SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”) is hereby entered
into by and between Kelly Gill (“Executive”) and Diversicare Healthcare
Services, Inc. (formerly known as Advocat Inc.), (hereinafter referred to as the
“Company”) (collectively referred to hereinafter as “the Parties”).

WHEREAS, Executive and the Company entered into an Amended and Restated
Employment Agreement effective as of April 1, 2012, as amended by Amendment No.
1 dated March 1, 2013 (“Employment Agreement” attached as Exhibit A);

WHEREAS, Executive and the Company have agreed that Executive shall resign from
Executive’s position as Chief Executive Officer and Director of the Company and
all positions Executive holds as an officer or director of any of the Company’s
subsidiaries, effective July 6, 2018 (the “Resignation Date”); and

WHEREAS, the Company and Executive do not anticipate that there will be any
disputes between them or legal claims arising out of Executive’s resignation
from employment with the Company, but nevertheless, desire to ensure a
completely amicable parting and to settle fully and finally any and all
differences or claims that might arise out of Executive’s employment.

NOW, THEREFORE, it is hereby agreed that:

1.Payment Upon Resignation. On the next regularly scheduled pay day following
the Resignation Date, the Company shall pay to Employee: (i) any earned or
accrued, but unpaid Base Salary and vacation through the Resignation Date; and
(ii) any unreimbursed business expenses accrued through the Resignation Date.
The Company will deduct normal withholdings for federal and state income taxes
and payroll taxes. Employee acknowledges that he is not owed any additional
compensation, benefits, or payment by virtue of his employment, or termination
of employment, except as provided pursuant to any benefit plans in which
Employee has participated.

2.Separation Benefits. In exchange for the general release of claims and other
good and valuable consideration, and only after the expiration of the seven day
revocation period described in Section 13 below, the Company agrees to pay and
provide to Executive the following:

The Company shall pay Executive in a lump sum an amount equivalent to twelve
(12) months of Executive’s Base Salary, and an amount equal to $266,539.55
representing earned but unpaid 2018 incentive compensation, from which all
proper taxes and withholdings will be taken, payable upon execution of this
Agreement and expiration of the seven (7) day Revocation Period described below
(“Salary Benefits”). The Company will also continue to provide group
hospitalization, health, dental care and life insurance benefits that are in
effect as of the Resignation Date as described in the Employment Agreement for a
period of eighteen (18) months following the Resignation Date (collectively
referred to with Salary Benefits as “Benefits”). Executive agrees that the
Benefits are in addition to any compensation Executive has earned from the
Company, and that Executive would not be entitled to the Benefits but for
Executive’s execution of this Agreement.

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In accordance with the 2010 Long-Term Incentive Plan and Section VIII(A) of the
Employment Agreement, all unvested options (“Options”), SARs or restricted stock
or restricted stock units granted to Executive under the Company’s 2005
Long-Term Incentive Plan, 2010 Long-Term Incentive Plan or other stock option
program or plan (the “Plan”) shall be deemed vested, and the Company shall cause
each Option, whether such Option vested prior to the Resignation Date or
pursuant to this Agreement, to remain exercisable until October 6, 2018 and each
SAR, whether such SAR vested prior to the Resignation Date or pursuant to this
Agreement, to remain exercisable until January 15, 2019. Any restricted units
that are held by the Executive on the Resignation Date shall become fully vested
and settled in accordance with their terms. The outstanding Options, SARs,
restricted stock and restricted stock units are detailed on the attached Exhibit
B. As provided in Section VIII(E) of the Employment Agreement, Executive may
require the Company to repurchase his vested Options and/or SARs for an amount
equal to the difference between the fair market value of a share of the
Company’s common stock on the Resignation Date and the per share exercise price
set forth in the Option or SAR times the number of shares granted under the
Option or SAR. The Company and Executive agree that Executive shall have until
October 6, 2018 to give the Company written notice of his intent to exercise
this right.

3.    General Release of Claims. (a) In consideration for the Company’s payment
of the Benefits to the Executive as set forth in this Agreement, and for other
good and valuable consideration, the Executive hereby releases and forever
discharges the Company and each of its predecessors, assigns, former and current
executives, representatives, partners, owners, parent companies, subsidiaries,
affiliates, including any and all persons acting with any of them (collectively
“Releasees”), from any and all causes of action, covenants, contracts, bonuses,
agreements, claims, charges, complaints and demands whatsoever in law or equity,
which the Executive (and the Executive’s heirs, executors, administrators,
successors and/or assigns) may now have or hereafter may have had by reason of
any matter, arising out of the Executive’s employment with the Company and the
termination thereof, up to and including the date of this Agreement, except for
the rights and obligations created by this Agreement.

(b) Without limiting the generality of the foregoing, this Agreement is intended
to and shall release Releasees from any and all claims, whether known or
unknown, which the Executive ever had or may have against any Releasee with
respect to the Executive’s employment, the terms and conditions of that
employment, and/or the termination thereof, including without limitation those
arising under the Civil Rights Act of 1866, 42 U.S.C.A. Section 1981, the Civil
Rights Act of 1964, as amended, 42 U.S.C.A. Section 2000e, et seq., the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C.A. Section 645 et
seq., the National Labor Relations Act, 29 U.S.C.A. Section 151 et seq., the
Fair Labor Standards Act, 29 U.S.C.A. Section 201 et seq., the Labor Management
Reporting and Disclosure Act of 1959, as amended, 29 U.S.C.A. Section 401 et
seq., the Americans with Disabilities Act, 42 U.S.C.A. Section 14501, et. seq.,
and the Genetic Information Nondiscrimination Act (GINA), all claims under the
Family and Medical Leave Act (FMLA), and/or any other federal, state, or local
human rights, civil rights, wage-hour, pension, or labor laws, rules and/or
regulation, public policy, contract or tort law, including any and all claims
for attorneys’ fees, costs, disbursements, or any action similar thereto.

THE EXECUTIVE SPECIFICALLY ACKNOWLEDGES AND AGREES THAT BY EXECUTING THIS
AGREEMENT, HE IS WAIVING ALL RIGHTS OR CLAIMS, IF ANY, THAT HE HAS OR

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MAY HAVE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED, WHICH
PROHIBITS DISCRIMINATION ON THE BASIS OF AGE.

4.    Covenant not to Sue. Executive hereby covenants and agrees not to file,
commence or initiate any suits, grievances, demands or causes of action against
the Releasees based upon or relating to any of the claims released and forever
discharged pursuant to this Agreement. In accordance with 29 C.F.R. §
1625.23(b), this covenant not to sue is not intended to preclude Executive from
bringing a lawsuit to challenge the validity of the release language contained
in this Agreement. If Executive breaches this covenant not to sue, he hereby
agrees to pay all of the reasonable costs and attorneys’ fees actually incurred
by the Releasees in defending against such claims, demands or causes of action,
together with such and further damages as may result, directly or indirectly,
from that breach. Moreover, Executive agrees that he will not persuade or
instruct any person to file a suit, claim or complaint with any state or federal
court or administrative agency against the Releasees. The Parties agree that
this Agreement will not prevent Executive from filing a charge of discrimination
with the Equal Employment Opportunity Commission (“EEOC”) or otherwise
participating in an EEOC investigation, provided that if the EEOC or any third
party obtains an award of damages from the Company on Executive’s behalf,
Executive agrees to turn over any such amounts to the Company.

5.    No Admission of Wrongdoing or Liability. Nothing contained in this
Agreement shall constitute, or be construed as or is intended to be an admission
or an acknowledgment by the Releasees of any wrongdoing or liability, all such
wrongdoing and liability being expressly denied.
 
6.    Confidentiality. Executive agrees to maintain absolute confidentiality and
secrecy concerning the terms of this Agreement and will not reveal, or
disseminate by publication in any manner whatsoever this document or any matters
pertaining to it to any other person, including but not limited to any past or
present executive, officer or director of the Company or any media
representative except as required by legal process. This confidentiality
provision does not apply to communications necessary between immediate family
members or legal and financial planners or tax preparers who are also bound by
this confidentiality provision.

7.     Cooperation. Executive acknowledges and warrants that Executive is not
aware of, or that Executive has fully disclosed to the Company in writing, any
matters for which Executive was responsible or which came to Executive’s
attention as an employee of the Company that might give rise to, evidence or
support any claim of illegal or improper conduct, regulatory violation, unlawful
discrimination, retaliation or other cause of action against Company or any
other Releasee. The Executive shall cooperate with the Company and assist the
Company on litigation matters following the date hereof, at the expense of the
Company.
8.    Non-Disparagement. Executive agrees that he will not make any statements,
publicly or otherwise, orally or in writing, disparaging the character,
reputation or standing of the Company. Executive acknowledges that no provision
of this Agreement is intended to prevent Executive from making a truthful report
in good faith to any governmental agency with oversight authority over the
Company.

9.    Company Property. All records, files, lists, including computer generated
lists, data, drawings, documents, equipment and similar items relating to the
Company’s business that Executive

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generated or received from the Company remains the Company’s sole and exclusive
property. Executive agrees to promptly return to the Company all property of the
Company in his possession. Executive further represents that he has not copied
or caused to be copied, printed out, or caused to be printed out any documents
or other material originating with or belonging to the Company. Executive
additionally represents that he will not retain in his possession any such
documents or other materials.

10.     Restrictive Covenants. Executive acknowledges that he entered into
restrictive covenants with the Company in Section IX of the Employment
Agreement, and that in accordance with the terms of the Employment Agreement, he
is subject to those obligations as they remain in full force and effect
following separation of his employment with the Company according to their
terms.

11.    Breach of Agreement. If either party brings a claim for breach of the
terms of this Agreement, the prevailing party shall be entitled to its
reasonable attorneys’ fees and expenses incurred in the prosecuting or defending
such an action. This Agreement is to be governed by the laws of the State of
Tennessee. The Parties agree that venue and jurisdiction for any legal action
arising out of or in connection with this Agreement shall be exclusively with
courts of the State of Tennessee located in Davidson County, Tennessee or the
United States District Court for the Middle District of Tennessee.

12.    Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Executive and the Company, and their officers, directors, executives,
agents, legal counsel, heirs, successors and assigns.

13.    Warranties/Representations. Executive hereby warrants and represents
that:

A.
He has carefully read and fully understands the comprehensive terms and
conditions of this Agreement and the releases set forth herein;

B.
He is executing this Agreement knowingly and voluntarily, without any duress,
coercion or undue influence by the Company, its representatives, or any other
person;

C.
He has been informed of his right to consult with legal counsel of his own
choice before executing this Agreement;

D.
He has pending no claim, complaint, grievance or any document with any federal
or state agency or any court seeking money damages or relief against the
Company;

E.
The Benefits recited above constitute good and valuable consideration;

F.
He is fully satisfied with the terms and conditions of this Agreement including,
without limitation, the consideration paid to him by the Company;

G.
He is not waiving rights or claims that may arise after the date this Agreement
is executed;

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H.
Except as specifically provided herein, he has been paid all compensation owed
to him by the Company;

I.
He has had the right to consider the terms of this Agreement for a full 21 days
and he hereby waives any and all rights to any further review period; and

J.
He has the right to revoke this Agreement within seven (7) calendar days after
signing it (the “Revocation Period”) by providing during this seven (7) day
period written notice of revocation to Board of Directors, Diversicare
Healthcare Services, Inc., 1621 Galleria Blvd., Brentwood, TN 37027. If he
revokes this Agreement during the seven-day period, the Agreement and all
obligations hereunder become null and void in their entirety.

14.    Entire Agreement; Severability of Terms; Attorneys Fees; Consulting. This
Agreement contains the entire understanding of the Parties as to the subject
matter hereof and supersedes all prior and contemporaneous oral and written
agreements and discussions with respect to the subject matter hereof, with the
exception of the provisions of Section VIII F., IX, and X of the Employment
Agreement, which remain in full-force and effect. In executing this Agreement,
neither party relies on any term, condition, promise, or representation other
than those expressed in this Agreement, including Exhibits A & B to this
Agreement. This Agreement may be amended or modified only by an agreement in
writing, signed by both Parties. If any provision of this Agreement is
determined to be invalid or otherwise unenforceable, then that invalidity or
unenforceability will not affect any other provision of this Agreement, which
will continue and remain in full force and effect. The Company shall reimburse
Executive for his reasonable attorneys’ fees and costs incurred in connection
with this Agreement. The Executive will provide general operational and
relationship consulting services to the Company as an independent contractor for
a period of three (3) months following the date hereof, in exchange for payment
of $10,000.00 per month. The Company may extend the consulting period for up to
three (3) additional months on a month-to-month basis for the same monthly
consideration.

15.    Compliance with the Older Worker Benefit Protection Act. Executive
warrants and represents that he has been given the opportunity to review this
Agreement with legal counsel and that he has had fair and full opportunity to
consider its terms and enters into this Agreement willingly and knowingly and
knows he has the right to review this Agreement for 21 days and to revoke it
within seven (7) days after signing it. Executive has the right to sign this
Agreement sooner than 21 days, and if he chooses to do so, he understands he is
waiving his right to the full 21-day period.

16.    Counterparts; Electronic Signatures.  This Agreement may be executed by
facsimile and/or electronic signature in two or more counterparts, each of which
shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument.  Facsimile and electronic signatures
shall, for all purposes, be treated as originals.

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[Signatures follow on next page.]

Dated: July 10, 2018             _/s/ Kelly Gill_______________________
KELLY GILL

Dated: July 10, 2018
DIVERSICARE HEALTHCARE SERVICES, INC.

By: _/s/ James R. McKnight, Jr._________
JAMES R. MCKNIGHT, JR., CHIEF EXECUTIVE OFFICER                 

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EXHIBIT A
Employment Agreement

See the Company's 2017 Form 10-K exhibit 10.28 for Kelly Gill's employment
agreement and exhibit 10.31 for Mr. Gill's amended employment agreement.

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EXHIBIT B
Outstanding Options, Restricted Stock and Restricted Stock Units

1.
Options/SARs                    Exercise Price

a.
50,000            $5.60

b.
35,000            $6.21

c.
15,000            $5.45

2.
Restricted Stock                                               Unvested, which
will vest upon resignation

a.
25,000 granted 3/11/16                   8,333

b.
25,000 granted 3/13/17                          16,667

c.
25,000 granted 3/13/18                 25,000

3.
Restricted stock Units – Will vest upon resignation

 
a.
10,719     purchased 3/13/17        paid $90,900       or $8.48/share

b.
2,977.46 purchased 3/13/18        paid $20,604       or $6.92/share

4.
Accrued dividends (as of 6/30/18)

a.
386.53 on 2018 restricted stock

b.
623.55 on 2017 restricted stock

c.
521.21 on 2016 restricted stock

d.
401.32 on 2017 RSUs

e.
46.04 on 2018 RSUs

25060768.1