Exhibit 10.2
SECOND AMENDMENT TO
CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT ("Amendment") is dated as of
August 28, 1997, by and among Harborside Healthcare Corporation ("HHC"), and the
other entities listed on SCHEDULE I hereto, as joint and several borrowers (each
a "BORROWER" and collectively the "BORROWERS"), the LENDERS party hereto
("Lenders"), and THE CHASE MANHATTAN BANK, as Administrative Agent for the
lenders party hereto and any successors or assigns (the "Agent"), and amends the
Credit Agreement entered into as of April 14, 1997 (the "Credit Agreement"), by
and among the Borrowers, the Agent and the Lenders, as amended by the First
Amendment to Credit Agreement dated as of August 1, 1997 by and among the
Borrowers, the Agent and the Lenders. The capitalized terms which are not
defined in this Amendment shall have their respective meanings specified in the
Credit Agreement.
WHEREAS, The Sumitomo Bank, Limited, The First National Bank of Maryland
and Bank of Montreal are hereby becoming Lenders under the Credit Agreement;
WHEREAS, the Borrowers, the Agent and the Lenders desire to amend the
Credit Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereby amend the Credit Agreement as follows:
Section 1. SECTION 1.01 to the Credit Agreement shall be amended by
deleting the definitions for "Alternate Base Rate", "Applicable Rate",
"Borrowing Base", "Consolidated EBITDAR", "Consolidated Fixed Coverage Ratio",
"Consolidated Leverage Ratio", "Eligible Real Estate", "Maturity Date", "Prime
Rate", "Qualified Appraisal", "Rent", "Required Lenders" and "Statutory Reserve
Rate" in their entirety and substituting therefor the following definitions:
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to
the Prime Rate in effect on such day plus the Applicable Rate. Any change
in the Alternate Base Rate due to a change in the Prime Rate, shall be
effective from and including the effective date of such change in the
Prime Rate.
"APPLICABLE RATE" means, for any day, with respect to any Eurodollar
Loan or ABR Loan, as the case may be, the applicable percentage per annum
as set forth below opposite the Consolidated Leverage Ratio:
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Consolidated Applicable
Leverage Eurodollar Applicable
RATIO RATE ABR RATE
Greater than or
equal to: 5.00:1.00 1.75% 0.50%
Greater than or
equal to: 4.00:1.00 1.50% 0.25%
but less than: 5.00:1.00
Greater than or
equal to: 3.00:1.00 1.00% 0.00%
but less than: 4.00:1.00
Less than: 3.00:1.00 0.75% 0.00%
Upon delivery of the Compliance Certificate by HHC to Agent pursuant to
Section 4.02(d) and Section 5.01(c), the Applicable ABR Rate and the
Applicable Eurodollar Rate shall automatically be adjusted in accordance
with such Compliance Certificate, such adjustment to become effective on
the next succeeding Business Day following the receipt by the Agent of
such Compliance Certificate; PROVIDED, in the event a Compliance
Certificate is not delivered within five (5) days after the date such
Compliance Certificate is required to be delivered pursuant to Section
5.01(c), then until delivery of such Compliance Certificate, the
Applicable ABR Rate shall be .50% per annum and the Applicable Eurodollar
Rate shall be 1.75% per annum; PROVIDED FURTHER that if a Compliance
Certificate erroneously indicates an applicable rate more favorable to the
Borrowers than would be afforded by the actual calculation of the
Consolidated Leverage Ratio, the Borrowers shall promptly pay such
additional interest as shall correct for such error.
"BORROWING BASE" means, at the date of the most recent Borrowing
Base Certificate required to be furnished pursuant to Section 2.02(e)
hereof, (A) the sum of (i) 75% of the Eligible Accounts and (ii) 75% of
the Designated Value of Eligible Real Estate, less (B) all obligations and
liabilities of the Lessor, Lessee and Borrowers to any of the Lease Agent
or the Lease Lenders, arising out of or in connection with the amounts
then due and payable on the Tranche A Loans and the Tranche B Loans (each
as defined in the Lease Facility Documents) and the aggregate amount
outstanding Investor Contribution and all amounts due and payable on
account of the Investor Yield (as defined in the Lease Facility
Documents), including, without limitation, all unpaid principal of and
interest on any and all such obligations.
"CONSOLIDATED EBITDAR" shall mean for each twelve month period
ending on the last day of the accounting period covered by the
consolidated financial statements of HHC and its Subsidiaries, and
delivered pursuant to Section 5.1, the sum of (a) Consolidated Net Income
(but excluding any extraordinary losses or nonrecurring expenses, in each
case only to the extent that such amount was otherwise included in the
determination of applicable Consolidated Net Income), PLUS (b) interest
expense, PLUS (c) taxes deducted in calculating Consolidated Net Income,
PLUS (d) depreciation, PLUS (e) amortization, PLUS (f) Rent, in each case
of HHC and its Subsidiaries on a consolidated basis determined in
accordance with GAAP.
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"CONSOLIDATED FIXED COVERAGE RATIO" shall mean for each twelve month
period ending on the last day of the accounting period covered by the
consolidated financial statements of HHC and its Subsidiaries, and
delivered pursuant to Section 5.1, the ratio of (i) Consolidated EBITDAR
for such period, to (ii) (a) Rental Payments, PLUS (b) the sum of interest
and principal payments due in respect of Indebtedness for such period of
HHC and its Subsidiaries on a consolidated basis determined in accordance
with GAAP (for purposes hereof the rental payments due with respect to the
capital lease obligation associated with HHC's four facilities acquired on
July 1, 1996 in the Cleveland, Ohio area (the "Ohio Capital Lease
Obligation") shall be included as Rental Payments and not as payments due
in respect of Indebtedness).
"CONSOLIDATED LEVERAGE RATIO"shall mean for each twelve month period
ending on the last day of the accounting period covered by the
consolidated financial statements of HHC and its Subsidiaries, and
delivered pursuant to Section 5.1, the ratio of (A) (i) Indebtedness, PLUS
(ii) LC Exposure, PLUS (iii) Capital Lease Obligations (excluding the Ohio
Capital Lease Obligation), PLUS (iv) the product of eight (8) times Rental
Payments PLUS (v) the dollar amount of any Pro Forma Rental Payment
Adjustment, to (B) Pro Forma Consolidated EBITDAR.
"ELIGIBLE REAL ESTATE" means (A) the real property owned by any of
the Borrowers with respect to which (i) the Administrative Agent, for the
benefit of the Lenders, has a first priority mortgage, and (ii) the
Administrative Agent and HHC have jointly designated as Eligible Real
Estate (for purposes of this clause (A)(ii), the Administrative Agent and
HHC have designated Harborside Healthcare-Toledo, Harborside
Healthcare-Ocala, and Harborside Healthcare-Gulf Coast as Eligible Real
Estate), plus (B) the real property owned by Lessor with respect to which
the Lease Agent, for the benefit of the Lease Lenders, has a first
priority mortgage pursuant to the Lease Facility Documents.
"MATURITY DATE" means September 1, 2002.
"PRIME RATE" means (a) the highest of (1) the rate of interest
publicly announced by the Agent as its prime rate in effect at its
principal office in New York City (this rate is not intended to be the
lowest rate charged by the Agent to its borrowers), and (2) the Federal
Funds Effective Rate from time to time in effect plus 0.5%; each change in
the Prime Rate shall be effective from and including the date such change
is publicly announced as being effective (the Prime Rate not being
intended to be the lowest rate of interest charged by the Administrative
Agent in connection with extensions of credit to debtors).
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"QUALIFIED APPRAISAL" means an appraisal of the fair market value of
any portion of the Eligible Real Estate, which appraisal meets each of the
following requirements: (i) such appraisal was prepared by a nationally
recognized reputable appraiser acceptable to the Administrative Agent,
(ii) unless otherwise determined by the Administrative Agent in its sole
discretion, the date of such appraisal is not more than twelve (12) months
prior to the date such appraisal is being used to determine the Designated
Value of such Eligible Real Estate, (iii) such appraisal has been assigned
to the Administrative Agent by the preparer thereof, and (iv) the scope
and basis of such appraisal is satisfactory to the Administrative Agent in
its sole discretion and comply with the Financial Institutions Reform,
Recovery and Enforcement Act of 1989.
"RENT" shall mean for each twelve month period ending on the last
day of the accounting period covered by the consolidated financial
statements of HHC and its Subsidiaries, and delivered pursuant to Section
5.1, the dollar amount of rent expense recognized in the aforementioned
consolidated financial statements, but shall not include the amount
required to be paid in connection with the Ohio Capital Lease Obligation
or amounts required to be paid in respect of maintenance, repairs, income
taxes, insurance, assessments or other similar charges.
"REQUIRED LENDERS" means, at any time, Lenders having Revolving
Credit Exposures and unused Commitments representing 66 2/3% of the sum of
the total Revolving Credit Exposures and unused Commitments at such time.
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is
the number one minus the aggregate of the highest maximum reserve
percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board to which any
Lender is subject, with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of the Board). Such reserve percentages shall include
those imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation. The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
Section 2. SECTION 1.01 to the Credit Agreement shall be further amended
by adding the following definitions:
"COMMITMENT FEE RATE" means, for any day, the applicable percentage
per annum as set forth below opposite the Consolidated Leverage Ratio:
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Consolidated Commitment
Leverage Fee
RATIO RATE
Greater than or
equal to: 5.00:1.00 0.375%
Greater than or
equal to: 4.00:1.00 0.25%
but less than: 5.00:1.00
Greater than or
equal to: 3.00:1.00 0.25%
but less than: 4.00:1.00
Less than: 3.00:1.00 0.20%
Upon delivery of the Compliance Certificate by HHC to Agent pursuant to
Section 4.02(d) and Section 5.01(c), the Commitment Fee Rate shall
automatically be adjusted in accordance with such Compliance Certificate,
such adjustment to become effective on the next succeeding Business Day
following the receipt by the Agent of such Compliance Certificate;
PROVIDED, in the event a Compliance Certificate is not delivered within
five (5) days after the date such Compliance Certificate is required to be
delivered pursuant to Section 5.01(c), then until delivery of such
Compliance Certificate, the applicable Commitment Fee Rate shall be 0.375%
per annum; PROVIDED FURTHER that if a Compliance Certificate erroneously
indicates an applicable rate more favorable to the Borrowers than would be
afforded by the actual calculation of the Consolidated Leverage Ratio, the
Borrowers shall promptly pay such additional interest as shall correct for
such error.
"COMPLIANCE CERTIFICATE" means a certificate delivered to the Agent
and the Lenders by HHC, as agent for the Borrowers, pursuant to Sections
4.02(d) and 5.01(c).
"LC FEE RATE" means, for any day, with respect to any Letter of
Credit, the applicable percentage per annum as set forth below opposite
the Consolidated Leverage Ratio:
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Consolidated
Leverage LC Fee
RATIO RATE
Greater than or
equal to: 5.00:1.00 1.25%
Greater than or
equal to: 4.00:1.00 1.00%
but less than: 5.00:1.00
Greater than or
equal to: 3.00:1.00 1.00%
but less than: 4.00:1.00
Less than: 3.00:1.00 1.00%
Upon delivery of the Compliance Certificate by HHC to Agent pursuant to
Section 4.02(d) and Section 5.01(c), the LC Fee Rate shall automatically
be adjusted in accordance with such Compliance Certificate, such
adjustment to become effective on the next succeeding Business Day
following the receipt by the Agent of such Compliance Certificate;
PROVIDED, in the event a Compliance Certificate is not delivered within
five (5) days after the date such Compliance Certificate is required to be
delivered pursuant to Section 5.01(c), then until delivery of such
Compliance Certificate, the applicable LC Fee Rate shall be 1.25% per
annum; PROVIDED FURTHER that if a Compliance Certificate erroneously
indicates an applicable rate more favorable to the Borrowers than would be
afforded by the actual calculation of the Consolidated Leverage Ratio, the
Borrowers shall promptly pay such additional interest as shall correct for
such error.
"LEASE AGENT" shall have the meaning set forth in the definition of
"Lease Facility Documents."
"LEASE LENDERS" shall have the meaning set forth in the definition
of "Lease Facility Documents."
"LESSOR" means HHC 1997-1 Trust.
"LEASE FACILITY DOCUMENTS" means (i) that certain Credit Agreement
dated as of the date hereof among Lessor, the lenders party thereto (the
"Lease Lenders") and The Chase Manhattan Bank, as Agent for the Lease
Lenders and any successors or assigns (the "Lease Agent"), (ii) that
certain Guaranty Agreement executed as of the date hereof by the Borrowers
in favor of the Lease Agent and the Lease Lenders, (iii) that certain
Participation Agreement dated as of the date hereof among HHC as Lessee,
Lessor, BMO Leasing (U.S.), Inc. and the Lease Agent, (iv) that certain
Lease Agreement dated as of the date hereof between Lessor and HHC as
Lessee, and (v) any and all other documents executed in connection with
each of the foregoing agreements.
"PRO FORMA CONSOLIDATED EBITDAR" shall mean for each twelve month
period ending on the last day of the accounting period covered by the
consolidated financial statements of HHC and its Subsidiaries, and
delivered pursuant to Section 5.1, the sum
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of (a) Consolidated Net Income (but excluding any extraordinary losses or
nonrecurring expenses, in each case only to the extent that such amount
was otherwise included in the determination of applicable Consolidated Net
Income), PLUS (b) interest expense, PLUS (c) taxes deducted in calculating
Consolidated Net Income, PLUS (d) depreciation, PLUS (e) amortization,
PLUS (f) Rent, in each case of HHC and its Subsidiaries on a consolidated
basis determined in accordance with GAAP, PLUS (g) any applicable Pro
Forma EBITDAR Adjustment.
"PRO FORMA EBITDAR ADJUSTMENT" shall mean the dollar amount of the
pro forma adjustment to the historical consolidated financial statements
of HHC and its Subsidiaries for each twelve month period ending on the
last day of the accounting period covered by the financial statements
delivered pursuant to Section 5.1 and resulting from one or more
acquisitions completed by HHC and its Subsidiaries in the aforementioned
accounting period on a date other than the first day of the given
accounting period. Such Pro Forma EBITDAR Adjustment to be equal to the
net adjustment to income before interest expense, income taxes,
depreciation, amortization and rent and to be prepared substantially in
conformity with the guidelines for preparation of pro forma financial
statements included in filings with the Securities and Exchange Commission
and in a manner acceptable to Lenders.
"PRO FORMA RENTAL PAYMENT ADJUSTMENT" shall mean the dollar amount
of the pro forma adjustment to the historical Rental Payments of HHC and
its Subsidiaries for each twelve month period ending on the last day of
the accounting period covered by the financial statements delivered
pursuant to Section 5.1 and resulting from one or more acquisitions
completed by HHC and its Subsidiaries in the aforementioned accounting
period on a date other than the first day of the given accounting period.
Such Pro Forma Rental Payment Adjustment to be equal to (A) the annualized
dollar amount of fixed rental payments which HHC or its Subsidiaries are
required to make by the terms of the aforementioned acquisitions, but
shall not include amounts required to be paid in respect in maintenance,
repairs, income taxes, insurance, assessments or other similar charges,
less (B) the amount of Rental Payments which HHC or its Subsidiaries have
already paid during the accounting period under the terms of the
aforementioned acquisition.
"RENTAL PAYMENTS" shall mean for each twelve month period ending on
the last day of the accounting period covered by the consolidated
financial statements of HHC and its Subsidiaries, and delivered pursuant
to Section 5.1, the dollar amount of the fixed payments which HHC or its
Subsidiaries are required to make by the terms of any lease to its
landlords during the aforementioned twelve month period, including the
amount required to be paid in connection with the Ohio Capital Lease
Obligation, but shall not include amounts required to be paid in respect
of maintenance, repairs, income taxes, insurance, assessments or other
similar charges.
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"SECURITY DOCUMENTS" means, collectively, the Real Estate Security
Documents, that certain Security Agreement executed by certain of the
Borrowers in favor of the Agent dated as of April 14, 1997, that certain
A/R Security Agreement executed by certain of the Borrowers in favor of
the Agent dated as of April 14, 1997, that certain Pledge Agreement
executed by certain of the Borrowers in favor of the Agent dated as of
April 14, 1997 and those certain Accounts Receivable Intercreditor
Agreements executed by certain of the Meditrust Entities and the Agent,
each as from time to time amended or supplemented, and any and all other
documents executed in connection with each of the foregoing agreements or
this Agreement with respect to any collateral.
Section 3. SECTION 1.01 to the Credit Agreement shall be further amended
by deleting the reference to "40%" in the first sentence of the definition of
"Change of Control" and substituting therefor "30%".
Section 4. AMENDMENT OF SECTION 2.02. Subsection 2.02(c) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting therefor the following:
(c) At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount of
$1,000,000 or an integral multiple of $100,000 in excess thereof. At the
time that each ABR Revolving Borrowing is made, such Borrowing shall be in
an aggregate amount that is an integral multiple of $100,000; PROVIDED
that an ABR Revolving Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the total Commitments or that is
required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.05(e). Each Swingline Loan shall be in an amount
that is an integral multiple of $100,000. Borrowings of more than one Type
and Class may be outstanding at the same time; PROVIDED that there shall
not at any time be more than a total of ten (10) Eurodollar Revolving
Borrowings outstanding.
Section 5. AMENDMENT OF ARTICLE II. The Credit Agreement is hereby amended
by adding the following SECTION 2.20 to Article II:
SECTION 2.20. MATURITY DATE. The Maturity Date for all or a portion of the
Loans may be extended at the request of the Borrowers for an additional period
of two (2) years subject to the written consent of all Lenders in their sole
discretion. A request for an extension can be made not more than fifteen months
and not less than twelve months prior to the Maturity Date.
Section 6. AMENDMENT OF SECTION 2.05. Subsection 2.05(b) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting therefor the following:
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS. To request the issuance of a Letter of Credit (or the
amendment, renewal
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or extension of an outstanding Letter of Credit), HHC, as agent for the
Borrowers, shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the
Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably
in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, the
date of issuance, amendment, renewal or extension, the date on which such
Letter of Credit is to expire (which shall comply with paragraph (c) of
this Section), the amount of such Letter of Credit, the name and address
of the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit. If
requested by the Issuing Bank, HHC, as agent for the Borrowers, also shall
submit a letter of credit application on the Issuing Bank's standard form
in connection with any request for a Letter of Credit. A Letter of Credit
shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrowers
shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension (i) the LC Exposure shall
not exceed $7,500,000 and (ii) the sum of the total Revolving Credit
Exposures at such time shall not exceed the lesser of (i) the total
Commitments at such time, and (ii) the Borrowing Base at such time.
Section 7. AMENDMENT OF SECTION 2.11. Subsections 2.11(a) and 2.11(b) of
the Credit Agreement are hereby amended by deleting such subsections in their
entirety and substituting therefor the following:
(a) The Borrowers, jointly and severally agree to pay to the
Administrative Agent for the account of each Lender a facility fee which
shall accrue at the Commitment Fee Rate on the daily average unused
portion of the facility until the later of the termination of the
Commitment or until the entire Revolving Credit Exposure has been paid or
terminated in full. Accrued facility fees shall be payable in arrears on
the last day of March, June, September and December of each year and on
the date on which the Commitments terminate, commencing on the first such
date to occur after the date hereof; PROVIDED that any facility fees
accruing after the date on which the Commitments terminate shall be
payable on demand. All facility fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(b) The Borrowers agree (i) to pay to the Administrative Agent, for
the account of each Lender, on the date of issuance of each Letter of
Credit and on the anniversary of each Letter of Credit an annual letter of
credit fee, calculated at the LC Fee Rate, on the face amount of each
Letter of Credit, (ii) to pay to the Issuing Bank, for its own account, an
annual fronting fee in an amount equal to 0.125% of the face amount of
each Letter of Credit, and (iii) to pay to the Issuing Bank, the Issuing
Bank's standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder
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Section 8. AMENDMENT OF SECTION 3.07. Section 3.07 of the Credit Agreement
is hereby amended by deleting such section in its entirety and substituting
therefor the following:
Section 3.07 COMPLIANCE WITH LAWS AND AGREEMENTS. Each Borrower and
its Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material
Adverse Effect. No Default has occurred and is continuing. Each Borrower
and its Subsidiaries has such operating licenses that are material to the
condition (financial or otherwise), business or operations of the Borrower
and its Subsidiaries and each such operating license, when issued, was
issued for a period of twelve months or longer.
Section 9. AMENDMENT OF SECTION 5.01. Subsection 5.01(c) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting therefor the following:
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, (i) a certificate of a Financial Officer of the
Borrowers certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) a Compliance
Certificate setting forth reasonably detailed calculations demonstrating
compliance with Sections 6.09, 6.10 and 6.11 and (iii) a certificate of a
Financial Officer of the Borrowers stating whether any change in GAAP or
in the application thereof, which are applicable to HHC or its financial
statements, has occurred since the date of the audited financial
statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate;
Section 10. AMENDMENT OF SECTION 6.01.
(a) Section 6.01 of the Credit Agreement is hereby amended by the addition
of the following:
(i) Indebtedness created under the Lease Facility Documents. (j)
Indebtedness to any Lender under interest rate swap agreements or
similar interest rate protection or hedging agreements in an
aggregate amount not to exceed $4,000,000.
(b) Section 6.01 of the Credit Agreement is hereby further amended by
deleting the last full paragraph of Section 6.01.
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Section 11. AMENDMENT OF SECTION 6.02. Section 6.02 of the Credit
Agreement is hereby amended by the addition of the following:
(f) any Lien securing the Indebtedness permitted under Section 6.01(i).
Section 12. AMENDMENT OF SECTION 6.04. Subsection 6.04(e) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting therefor the following:
(e) acquisitions by any Borrower as long as (i) the Board of
Directors of the acquiring Borrower (or at the Board's discretion, such
Borrower's Executive Committee of its Board of Directors) has approved the
proposed acquisition, (ii) the Administrative Agent is notified at least
three business days in advance of the consummation of such acquisition if
more than $5,000,000 of Loans are to be borrowed hereunder and used in
connection with the completion of such acquisition, (iii) immediately
before and immediately after such acquisition no Default or Event of
Default will occur or exist, (iv) thirty days prior to the consummation of
such acquisition, the Borrowers provide the most recent audited annual
financial statements for the entity being acquired (PROVIDED, that the
requirements of this clause (iv) shall apply only if the purchase price
for such acquisition exceeds $15,000,000 and a majority of such purchase
price will be financed using Loans borrowed under this Agreement), (v)
such acquisition is consistent with the Borrowers current acquisition
strategy set forth on SCHEDULE 6.04 hereto, and (vi) if such acquisition
involves the formation or acquisition by any Borrower of any Person that
becomes a Subsidiary or as a result of or in connection with such
acquisition, such Subsidiary shall execute such security agreements,
mortgages, pledge agreements, financing statements, intercreditor
agreements and such other documents as are requested by the Administrative
Agent and shall become bound by this Agreement and such other documents
executed in connection herewith (PROVIDED, that the requirements of this
clause (vi) shall not apply if, but only to the extent, that such
Subsidiary is or at the time of such acquisition becomes a party to any
agreement for borrowed funds Indebtedness or operating lease agreement
with any third party that prohibits the Administrative Agent from
obtaining a Lien on the assets or capital stock of or other beneficial
interests in such Subsidiary). Notwithstanding anything to the contrary in
any of the Operative Agreements, in the event that any such Subsidiary is
not required to satisfy the requirements of clauses 6.04(e)(vi) above due
to operation of the proviso to 6.04(e)(vi) above, and such Subsidiary does
not grant to the Agent a first security interest in all of its accounts
receivable then or thereafter existing or arising, then such Subsidiary
shall not be included in Holding's consolidated group in determining
compliance with any financial covenants set forth in Sections 6.09, 6.10
and 6.11 hereof;
Section 13. AMENDMENT OF SECTION 6.08. Section 6.08 of the Credit
Agreement is hereby amended by deleting such section in its entirety and
substituting therefor the following:
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Section 6.08 RESTRICTIVE AGREEMENTS. The Borrowers will not, and
will not permit any of its Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrowers or any Subsidiary to create, incur or permit to exist any Lien
upon any of its property or assets, or (b) the ability of any Subsidiary
to pay dividends or other distributions with respect to any shares of its
capital stock or to make or repay loans or advances to the Borrowers or
any other Subsidiary or to Guarantee Indebtedness of the Borrowers or any
other Subsidiary, or (c) the ability of the Borrowers to grant to the
Lenders or the Agent any Lien upon any of the Borrowers' property or
assets, (except that this clause (c) shall not apply to the incurrence of
purchase money obligations permitted under Section 6.01(e)); PROVIDED that
(i) the foregoing shall not apply to restrictions and conditions imposed
by law or by this Agreement, (ii) the foregoing shall not apply to
restrictions and conditions existing on the date hereof identified on
Schedule 6.08 (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions
and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions
apply only to the Subsidiary that is to be sold and such sale is permitted
hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such
Indebtedness, (v) clause (a) of the foregoing shall not apply to customary
provisions in leases restricting the assignment thereof, and (vi) the
foregoing shall not apply to the restrictions imposed by the Meditrust
Entities in those certain agreements in effect on the date hereof.
Section 14. AMENDMENT OF SECTION 6.10. Section 6.10 is hereby amended by
deleting such section in its entirety and substituting therefor the following:
Section 6.10 LEVERAGE RATIO. The Borrowers shall not permit the
Consolidated Leverage Ratio to exceed during any period described below
the ratio set forth opposite such period:
RATIO PERIOD
5.50-to-1.00 August 1, 1997 through October 31, 2000
4.5-to-1.00 November 1, 2000 and thereafter
Section 15. AMENDMENT OF SECTION 6.11. Section 6.11 is hereby amended by
deleting such section in its entirety and substituting therefor the following:
Section 6.11NET WORTH. The Borrowers shall maintain at all times
minimum Consolidated Net Worth of not less than the sum of (i) $46,000,000
PLUS (ii) 50% of Consolidated Net Income for each fiscal period beginning
after March 31, 1997, PLUS
12
(iii) all cash net proceeds actually received by the Borrowers after March
31, 1997 from the issuance of equity interests.
Section 16. AMENDMENT OF ARTICLE VII. Article VII of the Credit Agreement
is hereby amended by the addition of the following:
(p) the Borrowers or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) when and as
the same shall become due and payable under any Lease Facility Document.
(q) an Event of Default (as defined in the Lease Facility Documents)
shall have occurred under any of the Lease Facility Documents.
Section 17. AMENDMENT OF ARTICLE VIII. Article VIII of the Credit
Agreement is hereby amended by deleting the last sentence in the third full
paragraph in its entirety and substituting therefor the following:
The Administrative Agent shall be deemed not to have knowledge of
any Default, other than a payment Default, unless and until written notice
thereof is given to the Administrative Agent by the Borrowers or a Lender,
and the Administrative Agent shall not be responsible for or have any duty
to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement
or any other agreement, instrument or document, or (v) the satisfaction of
any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.
Section 18. AMENDMENT OF SECTION 9.02. Section 9.02(b) of the Credit
Agreement is hereby amended by the addition of the following:
(vi) release any guarantee or any collateral without the prior written
consent of each Lender.
Section 19. AMENDMENT OF SECTION 9.04. Section 9.04(b) of the Credit
Agreement is hereby amended by deleting the second proviso in the first sentence
of Section 9.04(b) in its entirety and substituting therefor the following:
PROVIDED FURTHER that any consent of the Borrowers otherwise required
under this paragraph shall not be required if an Event of Default has
occurred and is continuing.
13
Section 20. CONSENT. The Agent and the Lenders hereby consent to the
execution by any of the Borrowers of any of the Lease Facility Documents.
Section 21. COLLATERAL. The Borrowers, the Agent and the Lenders hereby
acknowledge and agree that effective as of the date hereof the collateral
securing the obligations of the Borrowers to the Agent and the Lenders pursuant
to the Credit Agreement and the Security Documents also secures the obligations
of the Borrowers to the Lease Agent and the Lease Lenders under the Lease
Facility Documents.
Section 22. SCHEDULE I; ADDITIONAL BORROWER. SCHEDULE I attached to the
Credit Agreement is hereby amended by deleting such SCHEDULE I in its entirety
and substituting therefor the SCHEDULE I attached to this Amendment. As a result
of such change, effective the date of this Amendment, Harborside of Dayton
Limited Partnership, Harborside Acquisition Limited Partnership I, Harborside
Acquisition Limited Partnership II, Harborside Acquisition Limited Partnership
III, Harborside Acquisition Limited Partnership IV, Harborside Acquisition
Limited Partnership V, Harborside Acquisition Limited Partnership VI, Harborside
Acquisition Limited Partnership VII, Harborside Acquisition Limited Partnership
VIII, Harborside Acquisition Limited Partnership IX and Harborside Acquisition
Limited Partnership X (collectively "New Borrowers") shall become additional
Borrowers under the Credit Agreement and shall become bound by this Amendment,
the Credit Agreement and all other documents executed in connection therewith as
if it were a signatory to such documents.
Section 23. SCHEDULE 2.01. SCHEDULE 2.01 attached to the Credit Agreement
is hereby amended by deleting such SCHEDULE 2.01 in its entirety and
substituting therefor the SCHEDULE 2.01 attached to this Amendment.
Section 24. EFFECTIVENESS; CONDITION TO EFFECTIVENESS. This Amendment
shall become effective as of the date first set forth above, upon execution
hereof by the Borrowers, the Agent and the Lenders and satisfaction of the
following conditions:
(a) SECURITY AGREEMENT. The Borrowers shall have delivered to the Agent
the Second Amendment to Security Agreement dated as of the date hereof
executed by certain of the Borrowers in favor of the Agent.
(b) A/R SECURITY AGREEMENT. The Borrowers shall have delivered to the
Agent the First Amendment to A/R Security Agreement dated as of the date
hereof executed by certain of the Borrowers in favor of the Agent.
(c) PLEDGE AGREEMENT. The Borrowers shall have delivered to the Agent the
First Amendment to Pledge Agreement dated as of the date hereof executed
by certain of the Borrowers in favor of the Agent.
(d) FINANCING STATEMENTS. The New Borrowers shall have delivered to the
Agent financing statements pursuant to the Second Amendment to the
Security Agreement.
14
Section 25. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby confirm
to the Agent the representations and warranties of the Borrowers set forth in
Article III of the Credit Agreement as of the date hereof, as if set forth
herein in full.
Section 26. NO DEFAULT. The Borrowers hereby acknowledge that no Default
or Event of Default has occurred under the Credit Agreement.
Section 27. NO OTHER CHANGES. Except as amended by this Amendment, the
Credit Agreement remains in full force and effect.
Section 28. COUNTERPARTS. This Amendment may be executed in any number of
counterparts each of which shall be an original with the same effect as if all
of the signatures to this Amendment were upon the same instrument.
Section 29. MISCELLANEOUS. This Amendment shall be governed by and
construed and enforced under the laws of the State of New York.
[remainder of page left blank]
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
HARBORSIDE HEALTHCARE CORPORATION
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
BAY TREE NURSING CENTER CORP.
BELMONT NURSING CENTER CORP.
COUNTRYSIDE CARE CENTER CORP.
HARBORSIDE HEALTH I CORPORATION
HARBORSIDE TOLEDO CORP.
KHI CORPORATION
OAKHURST MANOR NURSING CENTER CORP.
ORCHARD RIDGE NURSING CENTER CORP.
SUNSET POINT NURSING CENTER CORP.
WEST BAY NURSING CENTER CORP.
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE OF CLEVELAND LIMITED
PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE HEALTHCARE ADVISORS
LIMITED PARTNERSHIP
By: KHI Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
16
HARBORSIDE HEALTHCARE BALTIMORE
LIMITED PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE HEALTHCARE LIMITED
PARTNERSHIP
By: KHI Corp.
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE HEALTHCARE NETWORK
LIMITED PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE NEW HAMPSHIRE LIMITED
PARTNERSHIP
By: Harborside Toledo Corp.
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
17
HARBORSIDE OF OHIO LIMITED PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE REHABILITATION LIMITED
PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE TOLEDO LIMITED PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HHCI LIMITED PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
RIVERSIDE RETIREMENT LIMITED
PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
18
HARBORSIDE PROPERTIES TRUST I
By
-----------------------------------
Name: Xxxxxxx Xxxxxxxx, in his
capacity as trustee and not
individually
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx, in his
capacity as trustee and not
individually
HARBORSIDE MASSACHUSETTS LIMITED
PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE OF DAYTON LIMITED
PARTNERSHIP
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP I
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
19
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP II
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP III
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP IV
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP V
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
20
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP VI
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP VII
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP VIII
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP IX
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
21
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP X
By: Harborside Health I Corporation
Its General Partner
By
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
22
THE CHASE MANHATTAN BANK, individually
and as Agent
By
-----------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF MARYLAND
By:
-----------------------------------
Name:
Title:
BANK OF MONTREAL
By:
-----------------------------------
Name:
Title:
23
SCHEDULE I
BORROWERS:
Bay Tree Nursing Center Corp.
Belmont Nursing Center Corp.
Countryside Care Center Corp.
Harborside of Cleveland Limited Partnership
Harborside Health I Corporation
Harborside Healthcare Advisors Limited Partnership
Harborside Healthcare Baltimore Limited Partnership
Harborside Healthcare Corporation
Harborside Healthcare Limited Partnership
Harborside Healthcare Network Limited Partnership
Harborside New Hampshire Limited Partnership
Harborside of Ohio Limited Partnership
Harborside Rehabilitation Limited Partnership
Harborside Toledo Limited Partnership
Harborside Toledo Corp.
HHCI Limited Partnership
KHI Corporation
Oakhurst Manor Nursing Center Corp.
Orchard Ridge Nursing Center Corp.
Riverside Retirement Limited Partnership
Sunset Point Nursing Center Corp.
West Bay Nursing Center Corp.
Harborside Properties Trust I
Harborside Massachusetts Limited Partnership
Harborside of Dayton Limited Partnership
Harborside Acquisition Limited Partnership I
Harborside Acquisition Limited Partnership II
Harborside Acquisition Limited Partnership III
Harborside Acquisition Limited Partnership IV
Harborside Acquisition Limited Partnership V
Harborside Acquisition Limited Partnership VI
Harborside Acquisition Limited Partnership VII
Harborside Acquisition Limited Partnership VIII
Harborside Acquisition Limited Partnership IX Harborside
Acquisition Limited Partnership X
24
SCHEDULE 2.01
Commitment Percentages
Commitment Maximum Amount of Revolving
LENDER PERCENTAGE CREDIT EXPOSURE
The Chase Manhattan Bank ........ 36% $9,000,000
Bank of Montreal ................ 26% $6,500,000
The Sumitomo Bank, Limited ...... 19% $4,750,000
The First National Bank ......... 19% $4,750,000
of Maryland
25
