EXHIBIT 10.31
AMENDMENT NO. 1
TO
MEZZANINE LOAN AGREEMENT
THIS AMENDMENT NO. 1 (this "Amendment") is entered into as of March 8,
2004, by and among SHG PROPERTY RESOURCES, LLC And SHG INVESTMENTS, LLC
(collectively as "BORROWER"), CAPITALSOURCE FINANCE LLC, ("CAPITALSOURCE"), The
other financial institutions from time to time party thereto (CapitalSource and
such other financial institutions, collectively, as "LENDER"), SKILLED
HEALTHCARE GROUP, INC. (formerly known as Fountain View, Inc.) (as "GUARANTOR")
and CapitalSource as administrative agent and collateral agent for Lender (in
such capacity, "AGENT").
BACKGROUND
Borrower, CapitalSource as Lender, other institutions then also comprising
Lender ("Former Lenders"), Guarantor and Agent entered into a Loan 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
Lender provided Borrower with certain financial accommodations.
Pursuant to the terms of the Loan Agreement, Borrower, upon ten days prior
notice to Agent, prepaid a portion of the Debt, consisting of the outstanding
principal amount (together with all interest due thereon) of those certain
Promissory Notes made by Borrower in favor of each of the Former Lenders (the
"Prepaid Notes") which, together with the outstanding Promissory Note made by
Borrower in favor of CapitalSource, comprised the defined term "Note". Financing
for the Prepaid Notes was provided by CapitalSource. Contemporaneous with the
financing of the Prepaid Notes, Borrower issued and delivered to CapitalSource
an Amended and Restated Promissory Note in the form annexed hereto as Exhibit A
(the "Restated Note"). The parties hereto have agreed to amend the Loan
Agreement to, inter alia, (a) clarify that the Restated Note hereafter
constitutes the "Note" as defined therein, (b) remove references to the Former
Lenders and (c) reduce the interest rate payable thereunder.
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. Amendments 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) References to each of the Former Lenders appearing in the
first introductory paragraph of the Loan Agreement are deleted in their
entireties.
(b) The definitions of "Guarantor", "Loan", "Note" and "Spread"
appearing in Section 1.1 of the Loan Agreement are amended and restated in their
entireties to read as follows:
"Guarantor shall mean skilled care Group, Inc., formerly
Known as Fountain View, Inc., a Delaware corporation."
"Loan shall mean the loan in the principal amount of seven
Million Nine Hundred and Fifty Eight Thousand Three Hundred
and Thirty Three and 38/100 Dollars ($7,958,333.38) made by
Lender to Borrower pursuant to this Agreement."
"'Note'" shall mean that certain Amended and Restated
Promissory Note, dated as of March 8, 2004, in the principal
amount of Seven Million Nine Hundred and Fifty Eight Thousand
Three Hundred and Thirty Three and 38/100 Dollars
($7,958,333.38) in favor of CapitalSource Finance LLC, as the
same may be amended, restated, replaced, supplement or
otherwise modified from time to time."
"'Spread'" shall mean 15%."
(c) The names, addresses and other notice information for each of
the Former Lenders appearing in Section 10.6 of the Loan Agreement are deleted
in their entireties.
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 Borrower, Guarantor
and Lender and (ii) and such other certificates, instruments, documents,
agreements and opinions of counsel as may be required by Agent or its counsel,
each of which shall be in form and substance 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 Borrower and are enforceable
against Borrower 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 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 10 the Loan Agreement.
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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 Lender,
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. Reaffirmation of Guaranty. By its signature below, Guarantor hereby
reaffirms its guaranty of the Guaranteed Obligations, as such term is defined in
that certain Mezzanine Guaranty of Payment dated as of August 19,2003, which
Guaranty remains in full force and effect.
7. 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.
8. 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.
9. 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.
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
SHG PROPERTY RESOURCES, LLC
By: /s/ JOHN HARRISON
-------------------------------------
Name: JOHN HARRISON
Title: CFO
SHG INVESTMENTS, LLC
By: /s/ JOHN HARRISON
-------------------------------------
Name: JOHN HARRISON
Title: CFO
CAPITALSOURCE FINANCE LLC
By: _____________________________________
Name: James J. Pieczynski
Title: Director
ACKNOWLEDGED AND AGREED:
SKILLED HEALTHCARE GROUP, INC.
By: /s/ JOHN HARRISON
-------------------------------------
Name: JOHN HARRISON
Title: CFO
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
SHG PROPERTY RESOURCES, LLC
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SHG INVESTMENTS, LLC
By: _____________________________________
Name: ___________________________________
Title: __________________________________
CAPITALSOURCE FINANCE LLC
By: /s/ James J.piececzynski
-------------------------------------
Name: James J. Pieczynski
Title: Director
ACKNOWLEDGED AND AGREED:
SKILLED HEALTHCARE GROUP, INC.
By: _____________________________________
Name: ___________________________________
Title: __________________________________