Document:

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                                                                    EXHIBIT 10.2

                        SETTLEMENT AND RELEASE AGREEMENT

         This Settlement and Release Agreement (the "Agreement") is entered into
and effective as of 11:30, CST, on August 31, 2001 by and between Texas
Diversicare Limited Partnership, a Texas limited partnership (the "Partnership")
and Diversicare Leasing Corp., a Tennessee corporation ("DLC").

                                    RECITALS

         WHEREAS, The Partnership executed and delivered a Wraparound Promissory
Note (the "Wraparound Note") in the original amount of $ 7,500,000, dated August
30, 1991 to Diversicare Nursing Centers, Inc., a Florida corporation, which was
assigned by Counsel Nursing Properties, Inc. (successor to Diversicare Nursing
Centers, Inc. by merger) to DLC on August 10, 1994;

         WHEREAS, The Partnership is the owner of six nursing homes located in
the state of Texas, in the counties of Caldwell, Goliad, Lampasas, Refugio and
DeWitt;

         WHEREAS, The six nursing homes are known as Chisolm Trail Nursing and
Rehabilitation Center, Goliad Nursing and Rehabilitation Center, Hillcrest Manor
Nursing and Rehabilitation Center, Lampasas Nursing and Rehabilitation Center,
Refugio Nursing and Rehabilitation Center, and Yorktown Nursing and
Rehabilitation Center (collectively the "Nursing Homes");

         WHEREAS, the Wraparound Note is secured by all of the real and personal
property of the Nursing Homes pursuant to a Wraparound Deed of Trust dated
August 30, 1991 (the "Wraparound Deed of Trust" and collectively with the
Wraparound Note, the "Wraparound Mortgage") executed by the Partnership;

         WHEREAS, The Wraparound Note provides for a balloon payment of the
remaining principal balance of approximately $ 6,500,000 on August 30, 2001;

         WHEREAS, The Partnership failed to make the required payment on August
30, 2001, and is now in default under the Wraparound Mortgage;

         WHEREAS, DLC has sent written notice to the Partnership demanding
payment and informing the Partnership of its intent to foreclose on the assets
of the Partnership if payment is not received immediately.

         WHEREAS, The Partnership has informed DLC that it does not have
available sufficient assets to pay the outstanding amount under the Wraparound
Note; and

         WHEREAS, DLC and the Partnership have agreed to the transfer of the
assets of the Partnership to DLC in full settlement of the outstanding amounts
under the Wraparound Note in exchange for the release of all remaining
obligations of the Partnership under the Wraparound Mortgage. The parties have
agreed to this settlement and release in lieu of DLC foreclosing on the Nursing
Homes which secure the Wraparound Mortgage.
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         NOW, THEREFORE, in consideration of the mutual premises, the conveyance
of the real and personal property of the Nursing Homes to DLC in lieu of
foreclosure, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:

         1        Satisfaction of Wraparound Mortgage. DLC hereby accepts the
                  transfer and conveyance of the real estate and personal
                  property from the Partnership made concurrently herewith in
                  full payment and satisfaction of the Wraparound Promissory
                  Note and all amounts due under the Wraparound Promissory Note
                  for principal, interest, penalty, late fees and all other sums
                  due thereunder.

         2        DLC Release of the Partnership. DLC does hereby irrevocably
                  and unconditionally release and forever discharge the
                  Partnership, and its general partner and their respective
                  directors, officers, successors and assigns (collectively, the
                  "Indemnified Persons") of and from any and all claims,
                  demands, actions, causes of action, rights, remedies or suits
                  which DLC ever had, now has or might hereafter have against
                  the Partnership, under, arising out of, relating to or
                  connected with (i) the Wraparound Promissory Note, (ii) the
                  Wraparound Deed of Trust, and (iii) any other documents or
                  instruments evidencing, securing or otherwise relating to the
                  Wraparound Mortgage. DLC agrees that, from and after the date
                  hereof, the Partnership shall not have any debts, liabilities
                  or obligations to DLC under or in respect of the Wraparound
                  Mortgage. Anything herein to the contrary notwithstanding, it
                  is understood and agreed that the release by DLC of the
                  Partnership set forth in this Paragraph 2 does not and shall
                  not be deemed to modify, amend, release or otherwise affect in
                  any manner whatsoever the liabilities and obligations of the
                  Partnership under (i) the Partnership Services Agreement
                  entered into between the Partnership, Diversicare
                  Incorporated, an Ontario corporation and Counsel Property
                  Corporation, an Ontario corporation, dated as of November 2,
                  1990 (the "Partnership Services Agreement") as assigned to DLC
                  pursuant to an Assignment and Assumption Agreement dated May
                  10, 1994, or (ii) the Guaranteed Return Loan Security
                  Agreement (the "Guaranteed Return Agreement") between the same
                  parties and dated the same date.

         3        Release of Liens and Collateral Security. DLC hereby releases
                  and discharges in full all liens, mortgages, pledges, charges,
                  security interests and other encumbrances granted by the
                  Partnership in favor of DLC as security for the obligations of
                  the Partnership under the Wraparound Mortgage, including
                  without limitation the Wraparound Deed of Trust, the
                  Wraparound Promissory Note and any financing statements filed
                  with respect to the foregoing.

         4        Delivery of Documents. In connection herewith, (i) the
                  Partnership shall execute and deliver to DLC appropriate
                  warranty deeds to the Nursing Homes and bills of sale for the
                  personal property located thereon; (ii) DLC shall execute and
                  deliver to the Partnership a full release of the lien
                  evidenced by the Wraparound Deed of Trust and shall execute
                  and deliver to the Partnership a full release and termination
                  of any UCC-1 and UCC-3 Financing Statements relating to the
                  Nursing Homes and the security interest of DLC evidenced
                  thereby; and (iii) DLC shall deliver to the Partnership the
                  executed original of the Wraparound Promissory Note. DLC shall
                  clearly mark the Wraparound Promissory Note to indicate the
                  satisfaction of the indebtedness and obligations with respect
                  to the
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                  Wraparound Mortgage Note evidenced thereby and the release and
                  discharge of the Partnership from any further liability or
                  obligation with respect thereto.

         5        Cooperation. At all times following the execution of this
                  Agreement, each party agrees to cooperate in good faith with
                  the others to execute and deliver, or cause to be executed and
                  delivered, such documents, and to do, or cause to be done,
                  such other acts or things as might be necessary or as might be
                  reasonably requested by any other party to give effect the
                  intent of this Agreement and assure that the benefits of this
                  Agreement are realized by each of the parties hereto.

         6        Amendment; Modification. This Agreement may not be amended or
                  modified except by a written instrument executed by all of the
                  parties hereto.

         7        Governing Law. This Agreement shall be construed and enforced
                  in accordance with the laws of the State of Texas.

         8        Multiple Counterparts. This Agreement may be executed
                  simultaneously in one or more counterparts, each of which
                  shall be deemed to be an original, but all of which together
                  shall constitute one and the same instrument.

         9        Captions. The captions of paragraphs of this Agreement have
                  been inserted solely for convenience and reference, and shall
                  not control or affect the meaning or construction of any
                  provisions of this Agreement.

         10       Binding Effect. This Agreement shall be binding upon and shall
                  inure to the benefit of each of the parties hereto and their
                  respective legal representatives, successors and assigns.
<PAGE>

         IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has executed this Agreement as of the time and date set forth above.

                                         TEXAS DIVERSICARE LIMITED
                                         PARTNERSHIP, by its General Partner,
                                         DIVERSACARE GENERAL PARTNER, INC.

                                         By:  /s/ Charles H. Rinne
                                              ---------------------------------
                                              Authorized Signing Officer

                                         DIVERSICARE LEASING CORP.

                                         By:  /s/ William R. Council III
                                              ---------------------------------
                                              Authorized Signing Officer<PAGE>
                                                                  EXHIBIT 10.1

                               AGREEMENT REGARDING
                        STOCK PURCHASE AND STOCK OPTIONS

         THIS AGREEMENT REGARDING STOCK PURCHASE AND STOCK OPTIONS (this
"Agreement"), is dated as of June 27, 2001 by and between The Enstar Group,
Inc., a Georgia corporation ("Enstar"), and Nimrod T. Frazer, an individual
resident of the State of Alabama ("Executive").

                              W I T N E S S E T H:

         WHEREAS, Executive is the Chairman and CEO of Enstar;

         WHEREAS, Enstar has determined that it is in the best interest of
Enstar and its shareholders that Enstar sell to Executive (from Enstar's
treasury stock) 100,000 shares of Enstar common stock, par value $.01 per share
(the "Common Stock"), and that Enstar grant Executive a nonqualified option to
acquire 100,000 shares of Enstar Common Stock, subject to the terms and
conditions herein contained;

         NOW, THEREFORE, in consideration of the premises and the promises and
agreements contained herein, and 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:

         Section 1. Agreement to Sell Shares and Grant Options. Enstar agrees to
sell (from Enstar's treasury stock) 100,000 shares of Enstar Common Stock to
Executive and to grant Executive a non-qualified option to acquire 100,000
shares of Enstar Common Stock, subject to the following terms and conditions:

                  (a)      On the terms and conditions herein below, Enstar
         shall (i) sell 50,000 shares of Enstar Common Stock to Executive and
         (ii) grant Executive a nonqualified option to acquire 50,000 shares of
         Enstar Common Stock (the "River Thames Option") on the condition that
         Enstar shall have closed the River Thames transaction on or before
         December 31, 2001 substantially in accordance with the terms thereof as
         previously presented to and approved by the Board of Directors of
         Enstar. The purchase price for each of the 50,000 shares of Enstar
         Common Stock to be sold pursuant to this Section 1(a) and the exercise
         price of each share of Enstar Common Stock that may be acquired
         pursuant to the River Thames Option shall be the price of Enstar's
         Common Stock as of the close of business on the day preceding date of
         the public announcement by Enstar of the execution of a letter of
         intent or definitive agreement for the River Thames transaction (the
         "River Thames Announcement Date"). The effective date of the grant of
         the River Thames Option shall be

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         the day preceding the River Thames Announcement Date; however, the
         grant of the River Thames Option is subject to the satisfaction of the
         condition subsequent that the River Thames transaction be closed as
         provided herein and satisfaction of the condition subsequent that
         Executive purchase 50,000 shares of Enstar Common Stock in accordance
         with the terms of Sections 1(a), 2(a) and 3(a) of this Agreement.

                  (b)      On the terms and conditions hereinbelow, Enstar shall
         (i) sell 50,000 shares of Enstar Common Stock to Executive and (ii)
         grant Executive a nonqualified option to acquire 50,000 shares of
         Enstar Common Stock (the "Castlewood Option") on the condition that
         Enstar shall have closed the Castlewood transaction on or before
         December 31, 2001 substantially in accordance with the terms thereof as
         previously presented to and approved by the Board of Directors of
         Enstar. The purchase price for each of the 50,000 shares of Enstar
         Common Stock to be sold pursuant to this Section 1(b) and the exercise
         price of each share of Enstar Common Stock that may be acquired
         pursuant to the Castlewood Option shall be the price of Enstar's Common
         Stock as of the close of business on the day preceding the date of the
         public announcement by Enstar of the execution of a letter of intent or
         definitive agreement for the Castlewood transaction (the "Castlewood
         Announcement Date"). The effective date of the grant of the Castlewood
         Option shall be the date preceding the Castlewood Announcement Date;
         however, the grant of the Castlewood Option is subject to satisfaction
         of the condition subsequent that the Castlewood transaction be closed
         as provided herein and satisfaction of the condition subsequent that
         Executive purchase 50,000 shares of Enstar Common Stock in accordance
         with the terms of Sections 1(b), 2(b) and 3(b) of this Agreement.

The 100,000 shares of Enstar Common Stock which may be purchased by Executive
under this Section 1 are sometimes referred to herein collectively as the
"Purchased Stock". Executive agrees to purchase the Purchased Stock and to
accept the River Thames Option and the Castlewood Option, subject to the terms
and conditions hereof.

         Section 2.        Closing.

                  (a)      The closing of the purchase and sale of the 50,000
         shares of Enstar Common Stock and the delivery of the River Thames
         Option pursuant to Section 1(a) above shall take place at the offices
         of Enstar no later than the 5th business day following the closing of
         the River Thames transaction, or on such other date and at such other
         time or place as the parties may agree.

                  (b)      The closing of the purchase and sale of the 50,000
         shares of Enstar Common Stock and the delivery of the Castlewood Option
         pursuant to Section 1(b) above shall take place at the offices of
         Enstar no later than the 5th business day following the closing of the
         Castlewood transaction, or on such other date and at such other time or
         place as the parties may agree.

                                      - 2 -
<PAGE>

         Section 3.        Deliveries by Buyer and Seller.

                  (a)      At the closing of the transactions contemplated in
         Section 2(a) above:

                  Enstar shall deliver or cause to be delivered to Executive the
         following:

                           (i)      the stock certificate or certificates
                                    representing 50,000 shares of Enstar Common
                                    Stock registered in Executive's name;

                           (ii)     a nonqualified stock option agreement
                                    substantially in the form of the Exhibit "A"
                                    attached hereto and made a part hereof (with
                                    all banks therein appropriately completed),
                                    duly executed by Enstar, representing the
                                    River Thames Option;

                  and Executive shall deliver or cause to be delivered to Enstar
         the following:

                           (i)      the aforesaid stock option agreement
                                    representing the River Thames Option, duly
                                    executed by Executive; and

                           (ii)     the full purchase price, in immediately
                                    available funds, for the 50,000 shares of
                                    Enstar Common Stock being purchased by
                                    Executive.

                  (b)      At the closing of the transactions contemplated in
         Section 2(b) above:

                  Enstar will deliver or cause to be delivered to Executive the
         following:

                           (i)      the stock certificate or certificates
                                    representing 50,000 shares of Enstar Common
                                    Stock registered in Executive's name;

                           (ii)     a nonqualified stock option agreement
                                    substantially in the form of Exhibit "A"
                                    attached hereto and made a part hereof (with
                                    all blanks therein appropriately completed),
                                    duly executed by Enstar, representing the
                                    Castlewood Option;

                  and Executive shall deliver or cause to be delivered to Enstar
         the following:

                           (i)      the aforesaid stock option agreement
                                    representing the Castlewood Option, duly
                                    executed by Executive; and

                           (ii)     the full purchase price, in immediately
                                    available funds, for the 50,000 shares of
                                    Enstar Common Stock being purchased by
                                    Executive.

                                      - 3 -
<PAGE>
         Section 4.        Securities Laws Matters. The provisions of this
Section 4 relate to any Purchased Stock that Executive purchases under this
Agreement:

                  (a)      Executive represents and warrants that Executive is
         acquiring the Purchased Stock for Executive's own account, to hold for
         investment, with no present intention of dividing Executive's
         participation with others or reselling or otherwise participating,
         directly or indirectly, in a distribution of the Purchased Stock and
         that Executive shall not make any sale of the Purchased Stock in
         violation of any state securities laws, or in violation of the
         Securities Act of 1933, as amended (the "Securities Act"), or the rules
         and regulations promulgated thereunder by the United States Securities
         and Exchange Commission.

                  (b)      Executive has been advised that the Purchased Stock
         is not being registered under any state securities laws, and are not
         being registered under the Securities Act in reliance upon certain
         exemptive provisions of said Acts.

                  (c)      Executive agrees that the Enstar may refuse to permit
         Executive to sell, transfer or dispose of the Purchased Stock unless
         there is in effect a registration statement under the Securities Act
         and any applicable state securities laws or Executive furnishes an
         opinion of counsel, satisfactory to counsel for the Enstar, to the
         effect that such registration is not required.

                  (d)      Executive understands and agrees that there may be
         placed on the stock certificates representing such Purchased Stock a
         legend stating in substance:

         THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ISSUED AND SOLD
         WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
         "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE
         UPON CERTAIN EXEMPTIVE PROVISIONS OF SAID ACTS. SAID SHARES CANNOT BE
         SOLD OR TRANSFERRED EXCEPT IF SUCH SALE OR TRANSFER WOULD BE: (1)
         PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
         ACT OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION; AND (2) IN A
         TRANSACTION WHICH IS EXEMPT UNDER APPLICABLE STATE SECURITIES LAWS, OR
         PURSUANT TO EFFECTIVE REGISTRATION STATEMENTS UNDER SUCH LAWS, OR IN A
         TRANSACTION WHICH IS OTHERWISE IN COMPLIANCE WITH SUCH LAWS.

Executive understands and agrees that other legends required under applicable
securities laws also may be placed on such certificates.

                  (e)      Executive is an "accredited investor" as defined by
         Rule 501(a) of Regulation D promulgated under the Securities Act in
         that Executive is both an executive officer of Enstar and has a net
         worth in excess of $1,000,000.

                                      - 4 -
<PAGE>

                  (f)      Executive has received no general or public
         solicitation or any advertisement concerning an offer to sell the
         Purchased Stock.

         Section 5.        Mutual Covenants. The parties mutually represent and
warrant to each other that the sale of the 50,000 shares of Enstar Common Stock
and delivery of the River Thames Option pursuant to Section 1(a) hereof are
interrelated and each aspect of such transaction is conditioned upon the
consummation of both transactions - that is, Enstar shall not be obligated to
deliver the River Thames Option to Executive if Executive should, for any
reason, default in his obligations to purchase the 50,000 shares of Enstar
Common Stock pursuant to Section 1(a) hereof. Likewise, the parties mutually
represent and warrant to each other that the sale of the 50,000 shares of Enstar
Common Stock and the delivery of Castlewood Option pursuant to Section 1(b)
hereof are interrelated and each aspect of such transaction is conditioned upon
the consummation of both transactions - that is, Enstar shall not be obligated
to deliver the Castlewood Option to Executive if Executive should, for any
reason, default in his obligations to purchase the 50,000 shares of Enstar
Common Stock pursuant to Section 1(b) hereof.

         Section 6.        Miscellaneous.

                  (a)      Each Party shall pay bear its own fees, costs and
         expenses incurred in connection with the negotiation of this Agreement
         and the matters contemplated hereby.

                  (b)      This Agreement shall be binding upon, and shall inure
         to the benefit of, the parties hereto and their respective successors
         and permitted assigns. Neither this Agreement, nor any of the rights,
         interest or obligations hereunder, shall be assigned, directly or
         indirectly, including, without limitation, by operation of law, by any
         party hereto without their prior written consent of the other party
         hereto.

                  (c)      The provisions this Agreement shall be construed in
         accordance with and governed by the laws of the State of Georgia
         (regardless of the laws that might otherwise govern under applicable
         principles of conflicts of laws).

                  (d)      This Agreement, and the other documents referred to
         herein or delivered pursuant hereto which form a part hereof,
         constitute the entire agreement between the parties with respect to the
         subject matter hereof and supercede all other prior agreements and
         understanding, both written and oral, between the parties with respect
         to the subject matter hereof.

                  (e)      This Agreement may be amended, modified, or
         supplemented at any time by written agreement of Enstar and Executive.

                  (f)      This Agreement may be executed in several
         counterparts, each of which when fully executed shall be an original,
         and all such counterparts taken together shall be deemed to constitute
         one and the same agreement. Delivery of any signature page via telecopy
         or

                                      - 5 -
<PAGE>

         other electronic facsimile transmission shall be deemed equivalent to
         physical delivery of the original signature page. Any signature page of
         any counterpart hereof, whether bearing an original signature or an
         electronic facsimile transmission of a signature, may be appended to
         any other counterpart hereof to form a completely executed counterpart
         hereof.

                                      - 6 -

<PAGE>

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

The Enstar Group, Inc.                         Executive

By:
   ------------------------------               --------------------------------
Title:                                          Nimrod T. Frazer
      ---------------------------

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