1
EXHIBIT 10.20
FIRST AMENDMENT TO GUARANTY OF PAYMENT AGREEMENT
THIS FIRST AMENDMENT TO GUARANTY OF PAYMENT AGREEMENT (herein
called the "Amendment") made as of October 29, 1999, to be effective for all
purposes as of July 1, 1999, by and among Alterra Healthcare Corporation, a
Delaware corporation, formerly known as Alternative Living Services, Inc.
("Guarantor"), Bank United, individually and as agent for itself and certain
additional lenders ("Agent").
W I T N E S S E T H:
WHEREAS, ALS Holdings, Inc., a Delaware corporation, ALS Wisconsin
Holdings, Inc., a Delaware corporation and Agent entered into that certain
Amended and Restated Financing and Security Agreement dated as of February 12,
1999, (as amended, supplemented, or restated to the date hereof, the "Financing
Agreement"), for the purpose and consideration therein expressed, whereby
Lenders (as defined in the Original Agreement) became obligated to make loans to
Borrower (as defined in the Financing Agreement) as therein provided; and
WHEREAS, in connection with the transactions contemplated by the
Financing Agreement, Guarantor executed and delivered to Agent, for the benefit
of Lenders, that certain Guaranty of Payment Agreement dated as of February 12,
1999 (as amended, supplemented or restated to the date hereof, the "Original
Guaranty"), pursuant to which Guarantor guaranteed the payment and performance
of all obligations of Borrower under the Financing Agreement; and
WHEREAS, Guarantor and Agent desire to amend the Original Guaranty to
amend the ratio of EBITDAR to Interest and Rent;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Guaranty, in
consideration of the loans which may hereafter be made by Lenders to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
Section 1.1. Terms Defined in the Original Guaranty. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Guaranty shall have the same meanings whenever used in
this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.
2
"Amendment" means this First Amendment to Guaranty of Payment
Agreement.
"Guaranty" means the Original Guaranty as amended hereby.
ARTICLE II.
Amendments to Original Guaranty
Section 2.1. Financial Covenants.
(a) Section 3.2.3 of the Original Guaranty is hereby amended in its
entirety to read as set forth below:
"Maintain a minimum ratio of (a) EBITDAR for the four
consecutive fiscal quarters ending on any Calculation Date to (b) the
sum of Interest plus Rent, all for the four consecutive fiscal quarters
ending on such Calculation Date, of not less than the ratio for the
applicable period set forth below:
Period Ratio
------ -----
From and including 1.4 to 1.0
September 30, 1999
through and including
December 31, 2000
From and including 1.5 to 1.0
January 1, 2001 and thereafter
For purposes of this Section 3.2.3, the term "Calculation Date" shall
mean the last date of each fiscal quarter of Guarantor."
(b) The Original Guaranty is hereby amended by adding the following
Section 3.2.3A immediately following Section 3.2.3 thereof:
"3.2.3A Minimum Liquidity.
Maintain Liquidity, at all times during the term of the Credit
Facility, measured quarterly, of not less than the greater of (a) $15,000,000 or
(b) the Guarantor's Debt Service for the ninety (90) day period beginning on the
date of determination. For purposes of this Section 3.2.3A, the term `Liquidity'
shall mean, at any time, the sum of (i) all cash of the Guarantor at such time
plus (ii) seventy-five percent (75%) of the aggregate costs (as determined in
accordance with GAAP) expended by Guarantor with respect to all Facilities owned
by the Guarantor at such time that are not subject to a Lien (including any such
Facilities that are under construction). The term `Guarantor's Debt Service'
means, with respect to any period, the sum of all lease payments and
3
interest and principal payments payable during such period on the aggregate
indebtedness of the Guarantor for Facilities that, at the time of determination,
do not constitute Guarantor's Stabilized Projects. The term `Guarantor's
Stabilized Project' means any Facility owned by Guarantor that (i) has a
Resident Occupancy of at least 95% and (ii) has achieved a ratio of Net
Operating Income to Debt Service of not less than 1.25 to 1.00 measured for
three consecutive months. The computation of the financial test set forth in
this Section shall be based on the Guarantor's quarterly financial statements
delivered to Lenders and the information used in the preparation thereof."
ARTICLE III.
Conditions of Effectiveness
Section 3.1. Effective Date. This Amendment shall become effective as
of July 1, 1999, when, and only when, Agent shall have received, at Agent's
office, a counterpart of this Amendment executed and delivered by Guarantor and
each Lender.
ARTICLE IV.
Representations and Warranties
Section 4.1. Representations and Warranties of Guarantor. In order to
induce each Lender to enter into this Amendment, Guarantor represents and
warrants to each Lender that:
(a) The representations and warranties contained in Article II of the
Original Guaranty are true and correct at and as of the time of the
effectiveness hereof.
(b) Guarantor is duly authorized to execute and deliver this Amendment
and is and will continue to be duly authorized to perform its obligations under
the Guaranty. Guarantor has duly taken all corporate action necessary to
authorize the execution and delivery of this Amendment and to authorize the
performance of the obligations of Guarantor hereunder.
(c) The execution and delivery by Guarantor of this Amendment, the
performance by Guarantor of its obligations hereunder and the consummation of
the transactions contemplated hereby do not and will not conflict with any
provision of law, statute, rule or regulation or of the articles of
incorporation and bylaws of Guarantor, or of any material agreement, judgment,
license, order or permit applicable to or binding upon Guarantor, or result in
the creation of any lien, charge or encumbrance upon any assets or properties of
Guarantor. Except for those which have been obtained, no consent, approval,
authorization or order of any court or governmental authority or third party is
required in connection with the execution and delivery by Guarantor of this
Amendment or to consummate the transactions contemplated hereby.
(d) When duly executed and delivered, each of this Amendment and the
Guaranty
4
will be a legal and binding obligation of Guarantor, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights and by
equitable principles of general application.
(e) The audited annual consolidated financial statements of Guarantor
dated as of December 31, 1998 and the unaudited quarterly consolidated financial
statements of Guarantor dated as of June 30, 1999 fairly present the
consolidated financial position at such dates and the consolidated statement of
operations and the changes in consolidated financial position for the periods
ending on such dates for Guarantor. Copies of such financial statements have
heretofore been delivered to each Lender. Since such dates no material adverse
change has occurred in the financial condition or businesses or in the
consolidated financial condition or businesses of Guarantor.
ARTICLE V.
Miscellaneous
Section 5.1. Ratification of Agreements. The Original Guaranty as
hereby amended is hereby ratified and confirmed in all respects. Any reference
to the Guaranty in any Financing Document shall be deemed to be a reference to
the Original Guaranty as hereby amended. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of Lenders under the Financing
Agreement, the Guaranty, or any other Financing Document nor constitute a waiver
of any provision of the Financing Agreement, the Guaranty or any other Financing
Document.
Section 5.2. Survival of Agreements. All representations, warranties,
covenants and agreements of Guarantor herein shall survive the execution and
delivery of this Amendment and the performance hereof, and shall further survive
until all of the Obligations are paid in full.
Section 5.3. Financing Documents. This Amendment is a Financing
Document, and all provisions in the Financing Agreement pertaining to Financing
Documents apply hereto.
Section 5.4. Governing Law. This Amendment shall be governed by and
construed in accordance the laws of the State of Texas and any applicable laws
of the United States of America in all respects, including construction,
validity and performance.
Section 5.5. Counterparts; Fax. This Amendment may be separately
executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Amendment. This Amendment may be validly executed by facsimile or
other electronic transmission.
THIS AMENDMENT AND THE OTHER FINANCING DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
5
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
Section 5.6. Consent of Lenders. Each Lender is executing this
Amendment to evidence its acknowledgment of, and consent to, the amendments to
the Original Guaranty contained herein.
[The Remainder Of This Page Has Been Intentionally Left Blank.]
6
IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.
ALTERRA HEALTHCARE CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President
BANK UNITED, AS AGENT AND
INDIVIDUALLY AS A LENDER
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
FIRSTAR BANK MILWAUKEE N.A.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
AMSOUTH BANK
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
