June 12, 2000 EXHIBIT 10.4
Vencor, Inc. and the Borrowers under the
Existing DIP Credit Agreement referred to below
One Vencor Place
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
President and Chief Executive Officer
Re: Amended and Restated Debtor-In-Possession Credit Agreement
----------------------------------------------------------
Ladies and Gentlemen:
Reference is made to that certain Debtor-In-Possession Credit
Agreement dated as of September 13, 1999 (as heretofore amended, supplemented or
otherwise modified, the "Existing DIP Credit Agreement"), by and among Vencor,
Inc., a Delaware corporation ("Vencor"), and Vencor Operating, Inc., a Delaware
corporation ("Vencor Opco"), each as debtor and debtor-in-possession, and each
of Vencor's subsidiaries listed on the signature pages thereof, each as debtor
and debtor-in-possession (each such subsidiary, Vencor and Vencor Opco
individually referred to herein as a "Borrower" and, collectively, on a joint
and several basis, as the "Borrowers"); the lenders party thereto (the "Existing
DIP Lenders"); and Xxxxxx Guaranty Trust Company of New York, as arranger,
collateral agent and administrative agent for the Existing DIP Lenders, and as
an issuing bank for letters of credit thereunder. Capitalized terms used herein
without definition herein shall have the meanings assigned to such terms in the
Existing DIP Credit Agreement.
You have advised us that one or more of the Borrowers may become
involved in an action, proceeding or contested matter (the commencement of any
such action, proceeding or contested matter by any Ventas Company or any Vencor
Company being a "Litigation Event") against one or more Ventas Companies with
respect to the Master Leases or the spin-off of the Vencor Companies from the
Ventas Companies. You have also advised us that, in order to finance the
Borrowers' litigation expenses, working capital needs and other general
corporate purposes if such a Litigation Event occurs, the Borrowers desire (i)
to restructure the credit facilities available under the Existing DIP Credit
Agreement to consist of two revolving loan facilities of $60,000,000 (the
"Tranche A Facility") and $30,000,000 (the "Tranche B Facility") with a maturity
date of one year, extendible to two years, with a sublimit for letters of credit
of $15,000,000 (collectively, the "DIP Facility"), and (ii) to make certain
other changes to the Existing DIP Credit Agreement.
Each of Appaloosa Investment Limited Partnership I ("Appaloosa"),
Ableco Finance LLC ("Ableco"), and Franklin Mutual Advisers LLC ("Franklin
Mutual") (each, together with Xxx Xxxxxx Prime Rate Income Trust, Xxx Xxxxxx
Senior Floating Rate Fund and Xxx Xxxxxx Senior Income Trust (collectively, "Xxx
Xxxxxx"), being referred to herein as an "Underwriting Lender") is pleased to
confirm its commitment to provide $16 million of the Tranche A Facility and $8
million of the Tranche B Facility; Xxx Xxxxxx Senior Floating Rate Fund is
pleased to confirm its commitment to provide $2.333 million of the Tranche A
Facility and $1.167 million of the Tranche B Facility; Xxx Xxxxxx Prime Rate
Income Trust is pleased to confirm its commitment to provide $6.667 million of
the Tranche A Facility and $3.333 million of the Tranche B Facility; and Xxx
Xxxxxx Senior Income Trust is pleased to confirm its commitment to provide $3.0
million of the Tranche A Facility and $1.5 million of the Tranche B Facility; in
each case on the terms and subject to the conditions contained in this letter
and the attached Annex A. Each of the Underwriting Lenders reserves the right to
arrange for other banks and financial institutions meeting the criteria for
being an Eligible Assignee (as defined in the Existing DIP Credit Agreement) to
provide a portion of its share of the DIP Facility; provided that the
commitments of the Underwriting Lenders shall be reduced ratably by the
commitments allocated to those institutions executing and delivering
counterparts hereto in the form of Annex B attached hereto. Xxxxxx Guaranty
Trust Company of New York will act as arranger for the Lenders (in such
capacity, the "Arranger"), Xxxxxx Guaranty Trust Company of New York will act as
syndication agent for the Lenders (in such capacity, the "Syndication Agent"),
and Xxxxxx Guaranty Trust Company of New York will act as administrative agent
for the Lenders (in such capacity, the "Administrative Agent"; collectively, the
Arranger, the Syndication Agent and the Administrative Agent are the "Agents").
Certain of the terms of each of the DIP Facility are set forth in the Summary
Term Sheet attached hereto as Annex A (the "Term Sheet").
-------
Our commitments are subject, in our respective reasonable discretion,
to the following conditions: (i) the continued accuracy in all material respects
of all written information, other than Projections (as defined below), which has
been or is hereafter made available to us or the Existing DIP Lenders or any of
their representatives by Vencor or its representatives in connection with the
transactions contemplated hereby (the "Information"), and (ii) there shall not
have been any adverse change in the condition (financial or otherwise), results
of operations, business or prospects of Vencor and its Consolidated
Subsidiaries, taken as a whole, which any of Appaloosa, Ableco, Franklin Mutual
or Xxx Xxxxxx, in its judgment, deems material. Our commitments are also
subject, in our respective reasonable discretion, to the satisfactory
negotiation, execution and delivery an amended and restated debtor-in-possession
credit agreement, and other related definitive documents (collectively, the
"Loan Documents") to be based upon and substantially consistent with the terms
set forth in this letter and the attached Term Sheet, and to the satisfaction of
the conditions to be set forth in the Loan Documents, including without
limitation those conditions set forth in the Term Sheet.
The Borrowers hereby represent that (a) all information heretofore
furnished in writing by any Vencor Company to any Agent or any Underwriting
Lender for purposes of or in connection with this letter or any transaction
contemplated hereby was, and all such information hereafter furnished in writing
by the Vencor Companies to any Agent or Underwriting Lender will be, true and
accurate in every material respect or based on reasonable estimates on the date
as of which such information is or was stated or certified, and Vencor has
disclosed to the
2
Underwriting Lenders in writing any and all facts which are known to it and
which have had or could reasonably be expected to have a Material Adverse
Effect, and (b) all financial projections (including without limitation the Cash
Plan (as defined in the Existing DIP Credit Agreement) for July and August 2000)
concerning the Vencor Companies that have been or are hereafter made available
to the Underwriting Lenders by the Borrowers or any of their representatives in
connection with the transactions contemplated hereby (the "Projections") have
been (or will be, in the case of Projections made available after the date
hereof) prepared in good faith based upon reasonable assumptions. The Borrowers
agree to supplement such Information and the Projections from time to time until
the Effective Date (as defined in the Term Sheet) so that the representation and
warranty in the preceding sentence is correct on the Effective Date. In
arranging and syndicating the DIP Facility, the Arranger and the Syndication
Agent will be using and relying on the Information and the Projections without
independent verification thereof. The representations and covenants contained in
this paragraph shall remain effective until a definitive amended and restated
debtor-in-possession credit agreement is executed and thereafter the disclosure
representations contained herein shall be superseded by those contained in such
definitive amended and restated debtor-in-possession credit agreement.
The Borrowers hereby agree, jointly and severally, to pay (without
duplication) the costs and expenses arising in connection with the preparation,
execution and delivery of this letter and the Loan Documents and the syndication
of the DIP Facility on the terms set forth in Section 11.03 of the Existing DIP
Credit Agreement as if this letter, the Loan Documents, the DIP Lenders, the
Agents, the loans and the commitments with respect to the DIP Facility were the
Financing Documents, the Lenders, the Agents, the Loans and the Commitments
referred to in such Section. The Borrowers further hereby agree, jointly and
severally, to indemnify and hold harmless (without duplication) each of the DIP
Lenders, the Agents and each director, officer, employee, agent and affiliate
thereof (each an "indemnified person") on the terms set forth in Section 11.03
of the Existing DIP Credit Agreement as if the DIP Lenders, the Agents and such
other indemnified persons were Indemnitees (as defined under the Existing DIP
Facility) and as if this letter, the Loan Documents, the loans and the
commitments under the DIP Facility were the Financing Documents, the Loans and
the Commitments referred to in such Section. The obligations to indemnify each
DIP Lender and such indemnified persons and to pay such expenses shall remain
effective until the effectiveness of the definitive amended and restated debtor-
in-possession credit agreement and thereafter the indemnification and expense
reimbursement obligations contained herein shall be superseded by those
contained in such definitive amended and restated debtor-in-possession credit
agreement. No Underwriting Lender or other DIP Lender or Agent shall be
responsible or liable to any other party or any other person for consequential
damages which may be alleged as a result of this letter. The foregoing
provisions of this paragraph shall be in addition to any rights that any
Underwriting Lender or DIP Lender or any indemnified person may have at common
law or otherwise.
In connection with the services to be provided hereunder by the
Underwriting Lenders and the Agents, each Underwriting Lender and Agent may
employ the services of its respective affiliates. Each Underwriting Lender and
Agent may share with such affiliates, and such affiliates may share with such
Underwriting Lender or Agent, any information concerning the Borrowers; provided
--------
that each Underwriting Lender and Agent agrees, and will cause such respective
affiliates to agree, to hold any non-public information confidential in
accordance with their respective customary policies relating to non-public
information and in accordance with
3
Section 11.11 of the Existing DIP Credit Agreement. Any such affiliate so
employed (and its directors, officers, employees, agents, attorneys and
affiliates) shall be entitled to all of the benefits afforded to the relevant
Underwriting Lender or Agent hereunder.
This letter is confidential and shall not be disclosed by you to any
person other than the Court and other parties in interest in the Chapter 11
cases of the Vencor Companies as may be required by law, and your accountants,
attorneys, financial advisors and, to the extent approved by the Underwriting
Lenders, other advisors, and then only on a confidential basis and in connection
with the transactions contemplated herein. Additionally, you may make
disclosures of this letter as are required by law or judicial process or as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation; provided that you will use your best efforts to
--------
notify us of any such disclosure prior to making such disclosure.
Our offer will terminate on June 15, 2000 unless on or before that
date you sign and return an enclosed counterpart of this letter; provided,
however, that the commitments herein shall terminate on August 31, 2000 unless
on or before such date the Borrowers (i) shall have obtained from the Court
authorization to execute and deliver this letter agreement (and the Term Sheet)
and to pay the fees described in the Term Sheet and (ii) shall have paid to the
Administrative Agent, for distribution to the Arranger, the Underwriting Lenders
and such other Persons as may be entitled thereto, as the case may be, the
arranging fees and the financing fees described in the Term Sheet which are due
and payable upon Court approval of this letter agreement. The DIP Facility
referred to herein shall in no event be available unless the Effective Date
shall have occurred on or prior to September 30, 2000.
This letter agreement shall be governed by and construed in accordance
with the internal laws of the State of New York. This letter agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
[Remainder of page intentionally left blank]
4
Very truly yours,
ABLECO FINANCE LLC
By: _____________________________________
Name:
Title:
APPALOOSA INVESTMENT LIMITED PARTNERSHIP I
By: _____________________________________
Name:
Title:
FRANKLIN MUTUAL ADVISERS LLC
By: _____________________________________
Name:
Title:
S-1
XXX XXXXXX PRIME RATE INCOME TRUST
By: XXX XXXXXX INVESTMENT ADVISORY CORP.
By: ___________________________________
Name:
Title:
XXX XXXXXX SENIOR FLOATING RATE FUND
By: XXX XXXXXX INVESTMENT ADVISORY CORP.
By: ___________________________________
Name:
Title:
XXX XXXXXX SENIOR INCOME TRUST
By: XXX XXXXXX INVESTMENT ADVISORY CORP.
By: ___________________________________
Name:
Title:
S-2
AGREED AND ACCEPTED
this 12th day of June, 2000
Advanced Infusion Systems, Inc.
American X-Rays, Inc.
C.P.C. of Louisiana, Inc.
Community Behavioral Health SYSTEM, Inc.
Community Psychiatric Centers of Arkansas, Inc.
Community Psychiatric Centers of California
Community Psychiatric Centers of Florida, Inc.
Community Psychiatric Centers of Idaho, Inc.
Community Psychiatric Centers of Indiana, Inc.
Community Psychiatric Centers of Kansas, Inc.
Community Psychiatric Centers of Mississippi, Inc.
Community Psychiatric Centers of Missouri, Inc.
Community Psychiatric Centers of North Carolina, Inc.
Community Psychiatric Centers of Oklahoma, Inc.
Community Psychiatric Centers of Utah, Inc.
Community Psychiatric Centers Properties Incorporated
Community Psychiatric Centers Properties of OKlahoma,
Inc.
Community Psychiatric Centers Properties of Texas, Inc.
Community Psychiatric Centers Properties of Utah, Inc.
Courtland Gardens Health Center, Inc.
CPC Investment Corp.
CPC Managed Care Health Services, Inc.
CPC of Georgia, Inc.
CPC Properties of Arkansas, Inc.
CPC Properties of Illinois, Inc.
CPC Properties of Indiana, Inc.
CPC Properties of Kansas, Inc.
CPC Properties of Louisiana, Inc.
CPC Properties of Mississippi, Inc.
CPC Properties of Missouri, Inc.
CPC Properties of North Carolina, Inc.
First Rehab, Inc.
Florida Hospital Properties, Inc.
Health Care Holdings, Inc.
Health Care Technology, Inc.
Helian ASC of Northridge, Inc.
Helian Health Group, Inc.
Helian Recovery Corporation
S-3
Homestead Health Center, Inc.
Horizon Healthcare Services, Inc.
Interamericana Health Care Group
X.X. Xxxxxx Hospital, Inc.
Lafayette Health Care Center, Inc.
MedEquities, Inc.
Medisave of Tennessee, Inc.
Medisave Pharmacies, Inc.
Old Orchard Hospital, Inc.
Palo Alto Surgecenter Corporation
Peachtree-Parkwood Hospital, Inc.
PersonaCare, Inc.
PersonaCare Living Center of Clearwater, Inc.
PersonaCare of Bradenton, Inc.
PersonaCare of Clearwater, Inc.
PersonaCare of Connecticut, Inc.
PersonaCare of Georgia, Inc.
PersonaCare of Huntsville, Inc.
PersonaCare of Little Rock, Inc.
PersonaCare of Ohio, Inc.
PersonaCare of Owensboro, Inc.
PersonaCare of Pennsylvania, Inc.
PersonaCare of Pompano East, Inc.
PersonaCare of Pompano West, Inc.
PersonaCare of Reading, Inc.
PersonaCare of San Antonio, Inc.
PersonaCare of San Xxxxx, Inc.
PersonaCare of Shreveport, Inc.
PersonaCare of St. Petersburg, Inc.
PersonaCare of Warner Xxxxxxx, Inc.
PersonaCare of Wisconsin, Inc.
PersonaCare Properties, Inc.
Prodata Systems, Inc.
Recovery Inns of America, Inc.
Respiratory Care Services, Inc.
Stamford Health Facilities, Inc.
THC-Chicago, Inc.
THC-Hollywood, Inc.
THC-Houston, Inc.
THC-Minneapolis, Inc.
THC-North Shore, Inc.
THC-Orange County, Inc.
THC-San Diego, Inc.
THC-Seattle, Inc.
TheraTx Healthcare Management, Inc.
TheraTx Health Services, Inc.
S-4
TheraTx Management Services, Inc.
TheraTx Medical Supplies, Inc.
TheraTx Rehabilitation Services, Inc.
TheraTx Staffing, Inc.
Transitional Hospitals Corporation, a Delaware
Corporation
Transitional Hospitals Corporation, a Nevada Corporation
Transitional Hospitals Corporation of Indiana, Inc.
Transitional Hospitals Corporation of Louisiana, Inc.
Transitional Hospitals Corporation of Michigan, Inc.
Transitional Hospitals Corporation of Nevada, Inc.
Transitional Hospitals Corporation of New Mexico, Inc.
Transitional Hospitals Corporation of Tampa, Inc.
Transitional Hospitals Corporation of Texas, Inc.
Transitional Hospitals Corporation of Wisconsin, Inc.
Xxxxxx Nursing Center, Inc.
Xxxxxxxx Enterprises, Inc.
VC-OIA, Inc.
VC-TOHC, Inc.
XX-XX, Inc.
Vencare, Inc.
Vencare Rehab Services, Inc.
Vencor Facility Services, Inc.
Vencor Holdings, L.L.C.
Vencor Home Care Services, Inc.
Vencor Hospice, Inc.
Vencor Hospitals East, L.L.C.
Vencor Hospitals West, L.L.C.
Vencor, Inc.
Vencor Insurance Holdings, Inc.
Vencor Investment Company
Vencor Nevada, L.L.C.
Vencor Nursing Centers East, L.L.C.
Vencor Nursing Centers Central L.L.C.
Vencor Nursing Centers North, L.L.C.
Vencor Nursing Centers South, L.L.C.
Vencor Nursing Centers West, L.L.C.
Vencor Operating, Inc.
Vencor Pediatric Care, Inc.
Vencor Provider Network, Inc.
Ventech Systems, Inc.
S-5
BY: Vencor Operating, Inc., as agent and attorney-in-
fact for each of the foregoing entities
By: ______________________________________
Name:
Title:
Stamford Health Associates, L.P.
BY: Stamford Health Facilities, Inc., Its General
Partner
By: ______________________________________
Name:
Title:
Vencor Home Care and Hospice Indiana Partnership
BY: Vencor Home Care Services, Inc., Its General Partner
By: ______________________________________
Name:
Title:
BY: Vencor Hospice, Inc., Its General Partner
By: ______________________________________
Name:
Title:
S-6
Vencor Hospitals Limited Partnership
BY: Vencor Operating, Inc., Its General Partner
By: ______________________________________
Name:
Title:
BY: Vencor Nursing Centers Limited Partnership, Its
General Partner
BY: Vencor Operating, Inc., Its General
Partner
By: ______________________________________
Name:
Title:
Vencor Nursing Centers Central Limited Partnership
BY: Vencor Operating, Inc., Its General Partner
By: ______________________________________
Name:
Title:
BY: Vencor Nursing Centers Limited Partnership, Its
General Partner
BY: Vencor Operating, Inc., Its General
Partner
By: _____________________________________
Name:
Title:
S-7
Vencor Nursing Centers Limited Partnership
BY: Vencor Operating, Inc., Its General Partner
By: _____________________________________
Name:
Title:
BY: Vencor Hospitals Limited Partnership, Its General
Partner
BY: Vencor Operating, Inc., Its General
Partner
By: _________________________________
Name:
Title:
S-8
ACKNOWLEDGED AND AGREED:
XXXXXX GUARANTY TRUST COMPANY OF NEW
YORK, as Arranger, Collateral Agent
and Administrative Agent
By: _______________________________________
Name:
Title:
S-9
ANNEX A
-------
SUMMARY TERM SHEET
FOR AMENDED AND RESTATED DIP FACILITY
This Term Sheet summarizes the material terms of a proposed amendment and
restatement of the existing debtor-in-possession financing for Vencor, Inc.
("Vencor") and its subsidiaries. This Term Sheet is intended merely as an
outline of the material terms of such amended and restated credit facilities. It
does not include descriptions of all of the terms, conditions and other
provisions that are to be contained in the definitive documentation relating to
such amended and restated credit facilities and it is not intended to limit the
scope of discussion and negotiation of any matters not inconsistent with the
specific matters set forth herein. All terms defined in the commitment letter to
which this Term Sheet is attached (the "Commitment Letter") and not otherwise
defined herein shall have the same meanings when used herein.
Borrowers: Vencor and each of its subsidiaries which is a
---------
borrower under the existing Debtor-In-Possession
Credit Agreement dated as of September 13, 1999
(the "Existing DIP Facility"), as debtors and
debtors-in-possession in the Chapter 11 cases (the
"Cases") of such entities commenced with the United
States Bankruptcy Court for the District of
Delaware (the "Court"), will be joint and several
borrowers (collectively, the "Borrowers").
Guarantors: The obligations of the Borrowers will be guaranteed
----------
by each subsidiary of Vencor which is a guarantor
under the documentation relating to the Existing
DIP Facility.
Administrative Xxxxxx Guaranty Trust Company of New York (in such
--------------
Agent and capacity, and "Administrative Agent").
---------
Collateral Agent: The Administrative Agent shall have the absolute
----------------
right to resign in such capacity upon notice to the
Borrowers consistent with the notice provisions of
the Existing DIP Facility.
Arranger: Xxxxxx Guaranty Trust Company of New York (in such
-------- capacity, the "Arranger").
Syndication Agent: Xxxxxx Guaranty Trust Company of New York (in such
----------------- capacity, the "Syndication Agent").
Other Agents: Each of the Underwriting Lenders shall be a Co-
------------
Agent. Except for the fees described herein, no
fees shall be payable to the Agents in connection
with the DIP Facility.
DIP Lenders: Appaloosa, Ableco, Franklin Mutual and Xxx Xxxxxx
----------- shall underwrite the DIP Facility, and each shall
be entitled to arrange
A-1
for other banks and financial institutions which
are holders of pre-petition debt as of the
Effective Date to provide a portion of the DIP
Facility (Appaloosa, Ableco, Franklin Mutual, Xxx
Xxxxxx and such other banks and financial
institutions being, collectively, the "DIP
Lenders"). On the Effective Date, all commitments
and loans outstanding under the Existing DIP
Facility will be converted to commitments and loans
under the DIP Facility (as defined below) and will
be transferred to and reallocated amongst the DIP
Lenders.
Amount of DIP Facility: The amended and restated debtor-in-possession
----------------------
credit facility (the "DIP Facility") will consist
of a revolving credit line of up to $90 million,
consisting of a $60,000,000 revolving credit
facility (the "Tranche A Facility") and a
$30,000,000 revolving credit facility (the "Tranche
B Facility"). Aggregate borrowings under the
Tranche A Facility and the Tranche B Facility shall
be subject to the limitations described below.
Effective Date: The date (which shall be no earlier than the date
--------------
of Court approval of the DIP Facility and no later
than September 30, 2000) on which the conditions
described under the heading "Conditions Precedent"
below have been satisfied or waived (the "Effective
Date").
Availability: Amounts available for borrowing under the Tranche A
------------
Facility shall be limited each month to a
"Borrowing Base" to be calculated in the same
manner as provided in the Existing DIP Facility.
Amounts under the Tranche B Facility will be
available only upon the consent of Required DIP
Lenders, in their sole discretion. At the time such
consent is given, Required DIP Lenders may, in
their sole discretion, prescribe additional
limitations on the aggregate amount which may be
borrowed under the Tranche B Facility, the times
such borrowings may be made and the other terms and
conditions relating to the availability of the
Tranche B Facility.
Purpose/Use of Proceeds: To finance the Borrowers' litigation expenses,
-----------------------
working capital needs and other general corporate
purposes more specifically identified in the cash
plan delivered by the Borrowers on or prior to the
Effective Date and updated periodically by the
Borrowers (as so updated, the "Cash Plan"), which
updates shall be satisfactory in form and substance
to Required DIP Lenders. Other than as described in
the preceding sentence, proceeds shall not be used
for any purposes for which the proceeds of loans
under the Existing DIP Facility could not have been
used.
Stated Maturity Date: 1 year from the Effective Date; provided that,
--------------------
subject to the remainder of this paragraph, the
Stated Maturity Date with
A-2
respect to each DIP Lender's loans and commitments
shall be extended to the date which is one year
from the original Stated Maturity Date unless DIP
Lenders holding 25% or more of the total credit
exposure under the DIP Facility notify the
Administrative Agent and the Borrowers at least 45
days prior to the first such Stated Maturity Date
that such DIP Lenders elect not to extend their
loans and commitments. In any event, if one or more
DIP Lenders elects not to extend its loans and
commitments beyond the original Stated Maturity
Date, the Administrative Agent shall notify each
DIP Lender promptly of such election, and each DIP
Lender which has not theretofore made such election
shall be entitled to make such election by
notifying the Administrative Agent and the
Borrowers at least 30 days prior to the first such
Stated Maturity Date. Any DIP Lender that has so
notified the Administrative Agent and the Borrowers
of its election not to extend shall not be required
to extend its loans and commitments. In the event
fewer than 25% of the DIP Lenders elect not to
extend their loans and commitments on or prior to
the date which is 30 days prior to the first Stated
Maturity Date, the commitments and loans of any DIP
Lender not giving such notice of such election
shall be automatically extended to the later Stated
Maturity Date. Any loans of any DIP Lender not
giving such notice of such election shall be
automatically extended to the later Stated Maturity
Date.
Letters of Credit: Up to $15 million of the DIP Facility will be made
-----------------
available for the issuance of letters of credit
("Letters of Credit"), subject to the limitations
on availability set forth above.
Interest Rate: All loans outstanding under the Tranche A Facility
-------------
shall bear interest at the Prime Rate (as defined
in the DIP Credit Agreement) plus 2.50% per annum
until paid in full. All loans outstanding under the
Tranche B Facility shall bear interest at the Prime
Rate plus 4.50% per annum until paid in full.
Default Rate: Upon the occurrence and during the continuation of
------------
an Event of Default (as defined below), (a) loans
outstanding under the Tranche A Facility shall bear
interest at the Prime Rate plus 4.50% per annum and
(b) loans outstanding under the Tranche B Facility
shall bear interest at the Prime Rate plus 6.50%
per annum.
Interest Payments: Monthly and upon any prepayment, in each case
-----------------
payable in arrears and computed on the basis of a
360-day year and the actual number of days elapsed.
Financing Fees, Commitment The Borrowers shall pay to the Administrative
--------------------------
Fees and Other Fees: Agent non-refundable financing fees equal to (i)
-------------------
2% of the entire amount of the commitments under
the commitments Letter, payable on the date
immediately following the date of authorization by
the Court of both the execution and delivery of the
Commitment
A-3
Letter and the payment of fees described herein
(such authorization being the "Court Approval") to
the DIP Lenders party to the Commitment Letter
(including those DIP Lenders that execute and
return to the administrative agent under the
Existing DIP Facility a counterpart to the
Commitment Letter attached hereto as Annex B prior
-------
to 11:00 a.m. (New York time) on June 15, 2000)
ratably in accordance with their relative
commitments to the DIP Facility, and (ii) 3% of the
entire amount of the commitments under the DIP
Facility, payable on the Effective Date ratably to
all DIP Lenders. The Borrowers shall also pay to
the Arranger for its own account, on the date
immediately following the date of Court Approval, a
non-refundable arranging fee equal to $100,000, and
to the Syndication Agent for its own account, on
the date immediately following the date of Court
Approval, a non-refundable syndication fee of
$150,000.
After the Effective Date, the Borrowers shall pay
to the Administrative Agent, for ratable
distribution to the DIP Lenders, unused commitment
fees equal to (i) 1.00% per annum of the daily
average unused amount of the Tranche A Facility and
(ii) 0.25% (increasing to 1.00% upon and after the
Tranche B Facility becomes available for borrowing)
of the daily average unused amount of the Tranche B
Facility, which fees shall commence accruing on the
Effective Date and be payable monthly in arrears
and shall be computed on the basis of a 360-day
year and the actual number of days elapsed.
If the Tranche B Facility becomes available for
borrowing, on the date of termination of all
commitments of the DIP Lenders the Borrowers shall
pay to the Administrative Agent, for ratable
distribution to the DIP Lenders, a fee equal to
0.50% of the entire amount of the commitments under
the DIP Facility (determined as of the date the
Tranche B Facility becomes available for
borrowing).
The Borrowers shall also pay to the Administrative
Agent for its own account a non-refundable monthly
administrative agent's fee of $25,000 payable in
advance each month.
Letter of Credit Fees: A letter of credit fee shall be payable monthly in
---------------------
arrears to the Administrative Agent for ratable
distribution to the DIP Lenders on the aggregate
amount available to be drawn under outstanding
Letters of Credit (regardless of whether the
conditions to drawing have been satisfied) equal to
4.50% per annum (or 6.50% per annum upon the
occurrence and during the continuation of an Event
of Default), calculated on the basis of a 360-day
year and the actual number of days elapsed.
Additional
A-4
customary fees and expenses shall be payable as
agreed between the Borrowers and the DIP Lenders
issuing the letters of credit.
Collateral: All obligations of the Borrowers in respect of the
----------
DIP Facility shall be secured by first priority
priming security interests and liens in favor of
the Collateral Agent on behalf of the DIP Lenders
in all existing and future personal, mixed and real
property of the Borrowers and the Guarantors which
serves as Collateral for the Existing DIP Facility
(collectively, the "Collateral"), subject and
subordinate only to liens that are senior to the
Existing DIP Facility under the final order of the
Court approving the same.
Priority: In addition to the collateral security arrangements
--------
described above, all obligations of the Borrowers
in respect of the DIP Facility shall constitute
allowed, administrative expense claims with
priority under Section 364(c)(1) of the Bankruptcy
Code over all other administrative expense claims
in the Cases subject to the exceptions set forth in
the Existing DIP Facility.
Mandatory Prepayments: The net proceeds of any casualty insurance and the
---------------------
net proceeds of any income tax refunds (exclusive
of amounts applied to PIP payments), debt and
equity issuances and asset sales, subject to
certain limited exceptions substantially the same
as those contained in the Existing DIP Facility,
shall be applied to repay outstanding amounts and
reduce commitments under the DIP Facility.
Representations and Substantially the same as those set forth in the
-------------------
Warranties: Existing DIP Facility.
----------
Covenants: As set forth in the Existing DIP Facility, except
---------
that (i) financial covenant levels and periods for
reporting shall be revised in accordance with the
memorandum from counsel to the Borrowers dated May
19, 2000 to the lenders under the Existing DIP
Facility, (ii) the maximum amount of Permitted
Encumbrances described in subparagraph (d) of the
definition of such term shall be increased to $15
million, and (iii) Section 7.04(d) of the Existing
DIP Facility will be revised to permit an
additional $1 million of capital contributions to
Cornerstone. In addition, the Borrowers shall
covenant to file a plan of reorganization
acceptable to Required DIP Lenders by July 18,
2000.
Events of Default: As set forth in the Existing DIP Facility,
-----------------
including without limitation an Event of Default if
the Borrowers are required to pay base rent (or
escrow rent) to the Ventas Companies in an amount
greater than $15.15 million per month, except that
(i) the Event of Default in Section 8.01(p) of the
Existing DIP Facility shall be deleted, (ii) the
Event of Default in Section 8.01(q) of the Existing
DIP Facility shall be deleted, (iii) the Event of
Default under Section 8.01(f) of
A-5
the Existing DIP Facility occurring upon the
occurrence of an event of default under any Master
Lease Agreement shall be deleted, and (iv) an Event
of Default shall be deemed to occur if the
Borrowers enter into a settlement agreement with
Ventas or the United States without prior approval
of Required DIP Lenders.
Notwithstanding anything to the contrary contained
in the covenants or events of default under the
Existing DIP Facility, the commencement of any
action or proceeding, and/or the filing of a
complaint, in the Cases by one or more Vencor
Companies (as defined in the Existing DIP Facility)
against one or more Ventas Companies (as defined in
the Existing DIP Facility), and/or the response by
one or more Vencor Companies to the commencement of
any action or proceeding, and/or the filing of a
complaint, in the Cases by one or more of the
Ventas Companies against one or more Vencor
Companies, with respect to the Master Leases or the
spin-off of the Vencor Companies from the Ventas
Companies (such commencement being a "Litigation
Event") shall not constitute an Event of Default
under the DIP Facility.
Remedies: As set forth in the Existing DIP Facility.
--------
Conditions Precedent: Customary and appropriate for amended and restated
--------------------
financings of this type, including without
limitation (i) execution and delivery of an
amendment providing for the DIP Facility, in
accordance with the terms set forth herein and
otherwise in form and substance reasonably
satisfactory to the DIP Lenders, (ii) absence of
any Event of Default or Default under (and as
defined in) the Existing DIP Facility (other than
an Event of Default resulting from the occurrence
of a Litigation Event), (iii) receipt of all
required approvals with respect to the amendments
to the Existing DIP Facility being effected
pursuant to the DIP Facility, including entry of a
final order satisfactory to the Agents approving
the material modification of the Existing DIP
Facility pursuant to the DIP Facility and
confirming its superpriority administrative expense
claim status and all first priority liens securing
the DIP Facility, and (iv) delivery of the Cash
Plan for the two months immediately following the
Effective Date in form and substance satisfactory
to the DIP Lenders. The effectiveness of the DIP
Facility shall also be conditioned upon the
occurrence of a Litigation Event.
Conditions to all As set forth in the Existing DIP Facility.
-----------------
Borrowings:
----------
Indemnity and As set forth in the Existing DIP Facility.
-------------
A-6
Expenses:
--------
Taxes, Reserve As set forth in the Existing DIP Facility.
--------------
Requirements &
--------------
Indemnities:
-----------
Governing Law and The Borrowers and each guarantor of the DIP
-----------------
Jurisdiction: Facility will submit to the non-exclusive
------------
jurisdiction and venue of the federal and state
courts of the State of New York and shall waive any
right to trial by jury. New York law shall govern
the definitive documentation under the DIP
Facility.
Required DIP Lenders: DIP Lenders holding 75% of the aggregate exposure
--------------------
(including loans and commitments) under the DIP
Facility.
Assignments: Institutions which are DIP Lenders as of the
-----------
Effective Date shall have a right of first refusal
with respect to any proposed assignment by a DIP
Lender to any entity other than an institution
which is a DIP Lender at the time of such proposed
assignment.
Counsel to the Arranger: O'Melveny & Xxxxx LLP.
-----------------------
A-7
ANNEX B
-------
COUNTERPART TO COMMITMENT LETTER
Subject to satisfactory documentation and the other conditions set forth in the
Commitment Letter to which this Counterpart is attached, the undersigned is
pleased to commit up to $__________ (the "Committed Amount") in the aggregate to
the DIP Facility. We understand that our allocated commitment will not exceed
$24,000,000 and not be less than $5,000,000; provided that if that portion of
the DIP Facility which represents our ratable portion thereof, determined on the
basis of our and our affiliates' pre-petition debt exposure (to Vencor
Companies) relative to the pre-petition debt exposure (to Vencor Companies) of
all committing Lenders, is less than $5,000,000, whether we are allocated a
commitment and the amount thereof shall be determined in the discretion of the
Co-Agents. We further understand that except as set forth in the preceding
sentence, the amount of our allocation shall not exceed the Committed Amount and
shall be determined in the discretion of the Co-Agents. We further understand
that this Counterpart shall not be effective unless completed, executed and
delivered to O'Melveny & Xxxxx LLP prior to 11:00 a.m. (New York time) on June
15, 2000.
____________________________________
[Name of DIP Lender]
By: ________________________________
Name:
Title:
Notice Address:
_________________
_________________
_________________
Tel:
Fax:
B-1
