<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______.
COMMISSION FILE NUMBER 0-21159
ATRIA COMMUNITIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 61-1303738
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
515 WEST MARKET STREET
SUITE 200
LOUISVILLE, KY 40202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(502) 596-7540
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at March 31, 1997
--------------------- -----------------------------
Common stock, $.10 par value 15,830,000 shares
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1 of 13
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ATRIA COMMUNITIES, INC.
FORM 10-Q
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statement of Income--
for the three months ended March 31, 1997
and 1996............................................. 3
Condensed Consolidated Balance Sheet--March 31,
1997 and December 31, 1996........................... 4
Condensed Consolidated Statement of Cash Flows--
for the three months ended March 31, 1997 and 1996... 5
Notes to Condensed Consolidated Financial Statements.. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...................... 12
2
<PAGE>
ATRIA COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Revenues....................... $14,217 $12,611
------- -------
Salaries, wages and benefits... 5,660 4,677
Supplies....................... 1,290 1,227
Rent........................... 39 100
Depreciation and amortization.. 1,388 1,312
Other operating expenses....... 2,786 2,434
------- -------
11,163 9,750
------- -------
Operating income............... 3,054 2,861
Interest expense............... 1,182 982
Investment income.............. (753) (48)
------- -------
Income before income taxes..... 2,625 1,927
Provision for income taxes..... 1,047 761
------- -------
Net income............... $ 1,578 $ 1,166
======= =======
Earnings per common and common
equivalent share.............. $ 0.10 $ 0.11
======= =======
Shares used in computing
earnings per common and common
equivalent share.............. 15,987 10,095
</TABLE>
See accompanying notes.
3
<PAGE>
ATRIA COMMUNITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
---------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 50,004 $ 65,238
Accounts receivable less allowance for loss of
$133--March 31 and $130--December 31.............. 739 574
Other.............................................. 909 985
-------- --------
51,652 66,797
Property and equipment, at cost..................... 184,588 161,946
Accumulated depreciation............................ (28,625) (27,426)
-------- --------
155,963 134,520
Intangible assets less accumulated amortization of
$3,788--March 31 and $3,599--December 31........... 3,714 3,353
Other............................................... 5,770 5,112
-------- --------
$217,099 $209,782
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................... $ 2,553 $ 2,536
Salaries, wages and other compensation............. 1,521 1,163
Other accrued liabilities.......................... 4,320 2,686
Long-term debt due within one year................. 14,825 14,825
-------- --------
23,219 21,210
Long-term debt...................................... 98,817 95,207
Deferred credits and other liabilities.............. 4,437 4,419
Stockholders' equity:
Common stock, $.10 par value; authorized
50,000 shares; issued and outstanding 15,830
shares at March 31 and December 31................ 1,583 1,583
Capital in excess of par value..................... 85,760 85,658
Retained earnings.................................. 3,283 1,705
-------- --------
90,626 88,946
-------- --------
$217,099 $209,782
======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
ATRIA COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 1,578 $ 1,166
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization...................... 1,388 1,312
Deferred income taxes.............................. - 35
Other.............................................. (42) 31
Changes in operating assets and liabilities:
Accounts receivable.............................. (167) (51)
Other assets..................................... 95 30
Accounts payable................................. 374 206
Income taxes..................................... 916 761
Other accrued liabilities........................ 834 (65)
-------- -------
Net cash provided by operating activities...... 4,976 3,425
-------- -------
Cash flows from investing activities:
Purchase of property and equipment.................... (11,293) (509)
Acquisition of assisted living communities............ (8,000) -
Other................................................. (695) (288)
-------- -------
Net cash used in investing activities.......... (19,988) (797)
-------- -------
Cash flows from financing activities:
Issuance of long-term debt............................ 868 1,277
Repayment of long-term debt........................... (1,001) (1,069)
Net payments to Vencor, Inc........................... - (1,628)
Other................................................. (89) (73)
-------- -------
Net cash used in financing activities.......... (222) (1,493)
-------- -------
Change in cash and cash equivalents...................... (15,234) 1,135
Cash and cash equivalents at beginning of period......... 65,238 2,819
-------- -------
Cash and cash equivalents at end of period............... $ 50,004 $ 3,954
======== =======
Supplemental information:
Interest payments..................................... $ 1,352 $ 617
Income tax payments................................... 131 761
</TABLE>
See accompanying notes.
5
<PAGE>
ATRIA COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--REPORTING ENTITY
Atria Communities, Inc. ("Atria" or the "Company") is a national provider of
assisted and independent living communities for the elderly. At March 31, 1997,
Atria operated 25 communities located in 13 states with a total of 3,226 units,
including 967 assisted living units and 2,259 independent living units.
In May 1996, the Board of Directors of Vencor, Inc. ("Vencor") authorized
management to establish Atria as a wholly owned subsidiary to operate Vencor's
assisted and independent living business. As part of that transaction,
management consummated an initial public offering (the "IPO") of 5,750,000
shares of Atria's common stock (including 750,000 shares in connection with the
exercise of the underwriters' overallotment option) in the third quarter of
1996. At March 31, 1997, Vencor owned 10,000,000 shares, or 63.2%, of Atria's
outstanding common stock.
NOTE 2--BASIS OF PRESENTATION
For periods prior to the IPO, the accompanying condensed consolidated
financial statements reflect the operations of the assisted and independent
living business of Vencor which were transferred to Atria at or prior to
completion of the IPO. These financial statements have been derived from the
consolidated financial statements of Vencor and reflect the operations of Atria
as a separate entity for all periods presented.
The accompanying condensed consolidated financial statements do not include
all of the disclosures normally required by generally accepted accounting
principles or those normally made in Atria's annual audited financial
statements. Accordingly, these financial statements should be read in
conjunction with Atria's audited consolidated financial statements for the year
ended December 31, 1996 filed with the Securities and Exchange Commission on
Form 10-K.
The accompanying condensed consolidated financial statements have been
prepared in accordance with Atria's customary accounting practices and have not
been audited. Management believes that the financial information included
herein reflects all adjustments necessary for a fair presentation of interim
results and all such adjustments are of a normal and recurring nature.
NOTE 3--REVENUES
Revenues are recognized when services are rendered and consist of daily
resident fees and fees for other ancillary services. Agreements with residents
are generally for a term of one year. Revenues from management contracts are
recognized in the period earned in accordance with the terms of the management
agreement.
Substantially all revenues are derived from private pay sources. A summary of
revenues for the three months ended March 31, 1997 and 1996 follows (dollars in
thousands):
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Owned and leased facilities......... $14,138 $12,544
Managed facilities.................. 79 67
------- -------
$14,217 $12,611
======= =======
</TABLE>
6
<PAGE>
ATRIA COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4--EARNINGS PER COMMON SHARE
Shares used in the computation of earnings per common share include 10,000,000
shares of common stock issued to Vencor for its contribution of assets to Atria
and the assumption by Atria of related liabilities, and shares of restricted
stock issued at the consummation date of the IPO. In addition, for the three
months ended March 31, 1997, the computation also gives effect to the 5,750,000
shares issued in connection with the IPO and the dilution associated with the
issuance of common stock options. Share and per share amounts for periods prior
to the IPO are presented on a pro forma basis.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 "Earnings Per Share," which will require Atria to change the current
method of computing earnings per common share and restate all prior periods.
Statement No. 128 is required to be adopted on December 31, 1997 and requires,
among other things, that the calculation of primary earnings per common share
exclude the dilutive effect of common stock options. The change in the
calculation method is not expected to have a material impact on previously
reported earnings per common share.
NOTE 5--SUBSEQUENT EVENT
On April 1, 1997, Atria acquired American ElderServe Corporation ("American
ElderServe"), an operator of assisted living communities, for a combination of
Atria common stock, cash and assumption of debt valued at approximately $30.5
million. At the time of the acquisition, American ElderServe operated 12
assisted living communities consisting of 503 units and also had six additional
facilities under construction containing 345 units scheduled to open in 1997.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Atria is a national provider of assisted and independent living communities
for the elderly, currently operating 25 communities comprising 3,226 units
located in 13 states. At March 31, 1997, Atria had 26 assisted living
communities containing approximately 1,850 units under development, including
seven communities under construction.
PLANNED EXPANSION AND DEVELOPMENT
Atria intends to expand its business in the future through both construction
of additional communities and acquisition of existing facilities which could add
60 to 85 assisted and independent living communities consisting of approximately
5,400 to 7,650 units by the year 2000 (including the 26 communities currently
being developed). The estimated cost to construct, equip or otherwise acquire
such communities could approximate $375 to $550 million.
The estimated cost of Atria's planned expansion and development is
significantly in excess of: (i) estimated cash flows from operations; (ii)
proceeds from the IPO; and (iii) borrowings available under a $200 million bank
credit facility (the "Atria Credit Facility"). Management believes that
substantial additional financing will be required to continue Atria's growth
plans beyond 1997. Available sources of future capital may include, among other
things, equity, public or private debt, and additional bank revolving credits.
However, there can be no assurance that such financing will be available on
terms which are acceptable to Atria, nor can there be any assurance that
additional financing will not be required or sought by Atria in 1997.
Newly opened communities are expected to incur operating losses until
sufficient occupancy levels and operating efficiencies are achieved. Based upon
historical experience, management believes that a typical community will achieve
its targeted occupancy levels twelve months from commencement of operations.
Accordingly, Atria will require substantial amounts of liquidity to maintain the
operations of newly opened communities. In addition, if sufficient occupancy
levels related to newly opened communities are not achieved within a reasonable
period, the results of operations, financial position and liquidity of Atria
could be materially and adversely impacted.
The statements contained under "Planned Expansion and Development" are forward
looking statements and are qualified by reference to certain cautionary
statements detailed in Atria's Annual Report on Form 10-K for the year ended
December 31, 1996 filed with the Securities and Exchange Commission.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
A summary of operations follows:
PERCENTAGE OF REVENUES
----------------------
FIRST QUARTER
-------------
1997 1996
----- -----
<S> <C> <C>
Revenues............................ 100.0% 100.0%
----- -----
Salaries, wages and benefits........ 39.8 37.1
Supplies............................ 9.1 9.7
Rent................................ 0.3 0.8
Depreciation and amortization....... 9.8 10.4
Other operating expenses............ 19.5 19.3
----- -----
78.5 77.3
----- -----
Operating income.................... 21.5 22.7
Interest expense.................... 8.3 7.8
Investment income................... (5.3) (0.4)
----- -----
Income before income taxes......... 18.5 15.3
Provision for income taxes.......... 7.4 6.1
----- -----
Net income......................... 11.1% 9.2%
===== =====
</TABLE>
Revenues increased 12.7% to $14.2 million in the first quarter of 1997
compared to $12.6 million in the same period last year. The increases were
primarily attributable to price increases ($700,000), growth in ancillary
services ($100,000) and the addition of two acquired facilities and two newly
constructed facilities in the first quarter of 1997 ($800,000). Same-store
occupancy was 95.7% in the first quarter of 1997, approximately the same as the
same period a year ago.
Compensation costs and other operating expenses as a percentage of revenues
increased in the first quarter of 1997 compared to 1996. Increases in such
costs resulted primarily from growth in administrative expenses of approximately
$650,000 associated with Atria's expansion and development program.
Despite growth in administrative expenses, first quarter 1997 operating income
totaled $3.1 million, up 6.7% from $2.9 million a year ago primarily as a result
of improved same-store operations. Operating results of the two newly
constructed facilities opened in March 1997 had no material effect on first
quarter operating income.
Net income rose 35.3% to $1.6 million from $1.2 million last year. The
increase was attributable to improvements in operating income and growth in
investment income resulting from the IPO.
For periods prior to the IPO, certain allocations and estimates have been made
by management in the consolidated financial statements to present the
historical financial position and results of operations of Atria as a separate
entity. Upon consummation of the IPO, Atria became contractually obligated to
pay Vencor for certain centralized management and administrative services
underlying such historical allocations and estimates. The operating results of
Atria include $114,000 and $150,000 of corporate costs and expenses charged by
Vencor for the three months ended March 31, 1997 and 1996, respectively.
Management believes that these allocations reasonably reflect the proportional
costs incurred by Vencor on behalf of Atria.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations totaled $5.0 million and $3.4 million for the
first quarter of 1997 and 1996, respectively. The improvement in cash flows
from operations resulted primarily from improvements in net income and growth in
accrued liabilities.
Net cash used in investing activities totaled $20.0 million and $800,000 for
the first quarter of 1997 and 1996, respectively. Atria's investing activities
included capital expenditures related to the development of new facilities and
expansion of existing operations totaling $11.3 million and $500,000 for the
respective periods. In addition, Atria acquired two facilities in the first
quarter of 1997 at a cost of approximately $8.0 million.
Net cash used in financing activities totaled $200,000 and $1.5 million for
the first quarter of 1997 and 1996, respectively. The 1996 amount includes $1.6
million of net repayments of advances from Vencor prior to the IPO.
Working capital totaled $28.4 million at March 31, 1997, compared to $45.6
million at December 31, 1996. Substantially all cash and cash equivalents in
excess of working capital needs will be used to fund the Company's expansion and
development program. In connection with its expansion and development plans,
Atria maintains the $200 million Atria Credit Facility. At March 31, 1997,
available borrowings under the Atria Credit Facility approximated $110 million.
At March 31, 1997, the Company had under development 26 sites for new assisted
living communities, seven of which were under construction. In addition, on
April 1, 1997, Atria acquired American ElderServe for a combination of cash,
Atria common stock and assumption of debt valued at approximately $30.5 million.
American ElderServe owned 12 assisted living communities containing 503 units
and had six facilities under construction which are expected to open in 1997.
Capital expenditures related to acquisitions of existing facilities,
construction of new facilities and expansion and improvement of existing
facilities could approximate $100 to $110 million in 1997. Although management
believes that cash flows from operations, proceeds from the IPO and available
borrowings under the Atria Credit Facility are sufficient to meet these
liquidity needs, Atria will require substantial additional financing to continue
its growth plans beyond 1997. At March 31, 1997, the additional cost to
complete and equip seven communities under construction approximated $26
million.
Atria plans to retain future earnings to finance the growth of its business
rather than to pay cash dividends. Payment of cash dividends in the future will
depend on the financial condition, results of operations and capital
requirements of Atria as well as other factors deemed relevant by the Board of
Directors. The Atria Credit Facility prohibits Atria from paying cash
dividends.
The Atria Credit Facility contains financial covenants and other restrictions
that (i) require Atria to meet certain financial tests, (ii) require that there
be no change of control of Atria, (iii) limit, among other things, the ability
of Atria and certain of its subsidiaries to borrow additional funds, dispose of
certain assets and engage in mergers and other business combinations, (iv)
prohibit distributions to Atria's stockholders and (v) require that Vencor own
at least 30% of Atria's common stock. Vencor has guaranteed for four years
certain borrowings by Atria under the Atria Credit Facility in amounts up to
$100 million in the first year following the IPO, declining to $75 million, $50
million and $25 million in each respective year thereafter. Atria was in
compliance with all debt covenants at March 31, 1997.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 QUARTERS FIRST
-------------------------------------- QUARTER
FIRST SECOND THIRD FOURTH YEAR 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $12,611 $12,837 $13,038 $13,360 $51,846 $14,217
------- ------- ------- ------- ------- -------
Salaries, wages and benefits... 4,677 4,727 5,253 5,204 19,861 5,660
Supplies....................... 1,227 1,223 1,233 1,341 5,024 1,290
Rent........................... 100 99 114 40 353 39
Depreciation and amortization.. 1,312 1,313 1,123 1,312 5,060 1,388
Non-recurring transactions..... - 1,050 - - 1,050 -
Other operating expenses....... 2,434 2,495 2,750 2,915 10,594 2,786
------- ------- ------- ------- ------- -------
9,750 10,907 10,473 10,812 41,942 11,163
------- ------- ------- ------- ------- -------
Operating income............... 2,861 1,930 2,565 2,548 9,904 3,054
Interest expense............... 982 1,051 966 1,288 4,287 1,182
Investment income.............. (48) (61) (404) (926) (1,439) (753)
------- ------- ------- ------- ------- -------
Income before income taxes..... 1,927 940 2,003 2,186 7,056 2,625
Provision for income taxes..... 761 372 791 863 2,787 1,047
------- ------- ------- ------- ------- -------
Net income.................. $ 1,166 $ 568 $ 1,212 $ 1,323 $ 4,269 $ 1,578
======= ======= ======= ======= ======= =======
Earnings per common and common
equivalent share.............. $ 0.11 $ 0.06 $ 0.10 $ 0.08 $ 0.35 $ 0.10
======= ======= ======= ======= ======= =======
Shares used in computing
earnings per common and
common equivalent share....... 10,095 10,095 12,595 15,924 12,226 15,987
Average occupancy.............. 95.7% 95.4% 96.2% 97.0% 96.1% 94.6%
Number of communities at end
of period..................... 22 22 22 21 25
Number of units at end of
period......................... 3,022 3,022 3,022 2,942 3,226
</TABLE>
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
2.1 Agreement and Plan of Merger among Atria Communities, Inc., Atria
Communities Southeast, Inc., American ElderServe Corporation,
Andy L. Schoepf, Elizabeth A. Schoepf, and Evely C.Schoepf, dated
as of March 3, 1997. Exhibit 2.1 to the Company's Current Report
on Form 8-K dated April 1, 1997 (Comm. File No. 0-21159) is
hereby incorporated by reference.
4.1 Amendment No. 1 to Credit Agreement dated as of January 15, 1997
among Atria Communities, Inc., as borrower, the lending
institutions named therein, PNC Bank, National Association, as
Administrative Agent, PNC Bank, Kentucky, Inc., as Managing
Agent, and National City Bank of Kentucky, as Documentation
Agent.
4.2 Amendment No. 2 to Credit Agreement dated as of March 27, 1997
among Atria Communities, Inc., as borrower, the lending
institutions named therein, PNC Bank, National Association, as
Administrative Agent, PNC Bank, Kentucky, Inc., as Managing
Agent, and National City Bank of Kentucky, as Documentation
Agent.
10.1 Amendment No. 1 to Security Agreement dated as of March 27, 1997
among Atria Communities, Inc., as Assignor, other original
assignors named therein, additional assignors named therein, and
PNC Bank, National Association, as Collateral Agent.
10.2 Amendment No. 1 to Pledge Agreement dated as of March 27, 1997
among Atria Communities, Inc., as Pledgor, other original
pledgors named therein, additional pledgors named therein, and
PNC Bank, National Association, as Collateral Agent.
10.3 Amendment No. 1 to Parent Guaranty dated as of March 27, 1997
among Atria Communities, Inc., as Borrower, Vencor, Inc., as
Parent Guarantor, First Healthcare Corporation, Northwest Health
Care, Inc., Medisave Pharmacies, Inc., Nationwide Care, Inc.,
TheraTx, Incorporated, Vencor Hospitals Illinois, Inc., Vencor
Hospitals South, Inc., Vencor Hospitals East, Inc., Vencor
Hospitals California, Inc., Vencor Hospitals Texas, Ltd., Ventech
Systems, Inc., Pasatiempo Development Corp., VCI Specialty
Services, Inc., and Vencor Properties, Inc., as Supporting
Guarantors, and PNC Bank, National Association, as Administrative
Agent.
10.4 Amendment No. 1 to Subsidiary Guaranty dated as of March 27, 1997
between the subsidiaries of Atria Communities, Inc. named therein
and PNC Bank, National Association, as Administrative Agent.
10.5 Registration Rights Agreement between Atria Communities, Inc. and
Andy L. Schoepf dated as of April 1, 1997. Exhibit 99.1 to the
Company's Current Report on Form 8-K dated April 1, 1997 (Comm.
File No. 0-21159) is hereby incorporated by reference.
10.6 Development Agreement between Elder Healthcare Developers, LLC
and Atria Communities, Inc. dated as of April 1, 1997. Exhibit
99.2 to the Company's Current Report on Form 8-K dated April 1,
1997 (Comm. File No. 0-21159) is hereby incorporated by
reference.
10.7 Operating Agreement of Elder Healthcare Developers, LLC dated as
of April 1, 1997. Exhibit 99.3 to the Company's Current Report on
Form 8-K dated April 1, 1997 (Comm. File No. 0-21159) is herein
incorporated by reference.
11 Statement Re: Computation of earnings per common and common
equivalent share for the three months ended March 31, 1997 and
1996.
27 Financial Data Schedule (included only in filings submitted under
the Electronic Data Gathering Analysis and Retrieval ("EDGAR")
system).
(b) REPORTS ON FORM 8-K:
No reports on Form 8-K were filed during the three months ended March
31, 1997.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATRIA COMMUNITIES, INC.
Date: April 30, 1997 /s/ W. PATRICK MULLOY, II
- ---------------------- ---------------------------------------------
W. Patrick Mulloy, II
President and Chief Executive Officer
Date: April 30, 1997 /s/ J. TIMOTHY WESLEY
- ---------------------- ---------------------------------------------
J. Timothy Wesley
Chief Financial Officer, Vice President of
Development and Secretary
(Principal Financial Officer)
13
<PAGE>
EXHIBIT 4.1
================================================================================
ATRIA COMMUNITIES, INC.
AS BORROWER
AND
THE LENDERS NAMED HEREIN
AS LENDERS
AND
PNC BANK, NATIONAL ASSOCIATION
AS ADMINISTRATIVE AGENT
PNC BANK, KENTUCKY, INC.
AS MANAGING AGENT
NATIONAL CITY BANK OF KENTUCKY
AS DOCUMENTATION AGENT
_____________________
AMENDMENT NO. 1
DATED AS OF
JANUARY 15, 1997
TO
CREDIT AGREEMENT
DATED AS OF
AUGUST 15, 1996
_____________________
<PAGE>
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of January 15, 1997,
among ATRIA COMMUNITIES, INC., a Delaware corporation (herein, together with its
successors and assigns, the "BORROWER"); the Lenders who have executed this
Amendment as indicated by their signatures on the signature pages hereof,
constituting the Required Lenders (such Lenders and the other Lenders party to
the Credit Agreement, the "LENDERS"); PNC BANK, NATIONAL ASSOCIATION, a national
banking association, as administrative agent (the "ADMINISTRATIVE AGENT") for
the Lenders under the Credit Agreement (hereafter defined); PNC BANK, KENTUCKY,
INC., a Kentucky banking corporation, as managing agent (the "MANAGING AGENT")
for the Lenders under the Credit Agreement; and NATIONAL CITY BANK OF KENTUCKY,
a national banking association, as documentation agent (the "DOCUMENTATION
AGENT") for the Lenders under the Credit Agreement:
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders named therein, and the Agents party hereto
entered into the Credit Agreement, dated as of August 15, 1996 (the "CREDIT
AGREEMENT"; with the terms defined therein, or the definitions of which are
incorporated therein, being used herein as so defined).
(2) The Borrower, such Agents and the Lenders party hereto desire to amend
certain of the terms and provisions of the Credit Agreement, all as more fully
set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1. APPLICABLE RATE MARGINS--MPP LOANS. Section 1.8(g) of the Credit
Agreement is hereby amended to read in its entirety as set forth below:
(g) As used herein, the term "APPLICABLE MPP BASE RATE MARGIN" means 0.00%
per annum and the term "APPLICABLE MPP EURODOLLAR MARGIN" means 1+1/8% per
annum; PROVIDED, that subsequent to the fiscal quarter of the Borrower ended
nearest to September 30, 1996, the Applicable MPP Base Rate Margin and the
Applicable MPP Eurodollar Margin will change to the percentage rate per annum
indicated in the Pricing Grid tables which appear below, based on the ratio
referred to in section 8.12(a) or (b), whichever is applicable. Changes in the
Applicable MPP Base Rate Margin and the Applicable MPP Eurodollar Margin based
upon changes in such ratio shall become effective on the first day of the month
following the delivery to the Administrative Agent pursuant to clause (a) or (b)
of section 7.1 of the financial statements of the Borrower, accompanied by the
certificate referred to in clause (e) of section 7.1, demonstrating the
computation of such ratio, based upon the ratio in effect at the end of the
applicable period covered (in whole or in part) by such financial statements;
PROVIDED that if any such financial statements or the related certificate are
not timely delivered, the Managing Agent may determine the Applicable MPP Base
Rate Margin or Applicable MPP Eurodollar Margin for any MPP Loan based upon a
good faith estimate by the Borrower of such ratio as in effect at the end of the
applicable period to be covered (in whole or in part) by such financial
statements, PROVIDED, FURTHER, that if upon delivery of such delinquent
financial statements and related certificate, such financial statements indicate
that such good faith estimate was incorrect and, as a result thereof, the
Applicable MPP Base Rate Margin or Applicable MPP Eurodollar Margin for any MPP
Loan was too low at such determination, the Applicable MPP Base Rate Margin or
Applicable MPP Eurodollar Margin for any MPP Loan shall be increased, as
appropriate, with retroactive effect to the date of the change made on the basis
of such determination, and the Borrower will immediately pay to the
Administrative Agent for the account of the Lenders all additional interest due
by reason of such increased Applicable MPP Base Rate Margin or Applicable MPP
Eurodollar Margin for any MPP Loan. Any changes in the Applicable MPP Base Rate
Margin or Applicable MPP Eurodollar Margin shall be determined by the Managing
Agent and from time to time, or promptly upon request, the Managing Agent will
provide notice of such determinations to the Borrower, the Administrative Agent
and the Lenders. Any such determination by the Managing Agent pursuant to this
section 1.8(g) shall be conclusive and binding absent manifest error.
<PAGE>
<TABLE>
<CAPTION>
PRICING GRID
===========================================================================================================
RATIO PROVIDED APPLICABLE MPP BASE APPLICABLE MPP
IN (S) 8.12(A) RATE MARGIN EURODOLLAR MARGIN
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Greater than 4.00 to 1.00 Less than or equal to 4.75 to 1.00 3/4 of 1% 2+1/4%
- -----------------------------------------------------------------------------------------------------------
Greater than 3.25 to 1.00 Less than or equal to 4.00 to 1.00 1/2 of 1% 2%
- -----------------------------------------------------------------------------------------------------------
Greater than 2.50 to 1.00 Less than or equal to 3.25 to 1.00 1/8 of 1% 1+5/8%
- -----------------------------------------------------------------------------------------------------------
Greater than 1.50 to 1.00 Less than or equal to 2.50 to 1.00 0% 1+3/8%
- -----------------------------------------------------------------------------------------------------------
Less than or equal to 1.50 to 1.00 0% 1+1/8%
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===========================================================================================================
RATIO PROVIDED APPLICABLE MPP BASE APPLICABLE MPP
IN (S) 8.12(B) RATE MARGIN EURODOLLAR MARGIN
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Greater than 3.25 to 1.00 1/2 of 1% 2%
- -----------------------------------------------------------------------------------------------------------
Greater than 2.50 to 1.00 Less than or equal to 3.25 to 1.00 1/8 of 1% 1+5/8%
- -----------------------------------------------------------------------------------------------------------
Greater than 1.50 to 1.00 Less than or equal to 2.50 to 1.00 0% 1+3/8%
- -----------------------------------------------------------------------------------------------------------
Less than or equal to 1.50 to 1.00 0% 1+1/8%
===========================================================================================================
</TABLE>
1.2. APPLICABLE RATE MARGINS--DPP LOANS. Section 1.8(h) of the Credit
Agreement is hereby amended to read in its entirety as set forth below:
(h) As used herein, the term "APPLICABLE DPP BASE RATE MARGIN" means 0%
per annum and the term "APPLICABLE DPP EURODOLLAR MARGIN" means 7/8 of 1% per
annum; PROVIDED, that subsequent to the fiscal quarter of the Parent ended
nearest to June 30, 1996, the Applicable DPP Base Rate Margin and the Applicable
DPP Eurodollar Margin will change to the percentage rate per annum indicated in
the Pricing Grid table which appears below, based on the leverage ratio referred
to in section 14(b) of the Parent Guaranty. Changes in the Applicable DPP Base
Rate Margin and the Applicable DPP Eurodollar Margin based upon changes in such
ratio shall become effective on first day of the month following the delivery to
the Administrative Agent pursuant to subdivision (a) or (b) of section 7 of the
Parent Guaranty of the financial statements of the Parent, accompanied by the
certificate referred to in subdivision (c) of such section, demonstrating the
computation of such ratio, based upon the ratio in effect at the end of the
applicable period covered (in whole or in part) by such financial statements;
PROVIDED that if any such financial statements or the related certificate are
not timely delivered, the Managing Agent may determine the Applicable DPP Base
Rate Margin or Applicable DPP Eurodollar Margin for any DPP Loan based upon a
good faith estimate by the Borrower (or the Parent) of such ratio as in effect
at the end of the applicable period to be covered (in whole or in part) by such
financial statements, PROVIDED, FURTHER, that if upon delivery of such
delinquent financial statements and related certificate, such financial
statements indicate that such good faith estimate was incorrect and, as a result
thereof, the Applicable DPP Base Rate Margin or Applicable DPP Eurodollar Margin
for any DPP Loan was too low at such determination, the Applicable DPP Base Rate
Margin or Applicable DPP Eurodollar Margin for any DPP Loan shall be increased,
as appropriate, with retroactive effect to the date of the change made on the
basis of such determination, and the Borrower will immediately pay to the
Administrative Agent for the account of the Lenders all additional interest due
by reason of such increased Applicable DPP Base Rate Margin or Applicable DPP
Eurodollar Margin for any DPP Loan. Any changes in the Applicable DPP Base Rate
Margin or Applicable DPP Eurodollar Margin shall be determined by the Managing
Agent and from time to time, or promptly upon request, the Managing Agent will
provide notice of such determinations to the Borrower, the Administrative Agent
and the Lenders. Any such determination by the Managing Agent pursuant to this
section 1.8(h) shall be conclusive and binding absent manifest error.
2
<PAGE>
<TABLE>
<CAPTION>
PRICING GRID
====================================================================================================
APPLICABLE DPP BASE APPLICABLE DPP
LEVERAGE RATIO RATE MARGIN EURODOLLAR MARGIN
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
Less than or equal to 2.00 to 1.00 0% 3/4 of 1%
- ----------------------------------------------------------------------------------------------------
Greater than 2.00 to 1.00 Less than or equal to 2.25 to 1.00 0% 7/8 of 1%
- ----------------------------------------------------------------------------------------------------
Greater than 2.25 to 1.00 Less than or equal to 2.50 to 1.00 0% 1%
- ----------------------------------------------------------------------------------------------------
Greater than 2.50 to 1.00 Less than 2.75 to 1.00 1/8 of 1% 1+1/8%
- ----------------------------------------------------------------------------------------------------
Greater than 2.75 to 1.00 Less than or equal to 3.00 to 1.00 1/4 of 1% 1+1/4%
- ----------------------------------------------------------------------------------------------------
Greater than 3.00 to 1.00 1/2 of 1% 1+1/2%
====================================================================================================
</TABLE>
1.3. DEFINITIONAL CHANGES. (A) SUBSIDIARY GUARANTOR. The words "Wholly-
Owned" are deleted from the definition of the term "Subsidiary Guarantor" in
section 10 of the Credit Agreement.
(B) CASH EQUIVALENTS. The definition of the term "Cash Equivalents" in
section 10 of the Credit Agreement is amended to read in its entirety as
follows:
"CASH EQUIVALENTS" shall mean (i) obligations issued or directly and
fully guaranteed or insured by the United States of America or any agency
or instrumentality thereof (PROVIDED that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than 18 months from the date of acquisition, (ii) obligations
issued by any of the following United States federal government agencies or
instrumentalities: the Federal National Mortgage Association ("Fannie
Mae"), the Federal Home Loan Bank, the Federal Farm Credit Bank, or the
Federal Home Loan Mortgage Corporation ("Freddie Mac"), having maturities
of not more than 18 months from the date of acquisition, (iii) obligations
issued or directly and fully guaranteed or insured by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, which are rated at least
A by S&P or at least A by Moody's, having maturities of not more than 18
months from the date of acquisition, (iv) U.S. dollar denominated time
deposits, money market deposits, certificates of deposit and bankers'
acceptances of (x) any Lender or (y) any bank whose short-term commercial
paper rating from S&P is at least A-1 or the equivalent thereof or from
Moody's is at least P-1 or the equivalent thereof (any such bank, an
"APPROVED LENDER"), in each case with maturities of not more than 18 months
from the date of acquisition, (v) U.S. dollar denominated time deposits,
money market deposits and certificates of deposits of any financial
institution not satisfying the requirements of clause (iv)(y) above whose
deposits are guaranteed by the Federal Deposit Insurance Corporation or the
Federal Savings and Loan Insurance Corporation, up to $100,000 in the case
of any such financial institution, in each case with maturities of not more
than 18 months from the date of acquisition, (vi) commercial paper issued
by any Lender or Approved Lender or by the parent company of any Lender or
Approved Lender and commercial paper issued by, or guaranteed by, any
industrial or financial company with a short-term commercial paper rating
of at least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by Moody's, or guaranteed by any industrial company with
a long term unsecured debt rating of at least A or A2, or the equivalent of
each thereof, from S&P or Moody's, as the case may be, and in each case
maturing within one year after the date of acquisition, (vii) fully
collateralized repurchase agreements with a term of not more than 30 days
for obligations described in clause (i) above entered into with a Lender or
with a financial institution satisfying the requirements of clause (iv)(y)
above, and (viii) investments in money market funds substantially all the
assets of which are comprised of obligations or securities of the types
described in clauses (i) through (vii) above.
(C) PERMITTED ACQUISITIONS. The following is hereby added at the end of
the definition of the term "Permitted Acquisition" in section 10 of the Credit
Agreement:
Notwithstanding the above provisions of this definition, (x) the
acquisition for development of land which is not encumbered at the time of
acquisition by any Lien securing Indebtedness shall in no event constitute
a Permitted Acquisition, and any such acquisition shall not be subject to
the restrictions contained in section
3
<PAGE>
8.2(d); and (y) the acquisition of land (or of a person substantially all
of whose assets consist of land) containing facilities the construction of
which is less than 50% complete (based on currently projected costs),
including the amount of any Priority Debt assumed in connection with any
such acquisition, shall not be counted against the $50,000,000
consideration limitation in any fiscal year which is provided above.
1.4. LIQUIDATION OR DISSOLUTION OF SUBSIDIARIES. (a) Clause (i) of
section 8.2(c) of the Credit Agreement is amended to delete the parenthetical
phrase "(contemporaneously with the retirement or other discharge of all IRB
Debt and Priority Debt of such Subsidiary, if any)" which is contained therein
and to substitute in lieu thereof the following:
(PROVIDED that if any such Subsidiary has any IRB Debt or Priority Debt
which is secured by any Lien upon the property of such Subsidiary, upon
such merger, consolidation, liquidation or dissolution such IRB Debt or
Priority Debt is retired or otherwise discharged, or if the same is not so
retired or discharged, such Lien is not extended to any other property of
the Borrower or any other Subsidiary Guarantor with which such Subsidiary
Guarantor is merged or consolidated or to whom such property is transferred
in such dissolution or liquidation)
(b) The following sentence is added at the end of section 7.11 of the
Credit Agreement:
Notwithstanding the foregoing, nothing in this section 7.11 shall prohibit
the merger, consolidation, liquidation or dissolution of any Subsidiary
effected in compliance with the provisions of section 8.2(c) hereof.
1.5. PERMITTED GUARANTY OF CERTAIN PRIORITY DEBT. The word "and" at the
end of clause (g) of section 8.4 of the Credit Agreement is deleted, clause (h)
of section 8.4 is renumbered as clause (i), and a new clause (h) is inserted in
section 8.4 of the Credit Agreement, reading as follows:
(h) notwithstanding the restrictions contained in clause (g) above,
the Borrower may guaranty Priority Debt of a Subsidiary which is not a
Subsidiary Guarantor which is incurred or arises in connection with a
Permitted Acquisition; PROVIDED that the aggregate principal amount of
Priority Debt so guaranteed shall not exceed $500,000; and
1.6. PROPERTIES CURRENTLY INCLUDED IN THE MATURE PROPERTY POOL. For the
avoidance of doubt, the Borrower, the Administrative Agent, the Managing Agent
and the Lenders hereby confirm that as of January 1, 1997 the following
properties are included in the Mature Property Pool:
<TABLE>
<CAPTION>
Community Location Site No. No. Units
- ------------------ -------------- -------- ---------
<S> <C> <C> <C>
Valley Manor Tucson, Arizona 437 69
Villa Campana Tucson, Arizona 852 141
Evergreen Woods Springhill, Florida 7132 216
Heritage at Hernando Brooksville, Florida 7135 57
Hillcrest Boise, Idaho 7160 115
Heritage at Wildwood Indianapolis, Indiana 616 72
Villa Ventura Kansas City, Missouri 821 172
Narrows Glem/Laurel House Tacoma, Washington 7195 142/57
Campana Del Rio Tucson, Arizona 7100 214
Courtyard at San Marcos (65%) San Marcos, California 7112 212
Courtcastle Gardens Denver, Colorado 7125 99
Crosslands Sandy, Utah 7185 120
Kachina Point Sedona, Arizona 7105 102
Woodhaven at Windsor Woods Hudson, Florida 7137 180
Meridian House Lantana, Florida 7138 173
Hearthstone Topeka, Kansas 7165 155
Colonial Oaks* Marion, Indiana 618 63
Foxhill Village* Westwood, Massachusetts 7174 356
</TABLE>
__________________
* Managed property (no Mortgage).
4
<PAGE>
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants that: (a) the Borrower has delivered
to the Administrative Agent and each Lender prior to the execution of this
Amendment true, correct and complete copies of the consolidated financial
statements of the Borrower and its consolidated subsidiaries for the nine months
ended September 30, 1996, such consolidated financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied (except as noted therein), and fairly present the
consolidated financial condition of the Borrower and its consolidated
subsidiaries at such date and the consolidated results of their operations and
cash flows for the period then ended, subject to audit adjustments; (b) this
Amendment has been duly authorized by all necessary corporate action on the part
of the Borrower, has been duly executed and delivered by a duly authorized
officer or officers of the Borrower, and constitutes the valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms; (c) the representations and warranties of the Borrower contained in
the Credit Agreement, as amended hereby, are true and correct on and as of the
date hereof as though made on and as of the date hereof, except to the extent
that such representations and warranties expressly relate to a specified date,
in which case such representations and warranties are hereby reaffirmed as true
and correct when made; (d) no condition or event has occurred or exists which
constitutes or which, after notice or lapse of time or both, would constitute an
Event of Default; and (e) the Borrower is in full compliance with all covenants
and agreements contained in the Credit Agreement, as amended hereby, and the
other Credit Documents to which it is a party.
SECTION 3. RATIFICATIONS.
The terms and provisions set forth in this Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Credit
Agreement, and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Credit Agreement are ratified and confirmed and
shall continue in full force and effect.
SECTION 4. BINDING EFFECT.
This Amendment shall become effective if and when, on or prior to January
31, 1997, (i) this Amendment shall have been executed by the Borrower, the
Administrative Agent, the Managing Agent and the Documentation Agent, and
counterparts hereof as so executed shall have been delivered to the
Administrative Agent, (ii) the Acknowledgment and Consent appended hereto shall
have been executed by the Credit Parties named therein, and counterparts thereof
as so executed shall have been delivered to the Administrative Agent, (iii) the
Administrative Agent shall have been notified by Lenders constituting the
Required Lenders that such Lenders have executed this Amendment (which
notification may be by facsimile or other written confirmation of such
execution), and (iv) the Administrative Agent shall have notified the Borrower
and each Lender in writing that the conditions specified in the foregoing
clauses have been satisfied; and thereafter this Amendment shall be binding upon
and inure to the benefit of the Borrower, the Administrative Agent, the Managing
Agent, the Documentation Agent and each Lender and their respective permitted
successors and assigns. After this Amendment becomes effective, the Managing
Agent will promptly furnish a copy of this Amendment to each Lender and the
Borrower.
SECTION 5. MISCELLANEOUS.
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Amendment shall survive the execution and delivery of
this Amendment, and no investigation by any Agent or any Lender or any
subsequent Loan or other Credit Event shall affect the representations and
warranties or the right of any Agent or any Lender to rely upon them.
5.2. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and all
other agreements, instruments or documentation now or hereafter executed and
delivered pursuant to the terms of the Credit Agreement as amended hereby, are
hereby amended so that any reference therein to the Credit Agreement shall mean
a reference to the Credit Agreement as amended hereby.
5.3. EXPENSES. As provided in the Credit Agreement, but without limiting
any terms or provisions thereof, the Borrower agrees to pay on demand all costs
and expenses incurred by the Administrative Agent in connection with the
preparation, negotiation, and execution of this Amendment, including without
limitation the costs and fees of the Administrative Agent's special legal
counsel, regardless of whether this Amendment becomes effective in accordance
with the terms hereof, and all costs and expenses incurred by the Administrative
Agent or any Lender in connection with the enforcement or preservation of any
rights under the Credit Agreement, as amended hereby.
5
<PAGE>
5.4. SEVERABILITY. Any term or provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.
5.5. APPLICABLE LAW. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky.
5.6. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.7. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit Agreement.
5.8. COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same agreement.
[The balance of this page is intentionally blank.]
6
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as
of the date first above written.
ATRIA COMMUNITIES, INC.
BY: _________________________________________
CHIEF FINANCIAL OFFICER AND
VICE PRESIDENT OF DEVELOPMENT
PNC BANK, NATIONAL ASSOCIATION,
INDIVIDUALLY AND AS
ADMINISTRATIVE AGENT
BY: _________________________________________
VICE PRESIDENT
NATIONAL CITY BANK OF KENTUCKY,
INDIVIDUALLY AND AS
DOCUMENTATION AGENT
BY: _________________________________________
VICE PRESIDENT
PNC BANK, KENTUCKY, INC.,
INDIVIDUALLY AND AS
MANAGING AGENT
BY: _________________________________________
VICE PRESIDENT
THE TORONTO-DOMINION BANK
BY: _________________________________________
VICE PRESIDENT
7
<PAGE>
BANK ONE, KENTUCKY, NA
BY: _________________________________________
VICE PRESIDENT
NATIONSBANK, N.A.
BY: _________________________________________
VICE PRESIDENT
FLEET NATIONAL BANK
BY: _________________________________________
VICE PRESIDENT
THE BANK OF NEW YORK
BY: _________________________________________
VICE PRESIDENT
THE CHASE MANHATTAN BANK
BY: _________________________________________
VICE PRESIDENT
8
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
BY: _________________________________________
VICE PRESIDENT
AMSOUTH BANK OF ALABAMA
BY: _________________________________________
VICE PRESIDENT
U.S. BANK OF WASHINGTON,
NATIONAL ASSOCIATION
BY: _________________________________________
VICE PRESIDENT
FIRST AMERICAN NATIONAL BANK
BY: _________________________________________
VICE PRESIDENT
KEYBANK NATIONAL ASSOCIATION
BY: _________________________________________
9
<PAGE>
ACKNOWLEDGMENT AND CONSENT
For the avoidance of doubt, and without limitation of the intent and effect
of sections 5 and 6 of the Parent Guaranty and sections 6 and 10 of the
Subsidiary Guaranty (as each of such terms is defined in the Credit Agreement
referred to in the Amendment No. 1 to Credit Agreement (the "AMENDMENT"), to
which this Acknowledgment and Consent is appended), each of the undersigned
hereby unconditionally and irrevocably (i) acknowledges receipt of a copy of the
Credit Agreement and the Amendment, and (ii) consents to all of the terms and
provisions of the Credit Agreement as amended by the Amendment.
Capitalized terms which are used herein without definition shall have the
respective meanings ascribed thereto in the Credit Agreement referred to herein.
This Acknowledgment and Consent is for the benefit of the Lenders, the
Administrative Agent, the Collateral Agent, the Managing Agent, the
Documentation Agent, any other person who is a third party beneficiary of the
Parent Guaranty or the Subsidiary Guaranty, and their respective successors and
assigns. No term or provision of this Acknowledgment and Consent may be modified
or otherwise changed without the prior written consent of the Administrative
Agent, given as provided in the Credit Agreement. This Acknowledgment and
Consent shall be binding upon the successors and assigns of each of the
undersigned. This Acknowledgment and Consent may be executed by any of the
undersigned in separate counterparts, each of which shall be an original and all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has duly executed and delivered
this Acknowledgment and Consent as of the date of the Amendment referred to
herein.
SIGNATURES OF PARTIES TO THE PARENT GUARANTY
VENCOR, INC.
BY:____________________________________
VICE PRESIDENT
FIRST HEALTHCARE CORPORATION
BY:____________________________________
VICE PRESIDENT
NORTHWEST HEALTHCARE, INC.
BY:____________________________________
VICE PRESIDENT
<PAGE>
SIGNATURES OF PARTIES TO THE PARENT GUARANTY-CONTINUED
MEDISAVE PHARMACIES, INC.
BY:____________________________________
VICE PRESIDENT
HILLHAVEN OF CENTRAL FLORIDA, INC.
BY:____________________________________
VICE PRESIDENT
NATIONWIDE CARE, INC.
BY:____________________________________
VICE PRESIDENT
2
<PAGE>
SIGNATURES OF PARTIES TO THE SUBSIDIARY GUARANTY
LANTANA PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
PHILLIPPE ENTERPRISES, INC.
BY: _________________________________
VICE PRESIDENT
HILLHAVEN PROPERTIES, LTD.
BY: _________________________________
VICE PRESIDENT
CASTLE GARDENS RETIREMENT CENTER
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
HILLCREST RETIREMENT CENTER, LTD.
BY: FAIRVIEW LIVING CENTERS, INC.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
3
<PAGE>
SIGNATURES OF PARTIES TO THE SUBSIDIARY GUARANTY-CONTINUED
SANDY RETIREMENT CENTER LIMITED
PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
TOPEKA RETIREMENT CENTER, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
EVERGREEN WOODS, LTD.
BY: ATRIA COMMUNITIES, INC.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
FAIRVIEW LIVING CENTERS, INC.
BY: _________________________________
VICE PRESIDENT
4
<PAGE>
SIGNATURES OF PARTIES TO THE SUBSIDIARY GUARANTY-CONTINUED
TWENTY-NINE HUNDRED ASSOCIATES, LTD.
BY: TWENTY-NINE HUNDRED CORPORATION,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
TWENTY-NINE HUNDRED CORPORATION
BY: _________________________________
VICE PRESIDENT
WOODHAVEN PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
TUCSON RETIREMENT CENTER LIMITED
PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
5
<PAGE>
Exhibit 4.2
________________________________________________________________________________
ATRIA COMMUNITIES, INC.
AS BORROWER
AND
THE LENDERS NAMED HEREIN
AS LENDERS
AND
PNC BANK, NATIONAL ASSOCIATION
AS ADMINISTRATIVE AGENT
PNC BANK, KENTUCKY, INC.
AS MANAGING AGENT
NATIONAL CITY BANK OF KENTUCKY
AS DOCUMENTATION AGENT
_____________________
AMENDMENT NO. 2
DATED AS OF
MARCH 27, 1997
TO
CREDIT AGREEMENT
DATED AS OF
AUGUST 15, 1996
_____________________
<PAGE>
AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT, dated as of March 27, 1997, among
ATRIA COMMUNITIES, INC., a Delaware corporation (herein, together with its
successors and assigns, the "BORROWER"); the Lenders who have executed this
Amendment as indicated by their signatures on the signature pages hereof,
constituting the Required Lenders (such Lenders and the other Lenders party to
the Credit Agreement, the "LENDERS"); PNC BANK, NATIONAL ASSOCIATION, a national
banking association, as administrative agent (the "ADMINISTRATIVE AGENT") for
the Lenders under the Credit Agreement (hereafter defined); PNC BANK, KENTUCKY,
INC., a Kentucky banking corporation, as managing agent (the "MANAGING AGENT")
for the Lenders under the Credit Agreement; and NATIONAL CITY BANK OF KENTUCKY,
a national banking association, as documentation agent (the "DOCUMENTATION
AGENT") for the Lenders under the Credit Agreement:
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders named therein, and the Agents party hereto
entered into the Credit Agreement, dated as of August 15, 1996, and Amendment
No. 1 to Credit Agreement, dated as of January 15, 1997 (as so amended, the
"CREDIT AGREEMENT"; with the terms defined therein, or the definitions of which
are incorporated therein, being used herein as so defined).
(2) The Borrower, such Agents and the Lenders party hereto desire to amend
certain of the terms and provisions of the Credit Agreement, all as more fully
set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT.
1.1. DEFINITIONAL CHANGES. (A) ADDITIONAL DEFINED TERMS. The following
defined terms shall be inserted in section 10 of the Credit Agreement in
appropriate alphabetical order:
"AMERICAN ELDERSERVE ACQUISITION" shall mean the acquisition by the
Borrower of American ElderServe Corporation and its subsidiaries pursuant
to the terms of the Agreement and Plan of Merger, dated as of March 3,
1997, among the Borrower, Atria Communities Southeast, Inc., American
ElderServe Corporation, Andy L. Schoepf, Elizabeth A. Schoepf and Evely C.
Schoepf, for consideration consisting of (i) approximately 675,000 shares
of Common Stock of the Borrower, (ii) approximately $8,000,000 cash and
(iii) the assumption of the American ElderServe Assumed Debt and the
American ElderServe Assumed Finance Lease Obligations.
"AMERICAN ELDERSERVE ASSUMED DEBT" shall mean obligations of American
ElderServe Corporation and its Subsidiaries for borrowed money or
represented by bonds, notes or similar securities, with an aggregate
outstanding principal amount at the date of completion of the American
ElderServe Acquisition of approximately $15,000,000, all of which (except
for the Suburban Lodge Debt) will be permanently retired out of available
cash and/or refinanced by Loans under the Credit Agreement within 90 days
following the completion of the American ElderServe Acquisition.
"AMERICAN ELDERSERVE ASSUMED FINANCE LEASE OBLIGATIONS" shall mean
obligations of American ElderServe Corporation and its Subsidiaries arising
under a letter agreement dated April 25, 1996 between Health Care REIT,
Inc. and American ElderServe Corporation, providing for operating lease and
credit facilities, including all operating lease and related obligations
incurred pursuant to such letter agreement.
"DEVCO DEVELOPMENT AGREEMENT" shall mean the Development Agreement, to
be entered into contemporaneously with the completion of the American
ElderServe Acquisition, between the Borrower and Elder Healthcare
Developers, LLC, pursuant to which, among other things, Devco, LLC
undertakes to develop at least 15 Assisted Living Facilities in the
Southeast Region (as such terms are defined therein), as the same may be
from time to time modified, amended and/or supplemented.
"DEVCO JOINT VENTURE" shall mean Elder Healthcare Developers, LLC, a
Georgia limited liability company formed pursuant to an Operating
Agreement, to be entered into contemporaneously with the completion of the
American ElderServe Acquisition, between the Borrower and Schoepfco, LLC,
together with its successors and assigns.
"FIXED CHARGE COVERAGE RATIO" shall mean, for any Test Period, the
ratio of (x) EBITDA PLUS Total Rental Expense, to (y) Total Interest
Expense PLUS Total Rental Expense, in each case for such Test
<PAGE>
Period.
"PROPERTY JOINT VENTURE" shall mean (i) the Devco Joint Venture; and
(ii) any other person, other than a Subsidiary of the Borrower, which is
organized to, or whose principal business activities relate to, the
ownership, leasing, development or operation of real property and/or
assisted living facilities, and in which the Borrower and its Subsidiaries
have invested, or to whom the Borrower and its Subsidiaries have loaned or
advanced any funds aggregating at least $1,000,000. Notwithstanding the
foregoing, the term Property Joint Venture shall not include the joint
venture investment in Atrium at Buckhead specified in clause (i) of section
8.5.
"SUBURBAN LODGE DEBT" shall mean a loan in the approximate principal
amount of $2,700,000 secured by The Suburban Lodge in Savannah, Georgia.
"TOTAL RENTAL EXPENSE" shall mean, for any period, total rental
expense (other than that which is attributable to Capitalized Leases and is
included in Total Interest Expense) of the Borrower and its Subsidiaries on
a consolidated basis, all as determined in accordance with GAAP.
(B) INTEREST COVERAGE RATIO. The definition of the term Interest Coverage
Ratio in section 10 of the Credit Agreement is deleted.
(C) PERMITTED ACQUISITIONS. A new clause (z) is added to the last
sentence of the definition of the term "Permitted Acquisition" in section 10 of
the Credit Agreement so that, as so amended, such sentence reads in its entirety
as follows:
Notwithstanding the above provisions of this definition, (x) the
acquisition for development of land which is not encumbered at the time of
acquisition by any Lien securing Indebtedness shall in no event constitute
a Permitted Acquisition, and any such acquisition shall not be subject to
the restrictions contained in section 8.2(d); (y) the acquisition of land
(or of a person substantially all of whose assets consist of land)
containing facilities the construction of which is less than 50% complete
(based on currently projected costs), including the amount of any Priority
Debt assumed in connection with any such acquisition, shall not be counted
against the $50,000,000 consideration limitation in any fiscal year which
is provided above; and (z) neither the American ElderServe Acquisition, nor
any acquisition of up to 15 assisted living facilities pursuant to the
Devco Joint Venture, shall count against the $25,000,000 or $50,000,000
consideration limitations which are provided above.
1.2. INDEBTEDNESS. Clause (c) of section 8.4 of the Credit Agreement is
amended to include reference to the American ElderServe Assumed Debt and the
American ElderServe Assumed Finance Lease Obligations, so that it reads in its
entirety as follows:
(c) the following: (i) Existing Indebtedness, and any refinancing,
extension, renewal or refunding of any such Existing Indebtedness, PROVIDED
that (A) the aggregate principal amount of any such Indebtedness in respect
of Residential Mortgage Bond programs of the Borrower and its Subsidiaries
(as described in the Registration Statement) currently in existence is not
increased above $50,000,000, and (B) the principal amount of any other such
Existing Indebtedness is not increased; (ii) the American ElderServe
Assumed Debt (including any guaranty by the Borrower or any Subsidiary of
any of the American ElderServe Assumed Debt), PROVIDED that the entire
American ElderServe Assumed Debt (and any such guaranty), other than the
Suburban Lodge Debt (and any such guaranty in respect thereof), is retired,
repaid or prepaid in full within 90 days following the date the American
ElderServe Acquisition is completed and not refinanced in whole or in part
with Indebtedness other than Loans made hereunder; and (iii) Contingent
Obligations of the Borrower and its Subsidiaries in respect of the American
ElderServe Assumed Finance Lease Obligations covering not more than
$25,000,000 of Approved Costs (as defined in the documents governing the
American ElderServe Assumed Finance Lease Obligations as in effect on the
date the American ElderServe Acquisition is completed);
1.3. LIENS. Clause (d) of section 8.3 of the Credit Agreement is amended
to include reference to Liens securing the American ElderServe Assumed Debt and
the American ElderServe Assumed Finance Lease Obligations, so that it reads in
its entirety as follows:
(d) Liens (i) in existence on the Closing Date which are listed, and
the Indebtedness secured thereby and the property subject thereto on the
Closing Date described, in Annex V; (ii) arising out of the refinancing,
extension, renewal or refunding of any Indebtedness secured by any such
Liens, PROVIDED that the principal amount of such Indebtedness is not
increased and such Indebtedness is not secured by any additional assets;
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(iii) in existence on the date the American ElderServe Acquisition is
completed, securing the American ElderServe Assumed Debt, but such Liens
shall be discharged upon payment of the American ElderServe Assumed Debt
applicable thereto as contemplated by section 8.4(c)(ii); and (iv) in
existence on the date the American ElderServe Acquisition is completed or
created thereafter pursuant to commitments in respect of the American
ElderServe Assumed Finance Lease Obligations in effect on such date,
covering land, facilities, equipment, inventory, working capital, accounts
receivable and other property of facilities financed by, and securing only,
the American ElderServe Assumed Finance Lease Obligations permitted by
section 8.4(c)(iii), but not any extensions or renewals of any such Liens;
1.4. ADVANCES, INVESTMENTS AND LOANS. Section 8.5 of the Credit Agreement
is amended by deleting the word "and" at the end of clause (h) thereof and by
replacing clause (i) thereof with the following three clauses:
(i) loans, advances and investments not otherwise permitted pursuant
to the preceding clauses, made by the Borrower or any Subsidiary Guarantor
in Atrium at Buckhead, a Georgia limited liability company in which the
Borrower has a 50% equity interest, for the purpose of financing a 74 unit
assisted living facility near Atlanta, Georgia, up to an aggregate of not
more than $9,000,000;
(j) loans, advances and investments not otherwise permitted pursuant
to the preceding clauses, made by the Borrower or any Subsidiary Guarantor
in any Property Joint Venture by means of cash or Cash Equivalents or
property transfers after the Closing Date and taking into account any
repayment of any such loans or advances or the return or other realization
in cash or Cash Equivalents of the amount of such investments, in
compliance with the following requirements:
(A) at the time of making any such loan, advance or investment
and after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing;
(B) the Property Joint Venture to which such loan or advance is
made, or in which such investment is made, shall own or be committed
to acquire or develop one or more assisted living properties located
in the United States;
(C) the Borrower or a Subsidiary Guarantor shall have been
retained (or shall have a commitment to be retained upon completion of
any proposed development) to manage such property or properties,
subject to any termination of any existing management contracts
pertaining thereto;
(D) at least 80% of the aggregate amount so invested in any
Property Joint Venture will be in the form of secured loans or
advances having a final maturity date not to exceed three years from
the initial drawdown date but in no event extending beyond the
Revolving Loan Maturity Date (assuming the same will be extended as
provided in section 3.4, unless the Lenders through the Administrative
Agent have previously indicated that such extension will not be agreed
to) and bearing interest prior to maturity at an arms-length rate or
rates;
(E) at least 10 days prior to the date of any such loan, advance
or investment the Borrower shall have provided to the Administrative
Agent notice of such proposed loan, advance or investment, together
with copies of all documents (or proposed forms of documents) incident
thereto; and such documents shall be satisfactory in form and
substance to the Managing Agent;
(F) the aggregate amount of all such loans, advances and
investments made after the Closing Date shall not at any time exceed
$40,000,000;
(G) contemporaneously with or prior to the making of any such
loan, advance or other investment the Borrower shall have caused to be
delivered to the Administrative Agent a supplement or amendment to the
Pledge Agreement, pursuant to which the Borrower or any applicable
Subsidiary Guarantor has pledged to the Collateral Agent its interests
in the Property Joint Venture (including any promissory notes
evidincing any loans or advances to such Property Joint Venture); and
(H) contemporaneously with or prior to the making of any such
loan or advance the proceeds of which are to be used to acquire,
develop or operate any property or facility, the Borrower shall have
caused to be delivered to the Administrative Agent, (1) a guaranty
agreement, substantially in the form of the Subsidiary Guaranty, of
such Property Joint Venture, guaranteeing the Obligations, subject to
the effect of any limitations on the enforceability of such guaranty
arising under any fraudulent transfer laws, together with such
evidence as the Administrative Agent may reasonably
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request to establish the financial condition and solvency of such
person, (2) a subordination agreement pursuant to which all other
equity investors in such Property Joint Venture subordinate all
obligations owed by such Property Joint Venture to such guaranty and
any obligations in respect of any such loans or advances to such
Property Joint Venture, and (3) a mortgage and security agreement,
satisfactory in form and substance to the Administrative Agent,
pursuant to which such person has granted a first priority Lien on and
security interest in all of the assets and properties to be so
financed by such loans or advances, subject to no encumbrances which
are not acceptable to the Administrative Agent, accompanied by
boundary surveys, mortgagee title policies, environmental assessments
and other supporting documentation required by the Managing Agent,
acting in good faith and with due regard to the supporting document
requirements provided in section 7.10(a);
(k) loans, advances and investments not otherwise permitted pursuant
to the preceding clauses, made by the Borrower or any Subsidiary Guarantor
in cash or Cash Equivalents after the Closing Date and taking into account
any repayment of any such loans or advances or the return or other
realization in cash or Cash Equivalents of the amount of such investments,
in persons other than Property Joint Ventures, in compliance with the
following requirements:
(A) at the time of making any such loan, advance or investment
and after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing;
(B) the person (including a joint venture) to which such loan or
advance is made, or in which such investment is made, shall own or be
committed to acquire one or more assisted living properties located in
the United States;
(C) the Borrower or a Subsidiary Guarantor shall have been
retained (or shall have a commitment to be retained upon completion of
any proposed development) to manage such property or properties,
subject to any termination of any existing management contracts
pertaining thereto;
(D) at least 10 days prior to the date of any such loan, advance
or investment involving $3,000,000 or more (including any commitments
in respect of future loans, advances or investments), the Borrower
shall have delivered to the Administrative Agent an officer's
certificate executed on behalf of the Borrower by an Authorized
Officer of the Borrower, which certificate shall (1) contain the date
such loan, advance or investment is scheduled to be consummated, (2)
specify the known or estimated amount thereof, (3) contain a
description, to the extent then known, of the property and/or assets
owned or proposed to be acquired by such person, (4) demonstrate that
at the time of making any such loan, advance or investment the
covenants contained in sections 8.10, 8.11, 8.12 and 8.13 shall be
complied with on a PRO FORMA basis as if the loan, advance or
investment so made had been made by the Borrower, and the Indebtedness
assumed and/or incurred to acquire and/or finance same has been
outstanding, for the 12 month period immediately preceding such loan,
advance or investment (without giving effect to any credit for
unobtained or unrealized gains in connection therewith), (5) confirms
that the property acquired or to be acquired by such person with the
proceeds of such loan, advance or investment is to be (or is to be
following completion of development thereof) managed by the Borrower
or a Subsidiary Guarantor, and (6) attach thereto a true and correct
copy of the then proposed loan agreement, purchase agreement or
similar agreement, partnership agreement and/or management contract
entered into in connection with such loan, advance or investment; and
(E) the aggregate amount of all such loans, advances and
investments made after the Closing Date, when taken together with the
aggregate principal amount of all loans, advances and investments at
the time outstanding made pursuant to clause (i) of this section 8.5
and made by the Borrower and the Subsidiary Guarantors to all
Subsidiaries which are not Subsidiary Guarantors, shall not exceed
$20,000,000.
1.5. CERTAIN LEASES. Section 8.6 of the Credit Agreement is amended to
read in its entirety as follows:
8.6. CERTAIN LEASES. The Borrower will not permit the aggregate
rental payments (exclusive of any supplemental or additional rental
payments in respect of taxes, maintenance or insurance) under all
noncancelable leases (other than Capital Leases) of real and/or personal
property having an original term (including any extensions or renewals at
the option of the lessee or lessor) of at least one year, to exceed
$4,000,000 on a combined basis for the Borrower, its Subsidiaries and the
Property Joint Ventures, in any period of 12 consecutive months.
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1.6. LEVERAGE RATIO. (a) Section 8.12(a) of the Credit Agreement is
amended by changing the dollar amount $1,000,000, which appears in clause (A) of
the definition of Cash Flow from Operations which is contained therein, to
$1,500,000, and by adding after clause (B) of such definition the following: ",
or (C) any such properties which are leased if there is any restriction on the
payment to the Borrower of the cash flow or dividends in respect thereof".
(b) A sentence is added at the end of section 8.12(b) of the Credit
Agreement so that, as so amended, section 8.12(b) of the Credit Agreement reads
in its entirety as follows:
(b) The Borrower will not, at any time following the termination of
the Parent Guaranty in accordance with its terms, permit the ratio of (i)
Total Indebtedness to (ii) EBITDA for any Test Period, to exceed 3.50 to
1.00. In addition, the Borrower will not, at any time following the
termination of the Parent Guaranty in accordance with its terms, permit the
ratio of (i) Total Indebtedness to (ii) EBITDA for any Test Period, to
exceed 3.50 to 1.00, EXCEPT that, solely for purposes of this sentence,
Total Indebtedness and EBITDA shall be computed on a combined basis for the
Borrower, its Subsidiaries and the Property Joint Ventures, notwithstanding
anything to the contrary contained in the definitions of those terms.
1.7. SUBSTITUTION OF FIXED CHARGE COVERAGE RATIO FOR INTEREST COVERAGE
RATIO. Section 8.13 of the Credit Agreement is amended to read in its entirety
as follows:
8.13. FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
Fixed Charge Coverage Ratio for any Test Period to be less than 2.00 to
1.00. In addition, the Borrower will not permit the Fixed Charge Coverage
Ratio (determined on a combined basis for the Borrower, its Subsidiaries
and the Property Joint Ventures, notwithstanding anything to the contrary
contained in the definition of the term Fixed Charge Coverage Ratio or any
other defined terms used in such definition) for any Test Period to be less
than 2.00 to 1.00.
1.8. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. Section 8.15 of
the Credit Agreement is amended by deleting the word "and" which appears at the
end of clause (ix) thereof and inserting at the end of clause (x) thereof before
the period at the end thereof the following: ", (xi) any restrictions contained
in the documents relating to the American ElderServe Assumed Debt at the time
the American ElderServe Acquisition was completed, which restrictions may remain
in place so long as the American ElderServe Assumed Debt is permitted to remain
outstanding under clause (c)(ii) of section 8.4, and (xii) any restrictions
contained in the documents relating to the American ElderServe Assumed Finance
Lease Obligations at the time the American ElderServe Acquisition was completed,
and any similar restrictions contained in any subsequent documents related
thereto which are not more restrictive than the restrictions in existence on
such date, PROVIDED that the American ElderServe Assumed Finance Lease
Obligations are within the limits prescribed in section 8.4(c)(iii)".
SECTION 2. AMENDMENTS TO OTHER CREDIT DOCUMENTS.
2.1. PLEDGE AGREEMENT. On the Effective Date (as hereinafter defined), the
Credit Parties named therein (including American ElderServe Corporation and its
Subsidiaries) and the Collateral Agent shall enter into Amendment No. 1 to
Pledge Agreement, substantially in the form attached hereto as Exhibit A
("AMENDMENT NO. 1 TO PLEDGE AGREEMENT"), and the additional stock, partnership
interests and/or membership interests to be pledged thereunder shall be pledged
to the Collateral Agent as provided therein.
2.2. SECURITY AGREEMENT. On the Effective Date, the Credit Parties named
therein (including American ElderServe Corporation and its Subsidiaries) and the
Collateral Agent shall enter into Amendment No. 1 to Security Agreement,
substantially in the form attached hereto as Exhibit B ("AMENDMENT NO. 1 TO
SECURITY AGREEMENT").
2.3. PARENT GUARANTY. On the Effective Date, the Credit Parties named
therein and the Administrative Agent shall enter into Amendment No. 1 to Parent
Guaranty, substantially in the form attached hereto as Exhibit C ("AMENDMENT NO.
1 TO PARENT GUARANTY").
2.4. SUBSIDIARY GUARANTY. On the Effective Date, the Credit Parties named
therein (including American ElderServe Corporation and its Subsidiaries) and the
Administrative Agent shall enter into Amendment No. 1 to Subsidiary Guaranty,
substantially in the form attached hereto as Exhibit D ("AMENDMENT NO. 1 TO
SUBSIDIARY GUARANTY").
2.5. CONSENT TO AMENDMENTS. The Lenders party hereto and the Agents party
hereto hereby consent to the execution and delivery of Amendment No. 1 to Pledge
Agreement,
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Amendment No. 1 to Security Agreement, Amendment No. 1 to Parent Guaranty, and
Amendment No. 1 to Subsidiary Guaranty, and to the amendments effected thereby.
2.6. FILINGS, RECORDINGS, ETC. Promptly following the Effective Date, the
Borrower will at its expense cause any and all UCC financing statements, notices
of secured transactions and other filings and recordings considered by the
Collateral Agent to be necessary or desirable in connection with the grant of
the security interests pursuant to Amendment No. 1 to Pledge Agreement and
Amendment No. 1 to Security Agreement to be executed, delivered, made, filed
and/or otherwise effected.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
3.1. CURRENT FINANCIAL STATEMENTS. The Borrower has delivered to the
Administrative Agent and each Lender prior to the execution of this Amendment
true, correct and complete copies of the unaudited consolidated financial
statements of the Borrower and its consolidated subsidiaries for the fiscal
quarter ended September 30, 1996. Such unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied (except as noted therein), and fairly present
the consolidated financial condition of the Borrower and its consolidated
subsidiaries at such date and the consolidated results of their operations and
cash flows for the period then ended, subject to normal audit adjustments which
are not expected to be material.
3.2. AMERICAN ELDERSERVE ACQUISITION AND JOINT VENTURE DOCUMENTS. The
Borrower has delivered to the Managing Agent and the Documentation Agent prior
to the execution of this Amendment true, correct and complete copies of the
following documents (the "ACQUISITION AND JOINT VENTURE DOCUMENTS") relating to
the acquisition by the Borrower of American ElderServe Corporation ("AMERICAN
ELDERSERVE") and its Subsidiaries and the establishment by the Borrower of a
development joint venture with certain of the principals of American ElderServe:
(a) Agreement and Plan of Merger, dated as of March 3, 1997, among
the Borrower, Atria Communities Southeast, Inc., American ElderServe
Corporation, Andy L. Schoepf, Elizabeth A. Schoepf and Evely C. Schoepf;
(b) Agreement for Purchase and Sale of Partnership Interest on
Plantation South at Auburn Partnership, for consideration of approximately
$286,009; Agreements for Purchase and Sale of Partnership Interest of
Plantation South on Cypresswood Limited Partnership, for aggregate
consideration of approximately $621,910; and Agreement for the Purchase and
Sale of Real Property (50% interest in Plantation South at Hartwell) for
consideration of approximately $250,000;
(c) consent letter of Health Care REIT, Inc., relating to
modification of the American ElderServe Assumed Finance Lease Obligations,
substantially in the form of the draft thereof dated March 26, 1997;
(d) Operating Agreement, to be entered into contemporaneously with
the completion of the American ElderServe Acquisition, between the Borrower
and Schoepfco, LLC, relating to the formation of Elder Healthcare
Developers, LLC, a Georgia limited liability company; and
(e) Development Agreement, to be entered into contemporaneously with
the completion of the American ElderServe Acquisition, between Elder
Healthcare Developers, LLC and the Borrower, relating to the development of
at least 15 Assisted Living Facilities in the Southeast Region (as such
terms are defined therein).
There are no "side letters" or similar documents which purport to modify or
waive any of the terms or conditions of any of the Acquisition and Development
Documents.
3.3. PRO FORMA BALANCE SHEET. The Borrower has delivered to the Managing
Agent, the Documentation Agent and each Lender prior to the execution of this
Amendment a PRO FORMA consolidated balance sheet of the Borrower and its
consolidated subsidiaries as of December 31, 1996. Such PRO FORMA consolidated
balance sheet has been prepared in accordance with generally accepted accounting
principles, consistently applied (except as noted therein), and fairly presents
the PRO FORMA consolidated financial condition of the Borrower and its
consolidated subsidiaries at such date as if the consummation of the acquisition
by the Borrower of American ElderServe Corporation in accordance with the
Acquisition and Joint Venture Documents had been completed on such date.
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3.4. NEW PARENT CREDIT AGREEMENT. The Borrower has delivered to the
Managing Agent and the Documentation Agent prior to the execution of this
Amendment true, correct and complete copies of (i) a Credit Agreement, dated as
of March 17, 1997, among the Parent, as Borrower, the banks referred to therein,
the Swingline Bank referred to therein, the LC Issuing Banks referred to
therein, Morgan Guaranty Trust Company of New York, as Documentation Agent and
Collateral Agent, and NationsBank, N.A., as Administrative Agent, providing for
credit facilities of up to $1,600,000,000 (the "NEW PARENT CREDIT AGREEMENT"),
and (ii) a proposed amendment thereof to be entered into on or about March 31,
1997 to inter alia increase the credit facilities thereunder to $1,750,000,000.
3.5. AUTHORIZATION, VALIDITY AND BINDING EFFECT. This Amendment has been
duly authorized by all necessary corporate action on the part of the Borrower,
has been duly executed and delivered by a duly authorized officer or officers of
the Borrower, and constitutes the valid and binding agreement of the Borrower,
enforceable against the Borrower in accordance with its terms.
3.6. REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. The representations
and warranties of the Borrower contained in the Credit Agreement, as amended
hereby, are true and correct on and as of the date hereof as though made on and
as of the date hereof, except to the extent that such representations and
warranties expressly relate to a specified date, in which case such
representations and warranties are hereby reaffirmed as true and correct when
made.
3.7. NO EVENT OF DEFAULT, ETC. No condition or event has occurred or
exists which constitutes or which, after notice or lapse of time or both, would
constitute an Event of Default.
3.8. COMPLIANCE. The Borrower is in full compliance with all covenants and
agreements contained in the Credit Agreement, as amended hereby, and the other
Credit Documents to which it is a party.
SECTION 4. RATIFICATIONS.
The terms and provisions set forth in this Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Credit
Agreement, and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Credit Agreement are ratified and confirmed and
shall continue in full force and effect.
SECTION 5. AMENDMENT FEE.
Whether or not this Amendment becomes effective as provided in section 6
hereof, the Borrower will pay to the Administrative Agent in immediately
available funds, for PRO RATA distribution among the Lenders in accordance with
their respective Commitments, a nonrefundable amendment fee of $100,000 (i.e. 5
basis points on the Total Commitment) within two Business Days after the
Administrative Agent notifies the Borrower that the conditions specified in
clauses (a), (b) and (c) of section 6 hereof have been satisfied.
SECTION 6. BINDING EFFECT.
This Amendment shall become effective if and when, on a date (the
"EFFECTIVE DATE") or prior to April 30, 1997, the following conditions shall
have been satisfied:
(a) this Amendment shall have been executed by the Borrower, the
Administrative Agent, the Managing Agent and the Documentation Agent, and
counterparts hereof as so executed shall have been delivered to the
Administrative Agent;
(b) the Acknowledgment and Consent appended hereto shall have been
executed by the Credit Parties named therein, and counterparts thereof as
so executed shall have been delivered to the Administrative Agent;
(c) the Administrative Agent shall have been notified by Lenders
constituting the Required Lenders that such Lenders have executed this
Amendment (which notification may be by facsimile or other written
confirmation of such execution);
(d) the Borrower shall have contemporaneously completed the
acquisition of American ElderServe and its Subsidiaries and established the
development joint venture between the Borrower and certain of the
principals of American ElderServe, in accordance with the Acquisition and
Joint Venture Documents; there shall not have been any material amendment
to or other modification of any of the
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Acquisition and Joint Venture Documents from the versions thereof delivered
to the Agents pursuant to section 3.2, or any waiver of any material term
or condition thereof; and such Agents shall have received copies of all
such documents incident to the such transactions and the consummation
thereof, and all such documents shall be satisfactory in form and substance
to such Agents;
(e) Amendment No. 1 to Pledge Agreement, Amendment No. 1 to Security
Agreement, Amendment No. 1 to Parent Guaranty and Amendment No. 1 to
Subsidiary Guaranty shall each have been duly executed and delivered and
shall each be in full force and effect;
(f) the New Parent Credit Agreement shall have become effective in
accordance with its terms; and
(g) the Borrower shall have timely paid to the Administrative Agent
the amendment fee referred to in section 5 hereof;
and thereafter this Amendment shall be binding upon and inure to the benefit of
the Borrower, the Administrative Agent, the Managing Agent, the Documentation
Agent and each Lender and their respective permitted successors and assigns. The
Administrative Agent may assume that an authorization by a Lender to release its
signed counterpart of this Amendment is confirmation by such Lender that the
conditions specified above have been satisfied insofar as it is concerned,
subject to any disbursement to such Lender of its portion of any funds to which
it is entitled as referred to in the above conditions. After this Amendment
becomes effective, the Managing Agent will promptly furnish a copy of this
Amendment to each Lender and the Borrower and confirm the specific Effective
Date hereof.
SECTION 7. MISCELLANEOUS.
7.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Amendment shall survive the execution and delivery of
this Amendment, and no investigation by any Agent or any Lender or any
subsequent Loan or other Credit Event shall affect the representations and
warranties or the right of any Agent or any Lender to rely upon them.
7.2. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and all
other agreements, instruments or documentation now or hereafter executed and
delivered pursuant to the terms of the Credit Agreement as amended hereby, are
hereby amended so that any reference therein to the Credit Agreement shall mean
a reference to the Credit Agreement as amended hereby.
7.3. EXPENSES. As provided in the Credit Agreement, but without limiting
any terms or provisions thereof, the Borrower agrees to pay on demand all costs
and expenses incurred by the Administrative Agent, the Managing Agent or the
Documentation Agent in connection with the preparation, negotiation, and
execution of this Amendment, including without limitation the costs and fees of
the Documentation Agent's and the Administrative Agent's special legal counsel,
regardless of whether this Amendment becomes effective in accordance with the
terms hereof, and all costs and expenses incurred by the Administrative Agent,
the Managing Agent, the Documentation Agent or any Lender in connection with the
enforcement or preservation of any rights under the Credit Agreement, as amended
hereby.
7.4. SEVERABILITY. Any term or provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.
7.5. APPLICABLE LAW. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky.
7.6. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
7.7. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit
8
<PAGE>
Agreement.
7.8. COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same agreement.
[The balance of this page is intentionally blank.]
9
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as
of the date first above written.
ATRIA COMMUNITIES, INC. THE BANK OF NEW YORK
BY:_______________________________ BY:_________________________________
CHIEF FINANCIAL OFFICER AND VICE PRESIDENT
VICE PRESIDENT OF DEVELOPMENT
PNC BANK, NATIONAL ASSOCIATION, THE CHASE MANHATTAN BANK
INDIVIDUALLY AND AS
ADMINISTRATIVE AGENT
BY:_______________________________ BY:_________________________________
VICE PRESIDENT VICE PRESIDENT
NATIONAL CITY BANK OF KENTUCKY, MORGAN GUARANTY TRUST COMPANY OF
INDIVIDUALLY AND AS NEW YORK
DOCUMENTATION AGENT
BY:_______________________________ BY:_________________________________
VICE PRESIDENT VICE PRESIDENT
PNC BANK, KENTUCKY, INC., AMSOUTH BANK OF ALABAMA
INDIVIDUALLY AND AS
MANAGING AGENT
BY:_______________________________ BY:_________________________________
VICE PRESIDENT VICE PRESIDENT
THE TORONTO-DOMINION BANK U.S BANK OF WASHINGTON,
NATIONAL ASSOCIATION
BY:_______________________________ BY:_________________________________
MGR. CREDIT ADMINISTRATION VICE PRESIDENT
BANK ONE, KENTUCKY, NA FIRST AMERICAN NATIONAL BANK
BY:_______________________________ BY:_________________________________
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
NATIONSBANK, N.A. KEYBANK NATIONAL ASSOCIATION
BY:_______________________________ BY:_________________________________
VICE PRESIDENT ASSISTANT VICE PRESIDENT
FLEET NATIONAL BANK
BY:_______________________________
VICE PRESIDENT
10
<PAGE>
ACKNOWLEDGMENT AND CONSENT
For the avoidance of doubt, and without limitation of the intent and effect
of sections 5 and 6 of the Parent Guaranty and sections 6 and 10 of the
Subsidiary Guaranty (as each of such terms is defined in the Credit Agreement
referred to in the Amendment No. 2 to Credit Agreement (the "AMENDMENT"), to
which this Acknowledgment and Consent is appended), each of the undersigned
hereby unconditionally and irrevocably (i) acknowledges receipt of a copy of the
Credit Agreement and the Amendment, and (ii) consents to all of the terms and
provisions of the Credit Agreement as amended by the Amendment.
Capitalized terms which are used herein without definition shall have the
respective meanings ascribed thereto in the Credit Agreement referred to herein.
This Acknowledgment and Consent is for the benefit of the Lenders, the
Administrative Agent, the Collateral Agent, the Managing Agent, the
Documentation Agent, any other person who is a third party beneficiary of the
Parent Guaranty or the Subsidiary Guaranty, and their respective successors and
assigns. No term or provision of this Acknowledgment and Consent may be modified
or otherwise changed without the prior written consent of the Administrative
Agent, given as provided in the Credit Agreement. This Acknowledgment and
Consent shall be binding upon the successors and assigns of each of the
undersigned. This Acknowledgment and Consent may be executed by any of the
undersigned in separate counterparts, each of which shall be an original and all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has duly executed and delivered
this Acknowledgment and Consent as of the date of the Amendment referred to
herein.
SIGNATURES OF PARTIES TO THE PARENT GUARANTY
VENCOR, INC.
FIRST HEALTHCARE CORPORATION
NORTHWEST HEALTH CARE, INC.
MEDISAVE PHARMACIES, INC.
NATIONWIDE CARE, INC.
THERATX, INCORPORATED
(SUCCESSOR BY MERGER WITH
PEACH ACQUISITION CORP.)
VENCOR HOSPITALS ILLINOIS, INC.
VENCOR HOSPITALS SOUTH, INC.
VENCOR HOSPITALS EAST, INC.
VENCOR HOSPITALS CALIFORNIA, INC.
VENCOR HOSPITALS TEXAS, LTD.
BY: VCI SPECIALTY SERVICES, INC.,
ITS GENERAL PARTNER
VENTECH SYSTEMS, INC.
PASATIEMPO DEVELOPMENT CORP.
VCI SPECIALTY SERVICES, INC.
VENCOR PROPERTIES, INC.
BY:______________________________________
VICE PRESIDENT
<PAGE>
SIGNATURES OF PARTIES TO THE SUBSIDIARY GUARANTY
LANTANA PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
PHILLIPPE ENTERPRISES, INC.
HILLHAVEN PROPERTIES, LTD.
CASTLE GARDENS RETIREMENT CENTER
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
HILLCREST RETIREMENT CENTER, LTD.
BY: FAIRVIEW LIVING CENTERS, INC.,
A GENERAL PARTNER
SANDY RETIREMENT CENTER LIMITED PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
TOPEKA RETIREMENT CENTER, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
EVERGREEN WOODS, LTD.
BY: ATRIA COMMUNITIES, INC.,
A GENERAL PARTNER
FAIRVIEW LIVING CENTERS, INC.
TWENTY-NINE HUNDRED ASSOCIATES, LTD.
BY: TWENTY-NINE HUNDRED CORPORATION,
A GENERAL PARTNER
TWENTY-NINE HUNDRED CORPORATION
WOODHAVEN PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
TUCSON RETIREMENT CENTER LIMITED
PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
2
<PAGE>
EXHIBIT 10.1
AMENDMENT NO. 1 TO SECURITY AGREEMENT
THIS AMENDMENT, dated as of March 27, 1997, by (i) each of the Assignors
which is a party to the Security Agreement referred to below (the "ORIGINAL
ASSIGNORS"); and (ii) each of the following additional Subsidiaries of the
Borrower: ATRIA COMMUNITIES SOUTHEAST, INC., a Delaware corporation which is the
surviving corporation of a merger with American ElderServe Corporation, a
Georgia corporation, AMERICAN ELDERSERVE MANAGEMENT, INC., a Georgia
corporation, SOUTHERN CARE, INC., a Georgia corporation, AMERICAN ELDERSERVE OF
ALABAMA, INC., a Georgia corporation, AMERICAN ELDERSERVE OF TEXAS, INC., a
Texas corporation, SOUTHEAST ASSISTED LIVING RESIDENCES, INC., a Georgia
corporation, AMERICAN ELDERSERVE OF NORTH CAROLINA, INC., a North Carolina
corporation, AMERICAN ELDERSERVE OF FLORIDA, INC., a Florida corporation,
PLANTATION SOUTH ON CYPRESSWOOD LIMITED PARTNERSHIP, a Texas limited
partnership, and PLANTATION SOUTH AT AUBURN PARTNERSHIP, an Alabama general
partnership (each, together with its successors and assigns, an "ADDITIONAL
ASSIGNOR"); with (iii) PNC BANK, NATIONAL ASSOCIATION, a national banking
association, as Collateral Agent (the "COLLATERAL AGENT") under the Security
Agreement identified below:
PRELIMINARY STATEMENTS:
(1) The Original Assignors have heretofore entered into the Security
Agreement, dated as of August 15, 1996, in favor of the Collateral Agent (the
"SECURITY AGREEMENT"; with the terms defined therein, or the definitions of
which are incorporated therein, being used herein as so defined).
(2) The parties hereto desire to amend certain of the terms and provisions
of the Security Agreement, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1. JOINDER OF ADDITIONAL ASSIGNORS. Effective upon the execution and
delivery of this Amendment, each Additional Assignor hereby joins in and becomes
a party to the Security Agreement, as amended hereby, as an Assignor thereunder
as fully as if it had been an original signatory to the Security Agreement. All
representations, warranties, covenants, agreements and waivers contained in the
Security Agreement, as amended hereby, applicable to Assignors thereunder shall
apply to the Additional Assignors from and after the date of execution and
delivery of this Amendment.
2. ADDITIONS TO ANNEX B. Annex B to the Security Agreement is amended by
the addition of the following information as to the chief executive office (and
the registered office, if a corporation) of the Additional Assignors:
<TABLE>
<CAPTION>
=====================================================================================================
NAME ADDRESS
- -----------------------------------------------------------------------------------------------------
<S> <C>
Atria Communities Southeast, Inc. 515 West Market Street
Louisville, Kentucky 40202
1770 Indian Trail Road, Suite 400
Duluth, Georgia 30093
- -----------------------------------------------------------------------------------------------------
American ElderServe Management, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
- -----------------------------------------------------------------------------------------------------
Southern Care, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
- -----------------------------------------------------------------------------------------------------
American ElderServe of Alabama, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
__________, Alabama
- -----------------------------------------------------------------------------------------------------
American ElderServe of Texas, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
_____________, Texas
- -----------------------------------------------------------------------------------------------------
Southeast Assisted Living Residences, Inc. 1770 Indian Head Trail, Suite 400
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================
NAME ADDRESS
- -----------------------------------------------------------------------------------------------------
<S> <C>
Duluth, Georgia 30093
- -----------------------------------------------------------------------------------------------------
American ElderServe of North Carolina, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
______________, North Carolina
- -----------------------------------------------------------------------------------------------------
American ElderServe of Florida, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
_____________, Florida
- -----------------------------------------------------------------------------------------------------
Plantation South on Cypresswood Limited Partnership 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
________, Texas
- -----------------------------------------------------------------------------------------------------
Plantation South at Auburn Partnership 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
__________, Alabama
=====================================================================================================
</TABLE>
3. ADDITIONS TO ANNEX C. Annex C to the Security Agreement is amended by
the addition of the following information as to location of Inventory and
Equipment of the Additional Assignors:
<TABLE>
<CAPTION>
=====================================================================================================
NAME ADDRESS
- -----------------------------------------------------------------------------------------------------
<S> <C>
Atria Communities Southeast, Inc. 515 West Market Street
Louisville, Kentucky 40202
1770 Indian Trail Road, Suite 400
Duluth, Georgia 30093
- -----------------------------------------------------------------------------------------------------
American ElderServe Management, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
- -----------------------------------------------------------------------------------------------------
Southern Care, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
- -----------------------------------------------------------------------------------------------------
American ElderServe of Alabama, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
__________, Alabama
- -----------------------------------------------------------------------------------------------------
American ElderServe of Texas, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
_____________, Texas
- -----------------------------------------------------------------------------------------------------
Southeast Assisted Living Residences, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
- -----------------------------------------------------------------------------------------------------
American ElderServe of North Carolina, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
______________, North Carolina
- -----------------------------------------------------------------------------------------------------
American ElderServe of Florida, Inc. 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================
NAME ADDRESS
- -----------------------------------------------------------------------------------------------------
<S> <C>
_____________, Florida
- -----------------------------------------------------------------------------------------------------
Plantation South on Cypresswood Limited Partnership 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
________, Texas
- -----------------------------------------------------------------------------------------------------
Plantation South at Auburn Partnership 1770 Indian Head Trail, Suite 400
Duluth, Georgia 30093
__________, Alabama
=====================================================================================================
</TABLE>
4. RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Security Agreement, and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Security Agreement are ratified and
confirmed and shall continue in full force and effect.
5. MISCELLANEOUS. The terms and provisions of sections 10.2 [Waiver;
Amendment], 10.4 [Successors and Assigns], 10.5 [Headings Descriptive], 10.6
[Severability], 10.7 [Governing Law], and 11 [Waiver of Jury Trial] of the
Security Agreement are hereby incorporated into this Amendment as if set forth
in full herein, except that references in such incorporated terms and provisions
to "this Agreement", "herein", "hereby" and words of similar import shall be
deemed to refer to this Amendment instead of the Security Agreement. This
Amendment may be executed by the parties hereto separately in counterparts, each
of which shall be an original and all of which together shall constitute one and
the same agreement.
[The balance of this page is intentionally blank.]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
ATRIA COMMUNITIES, INC.
BY:________________________________________
CHIEF FINANCIAL OFFICER AND
VICE PRESIDENT FOR DEVELOPMENT
LANTANA PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
PHILLIPPE ENTERPRISES, INC.
HILLHAVEN PROPERTIES, LTD.
CASTLE GARDENS RETIREMENT CENTER
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
HILLCREST RETIREMENT CENTER, LTD.
BY: FAIRVIEW LIVING CENTERS, INC.,
A GENERAL PARTNER
SANDY RETIREMENT CENTER LIMITED PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
TOPEKA RETIREMENT CENTER, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
EVERGREEN WOODS, LTD.
BY: ATRIA COMMUNITIES, INC.,
A GENERAL PARTNER
FAIRVIEW LIVING CENTERS, INC.
TWENTY-NINE HUNDRED ASSOCIATES, LTD.
BY: TWENTY-NINE HUNDRED CORPORATION,
A GENERAL PARTNER
TWENTY-NINE HUNDRED CORPORATION
WOODHAVEN PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
TUCSON RETIREMENT CENTER LIMITED
PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
4
<PAGE>
ATRIA COMMUNITIES SOUTHEAST, INC.
AMERICAN ELDERSERVE MANAGEMENT, INC.
SOUTHERN CARE, INC.
AMERICAN ELDERSERVE OF ALABAMA, INC.
AMERICAN ELDERSERVE OF TEXAS, INC.
SOUTHEAST ASSISTED LIVING RESIDENCES, INC.
AMERICAN ELDERSERVE OF NORTH CAROLINA, INC.
AMERICAN ELDERSERVE OF FLORIDA, INC.
PLANTATION SOUTH ON CYPRESSWOOD
LIMITED PARTNERSHIP
BY: AMERICAN ELDERSERVE OF TEXAS, INC.
ITS GENERAL PARTNER
PLANTATION SOUTH AT AUBURN PARTNERSHIP
BY: AMERICAN ELDERSERVE OF ALABAMA, INC.
ITS GENERAL PARTNER
BY:____________________________________
VICE PRESIDENT
PNC BANK, NATIONAL ASSOCIATION,
AS COLLATERAL AGENT
BY: _________________________________
VICE PRESIDENT
5
<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 1 TO PLEDGE AGREEMENT
THIS AMENDMENT, dated as of March 27, 1997, by (i) each of the Pledgors
which is a party to the Pledge Agreement referred to below (the "ORIGINAL
PLEDGORS"); and (ii) the following additional Subsidiaries of the Borrower,
namely, ATRIA COMMUNITIES SOUTHEAST, INC., a Delaware corporation which is the
surviving corporation of a merger with American ElderServe Corporation, a
Georgia corporation, AMERICAN ELDERSERVE OF TEXAS, INC., a Texas corporation,
AMERICAN ELDERSERVE OF ALABAMA, INC., a Georgia corporation, and SOUTHERN CARE,
INC., a Georgia corporation (each, together with its successors and assigns, an
"ADDITIONAL PLEDGOR", and collectively, the "ADDITIONAL PLEDGORS"); with (iii)
PNC BANK, NATIONAL ASSOCIATION, a national banking association, as Collateral
Agent under the Credit Agreement (herein, together with its successors and
assigns in such capacity, the "PLEDGEE"):
PRELIMINARY STATEMENTS:
(1) The Original Pledgors have heretofore entered into the Pledge
Agreement, dated as of August 15, 1996, in favor of the Collateral Agent as the
Pledgee thereunder (the "PLEDGE AGREEMENT"; with the terms defined therein, or
the definitions of which are incorporated therein, being used herein as so
defined).
(2) The parties hereto desire to amend certain of the terms and provisions
of the Pledge Agreement, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1. JOINDER OF ADDITIONAL PLEDGORS. Effective upon the execution and
delivery of this Amendment, each Additional Pledgor hereby joins in and becomes
a party to the Pledge Agreement, as amended hereby, as a Pledgor thereunder as
fully as if it had been an original signatory to the Pledge Agreement. All
representations, warranties, covenants, agreements and waivers contained in the
Pledge Agreement, as amended hereby, applicable to Pledgors thereunder shall
apply to the Additional Pledgors from and after the date of execution and
delivery of this Amendment.
2. REPLACEMENT OF SECTIONS 2 AND 3 OF PLEDGE AGREEMENT. In order, among
other things, to incorporate terms and provisions applicable to the pledge of
interests in limited liability companies, sections 2 and 3 of the Pledge
Agreement are amended and restated to read in their entirety as follows:
<PAGE>
2. DEFINITION OF STOCK, NOTES, SECURITIES,
PARTNERSHIP INTERESTS, MEMBERSHIP INTERESTS, ETC.
As used herein, (i) the term "STOCK" shall mean all of the issued and
outstanding shares of stock at any time owned by any Pledgor of any
corporation; (ii) the term "NOTES" shall mean all promissory notes from
time to time issued to, or held by, any Pledgor other than Cash
Equivalents; (iii) the term "SECURITIES" shall mean all of the Stock and
Notes; (iii) the term "PARTNERSHIP INTERESTS" shall mean the entire
partnership interest at any time owned by any Pledgor in any general or
limited partnership (a "PLEDGED PARTNERSHIP"); (iv) the term "MEMBERSHIP
INTEREST" shall mean the entire membership interest at any time owned by
any Pledgor in any limited liability company (a "PLEDGED LLC"); and (v) the
term "PLEDGED ENTITY" shall mean either a Pledged Partnership or a Pledged
LLC, as applicable.
Each Pledgor represents and warrants that on the date hereof: (a) each
Subsidiary of such Pledgor and the direct ownership thereof is listed on
Annex A hereto; (b) the Stock consists of the number and type of shares of
the stock of the corporations as described in Annex B hereto; (c) such
Pledgor is the holder of record with respect to any Subsidiary and sole
beneficial owner of such Stock; (d) such Stock constitutes that percentage
of the issued and outstanding capital stock of the issuing corporation as
is set forth in Annex B hereto; (e) the Notes held by such Pledgor consist
of the promissory notes described in Annex C hereto; (f) the Partnership
Interests and Membership Interests, as the case may be, held by such
Pledgor constitutes that percentage of the entire interest of each Pledged
Partnership and Pledged LLC, as the case may be, as is set forth on Annex D
hereto; and (g) on the date hereof, no Pledgor owns or possesses any other
Securities or Partnership Interests or Membership Interests.
3. PLEDGE OF SECURITIES, GRANT OF SECURITY INTERESTS, ETC.
3.1. PLEDGE. To secure the Obligations and for the purposes set forth
in section 1, each Pledgor hereby pledges and grants to the Pledgee a first
priority continuing security interest in, and as part of such grant and
pledge, hereby transfers and assigns to the Pledgee all of the following
whether now existing or hereafter acquired (the "COLLATERAL"):
(a) such Pledgor's (x) Partnership Interest and all of such
Pledgor's right, title and interest in each Pledged Partnership and
(y) Membership Interest and all of such Pledgor's right, title and
interest in each Pledged LLC, in each case including, without
limitation:
(i) all the capital thereof and its interest in all
profits, losses and other distributions to which such Pledgor
shall at any time be entitled in respect of such Partnership
Interest and/or Membership Interest;
(ii) all other payments due or to become due to such
Pledgor in respect of such Partnership Interest and/or Membership
Interest, whether under any partnership agreement, limited
liability company agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;
(iii) all of its claims, rights powers, privileges,
authority, options security interest, liens and remedies, if any,
under any partnership agreement or limited liability company
agreement or at law or otherwise in respect of such Partnership
Interest and/or Membership Interest;
(iv) all present and future claims if any, of the Pledgor
against any Pledged Partnership and any Pledged LLC for moneys
loaned or advanced, for services rendered or otherwise;
(v) all of such Pledgor's rights under any partnership
agreement, limited liability company agreement or at law to
exercise and enforce every right, power, remedy, authority,
option and privilege of such Pledgor relating to the Partnership
Interest and/or Membership Interest including any power to
terminate, cancel or modify any partnership agreement or limited
liability company agreement, to execute any instruments and to
take any and all other action on behalf of and in the name of
such Pledgor in respect of the Partnership Interest and any
Pledged Partnership and the Membership Interest or any Pledged
LLC, to make determinations, to exercise any election (including,
but not limited to, election of remedies) or option or to give or
receive any notice, consent, amendment,
2
<PAGE>
waiver or approval, together with full power and authority to
demand, receive, enforce, collect or receipt for any of the
foregoing, to enforce or execute any checks, or other instruments
or orders, to file any claims and to take any action in
connection with any of the foregoing;
(vi) all other property hereafter delivered in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof; and
(vii) to the extent not otherwise included, all proceeds of
any or all of the foregoing;
(b) all Securities owned by such Pledgor on the date hereof, if
any, and such Pledgor hereby pledges and deposits as security with the
Pledgee and delivers to the Pledgee certificates or instruments
therefor duly endorsed in blank in the case of Notes and accompanied
by undated stock powers duly executed in blank by such Pledgor in the
case of Stock, or such other instruments of transfer as are acceptable
to the Pledgee; and
(c) all of such Pledgor's right, title and interest in and to
such Securities (and in and to all certificates or instruments
evidencing such Securities), which such Pledgor hereby assigns,
transfers, hypothecates, mortgages, charges and sets over to the
Pledgee, to be held by the Pledgee, upon the terms and conditions set
forth in this Agreement.
3.2. SUBSEQUENTLY ACQUIRED SECURITIES, PARTNERSHIP INTERESTS AND
MEMBERSHIP INTERESTS. If a Pledgor shall acquire (by purchase, stock
dividend or otherwise) any additional Securities, Partnership Interests
and/or Membership Interests at any time or from time to time after the date
hereof which are represented by certificates or instruments, such Pledgor
will forthwith pledge and deposit such Securities, Partnership Interests
and/or Membership Interests as security with the Pledgee and deliver to the
Pledgee certificates or instruments thereof, duly endorsed in blank in the
case of Notes and accompanied by undated stock powers duly executed in
blank in the case of Stock, by such Pledgor or such other instruments of
transfer as are acceptable to the Pledgee, and will promptly thereafter
deliver to the Pledgee a certificate executed by a principal executive
officer of such Pledgor describing such Securities, Partnership Interests
and/or Membership Interests and certifying that the same have been duly
pledged with the Pledgee hereunder.
3.3. UNCERTIFICATED SECURITIES, PARTNERSHIP INTERESTS AND/OR
MEMBERSHIP INTERESTS. Notwithstanding anything to the contrary contained
in sections 3.1 and 3.2, if any Securities, Partnership Interests and/or
Membership Interests (whether or not now owned or hereafter acquired) are
uncertificated securities, a Pledgor shall promptly notify the Pledgee
thereof, and shall promptly take all actions required to perfect the
security interest of the Pledgee under applicable law (including, in any
event, under sections 8-313 and 8-321 of the Uniform Commercial Code if
applicable). Each Pledgor further agrees to take such actions as the
Pledgee deems reasonably necessary or desirable to effect the foregoing and
to permit the Pledgee to exercise any of its rights and remedies hereunder,
and agrees to provide an opinion of counsel reasonably satisfactory to the
Pledgee with respect to any such pledge of uncertificated securities,
Partnership Interests and/or Membership Interests promptly upon the request
of the Pledgee.
3.4. DEFINITIONS OF PLEDGED STOCK, PLEDGED NOTES, AND PLEDGED
SECURITIES AND COLLATERAL. All Stock at any time pledged or required to be
pledged hereunder is hereinafter called the "PLEDGED STOCK"; all Notes at
any time pledged or required to be pledged hereunder are hereinafter called
the "PLEDGED NOTES"; and all Pledged Stock and Pledged Notes together are
called the "PLEDGED SECURITIES".
3. DIVIDENDS AND OTHER DISTRIBUTIONS. Section 5 of the Pledge Agreement
is amended by inserting ", membership interests" after the words "partnership
interests" in each place where such words appear in clause (i), (ii) and (iii)
of section 5 of the Pledge Agreement.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. Clauses
(v) through (xiii) of section 15(a) of the Pledge Agreement are deleted and
replaced by the following:
(v) it will defend the Pledgee's right, title and interest in
and to the Partnership Interests, the Membership Interests and in and
to the Collateral pledged by it pursuant hereto or in which it has
granted a security interest pursuant hereto against the claims and
demands of all other
3
<PAGE>
persons whomsoever, and such Pledgor covenants and agrees that it will
have like title to and right to pledge any other property at any time
hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the
Pledgee and the Secured Creditors;
(vi) it is the legal and beneficial owner of and has good title
to its Partnership Interests and Membership Interests and has good
title to all of the other Collateral pledged by it pursuant hereto or
in which it has granted a security interest pursuant hereto, free and
clear of all claims, pledges, liens, encumbrances and security
interests of every nature whatsoever, except such as are created
pursuant to this Agreement, and has the unqualified right to pledge
and grant a security interest in the same as herein provided without
the consent of any other person, firm, association or entity which has
not been obtained;
(vii) it has full power, authority and legal right to pledge the
Partnership Interests and the Membership Interests pledged by it
pursuant to this Agreement and such Partnership Interests and
Membership Interests have been validly acquired and are fully paid for
and are duly and validly pledged hereunder;
(viii) it is not in default in the payment of any portion of
any mandatory capital contribution, if any, required to be made under
any partnership agreement or limited liability company agreement to
which such Pledgor is a party, and such Pledgor is not in violation of
any other material provisions of any partnership agreement or limited
liability company agreement to which such Pledgor is a party, or
otherwise in default or violation thereunder, no Partnership Interest
or Membership Interest is subject to any defense, offset or
counterclaim, nor have any of the foregoing been asserted or alleged
against such Pledgor by any person with respect thereto and as of the
date of pledge hereunder, there are no certificates, instruments,
documents or other writings (other than the partnership agreements and
certificates, if any, and limited liability company agreements
delivered to the Collateral Agent) which evidence any Partnership
Interest or Membership Interest of such Pledgor;
(ix) the pledge and assignment of the Partnership Interests and
the Membership Interests pursuant to this Agreement, together with the
relevant filings, consents or recordings (which filings and recordings
have been made or obtained), creates a valid, perfected and continuing
first security interest in such Partnership Interests and membership
Interests and the proceeds thereof, subject to no prior lien or
encumbrance or to any agreement purporting to grant to any third party
a lien or encumbrance on the property or assets of such Pledgor which
would include the Collateral;
(x) there are no currently effective financing statements
under the UCC covering any property which is now or hereafter may be
included in the Collateral and such Pledgor will, without the prior
written consent of the Pledgee, execute and, until the Termination
Date, there will not ever be on file in any public office any
enforceable financing statement or statements covering any or all of
the Collateral, except financing statements filed or to be filed in
favor of the Pledgee as secured party;
(xi) it shall give the Pledgee prompt notice of any written
claim relating to the Collateral and shall deliver to the Pledgee a
copy of each other demand, notice or document received by it which may
adversely affect the Pledgee's interest in the Collateral promptly
upon, but in any event within 10 days after, such Pledgor's receipt
thereof;
(xii) it shall not withdraw as a partner of any Pledged
Partnership or member of any Pledged LLC, or file or pursue or take
any action which may, directly or indirectly, cause a dissolution or
liquidation of or with respect to any Pledged Partnership or Pledged
LLC or seek a partition of any property of any Pledged Partnership or
Pledged LLC, except as permitted by the Credit Agreement;
(xiii) a notice in the form set forth in Annex E attached hereto
and by this reference made a part hereof (such notice the "PARTNERSHIP
NOTICE"), appropriately completed, notifying each Pledged Partnership
of the existence of this Agreement and a certified copy of this
Agreement have been delivered by such Pledgor to the relevant Pledged
Partnership, and such Pledgor has received and delivered to the
Pledgee an acknowledgment in the form set forth in Annex E attached
hereto (such acknowledgement, the "PARTNERSHIP ACKNOWLEDGEMENT"), duly
executed by the relevant Pledged Partnership; and
4
<PAGE>
(xiv) a notice in the form set forth in Annex F attached hereto
and by this reference made a part hereof (such notice the "LLC
NOTICE"), appropriately completed, notifying each Pledged LLC of the
existence of this Agreement and a certified copy of this Agreement
have been delivered by such Pledgor to the relevant Pledged LLC, and
such Pledgor has received and delivered to the Pledgee an
acknowledgment in the form set forth in Annex F attached hereto (such
acknowledgement, the "LLC ACKNOWLEDGEMENT"), duly executed by the
relevant Pledged LLC.
5. ADDITION OF ANNEX F. The Pledge Agreement is amended by adding as an
Annex thereto Annex F attached hereto.
6. ADDITIONS TO ANNEX A. Annex A to the Pledge Agreement is amended by
the addition of the following information:
<TABLE>
<CAPTION>
======================================================================================================================
NAME OF JURISDICTION PERCENTAGE OF NAMES AND JURISDICTIONS JURISDICTIONS
SUBSIDIARY WHERE OUTSTANDING STOCK ADDRESSES WHERE WHERE
AND ORGANIZED OR OTHER EQUITY OF MINORITY QUALIFIED AS SUBSTANTIAL
TYPE OF INTERESTS OWNED HOLDERS, A FOREIGN ASSETS
ORGANIZATION (INDICATING WHETHER IF ANY CORPORATION LOCATED
OWNED BY THE OR
BORROWER OR A OTHER ENTITY
SPECIFIED SUBSIDIARY)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Atria Delaware 100%, owned by the N/A to be qualified Georgia
Communities Borrower in Alabama,
Southeast, Inc., Florida and
a corporation Georgia upon
merger of
American
ElderServe
Corporation
into Atria
Communities,
Southeast, Inc.
- ----------------------------------------------------------------------------------------------------------------------
American Georgia 100%, owned by Atria N/A N/A Georgia
ElderServe Communities
Management, Southeast, Inc.
Inc., a
corporation
- ----------------------------------------------------------------------------------------------------------------------
American Texas 100%, owned by Atria N/A N/A Texas
ElderServe of Communities
Texas, Inc., a Southeast, Inc.
corporation
- ----------------------------------------------------------------------------------------------------------------------
Southern Care, Georgia 100%, owned by Atria N/A N/A Georgia
Inc., a Communities
corporation Southeast, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Southeast Georgia 100%, owned by Atria N/A N/A Georgia
Assisted Communities
Living Southeast, Inc.
Residences,
Inc., a
corporation
- ----------------------------------------------------------------------------------------------------------------------
American Georgia 100%, owned by Atria N/A Alabama Alabama
ElderServe of Communities
Alabama, Inc., Southeast, Inc.
======================================================================================================================
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
NAME OF JURISDICTION PERCENTAGE OF NAMES AND JURISDICTIONS JURISDICTIONS
SUBSIDIARY WHERE OUTSTANDING STOCK ADDRESSES WHERE WHERE
AND ORGANIZED OR OTHER EQUITY OF MINORITY QUALIFIED AS SUBSTANTIAL
TYPE OF INTERESTS OWNED HOLDERS, A FOREIGN ASSETS
ORGANIZATION (INDICATING WHETHER IF ANY CORPORATION LOCATED
OWNED BY THE OR
BORROWER OR A OTHER ENTITY
SPECIFIED SUBSIDIARY)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
a corporation
- ----------------------------------------------------------------------------------------------------------------------
American North 100%, owned by Atria N/A N/A North Carolina
ElderServe Carolina Communities
of North Southeast, Inc.
Carolina, Inc.,
a corporation
- ----------------------------------------------------------------------------------------------------------------------
American Florida 100%, owned by Atria N/A N/A Florida
ElderServe Communities
of Florida, Inc., Southeast, Inc.
a corporation
- ----------------------------------------------------------------------------------------------------------------------
Plantation Texas 67% General N/A N/A Texas
South on Partnership Interest
Cypresswood held by American
Limited ElderServe of Texas
Partnership, a Inc.
limited
partnership 33% Limited
Partnership Interest
held by Atria
Communities
Southeast, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Plantation Alabama 51% General N/A N/A Alabama
South at Partnership Interest
Auburn held by American
Partnership, a ElderServe of
general Alabama, Inc.
partnership
49% General
Partnership Interest
held by Atria
Communities
Southeast, Inc.
===============================================================================================================
</TABLE>
7. ADDITIONS TO ANNEX B. Annex B to the Pledge Agreement is amended by
the addition of the following information:
<TABLE>
<CAPTION>
================================================================================
NAME OF TYPE NUMBER
ISSUING OF OF CERTIFICATE PERCENTAGE
CORPORATION SHARES SHARES NO. OWNED
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Atria Communities 100%
Southeast, Inc.
================================================================================
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
================================================================================
NAME OF TYPE NUMBER
ISSUING OF OF CERTIFICATE PERCENTAGE
CORPORATION SHARES SHARES NO. OWNED
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American 100%
ElderServe
Management, Inc.
- --------------------------------------------------------------------------------
Southern Care, Inc. Common Stock, 1,000 100%
$1 par value
- --------------------------------------------------------------------------------
American Common Stock, 500 100%
ElderServe of $1 par share
Alabama, Inc.
- --------------------------------------------------------------------------------
American Common Stock, 500 100%
ElderServe of $1 par share
Texas, Inc.
- --------------------------------------------------------------------------------
Southeast Assisted 100%
Living Residences,
Inc.
- --------------------------------------------------------------------------------
American ElderServe 100%
of North Carolina,
Inc.
- --------------------------------------------------------------------------------
American ElderServe 100%
of Florida, Inc.
================================================================================
</TABLE>
8. ADDITIONS TO ANNEX C. Annex C to the Pledge Agreement is amended by
the addition of the following information:
<TABLE>
<CAPTION>
===========================================================================================================
ISSUER PAYEE PRINCIPAL AMOUNT INTEREST RATE MATURITY DATE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Atria Communities, Atria Communities any advances; weighted average on demand
Inc. Southeast, Inc. subordinated as borrowing rate or
provided therein specified alternative
- -----------------------------------------------------------------------------------------------------------
Atria Communities, American any advances; weighted average on demand
Inc. ElderServe subordinated as borrowing rate or
Management, Inc. provided therein specified alternative
- -----------------------------------------------------------------------------------------------------------
Atria Communities, Southern Care, Inc. any advances; weighted average on demand
Inc. subordinated as borrowing rate or
provided therein specified alternative
- -----------------------------------------------------------------------------------------------------------
Atria Communities, American any advances; weighted average on demand
Inc. ElderServe subordinated as borrowing rate or
of Alabama, Inc. provided therein specified alternative
- -----------------------------------------------------------------------------------------------------------
Atria Communities, American any advances; weighted average on demand
Inc. ElderServe subordinated as borrowing rate or
of Texas, Inc. provided therein specified alternative
- -----------------------------------------------------------------------------------------------------------
Atria Communities, Southeast Assisted any advances; weighted average on demand
Inc. Living Residences, subordinated as borrowing rate or
Inc. provided therein specified alternative
===========================================================================================================
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
ISSUER PAYEE PRINCIPAL AMOUNT INTEREST RATE MATURITY DATE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Atria Communities, American any advances; weighted average on demand
Inc. ElderServe subordinated as borrowing rate or
of North Carolina, provided therein specified alternative
Inc.
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities, American any advances; weighted average on demand
Inc. ElderServe subordinated as borrowing rate or
of Florida, Inc. provided therein specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities, Plantation South any advances; weighted average on demand
Inc. on Cypresswood subordinated as borrowing rate or
Limited provided therein specified alternative
Partnership
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities, Plantation South any advances; weighted average on demand
Inc. at subordinated as borrowing rate or
Auburn Partnership provided therein specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities Atria Communities, any advances weighted average on demand
Southeast, Inc. Inc. borrowing rate or
specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities American any advances weighted average on demand
Southeast, Inc. ElderServe borrowing rate or
Management, Inc. specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities Southern Care, Inc. any advances weighted average on demand
Southeast, Inc. borrowing rate or
specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities American any advances weighted average on demand
Southeast, Inc. ElderServe borrowing rate or
of Alabama, Inc. specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities American any advances weighted average on demand
Southeast, Inc. ElderServe borrowing rate or
of Texas, Inc. specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities Southeast Assisted any advances weighted average on demand
Southeast, Inc. Living Residences, borrowing rate or
Inc. specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities American any advances weighted average on demand
Southeast, Inc. ElderServe borrowing rate or
of NorthCarolina, specified alternative
Inc.
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities American any advances weighted average on demand
Southeast, Inc. ElderServe borrowing rate or
of Florida, Inc. specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities Plantation South any advances weighted average on demand
Southeast, Inc. on Cypresswood borrowing rate or
Limited specified alternative
Partnership
- ----------------------------------------------------------------------------------------------------------------------------
Atria Communities Plantation South any advances weighted average on demand
Southeast, Inc. at borrowing rate or
Auburn Partnership specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
American ElderServe Atria Communities, any advances weighted average on demand
Management, Inc. Inc. borrowing rate or
specified alternative
- ----------------------------------------------------------------------------------------------------------------------------
American Atria Communities any advances weighted average on demand
ElderServe Southeast, Inc. borrowing rate or
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
ISSUER PAYEE PRINCIPAL AMOUNT INTEREST RATE MATURITY DATE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management, Inc. specified alternative
- --------------------------------------------------------------------------------------------------------------------
Southern Care, Inc. Atria Communities, any advances weighted average on demand
Inc. borrowing rate or
specified alternative
- --------------------------------------------------------------------------------------------------------------------
Southern Care, Inc. Atria Communities any advances weighted average on demand
Southeast, Inc. borrowing rate or
specified alternative
- --------------------------------------------------------------------------------------------------------------------
American ElderServe Atria Communities, any advances weighted average on demand
of Alabama, Inc. Inc. borrowing rate or
specified alternative
- --------------------------------------------------------------------------------------------------------------------
American ElderServe Atria Communities any advances weighted average on demand
of Alabama, Inc. Southeast, Inc. borrowing rate or
specified alternative
- --------------------------------------------------------------------------------------------------------------------
American ElderServe Atria Communities, any advances; may weighted average on demand
of Texas, Inc. Inc. be subordinated borrowing rate or
to obligations specified alternative
under Lease
Agreement with
Health Care REIT
- --------------------------------------------------------------------------------------------------------------------
American ElderServe Atria Communities any advances; may weighted average on demand
of Texas, Inc. Southeast, Inc. be subordinated to borrowing rate or
obligations specified alternative
under Lease
Agreement with
Health Care REIT
- --------------------------------------------------------------------------------------------------------------------
Southeast Assisted Atria Communities, any advances weighted average on demand
Living Residences, Inc. borrowing rate or
Inc. specified alternative
- --------------------------------------------------------------------------------------------------------------------
Southeast Assisted Atria Communities any advances weighted average on demand
Living Residences, Southeast, Inc. borrowing rate or
Inc. specified alternative
- --------------------------------------------------------------------------------------------------------------------
American ElderServe Atria Communities, any advances; may weighted average on demand
of North Carolina, Inc. be subordinated to borrowing rate or
Inc. obligations specified alternative
under Lease
Agreement with
Health Care REIT,
Inc.
- --------------------------------------------------------------------------------------------------------------------
American ElderServe Atria Communities any advances; may weighted average on demand
of North Carolina, Southeast, Inc. be subordinated to borrowing rate or
Inc. obligations specified alternative
under Lease
Agreement with
Health Care REIT,
Inc.
- --------------------------------------------------------------------------------------------------------------------
American ElderServe Atria Communities, any advances; may weighted average on demand
of Florida, Inc. Inc. be subordinated to borrowing rate or
obligations specified alternative
under Lease
Agreement with
Health Care REIT,
Inc.
- --------------------------------------------------------------------------------------------------------------------
American Atria Communities any advances; may weighted average on demand
ElderServe of be subordinated to borrowing rate or
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
ISSUER PAYEE PRINCIPAL AMOUNT INTEREST RATE MATURITY DATE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida, Inc. Southeast, Inc. obligations under specified alternative
Lease Agreement
with Health Care
REIT, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Plantation South on Atria Communities, any advances; may weighted average on demand
Cypresswood Inc. be subordinated to borrowing rate or
Limited obligations specified alternative
Partnership under Lease
Agreement with
Health Care REIT,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
Plantation South on Atria Communities any advances; may weighted average on demand
Cypresswood Southeast, Inc. be subordinated to borrowing rate or
Limited obligations specified alternative
Partnership under Lease
Agreement with
Health Care REIT,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
Plantation South on American any advances; may weighted average on demand
Cypresswood ElderServe be subordinated to borrowing rate or
Limited of Texas, Inc. obligations specified alternative
Partnership under Lease
Agreement with
Health Care REIT,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
Plantation South at Atria Communities, any advances weighted average on demand
Auburn Partnership Inc. borrowing rate or
specified alternative
- ----------------------------------------------------------------------------------------------------------------------
Plantation South at Atria Communities any advances weighted average on demand
Auburn Partnership Southeast, Inc. borrowing rate or
specified alternative
- ----------------------------------------------------------------------------------------------------------------------
Plantation South at American any advances weighted average on demand
Auburn Partnership ElderServe borrowing rate or
of Alabama, Inc. specified alternative
- ----------------------------------------------------------------------------------------------------------------------
Elder Healthcare Atria Communities, any advances 25 bp over weighted up to approximately
Developers, LLC Inc. average borrowing 3 years
rate or specified
alternative
======================================================================================================================
</TABLE>
9. ADDITIONS TO ANNEX D. Annex D to the Pledge Agreement is amended by
the addition of the following information:
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
NAME OF PLEDGED ENTITY TYPE OF ORGANIZATION
- ----------------------------------------------------------------------------------------------------------------------
Elder Healthcare Developers, LLC Georgia limited liability company
- ----------------------------------------------------------------------------------------------------------------------
Plantation South on Cypresswood Limited Partnership Texas limited partnership
- ----------------------------------------------------------------------------------------------------------------------
Plantation South at Auburn Partnership Alabama general partnership
- ----------------------------------------------------------------------------------------------------------------------
Roswell ALC Limited Partnership Georgia limited partnership
======================================================================================================================
</TABLE>
10
<PAGE>
10. RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Security Agreement, and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Pledge Agreement are ratified and
confirmed and shall continue in full force and effect.
11. MISCELLANEOUS. The terms and provisions of sections 20 [Waiver;
Amendment], 22 [Miscellaneous] and 23 [Waiver of Jury Trial] of the Pledge
Agreement are hereby incorporated into this Amendment as if set forth in full
herein, except that references in such incorporated terms and provisions to
"this Agreement", "herein", "hereby" and words of similar import shall be deemed
to refer to this Amendment instead of the Pledge Agreement. This Amendment may
be executed by the parties hereto separately in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
agreement.
[The balance of this page is intentionally blank.]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
ATRIA COMMUNITIES, INC.
BY:________________________________________
CHIEF FINANCIAL OFFICER AND
VICE PRESIDENT FOR DEVELOPMENT
LANTANA PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
PHILLIPPE ENTERPRISES, INC.
HILLHAVEN PROPERTIES, LTD.
CASTLE GARDENS RETIREMENT CENTER
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
HILLCREST RETIREMENT CENTER, LTD.
BY: FAIRVIEW LIVING CENTERS, INC.,
A GENERAL PARTNER
SANDY RETIREMENT CENTER LIMITED PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
TOPEKA RETIREMENT CENTER, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
EVERGREEN WOODS, LTD.
BY: ATRIA COMMUNITIES, INC.,
A GENERAL PARTNER
FAIRVIEW LIVING CENTERS, INC.
TWENTY-NINE HUNDRED ASSOCIATES, LTD.
BY: TWENTY-NINE HUNDRED CORPORATION,
A GENERAL PARTNER
TWENTY-NINE HUNDRED CORPORATION
WOODHAVEN PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
TUCSON RETIREMENT CENTER LIMITED
PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
ATRIA COMMUNITIES SOUTHEAST, INC.
BY: _________________________________
VICE PRESIDENT
AMERICAN ELDERSERVE OF TEXAS, INC.
BY:__________________________________
VICE PRESIDENT
12
<PAGE>
AMERICAN ELDERSERVE OF ALABAMA, INC.
BY:__________________________________
VICE PRESIDENT
SOUTHERN CARE, INC.
BY:___________________________________
VICE PRESIDENT
PNC BANK, NATIONAL ASSOCIATION,
AS COLLATERAL AGENT AND PLEDGEE
BY: _________________________________
VICE PRESIDENT
13
<PAGE>
ANNEX F
to
Pledge Agreement
LLC NOTICE
[Letterhead of Pledgor]
[Date]
TO:[NAME OF LLC]
Notice is hereby given that, pursuant to a Pledge Agreement (a true and
correct copy of which is attached hereto), dated as of August 15, 1996 (as
amended, modified or supplemented from time to time in accordance with the terms
thereof, the "PLEDGE AGREEMENT"), among the pledgors party thereto, including
the undersigned (the "PLEDGOR") and PNC Bank, National Association, as
Collateral Agent (herein, together with its successors and assigns in such
capacity, the "PLEDGEE") for the Secured Creditors described therein, the
Pledgor has pledged and assigned to the Pledgee for the benefit of the Secured
Creditors, and granted to the Pledgee for the benefit of the Secured Creditors a
continuing security interest in, all right, title and interest of the Pledgor,
whether now existing or hereafter arising or acquired, as a member in [NAME OF
LLC] (the "LLC"), and in, to and under the [TITLE OF APPLICABLE LLC AGREEMENT]
(the "LLC AGREEMENT"), including, without limitation:
(i) all the capital of the LLC and the Pledgor's interest in
all profits, losses and other distributions to which the Pledgor shall at
any time be entitled in respect of such membership interest ("MEMBERSHIP
INTEREST");
(ii) all other payments due or to become due to the Pledgor in
respect of such Membership Interest, whether under the LLC Agreement or
otherwise, whether as contractual obligations, damages, insurance proceeds
or otherwise;
(iii) all of its claims, rights, powers, privileges, authority,
options, security interest, liens and remedies, if any, under the LLC
Agreement or at law or otherwise in respect of such Membership Interest;
(iv) all present and future claims, if any, of the Pledgor
against the LLC for moneys loaned or advanced, for services rendered or
otherwise;
(v) all of the Pledgor's rights under the LLC Agreement or at
law to exercise and enforce every right, power, remedy, authority, option
and privilege of the Pledgor relating to the Membership Interest, including
any power to terminate, cancel or modify the LLC Agreement, to execute any
instruments and to take any and all other action on behalf of and in the
name of the Pledgor in respect of the Membership Interest and the LLC, to
make determinations, to exercise any election (including, but not limited,
election of remedies) or option or to give or receive any notice, consent,
amendment, waiver or approval, together with full power and authority to
demand, receive, enforce, collect or receipt for any of the foregoing or to
enforce or execute any checks, or other instruments or orders, to file any
claims and to take any action in connection with any of the foregoing;
(vi) all other property hereafter delivered in substitution for
or in addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, securities,
interest, dividends, rights and other property at any time and from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof; and
(vii) to the extent not otherwise included, all proceeds of any
or all of the foregoing.
Pursuant to the Pledge Agreement, the LLC is hereby authorized and directed
to register the Pledgor's pledge to the Pledgee on behalf of the Secured
Creditors of the interest of the Pledgor on the LLC's books.
The Pledgor and the LLC each hereby consents, notwithstanding anything to
the contrary contained in the LLC Agreement or any other agreement for the
benefit of the Pledgor or the LLC relating thereto, to (i) the grant by any
other Pledgor of a security interest to the Pledgee in its Membership Interest,
its interest in the LLC Agreement and its other rights and interests relating
thereto, as described above, pursuant to the Pledge Agreement; and (ii) any
sale,
<PAGE>
transfer or other disposition by the Pledgee of any Membership Interest of the
Pledgee or any other Pledgor any or other rights or interests in connection with
the foreclosure of such security interest or the exercise of any other remedies
available to the Pledgee under or in connection with the Pledge Agreement in
respect thereof.
The Pledgor hereby requests the LLC to indicate the LLC's acceptance of
this Notice and consent to and agreement with its terms and provisions by
signing a copy hereof where indicated on the attached page and returning the
same to the Pledgee on behalf of the Secured Creditors.
[NAME OF PLEDGOR]
By:______________________________________
Title:
2
<PAGE>
ACKNOWLEDGMENT
[NAME OF LLC] (the "LLC") hereby (i) acknowledges receipt of a copy of the
assignment by [NAME OF PLEDGOR] (the "PLEDGOR") of its interest under the [TITLE
OF APPLICABLE LLC AGREEMENT] (the "LLC AGREEMENT") pursuant to the terms of the
Pledge Agreement, dated as of August 15, 1996 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the "PLEDGE
AGREEMENT"), among the Pledgors party thereto, including the Pledgor, and PNC
Bank, National Association, as Collateral Agent (herein, together with its
successors and assigns, the "PLEDGEE") on behalf of the Secured Creditors
described therein; (ii) confirms its agreement to all of the terms and
provisions of the letter to which this acknowledgment is attached; and (iii)
confirms the registration of the Pledgor's pledge of its interest to the Pledgee
on behalf of the Secured Creditors on the LLC's books.
Dated: __________ , 1997
[NAME OF LLC]
By: ____________________________________
Title:
3
<PAGE>
EXHIBIT 10.3
AMENDMENT NO. 1 TO PARENT GUARANTY
THIS AMENDMENT, dated as of March 27, 1997, by (i) ATRIA COMMUNITIES, INC.,
a Delaware corporation (herein, together with its successors and assigns, the
"BORROWER"); (ii) VENCOR, INC., a Delaware corporation (herein, together with
its successors and assigns, the "PARENT GUARANTOR"); (iii) each of the following
(each, together with its successors and assigns, a "SUPPORTING GUARANTOR" and
collectively, the "SUPPORTING GUARANTORS"): FIRST HEALTHCARE CORPORATION, a
Delaware corporation, NORTHWEST HEALTH CARE, INC., an Idaho corporation,
MEDISAVE PHARMACIES, INC., a Delaware corporation, NATIONWIDE CARE, INC., an
Indiana corporation, THERATX, INCORPORATED, a Delaware corporation which is the
successor by merger with Peach Acquisition Corp., VENCOR HOSPITALS ILLINOIS,
INC., a Delaware corporation, VENCOR HOSPITALS SOUTH, INC., a Delaware
corporation, VENCOR HOSPITALS EAST, INC., a Delaware corporation, VENCOR
HOSPITALS CALIFORNIA, INC., a Delaware corporation, VENCOR HOSPITALS TEXAS,
LTD., a Texas limited partnership, VENTECH SYSTEMS, INC., a Delaware
corporation, PASATIEMPO DEVELOPMENT CORP., a California corporation, VCI
SPECIALTY SERVICES, INC., a Delaware corporation, and VENCOR PROPERTIES, INC., a
Delaware corporation; and (iv) PNC BANK, NATIONAL ASSOCIATION, a national
banking association, as Administrative Agent (the "ADMINISTRATIVE AGENT") under
the Credit Agreement referred to in the Parent Guaranty identified below:
PRELIMINARY STATEMENTS:
(1) The Borrower, the Parent Guarantor and the Supporting Guarantors have
heretofore entered into the Parent Guaranty, dated as of August 15, 1996, in
favor of the Administrative Agent (the "PARENT GUARANTY"; with the terms defined
therein, or the definitions of which are incorporated therein, being used herein
as so defined).
(2) By virtue of the merger of Peach Acquisition Corp. with and into
TheraTx, Incorporated, as the surviving corporation in such merger, TheraTx,
Incorporated is bound as a Supporting Guarantor under the Parent Guaranty.
(3) The parties hereto desire to amend certain of the terms and provisions
of the Parent Guaranty, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1. RELEASE OF A SUPPORTING GUARANTOR. In light of the fact that
Hillhaven of Central Florida, Inc. will not be required to guaranty the
obligations of the Parent Guaranty under the 1997 Credit Agreement referred to
below, effective upon the execution and delivery of this Amendment, it is hereby
released from its obligations as a Supporting Guarantor under the Parent
Guaranty and shall no longer be a party thereto.
2. MISCELLANEOUS AMENDMENTS RELATIVE TO NEW CREDIT AGREEMENT OF PARENT
GUARANTOR. The Parent Guaranty is hereby amended as follows:
2.1. Clause (f) of section 7 of the Parent Guaranty is amended to read in
its entirety as follows:
(f) promptly after execution thereof, copies of any amendment to its
existing Credit Agreement, dated as of March 17, 1997, with the banks named
therein and Morgan Guaranty Trust Company of New York, as Documentation
Agent and Collateral Agent, and NationsBank, N.A., as Administrative Agent,
as in effect on March 18, 1997, which is the closing date thereunder (as so
in effect on March 18, 1997, and as the same may be amended (including the
proposed amendment to be entered into on or about March 31, 1997 to inter
alia increase the credit facilities thereunder to $1,750,000,000),
supplemented or modified, or replaced, with an agreement with substantially
the same bank group (whether in the same or a larger or smaller aggregate
amount of credit facilities), the "1997 CREDIT AGREEMENT"), and copies of
any other credit agreement entered into after the Closing Date in
connection with a replacement or refinancing thereof (and any amendments
thereto); and
2.2. All references to "1995 Credit Agreement" in the Parent Guaranty are
hereby changed to references to "1997 Credit Agreement".
3. AMENDMENT OF SEPARATE LEVERAGE COVENANT. Section 14(b) of the Parent
Guaranty is amended to read in its entirety as follows:
(B) SEPARATE LEVERAGE COVENANT. The Parent Guarantor will maintain at
the end of each Fiscal Quarter (a "QUARTERLY MEASUREMENT DATE"), the ratio
of (x) Consolidated Debt for Borrowed Money to (y) Consolidated EBITDA for
the four consecutive Fiscal Quarters then ended not in excess of 4.00 to
1.00.
<PAGE>
For purposes of calculating the foregoing ratio at any Quarterly
Measurement Date, if any corporation or other entity shall have been
acquired by any Vencor Company during the relevant period of four
consecutive Fiscal Quarters, Consolidated EBITDA for such period shall be
calculated as if such corporation or other entity had been acquired at the
beginning of such period, to the extent that the relevant financial
information with respect to it for the portion of such period prior to such
acquisition can be determined with reasonable accuracy. As used in this
Agreement, the terms "FISCAL QUARTERS", "CONSOLIDATED DEBT FOR BORROWED
MONEY", "CONSOLIDATED EBITDA", "VENCOR COMPANY", "CONSOLIDATED NET WORTH"
and "DEBT" shall have the same meanings as are ascribed to such terms in
the 1997 Credit Agreement as in effect on March 31, 1997 (which is the
closing date thereunder, herein the "VENCOR CLOSING DATE"), without giving
effect to any subsequent modification or termination thereof, and any other
defined terms which are used in such terms in the 1997 Credit Agreement
shall likewise have such meanings without giving effect to any subsequent
modification or termination thereof.
4. AMENDMENT OF NEGATIVE PLEDGE COVENANT. Section 15 of the Parent
Guaranty is amended to include appropriate references to the Parent Guarantor's
1997 Credit Agreement and the Liens granted pursuant thereto or permitted
thereunder, so that such section reads in its entirety as follows:
15. NEGATIVE PLEDGE. The Parent Guarantor will not:
(i) permit any Subsidiary of the Parent Guarantor (other than the
Borrower and its Subsidiaries) to create, incur or suffer to exist any Lien
upon or with respect to any of its property, whether now owned or hereafter
acquired, or assign any right to receive income, in each case to secure or
provide for the payment of any Consolidated Debt for Borrowed Money, OTHER
THAN:
(A) (1) Liens created on or prior to the Vencor
Closing Date pursuant to any document securing obligations
under the 1997 Credit Agreement; (2) Liens on the equity
interests in and debt obligations of TheraTx, Incorporated
and its Subsidiaries; (3) the Project Mortgages (as defined
in the 1997 Credit Agreement as in effect on the Vencor
Closing Date); and (4) Liens on equity interests in and,
debt obligations owed by, any Material Subsidiary (as
defined in the 1997 Credit Agreement as in effect on the
Vencor Closing Date), and Liens on any debt obligations of
any other Subsidiary of the Parent Guarantor, in each case
required to be pledged as security for obligations under the
1997 Credit Agreement pursuant to contractual obligations
not substantially more onerous to the Parent Guarantor than
those contained in Section 3 of the Security Agreement,
dated as of March 17, 1997, in favor of the Collateral Agent
under the 1997 Credit Agreement, as in effect on the Vencor
Closing Date;
(B) Liens existing on the Vencor Closing Date (other
than Liens permitted by clause (A) above) securing Debt
outstanding on the Vencor Closing Date in an aggregate
principal amount not exceeding $200,000,000;
(C) any Lien existing on any asset prior to the
acquisition thereof by the Parent Guarantor or such
Subsidiary and not created in contemplation of such
acquisition;
(D) any Lien existing on any asset of any person at
the time such person becomes a Subsidiary of the Parent
Guarantor or merges into the Parent Guarantor or any of its
Subsidiaries; PROVIDED that such Lien was not created in
contemplation of such event;
(E) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the
cost of acquiring or constructing such asset, PROVIDED that
such Lien attaches to such asset concurrently with or within
180 days after the acquisition or completion of construction
thereof and attaches to no other asset other than such asset
so financed;
(F) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any
Lien permitted by the foregoing clauses (A) through (E),
PROVIDED that the principal amount of such Debt is not
increased and such Debt is not secured by any additional
assets;
2
<PAGE>
(G) Permitted Encumbrances (as defined in the 1997
Credit Agreement, as in effect on the Vencor Closing Date);
(H) Liens arising in the ordinary course of business
(other than Liens of the types described in the definition
of "Permitted Encumbrances") which (i) do not secure Debt,
(ii) do not secure any single obligation (or series of
related obligations) in an amount exceeding $5,000,000;
PROVIDED that the limitation in this clause (ii) shall not
apply to Liens securing worker's compensation, unemployment
insurance and other types of social security, and (iii) do
not in the aggregate materially detract from the value of
the assets of the Parent Guarantor and its Subsidiaries,
taken as a whole, or materially impair the use thereof in
the operation of their business;
(I) Liens on cash (not exceeding $10,000,000 in
aggregate amount) of Cornerstone Insurance Company to secure
its reimbursement obligations under letters of credit for
its own account;
(J) other Liens securing Debt of the Parent Guarantor
not exceeding $25,000,000 in aggregate outstanding principal
amount; and
(K) other Liens securing Debt of Subsidiaries not
exceeding $25,000,000 in aggregate outstanding principal
amount; or
(ii) itself create, incur or suffer to exist any Lien upon or with
respect to any of its property, whether now owned or hereafter acquired, or
assign any right to receive income, in each case to secure or provide for
the payment of any Consolidated Debt for Borrowed Money owed pursuant to
the 1997 Credit Agreement, OTHER THAN:
(A) Liens on certain Indiana properties, and any other
properties, stock, securities, interests or other assets,
granted as security for obligations under the 1997 Credit
Agreement prior to the Vencor Closing Date, including any
extensions or renewals thereof); and
(B) Liens on equity interests in and, debt obligations
owed by, any Material Subsidiary (as defined in the 1997
Credit Agreement as in effect on the Vencor Closing Date),
and Liens on debt obligations of any other Subsidiary of the
Parent Guarantor, in each case required to be pledged as
security for obligations under the 1997 Credit Agreement
pursuant to contractual obligations not substantially more
onerous to the Parent Guarantor than those contained in
Section 3 of the Security Agreement, dated as of March 17,
1997, in favor of the Collateral Agent under the 1997 Credit
Agreement, as in effect on the Vencor Closing Date,
without making effective provision, and the Parent Guarantor in such case
will make or cause to be made effective provision, whereby the Required
Payments and the obligations of the Parent Guarantor hereunder shall be
secured by such Lien equally and ratably with any and all other
indebtedness or obligations thereby secured.
5. CONFORMING CHANGES IN GUARANTY OF SUPPORTING GUARANTORS. In order to
conform the language in sections 19.10 and 19.11 of the Parent Guaranty to
language being incorporated into the form of Corresponding Vencor Guaranty for
the Supporting Guarantors which is being executed and delivered in connection
with the 1997 Credit Agreement referred to herein, sections 19.10 and 19.11 of
the Parent Guaranty are amended to read in their entirety as follows:
19.10. FRAUDULENT TRANSFER LAWS. It is the desire and intent of
each Supporting Guarantor and the Creditors that this Agreement shall be
enforced to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought. If
and to the extent that the obligations of any Supporting Guarantor under
this Agreement would, in the absence of this sentence, be adjudicated to be
invalid or unenforceable because of any applicable state or federal law
relating to fraudulent conveyances or transfers, then the amount of such
Supporting Guarantor's liability hereunder in respect of the obligations of
the Parent Guarantor guaranteed hereunder shall be deemed to be reduced AB
INITIO to that maximum amount which would be permitted without causing such
Supporting Guarantor's obligations hereunder to be so invalidated; PROVIDED
that if, at the time of enforcement of this Agreement against any
Supporting Guarantor
3
<PAGE>
or any Corresponding Vencor Guaranty against any Supporting Guarantor which
is a party thereto, the amount payable under this Agreement by such
Supporting Guarantor and the Corresponding Vencor Guaranty of such
Supporting Guarantor is limited by this section 19.10 and/or the
corresponding provision of the Corresponding Vencor Guaranty, as the case
may be, then the amounts payable by such Supporting Guarantor under both
this Agreement and the Corresponding Vencor Guaranty shall be limited so
that the maximum amount payable under each of this Agreement and the
Corresponding Vencor Guaranty is proportional to the respective aggregate
amount guaranteed under this Agreement and such Corresponding Vencor
Guaranty (without regard to the limits under this section 19.10 and the
substantially identical provision of the Corresponding Vencor Guaranty), as
the case may be, when the Significant Credit Event that exists at the time
of enforcement occurred (or if two or more Significant Credit Events exist
at the time of enforcement, when the earlier of such Significant Credit
Events occurred).
19.11. PRO RATA PAYMENTS. Each Supporting Guarantor agrees that,
if it makes any payments upon enforcement of either this Agreement or the
Corresponding Vencor Guaranty of such Supporting Guarantor, it will make a
PRO RATA payment under the other of this Agreement or such Corresponding
Vencor Guaranty so that (i) the payments under this Agreement and the
Corresponding Vencor Guaranty of such Supporting Guarantor are concurrent
and (ii) the total amount paid by such Supporting Guarantor under each of
this Agreement and its Corresponding Vencor Guaranty is proportional to the
aggregate amount guaranteed under this Agreement and such Corresponding
Vencor Guaranty, as the case may be (without regard to the limits under
section 19.10 or the substantially identical provisions of the
Corresponding Vencor Guaranty) when the Significant Credit Event that
exists at the time of enforcement occurred (or if two or more Significant
Credit Events exist at the time of enforcement, when the earlier of such
Significant Credit Events occurred).
6. RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Parent Guaranty, and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Parent Guaranty are ratified and
confirmed and shall continue in full force and effect.
7. MISCELLANEOUS. The terms and provisions of sections 20 [Survival of
Agreements, etc.], 24 [Costs and Expenses of Enforcement, etc.], 28 [Jury Trial
Waiver], 29 [Waiver; Amendment], 30 [Kentucky Notice of Guaranteed Amount and
Termination Date], and 31 [Miscellaneous] of the Parent Guaranty are hereby
incorporated into this Amendment as if set forth in full herein, except that
references in such incorporated terms and provisions to "this Agreement",
"herein", "hereby" and words of similar import shall be deemed to refer to this
Amendment instead of the Parent Guaranty.
[The balance of this page is intentionally blank.]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
VENCOR, INC.
FIRST HEALTHCARE CORPORATION
NORTHWEST HEALTH CARE, INC.
MEDISAVE PHARMACIES, INC.
NATIONWIDE CARE, INC.
THERATX, INCORPORATED
VENCOR HOSPITALS ILLINOIS, INC.
VENCOR HOSPITALS SOUTH, INC.
VENCOR HOSPITALS EAST, INC.
VENCOR HOSPITALS CALIFORNIA, INC.
VENCOR HOSPITALS TEXAS, LTD.
BY: VCI SPECIALTY SERVICES, INC.,
ITS GENERAL PARTNER
VENTECH SYSTEMS, INC.
PASATIEMPO DEVELOPMENT CORP.
VCI SPECIALTY SERVICES, INC.
VENCOR PROPERTIES, INC.
BY:______________________________________
VICE PRESIDENT
PNC BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
BY: _________________________________
VICE PRESIDENT
5
<PAGE>
EXHIBIT 10.4
AMENDMENT NO. 1 TO SUBSIDIARY GUARANTY
THIS AMENDMENT, dated as of March 27, 1997, by (i) each of the Guarantors
which is a party to the Subsidiary Guaranty referred to below (the "ORIGINAL
GUARANTORS"); (ii) each of the following additional Subsidiaries of the
Borrower: ATRIA COMMUNITIES SOUTHEAST, INC., a Delaware corporation which is the
surviving corporation of a merger with American ElderServe Corporation, a
Georgia corporation, AMERICAN ELDERSERVE MANAGEMENT, INC., a Georgia
corporation, SOUTHERN CARE, INC., a Georgia corporation, AMERICAN ELDERSERVE OF
ALABAMA, INC., a Georgia corporation, AMERICAN ELDERSERVE OF TEXAS, INC., a
Texas corporation, SOUTHEAST ASSISTED LIVING RESIDENCES, INC., a Georgia
corporation, AMERICAN ELDERSERVE OF NORTH CAROLINA, INC., a North Carolina
corporation, AMERICAN ELDERSERVE OF FLORIDA, INC., a Florida corporation,
PLANTATION SOUTH ON CYPRESSWOOD LIMITED PARTNERSHIP, a Texas limited
partnership, and PLANTATION SOUTH AT AUBURN PARTNERSHIP, an Alabama general
partnership (each, together with its successors and assigns, an "ADDITIONAL
SUBSIDIARY GUARANTOR"); and (iii) PNC BANK, NATIONAL ASSOCIATION, a national
banking association, as Administrative Agent (the "ADMINISTRATIVE AGENT") under
the Credit Agreement referred to in the Subsidiary Guaranty identified below:
PRELIMINARY STATEMENTS:
(1) The Original Guarantors have heretofore entered into the Subsidiary
Guaranty, dated as of August 15, 1996, in favor of the Administrative Agent (the
"SUBSIDIARY GUARANTY"; with the terms defined therein, or the definitions of
which are incorporated therein, being used herein as so defined).
(2) The parties hereto desire to amend certain of the terms and provisions
of the Subsidiary Guaranty, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1. JOINDER OF ADDITIONAL SUPPORTING GUARANTORS. Effective upon the
execution and delivery of this Amendment, each Additional Subsidiary Guarantor
hereby joins in and becomes a party to the Subsidiary Guaranty, as amended
hereby, as a Guarantor thereunder as fully as if it had been an original
signatory to the Subsidiary Guaranty. All representations, warranties,
covenants, agreements and waivers contained in the Subsidiary Guaranty, as
amended hereby, applicable to Guarantors thereunder shall apply to the
Additional Subsidiary Guarantors from and after the date of execution and
delivery of this Amendment.
2. RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Subsidiary Guaranty, and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Subsidiary Guaranty are ratified and
confirmed and shall continue in full force and effect.
3. MISCELLANEOUS. The terms and provisions of sections 13, 14, 15, 16,
20, 23, 25 and 26 of the Subsidiary Guaranty are hereby incorporated into this
Amendment as if set forth in full herein, except that references in such
incorporated terms and provisions to "this Guaranty", "herein", "hereby" and
words of similar import shall be deemed to refer to this Amendment instead of
the Subsidiary Guaranty.
[The balance of this page is intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
LANTANA PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
PHILLIPPE ENTERPRISES, INC.
HILLHAVEN PROPERTIES, LTD.
CASTLE GARDENS RETIREMENT CENTER
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
HILLCREST RETIREMENT CENTER, LTD.
BY: FAIRVIEW LIVING CENTERS, INC.,
A GENERAL PARTNER
SANDY RETIREMENT CENTER LIMITED PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
TOPEKA RETIREMENT CENTER, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
EVERGREEN WOODS, LTD.
BY: ATRIA COMMUNITIES, INC.,
A GENERAL PARTNER
FAIRVIEW LIVING CENTERS, INC.
TWENTY-NINE HUNDRED ASSOCIATES, LTD.
BY: TWENTY-NINE HUNDRED CORPORATION,
A GENERAL PARTNER
TWENTY-NINE HUNDRED CORPORATION
WOODHAVEN PARTNERS, LTD.
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
TUCSON RETIREMENT CENTER LIMITED
PARTNERSHIP
BY: HILLHAVEN PROPERTIES, LTD.,
A GENERAL PARTNER
BY: _________________________________
VICE PRESIDENT
ATRIA COMMUNITIES SOUTHEAST, INC.
AMERICAN ELDERSERVE MANAGEMENT, INC.
SOUTHERN CARE, INC.
AMERICAN ELDERSERVE OF ALABAMA, INC.
AMERICAN ELDERSERVE OF TEXAS, INC.
SOUTHEAST ASSISTED LIVING RESIDENCES, INC.
AMERICAN ELDERSERVE OF NORTH CAROLINA, INC.
AMERICAN ELDERSERVE OF FLORIDA, INC.
PLANTATION SOUTH ON CYPRESSWOOD
LIMITED PARTNERSHIP
BY: AMERICAN ELDERSERVE OF TEXAS, INC.
ITS GENERAL PARTNER
PLANTATION SOUTH AT AUBURN PARTNERSHIP
BY: AMERICAN ELDERSERVE OF ALABAMA, INC.
ITS GENERAL PARTNER
BY:____________________________________
VICE PRESIDENT
2
<PAGE>
PNC BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
BY: _________________________________
VICE PRESIDENT
3
<PAGE>
EXHIBIT 11
ATRIA COMMUNITIES, INC.
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
PRIMARY EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Net income................................................... $ 1,578 $ 1,166
======= =======
Shares used in the computation (a):
Weighted average common shares outstanding................. 15,830 10,095
Dilutive effect of common stock equivalents................ 157 -
------- -------
Shares used in computing earnings per common and common
equivalent share......................................... 15,987 10,095
======= =======
Primary earnings per common and common equivalent share (a).. $ 0.10 $ 0.11
======= =======
FULLY DILUTED EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Net income................................................... $ 1,578 $ 1,166
======= =======
Shares used in the computation (a):
Weighted average common shares outstanding................. 15,830 10,095
Dilutive effect of common stock equivalents................ 157 -
------- -------
Shares used in computing earnings per common and common
equivalent share......................................... 15,987 10,095
======= =======
Fully diluted earnings per common and common
equivalent share (a)....................................... $ 0.10 $ 0.11
======= =======
</TABLE>
- ------------------
(a) Share and per share amounts for periods prior to the IPO are presented on a
pro forma basis.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM ATRIA COMMUNITIES,
INC.'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 50,004
<SECURITIES> 0
<RECEIVABLES> 739
<ALLOWANCES> (133)
<INVENTORY> 132
<CURRENT-ASSETS> 51,652
<PP&E> 184,588
<DEPRECIATION> (28,625)
<TOTAL-ASSETS> 217,099
<CURRENT-LIABILITIES> 23,219
<BONDS> 98,817
0
0
<COMMON> 1,583
<OTHER-SE> 89,043
<TOTAL-LIABILITY-AND-EQUITY> 217,099
<SALES> 0
<TOTAL-REVENUES> 14,217
<CGS> 0
<TOTAL-COSTS> 6,989
<OTHER-EXPENSES> 2,777
<LOSS-PROVISION> 9
<INTEREST-EXPENSE> 1,182
<INCOME-PRETAX> 2,625
<INCOME-TAX> 1,047
<INCOME-CONTINUING> 1,578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,578
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
