EXHIBIT 10.23
AMENDMENT NO. 1
TO
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 (this "Amendment") is entered into as of October
30, 2003, by and among the Borrowers signatory hereto (each individually a
"BORROWER" and collectively, the "BORROWERS") and CAPITALSOURCE FINANCE LLC, a
Delaware limited liability company ("CAPITALSOURCE"), as administrative agent
and Agent for Lenders (in such capacities, the "AGENT"), and Lenders party
hereto.
BACKGROUND
Certain Borrowers, Agent and Lenders entered into a Revolving Credit
and Security Agreement dated as of August 19, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement")
pursuant to which Agent and Lenders provide Borrowers with certain financial
accommodations.
Borrowers have requested that Agent and Lenders make certain amendments
to the Loan Agreement, and Agent and Lenders are willing to do so on the terms
and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrowers by Agent
and Lenders, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 3 below, the Loan Agreement is hereby
amended as follows:
(a) Appendix A is amended as follows:
(i) the following defined terms are added in
their appropriate alphabetical order:
"Collateral Account" means a general interest bearing
deposit account established at and maintained by
Agent in the name of and for the benefit of Agent,
L/C Banks and Lenders and under the exclusive
dominion and control of Agent, into which Collateral
in the form of cash shall be deposited and as to
which Agent has "control" pursuant to Section 9-104
of the UCC.
"Funded L/C Exposure" means the aggregate principal
amount, as of any date of determination, of all
payments that were made by Agent or any
L/C Bank under any Letter of Credit, but which have
not been reimbursed to Agent or such L/C Bank by the
Borrowers or converted into Advances pursuant to the
terms of this Agreement.
"L/C Bank" means, any bank that issues a Letter of
Credit for the account of the Borrowers.
"L/C Exposure" means the sum, as of any date of
determination, of the Unfunded L/C Exposure and the
Funded L/C Exposure.
"L/C Sublimit" shall mean One Million and 00/100
Dollars ($1,000,000).
"Letter of Credit" means each letter of credit issued
by Agent or any L/C Bank for or on behalf of
Borrowers, which (i) is a standby letter of credit,
(ii) issued for the purpose for which the Borrowers
have historically obtained letters of credit, or for
such other purpose as is reasonably acceptable to the
Agent, and, in all cases, for a purpose permitted for
use of proceeds hereunder, (iii) is denominated in
Dollars; (iv) is governed by the Uniform Customs and
Practices for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication 500,
except as otherwise agreed by the Agent or the
applicable L/C Bank, and (v) is in form reasonably
satisfactory to the Agent and the applicable L/C
Bank.
"Unfunded L/C Exposure" means the maximum amount
which Agent or the L/C Banks may be required, under
all Letters of Credit outstanding as of any date of
determination, to pay on such date or at any future
time. Unfunded L/C Exposure shall not include any
amounts outstanding within the meaning of Funded L/C
Exposure.
(ii) the following defined term is amended in its
entirety to provide as follows:
"Requisite Lenders" shall mean Lenders holding or
being responsible for (i) 100%, if there are only two
Lenders, and (ii) at least 66-2/3% if there are more
than two Lenders, in each case, of the sum of (a) all
outstanding Loans and (b) all unutilized Commitments,
including Unfunded L/C Exposure.
(b) Section 2.1(a) is hereby amended by inserting the
phrase ", including Advances in connection with the issuance of Letters of
Credit," after the phrase "Pro Rata Share of Advances" in the second and third
lines thereof.
(c) A new Section 2.16 is hereby inserted in its
appropriate sectional order to read as follows:
"2.16. Letters of Credit
(a) Letter of Credit Commitment. On the terms
and subject to the conditions herein set forth, the
Borrowing Agent, on behalf of Borrowers, may, at any
time and from time to time after the date hereof and
prior to the Termination Date, request that Agent
issue, and on the terms and subject to the conditions
contained herein, Agent, if so requested, shall
issue, or shall cause an L/C Bank to issue, within
ten (10) Business Days after the request for such
Letter of Credit, for the account of the Borrowers
one or more Letters of Credit; provided that no
Letter of Credit shall be issued if and to the extent
that after giving effect to its issuance, the
Unfunded L/C Exposure, (i) exceeds the L/C Sublimit
or (ii) taken together with the outstanding Advances,
including, without duplication, any Funded L/C
Exposure, would exceed the lesser of the Facility Cap
or the Availability. Borrowers acknowledge that
Availability shall be reduced by a reserve in the
full face amount of any such Letter of Credit.
(b) Related Letter of Credit Restrictions. If a
requested Letter of Credit is to have or is for the
purpose of replacing an existing Letter of Credit
that has, an expiry date falling after the Maturity
Date, then Borrower shall, on or before the
Termination Date (x) provide a "back-to-back" letter
of credit to Agent or the applicable L/C Bank in form
and substance reasonably satisfactory to Agent or the
applicable L/C Bank, as the case may be, issued by a
bank reasonably satisfactory to Agent or the
applicable L/C Bank, as the case may be, in an amount
equal to the Relevant Percentage of the then undrawn
stated amount of all outstanding Letters of Credit
and/or (y) deposit cash in the Collateral Account in
an amount equal to the Relevant Percentage of the
then undrawn stated amount of each such outstanding
Letter of Credit with respect to which a
"back-to-back" letter of credit was not issued to
Agent or the applicable L/C Bank; provided, however,
that notwithstanding the provision of such
"back-to-back" letter(s) of credit and/or the funding
of such Collateral Account, Borrowers shall remain
liable with respect to all Funded L/C Exposure and
Unfunded L/C Exposure, pursuant to the terms of this
Section 2.16 until the earlier of such time as each
such Letter of Credit expires by its terms without
any draws being made in respect thereof or such
Letter of Credit has been returned to Agent or the
applicable L/C Bank undrawn and marked "cancelled".
For this purpose, "Relevant Percentage" means, with
respect to the Termination Date, 105%, and with
respect to each annual anniversary thereafter, two
percent more than the Relevant Percentage for the
preceding annual anniversary.
(c) Issuance of Letters of Credit. If the
Borrowers wish Agent to issue, or arrange for
issuance by an L/C Bank of, a Letter of Credit, the
Borrowing Agent, on behalf of Borrowers, shall give
Agent notice to that effect, specifying the proposed
issuance date for such Letter of Credit (which shall
be a Business Day), the stated amount of the Letter
of Credit so requested, the proposed expiration date
of such Letter of Credit and the name and address of
the beneficiary of such Letter of Credit (as well as
such further information, relating to the use of such
Letter of Credit and otherwise, as Agent or the
applicable L/C Bank may reasonably request), at least
ten Business Days before the proposed issuance date
(or such shorter period as may be agreed upon in
writing by Agent or the applicable L/C Bank, as the
case may be, and the Borrowers).
(d) Advances Arising from Letter of Credit
Payments. Any payment by Agent or the applicable L/C
Bank in respect of any Letter of Credit shall
constitute for all purposes of this Agreement the
making by Agent of an Advance in the amount of such
payment (and if such payment is made by an L/C Bank,
Agent shall reimburse such L/C Bank in the amount of
such payment). All Funded L/C Amounts shall bear
interest as provided pursuant to Section 2.3. With
respect to each Advance made pursuant to this Section
2.16, Borrowers shall be deemed to have certified the
statements contained in Section V as of the date the
payment constituting such Advance was made by Agent;
provided, however, that in the event any such
statement was not true and correct in all material
respects as of such date, such Advance shall be
repayable on demand; provided, further, that upon any
such repayment, the failure of any such statement to
be true and correct in all material respects as of
such date shall not constitute an Event of Default
hereunder, unless the failure of any such statement
to be true and correct in all material respects as of
such date would have constituted an Event of Default
hereunder even if such repaid Advance had never been
made.
(e) Absolute Nature of Loan Obligations Relating
to Letters of Credit. The obligations of the
Borrowers in respect of Advances that arise as a
result of payments under Letters of Credit shall be
unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this
Agreement under all circumstances, including, without
limitation: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the
existence of any claim, setoff, defense or other
right which any Borrower may have at any time against
a beneficiary of any Letter of Credit or the Agent or
the applicable L/C Bank; (iii) the fact that, or any
allegation that, any draft, demand, certificate or
other document presented under such Letter of Credit
is or was forged, fraudulent, invalid or insufficient
in any respect, or any statement therein is or was
untrue or inaccurate in any respect; (iv) any breach
of contract or dispute among or between any Borrower,
Agent, any L/C Bank, any Lender, or any other Person;
(v) payment by the Agent or any L/C Bank to the
beneficiary under any Letter of Credit against
presentation of a demand, draft or certificate or
other document which does not comply with the terms
of such Letter of Credit; (vi) any other circumstance
or happening whatsoever, which is similar to any of
the foregoing; or (vii) the fact that any Event of
Default shall have occurred and be continuing (it
being understood that any such payment by the
Borrowers of its obligations hereunder in respect of
any such Advance shall be without prejudice to, and
shall not constitute a waiver of, any
rights any Party hereto may have or might acquire
against the beneficiary of any Letter of Credit or
against the Agent or any L/C Bank).
(f) Risks Related to Letters of Credit. (i)
Borrowers assume all risks of the acts or omissions
of any beneficiary or transferee of any Letter of
Credit with respect to the use of any Letter of
Credit. Each party hereto agrees that the Agent,
Lenders and the L/C Banks and their respective
directors, officers or employees shall not be liable
or responsible, except that any such Person shall not
be excused hereby on account of its gross negligence
or willful misconduct, for (i) the use which may be
made of any Letter of Credit or for any acts or
omissions of any beneficiary or transferee in
connection therewith; (ii) any reference which may be
made to this Agreement or to any Letter of Credit in
any agreements, instruments or other documents; (iii)
the validity, sufficiency or genuineness of any
document, or of any endorsement thereon, even if such
document or endorsement should in fact prove to be in
any or all respects invalid, insufficient, fraudulent
or forged or any statement therein prove to be untrue
or inaccurate in any respect whatsoever; (iv) payment
by the Agent or any L/C Bank (acting in good faith)
to the beneficiary thereof against presentation of
documents which do not strictly comply with the terms
of any Letter of Credit; or (v) any other
circumstances whatsoever in making or failing to make
payment under any Letter of Credit, but the foregoing
is without prejudice to any claim that any Loan Party
may have against Agent, any L/C Bank or any Lender.
Agent or the applicable L/C Bank may, in connection
with any Letter of Credit accept any document that
appears on its face to be in order, without
responsibility for further investigation. The
determination whether a demand is properly presented
under any Letter of Credit prior to its expiration or
whether a demand presented under any Letter of Credit
is in proper and sufficient form may be made by the
Agent or the applicable L/C Bank in its sole
discretion, and such determination shall be
conclusive and binding upon the Borrowers to the
extent permitted by law. The Borrowers hereby waive
any right to object to any payment to the beneficiary
thereof made under any Letter of Credit on
presentation of any demand that is in the form
provided in the Letter of Credit but varies with
respect to punctuation, capitalization, spelling or
similar matters of form.
(ii) Each Lender shall to the extent of
the percentage amount equal to the such Lender's Pro
Rata Share of the aggregate Funded L/C Exposure be
deemed to have irrevocably purchased an undivided
participation ("Pro Rata Purchase") in (i) each such
Funded L/C Exposure, (ii) Agent's credit support
enhancement provided to any L/C Bank which issues any
Letter of Credit and (iii) each Advance made as a
consequence of the issuance of a Letter of Credit and
all disbursements thereunder (the items set forth in
clauses (i) (ii) and (iii) collectively referenced as
"L/C Advances"), in each case in an amount equal to
such Lender's applicable Pro Rata Share of the
outstanding amount of the Letters of Credit and
disbursements thereunder. In the event that at the
time a disbursement is made the unpaid balance of
Advances exceeds or would exceed, with the making of
such disbursement, the amount permitted under Section
2.16(a), and such disbursement is not reimbursed by
Borrower within two (2) Business Days, Agent shall
promptly notify each Lender and upon Agent's demand
each Lender shall pay to Agent such Lender's Pro Rata
Share of such unreimbursed disbursement together with
such Lender's Pro Rata Share of Agent's unreimbursed
costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment
from Borrower of any amount disbursed by Agent for
which Agent had already been reimbursed by Lenders,
Agent shall deliver to each Lender that Lender's Pro
Rata Share of such repayment. Each Lender's
participation commitment shall continue until the
last to occur of any of the following events: (A)
Agent ceases to be obligated to issue or cause to be
issued Letters of Credit hereunder; (B) no Letters of
Credit issued hereunder remains outstanding and
uncancelled or (C) all Persons (other than the
Borrowers) have been fully reimbursed for all
payments made under or relating to Letters of Credit.
(g) Letter of Credit Fee. On the first day of
each month, commencing on the first such day
following the Closing Date and continuing thereafter
until the date the Unfunded L/C Exposure has been
reduced to zero, including on the Termination Date,
the Borrowers shall pay to Agent, for the account of
Lenders to the extent of their participation in the
Unfunded L/C Exposure a letter of credit fee (the
"Letter of Credit Fee"), computed by applying the
Letter of Credit Fee rate set forth in Section 3.6
below, to the Unfunded L/C Exposure from day to day
in the prior month or partial month, as the case may
be (and, in the case of the first payment of this
fee, without duplication of fees paid under Section
3.6 from the Closing Date).
(h) The aggregate stated amount available for
Letters of Credit issued by Agent or any L/C Bank
from time to time outstanding shall not exceed the
L/C Sublimit."
(d) Sections 3.2 and 3.3 are hereby amended in their
entirety to read as follows:
"3.2. Unused Line Fee.
(a) Borrower shall pay to Agent for the ratable
benefit of Lenders monthly an unused line fee (the
"UNUSED LINE FEE") in an amount equal to 0.042% per
month of the difference derived by subtracting (i)
the daily average amount of the balances under the
Revolving Facility (excluding any Unfunded L/C
Exposure under the L/C Sublimit) outstanding during
the preceding month, from (ii) the Facility Cap. The
Unused Line Fee shall be payable monthly in arrears
on the first day of each successive
calendar month (starting with the first calendar
month following the month in which the Closing Date
occurs).
(b) In the event the daily average amount of the
balances under the Revolving Facility (excluding any
Unfunded L/C Exposure under the L/C Sublimit)
outstanding during any calendar month is less than
$3,000,000 (the "MINIMUM AVERAGE MONTHLY LOAN
AMOUNT") Borrowers shall pay to Agent for the benefit
of Lenders a minimum loan fee in an amount equal to
0.042% per month on the amount by which the Minimum
Average Monthly Loan Amount exceeds such daily
average amount of unpaid balances. Such fee shall be
calculated on the basis of a year of 360 days and
actual days elapsed and such fee shall be charged to
Borrowers' account on the first day of each month
with respect to the prior month. In the event
Borrowers request that Agent cease charging the
minimum loan fee set forth in this Section 3.2(b),
the Unused Line Fee shall automatically increase to
0.083% per month effective on the first month
following the date of such request.
3.3. Collateral Management Fee.
Borrower shall pay Agent for its own account as
additional interest a monthly collateral management
fee (the "COLLATERAL MANAGEMENT FEE") equal to 0.083%
per month calculated on the basis of the daily
average amount of the balances under the Revolving
Facility (including any Unfunded L/C Exposure under
the L/C Sublimit) outstanding during the preceding
month. The Collateral Management Fee shall be payable
monthly in arrears on the first day of each
successive calendar month (starting with the first
calendar month following the month in which the
Closing Date occurs)."
(e) A new Section 3.6 is inserted in its appropriate
sectional order to read as follows:
"3.6. Letter of Credit Fee.
Borrower shall pay to Agent for the benefit of
Lenders to the extent of their participation in the
Unfunded L/C Exposure a Letter of Credit Fee of 3.5 %
per annum of the Unfunded L/C Exposure, plus any
administrative charges or expenses incurred by Agent
or customarily charged by Agent for such Letters of
Credit, which fee shall be payable monthly in arrears
on each day that interest under the Revolving
Facility is payable hereunder. Upon the occurrence
and during the continuance of an Event of Default,
all Letter of Credit Fees shall be payable on demand
at a rate equal to the Letter of Credit Fee plus 3%
per annum."
(f) Section 4.2(c) is amended in its entirety to provide
as follows:
"(c) immediately after giving effect to the
requested Advance, the sum of (i) the aggregate
outstanding principal amount of Advances under the
Revolving Facility, including Advances in connection
with the Letters of Credit, and (ii) the Unfunded L/C
Exposure, shall not exceed the lesser of the
Availability and the Facility Cap and the L/C
Exposure shall not exceed the L/C Sublimit;"
(g) Section 8(a) is amended in its entirety to provide as
follows:
"(a) Borrower shall fail to pay any amount on the
Obligations, including any Funded L/C Exposure, or
provided for in any Loan Document when due (whether
on any payment date, at maturity, by reason of
acceleration, by notice of intention to prepay, by
required prepayment or otherwise);"
(h) Section 11.1 is amended by adding the following
immediately prior to the period at the end thereof:
"; provided that if all Obligations (other than
Unmatured Surviving Obligations and Unfunded L/C
Exposure) have been satisfied and the Borrowers have
satisfied the requirements set forth in Section
2.16(b) to provide a `back-to-back' letter of credit
or deposit cash in the Collateral Account, then the
Liens granted to Agent, for the benefit of itself and
Lenders, under the Security Documents shall be
released".
3. Conditions of Effectiveness. This Amendment shall become
effective upon satisfaction of the following conditions precedent: Agent shall
have received (i) four (4) copies of this Amendment executed by Borrowers and
Lenders and (ii) and such other certificates, instruments, documents and
agreements as may be reasonably required by Agent or its counsel, each of which
shall be in form and substance reasonably satisfactory to Agent and its counsel.
4. Representations and Warranties. Each Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of Borrowers and are
enforceable against Borrowers in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each
Borrower hereby reaffirms all covenants, representations and warranties made in
the Loan Agreement to the extent the same are not amended hereby and agree that
all such covenants, representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(d) No Borrower has any defense, counterclaim or offset
with respect to the Loan Agreement.
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of like import shall mean and be a reference to the Loan
Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements executed and/or
delivered in connection therewith, shall remain in full force and effect, and
are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of Agent
or Lenders, nor constitute a waiver of any provision of the Loan Agreement, or
any other documents, instruments or agreements executed and/or delivered under
or in connection therewith.
6. Governing Law. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of New York.
7. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
8. Counterparts; Facsimile. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed an
original and all of which when taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
BORROWERS
BRIARCLIFF NURSING AND REHABILITATION CENTER, LP
By: Briarcliff Nursing and Rehabilitation
Center GP, LLC, its general partner
CAREHOUSE HEALTHCARE CENTER, LLC
CLAIRMONT BEAUMONT, LP
By: Clairmont Beaumont GP, LLC, its
general partner
CLAIRMONT LONGVIEW, LP
By: Clairmont Longview GP, LLC, its
general partner
THE CLAIRMONT TYLER, LP
By: The Clairmont Tyler GP, LLC, its
general partner
COLONIAL NEW BRAUNFELS CARE CENTER, LP
By: Colonial New Braunfels GP, LLC, its
general partner
COLONIAL TYLER CARE CENTER, LP
By: Colonial Tyler GP, LLC, its general
partner
COMANCHE NURSING CENTER, LP
By: Comanche Nursing Center GP, LLC, its
general partner
CORONADO NURSING CENTER, LP
By: Coronado Nursing Center GP, LLC, its
general partner
DEVONSHIRE CARE CENTER, LLC
THE EARLWOOD, LLC
FLATONIA OAK MANOR, LP
By: Flatonia Oak Manor GP, LLC, its
general partner
FOUNTAIN CARE CENTER, LLC
FOUNTAIN SENIOR ASSISTED LIVING, LLC
GUADALUPE VALLEY NURSING CENTER, LP
By: Guadalupe Valley Nursing Center GP,
LLC, its general partner
HALLETTSVILLE REHABILITATION AND NURSING CENTER,
LP
By: Hallettsville Rehabilitation GP, LLC
its general partner
HOSPITALITY NURSING AND REHABILITATION CENTER, LP
By: Hospitality Nursing GP, LLC, its
general partner
LIVE OAK NURSING CENTER, LP
By: Live Oak Nursing Center GP, LLC, its
general partner
MONUMENT REHABILITATION AND NURSING CENTER, LP
By: Monument Rehabilitation Center GP,
LLC, its general partner
OAK CREST NURSING CENTER, LP
By: Oak Crest Nursing Center GP, LLC, its
general partner
OAKLAND MANOR NURSING CENTER, LP
By: Oakland Manor, GP, LLC, its general
partner
SKILLED HEALTHCARE II, LLC
SOUTHWOOD CARE CENTER, LP
By: Southwood Care Center GP, LLC, its
general partner
SPRING SENIOR ASSISTED LIVING, LLC
TEXAS CITYVIEW CARE CENTER, LP
By: Texas Cityview Care Center, GP, LLC,
its general partner
TEXAS HERITAGE OAKS NURSING AND REHABILITATION
CENTER, LP
By: Texas Heritage Oaks Nursing and
Rehabilitation Center GP, LLC, its
general partner
TOWN AND COUNTRY MANOR, LP
By: Town and Country Manor GP, LLC, its
general partner
VALLEY HEALTHCARE CENTER, LLC
VILLA MARIA HEALTHCARE CENTER, LLC
WEST SIDE CAMPUS OF CARE, LP
By: West Side Campus of Care GP, LLC, its
general partner
WILLOW CREEK HEALTHCARE CENTER, LLC
By: \s\ Roland G. Rapp
------------------------------------------
Name: Roland G. Rapp
Title: Secretary
AGENT AND SOLE LENDER
CAPITALSOURCE FINANCE LLC
By: \s\ J. Anthony Romero
------------------------------------------
Name: J. Anthony Romero
Its: Portfolio Manager