EXHIBIT 10.53
SECOND AMENDMENT TO PARTICIPATION AGREEMENT
SECOND AMENDMENT TO PARTICIPATION AGREEMENT, dated as of December 22,
1998 (this "Amendment"), to the Amended and Restated Participation Agreement,
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dated as of November 4, 1997 as amended by the First Amendment to the Amended
and Restated Participation Agreement, dated as of July 8, 1998 (as the same may
be further amended, supplemented or otherwise modified from time to time, the
"Participation Agreement"), among LIVING CENTERS HOLDING COMPANY, a Delaware
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corporation (the Lessee"), FBTC LEASING CORP., a New York corporation (the
"Lessor"), THE CHASE MANHATTAN BANK, a New York banking corporation, as agent
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(in such capacity, the "Agent") for each of the financial institutions listed on
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the signature pages hereof and for the financial institutions from time to time
parties hereto (each, a "Lender"; collectively, the "Lenders") and THE FUJI
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BANK, LIMITED (HOUSTON AGENCY), as co-agent (in such capacity, the "Co-Agent").
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Capitalized terms used but not otherwise defined in this Amendment shall have
the meanings set forth in Annex A to the Participation Agreement.
W I T N E S S E T H:
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WHEREAS, pursuant to the Participation Agreement, the parties thereto
agreed to participate in a transaction in which, among other things, (i) the
Lenders agreed to make certain loans to the Lessor pursuant to the Amended and
Restated Credit Agreement dated as of November 4, 1997 among the Lessor, the
Agent and the Lenders; (ii) the Lessor agreed to use the proceeds of the Loans
to acquire and construct certain properties; and (iii) the Lessor agreed to
lease such properties to Lessee pursuant to the Lease.
WHEREAS, the Lessee has requested, and, upon this Amendment becoming
effective, the Lenders have agreed, that certain provisions of the Participation
Agreement be amended in the manner provided for in this Amendment; and
WHEREAS, Chase Securities Inc. has agreed to act as the lead arranger
and book manager in arranging the consents necessary for the effectiveness of
this Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. (a) General. Terms defined in the Participation
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Agreement and used herein shall, unless otherwise indicated, have the meanings
given to them in the Participation Agreement. Terms defined and used in this
Amendment shall have the meanings given to them in this Amendment.
(b) Amendment of Definitions.
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The definition of the term "Consolidated Leverage Ratio Stepdown
Date" contained in Annex A of the Participation Agreement is hereby amended by
deleting the amount "$125,000,000 in the fourth line and substituting in lieu
thereof the amount "$100,000,000".
(c) Replacement of Definitions. The Participation Agreement is hereby
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amended by deleting from Annex A thereto the definition "Consolidated
EBITDA" in its entirety and substituting in lieu thereof the following new
definition of "Consolidated EBITDA":
"Consolidated EBITDA": for any period, Consolidated Net Income for
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such period plus, without duplication and, other than with respect to item
(j) below, to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) total income tax
expense, (b) interest expense, amortization or writeoff of debt discount and
debt issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary or non-
recurring expenses or losses (including, whether or not otherwise includable
as a separate item in the statement of such Consolidated Net Income for such
period, losses on sales of assets outside of the ordinary course of
business), (f) any other non-cash charges, (g) with respect to the
computation of the financial covenants contained in Section 7.1 for any
Reference Period ending on or prior to September 30, 1998, fees and expenses
related to the transactions contemplated by the Recapitalization Agreement
(including conforming accounting adjustments) and the financing thereof in an
aggregate amount equal to the lesser of the actual amount of such expenses
and $122,000,000, (h) non-recurring cash charges taken on or prior to
September 30, 1999 as a result of the Mariner Merger in an aggregate amount
not to exceed $35,000,000 (such charges not in excess of such amount, the
"Mariner Merger Charges"), (i) any lease payments by Summit Institute for
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Pulmonary Medicine and Rehabilitation, Inc. ("Summit") with respect to the
Riverside Community Hospital, Bossier City, Bossier Parish, Louisiana, to the
extent and in the proportion of the guarantee by Summit of the then
outstanding principal amount of the Summit IRB (the "Summit Guarantee") and
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(j) at any date of determination ending on the dates set forth in this clause
(j) below, the amount of cost synergies reasonably projected to be achieved
by Mariner as a result of the Mariner Merger and which as of such dates have
not yet been achieved, up to a maximum for the determination date ending: (i)
December 31, 1998, $18,000,000, (ii) March 31, 1999, $18,000,000, (iii) June
30, 1999, $16,000,000 and (iv) September 30, 1999, $14,000,000, and minus, to
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the extent included in the statement of such Consolidated Net Income for such
period, the sum of (a) interest income, (b) any extraordinary or non-
recurring income or gains (including, whether or not otherwise includable as
a separate item in the statement of such Consolidated Net Income for such
period, gains on the sales of assets outside of the ordinary course of
business) and (c) any other non-cash income, all as determined on a
consolidated basis; provided, that there shall be included in Consolidated
EBITDA for such period the difference (but not below zero) between (a) the
amount of Consolidated Net Income with respect to Mariner and its
Subsidiaries for such period, to the extent of any cash distributions paid by
Mariner to Mariner during such period and (b) the amount of any investment by
Mariner in or for the account of Mariner during such period which is not
utilized by Mariner during such period for the purposes set forth in Section
7.8(k)."
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(d) Addition of Definitions. The following defined terms are hereby
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added to Annex A of the Participation Agreement in appropriate alphabetical
order:
"Mariner": Mariner Post-Acute Network, Inc. (formerly known as
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Paragon Health Network, Inc.), a Delaware corporation.
References in the Operative Documents to "Paragon" shall be
deemed to refer to Mariner.
"Second Amendment": the Second Amendment, dated as of December
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22, 1998, to this Agreement.
"Second Amendment Effective Date": the date of effectiveness of
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the Second Amendment.
2. Replacement of Pricing Grid. Schedule 1 to Annex A of the
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Participation Agreement is hereby amended by deleting such Schedule 1 in its
entirety and substituting in lieu thereof the Pricing Grid attached as Schedule
1 hereto.
3. Fees. In consideration of the agreement of the Lenders to consent
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to the amendments contained herein, Mariner agrees to pay to (a) each Lender
which so consents, on or prior to December 22, 1998, an amendment fee in an
amount equal to 0.25% of the amount of such Lender's Commitment, payable on the
date hereof in immediately available funds, and (b) the Lessor, if it should so
consent, on or prior to December 22, 1998 an amendment fee in an amount equal to
0.25% of the amount of the Lessor's Commitment, payable on the date hereof in
immediately available funds.
4. Conditions to Effectiveness. The amendments provided for herein
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shall become effective on the date the Agent shall have received counterparts of
this Amendment duly executed and delivered by the Lessee, the Lessor and the
Required Lenders.
5. Reference to and Effect on the Operative Documents; Limited Effect.
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On and after the date hereof and the satisfaction of the conditions contained in
paragraph 4 of this Amendment, each reference in the Participation Agreement to
"this Agreement", "hereunder", "hereof" or words of like import referring to the
Participation Agreement, and each reference in the other Operative Documents to
"the Participation Agreement", "thereunder", "thereof" or words of like import
referring to the Participation Agreement, shall mean and be a reference to the
Participation Agreement as amended hereby. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Lender or any Agent
under any of the Operative Documents, nor constitute a waiver of any provisions
of any of the Operative Documents. Except as expressly amended herein, all of
the provisions and covenants of the Participation Agreement and the other
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Operative Documents are and shall continue to remain in full force and effect in
accordance with the terms thereof and are hereby in all respects ratified and
confirmed.
6. Counterparts. This Amendment may be executed by one or more of the
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parties hereto in any number of separate counterparts (which may include
counterparts delivered by facsimile transmission) and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. Any
executed counterpart delivered by facsimile transmission shall be effective as
for all purposes hereof.
7. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
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PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
LIVING CENTERS HOLDING COMPANY, as Lessee
By:
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Name:
Title:
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FBTC LEASING CORP., as Lessor
By:
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Name:
Title:
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THE CHASE MANHATTAN BANK, as Agent and a Lender
By:
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Name:
Title:
8
THE FUJI BANK, LIMITED, as Co-Agent and a Lender
By:
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Name:
Title:
9
CITIBANK, N.A., as a Lender
By:
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Name:
Title:
10
NATIONSBANK, N.A., as a Lender
By:
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Name:
Title:
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, as a Lender
By:
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Name:
Title:
12
BANQUE PARIBAS, as a Lender
By:
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Name:
Title:
By:
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Name:
Title:
13
CREDIT LYONNAIS NEW YORK BRANCH, as a Lender
By:
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Name:
Title:
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇ AND
GRAND CAYMAN BRANCHES, as a Lender
By:
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Name:
Title:
By:
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Name:
Title:
15
FIRST UNION NATIONAL BANK, as a Lender
By:
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Name:
Title:
16
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, as a Lender
By:
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Name:
Title:
17
TORONTO DOMINION BANK (TEXAS), INC., as a Lender
By:
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Name:
Title:
▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, N.A., as a Lender
By:
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Name:
Title:
19
MARINE MIDLAND BANK, as a Lender
By:
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Name:
Title:
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Schedule 1
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PRICING GRID FOR REVOLVING CREDIT LOANS, SWING LINE LOANS
TRANCHE A TERM LOANS AND COMMITMENT FEES
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Consolidated Leverage Ratio Applicable Margin Applicable Margin Commitment Fee
for ABR Loans for Eurodollar Loans Rate
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greater than or equal to 5.25 to 1.0 1.25% 2.75% .50%
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less than 5.25 to 1.0 and
greater than or equal to 4.75 to 1.0 1.00% 2.50% .50%
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less than 4.75 to 1.0 and
greater than or equal to 4.25 to 1.0 .75% 2.25% .40%
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less than 4.25 to 1.0 and
greater than or equal to 3.75 to 1.0 .50% 2.00% .375%
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less than 3.75 to 1.0 .25% 1.75% .30%
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Changes in the Applicable Margin with respect to Revolving Credit Loans, Tranche
A Term Loans or in the Commitment Fee Rate resulting from changes in the
Consolidated Leverage Ratio shall become effective on the date (the "Adjustment
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Date") on which financial statements are delivered to the Lenders pursuant to
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Section 6.1 (but in any event not later than the 45th day after the end of each
of the first three quarterly periods of each fiscal year or the 90th day after
the end of each fiscal year, as the case may be) and shall remain in effect
until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time periods
specified above, then, until such financial statements are delivered, the
Consolidated Leverage Ratio as at the end of the fiscal period that would have
been covered thereby shall for the purposes hereunder be deemed to be greater
than or equal to 5.25 to 1.0. In addition, at all times while an Event of
Default shall have occurred and be continuing, the Consolidated Leverage Ratio
shall for the purposes hereunder be deemed to be greater than or equal to 5.25
to 1.0. Each determination of the Consolidated Leverage Ratio hereunder shall
be made with respect to the period of four consecutive fiscal quarters of the
Borrower ending at the end of the period covered by the relevant financial
statements.
