Exhibit 99.1
FORBEARANCE AGREEMENT
(THE MULTICARE COMPANIES, INC.)
FORBEARANCE AGREEMENT, dated as of March 20, 2000, (this
"Agreement") among The Multicare Companies, Inc., certain Subsidiaries thereof,
Mellon Bank, N.A. as Administrative Agent and Issuer of Letters of Credit,
Citicorp USA, Inc. as Syndication Agent, First Union National Bank as
Documentation Agent, Bank of America, N.A. as Syndication Agent, and the Lenders
and Secured Parties referred to below.
Reference is made to that certain Credit Agreement, dated as
of October 7, 1997, as amended, among The Multicare Companies, Inc., certain
Subsidiaries thereof, Mellon Bank, N.A. as Administrative Agent and Issuer of
Letters of Credit, First Union National Bank as Documentation Agent, Citicorp
USA, Inc. as Syndication Agent, Bank of America, N.A. as Syndication Agent and
the Lenders referred to therein (the "Credit Agreement") and to the other Loan
Documents entered into in connection therewith. Capitalized terms not otherwise
defined herein are used as defined in the Credit Agreement or in the other Loan
Documents referred to therein.
WHEREAS, a meeting was held on March 14, 2000 in which
Multicare presented certain information and plans (the "Presentation") to the
Lenders and other Secured Parties including, among other things, that it wishes
to restructure certain of its Indebtedness and that there is a possibility that
it will be unable to make certain payments on Indebtedness due to the Lenders
and other Secured Parties on a timely basis;
WHEREAS, the Borrowers have requested an opportunity to more
fully develop and effect certain proposals discussed at that meeting;
WHEREAS, the Lenders and other Secured Parties are willing to
accede to the request of the Borrowers under the circumstances referred to below
on the terms and conditions set forth below;
NOW THEREFORE, the undersigned hereby agree as follows:
1. Definitions. The following terms shall have the meanings
specified herein.
a. "Forbear" means to refrain from accelerating the Loans
or other Obligations or exercising remedies, whether arising by contract, at law
or in equity, under the Loan Documents or otherwise, against the Borrowers or
Collateral or Additional Security or withdrawing or freezing funds in deposit or
other accounts pursuant to set-off rights, rights to charge such accounts or
other similar rights, whether arising under the Loan Documents (including
Section 1.6(c)(Authorization to Charge Accounts) or 12.18 (Set-Off) of the
Credit Agreement) or otherwise or taking similar action or demanding that the
Borrowers comply with Section 9.2(a)(iii) of the Credit Agreement (but does not
preclude cash management functions and usual and customary payments made in
connection therewith).
b. "Specified Defaults" means the occurrence or existence
of any Defaults or Events of Default (or similar terms under any Loan Documents)
arising out of any of the following events or conditions:
(i) the failure of the Borrowers to pay any
principal or interest on the Loans (as more fully set forth in Sections 9.1(a)
and (b) of the Credit Agreement);
(ii) the failure of the Borrowers to generally pay
debts as they mature, or pay any subordinated obligations or other Indebtedness
or otherwise default under any such Indebtedness (including, without limitation,
events referred to in Section 9.1(f)(i), (iii) or (iv) of the Credit Agreement
unless such events constitute a separate Event of Default under the Credit
Agreement by virtue of a provision other than Section 9.1(f)), in each case so
long as the holders of the subordinated obligations or other Indebtedness do not
take any action to enforce remedies against the Borrowers or collateral, if any;
(iii) any default in the financial covenants set forth
in Article 7 of the Credit Agreement;
(iv) any Event of Default solely by reason of
Section 9.1(j) of the Credit Agreement (Material Adverse Effect) already
disclosed to the Lenders in writing or in the Presentation;
(v) the failure of the Borrowers to provide cash
collateral in connection with Letters of Credit (i.e., as existing or extended)
pursuant to Section 3.1(h) and 9.2(a)(iii) of the Credit Agreement;
(vi) the failure to pay any commitment fees, Letter
of Credit fees, the Administrative Agent's regular fees and similar fees (but
not the failure to pay costs and expenses);
(vii) any Event of Default that has occurred or may
occur under either the Pledge Agreement or the Security Agreement solely as such
defined term relates to a Default or Event of Default under the Credit Agreement
or any other Loan Document that constitutes a Specified Default as set forth
above; and
(viii) any failure by any of the Loan Parties to
perform its obligations under the Loan Documents which failure constitutes a
Specified Default referred to in clauses (i) through (vii) above.
2. Forbearance and Waiver.
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a. Subject to the provisions of Section 5
(Conditions/Additional Undertakings) below, the undersigned in their capacity as
Lenders direct the Administrative Agent, and the Administrative Agent agrees to
accept and follow such direction, to Forebear through May 19, 2000,
notwithstanding any Specified Defaults.
b. Subject to the provisions of Section 5
(Conditions/Additional Undertakings) below, each of the undersigned in their
capacity as Lender, a Swap Party or other
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Secured Party, hereby agree to Forbear through May 19, 2000, notwithstanding any
Specified Defaults.
c. Subject to the provisions of Section 5
(Conditions/Additional Undertakings) below, each of the undersigned in their
capacity as a Lender, hereby agree to waive the imposition during the period
commencing on the date hereof and ending on May 19, 2000 of the Default Rate in
connection with any Specified Default.
d. Subject to the provisions of Section 5
(Conditions/Additional Undertakings) below, and notwithstanding the Borrowers'
failure to satisfy each of the conditions set forth in Section 4.2 (Conditions
to Each Loan and Issuance of Each Letter of Credit) of the Credit Agreement,
each of the undersigned in their capacity as a Lender, hereby agrees that the
Issuer of Letters of Credit may (but is not required to) issue extensions of
existing Letters of Credit (in a face amount no greater than the face amount of
the existing Letters of Credit) for the period commencing on the date hereof and
ending on May 19, 2000 notwithstanding any Specified Default.
e. Subject to the provisions of Section 5
(Conditions/Additional Undertakings) below, each of the undersigned in their
capacity as a Lender, hereby agrees that the Borrowers shall not be required to
maintain Interest Rate Hedging Agreements pursuant to Section 6.12 (Interest
Rate Hedging Agreements) of the Credit Agreement for the period commencing on
the date hereof and ending on May 19, 2000.
3. Certain Limitations. To eliminate any uncertainty, it is
expressly understood and agreed that the Administrative Agent may take any
action granted to it under law or contract (including, without limitation,
acceleration, foreclosure on Collateral and Additional Security and set-off),
a. a. after May 19, 2000,
b. in connection with any event or condition (including,
without limitation, a filing of a petition in bankruptcy as referred to in
section 9.1(m) of the Credit Agreement, a violation of the Indebtedness or Lien
covenants set forth in Sections 8.1 and 8.2 of the Credit Agreement or the entry
of a judgment referred to in Section 9.1(g) of the Credit Agreement) other than
a Specified Default or
c. if any of the events or conditions in Section 5
(Conditions/Additional Undertakings) below are not satisfied on a timely basis.
4. Not a Waiver. THIS AGREEMENT DOES NOT SERVE AS A WAIVER OF
ANY DEFAULTS OR EVENTS OF DEFAULT WHICH MAY NOW OR HEREAFTER EXIST and, except
as expressly provided above to the contrary for the period specified, the
Secured Parties reserve any and all rights and remedies under the Loan
Documents, at law or in equity, in connection with such Defaults or Events of
Default. Without limiting the generality of the foregoing, the Borrowers
acknowledge and agree that:
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a. from and after the date that the Borrowers default in
any payment obligations under the Loan Documents or there otherwise exists an
Event of Default, without limiting the generality of Section 1.8(b) of the
Credit Agreement, the Borrowers shall no longer be entitled to elect the LIBO
Rate option for Loans, such prohibition to take place automatically without
notice from the Administrative Agent which notice is hereby waived and
b. in connection with any default in payment of any of the
Obligations, Multicare will, and the Administrative Agent may, send notice to
any and all trustees under subordinated debt instruments of any of the Borrowers
stating that there has been a "Payment Default" or similar term and that the
trustee and bond holders may not accept any payment from the Borrowers.
No delay or failure on the part of the Secured Parties to exercise any right or
remedy hereunder or under the Loan Documents shall operate as a waiver thereof,
and no single or partial exercise of any right or remedy hereunder or thereunder
shall preclude other or further exercise thereof or the exercise of any other
right or remedy. No action or forbearance by the Secured Parties shall be
construed to constitute a waiver of any of the provisions hereof or thereof.
5. Conditions/Additional Undertakings.
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a. Attached hereto as Exhibit A are the conditions
precedent to the effectiveness of this Forbearance Agreement.
b. Attached hereto as Exhibit B are the conditions
subsequent to the continued effectiveness of this Forbearance Agreement through
May 19, 2000. If any of the conditions set forth on Exhibit B are not satisfied
by the dates specified on said Exhibit B, then the obligations set forth in
Section 2 (Forbearance and Waivers) above shall immediately terminate without
notice on May 20, 2000 or, if earlier for any reason, upon written notice to the
Borrowers given in accordance with the terms of the Credit Agreement.
c. If at any time the forbearance agreement with Genesis is
terminated, the obligations set forth in Section 2 (Forbearance and Waivers)
above shall immediately terminate without notice.
6. Release. As a material inducement to the Secured Parties to
enter into this Agreement, the Borrowers and each of them (A) do hereby remise,
release, acquit, satisfy and forever discharge the Secured Parties and all of
their past, present and future officers, directors, employees, agents,
attorneys, representatives, participants, heirs, successors and assigns, from
any and all manner of debts, accountings, bonds, warranties, representations,
covenants, promises, contracts, controversies, agreements, liabilities,
obligations, expenses, damages, judgments, executions, actions, claims, demands
and causes of action of any nature whatsoever, whether at law or in equity,
which any of the Borrowers has by reason of any matter, cause or thing, from the
beginning of the world to and including the date of this Agreement with respect
to any matters, transactions, occurrences, agreements, actions, or events
arising out of, in connection with or relating to the Loan Documents; and (B) do
hereby covenant and agree never to institute or cause to be instituted or
continue prosecution of any suit or other form of action or proceeding of any
kind or nature whatsoever against the Secured Parties, or any of their past,
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present or future officers, directors, employees, agents, attorneys,
representatives, participants, heirs, successors or assigns, by reason of or in
connection with any of the foregoing matters, claims or causes of action. The
Borrowers expressly acknowledge and agree that the waivers, estoppels and
releases contained in this Agreement shall not be construed as an admission of
wrongdoing, liability or culpability on the part of any of the Secured Parties
or the existence of any claims of the Borrowers against any of the Secured
Parties.
7. Governing Law. This Agreement shall for all purposes be
governed by and construed and enforced in accordance with the substantive law of
the Commonwealth of Pennsylvania without giving effect to the principles of
conflict of laws.
8. Future Negotiations. The parties hereto acknowledge and
agree that (A) the Secured Parties have not agreed to and have no future
obligation whatsoever to discuss, negotiate or agree to any restructuring of the
Borrowers' obligations with respect to the Loan Documents, or any of them, or
any modification, amendment, restructuring or reinstatement of the Loan
Documents or, except as expressly provided in this Agreement, to forbear from
exercising its rights and remedies under the Loan Documents, (B) if there are
any future discussions among the Secured Parties and the Borrowers concerning
any such restructuring, modification, amendment or reinstatement, then no
restructuring, modification, amendment, reinstatement, compromise, settlement,
agreement or understanding with respect to the Borrowers' obligations with
respect to the Loan Documents, or any of them, or any aspect thereof, shall
constitute a legally binding agreement or contract or have any force or effect
whatsoever unless and until reduced to writing and signed by authorized
representatives of all parties, and that none of the parties hereto shall assert
or claim in any legal proceedings or otherwise that any such agreement exists
except in accordance with the terms of this Section 8.
9. Ratification. Except to the extent and for the period
hereby waived or modified, the Credit Agreement and each of the Loan Documents
is hereby confirmed and ratified in all respects.
10. Counterpart Signatures. This Agreement may be executed in
any number of counterparts, each of which will constitute an original and all of
which together shall constitute one instrument. A faxed copy of a signature page
shall serve as the functional equivalent of a manually-executed copy for all
purposes.
11. Payment of Fees. The Administrative Agent shall allocate
the forbearance fee referred to in paragraph 2 of Exhibit A hereto among those
Secured Parties who sign and deliver a counterpart signature page in the manner
and time set forth in paragraph 1 of said Exhibit A on a pro rata basis, based
on the amount of the Obligations owing to them. The Administrative Agent's
records shall be conclusive for the purposes hereof.
12. Capacity of Signing Parties. Each of the undersigned
Secured Parties signs this in its capacity as a Lender and, if applicable, and
in any other capacity as a Secured Party.
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IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, hereby signs as of the date first above written.
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Name of Financial Institution(1)
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By:
Name:
Title:
THE MULTICARE COMPANIES, INC.,
for itself and each of the Borrowers under
the Credit Agreement
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By:
Name:
Title:
GENESIS ELDERCARE CORP., as Surety
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By:
Name:
Title:
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(1) Signing in all applicable capacities as Secured Parties, whether as
Administrative Agent, Lender or otherwise.
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Exhibit A
To Forbearance Agreement
Conditions Precedent
1. Execution of this Forbearance Agreement by (a) the Borrowers, or by
Multicare on behalf of the Borrowers, (b) the Required Lenders, and (c) the
Administrative Agent and return of counterpart signature pages by each to
Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP (to the attention of ▇▇▇▇ ▇▇▇▇▇▇▇) by actual
delivery at One ▇▇▇▇▇ Square, 18th and ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ or by facsimile transmission (facsimile number: 215-988-2757) no
later than 5:00 p.m. (Eastern Standard Time) on March 20, 2000.(2)
2. Upon satisfaction of the condition precedent contained in the immediately
preceding paragraph, payment of an irrevocable and nonrefundable fee to the
Administrative Agent in immediately available funds for the benefit of each
of the Secured Parties that signs and returns a counterpart to this
Forbearance Agreement in the time and manner specified in paragraph 1
above. Such fee shall be in an amount equal to $333,000.
3. Payment of costs and expenses of the Administrative Agent including,
without limitation, counsel and financial consultant fees.
4. Effectiveness of a forbearance agreement for Genesis.
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(2) For purposes of paragraphs 1 and 2 of this Exhibit A, the Administrative
Agent, in its sole and absolute discretion, is authorized to extend the
deadline set forth in paragraph 1 above for a period not to exceed 2
Business Days and any such action on the part of the Administrative Agent
shall be conclusive and binding for all purposes.
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Exhibit B
To Forbearance Agreement
Conditions Subsequent
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1. A financial advisor (that is not the same as the Genesis financial
advisor), reasonably acceptable to the Agents (the "Multicare Financial
Advisor"), shall be retained by Multicare no later than March 24, 2000. The
Agents and ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇, financial advisor to the Administrative
Agent, shall be given the opportunity to discuss (by phone or in person)
the affairs of the Borrowers with the Multicare Financial Advisor from time
to time upon reasonable request.
2. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ shall be given full access to the financial records and
to the management of the Borrowers and the Borrowers shall comply with the
requests made by ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ in the letter attached hereto as Annex
1 to Exhibit B.
3. The Borrowers shall cooperate with the Administrative Agent in all
remaining aspects of obtaining and perfecting the Additional Security. Each
of the Borrowers agrees that this undertaking is a material inducement to
the forbearance provided herein and but for this undertaking the Secured
Parties would be unwilling to agree to the terms of this Forbearance
Agreement. Further, the Borrowers agree that the value to the Borrowers of
the undertakings of the Secured Parties herein is at least equal or greater
than the value of this undertaking.
4. No later than March 31, 2000, Multicare shall present to the Secured
Parties, a proposed plan of reorganization of its capital structure which
proposal shall be shared, in preliminary form, with the Agents at least one
Business Day prior thereto. The plan will have specific target dates by
which certain actions will be completed. Completion of the specified
actions by the specified target dates shall be additional conditions
incorporated herein by reference.
5. Concurrent with the actions specified in the preceding item #4, Multicare
shall develop a contingency plan. Multicare will provide information to the
Agents on a regular basis as to the development of such plan and, at the
request of the Agents, will present the same to the Secured Parties.
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