EXHIBIT 10.2
AMENDMENT NO. 2
AMENDMENT No.2 (this "Amendment") dated as of March 22, 2002, under the
$300,000,000 Credit Agreement dated as of April 20, 2001 (as heretofore amended,
the "Credit Agreement") among KINDRED HEALTHCARE OPERATING, INC. (formerly named
Vencor Operating, Inc.) (the "Borrower"), KINDRED HEALTHCARE, INC. (formerly
named Vencor, Inc.) ("Kindred"), the LENDERS party thereto and JPMORGAN CHASE
BANK (formerly The Chase Manhattan Bank, successor-by-merger to Xxxxxx Guaranty
Trust Company of New York), as Administrative Agent and Collateral Agent.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to amend certain provisions of the
Credit Agreement and to waive certain provisions of the Intercreditor Agreement,
in each case, as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Defined Terms; References. Unless otherwise specifically defined
herein, each term used herein which is defined in the Credit Agreement has the
meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.
Section 2. Defined Terms. The definition of "Free Cash Flow" in Section
1.01 of the Credit Agreement is amended by deleting clause (iii) thereof and
renumbering clauses (iv), (v) and (vi) thereof as clauses (iii), (iv) and (v),
respectively.
Section 3. Acknowledgment. Each of the Lenders (i) acknowledges that the
Borrower has requested the lenders under the Exit Facility to increase the
aggregate commitments thereunder to $120,000,000, (ii) consents to such increase
in commitments, (iii) agrees that, upon such increase becoming effective, the
definition of "Exit Facility" in Section 1.01 of the Credit Agreement shall be
read to give effect to such increase in commitments and (iv) waives the
provisions of
Section 5.02 of the Intercreditor Agreement to the extent that such provisions
would not permit such increase in commitments.
Section 4. Prepayment of Loans. The language prior to clause (i) of Section
2.06(b) of the Credit Agreement is amended to read as follows:
"If on any date (an "Equity Receipt Date") on or after the Closing
Date Vencor receives any Net Cash Proceeds from any Equity Issuance,
Vencor shall promptly provide notice thereof to the Administrative
Agent, which notice shall specify the amount of the Net Cash Proceeds
received with respect thereto, whether all or any portion of such Net
Cash Proceeds will be transferred to the Issuer for application by the
Issuer to prepay loans hereunder (the amount, if any, specified for
such purpose, the "Senior Secured Prepayment Amount"), the positive
amount, if any, equal to (x) 75% of such Net Cash Proceeds less (y)
the Senior Secured Prepayment Amount (the "Designated Equity
Proceeds") and the date on which such Net Cash Proceeds were received.
If any such notice shall specify a Senior Secured Prepayment Amount,
then within three Business Days after the date of such notice, Vencor
shall transfer to the Issuer as an equity contribution such Senior
Secured Prepayment Amount and, unless such prepayment is not permitted
by the Exit Facility, the Issuer shall immediately prepay an aggregate
principal amount of Loans equal to the amount so transferred. The
Designated Equity Proceeds, if any, with respect to such Equity
Issuance shall be applied as follows:"
Section 5. Information. Section 5.01(o) of the Credit Agreement is amended
by replacing the reference to "promptly upon" with a reference to "within 15
Business Days of".
Section 6. Guarantees by Future Restricted Subsidiaries. Section 5.08 of
the Credit Agreement is amended by replacing the reference to "five" with a
reference to "15".
Section 7. Future Assets to Be Added to Collateral. (a) Sections 5.09(a)
and 5.09(d) of the Credit Agreement are each amended by replacing the reference
to "5" with a reference to "15".
(b) Section 5.09(b) of the Credit Agreement is amended by replacing the
reference to "two" with a reference to "five" and replacing the reference to
"30" with a reference to "45".
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Section 8. Fixed Charge Coverage Ratio (EBITDAR). Section 6.01(a) of the
Credit Agreement is amended and restated in its entirety to read as follows:
"At each Quarterly Measurement Date on or after June 30, 2001, the
ratio of (i) Consolidated EBITDAR for the four consecutive Fiscal
Quarters then ended to (ii) the sum of Consolidated Interest Expense
plus Consolidated Rental Expense plus the aggregate principal amount
of Debt of the Issuer and its Restricted Subsidiaries scheduled to be
amortized, in each case for the same four Fiscal Quarters, will not be
less than the ratio set forth below opposite such Quarterly
Measurement Date (or any Quarterly Measurement Date which falls during
the periods set forth below):
----------------------------------------------------
Period Ratio
----------------------------------------------------
June 30, 2001 through December 31, 2001 1.01 to 1
----------------------------------------------------
March 31, 2002 through December 31, 2004 1.15 to 1
----------------------------------------------------
March 31, 2005 and thereafter 1.20 to 1
----------------------------------------------------
; provided that (x) at any Quarterly Measurement Date prior to the end
of the fourth full Fiscal Quarter after the Closing Date, the
foregoing amounts shall be calculated as of the end of the then most
recently ended Fiscal Quarter on an Annualized Basis, (y) any amounts
payable by the Issuer and its Restricted Subsidiaries pursuant to
Section 6.12(a)(1)(i) and (ii) of the Plan of Reorganization in
respect of the Government Settlement during any relevant calculation
period shall be excluded from the calculation of the foregoing amounts
for such period and (z) the principal amount of loans payable under
the Exit Facility on the date of final maturity thereof shall be
excluded from the calculation of the foregoing amounts for the period
during which such date occurs."
Section 9. Total Leverage Ratio. Section 6.02(a) of the Credit Agreement is
amended and restated in its entirety to read as follows:
"On or after June 30, 2001, the ratio of (x) Consolidated Debt for
Borrowed Money to (y) Consolidated EBITDA for the four consecutive
Fiscal Quarters then most recently ended will not, at any date during
any period set forth below, exceed the ratio set forth below opposite
such period:
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---------------------------------------------------
Period Ratio
---------------------------------------------------
June 30, 2001 through December 31, 2001 3.95 to 1
---------------------------------------------------
March 31, 2002 and thereafter 3.25 to 1
---------------------------------------------------
; provided that for dates prior to the end of the fourth full Fiscal
Quarter after the Closing Date, Consolidated EBITDA shall be determined as
of the end of the then most recently ended Fiscal Quarter on an Annualized
Basis; provided further that any amounts payable by the Issuer and its
Restricted Subsidiaries pursuant to Section 6.12(a)(1)(i) and (ii) of the
Plan of Reorganization in respect of the Government Settlement during any
relevant calculation period shall be excluded from the calculation of the
foregoing amounts for such period."
Section 10. Minimum Consolidated Net Worth. Section 6.03 of the Credit
Agreement is amended and restated in its entirety to read as follows:
"At each Quarterly Measurement Date set forth below, Consolidated Net
Worth will not be less than the amount set forth below opposite such
Quarterly Measurement Date:
-----------------------------------------
Quarterly Measurement Date Amount
-----------------------------------------
June 30, 2001 $378,797,000
-----------------------------------------
September 30, 2001 $385,470,000
-----------------------------------------
December 31, 2001 $399,125,000
-----------------------------------------
March 31, 2002 $500,000,000
-----------------------------------------
June 30, 2002 $510,000,000
-----------------------------------------
September 30, 2002 $520,200,000
-----------------------------------------
December 31, 2002 $530,604,000
-----------------------------------------
March 31, 2003 $552,040,000
-----------------------------------------
June 30, 2003 $563,081,000
-----------------------------------------
September 30, 2003 $574,343,000
-----------------------------------------
December 31, 2003 $585,830,000
-----------------------------------------
March 31, 2004 $609,497,000
-----------------------------------------
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------------------------------------------------
June 30, 2004 $621,687,000
------------------------------------------------
September 30, 2004 $634,121,000
------------------------------------------------
December 31, 2004 $646,803,000
------------------------------------------------
March 31, 2005 $659,739,000
------------------------------------------------
June 30, 2005 $672,934,000
------------------------------------------------
September 30, 2005 $683,393,000
------------------------------------------------
December 31, 2005 $700,121,000
------------------------------------------------
March 31, 2006 $714,123,000
------------------------------------------------
June 30, 2006 $728,406,000
------------------------------------------------
September 30, 2006 $742,974,000
------------------------------------------------
December 31, 2006 $757,833,000
------------------------------------------------
March 31, 2007 $772,990,000
------------------------------------------------
June 30, 2007 $788,450,000
------------------------------------------------
September 30, 2007 $804,219,000
------------------------------------------------
December 31, 2007 and thereafter $820,303,000"
------------------------------------------------
Section 11. Limitation on Debt; Negative Pledge. Sections 7.01(b)(iv),
7.01(b)(v), 7.02(f) and 7.02(g) of the Credit Agreement are each amended by
replacing the reference to "$25,000,000" with a reference to "$50,000,000".
Section 12. Restricted Payments. (a) Section 7.7(a)(v)(A) of the Credit
Agreement is amended by inserting the following proviso at the end thereof: ";
provided that solely for purposes of this clause (v)(A), the reference in
Section 7.01(a) to "3.5:1" shall be read as a reference to "4.0:1".
(b) Section 7.07(a)(v)(B) of the Credit Agreement is amended and restated
in its entirety to read as follows:
"the aggregate amount expended for all Restricted Payments made
pursuant to this clause (v) (x) during the 2002 Fiscal Year, would not
exceed 25% of the Free Cash Flow calculated for the period beginning
on the first day of the first full Fiscal Quarter following the
Closing Date and ending on December 31, 2001 and (y) during any Fiscal
Year thereafter, would not exceed 20% of the Free Cash
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Flow calculated for the immediately preceding Fiscal Year (such
calculation to be based on financial statements for such immediately
preceding Fiscal Year that have been provided pursuant to this
Agreement);"
(c) Section 7.07(b) of the Credit Agreement is amended and restated in its
entirety to read as follows:
"Vencor shall not, directly or indirectly, use more than 25% of the
proceeds of any Restricted Payment to (i) declare or pay any dividend
or other distribution on any Equity Interests of Vencor (except
dividends payable solely in Equity Interests of the same class) or
(ii) purchase, redeem, retire or otherwise acquire (any of the
foregoing, an "acquisition") any Equity Interests of Vencor held by
any Person; provided that (x) acquisitions of Equity Interests of
Vencor permitted by Section 7.07(a)(ii) shall be excluded for purposes
of determining compliance with clause (ii) and (y) payments may be
declared and made and acquisitions may be effected pursuant to this
clause (b) only if at the time of, and after giving effect to, such
payment or acquisition, as applicable, no Default shall have occurred
and be continuing."
Section 13. Limitations on Acquisitions and Investments. Section
7.08(b)(ii) of the Credit Agreement is amended by (i) deleting the reference to
"(such Debt, "Investment Related Debt")", (ii) replacing the reference to
"$30,000,000" with a reference to "$130,000,000" and (iii) deleting the proviso
thereto.
Section 14. Representations Correct; No Default. Kindred and the Borrower
each represents and warrants that (i) the representations and warranties
contained in the Financing Documents are true as though made on and as of the
date hereof and will be true on and as of the Amendment Effective Date (as
defined below) as though made on and as of such date and (ii) no Default has
occurred and is continuing on the date hereof and no Default will occur or be
continuing on the Amendment Effective Date.
Section 15. Counterparts; Effectiveness. (a) This Amendment may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
(b) This Amendment shall become effective as of the date hereof on the date
(the "Amendment Effective Date") when the Administrative Agent shall have
received (i) duly executed counterparts hereof signed by Kindred, the
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Borrower and the Required Lenders (or, in the case of any Lender as to which an
executed counterpart shall not have been received, the Administrative Agent
shall have received telegraphic, telex or other written confirmation from such
party of execution of a counterpart hereof by such Lender) and (ii) confirmation
that the Borrower has paid all statements of Xxxxx Xxxx & Xxxxxxxx, special
counsel for the Administrative Agent, that have been rendered to the Borrower at
least two Business Days prior to the Amendment Effective Date in respect of this
Amendment or other Credit Agreement matters.
(c) No later than the first Business Day after the Fee Determination Date
(as defined below), the Borrower shall pay the Administrative Agent, in
immediately available funds for the account of each Lender that has evidenced
its agreement hereto as provided in clause (b) by 5:00 P.M. (New York City time)
on the later of (i) April 5, 2002 and (ii) the date the Administrative Agent
issues a notice to the Lenders saying this Amendment has become effective (such
later date, the "Fee Determination Date"), an amendment fee in an amount equal
to 0.15% of the aggregate outstanding principal amount of such Lender's Loans
(as outstanding on the opening of business on the date of this Amendment).
(d) Except as expressly set forth herein, the waivers and amendments
contained herein shall not constitute a waiver or amendment of any term or
condition of the Credit Agreement or any other Financing Document, and all such
terms and conditions shall remain in full force and effect and are hereby
ratified and confirmed in all respects.
Section 16. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED 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 by their respective authorized officers as of the day and year
first above written.
KINDRED HEALTHCARE OPERATING, INC.
By /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------------
Name: XXXXXXX X. XXXXXXXXXX
Title: SENIOR VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND TREASURER
KINDRED HEALTHCARE, INC.
By /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------------
Name: XXXXXXX X. XXXXXXXXXX
Title: SENIOR VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND TREASURER
8
CREDIT LYONNAIS NEW YORK
BRANCH
By: /s/ XXXXXXX HEIDRIECH
--------------------------------
Name: XXXXXXX HEIDRIECH
Title: SENIOR VICE PRESIDENT
BANKERS TRUST COMPANY
By: ____________________________________
Name:
Title:
XXX XXXXXX
PRIME RATE INCOME TRUST
By: Xxx Xxxxxx Investment Advisory Corp.
By: /s/ XXXX XXXXX
------------------------------------
Name: XXXX XXXXX
Title: VICE PRESIDENT
BEAR XXXXXXX & CO., INC.
By: ____________________________________
Name:
Title:
XXXXXXX SACHS CREDIT
PARTNERS, L.P.
By: /s/ XXXXX XxXXXXXXX
-----------------------
Name: XXXXX XxXXXXXXX
Title: AUTHORIZED SIGNATOR
JPMORGAN CHASE BANK, as
Administrative Agent and as Lender
By: /s/ XXXXXX XXXXXXXXX
------------------------------------
Name: XXXXXX XXXXXXXXX
Title: VICE PRESIDENT
XXX XXXXXX
SENIOR INCOME TRUST
By: Xxx Xxxxxx Investment Advisory Corp.
By: /s/ XXXX XXXXX
------------------------------------
Name: XXXX XXXXX
Title: VICE PRESIDENT
XXX XXXXXX
SENIOR FLOATING RATE FUND
By: Xxx Xxxxxx Investment Advisory Corp.
By: /s/ XXXX XXXXX
------------------------------------
Name: XXXX XXXXX
Title: VICE PRESIDENT
PENSLER CAPITAL CORPORATION
By: ____________________________________
Name:
Title:
GOLDENTREE HIGH YIELD
MASTER FUND, LTD
By: /s/ XXXX XXXXXX
------------------------------------
Name: Xxxx Xxxxxx
Title:
CONTINENTAL CASUALTY COMPANY
By: /s/ XXXXXXX X. XxXXXX
------------------------
Name: XXXXXXX X. XxXXXX
Title: VICE PRESIDENT
PRESIDENT & FELLOWS HARVARD
COLLEGE
By: REGIMENT CAPITAL MANAGEMENT, LLC
AS ITS INVESTMENT ADVISOR
BY: REGIMENT CAPITAL ADVISORS, LLC
ITS MANAGER AND PURSUANT TO
DELEGATED AUTHORITY
BY: /s/ XXXXXXX XXXXXXXX
----------------------
Name: XXXXXXX XXXXXXXX
Title: PRESIDENT
REGIMENT CAPITAL, LTD.
By: REGIMENT CAPITAL MANAGEMENT, LLC AS
ITS INVESTMENT ADVISOR
By: REGIMENT CAPITAL ADVISORS, LLC ITS
MANAGER AND PURSUANT TO DELEGATED
AUTHORITY
/s/ Xxxxxxx Xxxxxxxx
By: ____________________________________
Name: Xxxxxxx Xxxxxxxx
Title: President
SUNAMERICA LIFE INSURANCE COMPANY
/s/ Xxxx X. Xxxxxx, III
By: ____________________________________
Name: Xxxx X. Xxxxxx, III
Title: Authorized Agent
XXXXX FARGO BANK
By: ____________________________________
Name:
Title:
CERBERUS PARTNERS, L.P.
By: ____________________________________
Name:
Title:
AG CAPITAL FUNDING PARTNERS,
L.P.
By: XXXXXX, XXXXXX & CO., L.P. AS
INVESTMENT ADVISOR
/s/ Xxxx X. Xxxxxx
By: ____________________________________
Name: Xxxx X. Xxxxxx
Title: Managing Director
LCM I LIMITED PARTNERSHIP
By: LYON CAPITAL MANAGEMENT LLC, AS
ATTORNEY-IN-FACT
/s/ Farboud Tavangar
By: ____________________________________
Name: Farboud Tavangar
Title: Senior Portfolio Manager
NORTHWOODS CAPITAL III, LIMITED
By: XXXXXX, XXXXXX & CO., L.P. AS
COLLATERAL MANAGER
By: /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Director
NORTHWOODS CAPITAL II, LIMITED
By: XXXXXX, XXXXXX & CO., L.P. AS
COLLATERAL MANAGER
By: /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Director
NORTHWOODS CAPITAL, LIMITED
By: XXXXXX, XXXXXX & CO., L.P. AS
COLLATERAL MANAGER
By: /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Director
SPS HIGH YIELD LOAN TRADING
By: ____________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON
INTERNATIONAL
By: ____________________________________
Name:
Title:
DEUTSCHE BANK SHARPS XXXXXX
INC.
By: /s/ Xxxx Xxxxxx
--------------------------
Name: Xxxx Xxxxxx
Title:
HIGHLAND LEGACY LIMITED
By: ____________________________________
Name:
Title:
REDWOOD MASTER FUND, LTD
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Director
PACIFIC SELECT FUND HIGH YIELD
BOND PORTFOLIO
By: ____________________________________
Name:
Title:
GOLDENTREE HIGH YIELD
OPPORTUNITIES II, L.P.
By: /s/ Xxxx Xxxxxx
--------------------------
Name: Xxxx Xxxxxx
Title:
