FIRST AMENDMENT AND CONSENT TO
AMENDED AND RESTATED REVOLVING LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT AND CONSENT TO AMENDED AND RESTATED REVOLVING LOAN AND
SECURITY AGREEMENT (this “Amendment”) dated as of November 1, 2013 is by and
among THE PRIVATEBANK AND TRUST COMPANY, an Illinois banking corporation
(together with its successors and assigns, “Administrative Agent”) in its
capacity as administrative agent for the Lenders (as defined below), the
Lenders, DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee corporation, and
certain of its affiliates parties hereto identified on the signature pages as
“Original Borrower” (individually and collectively, “Original Borrower”), and
DIVERSICARE LEASING COMPANY II, LLC, a Delaware limited liability company (“DLC
II”), DIVERSICARE OF SENECA PLACE, LLC, a Delaware limited liability company
(“Seneca”), DIVERSICARE OF BRADFORD PLACE, LLC, DIVERSICARE OF PROVIDENCE, LLC,
DIVERSICARE OF SIENA WOODS, LLC and DIVERSICARE OF ST. THERESA, LLC, each a
Delaware limited liability company (individually and collectively, “CHP
Entities”), and together with DLC II and Seneca, individually and collectively,
“New Borrower”). New Borrower and Original Borrower are hereinafter referred to
individually and collectively as, “Borrower”.
RECITALS:
WHEREAS, Original Borrower, Administrative Agent, and the financial institutions
signatories thereto (the “Lenders”) are parties to that certain Amended and
Restated Revolving Loan and Security Agreement dated as of April 30, 2013 (as
amended or modified from time to time, the “Loan Agreement”); all capitalized
terms used but not defined herein shall have the meanings ascribed thereto in
the Loan Agreement; and
WHEREAS, Borrower, Administrative Agent and Lenders desire to amend the Loan
Agreement as provided in and subject to the terms and conditions of this
Amendment.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto (intending to
be legally bound) hereby agree as follows:
1.Consent. Subject to the satisfaction of the conditions set forth in Section 6
below and in reliance upon the representations and warranties set forth in
Section 5 below, Administrative Agent and the Lenders (as the Required Lenders
pursuant to the Loan Agreement) hereby consent to the formation by DLC II of
Seneca and the CHP Entities, each a wholly-owned subsidiary of DLC II, for the
purpose of entering into the Aviv Twinbrook Lease Documents to lease and operate
the

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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Twinbrook Facility and the CHP Lease Documents to lease and operate the CHP
Facilities, respectively (each as hereinafter defined).
2.Joinder and Assumption. From and after the date hereof, New Borrower hereby
absolutely and unconditionally (i) joins as and becomes a party to the Loan
Agreement as a Borrower thereunder and to each Financing Agreement to which
Original Borrower is a party, (ii) assumes, as a joint and several obligor
thereunder, all of the obligations, liabilities and indemnities of a Borrower
under the Loan Agreement and all other Financing Agreements, (iii) covenants and
agrees to be bound by and adhere to all of the terms, covenants, waivers,
releases, agreements and conditions of or respecting a Borrower with respect to
the Loan Agreement and the other Financing Agreements and all of the
representations and warranties contained in the Loan Agreement and the other
Financing Agreements with respect to New Borrower, and (iv) collaterally assigns
and transfers to Administrative Agent (for the benefit of Lenders and itself)
and hereby grants to Administrative Agent (for the benefit of Lenders and
itself) a continuing first-priority security interest in all of New Borrower’s
now owned and existing and hereafter acquired and arising Collateral, as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of all of the
Liabilities, subject to the Aviv Twinbrook Intercreditor Agreement and the Aviv
CHP Intercreditor Agreement. New Borrower hereby authorizes Administrative Agent
to file at any time uniform commercial code financing statements in such
jurisdictions and offices as Administrative Agent deems necessary in connection
with the perfection of a security interest in all of New Borrower’s now owned or
hereafter arising or acquired Collateral, including, without limitation,
Accounts and Deposit Accounts of New Borrower, and all proceeds and products
thereof. From and after the date hereof, any reference to the term “Borrower” in
the Loan Agreement and the Financing Agreements shall also include New Borrower.
3.Supplementation of Certain Disclosure Schedules. In connection with the
joinder of New Borrower to the Loan Agreement, Schedule 1 (Borrowers), Schedule
1.1(a) (Facilities), Schedule 7.8 (Names), Schedule 7.12 (Organizational Chart),
Schedule 7.33 (Capitalization) and Schedule 7.36 (Commercial Leases) of the Loan
Agreement shall be supplemented from and after the date of this Amendment as set
forth on the applicable and respective schedules attached hereto and made a part
hereof so that such schedules shall reflect the matters intended to be shown
thereon as of the date of this Amendment.
4.Amendments to Loan Agreement. Subject to the terms and conditions contained
herein, Borrower, Administrative Agent and Lenders hereby amend the Loan
Agreement as follows:
(a)The following definitions shall be inserted in correct alphabetical order
into Section 1.1 of the Loan Agreement:
(i)“Aviv CHP” means Ohio Indiana Property, L.L.C., a Delaware limited liability
company.
(ii)“Aviv CHP Intercreditor Agreement” means the Subordination and Intercreditor
Agreement dated as of November 1, 2013 by Aviv CHP, the Lessors and owners of
the real estate on which the CHP Facilities operate, in favor of Administrative
Agent, as amended or modified from time to time.
(iii)“Aviv CHP Lease Documents” means, collectively, the Lease dated as of
September 27, 2013 between Aviv CHP and the CHP Entities, and the security
agreements, documents, instruments and agreements executed in connection
therewith, in each case as the same may be amended or modified in conformity
with Section 9.16 of the Loan Agreement.
(iv)“Aviv Twinbrook” means Louisville Dutchmans Property, L.L.C., a Delaware
limited liability company.
(v)“Aviv Twinbrook Intercreditor Agreement” means the Subordination and
Intercreditor Agreement dated as of November 1, 2013 by Aviv Twinbrook, the
Lessor and owner of the real estate on which the Twinbrook Facility operates, in
favor of Administrative Agent, as amended or modified from time to time.

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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(vi)“Aviv Twinbrook Lease Documents” means, collectively, the Lease dated as of
July 31, 2013 between Aviv Twinbrook and Seneca, and the security agreements,
documents, instruments and agreements executed in connection therewith, in each
case as the same may be amended or modified in conformity with Section 9.16 of
the Loan Agreement.
(vii)“CHP Facilities” means, collectively, the nursing home and assisted living
facilities located in Ohio and Indiana listed on Exhibit A attached hereto.
(viii)“Twinbrook Facility” means Diversicare of Seneca Place, a nursing home
facility located at 3526 Dutchman’s Lane, Louisville, Kentucky.
(b)The definition of “Financing Agreements” in Section 1.1 of the Loan Agreement
shall hereafter be deemed to also include this Amendment, the Aviv CHP
Intercreditor Agreement, the Aviv Twinbrook Intercreditor Agreement and each of
the documents identified in Sections 7(c), (d), (e), and (n) below;
(c)The definition of “EBITDAR” in Section 1.1 of the Loan Agreement is hereby
amended and restated in its entirety as follows:
“EBITDAR” means with respect to the Borrower, for any period of determination,
the sum of the net earnings of the consolidated Borrower before nonrecurring
items (in accordance with GAAP and as reasonably agreed to by the Administrative
Agent), interest, taxes, depreciation, amortization and rent, plus up to an
amount of One Million Six Hundred Thousand Dollars ($1,600,000), as applicable,
in the aggregate, through December 31, 2013, for costs actually incurred in
connection with Borrower terminating its real estate leases with respect to all
of the skilled nursing facilities located in the State of Arkansas formally
operated by certain of the Borrowers, plus up to an amount of ** -REDACTED- in
the aggregate per Fiscal Quarter through June 30, 2014 of professional liability
payments, all as determined in accordance with GAAP, consistently applied.
(d)The definition of “Fixed Charges” in Section 1.1 of the Loan Agreement is
hereby amended and restated in its entirety as follows:
“Fixed Charges” means, for any period of determination, the sum of, without
duplication: (a) regularly scheduled payments of principal with respect to all
Indebtedness for borrowed money; plus (b) cash interest expense of Borrower for
its Indebtedness that has been paid during such period (including, without
limitation, interest attributable to issued and outstanding Letters of Credit);
plus (c) Net Capital Expenditures; plus (d) cash rent expense that has been paid
during such period; plus (e) dividends on stock; plus (f) the Required Dividends
and Redemption Amounts (except for amounts paid to redeem the Series C Preferred
Stock pursuant to the Restructuring Stock Issuance and Subscription Agreement,
which amounts shall be excluded from the calculation of Fixed Charges), plus (g)
cash paid income taxes of Borrower during such period, plus (h) for the period
from July 1, 2013 through and including December 31, 2013 up to an amount of
Eight Hundred Thousand Dollars ($800,000) of Capital Expenditures relating to
the Facilities of New Borrower for upgrades to their electronic medical records
systems, all of the foregoing as determined in accordance with GAAP,
consistently applied.
(e)The definition of “Intercreditor Agreements” in Section 1.1 of the Loan
Agreement is hereby amended and restated in its entirety as follows:
“Intercreditor Agreements” means (i) that certain Subordination and
Intercreditor Agreement dated as of the Original Closing Date, as amended by
that certain First Amendment to Subordination and Intercreditor Agreement dated
as of February 28, 2011, each by and among certain of the Borrowers,
Administrative Agent and Sterling Acquisition, as amended and restated by that
certain Amended and Restated Subordination and Intercreditor Agreement dated as
of even date herewith, by and among the Borrower, Administrative Agent and
Sterling Acquisition (the “Omega Intercreditor Agreement”), (ii) that certain
Subordination and Intercreditor Agreement by and among the Aviv

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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Lessor, Diversicare Highlands, LLC, and Administrative Agent dated as of
September 24, 2012 (the “Aviv Intercreditor Agreement”), (iii) the Aviv CHP
Intercreditor Agreement, and (iv) the Aviv Twinbrook Intercreditor Agreement, as
the same may be modified, supplemented or amended from time to time.
(f)The definition of “Restricted Agreements” in Section 1.1 of the Loan
Agreement shall hereafter be deemed to also include the Aviv CHP Lease Documents
and the Aviv Twinbrook Lease Documents.
(g)Section 9.1 of the Loan Agreement shall be amended by inserting the following
at the end thereof: “ , and (xi) Liens in favor of Aviv CHP in accordance with
the Aviv CHP Lease Documents and Aviv Twinbrook in accordance with the Aviv
Twinbrook Lease Documents, subject in all cases to the provisions of the Aviv
CHP Intercreditor Agreement and the Aviv Twinbrook Intercreditor Agreement,
respectively.
(h)Section 9.10(a) of the Loan Agreement is hereby amended and restated in its
entirety as follows:
“Borrower shall not make any payment, directly or indirectly, to the Aviv
Lessor, Aviv CHP, Aviv Twinbrook, Omega (or any Affiliate or Subsidiary thereof)
in contravention of any of the Intercreditor Agreements.”
5.No Other Amendments. Borrower acknowledges and expressly agrees that this
Amendment is limited to the extent expressly set forth herein and shall not
constitute a modification or amendment of the Loan Agreement or any other
Financing Agreements or a course of dealing at variance with the terms or
conditions of the Loan Agreement or any other Financing Agreements (other than
as expressly set forth in this Amendment, the First Note Modification, the First
Pledge Amendment (each as defined below) and the signed Reaffirmation attached
hereto).
6.Representations and Warranties. Borrower hereby represents and warrants to and
in favor of Administrative Agent and Lenders, which representations and
warranties shall survive the execution and delivery hereof, as follows:
(a)Each of the representations and warranties of each Borrower (including
Original Borrower and New Borrower) contained in the Loan Agreement and the
other Financing Agreements to which Borrower is a party are true and correct in
all material respects (without duplication of any materiality carve out already
provided therein) on and as of the date hereof, in each case as if made on and
as of such date, other than representations and warranties that expressly relate
solely to an earlier date (in which case such representations and warranties
were true and correct on and as of such earlier date); the principal place of
business and chief executive office for New Borrower is as set forth on Schedule
1 (as revised pursuant to Section 3 hereof);
(b)New Borrower has the limited liability company power and authority (i) to
enter into the Loan Agreement as amended by this Amendment and (ii) to do all
acts and things as are required or contemplated hereunder to be done, observed
and performed by New Borrower;
(c)This Amendment has been duly authorized, validly executed and delivered by
one or more Duly Authorized Officers of Borrower, and each of this Amendment,
the Loan Agreement as amended hereby, and each of the other Financing Agreements
to which Borrower is a party, constitutes the legal, valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, subject to bankruptcy, insolvency or other similar laws
affecting the enforcement of creditor’s rights and remedies generally;
(d)The execution and delivery of this Amendment and performance by Borrower
under this Amendment, the Loan Agreement and each of the other Financing
Agreements to which Borrower is a party do not and will not require the consent
or approval of any regulatory authority or governmental authority or agency
having jurisdiction over Borrower that has not already been obtained, nor be in
contravention of

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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or in conflict with the organizational documents of Borrower, or any provision
of any statute, judgment, order, indenture, instrument, agreement, or
undertaking, to which Borrower is party or by which Borrower’s respective assets
or properties are bound; and
(e)No Default or Event of Default will result after giving effect to this
Amendment, and no event has occurred that has had or could reasonably be
expected to have a Material Adverse Effect after giving effect to this
Amendment.
7.Conditions Precedent to Effectiveness of this Amendment. The consent set forth
in Section 1 hereof and the amendments contained in Section 4 of this Amendment
shall become effective on the date hereof as long as each of the following
conditions precedent is satisfied as determined by Administrative Agent:
(a)all of the representations and warranties of Borrower under Section 6 hereof,
which are made as of the date hereof, are true and correct;
(b)receipt by Administrative Agent of duly executed signature pages to this
Amendment from Borrower;
(c)receipt by Administrative Agent of duly executed signature pages to
(collectively, the “First Note Modifications”) the First Modifications to
Amended and Restated Revolving Credit Notes dated as of the date hereof from
Borrower (to, respectively, PrivateBank and Bankers Trust Company) and to the
First Modifications to Revolving Credit Notes dated as of the date hereof from
Borrower (to, respectively, Bank of Oklahoma and CIT Finance LLC);
(d)receipt by Administrative Agent of a duly executed signature page to the
Reaffirmation of Amended and Restated Guaranty from Guarantor, as provided in
the attachment hereto (“Guaranty Reaffirmation”);
(e)receipt by Administrative Agent of duly executed signature pages to (i) the
First Amendment to Amended and Restated Pledge Agreement dated as of the date
hereof, among Advocat Finance, Inc., DLC II, Borrower Agent and Administrative
Agent (the “First Pledge Amendment”), and (ii) the Pledge Agreement dated as of
the date hereof, among DLC II, New Borrower, Borrower Agent and Administrative
Agent (the “Pledge Agreement”);
(f)receipt by Administrative Agent of copies of resolutions of the governing
body of New Borrower authorizing the execution, delivery and performance by New
Borrower of the Loan Agreement, as amended by this Amendment, and each of the
other instruments, agreements and documents entered into in connection with this
Amendment to which New Borrower is a party (including with respect to the
security interest and equity pledge provided in favor of Administrative Agent),
certified by a Duly Authorized Officer of New Borrower;
(g)receipt by Administrative Agent of copies of resolutions of the governing
body of Original Borrower authorizing the execution, delivery and performance by
Original Borrower of this Amendment and each of the other instruments,
agreements and documents entered into in connection with this Amendment to which
Original Borrower is a party, certified by a Duly Authorized Officer of Original
Borrower;
(h)receipt by Administrative Agent of UCC tax, lien, pending suit, bankruptcy
and judgment searches against New Borrower (and each of its trade names and
assumed names), as of a recent date, the results of which must be in form and
substance acceptable to Administrative Agent;
(i)receipt by Administrative Agent of good standing certificates for New
Borrower from the Delaware Secretary of State and certificates of authorization
for New Borrower from the Secretary of State of the States of Indiana, Kentucky
and Ohio, respectively (as of a recent date);
(j)receipt by Administrative Agent of an opinion of Harwell Howard Hyne Gabbert
& Manner, the legal counsel to Borrower and Guarantor, in form and substance
reasonably satisfactory to Administrative Agent;
(k)receipt by Administrative Agent of a certified copy of New Borrower’s
certificate of formation, certified by the Delaware Secretary of State (as of a
recent date);

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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(l)receipt by Administrative Agent of a true, correct and complete copy of the
operating agreement of New Borrower, certified by a Duly Authorized Officer of
New Borrower;
(m)UCC Financing Statements, as requested by Administrative Agent, naming New
Borrower as debtor and Administrative Agent as secured party with respect to the
Collateral, together with such UCC termination statements necessary to release
all Liens (other than Permitted Liens) in any of the Collateral except
Administrative Agent, and other documents as Administrative Agent deems
necessary or appropriate, shall have been filed in all jurisdictions that
Administrative Agent deems necessary or advisable;
(n)receipt of a First Amendment to the Blocked Account Agreement, in form and
substance reasonably acceptable to Administrative Agent;
(o)receipt of certificates from Borrower’s insurance carriers evidencing
Administrative Agent as additional insured with respect to New Borrower’s
general liability insurance;
(p)receipt by Administrative Agent of a true, correct and complete copy of the
Management Agreements of New Borrower, certified by a Duly Authorized Officer of
New Borrower;
(q)receipt by Administrative Agent of a true, correct and complete copy of the
Aviv CHP Lease Documents and the Aviv Twinbrook Lease Documents, certified by a
Duly Authorized Officer of New Borrower;
(r)receipt by Administrative Agent of the duly executed and delivered Aviv CHP
Intercreditor Agreement and the Aviv Twinbrook Intercreditor Agreement;
(s)receipt by Administrative Agent of duly signed and completed Perfection
Certificates with respect to New Borrower;
(t)UCC Financing Statements, as requested by Administrative Agent, naming DLC II
as debtor and Administrative Agent as secured party with respect to the equity
of New Borrower pledged pursuant to the Pledge Agreement, and a UCC Financing
Statement (or UCC Amendment Statement), as requested by Administrative Agent,
naming Advocat Finance, Inc. as debtor and Administrative Agent as secured party
with respect to the equity of DLC II pledged pursuant to the First Pledge
Amendment, shall have been filed in all jurisdictions that Administrative Agent
deems necessary or advisable;
(u)receipt by Administrative Agent of copies of resolutions of the governing
body of Advocat Finance, Inc. authorizing the execution, delivery and
performance by Advocat Finance, Inc. of the First Pledge Amendment, certified by
a Duly Authorized Officer of Advocat Finance, Inc.;
(v)receipt by Administrative Agent of copies of resolutions of the governing
body of Guarantor authorizing the execution, delivery and performance by
Guarantor of the Guaranty Reaffirmation, certified by a Duly Authorized Officer
of Guarantor;
(w)receipt by Administrative Agent of copies of the supplemented Schedule 1
(Borrowers), Schedule 1.1(a) (Facilities), Schedule 7.8 (Names), Schedule 7.12
(Organizational Chart), Schedule 7.33 (Capitalization) and Schedule 7.36
(Commercial Leases) of the Loan Agreement;
(x)receipt by Administrative Agent of a First Amendment to the Term Loan
Agreement dated of even date herewith by and among the Affiliated Term
Borrowers, the Lenders and the Administrative Agent, and the Reaffirmation and
Consent thereto from Guarantor as provided in the attachment thereto;
(y)receipt of any applicable Letter of Credit Document (including an amendment
to the Master Letter of Credit Agreement or an entirely new Master Letter of
Credit Agreement) as Administrative Agent may require in connection with this
Amendment;
(z)receipt of a fully completed Borrowing Base Certificate, signed on behalf of
Borrower by a Duly Authorized Officer; and
(aa)receipt by Administrative Agent of such other certificates, schedules,
exhibits, documents, opinions, instruments, reaffirmations, amendments or
consents Administrative Agent may reasonably require, if any.
8.Reaffirmation; References to Loan Agreement; Etc.
(a)Borrower acknowledges and agrees that all of Borrower’s obligations and
Liabilities under the Loan Agreement and the other Financing Agreements, as
amended hereby, are and shall be valid

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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and enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. The first priority perfected security interests
and Liens and rights in the Collateral securing payment of the Liabilities are
hereby ratified and confirmed by Borrower in all respects.
(b)Upon the effectiveness of this Amendment, each reference in the Loan
Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like
import shall mean and be a reference to the Loan Agreement, as amended by this
Amendment.
(c)The failure by Administrative Agent, at any time or times hereafter, to
require strict performance by any Borrower of any provision or term of the Loan
Agreement, this Amendment or any of the Financing Agreements shall not waive,
affect or diminish any right of Administrative Agent hereafter to demand strict
compliance and performance herewith or therewith. Any suspension or waiver by
Administrative Agent of a breach of this Amendment or any Event of Default under
or pursuant to the Loan Agreement shall not, except as expressly set forth in a
writing signed by Administrative Agent, suspend, waive or affect any other
breach of this Amendment or any Event of Default under or pursuant to the Loan
Agreement, whether the same is prior or subsequent thereto and whether of the
same or of a different kind or character. None of the undertakings, agreements,
warranties, covenants and representations of any Borrower contained in this
Amendment, shall be deemed to have been suspended or waived by Administrative
Agent unless such suspension or waiver is (i) in writing and signed by
Administrative Agent (and, if applicable, the Required Lenders) and (ii)
delivered to Borrower by Administrative Agent or its counsel.
(d)In no event shall Administrative Agent’s execution and delivery of this
Amendment establish a course of dealing among Administrative Agent, any
Borrower, pledgor or Guarantor or any other obligor, or in any other way
obligate Administrative Agent to hereafter provide any amendments or
modifications or, if at any time applicable, consents or waivers with respect to
the Loan Agreement or any other Financing Agreement. The terms and provisions of
this Amendment shall be limited precisely as written and shall not be deemed (x)
to be a consent to any amendment or modification of any other term or condition
of the Loan Agreement or of any of the Financing Agreements (except as expressly
provided herein or in the other documents entered into in connection herewith,
including the First Note Modifications, the First Pledge Amendment, the Pledge
Agreement and the Guaranty Reaffirmation); or (y) to prejudice any right or
remedy which Administrative Agent may now have under or in connection with the
Loan Agreement or any of the other Financing Agreements. In the event an
ambiguity or question of intent or interpretation arises, this Amendment shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Amendment.
(e)Except as expressly provided herein (or in the other documents entered into
in connection herewith, including the First Note Modifications, the First Pledge
Amendment, the Pledge Agreement and the Guaranty Reaffirmation), the Loan
Agreement and all of the other Financing Agreements shall remain unaltered, and
the Loan Agreement and all of the other Financing Agreements shall remain in
full force and effect and are hereby ratified and confirmed in all respects.
(f)Borrower shall deliver to Administrative Agent when available a true, correct
and complete copy of the applicable nursing home licenses and assisted living
facility licenses, as applicable, for New Borrower.
9.Release.
(a)In consideration of, among other things, the consent and amendments provided
for herein, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Borrower (on behalf of themselves and
their respective subsidiaries, Affiliates, successors and assigns), and, to the
extent permitted by applicable law and the same is claimed by right of, through
or under the above, for their past, present and future employees, directors,
members, managers, partners, agents, representatives, officers, directors, and
equity holders (all collectively, with Borrower, the “Releasing Parties”), do
hereby unconditionally, irrevocably, fully, and forever remise, satisfy, acquit,
release and discharge Administrative Agent, Issuing Lender, and Lenders and each
of Administrative Agent’s, Issuing

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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Lender’s and Lender’s past, present and future officers, directors, agents,
employees, attorneys, parent, shareholders, successors, assigns, subsidiaries
and Affiliates and all other persons and entities to whom Administrative Agent
or Lenders would be liable if such persons or entities were found in any way to
be liable to any of the Releasing Parties (collectively, the “Lender Parties”),
of and from any and all manner of action and actions, cause and causes of
action, claims, cross-claims, charges, demands, counterclaims, suits,
proceedings, disputes, debts, dues, sums of money, accounts, bonds, covenants,
contracts, controversies, damages, judgments, liabilities, damages, costs,
expenses, executions, liens, claims of liens, claims of costs, penalties,
attorneys’ fees, or any other compensation, recovery or relief on account of any
liability, obligation, demand, proceedings or cause of action of whatever
nature, whether in law, equity or otherwise (including, without limitation,
those arising under 11 U.S.C. §§ 541-550 and interest or other carrying costs,
penalties, legal, accounting and other professional fees and expenses, and
incidental, consequential and punitive damages payable to third parties),
whether known or unknown, fixed or contingent, joint and/or several, secured or
unsecured, due or not due, primary or secondary, liquidated or unliquidated,
contractual or tortious, direct, indirect, or derivative, asserted or
unasserted, foreseen or unforeseen, suspected or unsuspected, now existing,
heretofore existing or which may have heretofore accrued against any or all of
Lender Parties, whether held in a personal or representative capacity, that the
Releasing Parties (or any of them) have or may have against the Lender Parties
or any of them (whether directly or indirectly) and which are based on any act,
fact, event, action or omission or any other matter, condition, cause or thing
occurring at or from any time prior to and including the date hereof in any way,
directly or indirectly arising out of, connected with or relating to this
Amendment, the Loan Agreement or any other Financing Agreement and the
transactions contemplated hereby and thereby, the Collateral or the Liabilities,
and all other agreements, certificates, instruments and other documents and
statements (whether written or oral) related to any of the foregoing, other than
any applicable good faith claim as to which a final determination is made in a
judicial proceeding (in which Administrative Agent and any of the Released
Parties have had an opportunity to be heard) which determination includes a
specific finding that Administrative Agent acted in a grossly negligent manner
or with actual willful misconduct or illegal activity. Borrower acknowledges
that Administrative Agent and Lenders are specifically relying upon the
representations, warranties and agreements contained herein and that such
representations, warranties and agreements constitute a material inducement to
Administrative Agent and Lenders in entering into this Amendment.
(b)Borrower understands, acknowledges and agrees that the release set forth
above may be pleaded as a full and complete defense and may be used as a basis
for an injunction against any action, suit or other proceeding which may be
instituted, prosecuted or attempted in breach of the provisions of such release.
(c)To the furthest extent permitted by law, Borrower hereby knowingly,
voluntarily, intentionally and expressly waives and relinquishes any and all
rights and benefits that it respectively may have as against Lender Parties
under any law, rule or regulation of any jurisdiction that would or could have
the effect of limiting the extent to which a general release extends to claims
which a Lender Party or Releasing Party does not know or suspect to exist as of
the date hereof. Borrower hereby acknowledges that the waiver set forth in the
prior sentence was separately bargained for and that such waiver is an essential
term and condition of this Amendment (and without which the consent in Section 1
and the amendments in Section 4 hereof would not have been agreed to by
Administrative Agent and Lenders).
10.Costs and Expenses. Without limiting the obligation of Borrower to reimburse
Administrative Agent for all costs, fees, disbursements and expenses incurred by
Administrative Agent as specified in the Loan Agreement, Borrower agrees to and
shall pay on demand all reasonable costs, fees, disbursements and expenses of
Administrative Agent in connection with the preparation, negotiation, revision,
execution and delivery of this Amendment and the other agreements, amendments,
modifications, reaffirmations, instruments and documents contemplated hereby,
including, without limitation, reasonable attorneys’ fees and out-of-pocket
expenses.
11.Financing Agreement. This Amendment shall constitute a Financing Agreement.

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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

12.Titles. Titles and section headings herein shall be without substantive
meaning and are provided solely for the convenience of the parties.
13.Severability; Etc. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Amendment shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Amendment. The parties hereto have
participated jointly in the negotiation and drafting of this Amendment. In the
event an ambiguity or question of intent or interpretation arises, this
Amendment shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Amendment.
14.Successors and Assigns. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, no Borrower may assign any of its respective rights or
obligations under this Amendment without the prior written consent of
Administrative Agent.
15.Further Assurances. Borrower shall, at its own cost and expense, cause to be
promptly and duly taken, executed, acknowledged and delivered all such further
acts, certificates, instruments, reaffirmations, amendments, documents and
assurances as may from time to time be necessary or as Administrative Agent may
from time to time reasonably request in order to more fully carry out the intent
and purposes of this Amendment and the other documents entered into in
connection herewith, including, without limitation, the First Note
Modifications, the First Pledge Amendment, the Pledge Agreement and the Guaranty
Reaffirmation.
16.Counterparts; Faxes. This Amendment may be executed in multiple counterparts,
each of which shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. A signature hereto sent or
delivered by facsimile or other electronic transmission shall be as legally
binding and enforceable as a signed original for all purposes.
17.Governing Law. This Amendment shall be governed by and construed and enforced
in accordance with the internal laws of the State of Illinois, without regard to
conflict of law principles.
[Signature Page Follows]

First Amendment and Consent to Amended and Restated Revolving Loan and Security
Agreement
First Amendment and Consent to Amended and Restated Revolving Loan and Security
Agreement
IN WITNESS WHEREOF, the parties hereto have duly executed this First Amendment
and Consent to Amended and Restated Revolving Loan and Security Agreement as of
the day and year first above written.
ORIGINAL BORROWER:

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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

BORROWER:
Diversicare Management Services Co.
ADVOCAT ANCILLARY SERVICES, INC.
ADVOCAT FINANCE, INC.
DIVERSICARE MANAGEMENT SERVICES CO.
ADVOCAT DISTRIBUTION SERVICES, INC.
DIVERSICARE ASSISTED LIVING SERVICES, INC.
DIVERSICARE ASSISTED LIVING SERVICES NC, LLC
DIVERSICARE LEASING CORP.
STERLING HEALTH CARE MANAGEMENT, INC.
By:
/s/James R. McKnight, Jr.
Name:
James R. McKnight, Jr.
Its:
Executive Vice President & Chief Financial Officer

SENIOR CARE CEDAR HILLS, LLC
SENIOR CARE GOLFCREST, LLC
SENIOR CARE GOLFVIEW, LLC
SENIOR CARE SOUTHERN PINES, LLC
BY:
SENIOR CARE FLORIDA LEASING, LLC, its sole member
BY:
DIVERSICARE LEASING CORP., its sole member
By:
/s/James R. McKnight, Jr.
 
Name:
James R. McKnight, Jr.
 
Its:
Executive Vice President & Chief Financial Officer

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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

SENIOR CARE FLORIDA LEASING, LLC
DIVERSICARE AFTON OAKS, LLC
DIVERSICARE BRIARCLIFF, LLC
DIVERSICARE CHISOLM, LLC
DIVERSICARE HARTFORD, LLC
DIVERSICARE HILLCREST, LLC
DIVERSICARE LAMPASAS, LLC
DIVERSICARE PINEDALE, LLC
DIVERSICARE WINDSOR HOUSE, LLC
DIVERSICARE YORKTOWN, LLC
DIVERSICARE ROSE TERRACE, LLC
DIVERSICARE THERAPY SERVICES, LLC
DIVERSICARE HIGHLANDS, LLC
BY:
DIVERSICARE LEASING CORP., its sole member
 
By:
/s/James R. McKnight, Jr.
 
Name:
James R. McKnight, Jr.
 
Its:
Executive Vice President & Chief Financial Officer
DIVERSICARE ASSISTED LIVING SERVICES NC I, LLC
DIVERSICARE ASSISTED LIVING SERVICES NC II, LLC
BY:
DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, its sole member
 
By:
/s/James R. McKnight, Jr.
 
Name:
James R. McKnight, Jr.
 
Its:
Executive Vice President & Chief Financial Officer
DIVERSICARE BALLINGER, LLC
DIVERSICARE DOCTORS, LLC
DIVERSICARE ESTATES, LLC
DIVERSICARE HUMBLE, LLC
DIVERSICARE KATY, LLC
DIVERSICARE NORMANDY TERRACE, LLC
DIVERSICARE TREEMONT, LLC
DIVERSICARE PARIS, LLC
BY:
DIVERSICARE TEXAS I, LLC, its sole member
 
By:
/s/James R. McKnight, Jr.
 
Name:
James R. McKnight, Jr.
 
Its:
Executive Vice President & Chief Financial Officer

Diversicare Texas I, LLC
By:
/s/James R. McKnight, Jr.
Name:
James R. McKnight, Jr.
Its:
Executive Vice President & Chief Financial Officer

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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

DIVERSICARE OF CHANUTE, LLC
DIVERSICARE OF COUNCIL GROVE, LLC
DIVERSICARE OF HAYSVILLE, LLC
DIVERSICARE OF SEDGWICK, LLC
DIVERSICARE OF LARNED, LLC
BY:
Diversicare Kansas, LLC
its sole member
 
 
 
By:
/s/James R. McKnight, Jr.
 
Name:
James R. McKnight, Jr.
 
Its:
Executive Vice President & Chief Financial Officer

DIVERSICARE HOLDING COMPANY, LLC

By:/s/James R. McKnight, Jr.            
Name:
James R. McKnight, Jr.
Its:
Executive Vice President & Chief Financial Officer

DIVERSICARE KANSAS, LLC

By:/s/James R. McKnight, Jr.            
Name:
James R. McKnight, Jr.
Its:
Executive Vice President & Chief Financial Officer

NEW BORROWER:

DIVERSICARE LEASING COMPANY II, LLC

By:/s/James R. McKnight, Jr.            
Name:
James R. McKnight, Jr.

Its:
Executive Vice President and

Chief Financial Officer

DIVERSICARE OF SENECA PLACE, LLC
DIVERSICARE OF BRADFORD PLACE, LLC
DIVERSICARE OF PROVIDENCE, LLC
DIVERSICARE OF SIENA WOODS, LLC
DIVERSICARE OF ST. THERESA, LLC

By:
Diversicare Leasing Company II, LLC, its sole member

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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

By:/s/James R. McKnight, Jr.            
Name:
James R. McKnight, Jr.
Its:
Executive Vice President & Chief Financial Officer

Acknowledged and Agreed:
DIVERSICARE HEALTHCARE SERVICES, INC. (f/k/a ADVOCAT INC.)
/s/Kelly J. Gill
 
Name:
Kelly J. Gill
 
Its:
President and Chief Executive Officer
 

ADMINISTRATIVE AGENT:

THE PRIVATEBANK AND TRUST COMPANY, in its capacity as administrative agent

By:/s/Adam D. Panos                
Name: Adam D. Panos
Its: Managing Director

LENDER:

THE PRIVATEBANK AND TRUST COMPANY

By:/s/Adam D. Panos                
Name: Adam D. Panos
Its: Managing Director

LENDER:
BANKERS TRUST COMPANY
By: /s/Jon M. Doll
 
Name:
  Jon M. Doll
 
Its:
  Vice President
 

LENDER:
BOKF, NA D/B/A BANK OF OKLAHOMA
By: /s/Ryan Kirk
 
Name:
  Ryan Kirk
 
Its:
  Vice President
 

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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

LENDER:
CIT FINANCE LLC
By: /s/Barbara Perich
 
Name:
  Barbara Perich
 
Its:
  Director
 

    
REAFFIRMATION OF AMENDED AND RESTATED GUARANTY

The undersigned (“Guarantor”) hereby (i) confirms and agrees with The
PrivateBank and Trust Company, an Illinois banking corporation in its capacity
as administrative agent (together with its successors and assigns,
“Administrative Agent”) that Guarantor’s Amended and Restated Guaranty dated as
of April 30, 2013 made in favor of Administrative Agent (as amended or modified,
“Guaranty”), remains in full force and effect and is hereby ratified and
confirmed in all respects, including with regard to the Amended and Restated
Revolving Loan and Security Agreement dated as of April 30, 2013 as amended by
the foregoing First Amendment and Consent to Amended and Restated Revolving Loan
and Security Agreement (“Amendment”), and each reference to the term “Borrower”
in the Guaranty shall also include New Borrower and each reference to the “Loan
Agreement” shall refer to the Loan Agreement as amended by the Amendment; (ii)
represents and warrants to Administrative Agent, which representations and
warranties shall survive the execution and delivery hereof, that Guarantor’s
representations and warranties contained in the Guaranty are true and correct as
of the date hereof, with the same effect as though made on the date hereof,
except to the extent that such representations expressly related solely to an
earlier date, in which case such representations were true and correct on and as
of such earlier date (and except for the representations in Section 10(b)
thereof which were true and correct on and as of the date when made); (iii)
agrees and acknowledges that such ratification and confirmation is not a
condition to the continued effectiveness of the Amendment or the Guaranty; and
(iv) agrees that neither such ratification and confirmation, nor Administrative
Agent’s solicitation of such ratification and confirmation, constitutes a course
of dealing giving rise to any obligation or condition requiring a similar or any
other ratification or confirmation from the undersigned with respect to
subsequent amendments or modifications, if any, to the Loan Agreement, as
amended by the Amendment or any other Financing Agreement (as defined in the
Loan Agreement, as amended by the Amendment). The execution, delivery and
effectiveness of this instrument shall not operate as a waiver of any right,
power or remedy of Administrative Agent under or pursuant to the Guaranty.
Guarantor acknowledges and agrees that Guarantor has received and reviewed a
fully-executed copy of the Amendment (and any other instrument, document or
agreement executed or delivered in connection therewith) and understands the
contents thereof. A signature hereto sent or delivered by facsimile or other
electronic transmission shall be as legally binding and enforceable as a signed
original for all purposes. This instrument shall be governed by and construed
and enforced in accordance with the internal laws of the State of Illinois,
without regard to conflict of law principles.
Dated as of: November 1, 2013
DIVERSICARE HEALTHCARE SERVICES, INC. (f/k/a ADVOCAT INC.)

By:/s/ Kelly J. Gill            
Name:    Kelly J. Gill
President and Chief Executive Officer

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

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

EXHIBIT A

CHP Facilities

Entity Name
Facility Name
Facility Address
Diversicare of Bradford Place, LLC
Diversicare of Bradford Place
1302 Millville Avenue
Hamilton, OH 45013
(Butler County)
Diversicare of Providence, LLC
Diversicare of Providence
4915 Charlestown Road
New Albany, IN 47150
(Floyd County)
Diversicare of Siena Woods, LLC
Diversicare of Siena Woods
6125 North Main Street
Dayton, OH 45415
(Montgomery County)
Diversicare of St. Theresa, LLC
Diversicare of St. Theresa
7010 Rowan Hill Drive
Cincinnati, OH 45227
(Hamilton County)

**    Redacted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.