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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 28, 1999
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VENCOR, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-14057 61-1323993
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
One Vencor Place
680 South Fourth Street
Louisville, Kentucky
(Address of principal executive offices)
40202-2412
(Zip Code)
Registrant's telephone number, including area code: (502) 596-7300
Not Applicable
(Former name or former address, if changed since last report.)
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Items 1-4. Not Applicable.
Item 5. Other Information.
Vencor, Inc. (the "Company") announced that its senior bank lenders have
granted a further waiver, through July 30, 1999, of breaches by the Company of
certain financial covenants under its bank credit agreement ("Credit
Agreement"). Pursuant to the waiver, the aggregate commitment under the
revolving credit portion of the Credit Agreement (the "Revolver") has been
permanently reduced from $125 million to $80 million. During the waiver period,
aggregate borrowings under the Revolver are limited to $55 million. At the
close of business on May 27, 1999, there were approximately $16 million of
outstanding borrowings under the Revolver.
The waiver continues to set forth certain events which would terminate the
obligation of the Senior Lenders to fund the Revolver, including the failure to
pay rent to Ventas, Inc. ("Ventas") without the consent of Ventas or the
protection of injunctive relief granting a stay of termination under the
Company's master leases. In addition, the obligation to fund will be frozen if
the Company pays, or if Medicare recoups, reimbursement overpayments in excess
of $10 million through the waiver period. The acceleration of or any action to
collect the unpaid principal or interest on the Company's $300 million 9 7/8%
Guaranteed Senior Subordinated Notes (the "Notes") also will terminate the
obligation to fund the Revolver.
As previously announced, the Company continues to negotiate with its Senior
Lenders and with Ventas in an effort to obtain a sustainable capital structure
for the Company and a reduction in the rents paid by the Company to Ventas. The
Company also intends to negotiate with the holders of the Notes as part of this
effort.
Certain statements set forth above, including, but not limited to,
statements containing the words "anticipates," "believes," "expects," "intends,"
"will," "may" and similar words constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such forward-
looking statements are based on management's current expectations and include
known and unknown risks, uncertainties and other factors, many of which the
Company is unable to predict or control, that may cause the Company's actual
results or performance to differ materially from any future results or
performance expressed or implied by such forward-looking statements. These
statements involve risks, uncertainties and other factors detailed from time to
time in the Company's filings with the Securities and Exchange Commission. Such
factors may include, without limitation, the Company's ability to amend or
refinance its existing debt and lease obligations or otherwise adjust its
current financial structure, the increase in the Company's cost of borrowing,
its ability to attract patients and the effects of healthcare reform and
legislation on the Company's business strategy and operations. The Company
cautions investors that any forward-looking statements made by the Company are
not guarantees of the future performance. The Company disclaims any obligation
to update any such factors or to announce publicly the results of any revisions
to any of the forward-looking statements included herein to reflect future
events or developments.
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A copy of the press release is included as an exhibit to this filing and is
incorporated herein by reference.
Item 6. Not Applicable.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
Exhibit 99.1 Press Release dated May 28, 1999.
Exhibit 99.2 Waiver No. 3 to Credit Agreement dated as of May 28, 1999.
Items 8-9. Not Applicable.
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 hereunto duly authorized.
VENCOR, INC.
Dated: May 28, 1999 By: /s/ Richard A. Schweinhart
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Richard A. Schweinhart
Senior Vice President and
Chief Financial Officer
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EXHIBIT 99.1
[Logo of Vencor, Inc. appears here]
CONTACT: Richard A. Schweinhart
Senior Vice President and Chief Financial Officer
(502) 596-7379
Richard A. Lechleiter
Vice President of Finance,
Corporate Controller and Treasurer
(502) 596-7734
VENCOR ANNOUNCES EXTENSION OF BANK WAIVER
LOUISVILLE, Ky. (May 28, 1999) - Vencor, Inc. (NYSE: VC) today announced that
its senior bank lenders have granted a further waiver, through July 30, 1999, of
breaches by Vencor of certain financial covenants under its bank credit
agreement ("Credit Agreement"). Pursuant to the waiver, the aggregate commitment
under the revolving credit portion of the Credit Agreement (the "Revolver") has
been permanently reduced from $125 million to $80 million. During the waiver
period, aggregate borrowings under the Revolver are limited to $55 million. At
the close of business on May 27, 1999, there were approximately $16 million of
outstanding borrowings under the Revolver.
The waiver continues to set forth certain events which would terminate the
obligation of the Senior Lenders to fund the Revolver, including the failure to
pay rent to Ventas, Inc. (NYSE: VTR) without the consent of Ventas or the
protection of injunctive relief granting a stay of termination under the
Company's master leases. In addition, the obligation to fund will be frozen if
the Company pays, or if Medicare recoups, reimbursement overpayments in excess
of $10 million through the waiver period. The acceleration of or any action to
collect the unpaid principal or interest on the Company's $300 million 9 7/8%
Guaranteed Senior Subordinated Notes (the "Notes") also will terminate the
obligation to fund the Revolver.
As previously announced, the Company continues to negotiate with its Senior
Lenders and with Ventas in an effort to obtain a sustainable capital structure
for the Company and a reduction in the rents paid by the Company to Ventas. The
Company also intends to negotiate with the holders of the Notes as part of this
effort.
Vencor is a long-term healthcare provider operating nursing centers,
hospitals and contract ancillary services in 46 states.
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Certain statements made in this press release, including, but not limited
to, statements containing the words "anticipates," "believes," "expects,"
"intends," "will," "may" and similar words constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are based on management's current expectations
and include known and unknown risks, uncertainties and other factors, many of
which the Company is unable to predict or control, that may cause the Company's
actual results or performance to differ materially from any future results or
performance expressed or implied by such forward-looking statements. These
statements involve risks, uncertainties and other factors detailed from time to
time in the Company's filings with the Securities and Exchange Commission. Such
factors may include, without limitation, the Company's ability to amend or
refinance its existing debt and lease obligations or otherwise adjust its
current financial structure, the increase in the Company's cost of borrowing,
its ability to attract patients and the effects of healthcare reform and
legislation on the Company's business strategy and operations. The Company
cautions investors that any forward-looking statements made by the Company are
not guarantees of the future performance. The Company disclaims any obligation
to update any such factors or to announce publicly the results of any revisions
to any of the forward-looking statements included herein to reflect future
events or developments.
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EXHIBIT 99.2
WAIVER NO. 3
WAIVER NO. 3 (this "Waiver No. 3") dated as of May 28, 1999, under the
$1,000,000,000 Credit Agreement dated as of April 29, 1998 (as heretofore
amended, the "Credit Agreement") among VENCOR OPERATING, INC., VENCOR, INC.
(formerly named Vencor Healthcare, Inc.), the LENDERS, SWINGLINE BANK AND LC
ISSUING BANKS party thereto, the SENIOR MANAGING AGENTS, MANAGING AGENTS AND CO-
AGENTS party thereto and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation Agent and Collateral Agent, and NATIONSBANK, N.A., as
Administrative Agent.
W I T N E S S E T H:
WHEREAS, Vencor has advised the Lender Parties that due to its recent
results of operations and current financial condition it needs an extension of
certain waivers under the Credit Agreement granted in (a) the Waiver dated
January 29, 1999 by the Lenders party thereto (hereinafter "Waiver No. 1") and
(b) the Waiver dated as of March 31, 1999 by the Lenders party thereto
(hereinafter "Waiver No. 2" and together with Waiver No. 1, the "Prior
Waivers"), as well as certain additional waivers and amendments, and, subject to
the terms and conditions hereof, the Lenders party hereto are willing to extend
such waivers under the Credit Agreement, grant such additional waivers and make
such amendments, all under the terms more fully set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise specifically defined herein,
each term used herein that is defined in the Credit Agreement shall have the
meaning assigned to such term in the Credit Agreement. As used herein, the
following additional terms have the following meanings:
"Disclosure Materials" means (a) the March 10 Meeting Materials, (b) the
May 20 Meeting Materials, (c) Vencor's Annual Report on Form 10-K for 1998 (the
"1998 10-K") and (d) Vencor's Quarterly Report on Form 10-Q for the first
quarter of 1999 (the "1st Quarter 10-Q").
"Freeze Period" means any period during which:
(a) any Vencor Company has failed to pay any rent or other sum payable to
a Ventas Company under any Master Lease Agreement when the same became due and
payable and any Ventas Company has given any Vencor Company a
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notice pursuant to Section 16.1(b) of such Master Lease Agreement demanding
payment thereof, and by 11:30 A.M. on the fifth day after such notice none of
the following circumstances exists: (i) such rent or other sum has been paid in
full, (ii) a stay of any termination or notice of termination of such Master
Lease Agreement is in effect by order of a court or arbitral authority or (iii)
the relevant Ventas Company has agreed in writing to withdraw its demand for
payment or to a standstill, tolling or other suspension of its rights to give a
notice of termination of such Master Lease Agreement, provided that if a Freeze
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Period does not exist on account of either clause (ii) or (iii), a Freeze Period
shall nonetheless subsequently and immediately exist if (A) any such stay
expires or is withdrawn or (B) any such withdrawal, standstill or other
suspension by its terms ceases to be in effect or otherwise terminates, as the
case may be; or
(b) any Ventas Company has given a notice to any Vencor Company pursuant to
the penultimate sentence of Section 16.1 of any Master Lease Agreement
terminating such Master Lease Agreement, for so long as none of the following
circumstances exists: (i) each event of default under such Master Lease
Agreement upon the basis of which such notice was given has been cured and the
relevant Ventas Company has confirmed in writing that such notice is no longer
effective and that such Master Lease Agreement will not be terminated on account
of such notice, (ii) a stay of any termination of such Master Lease Agreement is
in effect by order of a court or arbitral authority or (iii) the relevant Ventas
Company has agreed in writing to withdraw such notice or to a standstill,
tolling or other suspension of the period of time fixed in such notice, provided
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that if a Freeze Period does not exist on account of either clause (ii) or
(iii), a Freeze Period shall nonetheless subsequently and immediately exist if
(A) any such stay expires or is withdrawn or (B) any such withdrawal,
standstill, tolling or other suspension by its terms ceases to be in effect or
otherwise terminates; or
(c) the obligor of any Medicaid Receivable, Medicare Receivable or VA
Receivable (or any agent thereof) collects a payment of any PPS Overpayment
Amount by exercising a right of set-off or recoupment (or any similar right)
against its obligations on account of any such Receivable or, on account of any
demand by such an obligor or agent for payment by a date certain of any PPS
Overpayment Amount (after giving effect to any negotiations with such obligor or
agent prior to such date certain), any Vencor Company pays or will be, on the
day following any date of determination, obligated to pay any PPS Overpayment
Amount, and the cumulative amount of all PPS Overpayment Amounts so collected by
exercise of the right of set-off, recoupment or similar right from or paid by
the Vencor Companies, in the aggregate, or that the Vencor Companies, in the
aggregate, are obligated to pay during the period from March 10, 1999 to the
date of determination (without duplication but including in all cases any
amounts paid or payable pursuant to the April 21, 1999 letter from Mutual of
Omaha Insurance Company (the "MOIC Letter")) exceeds $10,000,000; or
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(d) the trustee under the 1998 Subordinated Note Indenture or Persons
purporting to constitute the holders of at least 25% of the outstanding 1998
Subordinated Notes give notice accelerating the maturity of the 1998
Subordinated Notes or such trustee or Persons purporting to be the holders of
10% or more of the principal amount of the 1998 Subordinated Notes commence
legal proceedings to collect any unpaid amount of principal of or interest on
the 1998 Subordinated Notes and in any such case the Required Basic Lenders
determine (which they may do in their sole and absolute discretion) that a
Freeze Period is to exist, provided that any such determination may be
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successively rescinded or re-instated by a subsequent determination of the
Required Basic Lenders (who need not be the same Basic Lenders and who may do so
in their sole and absolute discretion).
"Lease Accounting Issue" means the circumstance that, in the absence of an
amendment to the Master Lease Agreements of the nature described in the last
sentence of Section 2(a), under generally accepted accounting principles, the
Master Lease Agreements should have been treated as capital leases in the
preparation of Vencor's financial statements as a consequence of the provisions
in Section 16.4 thereof.
"March 10 Meeting Materials" means the written materials prepared by or on
behalf of Vencor and distributed to the Persons attending the lender meeting
held by Vencor on March 10, 1999 at such meeting.
"May 20 Meeting Materials" means the written materials prepared by or on
behalf of Vencor and distributed to the Persons attending the lender meeting
held by Vencor on May 20, 1999 at such meeting.
"PPS Overpayment Amount" means any amount that constitutes a liability of a
Vencor Company to a federal or state governmental authority on account of
hospital and skilled nursing facility PIP overpayments made to it, as described
in the March 10 Meeting Materials (but including amounts accrued after December
31, 1998).
Section 2. Certain Waivers. (a) The Lenders hereby waive (including for
purposes of Section 9.02 of the Credit Agreement but, in the case of clauses
(iv) and (v), subject to Section 9) any Default that:
(i) may have occurred or occurs as a result of Vencor failing to be in
compliance with the provisions of Article 6 of the Credit Agreement;
(ii) occurs as a result of any Vencor Company failing to pay any rent or
other sum payable to any Ventas Company under or pursuant to the terms of any
Master Lease Agreement when the same becomes due and payable;
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(iii) occurs as a result of the Borrower's failure to make the interest
payment on the 1998 Subordinated Notes due on May 1, 1999 (including by way of
an Event of Default described in clause (h) of Section 9.03 of the Credit
Agreement, but not including an Event of Default arising under clause (p) of
Section 9.02 of the Credit Agreement on account of the Facility B Loans having
been declared immediately due and payable, even if such acceleration is based
solely or in part on such failure to pay);
(iv) may have occurred as a result of the Borrower at any time prior to
the date hereof having made or been deemed to have made the representation and
warranty set forth in Section 4.05(d) of the Credit Agreement without
qualification by reference to the circumstances described in any of the
Disclosure Materials and the Lease Accounting Issue;
(v) may have occurred as a result of the Borrower at any time prior to
the date hereof having made or been deemed to have made the representations and
warranties set forth in Sections 4.05(b), 4.05(c), 4.06, 4.09 and 4.14 and such
representations and warranties, in light of the circumstances described in any
of the Disclosure Materials or the Lease Accounting Issue, having been incorrect
in material respects when made or deemed made; and
(vi) occurs by reason of Vencor failing timely to deliver any financial
statements or related certificates pursuant to Section 5.01 of the Credit
Agreement.
The Lenders also agree that any amendment of any Master Lease Agreement to
delete Section 16.4 thereof would not constitute a violation of Section 7.11(b)
of the Credit Agreement.
(b) The foregoing waivers shall be effective solely during the period
ending 5:00 P.M. (Eastern time) on July 30, 1999 (the "Waiver Period").
Section 3. Revolving Credit Facility. (a) The Revolving Credit
Commitments were permanently ratably reduced to an aggregate amount of
$125,000,000 pursuant to Waiver No. 2. The Revolving Credit Commitments are
hereby further permanently ratably reduced to an aggregate amount of
$80,000,000.
(b) The maximum Aggregate LC Exposure set forth in Section 2.07(b)(i) of
the Credit Agreement was permanently reduced to $30,000,000 pursuant to Waiver
No. 2. In addition to the limit on expiry dates set forth in Section 2.07(c)
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of the Credit Agreement, no Letter of Credit issued or extended during the
Waiver Period shal l have an expiry date when issued or so extended later than
one year from the date of issuance or the expiry date in effect immediately
prior to such extension, as the case may be.
(c) The requirements of clause (d) of Section 3.02 of the Credit
Agreement are hereby waived during the Waiver Period to the limited extent that
(i) the representation and warranty set forth in Section 4.05(d) is not true
solely on account of the circumstances described in any of the Disclosure
Materials or the Lease Accounting Issue or (ii) the representations and
warranties set forth in Sections 4.05(b), 4.05(c), 4.06, 4.09 and 4.14, in light
of the circumstances described in any of the Disclosure Materials or the Lease
Accounting Issue, are incorrect in material respects, and any representation or
warranty made or deemed made by the Borrower on or after the date hereof during
the Waiver Period pursuant to Section 3.02 of the Credit Agreement shall be
deemed qualified to such extent.
Section 4. Borrowings. (a) The Borrower agrees that during the period
from the date hereof until 5:30 P.M. (New York City time) on July 30, 1999, it
will not give any Notice of Borrowing for Swingline Loans or Revolving Credit
Loans in an amount in excess of its actual cash needs in the ordinary course of
business (net of other sources of funds available or expected to be available to
it, including previous Borrowings) during the three-day period beginning with
the related date of Borrowing, for amounts it actually intends to pay and
determined consistent with the Borrower's historical cash management practices
(it being agreed that such practices may need to take into account any changes
in funds availability made by the Vencor Companies' cash management banks as a
result of Vencor's current financial condition), as certified in reasonable
detail (including a breakdown by category of the expenses or other amounts to be
paid during such periods) by the Borrower's Chief Financial Officer or Treasurer
in a certificate accompanying such Notice of Borrowing, provided that:
(i) if the amount so determined is less than $1,000,000, such
Borrowing may be in the amount of $1,000,000;
(ii) the Borrower will not make any Borrowing for the purpose of making
payment of any rent or other sum payable to any Ventas Company under a
Master Lease Agreement except on the date a Vencor Company is actually
going to make such payment (as certified by the Borrower's Chief Financial
Officer or Treasurer in the certificate accompanying the related Notice of
Borrowing), and the requirement to make any such payment shall be
disregarded when determining the Borrower's actual cash needs on any day
prior to such day;
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(ii) the maximum amount of Swingline Borrowings and Revolving Credit
Borrowings and Aggregate LC Exposure that may be outstanding during the
Waiver Period may not exceed $55,000,000 (determined without including the
Aggregate LC Exposure on account of Letters of Credit outstanding on the
date of Waiver No. 1 (and any extensions or concurrent replacements thereof
that do not increase the amount thereof)); and
(iv) during any Freeze Period, the Borrower will not give any Notice
of Borrowing or request the issuance of any Additional Letter of Credit
other than for purposes of extending or concurrently replacing, without any
increase in the amount thereof, any Letter of Credit that was outstanding
on the date of Waiver No. 1 (or any previous extension or concurrent
replacement thereof), and during any Freeze Period neither the Revolving
Credit Lenders nor the Swingline Bank nor any LC Issuing Bank shall have
any obligation to fund any Borrowing or issue any Additional Letter of
Credit (other than as so qualified) (whether or not the related Notice of
Borrowing or notice of issuance was given before or during such Freeze
Period), provided that the foregoing does not affect the rights of the
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Swingline Bank and the obligations of the Revolving Credit Lenders under
Section 2.08(i) of the Credit Agreement.
(b) The Borrower further agrees that:
(i) all Borrowings made pursuant to this Section 4 shall be made and
remain outstanding solely as Base Rate Borrowings;
(ii) any Notice of Borrowing for a Borrowing of Revolving Credit Loans
during the Waiver Period shall be given not later than Noon (Eastern time)
on the date of such Borrowing and any Notice of Swingline Borrowing during
the Wavier Period shall be given not later than 1:00 P.M. (Eastern time) on
the date of the related Swingline Borrowing;
(iii) during the Waiver Period and at any time thereafter when any
Default has occurred and is continuing, the Applicable Margin, LC Fee Rate
and Commitment Fee Rate shall always be determined as if Level IX were
applicable, regardless of the actual Leverage Ratio;
(iv) during the Waiver Period and at any time thereafter when any
Default has occurred and is continuing, interest on all Base Rate Loans
shall be payable on the 22nd day of each month rather than quarterly and
letter of credit fees payable pursuant to Section 2.07(h) of the Credit
Agreement and commitment fees payable pursuant to Section 2.09 of the
Credit Agreement shall be payable on the 22nd day of each month instead
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of quarterly (and on each other date specified in the applicable section);
and
(v) during the Waiver Period and at any time thereafter when any
Default has occurred and is continuing, the Borrower may not elect any
Interest Period for a Fixed Rate Loan pursuant to Section 2.06 other than
one month or 30 days, as the case may be.
(c) The provisions of Section 4(a) (and for purposes thereof, of any
defined term used therein) may not be amended, waived, supplemented or modified
in any respect without the written consent of Lenders having outstanding
Revolving Credit Exposures and/or outstanding Facility A Loans in an aggregate
amount (excluding accrued interest) equal to at least 75% of the sum of (x) the
aggregate amount of the Revolving Credit Exposures at such time and (y) the
aggregate outstanding principal amount of Facility A Loans at such time.
Section 5. Additional Covenants. Each of Vencor and the Borrower agrees
that, so long as any Lender has any Credit Exposure under the Credit Agreement
or any interest or fee accrued thereunder remains unpaid:
(a) Vencor will deliver the following information to the Administrative
Agent:
(i) notice by facsimile immediately, and in any event on the same day,
if any Vencor Company either pays or fails to pay any rent or other amount
payable to any Ventas Company under any Master Lease Agreement when due
(without regard for any grace period);
(ii) notice by facsimile immediately, and in any event on the same day,
if the Borrower either makes or fails to make any payment of principal of
or interest on the 1998 Subordinated Notes when due (without regard for any
grace period);
(iii) notice by facsimile promptly, and in any event on the same day, of
receipt from any Ventas Company of (1) a notice pursuant to Section 16.1(b)
of any Master Lease Agreement demanding payment of any rent or other sum
payable under such Master Lease Agreement that was not paid when due, or
(2) a notice pursuant to the penultimate sentence of Section 16.1 of any
Master Lease Agreement terminating such Master Lease Agreement, in each
case together with a copy of such notice;
(iv) notice by facsimile promptly, and in any event on the same day, of
receipt from the trustee under the 1998 Subordinated Note Indenture or
Persons purporting to constitute the holders of at least 25% of the
outstanding 1998 Subordinated Notes of notice accelerating the
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maturity of the 1998 Subordinated Notes, together with a copy of such
notice, or of knowledge that such trustee or Persons purpor ting to be the
holders of 10% or more of the principal amount of the 1998 Notes have
commenced legal proceedings to collect any unpaid amount of principal of or
interest on the 1998 Subordinated Notes;
(v) notice by facsimile promptly, and in any event on the same day, of
(1) receiving notice or otherwise becoming aware that the obligor of any
Medicaid Receivable, Medicare Receivable or VA Receivable (or any agent
thereof) has collected a payment of any PPS Overpayment Amount by
exercising a right of set-off or recoupment (or any similar right) against
its obligations on account of such Receivable, (2) receipt of a demand by
such an obligor or agent for payment by a date certain of any PPS
Overpayment Amount or (3) making of a payment pursuant to the MOIC Letter,
specifying the amount of such payment so collected or made or amount
demanded and the cumulative amount (without duplication) of all such
payments made by, or so demanded or so collected from, the Vencor
Companies, in the aggregate, during the period from March 10, 1999 to the
date of such notice and, in any event, of determining that a Freeze Period
exists pursuant to clause (c) of the definition thereof;
(vi) by facsimile no later than 5:00 P.M. (Eastern time) on each
Tuesday (or, if such day is not a Domestic Business Day, the next
succeeding Domestic Business Day), a report setting forth for each day (a
"Census Measurement Day") during the seven-day period ending on the day
preceding such report the 10-day moving average of the daily census in (1)
its hospitals (the "Hospital Daily Census") and (2) its nursing homes (the
"Nursing Homes Daily Census") (all such calculations to be made in a manner
consistent with Vencor's historical practices in compiling and reporting
such data); and
(vii) for each month (with sufficient copies for each Lender) a copy of
Vencor's monthly management operating report (including financial
statements) for such month, to be in substantially the same format and
level of detail as the prior period report delivered to the Agents in
connection with the negotiation of Waiver No. 2 (with such exclusions and
variations as the Agents may approve) and to be delivered within 45 days
after the end of such month if it is the last month of a fiscal quarter and
in all other cases within 30 days after the end of such month.
(b) For each Census Measurement Day, the Hospital Daily Census shall be
no less than 2,500 and the Nursing Home Daily Census shall be no less than
29,000.
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Section 6. Miscellaneous Other Provisions. (a) The rights of each Lender
Party pursuant to clause (ii) of Section 12.03(a) of the Credit Agreement shall
be determined without giving effect to this Waiver No. 3 or the Prior Waivers.
Without limiting the generality of Section 12.03(a), the Borrower agrees that it
will pay on demand all statements for fees and expenses (which may include
amounts on account) of any financial, accounting or valuation advisers or
special counsel retained by the Agents or the steering committee for the
Lenders, as well as all out-of-pocket expenses incurred by either Agent or any
member of the steering committee in connection with it acting as such.
(b) The right of the Borrower pursuant to Section 12.06(c) to consent to
any Assignee and the related assignment shall be determined without giving
effect to this Waiver No. 3, and any Assignee and the related assignment shall
always (including any time after expiration of the Waiver Period) be subject to
the consent of the Administrative Agent regardless of whether any Event of
Default has occurred and is continuing.
(c) The amount specified in Section 9.02(k) of the Credit Agreement was
permanently reduced from $20,000,000 to $1,000,000 pursuant to Waiver No. 2.
(d) The Documentation Agent, in its capacity as Leasehold Mortgagee with
respect to the Master Lease Agreements, is authorized and directed to confirm
that the provisions of the May 8 Amendment No. 2 to the Second Standstill
Agreement between Vencor and Ventas, bearing on certain cure rights of the
Vencor Companies under the Master Lease Agreements, shall neither shorten nor
extend the cure period for the Leasehold Mortgagee pursuant to Section 22.4 of
the Master Lease Agreements.
Section 7. Lapse of Waiver. Vencor agrees that its failure to comply with
any provision of this Waiver No. 3 (which shall include the failure, for
whatever reason, of the Hospital Daily Census or the Nursing Home Daily Census
to be at or above the applicable level specified in Section 5(b)) shall cause
the waivers granted hereby to cease to be in effect (i) in the case of clauses
(i) through (v) of Section 5(a), if such failure continues for one Domestic
Business Day (without the requirement of any notice from the Administrative
Agent or any Lenders), (ii) in the case of clause (vii) of Section 5(a), if such
failure continues for more than five days after notice from the Administrative
Agent given at the direction of the Required Basic Lenders and (iii) in all
other cases, immediately and without the requirement of any prior notice from or
further action on the part of any Lender or the Agents.
Section 8. Representations Correct; No Default. Vencor represents and
warrants that, except as expressly waived hereby, on and as of the date hereof
(i) the representations and warranties contained in the Credit Agreement are
true as
9
<PAGE>
though made on and as of the date hereof and (ii no Default has occurred
and is continuing. Vencor further represents and warrants that:
(a) the financial statements in the 1998 10-K fairly present in all
material respects, in conformity with generally accepted accounting principles,
the consolidated financial position of Vencor and its consolidated subsidiaries
at the end of such year and their consolidated results of operations and cash
flows for such year;
(b) the financial statements in the 1st Quarter 10-Q fairly present in
all material respects, in conformity with generally accepted accounting
principles (subject to normal year-end adjustments and the absence of
footnotes), the consolidated financial position of Vencor and its consolidated
subsidiaries at the end of such quarter and their consolidated results of
operations for such quarter; and
(c) the information (other than projections and forecasts) included in the
May 20 Meeting Materials, when taken as a whole together with the other
Disclosure Materials, is true and accurate in all material respects or based on
reasonable estimates, and not incomplete by omitting to state any fact necessary
to make such information, when taken as a whole together with the other
Disclosure Materials, not misleading in any material respect in light of the
circumstances under which such information was provided. The projections and
forecasts included in the May 20 Meeting Materials were based on reasonable
assumptions and, when prepared, represented a reasonable estimate of the future
performance of the Vencor Companies (subject to any express disclaimers set
forth in the May 20 Meeting Materials).
Section 9. Counterparts; Effectiveness. (a) This waiver may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
(b) This Waiver No. 3 shall become effective as of the date hereof when
the Documentation Agent shall have received duly executed counterparts hereof
signed by Vencor, the Borrower and the Required Basic Lenders (or, in the case
of any Lender as to which an executed counterpart shall not have been received,
the Documentation Agent shall have received telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by such
Lender).
(c) Promptly after this Waiver No. 3 has become effective, the Borrower
shall pay to the Administrative Agent, in immediately available funds, for the
account of each Basic Lender that has evidenced its agreement hereto as provided
in Section 9(b) by 5:00 P.M. (Eastern time) on the later of (i) May 27, 1999 and
(ii) the date the Documentation Agent issues a notice to the Basic Lenders
saying
10
<PAGE>
that this Waiver No. 3 has become effective, a waiver fee in an amount equal to
0.10% of the sum of (A) the Revolving Credit Commitment of such Lender and (B)
the aggregate outstanding principal amount of the Facility A Loans of such
Lender (as at the opening of business on the date hereof).
(d) Except as expressly set forth herein, the waivers contained herein
shall not constitute a waiver or amendment of any term or condition of the
Credit Agreement or any other Financing Document, and all such terms and
conditions shall remain in full force and effect and are hereby ratified and
confirmed in all respects. Each of Vencor and the Borrower understands and
accepts the interim nature of the waivers provided hereby, and agrees that no
failure or delay by the Lender Parties, or any of them, in exercising any right,
power or privilege under this Waiver No. 3, either Prior Waiver or any Financing
Document, or any other action taken or not taken or statement made during the
period that either Prior Waiver was in effect or this Waiver No. 3 is in effect
shall operate as a waiver thereof or obligate any Lender Party to agree to an
extension of the waivers granted hereby or any other waivers, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise of thereof or of any other right, power or privilege.
The waivers set forth in clauses (iv) and (v) of Section 2(a) are solely for the
purpose of clarifying the ability of the Borrower during the Waiver Period,
subject to the terms hereof, to continue to have available to it Revolving
Credit Loans, Swingline Loans and Additional Letters of Credit, and do not
constitute a waiver, release or other diminution of any claim, cause of action
or other right that any Lender Party may have against any Person on account of
or in any way based on any representation and warranty made under any Financing
Document having been incorrect in any respect when made or deemed made, all of
which claims, causes of action and other rights are expressly preserved.
Section 10. Governing Law. THIS WAIVER NO. 3 SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Waiver No. 3 to be
duly executed by their respective authorized officers as of the day and year
first above written.
VENCOR OPERATING, INC.
By
------------------------------------------------
Name:
Title:
VENCOR, INC.
By
------------------------------------------------
Name:
Title:
LENDERS
-------
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
------------------------------------------------
Name:
Title:
NATIONSBANK, N.A.
By
------------------------------------------------
Name:
Title:
PARIBAS
By
------------------------------------------------
Name:
Title:
12
<PAGE>
By
------------------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By
------------------------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By
------------------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By
------------------------------------------------
Name:
Title:
By
------------------------------------------------
Name:
Title:
FLEET NATIONAL BANK
By
------------------------------------------------
Name:
Title:
13
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH
By
------------------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By
------------------------------------------------
Name:
Title:
SOCIETE GENERALE
By
------------------------------------------------
Name:
Title:
TORONTO-DOMINION (TEXAS), INC.
By
------------------------------------------------
Name:
Title:
WACHOVIA BANK, N.A.
By
------------------------------------------------
Name:
Title:
14
<PAGE>
ABN AMRO BANK N.V.
By
------------------------------------------------
Name:
Title:
By
------------------------------------------------
Name:
Title:
BANK ONE, KENTUCKY, NA
By
------------------------------------------------
Name:
Title:
COMERICA BANK
By
------------------------------------------------
Name:
Title:
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By
------------------------------------------------
Name:
Title:
By
------------------------------------------------
Name:
Title:
15
<PAGE>
NATIONAL CITY BANK OF KENTUCKY
By
------------------------------------------------
Name:
Title:
BANK OF AMERICA NT & SA
By
------------------------------------------------
Name:
Title:
THE BANK OF NEW YORK
By
------------------------------------------------
Name:
Title:
U.S. BANK
By
------------------------------------------------
Name:
Title:
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By
------------------------------------------------
Name:
Title:
By
------------------------------------------------
Name:
Title:
16
<PAGE>
FIRSTAR BANK, N.A.
By
------------------------------------------------
Name:
Title:
AMSOUTH BANK
By
------------------------------------------------
Name:
Title:
FIRST AMERICAN NATIONAL BANK
By
------------------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By
------------------------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED
By
------------------------------------------------
Name:
Title:
17
<PAGE>
BANK OF LOUISVILLE
By
------------------------------------------------
Name:
Title:
FIFTH THIRD BANK
By
------------------------------------------------
Name:
Title:
MICHIGAN NATIONAL BANK
By
------------------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
------------------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By
------------------------------------------------
Name:
Title:
18
<PAGE>
HIBERNIA NATIONAL BANK
By
------------------------------------------------
Name:
Title:
THE SUMITOMO BANK LIMITED
By
------------------------------------------------
Name:
Title:
19
<PAGE>
SUMMIT BANK
By
------------------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA
By
------------------------------------------------
Name:
Title:
FIRST DOMINION FUNDING I
By
------------------------------------------------
Name:
Title:
GOLDMAN SACHS CREDIT PARTNERS LP
By
------------------------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL SENIOR
INCOME TRUST
By
------------------------------------------------
Name:
Title:
20
