EXHIBIT 10.2
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of September 30, 1998 to the Credit Agreement dated as
of April 29, 1998 (the "CREDIT AGREEMENT") among VENCOR OPERATING, INC. (the
"BORROWER"), VENCOR, INC. (f/k/a Vencor Healthcare, Inc.), the LENDERS,
SWINGLINE BANK, LC ISSUING BANKS, SENIOR MANAGING AGENTS, MANAGING AGENTS AND
CO-AGENTS party thereto, XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation Agent and Collateral Agent, and NATIONSBANK, N.A., as
Administrative Agent.
WHEREAS, the parties hereto desire to amend the Credit Agreement to (i)
amend the financial covenants in Article 6 thereof, (ii) amend the restriction
on Consolidated Capital Expenditures in Section 7.07 thereof, (iii) amend the
Pricing Schedule attached thereto and (iv) amend and update certain other
provisions thereof;
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. Total Leverage Ratio. Subsection (a) of Section 6.01 is
amended to read as follows:
SECTION 6.01. Total Leverage Ratio. (a) On and after September 30,
1998, the ratio of (x) Adjusted Consolidated Debt for Borrowed Money to (y)
Consolidated EBITDAR 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:
PERIOD RATIO
------ -----
September 30, 1998 through December 30, 1998 7.50 to 1
December 31, 1998 through March 30, 1999 7.25 to 1
March 31, 1999 through June 29, 1999 7.10 to 1
June 30, 1999 through December 30, 1999 6.75 to 1
December 31, 1999 through March 30, 2000 6.50 to 1
March 31, 2000 through June 29, 2000 6.40 to 1
June 30, 2000 through September 29, 2000 6.30 to 1
September 30, 2000 through December 30, 2000 6.10 to 1
PERIOD RATIO
------ -----
December 31, 2000 through March 30, 2001 6.00 to 1
March 31, 2001 through March 30, 2002 5.00 to 1
March 31, 2002 through March 30, 2003 4.75 to 1
March 31, 2003 and thereafter 4.50 to 1
provided that, for dates prior to June 30, 1999, Consolidated EBITDAR shall be
determined as of the end of the then most recently ended Fiscal Quarter on an
Annualized Basis.
SECTION 3. Senior Leverage Ratio. Subsection (b) of Section 6.02 of the
Credit Agreement is amended to read as follows:
(b) On and after September 30, 1998, the ratio of (x) Adjusted
Consolidated Senior Debt for Borrowed Money to (y) Consolidated EBITDAR 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:
PERIOD RATIO
------ -----
September 30, 1998 through December 30, 1998 7.00 to 1
December 31, 1998 through March 30, 1999 6.75 to 1
March 31, 1999 through June 29, 1999 6.60 to 1
June 30, 1999 through December 30, 1999 6.25 to 1
December 31, 1999 through March 30, 2000 6.00 to 1
March 31, 2000 through June 29, 2000 5.90 to 1
June 30, 2000 through September 29, 2000 5.80 to 1
September 30, 2000 through December 30, 2000 5.60 to 1
December 31, 2000 through March 30, 2001 5.50 to 1
March 31, 2001 through March 30, 2002 4.40 to 1
March 31, 2002 through March 30, 2003 4.25 to 1
March 31, 2003 and thereafter 4.00 to 1
provided that, for dates prior to June 30, 1999, Consolidated EBITDAR shall
be determined as of the end of the then most recently ended Fiscal Quarter
on an Annualized Basis.
SECTION 4. Fixed Charge Coverage Ratio. Section 6.03 of the Credit
Agreement is amended to read as follows:Section 6.03. Fixed Charge Coverage
Ratio. At each Quarterly Measurement Date on or after September 30, 1998, 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 long term Debt of the Vencor
Companies scheduled to be amortized plus dividends on the Management Preferred
Stock, in each case for the same four Fiscal
2
Quarters, will not be less than the ratio set forth below opposite such
Quarterly Measurement Date or the period in which such Quarterly Measurement
Date falls, as the case may be:
DATE OR PERIOD RATIO
-------------- -----
September 30, 1998 1.05 to 1
December 31, 1998 through March 31, 1999 1.10 to 1
June 30, 1999 1.15 to 1
September 30, 1999 1.20 to 1
December 31, 1999 through March 31, 2000 1.25 to 1
June 30, 2000 through December 31, 2000 1.30 to 1
March 31, 2001 and thereafter 1.50 to 1
provided that, at any Quarterly Measurement Date prior to June 30, 1999,
the foregoing amounts shall be calculated for the period from the end of
the month in which the Closing Date occurs to such Quarterly Measurement
Date.
SECTION 5. Minimum Consolidated Net Worth. Section 6.04 of the Credit
Agreement is amended to read as follows:
SECTION 6.04. Minimum Consolidated Net Worth. Consolidated Net Worth
will at no time be less than the Minimum Compliance Level. The "MINIMUM
COMPLIANCE LEVEL" means, at any date (the "DATE OF DETERMINATION"), an
amount equal to the sum of (i) $845,000,000 plus (ii) for each Fiscal
Quarter ending after September 30, 1998 and on or prior to the date of
determination for which Consolidated Net Income is a positive number, an
amount equal to 75% of such positive number plus (iii) 100% of each amount
by which Consolidated Net Worth shall have been increased after September
30, 1998 and on or prior to the date of determination as a result of (x)
any issuance or sale of Equity Securities of Vencor, (y) any conversion of
convertible Debt of Vencor or (z) any gain on the sale of Equity Interests
(other than the Atria Shares) owned by any Vencor Company. The Minimum
Compliance Level shall not be reduced if Consolidated Net Income for any
Fiscal Quarter is a negative number.
SECTION 6. Limitation on Capital Expenditures. Subsection (a) of Section
7.07 of the Credit Agreement is amended to read as follows:
(a) Consolidated Capital Expenditures will not, for any Fiscal Year
listed below, exceed the amount indicated for such Fiscal Year:
3
FISCAL YEAR Amount
----------- ------
1998 $310,000,000
1999 $140,000,000
Each Fiscal Year Thereafter $105,000,000
The amount shown above for 1998 includes capital expenditures made by Old
Vencor and its Subsidiaries prior to the Closing Date.
SECTION 7. Amendment of Section 12.09 of the Credit Agreement. Section
12.09 of the Credit Agreement is amended by inserting the following proviso
after the last word of the first paragraph thereof:
; provided that the foregoing obligation to pledge Eligible Collateral or
to have letters of credit issued in favor of each of the XX Xxxxx shall not
apply to any Non-Complying Lender at any time if (i) such Non-Complying
Lender's Commitment Percentage of the aggregate amount that is available
for drawing under all Letters of Credit outstanding at such time is less
than $750,000 and (ii) such Non-Complying Lender has not previously pledged
Eligible Collateral or caused letters of credit to be issued in favor of
such LC Issuing Bank pursuant to this Section.
SECTION 8. Pricing Schedule. The Pricing Schedule attached to the Credit
Agreement is deleted and replaced by the Pricing Schedule attached hereto.
SECTION 9. Corporate or Other Existence and Power. Section 4.01 of the
Credit Agreement is amended to read as follows:
SECTION 4.01. Corporate or Other Existence and Power. Each Vencor
Company is a corporation, limited liability company or partnership duly
incorporated or organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, and has all
corporate or other powers and all governmental licenses, authorizations,
consents and approvals (collectively, "LICENSES") required to carry on its
business as now conducted and as proposed to be conducted, except:
(i) Licenses to operate pharmacies as to which there is no
reasonable doubt that they will be obtained on or before December 31,
1998; and
(ii) other Licenses as to which the delay in obtaining them (in
cases where there is no reasonable doubt that they will eventually be
obtained) and failures ever to obtain them (in cases where there is
such a reasonable doubt) could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4
Failures to obtain the Licenses referred to in the foregoing clauses (i)
and (ii), in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect.
SECTION 10. Amendments and Waivers. Section 12.05(b) of the Credit
Agreement is amended by deleting the words "Required Basic Lenders (or the
Administrative Agent with their written consent)" in the second line and in the
eighth and ninth lines and replacing them in each case with the words "Required
Basic Lenders (or, with their written consent, the Documentation Agent or the
Collateral Agent, as appropriate)".
SECTION 11. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 12. Counterparts. 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.
SECTION 13. Effectiveness. This Amendment shall become effective as of
the date hereof when:
(i) the Documentation Agent shall have received from the Borrower and
each of the Required Basic Lenders a counterpart hereof signed by such
party or facsimile or other written confirmation (in form satisfactory to
the Documentation Agent) that such party has signed a counterpart hereof;
and
(ii) the Administrative Agent shall have received, for the account of
each Basic Lender that signs this Amendment on or before October 16, 1998
an amendment fee equal to .25% of the sum of such Basic Lender's Revolving
Credit Commitment and its Facility A Commitment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
VENCOR OPERATING, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
--------------------------------
Title: Vice President of Finance
5
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ XXXXX X. XXXXX
---------------------
Title: Vice President
NATIONSBANK, N.A.
By: /s/ XXXXX XXXXXX
---------------------
Title: Vice President
BANQUE PARIBAS
By: /s/ XXXXXXX XXXXXXXXX
---------------------
Title: Vice President
By: /s/ XXXXX X. XXXXXXX
--------------------
Title: Director
THE BANK OF NOVA SCOTIA
By: /s/ X. X. XXXXX
---------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ FARBOUD TAVANGAR
---------------------------
Title: First Vice President
6
CREDIT SUISSE FIRST BOSTON
By: /s/ XXXXXXX X. XXXXXXX
---------------------
Title: Vice President
By: /s/ XXXXXX X. XXXXXX
---------------------
Title: Vice President
FLEET NATIONAL BANK
By: /s/ XXXXXX XXXXXXXXXXXXX
----------------------------
Title: Senior Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH
By: /s/ J. XXXXXXX XXXXXX
----------------------------
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ XXXXXXXX X. XXXXXXXXXX
--------------------------
Title: Vice President
SOCIETE GENERALE
By: /s/ XXXXXXX XXXXXX
---------------------
Title: Vice President
TORONTO-DOMINION (TEXAS), INC.
By: /s/ XXXXXX X. XXXXXX
---------------------
Title: Vice President
7
WACHOVIA BANK, N.A.
By: /s/ XXXX X. XXXX
---------------------
Title: Vice President
ABN AMRO BANK N.V.
By: /s/ XXXXX XXX
------------------------------
Title: Senior Vice President &
Managing Director - Pittsburgh
By: /s/ XXXXXXX X. XXXXXXX
---------------------
Title: Vice President
BANK ONE, KENTUCKY, NA
By: /s/ XXXXXX X. XXXXXXXX
----------------------------
Title: Senior Vice President
COMERICA BANK
By: /s/ XXXXXXX X. XXXXXX
-------------------------------
Title: Assistant Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By: /s/ XXXXX X. XXXXXXX
--------------------
Title: Director
By: /s/ XXXX X. XXXXXXXX
---------------------
Title: Vice President
0
XXXXXXXX XXXX XXXX XX XXXXXXXX
By: /s/ XXXXX XXXXX
---------------------
Title: Vice President
BANK OF AMERICA NT & SA
By: /s/ XXXXX XXXXXX
---------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ XXXXXX X. XXXXXXXXX III
--------------------------------
Title: Vice President - U.S.
Commercial Banking
U.S. BANK
By: /s/ XXXX XXXXXX
----------------------------
Title: Senior Vice President
BANK AUSTRIA
CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ XXXX X. XXXXXX
-----------------------
Title: Senior Associate
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------
Title: Executive Vice President
9
STAR BANK, N.A.
By: /s/ XXXX X. XXX
-------------------------------
Title: Assistant Vice President
AMSOUTH BANK
By: /s/ XXXX XXXXXXX
--------------
Title: Officer
FIRST AMERICAN NATIONAL BANK
By: /s/ XXXX X. XXXX
---------------------
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ XXXXX X. XXXXXXXXX
----------------------------
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED
By: /s/ XXXXXXX XXXXXXX
-----------------------------
Title: Deputy General Manager
BANK OF LOUISVILLE
By: /s/ XXX X. XXXXXXX, XX.
----------------------------
Title: Senior Vice President
10
FIFTH THIRD BANK
By:_____________________________
Name:
Title:
MICHIGAN NATIONAL BANK
By: /s/ XXXXX XXXXX
---------------------------
Title: Relationship Manager
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ XXXXXXX X. XXXXXXX
---------------------
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ XXXXX XXXXXXXXXXX
--------------------------------
Title: Duly Authorized Signatory
HIBERNIA NATIONAL BANK
By: /s/ XXXXXXXXXXX X. XXXXX
---------------------
Title: Vice President
THE SUMITOMO BANK LIMITED
By: /s/ XXXXXX X. TATA
----------------------------
Title: Senior Vice President
11
SUMMIT BANK
By: /s/ XXXXXXXX X. XXXXXX
------------------------------
Title: Regional Vice President
UNION BANK OF CALIFORNIA
By: /s/ XXXXXXXX XXXX
---------------------
Title: Vice President
XXX XXXXXX AMERICAN CAPITAL
SENIOR INCOME TRUST
By: /s/ XXXXXXX X. XXXXXXX
----------------------------
Title: Senior Vice President and
Director
12
PRICING SCHEDULE
Each of "Basic Euro-Dollar Margin", "Facility B Euro-Dollar Margin", "CD
Margin", "Basic Base Rate Margin", "Facility B Base Rate Margin", "Commitment
Fee Rate" and "LC Fee Rate" means:
(i) for any day on or before September 30, 1998, the rate set forth below
in the row opposite such term and in the column headed "Level VIII";
(ii) for any day after September 30, 1998 and before November 15, 1998, the
rate set forth in the row opposite such term and in the column headed "Level
IX"; and
(iii) for any day on or after November 15, 1998, the rate set forth below
in the row opposite such term and in the column corresponding to the "Pricing
Level" that applies on such day:
=====================================================================================
Pricing Xxxxx Xxxxx Xxxxx Xxxxx Xxxxx Xxxxx Xxxxx Xxxxx Xxxxx Xxxxx
X II III IV V VI VII VIII IX
-------------------------------------------------------------------------------------
Basic Euro-
Dollar Margin 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 3.00%
-------------------------------------------------------------------------------------
Facility B
Euro-Dollar 2.25% 2.25% 2.25% 2.50% 2.50% 2.75% 3.00% 3.00% 3.50%
Margin
-------------------------------------------------------------------------------------
CD Margin 0.875% 1.125% 1.375% 1.625% 1.875% 2.125% 2.375% 2.625% 3.125%
-------------------------------------------------------------------------------------
Basic Base
Rate Margin 0.00% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 2.00%
Facility B Base
Rate Margin 1.25% 1.25% 1.25% 1.50% 1.50% 1.75% 2.00% 2.00% 2.50%
-------------------------------------------------------------------------------------
Commitment
Fee Rate 0.25% 0.25% 0.30% 0.3125% 0.375% 0.50% 0.50% 0.50% 0.50%
-------------------------------------------------------------------------------------
LC Fee Rate 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 3.00%
=====================================================================================
Terms defined in the Agreement and not otherwise defined herein have, as
used herein, the respective meanings provided for therein. For purposes of this
Pricing Schedule, the following additional terms, as used herein, have the
following respective meanings:
"LEVEL I PRICING" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, the Leverage Ratio was less than or equal to 3.0 to 1.
"LEVEL II PRICING" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, the Leverage Ratio was greater than 3.0 to 1 and not
greater than 3.5 to 1.
"LEVEL III PRICING" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, the Leverage Ratio was greater than 3.5 to 1 and not
greater than 4.0 to 1.
13
"LEVEL IV PRICING" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, the Leverage Ratio was greater than 4.0 to 1 and not
greater than 4.5 to 1.
"LEVEL V PRICING" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, the Leverage Ratio was greater than 4.5 to 1 and not
greater than 5.0 to 1.
"LEVEL VI PRICING" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, the Leverage Ratio was greater than 5.0 to 1 and not
greater than 5.5 to 1.
"LEVEL VII PRICING" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, the Leverage Ratio was greater than 5.5 to 1 and not
greater than 6.0 to 1.
"LEVEL VIII PRICING" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, the Leverage Ratio was greater than 6.0 to 1 and less
than 6.5 to 1.
"LEVEL IX PRICING" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, the Leverage Ratio was equal to or greater than 6.5 to
1.
"LEVERAGE RATIO" means, at the end of any Fiscal Quarter, the ratio of (x)
Adjusted Consolidated Debt for Borrowed Money at the end of such Fiscal Quarter
to (y) Consolidated EBITDAR for the period of four consecutive Fiscal Quarters
then ended; provided that, at the end of any Fiscal Quarter ending before June
30, 1999 Consolidated EBITDAR shall be determined on an Annualized Basis.
"PRECEDING FISCAL QUARTER" means, with respect to any Rate Period, the most
recent Fiscal Quarter ended before such Rate Period begins.
"PRICING LEVEL" refers to the determination of which of Level I Pricing,
Level II Pricing, Level III Pricing, Level IV Pricing, Level V Pricing, Level VI
Pricing, Level VII Pricing, Level VIII Pricing or Level IX Pricing applies on
any day. Pricing Levels are referred to in ascending order (e.g., Level III
Pricing is a higher Pricing Level than Level II Pricing).
"RATE PERIOD" means any period from and including the 46th day of a Fiscal
Quarter to and including the 45th day of the immediately succeeding Fiscal
Quarter; provided that the first Rate Period shall begin on and include November
15, 1998.
14
