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Exhibit 10.11
FIFTH AMENDMENT TO GUARANTEE AND
CONTINGENT PURCHASE AGREEMENT
THIS FIFTH AMENDMENT TO GUARANTEE AND CONTINGENT PURCHASE AGREEMENT
(the "AMENDMENT") is entered into as of September 1, 1995 by and among NATIONAL
HEALTHCARE L.P., a Delaware limited partnership (formerly known as National
HealthCorp L. P.) ("NHLP"), NATIONAL HEALTHCARE CORPORATION, a Tennessee
corporation (formerly known as National Health Corporation) ("NATIONAL") (NHLP
and National may sometimes be referred to herein collectively as the
"GUARANTORS"), THIRD NATIONAL BANK IN NASHVILLE ("TNB"), SOUTHTRUST BANK OF
ALABAMA, NATIONAL ASSOCIATION ("ST"), FIRST UNION NATIONAL BANK OF TENNESSEE
(formerly known as Dominion Bank of Middle Tennessee) ("FUNB"), FIRST AMERICAN
NATIONAL BANK ("FANB") and FIRST CITY BANK ("FCB") (TNB, ST, FUNB, FANB and FCB
are hereinafter sometimes collectively referred to as the "BANKS"), and THIRD
NATIONAL BANK IN NASHVILLE, as agent for the Banks (in such capacity, the
"AGENT").
WITNESSETH:
WHEREAS, pursuant to that certain Guarantee and Contingent Purchase
Agreement dated as of December 16, 1988 by and among the Guarantors, TNB, ST,
Irving Trust Company (later known as The Bank of New York) ("BONY") and Sovran
Bank/Central South (later known as Sovran Bank/Tennessee) ("SBT") and Agent, as
amended by First Amendment to Guarantee and Contingent Purchase Agreement dated
October 17, 1991 by and among Guarantors, TNB, ST and Agent, as further amended
by Second Amendment to Guarantee and Contingent Purchase Agreement dated May 21,
1992 by and among Guarantors, Banks and Agent, as further amended by Third
Amendment to Guarantee and Contingent Purchase Agreement dated October 14, 1993
by and among the Guarantor, the Banks and Agent and as further amended by Fourth
Amendment to Guarantee and Contingent Purchase Agreement dated December 30, 1993
(as amended, the "GUARANTEE"), the Guarantors jointly and severally guaranteed,
among other things, repayment to the Banks of the following described notes
executed by National Health Corporation Leveraged Employee Stock Ownership Trust
(now known as National HealthCare Corporation Leveraged Employee Stock Ownership
Trust) (the "BORROWER" or the "ESOP") to the order of the TNB, ST, BONY and SBT,
respectively (as may be amended or modified from time to time, the "NOTES"):
(a) a certain non-recourse promissory note dated as of
December 16, 1988 in the original principal amount of Sixteen Million
Dollars ($16,000,000) executed by Borrower payable to TNB, together
with interest and other charges thereon;
(b) a certain non-recourse promissory note dated December 16,
1988 in the original principal amount of Fifteen Million Dollars
($15,000,000) executed by Borrower
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payable to BONY, together with interest and other charges thereon, as
assigned to TNB pursuant to that certain Assignment of Note and Loan
Documents dated October 18, 1991 executed by BONY in favor of TNB;
(c) a certain non-recourse promissory note dated December 16,
1988 in the original principal amount of Nine Million Dollars
($9,000,000) executed by Borrower payable to SBT, together with
interest and other charges thereon, as assigned to TNB pursuant to that
certain Assignment of Note and Loan Documents dated October 17, 1991
executed by SBT, in favor of TNB; and
(d) a certain non-recourse promissory note dated December 16,
1988 in the original principal amount of Ten Million Dollars
($10,000,000) executed by Borrower payable to ST, together with
interest and other charges thereon;
WHEREAS, the Guarantors, the Banks and the Agent desire to amend the
Guarantee as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, the parties agree as follows:
1. Section 1.01 of the Guarantee entitled "Certain Defined Terms"
is hereby amended by adding the following defined terms in the appropriate
alphabetical order:
"MAINTENANCE CAPITAL EXPENDITURES" means, with respect to any
Person, expenditures for the improvement, maintenance or renovation of
assets which are capitalized in accordance with GAAP, but specifically
excluding, without limitation, the expansion of existing nursing homes
or other health care related facilities and the acquisition,
development or construction of new property.
"MAINTENANCE CAPITAL EXPENDITURE AMOUNT" MEANS, WITH RESPECT
to NHLP for any period, the greater of (a) actual Maintenance Capital
Expenditures made during such period or (b) Five Hundred Dollars
($500.00) per bed owned or leased by NHLP during such period or any
portion thereof.
"NHC - REIT" means National Health Investors, Inc., a Maryland
corporation, its successors and assigns.
"REPORTED TAXABLE INCOME" means, with respect to NHLP for any
fiscal year, the ordinary and portfolio income of NHLP as reported to
the Internal Revenue Service on Form 1065 (or any successor form) for
such fiscal year.
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2. Section 2.01 of the Guarantee entitled "Joint and Several
Guarantee" is hereby amended by deleting the first phrase of the first sentence
therein in its entirety and substituting in lieu thereof the following:
"For value received in consideration of Banks' making the Loan
to Borrower and subject to Section 2.12 hereof,. . ." .
3. Section 2.06 of the Guarantee entitled "Remedies" is hereby
amended in its entirety to read as follows:
2.06 Remedies. The Guarantors agree that as between the
Guarantors on the one hand and the Banks on the other hand, the
obligations of the Borrower guaranteed hereunder may be declared to be
forthwith due and payable as provided in Section 11.2 of the Loan and
Security Agreement for purposes of this Section 2, notwithstanding any
stay, injunction or other prohibition preventing such declaration as
against the Borrower or any other guarantor of the Guaranteed
Obligations and that, in the event any such stay, injunction or other
prohibition shall be in effect at any time when any Event of Default
shall have occurred and be continuing, such obligations (whether or not
due and payable by the Borrower) may, for purposes of this Section 2,
be declared by Agent on behalf of Banks to be immediately due and
payable by the Guarantors subject to Section 2.12 herein, and Agent on
behalf of Banks may pursue any or all of Banks' remedies available
under the Collateral Documents. In addition, and without limitation of
the foregoing, at any tune when any Event of Default shall have
occurred and be continuing, Agent on behalf of Banks may, by notice to
the Guarantors and by tender to NHLP on behalf of the Guarantors and
NHC-REIT of the Note with an instrument of assignment attached thereto,
require the Guarantors and NHC-REIT to purchase the Loan (and the
Note), whereupon the Guarantors and NHC-REIT shall forthwith purchase
the Loan (and the Note) by payment to the Banks of an amount
(representing the purchase price therefor) in immediately available
funds equal to the sum of the principal of and accrued and unpaid
interest on the Loan at the time of such purchase together with any
amount that would be owing under Section 11.2 of the Loan and Security
Agreement in the event the Loan were being paid in full at the time of
such purchase (the "Purchase Price") payable thirty-eight percent (38%)
by the Guarantors and sixty-two percent (62%) by NHC-REIT. Such tender
shall be deemed to be made and title to the Note shall be deemed to
have passed to the Guarantors and NHC-REIT if the Agent on behalf of
Banks notify NHLP that the Agent on behalf of Banks is holding the Note
for the account of the Guarantors and NHC-REIT, whereupon the
Guarantors shall become jointly and severally obligated to immediately
pay their portion of the Purchase Price to the Agent on behalf of the
Banks. In connection with any legal proceeding instituted by the Agent
on behalf of Banks to enforce the obligation of the Guarantors to pay
their portion of the Purchase Price, the Guarantors hereby waive any
defense based upon adequate remedy at law. The
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Guarantors hereby expressly waive tender of the Note in connection with
any purchase thereof by the Guarantors required hereunder as a result
of an Event of Default specified in Article XI of the Loan and Security
Agreement. Any such purchase shall be made by the Guarantors from the
Agent on behalf of Banks without recourse and without representation or
warranty of any kind whatsoever. Following any such purchase, the
Guarantors shall remain obligated under this Section 2 in respect of
their guarantee of any other amounts owing by the Borrower under the
Loan and Security Agreement that may remain unpaid at the time.
4. Section 2.11 of the Guarantee entitled "Collateral Documents"
is hereby amended in its entirety to read as follows:
2.11 Collateral Documents. This Guarantee and Contingent
Purchase Agreement is secured by the Loan Documents described in
Section 3.2 of the Loan and Security Agreement as securing this
Agreement (herein the "COLLATERAL DOCUMENTS"). The Guarantors agree
that any breach under any Loan Document is and shall be deemed a breach
under this Agreement and the Guarantors hereby agree that upon the
occurrence of such breach or upon the occurrence of a breach of any
promise, covenant, representation or warranty contained herein, that
the Agent shall have the right to exercise the remedies set forth in
Section 2.06 of this Agreement.
5. Section 2 of the Guarantee entitled "The Guarantee
("Guarantee") and Collateral Documents" is hereby amended by adding the
following new Section 2.12 after existing Section 2.11 thereof:
2.12 Limited Guaranty. Guarantors' joint and several liability
to the Banks under this Agreement is limited to thirty-eight percent
(38%) of the sum of (A) the principal balance outstanding under the
Note upon the occurrence of an Event of Default, (B) interest accruing
under the Note, (C) interest on said amount at the maximum lawful rate
of interest permitted by law until paid measured from the date Agent
makes demand upon any Guarantor for payment under this Agreement, (D)
all other amounts owing by the Borrower under the Loan and Security
Agreement, and (E) of all reasonable attorneys' fees and expenses
incurred by Agent in the collection of the Guaranteed Obligations or
the protection of Agent's or any Bank's rights under this Agreement. If
any payments are received by Agent on behalf of the Banks in payment of
the Guaranteed Obligations from any source other than either Guarantor,
those payments will not reduce either Guarantor's liability under this
Agreement to the extent there remains an outstanding unpaid balance of
the Guaranteed Obligations.
6. Section 4.01(a)(iii) of the Guarantee entitled "Quarterly
Compliance" is hereby amended in its entirety to read as follows:
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(iii) Quarterly Compliance. NHLP and National
shall each furnish to Agent within forty-five (45) days after
the close of each quarter a statement confirming that no
default exists under this Agreement with respect to the party
furnishing this statement, and NHLP shall furnish to Agent
within forty-five (45) days after the close of each quarter
calculations showing compliance with Section 4.01(h) hereof.
7. Section 4.01(a) of the Guarantee entitled "Financial
Statements" is hereby amended by adding the following new Section 4.01(a)(iv)
after existing Section 4.01(a)(iii) thereof:
(iv) Other Reports. NHLP shall furnish to Agent
within ninety (90) days after the last day of the fourth
quarter of each fiscal year, (a) a calculation of Reported
Taxable Income for such fiscal year consistent with a
calculation which will be used to determine the Reported
Taxable Income to be filed on Form 1065 (or any successor
form) of the Internal Revenue Service by NHLP for such fiscal
year, and (b) promptly after filing thereof, a final copy of
Form 1065 (or any successor form) as filed by NHLP for such
fiscal year.
8. Section 4.01 (h) of the Guarantee entitled "Financial
Covenants" is hereby amended in its entirety to read as follows:
(h) Financial Covenants. NHLP shall comply with the following
financial covenants, with determination of compliance being made
quarterly:
(i) [INTENTIONALLY OMITTED].
(ii) [INTENTIONALLY OMITTED].
(iii) Funded Debt to Adjusted Tangible Net Worth
Ratio. NHLP shall at all times maintain a "Funded Debt" to
"ADJUSTED TANGIBLE NET WORTH" ratio of no more than 3.5 to 1.
"FUNDED DEBT" is defined as longterm debt (but excluding
Subordinated Debt), plus notes payable, plus current
maturities of long-term debt, plus capitalized and operating
leases, plus all guaranties; and "Adjusted Tangible Net Worth"
is defined as total equity of NHLP, plus approximately Fifteen
Million Seven Hundred Forty-Five Thousand Dollars
($15,745,000.00) in deferred income resulting from the profit
on the sale of nursing home properties to National as equity
(which amount shall decrease in accordance with NHLP's books
and records that comply with GAAP), plus
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Subordinated Debt, minus the general intangibles of NHLP,
including, without limitation, goodwill and unamortized loan
costs in excess of One Million Four Hundred Thousand Dollars
($1,400,000.00).
(iv) [INTENTIONALLY OMITTED].
(v) Debt Service Coverage. NHLP shall at all
times maintain a minimum "Debt Service Coverage" of 1.3 to 1.
"DEBT SERVICE COVERAGE" is defined as the ratio of (i) the
annualized sum of net income, plus depreciation/ amortization,
plus interest expense, minus the Maintenance Capital
Expenditures Amount for such period, to (ii) interest expense,
plus current maturities of long term debt, plus any payments
required to fund any guaranty obligations of NHLP.
(vi) Notes Receivable. NHLP shall at all times
limit the balance of notes receivable as set forth on its
financials to no more than NHLP's Adjusted Tangible Net Worth;
provided, however, that the notes receivable listed on Exhibit
I attached to the Loan Agreement and Security Agreement shall
be excluded from the balance of notes receivable as set forth
on NHLP's financials in determining compliance with this
subparagraph (h)(vi). The listing of notes receivable on
Exhibit I attached to the Loan and Security Agreement may be
modified, amended, increased and reduced from time to time by
the Majority Banks; provided, however, that any nursing home
project or use of Loan proceeds approved by Majority Banks
which results in a note receivable to NHLP automatically shall
be excluded from the balance of notes receivables and shall be
listed on Exhibit I.
(vii) Fixed Charge Coverage Ratio. NHLP shall at
all times maintain a Fixed Charge Coverage Ratio of not less
than 1.10 to 1. "Fixed Charge Coverage Ratio" is defined as
(a) the annualized sum of net income, plus depreciation and
amortization, plus interest expense, plus lease expense
(excluding any components included in interest expense and
amortization), minus distributions paid to holders of units of
NHLP for the fiscal year, as projected by NHLP in written
financial projections furnished to the Banks or as actually
paid, whichever is greater, divided by (b) the sum of interest
expense, plus current maturities of long-term debt, plus lease
expense (excluding any components included in interest expense
and current maturities of long-term debt) plus any payments
required to fund any obligations guaranteed by NHLP,
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including, without limitation, the Guaranteed Obligations, all
as determined in accordance with GAAP.
9. Section 4.02(a) of the Guarantee entitled "Limitations on
Payments" is retitled "Limitations on Payments and Distributions" and is amended
to add the following new Section 4.02(a)(ii) after existing Section 4.02(a)(i)
thereof:
(ii) Restrictions on Distributions. NHLP shall
not make distributions to the holders of units of NHLP other
than distributions in respect of any fiscal year which in the
aggregate do not exceed sixty-two and one-half percent (62.5%)
of Reported Taxable Income for such fiscal year, provided,
however, that in the event such distributions in respect of
any fiscal year (for purposes of this Section, the "First
Year") exceed sixty percent (60%) of Reported Taxable Income
for such year, NHLP shall not make distributions to holders of
units of NHLP pursuant to this Section in respect of the next
succeeding fiscal year (for purposes of this Section, the
"Second Year") which in the aggregate, together with
distributions made in respect of the First Year, exceed sixty
percent (60%) of the sum of Reported Taxable Income for the
First Year and the Second Year.
10. Section 4.02(b)(ii) of the Guarantee entitled "Tangible Net
Worth" is hereby deleted in its entirety and the remaining subsections are
renumbered accordingly.
11. Section 5(a) of the Guarantee is hereby amended in its
entirety to read as follows:
(a) NHLP and NHC-REIT shall on December 16, 1998 and on
December 31, 2001, and, if agreed to and as negotiated by NHLP,
NHC-REIT and the Banks, thereafter, (each of which dates is referred to
as a or the "NOTE PURCHASE DATE") purchase, upon tender by all of the
Banks to NHLP on behalf of NHLP and NHC-REIT of the Note with an
instrument of assignment attached thereto, the Loan evidenced by the
Note (and the Note evidencing the same) by payment to the Banks of an
amount (representing the purchase price therefor) in immediately
available funds equal to the sum of the principal of and accrued and
unpaid interest on the Note at the time of such purchase together with
any amounts that would be owing under the Loan and Security Agreement
in the event the Note was being paid in full at the time of such
purchase (the "Purchase Price") payable thirty-eight percent (38%) by
NHLP and sixty-two percent (62%) by NHC-REIT. Such tender shall be
deemed automatically to be made, and title to the Note shall be deemed
automatically to have passed to NHLP and NHC
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REIT on each Note Purchase Date, whereupon NHLP and NHC-REIT
shall become obligated forthwith to pay the Purchase Price to
the Banks, unless (i) Agent shall have notified NHLP on
behalf of NHLP and NHC-REIT no less than sixty (60) days
prior to the applicable Note Purchase Date that all of the
Banks elect not to so tender, or (ii) NHLP and NHC-REIT
request the Banks (through the Agent) no less than ninety
(90) days prior to the applicable Note Purchase Date that the
Banks not so tender, and Agent shall have given the notice
referred to in clause (i) above within the time period
provided therein, or (iii) the Agent shall notify NHLP on
behalf of NHLP and NHC-REIT no less than thirty (30) days
prior to the applicable Note Purchase Date that the interest
of an Electing Bank (as hereinafter defined) in its Note, or
in its portion of a Note, as applicable, has been purchased
by a Purchasing Bank (as hereinafter defined), whereupon, in
any such case, NHLP and NHC-REIT shall not be obligated on
such Note Purchase Date to pay the Purchase Price to the
Banks. The giving of notice by Agent under clause (i) above
or (iii) shall not affect in any way the rights of the Banks
to tender all of the Notes to NHLP on behalf of NHLP and
NHC-REIT with respect to any subsequent Note Purchase Date.
The Banks and NHLP agree that if any Bank determines to take
advantage of the automatic tender provisions hereof (the
"ELECTING BANK"), then all Banks shall be bound by such
determination unless no less than thirty (30) days prior to
the applicable Note Purchase Date another Bank or Banks (the
"Purchasing Bank") gives notice to Agent in writing that the
Purchasing Bank desires to purchase and does so purchase the
Electing Bank's Note or interest in a Note, as applicable, by
thirty (30) days prior to the applicable Note Purchase Date,
but in no event shall any Bank be obligated to purchase the
Electing Bank's Note or interest in a Note. The Purchasing
Bank shall pay the Electing Bank an amount equal to all
principal, interests, fees and other amounts owed or accrued
to the Electing Bank to the date on which such purchase
becomes effective, but no later than thirty (30) days prior
to the applicable Note Purchase Date (the "NOTE PAYMENT").
Upon receipt of the Note Payment, the Electing Bank shall
assign to the Purchasing Bank the Electing Bank's Note or
interest in the Note (and deliver the original Note to the
Purchasing Bank if held by the Electing Bank) pursuant to the
form of Assignment attached hereto as Exhibit A.
12. The Guarantors hereby reaffirm for the Banks and the Agent all
of their respective obligations, representations, warranties and covenants
contained in the Guarantee.
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13. The Guarantors hereby represent that no event has occurred and
no claim, offset, defense or other condition exists which with the passage of
time or giving of notice would constitute a default under any provisions of the
Guarantee, as hereby amended.
14. The Guarantors hereby further represent that no event has
occurred and no claim, offset, defense or other condition exists that would
relieve either NHLP and/or National of any of their respective obligations to
the Banks and/or Agent under the Guarantee, as hereby amended.
15. All terms used in this Amendment shall have the same meanings
as in the Guarantee unless otherwise defined herein.
16. Except as specifically modified herein, the Guarantee shall
remain in full force and effect, and nothing herein is intended to nor shall it
release, diminish or waive any rights of the Banks and Agent under Guarantee.
17. This Amendment may be executed in more than one counterpart,
all of which taken together, shall constitute one and the same instrument.
18. This Amendment shall be governed by and construed in accordance
with the laws of the State of Tennessee.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
GUARANTORS:
NATIONAL HEALTHCARE L.P.,
a Delaware limited partnership
By: NHC, Inc., general partner
By: /s/
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Title: Sr VP
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NATIONAL HEALTHCARE CORPORATION,
a Tennessee corporation
By: /s/
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Title: Sr VP
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BANKS:
THIRD NATIONAL BANK IN NASHVILLE
By: /s/
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Title: VP
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SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION
By: /s/
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Title: Group V.P.
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FIRST UNION NATIONAL BANK OF TENNESSEE
By: /s/
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Title: Vice President
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FIRST AMERICAN NATIONAL BANK
By: /s/
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Title: AVP
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FIRST CITY BANK
By:/s/
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Title: President and C.E.O
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AGENT:
THIRD NATIONAL BANK IN NASHVILLE,
Agent
By:
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Title:
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FIRST CITY BANK
By:
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Title:
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AGENT:
THIRD NATIONAL BANK IN NASHVILLE,
Agent
By:/s/
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Title: VP
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