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Exhibit 10.8
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT ("Agreement") made
and entered into as of this 1st day of September, 1995, by and between National
HealthCare L.P., a Delaware limited partnership (formerly known as National
HealthCorp L.P.) ("BORROWER") and National HealthCare Corporation, a Tennessee
corporation (formerly known as National Health Corporation) ("NATIONAL").
W I T N E S S E T H:
WHEREAS, National extended a revolving credit loan in the amount of
550,000,000 (the "$50,000,000 LOAN") to Borrower evidenced by that certain
Revolving Credit Note dated December 16, 1988 executed by Borrower to the order
of National in the original principal amount of $50,000,000 (the "NOTE")
pursuant to the terms of that certain Revolving Credit Agreement dated December
16, 1988 executed by and between Borrower and National (the "AGREEMENT");
WHEREAS, National obtained the funds to loan to Borrower under the
$50,000,000 Loan by selling $50,000,000 of National common stock to National
Health Corporation Leveraged Employee Stock Ownership Trust) (now known as
National HealthCare Corporation Leveraged Employee Stock Ownership Trust) (the
"TRUST");
WHEREAS, the Trust obtained the funds to purchase the National common
stock from a loan made by Third National Bank in Nashville ("TNB"), Irving Trust
Company ("IT"), Sovran Bank/Central South ("SCS") and SouthTrust Bank of Alabama
("ST") pursuant to a Loan and Security Agreement dated December 16, 1988
executed by and among Trust, Borrower, National, TNB, IT, SCS, ST and TNB as
Agent (the "LOAN AGREEMENT");
WHEREAS, the Loan Agreement benefitted the Borrower;
WHEREAS, Borrower transferred certain assets of Borrower to National
Health Investors, Inc., a Maryland corporation ("NHI") in 1991 and NHI
guaranteed, jointly and severally with National and the Borrower, the
indebtedness described in the Loan Agreement;
WHEREAS, at the request of Borrower, National and NHI, the Lenders to
the Loan Agreement have agreed to limit the joint and several guarantee
obligations of Borrower and National to thirty-eight percent (38 %) of the
indebtedness described in the Loan Agreement and limit the guarantee obligation
of NHI to sixty-two percent (62%) of the indebtedness described in the Loan
Agreement;
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WHEREAS, Borrower, National and NHI have agreed to likewise allocate
the credit extended under the $50,000,000 Loan between Borrower and NHI by
thirty-eight percent (38 %) and sixty-two percent (62 %), respectively, and NHI
has agreed to assume repayment for sixty-two percent (62%) of the amounts
outstanding under the Note as of September 1, 1995, all as pursuant to the terms
of that certain Revolving Credit Agreement dated as of September 1, 1995
executed by and between NHI and National and that certain Revolving Credit Note
dated as of September 1, 1995 executed by NHI to the order of National in the
principal amount of $31,000,000 in connection therewith;
WHEREAS, National and Borrower desire to amend the Agreement and Note
to reflect the reduction in the commitment to Borrower and to reflect other
changes to the terms of the Agreement;
WHEREAS, National and Borrower desire to amend and restate the
Agreement as hereinafter set forth;
NOW, THEREFORE, for and in consideration of the foregoing premises, and
the covenants and agreements contained herein, and other valuable consideration,
the receipt and sufficiency of which are acknowledged hereby, Borrower and
National hereby agree to amend and restate the Agreement as follows:
ARTICLE I
DEFINITIONS
Section 1.1. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 1.1. or in other
provisions of this Agreement in the singular shall have the same meanings when
used in the plural and vice versa):
"ADJUSTED TANGIBLE NET WORTH" means Adjusted Tangible Net Worth as
defined in Section 7.1(a) of this Agreement.
"AFFILIATE" means:
(a) Any corporation that is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the
Code) as is National; and
(b) Any other trade or business (whether or not incorporated)
controlling, controlled by, or under common control (within the meaning
of Sections 414(c) and 414(o) of the Code) with National; and
(c) Any other corporation, partnership, or other organization
that is a member of an affiliated service group (within the meaning of
Sections 414(m) and 414(o) of the Code) with National.
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"BONY" means Irving Trust Company later known as The Bank of New York.
"CLOSING" means Closing as defined in Section 5.1. of this Agreement.
"CLOSING DATE" means December 16, 1988.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT" means (a) from the Closing Date until September 1, 1995,
the obligation of National to extend credit to the Borrower pursuant to this
Agreement in the aggregate principal amount of up to Fifty Million and No/100
Dollars ($50,000,000) as set forth in Section 2.1. of this Agreement and (b)
from September 1, 1995, the obligation of National to extend credit to the
Borrower pursuant to this Agreement in the aggregate principal amount of up to
Nineteen Million and No/100 Dollars ($19,000,000) as set forth in Section 2.1.
of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESOP" means an employee stock ownership plan, as defined in Section
4975(e)(7) of the Code and the regulations thereunder, qualified under Section
401(a) of the Code.
"EVENT OF DEFAULT" means any Event of Default as such term is defined
in Article IX herein.
"FANB" means First American National Bank.
"FCB" means First City Bank.
"FUNB" means First Union National Bank of Tennessee, formerly known as
Dominion Bank of Middle Tennessee.
"FUNDED DEBT" means Funded Debt as defined in Section 7.1.(a) of this
Agreement.
"GAAP" means generally accepted accounting principles at any date of
determination in respect of a company or entity conducting a business the same
as or similar to that of the company or entity being studied, including, without
limitation, those set forth in applicable bulletins, opinions, pronouncements,
statements and interpretations issued by the Accounting Principles Board, the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied.
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"INDEBTEDNESS" means all amounts owing under this Agreement and all
indebtedness evidenced by the Note, including accrued interest thereon, and any
and all costs and expenses incurred by National in enforcing or protecting its
rights with respect to the Note, including, but not limited to, reasonable
attorneys' fees.
"IRS" means the Internal Revenue Service.
"LOAN" means any borrowing under this Agreement and/or any extension of
credit by National to or for Borrower pursuant to this Agreement or any other
Loan Documents, including any renewal, amendment, extension or modification
thereof.
"LOAN AGREEMENT" means the Loan and Security Agreement dated December
16, 1988 by and among the Borrower, National, Trust, BONY, SBT, ST and TNB and
TNB as Agent, as amended by that certain First Amendment to Loan and Security
Agreement dated as of October 17, 1991 executed by Trust, Borrower, National,
TNB, ST and TNB as Agent, as amended by that certain Second Amendment to Loan
and Security Agreement dated as of October 17, 1991 executed by Trust, Borrower,
National, TNB, ST and TNB as Agent, as amended by that certain Third Amendment
to Loan and Security Agreement dated December 31, 1991 executed by Trust,
Borrower, National, TNB, ST, FUNB and TNB as Agent, as amended by that certain
Fourth Amendment to Loan and Security Agreement dated May 21, 1992 executed by
Trust, Borrower, National, TNB, ST, FUNB, FANB, FCB and TNB as Agent, as amended
by that certain Fifth Amendment to Loan and Security Agreement dated December
30, 1993 executed by Trust, Borrower, National, NHI, TNB, ST, FUNB, FANB, FCB
and TNB as Agent, as amended by that certain Sixth Amendment to Loan and
Security Agreement dated May 31, 1994 executed by Trust, Borrower, National,
NHI, TNB, ST, FUNB, FANB, FCB and TNB as Agent, as amended by that certain
Seventh Amendment to Loan and Security Agreement dated as of September 1, 1995
executed by Trust, Borrower, National, NHI, TNB, ST, FUNB, FANB, FCB and TNB as
Agent, and as may be hereinafter amended, modified or restated from time to
time.
"LOAN DOCUMENTS" means Loan Documents as defined in Section 3.2. of
this Agreement.
"MAINTENANCE CAPITAL EXPENDITURES" means, with respect to any Person,
expenditures for the improvement, maintenance or renovation of assets which are
capitalized in accordance with GAAP, but specifically excluding, without
limitation, the expansion of existing nursing homes or other healthcare related
facilities and the acquisition, development or construction of new property.
"MAINTENANCE CAPITAL EXPENDITURE AMOUNT" means, with respect to
Borrower for any period, the greater of (a) actual Maintenance Capital
Expenditures made during such period or (b) Five Hundred Dollars ($500.00) per
bed owned or leased by Borrower during such period or any portion thereof.
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"MEMBER" means a participant of the Plan.
"NHI" means National Health Investors, Inc., a Maryland corporation.
"NHI CREDIT AGREEMENT" means the Revolving Credit Agreement dated as of
September 1, 1995 executed by and between National and NHI, as may be amended,
modified or restated from time to time.
"NOTE" means the promissory note executed by Borrower referenced in
Section 3.2. (a) hereof, together with any and all extensions, amendments,
restatements, renewals and modifications thereof.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other form of entity.
"PLAN" means the National Health Corporation Leveraged Employee Stock
Ownership Plan, as adopted by National, effective January 20, 1988, now known as
National HealthCare Corporation Leveraged Employee Stock Ownership Plan, and as
may be further amended and/or restated or merged from time to time.
"SBT" means Sovran Bank/Central South, later known as Sovran
Bank/Tennessee.
"ST" means South Trust Bank of Alabama.
"STATED RATE" means that rate of interest charged to the Trust for
borrowings by the Trust pursuant to the Loan Agreement, as such rate shall
change from time to time or be adjusted as provided for in the Loan Agreement.
"SOVRAN LOAN" means that certain loan in the original principal amount
of $38,500,000 from Sovran Bank/Central South to NHESOP, Inc. Leverage Employee
Stock Ownership Trust as evidenced by that certain Loan and Security Agreement
dated January 20, 1988 by and between Marine Midland Bank, N.A., not
individually but as Trustee of the NHESOP, Inc. Leverage Employee Stock
Ownership Trust and Sovran Bank/Central South.
"SUBORDINATED DEBT" means any indebtedness that, to the satisfaction of
National as evidenced by a writing signed by National is by its terms expressly
subject and subordinate in all respects to all payments of Funded Debt.
"TNB" means Third National Bank in Nashville.
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"TRUST" means the National Health Corporation Leveraged Employee Stock
Ownership Trust established by National, effective January 20, 1988, and
appointing Marine Midland Bank, N.A. as Trustee, which has been amended to
replace Marine Midland Bank, N.A. as Trustee with Xxxxxxx X. XxXxxxx, Xx. and
Xx. Xxxx X. Xxxxxxxx as Co-Trustees and to change the name to National
HealthCare Corporation Leveraged Employee Stock Ownership Trust, and as may be
further amended and/or restated from time to time.
ARTICLE II
COMMITMENT
Section 2.1. The Commitment. Subject to the terms and conditions of and
relying on the representations, warranties and covenants contained in this
Agreement, National agrees to lend to Borrower the aggregate maximum principal
amount of up to Fifty Million and No/100 Dollars ($50,000,000.00) (the
"COMMITMENT"); provided, however, that the Commitment shall be divided between
Borrower and NHI as of September 1, 1995 with $19,000,000 of the Commitment
being allocated to Borrower and $31,000,000 of the Commitment being allocated to
NHI pursuant to the terms of the NHI Credit Agreement and the Commitment to
Borrower and NHI may be reduced on a percentage basis of 38% and 62%,
respectively, from time to time, so that at no time shall the combined
Commitments of National to Borrower and NHI be in excess of the principal amount
outstanding from time to time under the Loan Agreement.
The Loan is a revolving loan so that amounts repaid on the Loan after
the Loan is funded can be reborrowed by Borrower but, in no event shall the
principal amount outstanding exceed the Commitment allocated to the Borrower.
National shall establish a loan account for Borrower and shall record
in such loan account each loan made to Borrower under the Commitment allocated
to the Borrower, all payments of principal and interest and the current
principal balance from time to time outstanding. The record thereof shall be
conclusive and binding on the Borrower as to such amounts in the records, except
in the case of manifest error; provided, however, that the failure of National
to record any of the foregoing shall not limit or otherwise affect the
obligation of the Borrower to repay all loans made to it hereunder together with
accrued interest thereon.
The Borrower shall pay the Stated Rate on all amounts from time to time
outstanding hereunder.
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ARTICLE III
LOAN PURPOSE AND DOCUMENTATION
Section 3.1. Purpose. The purpose of the Loan will be solely for the
refinancing of existing debt and the acquisition, renovation and development of
nursing home properties owned or leased by Borrower.
Section 3.2. List of Documents. National shall receive the following
documents, satisfactory in all respects to National, each of which shall be duly
authorized, executed, and delivered to National by the appropriate entity or
entities, (together with this Agreement and all other documents and certificates
executed in connection with this Agreement, collectively, the "LOAN DOCUMENTS"):
(a) Note. A revolving credit note executed by Borrower dated
December 16, 1988 in the aggregate principal amount of Fifty Million
and No/100 Dollars ($50,000,000.00), as amended and restated by the
Amended and Restated Revolving Credit Note dated as of September 1,
1995 in the aggregate principal amount of Nineteen Million and No/100
Dollars ($19,000,000), together with any extensions, renewals and
modifications thereof (the "NOTE").
The Note shall be in substantially the form of Exhibit A.
ARTICLE IV
PREPAYMENT TERMS AND USURY
Section 4.1. Prepayment. Borrower may prepay all or part of the
Indebtedness evidenced by the Note at any time before the Note matures without
penalty (any such prepayment shall be applied first to accrued interest and then
to principal); provided, however, that in the event of a prepayment of principal
by Borrower to National accompanied by a simultaneous substantial reduction in
contractual services between Borrower and National (exceeding thirty percent
(30%) of annualized revenues with the base being the immediately preceding
twelve (12) month period) then Borrower agrees to pay to National a prepayment
fee computed by multiplying the prepaid principal amount by the Wall Street
Journal Prime Rate on the date of prepayment by 15%. For example: Assume that
in the third year of the loan amortization National is purchased and both the
Management Agreement between Borrower and National, as well as National's
relationship as the Administrative General Partner of Borrower are terminated.
Further assume that the principal balance owing at this time is $15,000,000 and
the Wall Street Journal Prime Rate on the transaction date is 10%. The
prepayment fee would then be calculated as follows: Principal outstanding X Wall
Street Journal Prime Rate X 15%, or $15,000,000 X 10% X 15%, or $225,000.
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Section 4.2. Usury. Notwithstanding any provision of this Agreement or
the Note or any other Loan Documents to the contrary, it is the intent of
National and the Borrower, and all parties liable on the Note, that National or
any subsequent holder shall never be entitled to receive, collect, reserve or
apply, as interest, any amount in excess of the maximum rate of interest
permitted to be charged by applicable law or regulations, as amended or enacted
from time to time. In the event National, or any subsequent holder, ever
receive, collect, reserve or apply, as interest, any such excess, such amount
that would be excessive interest shall be deemed a partial prepayment of
principal and treated as such, or, if the principal Indebtedness is paid in
full, any remaining excess funds shall immediately be paid to the Borrower. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the highest lawful rate, the Borrower and National shall, to
the maximum extent permitted under applicable law, (a) exclude voluntary
prepayments and the effects thereof, and (b) amortize, prorate, allocate, and
spread, in equal parts, the total amount of interest throughout the entire term
of the Indebtedness; provided that if the Indebtedness is paid and performed in
full prior to the end of the full contemplated term hereof, and if the interest
received for the actual period of existence hereof exceeds the maximum lawful
rate, the holder of the Note shall refund to the Borrower the amount of such
excess or credit the amount of such excess against the principal portion of the
Indebtedness, as of the date it was received, and, in such event, National
shall not be subject to any penalties provided by any laws for contracting for,
charging, reserving or receiving interest in excess of the maximum lawful rate.
ARTICLE V
ADDITIONAL INTEREST AND FEES
Section 5.1. Additional Interest. Borrower shall pay to National an
amount equal to one-half of one percent (.50 %) (computed on the total
commitment of Fifty Million and No/100 Dollars ($50,000,000.00)) as additional
interest on the Loan ("ADDITIONAL INTEREST"), payable as follows:
(a) twenty-five percent (25%) of the Additional Interest on
or before December 21, 1988;
(b) eighteen and three-quarters percent (18.75%) of the
Additional Interest March 16, 1989;
(c) eighteen and three-quarters percent (18.75%) of the
Additional Interest on or before June 14, 1989;
(d) eighteen and three-quarters percent (18.75%) of the
Additional Interest on or before September 12, 1989; and
(e) eighteen and three-quarters percent (18.75%) of the
Additional Interest on or before December 11, 1989.
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All amounts due under this Section 5.1. shall be deemed to have been earned at
the closing of the Loan (the "CLOSING") and shall be due and payable as set
forth in this Section 5.1. irrespective of any events occurring after the
Closing, including but not limited to (i) Borrower's default under the Loan
Documents, (ii) Borrower's failure to draw down or utilize the full amount of
the Loan, or (iii) Borrower's refinancing of the Loan.
Section 5.2. Fees. As additional consideration, Borrower shall pay all
costs, expenses and fees of any kind incurred by the Trust in connection with
the Loan Agreement.
Section 5.3. Spread Fees. Borrower agrees that it shall on June 30 and
December 31 of each year pay to National the difference, if any, between the
amount of interest received by National from the Temporary Investments (as
defined in the Loan Agreement) from time to time held by National and the amount
of interest paid by the Trust pursuant to the Loan Agreement to borrow an amount
of money equal to the principal amount of the Temporary Investments from time to
time held by National.
ARTICLE VI
COVENANTS AND WARRANTIES OF BORROWER
Section 6.1. Borrower hereby covenants, represents and warrants that:
(a) Organization, Powers, etc. (i) Borrower has full power and
authority to execute this Agreement and the documents required
hereunder, as applicable, and to carry out the transactions
contemplated hereby; (ii) the Borrower is validly existing and duly
formed under the laws of the State of Delaware; (iii) the Borrower has
filed all papers with all governmental authorities required as a
pre-condition to own property and transact business; (iv) the Borrower
has all the necessary power and authority to own its properties and
assets and to carry on its businesses; and (v) the Borrower has all
necessary power to enter into, execute and perform the Loan Documents,
as applicable.
(b) Authorization of Borrowing etc. The execution, delivery
and performance of this Agreement, the borrowings hereunder and the
execution and delivery of the Note and other Loan Documents required
hereunder have been duly authorized by all limited partnership action
of the Borrower, and will not violate any provision of law, any order
of any court or other agency of government, any provision of any
indenture, agreement or other instrument to which the Borrower is a
party, or by which the Borrower or any of its properties or assets are
bound, or be in conflict with, result in a breach of or constitute
(with due notice and/or lapse of time) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever
upon any of the properties or assets of the Borrower except as
contemplated by this Agreement.
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(c) Validity and Binding Nature. This Agreement, the Note and
all other Loan Documents, when duly executed and delivered, are and
will be, legal, valid and binding obligations of the Borrower
enforceable in accordance with their respective terms.
(d) Title to Properties. The Borrower has good and marketable
title to all of the Borrower's properties and assets, and except as
disclosed to National all such properties and assets are free and clear
of mortgages, pledges, liens, charges and other encumbrances.
(e) Litigation. There is no action, suit or proceeding at law
or in equity or by or before any governmental instrumentality,
arbitration board or other agency now pending, or, to the knowledge of
the Borrower, threatened against or affecting the Borrower, or any
properties or rights of the Borrower, which, if determined adversely,
would materially impair the rights of the Borrower to carry on business
substantially as now conducted or would materially adversely affect the
financial condition of the Borrower as a whole, or would impair the
ability of the Borrower to perform its obligations under the Loan
Documents. The Borrower is not in default with respect to any order,
decree or judgment of any court, arbitrator or governmental body.
(f) Payment of Taxes. The Borrower has filed or caused to be
filed all Federal, state and local tax and information returns that are
required to be filed, and have paid or caused to be paid all taxes as
shown on said returns or on any assessment received by them, to the
extent that such taxes have become due, except for taxes that are being
contested in good faith and all property reserved/or on Borrower's
books and records.
(g) Agreements. Borrower is not a party to any restriction
adversely affecting its business, properties or assets, operations or
conditions (financial or otherwise). Borrower is not in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to
which it is a party.
(h) Purpose of Loan. Proceeds of the Loan will be used
exclusively for the purposes set out in section 3.1.
(i) Investment Company Act. The Borrower is not an "investment
company" or a company "controlled" by an "investment company," within
the meaning of the Investment Company Act of 1940, as amended.
(j) Regulation U. The Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System).
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(k) Situs. Borrower's chief place of business is at the
address appearing after Borrower's signature hereto. Borrower will
notify National promptly in writing of any change in the location of
any such chief place of business or the establishment of any new place
of business.
(1) Records. Borrower at all times will keep accurate and
complete records of its affairs. National shall have the right to call
at Borrower's places of business at intervals to be determined by
National, and without hindrance or delay, to inspect, audit, check, and
make extracts from the books, records, journals, orders, receipts,
correspondence, and other data of Borrower.
(m) Sell or Transfer. Borrower, shall not sell or transfer all
or a material portion of its assets to a third party outside the normal
course of Borrower's business without National's prior written consent.
(n) Notice upon Event of Default. In the event of the
occurrence of an Event of Default, Borrower shall notify National
immediately in writing, setting forth the nature of the default and the
action Borrower proposes to take to cure the default.
(o) Violation of Law. Borrower will comply with all applicable
statutes and government regulations concerning its operations and
assets.
(p) Costs, Expenses, etc. Borrower shall pay all costs
incurred by National in connection with the preparation, recording, and
filing of all documents evidencing or incident to this transaction,
including any legal fees incurred by National.
(q) Consent. No consent of any party, not already obtained,
including the limited and general partners of Borrower, and no license,
approval, authorization, registration, or declaration with any
governmental or regulatory authority or agency is required in
connection with the execution, delivery, performance, validity, or
enforceability of the Loan Documents.
(r) Quarterly Financials. Borrower shall furnish to National
within forty-five (45) days after the close of each quarter, including
with respect to (ii) and (iii) of this Section 6.1 (r) the last fiscal
quarter, (i) unaudited financial statements of Borrower using GAAP
consistently applied by a certified public accounting firm acceptable
to National, (ii) unaudited financial statements of Borrower's nursing
homes, and (iii) a quarterly aging of Borrower's Accounts.
(s) Annual Financials. Borrower shall furnish to National
within ninety (90) days after the close of each calendar year audited
financial statements of Borrower using GAAP consistently applied by a
certified public accounting firm acceptable to National, which
statements shall express an unqualified opinion as to the soundness of
Borrower's financial position. The audited financial statements shall
be accompanied by a statement
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from the chief financial officer and general partner of Borrower, that
no Events of Default have occurred (or with notice and/or the passage
of time would occur) under the Loan Documents.
(t) Quarterly Compliance. Borrower shall each furnish to
National within forty-five (45) days after the close of each quarter a
statement confirming that no Event of Default exists under this
Agreement, and Borrower shall furnish to National within forty-five
(45) days after the close of each quarter calculations showing
compliance with Section 7.1. hereof.
(u) SEC Reports. All of the financial statements of Borrower
and the descriptions of Borrower's business and operations in
Borrower's 10-Ks which have been delivered to National have been and
are true and correct in all material respects and there has been no
material adverse change in Borrower's financial condition, operations
or further prospects since June 30, 1995.
Section 6.2. Negative Covenants. So long as any Indebtedness secured
hereby is outstanding, Borrower covenants that, without the prior written
consent of National, it will not:
(a) Become liable, directly or indirectly, with respect to any
obligation for money borrowed, or the equivalent, except the (i)
Indebtedness, (ii) the loan evidenced by that certain Loan and Security
Agreement dated as of January 20, 1988 by and between Marine Midland
Bank, N.A., not individually but as Trustee of NHESOP, Inc. Leveraged
Employee Stock Ownership Trust and SBT, (iii) the Two Million and
No/100 Dollar ($2,000,000.00) working capital loan from Borrower to
National and (iv) pursuant to the Loan Agreement and related documents.
(b) Make investments, other than in qualified employer
securities of National, except for investments in Temporary Investments
(as defined in the Loan Agreement).
(c) Suffer or permit any of its assets to become subject to
any security interest, lien, or other encumbrance, except for those
required by the Loan Agreement.
(d) Create, incur or suffer to exist any pledge, mortgage,
assignment or other encumbrance of or upon any of its assets or
property now owned or hereafter acquired, or of or upon the income or
profits thereof, except (i) deposits or pledges in connection with or
to secure payment of worker's compensation, unemployment insurance, old
age pensions or other social security or in connection with the good
faith contest of any tax lien, (ii) presently existing liens, provided
that the principal amount of indebtedness outstanding from time to time
secured by such liens shall not be increased, (iii) liens remaining
undischarged for not longer than sixty (60) days from the creation
thereof in respect of judgments or awards that do not constitute an
Event of Default hereunder, (iv) liens for taxes or reassessments or
governmental charges or levies if payment shall not at the time be
required to be made, (v) liens in respect of pledges or deposits to
secure
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public or statutory obligations or to secure performance in connection
with bids or contracts or materialmen's, mechanics', carrier's,
workmen's, repairmen's or other like liens not then delinquent, or
deposits to obtain the release of such liens; deposits to secure
surety, stay, appeal or custom bonds; and licenses or leases of
patents, trademarks or trade names, (vi) leases, liens, rights of
reverter and other possessory rights of the lessor thereunder; zoning
restrictions, easements, rights-of-way or other restrictions on the use
of real property, and minor irregularities in the title thereto; and
any other liens and encumbrances similar to those described in this
subparagraph (vi) that were not incurred in connection with the
borrowing of money or the obtaining of advances or credits, (vii)
purchase money security interests so long as such liens attach only to
the property acquired thereby, and (vii) the security interests
expressly provided herein or in the Loan Agreement and related
documents; provided that all of the foregoing do not in the aggregate
materially detract from the value of Borrower's property or materially
impair the use thereof in the operation of its businesses or the
marketability thereof.
ARTICLE VII
COVENANTS AND CONDITIONS IMPOSED ON BORROWER
Section 7.1. Borrower shall comply with the following financial
covenants, with determination of compliance being made quarterly unless more
frequently requested by National:
(a) Funded Debt to Adjusted Tangible Net Worth Ratio. Borrower
shall at all times maintain a "FUNDED DEBT" TO "ADJUSTED TANGIBLE NET
WORTH" ratio of no more than 3.5 to 1. "Funded Debt" is defined as long
term debt (but excluding Subordinated Debt), plus notes payable, plus
current maturities of long term debt, plus capitalized and operating
leases, plus all guaranties; and "Adjusted Tangible Net Worth" is
defined as total equity of Borrower, plus approximately Fifteen Million
Seven Hundred Forty-Five Thousand Dollars ($15,745,000) in deferred
income resulting from the profit on the sale of nursing home properties
to National as equity (which amount shall decrease in accordance with
Borrower's books and records that comply with GAAP), plus Subordinated
Debt, minus goodwill and unamortized loan costs in excess of One
Million Four Hundred Thousand and No/100 Dollars ($1,400,000.00).
(b) Debt Service Coverage. Borrower shall at all times
maintain a minimum "Debt Service Coverage" of 1.3 to 1. The Debt
Service Coverage is defined as the ratio of (i) the annualized sum of
net income, plus depreciation/amortization, plus interest expense,
minus the Maintenance Capital Expenditures Amount for such period, to
(ii) interest expense, plus current maturities of long term debt, plus
any payments required to fund any guaranty obligations of Borrower.
(c) Notes Receivable. Borrower shall at all times limit the
balance of notes receivable as set forth on its financials to no more
than Borrower's Adjusted Tangible Net Worth; provided, however, that
the notes receivable listed in Exhibit B attached
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hereto shall be excluded from the balance of notes receivable as set
forth on Borrower's financials in determining compliance with this
subparagraph (c). The listing of notes receivable on Exhibit B attached
hereto may be modified, amended and/or reduced from time to time by
National; provided, however, that any nursing home project or use of
Loan proceeds approved by National which results in a note receivable
to Borrower automatically shall be excluded from the balance of notes
receivable and shall be listed on Exhibit B.
(d) Fixed Charge Coverage Ratio. Borrower shall at all times
maintain a Fixed Charge Coverage Ratio of not less than 1.10 TO 1.
"FIXED CHARGE COVERAGE RATIO" shall mean (a) the annualized sum of net
income, plus depreciation and amortization, plus interest expense, plus
lease expense (excluding any components included in interest expense
and amortization), minus distributions paid to holders of units of
Borrower for the fiscal year, as projected by Borrower in written
financial projections furnished to National or as actually paid,
whichever is greater, divided by (b) the sum of interest expense, plus
current maturities of long-term debt, plus lease expense (excluding any
components included in interest expense and current maturities of
long-term debt) plus any payments required to fund any obligations
guaranteed by Borrower, including, without limitation, the Guaranteed
Obligations (as such term is defined in the Loan Agreement), all as
determined in accordance with GAAP.
ARTICLE VIII
CONDITIONS PRECEDENT TO LOAN
Section 8.1. The following shall be conditions precedent to National's
obligation to make Loan contemplated hereby:
(a) Opinion of Counsel. Borrower shall provide National with
an opinion of counsel that is acceptable to National and National's
counsel.
(b) Charter and Limited Partnership Certificate. Borrower
shall provide National certified copies of Borrower's limited
partnership agreement and certificate of limited partnership of
Borrower, together with certified copies, satisfactory in all respects
to National, of all corporate and partnership resolutions and/or
actions taken by Borrower and its general partner, authorizing the
execution, delivery, and performance of this Agreement and the other
agreements and transactions contemplated herein.
(c) Signature Information. Borrower shall provide Agent a
certificate, satisfactory in all respects to National, of who will act
as Borrower's representative or representatives for the purpose of
executing documents and delivering and accepting notices and other
communications in connection with the Loan Documents. National may
conclusively rely on such certificate until National receives notice in
writing from Borrower to the contrary.
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(d) Documents. Borrower shall deliver to National the Note
duly completed and executed by Borrower.
(e) Event of Default. No Event of Default shall have occurred
and be continuing.
(f) Representations and Warranties. The representations and
warranties in the Loan Documents shall be true and correct on and as of
the Closing Date, and the chief financial officer of Borrower shall
have delivered to National a duly executed certificate satisfactory in
all respects to National as to the foregoing.
(g) Additional Documents or Information. Borrower shall
provide National with any other documents or information that National
may reasonably require.
Section 8.2. Waiver. No advance of the proceeds of the Loan shall
constitute a waiver of any of the conditions of National's obligation to make
the Loan, and the failure of Borrower to satisfy any condition not satisfied at
Closing within ten (10) days after receipt of written notice from National shall
constitute an Event of Default hereunder.
ARTICLE IX
DEFAULT
Section 9.1. The term "Event of Default," whenever used in this
Agreement and in any instrument referred to herein, shall mean any one or more
of the following events or conditions:
(a) Principal or Interest Payment. Failure by Borrower to make
payment of any installment of principal or interest on any of the
obligations contained herein or in the Note within five (5) business
days of when the same shall be due and payable under the terms hereof
or thereof.
(b) Covenant or Agreement. Any breach by Borrower of any
covenant, agreement, condition precedent, or undertaking of Borrower
contained in this Agreement, if such breach shall continue without
being cured for thirty (30) days after notice thereof to Borrower from
National by certified mail.
(c) Representations or Warranties. Any breach of Borrower's
representations or warranties contained herein or any misstatement or
omission of fact or failure to state facts necessary to make such
representations and warranties in this Agreement not misleading.
(d) Misleading Report. Any report, certificate, financial
statement or other instrument furnished in connection with this
Agreement or the borrowings hereunder shall prove to be false or
misleading in any material respect.
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(e) Involuntary Bankruptcy or Receivership Proceedings. A
receiver, custodian, liquidator or trustee of Borrower, or of any of
its property, is appointed by the order or decree of any court or
agency or supervisory authority having jurisdiction, and such decree or
order remains in effect for more than sixty (60) days; or Borrower is
adjudicated bankrupt or insolvent; or any of the property of Borrower
is sequestered by court order and such order remains in effect for more
than sixty (60) days; or a petition is filed against Borrower under any
state or federal bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or receivership law of
any jurisdiction, whether now or hereafter in effect, and not dismissed
within sixty (60) days of filing.
(f) Voluntary Petitions. Borrower takes affirmative steps to
prepare to file or files a petition in voluntary bankruptcy or seeks
relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect, or consents to the filing of any petition against it under any
such law.
(g) Monetary Judgment. Final judgment for the payment of money
exceeding valid, applicable, collectible insurance coverage by more
than One Hundred Thousand and No/100 Dollars ($100,000.00) shall be
rendered against the Borrower and such judgment is not discharged or
satisfied within one hundred twenty (120) days of the date such
judgment becomes final;
(h) Existence. The Borrower shall cease to exist.
(i) Plan Termination. The complete termination of the Trust,
which shall include, without limitation, the complete cessation of
contributions by National and its Affiliates to Plan or the termination
of the Plan by appropriate corporate resolution(s).
(j) Tax Lien. The filing of any tax lien whatsoever with
respect to any of Borrower's property, except for a tax lien that is
being contested in good faith.
(k) Cross Default. The occurrence of any event of default as
defined under (i) the Sovran Loan or (ii) the Loan Agreement.
Section 9.2. Remedies. Upon the occurrence of any Event of Default all
obligations of Borrower contained herein or in the Note shall become due and
payable immediately without presentment, demand, or notice to Borrower or any
other person obligated hereon or thereon.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Survival. All agreements, representations, and warranties
contained herein or made in writing by or on behalf of Borrower in connection
with the transactions contemplated hereby shall survive the execution and
delivery of this Agreement, any investigation at any time made by National and
the acquisition and disposition of the note evidencing the Indebtedness secured
hereby.
Section 10.2. Selection of Remedies. This Agreement shall not prejudice
the right of National at its option to enforce collection of the Note evidencing
the Indebtedness by suit or in any other lawful manner, or to resort to any
other security for the payment of the Note, this Agreement and the other Loan
Documents being additional, cumulative, and concurrent security for the payment
of such obligations.
Section 10.3. Cumulative Remedies. No right or remedy in this Revolving
Credit Agreement, the Note, or the other Loan Documents referred to herein is
intended to be exclusive of any other right or remedy, but every such right or
remedy shall be cumulative and shall be in addition to every other right or
remedy herein or in such notes conferred, now or hereafter existing, at law, in
equity, or by statute.
Section 10.4. Delay or Omission. No delay or omission by National to
exercise any right or remedy shall impair any other right or remedy or be
construed to be a waiver of any default or an acquiescence therein. Every right
and remedy herein conferred or now or hereafter existing at law, in equity, or
by statute may be exercised separately or concurrently and in such order and as
often as may be deemed reasonable by National.
Section 10.5. Invalidity. The invalidity or unenforceability of any of
the rights or remedies herein provided in any jurisdiction shall not in any way
affect the right to the enforcement in such jurisdiction or elsewhere of any of
the other rights or remedies herein provided.
Section 10.6. Time. Time is of the essence with regard to each and
every provision of this Agreement.
Section 10.7. Entire Agreement. This Agreement, and the documents
executed and delivered pursuant hereto, constitute the entire agreement between
the parties and no amendment or waiver of any provision of any Loan Document,
nor any consent thereunder, shall in any event be effective without the written
concurrence of National then such waiver or consent shall be effective only in
the specific instance and for the specific purposes for which given.
Section 10.8. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto; provided, however, in no event
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shall Borrower assign its rights under the Loan Documents without the prior
written consent of National. Any such assignment without such prior written
consent shall be void.
Section 10.9. Counterparts. This Agreement may be executed in two (2)
or more counterparts, and it shall not be necessary that the signatures of all
parties be contained on any one counterpart; each counterpart shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 10.10. Waiver of Jury Trial. NATIONAL AND BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVER (TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREIN.
Section 10.11. Closing. The closing shall occur at the offices of
Xxxxxx, Xxxxxxxx & Xxxxxxx on December 16, 1988 at 10:00 a.m. Nashville time or
at such other location and time as the parties hereto shall mutually agree.
Section 10.12. Costs, Expenses, and Taxes. Borrower agrees to pay on
demand all out-of-pocket costs and expenses of National (including the
reasonable fees and out-of-pocket expenses of counsel for National and of local
counsel, if any, whom National's counsel may retain) in connection with the
preparation, execution, delivery, administration, enforcement and/or protection
of National's rights under the Loan Documents. In addition, Borrower shall
indemnify National from and against any and all costs, expenses (including
reasonable legal fees), claims, demands, actions, losses or liabilities (except
such as are a direct result of the gross negligence or willful misconduct of
National) that National may suffer or incur in connection with this Agreement or
any of the Loan Documents. In addition, Borrower agree to pay and to hold
National harmless from all liability for any stamp or other taxes (including
taxes under Tennessee Code Annotated Section 67-4-409 due upon the recordation
of mortgages and financing statements) that may be payable in connection with
the execution or delivery of this Agreement, under this Agreement, or the
issuance of the Note or any other Loan Documents delivered or to be delivered
under or in connection with this Agreement. Borrower, upon request, promptly
will reimburse National for all amounts expended, advanced, or incurred by
National to satisfy any obligation of Borrower under this Agreement or any
other Loan Documents, or obligation of Borrower, or to collect the
Indebtedness, or to enforce the rights of National under this Agreement or any
other Loan Document, which amounts will include without limitation all court
costs, attorneys' fees, fees of auditors and accountants, costs of insurance,
and investigation expenses reasonably incurred by National in connection with
any such matters, together with interest thereon at the rate applicable to past
due principal and interest as set forth in the Loan Documents but in no event in
excess of the maximum lawful rate of interest permitted by applicable law on
each such amount. All obligations for which this Section provides shall survive
any termination of this Agreement.
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ARTICLE XI
CHOICE OF LAW
Section 11.1. Tennessee. This Agreement is being delivered and is
intended to be performed in the State of Tennessee and, to the extent not
governed by the laws of the United States of America, shall be construed and
enforced in accordance with and governed by the laws of such State.
Section 11.2. Jurisdiction. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY TENNESSEE STATE OR FEDERAL COURT SITTING IN THE CITY OF
NASHVILLE OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT. THE BORROWER HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT AND
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. THE BORROWER HEREBY AGREE THAT A FINAL
JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT, AFTER
ALL APPROPRIATE APPEALS, SHALL BE CONCLUSIVE AND BINDING UPON IT.
Section 11.3. Process. PROCESS MAY BE SERVED IN ANY SUIT, ACTION
COUNTERCLAIM OR PROCEEDING OF THE NATURE REFERRED TO IN SECTION 11.2. HEREOF BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, TO THE ADDRESS OF THE BORROWER, AND NATIONAL, AS APPLICABLE,
AS SET FORTH IN SECTION 12.1. HEREOF OR TO ANY OTHER ADDRESSES OF WHICH THE
BORROWER HAVE GIVEN WRITTEN NOTICE TO NATIONAL. THE BORROWER HEREBY AGREES THAT
SUCH SERVICE (A) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON IT IN ANY SUCH SUIT, ACTION, COUNTERCLAIM OR PROCEEDING, AND (B) SHALL TO
THE FULLEST EXTENT ENFORCEABLE BY LAW, BE TAKEN AND HELD TO BE VALID PERSONAL
SERVICE UPON AND PERSONAL DELIVERY TO IT.
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ARTICLE XII
NOTICE
SECTON 12.1 Notice. Any communications between the parties hereto or
notices provided herein shall be deemed given upon the mailing of same by
certified mail, return receipt requested, to: the address set forth below or to
such other addresses as the parties may indicate hereafter in writing.
Borrower: 000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. X. Xxxxxxx Xxxxx
National: 000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. XxXxxxx, Xx.
ARTICLE XIII
SEVERABILITY
Section 13.1. Severability. If any provision of this Agreement shall
be held invalid under any applicable law, such invalidty shall not affect any
other provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the day and date first above written.
NATIONAL HEALTHCARE L.P.
By: NHC, INC.
Managing General Partner
By: /s/
-----------------------------
Title: Sr. V.P.
--------------------------
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NATIONAL HEALTHCARE CORPORATION
By: /s/
--------------------------------
Title: Sr V.P.
-----------------------------
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