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                                                                    EXHIBIT 10.7

                   PAYMENT AND PERFORMANCE GUARANTY AGREEMENT

      THIS PAYMENT AND PERFORMANCE GUARANTY AGREEMENT (this "Guaranty") is made
as of the 28th day of April, 2005, by ADVOCAT INC., a Delaware corporation (the
"Guarantor"), for the benefit of GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation (including its successors, transferees and assigns,
"Lender").

                                    RECITALS:

      A. Diversicare Hartford, LLC, a Delaware limited liability company
("Borrower"), has borrowed the sum of THREE MILLION SEVEN HUNDRED THOUSAND AND
NO/100 DOLLARS ($3,700,000.00) (the "Loan") from Lender, evidenced by Borrower's
Promissory Note of even date herewith (the "Note") and that certain Loan
Agreement by and between Lender and Borrower of even date herewith (the "Loan
Agreement"), and secured by, among other things, a Mortgage and Security
Agreement, of even date herewith (the "Mortgage") granting a first lien on a
nursing home facility known as Hartford Health Care, which is located in the
City of Hartford, County of Geneva, State of Alabama (the "Facility").

      B. The Note, the Loan Agreement, the Mortgage and the other documents,
certificates, instruments and agreements executed by Borrower in connection with
the Loan or to otherwise evidence or secure the Loan, and all renewals,
supplements, or amendments thereto or a part thereof, are collectively referred
to as the "Loan Documents".

      C. As a condition of making the Loan, Guarantor has agreed to guaranty,
absolutely and unconditionally, payment of the Guaranty Obligations (as defined
below), subject to the terms and conditions set forth in this Guaranty.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the above and as an inducement to
Lender to make the Loan evidenced by the Note and the Loan Agreement, and as
security for the payment of the Loan and all interest from time to time accrued
and unpaid thereon, and all expenses, fees, charges and other amounts from time
to time due and owing to Lender under the Note, and the other Loan Documents,
and for the performance of all covenants, agreements and other obligations from
time to time owing to, or for the benefit of, Lender pursuant to the Loan
Documents, including, without limitation, the payment and performance of all of
Borrower's obligations pursuant to Article IV of the Loan Agreement
(collectively referred to herein as the "Guaranty Obligations"), Guarantor,
intending to be legally bound, hereby covenants, agrees, represents and warrants
as follows:

      1. Guaranty. Guarantor hereby absolutely and unconditionally guarantees to
the Lender the full, regular and punctual payment and performance of the
Guaranty Obligations within ten (10) days of the Lender's demand therefor.
Without limiting the generality of the foregoing, "Guaranty Obligations" is used
herein in its most comprehensive sense to include all debts, obligations and
indebtedness described in the Loan Documents, whether now or hereafter

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made, incurred, or created, voluntary or involuntary, due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, and
regardless of whether there is any recourse with respect to any portion of such
Guaranty Obligations as against Borrower or any partner of Borrower. In
addition, Guarantor guarantees the full payment of, and agrees to reimburse
Lender for, all costs of collection incurred by Lender in enforcing the Guaranty
Obligations and pursuing any remedies set forth in the Loan Documents and/or the
Guaranty, including, without limitation, court costs and actual attorneys' fees
(including, but not limited to, fees in any bankruptcy or appellate proceeding).

      2. Payments. All payments to be made by Guarantor to Lender hereunder
shall be made in lawful money of the United States of America, in immediately
available funds, at 200 Witmer Road, Horsham, Pennsylvania 19044, or such other
location designated by Lender in writing, and shall be accompanied by a notice
from Guarantor stating that such payments are made under this Guaranty. All
payments available to Lender for application in payment or reduction of the
Guaranty Obligations may be applied by Lender in such manner and in such amount,
and at such time or times and in such order and priority as Lender may see fit
and to the payment or reduction of such portion of the Guaranty Obligations as
Lender may elect.

      3. Subsequent Acts by Lender. Lender may, in its sole discretion and
without notice to Guarantor, take any action which might otherwise be deemed a
legal or equitable release or discharge of Guarantor's obligations hereunder
without either impairing or affecting the liability of Guarantor for payment of
the Guaranty Obligations (but in no event shall Lender collect more than the
aggregate amount of the Guaranty Obligations), which actions might include, by
way of illustration and not limitation:

            (a) at any time or from time to time, the time for Borrower's
performance of or compliance with any provision of the Loan Documents may be
extended or such performance or compliance may be waived by Lender;

            (b) the acceptance of partial payment of the Guaranty Obligations;

            (c) any of the acts permitted in the Loan Documents may be
performed;

            (d) the Loan Documents may from time to time be amended and/or
renewed by Borrower and Lender for the purpose of adding any provisions thereto
or changing in any manner the rights of Lender or of Borrower thereunder;

            (e) the maturity date of the Note may be changed or renewed in whole
or in part;

            (f) the maturity of the Note may be accelerated in accordance with
the terms of the Loan Documents or any future agreement between Borrower and
Lender or the holder of such Note;

            (g) any collateral security for all or any part of the Guaranty
Obligations may be exchanged, released, compromised, consolidated, surrendered
or otherwise dealt with, and Lender's interest therein may be released and may
or may not be perfected;

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            (h) the settlement, release, compounding, compromise, cancellation,
rearrangement or consolidation of any of the Guaranty Obligations;

            (i) the collection of or other liquidation of any claims Lender may
have in respect to the Guaranty Obligations;

            (j) the granting of indulgences, forbearance, compromises,
extensions or adjustments in respect to any covenant or agreement under the Loan
Documents; and/or

            (k) the release from liability of any Guarantor and/or any
additional parties who may guarantee payment of the Guaranty Obligations or any
portion thereof.

      4. Certain Rights, Subordination, Etc.

            (a) Lender may pursue its rights and remedies under this Guaranty
and shall be entitled to payment hereunder notwithstanding any other guaranty of
all or any part of the Guaranty Obligations, and notwithstanding any action
taken by Lender to enforce any of its rights or remedies under such other
guaranty, or any payment received thereunder (but in no event shall Lender
collect more than the aggregate amount of the Guaranty Obligations).

            (b) Any obligation or debt of Borrower now or hereafter held by
Guarantor is hereby subordinated to the Guaranty Obligations and, except for the
obligations due under the Management Agreement (as defined in the Loan
Agreement), which obligations are governed by the Subordination Agreement (as
defined in the Loan Agreement), Guarantor shall not enforce or collect any such
indebtedness from Borrower. Nevertheless, upon request by Lender, Guarantor
shall collect, enforce and receive such indebtedness of Borrower to Guarantor.
Any sums collected at Lender's request or collected in contravention of the
prohibition set forth herein shall be held by Guarantor as trustee for Lender
and shall be paid over to Lender on account of the Guaranty Obligations;
provided, however, that such payments shall not impair, reduce or affect in any
manner the liability of Guarantor under the other provisions of this Guaranty
(but in no event shall Lender collect more than the aggregate amount of the
Guaranty Obligations).

            (c) Guarantor agrees that if any event of default exists under the
Loan Documents ("Event of Default") and is continuing, (i) such Guarantor shall
not accept payment from any other guarantor of any Guaranty Obligations by way
of contribution or similar rights on account of any payment made hereunder by
Guarantor to Lender, all of which rights are hereby subordinated to Guarantor's
obligations hereunder to Lender, (ii) Guarantor will not take any action to
exercise or enforce any rights to such contribution, and (iii) if Guarantor
should receive payment, satisfaction or security for any indebtedness of
Borrower to Lender, the same shall be delivered to Lender in the form received,
endorsed or signed as may be appropriate for application on account of or as
security for the indebtedness of Borrower to Lender and, until so delivered,
shall be held in trust for Lender as security for the indebtedness of Borrower
to Lender.

            (d) In the event of any default by Borrower with respect to the
Guaranty Obligations, Guarantor agrees to pay or perform on demand the Guaranty
Obligations in the

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time and manner as provided in Paragraph 1 hereof. Lender shall not be under a
duty to protect, secure or insure or be required to liquidate any security or
lien provided by the Mortgage or other such collateral held by Lender prior to
making such demand.

            (e) Notwithstanding any payment or payments made by Guarantor under
this Guaranty, Guarantor expressly, irrevocably and unconditionally waives and
releases any and all "claims" (as that term is defined in the Bankruptcy Reform
Act of 1978, as amended, 11 U.S.C. Sections 101 et seq., and the regulations
adopted and promulgated pursuant thereto (collectively, the "Bankruptcy Code"))
it may now or hereafter have against Borrower, and shall not be entitled to, and
hereby expressly waives, any and all rights of subrogation, reimbursement,
indemnity, exoneration and contribution against Borrower, which Guarantor may
now or hereafter have against Borrower without regard to whether any such right
or claim arises expressly; provided, that such waiver and release shall not be
effective as to any such claim or entitlement or such subrogation and other
rights that accrue after the indefeasible payment, performance or other
satisfaction in full of the Guaranty Obligations.

      5. Representations and Warranties. Each Guarantor represents and warrants
to Lender that:

            (a) Existence, Power and Qualification. Guarantor is a duly
organized and validly existing corporation, has the power to own its properties
and to carry on its business as is now being conducted, and is duly qualified to
do business and is in good standing in every jurisdiction in which the character
of the properties owned by it or in which the transaction of its business makes
its qualification necessary.

            (b) Power and Authority. Guarantor has full power and authority to
incur the Guaranty Obligations provided for herein, all of which have been
authorized by all proper and necessary action.

            (c) Financial Position. The financial statements of the Guarantor
heretofore furnished to Lender are complete and correct and fairly present the
financial position of the Guarantor as of the date thereof. Since the date of
said financial statements there has been no material adverse change in the
financial position or operations, or the business taken as a whole, of Guarantor
from that set forth therein.

            (d) Litigation. Except as shown on Exhibit A attached hereto, there
are no legal or arbitral proceedings or any proceedings by or before any
governmental or regulatory authority or agency now pending against Guarantor, in
which an adverse decision could materially and adversely affect the financial
position of Guarantor.

            (e) No Breach. The execution and delivery of this Guaranty, the
consummation of the transactions herein contemplated and compliance with the
terms and provisions hereof will not (i) conflict with or result in a breach of,
or require any consent (not heretofore obtained at the time this representation
is made) under, any applicable law, administrative proceeding or regulation, or
any order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which Guarantor is a party or by which
Guarantor is

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bound or to which Guarantor is subject, (ii) constitute a default under any such
agreement or instrument or under Guarantor's articles of incorporation,
partnership agreement, operating agreement or any other agreement or instrument
binding upon Guarantor, or (iii) result in the creation or imposition of any
lien upon any of the revenues or assets of Guarantor pursuant to the terms of
any such agreement or instrument.

            (f) Approvals. To the best of Guarantor's knowledge, no
authorizations, approvals, or consents of (other than those heretofore obtained
and in full force and effect), and no filings or registrations with (other than
those heretofore obtained and in full force and effect), any governmental or
regulatory authority or agency are necessary for the execution, delivery or
performance by Guarantor of this Guaranty or for the validity or enforceability
thereof.

            (g) Taxes, etc. Guarantor has filed all United States federal and
state tax returns and all other tax returns that are required to be filed by
Guarantor and has paid all taxes due pursuant to such returns or pursuant to any
assessment received by Guarantor, except such taxes, the payment of which is not
yet due, or which if due, is not yet delinquent or is being contested in good
faith or which has not been finally determined.

            (h) Benefit. The making of the Loan by Lender to Borrower will
directly benefit Guarantor.

      6. Financial Covenants and Other Information. Guarantor shall provide
Lender the following financial statements and information on a continuing basis
during the term of the Loan:

            (a) Within one hundred twenty (120) days after the end of each
fiscal year of Guarantor, audited financial statements of Guarantor prepared by
a nationally recognized accounting firm or independent certified public
accountant acceptable to Lender, which statements shall be prepared in
accordance with GAAP and certified by the chief financial officer of Guarantor
as true and correct in all material respects and shall include a balance sheet
and a statement of income and expenses for the year then ended. In lieu of its
obligations hereunder, Guarantor may submit to lender, upon its filing thereof,
a copy of form 10K as filed with the United States Securities and Exchange
Commission.

            (b) Within forty-five (45) days of the end of each fiscal quarter of
Guarantor, unaudited financial statements of Guarantor, prepared in accordance
with GAAP, which statements shall include a balance sheet and statement of
income and expenses for the quarter then ended, certified by the chief financial
officer of Guarantor as true and correct in all material respects. In lieu of
its obligations hereunder, Guarantor may submit to Lender, upon its filing
thereof, a copy of Form 10Q as filed with the United States Securities and
Exchange Commission.

            (c) As soon as available, but in no event more than thirty (30) days
after the filing deadline, as may be extended from time to time, copies of all
federal, state and local tax returns of Guarantor, together with all supporting
documentation and required schedules.

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            (d) Within forty-five (45) days after the end of each fiscal quarter
of Guarantor, a certificate of the chief financial officer of Guarantor
confirming compliance with the covenants and requirements set forth above.

      The Lender reserves the right to require such other financial information
of Guarantor in such form and at such other times (including monthly or more
frequently, but not more frequently than reasonable) as Lender shall deem
necessary, and Guarantor agrees promptly to provide or to cause to be provided,
such information to Lender. All financial statements must be in form and detail
as Lender may from time to time request.

      7. Guaranty is a Continuing Obligation. The obligations of the Guarantor
under this Guaranty shall be continuing, absolute, irrevocable and unconditional
under all circumstances, and shall remain in full force and effect or be
reinstated, until all of the Guaranty Obligations shall have been paid and
performed in full, irrespective of the bankruptcy, insolvency, merger,
reorganization, termination, discontinuation or dissolution of the Borrower or
any assignment for the benefit of creditors by the Borrower. The Guarantor
acknowledges and agrees that Guarantor's obligations hereunder shall apply to
and continue with respect to any of the obligations of the Borrower under the
Loan Documents which are subsequently recovered from the Lender for the reasons
set forth below. In the event that any payment by or on the behalf of the
Borrower to Lender is held to constitute a preference, fraudulent transfer or
other voidable payment under any bankruptcy, insolvency or similar law, or if
for any other reason the Lender is required to refund such payment or pay the
amount thereof to any other party, including, without limitation, as a result of
the appointment of a receiver, intervenor, or conservator of, or trustee or
similar officer for, the Borrower or of any substantial part of its property or
otherwise, such payment by the Borrower or any other party to the Lender shall
not constitute a release of the Guarantor from any liability hereunder, and this
Guaranty shall continue to be effective or shall be reinstated (notwithstanding
any prior release, surrender or discharge by the Lender of this Guaranty or of
the Guarantor), as the case may be, with respect to, and this Guaranty shall
apply to, any and all amounts so refunded by the Lender or paid by the Lender to
another party (which amounts shall constitute part of the Guaranty Obligations),
and any interest paid by the Lender and any attorneys' fees, costs and expenses
paid or incurred by the Lender in connection with any such event. It is the
intent of the Guarantor and the Lender that the obligations and liabilities of
the Guarantor hereunder are absolute and unconditional under any and all
circumstances and that until the Guaranty Obligations are fully and finally paid
and performed, and not subject to refund or disgorgement, the obligations and
liabilities of the Guarantor hereunder shall not be discharged or released, in
whole or in part, by any act or occurrence that might, but for the provisions of
this Guaranty, be deemed a legal or equitable discharge or release of a
guarantor. The Lender shall be entitled to continue to hold this Guaranty in its
possession for a period of one year from the later of (a) the date the Guaranty
Obligations are paid and performed in full, or (b) if not paid in accordance
with the Guaranty Obligations, the expiration or termination of the Loan, and
for so long thereafter as may be necessary to enforce any obligation of the
Guarantor hereunder and/or to exercise any right or remedy of the Lender
hereunder.

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      8. Intentionally Deleted.

      9. Waiver and Release of Subrogation and Participation. Guarantor shall
have no right of subrogation in or under the Guaranty Obligations, and no rights
of reimbursement, indemnity or contribution from the Borrower or any other
rights by law, equity, statute or contract that would give rise to a
creditor-debtor relationship between Guarantor and the Borrower. Guarantor shall
have no right to participate in any way in any of the collateral which is
conveyed under the Loan Documents as security for the Guaranty Obligations.
Guarantor hereby explicitly waives and releases any of the above-described
rights of subrogation, reimbursement, indemnity, contribution, participation,
and any right to require the marshalling of Borrower's assets under any
circumstances.

      10. Continuing Validity. Guarantor further agrees that the validity of
this Guaranty and the obligations of Guarantor hereunder shall in no way be
terminated, affected or impaired (a) by reason of the assertion by Lender of any
rights or remedies which it may have under or with respect to either the Note,
the Mortgage, or the other Loan Documents, against any person obligated
thereunder or against the owner of the premises covered by the Mortgage, (b) by
reason of any failure to file or record any of such instruments or to take or
perfect any security intended to be provided thereby, (c) by reason of the
commencement of a case under the Bankruptcy Code by or against any person
obligated under the Note, the Mortgage or the other Loan Documents, or the death
of any Guarantor, or (d) by reason of any payment made on the Guaranty
Obligations or any other indebtedness arising under the Note, the Mortgage or
the other Loan Documents, whether made by Borrower or Guarantor or any other
person, which is required to be refunded pursuant to any bankruptcy or
insolvency law; it being understood that no payment so refunded shall be
considered as a payment of any portion of the Guaranty Obligations, nor shall it
have the effect of reducing the liability of Guarantor hereunder. It is further
understood, that if Borrower shall have taken advantage of, or be subject to the
protection of, any provision in the Bankruptcy Code, the effect of which is to
prevent or delay Lender from taking any remedial action against Borrower,
including the exercise of any option Lender has to declare the Guaranty
Obligations due and payable on the happening of any default or event by which
under the terms of the Note, the Mortgage or the other Loan Documents, the
Guaranty Obligations shall become due and payable, Lender may, as against
Guarantor, nevertheless, declare the Guaranty Obligations due and payable and
enforce any or all of its rights and remedies against Guarantor provided for
herein.

      11. Notice. All notices given under this Guaranty shall be in writing and
shall be either hand delivered or mailed, by certified U.S. mail, return receipt
requested, first class postage prepaid, to the other party, at its address set
forth below or at such other address as such party may designate by notice to
the other party:

            (a) If to Guarantor:

                   Advocat, Inc
                   277 Mallory Station Road, Suite 130
                   Franklin, Tennessee 37067
                   Attn: Glynn Riddle

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                   with a copy to:

                   Harwell Howard Hyne Gabbert & Manner, P.C.
                   315 Deaderick Street, Suite 1800
                   Nashville, TN 37238
                   Attention: John N. Popham, IV, Esq.

            (b) If to Lender:

                   GMAC Commercial Mortgage Corporation
                   200 Witmer Road
                   Horsham, Pennsylvania 19044
                   Attention: Servicing Department

                   with a copy to:

                   Bradley Arant Rose & White LLP
                   One Federal Place
                   1819 Fifth Avenue North
                   Birmingham, AL 35203-2119
                   Attention: Shannon L. Barnhill, Esq.

      12. No Waiver by Lender; Remedies. No failure on the part of Lender or the
holder of the Note to exercise, and no delay in exercising, any right hereunder
or thereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right. Guarantor hereby agrees
that all rights and remedies that Lender is afforded by reason of this Guaranty
are separate and cumulative and may be pursued separately, successively, or
concurrently, as Lender deems advisable. In addition, all such rights and
remedies are non-exclusive and shall in no way limit or prejudice Lender's
ability to pursue any other legal or equitable rights or remedies that may be
available. Failure of Lender to insist upon strict performance or observance of
any of the terms, provisions and covenants hereof or to exercise any right
herein contained shall not be construed as a waiver or relinquishment of the
right to demand strict performance at another time. Receipt by Lender of any
payment or performance on the Guaranty Obligations shall not be deemed a waiver
of the breach of any provision hereof or of any of the Loan Documents. Without
limiting the generality of the foregoing, Guarantor agrees that in any action by
Lender by reason of the Guaranty Obligations, Lender, at its election, may
proceed (a) against Guarantor together with Borrower, (b) against Guarantor and
Borrower, individually, or (c) against Guarantor only without having commenced
any action against, or having obtained any judgment against, Borrower.

      13. Certain Waivers by Guarantor. AS A FURTHER INDUCEMENT TO LENDER TO
MAKE THE LOAN AND IN CONSIDERATION THEREOF, GUARANTOR FURTHER COVENANTS AND
AGREES THAT SERVICE OF ANY SUMMONS AND COMPLAINT OR OTHER PROCESS IN ANY SUCH
ACTION OR

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PROCEEDING MAY BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO GUARANTOR AT
GUARANTOR'S ADDRESS HEREINABOVE SET FORTH, GUARANTOR HEREBY WAIVING PERSONAL
SERVICE THEREOF. GUARANTOR HEREBY WAIVES THE PLEADING OF ANY STATUTE OF
LIMITATIONS AS A DEFENSE TO THE OBLIGATIONS HEREUNDER. GUARANTOR HEREBY WAIVES
NOTICE OF THE ACCEPTANCE HEREOF, PRESENTMENT, DEMAND FOR PAYMENT, PROTEST,
NOTICE OF PROTEST, OR ANY AND ALL NOTICE OF NON-PAYMENT, NON-PERFORMANCE OR
NON-OBSERVANCE, OR OTHER PROOF, OR NOTICE OR DEMAND.

      THE GUARANTOR FURTHER WAIVES AND AGREES NOT TO ASSERT: (A) ANY RIGHT TO
REQUIRE LENDER TO PROCEED AGAINST BORROWER OR TO PROCEED AGAINST ANY OTHER
GUARANTOR, OR TO PROCEED AGAINST OR EXHAUST ANY SECURITY FOR THE GUARANTY
OBLIGATIONS, OR TO PURSUE ANY OTHER REMEDY AVAILABLE TO LENDER, OR TO PURSUE ANY
REMEDY IN ANY PARTICULAR ORDER OR MANNER, (B) THE BENEFIT OF ANY STATUTE OF
LIMITATIONS AFFECTING GUARANTOR'S LIABILITY HEREUNDER OR THE ENFORCEMENT HEREOF,
(C) NOTICE OF THE EXISTENCE, CREATION OR INCURRING OF NEW OR ADDITIONAL
INDEBTEDNESS OF BORROWER TO LENDER, (D) THE BENEFITS OF ANY STATUTORY PROVISION
LIMITING THE LIABILITY OF A SURETY, (E) ANY DEFENSE ARISING BY REASON OF ANY
DISABILITY OR OTHER DEFENSE OF BORROWER OR BY REASON OF THE CESSATION FROM ANY
CAUSE WHATSOEVER (OTHER THAN PAYMENT IN FULL) OF THE LIABILITY OF BORROWER FOR
THE GUARANTY OBLIGATIONS, (F) THE BENEFITS OF ANY STATUTORY PROVISION LIMITING
THE RIGHT OF LENDER TO RECOVER A DEFICIENCY JUDGMENT, OR TO OTHERWISE PROCEED
AGAINST ANY PERSON OR ENTITY OBLIGATED FOR PAYMENT OF THE GUARANTY OBLIGATIONS,
AFTER ANY FORECLOSURE OR TRUSTEE'S SALE OF ANY SECURITY FOR THE GUARANTY
OBLIGATIONS, AND (G) ANY OTHER DEFENSE OR CIRCUMSTANCE WHICH MIGHT OTHERWISE
CONSTITUTE A LEGAL OR EQUITABLE DISCHARGE OF GUARANTOR'S LIABILITY HEREUNDER,
ARISING FROM OR OUT OF THE LOAN, THE LOAN DOCUMENTS AND/OR THE FACILITY.

      14. Waiver of Automatic Stay. GUARANTOR HEREBY AGREES THAT, IN
CONSIDERATION OF LENDER'S AGREEMENT TO MAKE THE LOAN AND IN RECOGNITION THAT THE
FOLLOWING COVENANT IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN, IN THE
EVENT THAT GUARANTOR SHALL (A) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT
JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER ANY SECTION OR CHAPTER OF
TITLE 11 OF THE UNITED STATES CODE, AS AMENDED ("BANKRUPTCY CODE"), OR SIMILAR
LAW OR STATUTE, (B) BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER THE
BANKRUPTCY CODE OR SIMILAR LAW OR STATUTE, (C) FILE OR BE THE SUBJECT OF ANY
PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT,
LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER

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ANY PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY,
INSOLVENCY, OR OTHER RELIEF FOR DEBTORS, (D) HAVE SOUGHT OR CONSENTED TO OR
ACQUIESCED IN THE APPOINTMENT OF ANY TRUSTEE, RECEIVER, CONSERVATOR, OR
LIQUIDATOR, OR (E) BE THE SUBJECT OF AN ORDER, JUDGMENT OR DECREE ENTERED BY ANY
COURT OF COMPETENT JURISDICTION APPROVING A PETITION FILED AGAINST GUARANTOR FOR
ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT
OR LAW RELATING TO BANKRUPTCY, INSOLVENCY OR RELIEF FOR DEBTORS, THEN, SUBJECT
TO COURT APPROVAL, LENDER SHALL THEREUPON BE ENTITLED, AND GUARANTOR HEREBY
IRREVOCABLY CONSENTS TO, AND WILL NOT CONTEST, AND AGREES TO STIPULATE TO RELIEF
FROM, ANY AUTOMATIC STAY OR OTHER INJUNCTION IMPOSED BY SECTION 362 OF THE
BANKRUPTCY CODE, OR SIMILAR LAW OR STATUTE (INCLUDING, WITHOUT LIMITATION,
RELIEF FROM ANY EXCLUSIVE PERIOD SET FORTH IN SECTION 1121 OF THE BANKRUPTCY
CODE) OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES
OTHERWISE AVAILABLE TO LENDER AS PROVIDED IN THIS AGREEMENT AND/OR THE LOAN
DOCUMENTS, AND AS OTHERWISE PROVIDED BY LAW, AND GUARANTOR HEREBY IRREVOCABLY
WAIVES GUARANTOR'S RIGHTS TO OBJECT TO SUCH RELIEF.

      15. Guaranty of Payment. This is a guaranty of payment and not of
collection and upon any default of Borrower under the Note, the Mortgage, the
Loan Agreement or the other Loan Documents, Lender may, at its option, proceed
directly and at once, without notice, against Guarantor to collect and recover
the full amount of the liability hereunder or any portion thereof, without
proceeding against Borrower or any other person, or foreclosing upon, selling,
or otherwise disposing of or collecting or applying against any of the Facility
or other collateral for the Loan.

            (a) Joint and Several Liability. The term "Guarantor" as used in
this Guaranty shall refer individually and collectively to all signers of this
Guaranty. Each undertaking herein contained shall be the joint and several
undertaking of each signer hereof if more than one, and it is specifically
agreed that Lender may enforce the provisions hereof with respect to one or more
of such signers without seeking to enforce the same as to all or any such
signers. Guarantor hereby waives any requirement of joinder of all or any other
of the parties hereto in any suit or proceeding to enforce the provisions
hereof.

            (b) Assignment. Lender may assign this Guaranty or any rights or
powers hereunder, in whole or in part, in connection with the sale of the Note
and assignment of the Mortgage. The duties and obligations of Guarantor may not
be delegated or transferred by Guarantor without the prior written consent of
Lender which may be withheld in its absolute discretion. Each reference herein
to Lender shall be deemed to include its successors and assigns, to whose favor
the provisions of this Guaranty shall also inure. Each reference herein to
Guarantor shall be deemed to include the heirs, executors, administrators, legal
representatives, successors and assigns of Guarantor, all of whom shall be bound
by the

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provisions of this Guaranty. If any party hereto shall be a partnership or a
limited liability company, the agreements and obligations on the part of
Guarantor herein contained shall remain in force and application notwithstanding
any changes in the individuals or entities composing the partnership or the
limited liability company, and the term "Guarantor" shall include any altered or
successive partnerships and any altered or successive limited liability
companies but the predecessor partnerships and their partners, and the
predecessor limited liability companies and their members, shall not thereby be
released from any obligations or liability hereunder.

      16. Intentionally Deleted.

      17. Waiver of Trial by Jury; Service of Process. GUARANTOR HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE GUARANTOR AND THE LENDER
MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY PERTAINING TO,
THIS AGREEMENT AND/OR ANY OF THE OTHER LOAN DOCUMENTS. IT IS AGREED AND
UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY MADE BY THE GUARANTOR, AND THE GUARANTOR HEREBY
REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY
INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR
NULLIFY ITS EFFECT. THE GUARANTOR FURTHER REPRESENTS AND WARRANTS THAT GUARANTOR
HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE
REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED BY GUARANTOR OF GUARANTOR'S
OWN FREE WILL, AND THAT GUARANTOR HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL. GUARANTOR HEREBY IRREVOCABLY DESIGNATES NATIONAL REGISTERED
AGENTS, INC., AND HIS/HER SUCCESSORS IN OFFICE, AS THE TRUE AND LAWFUL ATTORNEY
OF GUARANTOR FOR THE PURPOSE OF RECEIVING SERVICE OF ALL LEGAL NOTICES AND
PROCESS ISSUED BY ANY COURT IN THE STATE OF ALABAMA AS WELL AS SERVICE OF ALL
PLEADINGS AND OTHER DOCUMENTS RELATED TO ANY LEGAL PROCEEDING OR ACTION ARISING
OUT OF THE NOTE. GUARANTOR AGREES THAT SERVICE UPON SAID NATIONAL REGISTERED
AGENTS, INC. SHALL BE VALID REGARDLESS OF GUARANTOR'S WHEREABOUTS AT THE TIME OF
SUCH SERVICE AND REGARDLESS OF WHETHER GUARANTOR RECEIVES A COPY OF SUCH
SERVICE, PROVIDED THAT THE LENDER SHALL HAVE MAILED A COPY TO GUARANTOR IN
ACCORDANCE WITH THE NOTICE PROVISIONS HEREIN. GUARANTOR AGREES TO PAY ALL COURT
COSTS AND REASONABLE ATTORNEY'S FEES INCURRED BY LENDER IN CONNECTION WITH
ENFORCING ANY PROVISION OF THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, LENDER
AGREES TO USE REASONABLE EFFORTS TO PROVIDE GUARANTOR WITH NOTICE OF THE FILING
OF ANY LAWSUIT BY LENDER AGAINST GUARANTOR.

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<PAGE>

      18. Power and Authority. Guarantor (and its representative, executing
below, if any) has full power, authority and legal right to execute this
Guaranty and to perform all its obligations under this Guaranty.

      19. Complete Agreement; Modification; Waiver. All understandings,
representations and agreements heretofore had with respect to this Guaranty are
merged into this Guaranty which are incorporated herein which alone fully and
completely expresses the agreement of Guarantor and Lender. In no event shall
any modification or waiver of the provisions of this Guaranty be effective
unless in writing executed by Lender. Any waiver granted by Lender shall be
applicable only in the specific instance for which it is given.

      20. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE FACILITY IS LOCATED AND
APPLICABLE FEDERAL LAW.

      21. Counterparts; Construction. This Guaranty may be executed in any
number of counterparts, all of which when taken together shall constitute one
and the same instrument. Words of any gender used in this Guaranty shall be held
and construed to include the other gender, and words in the singular shall be
held and construed to include the plural, and words in the plural shall be held
and construed to include the singular, unless this Guaranty or the context
otherwise requires.

      22. Review by Guarantor. GUARANTOR HAS RECEIVED COPIES OF, AND HAS HAD THE
OPPORTUNITY TO REVIEW, ALL OF THE LOAN DOCUMENTS REFERRED TO IN THIS GUARANTY.
GUARANTOR HAS DISCUSSED THIS GUARANTY WITH GUARANTOR'S LEGAL COUNSEL, AND
GUARANTOR UNDERSTANDS THE NATURE AND EXTENT AND THE LEGAL AND PRACTICAL
CONSEQUENCES OF GUARANTOR'S LIABILITY UNDER THIS GUARANTY.

      23. No Oral Agreement. To the extent allowed by law, Guarantor agrees to
be bound by the terms of the following notice:

      NOTICE:   THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE A WRITTEN
                AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE
                PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
                CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES.

                THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
                RELATING TO THE LOAN.

                    [SIGNATURES APPEAR ON THE FOLLOWING PAGE]

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<PAGE>

      IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned as of the day and year first written above.

                                    GUARANTOR:

                                    ADVOCAT INC., a Delaware corporation

                                    By: /s/ Glynn Riddle               (SEAL)
                                        ----------------------------------

                                    Name: Glynn Riddle

STATE OF  TENNESSEE  )
                     :
COUNTY    DAVIDSON   )

            I, the undersigned, a notary public in and for said county in said
state, hereby certify that Glynn Riddle , whose name as Chief Financial Officer
of ADVOCAT INC., a Delaware corporation, is signed to the foregoing instrument,
and who is known to me, acknowledged before me on this day that, being informed
of the contents of said instrument, he/she, as such officer and with full
authority, executed the same voluntarily for and as the act of said corporation.

            Given under my hand and official seal this 25th day of April, 2005.

                                           /s/ Andrea Riley
                                           -----------------------------------
                                           Notary Public

[NOTARIAL SEAL]                            My commission expires: May 28, 2006

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