Amendment To Loan & Negative Pledge

SECOND AMENDMENT TO
LOAN AND NEGATIVE PLEDGE AGREEMENT


This Second Amendment to Loan and Negative Pledge Agreement, made and entered into as of the 31st day of March, 1998, between First American National Bank, a national banking association, as Agent for AmSouth Bank, an Alabama banking corporation ("AmSouth"), First American National Bank ("FANB") (individually, a "Bank" and, collectively, the "Banks"), and Diversicare Assisted Living Services NC, LLC, a Tennessee limited liability company (the "Borrower"),


W I T N E S S E T H:


WHEREAS, pursuant to the terms of a Loan and Negative Pledge Agreement dated as of October 1, 1997, by and between FANB, AmSouth and Borrower (the "Loan Agreement"), the Banks agreed to make available to the Borrower, on a nonrevolving basis, up to $34,100,000, to finance the acquisition of the Facilities (capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Loan Agreement); and,


WHEREAS, Borrower has requested, and the Banks have agreed, to extend the Maturity Date of the Credit Facility to April 1, 1999, subject to the terms and conditions contained herein; and,


WHEREAS, the Banks, the Borrower and the Guarantors desire to amend the Loan Agreement to reflect the extension of the Maturity Date, as set forth herein,


NOW, THEREFORE, in consideration of the foregoing premises, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby amend the Loan Agreement as follows:


1. Definitions. The following definitions set forth in Section 1 of the Loan Agreement are amended to read as follows:


"Maturity Date" means April 1, 1999.


"Notes" means the Renewal and Modification Promissory Notes of even date herewith, executed by the Borrower in favor of the Banks, together with all renewals, amendments and extensions thereof.


2. Credit Facility. The references to the monthly interest payment dates in Section 2.1 of the Loan Agreement are hereby modified to refer to April 20, 1998, as the first payment date. The Maturity Date referred to in Section 2.1 of the Loan Agreement is hereby modified to refer to April 1, 1999.


3. Section 2.5 of the Loan Agreement is hereby deleted, and the following is substituted as new Section 2.5:


1 2


2.5 Fees. In consideration for the Bank's agreements to extend
the Maturity Date and to fund monies under the Loan in accordance with
the Loan Agreement, Borrower shall pay the Agent a closing fee of 0.5%
of the face amount of the Loan, to be distributed fifty percent (50%)
to AmSouth and fifty percent (50%) to FANB.


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