Exhibit 10.11
FOURTH AMENDMENT TO
DEBTOR-IN-POSSESSION CREDIT AGREEMENT AND
LIMITED WAIVER AND CONSENT
February 9, 2000
Reference is made to that certain Debtor-In-Possession Credit
Agreement dated as of September 13, 1999 (as heretofore amended, supplemented or
otherwise modified, the "DIP Credit Agreement"), by and among Vencor, Inc., a
Delaware corporation ("Vencor"), and Vencor Operating, Inc., a Delaware
corporation ("Vencor Opco"), each as debtor and debtor-in-possession, and each
of Vencor's subsidiaries listed on the signature pages thereof, each as debtor
and debtor-in-possession (each such subsidiary, Vencor and Vencor Opco
individually referred to herein as a "Borrower" and, collectively, on a joint
and several basis, as the "Borrowers"); the Lenders listed on the signature
pages thereof; and Xxxxxx Guaranty Trust Company of New York, as arranger,
collateral agent and administrative agent (in such capacity, "Administrative
Agent") for the Lenders, and as an issuing bank for Letters of Credit
thereunder. Capitalized terms used herein without definition herein shall have
the meanings assigned to such terms in the DIP Credit Agreement.
Borrowers have (i) advised Lenders that Borrowers plan to record a
significant charge to their December 1999 earnings to provide for additional bad
debt reserves, and that as a result, Borrowers may be unable to comply with
covenants in the DIP Credit Agreement requiring minimum Consolidated EBITDAR and
a minimum Net Amount of Eligible Accounts (it being understood that Borrowers
have not advised the Lenders that Borrowers will not be in compliance with such
covenants); (ii) requested certain amendments to the DIP Credit Agreement as
more fully set forth below; and (iii) submitted to Lenders an amendment and
supplement to the Cash Plan, attached hereto as Annex A (the "Cash Plan
-------
Supplement"), setting forth, for February 2000, March 2000 and April 2000, a
consolidated cash forecast for the Borrowers. Accordingly:
1. The undersigned Lenders hereby waive, for the period from December
1, 1999 through and including March 13, 2000, compliance with the
provisions of Sections 6.01 and 6.04 of the DIP Credit Agreement with
respect to all periods from December 1, 1999 through and including March
13, 2000; provided, that any breach of such provisions which would
--------
constitute an Event of Default but for the foregoing waiver shall be an
Event of Default on and after March 14, 2000 unless otherwise waived or
remedied prior to such date.
2. Each of the undersigned Lenders, pursuant to Section 7.03(b)(i) of
the DIP Credit Agreement, hereby consents to and approves the sale of
Borrowers' interest in their warehouse at 0000 Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxx on substantially the terms set forth in the
memorandum attached hereto as Annex B (the
-------
1
"Louisville Asset Sale"); provided that (i) no Default shall have occurred
and be continuing at the time of such sale, (ii) such sale is approved by
the Court to the extent such approval is required pursuant to the
Bankruptcy Code or an order of the Court, and (iii) within five Business
Days of Borrowers' receipt of the Net Cash Proceeds of the Louisville Asset
Sale, said Net Cash Proceeds shall be applied to repay outstanding Loans,
if any, and to reduce the Commitments in accordance with Section 2.08 of
the DIP Credit Agreement.
3. Borrowers and the undersigned Lenders hereby agree that:
(i) the definition of "Borrowing Base" in Section 1.01 of the
DIP Credit Agreement is hereby amended by adding at the end of the
table contained therein an additional row as follows:
"March 2000 $75,000,000"
(ii) Section 6.03 of the DIP Credit Agreement is hereby amended
by adding at the end of the table contained therein an additional row
as follows:
"March 2000 2,650"
(iii) Section 6.06 of the DIP Credit Agreement is hereby amended
by adding at the end of the table contained therein an additional row
as follows:
"March 2000 $74,000,000"
4. Each of the undersigned Lenders hereby (i) acknowledges that the
substance of the Cash Plan Supplement is satisfactory to such Lender, (ii)
consents to replacing the portion of the Cash Plan relating to February
2000 with the forecast for February 2000 contained in the Cash Plan
Supplement, and (iii) consents to supplementing the Cash Plan with the
forecast for March 2000 and April 2000 contained in the Cash Plan
Supplement.
On and after the Fourth Amendment Effective Date (as defined below),
each reference in the DIP Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the DIP Credit
Agreement, and each reference in the other Financing Documents to the "DIP
Credit Agreement", "thereunder", "thereof" or words of like import referring to
the DIP Credit Agreement, shall mean and be a reference to the DIP Credit
Agreement as amended by this Fourth Amendment to Debtor-In-Possession Credit
Agreement and Limited Waiver and Consent (this "Fourth Amendment"; the DIP
Credit Agreement, as so amended, being the "Amended Agreement").
Without limiting the generality of the provisions of Section 11.05 of
the DIP Credit Agreement, the waiver, the amendment and the consents set forth
in paragraphs 1, 2, 3 and 4 above shall be limited precisely as written, and
nothing in this Fourth Amendment shall be deemed to (a) constitute a waiver of
compliance by Borrowers with respect to (i) Section 6.01 or 6.04 of the DIP
Credit Agreement in any other instance or (ii) any other term, provision or
condition of the DIP Credit Agreement or any of such other Financing Documents,
(b) constitute
2
a consent to any other supplement to the Cash Plan or any other document,
transaction, occurrence, event or condition under Section 5.01(m) or 7.03(b)(i)
of the DIP Credit Agreement or any other term, provision or condition of the DIP
Credit Agreement or any of such other Financing Documents, or (c) prejudice any
right or remedy that the Administrative Agent or any Lender may now have or may
have in the future under or in connection with the DIP Credit Agreement or any
of such other Financing Documents. Except as specifically waived or amended by
this Fourth Amendment, the DIP Credit Agreement and such other Financing
Documents shall remain in full force and effect and are hereby ratified and
confirmed. Without limiting the generality of the foregoing, nothing herein
shall constitute, and nothing herein shall be construed to create, an extension
of the Commitments or an obligation on the part of the Lenders to extend the
Commitments beyond the Commitment Termination Date.
In order to induce Lenders to enter into this Fourth Amendment, each
Borrower, by its execution of a counterpart of this Fourth Amendment, represents
and warrants that (a) such Borrower has the corporate or other power and
authority and all material Governmental Approvals required to enter into this
Fourth Amendment and to carry out the transactions contemplated by, and perform
its obligations under, the Amended Agreement, (b) the execution and delivery of
this Fourth Amendment and the performance of the Amended Agreement have been
duly authorized by all necessary corporate or other action on the part of such
Borrower, (c) the execution and delivery by such Borrower of this Fourth
Amendment and the performance by such Borrower of the Amended Agreement do not
and will not contravene, or constitute a default under, any Applicable Laws
(including an applicable order of the Court) or any provision of its
Organizational Documents, or of any agreement or other instrument binding upon
it or result in or require the imposition of any Liens (other than the Liens
created by the Collateral Documents) on any of its assets, (d) the execution and
delivery by such Borrower of this Fourth Amendment and the performance by such
Borrower of the Amended Agreement do not and will not require any action by or
in respect of, or filing with, any governmental body, agency or official (except
for the Court and such as shall have been made at or before the time required
and shall be in full force and effect on and after the date when made), (e) this
Fourth Amendment and the Amended Agreement have been duly executed and delivered
by such Borrower and constitute the valid and binding obligations of such
Borrower, enforceable in accordance with their respective terms, except as may
be limited by general principles of equity, (f) for purposes of the Borrowing
Order (i) this Fourth Amendment constitutes a non-material modification of the
DIP Credit Agreement and the Financing Documents, and (ii) notice of this Fourth
Amendment has been given to and received by counsel to the Committee (as defined
in the Borrowing Order), and (g) after giving effect to this Fourth Amendment,
no event has occurred and is continuing or will result from the consummation of
the transactions contemplated by this Fourth Amendment that would constitute a
Default.
This Fourth Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. This Fourth
Amendment shall become effective (the date of such effectiveness being the
"Fourth Amendment Effective Date") upon the earliest date that (a) the Borrowers
and Required Lenders shall have executed counterparts of this Fourth Amendment
and the Borrowers and the Administrative Agent shall have received written or
telephonic notification of such execution and authorization of delivery thereof;
and (b) the Administrative Agent shall have
3
received evidence satisfactory to it that all outstanding statements of
O'Melveny & Xxxxx LLP, Xxxxx Xxxx & Xxxxxxxx and Xxxxxxxx & Xxxxx that are
received by Vencor prior to 12:00 Noon (New York City time) on February 10, 2000
have been paid in full; provided, however, that it shall be a condition
-------- -------
subsequent to the effectiveness hereof that the Administrative Agent shall have
received from the Borrowers an amendment and waiver fee in the aggregate amount
of $100,000 on or prior to the earlier of (1) the Commitment Termination Date
and (2) the date of payment of any fee to the Lenders (or, if earlier, the last
date on which payment of such fee is permitted) in connection with the first
amendment (if any) to the DIP Credit Agreement entered into after the date
hereof which extends the Stated Maturity Date (which $100,000 amendment and
waiver fee shall be in addition to any such fee payable in connection with such
amendment to the DIP Credit Agreement), for ratable distribution to each Lender
that has executed and delivered this Fourth Amendment on or prior to February
14, 2000 according to the ratio of (x) the Commitment of such executing Lender
to (y) the aggregate Commitments of all such executing Lenders, and if
Administrative Agent shall not have received such fee by such date, this Fourth
Amendment and all amendments, waivers and consents effected hereby shall
immediately be null and void, ab initio, and of no force and effect whatsoever.
THIS FOURTH AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
[Remainder of page intentionally left blank]
4
BORROWERS:
Advanced Infusion Systems, Inc.
American X-Rays, Inc.
C.P.C. of Louisiana, Inc.
Community Behavioral Health System, Inc.
Community Psychiatric Centers of Arkansas, Inc.
Community Psychiatric Centers of California
Community Psychiatric Centers of Florida, Inc.
Community Psychiatric Centers of Idaho, Inc.
Community Psychiatric Centers of Indiana, Inc.
Community Psychiatric Centers of Kansas, Inc.
Community Psychiatric Centers of Mississippi, Inc.
Community Psychiatric Centers of Missouri, Inc.
Community Psychiatric Centers of North Carolina, Inc.
Community Psychiatric Centers of Oklahoma, Inc.
Community Psychiatric Centers of Utah, Inc.
Community Psychiatric Centers Properties Incorporated
Community Psychiatric Centers Properties of Oklahoma,
Inc.
Community Psychiatric Centers Properties of Texas, Inc.
Community Psychiatric Centers Properties of Utah, Inc.
Courtland Gardens Health Center, Inc.
CPC Investment Corp.
CPC Managed Care Health Services, Inc.
CPC of Georgia, Inc.
CPC Properties of Arkansas, Inc.
CPC Properties of Illinois, Inc.
CPC Properties of Indiana, Inc.
CPC Properties of Kansas, Inc.
CPC Properties of Louisiana, Inc.
CPC Properties of Mississippi, Inc.
CPC Properties of Missouri, Inc.
CPC Properties of North Carolina, Inc.
First Rehab, Inc.
Florida Hospital Properties, Inc.
Health Care Holdings, Inc.
Health Care Technology, Inc.
Helian ASC of Northridge, Inc.
Helian Health Group, Inc.
Helian Recovery Corporation
Homestead Health Center, Inc.
Horizon Healthcare Services, Inc.
Interamericana Health Care Group
X.X. Xxxxxx Hospital, Inc.
Lafayette Health Care Center, Inc.
MedEquities, Inc.
Medisave of Tennessee, Inc.
Medisave Pharmacies, Inc.
Old Orchard Hospital, Inc.
Palo Alto Surgecenter Corporation
Peachtree-Parkwood Hospital, Inc.
PersonaCare, Inc.
PersonaCare Living Center of Clearwater, Inc.
PersonaCare of Bradenton, Inc.
PersonaCare of Clearwater, Inc.
PersonaCare of Connecticut, Inc.
PersonaCare of Georgia, Inc.
PersonaCare of Huntsville, Inc.
PersonaCare of Little Rock, Inc.
PersonaCare of Ohio, Inc.
PersonaCare of Owensboro, Inc.
PersonaCare of Pennsylvania, Inc.
PersonaCare of Pompano East, Inc.
PersonaCare of Pompano West, Inc.
PersonaCare of Reading, Inc.
PersonaCare of San Antonio, Inc.
PersonaCare of San Xxxxx, Inc.
PersonaCare of Shreveport, Inc.
PersonaCare of St. Petersburg, Inc.
PersonaCare of Warner Xxxxxxx, Inc.
PersonaCare of Wisconsin, Inc.
PersonaCare Properties, Inc.
ProData Systems, Inc.
Recovery Inns of America, Inc.
Respiratory Care Services, Inc.
Stamford Health Facilities, Inc.
THC-Chicago, Inc.
THC-Hollywood, Inc.
THC-Houston, Inc.
THC-Minneapolis, Inc.
THC-North Shore, Inc.
THC-Orange County, Inc.
THC-San Diego, Inc.
THC-Seattle, Inc.
TheraTx Healthcare Management, Inc.
TheraTx Health Services, Inc.
TheraTx Management Services, Inc.
TheraTx Medical Supplies, Inc.
TheraTx Rehabilitation Services, Inc.
TheraTx Staffing, Inc.
Transitional Hospitals Corporation, a Delaware
Corporation
Transitional Hospitals Corporation, a Nevada
Corporation
Transitional Hospitals Corporation of Indiana, Inc.
Transitional Hospitals Corporation of Louisiana, Inc.
Transitional Hospitals Corporation of Michigan, Inc.
Transitional Hospitals Corporation of Nevada, Inc.
Transitional Hospitals Corporation of New Mexico, Inc.
Transitional Hospitals Corporation of Tampa, Inc.
Transitional Hospitals Corporation of Texas, Inc.
Transitional Hospitals Corporation of Wisconsin, Inc.
Xxxxxx Nursing Center, Inc.
Xxxxxxxx Enterprises, Inc.
VC-OIA, Inc.
VC-TOHC, Inc.
XX-XX, Inc.
Vencare, Inc.
Vencare Rehab Services, Inc.
Vencor Facility Services, Inc.
Vencor Holdings, L.L.C.
Vencor Home Care Services, Inc.
Vencor Hospice, Inc.
Vencor Hospitals East, L.L.C.
Vencor Hospitals West, L.L.C.
Vencor, Inc.
Vencor Insurance Holdings, Inc.
Vencor Investment Company
Vencor Nevada, L.L.C.
Vencor Nursing Centers East, L.L.C.
Vencor Nursing Centers Central L.L.C.
Vencor Nursing Centers North, L.L.C.
Vencor Nursing Centers South, L.L.C.
Vencor Nursing Centers West, L.L.C.
Vencor Operating, Inc.
Vencor Pediatric Care, Inc.
Vencor Provider Network, Inc.
Ventech Systems, Inc.
BY: VENCOR OPERATING, INC., as agent and attorney-in-
fact for each of the foregoing entities
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
STAMFORD HEALTH ASSOCIATES, L.P.
BY: STAMFORD HEALTH FACILITIES, INC., ITS GENERAL
PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
VENCOR HOME CARE AND HOSPICE INDIANA PARTNERSHIP
BY: VENCOR HOME CARE SERVICES, INC., ITS GENERAL
PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
BY: VENCOR HOSPICE, INC., ITS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
VENCOR HOSPITALS LIMITED PARTNERSHIP
BY: VENCOR OPERATING, INC., ITS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
BY: VENCOR NURSING CENTERS LIMITED PARTNERSHIP, ITS
GENERAL PARTNER
BY: VENCOR OPERATING, INC., ITS GENERAL
PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
VENCOR NURSING CENTERS CENTRAL LIMITED PARTNERSHIP
BY: VENCOR OPERATING, INC., ITS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
BY: VENCOR NURSING CENTERS LIMITED PARTNERSHIP, ITS
GENERAL PARTNER
BY: VENCOR OPERATING, INC., ITS GENERAL
PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
VENCOR NURSING CENTERS LIMITED PARTNERSHIP
BY: VENCOR OPERATING, INC., ITS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
BY: VENCOR HOSPITALS LIMITED PARTNERSHIP, ITS
GENERAL PARTNER
BY: VENCOR OPERATING INC., ITS GENERAL
PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
AGENTS AND LENDERS:
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, as Arranger,
Collateral Agent and Administrative Agent and as a
Lender
By: /s/ Houston X. Xxxxxxxx
---------------------------
Name: Houston X. Xxxxxxxx
Title: Vice President
ABLECO FINANCE LLC, as a Lender
By:
----------------------------
Name:
Title:
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I, as a Lender
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
BANKERS TRUST COMPANY, as a Lender
By:
------------------------------
Name:
Title:
CHASE SECURITIES INC, AS AGENT FOR THE
CHASE MANHATTAN BANK, as a Lender
By:
-------------------------------
Name:
Title:
XXXXXXX XXXXX CREDIT PARTNERS L.P., as a Lender
By: /s/ Xxxx Xxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxx
Title: Authorized Signatory
PARIBAS, as a Lender
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Director
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X.Xxxxxx
Title: Managing Director
XXX XXXXXX PRIME RATE INCOME TRUST, as a Lender
By: XXX XXXXXX INVESTMENT ADVISORY CORP.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
FRANKLIN MUTUAL ADVISERS LLC, as a Lender
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Assistant Vice President
FRANKLIN FLOATING RATE TRUST, as a Lender
By: /s/ Xxxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
ACKNOWLEDGEMENT AND CONSENT OF SUBSIDIARY GUARANTOR
By its execution of a counterpart of this Fourth Amendment, the
undersigned, as a Subsidiary Guarantor under that certain Guaranty Agreement
dated as of September 13, 1999 (the "Guaranty") for the benefit of Lenders, and
as an Original Lien Grantor under that certain Security Agreement dated as of
September 13, 1999 (the "Security Agreement") between the undersigned, the
Borrowers and Collateral Agent, as Secured Party, hereby acknowledges that it
has read this Fourth Amendment and consents to the terms thereof and further
hereby confirms and agrees that, notwithstanding the effectiveness of this
Fourth Amendment, the obligations of the undersigned under the Guaranty and the
Security Agreement shall not be impaired or affected and each of the Guaranty
and the Security Agreement is, and shall continue to be, in full force and
effect and is hereby confirmed and ratified in all respects.
CARIBBEAN BEHAVIORAL HEALTH
SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
Annex A
-------
Vencor, Inc.
Cash Plan
Period: Weeks Beginning January 31, 2000 to April 28, 2000
Prepared: February 10, 2000
(in millions)
----------------------------------------------------------------------------------------------------------------------------
CASH FLOW FORECAST: (Prepared by Company on February 4, 2000)
Week Beginning: 1/31/00 2/7/00 2/14/00 2/21/00 2/28/00 3/6/00 3/13/00 3/20/00
Projected Receipts:
Facility Receipts $ 33.5 $ 35.0 $ 38.0 $ 30.4 $ 30.1 $ 27.2 $ 40.8 $ 38.0
Agency Receipts 19.0 19.0 15.0 19.2 12.5 13.5 20.2 19.5
PIP Receipts 8.5 - 10.5 - 8.9 - 10.0 -
Misc Receipts - - - - - - - -
-------- ------- -------- -------- -------- ------- -------- --------
Subtotal Receipts $ 61.0 $ 54.0 $ 63.5 $ 49.6 $ 51.5 $ 40.7 $ 71.0 $ 57.5
Projected Disbursements:
Accounts Payable $ (27.9) $ (27.9) $ (29.0) $ (15.6) $ (37.9) $ (26.7) $ (19.2) $ (19.2)
Ventas (15.2) - - - (15.2) - - -
Scheduled PIP Payments - (2.0) - - - - -
Payroll (21.1) (16.4) (19.6) (15.6) (18.9) (17.2) (17.2) (17.3)
Taxes (6.0) (11.2) (6.7) (7.9) (9.3) (6.7) (7.7) (4.3)
VEBA Funding (1.1) (1.0) (1.0) (1.0) (1.0) (1.5) (1.5) (1.5)
Vendor Deposits (2.4) (2.4) (2.4) - (2.4) (2.0) (2.0) (2.0)
Executive Retention - - - - - - - -
Restructuring Costs - (1.1) - - (1.0) - - -
-------- ------- -------- -------- -------- ------- -------- --------
Subtotal Uses of Cash $ (73.7) $ (62.0) $ (58.7) $ (40.1) $ (85.7) $ (54.1) $ (47.6) $ (44.3)
-------- ------- -------- -------- -------- ------- -------- --------
Daily Cash Flow before Next Day
Funding Requirements $ (12.7) $ (8.0) $ 4.8 $ 9.5 $ (34.2) $ (13.4) $ 23.4 $ 13.2
Reduce (Borrow) Next Day Funding - - - - - - - -
Requirement -------- ------- -------- -------- -------- ------- -------- --------
Subtotal Net Sources (Uses) of Cash $ (12.7) $ (8.0) $ 4.8 $ 9.5 $ (34.2) $ (13.4) $ 23.4 $ 13.2
-------- ------- -------- -------- -------- ------- -------- --------
Forecasted Revolver (Borrowing) $ (12.7) $ (8.0) $ 4.8 $ 9.5 $ (34.2) $ (13.4) $ 23.4 $ 13.2
Repayment
Beginning Revolver $ - $ - $ - $ - $ - $ - $ - $ -
Activity - - - - - - - -
-------- ------- -------- -------- -------- ------- -------- --------
Ending Revolver $ - $ - $ - $ - $ - $ - $ - $ -
======== ======= ======== ======== ======== ======= ======== ========
Beginning Cash $ 97.0 $ 84.3 $ 76.3 $ 81.1 $ 90.6 $ 56.4 $ 43.0 $ 66.4
Net Change in Cash (12.7) (8.0) 4.8 9.5 (34.2) (13.4) 23.4 13.2
-------- ------- -------- -------- -------- ------- -------- --------
Ending Cash $ 84.3 $ 76.3 $ 81.1 $ 90.6 $ 56.4 $ 43.0 $ 66.4 $ 79.6
======== ======= ======== ======== ======== ======= ======== ========
COVENANT COMPUTATION:
Cumulative Net Cash Flow $ (12.7) $ (20.7) $ (15.9) $ (6.4) $ (40.6) $ (54.0) $ (30.6) $ (17.4)
Permitted Variance (1) (18.0) (18.0) (18.0) (18.0) (18.0) (18.0) (18.0) (18.0)
-------- ------- -------- -------- -------- ------- -------- --------
Compliance with Cash Plan $ (30.7) $ (38.7) $ (33.9) $ (24.4) $ (58.6) $ (72.0) $ (48.6) $ (35.4)
======== ======= ======== ======== ======== ======= ======== ========
Week Beginning: 3/27/00 4/3/00 4/10/00 4/17/00 4/24/00
Projected Receipts:
Facility Receipts $ 30.3 $ 20.6 $ 31.0 $ 50.2 $ 45.7
Agency Receipts 12.5 15.0 14.3 18.9 17.0
PIP Receipts 10.0 - 10.0 - 10.0
Misc Receipts - - - - -
-------- ------- -------- -------- --------
Subtotal Receipts $ 52.8 $ 35.6 $ 55.3 $ 69.1 $ 72.7
Projected Disbursements:
Accounts Payable $ (14.8) $ (32.5) $ (30.4) $ (22.8) $ (22.8)
Ventas - (15.2) - - -
Scheduled PIP Payments - - - - -
Payroll (13.2) (21.9) (18.9) (18.1) (19.7)
Taxes (4.5) (8.0) (8.0) (8.0) (8.0)
VEBA Funding (1.5) (1.3) (1.3) (1.3) (1.3)
Vendor Deposits (2.0) (2.0) (2.0) (2.0) (2.0)
Executive Retention - - - - -
Restructuring Costs (0.1) (1.0) - - (0.1)
-------- ------- -------- -------- --------
Subtotal Uses of Cash $ (36.1) $ (81.9) $ (60.6) $ (52.2) $ (53.9)
-------- ------- -------- -------- --------
Daily Cash Flow before Next Day
Funding Requirements $ 16.7 $ (46.3) $ (5.3) $ 16.9 $ 18.8
Reduce (Borrow) Next Day Funding - - - - -
Requirement -------- ------- -------- -------- --------
Subtotal Net Sources (Uses) of Cash $ 16.7 $ (46.3) $ (5.3) $ 16.9 $ 18.8
-------- ------- -------- -------- --------
Forecasted Revolver (Borrowing) $ 16.7 $ (46.3) $ (5.3) $ 16.9 $ 18.8
Repayment
Beginning Revolver $ - $ - $ - $ - $ -
Activity - - - - -
-------- ------- -------- -------- --------
Ending Revolver $ - $ - $ - $ - $ -
======== ======= ======== ======== ========
Beginning Cash $ 79.6 $ 96.3 $ 50.0 $ 44.7 $ 61.6
Net Change in Cash 16.7 (46.3) (5.3) 16.9 18.8
-------- ------- -------- -------- --------
Ending Cash $ 96.3 $ 50.0 $ 44.7 $ 61.6 $ 80.4
======== ======= ======== ======== ========
COVENANT COMPUTATION:
Cumulative Net Cash Flow $ (0.7) $ (47.0) $ (52.3) $ (35.4) $ (16.6)
Permitted Variance (1) (18.0) (18.0) (18.0) (18.0) (18.0)
-------- ------- -------- -------- --------
Compliance with Cash Plan $ (18.7) $ (65.0) $ (70.3) $ (53.4) $ (34.6)
======== ======= ======== ======== ========
---------------------------------------------------------------------------------------------
(1) The Borrower is allowed to disburse up to $52,500,000 above the permitted
variance if, and only if, such disbursements are required to be made to
repay obligations owing to Medicare or its agents.
Annex B
-------
February 1, 2000
MEMORANDUM FOR VENCOR DIP LENDER GROUP
--------------------------------------
Re: Request for Consent to Proposed Asset Sale
------------------------------------------
Below is outlined a proposed transaction in which the Debtors would
sell a warehouse in Louisville, Kentucky for gross proceeds of $750,000. The
warehouse is not scheduled as a Property Held for Sale under the Debtor-in-
Possession Credit Agreement dated as of September 13, 1999 (the "Agreement"
---------
capitalized terms in this memorandum to have the definitions given to them in
the Agreement), and accordingly the Debtors request the consent of Required
Lenders to the transaction pursuant to Section 7.03 of the Agreement. The Net
Cash Proceeds of the sale would be applied to repay outstanding loans, if any,
and to reduce the Commitments in accordance with Section 2.08 of the Agreement.
On February 26, 1998, Vencor, Inc. purchased a warehouse located at
0000 Xxxxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxx (the "Property") for
--------
$740,000 which has been used to store many of the Debtors' records. In recent
months the Debtors determined it would be more efficient and less costly to
outsource the storage aspect of the Debtors' record retention program. It is
estimated that the outsourcing will result in an estimated annual savings of
$197,865 to the Debtors. Consequently, as of February 1, 2000, the Debtors are
discontinuing use of the warehouse. Until the Debtors are able to sell the
Property, they are responsible for security and maintenance costs on the
Property, which the Debtors estimate are $2,333 per month.
On or about October 6, 1999, the Debtors retained a broker to market
the Property. The broker has been involved with numerous sale and lease
transactions, including the ownership of eight buildings in the Xxxxxxx
Industrial Park in which the Property is located. The Property was marketed by:
(a) placement in the Louisville Board of Realtors Multiple Listing Service for
exposure to 150 local commercial/industrial members, (b) mailing a brochure to
local distributors and light manufacturers, (c) advertisement in Business First,
--------------
a business publication for the Louisville metropolitan area, (d) inclusion in
the database at Greater Louisville, Inc. for distribution to business
development prospects, and (e) installation of a "For Sale" sign on the
Property. The marketing efforts produced fifteen showings of the Property which
resulted in two offers for the Property, one of which was considerably lower
than the proposed purchase price.
The offer that the Debtors propose to accept is a $750,000 offer from
Xxxxxx Xxxx Xxxxxxx and Xxxxx X. Xxxxxxx (the "Purchaser"). The Debtors propose
---------
to accept this offer based on the offer price, the favorable terms of the offer,
pursuant to which the Property will be sold on an "as is" basis, and the lack of
interest from other potential purchasers after thorough marketing efforts. The
Debtors believe that the sale of the Property is in the best interests of the
Debtors, their estates and their creditors, and is amply justified by several
factors. First, the Property does not make a positive contribution to the
Debtors' case flow. Indeed, the Debtors must make monthly security and
maintenance related payments of approximately $2,333 in order to maintain the
safety and marketability of the closed warehouse. Second, the purchase price,
based on the information available to the broker, is the highest amount paid per
square foot for a building of comparable size in the immediate area of the
Xxxxxxx Industrial Park. As described above, the Debtors have marketed the
Property through an experienced broker knowledgeable about the local market
conditions. Despite diligent and extensive marketing, the Debtors received only
two offers for the Property, of which the Purchaser's was the highest and best.
The Purchaser has not objected to the thirty foot shared driveway and irregular
site configuration that have been objections raised by many of the other parties
that viewed the Property. If the Debtors are unable to sell the Property to the
Purchaser, the Debtors would lose their investment of time and expense in
marketing the Property.
The following is a summary of the pertinent provisions of the proposed
sale agreement: (i) the purchase price for the Property upon closing if
$750,000, including a deposit of $25,000, subject to transfer taxes and certain
adjustments for prorated taxes; (ii) the 425,000 deposit becomes non-refundable
45 days after the execution date of the sale agreement; (iii) upon closing and
pursuant to both the sale agreement and a separate agreement with the broker,
Vencor, Inc. will be required to pay three percent of the $750,000 purchase
price to the broker as a commission; (iv) the Property is being sold by Vencor,
Inc. on an "as is", "where is" and "with all faults" basis; and (v) the closing
is to take place on or before April 1, 2000.
* * *
Vencor will be pleased to provide further information with respect to
this transaction at your request. Please contact Xxxxxxxx Xxxxxxxx at (212)
225-2246 or Xxxxxx Xxxx-Xxxxxxxxx at (000) 000-0000 with any questions.
