EXHIBIT 10.56
FIRST AMENDMENT TO LOAN AGREEMENT
     This First Amendment to Loan Agreement (this “Amendment”), dated as of
December 18, 2007, is by and among those certain entities set forth on
Schedule 1 hereto, which are signatories hereto (such entities individually and
collectively, the “Borrower”), and LASALLE BANK NATIONAL ASSOCIATION, a national
banking association (together with its successors and assigns, the “Lender”).
RECITALS
     A. Borrower and Lender are parties to that certain Loan Agreement dated as
of August 10, 2007 (as amended, restated, supplemented and otherwise modified,
the “Loan Agreement”).
     B. The parties hereto desire to amend certain terms and provisions of the
Loan Agreement on the terms and conditions set forth herein.
     NOW, THEREFORE, in consideration of the premises herein contained, and for
other good and valuable consideration (the receipt, sufficiency and adequacy of
which are hereby acknowledged), the parties hereto (intending to be legally
bound) hereby agree as follows:
     1. Definitions. Terms capitalized herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the Loan Agreement, as amended
hereby.
     2. Amendments to Loan Agreement. Subject to the terms and conditions
contained herein, the Borrower and the Lender hereby amend the Loan Agreement as
follows:
          (a) The definition of “Adjusted Leased Asset EBITDA” is hereby amended
and restated in its entirety to read as follows:
“Adjusted Leased Asset EBITDA” means Adjusted EBITDA measured solely for all
Facilities other than the Facilities listed on Schedule 1.1(g).”
          (b) Section 2.10 of the Loan Agreement is hereby amended as follows:
               i. The current last sentence of Section 2.10(b), which reads:
“Prepayments of the Term Loan shall be applied against installments payable
under the Term Note in the reverse order of maturity,” is hereby deleted.
               ii. The following sentence is hereby added as the new last
sentence of Section 2.10(b): “All optional prepayments of the Term Loan made in
accordance with this Section 2.10(b) shall, on a cumulative basis, be applied to
and credited against each of the Mandatory Prepayments described in
Section 2.15(a) and Section 2.15(b) in the order that such Mandatory Prepayments
become due and are required to be made, until such Mandatory Prepayments are
paid in full or the cumulative amount of optional prepayments of the Term Loan
available to be so applied has been exhausted, whichever first occurs.”

 

--------------------------------------------------------------------------------

 

          (c) Section 12.12 of the Loan Agreement is hereby amended to delete
the contact information for Lender and substitute in lieu thereof the following
new contact information:
LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Joshua Kochek
Telephone No.: 312-904-0401
Facsimile No.: 312-904-1294
          (d) The list of Schedules to the Loan Agreement is hereby amended to
add a new reference to “Schedule 1.1(g) Facilities Excluded From Adjusted Leased
Asset EBITDA.”
          (e) The Schedules to the Loan Agreement are hereby amended to include
Schedule 1.1(g) attached hereto.
     3. Conditions Precedent. The amendment contained in Section 2 hereof is
subject to, and contingent upon, the prior or contemporaneous satisfaction of
the following conditions precedent:
          (a) The Borrower and Lender shall have executed and delivered to each
other this Amendment, and
          (b) The Borrower shall have delivered to the Lender true, correct and
complete copies of the resolutions of the Borrower Agent authorizing or
ratifying the execution, delivery and performance by the Borrower of this
Amendment.
     4. Reference to and Effect on the Loan Agreement.
          (a) Except as expressly provided herein, the Loan Agreement and all of
the other Financing Agreements shall remain unmodified and continue in full
force and effect and are hereby ratified and confirmed.
          (b) Except as expressly provided herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of: (i) any right,
power or remedy of the Lender under the Loan Agreement or any of the other
Financing Agreements, or (ii) any Default or Event of Default under the Loan
Agreement.
     5. Costs, Expenses and Taxes. Without limiting the obligation of the
Borrower to reimburse the Lender for costs, fees, disbursements and expenses
incurred by the Lender as specified in the Loan Agreement, the Borrower agrees
to pay on demand all reasonable costs, fees, disbursements and expenses of the
Lender in connection with the preparation, execution and delivery of this
Amendment and the other agreements, instruments and documents contemplated
hereby, including, without limitation, reasonable attorneys’ fees and
out-of-pocket expenses.

2

--------------------------------------------------------------------------------

 

     6. Representations and Warranties of the Borrower. The Borrower hereby
represents and warrants to the Lender, which representations and warranties
shall survive the execution and delivery hereof, that on and as of the date
hereof and after giving effect to this Amendment:
          (a) The Borrower has the requisite power and authority to execute,
deliver and perform its obligations under this Amendment. This Amendment has
been duly authorized by all necessary action of the Borrower. This Amendment
constitutes the legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar law affecting
creditors’ rights generally and general principles of equity;
          (b) The Borrower’s representations set forth in the Loan Agreement and
in the Financing Agreements are true, correct and complete on and as of the date
hereof; and
          (c) No Default or Event of Default has occurred and is continuing.
     7. Reference to Loan Agreement; No Waiver.
          (a) Upon the effectiveness of this Amendment, each reference in the
Loan Agreement to “this Loan Agreement,” “this Agreement”, “hereunder,”
“hereof,” “herein” or words of like import shall mean and be a reference to the
Loan Agreement as amended hereby. The term “Financing Agreements” as defined in
Section 1.1 of the Loan Agreement shall include (in addition to the Financing
Agreements described in the Loan Agreement) this Amendment and any other
agreements, instruments or other documents executed in connection herewith.
          (b) The Lender’s failure, at any time or times hereafter, to require
strict performance by the Borrower of any provision or term of the Loan
Agreement, this Amendment or the other Financing Agreements shall not waive,
affect or diminish any right of the Lender hereafter to demand strict compliance
and performance herewith or therewith. Any suspension or waiver by the Lender of
a breach of this Amendment or any Event of Default under the Loan Agreement
shall not, except as expressly set forth herein, suspend, waive or affect any
other breach of this Amendment or any Event of Default under the Loan Agreement,
whether the same is prior or subsequent thereto and whether of the same or of a
different kind or character. None of the undertakings, agreements, warranties,
covenants and representations of the Borrower contained in this Amendment, shall
be deemed to have been suspended or waived by the Lender unless such suspension
or waiver is: (i) in writing and signed by the Lender, and (ii) delivered to the
Borrower. In no event shall the Lender’s execution and delivery of this
Amendment establish a course of dealing among the Lender, the Borrower or any
other obligor or in any other way obligate the Lender to hereafter provide any
amendments or waivers with respect to the Loan Agreement. The terms and
provisions of this Amendment shall be limited precisely as written and shall not
be deemed: (A) to be a consent to a modification (except as expressly provided
herein) or waiver of any other term or condition of the Loan Agreement or of any
other Financing Agreement, or (B) to prejudice any right or remedy that the
Lender may now have under or in connection with the Loan Agreement or any of the
other Financing Agreements.
     8. Successors and Assigns. This Amendment shall be binding upon and inure
to the benefit of the Lender and each of the other parties hereto and their
respective successors and

3

--------------------------------------------------------------------------------

 

assigns; provided, however, the Borrower may not assign this Amendment or any of
the Borrower’s rights hereunder without the Lender’s prior written consent. Any
prohibited assignment of this Amendment shall be absolutely null and void. This
Amendment may only be amended or modified by a writing signed by the Lender and
the Borrower.
     9. Severability. Wherever possible, each provision of this Amendment shall
be interpreted in such a manner so as to be effective and valid under applicable
law, but if any provision of this Amendment is held to be prohibited by or
invalid under applicable law, such provision or provisions shall be ineffective
only to the extent of such provision and invalidity, without invalidating the
remainder of this Amendment.
     10. Governing Law. This Amendment shall be deemed to be a contract made
under the laws of the State of Illinois, and the rights and obligations of the
parties hereunder shall be construed in accordance with and be enforced and
governed by the internal laws of the State of Illinois, without regard to
conflict of law or choice of law principles.
     11. Counterparts; Facsimile or Other Electronic Transmission. This
Amendment may be executed in one or more counterparts, each of which taken
together shall constitute one and the same instrument. Delivery of an executed
counterpart of this Amendment by telefacsimile or other electronic transmission
shall be equally as effective as delivery of a manually executed counterpart of
this Amendment. Any party delivering an executed counterpart of this Amendment
by telefacsimile or other electronic transmission shall also deliver a manually
executed counterpart of this Amendment, but the failure to deliver a manually
executed counterpart shall not affect the validity, enforceability or binding
effect of this Amendment.
***Signature Page Follows***

4

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Loan Agreement to be duly executed and delivered as of the date first above
written.

            BORROWER:

DIVERSICARE MANAGEMENT
SERVICES CO., a Tennessee corporation,
as Borrower Agent
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer     

            ADVOCAT ANCILLARY SERVICES,
INC., a Tennessee corporation
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer     

            ADVOCAT FINANCE, INC., a Delaware
corporation
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer     

            DIVERSICARE MANAGEMENT
SERVICES CO., a Tennessee corporation
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer   

 

--------------------------------------------------------------------------------

 

         

            ADVOCAT DISTRIBUTION
SERVICES, INC., a Tennessee corporation
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer     

            DIVERSICARE ASSISTED LIVING
SERVICES, INC., a Tennessee corporation
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer     

            DIVERSICARE ASSISTED LIVING
SERVICES NC, LLC, a Tennessee limited
liability company
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer     

            DIVERSICARE LEASING CORP., a
Tennessee corporation
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer     

            STERLING HEALTH CARE
MANAGEMENT, INC., a Kentucky corporation
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer   

 

--------------------------------------------------------------------------------

 

            SENIOR CARE CEDAR HILLS, LLC, a
Delaware limited liability company
   

     
BY:
  SENIOR CARE FLORIDA LEASING, LLC, its sole
member

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            SENIOR CARE GOLFCREST, LLC, a
Delaware limited liability company
   

     
BY:
  SENIOR CARE FLORIDA LEASING, LLC, its sole
member

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            SENIOR CARE GOLFVIEW, LLC, a
Delaware limited liability company
   

     
BY:
  SENIOR CARE FLORIDA LEASING, LLC, its sole
member

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer   

 

--------------------------------------------------------------------------------

 

            SENIOR CARE FLORIDA LEASING,
LLC, a Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            SENIOR CARE SOUTHERN PINES,
LLC, a Delaware limited liability company
   

     
BY:
  SENIOR CARE FLORIDA LEASING, LLC, its sole
member

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE AFTON OAKS, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer   

 

--------------------------------------------------------------------------------

 

         

            DIVERSICARE ASSISTED LIVING
SERVICES NC I, LLC, a Delaware limited
liability company
   

     
BY:
  DIVERSICARE ASSISTED LIVING SERVICES NC, LLC,
its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

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

     
BY:
  DIVERSICARE ASSISTED LIVING SERVICES NC, LLC,
its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE BRIARCLIFF, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE CHISOLM, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer   

 

--------------------------------------------------------------------------------

 

            DIVERSICARE HARTFORD, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE HILLCREST, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE LAMPASAS, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE PINEDALE, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer   

 

--------------------------------------------------------------------------------

 

            DIVERSICARE WINDSOR HOUSE,
LLC, a Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE YORKTOWN, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE BALLINGER, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE TEXAS I, LLC, its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE DOCTORS, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE TEXAS I, LLC, its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer   

 

--------------------------------------------------------------------------------

 

            DIVERSICARE ESTATES, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE TEXAS I, LLC, its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE HUMBLE, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE TEXAS I, LLC, its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE KATY, LLC, a Delaware
limited liability company
   

     
BY:
  DIVERSICARE TEXAS I, LLC, its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE NORMANDY
TERRACE, LLC, a Delaware limited
liability company
   

     
BY:
  DIVERSICARE TEXAS I, LLC, its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer   

 

--------------------------------------------------------------------------------

 

            DIVERSICARE TEXAS I, LLC, a
Delaware limited liability company
      By:   /s/ Glynn Riddle         Name:   Glynn Riddle        Its: Executive
Vice President & Chief Financial Officer     

            DIVERSICARE TREEMONT, LLC, a
Delaware limited liability company
   

     
BY:
  DIVERSICARE TEXAS I, LLC, its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            DIVERSICARE ROSE TERRACE, LLC,
a Delaware limited liability company
   

     
BY:
  DIVERSICARE LEASING CORP., its sole member

                  By:   /s/ Glynn Riddle         Name:   Glynn Riddle       
Its: Executive Vice President & Chief Financial Officer     

            LENDER:

LASALLE BANK NATIONAL ASSOCIATION
      By:   /s/ Joshua Kochek         Joshua Kochek        Vice President   

 

--------------------------------------------------------------------------------

 

         

SCHEDULE 1
     1. BORROWERS
Advocat Ancillary Services, Inc.
Advocat Finance, Inc.
Diversicare Management Services Co.
Advocat Distribution Services, Inc.
Diversicare Assisted Living Services, Inc.
Diversicare Assisted Living Services NC, LLC
Diversicare Leasing Corp.
Sterling Health Care Management, Inc.
Senior Care Cedar Hills, LLC
Senior Care Golfcrest, LLC
Senior Care Golfview, LLC
Senior Care Florida Leasing, LLC
Senior Care Southern Pines, LLC
Diversicare Afton Oaks, LLC
Diversicare Assisted Living Services NC I, LLC
Diversicare Assisted Living Services NC II, LLC
Diversicare Briarcliff, LLC
Diversicare Chisolm, LLC
Diversicare Hartford, LLC
Diversicare Hillcrest, LLC,
Diversicare Lampasas, LLC
Diversicare Pinedale, LLC
Diversicare Windsor House, LLC
Diversicare Yorktown, LLC
Diversicare Ballinger, LLC
Diversicare Doctors, LLC
Diversicare Estates, LLC
Diversicare Humble, LLC
Diversicare Katy, LLC
Diversicare Normandy Terrace, LLC
Diversicare Texas I, LLC
Diversicare Treemont, LLC
Diversicare Rose Terrace, LLC

 

--------------------------------------------------------------------------------

 

SCHEDULE 1.1(g)
     2. FACILITIES EXCLUDED FROM ADJUSTED LEASED ASSET EBITDA
Alabama
Hartford Health Care
Windsor House
Arkansas
Newport Healthcare & Rehabilitation
Tennessee
Briarcliff Health Care Center
Texas
Afton Oaks Healthcare & Rehabilitation
Chisolm Trail Nursing & Rehabilitation Center
Hillcrest Manor Nursing & Rehabilitation Center