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Exhibit 10.17
AMENDMENT TO GUARANTY
THIS AMENDMENT TO GUARANTY AGREEMENT (hereinafter sometimes referred to
as this "Amendment"), entered into as of the 17th day of October, 1991, by and
among NATIONAL HEALTHCORP L.P., a Delaware limited partnership (the "Partnership
Guarantor"), XXXXX X. XxXXXXXX, an individual resident of the State of Florida
(formerly an individual resident of the State of Texas and hereinafter referred
to as the "Individual Guarantor") (the Partnership Guarantor and the Individual
Guarantor being sometimes hereinafter referred to individually as a "Guarantor"
and collectively as the "Guarantors"), and THE TORONTO-DOMINION BANK, acting
through its Chicago Branch (the "Bank");
W I T N E S S E T H:
WHEREAS, the Issuers have heretofore issued the Bonds pursuant to their
respective Indentures with the Trustees; and
WHEREAS, the proceeds of the Bonds have heretofore been loaned by the
Issuers to Florida Convalescent Centers, Inc., a Florida corporation (together
with its successors and permitted assigns, the "Borrower"), or have been
utilized by the Issuers pursuant to the Financing Agreements, for the purpose of
refunding the Refunded Bonds, the proceeds of which had been used to finance the
acquisition, construction and equipping of the Projects; and
WHEREAS, subject to the terms and conditions of that certain
Reimbursement Agreement dated as of December 1, 1987 (as amended from time to
time, the "Reimbursement Agreement") between the Borrower and the Bank, and
acknowledged by the Guarantors, the Bank has issued for the account of the
Borrower its Letters of Credit to assure the timely payment of the principal of
and interest on the Bonds, and the purchase price of Bonds tendered for purchase
pursuant to the Indentures; and
WHEREAS, pursuant to the provisions of the Reimbursement Agreement, the
Borrower is responsible for amounts drawn under the Letters of Credit, and for
fees and other amounts due with respect to the Letters of Credit; and
WHEREAS, as a condition to the issuance of the Letters of Credit, the
Guarantors entered into that certain Guaranty Agreement dated as of December 1,
1987 (as heretofore amended, the "Guaranty Agreement"), from the Guarantors in
favor of the Bank, pursuant to which the Guarantors have jointly, severally and
unconditionally guaranteed to the Bank the payment of all amounts owing by the
Borrower from time to time under the Reimbursement Agreement and certain other
amounts and obligations referred to in the Guaranty
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Agreement (the amounts and obligations so guaranteed being sometimes referred to
herein as the "Guaranteed Obligations"); and
WHEREAS, the Partnership Guarantor and National Health Investors, Inc.,
a Maryland corporation intending to qualify as a real estate investment trust
under the applicable provisions of the Internal Revenue Code ("NHI"), have
entered into an agreement pursuant to which the Partnership Guarantor will
convey its ownership interest in forty (40) nursing homes and three (3)
retirement centers, and in certain other assets, to NHI (said transaction being
hereinafter referred to as the "Asset Transfer"); and
WHEREAS, in consideration of the Asset Transfer, NHI has agreed, among
other things, to guarantee to the Bank the payment and performance of all of the
Guaranteed Obligations by executing and delivering that certain Guaranty
Agreement of even date herewith from NHI in favor of the Bank (the "NHI
Guaranty"); and
WHEREAS, as a condition to granting its consent to the Asset Transfer,
the Bank is requiring, among other things, that the Guaranty Agreement be
amended and reaffirmed as hereinafter provided, and that the Borrower agree to
amend the Reimbursement Agreement as provided in that certain Amendment to
Reimbursement Agreement of even date herewith (the "Reimbursement Agreement
Amendment") between the Borrower and the Bank, and acknowledged by the
Guarantors and NHI;
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each of the parties hereto, the parties hereto agree that
capitalized terms used herein but not otherwise defined or limited in this
Amendment shall have the meanings ascribed thereto in the Guaranty Agreement and
further agree as follows:
1. Amendment to Section 1.1.
(a) The Guaranty Agreement is hereby amended by amending
certain of the existing definitions in Section 1.1, Definitions, as follows:
(i) The definition of "Debt Service Coverage
Ratio" is hereby amended by deleting said definition in its entirety
and by substituting the following in lieu thereof:
"'Debt Service Coverage Ratio' means, with respect to
the Partnership Guarantor for any period, the ratio of (i) the
annualized sum of Net Income and operating lease obligations,
depreciation, amortization and interest expense for such
period, minus distributions paid to holders of units of the
Partnership Guarantor
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during such period, or projected by the Partnership Guarantor
in written financial projections furnished to the Bank to be
paid with respect to such period, whichever is greater, to
(ii) the sum of current maturities of Funded Debt and interest
expense, operating lease obligations and payments required to
fund any obligations guaranteed by the Partnership Guarantor,
including, without limitation, the Guaranteed Obligations, all
as determined in accordance with GAAP."
(ii) The definition of "Funded Debt" is hereby
amended by deleting from the end thereof the phrase ", and shall
include all capitalized lease obligations.", and by substituting in
lieu thereof the phrase "(excluding Subordinated Debt), plus notes
payable, current maturities of Funded Debt, capitalized lease
obligations, operating lease obligations and all Guarantees."
(iii) The definition of "Lien" is hereby amended
by deleting said definition in its entirety and by substituting the
following in lieu thereof:
"'Lien' means, with respect to any asset, any
mortgage, lien, pledge, security interest or encumbrance of
any kind in respect of such asset. For the purpose of this
Guaranty Agreement, each party hereto shall be deemed to own,
subject to a Lien, any asset that it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement relating to such asset."
(iv) The definition of "Subordinated Debt" is
hereby amended by inserting immediately before the period at the end
thereof the phrase "pursuant to subordination provisions satisfactory
to the Bank."
(iii) The definition of "Tangible Net Worth" is
hereby amended by deleting said definition in its entirety and by
substituting the following in lieu thereof:
"'Tangible Net Worth' means, with respect to the
Partnership Guarantor, Equity plus Subordinated Debt, minus
the general intangibles of the Partnership Guarantor,
including, without limitation, goodwill and unamortized loan
costs in excess of One Million Four Hundred Thousand Dollars
($1,400,000)."
(b) The Guaranty Agreement is hereby further amended by
deleting in their entirety the definitions of "Capitalized Lease Obligation",
"Consolidated Current Assets", "Consolidated Current Liabilities", "Consolidated
Funded Debt", "Consolidated Net
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Income", "Consolidated Tangible Net Worth", "Current Liabilities", "Current
Maturities of Funded Debt", "Operating Lease Obligations" and "Tangible Net
Assets".
(c) The Guaranty Agreement is hereby further amended by adding
the following new definitions in Section 1.1, Definitions:
"'Adjusted Tangible Net Worth' means, with respect to the
Partnership Guarantor, Equity plus Fifteen Million Seven Hundred
Forty-Five Thousand Dollars ($15,745,000) in deferred income resulting
from the profit on the sale of nursing home properties to National as
equity (which amount shall decrease over time in accordance with the
Partnership Guarantor's books and records that comply with GAAP), plus
Subordinated Debt, minus goodwill and unamortized loan costs in excess
of One Million Four Hundred Thousand and No/100 Dollars
($1,400,000.00).
"Consent Letter" means that certain letter dated September 27,
1991, from the Bank to the Partnership Guarantor, as modified and
supplemented by that certain letter date October 1, 1991, from the Bank
to the Partnership Guarantor, pursuant to which the Bank agreed to
consent to the Asset Transfer upon the fulfillment of all of the
conditions set forth therein.
'Fixed Charge Coverage Ratio' means, with respect to the
Partnership Guarantor for any period, (a) the annualized sum of Net
Income, plus depreciation, amortization, interest expense, and
capitalized lease obligations and operating lease obligations
(excluding any components included in interest expense and
amortization), minus distributions paid to holders of units of the
Partnership Guarantor during such period, or projected by the
Partnership Guarantor in written financial projections furnished to the
Bank to be paid with respect to such period, whichever is greater,
divided by (b) the sum of interest expense, current maturities of
Funded Debt, and capitalized lease obligations and operating lease
obligations (excluding any components included in interest expense and
current maturities of Funded Debt), and any payments required to fund
any obligations guaranteed by the Partnership Guarantor, including,
without limitation, the Guaranteed Obligations all as determined in
accordance with GAAP.
'Loan and Security Agreement' means that certain Loan and
Security Agreement dated as of December 16, 1988, by and among National
Health Corporation Leveraged Employee Stock Ownership Trust, the Banks
named therein, Third National Bank in Nashville as agent for said
banks, the Partnership Guarantor and National, as amended from time to
time.
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'Master Lease' means that certain Master Agreement to Lease
dated as of October 17, 1991, between NHI, as landlord, and the
Partnership Guarantor, as tenant, as the same may be amended from time
to time.
'National' means National Health Corporation, a Tennessee
corporation, and its successors and assigns.
'NHI' means National Health Investors, Inc., a Maryland
corporation intending to qualify as a real estate investment trust
under the applicable provisions of the Internal Revenue Code, and its
successors and permitted assigns.
'NHI Guaranty Agreement' means that certain Guaranty Agreement
of even date herewith from NHI in favor of the Bank, as the same may be
amended from time to time.
'Partnership Guarantor Pledge Agreement' means that certain
Collateral Pledge Agreement of even date herewith by and between the
Partnership Guarantor and the Bank, pursuant to which the Partnership
Guarantor has pledged certain cash or marketable securities to the Bank
pursuant to Section 4.19 hereof as collateral for the guaranty
obligations of the Partnership Guarantor hereunder, as amended from
time to time."
2. Amendments to Article II. Article II of the Guaranty Agreement is
hereby amended by deleting from Section 2.2 thereof the phrase "to Account No.
000-0-00000, at Manufacturers Hanover Trust Company, 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, for credit to The Toronto-Dominion Bank, New York Branch, in
favor of Toronto-Dominion Chicago Branch," and by substituting the following in
lieu thereof:
", by wire transfer, to Xxxxxx Guaranty Trust Company, ABA No.
000000000, to the account of The Toronto-Dominion Bank, Account No.
00000000, for further credit to Toronto-Dominion Cayman, Account No.
0000000,".
3. Amendments to Article IV.
(a) The Guaranty Agreement is hereby amended (i) by deleting
therefrom the phrase "one hundred twenty (120) days" wherever such phrase
appears in Section 4.9, Audited Annual Financial Statements and Information;
Certificate of No Default, Section 4.10, Quarterly Financial Statements and
Information, and Section 4.11, Quarterly Performance Certificates, and by
substituting in lieu thereof the phrase "ninety (90) days", and (ii) by deleting
therefrom the phrase "sixty (60) days" wherever such phrase appears in said
Sections 4.9, 4.10 and 4.11, and by substituting in lieu thereof the phrase
"forty-five (45) days".
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(b) The Guaranty is hereby amended by adding the following
clause immediately after the phrase "all of which shall be on a consolidated and
a consolidating basis with Partnership Guarantor's Subsidiaries" in Section 4.10
thereof:
", setting forth in comparative form the figures as at the end
of and (except for the first fiscal year after the date
hereof) for the corresponding quarter of the previous fiscal
year,".
(c) The Guaranty Agreement is hereby amended by deleting
therefrom Section 4.14, Financial Covenants, in its entirety and by substituting
the following therefor:
"4.14 Financial Covenants. The Partnership Guarantor
shall comply with the following financial covenants, with
determination of compliance being made quarterly unless more
frequently requested by the Bank:
(a) Current Ratio. The Partnership Guarantor shall at
all times maintain a Current Ratio of at least 1.5 to 1.0.
(b) Working Capital. The Partnership Guarantor shall
at all times maintain minimum Working Capital of at least Ten
Million and No/100 Dollars ($10,000,000.00).
(c) Funded Debt to Adjusted Tangible Net Worth Ratio.
The Partnership Guarantor shall at all times maintain a ratio
of Funded Debt to Adjusted Tangible Net Worth of no more than
3.5:1.0.
(d) Tangible Net Worth. The Partnership Guarantor
shall at all times maintain a Tangible Net Worth of not less
than (i) $32,000,000 for the period from the date of delivery
of this Guaranty Agreement through December 30, 1987; (ii)
$36,000,000 for the period from December 31, 1987 through
December 30, 1988; and (iii) $40,000,000 at all times
thereafter; provided, however, that beginning on March 31,
1990, and on subsequent calendar quarter endings, the minimum
Tangible Net Worth requirement set forth herein will increase
by One Million Four Hundred Thousand Dollars ($1,400,000) per
quarter on a cumulative basis.
(e) Debt Service Coverage. The Partnership Guarantor
shall at all times maintain a minimum Debt Service Coverage
Ratio of at least 1.3 to 1.0.
(f) Fixed Charge Coverage. The Partnership Guarantor
shall at all times maintain a Fixed Charge Coverage Ratio of
at least 1.10 to 1.0."
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(b) The Guaranty Agreement is hereby amended by deleting the
words "and (d)" from Section 4.16, No Merger, Consolidation or Sale of Assets,
and by substituting the following in lieu thereof:
"(d) the Partnership Guarantor causes NHI to confirm in a
writing satisfactory to the Bank that the NHI Guaranty
Agreement will continue to guaranty the obligations of the
surviving entity under the Reimbursement Agreement and other
Related Documents, and (e)".
(c) The Guaranty Agreement is hereby amended by adding the
following as new Sections 4.19, 4.20, 4.21, 4.22, 4.23 and 4.24 at the end of
Article IV thereof:
"4.19 Pledge of Additional Collateral. The
Partnership Guarantor covenants and agrees to deliver to the
Bank cash collateral in the amount of $5,000,000, to be held
by the Bank pursuant to, and subject to the terms and
conditions of, the Partnership Guarantor Pledge Agreement.
4.20 No More Favorable Terms for Other Lenders. The
Partnership Guarantor covenants and agrees that, with respect
to its lending and credit relationships with Persons other
than the Bank, the Partnership Guarantor will not agree or
consent in writing to covenants, events of default and terms
of repayment (including, without limitation, any obligations
to purchase or repurchase evidences of Indebtedness) which are
more favorable to such Person than the covenants, events of
default and terms of repayment set forth herein; provided,
however, that this covenant shall apply only to such lending
and credit relationships in which the Partnership Guarantor is
indebted, or has guaranteed or otherwise assured payment of
Indebtedness of a third party, to such Person in an amount
greater than $1,000,000, and shall not apply to either the
refinancing of the interests of The Bank of New York and
C&S/Sovran Bank in the financing made pursuant to the Loan and
Security Agreement or to the pledge by the Partnership
Guarantor of one or more certificates of deposit to Third
National Bank in Nashville in connection with such
refinancing.
4.21 Replacement of Letters of Credit. The Guarantors
acknowledge that, pursuant to the Reimbursement Agreement, the
Borrower has agreed to replace the Letters of Credit with one
or more Alternate Credit Facilities or Qualified Credit
Facilities (as such capitalized terms are defined in the
applicable Financing Agreements) on or before April 1, 1992,
notwithstanding the stated expiration dates of the Letters of
Credit.
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The Guarantors hereby covenant and agree to cause the Letters
of Credit to be so replaced and to assist the Borrower in
whatever way required in order to effect such replacements by
April l, 1992, including, without limitation, by guaranteeing
any reimbursement obligations relating to such Alternate
Credit Facilities or Qualified Credit Facilities.
4.22 Liens on and Dispositions of Certain Property
Interests.
(a) Liens. The Partnership Guarantor covenants and
agrees that it will not create, assume or suffer to exist any
Lien (other than those in existence on the date hereof and
consented to by the Bank) upon its right, title or interest in
and to any of the Facilities, including, but not limited to,
its rights, title or interest in, to and under the Master
Lease or any of the separate Leases referred to in Section
1.01 of the Master Lease, or its leasehold interest in
property created thereby, without the prior written consent of
Bank, except for Liens for taxes or other governmental charges
not yet due or that are being actively contested in good faith
by appropriate proceedings, and Liens in favor of the agent
and the lenders under the Loan and Security Agreement.
(b) Disposition of Certain Property Interests.
Notwithstanding the covenant set forth in Section 4.16 above,
the Partnership Guarantor covenants and agrees that it will
not sell, assign, convey, sublease or otherwise dispose of any
of its interest in any of the Facilities, including, but not
limited to, its rights, title or interest in, to and under the
Master Lease or in any of the separate Leases referred to in
Section 1.01 of the Master Lease, without the prior written
consent of the Bank.
4.23 Indemnification. The Partnership Guarantor shall
(to the fullest extent permitted by Applicable Law) indemnify
the Bank and each affiliate thereof and their respective
directors, officers, employees and agents from, and hold each
of them harmless against, any and all losses, liabilities,
claims or damages to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise
out of or result from this Guaranty Agreement, the Asset
Transfer or any related transaction, from any breach by the
Partnership Guarantor of this Guaranty Agreement or from any
investigation, litigation or other proceeding (including any
threatened investigation or proceeding) relating to the
foregoing, and the Partnership Guarantor shall
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reimburse the Bank and each affiliate thereof and their
respective directors, officers, employees and agents, upon
demand for any reasonable expenses (including, without
limitation, legal fees and expenses) incurred in connection
with any such investigation or proceeding; but excluding any
such losses, liabilities, claims, damages or expenses incurred
by reason of the gross negligence or willful misconduct of the
Person to be indemnified.
4.24 Additional Consents. The Partnership Guarantor
covenants and agrees that it will use its best efforts to
obtain the consents described on Exhibit "A" hereto and by
this reference incorporated herein at the earliest practicable
time and to furnish the Bank with evidence thereof
satisfactory to the Bank."
4. Amendments to Section 6.1. Section 6.1 of the Guaranty
Agreement, Events of Default, is hereby amended as follows:
(a) Section 6.1(b) of the Guaranty Agreement is hereby amended
by deleting the phrase "4.15 or 4.16" therefrom, and by substituting in lieu
thereof the phrase "4.15, 4.16, 4.19, 4.20, 4.21 and 4.22".
(b) Section 6.1(h) of the Guaranty Agreement is hereby amended
by inserting the following phrase immediately after the reference to the
"Revolver Agreement" and prior to the semi-colon: ", the Partnership Guarantor
Pledge Agreement, the NHI Guaranty Agreement or the Loan and Security
Agreement".
5. Amendments to Section 7.2. Section 7.2 of the Guaranty
Agreement, Notices, is hereby amended as follows:
(1) The notice address for the Chicago Branch of the Bank
remains unchanged; however, the address to which copies of notices to the Bank
are to be sent is hereby amended to read as follows: "The Toronto-Dominion Bank,
USA Division, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention:
Managing Director, Health Care Finance."
6. Consent to NHI Guaranty Agreement and Reimbursement Agreement
Amendment: Reaffirmation of Guaranty Obligations. The Guarantors hereby consent
to the execution and delivery of the NHI Guaranty Agreement and the
Reimbursement Agreement Amendment and hereby reaffirm their respective
obligations under the Guaranty Agreement, as herein amended, and the joint,
several, absolute and unconditional guaranty to the Bank of the timely payment
and performance of all of the Guaranteed Obligations.
7. Continuing Effectiveness Except as Amended. Except to the
extent specifically amended as herein set forth, the Guaranty
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Agreement remains unchanged, and the Guaranty Agreement, as herein amended,
remains in full force and effect.
8. Severability. Any provision of this Amendment which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or non-authorization as to the remaining provisions hereof and shall not affect
the validity, enforceability or legality of such provision in any other
jurisdiction.
9. Governing Law. This Amendment is intended to be performed in the
State of Illinois, and shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the State of
Illinois.
10. Multiple Counterparts. This Amendment may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. Satisfaction of Conditions. The Partnership Guarantor hereby
represents and warrants that it has satisfied all conditions required to be met
by it pursuant to the Consent Letter other than those, if any, waived in writing
by the Bank on or prior to the date hereof. The Individual Guarantor hereby
represents and warrants that the Borrower has satisfied all conditions required
to be met by it pursuant to the Consent Letter other than those, if any, waived
in writing by the Bank on or prior to the date hereof.
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IN WITNESS WHEREOF, the Guarantors and the Bank have duly executed and
delivered this Amendment, or caused same to be duly executed and delivered,
under seal, as of the date first above written.
/s/ XXXXX X. XXXXXXXX [SEAL]
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XXXXX X. XXXXXXXX
NATIONAL HEALTHCORP L.P., a
Delaware limited partnership
By: NHC, Inc., a Tennessee
corporation, as Managing
General Partner
By: /s/ XxXxxxx, Jr
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Title: Sr V.P
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Attest:
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Title:
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[SEAL]
[AMENDMENT TO GUARANTY]
