(e) is hereby amended by (a) deleting
the figure "60%" in the third line and substituting in lieu thereof the figure
"70%", and (b) deleting the date "December 31, 2006" in the fourth line and
substituting in lieu thereof the date "December 31, 2007".

9.

Amendment of Schedule 5.13.  Schedule 5.13 to the Credit Agreement is hereby
replaced with Schedule 5.13 to this Amendment.

10.

Conditions to Effectiveness.  This Amendment shall be effective only upon the
satisfaction of the following conditions:

(a)

the Borrower and the Lender shall have executed and delivered a counterpart of
this Amendment;

(b)

each of the representations and warranties of the Borrower contained in
Section 11 shall be true and correct in all material respects as of the date as
of which all of the other conditions contained in this Section 10 shall have
been satisfied; and

(c)

the Lender shall have received such documents, instruments, certificates,
opinions and approvals as it reasonably may have requested.

11.

Representations and Warranties of the Borrower.  As an inducement to the Lender
to enter into this Amendment, the Borrower hereby represents and warrants that,
on and as of the date hereof, and taking into account the provisions hereof, the
representations and

-3-

--------------------------------------------------------------------------------

warranties contained in the Credit Agreement and the other Loan Documents are
true and correct in all material respects, except for (a) representations and
warranties that expressly relate to an earlier date, which remain true and
correct as of said earlier date, and (b) representations and warranties that
have become untrue or incorrect solely because of changes permitted by the terms
of the Credit Agreement and the other Loan Documents.

12.

Effect of Amendment; Continuing Effectiveness of Credit Agreement and Loan
Documents.

(a)

Neither this Amendment nor any other indulgences that may have been granted to
the Borrower by the Lender shall constitute a course of dealing or otherwise
obligate the Lender to modify, expand or extend the agreements contained herein,
to agree to any other amendments to the Credit Agreement or to grant any consent
to, waiver of or indulgence with respect to any other noncompliance with any
provision of the Loan Documents.

(b)

Upon and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as modified hereby.  This Amendment shall constitute a Loan
Document for all purposes of the Credit Agreement and the other Loan Documents.

(c)

Any noncompliance by the Borrower with any of the covenants, terms, conditions
or provisions of this Amendment shall constitute an Event of Default.

(d)

Except to the extent amended or modified hereby, the Credit Agreement, the other
Loan Documents and all terms, conditions and provisions thereof shall continue
in full force and effect in all respects and shall be construed in accordance
with the modifications of the Credit Agreement effected hereby.  Without
limiting the generality of the foregoing, the Loan Documents and all of the
Collateral described therein secure and shall continue to secure the payment of
all Obligations, in each case taking into account the modifications of the
Credit Agreement effected hereby.

13.

Further Actions.  Each of the parties to this Amendment agrees that at any time
and from time to time upon written request of any other party, it will execute
and deliver such further documents and do such further acts and things as such
other party reasonably may request in order to effect the intents and purposes
of this Amendment.

14.

Counterparts.  This Amendment may be executed in multiple counterparts or
copies, each of which shall be deemed an original hereof for all purposes.  One
or more counterparts or copies of this Amendment may be executed by one or more
of the parties hereto, and some different counterparts or copies executed by one
or more of the other parties.  Each counterpart or copy hereof executed by any
party hereto shall be binding upon the party executing same even though other
parties may execute one or more different counterparts or

-4-

--------------------------------------------------------------------------------

copies, and all counterparts or copies hereof so executed shall constitute but
one and the same agreement.  Each party hereto, by execution of one or more
counterparts or copies hereof, expressly authorizes and directs any other party
hereto to detach the signature pages and any corresponding acknowledgment,
attestation, witness or similar pages relating thereto from any such counterpart
or copy hereof executed by the authorizing party and affix same to one or more
other identical counterparts or copies hereof so that upon execution of multiple
counterparts or copies hereof by all parties hereto, there shall be one or more
counterparts or copies hereof to which is(are) attached signature pages
containing signatures of all parties hereto and any corresponding
acknowledgment, attestation, witness or similar pages relating thereto.

15.

Miscellaneous.

(a)

This Amendment shall be governed by, construed and enforced in accordance with
the laws of the State of Tennessee, without reference to the conflicts or choice
of law principles thereof.

(b)

The headings in this Amendment and the usage herein of defined terms are for
convenience of reference only, and shall not be construed as amplifying,
limiting or otherwise affecting the substantive provisions hereof.

(c)

All references herein to the preamble, the recitals or sections, paragraphs,
subparagraphs, annexes or exhibits are to the preamble, recitals, sections,
paragraphs, subparagraphs, annexes and exhibits of or to this Amendment unless
otherwise specified.  The words "hereof", "herein" and "hereunder" and words of
similar import, when used in this Amendment, refer to this Amendment as a whole
and not to any particular provision of this Amendment.

(d)

Any reference herein to any instrument, document or agreement, by whatever
terminology used, shall be deemed to include any and all amendments,
modifications, supplements, extensions, renewals, substitutions and/or
replacements thereof as the context may require.

(e)

When used herein, (1) the singular shall include the plural, and vice versa, and
the use of the masculine, feminine or neuter gender shall include all other
genders, as appropriate, (2) "include", "includes" and "including" shall be
deemed to be followed by "without limitation" regardless of whether such words
or words of like import in fact follow same, and (3) unless the context clearly
indicates otherwise, the disjunctive "or" shall include the conjunctive "and".

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

[Remainder of Page Intentionally Left Blank;

Signature Page Follows]

-5-

--------------------------------------------------------------------------------

[Signature Page to First Amendment to Credit Agreement

(National HealthCare Corporation) dated October 28, 2008]

BORROWER:

NATIONAL HEALTHCARE CORPORATION

By:  

/s/Robert G. Adams

     Name:

Robert G. Adams

     Title:

CEO/President

LENDER:

BANK OF AMERICA, N.A.

By:

/s/Suzanne B. Smith

Name:

Suzanne B. Smith

Title:

Senior Vice President

7049644.3

--------------------------------------------------------------------------------

SCHEDULE 5.13

SUBSIDIARIES

AND OTHER EQUITY INVESTMENTS

Part (a).

Subsidiaries.

Subsidiaries of National HealthCare Corporation:

Company Name

State of Organization

City Corporation

TN

FMSC, Inc.

FL

NHC Delaware Investments Inc.

DE

NHC HealthCare/Lake City, Inc.

FL

NHC HealthCare/Pensacola, Inc.

FL

NHC/Delaware, Inc.

DE

National Healthcare Center of Fort Oglethorpe, L.P.

TN

NHC/OP, L.P.

DE

Premier Plus Insurance Company, Ltd.

Cayman Islands

Subsidiary of City Corporation:

Company Name

State of Organization

City Center, L.P.

TN (1% General Partner Interest)

Subsidiaries of NHC/Delaware, Inc.:

Company Name

State of Organization

National Healthcare Center of Fort Oglethorpe, L.P.

TN (1% General Partner Interest)

Nutritional Support Services, L.P.

TN (1% General Partner Interest)

NHC/OP, L.P.

DE (1% General Partner Interest)

Subsidiaries of NHC/OP, L.P.:

Company Name

State of Organization

National Health Realty, LLC

DE  

Medical Personnel Services, LLC

TN

NHC Hospice South Carolina, LLC

SC

Nutritional Support Services, L.P.

TN

Premier Group Insurance Company

TN

NHC HealthCare/Anniston, LLC

AL

NHC Place/Anniston, LLC

AL

NHC HealthCare/Huntsville, LLC

AL

NHC HealthCare/Moulton, LLC

AL

Schedule 5.13, p. 1

--------------------------------------------------------------------------------

NHC HealthCare/Shelby, LLC

AL

NHC HealthCare/Coconut Creek, LLC

FL

NHC HealthCare/Daytona Beach, LLC

FL

NHC HealthCare/Orlando, LLC

FL

NHC Place/Merritt Island, LLC

FL

NHC Place/Stuart, LLC

FL

NHC Place/Vero Beach, LLC

FL

NHC HealthCare/Rossville, LLC

GA

Chanute HealthCare Center, LLC

KS

Council Grove HealthCare Center, LLC

KS

Haysville HealthCare Center, LLC

KS

Larned HealthCare Center, LLC

KS

Sedgwick HealthCare Center, LLC

KS

Emporia Rehabilitation Center, LLC

KS

NHC HealthCare/Glasgow, LLC

KY

NHC HealthCare/Madisonville, LLC

KY

Buckley HealthCare Center, LLC

MA

Holyoke HealthCare Center, LLC

MA

John Adams Continuing Care Center, LLC

MA

Taunton HealthCare Center, LLC

MA

Charlevoix HealthCare Center, LLC

MO

Columbia HealthCare Center, LLC

MO

Joplin HealthCare Center, LLC

MO

NHC HealthCare/Desloge, LLC

MO

NHC HealthCare/Joplin, LLC

MO

NHC HealthCare/Kennett, LLC

MO

NHC Place/Lake St. Charles, LLC

MO

NHC HealthCare/Maryland Heights, LLC

MO

NHC HealthCare/St. Charles, LLC

MO

NHC HealthCare/West Plains, LLC

MO

NHC HealthCare/Town & Country, LLC

MO

Manchester Nursing Center, LLC

NH

Merrimack HealthCare Center, LLC

NH

Suncook Valley Assisted Living Center, LLC

NH

Villa Crest HealthCare Center, LLC

NH

NHC HealthCare/Aiken, LLC

SC

NHC HealthCare/Anderson, LLC

SC

NHC HealthCare/Bluffton, LLC

SC

NHC HealthCare-Charleston, LLC

SC

NHC HealthCare/Clinton, LLC

SC

NHC HealthCare/Garden City, LLC

SC

NHC HealthCare/Greenville, LLC

SC

NHC HealthCare/Greenwood, LLC

SC

NHC HealthCare/Laurens, LLC

SC

NHC HealthCare/Lexington, LLC

SC

Schedule 5.13, p. 2

--------------------------------------------------------------------------------

NHC HealthCare/Mauldin, LLC

SC

NHC HealthCare/North Augusta, LLC

SC

NHC HealthCare/Parklane, LLC

SC

NHC Place-Charleston, LLC

SC

AdamsPlace, LLC

TN

NHC HealthCare/Athens, LLC

TN

NHC HealthCare/Chattanooga, LLC

TN

NHC HealthCare/Columbia, LLC

TN

NHC HealthCare/Cool Springs, LLC

TN

NHC HealthCare/Dickson, LLC

TN

NHC HealthCare/Farragut, LLC

TN

NHC HealthCare/Franklin, LLC

TN

NHC HealthCare/Hendersonville, LLC

TN

NHC HealthCare/Hillview, LLC

TN

NHC HealthCare/Holston Hills, LLC

TN

NHC HealthCare/Johnson City, LLC

TN

NHC HealthCare/Knoxville, LLC

TN

NHC HealthCare/Lewisburg, LLC

TN

NHC HealthCare/McMinnville, LLC

TN

NHC HealthCare/Milan, LLC

TN

NHC HealthCare/Nashville, LLC

TN

NHC HealthCare/Oakwood, LLC

TN

NHC HealthCare/Pulaski, LLC

TN

NHC HealthCare/Scott, LLC

TN

NHC HealthCare/Sequatchie, LLC

TN

NHC HealthCare/Smithville, LLC

TN

NHC HealthCare/Somerville, LLC

TN

NHC HealthCare/Sparta, LLC

TN

NHC HealthCare/Springfield, LLC

TN

NHC HealthCare/Tullahoma, LLC

TN

NHC Place/Hendersonville, LLC

TN

NHC Private Nursing-Athens, LLC

TN

NHC Private Nursing-Chattanooga, LLC

TN

NHC Private Nursing-Columbia, LLC

TN

NHC Private Nursing-Johnson City, LLC

TN

NHC Private Nursing-Knoxville, LLC

TN

NHC Private Nursing-Milan, LLC

TN

NHC Private Nursing-Murfreesboro, LLC

TN

NHC Private Nursing-Somerville, LLC

TN

NHC Private Nursing-Springfield, LLC

TN

Standifer Place Properties, LLC

TN

NHC HealthCare/Bristol, LLC

VA

Arizona HealthCare Advisors, LLC

AZ

Hudson HealthCare Advisors, LLC

FL

Kansas HealthCare Advisors, LLC

KS

Schedule 5.13, p. 3

--------------------------------------------------------------------------------

Kentucky HealthCare Advisors, LLC

KY

Massachusetts HealthCare Advisors, LLC

MA

Missouri HealthCare Advisors, LLC

MO

New Hampshire HealthCare Facilities Advisors, LLC

NH

NHC Private Nursing Advisors, LLC

TN

South Carolina HealthCare Advisors, LLC

SC

Tennessee HealthCare Advisors, LLC

TN

Texas HealthCare Advisors, LLC

TX

Part (b).

Other Equity Investments.

Knoxville Health Care Center, LP

25% general partner (Borrower)

Caris HealthCare, LP

50% limited partner (NHC/OP)

National Hospice, Inc.

50% owned by NHC/OP

Schedule 5.13, p. 4

--------------------------------------------------------------------------------

[ex101boa1stamend002.gif] [ex101boa1stamend002.gif]

Schedule 5.13, p. 5

--------------------------------------------------------------------------------

SCHEDULE 7.02

EXISTING INVESTMENTS

Premier Plus Insurance Company

   Not a guarantor

   Consolidates with NHC

Wholly owned subsidiary (Borrower)

$ 11,630,211.00

Investments eliminated in consolidation

Premier Group Insurance Company

   Not a guarantor

   Consolidates with NHC

Wholly owned subsidiary (NHC/OP)

2,700,000.00

Investments eliminated in consolidation

City Center, LP

   Not a guarantor

   Consolidates with NHC

1% general (City Corporation) and 94.626% limited (NHC/OP) partner

5,660,326.00

Investment eliminated in consolidation

NHC of Fort Oglethorpe, LP

   Not a guarantor

   Consolidates with NHC

1% general (NHC, Inc.) and 79% limited (Borrower) partner

(2,543,886.00)

Investment eliminated in consolidation

Nutritional Support Services, LP

   Not a guarantor

   Consolidates with NHC

1% general (NHC/Delaware, Inc.) and 99% limited (NHC/OP) partner

10,344,829.00

Investment eliminated in consolidation

Knoxville Health Care Center, LP

   Not a guarantor

   Recorded on equity method

   Does not consolidate with NHC

25% general partner (Borrower)

1,306,037.00

Caris HealthCare, LP

   Not a guarantor

   Recorded on equity method

   Does not consolidate with NHC

50% limited partner (NHC/OP)

7,779,656.00

National Hospice, Inc.

General partner for Caris HealthCare, LP

   Not a guarantor

   Recorded on equity method

   Does not consolidate with NHC

50% owned by NHC/OP

97,527.00

Schedule 7.02, p. 1

--------------------------------------------------------------------------------

Notes Receivable

 

September 30, 2008

Osage Beach Health Care Center

Working capital loan (currently held by NHC/OP)

$ 188,973.32

Osage Beach Health Care Center

Industrial Development Authority of the City of Osage Beach, MO (currently held
by NHC/OP)

2,645,000.00

Standifer Place, LLC

Chattanooga Health and Edu. Bonds (currently held by NHC/OP)

50,000.00

Caris HealthCare, LP

Working capital loan (currently held by NHC/OP)

-0-

National Health Corporation

Term note (currently held by NHC/OP)

-0-

NHC HealthCare/Pensacola, Inc.

Escambia County Health Fac. 1987 A (currently held by NHC/OP)

950,000.00

NHC HealthCare/Pensacola, Inc.

Escambia County Health Fac. 1987 B (currently held by NHC/OP)

50,000.00

Ocoee Health Care Center

First mortgage (currently held by National Health Realty, Inc.)

3,759,397.00

Sarasota Health Care

First mortgage (currently held by National Health Realty, Inc.)

4,681,072.00

Castleton Health Care Center

Working capital loan (currently held by National Health Realty, Inc.)

125,239.00

Brownsburg Health Care Center

First mortgage (currently held by National Health Realty, Inc.)

5,610,798.00

Castleton Health Care Center

First mortgage (currently held by National Health Realty, Inc.)

1,625,922.00

Plainfield Health Care Center

First mortgage (currently held by National Health Realty, Inc.)

3,770,391.00

NHC HealthCare/West Plains

West Plains Bonds (currently held by National Health Realty, Inc.)

3,200,000.00

Castleton Health Care Center

Working capital loan (currently held by NHC/OP)

1,352,222.00

Schedule 7.02, p. 2

--------------------------------------------------------------------------------

Plainfield Health Care Center

Working capital loan (currently held by NHC/OP)

1,479,109.00

Brownsburg Health Care Center

Working capital loan (currently held by NHC/OP)

1,106,820.00

Macon Health Care Center

Working capital loan (currently held by NHC/OP)

3,029,089.00

Macon Health Care Center

Working capital loan (currently held by NHC/OP)

201,154.00

Standifer Place, LLC

Working capital loan (currently held by NHC/OP)

2,485,940.00

NHC of Fort Oglethorpe, L.P.

Construction Note (intercompany-eliminated in consolidation) (currently held by
NHC/OP)

2,458,737.00

Osceola Health Care Center

Working capital loan (currently held by NHC/OP)

633,834.00

Premier Plus

Loan to Borrower described in Section 7.03(f)

30,000,000.00

Coconut Creek

Revolving loan (currently held by NHR, LLC)

274,091.00

Schedule 7.02, p. 3

--------------------------------------------------------------------------------

SCHEDULE 7.03

EXISTING INDEBTEDNESS

Notes Payable by Obligor

 

 

National Health Corporation

Term note

10,000,000.00

NHC HealthCare West Plains

West Plains Bonds (currently held by National Health Realty, Inc.)

3,200,000.00

NHC HealthCare Pensacola, Inc.

Escambia County Health Fac. 1987 A

950,000.00

NHC HealthCare Pensacola, Inc.

Escambia County Health Fac. 1987 B

50,000.00

 

Guarantees:

 

 

National Health Corporation

1988 ESOT Debt (National Health Investors, Inc.'s portion)

1,029,649.00

NHC HealthCare/McMinnville, LLC, National HealthCare Corporation and National
Health Corporation

Appeal Bond payable to the 31st Judicial Circuit Court of the State of
Tennessee, issued by Liberty Mutual

5,332,226.08

Schedule 7.03, p. 1