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EXHIBIT 10.2
FIRST AMENDMENT TO AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED FINANCING AND SECURITY
AGREEMENT (this "Agreement") is made as of the ____ day of November, 2000,
effective as of September 30, 2000, by and among ARC CAPITAL CORPORATION II, a
Tennessee corporation ("ARCC"), the other Borrowers, if any, listed on the
signature pages hereof (the "Additional Borrower", collectively with the
Original Borrower, the "Borrower") and BANK UNITED, as agent (the "Agent") as
agent for itself and the other lenders who are or shall be from time to time
participating as lenders (collectively, the "Lenders") hereunder pursuant to the
Agency Agreements dated June 8, 1999 and October 1, 1999 or any amendment
thereto (as amended, restated or substituted from time to time the "Agency
Agreement").
RECITALS
A. The Lenders have provided to the Borrowers a credit facility (such
credit facility, as modified, increased, extended, restated or substituted, is
referred to hereinafter as the "Credit Facility" or the "Loan") in the maximum
principal sum of up to $100,000,000 or such greater amount not to exceed
$150,000,000 as the Lenders may from time to time commit to lend pursuant to any
Agency Agreement. Advances or readvances of the Loan have been made pursuant to,
and secured by, the provisions of that certain Amended and Restated Financing
and Security Agreement dated February 11, 2000 by and between the Agent and ARC
Capital Corporation II, a Tennessee corporation (the "Financing Agreement").
B. The advances under the Loan are evidenced by promissory notes made
or to be made by one or more of the Borrowers for the benefit of each of the
Lenders in the aggregate principal sum of the then-applicable Credit Facility
Committed Amount (as amended, restated, renewed or resubstituted from time to
time, the "Notes"). Each of the Notes is being amended pursuant to the terms of
a First Amendment to Promissory Note of even date herewith. The Notes are
secured by, among other things, certain Deeds of Trust (as defined in the
Financing Agreement) from the Borrowers in favor of the Agent for the benefit of
the Lenders covering such Borrowers' interest in the Land and the Improvements
for the applicable Facility (as defined in the Financing Agreement) or certain
assignments to the Lenders of Assigned Notes secured by Deeds of Trust payable
to Borrowers in connection with Synthetic Lease Transactions and Collateral
Assignments and such other real and personal property as shall be therein more
particularly set forth (collectively, the "Property"). The Credit Facility is
evidenced, secured and guaranteed by the Financing Documents (as defined in the
Financing Agreement).
C. The Borrowers obligations under the Credit Facility are guaranteed
by American Retirement Corporation, a Tennessee corporation (the "Guarantor")
pursuant to the terms of the Amended and Restated Guaranty of Payment Agreement
dated February 11, 2000 (the "Guaranty").
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D. The Borrowers have requested and the Lenders have agreed to modify
certain provisions of the Financing Agreement and the Guaranty.
E. The Lenders have required, as a condition to continuing to make
available the Credit Facility, that the Borrowers execute and deliver this
Agreement to the Agent.
NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Agent hereby
agree as follows:
1. The above Recitals are a part of this Agreement. Unless otherwise
expressly defined in this Agreement, terms defined in the Financing Agreement or
the Construction Agreement shall have the same meaning under this Agreement.
2. The Financing Agreement is hereby amended as follows:
(a) The following definitions in Section 1.1 of the Financing
Agreement are amended and restated in their entirety as follows:
"Interest Rate Margin" means, effective as of December 1, 2000 which
is the first day of the next Eurodollar Period, and thereafter, two
hundred sixty (260) basis points per annum; provided, however, for any
fiscal quarter in which the Guarantor's ratio of EBITDAR to Interest
and Rent equals or exceeds 1.50 to 1.00, the applicable interest rate
margin per annum shall be determined in accordance with the following
table:
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COLLATERAL VALUE RATIO INTEREST RATE MARGIN
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Greater than 65% 260 basis points
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Equal to or Less than 65% 250 basis points
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"Stabilized Project" means a Facility which has achieved Resident
Occupancy of at least 85% for three (3) consecutive months and a Debt
Service Coverage Ratio of not less than 1.25 to 1.00 for one full
fiscal quarter including a Facility which was a Development Project
which has satisfied the foregoing Resident Occupancy and Debt Service
Coverage Ratio requirements.
"Tangible Net Worth" means, at any time, the sum at such time of Net
Worth less the total of (a) all assets which would be classified as
intangible assets under GAAP, including goodwill, trademarks, trademark
applications, trade names, service marks, patent applications and
licenses, and deferred charges, (b) pre-opening costs, organizational
costs and deferred financing costs, and (c) advances or loans made to
or receivables from any unconsolidated affiliates of which the
Guarantor owns less than fifty percent (50%) or any stockholder of the
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Guarantor or any affiliate. All assets classified in the Guarantor's
financial statements as leaseholds of Senior Living Facilities or
leasehold acquisition costs related to Senior Living Facilities shall
be included as tangible assets in the calculation of its Tangible Net
Worth with the exception of leasehold acquisition costs, if any, for
the Senior Living Facility known as "Freedom Plaza Peoria".
(b) The last sentence of subsection (d) of Section 2.1 (The Loan)
which previously read as follows:
"No Eligible Project may remain in the Borrowing Base for more than
a period of thirty (30) full calendar months; however, such Eligible
Project will remain as Collateral unless released in accordance with
this Agreement."
is hereby deleted and replaced with the following sentences:
"At the option of the Lenders, the Borrowers shall be required to
remove an Eligible Project from the Borrowing Base at any time after it
has been in the Borrowing Base for thirty (30) full calendar months. In
such event, the Borrowers shall remove the Eligible Project from the
Borrowing Base within one hundred twenty (120) days of notice from the
Agent of the Lenders' decision. Any such Eligible Project will remain
as Collateral unless released in accordance with this Agreement."
(c) Subsection (d) of Section 7.2.2 (Pool A Project Covenants) is
hereby amended and restated in its entirety as follows:
(d) Each Development Project, in order to qualify as a Pool A
Project, shall satisfy the following "Minimum Occupancy Requirement". A
minimum Resident Occupancy of at least 18 residents by the end of its
first six Operating Months plus an average of a net additional three
(3) residents per month thereafter (measured quarterly and averaged for
all three-months periods) until 85% Resident Occupancy is achieved. For
first fiscal quarter after 85% Resident Occupancy is achieved, each
Development Project in order to qualify as a Pool A Project shall also
achieve a Debt Service Coverage Ratio of not less than 1.00 to 1.00,
not less than 1.10 to 1.00 for the next fiscal quarter and not less
than 1.25 to 1.0 for the quarter thereafter; and for each such quarter
shall also maintain such 85% Resident Occupancy (and, upon satisfying
such the 1.25 to 1.00 Debt Service Coverage, shall be classified as a
Stabilized Project.)
(d) The following new Section 4.16 (Consent to Releases) is hereby
added to the Financing Agreement:
"Section 4.16 Consent to Releases.
Anything contained in this Agreement to the contrary herein
notwithstanding, no Eligible Project may be released as Collateral without the
consent of all Lenders; provided, however, the
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Lenders hereby consent to the release of the Eligible Project known as Cleveland
Heights in accordance with the terms of the Financing Agreement."
(e) The following new Section 4.17 (Operating Deficiency Reserve
Account) is hereby added to the Financing Agreement:
Section 4.17 Operating Deficiency Reserve Account.
On or before the date of this Agreement, the Borrowers shall have
delivered to the Agent $1,000,000 (the "Operating Deficiency Reserve")
to be deposited with the Agent in an account (the "Operating Deficiency
Reserve Account") pledged to the Agent on behalf of the Lenders to
secure the Borrowers' Obligations pursuant to the Assignment of Deposit
Account of even date herewith. The Agent alone shall have the authority
to make advances from the Operating Deficiency Reserve Account pursuant
to Section 4.18.
(f) The following new Section 4.18 (Funding of Operating
Deficiencies and Limitations on Advances) is hereby added to the Financing
Agreement:
Section 4.18 Funding of Operating Deficiencies and Limitations on
Advances.
For all Eligible Projects in the Borrowing Base as of the date
hereof, no additional availability in the Borrowing Base or
reimbursement will be given for construction hard or soft costs. For
operating deficits or working capital requirements of the Eligible
Projects listed on Exhibit A attached hereto, the following will be the
order and source of funding:
(a) For the quarter ending December 31, 2000, the Borrowers will
fund out-of-pocket (without eligibility for reimbursement under the
Credit Facility) the difference between (i) the projected aggregate
operating deficits for all such Eligible Projects and (ii) the sum of
(A) the Operating Deficiency Reserve and (B) the remaining budgeted
availability in the Credit Facility for such Eligible Projects.
(b) Thereafter, the Borrowers may request advances from the
Operating Reserve Deficiency Account (without eligibility for
reimbursement under the Credit Facility) until it is either exhausted
or released pursuant to Section 4.19 hereof.
(c) Thereafter, advances for operating deficits or working capital
requirements, for such Eligible Projects may be made from the Credit
Facility.
(d) The amounts estimated to be funded from each source described in
subsection 4.18 (a), (b) and (c) above for the period beginning October
1, 2000
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until such Eligible Projects reach break-even operations based on
current projections are set forth as follows:
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Amount to be funded by $534,000
Borrowers for Operating
Deficiencies
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Amount to be funded from $1,000,000
Operating Deficiency Reserve
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Amount to be Funded from $4,010,000
availability under Credit
Facility
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Total Projected Operating $5,544,000
Deficits
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(e) Anything to the contrary set forth in subsection (a) through (d)
notwithstanding, on or before the last Bank Day of each fiscal quarter,
beginning with the quarter ending December 31, 2000, the Borrowers
shall submit a report projecting the aggregate dollar amount of
operating deficits until all Eligible Projects reach break-even
operations, net of aggregate remaining budgeted availability in the
Credit Facility from such Eligible Projects which are not Stabilized
Projects. If necessary as a result of such report after review and
acceptance by the Lenders an based upon the aggregate difference
between projected operating deficits and remaining budget availability,
the amount of Operating Deficiency Reserve will be replenished and/or
increased by the Borrowers upon demand by the Agent. Failure to deliver
such funds to the Agent within three (3) Banking Days of demand shall
constitute an Event of Default under the Financing Documents.
(g) The following new Section 4.19 (Release of Operating Deficit
Reserve) is hereby added to the Financing Agreement:
Section 4.19 Release of Operating Deficit Reserve.
The balance then held in Operating Deficiency Reserve Account will
be released to the Borrowers in whole or in part when the Lenders
determine that funds remaining to be advanced from the Operating
Reserve portion of the Eligible Project Total Development Budgets is
adequate to fund all projected operating deficits for the Eligible
Projects described in the Section 4.18. The Lenders will continue to
reserve the right to require additional operating deficit escrows to be
posted with the Agent in accordance with the provisions of Section
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4.18 and Section 4.20 at such time or times as the Agent determines
that funds available under the Credit Facility are inadequate.
(h) The following new Section 4.20 (Additional Funds) is hereby
added to the Financing Agreement:
Section 4.20 Additional Funds.
If at any time the unpaid costs, both direct and indirect costs and
calculated on a line item by line item basis, necessary to complete any
Development Project and the projected Operating Reserve for any
Eligible Project exceed the Total Development Budget or of any line
item in any Total Development Budget, as determined by the Agent in the
reasonable exercise of its discretion (and after giving effect to any
contingencies), the Borrowers shall provide from sources other than the
Credit Facility the funds necessary to pay the total costs or the costs
of the line item in the Total Development Budget which exceed the
amount budgeted, as the case may be. The Borrowers may be required to
deposit with the Lender from time to time such amounts as may be
required to pay these costs (the "Deposit") in excess of the maximum
availability in the Borrowing base for such Eligible Project. In making
advances under this Agreement, the Agent shall draw first upon the
Deposit until such sums are exhausted, and then upon the proceeds of
the Credit Facility.
(i) The Guarantor Certificate and Attachment 1 through 6 attached to
Exhibit E to the Financing Agreement are hereby replaced by the amended and
restated schedules attached hereto as Exhibit B to be completed by the Guarantor
and delivered to the Agent at the times required by the Financing Agreement.
3. The agreements of the Agent under this Agreement are subject to the
following terms and conditions, time being of the essence:
(a) Execution and delivery by the Borrower and/or the Guarantor as
applicable of each of the following documents (collectively the "Modification
Agreements"):
(i) This Agreement;
(ii) The First Amendment to Amended and Restated Guaranty of
Payment Agreement;
(iii) A First Amendment to Promissory Note for each of the
Notes; and
(iv) An Assignment of Deposit Account for the Operating Deficit
Deposit.
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(b) The Borrowers shall have paid to the Lender's their pro rata
share of a fee in consideration for the Modification Agreements of .125% of the
Credit Facility Committed Amount.
(c) The Agent shall have received an opinion of counsel for the
Borrowers and Guarantor in form and substance satisfactory to the Agent and all
due diligence items listed on the closing checklist.
(d) The Borrowers have paid all costs and expenses of the agent and
the other Lenders, including, but not limited to, legal fees in connection with
the preparation and execution of Modification Agreements.
(e) The Lenders shall be satisfied with their review of the
commitment by another lender to refinance the Eligible Project known as
"Cleveland Heights".
(f) The Lenders shall have received and be satisfied with their
review of a pro forma Borrowing Base Report showing, among other things, the
effect of the modifications set forth in this Agreement.
(g) The Agent shall have received current title bring-downs on all
Eligible Projects in the Borrowing Base.
4. The Borrowers hereby waive their claim that they were entitled to a
reduction in the Interest Rate Margin below 235 basis points for any period
prior to the date hereof.
5. Except as specifically set forth herein, the terms, provisions and
covenants of the Financing Agreement are hereby ratified and confirmed and
remain in full force and effect.
6. This Agreement may be executed in any number of duplicate originals
or counterparts, each of such duplicate originals or counterparts shall be
deemed to be an original and all taken together shall constitute but one and the
same instrument.
7. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas, without regard to principles of
choice of law.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered under seal by their duly authorized representatives as of
the date and year first written above.
BORROWER:
WITNESS/ATTEST: ARC CAPITAL CORPORATION II
a Tennessee corporation
By: (SEAL)
------------------------------- ----------------------------------
Xxxxxx X. Xxxxx
Executive Vice President
WITNESS/ATTEST: ARC CARRIAGE CLUB OF JACKSONVILLE, INC,
a Tennessee corporation
By: (SEAL)
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Xxxxxx X. Xxxxx
Executive Vice President
WITNESS/ATTEST: ARC SANTA CATALINA, INC., a Tennessee
corporation
By: (SEAL)
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Xxxxxx X. Xxxxx
Executive Vice President
AGENT:
WITNESS/ATTEST: BANK UNITED, as Agent for the Lenders
By: (SEAL)
------------------------------- ----------------------------------
Name:
Title:
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AGREEMENT OF GUARANTOR
The undersigned is the "Guarantor" under an Amended and Restated Master
Guaranty of Payment Agreement, dated February 11, 2000 as amended pursuant to
the First Amendment to Amended and Restated Guaranty of Payment Agreement of
even date herewith (as amended, modified, substituted, extended and renewed from
time to time, the "Guaranty") (as amended, modified, substituted, extended and
renewed from time to time, the "Performance Guaranty"), in favor of the Agent on
behalf of the Lenders. In order to induce the Lender to enter into the foregoing
Agreement, the undersigned (a) consents to the transactions contemplated by, and
agreements made by the Borrower under, the foregoing Agreement, including
without limitation the addition and (b) ratifies, confirms and reissues the
terms, conditions, promises, covenant, grants, assignments, security agreements,
agreements, representations, warranties and provisions contained in the
Guaranty, the Performance and the other Financing Documents entered into by the
Guarantor. Without limiting the generality of the foregoing, the Guarantor
covenants and agrees that it guarantees the obligations of the Additional
Borrower under the Credit Facility to the same extent as its guaranty of the
obligations of the Original Borrower.
WITNESS signature and seal of the undersigned as of the date of the
Agreement.
WITNESS/ATTEST: AMERICAN RETIREMENT CORPORATION a Tennessee
corporation
By: (SEAL)
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Xxxxxx X. Xxxxx
Executive Vice President
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Exhibit A
List of Eligible Projects Not Stabilized as of October 1, 2000
Project Name Location
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1. Greenwood Village Greenwood Village, Colorado, Arapahoe County,
2. Cleveland Heights Cleveland Heights, Ohio, Cuyahogo County
3. Homewood Residence at Boynton Beach Boynton Beach, Florida Palm Beach County
4. Homewood Residence at Coconut Creek Coconut Creek, Florida Broward County
5. Homewood Residence at Richmond Heights Richmond Heights, Ohio, Cuyahoga County
6. Homewood Residence at Delray Delray Beach, Florida, Palm Beach
7. Acorn-Xxxxxxx Place Arlington, Texas, Tarrant County
8. Acorn-Shavano Park Shavano Park, Texas, Bexar County
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EXHIBIT B
GUARANTOR CERTIFICATE
The undersigned, being the duly elected, qualified and acting
______________ of the Guarantor, on behalf of the Guarantor, hereby certifies
and warrants that:
1. He or she is the _____________ of the Guarantor and that, as such,
he or she is authorized to execute this certificate on behalf of the Guarantor.
2. As of the (fiscal quarter) (fiscal year) ending as of
________________, ____:
(a) The Guarantor is not in default of any of the provisions of
the Amended and Restated Guaranty of Payment dated February
11, 2000, as amended, modified or restated from time to
time;
(b) The Guarantor's Tangible Net Worth was $_______________ as
computed on Attachment 1 hereto;
(c) The Guarantor's ratio of Total Funded Debt to Total Capital
was ____% as computed on Attachment 2 hereto;
(d) The Guarantor's ratio of Funded Debt to Adjusted Total
Capital was ___% as computed on Attachment 3 hereto;
(e) The Guarantor's ratio of EBITDAR to Interest and Rent was
__________ to 1.0 on a rolling four (4) quarters basis as
computed on Attachment 4 hereto;
(f) The Guarantor's ratio of EBITDAR to Interest and Rent was
_____ to 1.0 on a single quarter basis as computed on
attached 4 hereto.
(g) The Guarantor's Current Ratio was _____ as computed on
Attachment 5 hereto.
(h) The value of the Guarantor's Liquid Assets was $_____ as
computed on Attachment 6 hereto.
(i) The Guarantor's Fixed Charge Coverage Ratio was ____ to 1.0
as computed on Attachment 7 hereto.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate, this ______ day of ______________, 200_.
GUARANTOR:
AMERICAN RETIREMENT CORPORATION
By:
----------------------------------------
Name:
Title:
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ATTACHMENT 1
Period Ending:____ , _____
Tangible Net Worth*:
1. Net Worth $__________
less
2. (a) all intangible assets $__________
(b) pre-opening costs, organization costs
and deferred financing costs $__________
(c) loans to or receivables from
unconsolidated affiliates $__________
Actual Tangible Net Worth = $_______________
Required Tangible Net Worth = $92,000,000 as of September 30, 2000, plus 50% of
Guarantor's Net Income (if positive) of $__________, plus seventy-five percent
(75%) of the net proceeds to Guarantor of any equity capital (or equity
equivalent) securities offering received during such period ($_______ x .75 =
$_________).
"Tangible Net Worth" means, at any time, the sum at such time of Net Worth less
the total of (a) all assets which would be classified as intangible assets under
GAAP, including goodwill, trademarks, trademark applications, trade names,
service marks, patent applications and licenses, and deferred charges, (b)
pre-opening costs, organizational costs and deferred financing costs, and (c)
advances or loans made to or receivables from any unconsolidated affiliates of
which the Guarantor owns less than fifty percent (50%) or any stockholder of the
Guarantor or any affiliate. All assets classified in the Guarantor's financial
statements as leaseholds of Senior Living Facilities or leasehold acquisition
costs related to Senior Living Facilities shall be included as tangible assets
in the calculation of its Tangible Net Worth with the exception of leasehold
acquisition costs, if any, for the Senior Living Facility known as "Freedom
Plaza Xxxxxx".
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ATTACHMENT 2
Period Ending: ______________, 200_
Ratio of Total Funded Debt to Total Capital
1. Total Funded Debt $______________ *
2. Total Capital $______________ **
Ratio: _____%
Required Ratio: not greater than 70%
* "Total Funded Debt" means the sum of the following but shall exclude trade and
other accounts payable in the ordinary course of business in accordance with
customary trade terms and which are not overdue (as determined in accordance
with customary trade practices) or which are being disputed in good faith by the
Guarantor and for which adequate reserves are being provided on the books of the
Guarantor in accordance with GAAP:
(a) indebtedness for borrowed money ($______) or for the
deferred purchase price of property, or services
($________) $_________
(b) obligations in respect of letters of credit, banker's
or other acceptances or similar obligations issued or
created for the account of the Guarantor $_________
(c) lease obligations which have been or should be, in
accordance with GAAP, capitalized on the books of the
Guarantor $_________
(d) liabilities secured by any property owned by the
Guarantor to the extent attached to the Guarantor's
interest in such property even though Guarantor is
not liable for the payment thereof $_________
(e) any obligation of the Guarantor or a commonly
Controlled Entity to a Multiemployer Plan $_________
(f) Synthetic Lease Funded Debt (as defined in the
Financing Agreement) $_________
(g) all liabilities of a joint venture whether such joint
venture is consolidated or unconsolidated $_________
(h) Contingent Funded Debt (as defined in the Financing
Agreement) $_________
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** "Total Capital" means the sum of the following:
(a) Net Worth $_________
(b) Total Funded Debt $_________
(c) Subordinated Debt $_________
(d) Value of Assets Associated with Contingent Debt $_________
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ATTACHMENT 3
Period Ending: ___________, 200__
Ratio of Funded Debt* to Adjusted Total Capital
1. Funded Debt $ *
-----------------
2. Adjusted Total Capital $ **
-----------------
Ratio: _____%
Required Ratio: not greater than 70%
* "Funded Debt" means the sum of the following but shall exclude trade and other
accounts payable in the ordinary course of business in accordance with customary
trade terms and which are not overdue (as determined in accordance with
customary trade practices) or which are being disputed in good faith by the
Guarantor and for which adequate reserves are being provided on the books of the
Guarantor in accordance with GAAP:
(a) indebtedness for borrowed money ($______) or for the
deferred purchase price of property, or services
($________) $_________
(b) obligations in respect of letters of credit, banker's
or other acceptances or similar obligations issued or
created for the account of the Guarantor $_________
(c) lease obligations which have been or should be, in
accordance with GAAP, capitalized on the books of the
Guarantor $_________
(d) liabilities secured by any property owned by the
Guarantor to the extent attached to the Guarantor's
interest in such property even though Guarantor is
not liable for the payment thereof $_________
(e) any obligation of the Guarantor or a commonly
Controlled Entity to a Multiemployer Plan $_________
(f) all liabilities of a joint venture whether such joint
venture is consolidated or unconsolidated $_________
** "Adjusted Total Capital" means the sum of the following:
(a) Net Worth $_________
(b) Funded Debt $_________
(c) Subordinated Debt $_________
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ATTACHMENT 4
A. Four (4) consecutive quarters ending: _______________, 200__
Ratio of EBITDAR, to Interest plus Rent
1. EBITDAR* $___________ (calculated as follows)
Net Income $_____________
Plus Net Interest $_____________
Plus Taxes $_____________
Plus Depreciation $_____________
Plus Amortization $_____________
Plus Rent $_____________
2. Interest $__________________
(Interest expense [excluding amortization of prepaid financing
costs] of $_______ net of interest income of $_________ equals $______________.)
Rent $_________
Total of Interest plus Rent $_________
Ratio: _____ to 1.0
Required Ratio:
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Period Ending Ratio
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September 30, 2000 1.10 to 1.00
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December 31, 2000 1.10 to 1.00
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March 31, 2001 1.10 to 1.00
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June 30, 2001 1.10 to 1.00
----------------------------------------------------------------
September 30, 2001 1.15 to 1.00
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December 31, 2001 1.20 to 1.00
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March 31, 2002 1.30 to 1.00
----------------------------------------------------------------
June 30, 2002 1.40 to 1.00
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B. One (1) quarter ending: ____________, 200__ Ratio of EBITDAR to Interest Plus
Rent:
1. EBITDAR* $___________ (calculated as follows)
Net Income $_____________
Plus Net Interest $_____________
Plus Taxes $_____________
Plus Depreciation $_____________
Plus Amortization $_____________
Plus Rent $_____________
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2. Interest $__________________
(Interest expense [excluding amortization of prepaid financing costs]
of $_______ net of interest income of $_________ equals $______________.)
Rent $_________
Total of Interest plus Rent $_________
Ratio: _____ to 1.0
Required Ratio:
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Period Ending Ratio
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September 30, 2000 1.15 to 1.00
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December 31, 2000 1.00 to 1.00
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March 31, 2001 1.03 to 1.00
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June 30, 2001 1.15 to 1.00
----------------------------------------------------------------
September 30, 2001 1.20 to 1.00
----------------------------------------------------------------
December 31, 2001 1.30 to 1.00
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March 31, 2002 1.40 to 1.00
----------------------------------------------------------------
June 30, 2002 1.50 to 1.00
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*EBITDAR means earnings before interest, taxes, depreciation, amortization, and
Rent. Any calculation of such ratio which includes the quarter ending December
31, 1999 shall exclude from the calculation of EBITDAR the amounts of both the
actual extraordinary charges (but not more than $13,000,000) and the actual
extraordinary gain (but not less than $3,000,000) taken by the Guarantor in that
fiscal quarter which are listed with estimated amounts on Exhibit A attached to
the Guaranty and shall at all times (i) exclude non-cash reserves for general
and/or professional liability claims and the costs associated therewith, (ii)
exclude all non-cash income arising from the contribution of assets to a joint
venture, and (iii) include cash payments made for general and/or professional
liability claims and the costs associated therewith.
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ATTACHMENT 5
Period Ending: ________, 200__
Current Ratio
1. Current Assets $____________*
2. Current Liabilities $____________**
Ratio of Current assets to Current Liabilities: ____ to ____
Required Ratio: not less than 1.0 to 1.0
* "Current Assets" means at the date hereof, the amount which, in conformity
with GAAP, would be set forth opposite the caption "total current assets" (or
any like caption) on a consolidated balance sheet of the Guarantor, excluding
inventory, Prepaids (as defined by GAAP) and Restricted Cash (as defined by
GAAP).
** "Current Liabilities" means at the date hereof, the amount which, in
conformity with GAAP, would be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the
Guarantor, excluding balloon payments of principal greater than 300% of the
regularly scheduled amortization payment in connection with such indebtedness,
provided such indebtedness is refinanced within ninety (90) days of such balloon
payment.
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ATTACHMENT 6
Period Ending: ________, 200__
Liquid Assets
Value of cash, cash equivalents and marketable securities $_______________
Required Value: not less than the greater of (a) ten percent (10%) of Tangible
Net Worth (as computed on Attachment 1) or (b) $12,000,000 plus (c) $.50 for
every $1.00 (the "Additional Required Liquidity") of net equity capital that is
invested after the date hereof by the Guarantor or its Subsidiaries in any of
the new investments described in subparts (i) through (iv) below (individually,
a "New Investment" or, collectively, the "New Investments") until such time or
times as the Guarantor's ratio of EBITDAR for a fiscal quarter to the
Guarantor's Interest and Rent for such period is equal to or greater than 1.40
to 1.00,
(i) acquisition of Guarantor's convertible
subordinated debentures $__________
(ii) voluntary prepayments of debt balances other
than payments currently scheduled or required pursuant to the
terms of the documents evidencing such indebtedness $__________
(iii) acquisitions of Senior Living Facilities $__________
(iv) the dollar amount spent on new (i.e., first
initiated after the effective dated hereof) construction
either for expansion of existing or development of new Senior
Living Facilities $__________
The foregoing notwithstanding the following limitations shall apply to
the Additional Required Liquidity: (1) New Investments must exceed $500,000 in a
fiscal quarter in order to give rise to commensurate Additional Required
Liquidity and thereafter, the Additional Required Liquidity shall be calculated
on the amount of New Investments in excess of $500,000 in such quarter (Dollar
amount of New Investments this period $_______); and (2) in all events, the
minimum Liquid Assets requirement shall not exceed $25,000,000 (except to the
extent 10% of the Guarantor's Tangible Net Worth exceeds $25,000,000).
Notwithstanding the foregoing, the following New Investments shall not
give rise to any Additional Required Liquidity: (1) the acquisition by the
Guarantor or any Subsidiary of any Senior Living Facility which is currently a
leasehold (Dollar amount this period $________); or (2) the cost of proposed
expansion of the Senior Living Facility knows as "Park Regency" (Dollar amount
this period $________).
In addition, with regard to the sale of an asset the proceeds of which
are invested in a new asset pursuant to a 1031 exchange transaction, only 50% of
the net capital in excess of the 1031 sale proceeds included in the New
Investment will be subject to the Additional Required Liquidity (Dollar amount
of Net Capital in excess of 1031 proceeds this period $__________).
20
ATTACHMENT 7
Four (4) Consecutive Quarters Ending ________, 200__.
Fixed Charge Coverage Ratio:
Ratio of EBITDAR $________
to
Interest $________
plus
Scheduled or Required
Principal Payments $________
Rent $________
Total of Interest Plus
Scheduled or Required
Principal Payments Rent $________
Ratio: ____ to 1.0
Required Ratio: 1.05 to 1.0
*EBITDAR has been calculated in the same way as described on Attachment 4.
