EXHIBIT 10.28
SECOND AMENDMENT TO LOAN AGREEMENT,
CONSENT TO MERGER AND CONFIRMATION OF GUARANTIES
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THIS AGREEMENT is made as of the 31st day of July, 1998, by and among BAY
TREE NURSING CENTER CORP., a Massachusetts corporation, COUNTRYSIDE CARE CENTER
CORP., a Massachusetts corporation, SUNSET POINT NURSING CENTER CORP., a
Massachusetts corporation and WEST BAY NURSING CENTER CORP., a Massachusetts
corporation, each having its principal place of business at Harbor Plaza, 470
Atlantic Avenue, Boston, Massachusetts 02210 (hereinafter collectively referred
to as the "Borrowers"); HARBORSIDE HEALTHCARE LIMITED PARTNERSHIP, a
Massachusetts limited partnership having its principal place of business at
Harbor Plaza, 470 Atlantic Avenue, Boston, Massachusetts 02210 (the
"Guarantor"); HARBORSIDE HEALTHCARE CORPORATION, a Delaware corporation having
its principal place of business at Harbor Plaza, 470 Atlantic Avenue, Boston,
Massachusetts 02210 ("Harborside") and MEDITRUST MORTGAGE INVESTMENTS, INC., a
Delaware corporation, having its principal place of business at 197 First
Avenue, Needham Heights, Massachusetts 02494 (hereinafter referred to as the
"Lender").
W I T N E S S E T H:
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WHEREAS, on October 13, 1994, the Lender made a loan to (I) the Borrowers
and (ii) BELMONT NURSING CENTER CORP., a Massachusetts corporation, OAKHURST
MANOR NURSING CENTER CORP., a Massachusetts corporation and ORCHARD RIDGE
NURSING CENTER CORP., a Massachusetts corporation (collectively, the "Released
Borrowers") in the original principal amount of FORTY-TWO MILLION THREE HUNDRED
THOUSAND DOLLARS ($42,300,000) (hereinafter referred to as the "Loan"),
evidenced by a Consolidated and Renewal Promissory Note, dated as of October 13,
1994, made by the Borrowers and the Released Borrowers to the order of the
Lender (hereinafter referred to as the "Note");
WHEREAS, the Note is referred to in that certain Loan Agreement, dated as
of October 13, 1994, by and between the Borrowers, the Released Borrowers, the
Guarantor and the Lender (the "Original Loan Agreement"), as amended by that
certain First Amendment to Loan Agreement, dated as of May 17, 1996 (the "First
Amendment" and the Original Loan Agreement as amended by the First Amendment is
hereinafter referred to as the "Loan Agreement") and is in all respect subject
to the provisions of the Loan Agreement;
WHEREAS, all capitalized terms used herein and not specifically defined
shall have the meaning ascribed to them in the Loan Agreement;
WHEREAS, payment of the indebtedness evidenced by the Note is secured, in
part, by four (4) separate Renewal, Consolidation, Mortgage, Spreader,
Assignment and Security Agreements, each dated as of October 13, 1994, executed
by the Borrowers in favor of the
Lender (collectively, the "Mortgages") encumbering certain real property more
particularly described in the Mortgages and all of the improvements now or
hereafter located thereon;
WHEREAS, the payment of the indebtedness evidenced by the Note and the
performance of all other obligations set forth under the Loan Documents (other
than the Lender's obligations) are unconditionally guaranteed by (I) the
Guarantor pursuant to that certain Guaranty, dated as of October 13, 1994, from
the Guarantor to the Lender (hereinafter referred to as the "Guaranty") and (II)
Harborside pursuant to that certain Guaranty, dated as of May 17, 1996 from
Harborside to the Lender (the "Harborside Guaranty");
WHEREAS, the Borrowers have requested that the Lender consent to the
proposed merger of HH Acquisition Corp. a Delaware corporation with and into
Harborside pursuant to and in accordance with the Agreement and Plan of Merger,
dated as of April 15, 1998, by and between HH Acquisition Corp. and Harborside
(the "Merger"); and
WHEREAS, notwithstanding anything to the contrary set forth in the Loan
Agreement or any of the other Loan Documents, the Lender is willing to consent
to the Merger, but as a condition of such consent, the Lender has requested that
the parties hereto execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration paid, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Notwithstanding anything to the contrary set forth in any of the Loan
Documents, the Lender hereby consents to the Merger and to the change in the
control of Harborside, the Borrowers, the Guarantor and the General Partner
resulting from the Merger and agrees that the same shall not constitute an Event
of Default under any of the Loan Documents.
2. Effective as of the consummation of the Merger, Section 3.6 of the
Loan Agreement is deleted in its entirety and is restated to thereafter read as
follows:
3.6. PREPAYMENT.
Except as otherwise expressly provided herein, a prepayment fee (referred
to herein as the "Prepayment Fee") shall be paid to the Lender in the event that
the Loan is prepaid (or shall become due and payable) prior to the Maturity
Date, whether such prepayment is voluntary or involuntary, including, without
limitation, any prepayment which results from any default under any of the Loan
Documents and an acceleration of the indebtedness due thereunder. The Borrowers
shall have the right, at any time during the Term, to prepay the entire
outstanding principal balance of the Loan, provided, that, the Borrowers furnish
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the Lender with at least ninety (90) days' prior written notice of its intent to
prepay (the "Prepayment Notice"), and provided, further, that the Borrowers pay
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to the Lender, upon the specific date for prepayment which shall be identified
in the Prepayment Notice (the "Prepayment Date"), together with the entire
outstanding principal balance of the Loan, all
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accrued and unpaid interest (including, without limitation, Additional Interest)
and any other costs, charges and sums due under this Agreement and all of the
other Loan Documents, a "Prepayment Fee" equal to (and defined herein as) the
greater of: (A) the then present value discounted at the Current Rate of the
difference between (I) the product of the Interest Rate then in effect,
multiplied by the then outstanding principal balance of the Loan, multiplied by
the remaining number of years (or fraction thereof) of the Term and (II) the
product of the annual rate of interest (as of the date of prepayment) of
actively traded marketable United States treasury securities bearing a fixed
rate of interest adjusted for a constant maturity equal to the remaining number
of years (rounded to the nearest whole year) of the Term (the "Current Rate"),
multiplied by the then-outstanding principal balance of the Loan, multiplied by
the remaining number of years (or fraction thereof) of the Term; or (B) one
percent (1%) of the then outstanding principal balance of the Loan multiplied by
the remaining number of years (or fraction thereof) of the Term. The Prepayment
Fee shall be paid without prejudice to the rights of the Lender to collect any
amounts due to the Lender. The Borrowers shall not be entitled to make any
partial prepayments of principal at any time during the Term without the prior
written consent of the Lender, which consent may be withheld in the Lender's
sole and absolute discretion. Once given, the Prepayment Notice may only be
revoked upon the payment of a fee (the "Prepayment Revocation Fee") equal to
one-half of one percent (.5%) of the then outstanding principal balance of the
Loan. The failure to make prepayment of the Loan in accordance with the
Prepayment Notice (unless such Prepayment Notice is revoked in accordance with
the immediately preceding sentence) shall be an Event of Default hereunder.
Notwithstanding anything to the contrary set forth herein, the Borrower may
extend the Prepayment Date (on one or more occasions) for up to ten (10)
Business Days upon prior written notice to the Lender, which written notice must
be received by the Lender prior to the Prepayment Date (as the same may be
exended) and must specify the date to which the Prepayment Date is to be
extended; provided, however, that in no event shall the Borrower have the right
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to extend the Prepayment Date to a date more than ten (10) Business Days after
the original Prepayment Date.
3. Effective as of the consummation of the Merger, Section 6 of the First
Amendment is deleted in its entirety.
4. Effective as of the consummation of the Merger, the Loan Agreement is
amended by adding the following Sections 6.1.05:
6.1.05. CURRENT RATIO-HARBORSIDE
Harborside shall maintain, at all times, a ratio of Consolidated
Current Assets to Consolidated Current Liabilities equal to or greater than 1.0
to 1, which shall be calculated on a monthly basis.
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5. Effective as of the consummation of the Merger, clause (i) of Section
6.14 of the Loan Agreement is deleted in its entirety and is restated to
thereafter read as follows:
(i) change their respective fiscal years or capital structures
6. Effective as of the consummation of the Merger, Section 6.18 of the
Loan Agreement is deleted in its entirety and is restated to thereafter read as
follows:
6.18 PERMITTED TRANSFERS.
Notwithstanding anything to the contrary set forth herein or in any of the
other Loan Documents, issuances and transfers of the capital stock of Harborside
shall be expressly permitted; provided, that, such issuances and/or transfers,
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whether individually or in the aggregate, do not result in any Change of
Control.
In addition, notwithstanding anything to the contrary set forth herein or
in any of the other Loan Documents, (A) the issued and outstanding stock of the
General Partner may be (I) transferred, on any one or more occasions, to any
other Person that is wholly-owned and controlled, directly or indirectly, by
Harborside or (II) pledged, on any one or more occasions, as collateral to
secure the obligations under any credit facility (or other financing
arrangement) now or hereafter entered into by Harborside with any institutional
lender, (B) the partnership interests in the Guarantor may be (I) transferred,
on any one or more occasions, to any other Person that is wholly-owned and
controlled, directly or indirectly, by Harborside or (II) pledged, on any one or
more occasions, as collateral to secure the obligations under any credit
facility (or other financing arrangement) now or hereafter entered into by
Harborside with any institutional lender, (C) the General Partner may merge into
or with any other Person that is wholly-owned and controlled, directly or
indirectly, by Harborside and (D) the Guarantor may merge into or with any other
Person that is wholly-owed and controlled, directly or indirectly, by
Harborside; provided, that (X) simultaneously with the consummation of any
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merger described in clause (d), the surviving entity (if such surviving entity
is not the Guarantor) executes a guaranty of the Loan Obligations in form and
substance substantially similar to the Guaranty, (Y) with respect to any merger
described in clause (c) or (d), the Lender receives at least fifteen (15) days
prior written notice of such merger and (Z) the Lender receives such assurances,
estoppels, assumptions and confirmations that it reasonably requires with
respect to such merger.
7. Effective as of the consummation of the Merger, Sections 10 G and 10 H
of the Loan Agreement are deleted in their entirety and are restated to
thereafter read as follows:
G. in the event that, without the prior written consent of the Lender, in
each instance, which consent may be withheld by the Lender in its sole and
absolute discretion:
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i. there shall be any change in the Person or Persons in control of
any Lessee or any Manager (whether by operation of law or
otherwise);
ii. any of the shares of the issued and outstanding capital stock of
the Borrowers or, subject to Section 6.18, the General Partner
shall be, on any one or more occasions, directly or indirectly,
sold, assigned, hypothecated or otherwise transferred (whether by
operation of law or otherwise);
iii. subject to Section 6.18, any portion of the interest of any
partner of the Guarantor in the Guarantor shall be, on any one or
more occasions, directly or indirectly, sold, assigned,
hypothecated or otherwise transferred (whether by operation of
law or otherwise); or
iv. any Change of Control occurs;
H. the death, incapacity, liquidation, dissolution or termination of
existence of any Borrower or, subject to Section 6.18, the merger of any
member of the Borrowing Group with any other Person; provided, however,
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that notwithstanding the foregoing, a merger involving Harborside shall not
constitute an Event of Default so long as (I) Harborside is the surviving
entity of such merger and there is no material adverse change to the
financial condition of Harborside as a result of or in connection with such
merger, (II) no Change of Control occurs as a result of such merger, (III)
the Lender receives at least fifteen (15) days prior written notice of such
merger and (IV) the Lender receives such assurances, estoppels, assumptions
and confirmations that it reasonably requires with respect to such merger;
8. Effective as of the consummation of the Merger, the Loan Agreement is
amended by deleting, in its entirety, the definition of Borrowers in EXHIBIT B
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and restating it to hereafter read as follows:
BORROWERS: Collectively, BAY TREE NURSING CENTER CORP., a Massachusetts
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corporation, COUNTRYSIDE CARE CENTER CORP., a Massachusetts corporation, SUNSET
POINT NURSING CENTER CORP., a Massachusetts corporation and WEST BAY NURSING
CENTER CORP., a Massachusetts corporation and their respective successors and
assigns.
9. Effective as of the consummation of the Merger, the Loan Agreement is
amended by adding the following definition to EXHIBIT B immediately after the
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term "Casualty":
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CHANGE OF CONTROL: The occurrence of any of the following events: (a) if,
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at any time prior to an IPO, Investcorp or any of its Affiliates or
Subsidiaries, any Person that is a member of the senior management of Harborside
as of the date of the Second Amendment, or any entity the majority of the equity
ownership interests of which is owned by such senior management of Harborside,
shall cease to own, directly or indirectly, in the aggregate, at least 51% of
the issued and outstanding voting stock of Harborside, free and clear of all
Liens or (b) if, at any time after an IPO, any Person (other than Investcorp,
any of its Affiliates or Subsidiaries, any Person that is a member of the senior
management of Harborside as of the date of the Second Amendment, any entity the
majority of the equity ownership interests of which is owned by such senior
management of Harborside or any Person acting in the capacity of an
underwriter), whether singly or in concert with one or more Persons, shall,
directly or indirectly, have acquired, or acquire the power (i) to vote or
direct the voting of 30% or more, on a fully diluted basis, of the outstanding
common stock of Harborside or (ii) to elect or designate for election a majority
of the Board of Directors of Harborside by voting power, contract or otherwise.
For the purposes of this definition only, the term "Affiliate" shall mean,
as to any Person, (a) any other Person (other than a Subsidiary) which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such Person, or (b) any other Person who is a director or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in the foregoing clause (a). For purposes of the immediately
preceding sentence, control of a Person shall mean the power, direct or
indirect, (x) to vote 51% or more of the securities having ordinary voting power
for the election of directors of such Person, whether by ownership of
securities, contract, proxy or otherwise, or (y) to direct or cause the
direction of the management and policies of such Person, whether by ownership of
securities, contract, proxy or otherwise.
10. Effective as of the consummation of the Merger, the Loan Agreement is
amended by adding the following definition to EXHIBIT B immediately after the
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term "Interest Rate":
INVESTCORP: Investcorp S.A., a Luxembourg corporation
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11. Effective as of the consummation of the Merger, the Loan Agreement is
amended by adding the following definition to EXHIBIT B immediately after the
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term "Investment Subsidiary":
IPO: Any sale by Harborside through a public offering of its common (or
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other voting) stock pursuant to an effective registration statement (other than
a registration statement on Form S-4, S-8 or any successor or similar form)
filed under the Securities Act of 1933, as amended.
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12. Effective as of the consummation of the Merger, the Loan Agreement is
amended by adding the following definition to EXHIBIT B immediately after the
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term "Pledgors' Shares":
PREPAYMENT DATE: As defined in Section 3.6.
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13. Effective as of the consummation of the Merger, the Loan Agreement is
amended by adding the following definition to EXHIBIT B immediately after the
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term "Retainage":
SECOND AMENDMENT: That certain Second Amendment to Loan Agreement, Consent
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to Merger and Confirmation of Guaranties, dated as of July 31, 1998, by and
among the Borrowers, the Guarantor, Harborside and the Lender.
14. Effective as of the consummation of the Merger, the Loan Agreement is
amended by deleting the following definitions in their entirety from EXHIBIT B:
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"Borrower Parties", "Monetary Default", "Monetary Default Prepayment Fee",
"NatWest Markets", "New Business", "New Business Credit", "Non-Monetary
Default", "Non-Monetary Default Prepayment Fee", "Partial Prepayment", "Partial
Prepayment Revocation Fee", "Partial Release Fee", "Partial Release Notice",
"Reduced Loan Amount", "Remaining Time", "Special Current Rate", "Special
Prepayment", "Special Prepayment Date", "Special Prepayment Fee", "Special
Prepayment Notice" and "Special Reduced Loan Amount".
15. Each of the Borrowers hereby represent and warrant to the Lender that,
except as already obtained or filed, as the case may be, no consent or approval
or other authorization of, or exemption by, or declaration or filing with, any
Person and no waiver of any right by any Person is required to authorize or
permit, or is otherwise required as a condition of such Borrower's execution and
delivery of this Agreement and the performance of its obligations under the Loan
Agreement as amended hereby.
16. This Agreement shall be deemed to amend the Loan Agreement solely as
expressly set forth herein and the Loan Agreement as amended hereby remains in
full force and effect and is hereby ratified and confirmed.
This Agreement shall not be deemed to amend any of the other Loan
Documents, each of which are hereby ratified, confirmed and reaffirmed and each
of which remain in full force and effect notwithstanding and unaffected by this
Amendment, except as may be otherwise expressly provided herein.
17. By the execution hereof, the Guarantor hereby ratifies, confirms and
reaffirms the Guaranty, which remains in full force and effect notwithstanding
and unaffected by this Agreement, except as may be otherwise expressly provided
herein.
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18. By the execution hereof, Harborside hereby ratifies, confirms and
reaffirms the Harborside Guaranty, which remains in full force and effect
notwithstanding and unaffected by this Agreement, except as may be otherwise
expressly provided herein.
19. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns.
20. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
21. This Agreement may be executed in one or more counterparts, each of
which taken together shall constitute an original and all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument on the date first above-mentioned.
WITNESSES: BORROWERS:
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BAYTREE NURSING CENTER CORP., a
Massachusetts corporation
/s/ Martin J. Damian Jr. By: /s/ William H. Stephan
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Name: Martin J. Damian, Jr. Name: William H. Stephan
Title: Treasurer
/s/ Kathryn Wellock
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Name: Kathryn Wellock
WITNESSES: COUNTRYSIDE CARE CENTER CORP., a
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Massachusetts corporation
/s/ Martin J. Damian Jr. By: /s/ William H. Stephan
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Name: Martin J. Damian, Jr. Name: William H. Stephan
Title: Treasurer
/s/ Kathryn Wellock
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Name: Kathryn Wellock
WITNESSES: SUNSET POINT NURSING CENTER CORP.,
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a Massachusetts corporation
/s/ Martin J. Damian Jr. By: /s/ William H. Stephan
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Name: Martin J. Damian, Jr. Name: William H. Stephan
Title: Treasurer
/s/ Kathryn Wellock
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Name: Kathryn Wellock
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WITNESSES: WEST BAY NURSING CENTER CORP., a
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Massachusetts corporation
/s/ Martin J. Damian Jr. By: /s/ William H. Stephan
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Name: Martin J. Damian, Jr. Name: William H. Stephan
Title: Treasurer
/s/ Kathryn Wellock
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Name: Kathryn Wellock
WITNESSES: GUARANTOR:
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HARBORSIDE HEALTHCARE LIMITED
PARTNERSHIP, a Massachusetts
limited partnership
By: KHI CORPORATION, a Delaware
corporation, its sole General
Partner
/s/ Martin J. Damian Jr. By: /s/ William H. Stephan
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Name: Martin J. Damian, Jr. Name: William H. Stephan
Title: Treasurer
/s/ Kathryn Wellock
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Name: Kathryn Wellock
WITNESSES: HARBORSIDE:
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HARBORSIDE HEALTHCARE CORPORATION,
a Delaware corporation
/s/ Martin J. Damian Jr. By: /s/ William H. Stephan
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Name: Martin J. Damian, Jr. Name: William H. Stephan
Title: Senior Vice President
and Chief Financial
Officer
/s/ Kathryn Wellock
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Name: Kathryn Wellock
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WITNESSES: LENDER:
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MEDITRUST MORTGAGE INVESTMENTS,
INC., a Delaware corporation
/s/ Kim M. Priesing By: /s/ Michael F. Bushee
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Name: Kim M. Priesing Name: Michael F. Bushee
Title: Chief Operating Officer
/s/ Richard W. Pomroy
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Name: Richard W. Pomroy
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