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EXHIBIT 10.1
AMENDMENT NO. 2 TO
REVOLVING CREDIT AGREEMENT
This Amendment No. 2 to Revolving Credit Agreement (this "Amendment") dated
as of February 11, 1997, by and among NHP Incorporated ("NHP"), the other
"Borrowers" identified on the signature page hereto (collectively, the
"Borrowers"), the financial institutions identified on the signature page
hereto, (collectively, the "Banks"), The First National Bank of Boston, as Lead
Agent for the Banks (in such capacity, the "Lead Agent"), and Fleet National
Bank (formerly Fleet Bank of Massachusetts, National Association) and Xxxxxx
Guaranty Trust Company of New York as Co-Agents for the Banks (in such capacity,
the "Co-Agents").
WITNESSETH
WHEREAS, pursuant to the terms of a certain Revolving Credit Agreement
dated as of August 18, 1995 (as amended and in effect as of the date hereof, the
"Credit Agreement"), by and among each of the Borrowers, each of the Banks, the
Lead Agent and the Co-Agents, the Banks agreed to make loans and otherwise
extend credit to the Borrowers; and
WHEREAS, the Borrowers have asked the Banks to agree to amend certain
covenants and definitions set forth in the Loan Agreement in order to better
reflect the operations and business of the Borrowers; and
WHEREAS, the Banks are willing to agree to such amendments upon the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used herein without
definition that are defined in the Credit Agreement shall have the same meanings
herein as therein.
SECTION 2. AMENDED LIBOR PRICING; COMMITMENT FEE.
(a) Section 1.1 of the Credit Agreement is hereby amended by
inserting the following additional definition at the beginning thereof:
ADJUSTMENT DATE. The first day of the month immediately
following the month in which an annual or quarterly report is to be delivered to
the Banks pursuant to Sections 8.4(a) or (b).
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(b) Section 1.1 of the Credit Agreement is hereby further
amended by inserting the following additional definition after the definition of
Agency Accounts:
APPLICABLE MARGIN. For each period commencing on an
Adjustment Date through the date immediately preceding the next Adjustment Date
(each a "Rate Adjustment Period"), the Applicable Margin shall be the applicable
margin set forth below with respect to the ratio of NHP and its Subsidiaries
Consolidated Total Indebtedness to EBITDA, as determined for the fiscal quarter
ending immediately prior to the applicable Rate Adjustment Period in accordance
with Section 10.3:
APPLICABLE APPLICABLE
CONSOLIDATED TOTAL MARGIN FOR MARGIN FOR
INDEBTEDNESS LIBOR RATE COMMITMENT
TO EBITDA LOANS FEE
------------------ ---------- ----------
Equal to or 125 Basis Points 37.5 Basis Points
less than
3.0 to 1.0, but
Greater than
2.5 to 1.0
Equal to or 100 25.0
less than
2.5 to 1.0, but
Greater than
2.0 to 1.0
Equal to or 75 25.0
less than
2.0 to 1.0
Notwithstanding the foregoing, if the Borrowers fail to deliver any financial
report required pursuant to Section 8.4(a) or (b) on any Adjustment Date, then
for the period commencing on such Adjustment Date until such financial report is
delivered, the Applicable Margin shall be the highest Applicable Margin set
forth above.
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(c) Section 2.2 of the Credit Agreement is hereby amended by
deleting the phrase "three hundred seventy-five one-thousandths of one percent
(0.375%)", and substituting therefor the phrase "the Applicable Margin".
(d) Section 2.5 of the Credit Agreement is hereby amended by
deleting the text of clause (b) thereof in its entirety, and substituting
therefor the following:
Each LIBOR Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the per annum rate equal to the LIBOR
Rate, PLUS the Applicable Margin, as the same may change from time to time.
SECTION 3. AMENDMENTS TO FINANCIAL COVENANTS.
(a) Section 1.1 of the Credit Agreement is hereby amended by
inserting the following additional definitions immediately after the definition
of Person set forth therein:
PRO FORMA CONSOLIDATED OPERATING CASH FLOW. With respect to
any acquisition permitted pursuant to Section 9.5(a) hereof: (a) if the cost of
such acquisition (including purchase money financing) is equal to or greater
than $7,500,000, Consolidated Operating Cash Flow of such acquired Person or
Persons for the twelve month period reflected in the most recent audited annual
financial statements of such Person or Persons, provided, however, that if
audited annual financial statements of such Person or Persons are not available,
Consolidated Operating Cash Flow of such Person or Persons for such twelve month
period must be demonstrated to the reasonable satisfaction of the Agent based
upon the best available financial statements of such Person or Persons or a
comfort letter from NHP's auditors, in each case subject to such assumptions and
adjustments as may be acceptable to the Agent; and (b) if the cost of such
acquisition (including purchase money financing) is less than $7,500,000,
Consolidated Operating Cash Flow of such acquired Person or Persons for the
twelve month period reflected in the most recent annual financial statements of
such Person or Persons, regardless of whether such financial statements have
been audited.
PRO FORMA EBITDA. With respect to any acquisition permitted
pursuant to Section 9.5(a) hereof: (a) if the cost of such acquisition
(including purchase money financing) is equal to or greater than $7,500,000,
EBITDA of such acquired Person or Persons for the twelve month period reflected
in the most recent audited annual financial statements of such Person or
Persons, provided, however, that if audited annual financial statements of such
Person or Persons are not available, EBITDA of such Person or Persons for such
twelve month period must be demonstrated to the reasonable satisfaction of the
Agent based upon the best available financial statements of such Person or
Persons or a comfort letter
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from NHP's auditors, in each case subject to such assumptions and adjustments as
may be acceptable to the Agent; and (b) if the cost of such acquisition
(including purchase money financing) is less than $7,500,000, EBITDA of such
acquired Person or Persons for the twelve month period reflected in the most
recent annual financial statements of such Person or Persons, regardless of
whether such financial statements have been audited.
(b) Section 10.1 of the Credit Agreement is hereby amended by
deleting the text thereof, and substituting therefor the following:
The Borrowers will not permit the ratio of (i) the sum of (a)
EBITDA (less, to the extent included in the calculation of EBITDA, any earnings
attributable to mortgage loans held by WM Financial that are borrowed against
under any mortgage warehousing facility permitted pursuant to Section 9.1(1))
for the period consisting of two consecutive fiscal quarters ending on the last
day of such fiscal quarter multiplied by two, PLUS (b) Pro Forma EBITDA with
respect to any Person or Persons acquired during such period of two consecutive
fiscal quarters, LESS (c) actual EBITDA attributable to the Borrowers' operation
of such Person or Persons described in clause (b) subsequent to the date of
acquisition, to (ii) Consolidated Total Interest Expense for such period to be
less than 3.0 to 1.0, provided, that with respect to any fiscal quarter ending
prior to September 30, 1996, the ratio of EBITDA to Consolidated Total Interest
Expense shall be calculated for the period from the Closing Date to and
including the date of computation. The ratio of EBITDA to Consolidated Total
Interest Expense shall be computed as of the last day of each fiscal quarter for
the immediately preceding period as described above commencing with the fiscal
quarter ending September 30, 1995.
(c) Section 10.2 of the Credit Agreement is hereby amended by
deleting the text thereof, and substituting therefor the following:
In the event that the Borrowers elect to convert the Loans to a
Converted Term Loan, from and after the date on which the Loans are converted to
Converted Term Loan pursuant to Section 4.1(c), the Borrowers will not permit
the ratio of (i) the sum of (a) Consolidated Operating Cash Flow for the period
consisting of two consecutive fiscal quarters ending on the last day of such
fiscal quarter multiplied by two, PLUS (b) Pro Forma Consolidated Operating Cash
Flow with respect to any Person or Persons acquired during such period of two
consecutive fiscal quarters, LESS (c) actual Consolidated Operating Cash Flow
attributable to the Borrowers' operation of such Person or Persons described in
clause (b) subsequent to the date of acquisition, to (ii) Consolidated Total
Debt Service for such period to be less than 1.1 to 1.0. The ratio of
Consolidated Operating Cash Flow to Consolidated Total Debt Service shall be
computed as of the last day of each fiscal quarter for the immediately preceding
period as described above, beginning with the fiscal quarter ending on September
30, 1997.
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(d) Section 10.3 of the Credit Agreement is hereby amended by
deleting the text thereof, and substituting therefor the following:
The Borrowers will not permit the ratio of (i) Consolidated
Total Indebtedness outstanding on the last day of any fiscal quarter to (ii) the
sum of (a) EBITDA (less, to the extent included in the calculation of EBITDA,
any earnings attributable to mortgage loans held by WM Financial that are
borrowed against under any mortgage warehousing facility permitted pursuant to
Section 9.1(1)) for the period consisting of two consecutive fiscal quarters
ending on the last day of such fiscal quarter multiplied by two, PLUS (b) Pro
Forma EBITDA with respect to any Person or Persons acquired during such period
of two consecutive fiscal quarters, LESS (c) actual EBITDA attributable to the
Borrowers' operation of such Person or Persons described in clause (b)
subsequent to the date of acquisition, to exceed 3.0 to 1.0, provided, that with
respect to any fiscal quarter ending prior to September 30, 1996, for purposes
of this Section 10.3, EBITDA shall be calculated by determining EBITDA for the
period from the Closing Date to and including the date of calculation, and
multiplying such amount by a fraction, the numerator of which is 365 and the
denominator of which is the number of days elapsed from the Closing Date to and
including such date of calculation. The ratio of Consolidated Total
Indebtedness to EBITDA shall be computed as of the last day of each fiscal
quarter for the immediately preceding period as described above, beginning with
the fiscal quarter ending September 30, 1995.
SECTION 4. AMENDMENT TO USE OF PROCEEDS COVENANT. Section 7.16 of the
Credit Agreement is hereby amended by deleting the text thereof in its entirety,
and substituting therefor the following:
The proceeds of the Loans shall be used by the Borrowers solely
for (a) the repayment of the Retired Indebtedness, (b) the financing of the
Borrowers' existing multifamily housing and commercial property management
business, and (c) the financing of (i) the growth of the Borrowers' multifamily
housing and commercial property management business, (ii) the Borrowers'
acquisition of or investment in businesses that manage, service, finance and/or
own multifamily housing or commercial properties, and (iii) the Borrowers'
acquisition of or investment in businesses that provide services to the owners,
managers and/or residents of multifamily housing or commercial properties (such
businesses described in Section 7.16(c) are hereinafter referred to as
"Complementary Businesses"), provided that neither the financing nor acquisition
or investment contemplated by Section 7.16(a), (b) or (c) cause the Borrowers to
be in default of any other covenants in this Agreement or create a violation of
law or banking regulation, and (d) the Borrowers' acquisition or investment,
where necessary or appropriate, of multifamily and commercial real estate assets
or direct or indirect interests in entities owning such multifamily or
commercial real estate assets for purposes of acquiring current property
management rights, provided, that any
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such acquisitions of real estate assets or direct or indirect interests in
entities owning such multifamily or commercial real estate assets shall be held
for a short duration and with the intention of finding a subsequent purchaser of
such real estate assets or direct or indirect interests in entities owning such
multifamily or commercial real estate assets, subject to the Borrowers'
retention of property management rights, and PROVIDED, FURTHER, that any use of
proceeds for an acquisition or investment as described above shall be permitted
pursuant to this Section 7.16 solely to the extent that such acquisition or
investment is not otherwise prohibited by the terms of this Agreement. The
Borrowers shall obtain Letters of Credit solely in furtherance of the above
purposes. No portion of the Loans is to be used, and no portion of the Letter
of Credit is to be obtained, for the purpose of purchasing or carrying any
"margin security" or "margin stock" as such terms are used in Regulations U and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221
and 224.
SECTION 5. FINANCIAL REPORTING. Section 8.4 of the Credit Agreement is
hereby amended in the following respects:
(a) by deleting from subsections (a) and (b) thereof the word
"consolidated" each place it appears, and substituting therefor the phrase
"consolidated (and consolidating)";
(b) by deleting from the end of clause (e) thereof the word
"and";
(c) by deleting the period at the end of clause (f) thereof
and substituting therefor a semicolon and the word "and"; and
(d) by inserting immediately after clause (f) thereof the
following additional clause:
(g) At the times for reporting set forth in clauses (a)
and (b) above, consolidating financial reports of the types described in such
clauses (a) and (b), for NHP Financial Services, Ltd. and its Subsidiaries.
SECTION 6. PERMITTED INDEBTEDNESS. Section 9.1 of the Credit Agreement is
hereby amended in the following respects:
(a) by deleting the text of clause (i) in its entirety and
substituting therefor the following:
"Indebtedness to a seller or sellers incurred by a
Borrower in connection with any acquisition which is permitted pursuant to
Section 9.5(a)(iii) hereof or Indebtedness assumed by a Borrower in connection
with any acquisition which is permitted pursuant to Section 9.5(a)(iii) hereof,
provided that the
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the aggregate principal amount of all such Indebtedness of the Borrowers under
this Section 9.1(i) shall not exceed $25,000,000 in the aggregate at any one
time;"
(b) by deleting the word "and" at the end of clause (n)
thereof;
(c) by deleting the period at the end of clause (o) thereof
and substituting therefor a semicolon; and
(d) by inserting, after clause (o) thereof, the following
additional clauses:
(p) Unsecured Indebtedness for borrowed money not to
exceed $100,000,000 in the aggregate, which is pari passu with, or subordinate
to, the Obligations, and with stated maturity of no earlier than January 1, 2002
and with no amortization required prior to the expiration of three (3) years
from the date of issuance of such Indebtedness; and
(q) Unsecured Indebtedness arising under interest rate
protection arrangements not to exceed $5,000,000 in the aggregate, which is pari
passu with the Obligations.
SECTION 7. AMENDMENT TO MERGER AND CONSOLIDATION COVENANT. Section 9.5 of
the Credit Agreement is hereby amended by deleting the text thereof in its
entirety, and substituting therefor the following:
(a) No Borrower will, nor will any Borrower permit any of its
Subsidiaries to, become a party to any merger or consolidation, or agree to or
effect any asset acquisition or stock acquisition without the prior written
consent of Banks holding 75% of the sum of (i) the outstanding principal amount
of the Loans on such date PLUS (ii) any Unpaid Reimbursement Obligations
relating to any Letter of Credit Participation purchased pursuant to Section
5.1, or, if no such principal or Unpaid Reimbursement Obligations are
outstanding, 75% of the Total Commitment except:
(i) the merger or consolidation of one or more of the
Subsidiaries of a Borrower with and into such Borrower, or the merger or
consolidation of two or more Subsidiaries of a Borrower;
(ii) the acquisition by any Borrower or any Subsidiary of
any Borrower of assets or stock in the ordinary course of business consistent
with past practices; and
(iii) acquisitions by any Borrower or any Subsidiary of any
Borrower, of other Persons which thereby become Subsidiaries, or divisions or
business segments of other Persons (whether by way of purchase of assets or
capital stock),
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PROVIDED, that in each case under this clause (iii) of this Section 9.5:
(A) in the case of a merger or consolidation to which NHP is a
party, NHP is the surviving entity, and in the case of a merger or consolidation
of a Subsidiary with any other Person, the surviving entity must also be a
Subsidiary;
(B) such person is in a business described in Section 7.16(c);
(C) no Default or Event of Default shall exist at the time of,
and none shall exist after giving effect to, such merger, consolidation or
acquisition;
(D) the Borrowers have delivered to the Agents and the Banks
reasonable prior written notice of such acquisition, which notice shall provide
the Agents and the Banks with a summary description containing information which
evidences compliance with the other provisions of this Section 9.5;
(E) the business and assets so acquired shall be acquired by
such Borrower, or such Subsidiary of the Borrowers, as the case may be, free and
clear of all liens and encumbrances (other than as permitted by Section 9.2),
and Indebtedness (other than as permitted by Section 9.1);
(F) no contingent obligations or liabilities will be incurred
or assumed in connection with such acquisition which could reasonably be
expected to have a materially adverse effect on the financial condition of the
Borrowers, taken as a whole;
(G) in the case of any acquisition or acquisitions during a
period of ten (10) consecutive Business Days for an aggregate acquisition price
(including purchase money financing) of $5,000,000 or more, the last such
acquisition during such period shall constitute a representation and warranty of
the Borrowers to the Lead Agent and the Banks that such acquisitions will not
result in a violation of the provisions of Section 10.1, Section 10.2 or Section
10.3 as of the end of the fiscal quarter in which such Loans are requested; and
(H) in the case of any acquisition of greater than fifty
percent (50%) in the aggregate of capital stock or other equity interests, the
issuer thereof must become a Subsidiary; and any new Subsidiary formed or
acquired as a result of or in connection with any acquisition shall be or then
become a Subsidiary of the
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Borrowers and each such Subsidiary (whether acquired or newly formed) shall
execute a guaranty of the obligations of the Borrowers hereunder and under the
other Loan Documents, such guaranty to be in form and substance acceptable to
the Banks.
(b) No Borrower will, nor will any Borrower permit any of its
Subsidiaries to, become a party to or agree to or effect any disposition of all
or substantially all of its assets, or any stock of any Subsidiary, without the
prior written consent of Banks holding 75% of the sum of (i) the outstanding
principal amount of the Loans on such date, plus (ii) any Unpaid Reimbursement
Obligations relating to any Letter of Credit Participation purchased pursuant to
Section 5.1, or, if no such principal or Unpaid Reimbursement Obligations are
outstanding, 75% of the Total Commitment.
SECTION 8. NEGATIVE COVENANT CONCERNING RESTRICTIONS ON DISTRIBUTIONS.
Article IX of the Credit Agreement is hereby amended by inserting the following
additional section after Section 9.12:
9.13. LIMITATION ON AGREEMENTS RESTRICTING DISTRIBUTIONS. The
Borrowers shall not, and shall not cause or permit their Subsidiaries to enter
into any agreement restricting the ability of such Borrower (or such Subsidiary)
to make Distributions to its parent.
SECTION 9. DEFAULTS OF GUARANTORS.
(a) Section 1.1 of the Credit Agreement is hereby amended by
inserting the following additional definition in its proper alphabetical order
therein:
GUARANTOR. NHP Financial Services, Ltd., NHP Financial
Services, Ltd., Rescorp Realty, Inc., NHP Florida Management Company, Preferred
Home Health, Inc., XXX-XXX 00, Inc., NHP Maintenance Services Company, NHP-HG
16, Inc., NHP-HG 17, Inc., Broad Street Management, Inc., NHP Southwark HA,
Inc., NHP-HG 15, Inc., NHP Cash Management Services, Inc., NHP A&R Services,
Inc., NHP Equity Services, Inc., NHP Asset Management Services, Inc.,
WMF/Xxxxxxx & Associates of Michigan, Inc., and any other person executing a
guaranty of any of the Obligations.
(b) Section 13.1 of the Agreement is hereby amended by
inserting, immediately after the word "Borrowers" in clauses (b), (c), (d), (e)
and (i), the phrase "or the Guarantors".
SECTION 10. GUARANTORS. Notwithstanding anything to the contrary set
forth in that certain Consent and Amendment Agreement dated as of March 27,
1996, by and among
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each of the parties hereto (the "Washington Mortgage Consent"), the requirement
that NHP Financial Services, Ltd. (formerly WMF Holdings, Ltd.) ("Holdings") and
each of its Subsidiaries become obligors with respect to the Obligations set
forth in Section 4 of the Washington Mortgage Consent shall be deemed satisfied
upon Holdings' execution of a guaranty of the Obligations in form and substance
satisfactory to the Majority Banks. It is a condition precedent to the
effectiveness of this Amendment that Holdings executes and delivers such a
Guaranty to the Banks. It is a further condition precedent to the effectiveness
of this Agreement that each of Rescorp Realty, Inc., NHP Florida Management
Company, Preferred Home Health, Inc., XXX-XXX 00, Inc., NHP Maintenance Services
Company, NHP-HG 16, Inc., NHP-HG 17, Inc., Broad Street Management, Inc., NHP
Southwark HA, Inc., NHP-HG 15, Inc., NHP Cash Management Services, Inc., NHP A&R
Services, Inc., NHP Equity Services, Inc., NHP Asset Management Services, Inc.,
and WMF/Xxxxxxx & Associates of Michigan, Inc. executes and delivers such
Guaranty to the Banks.
SECTION 11. NO OTHER CHANGES. Except as expressly set forth herein, there
are no amendments to any provisions of the Waiver. Each of the Borrowers hereby
reaffirms in all respects all of the covenants, agreements, terms and conditions
of the Credit Agreement, which are incorporated in full herein by reference, and
all terms, conditions and provisions thereof shall remain in full force and
effect. Each of the Borrowers hereby confirms that all representations and
warranties set forth in the Credit Agreement remain true as of the date hereof,
and no Default or Event of Default has occurred and is continuing as of the date
hereof.
SECTION 12. MISCELLANEOUS. The headings and titles of this Amendment are
for convenience only and do not constitute a part hereof. This Amendment shall
be governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts. This Amendment may be executed in any number of counterparts,
any one of which shall be deemed to be an original of this instrument, and in
separate counterparts, all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
as a sealed instrument by their duly authorized officers, as of the day and year
first above written.
NHP INCORPORATED
NHP MANAGEMENT COMPANY
PROPERTY SERVICES GROUP, INC.
NHP TEXAS MANAGEMENT COMPANY
NHP PUERTO RICO
MANAGEMENT COMPANY
NHP-XX XX, INC.
THE RISK SPECIALIST GROUP, INC.
NHP-HDV THREE, INC.
NHP-HG SIX, INC.
By:
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Title:
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Lead Agent
By:
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Title:
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, individually and as Co-Agent
By:
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Title:
FLEET NATIONAL BANK, individually and
as Co-Agent
By:
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Title:
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THE XXXXX NATIONAL BANK OF
WASHINGTON, D.C.
By:
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Title:
FIRST NATIONAL BANK OF MARYLAND
By:
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Title:
Each of the undersigned guarantors executes this Amendment to ratify their
respective Guaranties of the Obligations.
NHP FINANCIAL SERVICES, LTD.
RESCORP REALTY, INC
NHP FLORIDA MANAGEMENT COMPANY
PREFERRED HOME HEALTH, INC.
XXX-XXX 00,
XXX MAINTENANCE SERVICES COMPANY
XXX-XX 00,
XXX-XX 17,
BROAD STREET MANAGEMENT, INC.
NHP SOUTHWARK HA, INC.
NHP-HG 15, INC.
NHP CASH MANAGEMENT SERVICES, INC.
NHP A&R SERVICES, INC
NHP EQUITY SERVICES,
NHP ASSET MANAGEMENT SERVICES, INC
WMF/XXXXXXX & ASSOCIATES OF
MICHIGAN, INC.
By:
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Title:
