Second Amendment to Credit Agreement among Harborside Healthcare Corporation, Borrowers, and Lenders (September 25, 2000)

Summary

This amendment updates the terms of a credit agreement between Harborside Healthcare Corporation, its affiliates, and a group of lenders. It changes interest rate margins, financial ratio requirements, and reduces the total revolving credit commitment from $250 million to $150 million. The amendment also releases certain collateral in connection with a HUD-financed transaction and sets new restrictions on borrowing and acquisitions until March 31, 2001. The parties agree to these changes to facilitate ongoing financing and business operations.

EX-10.19(C) 2 0002.txt SECOND AMENDMENT SECOND AMENDMENT SECOND AMENDMENT, dated as of September 25, 2000 (this "Amendment"), to the Credit Agreement, dated as of August 11, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among HARBORSIDE HEALTHCARE CORPORATION, a Delaware corporation (the "Company"), the other entities listed on the signature pages thereof, as joint and several borrowers thereunder (the Company and such other entities being, collectively, the "Borrowers"), the banks and other financial institutions or entities parties thereto (the "Lenders"), CHASE SECURITIES INC., as arranger, MORGAN STANLEY SENIOR FUNDING, INC. and BT ALEX. BROWN INCORPORATED, as co-arrangers, MORGAN STANLEY SENIOR FUNDING, INC., as syndication agent, BANKERS TRUST COMPANY, as documentation agent, and THE CHASE MANHATTAN BANK, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). W I T N E S S E T H: WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make, and have made, certain loans and other extensions of credit to the Borrowers; and WHEREAS, the Borrowers have requested, and, upon this Amendment becoming effective, the Required Lenders will have agreed, to amend certain provisions of the Credit Agreement and to grant certain consents, in each case in the manner provided for in this Amendment. NOW, THEREFORE, in consideration of the premises and the agreements hereinafter set forth, the parties hereto hereby agree as follows: SECTION 1. Defined Terms. Terms defined in the Credit Agreement and used ------- ----- herein shall have the meanings given to them in the Credit Agreement. SECTION 2. Amendments to the Credit Agreement. ----------------------------------- 2.1. Amendment to Subsection 1.1 of the Credit Agreement. Subsection 1.1 of the Credit Agreement is hereby amended by deleting the table appearing in the definition of "Applicable Margin" and substituting in lieu of such table the following table: Alternate Base Rate Eurodollar Loans Loans Term Loans: 2.25% 3.25% Revolving Credit Loans: 2.25% 3.25% Swing Line Loans: 2.25% Not applicable; 2.2. Amendments to Subsection 7.9 of the Credit Agreement. ----------------------------------------------------- (a) Subsection 7.9(a) of the Credit Agreement is hereby amended by deleting the ratio "6.50 to 1.00" under the column titled "Ratio" (corresponding to the First Fiscal Quarter of Fiscal Year 2001) and substituting in lieu thereof the ratio "5.75 to 1.00". (b) Subsection 7.9(c) of the Credit Agreement is hereby amended by deleting the number "$24,700,000" under the column titled "Consolidated EBITDA" (corresponding to the Fourth Fiscal Quarter of Fiscal Year 2000) and substituting in lieu thereof the number "$23,200,000". 2.3. Amendment to Schedule III to the Credit Agreement. Schedule III to the Credit Agreement is hereby amended in its entirety to read as set forth in Schedule III hereto. SECTION 3. Changes of Commitment Amounts. The Company, for itself and as agent for the other Borrowers, hereby notifies the Administrative Agent and each Lender, pursuant to subsection 3.3 of the Credit Agreement, that, effective on the date hereof, the total Revolving Credit Commitments shall be permanently reduced from $250,000,000 to $150,000,000, and each Lender, by its execution and delivery of its respective Lender Consent Letter, hereby consents and agrees that such permanent reduction shall be effective on the date hereof and that such reduction shall be made pro rata according to the respective Revolving Credit Percentages of the Lenders. SECTION 4. Consent and Release of Certain Collateral. In connection with the acquisition by HHC Beachwood, Inc., HHC Broadview, Inc. and HHC Westbay, Inc. (each an affiliate of Investcorp) of the four nursing home facilities that Harborside of Cleveland Limited Partnership ("Cleveland") currently leases from the current owners of such facilities, which acquisition is to be funded principally by a mortgage insured by the Department of Housing and Urban Development (the "HUD Transaction"), each Lender, by its execution and delivery of its respective Lender Consent Letter, hereby consents and agrees that the Liens in favor of the Administrative Agent, on behalf of the Secured Parties, in the Medicare/Medicaid provider agreements and nursing home licenses owned by Cleveland as well as any right, privilege, estate or benefit pertaining thereto (the "Released Collateral") shall be released and the Administrative Agent, on behalf of the Secured Parties, shall execute and deliver such instruments and documents necessary to release the Lien on the Released Collateral, including, without limitation any Uniform Commercial Code amendment, release, partial release or termination statements; provided, however, that (a) in no event shall the foregoing release be construed as a release of the security interest of the Administrative Agent, for the benefit of the Secured Parties, in any Accounts (as defined in the Collateral Agreement) and (b) in the event that the foregoing mortgage insured by the Department of Housing and Urban Development is repaid in full, the Company shall execute and deliver, and cause its Subsidiaries to execute and deliver, to the Administrative Agent, for the benefit of the Secured Parties, all such instruments and documents as are necessary, or in the reasonable opinion of the Administrative Agent desirable, to obtain a legal, valid and enforceable security interest in favor of the Administrative Agent, for the benefit of the Secured Parties, in the Released Collateral, and for such security interest to constitute, subject to the existence of Permitted Liens and the provisions of the Intercreditor Agreement, perfected first priority liens on, and security interests in, such Released Collateral. Each Lender, by its execution and delivery of its Lender Consent Letter, hereby further consents to the encumbrance of the Released Collateral with Liens required in connection with the HUD Transaction. SECTION 5. Additional Borrowings and Acquisitions. To induce the Administrative Agent to enter into this Amendment, and the Lenders to execute and deliver Lender Consent Letters, each Borrower covenants and agrees that, from and after the date hereof and until March 31, 2001: (a) it will not be entitled to utilize the credit facilities provided for in the Credit Agreement if, after giving effect to such utilization, the sum of (i) the aggregate principal amount of all outstanding Loans, (ii) the aggregate undrawn amount of all outstanding Letters of Credit issued after March 30, 1999, (iii) the aggregate amount of all outstanding L/C Obligations in respect of Letters of Credit issued after March 30, 1999 and (iv) the aggregate principal amount of all Synthetic Lease Obligations shall exceed $58,450,000; (b) Harborside of Dayton Limited Partnership, a Massachusetts limited partnership and a Borrower under the Credit Agreement, shall not make any request pursuant to Section 1.2 of the Participation Agreement, dated as of August 11, 1998, among the Company, the Trust, the Synthetic Investors, the Lenders and the Administrative Agent, that loans or advances be made to the Trust under the Synthetic Lease Facility; (c) the Borrowers shall use the proceeds of Revolving Credit Loans solely (i) for general corporate purposes other than acquisitions and (ii) to finance capital expenditures permitted under the Credit Agreement; (d) the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, acquire any other Person (whether through a purchase of stock, merger, consolidation or otherwise) or all or any substantial portion of the assets, or any business or product line, of any other Person; provided that the Company and its Subsidiaries may acquire the 100-bed Brevard facility in Rockledge, Florida so long as the Acquisition Consideration therefor is not in excess of $4,375,000; (e) the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur or assume any Indebtedness, except (i) Indebtedness, in an aggregate principal amount not to exceed the amount set forth in the proviso to clause (d) above, (ii) Indebtedness of the Company and its Subsidiaries owing to any Investor or any Affiliate thereof in an aggregate principal amount at any one time outstanding not in excess of $15,000,000 and (iii) Indebtedness permitted by subsections 7.1(c), 7.1(g) and 7.1(m) of the Credit Agreement; and (f) any failure by any Borrower to comply with any of the covenants and agreements set forth in this Section 5 shall constitute an Event of Default under the Credit Agreement. SECTION 6. Inspection of Property; Discussions; Appraisals. To induce the Administrative Agent to enter into this Amendment, and the Lenders to execute and deliver Lender Consent Letters, each Borrower covenants and agrees that it shall: (a) permit representatives of the Administrative Agent (for itself and on behalf of any Lender) upon reasonable notice, and at the reasonable expense of the Company, to visit and inspect any properties of the Company, any of its Subsidiaries or the Trust and examine and make abstracts from any of their respective books and records, and to discuss the business, operations, assets and financial and other condition of such Persons with officers and employees thereof and with their independent certified public accountants with prior reasonable notice to, and coordination with, the chief financial officer or the treasurer of the Company; and (b) pay, promptly upon the request of the Administrative Agent, for the reasonable costs and expenses in connection with any appraisal ordered by the Administrative Agent, in its discretion, to determine the current market value of all skilled nursing facilities owned by the Company, any of its Subsidiaries and the Trust. SECTION 7. Conditions to Effectiveness. This Amendment shall become effective as of the date set forth above (the "Amendment Effective Date") when (a) each Borrower shall have executed and delivered to the Administrative Agent this Amendment, (b) the Required Lenders shall have executed and delivered to the Administrative Agent Lender Consent Letters (or facsimile transmissions thereof) consenting to the execution of this Amendment by the Administrative Agent, (c) the Company shall have paid to the Administrative Agent, for the ratable account of each Lender which shall have executed and delivered its respective Lender Consent Letter, an amendment fee in an amount equal to 0.10% of the sum of each such Lender's Revolving Credit Commitment then outstanding (it being understood that such amendment fee shall be calculated after giving effect to the permanent reduction of Revolving Credit Commitments set forth in Section 3 of this Amendment) and (d) the HUD Transaction shall have been consummated on or prior to December 31, 2000. SECTION 8. Representation and Warranties. The representations and warranties made by the Borrowers in the Credit Documents are true and correct in all material respects on and as of the Amendment Effective Date, before and after giving effect to the effectiveness of this Amendment, as if made on and as of the Amendment Effective Date, except to the extent such representations and warranties expressly relate to a specific earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date. SECTION 9. Payment of Expenses. The Company agrees to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and reasonable expenses incurred in connection with this Amendment and 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. SECTION 10. Reference to and Effect on the Credit Documents. On and after the Amendment Effective Date, 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 Credit 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 Amendment shall not, except as expressly provided herein, operate as waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Credit Documents. Except as expressly amended herein, all of the provisions of the Credit Agreement and the other Credit Documents are and shall remain in full force and effect in accordance with the terms thereof and are hereby in all respects ratified and confirmed. SECTION 11. Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Amendment signed by all the parties shall be lodged with the Company and the Administrative Agent. SECTION 12. Governing Law. This Amendment and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. 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. HARBORSIDE HEALTHCARE CORPORATION By: ______________________________________ Title: BAY TREE NURSING CENTER CORP. BELMONT NURSING CENTER CORP. COUNTRYSIDE CARE CENTER CORP. HARBORSIDE HEALTH I CORPORATION HARBORSIDE TOLEDO CORP. KHI CORP. MARYLAND HARBORSIDE CORP. NEW JERSEY HARBORSIDE CORP. OAKHURST MANOR NURSING CENTER CORP. ORCHARD RIDGE NURSING CENTER CORP. SAILORS, INC. SUNSET POINT NURSING CENTER CORP. WEST BAY NURSING CENTER CORP. By: ______________________________________ Title: HARBORSIDE ACQUISITION LIMITED PARTNERSHIP IV HARBORSIDE ACQUISITION LIMITED PARTNERSHIP V HARBORSIDE ACQUISITION LIMITED PARTNERSHIP VI HARBORSIDE ACQUISITION LIMITED PARTNERSHIP VII HARBORSIDE ACQUISITION LIMITED PARTNERSHIP VIII HARBORSIDE ACQUISITION LIMITED PARTNERSHIP IX HARBORSIDE ACQUISITION LIMITED PARTNERSHIP X HARBORSIDE ATLANTRIX LIMITED PARTNERSHIP HARBORSIDE CONNECTICUT LIMITED PARTNERSHIP HARBORSIDE HEALTHCARE BALTIMORE LIMITED PARTNERSHIP HARBORSIDE HEALTHCARE NETWORK LIMITED PARTNERSHIP HARBORSIDE MASSACHUSETTS LIMITED PARTNERSHIP HARBORSIDE NORTH TOLEDO LIMITED PARTNERSHIP HARBORSIDE OF CLEVELAND LIMITED PARTNERSHIP HARBORSIDE OF DAYTON LIMITED PARTNERSHIP HARBORSIDE OF FLORIDA LIMITED PARTNERSHIP HARBORSIDE OF OHIO LIMITED PARTNERSHIP HARBORSIDE REHABILITATION LIMITED PARTNERSHIP HARBORSIDE RHODE ISLAND LIMITED PARTNERSHIP RIVERSIDE RETIREMENT LIMITED PARTNERSHIP By: HARBORSIDE HEALTH I CORPORATION, as General Partner By: ______________________________________ Title: HARBORSIDE FUNDING LIMITED PARTNERSHIP By: HARBORSIDE HEALTHCARE LIMITED PARTNERSHIP, as General Partner By: KHI CORP., as General Partner By: _____________________________________ Title: BRIDGEWATER ASSISTED LIVING LIMITED PARTNERSHIP By: NEW JERSEY HARBORSIDE CORP., as General Partner By: _____________________________________ Title: HARBORSIDE NEW HAMPSHIRE LIMITED PARTNERSHIP HARBORSIDE TOLEDO LIMITED PARTNERSHIP HHCI LIMITED PARTNERSHIP By: HARBORSIDE TOLEDO CORP., as General Partner By: _____________________________________ Title: HARBORSIDE HEALTHCARE ADVISORS LIMITED PARTNERSHIP HARBORSIDE HEALTHCARE LIMITED PARTNERSHIP HARBORSIDE HOMECARE LIMITED PARTNERSHIP By: KHI CORP., as General Partner By: ______________________________________ Title: HARBORSIDE PROPERTIES TRUST I, a Massachusetts business trust By: ______________________________________ Name: _________________________, in his capacity as trustee and not individually THE CHASE MANHATTAN BANK, as Administrative Agent By: ______________________________________ Title: Schedule III to the Credit Agreement Pricing and Commitment Fee Grid Applicable Applicable Margin for Margin for Eurodollar Commitment Leverage Ratio ABR Loans Loans Fee -------------- --------- ------- ---------- Greater than or equal to 5.5 2.250% 3.250% 0.500% Less than 5.5 to 1.0, but greater than or equal to 5.0 to 1.0 2.000% 3.000% 0.500% Less than 5.0 to 1.0, but greater than or equal to 4.5 to 1.0 1.750% 2.750% 0.500% Less than 4.5 to 1.0, but greater than or equal to 4.0 to 1.0 1.500% 2.500% 0.375% Less than 4.0 to 1.0, but greater than or equal to 3.5 to 1.0 1.250% 2.250% 0.375% Less than 3.5 to 1.0, but greater than or equal to 3.0 to 1.0 1.000% 2.000% 0.300% Less than 3.0 to 1.0 0.750% 1.750% 0.250% LENDER CONSENT LETTER HARBORSIDE HEALTHCARE CORPORATION CREDIT AGREEMENT DATED AS OF AUGUST 11, 1998 To: The Chase Manhattan Bank, as Administrative Agent 270 Park Avenue New York, New York 10017 Ladies and Gentlemen: Reference is made to the Credit Agreement, dated as of August 11, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Harborside Healthcare Corporation, a Delaware corporation (the "Company"), the other entities listed on the signature pages thereof, as joint and several borrowers thereunder (the Company and such other entities being, collectively, the "Borrowers"), the banks and other financial institutions or entities parties thereto (the "Lenders"), Chase Securities Inc., as arranger, Morgan Stanley Senior Funding, Inc. and BT Alex. Brown Incorporated, as co-arrangers, Morgan Stanley Senior Funding, Inc., as syndication agent, Bankers Trust Company, as documentation agent, and The Chase Manhattan Bank, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). Unless otherwise defined herein, capitalized terms used herein and defined in the Credit Agreement are so used as so defined. The Borrowers have requested that the Lenders amend the Credit Agreement and grant certain consents, in each case on the terms described in the Second Amendment to the Credit Agreement in the form attached hereto as Exhibit A (the "Second Amendment"). Pursuant to subsection 9.1 of the Credit Agreement, the undersigned Lender hereby consents to the execution by the Administrative Agent of the Second Amendment. Very truly yours, ------------------------------------------------------ (NAME OF LENDER) By:___________________________________________________ Name: Title: Dated as of September 25, 2000