EXHIBIT 10.89
ACKNOWLEDGMENT AND AMENDMENT
ACKNOWLEDGMENT AND AMENDMENT, dated as of August 16, 1999 (this
"Acknowledgment and Amendment"), to the Credit Agreement, dated as of November
----------------------------
4, 1997 (as amended by the First Amendment, dated as of July 8, 1998, the Second
Amendment, dated as of December 22, 1998, the Third Amendment, dated as of May
11, 1999, and as may be further amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among MARINER POST-ACUTE NETWORK, INC.
----------------
(formerly known as Paragon Health Network, Inc.), a Delaware corporation (the
"Borrower"), the several banks and other financial institutions or entities from
---------
time to time parties thereto (the "Lenders"), BANK OF AMERICA, N.A. (formerly
-------
known as NationsBank, N.A., "BofA"), as documentation agent (in such capacity,
----
the "Documentation Agent"), and THE CHASE MANHATTAN BANK, as Administrative
-------------------
agent (in such capacity, the "Administrative Agent").
--------------------
WITNESSETH
----------
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to
make, and have made, certain loans and other extensions to credit to the
Borrower;
WHEREAS, the Borrower and BofA are party to the Amended and Restated
Confirmation for U.S. Dollar Total Return Swap Transaction, dated as of
September 21, 1998, as amended and restated as of March, 1999 (the "BofA Swap"),
---------
under that certain ISDA Master Agreement, dated as of October 31, 1997, among
the Borrower and BofA;
WHEREAS, the Borrower is obligated to BofA in respect of the BofA Swap
in an aggregate amount equal to $26,485,562.79, net of the application of
termination payments and collateral held in respect of the BofA Swap (the "BofA
----
Swap Obligation");
---------------
WHEREAS, the Borrower has requested, and, upon this Acknowledgment and
Amendment becoming effective, the Lenders have agreed, that certain provisions
of the Credit Agreement be amended to permit the restructuring of the BofA Swap
Obligation and to provide that such restructured obligation be secured on a pari
passu basis with the Lenders in the Collateral, all in the manner provided for
in this Acknowledgment and 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 Acknowledgment and Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
2
1. Defined Terms. (a) General. Terms defined in the Credit Agreement
------------- -------
and used herein shall, unless otherwise indicated, have the meanings given to
them in the Credit Agreement. Terms defined and used in this Acknowledgment and
Amendment shall have the meanings given to them in this Acknowledgment and
Amendment.
(b) Addition of Definitions. The following defined terms are hereby
-----------------------
added to Section 1.1 of the Credit Agreement in appropriate alphabetical order:
"BofA": Bank of America, N.A., a national banking association.
----
"BofA Swap": the Amended and Restated Confirmation for U.S. Dollar
---------
Total Return Swap Transaction, dated as of September 21, 1998, as amended
and restated as of March, 1999, under that certain ISDA Master Agreement,
dated as of October 31, 1997, among the Borrower BofA.
"Deficiency Note": the promissory note dated August 16, 1999, by the
---------------
Borrower in favor of BofA in an aggregate principal amount equal to
$26,485,562.79 which, among other things (i) provides for the payment of
interest thereon at a rate equal to the interest rate from time to time in
effect with respect to the Revolving Credit Loans, (ii) has a tenor equal
to that of the Revolving Credit Loans, (iii) provides that the loans
thereunder may only be accelerated by BofA (A) upon a failure to pay
principal and interest due thereon or (B) if the Loans are declared to be,
or automatically become, due and payable in accordance with Section 8, (iv)
does not contain any financial or operating covenants with respect to the
Borrower or any of its Subsidiaries, (v) is not assignable by BofA unless
contemporaneous with any assignment thereof BofA shall assign all of the
remaining Loans and Commitments held by it at such time to the assignee of
the Deficiency Note, (vi) provides that any amendments, supplements,
modifications, extensions or forebearances of the Revolving Credit Loans or
the Revolving Credit Commitments shall be equally and automatically
applicable to the loans thereunder mutatis mutandis without any further
consent of BofA thereunder, (vii) provides that any permanent reduction of
the Revolving Credit Commitments resulting in a prepayment of the Revolving
Credit Loans will be accompanied by a prepayment of the loans under the
Deficiency Note, ratably based on the amount of the prepayment of the
Revolving Credit Loans, (viii) acknowledges that BofA shall not be entitled
to be treated as a class separate from the Lenders with respect to the
obligations thereunder in any bankruptcy, insolvency or reorganization
proceedings of the Borrower and (ix) is on other terms and conditions
reasonably satisfactory to the Administrative Agent."
2. Amendment to Section 7.2. Section 7.2 of the Credit Agreement is
------------------------
hereby amended by (a) deleting the word "and" at the end of paragraph (j), (b)
deleting the period at the end of paragraph (k) and substituting in lieu
thereof, "and" and (c) inserting the following new paragraph (1):
3
"(l) Indebtedness in respect of the Deficiency Note."
3. Acknowledgment. The parties hereto acknowledge and agree that,
--------------
solely with respect to the Collateral, the obligations of the Borrower under the
Deficiency Note shall be (i) treated as "Borrower Obligations" as defined in the
Guarantee and Collateral Agreement and (ii) entitled to the benefits of the
collateral security provided under the Mortgages on a pari passu basis with the
Lenders.
4. Conditions to Effectiveness. The acknowledgments and amendments
---------------------------
provided for herein shall become effective upon the satisfaction of the
following conditions precedent and shall be deemed to be effective as of the
date hereof:
(a) The Administrative Agent shall have received counterparts of
this Acknowledgment and Amendment duly executed and delivered by the
Borrower and the Required Lenders.
(b) The swap transaction evidenced by the BofA Swap shall have
been terminated and the obligations in respect thereof shall have been
restructured in the form of the Deficiency Note (it being understood
that the guarantee of Mariner and certain of its Subsidiaries in
respect thereof shall remain in full force and effect).
(c) All other matters in connection with the termination of the
swap transaction evidenced by the BofA Swap shall be in form and
substance reasonably satisfactory to the Administrative Agent.
The execution and delivery of this Acknowledgment and Amendment by any Lender
shall be binding upon each of its successors and assigns (including Transferees
of its commitments and Loans in whole or in part prior to effectiveness hereof)
and binding in respect of all of its Commitments and Loans, including any
acquired subsequent to its execution and delivery hereof and prior to the
effectiveness hereof.
5. Representations and Warranties. The Borrower as of the date
------------------------------
hereof and after giving effect to the acknowledgments and amendments contained
herein, hereby confirms, reaffirms and restates that representations and
warranties made by it in Section 4 of the Credit Agreement (other than the last
sentence of Section 4.7 and other than with respect to any matters previously
disclosed in writing to the Lenders or disclosed in any of the Borrower's public
filings, including, without limitation, matters disclosed in its financial
statements); provided, that each reference to the Credit Agreement therein shall
--------
be deemed to be a reference to the Credit Agreement after giving effect to this
Acknowledgment and Amendment.
4
6. Payment of Expenses. The Borrower agrees to pay or reimburse the
-------------------
Administrative Agent for all of its out-of-pocket costs and expenses incurred in
connection with this Acknowledgment and Amendment, any other documents prepared
in connection herewith and the transactions contemplated hereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.
7. Reference to and Effect on the Loan Documents: Limited Effect. On and
-------------------------------------------------------------
after the date hereof and the satisfaction of the conditions contained in
paragraph 4 of this Acknowledgment and Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended hereby. The execution, delivery and effectiveness of
this Acknowledgment and 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 Loan Documents, nor constitute a waiver of any provisions
of any of the Loan Documents. Except as expressly amended or waived herein, all
of the provisions and covenants of the Credit Agreement and the other Loan
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.
8. Counterparts. This Acknowledgment and Amendment may be executed
------------
by one or more of the 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.
9. GOVERNING LAW. THIS ACKNOWLEDGMENT AND AMENDMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
5
IN WITNESS WHEREOF, the parties hereto have caused this Acknowledgment
and Amendment to be duly executed and delivered by their respective proper and
duly authorized officers as of the day and year first above written.
MARINER POST-ACUTE NETWORK, INC.
By: ____________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Xxxxx X. Xxxx
----------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
BANK OF AMERICA, N.A.
/s/ X. X. Xxxxx
-------------------------------
By: X. X. Xxxxx
Title: Managing Director
