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Second Amendment To Promissory Note - ADVOCAT INC - 8-9-2006

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Second Amendment To Promissory Note - ADVOCAT INC - 8-9-2006 Powered By Docstoc
					EXHIBIT 10.7 (Windsor) SECOND AMENDMENT TO PROMISSORY NOTE THIS SECOND AMENDMENT TO PROMISSORY NOTE (this "Second Amendment") is entered into as of the 1st day of July, 2006, by and between DIVERSICARE WINDSOR HOUSE, LLC, a Delaware limited liability company (the "Borrower"), and CAPMARK FINANCE INC., a California corporation, formerly known as GMAC Commercial Mortgage Corporation, a California corporation (the "Lender"). RECITALS: A. The Borrower executed to the order of the Lender that certain Promissory Note dated March 29, 2001, in the principal amount of $4,709,000, as amended by that certain First Amendment to Promissory Note dated April 1, 2006 (the "Note"). Unless otherwise defined herein, capitalized terms shall have the meaning assigned to them in the Note. B. The Borrower has requested that the Lender extend the Maturity Date of the Note, and the Lender has agreed, upon certain conditions, one of which is the execution of this Second Amendment. AGREEMENT NOW, THEREFORE, in consideration of the above Recitals and other good and valuable consideration, the Borrower and the Lender hereby amend the Note as follows: Section 4 of the Note, Maturity Date, is hereby amended to extend the Maturity Date from July 1, 2006 until September 1, 2006. All references in the Note to the "Maturity Date" are hereby amended to mean September 1, 2006. Except as expressly amended herein, the Note shall remain in full force and effect in accordance with its terms and conditions. Notwithstanding the execution of this Second Amendment, the indebtedness evidenced by the Note shall remain in full force and effect, and nothing contained herein shall be interpreted or construed as resulting in a novation of such indebtedness. The Borrower acknowledges and agrees that there are no offsets or defenses to payment of the obligations evidenced by the Note, as hereby amended, and hereby waives any defense, claim or counterclaim of the Borrower regarding the obligations of the Borrower under the Note, as hereby amended. The Borrower represents that there are no conditions of default or facts or consequences which will or could lead to a default under the obligations due from the Borrower under the Note, as amended herein, except as disclosed by Borrower and Diversicare Management Services Co. in that certain Quarterly Compliance Statement & Census Data report and that certain Compliance Certificate, each for the period ending March 31, 2006, and signed by Borrower's Chief Financial Officer and Executive Vice President.

IN WITNESS WHEREOF, the Borrower and Lender have caused this Second Amendment to be executed by their respective duly authorized representatives, as of the date first set forth above. BORROWER: DIVERSICARE WINDSOR HOUSE, LLC, a Delaware limited liability company By: Diversicare Leasing Corp., a Tennessee corporation Its: Sole Member
By: /s/ Glynn Riddle -----------------------------------Glynn Riddle, Chief Financial Officer

LENDER: CAPMARK FINANCE INC., a California corporation, formerly known as GMAC Commercial Mortgage Corporation, a California corporation
By: /s/ Laura Y. McDonald -----------------------------------Its: Senior Vice President

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EXHIBIT 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, William R. Council, III, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Advocat Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: (a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
August 9, 2006 /s/ William R. Council, III -----------------------------------William R. Council, III Chief Executive Officer

EXHIBIT 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, L. Glynn Riddle, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Advocat Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: (a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
August 9, 2006 /s/ L. Glynn Riddle, Jr. -----------------------------------L. Glynn Riddle, Jr. Chief Financial Officer

EXHIBIT 32 CERTIFICATION OF QUARTERLY REPORT ON FORM 10-Q OF ADVOCAT INC. FOR THE QUARTER ENDED JUNE 30, 2006 The undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the undersigned's best knowledge and belief, the Quarterly Report on Form 10-Q for Advocat Inc. (the "Company") for the period ending June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"): (a) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This Certification is executed as of August 9, 2006.
/s/ William R. Council, III --------------------------------------William R. Council, III Chief Executive Officer /s/ L. Glynn Riddle, Jr. --------------------------------------L. Glynn Riddle, Jr. Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.