FOUNTAIN VIEW, INC.
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement (herein, the "Amendment") is
entered into as of March 22, 2000, among Fountain View, Inc., a Delaware
corporation, the Banks party hereto, and Bank of Montreal as Agent for the
Banks.
PRELIMINARY STATEMENTS
A. The Borrower, the Banks, and the Agent entered into a certain Credit
Agreement, dated as of April 16, 1998, as amended (herein, the "Credit
Agreement"). All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement.
B. The Borrower has requested that the Banks amend the financial covenants
and related definitions and the pricing, and the Banks are willing to do so on
the terms and conditions provided for in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. AMENDMENTS.
Subject to the satisfaction of the conditions precedent set forth in
Section 3 below, the Credit Agreement shall be and hereby is amended as follows:
1.1. The definitions of "Applicable Margin" and "EBITDAR" appearing
in Section 5.1 of the Credit Agreement shall each be amended and restated
in their entirety to read as follows (it being agreed that the amended
Applicable Margin shall bE effective for all periods ending on and after
March 22, 2000):
"Applicable Margin" means, with respect to Loans,
Reimbursement Obligations, and the Revolving Credit Commitment fees and
letter of credit fees payable under Section 2.1 hereof, the rate per annum
specified below:
Applicable Margin for Reimbursement Obligations and Revolving
Loans which are Base Rate Loans: 2.00%
Applicable Margin for letter of credit fee and Revolving Loans
which are Eurodollar Loans: 3.00%
Applicable Margin for Term Loans which are Base Rate Loans: 2.25%
Applicable Margin for Term Loans which are Eurodollar Loans: 3.25%
Applicable Margin for Revolving Credit Commitment fee: .50%
; provided that the Applicable Margin shall be subject to quarterly
adjustments on the first Pricing Date, and thereafter from one Pricing Date
to the next, so that the Applicable Margin means a rate per annum
determined in accordance with the following schedule:
APPLICABLE
MARGIN FOR APPLICABLE MARGIN APPLICABLE APPLICABLE APPLICABLE
REIMBUSEMENT FOR LETTER OF MARGIN FOR MARGIN FOR MARGIN FOR
OBLIGATIONS AND CREDIT FEE AND TERM LOANS TERM LOANS REVOLVING
LEVERAGE RATIO REVOLVING LOANS REVOLVING LOANS WHICH ARE WHICH ARE CREDIT
FOR SUCH PRICING WHICH ARE BASE WHICH ARE BASE RATE EURODOLLAR COMMITMENT
DATE RATE LOANS EURODOLLAR LOANS LOANS LOANS FEE SHALL BE
Greater than or equal 2.00% 3.00% 2.25% 3.25% .50%
to 6.0 to 1.0
Less than 6.0 to 1.0, 1.75% 2.75% 2.00% 3.00% .50%
but greater than or
equal to 5.5 to 1.0
Less than 5.5 to 1.0, 1.50% 2.50% 1.75% 2.75% .50%
but greater than or
equal to 5.0 to 1.0
Less than 5.0 to 1.0, 1.25% 2.25% 1.50% 2.50% .50%
but greater than or
equal to 4.5 to 1.0
Less than 4.5 to 1.O 1.00% 2.00% 1.25% 2.25% .50%
For purposes hereof, the term "Pricing Date" means, for any fiscal quarter
of the Borrower ending on or after March 31, 2000, the date on which the
Agent is in receipt of the Borrower's most recent financial statements for
the fiscal quarter then ended, pursuant to Section 8.5(a) or (b) hereof.
The Applicable Margin shall be established based on the Leverage Ratio for
the most recently completed fiscal quarter and the Applicable Margin
established on a Pricing Date shall remain in effect until the next Pricing
Date. If the Borrower has not delivered its financial statements by the
date such financial statements (and, in the case of the year-end financial
statements, audit report) are required to be delivered under Section 8.5(a)
or (b) hereof, and such Default remains uncured for a period of 10 Business
Days, until such financial statements and audit report are delivered, the
Applicable Margin shall be the highest Applicable Margin (i.e., the
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Leverage Ratio shall be deemed to be greater than 6.0 to 1.0). If the
Borrower subsequently delivers such financial statements before the next
Pricing Date, the Applicable Margin established by such late delivered
financial statements shall take effect from the date of delivery until the
next Pricing Date. In all other circumstances, the Applicable Margin
established by such financial statements shall be in effect from the
Pricing Date that occurs immediately after the end of the Borrower's fiscal
quarter covered by such financial statements until the next Pricing
Date. Each determination of the Applicable Margin made by the Agent in
accordance with the foregoing shall be conclusive and binding on the
Borrower and the Banks if reasonably determined.
"EBITDAR" means, with reference to any period, Net Income for such period
plus the sum (without duplication) of all amounts deducted in arriving at
such Net Income amount in respect of (w) Interest Expense for such period,
(x) federal, state and local income taxes for such period, (y) depreciation
of fixed assets and amortization of intangible assets for such period, and
(z) Rental Expense for such period (plus, to the extent deducted in
arriving at EBITDAR for the relevant period, expenses incurred in
connection with, and amounts not reimbursed as a result of, the
decertification of the Carehouse facility located in Orange County,
California in amounts reasonably determined by the Borrower and established
to the reasonable satisfaction of the Agent and in all cases not to exceed:
$1,500,000 for the fiscal quarter ending December 31, 1999, $1,800,000 for
the fiscal quarter ending March 31, 2000, $800,000 for the fiscal quarter
ending June 30, 2000, and $0 for any fiscal quarter ending thereafter).
1.2. Section 8.23 of the Credit Agreement shall be amended and
restated in its entirety to read as follows:
Section 8.23. Leverage Ratio. As of the last day of each
fiscal quarter of the Borrower occurring during the periods specified
below, the Borrower shall not permit the Leverage Ratio as of the
last day of the relevant fiscal quarter to be greater than or equal
to:
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RATIO SHALL NOT BE GREATER
FROM AND INCLUDING TO AND INCLUDING THAN OR EQUAL TO
01/01/2000 09/30/2000 6.50 to 1.0
10/01/2000 06/30/2001 6.25 to 1.0
07/01/2001 12/31/2001 5.75 to 1.0
01/01/2002 06/30/2002 5.50 to 1.0
07/01/2002 09/30/2002 5.25 to 1.0
10/01/2002 12/31/2002 5.00 to 1.0
01/01/2003 03/31/2003 4.75 to 1.0
04/O1/2003 09/30/2003 4.50 to 1.0
10/01/2003 at all times thereafter 4.25 to 1.0
1.3. Section 8.24 of the Credit Agreement shall be amended and
restated in its entirety to read as follows:
Section 8.24. Senior Leverage Ratio. As of the last day of
each fiscal quarter of the Borrower occurring during the periods
specified below, the Borrower shall not permit the Senior Leverage
Ratio as of the last day of the relevant fiscal quarter to be greater
than or equal to:
RATIO SHALL NOT BE GREATER
FROM AND INCLUDING TO AND INCLUDING THAN OR EQUAL TO
01/01/2000 09/30/2000 4.00 to 1.0
10/01/2000 06/30/2001 3.75 to 1.0
07/01/2OO1 at all times thereafter 3.50 to 1.0
1.4. Section 8.26 of the Credit Agreement shall be amended by
deleting the phrase "not less than 1.15 to 1.0" and inserting in lieu
thereof the phrase "not less than 1.25 to 1.0" and deleting the phrase "the
aggregate amount of payments required to be made by the Borrower and its
Subsidiaries during the four fiscal quarters of the Borrower then ended in
respect of all principal on all Indebtedness for Borrowed Money (whether
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at maturity, as a result of mandatory sinking fund redemption, mandatory
prepayment, acceleration or otherwise) plus."
1.5. Section 8.27 of the Credit Agreement shall be amended and
restated in its entirety to read as follows:
Section 8.27. Capital Expenditures. The Borrower shall not,
nor shall it permit any other Subsidiary to, incur Capital
Expenditures (excluding from the determination of Capital
Expenditures hereunder Acquisitions permitted by Section 8.9(j) of
this Agreement) in an aggregate amount in excess of $l0,000,000
during any 12-month period ending on each June 30.
SECTION 2. WAIVER.
The Borrower acknowledges that it is in default of its obligations under
Sections 8.23 and 8.24 of the Credit Agreement for the period ending December
31, 1999 (the "Existing Defaults"). The Borrower hereby requests that the
Lenders waive the Existing Defaults, and upon the effectiveness of this
Amendment as hereinafter set forth, the Lenders hereby waive the Existing
Defaults through the period ended December 31,1999.
SECTION 3. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:
3.1. The Borrower, the Agent, and the Required Banks shall have
executed and delivered this Amendment.
3.2. The Agent shall have received for each Bank copies of
resolutions of the Borrower's Board of Directors authorizing the execution,
delivery, and performance of this Amendment and the other Loan Documents to
be executed by it pursuant to the terms hereof, certified to by its
Secretary or Assistant Secretary.
3.3. Each of the Banks that signs this amendment shall have
received an amendment fee in accordance with that certain Request for
Waiver/Amendment dated March 13, 200O issued by Bank of Montreal to the
Banks.
3.4. Each Subsidiary shall have executed its acknowledgement and
consent to this Amendment in the space provided for that purpose below.
3.5. Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Agent and its counsel.
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SECTION 4. REPRESENTATIONS.
In order to induce the Banks to execute and deliver this Amendment, the
Borrower hereby represents to the Agent and the Banks that as of the date
hereof, and after giving effect hereto, the representations and warranties set
forth in Section 6 of the Credit Agreement are and shall be and remain true and
correct (except that the representations contained in Section 6.5 shall be
deemed to refer to the most recent financial statements of the Borrower
delivered to the Banks) and the Borrower and its Subsidiaries are in compliance
with all of the terms and conditions of the Credit Agreement and the other Loan
Documents and no Default or Event of Default has occurred and is continuing or
shall result after giving effect to this Amendment.
SECTION 5. MISCELLANEOUS.
5.1. The Borrower has heretofore executed and delivered to the Agent and
the Banks certain of the Collateral Documents. The Borrower hereby acknowledges
and agrees that, notwithstanding the execution and delivery of this Amendment,
the Collateral Documents remain in full force and effect and the rights and
remedies of the Agent and the Banks thereunder, the obligations of the Borrower
thereunder, and the liens and security interests created and provided for
thereunder remain in full force and effect and shall not be affected, impaired,
or discharged hereby. Nothing herein contained shall in any manner affect or
impair the priority of the liens and security interests created and provided for
by the Collateral Documents as to the indebtedness which would be secured
thereby prior to giving effect to this Amendment.
5.2. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.
5.3. The Borrower agrees to pay on demand all costs and expenses of or
incurred by the Agent in connection with the negotiation, preparation,
execution, and delivery of this Amendment and the other instruments and
documents to be executed and delivered in connection herewith, including the
fees and expenses of counsel for the Agent.
5.4 This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
[SIGNATURE PAGES TO FOLLOW]
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This Third Amendment to Credit Agreement is entered into as of the date and
year first above written.
Fountain View, Inc.
By /s/ Robert Snukal
----------------------------
Name Robert M. Snukal
------------------------
Title CEO
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Accepted and agreed to as of the day and year last above written.
Bank of Montreal, in its individual capacity
as a Bank and as Agent
By /s/ Angelo A. Barone
------------------------------------------
Name Angelo A. Barone
-------------------------------------
Title Director
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Paribas
By /s/ Sean T. Conlon /s/ Don L. Unruh
------------------------------------------
Name Sean T. Conlon Don L. Unruh
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Title Managing Director Vice President
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Union Bank of California, N. A.
By /s/ Ronald L. Watterworth
-----------------------------------------
Name Ronald L. Watterworth
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Title Vice President
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Heller Financial, Inc.
By /s/ Raymond J. Lewis
-----------------------------------------
Name Raymond Lewis
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Title Senior Vice President
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FINOVA CAPITAL CORPORATION
By /s/ Regina C. Gornick
-----------------------------------------
Name Regina C. Gornick
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Title Vice President
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Pilgrim America Prime Rate Trust
By: Pilgrim Investments, Inc.,
as its investment manager
By /s/ Elizabeth O. MacLean
----------------------------------
Name Elizabeth O. MacLean
-----------------------------
Title Vice President
----------------------------
BHF (USA) Capital Corporation
By /s/ Ralph Della Rocca
----------------------------------
Name Ralph Della Rocca
----------------------------
Title Assistant Vice President
----------------------------
By /s/ Patrick S. Marsh
----------------------------------
Name Patrick S. Marsh
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Title Associate
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Balanced High-Yield Fund II Ltd.
By BHF (USA) Capital Corporation, acting
through its New York Branch, as
attorney-in-fact
By /s/ Ralph Della Rocca
----------------------------------
Name Ralph Della Rocca
----------------------------
Title Assistant Vice President
----------------------------
By /s/ Patrick S. Marsh
----------------------------------
Name Patrick S. Marsh
----------------------------
Title Associate
----------------------------
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ACKNOWLEDGEMENT AND CONSENT
The undersigned, being all of the Subsidiaries of Fountain View, Inc., have
heretofore executed and delivered to the Agent and the Banks one or more
Guaranties and Collateral Documents. Each of the undersigned hereby consents to
the Third Amendment to Credit Agreement as set forth above and confirms that its
Guaranty and Collateral Documents, and all of its obligations thereunder, remain
in full force and effect. Each of the undersigned further agrees that the
consent of the undersigned to any further amendments to the Credit Agreement
shall not be required as a result of this consent having been obtained, except
to the extent, if any, required by the Loan Documents referred to above.
"GUARANTORS"
FOUNTAIN VIEW HOLDINGS, INC. LOCOMOTION THERAPY, INC.
LOCOMOTION HOLDINGS, INC. ON-TRACK THERAPY CENTER, INC.
FOUNTAIN VIEW MANAGEMENT, INC.
SYCAMORE PARK CONVALESCENT HOSPITAL By /s/ Robert Snukal
AIB CORP. ------------------------------
ELMCREST CONVALESCENT HOSPITAL Name: Robert M. Snukal
BRIER OAK CONVALESCENT, INC. Title: Chief Executive Officer
BIA HOTEL CORP.
RIO HONDO NURSING CENTER SUMMIT CARE TEXAS, L.P.
FOUNTAINVIEW CONVALESCENT HOSPITAL
ALEXANDRIA CONVALESCENT HOSPITAL, INC. By: Summit Care Management Texas, Inc.,
I.'N O., INC. its capacity as general partner
SUMMIT CARE CORPORATION
SUMMIT CARE-CALIFORNIA, INC. By /s/ Robert Snukal
SUMMIT CARE-TEXAS No. 2, INC. ---------------------------
SUMMIT CARE-TEXAS No. 3, INC. Name: Robert M. Snukal
SUMMIT CARE PHARMACY, INC. Title: President
SKILLED CARE NETWORK
SUMMIT CARE TEXAS EQUITY, INC.
SUMMIT CARE MANAGEMENT TEXAS, INC.
SNF PHARMACY, INC. By: Summit Care Texas Equity, Inc.,
FV-SCC ACQUISITION CORP. in its capacity as limited partner
By /s/ Robert Snukal
---------------------------
Name: Robert M. Snukal
By /s/ Robert Snukal Title: President
-----------------------------
Name: Robert M. Snukal
Title: President