Exhibit 99.1
FORBEARANCE AGREEMENT
(GENESIS HEALTH VENTURES, INC.)
FORBEARANCE AGREEMENT, dated as of March 20, 2000, (this "Forbearance
Agreement") among Genesis Health Ventures, Inc., certain Subsidiaries thereof,
Mellon Bank, N.A. as Administrative Agent, Issuer of Letters of Credit,
Collateral Agent and Synthetic Lease Facility Agent, Citicorp USA, Inc. as
Syndication Agent, First Union National Bank as Documentation Agent, Bank of
America, N.A. as Syndication Agent, and the Lenders and Secured Parties referred
to below.
Reference is made to that certain Fourth Amended and Restated Credit
Agreement, dated as of August 20, 1999, among Genesis Health Ventures, Inc.,
certain Subsidiaries thereof, Mellon Bank, N.A. as Administrative Agent and
Issuer of Letters of Credit, First Union National Bank as Documentation Agent,
Citicorp USA, Inc. as Syndication Agent, Bank of America, N.A. as Syndication
Agent and the Lenders referred to therein (the "Credit Agreement") and to the
other Loan Documents entered into in connection therewith. Capitalized terms not
otherwise defined herein are used as defined in the Credit Agreement, the
Collateral Agency Agreement referred to therein or in the other Loan Documents
referred to therein.
WHEREAS, a meeting was held on March 14, 2000 in which Genesis
presented certain information and plans (the "Presentation") to the Lenders and
other Secured Parties including, among other things, that it wishes to
restructure certain of its Indebtedness and that there is a possibility that it
will be unable to make certain payments on Indebtedness due to the Lenders and
other Secured Parties on a timely basis;
WHEREAS, the Borrowers have requested an opportunity to more fully
develop and effect certain proposals discussed at that meeting;
WHEREAS, the Lenders and other Secured Parties are willing to accede to
the request of the Borrowers under the circumstances referred to below on the
terms and conditions set forth below;
NOW THEREFORE, the undersigned hereby agree as follows:
1. Definitions. The following terms shall have the meanings specified
herein.
a. "Forbear" means to refrain from accelerating the Loans or other
Obligations or exercising remedies, whether arising by contract, at law or in
equity, under the Loan Documents or otherwise, against the Borrowers or
Collateral or Additional Security or withdrawing or freezing funds in deposit or
other accounts pursuant to set-off rights, rights to charge such accounts or
other similar rights, whether arising under the Loan Documents (including
Section 1.6(c) (Authorization to Charge Accounts) or 12.18 (Set-Off) of the
Credit Agreement) or otherwise or taking similar action or demanding that the
Borrowers comply with
Section 9.2(a)(iii) of the Credit Agreement (but does not preclude cash
management functions and usual and customary payments made in connection
therewith).
b. "Specified Defaults" means the occurrence or existence of any
Defaults or Events of Default (or similar terms under any Loan Documents)
arising out of any of the following events or conditions:
(i) the failure of the Borrowers to pay any principal or interest
on the Loans (as more fully set forth in Sections 9.1(a) and (b) of the Credit
Agreement);
(ii) the failure of the Borrowers to generally pay debts as they
mature, or pay any subordinated obligations, Synthetic Lease Facility
obligations or other Indebtedness or otherwise default under any such
Indebtedness (including, without limitation, events referred to in Section
9.1(g)(i), (iii) or (iv) of the Credit Agreement unless such events constitute a
separate Event of Default under the Credit Agreement by virtue of a provision
other than Section 9.1(g), in each case so long as the holders of the
subordinated obligations, the Synthetic Lease Facility obligations or other
Indebtedness do not take any action to enforce remedies against the Borrowers or
collateral, if any;
(iii) any default in the financial covenants set forth in Article
7 of the Credit Agreement;
(iv) any Event of Default solely by reason of Section 9.1(j) of
the Credit Agreement (Material Adverse Effect) already disclosed to the Lenders
in writing or in the Presentation;
(v) the failure of the Borrowers to provide cash collateral in
connection with Letters of Credit (i.e., as existing or extended) pursuant to
Section 3.1(h) and 9.2(a) (iii) of the Credit Agreement;
(vi) the failure to pay any commitment fees, Letter of Credit
fees, the Administrative Agent's regular fees and similar fees (but not the
failure to pay costs and expenses);
(vii) any Event of Default that has occurred or may occur under
either the Pledge Agreement or the Security Agreement solely as such defined
term relates to a Default or Event of Default under the Credit Agreement or any
other Loan Document that constitutes a Specified Default as set forth above; and
(viii) any failure by any of the Loan Parties to perform its
obligations under the Loan Documents which failure constitutes a Specified
Default referred to in clauses (i) through (vii) above.
2. Forbearance and Waiver.
a. Subject to the provisions of Section 5 (Conditions/Additional
Undertakings) below, the undersigned in their capacity as Lenders direct the
Administrative
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Agent, and the Administrative Agent agrees to accept and follow such direction,
to Forebear through May 19, 2000, notwithstanding any Specified Defaults.
b. Subject to the provisions of Section 5 (Conditions/Additional
Undertakings) below, the undersigned in their capacity as Secured Parties,
direct the Collateral Agent, and the Collateral Agent agrees to accept such
direction, to Forbear through May 19, 2000, notwithstanding any Specified
Defaults.
c. Subject to the provisions of Section 5 (Conditions/Additional
Undertakings) below, each of the undersigned in their capacity as Lender, a Swap
Party or other Secured Party, hereby agree to Forbear through May 19, 2000,
notwithstanding any Specified Defaults.
d. Subject to the provisions of Section 5 (Conditions/Additional
Undertakings) below, each of the undersigned in their capacity as a Lender,
hereby agree to waive the imposition during the period commencing on the date of
this Forbearance Agreement and ending on May 19, 2000 of the Default Rate in
connection with any Specified Default.
e. Subject to the provisions of Section 5 (Conditions/Additional
Undertakings) below, and notwithstanding the Borrowers' failure to satisfy each
of the conditions set forth in Section 4.2 (Conditions to Each Loan and Issuance
of Each Letter of Credit) of the Credit Agreement, each of the undersigned in
their capacity as a Lender, hereby agrees that the Issuer of Letters of Credit
may (but is not required to) issue extensions of existing Letters of Credit (in
a face amount no greater than the face amount of the existing Letters of Credit)
for the period commencing on the date hereof and ending on May 19, 2000
notwithstanding any Specified Default.
f. Subject to the provisions of Section 5 (Conditions/Additional
Undertakings) below, each of the undersigned in their capacity as a Lender,
hereby agrees that the Borrowers shall not be required to maintain Interest Rate
Hedging Agreements pursuant to Section 6.12 (Interest Rate Hedging Agreements)
of the Credit Agreement for the period commencing on the date hereof and ending
on May 19, 2000.
3. Certain Limitations. To eliminate any uncertainty, it is expressly
understood and agreed that the Administrative Agent and the Collateral Agent may
take any action granted to any of them under law or contract (including, without
limitation, acceleration, foreclosure on Collateral and Additional Security and
set-off),
a. after May 19, 2000,
b. in connection with any event or condition (including, without
limitation, a filing of a petition in bankruptcy as referred to in section
9.1(n) of the Credit Agreement, a violation of the Indebtedness or Lien
covenants set forth in Sections 8.1 and 8.2 of the Credit Agreement or the entry
of a judgment referred to in Section 9.1(h) of the Credit Agreement) other than
a Specified Default or
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c. if any of the events or conditions in Section 5 (Conditions/
Additional Undertakings) below are not satisfied on a timely basis.
4. Not a Waiver. THIS AGREEMENT DOES NOT SERVE AS A WAIVER OF ANY
DEFAULTS OR EVENTS OF DEFAULT WHICH MAY NOW OR HEREAFTER EXIST and, except as
expressly provided above to the contrary for the period specified, the Secured
Parties reserve any and all rights and remedies under the Loan Documents and
other Senior Credit Documents, at law or in equity, in connection with such
Defaults or Events of Default. Without limiting the generality of the foregoing,
the Borrowers acknowledge and agree that:
a. from and after the date that the Borrowers default in any payment
obligations under the Loan Documents or there otherwise exists an Event of
Default, without limiting the generality of Section 1.8(b) of the Credit
Agreement, the Borrowers shall no longer be entitled to elect the LIBO Rate
option for Loans and the Lessees shall no longer be entitled to elect a LIBO
Rate option (or similar option) under the Synthetic Lease Facility, such
prohibition to take place automatically without notice from the Administrative
Agent or Synthetic Lease Facility Agent, which notice is hereby waived and
b. in connection with any default in payment of any of the
Obligations, Genesis will, and the Administrative Agent may, send notice to any
and all trustees under subordinated debt instruments of any of the Borrowers
stating that there has been a "Payment Default" or similar term and that the
trustee and bond holders may not accept any payment from the Borrowers.
No delay or failure on the part of the Secured Parties to exercise any right or
remedy hereunder or under the Senior Credit Documents shall operate as a waiver
thereof, and no single or partial exercise of any right or remedy hereunder or
thereunder shall preclude other or further exercise thereof or the exercise of
any other right or remedy. No action or forbearance by the Secured Parties shall
be construed to constitute a waiver of any of the provisions hereof or thereof.
5. Conditions/Additional Undertakings.
a. Attached hereto as Exhibit A are the conditions precedent to the
effectiveness of this Forbearance Agreement (other than the provisions set forth
in Section 6 (Additional Provisions Relating to Synthetic Lease) below). Upon
satisfaction of the conditions on said Exhibit A, the provisions of Section 2
above (Forbearance and Waivers) and all other provisions of this Forbearance
Agreement shall be effective excepting only the provisions of said Section 6,
which shall become effective when and if the conditions specified in said
Section 6 are satisfied. The lack of effectiveness of any provisions set forth
in Section 6 below shall not affect the validity or enforceability of any other
terms hereof.
b. Attached hereto as Exhibit B are the conditions subsequent to the
continued effectiveness of this Forbearance Agreement through May 19, 2000. If
any of the conditions set forth on Exhibit B are not satisfied by the dates
specified on said Exhibit B, then
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the obligations set forth in Section 2 (Forbearance and Waivers) above shall
immediately terminate without notice on May 20, 2000 or, if earlier for any
reason, upon written notice to the Borrowers given in accordance with the terms
of the Credit Agreement.
c. If at any time the forbearance agreement with Multicare should be
terminated, the obligations set forth in Section 2 (Forbearance and Waivers)
above shall immediately terminate without notice
6. Additional Provisions Relating to Synthetic Lease.
a. At such time as the Required Participants (as such term is
defined in the Synthetic Lease Facility documents) execute counterpart signature
pages hereto the following additional provisions shall become effective:
(i) Subject to the provisions of Section 5 (Conditions/Additional
Undertakings) above, the undersigned in their capacity as participants
in the Synthetic Lease Facility, direct the Synthetic Lease Facility
Agent, and the Synthetic Lease Facility Agent agrees to accept such
direction, to Forbear through May 19, 2000, notwithstanding any
Specified Defaults.
(ii) Subject to the provisions of Section 5 (Conditions/
Additional Undertakings) above, without limiting any of their other
rights and remedies under the Synthetic Lease Facility, the Lenders
under the Synthetic Lease Facility which are parties hereto, hereby
agree that so long as Borrowers shall continue to observe and perform
their respective obligations hereunder, an Event of Default under the
Credit Agreement shall not be deemed to be a Lease Event of Default
under the Synthetic Lease Facility. This waiver shall in no way
constitute a waiver of any other Lease Events of Default or any other
matters under to the Synthetic Lease Facility.
At such time as the Required Participants execute and deliver counterpart
signature pages to this Forbearance Agreement, subject to the provisions of
Section 5 above, the term "Specified Default" shall automatically be modified to
delete the period at the end thereof and replace it with "; and" and the
following language:
"(ix) any Event of Default that has occurred or may occur under
the Synthetic Lease Facility solely as such defined term relates to a
Default or Event of Default under the Credit Agreement or any other
Loan Document that constitutes a Specified Default as set forth above."
b. At such time as all of the SLF Parties execute counterpart
signature pages hereto the following additional provision shall become
effective:
(i) Subject to the provisions of Section 5 (Conditions/Additional
Undertakings) above, each of the undersigned in their capacity as a participant
in the Synthetic Lease Facility, hereby agree to waive the imposition during the
period
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commencing on the date of this Forbearance Agreement and ending on May 19, 2000
of the Overdue Rate in connection with any Specified Default.
At such time as all of the SLF Parties execute and deliver counterpart signature
pages to this Forbearance Agreement, subject to the provisions of Section 5
above, the term "Specified Default" shall automatically be further modified to
delete the period at the end thereof and replace it with "; and" and the
following language:
"(x) the failure of the Borrowers to pay any Basic Rent under the
Synthetic Lease Facility."
7. Release. As a material inducement to the Secured Parties to enter
into this Forbearance Agreement, the Borrowers and each of them (A) do hereby
remise, release, acquit, satisfy and forever discharge the Secured Parties and
all of their past, present and future officers, directors, employees, agents,
attorneys, representatives, participants, heirs, successors and assigns, from
any and all manner of debts, accountings, bonds, warranties, representations,
covenants, promises, contracts, controversies, agreements, liabilities,
obligations, expenses, damages, judgments, executions, actions, claims, demands
and causes of action of any nature whatsoever, whether at law or in equity,
which any of the Borrowers has by reason of any matter, cause or thing, from the
beginning of the world to and including the date of this Forbearance Agreement
with respect to any matters, transactions, occurrences, agreements, actions, or
events arising out of, in connection with or relating to the Loan Documents and
other Senior Credit Documents; and (B) do hereby covenant and agree never to
institute or cause to be instituted or continue prosecution of any suit or other
form of action or proceeding of any kind or nature whatsoever against the
Secured Parties, or any of their past, present or future officers, directors,
employees, agents, attorneys, representatives, participants, heirs, successors
or assigns, by reason of or in connection with any of the foregoing matters,
claims or causes of action. The Borrowers expressly acknowledge and agree that
the waivers, estoppels and releases contained in this Forbearance Agreement
shall not be construed as an admission of wrongdoing, liability or culpability
on the part of any of the Secured Parties or the existence of any claims of the
Borrowers against any of the Secured Parties.
8. Governing Law. This Forbearance Agreement shall for all purposes be
governed by and construed and enforced in accordance with the substantive law of
the Commonwealth of Pennsylvania without giving effect to the principles of
conflict of laws.
9. Future Negotiations. The parties hereto acknowledge and agree that
(A) the Secured Parties have not agreed to and have no future obligation
whatsoever to discuss, negotiate or agree to any restructuring of the Borrowers'
obligations with respect to the Loan Documents, the other Senior Credit
Documents or any of them, or any modification, amendment, restructuring or
reinstatement of the Senior Credit Documents or, except as expressly provided in
this Forbearance Agreement, to forbear from exercising its rights and remedies
under the Senior Credit Documents, (B) if there are any future discussions among
the Secured Parties and the Borrowers concerning any such restructuring,
modification, amendment or reinstatement, then no restructuring, modification,
amendment, reinstatement, compromise, settlement, agreement or understanding
with respect to the Borrowers' obligations with respect to the Loan Documents or
other Senior Credit Documents, or any of them, or any aspect thereof, shall
constitute a legally
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binding agreement or contract or have any force or effect whatsoever unless and
until reduced to writing and signed by authorized representatives of all
parties, and that none of the parties hereto shall assert or claim in any legal
proceedings or otherwise that any such agreement exists except in accordance
with the terms of this Section 9.
10. Ratification. Except to the extent and for the period hereby waived
or modified, the Credit Agreement, the Synthetic Lease Facility and each of the
Senior Credit Documents is hereby confirmed and ratified in all respects.
11. Counterpart Signatures. This Forbearance Agreement may be executed
in any number of counterparts, each of which will constitute an original and all
of which together shall constitute one instrument. A faxed copy of a signature
page shall serve as the functional equivalent of a manually-executed copy for
all purposes.
12. Payment of Fees. The Administrative Agent shall allocate the
forbearance fee referred to in paragraph 2 of Exhibit A hereto among those
Secured Parties who sign and deliver a counterpart signature page in the manner
and time set forth in paragraph 1 of said Exhibit A on a pro rata basis, based
on the amount of the Obligations owing to them. The Administrative Agent's
records shall be conclusive for the purposes hereof.
13. Capacity of Signing Parties. Each of the undersigned Secured
Parties signs this in its capacity as a Lender and as a participant in the
Synthetic Lease Facility, if applicable, and in any other capacity as a Secured
Party except that unless and until the Required Participants execute and deliver
counterpart signature pages hereto, Mellon Bank, N.A. shall not be deemed to
sign in its capacity as Synthetic Lease Agent and the Borrowers acknowledge and
agree that Mellon Bank, N. A. in its capacity as the Synthetic Lease Agent under
those circumstances is not bound by the terms hereof and may act in
contravention with the terms hereof.
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
hereby signs as of the date first above written.
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Name of Financial Institution(1)
-----------------------------------
By:
Name:
Title:
GENESIS HEALTH VENTURES, INC.,
for itself and each of the Borrowers under
the Credit Agreement
-----------------------------------
By:
Name:
Title:
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(1) Subject to Section 13, signing in all applicable capacities as Secured
Parties, whether as Administrative Agent, Lender or otherwise.
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Exhibit A
To Forbearance Agreement
Conditions Precedent
1. Execution of this Forbearance Agreement by (a) the Borrowers, or by Genesis
on behalf of the Borrowers, (b) the Required Lenders, (c) the Required
Secured Parties, (d) the Administrative Agent, and (e) the Collateral Agent
and return of counterpart signature pages by each to Drinker Biddle & Reath
LLP (to the attention of Jill Bronson) by actual delivery at One Logan
Square, 18th and Cherry Street, Philadelphia, PA 19103 or by facsimile
transmission (facsimile number: 215-988-2757) no later than 5:00 p.m.
(Eastern Standard Time) on March 20, 2000.(2)
2. Upon satisfaction of the condition precedent contained in the immediately
preceding paragraph, payment of an irrevocable and nonrefundable fee to the
Administrative Agent in immediately available funds for the benefit of each
of the Secured Parties that signs and returns a counterpart to this
Forbearance Agreement in the time and manner specified in paragraph 1
above. Such fee shall be in an amount equal to $667,000.
3. Payment of costs and expenses of the Administrative Agent, the Synthetic
Lease Facility Agent and the Collateral Agent including, without
limitation, counsel and financial consultant fees.
4. Effectiveness of a forbearance agreement for Multicare.
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(2) For purposes of paragraphs 1 and 2 of this Exhibit A, the Administrative
Agent, in its sole and absolute discretion, is authorized to extend the
deadline set forth in paragraph 1 above for a period not to exceed 2
Business Days and any such action on the part of the Administrative Agent
shall be conclusive and binding for all purposes.
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Exhibit B
To Forbearance Agreement
Conditions Subsequent
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1. A financial advisor (that is not the same as the Multicare financial
advisor), reasonably acceptable to the Agents (the "Genesis Financial
Advisor"), shall be retained by Genesis no later than March 24, 2000. The
Agents and Policano and Manzo, financial advisor to the Administrative
Agent, shall be given the opportunity to discuss (by phone or in person)
the affairs of the Borrowers with the Genesis Financial Advisor from time
to time upon reasonable request.
2. Policano and Manzo shall be given full access to the financial records and
to the management of the Borrowers and the Borrowers shall comply with the
requests made by Policano and Manzo in the letter attached hereto as Annex
1 to Exhibit B.
3. The Borrowers shall cooperate with the Collateral Agent in all remaining
aspects of obtaining and perfecting the Additional Security. Without
limiting the generality of the foregoing, the Borrowers will provide second
Liens on the property subject to the Synthetic Lease Facility (to the
extent that the necessary consents have been or can be obtained) no later
than March 24, 2000. Each of the Borrowers agrees that this undertaking is
a material inducement to the forbearance provided herein and but for this
undertaking the Secured Parties would be unwilling to agree to the terms of
this Forbearance Agreement. Further, the Borrowers agree that the value to
the Borrowers of the undertakings of the Secured Parties herein is at least
equal or greater than the value of this undertaking.
4. No later than April 14, 2000, Genesis shall present to the Secured Parties,
a proposed plan of reorganization of its capital structure which proposal
shall be shared, in preliminary form, with the Agents at least one Business
Day prior thereto. The plan will have specific target dates by which
certain actions will be completed. Completion of the specified actions by
the specified target dates shall be additional conditions incorporated
herein by reference.
5. Concurrent with the actions specified in the preceding item #4, Genesis
shall develop a contingency plan. Genesis will provide information to the
Agents on a regular basis as to the development of such plan and, at the
request of the Agents, will present the same to the Secured Parties.
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