##### 



Exhibit 10.1
 OPERATIONS TRANSFER AGREEMENT
 Agreement Diversicare
Treemont Diversicare Doctors Diversicare Estates Diversicare Katy Diversicare Humble Diversicare Normandy Diversicare Ballinger New Operator New Operators Diversicare Texas Diversicare Parties SMS North Texas SMS Estates SMS Doctors SMS Humble SMS
Katy SMS Treemont SMS Heritage Oaks SMS
Normandy Transferor Transferors SMS Parties
 RECITALS
 Treemont Facility Doctors Facility Estates Facility Katy Facility Humble Facility Normandy Terrace Facility Heritage Oaks Facility Facility Facilities




---



##### 



Employees
 Omega Omega Lease
 Subleases
 Bankruptcy Code Bankruptcy Court
 First Amended Chapter 11 Plan Proposed by the Debtors Plan Appendix 1 to the First Amended Disclosure Statement in Support of Chapter 11 Plan Proposed
by the Debtors Disclosure Statement
 Transfer
Date
  AGREEMENT
  SECTION 1
PURCHASE AND SALE OF BUSINESS OPERATION
 Purchase Price Business Businesses
 2




---



##### 



Base Purchase Price Base Purchase Price
   Additional Purchase Price Additional Purchase
Price
  Schedule 1.3(b)
     Deposit Deposit
 Acquired Assets
 3




---



##### 



Acquired
Assets
 Equipment Schedule 1.3(a) Equipment Schedule 1.3(a)
 Vehicles Schedule 1.3(b) Schedule 1.3(b)
 Inventory Inventory
 Intellectual Property Intellectual
Property
 Omega Lease Lease Assignment
 Contract Rights Assumed
Contracts Schedule 1.3(f) Schedule
1.3(f) Schedule 1.3(f)
 4




---



##### 



Permits, Etc Permits
 Books, Records and Information Books and
Records
 Unlisted Assets
 Excluded Assets
 Receivables
 Cash and Security; Deposits
 Contracts Excluded Contracts
 Organizational Records
 Excluded Permits
 Claims, Etc
 5




---



##### 



Rights under this Agreement
 Causes of Action
 Excluded Liabilities Excluded Liabilities
 SECTION 2
DELIVERIES UPON CLOSING DATE
 SMS Parties Deliveries Upon Closing Date
   Schedule 1.3(b)
 Closing Statement
  6




---



##### 



Diversicare Parties Deliveries Upon Closing
     Prorations
 Conditions to the Diversicare Parties Obligation to Close
 Representations, Warranties and Covenants.
 Continued Accuracy of Representations and Warranties
 7




---



##### 



Performance of Agreements
 Confirmation Order
 Deleted.
 Cure Amount Order Cure Amount Order
 Other Documents
 Change of Ownership Approval
 Material Adverse Change
 Conditions to the SMS Parties Obligations to Close
 Representations, Warranties and Covenants.
 Continued Accuracy of Representations and Warranties
 8




---



##### 



Performance of Agreements
 Confirmation Order
 Post Confirmation Credit Facility
 SECTION 3
TRANSFER OF OPERATIONS
 Effectiveness of Transfer; Cooperation
   Resident Funds; Advance Payments
 Residents
 9




---



##### 



Assumed
Obligations
  Final Cost Reports
 Employees
  10




---



##### 



Transferors Employees Retained
Employees
 WARN Act
 Accounts Receivable New Operator Account
  11




---



##### 



Transferor Account
     12




---



##### 



Payment of Operating Costs, Prorations and Deposits
 Treatment of Prorations
 Future Settlement
 Medicare; Medicaid; Veterans Administration
 13




---



##### 



Notices CMS
 Transfer of Records; Access To Policy and Procedures Manuals
 Deposits
 Compliance with Laws
 Residents; Resident Records
 Accounts Payable
 Access to Resident Records
 14




---



##### 



Regulatory Inspections; Surveys; Licensure Costs
 Remittances, Mail and Other Communications
 Admission Agreements Admission Agreements
 Confidentiality and HIPAA Compliance HIPAA
 15




---



##### 



SECTION 4
CLOSING AND TRANSFER DATES
 Closing Date Closing Date Closing
 Transfer Date Transfer Date
 Time and Place of Closing
 SECTION 5
REPRESENTATIONS AND WARRANTIES OF THE DIVERSICARE PARTIES
  Authority, Validity and Binding Effect
 No Defaults
   16




---



##### 



No Litigation
 Financial Capacity
 Accuracy of Representations and Warranties
 SECTION 6
REPRESENTATIONS AND WARRANTIES OF THE SMS PARTIES
 AS IS, WHERE IS
 Authority, Validity and Binding Effect
 17




---



##### 



Accuracy of Representations and Warranties
 Contract Rights
 Survey Deficiencies
 As IsWhere Is
 SECTION 7
TERMINATION
 Grounds for Termination
     18




---



##### 



Effect of Termination
    Survival
 Effect of Casualty/Condemnation
 19




---



##### 



Default
 SECTION 8
EXPIRATION OF REPRESENTATIONS AND WARRANTIES
 Expiration of Representations, Warranties and Covenants THE NEW OPERATORS ACKNOWLEDGE THAT THEY HAVE HAD SUFFICIENT OPPORTUNITY TO MAKE
WHATEVER INVESTIGATION MAY BE NECESSARY AND ADVISABLE FOR PURPOSES OF DETERMINING WHETHER OR NOT TO
ENTER INTO THIS AGREEMENT.
 20




---



##### 



SECTION 9
COVENANTS
 Access
 Operation Prior to Closing
 Notice of Breaches
 Bankruptcy Court Approvals
 Bankruptcy Court Confirmation Order Confirmation
Order
 21




---



##### 



Best Efforts
 Expenses
 SECTION 10
MISCELLANEOUS
 Regulatory Filings CHOW Application
 Further Assurances
 22




---



##### 



Notices
  
  
  
  Entire Agreement; Amendment; Waiver
 23




---



##### 



Assignment
 Joint Venture; Third Party Beneficiaries
 Brokers Fees
 Representation By Counsel
 Captions
 Counterparts
 Governing Law
 Enforceability
 Jurisdiction
 24




---



##### 



Waiver of Jury Trial
 [Signature Pages Follow]
 25




---



##### 



Exhibit 10.1
  SMS PARTIES:
 SENIOR MANAGEMENT SERVICES OF
AMERICA II, INC.By:
Name:
    
    /s/ Louis E. Robichaux, IV

Louis E. Robichaux, IVTitle:
    
    Chief Restructuring OfficerSENIOR MANAGEMENT SERVICES OR
AMERICA NORTH TEXAS, INC.
    
    SENIOR MANAGEMENT SERVICES OF
HERITAGE OAKS AT BALLINGER, INC.By: 
Name:
    
    /s/ Louis E. Robichaux, IV

Louis E. Robichaux, IV
    
    
    
    By:
Name:
    
    /s/ Louis E. Robichaux, IV

Louis E. Robichaux, IVTitle:
    
    Chief Restructuring Officer
    
    
    
    Title:
    
    Chief Restructuring OfficerSENIOR MANAGEMENT SERVICES OF
ESTATES AT FORT WORTH, INC.
    
    SENIOR MANAGEMENT SERVICES OF KATY,
INC.By:
    
    /s/ Louis E. Robichaux, IV
    
    
    
    By:
    
    /s/ Louis E. Robichaux, IVName:
    
    Louis E. Robichaux, IV
    
    
    
    Name:
    
    Louis E. Robichaux, IVTitle:
    
    Chief Restructuring Officer
    
    
    
    Title:
    
    Chief Restructuring OfficerSENIOR MANAGEMENT SERVICES OF
HUMBLE, INC.
    
    SENIOR MANAGEMENT SERVICES OF
TREEMONT, INC.By:
    
    /s/ Louis E. Robichaux, IV
    
    
    
    By:
    
    /s/ Louis E. Robichaux, IVName:
    
    Louis E. Robichaux, IV
    
    
    
    Name:
    
    Louis E. Robichaux, IVTitle:
    
    Chief Restructuring Officer
    
    
    
    Title:
    
    Chief Restructuring OfficerSENIOR MANAGEMENT SERVICES OF
DOCTORS AT DALLAS, INC.
    
    SENIOR MANAGEMENT SERVICES OF
NORMANDY AT SAN ANTONIO, INC.By:
    
    /s/ Louis E. Robichaux, IV
    
    
    
    By:
    
    /s/ Louis E. Robichaux, IVName:
    
    Louis E. Robichaux, IV
    
    
    
    Name:
    
    Louis E. Robichaux, IVTitle:
    
    Chief Restructuring Officer
    
    
    
    Title:
    
    Chief Restructuring Officer
 [ Signature Page to Operations Transfer Agreement ]




---



##### 



Exhibit 10.1
 DIVERSICARE PARTIES:
 DIVERSICARE TEXAS I, LLCBy:
    
    /s/ William R. Council, IIITitle:
    
    PresidentDIVERSICARE BALLINGER, LLC
DIVERSICARE DOCTORS, LLC
DIVERSICARE ESTATES, LLC 
DIVERSICARE HUMBLE, LLC
DIVERSICARE KATY, LLC
DIVERSICARE NORMANDY TERRACE, LLC
DIVERSICARE TREEMONT, LLCBY:
    
    DIVERSICARE TEXAS I, LLC
the sole memberBy:
    
    /s/ William R. Council, IIITitle:
    
    President
 [Signature Page to Operations Transfer Agreement]




---



##### 



Exhibit
10.1
 Schedule
1.3(b)
 SERENITY MANAGEMENT SERVICES, INC.By:
Name:
    
    /s/ Louis E. Robichaux, IV

Louis E. Robichaux, IVTitle:
    
    Chief Restructuring Officer
 [Signature Page to Operations Transfer Agreement]




---



##### 



Exhibit 10.1
 LIST OF SCHEDULES
 Schedule 1.1(b)(iv)
    
    PTO for Retained EmployeesSchedule 1.1(b)(v)
    
    Cure AmountsSchedule 1.3(a)
    
    EquipmentSchedule 1.3(b)
    
    Vehicles and Pay-off AmountsSchedule 1.3(f)
    
    Assumed Contracts and Cure Costs