SUTTONS REST HOME





                           PURCHASE AND SALE AGREEMENT





         THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made and entered

into as of the 14th day of November, 2003 (the "EFFECTIVE DATE") by and between

DIVERSICARE ASSISTED LIVING SERVICES NC II, LLC, a Delaware limited liability

company ("SELLER"), and MARGARET SUTTON, an individual resident of North

Carolina or her permitted assigns ("BUYER"), with reference to the following:



         A. Seller is the owner of the improved real property located at 4258 US

13 North, Goldsboro, Wayne County, North Carolina, formerly operated by Seller

as an adult care home facility known as Suttons Rest Home.



         B. Buyer desires to purchase from Seller, and Seller is willing to sell

and convey to Buyer, all of Seller's right, title and interest in and to said

real property, together with certain personal property located thereon and

certain other assets relating thereto, for the Purchase Price and subject to the

conditions contained in this Agreement.



         NOW, THEREFORE, in consideration of the Deposit (as hereinafter

defined) paid by Buyer hereunder, the mutual covenants and agreements contained

herein, and other good and valuable consideration, the receipt and sufficiency

of which are hereby acknowledged, the parties hereto agree as follows:



1.       PURCHASE AND SALE.



         1.1 PURCHASED ASSETS. Subject to the terms and conditions of this

Agreement, Seller agrees to sell, assign, transfer and convey to Buyer and Buyer

agrees to accept and purchase from Seller, for the Purchase Price set forth in

Section 3 hereof, the following (collectively, the "PURCHASED ASSETS"):



             1.1.1 All of Seller's right, title and interest in and to (i) that

certain tract or parcel of land located in the City of Goldsboro, Wayne County,

North Carolina, and being more particularly described in Exhibit A attached

hereto and made a part hereof (the "LAND"), together with all rights, tenements,

heriditaments, easements, privileges and appurtenances belonging or pertaining

thereto, and (ii) all buildings, structures or other improvements located on the

Land, including without limitation the adult care home facility, single family

residence and storage house formerly operated and known as Suttons Rest Home

(the "FACILITY"), all sidewalks, landscaping, parking lots and structures, and

driveways located thereon, and all permanently affixed fixtures located on, in

or used in connection with, and permanently affixed or incorporated into, the

Land, together with all replacements, additions and accessions thereto

collectively, including the Facility, (the







<PAGE>



"IMPROVEMENTS") (the "Land" and Improvements" are sometimes hereinafter

collectively referred to as the "REAL PROPERTY");



             1.1.2 The following items of machinery, equipment, furniture,

furnishings, supplies, inventory and other movable tangible personal property

owned by Seller and located at or on the Real Property and formerly used in

connection with the operation of the Facility (the "PERSONAL PROPERTY"): two (2)

old hospital beds, one (1) upright piano (broken), and one (1) commercial gas

stove.



             1.1.3 All of Seller's right, title and interest in and to the name

"Suttons Rest Home" (the "FACILITY NAME");



         1.2 EXCLUDED ASSETS. There is specifically excluded from the Purchased

Assets, and anything herein to the contrary notwithstanding, Seller is not

selling, assigning or transferring to Buyer, and Buyer is not acquiring and

purchasing from Seller, any of the following: (a) any right to the use of the

names "Advocat" or "Diversicare" or any derivative thereof; (b) any items of

machinery, equipment, furniture, furnishings, supplies, inventory and other

movable tangible personal property owned by the Seller other than the Personal

Property (c) the dryer in the laundry room at the Facility which is leased from

Coinmach and which Seller will remove (or cause to be removed) prior to Closing;

(d) the Medicaid provider number of Seller for the Facility; and (e) the license

of Seller from the State of North Carolina to operate the Facility as an adult

care home. Buyer acknowledges and agrees that in the event it desires to use the

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