1
EXHIBIT 10.4
THIRD AMENDMENT TO GUARANTY OF PAYMENT AGREEMENT
THIS THIRD AMENDMENT TO GUARANTY OF PAYMENT AGREEMENT (herein called
the "Amendment") made as of May 10, 2000 by and among Alterra Healthcare
Corporation, a Delaware corporation, formerly known as Alternative Living
Services, Inc. ("Guarantor"), and 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 by that certain First Amendment to Amended and Restated
Financing and Security Agreement dated as of October 29, 1999, that certain
Suspension, Waiver and Modification Agreement dated as of March 28, 2000, and
that certain Second Amendment to Amended and Restated Financing and Security
Agreement dated of even date herewith (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 Financing 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 by that certain First Amendment to Guaranty of Payment Agreement
dated as of October 29, 1999, and that certain Suspension, Waiver and
Modification Agreement dated as of March 28, 2000 (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 certain provisions thereof;
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:
2
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.
"Amendment" means this Third 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 3.2.1 of the Original Guaranty is hereby replaced in its
entirety by the following:
3.2.1 Minimum Tangible Net Worth.
Maintain, on a consolidated basis with all subsidiaries, at
all times during the term of the Credit Facility measured quarterly
beginning with the quarter ending December 31, 1999, a minimum Tangible
Net Worth of not less than the sum of $80,000,000 as of December 31,
1999 plus fifty percent (50%) of the Guarantor's net income (if
positive) for each subsequent quarter plus seventy-five (75%) of the
net proceeds to the Guarantor of any equity capital (or equity
equivalent) securities offering received during such quarter. "Tangible
Net Worth" means, at any time, the sum at such time of Net Worth
(defined as shareholder's equity as defined by GAAP) less the total of
(aa) all assets which would be classified as intangible assets under
GAAP, excluding (1) goodwill in excess of $25,000,000 prior to the
closing of the Equity Transaction, or (2) all goodwill after the
closing of the Equity Transaction, but including trademarks, trademark
applications, trade names, service marks, patent applications and
licenses, and deferred charges, (bb) Premises-opening costs,
organizational costs and deferred financing costs, and (cc) advances or
loans made to or receivables from any unconsolidated affiliates of
which the Guarantor owns less than fifty percent (50%) (other than
advances or loans made to or receivables from HCR/Alterra Development
II, LLC up to a total of $35,000,000) or any stockholder of the
Guarantor or any affiliate.
(b) Section 3.2.3A of the Original Guaranty is hereby replaced in its
entirety by the following:
2
3
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) (i)
$15,000,000 prior to the closing of the Equity Transaction, or (ii)
$20,000,000 after the closing of the Equity Transaction, 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 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.
Representations and Warranties
Section 3.1. Representations and Warranties of Guarantor. In order to
induce Agent to enter into this Amendment, Guarantor represents and warrants to
Agent 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 except in lieu of Section 2.1.6 of the Original Guaranty
and the last sentence of Section 2.1.7 of the Original Guaranty, Guarantor is
making the representations and warranties in subsection 3.1(e) below.
(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.
3
4
(d) When duly executed and delivered, each of this Amendment and the
Guaranty 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, 1999 fairly presents the consolidated financial
position at such date and the consolidated statement of operations and the
changes in consolidated financial position for the period ending on such date
for Guarantor. Copies of such financial statements have heretofore been
delivered to each Lender. Since such date no material adverse change has
occurred in the financial condition or businesses or in the consolidated
financial condition or businesses of Guarantor, except as described in the
Guarantors' annual report on Form 10-K filed with the Securities and Exchange
Commission on March 30, 2000.
ARTICLE IV.
Conditions of Effectiveness
Section 4.1. Effective Date. This Amendment shall become effective upon
satisfaction of the Conditions to Effectiveness of Section V of the Second
Amendment to Amended and Restated Financing and Security Agreement dated of even
date herewith.
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 pertain hg 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
4
5
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 OCHER 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
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
5
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: Vice President
-------------------------------
BANK UNITED, as Agent
By: /s/ Xxxxx Xxxxx
---------------------------------------
Name: Xxxxx Xxxxx
--------------------------------
Title: Vice President
-------------------------------
6
7
CONSENT OF FIRSTAR BANK, N.A.
Firstar Bank, N.A., a Lender under the Financing Agreement and a party
to the Agency Agreement, for good and valuable consideration the receipt of
which is hereby acknowledged, hereby consents to the provisions of this
Amendment and the transactions contemplated herein.
FIRSTAR BANK, N.A.
By: /s/ Xxxx X. Xxxxx
---------------------------------------
Name: Xxxx X. Xxxxx
--------------------------------
Title: Vice President
-------------------------------
7
8
CONSENT OF AMSOUTH BANK
Amsouth Bank, a Lender under the Financing Agreement and a party to the
Agency Agreement, for good and valuable consideration the receipt of which is
hereby acknowledged, hereby consents to the provisions of this Amendment and the
transactions contemplated herein.
AMSOUTH BANK
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: Vice President
-------------------------------
8
